Exhibit 4.20
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SECURITY AGREEMENT
dated as of May 21, 1999
between
LSP BATESVILLE FUNDING CORPORATION
and
THE BANK OF NEW YORK,
as Collateral Agent
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TABLE OF CONTENTS
Page
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RECITALS......................................................................1
AGREEMENT.....................................................................1
ARTICLE I: DEFINITIONS; PRINCIPLES OF CONSTRUCTION........................2
SECTION 1.1. Definitions.....................................2
ARTICLE II: ASSIGNMENT AND GRANT OF SECURITY
INTEREST.......................................................6
SECTION 2.1. Assignment and Grant of Security Interest.......6
SECTION 2.2. Security Interest Absolute......................7
SECTION 2.3. Power of Attorney...............................8
SECTION 2.4. Inspection and Verification....................11
ARTICLE III: GENERAL REPRESENTATIONS, WARRANTIES
AND COVENANTS.................................................11
SECTION 3.1. Title and Authority............................11
SECTION 3.2. Validity, Perfection and Priority of Lien......12
SECTION 3.3. No Liens; Other Financing Statements...........12
SECTION 3.4. Chief Executive Office; Name; Records..........13
SECTION 3.5. Additional Statements and Schedules............14
SECTION 3.6. Further Actions................................14
ARTICLE IV: SPECIAL PROVISIONS CONCERNING INVENTORY AND EQUIPMENT.........14
SECTION 4.1. Maintenance of Insurance; Protection of
Security Interest..............................14
SECTION 4.2. Location of Inventory and Equipment............14
ARTICLE V: SPECIAL PROVISIONS CONCERNING
RECEIVABLES, CONTRACTS AND INSTRUMENTS .......................15
SECTION 5.1. Additional Representations and Warranties......15
SECTION 5.2. Maintenance of Records; Legending of Records...15
SECTION 5.3. Modification of Terms; No Payment to Grantor...15
SECTION 5.4. Collection.....................................16
SECTION 5.5. Direction to Account Debtors; Grantor Bound....16
SECTION 5.6. Instruments....................................16
ARTICLE VI: SPECIAL PROVISIONS CONCERNING CONTRACTS.......................17
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SECTION 6.1. Security Interest in Contract Rights...........17
SECTION 6.2. Further Protection.............................17
SECTION 6.3. Liabilities Under Receivables and Contracts....18
SECTION 6.4. Remedies.......................................18
ARTICLE VII: DUTY OF CARE OF COLLATERAL AGENT..............................19
SECTION 7.1. Collateral Agent's Duties; Reasonable Care.....19
ARTICLE VIII: REMEDIES UPON OCCURRENCE OF AN
EVENT OF DEFAULT..............................................19
SECTION 8.1. Remedies; Obtaining the Collateral upon
Default........................................19
SECTION 8.2. Remedies; Disposition of the Collateral........21
SECTION 8.3. Waiver.........................................22
SECTION 8.4. Application of Proceeds; Grantor Liable for
Deficiency.....................................23
SECTION 8.5. No Waiver; Remedies Cumulative.................23
SECTION 8.6. Discontinuance of Proceedings..................24
ARTICLE IX: MISCELLANEOUS.................................................24
SECTION 9.1. Notices........................................24
SECTION 9.2. Amendment......................................24
SECTION 9.3. Successors and Assigns.........................25
SECTION 9.4. Survival.......................................25
SECTION 9.5. Headings Descriptive...........................25
SECTION 9.6. Severability...................................25
SECTION 9.7. Grantor's Duties...............................25
SECTION 9.8. Termination; Release...........................26
SECTION 9.9. Reinstatement..................................26
SECTION 9.10. Counterparts...................................26
SECTION 9.11 Governing Law..................................26
SECTION 9.12 Consent to Jurisdiction........................26
SECTION 9.13 Waiver of Jury Trial...........................27
SECTION 9.14. Authority of Collateral Agent..................27
SECTION 9.15. Indemnities and Expenses.......................28
SECTION 9.16. Entire Agreement...............................28
SECTION 9.17. Independent Security...........................28
SECTION 9.18. Third Party Beneficiaries......................29
SECTION 9.19 Limitation of Liability........................29
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Schedule I - Filing Offices
Schedule II - Instruments
Schedule III - Copyrights
Schedule IV - Patents
Schedule V - Trademarks
Schedule VI - Chief Executive Office and Principal Place of Business
Schedule 4.2 - Locations of Collateral
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SECURITY AGREEMENT
SECURITY AGREEMENT, dated as of May 21, 1999 (this "Agreement"),
made by LSP BATESVILLE FUNDING CORPORATION, a Delaware corporation (the
"Grantor"), in favor of THE BANK OF NEW YORK, as collateral agent (together with
its successors in such capacity, the "Collateral Agent") for the benefit of the
Senior Secured Parties pursuant to the Second Amended and Restated Collateral
Agency Agreement, dated as of May 21, 1999 (the "Collateral Agency Agreement"),
among (as of the date hereof) the LSP Energy Limited Partnership (the
"Partnership"), the Grantor, the Trustee, the VEPCO L/C Agent, the Collateral
Agent, the Intercreditor Agent and the Administrative Agent.
RECITALS
WHEREAS, the Partnership was formed for the purpose of developing,
financing, constructing, owning and operating an approximately 837 MW (net)
natural gas-fired combined-cycle electric generation facility located in
Batesville, Mississippi (the "Project");
WHEREAS, the Partnership and the Funding Corporation have determined
to issue (i) $150,000,000 aggregate principal amount of their 7.164% Series A
Senior Secured Bonds due January 15, 2014 (the "Series A Bonds") and (ii)
$176,000,000 aggregate principal amount of their 8.160% Series B Senior Secured
Bonds due July 15, 2025 (the "Series B Bonds" and, collectively with the Series
A Bonds, the "Bonds") pursuant to the Trust Indenture, dated as of the date
hereof (the "Indenture"), among the Partnership, the Funding Corporation and The
Bank of New York, as trustee (the "Trustee");
WHEREAS, the Partnership and the Funding Corporation will use the
proceeds of the Bonds to (i) repay in full the Indebtedness outstanding under
the Amended and Restated Bank Facility Credit Agreement, dated as of December
15, 1998, by and among the Partnership, the banks and other financial
institutions party thereto and Credit Suisse First Boston as agent, and (ii) pay
the remaining Project Costs;
WHEREAS, the execution by the Grantor of this Agreement is a
condition precedent to the issuance and sale of the Bonds and the execution by
the Senior Secured Parties of the related Financing Documents.
AGREEMENT
NOW, THEREFORE, in consideration of the premises and for other good
and valuable consideration, the receipt and adequacy of which are hereby
acknowledged, the Grantor hereby agrees with the Collateral Agent as follows:
ARTICLE I
DEFINITIONS; PRINCIPLES OF CONSTRUCTION
SECTION 1.1. Definitions.
(a) For all purposes of this Agreement, capitalized terms used but
not otherwise defined herein shall have the meanings set forth in the Indenture.
(b) The following terms shall have the following respective meanings
unless the context otherwise requires. Commercial terms used but not defined
herein or in the Indenture shall have the meanings specified for such terms in
the UCC as in effect in the State of New York.
"Chattel Paper" shall mean "chattel paper" as such term is defined
in the UCC as in effect in any relevant jurisdiction.
"Collateral" shall have the meaning specified in Section 2.1(a).
"Contract Rights" shall have the meaning specified in Section 6.1.
"Contracts" shall mean all contracts to which the Grantor now is, or
hereafter will be, bound, or a party, beneficiary or assignee, including,
without limitation, all of the Transaction Documents (to the extent the Grantor
is a party thereto), including all exhibits, schedules and appendices thereto,
and all other instruments, agreements and documents executed and delivered with
respect to such contracts, and all revenues, rentals, Proceeds and other sums of
money due and to become due from any of the foregoing, as the same may be
modified, supplemented or amended from time to time in accordance with their
respective terms.
"Copyrights" shall mean all of the following now owned or hereafter
acquired by the Grantor: (a) all copyright rights in any work subject to the
copyright laws of the United States, whether as author, assignee, transferee or
otherwise; and (b) all registrations and applications for registration of any
such copyright rights in the United
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States, including registrations, recordings, supplemental registrations and
pending applications for registration in the United States Copyright Office,
including, without limitation, those listed on Schedule III.
"Default" shall have the meaning ascribed thereto in the
Intercreditor Agreement.
"Documents" shall mean "documents" as such term is defined in the
UCC as in effect in any relevant jurisdiction.
"Equipment" shall mean all "equipment" (as such term is defined in
the UCC as in effect in any relevant jurisdiction) now or hereafter owned or
leased by the Grantor.
"Event of Default" shall have the meaning ascribed thereto in the
Intercreditor Agreement.
"Financing Statements" shall mean all financing statements,
recordings, filings or other instruments of registration necessary and
appropriate to perfect a security interest or Lien by filing in any appropriate
filing or recording office in accordance with the UCC as enacted in any and all
relevant jurisdictions or any other relevant applicable law.
"Financial Assets" shall mean "financial assets" as such term is
defined in the UCC as in effect in any relevant jurisdiction.
"Fixtures" shall mean "fixtures" as such term is defined in the UCC
as in effect in any relevant jurisdiction.
"General Intangibles" shall mean all "general intangibles" (as such
term is defined in the UCC as in effect in any relevant jurisdiction) now or
hereafter owned by the Grantor and shall include, but not be limited to, all
Trademarks, trademark applications, trademark registrations, tradenames,
fictitious business names, business names, company names, business identifiers,
prints, labels, trade styles and service marks (whether or not registered),
including logos and/or designs, Copyrights, Patents, patent applications,
goodwill of the Grantor's business symbolized by any of the foregoing, trade
secrets, license rights, license agreements, permits, franchises and any rights
to tax refunds to which the Grantor is now or hereafter may be entitled.
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"Instruments" shall mean "instruments" as such term is defined in
the UCC as in effect in any relevant jurisdiction.
"Insurance Policies" shall mean all insurance policies to which the
Grantor now is, or hereafter will be, a party, including, without limitation,
all insurance policies required pursuant to this Agreement and the other
Financing Documents.
"Insurance Proceeds" shall mean all amounts and proceeds of any kind
(including interest, if any, thereon) paid or payable pursuant to any Insurance
Policy.
"Intellectual Property" shall mean, collectively, Copyrights,
Patents and Trademarks.
"Inventory" shall mean all of the inventory of the Grantor of every
type or description, including all "inventory" as such term is defined in the
UCC as in effect in any relevant jurisdiction, now owned or hereafter acquired
and wherever located, whether raw, in process or finished, all materials usable
in processing the same and all documents of title covering any inventory,
including, without limitation, work in process, materials used or consumed in
the Grantor's businesses, now owned or hereafter acquired or manufactured by the
Grantor and held for sale in the ordinary course of its business, all present
and future substitutions therefor, parts and accessories thereof and all
additions thereto, and all proceeds thereof and products of such inventory in
any form whatsoever.
"Inventory Records" shall mean all books, records and other property
and General Intangibles at any time relating to the Inventory.
"Investment Property" shall mean "investment property" as such term
is defined in the UCC as in effect in any relevant jurisdiction.
"Patents" shall mean all of the following now owned or hereafter
acquired by the Grantor: (a) all letters patent of the United States, all
registrations and recordings thereof, and all applications for letters patent of
the United States, including registrations, recordings and pending applications
in the United States Patent and Trademark Office, including, without limitation,
those listed on Schedule IV; and (b) all reissues, continuations, divisions,
continuations-in-part, renewals or extensions thereof, and the inventions
disclosed or claimed therein, including the right to make, use and/or sell the
inventions disclosed or claimed therein.
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"Proceeds" shall mean "proceeds" as such term is defined in the UCC
as in effect in any relevant jurisdiction or under other relevant law and, in
any event, shall include, but shall not be limited to, (i) any and all proceeds
of any insurance, indemnity, warranty or guaranty payable to the Collateral
Agent or the Grantor from time to time, and claims for insurance, indemnity,
warranty or guaranty effected or held for the benefit of the Grantor with
respect to any of the Collateral, (ii) any and all payments (in any form
whatsoever) made or due and payable to the Grantor from time to time in
connection with any requisition, confiscation, condemnation, seizure or
forfeiture of all or any part of the Collateral by any Governmental Authority
(or any person acting under color of Governmental Authority) and (iii) any and
all other amounts from time to time paid or payable under or in connection with
any of the Collateral.
"Receivables" shall mean any "account" as such term is defined in
the UCC as in effect in any relevant jurisdiction and in any event shall
include, but not be limited to, all of the Grantor's rights to payment for goods
(including, without limitation, electricity) sold or leased, or services
performed, by the Grantor, whether now in existence or arising from time to time
hereafter, including, without limitation, rights evidenced by an account, note,
contract, contract rights (including any and all rights to liquidated damage
payments), security agreement, chattel paper, or other evidence of indebtedness
or security, together with (i) all security pledged, assigned, hypothecated or
granted to or held by the Grantor to secure the foregoing, (ii) all guarantees,
warranties, endorsements, indemnifications or collateral on, or of, any of the
foregoing, (iii) all powers of attorney for the execution of any evidence of
indebtedness or security or other writing in connection therewith, (iv) all
books, correspondence, credit files, records, ledger cards, invoices and other
papers relating thereto, including, without limitation, all similar information
stored on a magnetic medium or other similar storage device and other papers and
documents in the possession or under the control of the Grantor or any computer
bureau from time to time acting for the Grantor, (v) all evidences of the filing
of Financing Statements and other statements and the registration of other
instruments in connection therewith and amendments thereto, notices to other
creditors or secured parties, and certificates from filing or other registration
officers, (vi) all credit information, reports and memoranda relating thereto,
and (vii) all other writings related in any way to the foregoing.
"Security Entitlement" shall have the meaning assigned to that term
under the UCC as in effect in the State of New York.
"Security Interest" shall have the meaning specified in Section 2.1.
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"Trademarks" shall mean all of the following now owned or hereafter
acquired by the Grantor: (i) all trademarks, service marks, trade names,
corporate names, company names, business names, fictitious business names, trade
styles, trade dress, logos, other source or business identifiers, designs and
general intangibles of like nature, now existing or hereafter adopted or
acquired, all registrations and recordings thereof, and all registration and
recording applications filed in connection therewith, including registrations
and registration applications in the United States Patent and Trademark Office,
any State of the United States or any political subdivision thereof, and all
extensions or renewals thereof, including, without limitation, those listed on
Schedule V; (ii) all goodwill associated therewith or symbolized thereby; and
(iii) all other assets, rights and interests that uniquely reflect or embody
such goodwill.
SECTION 1.2. Principles of Construction. Except as otherwise
expressly provided herein, the principles of construction set forth in the
Indenture shall apply to this Agreement.
ARTICLE II
ASSIGNMENT AND GRANT OF SECURITY INTEREST
SECTION 2.1. Assignment and Grant of Security Interest. (a) As
security for the prompt and complete payment and performance when due of all of
the Senior Secured Obligations, the Grantor hereby grants to the Collateral
Agent, for itself and for the ratable benefit of the other Senior Secured
Parties, a continuing security interest of first priority (the "Security
Interest") in the Grantor's right, title and interest (if any) in, to and under
the following, in each case, whether now owned or existing or hereafter
acquired, arising or created, and wherever located: (i) all Receivables; (ii)
all Documents; (iii) all Equipment; (iv) all General Intangibles; (v) all
Inventory; (vi) all cash collateral accounts established with respect to the
Grantor, and all checking, savings, deposit or other accounts of the Grantor,
including, without limitation, the Accounts (other than the Aquila PPA Reserve
Account, the Panola County Account and the Distribution Account) and any
successor accounts thereto, and all property on deposit therein or credited
thereto, including, without limitation, all Investment Property, Security
Entitlements, Financial Assets, securities, instruments or cash on deposit
therein or credited thereto and all Security Entitlements with respect thereto;
(vii) all Contracts and Contract Rights; (viii) all cash, accounts, deposits,
securities and insurance policies now or at any time hereafter in the possession
or under control of the Grantor or its bailees and any interest therein; (ix)
all Insurance Policies and all Insurance Proceeds and Loss Proceeds; (x) all
Governmental Approvals, provided that any Governmental Approval which by its
terms or by operation of law would become void, voidable, terminable or
revocable (or would constitute a
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breach or default thereunder or under applicable law) if mortgaged, pledged or
assigned hereunder or if a security interest therein were granted hereunder are
expressly excepted and excluded from the Lien and the terms of this Agreement to
the extent, and only to the extent, necessary so as to avoid such voidness,
voidability, terminability or revocability or breach or default; (xi) all
Fixtures; (xiii) without limiting the generality of the foregoing, all other
personal property, Goods, Instruments, Chattel Paper, credits, claims, demands,
assets, books and records, customer lists, ledger cards, credit files,
print-outs and other materials and records pertaining to any of the foregoing,
of the Grantor, whether now existing or hereafter acquired from time to time and
whether or not of a type which may be subject to a security interest under the
UCC as in effect in the State of New York; and (xiv) any and all additions and
accessions to any of the foregoing, all improvements thereto, all substitutions
and replacements therefor and all products and Proceeds thereof (all of the
above collectively, the "Collateral").
(b) The security interest granted to the Collateral Agent pursuant
to this Agreement extends to all Collateral of the kind which is the subject of
this Agreement which the Grantor may acquire at any time during the continuation
of this Agreement, whether such Collateral is in transit or in the Grantor's,
the Collateral Agent's, any other Senior Secured Party's or any other Person's
constructive, actual or exclusive occupancy or possession until the release
thereof pursuant to Section 9.8.
(c) The assignments and security interests under this Agreement
granted to the Collateral Agent shall not relieve the Grantor from the
performance of any term, covenant, condition or agreement on the Grantor's part
to be performed or observed under or in respect of any of the Collateral pledged
by it hereunder or from any liability to any Person under or in respect of any
of such Collateral or impose any obligation on the Collateral Agent to perform
or observe any such term, covenant, condition or agreement on the Grantor's
part to be so performed or observed or impose any liability on the Collateral
Agent for any act or omission on the part of the Grantor or for any breach of
any representation or warranty on the part of the Grantor contained in this
Agreement or any other Transaction Document, or in respect of the Collateral
pledged by it hereunder or made in connection herewith or therewith. The
obligations of the Grantor contained in this paragraph shall survive the
termination of this Agreement and the discharge of the Grantor's other
obligations hereunder.
(d) This Agreement shall create a continuing security interest in
the Collateral until the release thereof pursuant to Section 9.8.
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SECTION 2.2. Security Interest Absolute. The parties hereto shall
not challenge or question in any proceeding the validity or enforceability of
this Agreement as a whole or any term or provision contained herein or the
validity of any Lien or Financing Statement in favor of the Collateral Agent.
All rights of the Collateral Agent and the other Senior Secured Parties and all
security interests hereunder shall, to the fullest extent permitted by law, be
absolute and unconditional irrespective of:
(a) any invalidity, irregularity or unenforceability of any
Financing Document or any other agreement or instrument relating thereto, or any
amendment, change or modification of any of the Financing Documents;
(b) any impairment, modification, change, exchange, release or
subordination of or limitation on, any liability to, or stay of actions or lien
enforcement proceedings against, the Grantor, its property or its estate in
bankruptcy resulting from any bankruptcy, arrangement, readjustment,
composition, liquidation, rehabilitation or similar proceeding against or
otherwise involving or affecting the Grantor;
(c) any change in the time, manner or place of payment of, or in any
other term of, all or any of the Senior Secured Obligations, or any other
amendment or waiver of or any consent to any departure from, any Financing
Document;
(d) any change in the time, order or method of attachment or
perfection of Liens or the filing or recording of Financing Statements or other
security documents and irrespective of anything contained in any filing or
agreement to which any the Collateral Agent or any other Senior Secured Party
may now or hereafter be a party;
(e) any exchange, release or non-perfection of any other collateral,
or any release or amendment or waiver of, or consent to departure from, any
guaranty for all or any of the Senior Secured Obligations; or
(f) any other circumstance which might otherwise constitute a
defense available to, or a discharge of, the Grantor or a third party pledgor,
except as otherwise provided herein.
SECTION 2.3. Power of Attorney. (a) The Grantor hereby irrevocably
constitutes and appoints the Collateral Agent, on behalf of itself and the other
Senior Secured Parties, or any Person, officer or agent thereof whom the
Collateral Agent may designate, as the Grantor's true and lawful
attorney-in-fact with full irrevocable power and authority in the place and
stead of the Grantor and in the name of the Grantor or in its own
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name, at the Grantor's cost and expense, to exercise all or any of the following
powers, which, being coupled with an interest, shall be irrevocable until the
Senior Secured Obligations have been indefeasibly paid in full in cash or cash
equivalents and all commitments of the Senior Secured Parties under the
Financing Documents have been terminated:
(i) to receive, take, endorse, sign, assign and deliver, all
in the Collateral Agent's name or the Grantor's name, any and all checks,
notes, drafts, and other documents or instruments relating to the
Collateral;
(ii) to receive, open and dispose of all mail addressed to the
Grantor and to notify postal authorities to change the address for
delivery thereof to such address as the Collateral Agent designates;
(iii) to request from account debtors of the Grantor, in the
Grantor's name or in the name of the Collateral Agent or the Collateral
Agent's designee, information concerning the Receivables and the amounts
owing thereon;
(iv) to transmit to account debtors indebted on Receivables
notice of the Collateral Agent's interest therein;
(v) to notify account debtors indebted on Receivables to make
payment directly to the Collateral Agent;
(vi) to take or bring, in the Grantor's name or in the
Collateral Agent's name on behalf of the Senior Secured Parties, all
steps, actions, suits or proceedings deemed by the Collateral Agent to be
necessary or desirable to enforce or effect collection of the Receivables;
(vii) to the fullest extent permitted by law, to prepare, sign
and file any Financing Statements or file this Agreement in the name of
the Grantor as debtor;
(viii) if the Grantor shall have failed to do so in a timely
manner, to take or cause to be taken all actions necessary to perform or
comply, or cause performance or compliance with, the covenants of the
Grantor contained in any Financing Document;
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(ix) to sign and endorse any invoices, freight or express
bills, bills of lading, storage or warehouse receipts, drafts against
debtors, assignments, verifications, notices and other documents in
connection with any of the Collateral;
(x) to defend any suit, action or proceeding brought against
the Grantor with respect to any Collateral;
(xi) to settle, compromise or adjust any suit, action or
proceeding described in the preceding clause (x) and, in connection
therewith, to give such discharges or releases as the Collateral Agent,
acting upon directions from (x) the Intercreditor Agent acting pursuant
to the Intercreditor Agreement or (y) the Senior Secured Parties acting
pursuant to Section 7.15 of the Intercreditor Agreement, or as otherwise
expressly provided herein, may deem appropriate;
(xii) generally, to sell or transfer and make any agreement
with respect to or otherwise deal with any of the Collateral as fully and
completely as though the Collateral Agent was the absolute owner thereof
for all purposes, and to do, at the Collateral Agent's option and the
Grantor's expense, at any time, or from time to time, all reasonable acts
and things which the Collateral Agent, acting upon directions from (x) the
Intercreditor Agent acting pursuant to the Intercreditor Agreement or (y)
the Senior Secured Parties acting pursuant to Section 7.15 of the
Intercreditor Agreement, or as otherwise expressly provided herein, deems
necessary to protect, preserve or realize upon the Collateral and the
Liens of the Collateral Agent thereon;
(xiii) to execute, in connection with any foreclosure, any
endorsements, assignments or other instruments of conveyance or transfer
with respect to the Collateral;
(xiv) to exercise the Grantor's rights under any Contract in
accordance with Section 6.1; and
(xv) to exercise any and all other rights, remedies, powers
and privileges of the Grantor with respect to the Collateral,
provided, however, that the Collateral Agent shall not exercise its powers under
clauses (i), (ii), (iii), (iv), (vi), (viii), (ix), (x), (xi), (xii), (xiii),
(xiv) or (xv) unless an Event of Default has occurred and is continuing.
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(b) The Grantor hereby ratifies all that said attorney shall
lawfully do or cause to be done by virtue hereof. The Grantor hereby
acknowledges and agrees that in acting pursuant to this power-of-attorney the
Collateral Agent shall be acting in its own interest and in the interest of the
other Senior Secured Parties and the Grantor acknowledges and agrees that the
Collateral Agent and the other Senior Secured Parties shall have no fiduciary
duties to the Grantor and the Grantor hereby waives any claims to the rights of
a beneficiary of a fiduciary relationship hereunder.
SECTION 2.4. Inspection and Verification. The Collateral Agent and
such Persons as the Collateral Agent may reasonably designate shall have the
right, no more often than once each year, unless an Event of Default has
occurred and is continuing, and, if an Event of Default has occurred and is
continuing, at any reasonable time or times, in each case upon ten (10) days'
notice and at the Grantor's own cost and expense, to inspect the Collateral, all
records related thereto (and to make extracts and copies from such records) and
the premises upon which any of the Collateral is located, to discuss the
Grantor's affairs with the appropriate officers of the Grantor and its
independent accountants and to verify under reasonable procedures the validity,
amount, quality, quantity, value, condition and status of, or any other matter
relating to, the Collateral, including, in the case of Receivables or Collateral
in the possession of any third party, by contacting account debtors or the third
party possessing such Collateral for the purpose of making such a verification.
The Collateral Agent shall have the absolute right to share any information it
gains from such inspection or verification with any other Senior Secured Party.
ARTICLE III
GENERAL REPRESENTATIONS, WARRANTIES AND COVENANTS
The Grantor hereby represents, warrants and covenants to the
Collateral Agent and the other Senior Secured Parties, which representations,
warranties and covenants shall survive execution and delivery of this Agreement
and the making and repayment of the other Senior Secured Obligations, as
follows:
SECTION 3.1. Title and Authority. The Grantor has good and valid
rights in and title to the Collateral with respect to which it has purported to
grant a Security Interest hereunder and has full power and authority to grant to
the Collateral Agent the Security Interest in the Collateral (to the extent of
the Grantor's right, title and interest therein) pursuant hereto and to execute,
deliver and perform its obligations in accordance with the terms of this
Agreement, without the consent or approval of any Person other than any consent
or approval that has been obtained and is in full force and effect.
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SECTION 3.2. Validity, Perfection and Priority of Lien.
(a) This Agreement creates in favor of the Collateral Agent, for
itself and for the ratable benefit of the other Senior Secured Parties, a legal,
valid and enforceable security interest in the Collateral and the proceeds
thereof owned by the Grantor, and when Financing Statements in appropriate form
are filed by the Grantor in the offices specified on Schedule I hereto, the Lien
created under this Agreement will constitute a fully perfected Lien on, and
security interest in, all right, title and interest of the Grantor in such
Collateral and the proceeds thereof, in each case prior and superior in right to
any other Person.
(b) (i) Fully executed Financing Statements or other appropriate
filings, recordings or registrations containing a description of the Collateral
have been filed in each governmental, municipal or other office specified in
Schedule I, which are all the filings, recordings and registrations that are
necessary to publish notice of and protect the validity of and to establish a
valid and perfected security interest in favor of the Collateral Agent (for the
benefit of itself and for the ratable benefit of the Senior Secured Parties) in
respect of all Collateral in which the Security Interest may be perfected by
filing, recording or registration in the United States (or any political
subdivision thereof) and its territories and possessions, and no further or
subsequent filing, refiling, recording, rerecording, registration or
reregistration is necessary in any such jurisdiction, except as provided under
applicable law with respect to the filing of continuation statements and except
that recordation of the Security Interest in the United States Patent and
Trademark Office may be necessary with respect to Collateral consisting of
Patents and Trademarks and recordation of the Security Interest, in addition to
registration of any unregistered copyrights, in the United States Copyright
Office may be necessary with respect to Collateral consisting of Copyrights. The
Grantor will pay any applicable filing fees and related expenses. The Grantor
hereby irrevocably authorizes the Collateral Agent to file any such Financing
Statements without its signature as the debtor.
(ii) The Instruments listed on Schedule II hereto, which, as of the
date hereof, constitute all instruments of the Grantor, and all other Chattel
Paper have been stamped to indicate the Security Interest of the Collateral
Agent for itself and the ratable benefit of the Senior Secured Parties
hereunder.
SECTION 3.3. No Liens; Other Financing Statements. (a) Except for
the Lien granted to the Collateral Agent for itself and the ratable benefit of
the Senior Secured Parties hereunder and other Permitted Liens, and, further,
except for the interest in and control over the Accounts (other than the Aquila
PPA Reserve Account and the
12
Panola County Account) of and by the Collateral Agent and the Administrative
Agent as provided in the Common Agreement and the Securities Account Control
Agreement, and the interest in and control over the Indenture Funds of and by
the Trustee and the Securities Intermediary as provided in the Indenture, the
Grantor owns and will continue to own valid and marketable title in and to each
item of the Collateral free and clear of any and all Liens and the Grantor shall
defend the Collateral against all claims and demands of all Persons at any time
claiming the same or any interest therein adverse to the Collateral Agent or any
other Senior Secured Party.
(b) Other than Financing Statements filed in connection herewith,
there is no Financing Statement (or similar statement or instrument of
registration under the law of any jurisdiction) covering or purporting to cover
any interest of any kind in the Collateral. The Grantor will not execute or
authorize any Financing Statement (or similar statement or instrument of
registration under the law of any jurisdiction) or statements relating to the
Collateral to be filed in any public office, except Financing Statements filed
or to be filed in respect of and covering the security interests granted hereby
to the Collateral Agent by the Grantor.
SECTION 3.4. Chief Executive Office; Name; Records. (a) The chief
executive office and principal place of business of the Grantor is located at
the address set forth on Schedule VI. The originals of all documents evidencing
all Contracts and Receivables of the Grantor, and the only original books of
account and records concerning the Collateral are, and will continue to be, kept
at, and controlled and directed (including, without limitation, for general
accounting purposes) from, the chief executive office of the Grantor as set
forth on Schedule VI, or at such new location for such chief executive office as
the Grantor may establish in accordance with Section 3.4(b).
(b) The Grantor shall not establish a new location for its chief
executive office or change its name or the name under which it presently
conducts its business unless (i) it has given to the Collateral Agent not less
than sixty (60) days' prior written notice of its intention so to do, clearly
describing such new location or specifying such new name, as the case may be,
and providing such other information in connection therewith as the Collateral
Agent may reasonably request, and (ii) with respect to such new location or such
new name, as the case may be, the Grantor shall have taken all action to
maintain the security interest of the Collateral Agent in the Collateral
intended to be granted hereby at all times fully perfected and in full force and
effect.
SECTION 3.5. Additional Statements and Schedules. The Grantor shall
execute and deliver to the Collateral Agent, from time to time, for its
convenience in
13
maintaining a record of the Collateral, such written statements and schedules
as is necessary or as the Collateral Agent may reasonably require, designating,
identifying or describing the Collateral.
SECTION 3.6. Further Actions. The Grantor will, at its own expense,
make, execute, endorse, acknowledge, file and/or deliver to the Collateral Agent
from time to time such lists, descriptions and designations of its Collateral,
warehouse receipts, receipts in the nature of warehouse receipts, bills of
lading, documents of title, vouchers, invoices, schedules, confirmatory
assignments, conveyances, Financing Statements, transfer endorsements, powers of
attorney, certificates, reports and other assurances or instruments and take
such further steps relating to the Collateral and other property or rights
covered by the Security Interest hereby granted by the Grantor, which is
necessary or as the Collateral Agent deems reasonably appropriate or advisable
to perfect, preserve or protect its security interest in the Collateral within
thirty (30) days after any request by the Collateral Agent or such earlier date
as may be required by applicable law or necessary to preserve or protect the
security interests in the Collateral granted by the Grantor pursuant to this
Agreement, including the payment of any fees and taxes required in connection
with the execution and delivery of this Agreement, the granting of the Lien
created hereby and the filing of any Financing Statements or other documents in
connection here with.
ARTICLE IV
SPECIAL PROVISIONS CONCERNING INVENTORY AND EQUIPMENT
SECTION 4.1. Maintenance of Insurance; Protection of Security
Interest. The Grantor shall carry with respect to the Collateral and its use
such insurance as shall be required under the Transaction Documents.
SECTION 4.2. Location of Inventory and Equipment. All Inventory and
Equipment owned on the date hereof by the Grantor is located at one of the
locations shown on Schedule 4.2 (other than Equipment undergoing repairs). The
Grantor agrees that all Inventory and Equipment now held or subsequently
acquired by it shall be kept at (or shall be in transport to) one of the
locations on Schedule 4.2.
ARTICLE V
SPECIAL PROVISIONS CONCERNING
RECEIVABLES, CONTRACTS AND INSTRUMENTS
14
SECTION 5.1. Direction to Account Debtors; Grantor Bound. (a) The
Grantor agrees that the Collateral Agent may (i) directly notify the account
debtors or obligors with respect to any Receivables and/or under any Project
Documents to make payments with respect thereto directly to the Revenue
Account, and (ii) from and after the occurrence of an Event of Default, directly
notify the account debtors or obligors with respect to any Receivables and/or
under any Project Documents to make payments with respect thereto directly to
the Collateral Agent.
(b) Upon the occurrence and during the continuance of an Event of
Default, the Grantor agrees to be bound by any collection, compromise,
forgiveness, extension or other action taken by the Collateral Agent with
respect to the Receivables and/or the Project Documents. The reasonable costs
and expenses (including reasonable attorneys' fees) of collection, whether
incurred by the Grantor, the Collateral Agent, any other Senior Secured Party,
shall be borne by the Grantor.
ARTICLE VI
SPECIAL PROVISIONS CONCERNING CONTRACTS
SECTION 6.1. Security Interest in Contract Rights. The Grantor's
grant, pursuant to Section 2.1, to the Collateral Agent, of a security interest
in all of its right, title and interest in and to each and all of the Contracts
and the contract rights thereunder, includes, but is not limited to:
(i) all (A) rights to payment under any Contract and (B)
payments due and to become due under any Contract, in each case whether as
contractual obligations, damages or otherwise;
(ii) all of its claims, rights, powers, privileges and
remedies under any Contract; and
(iii) all of its rights under any Contract to make
determinations, to exercise any election (including, without limitation,
election of remedies) or option or to give or receive any notice, consent,
waiver or approval together with full power and authority with respect to
any Contract to demand, receive, enforce or collect any of the foregoing
rights or any property the subject of any of the Contracts, to enforce or
execute any checks or other instruments or orders, to file any claims and
to take any action in connection with any of the foregoing (the Contracts,
together with all of the foregoing in this Section 6.1, the "Contract
Rights");
15
provided, however, that, unless an Event of Default shall have occurred and be
continuing, notwithstanding anything else herein to the contrary, the Grantor
may, subject to the terms and provisions of the Financing Documents, exclusively
exercise all of its rights, powers, privileges and remedies under the Contracts.
SECTION 6.2. Further Protection. The Grantor shall defend the title
to the Contract Rights against the claims and demands of any Person other than
the Collateral Agent and the other Senior Secured Parties, and hereby grants the
Collateral Agent full power and authority, upon the occurrence and during the
continuance of an Event of Default, to take all actions as the Collateral Agent,
acting upon directions from (x) the Intercreditor Agent acting pursuant to the
Intercreditor Agreement or (y) the Senior Secured Parties acting pursuant to
Section 7.15 of the Intercreditor Agreement, or as otherwise expressly provided
herein, reasonably deems necessary or advisable to effectuate the provisions set
forth in this sentence.
SECTION 6.3. Liabilities Under Receivables and Contracts. Any thing
herein to the contrary notwithstanding (including, without limitation, the grant
of any rights to the Collateral Agent), the Grantor shall remain liable under
each of the Receivables and Contracts to observe and perform all the conditions
and obligations to be observed and performed by it thereunder and under or with
respect to the Collateral, all in accordance with the terms of any agreement
giving rise to each such Receivable, Contract or procurement of Collateral.
Neither the Collateral Agent nor any other Senior Secured Party shall have any
obligation or liability under any Receivable (or any agreement giving rise
thereto) or Contract or with respect to the Collateral by reason of or arising
out of this Agreement or the receipt by the Collateral Agent of any payment
relating to such Receivable, Contract or Collateral pursuant hereto, nor shall
the Collateral Agent or any other Senior Secured Party be obligated in any
manner to perform any of the obligations of the Grantor under or pursuant to any
Receivable (or any agreement giving rise thereto) or under or pursuant to any
Contract, to make any payment, to make any inquiry as to the nature or the
sufficiency of any payment received by it or as to the sufficiency of any
performance by any party under any Receivable (or any agreement giving rise
thereto) or under any Contract, to present or file any claim, to take any action
to enforce any performance or to collect the payment of any amounts which may
have been assigned to it or to which it may be entitled at any time or times.
SECTION 6.4. Remedies. Upon the occurrence of any Event of Default,
the Collateral Agent shall have the rights set forth in Article IX, and, acting
upon directions from (x) the Intercreditor Agent acting pursuant to the
Intercreditor Agreement or (y) the Senior Secured Parties acting pursuant to
Section 7.15 of the Intercreditor Agreement, or
16
as otherwise expressly provided herein, may (i) enforce all remedies, rights,
powers and privileges of the Grantor under any or all of the Contracts, (ii)
sell any or all of the Contract Rights at public or private sale upon at least
ten (10) days' prior written notice and/or (iii) substitute itself or any
nominee or trustee in lieu of the Grantor as party to any of the Contracts and
to notify the obligor of any Contract Right (the Grantor hereby agreeing to
deliver any such notice at the request of the Collateral Agent) that all
payments and performance under the relevant Contract shall be made or rendered
to the Collateral Agent or such other Person as the Collateral Agent may
designate.
ARTICLE VII
DUTY OF CARE OF COLLATERAL AGENT
SECTION 7.1. Collateral Agent's Duties; Reasonable Care. (a) The
Collateral Agent shall have the duty to exercise reasonable care in the custody
and preservation of any Collateral in its possession, which duty shall be fully
satisfied if the Collateral Agent maintains safe custody of such Collateral in
accordance with customary banking standards.
(b) Except as hereinabove specifically set forth, the Collateral
Agent shall have no further obligation to ascertain the occurrence of, or to
notify the Grantor with respect to, any matters relating to any Collateral and
shall not be deemed to assume any such further obligation as a result of the
establishment by the Collateral Agent of any internal procedures with respect to
any Collateral in its possession, nor shall the Collateral Agent be deemed to
assume any other responsibility for, or obligations or duty with respect to,
any Collateral, or its use, including, without limitation, any obligation or
duty to take any action to collect, preserve or protect its or the Grantor's
rights in the Collateral, but the same shall be at the sole risk and
responsibility of the Grantor at all times.
(c) The Grantor hereby releases the Collateral Agent and each other
Senior Secured Party from any claims, causes of action and demands at any time
arising out of or with respect to this Agreement, the Senior Secured
Obligations, the Collateral and its use and/or any actions taken or omitted to
be taken by the Collateral Agent with respect thereto (except such claims,
causes of action and demands arising from the gross negligence or wilful
misconduct of the Collateral Agent).
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ARTICLE VIII
REMEDIES UPON OCCURRENCE OF AN EVENT OF DEFAULT
For the avoidance of doubt, the provisions of Section 8.1, Section
8.2 and Section 8.4 shall apply only upon the occurrence and during the
continuance of an Event of Default.
SECTION 8.1. Remedies; Obtaining the Collateral upon Default. (a)
Upon the occurrence and during the continuance of an Event of Default, the
Collateral Agent, acting upon directions from (x) the Intercreditor Agent
acting pursuant to the Intercreditor Agreement or (y) the Senior Secured Parties
acting pursuant to Section 7.15 of the Intercreditor Agreement, or as otherwise
expressly provided herein, shall be entitled to exercise on behalf of itself and
the other Senior Secured Parties, all the rights and remedies of a secured party
under the UCC as in effect in any relevant jurisdiction and all rights now or
hereafter existing under all other applicable law to enforce this Agreement and
the security interests contained herein, and, in addition, subject to any
Applicable Laws then in effect, the Collateral Agent, acting upon directions
from (x) the Intercreditor Agent acting pursuant to the Intercreditor Agreement
or (y) the Senior Secured Parties acting pursuant to Section 7.15 of the
Intercreditor Agreement, or as otherwise expressly provided herein, may, in
addition to its other rights and remedies hereunder, including without
limitation under Section 8.2 and Section 8.6, and also the rights of the
Collateral Agent and the other Senior Secured Parties under any of the
Transaction Documents, do any of the following to the fullest extent permitted
by applicable law:
(i) personally, or by agents, trustees or attorneys, immediately
take possession of the Collateral or any part thereof, from the Grantor or any
other Person who then has possession of any part thereof with or without notice
or process of law, and for that purpose may enter upon the Grantor's premises or
such other Person's premises where any of the Collateral is located and remove
the same and use in connection with such removal any and all services, supplies,
aids and other facilities of the Grantor;
(ii) instruct the obligor or obligors of any agreement, instrument
or other obligation (including, without limitation, the Receivables and the
Contracts) constituting the Collateral to make any payment required by the terms
of such instrument or agreement directly to the Collateral Agent; and
(iii) take possession of the Collateral or any part thereof, by
directing the Grantor in writing to turn over the same to the Collateral Agent
at the Site or, to the extent such Collateral may be moved, to deliver the same
to the Collateral Agent at any other
18
place or places designated by the Collateral Agent, in which event the Grantor
shall, at its own expense, (A) forthwith turn over the same to the Collateral
Agent at one of the locations on Schedule 4.2 or cause the same to be moved to
the place or places so designated by the Collateral Agent and there delivered to
the Collateral Agent, as the case may be, (B) store and keep any Collateral so
turned over or delivered to the Collateral Agent at one of the locations shown
on Schedule 4.2 or at such place or places pending further action by the
Collateral Agent as provided in Section 8.2, and (C) while the Collateral shall
be so stored and kept, provide such guards and maintenance services as shall be
necessary to protect the same and to preserve and maintain the Collateral in
good condition.
(b) The Grantor's obligation to turn over or deliver the Collateral
as set forth above is of the essence of this Agreement and, accordingly, upon
application to a court of equity having jurisdiction, the Collateral Agent
shall be entitled to obtain a decree requiring specific performance by the
Grantor of said obligation.
(c) When Collateral is in the Collateral Agent's possession, (i) the
Grantor shall pay (or reimburse the Collateral Agent on demand for) all
reasonable expenses (including the cost of any insurance and payment of taxes or
other charges) incurred in the custody, preservation, use or operation of the
Collateral, and the obligation to reimburse all such expenses shall be secured
hereby, and (ii) the risk of accidental loss or damage shall be on the Grantor
to the extent of any deficiency in any effective insurance coverage.
SECTION 8.2. Remedies; Disposition of the Collateral. Any Collateral
repossessed by the Collateral Agent under or pursuant to Section 8.1 and any
other Collateral, whether or not so repossessed by the Collateral Agent, may, to
the extent permitted by any contract terms governing such Collateral and to the
fullest extent permitted by applicable law, be sold, leased or otherwise
disposed of under one or more contracts or as an entirety, whether by public or
private sale and without the necessity of gathering at the place of sale the
property to be sold, may be sold in such manner, at such time or times, at such
place or places and on such terms (whether cash or credit, and in the case of
credit, without assumption of future credit risk) in compliance with Applicable
Laws, determine to be commercially reasonable. If any Collateral is sold by the
Collateral Agent upon credit or for future delivery the Collateral Agent shall
not be liable for the failure of the purchaser to pay for the same and in such
event the Collateral Agent may resell the Collateral. In no event shall the
Grantor be credited with any part of the proceeds of sale of any Collateral
until payment thereof in cash or cash equivalents has actually been received by
the Collateral Agent. Any of the Collateral may be sold, leased or otherwise
disposed of, or options or contracts may be entered to do so, in the condition
19
in which the same existed when taken by the Collateral Agent or after any
overhaul or repair in a commercially reasonable manner. Any such disposition
shall be made upon not less than ten (10) days' written notice to the Grantor
specifying the time such disposition is to be made and, if such disposition
shall be a public sale, specifying the place of such sale. Any such sale may be
adjourned 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. To the extent permitted by applicable law, the Collateral Agent or
any other Senior Secured Party may itself bid for and become the buyer of the
Collateral or any item thereof offered for sale at a public auction without
accountability to the Grantor.
SECTION 8.3. Waiver. (a) EXCEPT AS OTHERWISE PROVIDED IN THIS
AGREEMENT, THE GRANTOR HEREBY WAIVES, TO THE EXTENT PERMITTED BY APPLICABLE LAW,
NOTICE OR JUDICIAL HEARING IN CONNECTION WITH THE COLLATERAL AGENT'S TAKING
POSSESSION OR THE COLLATERAL AGENT'S DISPOSITION OF ANY OF THE COLLATERAL IN
ACCORDANCE WITH THIS AGREEMENT, INCLUDING, WITHOUT LIMITATION, ANY AND ALL
PRIOR NOTICE AND HEARING FOR ANY PREJUDGMENT REMEDY OR REMEDIES AND ANY SUCH
RIGHT WHICH THE GRANTOR WOULD OTHERWISE HAVE UNDER THE CONSTITUTION OR ANY
STATUTE OF THE UNITED STATES OR OF ANY STATE, AND THE GRANTOR HEREBY FURTHER
WAIVES:
(i) all damages occasioned by such taking of possession except
any damages which are finally judicially determined to have been the
direct result of the Collateral Agent's gross negligence or wilful
misconduct;
(ii) all other requirements as to the time, place and terms of
sale or other requirements with respect to the enforcement of the
Collateral Agent's and the other Senior Secured Parties' rights hereunder;
(iii) demand of performance or other demand, notice of intent
to demand or accelerate, notice of acceleration, presentment, protest,
advertisement or notice of any kind to or upon the Grantor or any other
Person; and
(iv) all rights of redemption, appraisement, valuation, stay,
extension or moratorium now or hereafter in force under any applicable law
in order to prevent or delay the enforcement of this Agreement or the
absolute sale of the Collateral or any portion thereof, and the Grantor,
for itself and all who may
20
claim under it, insofar as it may now or hereafter lawfully do so, hereby
waives the benefit of such laws.
(b) Without limiting the generality of the foregoing, the Grantor
hereby: (i) authorizes the Collateral Agent, without notice to or demand upon
the Grantor and without otherwise affecting the obligations of the Grantor
hereunder from time to time, to take and hold other collateral granted to it by
any other Person (in addition to the Collateral) for payment of any Senior
Secured Obligations, or any part thereof, and to exchange, enforce or release
such other collateral or any part thereof, and to accept and hold any
endorsement or guarantee of payment of the Senior Secured Obligations or any
part thereof, and to release or substitute any endorser or guarantor or any
other Person granting security for or in any way obligated upon any Senior
Secured Obligations, or any part thereof; and (ii) waives and releases any and
all right to require the Collateral Agent or the other Senior Secured Parties to
collect any of the Senior Secured Obligations from any specific item or items of
Collateral or from any other party liable as guarantor or in any other manner in
respect of any of the Senior Secured Obligations or from any collateral (other
than the Collateral) for any of the Senior Secured Obligations.
(c) Any sale of, or the grant of options to purchase, or any other
realization upon, any Collateral shall, provided that it is done in accordance
with applicable law and this Agreement, operate to divest all right, title,
interest, claim and demand, either at law or in equity, of the Grantor therein
and thereto, and shall be a perpetual bar both at law and in equity against the
Grantor and against any and all Persons claiming or attempting to claim the
Collateral so sold, optioned or realized upon, or any part thereof, from,
through and under the Grantor.
SECTION 8.4. Application of Proceeds; Grantor Liable for Deficiency.
Except as otherwise expressly provided herein or in the other Financing
Documents, following the occurrence of an Event of Default and the acceleration
of the maturity of the Senior Secured Obligations (whether automatically, by
declaration or otherwise), the proceeds of any collection, sale or other
realization of all or any part of the Collateral pursuant to this Agreement, and
any other cash at the time of such collection, sale or other realization held by
the Collateral Agent under this Agreement, shall be applied by the Collateral
Agent in accordance with Article IV of the Collateral Agency Agreement. For
avoidance of doubt, it is understood that the Grantor shall remain liable to the
extent of any deficiency between the amount of proceeds of the Collateral and
the aggregated amount of the Senior Secured Obligations in accordance with the
Financing Documents.
21
SECTION 8.5. No Waiver; Remedies Cumulative. No failure or delay on
the part of the Collateral Agent or any other Senior Secured Party in exercising
any right, remedy, power or privilege hereunder and no course of dealing between
the Grantor and the Collateral Agent or any other Senior Secured Party shall
operate as a waiver thereof; nor shall any single or partial exercise of any
right, power or privilege hereunder preclude any other or further exercise
thereof or the exercise of any other right, remedy, power or privilege. A waiver
by the Collateral Agent or any other Senior Secured Party of any right or remedy
hereunder on any one occasion shall not be construed as a bar to any right or
remedy which the Collateral Agent or any other Senior Secured Party would
otherwise have on any future occasion. The rights and remedies herein expressly
provided are cumulative and may be exercised singly or concurrently and as often
and in such order as the Collateral Agent any other Senior Secured Party deems
expedient and are not exclusive of any rights or remedies which the Collateral
Agent or the other Senior Secured Parties would otherwise have whether by
agreement or now or hereafter existing under applicable law. No notice to or
demand on the Grantor in any case shall entitle the Grantor to any other or
further notice or demand in similar or other circumstances or constitute a
waiver of the rights of the Collateral Agent or the other Senior Secured Parties
to any other or future action in any circumstances without notice or demand.
SECTION 8.6. Discontinuance of Proceedings. In case the Collateral
Agent or any other Senior Secured Party shall have instituted any proceeding to
enforce any right, power or remedy under this Agreement by foreclosure, sale,
entry or otherwise, and such proceeding shall have been discontinued or
abandoned for any reason or shall have been determined adversely to the
Collateral Agent or such other Senior Secured Party, then, in every such case,
subject to the terms of any final non-appealable judgment rendered in any such
proceeding, the Grantor, the Collateral Agent, the other Senior Secured Parties
and each holder of any of the Senior Secured Obligations shall be restored to
their former positions and rights hereunder with respect to the Collateral,
subject to the Security Interest created under this Agreement, and all rights,
remedies and powers of the Collateral Agent and the other Senior Secured Parties
shall continue as if no such proceeding had been instituted.
ARTICLE IX
MISCELLANEOUS
SECTION 9.1. Notices. Unless otherwise specifically herein provided,
all notices required or permitted under the terms and provisions hereof shall be
in writing and any such notice shall become effective if given in accordance
with the provisions of Section 1.4 of the Indenture.
22
SECTION 9.2. Amendment. No waiver, amendment, modification or
termination of any provision of this Agreement, or consent to any departure by
the Grantor therefrom, shall in any event be effective without the prior written
consent of the Collateral Agent, acting upon directions from (x) the
Intercreditor Agent acting pursuant to the Intercreditor Agreement or (y) the
Senior Secured Parties acting pursuant to Section 7.15 of the Intercreditor
Agreement, or as otherwise expressly provided herein, and none of the Collateral
shall be released without the written consent of the Collateral Agent, acting
upon directions from (x) the Intercreditor Agent acting pursuant to the
Intercreditor Agreement or (y) the Senior Secured Parties acting pursuant to
Section 7.15 of the Intercreditor Agreement, or as other wise expressly provided
herein. Any such waiver or consent shall be effective only in the specific
instance and for the specific purpose for which given.
SECTION 9.3. Successors and Assigns. This Agreement shall be binding
upon and inure to the benefit of the Grantor, the Collateral Agent and the other
Senior Secured Parties, all future holders of the Senior Secured Obligations and
their respective successors, transferees and assigns (to the extent such
successors, transferees and assigns are permitted under the Financing
Documents).
SECTION 9.4. Survival. All agreements, statements, representations
and warranties made by the Grantor herein or in any certificate or other
instrument delivered by the Grantor or on its behalf under this Agreement shall
be considered to have been relied upon by the Collateral Agent and the other
Senior Secured Parties and shall survive the execution and delivery of this
Agreement and the other Financing Documents regardless of any investigation
made by the Collateral Agent or any other Senior Secured Party or made on their
behalf.
SECTION 9.5. Headings Descriptive. The headings of the several
sections of this Agreement are inserted for convenience only and shall not in
any way affect the meaning or construction of any provision of this Agreement.
SECTION 9.6. Severability. In case any provision in or obligation
under this Agreement shall be invalid, illegal or unenforceable in any
jurisdiction, the validity, legality and enforceability of the remaining
provisions or obligations, or of such provision or obligation in any other
jurisdiction, shall not in any way be affected or impaired thereby.
SECTION 9.7. Grantor's Duties. Anything herein contained to the
contrary notwithstanding, the Grantor shall remain liable to perform all of its
obligations under or with respect to the Collateral, and neither the Collateral
Agent nor any other Senior Secured Party shall have any obligations or
liabilities under or with respect to any
23
Collateral by reason of or arising out of this Agreement, nor shall the
Collateral Agent or the other Senior Secured Parties be required or obligated in
any manner to perform or fulfill any of the obligations of the Grantor under or
with respect to any Collateral.
SECTION 9.8. Termination; Release. Upon the date at which all of the
Senior Secured Obligations have been indefeasibly paid in full in cash or cash
equivalents and all commitments of the Senior Secured Parties under the
Financing Documents have terminated, this Agreement shall terminate, and the
Collateral Agent, at the request, pursuant to instructions from, and at expense
of, the Grantor, will promptly execute and deliver to the Grantor the proper
instruments (including UCC termination statements on form UCC-3) acknowledging
the termination of this Agreement, and will duly assign, transfer and deliver to
the Grantor (without recourse and without any representation or warranty of any
kind) such of the Collateral as may be in the possession of the Collateral
Agent and has not theretofore been disposed of or otherwise applied or released.
SECTION 9.9. Reinstatement. This Agreement shall continue to be
effective or be reinstated, as the case may be, if at any time any amount
received by the Collateral Agent or any other Senior Secured Party in respect of
the Senior Secured Obligations is rescinded or must otherwise be restored or
returned by the Collateral Agent or such other Senior Secured Party upon the
insolvency, bankruptcy, dissolution, liquidation or reorganization of the
Grantor or upon the appointment of any intervenor or conservator of, or trustee
or similar official for, the Grantor or any substantial part of its assets, or
upon the entry of an order by a bankruptcy court avoiding payment of such
amount, or otherwise, all as though such payments had not been made.
SECTION 9.10. Counterparts. This Agreement may be executed in any
number of counterparts, each of which, taken together, shall constitute one and
the same instrument and any of the parties hereto may execute this Agreement by
signing any such counterpart.
SECTION 9.11 Governing Law. This Agreement shall be governed by the
laws of the State of New York of the United States of America and shall for all
purposes be governed by and construed in accordance with the laws of such state
without regard to the conflict of law rules thereof other than Section 5-1401 of
the New York General Obligations Law.
SECTION 9.12 Consent to Jurisdiction. Any legal action or proceeding
by or against the Grantor with respect to or arising out of this Agreement may
be brought in or removed to the courts of the State of New York, in and for the
County of New
24
York, or of the United States of America for the Southern District of New York.
By execution and delivery of this Agreement, the Grantor accepts, for itself and
in respect of its property, generally and unconditionally, the jurisdiction of
the aforesaid courts for legal proceedings arising out of or in connection with
this Agreement and irrevocably consents to the appointment of CT Corporation
System, with offices on the date hereof at 0000 Xxxxxxxx, Xxx Xxxx, Xxx Xxxx
00000, as its agent to receive service of process in New York, New York. If for
any reason such agent shall cease to be available to act as such, the Grantor
agrees to appoint a new agent on the terms and for the purposes of this
provision. Nothing herein shall affect the right to serve process in any other
manner permitted by law or any right to bring legal action or proceedings in any
other competent jurisdiction, including judicial or non-judicial foreclosure of
real property interests which are part of the Collateral. The Grantor further
agrees that the aforesaid courts of the State of New York and of the United
States of America for the Southern District of New York shall have exclusive
jurisdiction with respect to any claim or counterclaim of the Grantor based upon
the assertion that the rate of interest charged by or under this Agreement or
under the other Financing Documents is usurious. The Grantor hereby waives any
right to stay or dismiss any action or proceeding under or in connection with
the Project, this Agreement or any other Transaction Document brought before the
foregoing courts on the basis of forum non-conveniens or improper venue.
SECTION 9.13 Waiver of Jury Trial. EACH OF THE GRANTOR AND THE
COLLATERAL AGENT HEREBY KNOWINGLY, VOLUNTARILY, AND INTENTIONALLY WAIVES ANY
RIGHTS IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON,
OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH, THIS AGREEMENT, OR ANY COURSE
OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN), OR
ACTIONS OF THE OTHER PARTIES HERETO. THIS PROVISION IS A MATERIAL INDUCEMENT FOR
THE COLLATERAL AGENT TO ENTER INTO THIS AGREEMENT.
SECTION 9.14. Authority of Collateral Agent. The Grantor
acknowledges that the rights and responsibilities of the Collateral Agent under
this Agreement with respect to any action taken by the Collateral Agent or the
exercise or non-exercise by the Collateral Agent 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 Collateral Agent and the other
Senior Secured Parties, be governed by this Agreement and the other Financing
Documents and by such other agreements with respect thereto as may exist from
time to time among them, but, as between the Collateral Agent and the Grantor,
the Collateral Agent shall be conclusively presumed to be acting as agent for
the
25
other Senior Secured Parties with full and valid authority so to act or refrain
from acting, and the Grantor shall not be under any obligation, or entitlement,
to make any inquiry respecting such authority.
SECTION 9.15. Indemnities and Expenses. The obligation of the
Grantor to pay the costs and expenses of, and to indemnify, defend and hold harm
less, the Collateral Agent and the other Senior Secured Parties under and in
connection with this Agreement shall be as provided in Section 7.15 of the
Intercreditor Agreement as in effect as of the date hereof. No amendment to such
Section 7.15 or termination of the Intercreditor Agreement shall affect the
provisions of this Section 7.15 unless such amendment or termination shall have
been consented to by the parties to this Agreement in accordance with the
provisions hereof and of the other Financing Documents.
SECTION 9.16. Entire Agreement. This Agreement, together with any
other agreement executed in connection herewith, is intended by the parties as a
final expression of their agreement as to the matters covered hereby and is
intended as a complete and exclusive statement of the terms and conditions
thereof.
SECTION 9.17. Independent Security. The security provided for in
this Agreement shall be in addition to and shall be independent of every other
security which the Collateral Agent or the other Senior Secured Parties may at
any time hold for any of the Senior Secured Obligations hereby secured, whether
or not under the Senior Security Documents. The execution of any other Senior
Security Document shall not modify or supersede the security interest or any
rights or obligations contained in this Agreement and shall not in any way
affect, impair or invalidate the effectiveness and validity of this Agreement or
any term or condition hereof. The Grantor hereby waives its right to plead or
claim in any court that the execution of any other Senior Security Document is a
cause for extinguishing, invalidating, impairing or modifying the effectiveness
and validity of this Agreement or any term or condition contained herein. The
Collateral Agent shall be at liberty to accept further security from the Grantor
or from any third party and/or release such security without notifying the
Grantor and without affecting in any way the obligations of the Grantor under
the Senior Security Documents or the other Financing Documents. The Collateral
Agent, upon directions from (x) the Intercreditor Agent acting pursuant to the
Intercreditor Agreement or (y) the Senior Secured Parties acting pursuant to
Section 7.15 of the Intercreditor Agreement, or as otherwise expressly provided
herein, shall determine if any security conferred upon the Collateral Agent or
the other Senior Secured Parties under the Senior Security Documents shall be
enforced by the Collateral Agent, as well as the sequence of securities to be so
enforced.
26
SECTION 9.18. Third Party Beneficiaries. The agreements of the
parties hereto are intended to benefit the Senior Secured Parties and their
respective successors and assigns.
SECTION 9.19 Limitation of Liability. The provisions of Section 14.1
of the Indenture shall apply to this Agreement.
SECTION 9.20 Collateral Agency Agreement. The rights, benefits,
privileges and immunities given to the Collateral Agent and set forth in the
Collateral Agency Agreement are expressly incorporated herein by reference
thereto.
27
IN WITNESS WHEREOF, the parties hereto have caused this Security
Agreement to be duly executed and delivered by their duly authorized officers as
of the date first above written.
LSP BATESVILLE FUNDING CORPORATION
By: /s/ Xxxxx Xxxxxxxxxxx
---------------------
Name: Xxxxx Xxxxxxxxxxx
Title: Senior Vice President and
Secretary
THE BANK OF NEW YORK,
not in its individual capacity
but solely as Collateral Agent
By: /s/ Xxxx Xxxx Xxxxxxx
---------------------
Name: Xxxx Xxxx Xxxxxxx
Title: Assistant Vice President
Signature Page to Funding Corporation Security Agreement
28
Schedule I to
Security Agreement
Grantor's Filing Offices
New Jersey Secretary of State
Mississippi Secretary of State
Panola County Local Filing Office
Schedule II to
Security Agreement
Instruments
None.
Schedule III to
Security Agreement
Copyrights
None.
Schedule IV to
Security Agreement
Patents
None.
Schedule V to
Security Agreement
Trademarks
None.
Schedule VI to
Security Agreement
Grantor's Chief Executive Office and
Principal Place of Business
Chief Executive Office:
Xxx Xxxxx Xxxxxx
00xx Xxxxx
Xxxx Xxxxxxxxx, Xxx Xxxxxx 00000
Principal Place of Business:
Xxx Xxxxx Xxxxxx
00xx Xxxxx
Xxxx Xxxxxxxxx, Xxx Xxxxxx 00000
Schedule 4.2 to
Security Agreement
Locations of Inventory and Equipment
Xxx Xxxxx Xxxxxx
00xx Xxxxx
Xxxx Xxxxxxxxx, Xxx Xxxxxx 00000
