Credit and Collateral. for the PFI's Obligations. The PFI shall pledge collateral pursuant to the terms and conditions of the Advances Agreement to secure its Credit Enhancement. As security for its Credit Enhancement together with all other obligations of the PFI arising under this Contract, the PFI, pursuant to the Advances Agreement, assigns, transfers, and pledges to the Bank, and grants to the Bank, a security interest in collateral identified, by category, by specific item or otherwise, by the PFI. The Credit Enhancement and all other obligations of the PFI under this Contract shall be an obligation arising under and secured pursuant to the Advances Agreement, and deemed to be Indebtedness or Liabilities (if either term is used in the Advances Agreement) of the PFI and an extension of credit by the Bank pursuant to the Advances Agreement. The PFI shall at all times maintain an adequate amount of pledged collateral for its Credit Enhancement, which amount shall be determined by the Bank, taking into account other credit obligations of the PFI secured pursuant to the terms and conditions of the Advances Agreement. It is understood and agreed, notwithstanding any other provision of this Contract or any pledge of collateral for a particular purpose, that all collateral, and proceeds thereof, in which the Bank has a security interest secures any and all indebtedness or liability of the PFI to the Bank arising under any agreement with the Bank as more fully provided in the Advances Agreement and in Section 4.8 of this Contract. Notwithstanding the foregoing provision of this Section 4.7, the collateral and security interest granted hereunder shall not be deemed in any manner to evidence that the delivery of the Mortgages hereunder is a secured borrowing as opposed to a true sale. The PFI agrees that until all Mortgages serviced or credit enhanced under this Contract are repaid or otherwise disposed of, the PFI will continue to provide the Bank with financial information as required by the Guides, the MPF Program Requirements and the Bank from time to time, and to notify the Bank promptly in writing of any material changes that occur in the PFI's financial condition. The PFI further agrees that the Bank may provide such financial information to the MPF Provider and other Participants or potential Participants in the Mortgages. Further, the PFI represents and warrants to the Bank that the PFI has the full power and authority to provide the Credit Enhancement required under this Article IV, and has duly authorized such Credit Enhancement as more particularly described in Section 5.2 (b).
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Sources: Participating Financial Institution Agreement (Federal Home Loan Bank of New York)
Credit and Collateral. Seller’s Credit and Collateral Requirements Seller shall provide and maintain Performance Assurance in an amount equal to ten percent (10%) of the sum of the estimated Delivered Capacity Payments for all of the remaining months of the Delivery Period including the current month, with such estimated Delivered Capacity Payments being based on the applicable Contract Capacity values times the applicable Capacity Rates and not being subject to reduction, change or adjustment based on the results of any dispatch of the DR Resource made in accordance with this Agreement. Seller shall post one-half of the Performance Assurance within thirty (30) days following the Execution Date, with the remainder to be posted within thirty (30) days after CPUC Approval is obtained or waived by SCE in its sole discretion. Grant of Security Interest/Remedies To secure its obligations under this Agreement, and until released as provided herein, Seller hereby grants to SCE a present and continuing security interest in, and lien on (and right of setoff against), and collateral assignment of, the Performance Assurance and all cash collateral and cash equivalent collateral and any and all proceeds resulting therefrom or the liquidation thereof, whether now or hereafter held by, on behalf of, or for the PFI's Obligationsbenefit of, such SCE, and each Party agrees to take such action as the other Party reasonably requires in order to perfect SCE’s first-priority security interest in, and lien on (and right of setoff against), such Performance Assurance and collateral and any and all proceeds resulting therefrom or from the liquidation thereof. Upon or any time after the occurrence or deemed occurrence and during the continuation of an Event of Default or an Early Termination Date, SCE, if it is the Non-Defaulting Party, may do any one or more of the following: (i) exercise any of the rights and remedies of a SCE with respect to all Performance Assurance, including any such rights and remedies under law then in effect; (ii) exercise its rights of setoff against any and all property of the Defaulting Party in the possession of the Non-Defaulting Party or its agent; (iii) draw on any outstanding Letter of Credit issued for its benefit; and (iv) liquidate all Performance Assurance then held by or for the benefit of SCE free from any claim or right of any nature whatsoever of the Defaulting Party, including any equity or right of purchase or redemption by the Defaulting Party. In such an event SCE shall apply the proceeds of the collateral realized upon the exercise of any such rights or remedies to reduce the Seller’s obligations under the Agreement (the Seller remaining liable for any amounts owing to SCE after such application), subject to SCE’s obligation to return any surplus proceeds remaining after such obligations are satisfied in full. The PFI Seller shall pledge collateral pay on request and indemnify SCE against any taxes (including without limitation, any applicable transfer taxes and stamp, registration or other documentary taxes), assessments, or charges that may become payable by reason of the security interests, general first lien and right of offset granted under this Agreement or the execution, delivery, performance or enforcement of this Agreement, as well as any penalties with respect thereto. Reduction and Substitution of Performance Assurance Subject to Section 4.1, on any Business Day, Seller may request a reduction in the amount of Performance Assurance previously provided by the Seller for the benefit of SCE, provided that, after giving effect to the requested reduction in Performance Assurance, no Event of Default or Potential Event of Default with respect to the Seller shall have occurred and be continuing, and no Early Termination Date has occurred or been designated as a result of an Event of Default with respect to the Seller for which there exist any unsatisfied payment obligations. A permitted reduction in Performance Assurance may be effected by the Transfer of Cash to the Seller or the reduction of the amount of an outstanding Letter of Credit previously issued for the benefit of SCE. The Seller shall have the right to specify the means of effecting the reduction in Performance Assurance. In all cases, the cost and expense of reducing Performance Assurance (including, but not limited to, the reasonable costs, expenses, and attorneys’ fees of SCE) shall be borne by the Seller. Unless otherwise agreed in writing by the Parties, (i) if the Seller’s reduction demand is made on or before the Notification Time on a Business Day, then SCE shall have one (1) Business Day to effect a permitted reduction in Performance Assurance and (ii) if the Seller’s reduction demand is made after the Notification Time on a Business Day, then SCE shall have two (2) Business Days to effect a permitted reduction in Performance Assurance, in each case, if such reduction is to be effected by the return of Cash to the Seller. If a permitted reduction in Performance Assurance is to be effected by a reduction in the amount of an outstanding Letter of Credit previously issued for the benefit of SCE, SCE shall promptly take such action as is reasonably necessary to effectuate such reduction. Except when an Event of Default or Potential Event of Default with respect to the Seller shall have occurred and be continuing or an Early Termination Date has occurred or been designated as a result of an Event of Default with respect to the Seller for which there exist any unsatisfied payment obligations, the Seller may substitute Performance Assurance for other existing Performance Assurance of equal value upon one (1) Business Day’s written Notice (provided such Notice is made on or before the Notification Time, otherwise the notification period shall be two (2) Business Days) to SCE. Upon the Transfer to SCE of the substitute Performance Assurance, SCE shall Transfer the relevant replaced Performance Assurance to the Seller within two (2) Business Days. Notwithstanding anything herein to the contrary, no such substitution shall be permitted unless (i) the substitute Performance Assurance is Transferred simultaneously or has been Transferred to SCE prior to the release of the Performance Assurance to be returned to the Seller and the security interest in, and general first lien upon, such substituted Performance Assurance granted pursuant hereto in favor of SCE shall have been perfected as required by applicable law and shall constitute a first priority perfected security interest therein and general first lien thereon, and (ii) after giving effect to such substitution, the substitute Performance Assurance shall equal the amount of Performance Assurance being replaced. Each substitution of Performance Assurance shall constitute a representation and warranty by the Seller that the substituted Performance Assurance shall be subject to and governed by the terms and conditions of this Article 4, including without limitation the Advances Agreement security interest in, general first lien on and right of offset against, such substituted Performance Assurance granted pursuant hereto in favor of SCE pursuant to secure this Article 4. The Transfer of any Performance Assurance by SCE in accordance with this Section 4.3 shall be deemed a release by SCE of its Credit Enhancementsecurity interest, general first lien and right of offset granted pursuant to this Article 4 hereof only with respect to such returned Performance Assurance. As security In connection with each Transfer of any Performance Assurance pursuant to this Article 4, the Seller will, upon request of SCE, execute a receipt showing the Performance Assurance Transferred to it. Administration of Performance Assurance Cash. Performance Assurance provided in the form of Cash to SCE shall be subject to the following provisions. Notwithstanding the provisions of applicable law, if no Event of Default has occurred and is continuing with respect to SCE and no Early Termination Date has occurred or been designated as a result of an Event of Default with respect to SCE for which there exist any unsatisfied payment obligations, then SCE shall have the right to sell, pledge, rehypothecate, assign, invest, use, commingle or otherwise use in its Credit Enhancement together business any Cash that it holds as Performance Assurance hereunder, free from any claim or right of any nature whatsoever of the Seller, including any equity or right of redemption by the Seller. So long as no Event of Default or Potential Event of Default with all other respect to the Seller has occurred and is continuing, and no Early Termination Date for which any unsatisfied payment obligations of the PFI arising under this ContractSeller exist has occurred or been designated as the result of an Event of Default with respect to the Seller, and to the extent that an obligation to Transfer Performance Assurance would not be created or increased by the Transfer, in the event that SCE is holding Cash, SCE will Transfer (or caused to be Transferred) to the Seller, in lieu of any interest or other amounts paid or deemed to have been paid with respect to such Cash (all of which may be retained by SCE), the PFIInterest Amount. The Seller shall invoice SCE monthly setting forth the calculation of the Interest Amount due, pursuant and SCE shall make payment thereof by the later of (A) the third (3rd) Business Day of the first month after the last month to which such invoice relates or (B) the third (3rd) Business Day after the day on which such invoice is received. On or after the occurrence of a Potential Event of Default or an Event of Default with respect to the Advances Agreement, assigns, transfers, and pledges Seller or an Early Termination Date as a result of an Event of Default with respect to the BankSeller, and grants to SCE shall retain any such Interest Amount as additional Performance Assurance hereunder until the Bank, a security interest in collateral identified, by category, by specific item or otherwise, by the PFI. The Credit Enhancement and all other obligations of the PFI Seller under this Contract shall be an obligation arising under and secured pursuant to the Advances Agreement, and deemed to be Indebtedness or Liabilities (if either term is used Agreement have been satisfied in the Advances Agreement) case of the PFI and an extension Early Termination Date or for so long as such Event of credit by the Bank pursuant to the Advances Agreement. The PFI shall at all times maintain an adequate amount of pledged collateral for its Credit Enhancement, which amount shall be determined by the Bank, taking into account other credit obligations of the PFI secured pursuant to the terms and conditions of the Advances Agreement. It Default is understood and agreed, notwithstanding any other provision of this Contract or any pledge of collateral for a particular purpose, that all collateral, and proceeds thereof, in which the Bank has a security interest secures any and all indebtedness or liability of the PFI to the Bank arising under any agreement with the Bank as more fully provided continuing in the Advances Agreement and in Section 4.8 case of this Contract. Notwithstanding the foregoing provision an Event of this Section 4.7, the collateral and security interest granted hereunder shall not be deemed in any manner to evidence that the delivery of the Mortgages hereunder is a secured borrowing as opposed to a true sale. The PFI agrees that until all Mortgages serviced or credit enhanced under this Contract are repaid or otherwise disposed of, the PFI will continue to provide the Bank with financial information as required by the Guides, the MPF Program Requirements and the Bank from time to time, and to notify the Bank promptly in writing of any material changes that occur in the PFI's financial condition. The PFI further agrees that the Bank may provide such financial information to the MPF Provider and other Participants or potential Participants in the Mortgages. Further, the PFI represents and warrants to the Bank that the PFI has the full power and authority to provide the Credit Enhancement required under this Article IV, and has duly authorized such Credit Enhancement as more particularly described in Section 5.2 (b)Default.
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