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EXHIBIT 4.6
EXECUTION COPY
04/20/99
EAST COAST POWER HOLDING COMPANY
SECURITY AGREEMENT
Dated as of April 20, 1999
made by
EAST COAST POWER HOLDING COMPANY L.L.C.
as Grantor,
to
THE BANK OF NEW YORK
as Trustee
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TABLE OF CONTENTS
SECTION PAGE
------- ----
SECTION 1. Certain Defined Terms.............................................1
SECTION 2. Grant of Security.................................................2
SECTION 4. Delivery of Collateral............................................2
SECTION 5. Representations and Warranties....................................3
SECTION 6. Further Assurances; Place of Perfection...........................5
SECTION 7. Covenant to Give Further Security.................................6
SECTION 8. Trustee Appointed Attorney-in-Fact................................6
SECTION 9. Trustee May Perform...............................................7
SECTION 10. No Assumption of Duties; Reasonable Care..........................7
SECTION 11. Voting Rights; Dividends; Etc.....................................7
SECTION 12. Transfers and Other Liens; Additional Equity Interests............8
SECTION 13. Security Interest Absolute........................................9
SECTION 14. Remedies.........................................................10
SECTION 15. Indemnity and Expenses...........................................11
SECTION 16. Amendments, Waivers and Consents.................................12
SECTION 17. Notices; Etc.....................................................12
SECTION 18. Continuing Security Interest.....................................13
SECTION 19. Waivers and Acknowledgments......................................13
SECTION 20. Subrogation......................................................14
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SECTION 21. Release and Termination.......................................14
SECTION 22. Authority of the Trustee......................................14
SECTION 23. Execution in Counterparts.....................................15
SECTION 24. Reinstatement.................................................15
SECTION 25. Severability..................................................15
SECTION 26. Governing Law; Entire Agreement...............................15
Schedule I.................................................................17
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EXHIBIT 4.6
EAST COAST POWER HOLDING COMPANY
SECURITY AGREEMENT
SECURITY AGREEMENT dated April 20, 1999, made by EAST COAST POWER
HOLDING COMPANY L.L.C., a Delaware limited liability company (the "Grantor"),
to THE BANK OF NEW YORK, a New York banking corporation, in its capacity as
trustee (the "Trustee") for the holders from time to time (the "Holders") of
the Notes (as defined in the Indenture referred to below), issued by East Coast
Power L.L.C., a Delaware limited liability company (the "Company") under the
Indenture referred to below.
PRELIMINARY STATEMENTS.
(1) The Company and the Trustee have entered into an indenture dated
as of April 20, 1999 (as amended, restated, supplemented or otherwise modified
from time to time, the "Indenture"), pursuant to which the Company is issuing
Notes on the date hereof in an aggregate principal amount of $850,000,000.
(2) It is a condition precedent to the initial purchase of the Notes
by the initial Holders thereof that the Grantor shall have granted the 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 initial Holders to purchase the Initial Notes (as defined in the
Indenture), the Grantor hereby agrees with the Trustee, for the benefit of the
Trustee and for the ratable benefit of the Holders of the Notes, as follows:
SECTION 1. Certain Defined Terms. Unless otherwise defined in this
Section 1, (a) capitalized terms used in this Agreement have the meanings
specified in the Indenture and (b) terms used in Article 8 or 9 of the Uniform
Commercial Code from time to time in effect in the State of New York (the
"NYUCC") are used herein as therein defined. As used in this Agreement, the
following terms shall have the following meanings (such meanings to be equally
applicable to both the singular and the plural forms of the terms defined):
"Collateral" has the meaning specified in Section 2.
"NYUCC" has the meaning specified above in this Section 1.
"Pledged Interests" has the meaning specified in Section 2(a).
"Secured Obligations" has the meaning specified in Section 3.
"Security Collateral" has the meaning specified in Section 2(a).
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SECTION 2. Grant of Security. The Grantor hereby pledges and assigns
to the Trustee, for its benefit and the ratable benefit of the Holders of the
Notes, and hereby grants to the Trustee, for its benefit and for the ratable
benefit of the Holders of the Notes, a continuing security interest in and to
all of the Grantor's right, title and interest in and to, the following
(whether consisting of investment securities, book-entry securities or other
securities, security entitlements, financial assets or other investment
property, accounts, general intangibles, instruments or documents, securities
accounts, deposit accounts or other bank, trust or cash collateral accounts, or
other property, assets or rights), whether now owned or hereafter acquired,
wherever located and whether now or hereafter existing (collectively, the
"Collateral"):
(a) all of the membership interests in the Company described on
Schedule I hereto whether or not evidenced by certificates (collectively,
the "Pledged Interests"), and the certificates, if any, representing such
interests, any security therefor and all dividends, distributions, profits,
bonuses, premiums, income, cash, instruments and other property and assets
from time to time received, receivable or otherwise distributed in respect
of or in exchange for any or all of such membership interests (all such
Collateral being, the "Security Collateral"); and
(b) all proceeds (including cash proceeds) of any and all of the
foregoing Collateral (including, without limitation, proceeds that
constitute property of the types described in clause (a) of this Section 2)
and, to the extent not otherwise included, all (i) payments under insurance
(whether or not the Trustee is the loss payee thereof), or any indemnity,
warranty or guaranty, payable by reason of loss or damage to or otherwise
with respect to any of the foregoing Collateral and (ii) payments and
distributions made with respect to the foregoing Collateral.
SECTION 3. Security for Obligations. This Agreement secures the
payment of all obligations, now or hereafter existing, of the Company under the
Indenture and the Notes and of the Grantor under this Agreement (including,
without limitation, any extensions, modifications, substitutions, amendments
and renewals thereof), in each case whether direct or indirect, absolute or
contingent, and whether for principal, interest, fees, indemnification
payments, contract causes of action, costs, expenses or otherwise (all such
obligations being the "Secured Obligations"). Without limiting the generality
of the foregoing, this Agreement secures, to the fullest extent permitted by
applicable law, the payment of all amounts that constitute part of the Secured
Obligations and would be owed by the Company to the Trustee or the Holders
under the Indenture, the Notes or the Security Documents but for the fact that
they are unenforceable or not allowable due to the existence of a bankruptcy,
reorganization or similar proceeding involving the Company.
SECTION 4. Delivery of Collateral. (a) The Grantor shall ensure that
all certificates or instruments representing or evidencing Security Collateral,
if any, are delivered to
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and be held by or on behalf of the Trustee pursuant hereto and are 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
reasonably satisfactory to the Trustee. The Trustee shall have the right, at
any time and without notice to the Grantor, to transfer to or register in the
name of the Trustee or any of its nominees any or all of the Security
Collateral, subject only to the revocable rights specified in Section 11(b). In
addition, the Trustee shall have the right at any time and from time to time to
exchange certificates or instruments representing or evidencing Security
Collateral held by them for certificates or instruments of smaller or larger
denominations.
(b) Concurrently with the execution and delivery of this Agreement,
the Grantor shall cause to be filed proper financing statements in all
jurisdictions necessary or prudent to perfect and protect the liens and
security interests created hereunder, covering the Collateral described herein.
SECTION 5. Representations and Warranties. The Grantor represents and
warrants as of the date of this Agreement as follows:
(a) The Grantor is a limited liability company duly organized, validly
existing and in good standing under the laws of the State of Delaware. The
Grantor has all power and authority and all governmental licenses,
authorizations, consents and approvals required in each case to carry on
its business as now conducted, except to the extent that the failure to
have such power, authority, licenses, authorizations, consents and
approvals could not reasonably be expected to have a material adverse
effect on the Grantor's ability to perform any of its obligations hereunder
or a material adverse effect on the business, operations, assets or
financial condition of the Grantor and its Subsidiaries taken as a whole (a
"Grantor Material Adverse Effect").
(b) The execution, delivery and performance by the Grantor of this
Agreement are within the Grantor's powers, have been duly authorized by all
necessary action of the Grantor, require, in respect of the Grantor, no
action by or in respect of, or filing with, any governmental body, agency
or official (other than the filing of financing statements in favor of the
Trustee on or prior to the date hereof as may be required for the
perfection of the Security Interest herein granted in the Collateral) and
do not contravene, or constitute a default under, any provision of law or
regulation (including Regulation X of the Board of Governors of the Federal
Reserve System) applicable to the Grantor or Regulation U of the Board of
Governors of the Federal Reserve System or the certificate of formation or
limited liability company agreement of the Grantor or any judgment,
injunction, order, decree or material agreement binding upon the Grantor or
result in or require the creation or imposition of any Lien on any of the
Collateral.
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(c) This Agreement has been duly executed and delivered by the
Grantor. This Agreement is the legal, valid and binding obligation of the
Grantor, enforceable against the Grantor in accordance with its terms,
except as the enforceability thereof may be limited by any applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting creditors' rights generally and by general principles of equity.
(d) There is no pending, or to the Grantor's knowledge, threatened
action, suit or proceeding against the Grantor before any court or
arbitrator or any governmental body, agency or official in which there is a
reasonable possibility of an adverse decision which could reasonably be
expected to have a Grantor Material Adverse Effect or which in any manner
draws into question the legality, validity, binding effect or
enforceability of this Agreement.
(e) The chief place of business and chief executive office of the
Grantor are located at the address specified in Section 17. The Grantor has
no trade names.
(f) The Grantor is the legal and beneficial owner of the Collateral
which is in existence on the date hereof free and clear of any Lien (other
than Liens not prohibited by the Indentures), except for the security
interest created by this Agreement and the Liens created under the Bridge
Loan which will terminate upon the filing of termination financing
statements on the Issue Date. 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, and the Grantor has not entered into any
security control agreement or other agreement similar in effect, in each
case covering all or any part of the Collateral, except such as may have
been filed in favor of the Trustee relating to this Agreement or the other
Security Documents.
(g) There are no existing options, warrants, calls or commitments of
any character whatsoever relating to any Equity Interests in the Company
owned by the Grantor except for this Agreement and the limited liability
company agreement of the Company. There are no shareholder agreements,
voting trust agreements or other agreements or understandings to which the
Grantor is a party or by which the Grantor may otherwise be bound that
affect the voting or other rights of a holder of any Equity Interest in the
Company (including, without limitation, the ability to transfer any such
Equity Interest), except for this Agreement and the limited liability
company agreement of the Company.
(h) This Agreement, the pledge of the Collateral pursuant hereto and
the pledge, assignment and delivery to the Trustee of the certificates
representing the Security Collateral pursuant hereto, together with stock
or other transfer powers duly executed in blank, create a valid and
perfected first priority security interest in the Collateral, securing
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the payment of the Secured Obligations, and all filings and other actions
necessary to perfect and protect such security interest have been duly
taken.
(i) 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 Grantor of the assignment and security interest
granted hereby, for the pledge by the Grantor of any of the Collateral
pursuant hereto or for the execution, delivery or performance of this
Agreement by the Grantor, (ii) for the perfection or continuation of
perfection of the pledge, assignment and security interest created hereby
(including the priority of such pledge, assignment or security interest),
except for the filing of financing and continuation statements under the
Uniform Commercial Code, which financing statements have been duly filed,
(iii) for the exercise by the Trustee of its voting or other rights
provided for in this Agreement or the remedies in respect of the Collateral
pursuant to this Agreement, except as may be required in connection with
the disposition of any portion of the Security Collateral by laws affecting
the offering and sale of securities generally or (iv) consents,
authorizations, approvals or other actions or filings that have been made
or obtained on or prior to the date hereof.
SECTION 6. Further Assurances; Place of Perfection. (a) The Grantor
agrees that from time to time, at its sole expense, the Grantor will promptly
execute and deliver all further instruments and documents, and take all further
action, that may be necessary or prudent, or that the Trustee may reasonably
request, in order to perfect and protect any pledge, assignment or security
interest granted or purported to be granted hereunder (including, without
limitation, the priority thereof) or to enable the Trustee to exercise and
enforce its rights and remedies hereunder. Without limiting the generality of
the foregoing, the Grantor will:
(i) if any Collateral shall be evidenced by a certificate, promissory
note or other instrument or by chattel paper, deliver and pledge to the
Trustee hereunder such certificate, note or other instrument or such
chattel paper duly endorsed and accompanied by duly executed instruments of
transfer or assignment, all in form and substance reasonably satisfactory
to the Trustee; and
(ii) execute and file such financing statements, continuation
statements or other similar documents, or amendments thereto, and such
other instruments or notices, as may be necessary or as the Trustee may
deem reasonably prudent and may request, in order to perfect and preserve
the pledge, assignment and security interest granted or purported to be
granted under this Agreement.
(b) The Grantor hereby authorizes the Trustee to cause the filing of
one or more financing statements, continuation statements or other similar
documents, and amendments thereto,
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relating to all or any part of the Collateral without the signature of the
Grantor where permitted by applicable law. A photocopy or other reproduction of
this Agreement or any financing statement or other similar document covering
the Collateral or any part thereof shall be sufficient as a financing statement
or other similar document where permitted by applicable law.
(c) The Grantor shall furnish to the Trustee from time to time
statements and schedules further identifying and describing the Collateral and
such other reports in connection with the Collateral as the Trustee may
reasonably request, all in reasonable detail.
SECTION 7. Covenant to Give Further Security. The Grantor hereby
agrees that, if, and at such time as, it acquires title to, or any other
ownership interest in, any additional Equity Interests in any issuer of the
Pledged Interests, it will, at its sole expense:
(a) as promptly as practicable and in any event within five (5) days
after such acquisition, notify the Trustee of its acquisition of title
thereto or such other ownership interest therein; and
(b) as promptly as practicable and in any event within 30 days after
such acquisition, (i) duly execute and deliver such mortgages, pledges,
assignments and/or other security agreements as are necessary to create a
valid lien thereon and security interest therein in favor of the Trustee,
for its benefit and the benefit of the Holders of the Notes, in each case
in form and substance satisfactory to the Trustee, and (ii) make all
filings and take all other actions that are necessary or that the Trustee
may deem reasonably prudent and may request to perfect and protect a valid
and perfected first priority lien thereon and security interest therein in
favor of the Trustee, for its benefit and the benefit of the Holders of the
Notes.
SECTION 8. Trustee Appointed Attorney-in-Fact. In addition to all of
the powers granted to the Trustee pursuant to the Indenture, the Grantor hereby
irrevocably appoints the Trustee its attorney-in-fact (which appointment is
coupled with an interest and is irrevocable), with full authority in the place
and stead of the Grantor and in the name of the Grantor or otherwise and with
full power of substitution, from time to time upon the occurrence and during
the continuation of an Event of Default, to take any action and to execute any
instrument to accomplish the purposes of this Agreement (it being understood
that the Trustee will not be required to act unless otherwise set forth herein
or in the Indenture), including, without limitation:
(a) upon the occurrence and during the continuation of an Event of
Default, 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 Collateral;
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(b) to receive, endorse and collect any drafts, instruments or other
documents or any chattel paper in connection with this Agreement
(including, without limitation, all instruments representing or evidencing
any interest payment or other distribution in respect of the Security
Collateral or any part thereof) and to give full discharge for the same;
(c) to sell, transfer, assign or otherwise deal with the Collateral or
any part thereof under, and in accordance with, the terms of the Indenture
or Section 14 in the same manner and to the same extent as if the Trustee
was the absolute owner thereof; and
(d) upon the occurrence and during the continuation of any Event of
Default, to file any claims or take any action or institute any proceedings
that may be necessary or that the Trustee may deem desirable for the
collection of any of the Collateral or otherwise to enforce the rights of
the Trustee with respect to any of the Collateral.
SECTION 9. Trustee May Perform. If the Grantor fails to make any
payment required to be made by it, or to perform any other act or agreement
required to be performed by it, in each case under this Agreement, the Trustee,
without waiving or releasing any obligation or default, may (but shall not be
obligated to) make such payment or perform such other act, or cause the payment
or performance thereof, for the account and at the sole expense of the Grantor.
All amounts so paid by the Trustee and all costs and expenses so incurred shall
constitute obligations of the Grantor secured hereunder and shall be payable
under Section 15(b). The Trustee shall not be liable for any damages resulting
from any such payment or performance.
SECTION 10. No Assumption of Duties; Reasonable Care. The rights and
powers conferred on the Trustee hereunder are solely to preserve and protect
the security interest of the Trustee and the Holders of the Notes in and to the
Collateral granted hereby and shall not be interpreted to, and shall not impose
any duties on the Trustee in connection therewith other than those expressly
provided herein or imposed under applicable law. Except as provided by
applicable law or by the Indenture, the Trustee shall be deemed to have
exercised reasonable care in the custody and preservation of the Collateral in
its possession if the Collateral is accorded treatment substantially equal to
that which the Trustee accords similar property held by the Trustee for its own
account, it being understood that the Trustee in its capacity as such shall not
have any responsibility for (a) ascertaining or taking action with respect to
calls, conversions, exchanges, maturities or other matters relative to any
Collateral, whether or not the Trustee has or is deemed to have knowledge of
such matters or (b) taking any necessary steps to preserve rights against any
parties with respect to any Collateral. The Trustee shall be entitled to all
the rights, benefits, privileges and immunities accorded to it under the
Indenture.
SECTION 11. Voting Rights; Dividends; Etc. (a) So long as no Event of
Default shall have occurred and be continuing:
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(i) The Grantor shall be entitled to exercise or refrain from
exercising any and all voting and other consensual rights pertaining to the
Security Collateral pledged and assigned by it hereunder, or any part
thereof, for any purpose not inconsistent with the terms of this Agreement,
the Indenture and the Notes.
(ii) The Grantor shall be entitled to receive, retain, and distribute
any and all dividends, interest and other distributions paid or distributed
in respect of the Security Collateral if and to the extent that the payment
thereof is not otherwise prohibited by the terms of the Indenture or the
Notes.
(iii) The Trustee shall execute and deliver (or cause to be executed
and delivered) to the Grantor all such proxies and other instruments as the
Grantor may reasonably request for the purpose of enabling the Grantor to
exercise the voting and other rights that it is entitled to exercise
pursuant to paragraph (i) above and to receive the dividends or payments
that it is authorized to receive, retain, and distribute pursuant to
paragraph (ii) above.
(b) Upon the occurrence and during the continuance of an Event of
Default:
(i) All rights of the Grantor (A) to exercise or refrain from
exercising the voting and other consensual rights that it would otherwise
be entitled to exercise pursuant to Section 11(a)(i) shall, upon notice to
the Grantor by the Trustee acting at the direction of the Holders of a
majority interest of Outstanding Notes, cease and (B) to receive the
dividends, payments, and other distributions that it would otherwise be
authorized to receive, retain, and distribute pursuant to Section 11(a)(ii)
shall automatically cease, and all such rights shall thereupon become
vested in the Trustee, which shall thereupon have the sole right to
exercise or refrain from exercising such voting and other consensual rights
and to receive and hold as Collateral such dividends, payments, and other
distributions as the Holders of a majority in interest of Outstanding Notes
shall direct.
(ii) All dividends, payments, and other distributions that are
received by the Grantor contrary to the provisions of paragraph (i) of this
Section 11(b) shall be received in trust for the benefit of the Trustee,
shall be segregated from other funds of the Grantor and shall be forthwith
paid over to the Trustee as Collateral in the same form as so received
(with any necessary indorsement).
SECTION 12. Transfers and Other Liens; Additional Equity Interests.
(a) The Grantor agrees that it will not (i) sell, assign or otherwise dispose
of, or grant any option with respect to, any of the Collateral of the Grantor
if such sale, assignment, disposition or grant of option would cause or result
in a Default or an Event of Default or (ii) create or suffer to exist any Lien
on any of the Collateral except for Liens created hereunder.
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(b) The Grantor agrees that it shall cause the Company not to issue
any Equity Interests in addition to or in substitution for the Pledged
Interests, unless immediately upon such issuance, such Equity Interests is
pledged to the Trustee for the benefit of the Holders.
(c) Any sale, assignment or other disposition of any of the Collateral
shall be subject to the Lien created hereunder in favor of the Trustee (on its
behalf and on behalf of the Holders of the Notes) continuing in such
Collateral.
SECTION 13. Security Interest Absolute. The obligations of the Grantor
under this Agreement are independent of the Secured Obligations, and a separate
action or actions may be brought and prosecuted against the Grantor to enforce
this Agreement, irrespective of whether any action is brought against the
Company or whether the Company is joined in any such action or actions. All
rights of the Trustee and the pledge, assignment and security interest
hereunder, and all obligations of the Grantor hereunder, shall be irrevocable,
absolute and unconditional, irrespective of, and the Grantor hereby irrevocably
waives (to the maximum extent permitted by applicable law) any defenses it may
now have or may hereafter acquire in any way relating to, any or all of the
following:
(a) any lack of validity or enforceability of the Indenture, the
Notes, any Security Document or any other agreement or instrument relating
thereto;
(b) 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
obligations under the Indenture, the Notes or any Security Document, or any
other amendment or waiver of or any consent to any departure from the
Indenture, the Notes or any Security Document, including, without
limitation, any increase in the Secured Obligations resulting from the
extension of additional credit to the Company, any of its Subsidiaries or
otherwise;
(c) any taking, exchange, release or non-perfection 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;
(d) 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 obligations of the Company under or in respect of the Indenture,
the Notes and the Security Documents or any other assets of the Company or
any of its Subsidiaries;
(e) any change, restructuring or termination of the corporate,
partnership or other structure or existence of the Company or any of its
Subsidiaries; and
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(f) any other circumstance (including without limitation any statute
of limitations) that might otherwise constitute a defense available to, or
a discharge of, the Grantor or a third party grantor of a security interest
other than payment in full of the Secured Obligations.
SECTION 14. Remedies. If an Event of Default shall have occurred and
be continuing:
(a) The Trustee or the majority of the Holders of the Notes may, or in
the event of an acceleration under Section 502 of the Indenture then the
Trustee shall, exercise in respect of the Collateral, in addition to other
rights and remedies provided for herein or in the Indenture or otherwise
available to it, all the rights and remedies of a secured party upon
default under the NYUCC (whether or not the NYUCC applies to the affected
Collateral) and also may (i) require the Grantor to, and the Grantor hereby
agrees that it will at its expense and upon request of the Trustee
forthwith, assemble all or part of the Collateral as directed by the
Trustee and make it available to the Trustee at a place to be designated by
the Trustee that is reasonably convenient to both parties and (ii) without
notice except as specified below, sell the Collateral or any part thereof
in one or more parcels at public or private sale, at any of the Trustee's
offices or elsewhere, for cash, on credit or for future delivery, and upon
such other terms as commercially reasonable. The Grantor agrees that, to
the extent notice of sale shall be required by law, at least ten days'
notice to the Grantor of the time and place of any public sale or the time
after which any private sale is to be made shall constitute reasonable
notification. The Trustee shall not be obligated to make any sale of
Collateral regardless of notice of sale having been given. The Trustee 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 Trustee in respect of any sale
of, collection from, or other realization upon all or any part of the
Collateral be held by the Trustee as collateral for, and/or then or at any
time thereafter applied (after payment of any amounts payable to the
Trustee pursuant to Section 15(b)) in whole or in part by the Trustee for
the ratable benefit of the Holders of the Notes against, all or any part of
the Secured Obligations in such order as the Trustee shall elect. Any
surplus of such cash or cash proceeds held by the Trustee and remaining
after payment in full of all the Secured Obligations shall be paid over to
the Grantor or to whomsoever else may be lawfully entitled to receive such
surplus.
(c) Notwithstanding the foregoing, the Grantor and the Trustee
recognize that any disposition of Collateral mut be made in accordance with
any applicable federal or state securities laws. The Grantor recognizes
that the Trustee may deem it impracticable
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to effect a public sale of all or any part of the Collateral subject to
such securities laws and that the Trustee may, therefore, determine to make
one or more private sales of any such Collateral to a restricted group of
purchasers who will be obligated to agree, among other things, to acquire
such Collateral for their own account, for investment and not with a view
to the distribution or resale thereof. The Grantor acknowledges that any
such private sale may be at prices and on terms less favorable than the
prices and other terms which might have been obtained at a public sale and,
notwithstanding the foregoing, agrees that such private sale shall be
deemed to have been made in a commercially reasonable manner and that the
Trustee shall have no obligation to delay sale of any such securities for
the period of time necessary to permit the Grantor to register such
Collateral for public sale under the Securities Act of 1933, as amended.
SECTION 15. Indemnity and Expenses. (a) The Grantor agrees to
indemnify, defend and save and hold harmless the Trustee and each of its
officers, directors, employees, agents and advisors (each, an "Indemnified
Party") from and against, and shall pay on demand, any and all claims, damages,
losses, liabilities and expenses (including, without limitation, reasonable
fees and expenses of counsel) that may be incurred by or asserted or awarded
against any Indemnified Party, in each case arising out of or in connection
with or resulting from the Trustee's performance as Trustee under this
Agreement (including, without limitation, enforcement of this Agreement),
except any such claim, damage, loss, liability or expense as may be
attributable to its negligence or willful misconduct.
(b) The Grantor will upon demand pay to the Trustee (i) the amount of
any and all reasonable out-of-pocket costs and expenses of the Trustee,
including the reasonable fees, expenses, and disbursements of counsel to the
Trustee and of any experts and agents, that the Trustee may incur in connection
with (A) the custody, preservation, use or operation of, or the sale of,
collection from or other realization upon, any of the Collateral or (B) the
failure by the Grantor to perform or observe any of the provisions hereof; and
(ii) all costs and expenses of the Trustee and each of the Holders of the Notes
in connection with the exercise of any of their rights hereunder or the
enforcement of this Agreement (including, without limitation, the reasonable
fees and expenses of counsel for the Trustee and each of the Holders of the
Notes with respect thereto), whether in any action, suit or litigation, any
bankruptcy, insolvency or other similar proceeding affecting creditors' rights
generally or in any negotiated settlement or workout, except in the case of
clauses (i) and (ii), any such cost, expense, or disbursement as may be
attributable to the Trustee's negligence or willful misconduct.
(c) Without prejudice to the survival of any other agreement of the
Grantor hereunder, the agreements and obligations of the Grantor contained in
this Section 16 shall survive the termination of this Agreement and the
resignation or removal of the Trustee.
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SECTION 16. Amendments, Waivers and Consents. Any amendment or waiver
of any provision of this Agreement and any consent to any departure by the
Grantor from any provision of this Agreement shall be effective only if in
writing, signed by the Trustee and made or duly given in compliance with all of
the terms and provisions of the Indenture, and then such waiver or consent
shall be effective only in the specific instance and for the specific purpose
for which given. Neither the Trustee nor any Holder of Notes shall be deemed,
by any act, delay, indulgence, omission or otherwise, to have waived any right
or remedy hereunder or to have acquiesced in any Default or Event of Default or
in any breach of any of the terms and conditions hereof. Failure of the Trustee
or any Holder of Notes to exercise, or delay in exercising, any right, power or
privilege hereunder shall not preclude any other or further exercise thereof or
the exercise of any other right, power or privilege. A waiver by the Trustee or
any Holder of Notes of any right or remedy hereunder on any one occasion shall
not be construed as a bar to any right or remedy that the Trustee or such
Holder of Notes would otherwise have on any future occasion. The rights and
remedies herein provided are cumulative, may be exercised singly or
concurrently and are not exclusive of any rights or remedies provided by law.
(b) Without the consent of any Holders of the Notes and the Grantors,
the Trustee may amend or waive any provision of this Agreement or consent to
any departure by any Grantor from any provision hereof, for any of the
following purposes:
(i) to evidence the succession of another Person to the Company, or
any other Grantor, and the assumption by any such successor of the
obligations of the Company or such other Grantor contained herein;
(ii) to evidence and provide for the appointment of a successor
Trustee;
(iii) to cure any ambiguity, to correct or supplement any provision in
this Agreement that may defective or inconsistent with any other provision
of this Agreement or the Indenture, or to make any other provisions with
respect to matters or questions arising under this Agreement with shall not
be inconsistent with the provisions of this Agreement or the Indenture;
provided that, in each case, such actions pursuant to this clause shall not
materially adversely affect the interests of the Holders;
(iv) to mortgage, pledge, hypothecate or grant of security interest in
additional collateral in favor of the Trustee for the benefit of the
Holders; or
SECTION 17. Notices; Etc. All notices and other communications
provided for hereunder shall be in writing (including telecopier, telegraphic,
telex or cable communication) and, mailed, telecopied, cabled or delivered:
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(a) if to the Grantor, at its address at 0000 Xxxxx Xxxxxx, XX 0000,
Xxxxxxx, Xxxxx 00000, Telecopy: (000) 000-0000, Telephone: (000) 000-0000,
Attention: Xxxxx X. Xxxxx, Compliance; and
(b) if to the Trustee, at its Corporate Trust Office referred to in
the Indenture;
or, as to any such 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 communications shall, when mailed,
telecopied, telegraphed or telexed, be effective when deposited in the mails,
telecopied, or confirmed by telex answerback, respectively, except that notices
and communications to the Trustee shall not be effective until received by the
Trustee. Delivery by telecopier of an executed counterpart of any amendment or
waiver of any provision of this Agreement to be executed and delivered
hereunder shall be effective as delivery of a manually executed counterpart
thereof.
SECTION 18. Continuing Security Interest. Subject to any collateral
released in Section 16, this Agreement shall create a continuing security
interest in and to the Collateral and shall (a) remain in full force and effect
until the payment in full in cash of the Secured Obligations, (b) be binding
upon the Grantor and its successors and permitted assigns and (c) inure,
together with the rights and remedies of the Trustee hereunder, to the benefit
of, and be enforceable by, the Trustee, the Holders of the Notes and their
respective successors, transferees and assigns. Without limiting the generality
of the foregoing clause (c), the Trustee may assign or otherwise transfer all
or any portion of its rights and obligations under the Indenture and the Notes
to any other Person, and such other Person shall thereupon become vested with
all the benefits in respect thereof granted to the Trustee, as the case may be,
herein or otherwise, in each case as and to the extent provided in Section 610
of the Indenture.
SECTION 19. Waivers and Acknowledgments. (a) The Grantor hereby waives
promptness, diligence, notice of acceptance and any other notice with respect
to any of the Secured Obligations and this Agreement and any requirement that
the Trustee or any Holder of a Note protect, secure, perfect or insure any Lien
or any property subject thereto or exhaust any right or take any action against
the Company or any other Person or any Collateral.
(b) The Grantor hereby waives any right to revoke this Agreement, and
acknowledges that this Agreement is continuing in nature and applies to all
Secured Obligations, whether existing now or in the future.
(c) The Grantor acknowledges that it will receive substantial direct
and indirect benefits from the financing arrangements contemplated by the
Indenture, the Notes and the Security Documents and that the waivers set forth
in this Section 19 are knowingly made in contemplation of such benefits.
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SECTION 20. Subrogation. The Grantor will not exercise any rights that
it may now or hereafter acquire against the Company or any of its Subsidiaries
that arise from the existence, payment, performance or enforcement of the
Grantor's obligations under this Agreement, including, without limitation, any
right of subrogation, reimbursement, exoneration, contribution or
indemnification and any right to participate in any claim or remedy of the
Trustee or any Holders of the Notes against the Company or of its Subsidiaries
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 Company or any of its Subsidiaries, 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 Secured Obligations and all other amounts payable under this
Agreement shall have been paid in full in cash (except that the Grantor may
exercise any such claim, right or remedy solely against, and the Grantor may
take and receive any such amount solely from, amounts permitted to be
distributed or paid on account of Subordinated Indebtedness in accordance with
and subject to the restrictions set forth in Section 1012 of the Indenture). If
any amount shall be paid to the Grantor 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 Trustee and the other Holders of
the Notes and shall forthwith be paid to the Trustee 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 Indenture, or
to be held as Collateral for any Secured Obligations or other amounts payable
under this Agreement thereafter arising.
SECTION 21. Release and Termination. Upon the payment in full in cash
of the Secured Obligations, the pledge, assignment and security interest
granted hereby shall terminate and all rights to the Collateral shall revert to
the Grantor. Upon any such termination, the Trustee will, at the Grantor's
expense, execute and deliver to the Grantor such documents as the Grantor shall
reasonably request to evidence such termination.
SECTION 22. Authority of the Trustee. (a) The Trustee shall have and
be entitled to exercise all powers hereunder that are specifically granted to
the Trustee by the terms hereof, together with such powers as are reasonably
incident thereto. The Trustee may perform any of its duties hereunder or in
connection with the Collateral by or through agents or employees and shall be
entitled to retain counsel and to act in reliance upon the advice of counsel
concerning all such matters. Except as otherwise expressly provided in this
Agreement or the Indenture, neither the Trustee nor any director, officer,
employee, attorney or agent of the Trustee shall be liable to the Grantor for
any action taken or omitted to be taken by the Trustee, in its capacity as
Trustee, hereunder, except for its own negligence or willful misconduct, and
the Trustee shall not be responsible for the validity, effectiveness or
sufficiency hereof or of any document or security furnished pursuant hereto.
The Trustee and its directors, officers, employees, attorneys and agents
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shall be entitled to rely on any communication, instrument or document believed
by it or them to be genuine and correct and to have been signed or sent by the
proper person or persons.
(b) The Grantor acknowledges that the rights and responsibilities of
the Trustee under this Agreement with respect to any action taken by the
Trustee or the exercise or non-exercise by the Trustee of any option, right,
request, judgment or other right or remedy provided for herein or resulting or
arising out of this Agreement shall, as between the Trustee and the Holders of
the Notes, be governed by the Indenture and by such other agreements with
respect thereto as may exist from time to time among them, but, as between the
Trustee and the Grantor, the Trustee shall be conclusively presumed to be
acting as agent for the Holders of the Notes with full and valid authority so
to act or refrain from acting, and the Grantor shall not be obligated or
entitled to make any inquiry respecting such authority.
SECTION 23. 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 24. Reinstatement. This Agreement shall continue to be
effective or be reinstated, as the case may be, if at any time any payment of
any of the Secured Obligations is rescinded or must otherwise be returned by
the Trustee, any Holder of the Notes or by any other Person upon the
insolvency, bankruptcy or reorganization of the Company or otherwise, all as
though such payment had not been made.
SECTION 25. Severability. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
SECTION 26. Governing Law; Entire Agreement. This Agreement shall be
governed by, and construed in accordance with, the laws of the State of New
York. This Agreement constitutes the entire understanding among the Grantor,
the Trustee and the Holders of the Notes with respect to the subject matter
hereof and supercede any prior agreements, written or oral, with respect
thereto.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and delivered by its officer thereunto duly authorized as of
the date first above written.
EAST COAST POWER HOLDING
COMPANY L.L.C.
By: JOINT ENERGY DEVELOPMENT
INVESTMENTS II LIMITED
PARTNERSHIP, its Sole Member
By: ENRON CAPITAL MANAGEMENT
II LIMITED PARTNERSHIP,
its General Partner
By: ENRON CAPITAL II CORP.,
its General Partner
By: /s/ XXXXXX XXXXXXXX
------------------------
Name: Xxxxxx Xxxxxxxx
Title: Vice-President
THE BANK OF NEW YORK, as Trustee
By: /s/ XXXX XXXX XXXXXXX
-------------------------------------
Name: Xxxx Xxxx Xxxxxxx
Title: Assistant Vice President
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SCHEDULE I
EQUITY INTERESTS
================================================================================
PERCENTAGE OF
OUTSTANDING
ISSUER TYPE OF INTEREST EQUITY INTEREST
------ ---------------- ---------------
================================================================================
East Coast Power L.L.C. Class A Limited Liability 100% of
Company Membership Interest Class A Limited Liability
Company Membership
Interests
================================================================================
