1
EXECUTION COPY
CASH COLLATERAL AGREEMENT
Dated as of June 25, 1999
Among
AZURIX CORP.
as Pledgor
and
THE CHASE MANHATTAN BANK
as Collateral Agent and Collateral Securities Intermediary
and
THE OTHER PARTIES NAMED HEREIN
2
T A B L E O F C O N T E N T S
SECTION PAGE
Section 1. Grant of Security.....................................................................................2
Section 2. Security for Obligations..............................................................................3
Section 3. Delivery of Cash Collateral...........................................................................3
Section 4. Maintaining the Cash Collateral Account...............................................................3
Section 5. The Collateral Securities Intermediary; Investments...................................................4
Section 6. Release of Amounts; Increase in Amounts...............................................................6
Section 7. Representations and Warranties........................................................................7
Section 8. Affirmative Covenants.................................................................................9
Section 9. Negative Covenants...................................................................................10
Section 10. Further Assurances...................................................................................10
Section 11. Place of Perfection; Records.........................................................................11
Section 12. Transfers and Other Liens............................................................................11
Section 13. Collateral Agent Appointed Attorney-in-Fact..........................................................11
Section 14. The Collateral Agent May Perform.....................................................................11
Section 15. Authorization and Action.............................................................................11
Section 16. Remedies.............................................................................................15
Section 17. Security Interest Absolute...........................................................................16
Section 18. Amendments; Waivers; Etc.............................................................................17
Section 19. Addresses for Notices................................................................................17
Section 20. Continuing Security Interest; Assignments Under the Credit Agreement.................................17
Section 21. Termination..........................................................................................18
Section 22. Governing Law; Terms.................................................................................18
Section 23. Jurisdiction; Venue..................................................................................18
Section 24. Subrogation..........................................................................................18
Section 25. Execution in Counterparts............................................................................19
Section 26. Severability.........................................................................................19
Schedule
Schedule I - Notices
3
CASH COLLATERAL AGREEMENT
CASH COLLATERAL AGREEMENT dated as of June 25, 1999, among
AZURIX CORP., a Delaware corporation with an office at 000 Xxxx Xxxxxx, Xxxxx
0000, Xxxxxxx, Xxxxx 00000 (the "Pledgor"), THE CHASE MANHATTAN BANK, as
collateral agent (the "Collateral Agent"), for the benefit of the Secured
Parties referred to below, and as securities intermediary (the "Collateral
Securities Intermediary") hereunder, WESTDEUTSCHE LANDESBANK GIROZENTRALE, as
agent (the "Agent" and, together with the Collateral Agent, the "Agents") for
the Lenders under the Credit Agreement referred to below, and WESTDEUTSCHE
LANDESBANK GIROZENTRALE, as the Initial Lender under the Credit Agreement.
PRELIMINARY STATEMENTS:
(1) Azurix Buenos Aires S.A., a company organized under the
laws of Argentina (the "Borrower"), has entered into the Credit Agreement dated
as of June 24, 1999 (as amended, supplemented or otherwise modified from time
to time, being the "Credit Agreement"; the terms defined therein and not
otherwise defined herein being used herein as therein defined), with the Agent
for the lenders (the "Lenders" and, together with the Agent, the "Secured
Parties") party thereto.
(2) Pursuant to Section 15, the Lenders have appointed the
Collateral Agent for purposes of maintaining the Cash Collateral Account and
performing certain actions with respect thereto (including, without limitation,
investing available amounts from time to time on deposit therein and
transferring or otherwise disbursing such amounts) subject to the terms of this
Agreement.
(3) The Pledgor has appointed Xxxxx, Xxxxxx & Co. Asset
Managers, L.P. (the "Designee") in its capacity as an investment adviser under
an investment manager services agreement, solely for the purpose of making
investment decisions under Section 5 hereof.
(4) The Collateral Agent has opened a non-interest bearing
collateral securities account (the "Cash Collateral Account") in its name with
The Chase Manhattan Bank, Corporate Trust Group, 000 Xxxx 00xx Xxxxxx, Xxx
Xxxx, Xxx Xxxx 00000, Attention: Pledged Asset Control Services, 10th Floor,
Account No. 323-341012, in the name of the Collateral Agent and under the sole
control and dominion of the Collateral Agent and subject to the terms of this
Agreement.
(5) Unless otherwise defined herein or in the Credit
Agreement, terms used in Article 8 or 9 of the Uniform Commercial Code in
effect in the State of New York (the "UCC")
4
2
are used herein as therein defined. In addition, as used herein the following
terms have the following meanings: (i) "Book-Entry Securities" means securities
maintained in the form of entries (including, without limitation, the security
entitlements in such securities) in the commercial book-entry system of the
Federal Reserve Bank of New York; (ii) "entitlement holder" means an
"entitlement holder" as defined (A) in Section 8-102(a)(7) of the UCC and (B)
with respect to Book-Entry Securities governed by the Federal Book-Entry
Regulations, in 31 C.F.R. ss. 357.2; (iii) "Federal Book-Entry Regulations"
means (A) the federal regulations contained in Subpart B ("Treasury/Reserve
Automated Debt Entry System (TRADES)") governing Book-Entry Securities
consisting of U.S. Treasury bonds, notes and bills and Subpart D ("Additional
Provisions") of 31 C.F.R. Part 357, 31 C.F.R. ss. 357.10 through ss. 357.14 and
ss. 357.41 through ss. 357.44, including related defined terms in 31 C.F.R. ss.
357.2); and (B) to the extent substantially identical to the Federal Book-Entry
Regulations referred to in clause (A) above, the federal regulations governing
other Book-Entry Securities; (iv) "securities intermediary" has the meaning
specified (A) in Section 8-102(a)(14) of the UCC and (B) with respect to
Book-Entry Securities governed by the Federal Book-Entry Regulations, in 31
C.F.R. ss. 357.2; (viii) "security entitlement" has the meaning specified in
(A) Section 8-102(a)(17) of the UCC and (B) with respect to Book-Entry
Securities governed by the Federal Book-Entry Regulations, 31 C.F.R. ss. 357.2
(6) It is a condition precedent to the making of Advances by
the Lenders under the Credit Agreement that the Pledgor shall have granted the
assignment and security interest and made the pledge and assignment
contemplated by this Agreement.
NOW, THEREFORE, in consideration of the premises and in order
to induce the Lenders to make Advances under the Credit Agreement, the Pledgor
hereby agrees with the Collateral Agent for its benefit and the ratable benefit
of the other Secured Parties as follows:
SECTION 1. Grant of Security. The Pledgor hereby assigns and
pledges to the Collateral Agent for its benefit and the ratable benefit of the
other Secured Parties, and hereby grants to the Collateral Agent for its
benefit and the ratable benefit of the other Secured Parties, a first lien on
and prior perfected security interest in and to the following (collectively,
the "Cash Collateral"):
(a) all of the following:
(i) the Cash Collateral Account, all cash, financial
assets, investment property and other property from time to
time held therein and all certificates and instruments, if
any, from time to time representing or evidencing the Cash
Collateral Account
(ii) all Permitted Investments (as defined in the
Credit Agreement) from time to time held in the Cash
Collateral Account and all certificates and
5
3
instruments, if any, from time to time representing or
evidencing the Permitted Investments;
(iii) all notes, certificates of deposit, deposit
accounts, checks and other instruments from time to time
hereafter delivered to or otherwise possessed by the
Collateral Agent for or on behalf of the Pledgor in
substitution for or in addition to any or all of the then
existing Cash Collateral;
(iv) all interest, dividends, cash, instruments and
other property from time to time received, receivable or
otherwise distributed in respect of or in exchange for any or
all of the then existing Cash Collateral; and
(b) all proceeds (including cash proceeds) of any and all of
the foregoing Cash Collateral (including, without limitation, proceeds
that constitute property of the types described in clause (a) of this
Section 1).
SECTION 2. Security for Obligations. This Agreement secures
the payment of all obligations of the Borrower now or hereafter existing under
the Loan Documents, whether for principal, interest, fees, expenses, taxes or
otherwise (all such obligations being the "Secured Obligations"). Without
limiting the generality of the foregoing, this Agreement secures the payment of
all amounts that constitute part of the Secured Obligations and would be owed
by the Borrower to the Secured Parties under the Loan Documents but for the
fact that they are unenforceable or not allowable due to the existence of a
bankruptcy, reorganization or similar proceeding involving any Loan Party.
SECTION 3. Delivery of Cash Collateral. All certificates or
instruments representing or evidencing Cash Collateral shall be delivered to
and held by the Collateral Agent on its behalf and on behalf of the other
Secured Parties and shall be in suitable form for transfer by delivery, or
shall be accompanied by duly executed instruments of transfer or assignment in
blank, all in form and substance satisfactory to the Collateral Agent. The
Collateral Agent shall have the right, at any time in its discretion and
without notice to the Pledgor, to transfer to or to register in the name of the
Collateral Agent or any of its nominees any or all of the Cash Collateral. In
addition, the Collateral Agent shall have the right at any time to exchange
certificates or instruments representing or evidencing Cash Collateral for
certificates or instruments of smaller or larger denominations. All Cash
Collateral credited to or held in the Cash Collateral Account shall be
registered in the name of the Collateral Agent and indorsed to the Collateral
Securities Intermediary or in blank.
SECTION 4. Maintaining the Cash Collateral Account. So long as
any Advance shall remain unpaid or any Lender shall have any Commitment under
the Credit Agreement:
6
4
(a) The Collateral Agent will maintain the Cash Collateral
Account with the Collateral Securities Intermediary at its offices
referred to in the fourth preliminary statement to this Agreement.
(b) It shall be a term and condition of the Cash Collateral
Account, notwithstanding any term or condition to the contrary in any
other agreement relating to the Cash Collateral Account and except as
otherwise provided by the provisions of Sections 6, 16 and 21, that no
amount (including interest on Permitted Investments) shall be paid or
released to or for the account of, or withdrawn by or for the account
of, the Pledgor or any other Person from the Cash Collateral Account
without the written consent of the Agent upon prior written
instruction of the Lenders.
The Cash Collateral Account shall be subject to such applicable laws, and such
applicable regulations of the Board of Governors of the Federal Reserve System
and of any other appropriate banking or governmental authority, as may now or
hereafter be in effect.
SECTION 5. The Collateral Securities Intermediary; Investments.
(a) The Collateral Securities Intermediary represents and warrants to, and
agrees with, the Secured Parties that:
(i) It is a securities intermediary and is acting as such
with respect to the Cash Collateral Account and all assets, property
and items (including all security entitlements maintained or carried
in the Cash Collateral Account) from time to time transferred,
credited or deposited to or maintained or carried in the Cash
Collateral Account.
(ii) All assets, property and items held by the Collateral
Securities Intermediary for the account of the Collateral Agent are,
and will continue to be, credited to the Cash Collateral Account in
accordance with the provisions hereof, and all Cash Collateral
transferred or delivered to the Cash Collateral Account shall be
registered in the name of or payable to the order of the Collateral
Agent, and indorsed to the Collateral Securities Intermediary or in
blank.
(iii) The Cash Collateral Account is, and shall continue to
be, a securities account.
(iv) To the fullest extent permitted by applicable law, all
assets, property and other items from time to time carried in the Cash
Collateral Account (whether consisting of cash, investment property,
securities, security entitlements, instruments or other property,
assets or items) will be treated as "financial assets" within the
meaning of Section 8-102(a)(9) of the UCC.
(v) The Collateral Agent is the sole entitlement holder with
respect to the Cash Collateral Account and all financial assets from
time to time maintained therein,
7
5
and the Collateral Securities Intermediary has identified, and will
continue to identify, in its records the Collateral Agent as the sole
person having a securities entitlement against the Collateral
Securities Intermediary with respect thereto.
(vi) In furtherance of clause (v) above, the Collateral
Securities Intermediary (A) shall comply with any and all entitlement
orders received by it from the Collateral Agent in respect of the Cash
Collateral Account or any assets, property or items from time to time
maintained therein without the consent of the Pledgor or any other
Person, and (B) except to the limited extent permitted under clause
(b) of this Section 5 with respect to the giving of instructions for
the investment in Permitted Investments of amounts on deposit in the
Cash Collateral Account to the extent permitted thereunder, it shall
not comply with the entitlement orders of any other Person.
(vii) The Collateral Securities Intermediary has not and will
not enter into any agreement permitting any third party to deliver or
originate entitlement orders with respect to the Collateral Account.
(viii) The "securities intermediary's jurisdiction" (within
the meaning of Section 8-110(e) of the UCC) of the Collateral
Securities Intermediary with respect to the Cash Collateral Account
is, and will continue to be for so long as this Agreement shall remain
in effect, the State of New York.
(b) If requested by the Pledgor or the Designee, the
Collateral Securities Intermediary will, subject to the provisions of
Section 6, 16 and 21 and so long as no Default or Event of Default has
occurred and is continuing, (i) invest amounts on deposit in the Cash
Collateral Account in such Permitted Investments in the name of the
Collateral Agent as the Pledgor or Designee may select and the Agent
may approve upon notice to the Collateral Agent and the Pledgor and
(ii) invest interest paid on the Permitted Investments referred to in
clause (i) above, and reinvest other proceeds of any such Permitted
Investments that may mature or be sold, in each case in such Permitted
Investments in the name of the Collateral Agent as the Pledgor or
Designee may select and the Agent may approve upon notice to the
Collateral Agent and the Pledgor. Interest and proceeds that are not
invested or reinvested in Permitted Investments as provided above
shall be deposited and held in the Cash Collateral Account. Cash not
invested in Permitted Investments shall not earn interest.
(c) Neither the Collateral Agent nor the Collateral
Securities Intermediary shall have any liability to the Pledgor, any
of the Secured Parties or any other Person for, or as a result of, any
losses suffered from any sale or liquidation of any Permitted
Investment prior to its stated maturity unless such losses result from
the Collateral Agent's or the Collateral Securities Intermediary's
gross negligence or wilful misconduct. The Collateral Securities
Intermediary shall have no obligation to invest or reinvest any
amounts held
8
6
hereunder in the absence of written investment direction,
and in no event shall the Collateral Securities Intermediary be liable
for the selection of Permitted Investments or for investment losses
incurred thereon.
SECTION 6. Release of Amounts; Increase in Amounts. (a) Upon
instruction from the Agent and so long as no Default or Event of Default has
occurred or is continuing, one Business Day following the date on which
interest is due and payable under Section 2.05 of the Credit Agreement, the
Collateral Agent shall pay and release to an account of the Pledgor notified to
the Collateral Agent in writing by the Pledgor, the amount by which the
aggregate amount of cash and Permitted Investments then held or deposited in
the Cash Collateral Account exceeds the Required Collateral Amount calculated
two days prior to the applicable period. Such excess amount being determined by
the Agent, which determination shall be conclusive absent manifest error.
(b) The Collateral Agent will release, and the Pledgor hereby
authorizes the Collateral Agent to release, to the Agent amounts on
deposit in the Cash Collateral Account pursuant to Section 2.05 of the
Credit Agreement in order to repay the amounts outstanding under the
Credit Agreement on the Maturity Date.
(c) Upon the occurrence and the continuance of any Event of
Default, the Collateral Agent shall (upon instruction of the Required
Lenders) release, and the Pledgor hereby authorizes the Collateral
Agent to release, all amounts on deposit in the Cash Collateral
Account on such release date to be applied in accordance with Section
16(b) in order to repay the amounts outstanding under the Credit
Agreement on the date thereof.
(d) The Pledgor shall cause, through cash deposits to the
Cash Collateral Account:
(i) on the first day of each Interest Period, (x)
the U.S. dollar market value of the Cash Collateral to be
equal to or greater than (y) the Required Collateral Amount,
in each case, for such Interest Period and as determined in
accordance with the notices delivered below; and
(ii) on each Monthly Date, (x) the U.S. dollar
market value of the Cash Collateral to be equal to or greater
than (y) the Accrued Required Collateral Amount, in each
case, for such Monthly Date and as determined in accordance
with the notices delivered below; and
(iii) from time to time requested by the Agent, (x)
the U.S. Dollar market value of the Cash Collateral to be
equal to or greater than (y) the Accrued Required Collateral
Amount.
9
7
(e) In connection with clause (d)(i) above with respect to
any Interest Period:
(i) In connection with clause (d)(i) above with
respect to any Interest Period, two Business Day's prior to
the last day of such Interest Period, the Collateral Agent
shall notify the Pledgor and the Agent in writing as to the
amount under (d)(i)(x) above and the Agent shall notify the
Collateral Agent and the Pledgor in writing as to the amount
under (d)(i)(y) above. Such amounts shall (i) be calculated
in good faith and with reasonable detail, (ii) in the case of
(d)(i)(x) be calculated based upon market value; and (iii)
shall be determinative absent manifest error.
(ii) In connection with clause (d)(ii) above with
respect to any Interest Period, two Business Day's prior to
the last day of each Monthly Period, the Collateral Agent
shall notify the Pledgor and the Agent in writing as to the
amount under (d)(ii)(x) above and the Agent shall notify the
Collateral Agent and the Pledgor in writing as to the amount
under (d)(ii)(y) above. Such amounts shall (i) be calculated
in good faith and with reasonable detail, (ii) in the case of
(d)(ii)(x) be calculated based upon market value; and (iii)
shall be determinative absent manifest error.
In the event that there are Base Rate Advances, the parties hereby agree that
references in this Section to Interest Periods shall include a reference to
Base Rate Periods, if any. For purposes of calculating projected interest for
any Base Rate Period, the rate applicable to the first day of such period will
be used for the calculation of projected interest for the entire Base Rate
Period. Notwithstanding anything else provided herein, the Agent shall notify
the Collateral Agent not later than four days prior to the date of the giving
of any notice to be provided by the Collateral Agent under (e)(i) and (e)(ii)
as to the relevant date of such notice.
SECTION 7. Representations and Warranties. The Pledgor
represents and warrants as follows:
(a) The Pledgor is a corporation duly incorporated, validly
existing and in good standing under the laws of the State of Delaware.
(b) The execution, delivery and performance by the Pledgor of
this Agreement and the consummation of the transactions contemplated
hereby are within the Pledgor's corporate powers and have been duly
authorized by all necessary corporate action and do not contravene (i)
the Pledgor's charter or by-laws or (ii) any law or any contractual
restriction binding on or affecting the Pledgor.
10
8
(c) No authorization or approval or other action by, and no
notice to or filing with, any governmental authority or regulatory
body or any other third party is required for the due execution,
delivery and performance by the Pledgor of this Agreement.
(d) This Agreement has been duly executed and delivered by
the Pledgor. This Agreement is the legal, valid and binding obligation
of the Pledgor enforceable against the Pledgor in accordance with its
terms, subject to applicable bankruptcy, insolvency or other similar
laws affecting creditor's rights generally.
(e) There is no pending or threatened action, suit,
investigation, litigation or proceeding affecting the Pledgor or any
of its Subsidiaries before any court, governmental agency or
arbitrator that (i) could be reasonably likely to have a Material
Adverse Effect or (ii) purports to affect the legality, validity or
enforceability of this Agreement or the consummation of the
transactions contemplated hereby.
(f) The Consolidated balance sheet of the Pledgor and its
Subsidiaries as at December 31, 1998, and the related Consolidated
statements of income and cash flows of the Pledgor and its
Subsidiaries for the fiscal year then ended, fairly present in all
material respects the Consolidated financial condition of the Pledgor
and its Subsidiaries as at such date and the Consolidated results of
the operations of the Pledgor and its Subsidiaries for the year ended
on such date, all in accordance with generally accepted accounting
principles consistently applied. Since December 31, 1998, there has
been no Material Adverse Change.
(g) The Pledgor has, independently and without reliance upon
any Secured Party, and based on such documents and information as it
has deemed appropriate, made its own credit analysis and decision to
enter into this Agreement, and the Pledgor has established adequate
means of obtaining from any other Loan Party on a continuing basis
information pertaining to, and is now and on a continuing basis will
be familiar with, the financial condition, operations, properties and
prospects of such other Loan Party.
(h) The chief place of business and chief executive office of
the Pledgor and the office where the Pledgor keeps its records
concerning the Cash Collateral are located at the address first
specified above for the Pledgor.
(i) The Pledgor is the legal and beneficial owner of the Cash
Collateral free and clear of any Lien, except for the security
interest created by this Agreement. No effective financing statement
or other instrument similar in effect covering all or any part of the
Cash Collateral is on file in any recording office, except such as may
have been filed in favor of the Collateral Agent relating to this
Agreement. The Pledgor has no trade names.
11
9
(j) This Agreement and the pledge and assignment of the
certificates representing the Cash Collateral pursuant hereto create a
valid and perfected first priority security interest in the Cash
Collateral, securing the payment of the Secured Obligations, and all
filings and other actions necessary or desirable to perfect and
protect such security interest have been duly taken.
(k) No consent of any other Person and no authorization,
approval or other action by, and no notice to or filing with, any
governmental authority or regulatory body or other third party is
required either (i) for the grant by the Pledgor of the assignment and
security interest granted hereby, for the pledge by the Pledgor of the
Cash Collateral pursuant hereto or for the execution, delivery or
performance of this Agreement by the Pledgor, (ii) for the perfection
or maintenance of the pledge, assignment and security interest created
hereby (including the first priority nature of such pledge, assignment
or security interest) or (iii) for the exercise by the Collateral
Agent of its voting or other rights provided for in this Agreement or
the remedies in respect of the Cash Collateral pursuant to this
Agreement.
(l) The Pledgor is not an "investment company", as defined in
the Investment Company Act of 1940, as amended. Neither the making of
any Advances, nor any the application of the proceeds or repayment
thereof by the proceeds of the Cash Collateral Account, nor any
funding of the Cash Collateral Account, nor consummation of the
financing contemplated under the Loan Documents, will violate any
provision of such Act or any rule, regulation or order of the
Securities and Exchange Commission thereunder.
SECTION 8. Affirmative Covenants. The Pledgor covenants and
agrees that, so long as any part of the Secured Obligations shall remain unpaid
or any Lender shall have any Commitment, the Pledgor will, unless the Agent
shall otherwise consent in writing:
(a) Compliance with Laws, Etc. Comply in all material
respects, with all applicable laws, rules, regulations and orders,
except for a noncompliance which would not have a Material Adverse
Effect.
(b) Preservation of Corporate Existence, Etc. Preserve and
maintain its corporate existence, rights (charter and statutory) and
franchises; provided, however, that the Pledgor shall not be required
to preserve any right or franchise if the Board of Directors of the
Pledgor shall determine that the preservation thereof is no longer
desirable in the conduct of the business of the Pledgor, and that the
loss thereof is not disadvantageous in any material respect to the
Pledgor or the Lenders.
(c) Visitation Rights. At any reasonable time and from time
to time, permit any of the Secured Parties or any agents or
representatives thereof, to examine and make copies of and abstracts
from the records and books of account of, and visit the properties
12
10
of, the Pledgor, and to discuss the affairs, finances and accounts of
the Pledgor with any of their officers or directors and with their
independent certified public accountants; provided, however, that such
records, books of account and properties so examined, copied,
abstracted or visited shall in the judgment of the Required Lenders be
relevant to any of the Loan Documents (including the rights and
remedies thereunder), and the transactions contemplated thereby.
(d) Required Collateral Amount. Maintain the Required
Collateral Amount in the Cash Collateral Account.
SECTION 9. Negative Covenants. The Pledgor covenants and
agrees that, so long as any part of the Secured Obligations shall remain unpaid
or any Lender shall have any Commitment, the Pledgor will not, without the
prior written consent of the Agent, create or suffer to exist any Lien on or
with respect to the Collateral, except for those created pursuant to the Loan
Documents.
SECTION 10. Further Assurances. (a) The Pledgor agrees that
from time to time, at the expense of the Pledgor, it will promptly execute and
deliver all further instruments and documents, and take all further action,
that may be necessary or desirable, or that any Agent may request, in order to
perfect and protect any pledge, assignment or security interest granted or
purported to be granted hereby or to enable such Agent or any Lender to
exercise and enforce its rights and remedies hereunder with respect to any Cash
Collateral. Without limiting the generality of the foregoing, the Pledgor will:
(i) xxxx conspicuously, at the request of the Collateral Agent, each of its
records pertaining to the Cash Collateral with a legend, in form and substance
satisfactory to the Agent, indicating that such Cash Collateral is subject to
the security interest granted hereby; (ii) if any Cash Collateral shall be
evidenced by a promissory note or other instrument, deliver and pledge to the
Collateral Agent hereunder such note or instrument duly indorsed and
accompanied by duly executed instruments of transfer or assignment, all in form
and substance satisfactory to the Agent; and (iii) 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 any Agent may
request, in order to perfect and preserve the pledge, assignment and security
interest granted or purported to be granted hereby.
(b) The Pledgor hereby authorizes the Collateral Agent to
file one or more financing or continuation statements, and amendments
thereto, relating to all or any part of the Cash Collateral without
the signature of the Pledgor where permitted by law. A photocopy or
other reproduction of this Agreement or any financing statement
covering the Cash Collateral or any part thereof shall be sufficient
as a financing statement where permitted by law.
(c) The Collateral Agent will furnish to the Agent monthly
statements and such other statements as the Agent may reasonably
request, together with schedules further
13
11
identifying and describing the Cash Collateral and such other reports
in connection with the Cash Collateral as any Agent may reasonably
request, all in reasonable detail.
SECTION 11. Place of Perfection; Records. The Pledgor shall
keep its chief place of business and chief executive office and the office
where it keeps its records concerning the Cash Collateral, at the location
therefor specified in Section 8(h) or, upon 30 days' prior written notice to
the Agents, at such other locations in a jurisdiction where all actions
required by Section 10 shall have been taken with respect to the Cash
Collateral.
SECTION 12. Transfers and Other Liens. The Pledgor shall not
(a) sell, assign (by operation of law or otherwise) or otherwise dispose of, or
grant any option with respect to, any of the Cash Collateral, or (b) create or
suffer to exist any Lien upon or with respect to any of the Cash Collateral
except for the pledge, assignment and security interest created by this
Agreement.
SECTION 13. Collateral Agent Appointed Attorney-in-Fact. The
Pledgor hereby irrevocably appoints the Collateral Agent as the 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, from time to time, upon the occurrence
and during the continuation of an Event of Default, in the Collateral Agent's
discretion, to take any action and to execute any instrument that the Agent may
deem necessary or advisable to accomplish the purposes of this Agreement,
including, without limitation:
(a) to ask for, 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 Cash Collateral,
(b) to receive, indorse and collect any drafts or other
instruments and documents in connection with clause (a) above, and
(c) to file any claims or take any action or institute any
proceedings that the Agent may deem necessary or desirable for the
collection of any of the Cash Collateral or otherwise to enforce the
rights of the Collateral Agent with respect to any of the Cash
Collateral.
SECTION 14. The Collateral Agent May Perform. If the Pledgor
fails to perform any agreement contained herein, the Collateral Agent may
itself perform, or cause performance of, such agreement, and the expenses of
the Collateral Agent incurred in connection therewith shall be payable by the
Pledgor under Section 15(e).
SECTION 15. Authorization and Action. (a) The Lender hereby
appoints and authorizes the Collateral Agent to take such action as agent on
its behalf and to exercise such powers and discretion under this Agreement as
are delegated to the Collateral Agent by the terms
14
12
hereof, together with such powers and discretion as are reasonably incidental
thereto. As to any matters not expressly provided for by this Agreement
(including, without limitation, enforcement of the Cash Collateral), the
Collateral Agent shall not be required to exercise any discretion or take any
action, but shall be required to act or to refrain from acting (and shall be
fully protected in so acting or refraining from acting) upon the instructions of
the Lenders, and such instructions shall be binding upon all Secured Parties.
(b) The Collateral Agent may rely and shall be protected in
acting or refraining from acting upon any written notice, instruction
or request furnished to it hereunder and believed by it to be genuine
and to have been signed or presented by the proper party or parties.
The Collateral Agent shall be under no duty to inquire into or
investigate the validity, accuracy or content of any such document.
The Collateral Agent shall have no duty to solicit any payments which
may be due it hereunder. Notwithstanding anything else provided
herein, if the Collateral Agent receives instructions from the Pledgor
and the Designee, the Collateral Agent shall rely and shall be
protected in acting or refraining from acting upon any written
instruction solely of the Pledgor in accordance with this Section
15(b).
(c) The Collateral Agent shall not be liable to any Person
for any action taken or omitted by it in good faith unless a court of
competent jurisdiction determines that the Collateral Agent's willful
misconduct or gross negligence was a cause of any loss to such Person.
In the administration of any escrow account hereunder, if any, the
Collateral Agent may execute any of its powers and perform its duties
hereunder directly or through agents or attorneys and may, consult
with counsel, accountants and other skilled persons to be selected and
retained by it. Except as otherwise provided in the first sentence of
this Section 15(c), the Collateral Agent shall not be liable for
anything done, suffered or omitted in good faith by it in accordance
with the advice or opinion of any such counsel, accountants or other
skilled persons.
(d) The Collateral Agent may resign and be discharged from
its duties or obligations hereunder by giving notice in writing of
such resignation specifying a date when such resignation shall take
effect and may be removed at any time for cause by the Required
Lenders in their sole discretion. Upon such resignation and removal,
the Required Lenders shall have the right to appoint a successor agent
with the consent of the Pledgor (such consent not to be unreasonably
withheld or delayed). If no successor agent shall have been so
appointed, and shall have accepted such appointment, within 30 days
after the retiring Collateral Agent's giving notice of resignation or
the Required Lenders' removal of the retiring Collateral Agent, then
the retiring Collateral Agent may, on behalf of the Lenders, appoint a
successor agent, which shall be a commercial bank organized under the
laws of the United States or of any State thereof and having a
continued capital surplus of at least $1,000,000,000. Upon the
acceptance of any appointment as agent hereunder by a successor agent
and upon the execution and filing or recording of such
15
13
financing statements, or amendments thereto, and such other
instruments or notices, as may be necessary or desirable, or as the
Required Lenders may request, in order to continue the perfection of
the Liens granted or purported to be granted by the Collateral
Documents, such successor agent shall succeed to and become vested
with all the rights, powers, discretion, privileges and duties of the
retiring Collateral Agent, and the retiring Collateral Agent shall be
discharged from its duties and obligations under this Agreement. After
any retiring Collateral Agent's resignation or removal hereunder as
Collateral Agent, the provisions of this Section 15 shall inure to its
benefit as to any actions taken or omitted to be taken by it while it
was Collateral Agent under this Agreement. The Collateral Agent shall
have the right to withhold an amount equal to the amount due and owing
to the Collateral Agent, plus any costs and expenses the Collateral
Agent shall reasonably believe may be incurred by the Collateral Agent
in connection with the termination of the Cash Collateral Agreement.
(e) The Pledgor hereby agrees to (i) pay the Collateral
Agent upon execution of this Agreement reasonable compensation for the
services to be rendered hereunder, and (ii) pay or reimburse the
Collateral Agent upon request for all expenses, disbursement and
advances, including reasonable attorney's fees, incurred or made by it
in connection with the preparation, execution, performance, delivery
modification and termination of this Agreement.
(f) The Lenders shall indemnify (to the extent not reimbursed
by the Pledgor), ratably according to the respective principal amounts
of the Notes then held by each of them (or if no Notes are at the time
outstanding or if any Notes are held by Persons that are not Lenders,
ratably according to their respective Commitments), the Collateral
Agent from all loss, liability or expense (including the fees and
expenses of in house or outside counsel) arising out of or in
connection with (i) its execution and performance of this Agreement,
except to the extent that such loss, liability or expense is due to
the gross negligence or willful misconduct of the Collateral Agent, or
(ii) its following any instructions or other directions from the
Lenders, except to the extent that its following any such instruction
or direction is expressly forbidden by the terms hereof. Anything in
this agreement 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 lost
profits), even if the Collateral Agent has been advised of the
likelihood of such loss or damage and regardless of the form of
action.
(g) Each party hereto, except the Collateral Agent, shall, in
the notice section of this Agreement, provide the Collateral Agent
with their Tax Identification Number (TIN) as assigned by the Internal
Revenue Service, if any. All interest or other income earned under the
Cash Collateral Agreement shall be allocated and paid as provided
herein and reported by the recipient to the Internal Revenue Service
as having been so allocated and paid.
16
14
(h) The duties and responsibilities of the Collateral Agent
hereunder shall be determined solely by the express provisions of this
Cash Collateral Agreement, and no other or further duties or
responsibilities shall be implied. The Collateral Agent shall not have
any liability under, nor duty to inquire into the terms and provisions
of any agreement or instructions, other than outlined in the
Agreement.
(i) In the event funds transfer instructions are given (other
than in writing at the time of execution of the Agreement), whether in
writing, by telecopier or otherwise, the Collateral Agent is
authorized to seek confirmation of such instructions by telephone
call-back to the person or persons designated in a writing reasonably
acceptable to and acknowledged by the Collateral Agent, and the
Collateral Agent may rely upon the confirmations of anyone purporting
to be the person or persons so designated. The persons and telephone
numbers for call-backs may be changed only in a writing actually
received and acknowledged by the Collateral Agent. The parties to this
Agreement acknowledge that such security procedure is commercially
reasonable.
(j) It is understood that the Collateral Agent and the
beneficiary's Bank in any funds transfer may rely solely upon any
account numbers or similar identifying number provided by either of
the other parties hereto to identify (i) the beneficiary, (ii) the
beneficiary's Bank, or (iii) an intermediary bank. The Collateral
Agent may apply any of the escrowed funds, if any, for any payment
order it executes using any such identifying number, even where its
use may result in a person other than the beneficiary being paid, or
the transfer of funds to a Bank other than the beneficiary's Bank, or
an intermediary Bank designated.
(k) The Collateral Agent shall not incur any liability to any
Person for following in good faith the instructions herein contained
or expressly provided for, or written instructions given by the
parties hereto, in each case unless a court of competent jurisdiction
determines that the Collateral Agent's gross negligence or wilful
misconduct was a cause of any loss to such Person.
(l) In the event that the Collateral Agent shall be uncertain
as to its duties or rights hereunder or shall receive instructions,
claims or demands from any party hereto which, in its opinion,
conflict with any of the provisions of this Agreement, it shall be
entitled to refrain from taking any action and its sole obligation
shall be to keep safely all property held in escrow until it shall be
directed otherwise in writing by all of the other parties hereto or by
a final order or judgment of a court of competent jurisdiction.
(m) Any corporation into which the Collateral Agent in its
individual capacity 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 in its
17
15
individual capacity shall be a party, or any corporation to which
substantially all the corporate trust business of the Collateral Agent
in its individual capacity may be transferred, shall be the Collateral
Agent under this Cash Collateral Agreement without further act.
(n) This Agreement does not create any obligation of the
Securities Intermediary except for those expressly set forth in this
Agreement and in Part 5 of Article 8 of the UCC. In particular, the
Collateral Securities Intermediary need not investigate whether the
Secured Party is entitled under the Secured Party's agreements with
the Pledgor to give an entitlement order or other direction concerning
the Cash Collateral Account. The Collateral Securities Intermediary
may rely on notices and communications it believes given by the
appropriate party.
SECTION 16. Remedies. If any Event of Default shall have
occurred and be continuing:
(a) The Collateral Agent may exercise in respect of the Cash
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 upon default under the UCC at such time (whether or not
the UCC applies to the affected Cash Collateral) and also may (i)
require the Pledgor to, and the Pledgor hereby agrees that it will at
its expense and upon request of the Collateral Agent forthwith,
assemble all or part of the Cash Collateral as directed by the
Collateral Agent and make it available to the Collateral Agent at a
place to be designated by the Collateral Agent that is reasonably
convenient to both parties and (ii) without notice except as specified
below, sell the Cash Collateral or any part thereof at public or
private sale, at any of the Collateral Agent's offices or elsewhere,
for cash, on credit or for future delivery, and upon such other terms
as the Collateral Agent may deem commercially reasonable. The Pledgor
agrees that, to the extent notice of sale shall be required by law, at
least ten days' notice to the Pledgor of the time and place of any
public sale or the time after which any private sale is to be made
shall constitute reasonable notification. The Collateral Agent shall
not be obligated to make any sale of Cash Collateral regardless of
notice of sale having been given. The Collateral Agent may adjourn any
public or private sale from time to time by announcement at the time
and place fixed therefor, and such sale may, without further notice,
be made at the time and place to which it was so adjourned.
(b) All cash proceeds received by the Collateral Agent in
respect of any sale of, collection from, or other realization upon all
or any part of the Cash Collateral shall be applied (after payment of
any amounts payable to the Collateral Agent hereunder) in whole or in
part by the Agent for the ratable benefit of the Lenders against, all
or any part of the Secured Obligations in such order as the Agent
shall elect. Any surplus of such cash or cash proceeds held by the
Collateral Agent and remaining after payment in full of
18
16
all the Secured Obligations shall be paid over to the Pledgor or to
whomsoever may be lawfully entitled to receive such surplus.
(c) All payments received by the Pledgor under or in
connection with the Cash Collateral shall be received in trust for the
benefit of the Collateral Agent, shall be segregated from other funds
of the Pledgor and shall be forthwith paid over to the Collateral
Agent in the same form as so received (with any necessary
indorsement).
(d) The Collateral Agent may, without notice to the Pledgor
except as required by law and at any time or from time to time,
charge, set-off and otherwise apply all or any part of the Secured
Obligations against the Cash Collateral Account (including the
Permitted Investments) or any part thereof.
SECTION 17. Security Interest Absolute. The obligations of
the Pledgor under this Agreement are independent of the Secured Obligations,
and a separate action or actions may be brought and prosecuted against the
Pledgor to enforce this Agreement, irrespective of whether any action is
brought against the Borrower or whether the Borrower is joined in any such
action or actions. All rights of each of the Lenders and the Agents and the
pledge, assignment and security interest hereunder, and all obligations of the
Pledgor hereunder, shall be absolute and unconditional, irrespective of:
(a) any failure from time to time on the part of any Loan
Party to be duly organized and existing under the laws of each
applicable jurisdiction;
(b) any lack of validity or enforceability of any Loan
Document or any other agreement or instrument relating thereto;
(c) any change in the time, manner or place of payment of, or
in any other term of, all or any of the Secured Obligations or any
other amendment or waiver of or any consent to any departure from any
Loan Document, including, without limitation, any increase in the
Secured Obligations resulting from the extension of additional credit
to the Pledgor or any of its subsidiaries or otherwise;
(d) any taking, exchange, release or nonperfection of any
other collateral, or any taking, release or amendment or waiver of or
consent to departure from any guaranty, for all or any of the Secured
Obligations;
(e) any manner of application of collateral, or proceeds
thereof, to all or any of the Secured Obligations, or any manner of
sale or other disposition of any collateral for all or any of the
Secured Obligations or any other assets of the Pledgor or any of its
subsidiaries;
19
17
(f) any change, restructuring or termination of the
corporate structure or existence of the Pledgor or any of its
subsidiaries; or
(g) any other circumstance that might otherwise constitute a
defense available to, or a discharge of, the Pledgor or a third party
Pledgor of a security interest.
SECTION 18. Amendments; Waivers; Etc. No amendment or waiver
of any provision of this Agreement, and no consent to any departure by the
Pledgor herefrom, shall in any event be effective unless the same shall be in
writing and signed by all of the parties hereto, and a copy of such document is
delivered to the Collateral Agent, and then such waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given. No failure on the part of any of the Agents to exercise, and no delay in
exercising, any right hereunder shall operate as a waiver thereof; nor shall
any single or partial exercise of any such right preclude any other or further
exercise thereof or the exercise of any other right.
SECTION 19. Addresses for Notices. All notices and other
communications provided for hereunder shall be in writing (including
telecopier, telegraphic, telex or cable communication) and, mailed,
telegraphed, telecopied, telexed, cabled or delivered to the Pledgor, the Agent
or the Collateral Agent, as the case may be, in each case addressed to it at
its address specified in Schedule I hereto 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, telecopied, telegraphed,
telexed or cabled, respectively, be effective when deposited in the mails,
telecopied, delivered to the telegraph company, confirmed by telex answerback
or delivered to the cable company, respectively, addressed as aforesaid.
SECTION 20. Continuing Security Interest; Assignments Under
the Credit Agreement. This Agreement shall create a continuing security
interest in the Cash Collateral and shall (a) remain in full force and effect
until the later of the (i) payment in full in cash of the Secured Obligations
and (ii) the expiration or the termination of the Commitments under the Credit
Agreement, (b) be binding upon the Pledgor, its successors and assigns and (c)
inure, together with the rights and remedies of the Agents hereunder, to the
benefit of the Agent, the Lenders and their respective successors, transferees
and assigns. Without limiting the generality of the foregoing clause (c), any
Lender may assign or otherwise transfer all or any portion of its rights and
obligations under the Credit Agreement (including, without limitation, all or
any portion of its Commitment, the Advances owing to it and the Note or Notes
held by it) to any other Person, and such other Person shall thereupon become
vested with all the benefits in respect thereof granted to such Lender herein
or otherwise, in each case as provided in Section 8.07 of the Credit Agreement.
Neither this Cash Collateral Agreement nor any right or interest hereunder may
be assigned in whole or in part by any party without the prior consent of the
other parties.
20
18
SECTION 21. Termination. Upon the later of (a) the payment in
full in cash of the Secured Obligations and (b) the expiration or the
termination of the Commitments under the Credit Agreement, the pledge,
assignment and security interest granted hereby shall terminate and all rights
to the Cash Collateral shall revert to the Pledgor. Upon any such termination,
the Collateral Agent will, at the Pledgor's expense, execute and deliver to the
Pledgor such documents as the Pledgor shall reasonably request to evidence such
termination.
SECTION 22. Governing Law; Terms. This Agreement shall be
governed by and construed in accordance with the laws of the State of New York
without regard to its principles of conflicts of laws, except to the extent
that the validity or perfection of the security interest hereunder, or remedies
hereunder, in respect of any particular Cash Collateral are governed by the
laws of a jurisdiction other than the State of New York.
SECTION 23. Jurisdiction; Venue. (a) The Pledgor hereby
irrevocably and unconditionally submits, for itself and its property, to the
nonexclusive jurisdiction of any New York State or Federal court (to the extent
such court has subject matter jurisdiction) sitting in New York City and any
appellate court from any thereof in any action or proceeding arising out of or
relating to this Agreement or for the recognition and enforcement of any
judgment, and the Pledgor hereby irrevocably and unconditionally agrees that
all claims in respect of such action or proceeding may be heard and determined
in such New York State court or in such Federal court. The Pledgor hereto
agrees that a final judgment in any such action or proceeding shall be
conclusive and may be enforced in other jurisdictions by suit on the judgment
or in any other manner provided by law. The Pledgor hereto irrevocably and
unconditionally waives, to the fullest extent it may legally and effectively do
so, any objection that it may now or hereafter have to the laying of venue of
any suit, action or proceeding arising out of or relating to this Agreement in
any New York State or federal court. The Pledgor hereby irrevocably waives, to
the fullest extent it may effectively do so, the defense of an inconvenient
forum to the maintenance of such action or proceeding in any such court or any
other similar grounds. The Pledgor agrees that a final judgment in any such
action or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by
applicable law.
(b) Nothing in this Section 23 shall affect the right of any
of the Secured Parties to serve legal process in any other manner
permitted by applicable law or affect any right which such Lender or
Agent would otherwise have to bring any action or proceeding against
the Pledgor or its property in the courts of any other jurisdiction.
SECTION 24. Subrogation. The Pledgor will not exercise any
rights that it may now or hereafter acquire against the Borrower that arise
from the existence, payment, performance or enforcement of the Pledgor's
obligations or the Secured Obligations under this Agreement or any other Loan
Document, including, without limitation, any right of subrogation,
reimbursement, exoneration, contribution or indemnification and any right to
participate in any claim or remedy of the Collateral Agent or any other Secured
Party against the Borrower or any other insider pledgor
21
19
or any Collateral, whether or not such claim, remedy or right arises in equity
or under contract, statute or common law, including, without limitation, the
right to take or receive from the Borrower or any other insider pledgor,
directly or indirectly, in cash or other property or by set-off or in any other
manner, payment or security on account of such claim, remedy or right, unless
and until all of the Pledgor's obligations or the Secured Obligations and all
other amounts payable under this Agreement shall have been paid in full in cash.
If any amount shall be paid to the Pledgor in violation of the preceding
sentence at any time prior to the later of the payment in full in cash of the
Secured Obligations and all other amounts payable under this Agreement, such
amount shall be held in trust for the benefit of the Collateral Agent and the
other Secured Parties and shall forthwith be paid to the Collateral Agent to be
credited and applied to the Secured Obligations and all other amounts payable
under this Agreement, whether matured or unmatured, in accordance with the terms
of the Loan Documents, or to be held as Collateral for any Secured Obligations
or other amounts payable under this Agreement thereafter arising.
SECTION 25. Execution in Counterparts. This Agreement may be
executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed shall be deemed to be an
original and all of which taken together shall constitute one and the same
agreement. Delivery of an executed counterpart of a signature page to this
Agreement by telecopier shall be effective as delivery of a manually executed
counterpart of this Agreement.
SECTION 26. Severability. If any term or provision of this
Agreement is or shall become illegal, invalid or unenforceable in any
jurisdiction, all other terms and provisions of this Agreement shall remain
legal, valid and enforceable in such jurisdiction and such illegal, invalid or
unenforceable provision shall be legal, valid and enforceable in any other
jurisdiction.
* * * *
22
IN WITNESS WHEREOF, the Pledgor has caused this Agreement to be duly
executed and delivered by its officer thereunto duly authorized as of the date
first above written.
AZURIX CORP., as Pledgor
By /s/ Xxxxxxx X. Xxxxxxxxx
---------------------------------------------
Name: Xxxxxxx X. Xxxxxxxxx
Title: Vice President
WESTDEUTSCHE LANDESBANK
GIROZENTRALE, as Agent
By /s/ Xxxxxxx X. Xxxxxx
----------------------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Director
By /s/ Xxxxxx X. Xxxxxxxxx
-----------------------------------------------
Name: Xxxxxx X. Xxxxxxxxx
Title: Vice President
WESTDEUTSCHE LANDESBANK
GIROZENTRALE, as Lender
By /s/ Xxxxxxx X. Xxxxxx
----------------------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Director
By /s/ Xxxxxx X. Xxxxxxxxx
----------------------------------------------
Name: Xxxxxx X. Xxxxxxxxx
Title: Vice President
THE CHASE MANHATTAN BANK,
as Collateral Agent and as Collateral Securities
Intermediary
By /s/ Xxxxxx Xxxxx
---------------------------------------------
Name: Xxxxxx Xxxxx
Title: Vice President
23
SCHEDULE I
NOTICES
