Exhibit 10.7
EXECUTION COPY
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SECOND LIEN SHARED SECURITY AGREEMENT
Dated August 11, 2003
From
The Grantors referred to herein
as Grantors
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to
Xxxxx Fargo Bank Minnesota, N.A.
as Collateral Trustee
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Dynegy Second Lien Shared Security Agreement
T A B L E O F C O N T E N T S
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Section Page
Section 1. Definitions; Other Interpretive Provisions ....................... 3
Section 2. Grant of Security ............................................... 12
Section 3. Security for Obligations ........................................ 16
Section 4. Grantors Remain Liable .......................................... 17
Section 5. Delivery and Control of Security Collateral ..................... 17
Section 6. Maintaining the Account Collateral .............................. 19
Section 7. Maintaining Electronic Chattel Paper, Transferable
Records and Letter-of-Credit Rights and Giving
Notice of Commercial Tort Claims ............................... 21
Section 8. Representations and Warranties .................................. 21
Section 9. Further Assurances .............................................. 24
Section 10. Post-Closing Changes; Bailees; Collections on
Receivables and Related Contracts .............................. 25
Section 11. As to Intellectual Property Collateral .......................... 26
Section 12. Voting Rights; Dividends; Etc. .................................. 27
Section 13. As to Letter-of-Credit Rights ................................... 28
Section 14. Transfers and Other Liens; Additional Shares .................... 29
Section 15. Collateral Trustee Appointed Attorney-in-Fact ................... 29
Section 16. Collateral Trustee May Perform .................................. 30
Section 17. The Collateral Trustee's Duties ................................. 30
Section 18. Remedies ........................................................ 30
Section 19. Indemnity and Expenses .......................................... 32
Section 20. Amendments; Waivers; Additional Grantors; Etc. .................. 33
Section 21. Notices, Etc. ................................................... 33
Section 22. Continuing Security Interest .................................... 34
Section 23. Release; Termination ............................................ 35
Section 24. Security Interest Absolute ...................................... 35
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Section 25. Execution in Counterparts ....................................... 36
Section 26. The Mortgages ................................................... 36
Section 27. Collateral in the State of Louisiana ............................ 36
Section 28. Governing Law ................................................... 37
Section 29. Submission to Jurisdiction and Waiver ........................... 37
Section 30. Intercreditor Agreement ......................................... 38
Schedules
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Schedule I - Location, Chief Executive Office, Place Where Agreements
Are Maintained, Type Of Organization, Jurisdiction Of
Organization And Organizational Identification Number
Schedule II - Pledged Equity, Pledged Debt, Securities Accounts and
Commodity Accounts
Schedule II-A - Equity not to Be Pledged
Schedule III - Changes in Name, Location, Etc.
Schedule IV - Account Collateral (Designated Accounts)
Schedule V - Account Collateral not Subject to Account Control Agreement
Schedule VI - Commercial Tort Claims
Exhibits
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Exhibit A - Form of Second Lien Shared Security Agreement Supplement
Exhibit B - Form of Account Control Agreement (Deposit Account/
Securities Account)
Exhibit C - Form of Securities Account Control Agreement
Exhibit D - Form of Commodity Account Control Agreement
Exhibit E - Form of Intellectual Property Second Lien Shared Security
Agreement
Exhibit F - Form of Intellectual Property Second Lien Shared Security
Agreement Supplement
Exhibit G - Form of Consent to Assignment of Letter of Credit Rights
Dynegy Second Lien Shared Security Agreement
SECOND LIEN SHARED SECURITY AGREEMENT
SECOND LIEN SHARED SECURITY AGREEMENT dated August 11, 2003 (this
"Second Lien Shared Security Agreement") made by Dynegy Holdings Inc., a
Delaware corporation ( "DHI"), the other Persons listed on the signature pages
hereof (the "Initial Grantors") and the Additional Grantors (as defined in
Section 20) (DHI, Initial Grantors and the Additional Grantors being,
collectively, the "Grantors"), to Xxxxx Fargo Bank Minnesota, N.A., (with its
successors in such capacity, the "Collateral Trustee") for the benefit of the
Secured Parties (as defined below).
PRELIMINARY STATEMENTS.
(1) DHI and the guarantors named therein have entered into an
Indenture, dated as of the date hereof (the "Indenture") with Wilmington Trust
Company, as Trustee (in such capacity, the "Trustee") and the Collateral Trustee
pursuant to which it is issuing, as of the date hereof, (i) $225,000,000 of
Second Priority Senior Secured Floating Rate Notes due 2008, (ii) $525,000,000
of 9.875% Second Priority Senior Secured Notes due 2010, (iii) $700,000,000 of
10.125% Second Priority Senior Secured Notes due 2013 and (iv) may, from time to
time, issue additional notes in accordance with the provisions of the Indenture
(collectively, the "Notes").
(2) DHI has entered into a Credit Agreement dated as of April 1, 2003
with Dynegy Inc., as the parent guarantor (the "Parent Guarantor"), the other
guarantor parties thereto, Citibank, N.A. and Bank of America, N.A., as
administrative agents, the other lender parties thereto, Citibank, N.A., as
payment agent, Bank One, NA (main office Chicago), as L/C Issuer, Bank One, NA
(main office Chicago), as collateral agent (together with successors in such
capacity, the "First Priority Collateral Agent"), Xxxxxxx Xxxxx Barney, Inc.,
Banc of America Securities LLC and Bank One, NA (main office Chicago), as
co-lead arrangers, and Xxxxxxx Xxxxx Xxxxxx, Inc. and Banc of America Securities
LLC, as book running managers (said Agreement, as it may hereafter be amended,
amended and restated, supplemented, replaced, refinanced or otherwise modified
from time to time, being the "Credit Agreement").
(3) DHI is the guarantor under that certain Guaranty dated August 7,
2000 (the "CoGen Guaranty") in favor of the Guaranteed Parties (as defined
therein) (the "CoGen Guaranteed Parties") pursuant to which it guaranteed
certain of the obligations of CoGen Lyondell, Inc. under the Operative Documents
referred to in that certain Participation Agreement dated August 7, 2000, among
CoGen Lyondell, Inc., as the Lessee, Dynegy Holdings Inc., as Guarantor,
Operating Lessor Limited Company, as the Lessor, Four Winds Funding Corp., as
Tranche A Lender, Tranche B Lender and Conduit, the Certificate Holders and the
Liquidity Banks party thereto, and Commerzbank AG, New York Branch, as
Administrative Agent and Lease Arranger (the CoGen Guaranty together with such
Operative Documents and any amendments, supplements, replacements, restatements
and refinancings thereof being referred to herein as the "CoGen Facility").
(4) DHI is the guarantor under those certain Guaranties dated March
10, 2000 and June 28, 2002 (the "Riverside Guaranties") in favor of the
Guaranteed Parties and the Lenders, respectively (each as defined therein) (the
"Riverside Guaranteed Parties") pursuant to which it
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guaranteed certain of the obligations of Riverside Generating Company, L.L.C.
under the Operative Documents referred to in that certain Participation
Agreement, dated March 10, 2000, among Riverside Generating Company, L.L.C., as
the Lessee and Construction Agent, Dynegy Holdings Inc., as Guarantor, Xxxxxxxx
County Riverside Trust 2000, as the Lessor, Atlantic Asset Securitization Corp.,
as Tranche A Lender, the Liquidity Purchasers, the Tranche B Lenders and the
Certificate Holder party thereto, Commerzbank AG, New York and Grand Cayman
Branches, as Syndication Agent, Credit Agricole Indosuez, as Documentation
Agent, and Canadian Imperial Bank of Commerce, Bayerische Landesbank
Girozentrale and KBC Bank N.V., as Co-Agents, and Credit Lyonnais New York
Branch, as Administrative Agent and Lead Arranger (together with any amendments,
supplements, replacements, restatements and refinancings thereof, collectively,
the "Riverside Facility").
(5) DHI is party to that certain Amended and Restated Performance
Agreement, effective as of March 27, 2001 (as heretofore amended, the "Alpha
Guaranty"), in favor of ABG Gas Supply, L.L.C. pursuant to which it guaranteed
the obligations of (i) DMT Supply LP under that certain Amended and Restated
Natural Gas Purchase Agreement dated as of March 27, 2001 and (ii) Dynegy
Marketing & Trade under that certain Nomination Agreement dated as of March 27,
2000 (the Alpha Guaranty and the documents referred to in clauses (i) and (ii),
together with any amendments, supplements, replacements, restatements and
refinancings thereof, are collectively referred to herein as the "Alpha
Facility").
(6) DHI is party to that certain Collateral Trust and Intercreditor
Agreement dated April 1, 2003 (as such agreement may be amended, supplemented,
replaced or otherwise modified hereafter from time to time, the "Collateral
Trust Agreement") with the Grantors, Wilmington Trust Company, a Delaware
banking corporation (not in its individual capacity, but solely as corporate
trustee, together with any successor corporate trustee appointed pursuant to
Article VII of the Collateral Trust Agreement, the "First Priority Corporate
Trustee") and Xxxx X. Xxxxxx, Xx., an individual residing in the State of
Delaware, not in his individual capacity but solely as individual trustee
(together with any successor individual trustee appointed pursuant to Article
VII of the Collateral Trust Agreement, the "First Priority Individual Trustee";
and, together with the Corporate Trustee, the "First Priority Collateral
Trustees").
(7) Pursuant to the Credit Agreement and in order to satisfy certain
conditions in the Alpha Guaranty, the CoGen Guaranty and the Riverside
Guaranties, the Grantors and the First Priority Collateral Trustees entered into
a Shared Security Agreement, dated April 1, 2003 (together with any amendments,
supplements, replacements and restatements thereof, the "First Priority Shared
Security Agreement"), in order to grant to the First Priority Collateral
Trustees for the ratable benefit of the Shared Secured Parties (as defined in
the Credit Agreement) a security interest in the Shared Collateral.
(8) The First Priority Collateral Trustees agreed, pursuant to the
terms of the Collateral Trust Agreement, to accept the pledge and assignment,
and the grant of a security interest, under the First Priority Shared Security
Agreement as security for the Priority Lien Obligations.
(9) Pursuant to the Credit Agreement and the Indenture, the Grantors,
the First Priority Collateral Trustees, the First Priority Collateral Agent and
the Collateral Trustee have
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agreed to enter into an Intercreditor Agreement, dated as of the date hereof (as
such agreement may be amended, amended and restated, supplemented, replaced or
otherwise modified hereafter from time to time the "Intercreditor Agreement").
(10) The Collateral Trustee has agreed, pursuant to the terms of the
Indenture and the Intercreditor Agreement, to accept the pledge and assignment,
and the grant of a security interest, under this Second Lien Shared Security
Agreement as security for the Parity Lien Obligations.
(11) Each Grantor is the owner of the Initial Pledged Equity set forth
opposite such Grantor's name on and as otherwise described in Part I of Schedule
II hereto and issued by the Persons named therein and of the Initial Pledged
Debt set forth (to the extent the same is evidenced by instruments) opposite
such Grantor's name on and as otherwise described in Part II of Schedule II
hereto and issued by the Obligors named therein.
(12) Each Grantor has Pledged Security Entitlements with respect to
all the Pledged Financial Assets credited from time to time to such Grantor, as
set forth opposite such Grantor's name on and as otherwise described in Part III
of Schedule II hereto.
(13) Each Grantor has rights in and to the Pledged Commodity Contracts
carried from time to time in such Grantor's Commodities Accounts, set forth
opposite such Grantor's name on and as otherwise described in Part IV of
Schedule II hereto.
(14) Each Grantor has opened Other Deposit Accounts with banks, in the
name of such Grantor and subject to the terms of this Second Lien Shared
Security Agreement, as described in Schedule IV hereto.
(15) It is a condition precedent to the Trustee entering into the
Indenture that the Grantors shall have granted the assignment and security
interest and made the pledge and assignment contemplated by this Second Lien
Shared Security Agreement.
(16) Each Grantor will derive substantial direct and indirect benefit
from the transactions contemplated by this Second Lien Shared Security
Agreement.
NOW, THEREFORE, in consideration of the premises and in order to
induce the Trustee to enter into the Indenture and the holders of the Notes to
purchase the Notes, each Grantor hereby agrees with the Collateral Trustee for
the ratable benefit of the Secured Parties as follows:
Section 1. Definitions; Other Interpretive Provisions. The
interpretive provisions set forth in Section 1.04 of the Indenture are
incorporated by reference herein. Terms defined in the Indenture or the
Intercreditor Agreement and not otherwise defined in this Second Lien Shared
Security Agreement are used in this Second Lien Shared Security Agreement as
defined in the Indenture or the Intercreditor Agreement. The terms incorporated
by reference to the Credit Agreement are defined as used in the Credit Agreement
as in effect as of the date hereof. Further, unless otherwise defined in this
Second Lien Shared Security Agreement, the Indenture or the Intercreditor
Agreement, terms defined in Article 8 or 9 of the UCC and/or in the Federal Book
Entry Regulations are used in this Second Lien Shared Security Agreement as such
terms
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are defined in such Article 8 or 9 and/or the Federal Book Entry Regulations. As
used in this Second Lien Shared Security Agreement the following terms shall
have the meanings set forth below:
"Account Collateral" means, collectively, the following:
(a) the Other Deposit Accounts and all funds and financial
assets from time to time credited thereto (including, without
limitation, all Cash Equivalents), all interest, dividends,
distributions, cash, instruments and other property from time to time
received, receivable or otherwise distributed in respect of or in
exchange for any or all of such funds and financial assets, and all
certificates and instruments, if any, from time to time representing
or evidencing the Cash Collateral Accounts and the Other Deposit
Accounts;
(b) all promissory notes, certificates of deposit, deposit
accounts, checks and other instruments from time to time delivered to
or otherwise possessed by the Collateral Trustee for or on behalf of
any Grantor, including, without limitation, those delivered or
possessed in substitution for or in addition to any or all of the then
existing Account Collateral; and
(c) all interest, dividends, distributions, cash, instruments
and other property from time to time received, receivable or otherwise
distributed in respect of or in exchange for any or all of the then
existing Account Collateral.
"Account Control Agreement" has the meaning specified in Section 6(a).
"Additional Grantor" has the meaning specified in Section 20(b).
"Additional Provisions" has the meaning specified in the definition of
"Federal Book Entry Regulations" set forth herein.
"After-Acquired Intellectual Property" has the meaning specified in
Section 11(b).
"Agreement Collateral" means the Assigned Agreements, including,
without limitation, (a) all rights of any Grantor to receive moneys due and
to become due under or pursuant to the Assigned Agreements, (b) any rights
of such Grantor to receive proceeds of any insurance, indemnity, warranty
or guaranty with respect to the Assigned Agreements, (c) claims of any
Grantor for damages arising out of or for breach of or default under the
Assigned Agreements and (d) the right of any Grantor to terminate the
Assigned Agreements, to perform thereunder and to compel performance and
otherwise exercise all remedies thereunder.
"Alpha Facility" has the meaning specified in Preliminary Statement
(5).
"Alpha Guaranty" has the meaning specified in Preliminary Statement
(5).
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"Assigned Agreements" means, collectively, each of the contracts and
agreements to which any Grantor is now or may hereafter become a party, in
each case as such contracts and agreements may be amended, amended and
restated, supplemented or otherwise modified from time to time, to the
extent permitted by the Indenture.
"CoGen Facility" has the meaning specified in Preliminary Statement
(3).
"CoGen Guaranteed Parties" has the meaning specified in Preliminary
Statement (3).
"CoGen Guaranty" has the meaning specified in Preliminary Statement
(3).
"Collateral Trust Agreement" has the meaning specified in Preliminary
Statement (6).
"Collateral Trustee" has the meaning specified in the recital of the
parties hereto.
"Commercial Tort Claims Collateral" means all commercial tort claims
described in Schedule VI hereto, provided, however, that any commercial
tort claim shall not be included in the "Commercial Tort Claims Collateral"
to the extent, but only to the extent, that the assignment thereof or grant
of a security interest therein would violate any effective or enforceable
provision of applicable law.
"Commodity Account Control Agreement" has the meaning specified in
Section 5(d).
"Commodity Accounts" means those commodities accounts of each Grantor
as described in Part IV of Schedule II hereto.
"Computer Software" means all computer software, programs and
databases (including, without limitation, source code, object code and all
related applications and data files), firmware and documentation and
materials relating thereto, together with any and all maintenance rights,
service rights, programming rights, hosting rights, test rights,
improvement rights, renewal rights and indemnification rights and any
substitutions, replacements, improvements, error corrections, updates and
new versions of any of the foregoing.
"Consent to Assignment of Letter of Credit Rights" means an agreement
in substantially the form of the Consent to Assignment of Letter of Credit
Rights attached hereto as Exhibit G or otherwise in form and substance
reasonably satisfactory to the Collateral Trustee.
"Copyrights" means all copyrights, including, without limitation,
copyrights in Computer Software (as hereinafter defined), internet web
sites and the content thereof, whether registered or unregistered.
"Credit Agreement" has the meaning specified in Preliminary Statement
(2).
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"Designated Accounts" means any Account Collateral that constitutes:
(a) any deposit accounts listed in Schedule IV hereto and the funds
credited to any such deposit accounts, and (b) any securities accounts and
any financial assets that are credited to any such securities accounts.
"DHI" has the meaning specified in the recital of the parties hereto.
"Equipment" means all equipment in all of its forms, including,
without limitation, all machinery, tools, motor vehicles, vessels,
aircraft, furniture and fixtures, and all parts thereof and all accessions
thereto and all software related thereto, including, without limitation,
software that is embedded in and is part of the equipment.
"Excluded Agreements" has the meaning specified in paragraph (ii) in
the "notwithstanding" clause at the end of Section 2.
"Excluded Authorizations" has the meaning specified in paragraph (iii)
of the "notwithstanding" clause at the end of Section 2.
"Excluded Equity" has the meaning specified in paragraph (v) of the
"notwithstanding" clause at the end of Section 2.
"Excluded Shared Collateral" means any Shared Collateral that, under
the provisions of paragraph (i) of the "notwithstanding" clause at the end
of Section 2, is to be excluded from the lien and security interest granted
by any Grantor under clauses (a) through (j) of Section 2.
"Federal Book Entry Regulations" means (a) the federal regulations
contained in Subpart B ("Treasury/Reserve Automated Debt Entry System
(TRADES)") governing book-entry securities consisting of U.S. Treasury
bonds, notes and bills and Subpart D ("Additional Provisions") of 31 C.F.R.
Part 357, 31 C.F.R. Section 357.2, Section 357.10 through Section 357.14
and Section 357.41 through Section 357.44 and (b) to the extent
substantially identical to the federal regulations referred to in clause
(a) above (as in effect from time to time), the federal regulations
governing other book-entry securities.
"First Priority Collateral Agent" has the meaning specified in
Preliminary Statement (2).
"First Priority Collateral Trustees" has the meaning specified in
Preliminary Statement (6).
"First Priority Controlling Collateral Parties" has the meaning
specified in the Intercreditor Agreement.
"First Priority Corporate Trustee" has the meaning specified in
Preliminary Statement (6).
"First Priority Individual Trustee" has the meaning specified in
Preliminary Statement (6).
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"First Priority Lien Satisfaction Date" means the first date on which
the Priority Lien Obligations are Paid in Full.
"First Priority Shared Security Agreement" has the meaning specified
in Preliminary Statement (7).
"Grantors" has the meaning specified in the recital of the parties
hereto.
"Indemnified Party" has the meaning specified in Section 19.
"Indenture" has the meaning specified in Preliminary Statement (1).
"Indenture Documents" means the Indenture, the Notes, the Mortgages,
this Second Lien Shared Security Agreement, the Second Lien Non-Shared
Security Agreement and the Intercreditor Agreement.
"Initial Grantors" has the meaning specified in the recital of the
parties hereto.
"Initial Pledged Debt" means the indebtedness described in Part II of
Schedule II hereto.
"Initial Pledged Equity" means the shares of stock or other Equity
Interests as described in Part I of Schedule II hereto.
"Intellectual Property Collateral" means, collectively, the following:
(a) all Patents; (b) all Trademarks; (c) all Copyrights; (d) all Computer
Software; (e) all Trade Secrets and all other intellectual, industrial and
intangible property of any type, including, without limitation, industrial
designs and mask works; (f) all registrations and applications for
registration for any of the foregoing, together with all reissues,
divisions, continuations, continuations-in-part, extensions, renewals and
reexaminations thereof; (g) all tangible embodiments of the foregoing, all
rights in the foregoing provided by international treaties or conventions,
all rights corresponding thereto throughout the world and all other rights
of any kind whatsoever of any Grantor accruing thereunder or pertaining
thereto; (h) all agreements, permits, consents, orders and franchises
relating to the license, development, use or disclosure of any of the
foregoing to which any Grantor, now or hereafter, is a party or a
beneficiary ("IP Agreements"); and (i) any and all claims for damages and
injunctive relief for past, present and future infringement, dilution,
misappropriation, violation, misuse or breach with respect to any of the
foregoing, with the right, but not the obligation, to xxx for and collect,
or otherwise recover, such damages.
"Intellectual Property Second Lien Shared Security Agreement" has the
meaning specified in Section 11(a).
"Intercreditor Agreement" has the meaning specified in Preliminary
Statement (9).
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"Inventory" means all inventory in all of its forms, including,
without limitation, (a) all raw materials, work in process, finished goods
and materials used or consumed in the manufacture, production, preparation
or shipping thereof, (b) goods in which any Grantor has an interest in mass
or a joint or other interest or right of any kind, and (c) goods that are
returned to or repossessed or stopped in transit by any Grantor), and all
accessions thereto and products thereof and documents therefor, and all
software related thereto, including, without limitation, software that is
embedded in and is part of the inventory, provided, however, that goods in
which any Grantor has an interest or right as consignee shall be excluded
from the definition of "Inventory".
"IP Agreements" has the meaning specified in the definition of the
term "Intellectual Property Collateral" herein.
"IP Second Lien Shared Security Agreement Supplement" has the meaning
specified in Section 11(b).
"Knowledge" means, in the case of the knowledge of a Grantor, the best
knowledge of such Grantor's executive officers after due inquiry and
investigation.
"Mortgages" means each deed of trust, trust deed, mortgage, leasehold
mortgage and leasehold deed of trust delivered by a Grantor pursuant to the
Indenture or any instrument evidencing Parity Lien Obligations.
"Netting Agreements" has the meaning set forth in Section 1.01 of the
Credit Agreement.
"Notes" has the meaning specified in Preliminary Statement (1).
"Obligors" means any Person obligated on an account, chattel paper,
instrument, or general intangible.
"Other Deposit Accounts" means those deposit accounts with banks
opened by each Grantor, as described in Schedule IV and Schedule V hereto.
"Paid in Full" means (a) the payment in full in cash of (i) all
principal and interest in respect of the Priority Lien Obligations and (ii)
all other valid Priority Lien Obligations that are claimed within 30 days
of the last date on which all principal and interest in respect of the
Priority Lien Obligations shall have been paid in full and (b) the
termination in full of all commitments in respect of the Priority Lien
Obligations. "Payment in Full" shall have the correlative meaning.
"Parent Guarantor" has the meaning set forth in Preliminary Statement
(2).
"Patents" means all patents, patent applications, utility models and
statutory invention registrations, all inventions claimed or disclosed
therein and all improvements thereto.
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"Permitted Collateral" means any of the following property: (a)
Receivables (together with all general intangibles, and payment intangibles
related thereto or arising therefrom and all proceeds and products of any
of the foregoing), (b) cash and short-term investments, and (c) all
dividends, interest, distributions, and other proceeds from time to time
received, receivable or otherwise distributed in respect of, or in exchange
for, any or all of the foregoing.
"Permitted Contracts" has the meaning set forth in Section 1.01 of the
Credit Agreement.
"Pledged Account Banks" has the meaning specified in Section 6(a).
"Pledged Commodity Contracts" means the commodity contracts carried
from time to time in each Grantor's Commodity Account.
"Pledged Debt" has the meaning specified in the definition of the term
"Security Collateral" herein.
"Pledged Equity" has the meaning specified in the definition of the
term "Security Collateral" herein.
"Pledged Financial Assets" means the financial assets credited from
time to time to each Grantor's Securities Accounts.
"Pledged Security Entitlements" means each Grantor's security
entitlements with respect to the Pledged Financial Assets credited from
time to time to such Grantor's Securities Accounts.
"Receivables" means, to the extent the same are not referred to in
Sections 2(d), 2(e) and 2(f) herein, all accounts (including, without
limitation, receivables under Permitted Contracts or Netting Agreements),
chattel paper (including, without limitation, tangible chattel paper and
electronic chattel paper), instruments (including, without limitation,
promissory notes), deposit accounts, letter-of-credit rights, general
intangibles (including, without limitation, payment intangibles) and other
obligations of any kind, whether or not arising out of or in connection
with the sale or lease of goods or the rendering of services and whether or
not earned by performance, and all rights now or hereafter existing in and
to all supporting obligations and in and to all security agreements,
mortgages, Liens, leases, letters of credit and other contracts securing or
otherwise relating to the foregoing property (any and all such supporting
obligations, security agreements, mortgages, Liens, leases, letters of
credit and other contracts being referred to herein as the "Related
Contracts").
"Required Regulatory Approvals" has the meaning specified in Section
8(g).
"Related Contracts" has the meaning specified in the definition of the
term "Receivables" herein.
"Riverside Facility" has the meaning specified in Preliminary
Statement (4).
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"Riverside Guaranteed Parties" has the meaning specified in
Preliminary Statement (4).
"Riverside Guaranties" has the meaning specified in Preliminary
Statement (4).
"Second Lien Non-Shared Security Agreement" has the meaning specified
in the Intercreditor Agreement.
"Second Lien Shared Security Agreement" has the meaning specified in
the recital of the parties hereto.
"Second Lien Shared Security Agreement Supplement" has the meaning
specified in Section 20(c).
"Second Preferred Fleet Mortgage" means the Second Preferred Fleet
Mortgage dated as of August 11, 2003 by Midstream Barge Company, L.L.C. in
favor of the Collateral Trustee, as the same may be amended, amended and
restated, supplemented, replaced or otherwise modified from time to time in
accordance with the Indenture and the Intercreditor Agreement.
"Secured Parties" means each of the Collateral Trustee, the Trustee,
the holders of any Note, the holders of any other Parity Lien Obligations
and any other Second Priority Collateral Party.
"Securities Account Control Agreement" has the meaning specified in
Section 5(c).
"Securities Accounts" means those securities accounts of each Grantor
as described in Part III of Schedule II hereto.
"Security Collateral" means, collectively, the following:
(a) the Initial Pledged Equity and the certificates, if any,
representing the Initial Pledged Equity, and all dividends,
distributions, return of capital, cash, instruments and other property
from time to time received, receivable or otherwise distributed in
respect of or in exchange for any or all of the Initial Pledged Equity
and all subscription warrants, rights or options issued thereon or
with respect thereto;
(b) the Initial Pledged Debt and the instruments, if any,
evidencing the Initial Pledged Debt, and all interest, cash,
instruments and other property from time to time received, receivable
or otherwise distributed in respect of or in exchange for any or all
of the Initial Pledged Debt;
(c) all additional shares of stock and other Equity Interests of
or in any issuer of the Initial Pledged Equity or any successor entity
from time to time acquired by any Grantor in any manner and all
additional shares of stock or Equity Interests of or in any new direct
Subsidiary of any Grantor formed or
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acquired by any Grantor in any manner after the date of this Second
Lien Shared Security Agreement (such shares and other Equity
Interests, together with the Initial Pledged Equity, being the
"Pledged Equity"), and the certificates, if any, representing such
additional shares or other Equity Interests, and all dividends,
distributions, return of capital, cash, instruments and other property
from time to time received, receivable or otherwise distributed in
respect of or in exchange for any or all of such shares or other
Equity Interests and all subscription warrants, rights or options
issued thereon or with respect thereto;
(d) all additional indebtedness from time to time owed to any
Grantor (such indebtedness, together with the Initial Pledged Debt,
being the "Pledged Debt") and the instruments, if any, evidencing such
indebtedness, and all interest, cash, instruments and other property
from time to time received, receivable or otherwise distributed in
respect of or in exchange for any or all of such indebtedness;
(e) the Securities Account, all Pledged Security Entitlements
with respect to all Pledged Financial Assets from time to time
credited to the Securities Account, and all Pledged Financial Assets,
and all dividends, distributions, return of capital, interest, cash,
instruments and other property from time to time received, receivable
or otherwise distributed in respect of or in exchange for any or all
of such Pledged Security Entitlements or such Pledged Financial Assets
and all subscription warrants, rights or options issued thereon or
with respect thereto;
(f) the Commodities Account, all Pledged Commodity Contracts
from time to time carried in the Commodities Account, and all value,
cash, instruments and other property from time to time received,
receivable or otherwise distributed in respect of or in exchange for
any or all of such Pledged Commodity Contracts; and
(g) all other investment property (including, without
limitation, all (i) securities, whether certificated or
uncertificated, (ii) security entitlements, (iii) securities accounts,
(iv) commodity contracts and (v) commodity accounts) in which any
Grantor has now, or acquires from time to time hereafter, any right,
title or interest in any manner, and the certificates or instruments,
if any, representing or evidencing such investment property, and all
dividends, distributions, return of capital, interest, distributions,
value, cash, instruments and other property from time to time
received, receivable or otherwise distributed in respect of or in
exchange for any or all of such investment property and all
subscription warrants, rights or options issued thereon or with
respect thereto.
"Security Control Agreements" has the meaning specified in Section
5(d).
"Shared Collateral" has the meaning specified in the first paragraph
of Section 2.
"Shared Collateral Documents" has the meaning set forth in Section
1.01 of the Intercreditor Agreement.
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"Subagent" has the meaning specified in Section 17(b).
"Trademarks" means all trademarks, service marks, domain names, trade
dress, logos, designs, slogans, trade names, business names, corporate
names and other source identifiers, whether registered or unregistered
(provided that no security interest shall be granted in United States
intent-to-use trademark applications to the extent that, and solely during
the period in which, the grant of a security interest therein would impair
the validity or enforceability of such intent-to-use trademark applications
under applicable federal law), together, in each case, with the goodwill
symbolized thereby.
"Trade Secrets" means all confidential and proprietary information,
including, without limitation, know-how, trade secrets, manufacturing and
production processes and techniques, inventions, research and development
information, databases and data, including, without limitation, technical
data, financial, marketing and business data, pricing and cost information,
business and marketing plans and customer and supplier lists and
information.
"Trustee" has the meaning specified in Preliminary Statement (1).
"UCC" means the Uniform Commercial Code as in effect, from time to
time, in the State of New York; provided that, if perfection or the effect
of perfection or non-perfection or the priority of any security interest in
any Collateral is governed by the Uniform Commercial Code as in effect in a
jurisdiction other than the State of New York, "UCC" means the Uniform
Commercial Code as in effect from time to time in such other jurisdiction
for purposes of the provisions hereof relating to such perfection, effect
of perfection or non-perfection or priority.
"UETA" means the Uniform Electronic Transactions Act, as in effect in
any relevant jurisdiction.
Section 2. Grant of Security. Each Grantor hereby grants to the
Collateral Trustee, in each case, in trust pursuant to the Indenture for the
ratable benefit of the Secured Parties, a security interest in, such Grantor's
right, title and interest in and to the following, in each case, as to each type
of property described below, whether now owned or hereafter acquired by such
Grantor, wherever located, and whether now or hereafter existing or arising
(collectively, the "Shared Collateral"):
(a) all Equipment;
(b) all Inventory;
(c) all Receivables and all Related Contracts;
(d) the Security Collateral;
(e) the Agreement Collateral;
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(f) the Account Collateral;
(g) the Intellectual Property Collateral;
(h) all Commercial Tort Claims Collateral;
(i) all books and records (including, without limitation, customer
lists, credit files, printouts and other computer output materials and
records) of such Grantor pertaining to any of the Shared Collateral; and
(j) all proceeds of, collateral for, income, royalties and other
payments now or hereafter due and payable with respect to, and supporting
obligations relating to, any and all of the Shared Collateral (including,
without limitation, proceeds, collateral and supporting obligations that
constitute property of the types described in clauses (a) through (i) of
this Section 2 and this clause (j)) and, to the extent not otherwise
included, all (A) payments under insurance (whether or not the Collateral
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 Shared Collateral, (B) tort claims, including, without
limitation, all commercial tort claims and (C) cash.
Notwithstanding anything to the contrary contained in this Section 2,
the following property shall be excluded from the lien and security interest
granted hereunder (and shall, as applicable, not be included as "Shared
Collateral", "Equipment", "Inventory", "Receivables", "Related Contracts",
"Security Collateral", "Agreement Collateral", "Account Collateral",
"Intellectual Property Collateral", "Commercial Tort Claims Collateral",
"Assigned Agreements", "Pledged Equity" or "Pledged Debt" for the purposes
hereof):
(i) any Shared Collateral constituting property that is the subject
of or relating to any contract, agreement or other document to which any
Grantor is a party on the date hereof or any similar contract, agreement or
other document entered into by such Grantor after the date hereof shall, in
each case, be excluded from the lien and security interest created by such
Grantor under this Section 2 to the extent (but only to the extent) that
the assignment thereof, or the creation of a lien and security interest
therein, would constitute a breach of the terms of such contract, agreement
or other document, or would cause a default or event of default under the
terms of such contract, agreement or other document, or would permit any
party to such contract, agreement or other document to terminate any
material contract right arising under any such contract agreement or other
document or to exercise any put, call, right of refusal, purchase option or
other similar right, or would permit any party to such contract, agreement
or other document to terminate such contract, agreement or other document;
provided, however, that any of the Excluded Shared Collateral shall
automatically cease to be excluded from this Section 2 at such time as (x)
the prohibition of assignment or of the creation of a lien and security
interest in such Excluded Shared Collateral is no longer in effect or is
rendered ineffective as a matter of law or (y) the applicable Grantor has
obtained the consent of the other parties to such agreement to the
assignment of, or creation of a lien and security interest in, such
Excluded Shared Collateral (which consent such Grantor shall not be
required to obtain hereunder, except upon a request of the Collateral
Trustee after the occurrence and during
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the continuance of an Event of Default following the First Priority Lien
Satisfaction Date) or (z) the breach, default, event of default or any
other conditions otherwise giving rise to the exclusion of such property
under this clause (i) shall cease to exist;
(ii) any contract, agreement or other document (and any contract
rights arising thereunder) to which any of the Grantors is a party on the
date hereof and any similar contract or agreement entered into by any
Grantor after the date hereof, in each case, shall be excluded from the
lien and security interest granted by such Grantor under this Section 2 to
the extent (but only to the extent) that the assignment thereof, or the
creation of a lien and security interest therein, would constitute a breach
of the terms of such contract, agreement or other document to which any of
the Grantors may now or hereafter be a party or to which any Grantor may
now or hereafter be subject, or would cause a default or event of default
under the terms of such contract, agreement or other document, or would
permit any party to such contract, agreement or other document to terminate
any material contract right arising under any such contract agreement or
other document or to exercise any put, call, right of refusal, purchase
option or other similar right, or would permit any party to such contract,
agreement or other document to terminate such contract, agreement or other
document (all such contracts, agreements and other documents being the
"Excluded Agreements"); provided, however, that (x) except as set forth in
clause (iv) below, the exclusion from the lien and security interest
granted by such Grantor hereunder of any contract rights of any of the
Grantors under one or more of the Excluded Agreements shall not limit,
restrict or impair the grant by such Grantor of the lien and security
interest in any accounts or receivables arising under any such Excluded
Agreement or any payments due or to become due thereunder, and (y) any of
the Excluded Agreements shall automatically cease to be excluded from this
Section 2 at such time as, (A) the prohibition of assignment or of the
creation of a lien and security interest in such agreement is no longer in
effect or is rendered ineffective as a matter of law or (B) the applicable
Grantor has obtained the consent of the other parties to such agreement to
the assignment of, or creation of a lien and security interest in, the
contract rights of such Grantor thereunder (which consent such Grantor
shall not be required to obtain hereunder, except upon a request of the
Collateral Trustee after the occurrence and during the continuance of an
Event of Default following the First Priority Lien Satisfaction Date);
(iii) any license, permit or authorization from any Governmental
Authority (as defined in the Credit Agreement) in favor of any Grantor
shall be excluded from the lien and security interest granted by such
Grantor under this Section 2 to the extent (but only to the extent) that
the assignment thereof or the creation of a lien and security interest
therein would constitute a breach of or a default or event of default under
the terms of such license, permit or authorization or would require any
separate license, permit or authorization or would otherwise terminate such
license, permit or authorization (all of the licenses, permits and
authorizations referred to herein being the "Excluded Authorizations");
provided, however, that any of the Excluded Authorizations shall cease to
be excluded from this Section 2 at such time as (x) the prohibition of
assignment or of the creation of a lien and security interest in such
license, permit or authorization is no longer in effect or is rendered
ineffective as a matter of law or (y) the applicable Grantor has obtained
the consent of the applicable Governmental Authority (as defined in the
Dynegy Second Lien Shared Security Agreement
15
Credit Agreement) to the assignment of, or creation of a lien and security
interest in, such license, permit or authorization of such Grantor (which
consent such Grantor shall not be required to obtain hereunder, except upon
a request of the Collateral Trustee after the occurrence and during the
continuance of an Event of Default following the First Priority Lien
Satisfaction Date);
(iv) any Permitted Collateral of any Grantor from time to time
pledged, assigned, conveyed or transferred, or against which any right of
set-off is granted or in which a Lien or security interest is granted, by
such Grantor under any Permitted Contract or Netting Agreement shall be
excluded from the lien and security interest granted by such Grantor under
this Section 2. To the extent any such lien and security interest is deemed
to be granted pursuant to this Agreement in such Permitted Collateral
hereunder notwithstanding the exclusion contemplated hereby, such lien and
security interest shall ipso facto immediately and automatically terminate,
without any further action by any Person, upon any such pledge, assignment,
conveyance, transfer, grant of such right of set-off or grant of such Lien
and security interest, provided, however, that any such Permitted
Collateral shall cease to be excluded from this Section 2 at such time as
(x) the Permitted Contract or Netting Agreement, as the case may be,
related thereto is terminated and the setoff rights, Lien and security
interest granted in such Permitted Collateral are terminated or (y) the
applicable Grantor has obtained the consent of the applicable Counterparty
(as defined in the Credit Agreement) to such Permitted Contracts or Netting
Agreements to the assignment of, or creation of a lien and security
interest in such Permitted Collateral hereunder (which consent such Grantor
shall not be required to obtain hereunder, except upon a request of the
Collateral Trustee after the occurrence and during the continuance of an
Event of Default following the First Priority Lien Satisfaction Date);
(v) as to each Grantor, any outstanding voting stock of any entity
that is a controlled foreign corporation under Section 957 of the Internal
Revenue Code (or any successor provision thereto), except for voting stock
consisting of no more than 66% of the outstanding voting stock of such
entity (any such stock being the "Excluded Equity");
(vi) any property or accounts (including without limitation, coal,
power, energy, other energy related products, natural gas, natural gas
liquids, condensate, and sulfur, and including any other products resulting
from generating, gas gathering, processing, fractionating and refining,
marketed by any Grantor on behalf of third parties and the proceeds derived
therefrom pursuant to processing agreements and/or marketing arrangements),
to the extent (but only to the extent) that any Grantor manages, maintains
or markets such property on behalf of a third party, including, without
limitation, any Shared Collateral maintained, managed or marketed by any
Grantor for a joint venture in which third parties participate or on behalf
of third parties;
(vii) any policy of insurance, provided, however, that proceeds of
insurance shall be included as Shared Collateral to the extent the security
interest granted hereby in the goods covered by such insurance would
continue in accordance with Section 9-315 of the UCC; and
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16
(viii) the shares of stock or such other Equity Interests owned by and
set forth opposite any relevant Grantor's name on Schedule II-A hereto;
provided, however, that any proceeds received by any Grantor from the
disposition of Excluded Shared Collateral, Excluded Authorizations, Excluded
Equity and any other property excluded under clauses (i) through (viii) above
shall constitute Shared Collateral unless any assets or property constituting
such proceeds are themselves subject to the exclusions set forth in clauses (i)
through (viii) above.
Section 3. Security for Obligations. (a) Subject to the provisions of
Sections 3(b) below, this Second Lien Shared Security Agreement secures, in the
case of each Grantor, the payment of all Parity Lien Obligations, whether direct
or indirect, absolute or contingent, and whether for principal, reimbursement
obligations, interest, fees, premiums, penalties, indemnifications, contract
causes of action, costs, expenses or otherwise. Without limiting the generality
of the foregoing, this Second Lien Shared Security Agreement secures, as to each
Grantor, the payment of all amounts that constitute part of the Parity Lien
Obligations and would be owed by such Grantor to any Secured Party but for the
fact that they are unenforceable or not allowable due to the existence of a
bankruptcy, reorganization or similar proceeding involving a Grantor.
(b) Notwithstanding anything to the contrary set forth in this Second
Lien Shared Security Agreement or any other Indenture Document, any Shared
Collateral that constitutes NGL Assets (as defined in the Indenture) shall
secure any Parity Lien Obligations in an aggregate amount not to exceed (i) the
maximum amount permitted to be secured by the NGL Assets under the 1996
Indenture on the date of incurrence of such Parity Lien Obligations (without
taking into account any First Priority Secured Obligations and Parity Lien
Obligations secured by the NGL Assets prior to the date of such incurrence) less
(ii) the amount of all First Priority Secured Obligations and previously
incurred Parity Lien Obligations secured by NGL Assets on such date, as such
amount shall be set forth in an officers certificate of DHI demonstrating the
calculation thereof in reasonable detail. If Parity Lien Obligations are
incurred on more than one occasion such Parity Lien Obligations shall be treated
as separate tranches each independently secured by the maximum amount permitted
under this clause (b) and each tranche shall share proceeds from any realization
on any such collateral on a ratable basis.
(c) Notwithstanding anything to the contrary contained herein, it is
agreed that, with respect to the Parent Guarantor, the "Shared Collateral" shall
include only the Parent Guarantor's right, title and interest to the following,
in each case, whether now owned or hereafter acquired by the Parent Guarantor,
and whether now or hereafter existing or arising:
(i) the Initial Pledged Equity set forth opposite the Parent
Guarantor's name on and otherwise described in Part I of Schedule II hereto
and issued by DHI and BG Holdings, Inc., respectively, and the
certificates, if any, representing such Initial Pledged Equity, and all
dividends, distributions, return of capital, cash, instruments and other
property from time to time received, receivable or otherwise distributed in
respect of or in exchange for any or all of such Initial
Dynegy Second Lien Shared Security Agreement
17
Pledged Equity and all subscription warrants, rights or options issued
thereon or with respect thereto;
(ii) all additional shares of stock and other Equity Interests of or
in DHI, BG Holdings, Inc. or any successor entity (such shares and other
Equity Interests, together with the Initial Pledged Equity, being part of
the Pledged Equity), and the certificates, if any, representing such
additional shares or other Equity Interests, and all dividends,
distributions, return of capital, cash, instruments and other property from
time to time received, receivable or otherwise distributed in respect of or
in exchange for any or all of such shares or other Equity Interests and all
subscription warrants, rights or options issued thereon or with respect
thereto; and
(iii) all proceeds of, collateral for, income, royalties and other
payments now or hereafter due and payable with respect to, and supporting
obligations relating to, any and all of the foregoing.
It is further acknowledged and agreed that (x) the Parent Guarantor is
signing this Second Lien Shared Security Agreement solely for the purpose of
granting a security interest in the foregoing property, (y) the security
interests granted by the Parent Guarantor hereunder shall not cover any property
of the Parent Guarantor other than the foregoing property, and (z) any
representations, warranties, covenants, and agreements made by the Parent
Guarantor herein shall relate only to the foregoing property.
Section 4. Grantors Remain Liable. Anything herein to the contrary
notwithstanding, (a) each Grantor shall remain liable under the contracts and
agreements included in such Grantor's Shared Collateral to the extent set forth
therein to perform all of its duties and obligations thereunder to the same
extent as if this Second Lien Shared Security Agreement had not been executed,
(b) the exercise by the Collateral Trustee of any of the rights hereunder shall
not release any Grantor from any of its duties or obligations under the
contracts and agreements included in the Shared Collateral and (c) none of the
Collateral Trustee or any Secured Party shall have any obligation or liability
under the contracts and agreements included in the Shared Collateral by reason
of this Second Lien Shared Security Agreement or any other Indenture Document,
nor shall any of the Collateral Trustee or any Secured Party be obligated to
perform any of the obligations or duties of any Grantor thereunder or to take
any action to collect or enforce any claim for payment assigned hereunder or
thereunder.
Section 5. Delivery and Control of Security Collateral. (a) Subject
to Section 5(h), with respect to any certificates or instruments representing or
evidencing Security Collateral (other than Permitted Investments), to the extent
that any relevant Grantor has Knowledge of the existence of such certificates
and instruments, such certificates and instruments shall be delivered to and
held by or on behalf of the Collateral Trustee pursuant to this Second Lien
Shared Security Agreement and shall be in suitable form for transfer by
delivery, or shall be accompanied by duly executed instruments of transfer or
assignment in blank, all in form and substance reasonably satisfactory to the
Collateral Trustee. After the occurrence and during the continuance of an Event
of Default following the First Priority Lien Satisfaction Date, the Collateral
Trustee shall have the right, at any time in its discretion and with
Dynegy Second Lien Shared Security Agreement
18
notice to DHI, to transfer to or to register in the name of the Collateral
Trustee or any of its nominees any or all of the Security Collateral, subject
only to the revocable rights specified in Section 13(a), provided, however, that
the failure to deliver any such notice to DHI shall not affect the validity of
such actions of the Collateral Trustee. In addition, after the occurrence and
during the continuance of an Event of Default and subject to the Intercreditor
Agreement, the Collateral Trustee shall have the right at any time to exchange
certificates or instruments representing or evidencing Security Collateral for
certificates or instruments of smaller or larger denominations.
(b) Subject to Section 5(h), with respect to any Security Collateral
in which any Grantor has any right, title or interest and that constitutes an
uncertificated security, to the extent that such Grantor has Knowledge of the
existence of such uncertificated securities, such Grantor will cause the issuer
thereof either (at such Grantor's election) (i) to register the Collateral
Trustee as the registered owner of such security or (ii) to agree in an
authenticated record with such Grantor and the Collateral Trustee that such
issuer will comply with instructions with respect to such security originated by
the Collateral Trustee without further consent of such Grantor, such
authenticated record to be in form and substance reasonably satisfactory to the
Collateral Trustee provided, however, that the Collateral Trustee agrees that it
will not deliver any such instructions to such issuer except upon the occurrence
and during the continuance of an Event of Default. With respect to any Security
Collateral in which any Grantor has any right, title or interest and that is not
an uncertificated security, upon the request of the Collateral Trustee after the
occurrence and during the continuance of an Event of Default following the First
Priority Lien Satisfaction Date, such Grantor will notify each such issuer of
Pledged Equity that such Pledged Equity is subject to the security interest
granted hereunder.
(c) Subject to Section 5(h), with respect to any Security Collateral
in which any Grantor has any right, title or interest and that constitutes a
security entitlement in which the Collateral Trustee is not the entitlement
holder, to the extent that such Grantor has Knowledge of the existence of such
security entitlements, such Grantor will cause the securities intermediary with
respect to such security entitlement either (at such Grantor's election) (i) to
identify in its records the Collateral Trustee as the entitlement holders of
such security entitlement against such securities intermediary or (ii) to agree
in an authenticated record with such Grantor and the Collateral Trustee that
such securities intermediary will comply with entitlement orders (that is,
notifications communicated to such securities intermediary directing transfer or
redemption of the financial asset to which such Grantor has a security
entitlement) originated by the Collateral Trustee without further consent of
such Grantor, such authenticated record to be in substantially the form of
Exhibit C hereto or otherwise in form and substance reasonably satisfactory to
the Collateral Trustee (such agreement being a "Securities Account Control
Agreement").
(d) Subject to Section 5(h), with respect to any Security Collateral
in which any Grantor has any right, title or interest and that constitutes a
commodity contract, to the extent that such Grantor has Knowledge of the
existence of such commodity contracts, such Grantor shall cause the commodity
intermediary with respect to such commodity contract to agree in an
authenticated record with such Grantor and the Collateral Trustee that such
commodity intermediary will apply any value distributed on account of such
commodity contract as directed by the Collateral Trustee without further consent
of such Grantor, such authenticated record to be in substantially the form of
Exhibit D hereto or otherwise in form and substance reasonably
Dynegy Second Lien Shared Security Agreement
19
satisfactory to the Collateral Trustee (such agreement being a "Commodity
Account Control Agreement", and all such authenticated records, together with
all Securities Account Control Agreements being, collectively, "Security Control
Agreements").
(e) No Grantor will change or add any securities intermediary or
commodity intermediary that maintains any securities account or commodity
account in which any of the Shared Collateral is credited or carried, or change
or add any such securities account or commodity account, in each case without
first complying with the above provisions of this Section 5 in order to perfect
the security interest granted hereunder in such Shared Collateral. For the
avoidance of doubt, the provisions of this Section 5(e) shall not apply to any
securities account or commodity account that any Grantor manages or maintains on
behalf of third parties, such as securities accounts and commodity accounts
maintained or managed by any Grantor for a joint venture in which third parties
participate.
(f) Upon the request of the Collateral Trustee upon the occurrence
and during the continuance of an Event of Default following the First Priority
Lien Satisfaction Date, such Grantor will notify each such issuer of Pledged
Debt that such Pledged Debt is subject to the security interest granted
hereunder.
(g) To the extent that any of the Shared Collateral constituting
money or any of the Account Collateral or any Security Collateral is subject to
a Permitted Lien and such Permitted Lien has been perfected through control (as
such term is used in Sections 9-104 and 9-106 of the UCC) or possession,
perfection through possession or control of the security interest created
hereunder shall not be required.
(h) Notwithstanding anything to the contrary set forth in this
Section 5 or any other provision of this Second Lien Shared Security Agreement,
until the First Priority Lien Satisfaction Date, Grantors shall not be required
to (i) take any of the actions required under Sections 5(a) through 5(d) herein
or (ii) take any other actions with respect to any Collateral that would violate
or be inconsistent with the terms of the Intercreditor Agreement or the First
Priority Shared Security Agreement. Subject to the terms of the Intercreditor
Agreement, the Grantors shall comply with the provisions set forth in Sections 5
and 9 of the First Priority Shared Security Agreement until the First Priority
Lien Satisfaction Date. Under the terms of Section 2.09 of the Intercreditor
Agreement, the First Priority Collateral Parties have agreed to act as bailees
on behalf of the Collateral Trustee in respect of certain Collateral on the
terms and conditions set forth therein.
Section 6. Maintaining the Account Collateral. Following the First
Priority Lien Satisfaction Date and so long as any Parity Lien Obligations
(other than indemnification obligations that are not yet due and payable) which
are accrued and payable shall remain unpaid and unsatisfied and subject to the
Intercreditor Agreement:
(a) Each Grantor will maintain all Designated Accounts only with the
Collateral Trustee or with banks (the "Pledged Account Banks") that have
agreed, in a record authenticated by the Grantor, the Collateral Trustee
and the Pledged Account Banks, to (i) comply with instructions originated
by the Collateral Trustee (as set forth in the Account Control Agreement)
directing the disposition of funds in the Designated
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Accounts without the further consent of the Grantor and (ii) waive or
subordinate (other than as agreed between any Pledged Account Bank and the
Collateral Trustee) in favor of the Collateral Trustee all claims of the
Pledged Account Banks (including, without limitation, claims by way of a
security interest, lien or right of setoff or right of recoupment) to the
Account Collateral, which authenticated record shall be substantially in
the form of Exhibit B hereto, or shall otherwise be in form and substance
reasonably satisfactory to the Collateral Trustee (the "Account Control
Agreement"); provided, however, this Section 6(a) shall not apply to Other
Deposit Accounts listed in Schedule V hereto, as such Schedule may be
updated from time to time.
(b) Subject in all respects to the provisions of Section 5(g) hereof,
each Grantor agrees that it will not add any bank that maintains a deposit
account for such Grantor or open any new deposit account with any then
existing Pledged Account Bank unless (i) the Collateral Trustee shall have
received at least 10 days' prior written notice of such additional bank or
such new deposit account and (ii) the Collateral Trustee shall have
received, in the case of a bank or Pledged Account Bank that is not the
Collateral Trustee, an Account Control Agreement authenticated by such new
bank and such Grantor, or a supplement to an existing Account Control
Agreement with such then existing Pledged Account Bank, covering such new
deposit account (and, upon the receipt by the Collateral Trustee of such
Account Control Agreement or supplement, Schedule IV hereto shall be
automatically amended to include such Other Deposit Account). Each Grantor
may terminate any bank as a Pledged Account Bank or terminate any
Designated Account, if it gives the Collateral Trustee at least 10 days'
prior written notice of such termination (and, upon such termination,
Schedule IV hereto shall be automatically amended to delete such Pledged
Account Bank and Other Deposit Account without any additional formal
actions or agreements). For the avoidance of doubt, the provisions of this
Section 6(b) shall not apply to any deposit account that any Grantor
manages or maintains on behalf of third parties, such as deposit accounts
maintained or managed by any Grantor for a joint venture in which third
parties participate.
(c) Subject in all respects to the provisions of Section 5(g) hereof,
upon any termination by a Grantor of any Other Deposit Account by such
Grantor, or any Pledged Account Bank with respect thereto, such Grantor
will promptly (i) either (at such Grantor's election), (A) comply with the
provisions regarding the opening of new deposit accounts as set forth in
the first sentence of Section 6(b) or (B) subject to the restrictions set
forth in Section 6(f), transfer all funds and property held in such
terminated Other Deposit Account to another Other Deposit Account listed in
Schedule IV and (ii) notify all Obligors that were making payments to such
Other Deposit Account to make all future payments to another Other Deposit
Account listed in Schedule IV hereto, in each case so that the Collateral
Trustee shall have a continuously perfected security interest in such
Designated Accounts. Subject in all respects to the provisions of Section
5(g) hereof, after the occurrence and during the continuance of an Event of
Default following the First Priority Lien Satisfaction Date, each Grantor
agrees to terminate any or all Account Collateral and Account Control
Agreements upon request by the Collateral Trustee.
Dynegy Second Lien Shared Security Agreement
21
(d) Upon the occurrence and during the continuance of an Event of
Default following the First Priority Lien Satisfaction Date, the Collateral
Trustee shall have sole right to direct the disposition of funds with
respect to each of the Designated Accounts.
(e) Following the First Priority Lien Satisfaction Date, the
Collateral Trustee may, at any time after notice to DHI (provided, however,
that the failure to give any such notice to DHI shall not affect the
validity of any action taken by the Collateral Trustee pursuant to the
provisions of this Section 6(e)), but without consent from the Grantor,
transfer, or direct the transfer of, funds from the Designated Accounts to
satisfy the Grantor's obligations under this Second Lien Shared Security
Agreement if (A) a payment default in respect of principal under this
Second Lien Shared Security Agreement shall have occurred and be continuing
for a period greater than or equal to three Business Days, or (B) a payment
default in respect of any amount other than principal due under this Second
Lien Shared Security Agreement shall have occurred and be continuing for a
period greater than or equal to five Business Days, or (C) an acceleration
of the Parity Lien Debt shall have occurred and be continuing.
(f) Each of the Grantors agrees that at no time shall the aggregate
amount on deposit in the Other Deposit Accounts listed in Schedule V hereto
(other than any Other Deposit Account that is subject to a Permitted Lien)
exceed $20,000,000.
Section 7. Maintaining Electronic Chattel Paper, Transferable Records
and Letter-of-Credit Rights and Giving Notice of Commercial Tort Claims. So long
as any Parity Lien Obligations (other than indemnification obligations that are
not yet due and payable) which are accrued and payable shall remain unsatisfied:
(a) Following the First Priority Lien Satisfaction Date, each Grantor
will maintain all (i) electronic chattel paper (to the extent that such
Grantor has Knowledge of the existence of such electronic chattel paper) so
that the Collateral Trustee have control of the electronic chattel paper in
the manner specified in Section 9-105 of the UCC and (ii) all transferable
records (to the extent that such Grantor has Knowledge of the existence of
such transferable records) so that the Collateral Trustee have control of
the transferable records in the manner specified in Section 16 of the UETA;
and
(b) Each Grantor will immediately give notice to the Collateral
Trustee of any material commercial tort claim that may arise in the future
and will immediately execute or otherwise authenticate a supplement to this
Second Lien Shared Security Agreement, and otherwise take all necessary
action, to subject such material commercial tort claim to the security
interest created under this Second Lien Shared Security Agreement provided,
however, that any commercial tort claim shall not be covered by the
provisions of this Section 7(b) to the extent, but only to the extent, that
the assignment thereof or grant of a security interest therein would
violate any effective or enforceable provision of applicable law.
Section 8. Representations and Warranties. Each Grantor represents
and warrants as follows:
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(a) As of the date hereof, such Grantor's exact legal name, which is
sufficient in accordance with Section 9-503(a) of the UCC, is correctly set
forth in Schedule I hereto. With respect to each Grantor that is not a
"registered organization" as such term is defined in Section 9-102 of the
UCC, such Grantor has its chief executive office in the state or
jurisdiction set forth in Schedule I hereto. Within the five years
preceding the execution of this Second Lien Shared Security Agreement, the
information set forth in Schedule I hereto with respect to such Grantor is
true and accurate in all respects, except to the extent that failure of
such information to be true and accurate could not reasonably be expected
to result in a Material Adverse Effect (as defined in the Credit
Agreement). To the Knowledge of such Grantor, such Grantor has not
previously changed its name, the location of its chief executive office,
type of organization, jurisdiction of organization or organizational
identification number (if such Grantor, now or has been organized in a
jurisdiction that requires the organizational number of a debtor to be
identified on the relevant financing statement in order to create a
perfected second priority security interest) from those set forth in
Schedule I hereto except as disclosed in Schedule III hereto.
(b) Subject to Section 5(h), all Security Collateral consisting of
certificated securities and instruments (other than Permitted Investments),
have to the Knowledge of the relevant Grantor been delivered to the
Collateral Trustee. Subject to Section 5(h), to the Knowledge of the
relevant Grantor, none of the Receivables or Agreement Collateral is
evidenced by a promissory note or other instrument that has not been
delivered to the Collateral Trustee.
(c) Such Grantor is the legal and beneficial owner of the Shared
Collateral of such Grantor free and clear of any Lien, claim, option or
right of others, except for Permitted Liens or the security interest
created under this Second Lien Shared Security Agreement. No effective
financing statement or other instrument similar in effect covering all or
any part of such Shared Collateral or listing such Grantor or any trade
name of such Grantor as debtor is on file in any recording office, except
(i) such as may have been filed in favor of the First Priority Controlling
Collateral Parties relating to the First Priority Shared Secured Agreement,
(ii) such as may have been filed in favor of the Collateral Trustee
relating to this Second Lien Shared Security Agreement or (iii) as
otherwise permitted under the Indenture.
(d) Subject to Section 5(h), with respect to the Pledged Equity that
is an uncertificated security, to the extent that such Grantor has
Knowledge of the existence of any such uncertificated securities, such
Grantor has caused the issuer thereof either (at such Grantor's election)
(i) to register the Collateral Trustee as the registered owner of such
security or (ii) to agree in an authenticated record with such Grantor and
the Collateral Trustee that such issuer will comply with instructions with
respect to such security originated by the Collateral Trustee without
further consent of such Grantor provided, however, that the Collateral
Trustee agrees that they will not deliver any such instructions to such
issuer except upon the occurrence and during the continuance of an Event of
Default. If such Grantor is an issuer of Pledged Equity, such Grantor
confirms that it has received notice of such security interest. Subject to
Section 5(h), with respect to all Security Collateral consisting of
certificated securities and instruments, to the
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extent that the relevant Grantor has Knowledge of the existence of such
certificated securities and instruments, all such certificated securities
and instruments have been delivered to the Collateral Trustee.
(e) The Initial Pledged Equity pledged by such Grantor constitutes
the percentage of the issued and outstanding Equity Interests of the
issuers thereof indicated on Schedule II hereto.
(f) Subject in all respects to the provisions of Section 5(g) hereof,
to the Knowledge of the relevant Grantor, such Grantor has no deposit
accounts, other than the Account Collateral listed on Schedule IV hereto,
as such Schedule IV may be amended from time to time pursuant to Section
6(b), and to the Knowledge of the relevant Grantor, legal, binding and
enforceable Account Control Agreements with the First Priority Controlling
Collateral Parties are in effect for each deposit account that constitutes
Account Collateral (other than Account Collateral consisting of deposit
accounts maintained with the First Priority Controlling Collateral
Parties), except to the extent such Account Control Agreements are not
required by Sections 5(g) or 6(a). For the avoidance of doubt, the
representations and warranties in this Section 8(f) do not apply with
respect to any deposit account that any Grantor manages or maintains on
behalf of third parties, such as deposit accounts maintained or managed by
any Grantor for a joint venture in which third parties participate.
(g) Except for the consent of the First Priority Collateral Trustees
which has been obtained and subject in all respects to the provisions of
Sections 5(g) and 5(h) hereof, to the Knowledge of the relevant Grantor,
all filings and other actions (including without limitation, (A) actions
necessary to obtain control of Shared Collateral as provided in Sections
9-104, 9-105 and 9-106 of the UCC and Section 16 of UETA and (B) actions
necessary to perfect the Collateral Trustee's security interest with
respect to Shared Collateral constituting certificated securities or
instruments) (excluding (X) notices to state regulators in the State of
North Carolina and (Y) approvals of the New York State Public Service
Commission that may be required in connection with the creation or
perfection of a Lien on any Shared Collateral (the "Required Regulatory
Approvals") which the applicable Grantor will use all commercially
reasonable efforts to obtain as promptly as reasonably practicable after
the date hereof) necessary to perfect the security interest in the Shared
Collateral of such Grantor created under this Second Lien Shared Security
Agreement have been duly made or taken and are in full force and effect,
and this Second Lien Shared Security Agreement creates in favor of the
Collateral Trustee for the benefit of the Secured Parties a valid and,
together with such filings and other actions, perfected security interest
in the Shared Collateral of such Grantor, securing the payment of the
Parity Lien Obligations except, in each case, (i) as is otherwise permitted
pursuant to the express provisions of this Second Lien Shared Security
Agreement, (ii) for Permitted Liens and (iii) where the Required Regulatory
Approvals must be obtained.
(h) To the Knowledge of the relevant Grantor, the Grantor has no
commercial tort claims other than those listed in Schedule VI hereto.
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Section 9. Further Assurances. (a) Subject to Section 5(h) and the
Intercreditor Agreement, each Grantor agrees that from time to time, at the
expense of such Grantor, such Grantor will promptly execute and deliver, or
otherwise authenticate, all further instruments and documents, and take all
further action that (to the Knowledge of such Grantor) may be necessary, or that
the Collateral Trustee reasonably may request, in order to perfect and protect
any pledge, assignment or security interest granted or purported to be granted
by such Grantor hereunder or to enable the Collateral Trustee to exercise and
enforce its rights and remedies hereunder with respect to any Shared Collateral
of such Grantor. Without limiting the generality of the foregoing, each Grantor
will promptly with respect to Shared Collateral of such Grantor and subject to
the Indenture, Section 5(h) hereof and the Intercreditor Agreement (and the
right of the First Priority Controlling Collateral Parties to have such actions
taken for their benefit): (i) if any such Shared Collateral shall be evidenced
by a promissory note or other instrument or chattel paper and if such Grantor
has Knowledge of the existence of any such promissory notes, instruments, or
chattel paper, deliver and pledge to the Collateral Trustee hereunder such note
or instrument or chattel paper duly indorsed and accompanied by duly executed
instruments of transfer or assignment, all in form and substance reasonably
satisfactory to the Collateral Trustee; (ii) execute or authenticate and file
such financing or continuation statements, or amendments thereto, and such other
instruments or notices, as may be necessary, or as the Collateral Trustee
reasonably may request, in order to perfect and preserve the security interest
granted or purported to be granted by such Grantor hereunder; (iii) with respect
to any certificates representing Security Collateral that constitutes
certificated securities, to the extent that the relevant Grantor has Knowledge
of the existence of such certificates, deliver and pledge to the Collateral
Trustee for ratable benefit of the Secured Parties certificates representing
Security Collateral that constitutes certificated securities, accompanied by
undated stock or bond powers executed in blank; (iv) subject in all respects to
the provisions of Section 5(g) hereof, with respect to any Shared Collateral
consisting of deposit accounts, electronic chattel paper, investment property or
transferable records, to the extent that the relevant Grantor has Knowledge of
the existence of such deposit accounts, electronic chattel paper, investment
property or transferable records, take all action necessary to ensure that the
Collateral Trustee has control of Shared Collateral consisting of deposit
accounts, electronic chattel paper, investment property and transferable records
as provided in Sections 9-104, 9-105 and 9-106 of the UCC and in Section 16 of
UETA; (v) upon the occurrence and during the continuance of an Event of Default,
at the request of the Collateral Trustee, take all action to ensure that the
Collateral Trustee's security interest is noted on any certificate of title
related to any Shared Collateral evidenced by a certificate of title; and (vi)
deliver to the Collateral Trustee evidence that all other action that the
Collateral Trustee may deem reasonably necessary in order to perfect and protect
the security interest created by such Grantor under this Second Lien Shared
Security Agreement has been taken.
(b) Each Grantor hereby authorizes the Collateral Trustee to file one
or more financing and continuation statements, and amendments thereto, relating
to all or any part of the Shared Collateral of such Grantor without the
signature of such Grantor where permitted by law. A photocopy or other
reproduction of this Second Lien Shared Security Agreement or any financing
statement covering the Shared Collateral or any part thereof shall be sufficient
as a financing statement where permitted by law. Each Grantor ratifies its
authorization for the Collateral Trustee to have filed such financing
statements, continuation statements or amendments filed prior to the date
hereof.
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(c) Each Grantor will furnish to the Collateral Trustee from time to
time statements and schedules further identifying and describing the Shared
Collateral of such Grantor and such other reports in connection with such Shared
Collateral as the Collateral Trustee may reasonably request, all in reasonable
detail.
Section 10. Post-Closing Changes; Bailees; Collections on Receivables
and Related Contracts. (a) No Grantor will change its name, type of
organization, jurisdiction of organization, organizational identification number
(if such Grantor is organized in a jurisdiction that requires the organizational
number of a debtor to be identified on a financing statement in order to create
a perfected second priority security interest) or location of its chief
executive office (in the case only of a Grantor that is not a "registered
organization", as such term is defined in Section 9-102 of the UCC) from those
set forth in Section 8(a) of this Second Lien Shared Security Agreement without
first giving at least 30 days' prior written notice to the Collateral Trustee
and taking all action required by the Collateral Trustee for the purpose of
perfecting or protecting the security interest granted by this Second Lien
Shared Security Agreement. Except with respect to security agreements related to
Permitted Liens, no Grantor will become bound by a security agreement
authenticated by another Person (determined as provided in Section 9-203(d) of
the UCC) without giving the Collateral Trustee 30 days' prior written notice
thereof and taking all action required by the Collateral Trustee to ensure that
the perfection and second priority nature of the Collateral Trustee's security
interest in the Shared Collateral will be maintained. If any Grantor that is
organized in a jurisdiction that requires the organizational number of a debtor
to be identified on a relevant financing statement in order to create a
perfected second priority security interest does not have an organizational
identification number and later obtains one, it will forthwith notify the
Collateral Trustee of such organizational identification number.
(b) If any Shared Collateral constituting goods of any Grantor is, to
the Knowledge of such Grantor, at any time in the possession or control of a
warehouseman, bailee or agent, or if the Collateral Trustee so requests, such
Grantor will (i) notify such warehouseman, bailee or agent of the security
interest created hereunder and under the First Priority Shared Security
Agreement, (ii) instruct such warehouseman, bailee or agent to hold all such
Shared Collateral solely for the Collateral Trustee's account subject (A) to the
Intercreditor Agreement (and the prior rights of the First Priority Controlling
Collateral Parties on behalf of the holders of the First Priority Obligations)
and (B) after the First Priority Lien Satisfaction Date, to the Collateral
Trustee's instructions (which shall permit such Shared Collateral to be removed
by such Grantor in the ordinary course of business until the Collateral Trustee
notifies such warehouseman, bailee or agent that an Event of Default has
occurred and is continuing), (iii) use commercially reasonable efforts, to cause
such warehouseman, bailee or agent to authenticate a record acknowledging that
it holds possession of such Shared Collateral for the applicable First Priority
Controlling Collateral Parties' and Collateral Trustee's benefit and shall,
after the First Priority Lien Satisfaction Date, act solely on the instructions
of the Collateral Trustee without the further consent of the Grantor or any
other Person; provided, however, that the Collateral Trustee agrees that it will
not deliver any such instructions to such issuer except upon the occurrence and
during the continuance of an Event of Default following the First Priority Lien
Satisfaction Date, and (iv) make such authenticated record available to the
Collateral Trustee.
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26
(c) Except as otherwise provided in this subsection (c), each Grantor
will continue to collect, at its own expense, all amounts due or to become due
such Grantor under the Assigned Agreements, Receivables and Related Contracts.
In connection with such collections, such Grantor may take (and, at the
Collateral Trustee's direction given after the occurrence and during the
continuance of an Event of Default following the First Priority Lien
Satisfaction Date, will take) such action as such Grantor or the Collateral
Trustee may deem necessary to enforce collection of the Assigned Agreements,
Receivables and Related Contracts; provided, however, that the Collateral
Trustee shall have the right at any time, upon the occurrence and during the
continuance of an Event of Default following the First Priority Lien
Satisfaction Date, and upon written notice to such Grantor of its intention to
do so, to notify the Obligors under any Receivables and Related Contracts of the
assignment of such Receivables and Related Contracts to the Collateral Trustee
and to direct such Obligors to make payment of all amounts due or to become due
to such Grantor thereunder directly to the Collateral Trustee and, upon such
notification and at the expense of such Grantor, to enforce collection of any
such Receivables and Related Contracts, to adjust, settle or compromise the
amount or payment thereof, in the same manner and to the same extent as such
Grantor might have done, and to otherwise exercise all rights with respect to
such Receivables and Related Contracts, including, without limitation, those set
forth set forth in Section 9-607 of the UCC. After receipt by any Grantor of the
notice from the Collateral Trustee referred to in the proviso to the preceding
sentence, (i) all amounts and proceeds (including, without limitation,
instruments) received by such Grantor in respect of the Receivables and Related
Contracts of such Grantor shall be received in trust for the benefit of the
Collateral Trustee hereunder, shall be segregated from other funds of such
Grantor and shall be forthwith paid over to the Collateral Trustee in the same
form as so received (with any necessary indorsement) to be applied as provided
in the Intercreditor Agreement and (ii) such Grantor will not adjust, settle or
compromise the amount or payment of any Receivable or amount due on any Related
Contract, release wholly or partly any Obligor thereof, or allow any credit or
discount thereon except in the ordinary course of such Grantor's business. For
the avoidance of doubt, none of the provisions of this Section 10(c) shall apply
with respect to any Property that is excluded from the lien and security
interest granted hereunder pursuant to the provisions of paragraphs (i), (ii),
(iii), (iv), (v), (vi), (vii) or (viii) of the "notwithstanding" clause at the
end of Section 2, including, but not limited to, Excluded Shared Collateral,
Excluded Authorizations, Permitted Collateral or Excluded Equity.
Section 11. As to Intellectual Property Collateral. (a) With
respect to its material Intellectual Property Collateral, each Grantor agrees,
upon the request of the Collateral Trustee, to execute or otherwise authenticate
an agreement in substantially the form set forth in Exhibit E hereto or
otherwise in form and substance reasonably satisfactory to the Collateral
Trustee (an "Intellectual Property Second Lien Shared Security Agreement"), for
recording the security interest granted hereunder to the Collateral Trustee in
such Intellectual Property Collateral with the U.S. Patent and Trademark Office,
the U.S. Copyright Office and any other governmental authorities necessary to
perfect the security interest hereunder in such material Intellectual Property
Collateral; provided that such Intellectual Property Collateral is granted to
the First Priority Controlling Collateral Parties.
(b) Each Grantor agrees that should it obtain an ownership interest
in any item of the type set forth in Section 2(g) that is not on the date hereof
a part of the Intellectual Property Collateral ("After-Acquired Intellectual
Property") (i) the provisions of this Second Lien Shared
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Security Agreement shall automatically apply thereto, and (ii) any such
After-Acquired Intellectual Property and, in the case of trademarks, the
goodwill symbolized thereby, shall automatically become part of the Intellectual
Property Collateral subject to the terms and conditions of this Second Lien
Shared Security Agreement with respect thereto; provided that such Intellectual
Property Collateral is granted to the First Priority Controlling Collateral
Parties. At the end of each fiscal quarter of DHI, each Grantor shall give
written notice to the Collateral Trustee identifying any material After-Acquired
Intellectual Property acquired during such fiscal quarter, and upon the request
of the Collateral Trustee, such Grantor shall execute and deliver to the
Collateral Trustee with such written notice, or otherwise authenticate, an
agreement substantially in the form of Exhibit F hereto or otherwise in form and
substance reasonably satisfactory to the Collateral Trustee (an "IP Second Lien
Shared Security Agreement Supplement") covering such material After-Acquired
Intellectual Property which IP Second Lien Shared Security Agreement Supplement
shall be recorded with the U.S. Patent and Trademark Office, the U.S. Copyright
Office and any other governmental authorities necessary to perfect the security
interest hereunder in such material After-Acquired Intellectual Property;
provided that such Intellectual Property Collateral is granted to the First
Priority Controlling Collateral Parties.
Section 12. Voting Rights; Dividends; Etc. (a) So long as no Event of
Default shall have occurred and be continuing:
(i) Each Grantor shall be entitled to exercise any and all voting
and other consensual rights pertaining to the Security Collateral of such
Grantor or any part thereof for any purpose; provided however, that such
Grantor will not exercise or refrain from exercising any such right if such
action could reasonably be expected to result in a Material Adverse Effect
(as defined in the Credit Agreement).
(ii) Each Grantor shall be entitled to receive and retain any and all
dividends, interest and other distributions paid in respect of the Security
Collateral of such Grantor if and to the extent that the payment thereof is
not otherwise prohibited by the terms of this Second Lien Shared Security
Agreement; provided, however, that any and all dividends, interest and
other distributions paid or payable other than in cash in respect of, and
instruments and other property received, receivable or otherwise
distributed in respect of, or in exchange for, any Security Collateral
shall be, and shall be forthwith delivered to the First Priority
Controlling Collateral Parties, or following the First Priority Lien
Satisfaction Date, the Collateral Trustee to hold as, Security Collateral
and shall, if received by such Grantor, be received in trust for the
benefit of the Collateral Trustee, be segregated from the other property or
funds of such Grantor and be forthwith delivered to the Collateral Trustee
as Security Collateral in the same form as so received (with any necessary
indorsement).
(iii) Following the First Priority Lien Satisfaction Date, the
Collateral Trustee will execute and deliver (or cause to be executed and
delivered) to each Grantor all such proxies and other instruments as such
Grantor may reasonably request for the purpose of enabling such 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 interest
payments that it is authorized to receive and retain pursuant to paragraph
(ii) above.
Dynegy Second Lien Shared Security Agreement
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(b) Upon the occurrence and during the continuance of an Event of
Default, subject to the Intercreditor Agreement and notice to DHI (provided that
the failure to give any such notice shall not affect the validity of any of the
following actions taken by the Collateral Trustee):
(i) All rights of each Grantor (x) to exercise or refrain from
exercising the voting and other consensual rights that it would otherwise
be entitled to exercise pursuant to Section 12(a)(i) shall, upon notice to
such Grantor by the First Priority Controlling Collateral Parties, or
following the First Priority Lien Satisfaction Date, the Collateral
Trustee, cease and (y) to receive the dividends, interest and other
distributions that it would otherwise be authorized to receive and retain
pursuant to Section 12(a)(ii) shall automatically cease, and all such
rights shall thereupon become vested in the First Priority Controlling
Collateral Parties, or following the First Priority Lien Satisfaction Date,
the Collateral Trustee, who 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, interest and other
distributions.
(ii) All dividends, interest and other distributions that are
received by any Grantor contrary to the provisions of paragraph (i) of this
Section 12(b) shall be received in trust for the benefit of the Collateral
Trustee, shall be segregated from other funds of such Grantor and shall be
forthwith paid over to the First Priority Controlling Collateral Parties,
or following the First Priority Lien Satisfaction Date, the Collateral
Trustee as collateral in the same form as so received (with any necessary
indorsement).
(iii) Following the First Priority Lien Satisfaction Date, the
Collateral Trustee shall be authorized to send to each Securities
Intermediary or Commodity Intermediary as defined in and under any Security
Control Agreement a Notice of Exclusive Control as defined in and under
such Security Control Agreement.
Section 13. As to Letter-of-Credit Rights. (a) Each Grantor, by
granting a security interest in its Receivables consisting of letter-of-credit
rights to the Collateral Trustee, intends to (and hereby does) assign to the
Collateral Trustee its rights (including its contingent rights) to the proceeds
of all Related Contracts consisting of letters of credit of which it is or
hereafter becomes a beneficiary or assignee, subject to the prior rights of the
First Priority Controlling Collateral Parties therein for the benefit of the
holders of the First Priority Obligations. Following the First Priority Lien
Satisfaction Date and upon the request of the Collateral Trustee after the
occurrence and during the continuance of an Event of Default and subject to the
Intercreditor Agreement, each Grantor will promptly use its commercially
reasonable efforts to cause the issuer of each letter of credit and each
nominated person (if any) with respect thereto to consent to such assignment of
the proceeds thereof in a Consent to Assignment of Letter of Credit Rights.
(b) Upon the occurrence and during the continuance of an Event of
Default following the First Priority Lien Satisfaction Date, each Grantor will,
promptly upon request by the Collateral Trustee, (i) notify (and such Grantor
hereby authorizes the Collateral Trustees to notify) the issuer and each
nominated person with respect to each of the Related Contracts consisting of
letters of credit that the proceeds thereof have been assigned to the Collateral
Dynegy Second Lien Shared Security Agreement
29
Trustee hereunder and any payments due or to become due in respect thereof are
to be made directly to the Collateral Trustee or its designee.
(c) With respect to any Securities Account Control Agreement,
Commodity Accounts Control Agreement, Account Control Agreement or Consent to
Assignment of Letter of Credit Rights, the Collateral Trustee agrees that it
will not issue any entitlement orders or other directions, instructions or
notifications thereunder with respect to the disposition or transfer of any
Shared Collateral therein addressed or blocking any Grantor's ability to deal
with any such Shared Collateral, except upon the occurrence and during the
continuance of an Event of Default following the First Priority Lien
Satisfaction Date. The Collateral Trustee further agrees that, upon its issuance
of any such entitlement orders, directions, instructions or notifications, it
will promptly provide a copy thereof to the relevant Grantor.
Section 14. Transfers and Other Liens; Additional Shares. (a) Each
Grantor agrees that it will not (i) sell, assign or otherwise dispose of, or
grant any option with respect to, any of the Shared Collateral, other than
sales, assignments and other dispositions of Shared Collateral, and options
relating to Shared Collateral, permitted under the terms of the Indenture and
Intercreditor Agreement or (ii) create or suffer to exist any Lien upon or with
respect to any of the Shared Collateral of such Grantor except for the pledge,
assignment and security interest created under this Second Lien Shared Security
Agreement and Liens permitted under the Indenture.
(b) Each Grantor agrees that it will pledge hereunder, promptly upon
its acquisition (directly or indirectly) thereof, any and all additional Equity
Interests or other securities that are issued by any Grantor and are Pledged
Equity.
Section 15. Collateral Trustee Appointed Attorney-in-Fact. Subject to
the Indenture and the Intercreditor Agreement, each Grantor hereby irrevocably
appoints the Collateral Trustee such Grantor's attorney-in-fact, with full
authority in the place and stead of such Grantor and in the name of such Grantor
or otherwise, from time to time, upon the occurrence and during the continuance
of an Event of Default following the First Priority Lien Satisfaction Date, in
the Collateral Trustee's discretion, to take any action and to execute any
instrument that the Collateral Trustee may deem necessary or advisable to
accomplish the purposes of this Second Lien Shared Security Agreement,
including, without limitation:
(a) to obtain and adjust insurance required to be paid to the
Collateral Trustee pursuant to the provisions of the Indenture,
(b) 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 Shared Collateral,
(c) to receive, indorse and collect any drafts or other instruments,
documents and chattel paper, in connection with clause (a) or (b) above,
and
(d) to file any claims or take any action or institute any
proceedings that the Collateral Trustee may deem necessary or desirable for
the collection of any of the Shared Collateral or otherwise to enforce
compliance with the terms and conditions of
Dynegy Second Lien Shared Security Agreement
30
any Assigned Agreement or the rights of the Collateral Trustee with respect
to any of the Shared Collateral.
Section 16. Collateral Trustee May Perform. Subject to the
Intercreditor Agreement, if any Grantor fails to perform any agreement contained
herein, the Collateral Trustee may, but without any obligation to do so and
without notice, themselves perform, or cause performance of, such agreement, and
the expenses of the Collateral Trustee incurred in connection therewith shall be
payable by such Grantor under Section 19.
Section 17. The Collateral Trustee's Duties. (a) The powers conferred
on the Collateral Trustee hereunder are solely to protect the Shared Secured
Parties' interest in the Shared Collateral and shall not impose any duty upon
them to exercise any such powers. Except for the safe custody of any Shared
Collateral in its possession and the accounting for moneys actually received by
them hereunder, the Collateral Trustee shall have no duty as to any Shared
Collateral, as to ascertaining or taking action with respect to calls,
conversions, exchanges, maturities, tenders or other matters relative to any
Shared Collateral, whether or not any Secured Party has or is deemed to have
knowledge of such matters, or as to the taking of any necessary steps to
preserve rights against any parties or any other rights pertaining to any Shared
Collateral. The Collateral Trustee shall be deemed to have exercised reasonable
care in the custody and preservation of any Shared Collateral in its possession
if such Shared Collateral is accorded treatment substantially equal to that
which it accords its own property.
(b) Anything contained herein to the contrary notwithstanding, the
Collateral Trustee may from time to time, when the Collateral Trustee deems it
to be necessary, appoint one or more subagents (each a "Subagent") for the
Collateral Trustee hereunder with respect to all or any part of the Shared
Collateral, subject to Section 11.02 of the Indenture. In the event that the
Collateral Trustee so appoints any Subagent with respect to any Shared
Collateral, (i) the assignment and pledge of such Shared Collateral and the
security interest granted in such Shared Collateral by each Grantor hereunder
shall be deemed for purposes of this Second Lien Shared Security Agreement to
have been made to such Subagent, in addition to the Collateral Trustee, for the
ratable benefit of the Secured Parties, as security for the Parity Lien
Obligations of such Grantor, (ii) such Subagent shall automatically be vested,
in addition to the Collateral Trustee, with all rights, powers, privileges,
interests and remedies of the Collateral Trustee hereunder with respect to such
Shared Collateral, and (iii) the term "Collateral Trustee," when used herein in
relation to any rights, powers, privileges, interests and remedies of the
Collateral Trustee with respect to such Shared Collateral, shall include such
Subagent; provided, however, that no such Subagent shall be authorized to take
any action with respect to any such Shared Collateral unless and except to the
extent expressly authorized in writing by the Collateral Trustee and permitted
by the Intercreditor Agreement.
Section 18. Remedies. If any Event of Default shall have occurred and
be continuing and subject to the Intercreditor Agreement:
(a) The Collateral Trustee may exercise in respect of the Shared
Collateral, in addition to other rights and remedies provided for herein or
otherwise available to it, all the rights and remedies of a secured party
upon default under the UCC (whether or not the UCC applies to the affected
Shared Collateral) and also may: (i) require each Grantor
Dynegy Second Lien Shared Security Agreement
31
to, and each Grantor hereby agrees that it will at its expense and upon
request of the Collateral Trustee forthwith, assemble all or part of the
Shared Collateral as directed by the Collateral Trustee and make it
available to the Collateral Trustee at a place and time to be designated by
the Collateral Trustee that is reasonably convenient to all parties; (ii)
without notice except as specified below, sell the Shared Collateral or any
part thereof in one or more parcels at public or private sale, at any of
the Collateral Trustee's offices or elsewhere, for cash, on credit or for
future delivery, and upon such other terms as the Collateral Trustee may
deem commercially reasonable; (iii) to the fullest extent permitted by
applicable law and by contracts with third parties, and subject to any
applicable safety requirements at any such premises, occupy any premises
owned or leased by any of the Grantors where the Shared Collateral or any
part thereof is assembled or located for a reasonable period in order to
effectuate their rights and remedies hereunder or under law, without
obligation to such Grantor in respect of such occupation; and (iv) exercise
any and all rights and remedies of any of the Grantors under or in
connection with the Shared Collateral, or otherwise in respect of the
Shared Collateral, including, without limitation, (A) any and all rights of
such Grantor to demand or otherwise require payment of any amount under, or
performance of any provision of, the Assigned Agreements, the Receivables,
the Related Contracts and the other Shared Collateral, (B) withdraw, or
cause or direct the withdrawal, of all funds with respect to the Account
Collateral and (C) exercise all other rights and remedies with respect to
the Assigned Agreements, the Receivables, the Related Contracts and the
other Shared Collateral, including, without limitation, those set forth in
Section 9-607 of the UCC. Each Grantor agrees that, to the extent notice of
sale shall be required by law, at least ten days' notice to such 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 Collateral
Trustee shall not be obligated to make any sale of Shared Collateral
regardless of notice of sale having been given. The Collateral 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) Any cash held by or on behalf of the Collateral Trustee and all
cash proceeds received by or on behalf of the Collateral Trustee in respect
of any sale of, collection from, or other realization upon all or any part
of the Shared Collateral may, in the discretion of the Collateral Trustee,
be held by the Collateral Trustee as collateral for, and/or then or at any
time thereafter applied (after payment of any amounts payable to the
Collateral Trustee pursuant to Section 19) in whole or in part by the
Collateral Trustee for the ratable benefit of the Secured Parties against,
all or any part of the Parity Lien Obligations, in accordance with the
terms of the Intercreditor Agreement.
(c) All payments received by any Grantor under or in connection with
any Assigned Agreement or otherwise in respect of the Shared Collateral
shall be received in trust for the benefit of the Collateral Trustee, shall
be segregated from other funds of such Grantor and shall be forthwith paid
over to the First Priority Controlling Collateral Parties, or following the
First Priority Lien Satisfaction Date, the Collateral Trustee in the same
form as so received (with any necessary endorsement).
Dynegy Second Lien Shared Security Agreement
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(d) The Collateral Trustee may, without notice to any Grantor except
as required by law and at any time or from time to time, charge, set-off
and otherwise apply all or any part of the Parity Lien Obligations against
any funds held with respect to the Account Collateral or in any other
deposit account.
(e) In the event of any sale or other disposition of any of the
Intellectual Property Collateral of any Grantor, the goodwill symbolized by
any Trademarks subject to such sale or other disposition shall be included
therein, and such Grantor shall supply to the Collateral Trustee or their
designee such Grantor's know-how and expertise, and documents and things
relating to any Intellectual Property Collateral subject to such sale or
other disposition, and such Grantor's customer lists and other records and
documents relating to such Intellectual Property Collateral and to the
manufacture, distribution, advertising and sale of products and services of
such Grantor.
Section 19. Indemnity and Expenses. (a) Each Grantor agrees to
indemnify, defend and save and hold harmless the Collateral Trustee and each
Secured Party and each of their affiliates and their respective 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 this Second Lien Shared Security Agreement (including, without
limitation, enforcement of this Second Lien Shared Security Agreement), except
to the extent such claim, damage, loss, liability or expense is found in a
final, non-appealable judgment by a court of competent jurisdiction to have
resulted from such Indemnified Party's gross negligence or willful misconduct.
The provisions of this Section 19(a) shall survive the termination of this
Agreement.
(b) Each Grantor will upon demand pay to the Collateral Trustee the
amount of any and all reasonable expenses, including, without limitation, the
reasonable fees and expenses of their counsel and of any experts and agents,
that the Collateral Trustee may incur in connection with (i) the administration
of this Second Lien Shared Security Agreement, (ii) the custody, preservation,
use or operation of, or the sale of, collection from or other realization upon,
any of the Shared Collateral of such Grantor, (iii) the exercise or enforcement
of any of the rights of the Collateral Trustee, the Secured Parties hereunder or
(iv) the failure by such Grantor to perform or observe any of the provisions
hereof.
(c) EACH GRANTOR ACKNOWLEDGES THAT THIS SECOND LIEN SHARED SECURITY
AGREEMENT AND OTHER TRANSACTION DOCUMENTS CONTAIN PROVISIONS RELEASING EACH
INDEMNIFIED PARTY FROM LIABILITY AND/OR INDEMNIFYING AND HOLDING HARMLESS EACH
INDEMNIFIED PARTY FOR, AMONG OTHER THINGS, INDEMNIFIED PARTY'S OWN NEGLIGENCE.
EACH GRANTOR AGREES THAT THE RELEASE AND/OR INDEMNITY PROVISIONS CONTAINED IN
THESE DOCUMENTS ARE CAPTIONED TO CLEARLY IDENTIFY THE RELEASE AND/OR INDEMNITY
PROVISIONS AND, THEREFORE, ARE SO CONSPICUOUS THAT EACH GRANTOR HAS FAIR NOTICE
OF THE EXISTENCE AND CONTENTS OF SUCH PROVISIONS. EACH GRANTOR HEREBY WAIVES ANY
DEFENSES IT MIGHT ASSERT AGAINST
Dynegy Second Lien Shared Security Agreement
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EACH INDEMNIFIED PARTY BASED ON THE HOLDING OF THE TEXAS SUPREME COURT IN ETHYL
CORP. x. XXXXXX CONST. CO., 725 S.W.2d 705 (Tex. 1987), PAGE PETROLEUM, INC., et
al. V. DRESSER INDUSTRIES, INC., et al., 853 S.W.2d 505 (Tex. 1993), AND QUORUM
HEALTH RESOURCES, L.L.C. v. MAVERICK COUNTY HOSPITAL DISTRICT et al., 308 F.3rd
451 (5th Cir. 2002) AND ANY RELATED CASE LAW HOLDINGS.
Section 20. Amendments; Waivers; Additional Grantors; Etc. (a) Subject
to the terms of the Indenture and the Intercreditor Agreement and clause (b)
below, no amendment or waiver of any provision of this Second Lien Shared
Security Agreement, and no consent to any departure by any Grantor herefrom,
shall in any event be effective unless the same shall be in writing and signed
by the Collateral Trustee and DHI and otherwise shall comply with the provisions
of Section 3.01 of the Intercreditor Agreement, and then such waiver or consent
shall be effective only in the specific instance and for the specific purpose
for which given. No failure on the part of the Collateral Trustee or any other
Secured Party to exercise, and no delay in exercising any right hereunder, shall
operate as a waiver thereof; nor shall any single or partial exercise of any
such right preclude any other or further exercise thereof or the exercise of any
other right.
(b) This Second Lien Shared Security Agreement shall be automatically
amended or waived without further action under the conditions set forth in the
Intercreditor Agreement. In the event of any such amendment, the Collateral
Trustee upon the request of any Grantor or any First Priority Secured Party will
enter into an instrument confirming such amendment or waiver.
(c) Upon the execution and delivery, or authentication, by any Person
of a security agreement supplement in substantially the form of Exhibit A hereto
(each a "Second Lien Shared Security Agreement Supplement"), (i) such Person
shall be referred to as an "Additional Grantor" and shall be and become a
Grantor hereunder, and each reference in this Second Lien Shared Security
Agreement to "Grantor" shall also mean and be a reference to such Additional
Grantor, and each reference in this Second Lien Shared Security Agreement to
"Shared Collateral" shall also mean and be a reference to the Shared Collateral
of such Additional Grantor, and (ii) the supplemental schedules I-VI attached to
each Second Lien Shared Security Agreement Supplement shall be incorporated into
and become a part of and supplement Schedules I-VI, respectively, hereto, and
the Collateral Trustee may attach such supplemental schedules to such Schedules;
and each reference to such Schedules shall mean and be a reference to such
Schedules as supplemented pursuant to each Second Lien Shared Security Agreement
Supplement.
Section 21. Notices, Etc. (a) Unless otherwise expressly provided
herein, all notices and other communications provided for hereunder or any other
Shared Collateral Document shall be in writing (including by facsimile
transmission). All such written notices shall be mailed, faxed or delivered to
the applicable address, facsimile number or (subject to Section 21(c))
electronic mail address, as follows:
(i) as to the Collateral Trustee, addressed to its address specified
in the Indenture;
Dynegy Second Lien Shared Security Agreement
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(ii) as to any Grantor, addressed to it at its address shown on
Schedule I hereto; and
(iii) as to any party, at such other address as shall be designated by
such party in a written notice to the other parties.
All such notices and other communications shall be deemed to be given
or made upon the earlier to occur of (i) actual receipt by the relevant party
hereto and (ii) (A) if delivered by hand or by courier, when signed for by or on
behalf of the relevant party hereto; (B) if delivered by mail, four Business
Days after deposit in the mails, postage prepaid; (C) if delivered by facsimile,
when sent and receipt has been confirmed by telephone; and (D) if delivered by
electronic mail (which form of delivery is subject to the provisions of Section
21(c)), when delivered. In no event shall a voicemail message be effective as a
notice, communication or confirmation hereunder.
(b) Any amendment or waiver of any provision of this Second Lien
Shared Security Agreement or of any Second Lien Shared Security Agreement
Supplement or Schedule hereto may be transmitted and/or signed by facsimile. The
effectiveness of any such documents and signatures shall, subject to applicable
law, have the same force and effect as manually signed originals and shall be
binding on all parties thereto. The Collateral Trustee may also require that any
such documents and signatures be confirmed by a manually signed original
thereof; provided, however, that the failure to request or deliver the same
shall not limit the effectiveness of any facsimile document or signature.
(c) Electronic mail and Internet and intranet websites may be used
only to distribute routine communications and to distribute Shared Collateral
Documents for execution by the parties thereto, and may not be used for any
other purpose.
(d) The Collateral Trustee shall be entitled to rely and act upon any
notices purportedly given by or on behalf of any Grantor even if (i) such
notices were not made in a manner specified herein, were incomplete or were not
preceded or followed by any other form of notice specified herein, or (ii) the
terms thereof, as understood by the recipient, varied from any confirmation
thereof. Each Grantor shall indemnify the Collateral Trustee from all losses,
costs, expenses and liabilities resulting from the reliance by such Person on
each notice purportedly given by or on behalf of any Grantor. All telephonic
notices to and other communications with the Collateral Trustee may be recorded
by the Collateral Trustee, and each of the parties hereto hereby consents to
such recording.
Section 22. Continuing Security Interest. This Second Lien Shared
Security Agreement shall create a continuing security interest in the Shared
Collateral and shall (a) remain in full force and effect until all of the Shared
Collateral is released, and this Second Lien Shared Security Agreement is
terminated in accordance with the terms of this Second Lien Shared Security
Agreement and the Indenture, (b) be binding upon each Grantor, its successors
and assigns and (c) inure, together with the rights and remedies of the
Collateral Trustee hereunder, to the benefit of the Collateral Trustee and on
behalf of the Secured Parties and their respective successors, transferees and
assigns. Without limiting the generality of the foregoing clause (c), any holder
of the Notes may assign or otherwise transfer all or any portion of its Notes to
any
Dynegy Second Lien Shared Security Agreement
35
other Person, and such other Person shall thereupon become vested with all the
benefits in respect thereof granted to such holder of the Notes herein or
otherwise, in each case as provided in Section 2.06 of the Indenture.
Section 23. Release; Termination. The Collateral Trustee shall release
all or any portion of the Shared Collateral solely on terms and subject to the
conditions set forth in, or as required by, Article 2 of the Intercreditor
Agreement or Section 12.04 of the Indenture. Upon request (and at the expense)
of any Grantor, the Collateral Trustee will execute and deliver such instruments
of release as such Grantor may reasonably request to evidence any such release.
Section 24. Security Interest Absolute. The obligations of each
Grantor under this Second Lien Shared Security Agreement are independent of the
Parity Lien Obligations or any other Obligations of any other Grantor under or
in respect of this Second Lien Shared Security Agreement, and a separate action
or actions may be brought and prosecuted against each Grantor to enforce this
Second Lien Shared Security Agreement, irrespective of whether any action is
brought against such Grantor or any other Grantor or whether such Grantor or any
other Grantor is joined in any such action or actions. All rights of the
Collateral Trustee and the other Secured Parties and the pledge, assignment and
security interest hereunder, and all obligations of each Grantor hereunder,
shall to the fullest extent permitted under applicable law, be irrevocable,
absolute and unconditional irrespective of, and to the fullest extent permitted
under applicable law, each 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 this Second Lien Shared
Security Agreement 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 Parity Lien Obligations or any other
Obligations of any other Grantor under or in respect of this Second Lien
Shared Security Agreement or any other amendment or waiver of or any
consent to any departure from this Second Lien Shared Security Agreement,
including, without limitation, any increase in the Parity Lien Obligations
resulting from the extension of additional credit to any Grantor or any of
its Subsidiaries or otherwise;
(c) any taking, exchange, release or non-perfection of any Shared
Collateral or 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
Parity Lien Obligations;
(d) any manner of application of any Shared Collateral or any other
collateral, or proceeds thereof, to all or any of the Parity Lien
Obligations, or any manner of sale or other disposition of any Shared
Collateral or any other collateral for all or any of the Parity Lien
Obligations or any other Obligations of any other Grantor under or in
respect of this Second Lien Shared Security Agreement or any other assets
of any Grantor or any of its Subsidiaries;
Dynegy Second Lien Shared Security Agreement
36
(e) any change, restructuring or termination of the corporate
structure or existence of any Grantor or any of its Subsidiaries;
(f) any failure of any Secured Party to disclose to any Grantor any
information relating to the business, condition (financial or otherwise),
operations, performance, assets, nature of assets, liabilities or prospects
of any other Grantor now or hereafter known to such Secured Party (each
Grantor waiving any duty on the part of the Secured Parties to disclose
such information);
(g) the failure of any other Person to execute this Second Lien
Shared Security Agreement or any other Shared Collateral Document, guaranty
or agreement or the release or reduction of liability of any Grantor or
other grantor or surety with respect to the Parity Lien Obligations; or
(h) any other circumstance (including, without limitation, any
statute of limitations) or any existence of or reliance on any
representation by any Secured Party that might otherwise constitute a
defense available to, or a discharge of, such Grantor or any other Grantor
or a third party grantor of a security interest.
To the fullest extent permitted under applicable law, this Second Lien Shared
Security Agreement shall continue to be effective or be reinstated, as the case
may be, if at any time any payment of any of the Parity Lien Obligations is
rescinded or must otherwise be returned by the Collateral Trustee or any Secured
Party or by any other Person upon the insolvency, bankruptcy or reorganization
of any Grantor or otherwise, all as though such payment had not been made.
Section 25. Execution in Counterparts. This Second Lien Shared
Security Agreement may be executed in any number of 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 Second Lien Shared Security Agreement by
telecopier shall be effective as delivery of an original executed counterpart of
this Second Lien Shared Security Agreement.
Section 26. The Mortgages. In the event that any of the Shared
Collateral hereunder is also subject to a valid and enforceable Lien under the
terms of any Mortgage or the Second Preferred Fleet Mortgage and the terms of
such Mortgage or Second Preferred Fleet Mortgage are inconsistent with the terms
of this Second Lien Shared Security Agreement, then with respect to such Shared
Collateral, the terms of such Mortgage or such Second Preferred Fleet Mortgage
shall be controlling in the case of fixtures and real estate leases, letting and
licenses of, and contracts and agreements relating to the lease of, real
property, and the terms of this Second Lien Shared Security Agreement shall be
controlling in the case of all other Shared Collateral.
Section 27. Collateral in the State of Louisiana. (a) As to all Shared
Collateral now or hereafter located in the State of Louisiana, or as to which
the laws of the State of Louisiana may now be or hereafter become applicable,
each Grantor hereby acknowledges the Parity Lien Obligations, whether now
existing or to arise hereafter, and confesses judgment thereon if the Parity
Lien Obligations are not paid at maturity, and does by these presents
Dynegy Second Lien Shared Security Agreement
37
consent, agree and stipulate that if any portion of the Parity Lien Obligations
is not promptly and fully paid when due, the Parity Lien Obligations shall, at
the option of the Collateral Trustee and subject to the Intercreditor Agreement,
become immediately due and payable and it shall be lawful for the Collateral
Trustee, without making a demand and without notice or putting in default, the
same being hereby expressly waived, to cause all and singular the Shared
Collateral to be seized and sold by executory process, without appraisement
(appraisement being hereby expressly waived), either in its entirety or in lots
or parcels, as the Collateral Trustee may determine, to the highest bidder for
cash, or on such terms as plaintiff in such proceedings may direct.
(b) To the fullest extent permitted under applicable law, each
Grantor hereby expressly waives: (a) the benefit of appraisement, as provided in
Articles 2332, 2336, 2723 and 2724, Louisiana Code of Civil Procedure, and all
other laws conferring the same; (b) the demand and three (3) days delay accorded
by Articles 2639 and 2721, Louisiana Code of Civil Procedure; (c) the notice of
seizure required by Articles 2293 and 2721, Louisiana Code of Civil Procedure;
(d) the three (3) days delay provided by Articles 2331 and 2722, Louisiana Code
of Civil Procedure; and (e) the benefit of the other provisions of Articles
2331, 2722 and 2723, Louisiana Code of Civil Procedure, and the benefit of any
other Articles or laws relating to rights of appraisement, notice, or delay not
specifically mentioned above; and, to the fullest extent permitted under
applicable law, each Grantor expressly agrees to the immediate seizure of the
Shared Collateral in the event of suit hereon.
(c) Each Grantor acknowledges that the Collateral Trustee shall have
all rights to appointment of a keeper in connection with any action to foreclose
the lien hereof, all in accordance with La. R.S. 9:5136 et seq. The Court before
which the proceedings are pending shall determine the keeper's fees, and the
payment of such fees shall constitute a portion of the Parity Lien Obligations
secured by the lien hereof.
(d) This Section 27 shall in no way affect or be deemed a waiver of
the provisions of Section 28 or Section 29.
Section 28. Governing Law. This Second Lien Shared Security Agreement
shall be governed by, and construed in accordance with, the laws of the State of
New York.
Section 29. Submission to Jurisdiction and Waiver. (a) Each Grantor
hereby irrevocably and unconditionally submits, for itself and its property, to
the nonexclusive jurisdiction of any New York State court or federal court of
the United States sitting in New York City, and any appellate court from any
thereof, in any action or proceeding arising out of or relating to this Second
Lien Shared Security Agreement and the other Indenture Documents to which it is
or is to be a party, or for recognition or enforcement of any judgment, and each
Grantor hereby irrevocably and unconditionally agrees that all claims in respect
of any such action or proceeding may be heard and determined in any such New
York State court or, to the extent permitted by law, in such federal court. Each
Grantor agrees that a final judgment in any such action or proceeding shall be
conclusive and may be enforced in other jurisdictions by suit on the judgment or
in any other manner provided by law. Nothing in this Second Lien Shared Security
Agreement shall affect any right that any party may otherwise have to bring any
action
Dynegy Second Lien Shared Security Agreement
38
or proceeding relating to this Second Lien Shared Security Agreement in the
courts of any jurisdiction.
(b) Each Grantor irrevocably and unconditionally waives, to the
fullest extent it may legally and effectively do so, any objection that it may
now or hereafter have to the laying of venue of any suit, action or proceeding
arising out of or relating to this Second Lien Shared Security Agreement to
which it is or is to be a party in any New York State or federal court. Each
Grantor hereby irrevocably waives, to the fullest extent permitted by law, the
defense of an inconvenient forum to the maintenance of such suit, action or
proceeding in any such court.
(c) EACH GRANTOR HEREBY KNOWINGLY, INTENTIONALLY AND VOLUNTARILY
IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR
COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR
RELATING TO THIS SECOND LIEN SHARED SECURITY AGREEMENT, THE LOANS OR THE ACTIONS
OF ANY BANKS IN THE NEGOTIATION, ADMINISTRATION, PERFORMANCE OR ENFORCEMENT
THEREOF.
Section 30. Intercreditor Agreement. Notwithstanding anything in this
Second Lien Shared Security Agreement to the contrary, the Lien and security
interest granted to the Collateral Trustee pursuant to this Second Lien Shared
Security Agreement and the exercise of any right or remedy by the Collateral
Trustee hereunder are subject to the provisions of the Intercreditor Agreement.
In the event of any conflict between the terms of the Intercreditor Agreement
and this Second Lien Shared Security Agreement, the terms of the Intercreditor
Agreement shall govern.
Dynegy Second Lien Shared Security Agreement
39
IN WITNESS WHEREOF, the parties hereto have executed this Second Lien
Shared Security Agreement to be effective as provided herein.
DYNEGY HOLDINGS INC.
By: /s/ Xxxxxxx X. Xxxx
-------------------------------------
Name: Xxxxxxx X. Xxxx
-----------------------------------
Title: Assistant Treasurer
----------------------------------
Dynegy Second Lien Shared Security Agreement
40
DYNEGY POWER CORP.
DPC II INC.
DYNEGY ENGINEERING, INC.
DYNEGY SERVICES, INC.
DYNEGY POWER MANAGEMENT
SERVICES, L.P.,
By: Dynegy Services, Inc., its
general partner
CALCASIEU POWER, INC.
DYNEGY OPERATING COMPANY
DYNEGY PARTS AND TECHNICAL SERVICES,
INC.
DYNEGY POWER MANAGEMENT SERVICES, INC.
HEP COGEN, INC.
XXXXXXXX XXXXX, INC.
DYNEGY POWER INVESTMENTS, INC.
DYNEGY POWER SERVICES, INC.
DYNEGY POWER NEVADA, INC.
MICHIGAN COGEN, INC.
MICHIGAN POWER, INC.
MICHIGAN POWER HOLDINGS, INC.
OCG COGEN, INC.
OYSTER CREEK COGEN, INC.
PORT XXXXXX XXXXX, INC.
RRP COMPANY
DPC COLOMBIA - OPON POWER RESOURCES
COMPANY
TERMO SANTANDER HOLDING, LLC
RIVERSIDE GENERATION, INC.
RIVERSIDE GENERATING COMPANY, L.L.C.
ROLLING HILLS GENERATION, INC.
DYNEGY RENAISSANCE POWER, INC.
DYNEGY NORTHEAST GENERATION, INC.
XXXXXX POWER, L.L.C.
DYNEGY MIDSTREAM GP, INC.
DYNEGY MIDSTREAM SERVICES, LIMITED
PARTNERSHIP
By: Dynegy Midstream G.P., Inc.,
its general partner
By: /s/ Xxxxxx X. Xxx
-------------------------------------
Xxxxxx X. Xxx
Xx. Vice President-Treasurer
Dynegy Second Lien Shared Security Agreement
41
DYNEGY LIQUIDS MARKETING AND TRADE
DYNEGY OPI, LLC
DYNEGY NGL PIPELINE COMPANY, LLC
DYNEGY INTRASTATE PIPELINE, LLC
DYNEGY ENERGY PIPELINE COMPANY LLC
DYNEGY UPPER HOLDINGS, L.L.C.
DYNEGY HOLDING COMPANY, L.L.C.
DMG ENTERPRISES, INC.
HAVANA DOCK ENTERPRISES, LLC
DMT HOLDINGS, INC.
DMT G.P., L.L.C.
DMT HOLDINGS, L.P.
DYNEGY MARKETING AND TRADE
DYNEGY COAL TRADING & TRANSPORTATION,
L.L.C.
NGC STORAGE, INC.
BLACK THUNDER MEMBER, INC.
PARISH POWER, INC.
CALCASIEU POWER, LLC
DELTA COGEN, INC.
DYNEGY POWER HOLDINGS, INC.
COGEN POWER, INC.
COGEN POWER, L.P.
By: CoGen Power, Inc., its general
partner
DYNEGY LIQUIDS G.P., L.L.C.
By: Dynegy Midstream Services,
Limited Partnership, its sole
member
By: Dynegy Midstream G.P., Inc.
its general partner
DYNEGY INC.
By: /s/ Xxxxxx X. Xxx
-------------------------------------
Xxxxxx X. Xxx
Xx. Vice President-Treasurer
Dynegy Second Lien Shared Security Agreement
42
MIDSTREAM BARGE COMPANY, L.L.C.
DYNEGY REGULATED HOLDINGS, LLC
By: /s/ Xxxxxx X. Xxx
-------------------------------------
Xxxxxx X. Xxx
Vice President-Treasurer
Dynegy Second Lien Shared Security Agreement
43
BG HOLDINGS, INC.
BLACK MOUNTAIN COGEN, INC.
BLUEGRASS GENERATION, INC.
BLUEGRASS GENERATION COMPANY, L.L.C.
DYNEGY CABRILLO II LLC
BLUE RIDGE GENERATION INC.
BLUE RIDGE GENERATION LLC
CHICKAHOMINY GENERATING COMPANY
CHICKAHOMINY POWER, LLC
FLORIDA MERCANTILE POWER, INC.
PALMETTO POWER, L.L.C.
GASIFICATION SERVICES, INC.
GEORGIA MERCANTILE POWER, INC.
HEARD COUNTY POWER, L.L.C.
XXXX COUNTY IPP, INC.
HARTWELL INDEPENDENT POWER PARTNERS,
INC.
HARTWELL POWER COMPANY
DYNEGY DANSKAMMER, L.L.C.
DYNEGY ROSETON, L.L.C.
DYNEGY XXXXXX POWER RETAIL, L.L.C.
DYNEGY GLOBAL ENERGY, INC.
DYNEGY BROADBAND MARKETING AND TRADE
DYNEGY GP INC.
DYNEGY TECHNOLOGY CAPITAL CORP.
DYNEGY STRATEGIC INVESTMENTS, L.P.
By: Dynegy Strategic Investments GP,
L.L.C., its general partner
DYNEGY STRATEGIC INVESTMENTS GP, L.L.C.
RENAISSANCE POWER, L.L.C.
ROLLING HILLS GENERATING, L.L.C.
DYNEGY POWER MARKETING, INC.
By: /s/ Xxxxxxx X. Xxxx
-------------------------------------
Xxxxxxx X. Xxxx
Vice President
Dynegy Second Lien Shared Security Agreement
44
DYNEGY ENERGY SERVICES, INC.
ILLINOIS POWER ENERGY, INC.
DES NORTHEAST, INC.
DEM GP, LLC
DYNEGY ENERGY MARKETING, LP
By: DEM GP, LLC, its general partner
DYNEGY ADMINISTRATIVE SERVICES COMPANY
NIPC, INC.
DFS L.P., LLC
DFS GENERAL PARTNER, LLC
DYNEGY FINANCIAL SERVICES, LIMITED
PARTNERSHIP
DYNEGY XXXXXX MEMBER, INC.
DYNEGY MIDWEST GENERATION , INC.
DYNEGY I.T., INC.
CHESAPEAKE POWER, INC.
XXXXX RIVER ENERGY CORP.
DPC POWER RESOURCES HOLDING COMPANY
DRY CREEK POWER, INC.
ROCKINGHAM POWER, L.L.C.
DYNEGY POWER DEVELOPMENT COMPANY
By: /s/ Xxxxxxx X. Xxxx
-------------------------------------
Xxxxxxx X. Xxxx
Vice President
Dynegy Second Lien Shared Security Agreement
45
DYNEGY MANAGEMENT, INC.
DMS LP, INC.
DMT L.P., L.L.C.
DYNEGY STRATEGIC INVESTMENTS LP, INC.
DEM LP, LLC
By: /s/ Xxxxx X. Xxxxxxxxxxx
-------------------------------------
Xxxxx X. Xxxxxxxxxxx
President
Dynegy Second Lien Shared Security Agreement
46
Acknowledged on the date hereof by:
XXXXX FARGO BANK MINNESOTA, N.A.,
as Collateral Trustee
By: /s/ Xxxxxxx Xxxx
-------------------------------------
Name: Xxxxxxx Xxxx
Title: Corporate Trust Officer
Dynegy Second Lien Shared Security Agreement
