Exhibit 10.18.2
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AMENDED AND RESTATED SECURITY DEPOSIT AGREEMENT
between
EME HOMER CITY GENERATION L.P.
and
THE BANK OF NEW YORK
as Collateral Agent
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Dated as of December __, 2001
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TABLE OF CONTENTS
PAGE
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ARTICLE I DEFINITIONS...............................................2
Section 1.1 Defined Terms.........................................2
Section 1.2 OTHER DEFINITIONAL PROVISIONS.........................7
ARTICLE II AGREEMENT OF COLLATERAL AGENT; CREATION OF ACCOUNTS; GRANT OF
SECURITY INTERESTS....................................7
Section 2.1 AGREEMENT OF COLLATERAL AGENT.........................7
Section 2.2 CREATION OF ACCOUNTS AND SUBACCOUNTS..................7
Section 2.3 DELIVERY OF REVENUES, ETC. TO COLLATERAL AGENT........9
Section 2.4 SECURITY INTERESTS IN THE LESSEE ACCOUNTS.............9
Section 2.5 SECURITIES ACCOUNTS..................................10
ARTICLE III DEPOSITS INTO ACCOUNTS.................................11
Section 3.1 REVENUE ACCOUNT......................................11
Section 3.2 RECOVERY EVENT PROCEEDS ACCOUNT......................11
Section 3.3 RESERVE ACCOUNT......................................11
Section 3.4 EQUITY ACCOUNT.......................................12
Section 3.5 DEPOSITS IRREVOCABLE.................................12
ARTICLE IV TRANSFERS FROM ACCOUNTS.................................12
Section 4.1 REVENUE ACCOUNT......................................12
Section 4.2 RECOVERY EVENT PROCEEDS ACCOUNT......................14
Section 4.3 SENIOR RENT PAYMENT ACCOUNT..........................15
Section 4.4 RESERVE ACCOUNT......................................15
Section 4.5 PERMITTED INDEBTEDNESS ACCOUNT.......................15
Section 4.6 EQUITY ACCOUNT.......................................16
Section 4.7 SUPPLEMENTAL ACCOUNT.................................20
Section 4.8 SUBORDINATED RENT PAYMENT ACCOUNT....................21
Section 4.9 SUBORDINATED RESERVE ACCOUNT.........................21
Section 4.10 SUSPENDED DISTRIBUTIONS ACCOUNT....................22
Section 4.11 DELIVERY OF REQUEST LETTERS........................22
Section 4.12 SHORTFALL NOTICES..................................22
Section 4.13 TRANSFERS FROM ACCOUNTS DURING A DEFAULT PERIOD....22
Section 4.14 COLLATERAL AGENT'S CALCULATIONS....................24
Section 4.15 INSUFFICIENT AMOUNTS...............................25
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ARTICLE V INVESTMENT...............................................25
ARTICLE VI COLLATERAL AGENT........................................26
Section 6.1 RIGHTS, DUTIES, ETC..................................26
Section 6.2 RESIGNATION OR REMOVAL...............................27
ARTICLE VII DETERMINATIONS.........................................27
ARTICLE VIII MISCELLANEOUS.........................................27
Section 8.1 INDEMNIFICATION OF COLLATERAL AGENT..................27
Section 8.2 WAIVER OF RIGHT OF SET-OFF...........................28
Section 8.3 TERMINATION..........................................28
Section 8.4 SEVERABILITY.........................................29
Section 8.5 COUNTERPARTS.........................................29
Section 8.6 AMENDMENTS...........................................29
Section 8.7 APPLICABLE LAW.......................................29
Section 8.8 NOTICES..............................................29
Section 8.9 BENEFIT OF SECURITY DEPOSIT AGREEMENT................30
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AMENDED AND RESTATED SECURITY DEPOSIT AGREEMENT, dated as of
December __, 2001 (this "AGREEMENT"), between EME HOMER CITY GENERATION L.P., a
Pennsylvania limited partnership ("EME HOMER CITY" or the "FACILITY Lessee"),
and THE BANK OF NEW YORK, as collateral agent for the Secured Parties (as
defined below) (in such capacity, the "COLLATERAL AGENT").
RECITALS
A. Contemporaneously herewith, EME Homer City will enter into a
transaction pursuant to the Participation Agreements listed on SCHEDULE 1, each
by and among EME Homer City, the applicable Owner Lessor, ▇▇▇▇▇ Fargo Bank
Northwest, National Association, not in its individual capacity but solely as
Owner Manager, the Owner Participant, ▇▇▇▇▇ City Funding LLC, as Lender, the
Lease Indenture Trustee, the Security Agent and The Bank of New York, not in its
individual capacity but solely as Bondholder Trustee (as amended, modified and
supplemented and in effect from time to time, collectively, the "PARTICIPATION
AGREEMENTS") whereby EME Homer City will sell undivided interests in its
generating assets to the Owner Lessors and the Owner Lessors will lease such
undivided interests in its generating assets to EME Homer City under the
Facility Leases.
B. In consideration of the transactions contemplated by the
Participation Agreements, EME Homer City will be obligated to pay to the Secured
Parties the aggregate amount of all obligations owed by EME Homer City to the
Secured Parties under the Operative Documents (the "LEVERAGED LEASE
OBLIGATIONS").
C. In satisfaction of the requirements of the Secured Parties, the
Facility Lessee desires by this Agreement to provide interests in certain
Accounts as security for EME Homer City's obligations under the Participation
Agreements and the other Operative Documents.
D. In order to simplify administration of such Accounts and to
provide for the orderly enforcement of their respective rights, the Secured
Parties have appointed the Collateral Agent to serve as their common
representative, to be the beneficiary under any security interest intended to
benefit the Secured Parties, and to hold the liens created, or to be created,
under the Operative Documents.
E. The parties hereto desire by this Agreement (as defined above) to
provide for the receipt of Revenues and the application thereof to the payment
of Operating Expenses (as defined below) and Leveraged Lease Obligations and for
other purposes as described herein.
F. Pursuant to the Ownership and Operation Agreement, dated as of
December ___, 2001 (as amended, supplemented or otherwise modified from time to
time, the "OWNERSHIP AND OPERATION AGREEMENT"), among the Collateral Agent and
the Secured Parties, the Collateral Agent has agreed to serve as a common
collateral agent for all Secured Parties.
G. It is a condition precedent to the approval by the Secured
Parties of the transactions contemplated by the Operative Documents that the
Facility Lessee shall have executed and delivered this Agreement to the
Collateral Agent for the benefit of the Secured Parties.
H. The parties hereto desire to amend and restate the Security
Deposit Agreement, among Edison Mission Holdings Co., Edison Mission Finance
Co., ▇▇▇▇▇ City Property Holdings, Inc., Chestnut Ridge Energy Co., Mission
Energy Westside, Inc., EME Homer City Generation L.P. and United States Trust
Company of New York, as Collateral Agent, dated March 18, 1999 in its entirety
and release the liens granted therein as provided herein.
NOW, THEREFORE, in consideration of the foregoing premises and for
other good and valuable consideration, the receipt of which is hereby
acknowledged, each of the parties hereto hereby agrees that the Security Deposit
Agreement, dated March 18, 1999 is hereby amended and restated as follows:
ARTICLE I
DEFINITIONS
Section 1.1 Defined Terms. The following terms shall have the
meanings indicated:
"ACCOUNTS" means all accounts established pursuant to SECTION 2.2 of
this Agreement.
"ADDITIONAL RESERVE PERIOD" means the period from and including the
Additional Reserve Trigger Date to but excluding the Lien Release Date.
"ADDITIONAL RESERVE TRIGGER DATE" means the first Restricted
Payment Date on which the conditions set forth in Section 6.9(c)(i) of the
Participation Agreement are not satisfied.
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"AMENDMENT DATE" means the date the Operative Documents are
executed.
"AUTHORIZED REPRESENTATIVE" means those of officers and employees
of the Facility Lessee whose signatures and incumbency shall have been certified
by the Facility Lessee to the Collateral Agent and each Owner Lessor's
Representative.
"COLLATERAL AGENT" has the meaning specified in the PREAMBLE.
"COMPONENT A LETTER OF CREDIT" means a letter of credit that may be
delivered to the Collateral Agent at the election of a Owner Lessor in total or
partial satisfaction of the amount on deposit in the applicable subaccount of
the Equity Account in accordance with Section 4.6 hereof.
"DEFAULT PERIOD" means the period commencing on the date the
Collateral Agent receives a written notice from the Facility Lessee or any of
the Secured Parties stating that a Lease Default or a Lease Event of Default has
occurred and is continuing under any of the Facility Leases. Such notice shall
be deemed to have been delivered if a voluntary petition of Bankruptcy has been
filed under Title 11 of the United States Code (or any similar action has been
taken under the laws of any other jurisdiction) with respect to the Facility
Lessee.
"DEPOSITARY" means Bank of America NT&SA.
"EME HOMER CITY" has the meaning specified in the PREAMBLE.
"ENTITLEMENT ORDER" means "entitlement order" as defined in Article
8 of the New York UCC.
"EQUITY ACCOUNT" has the meaning specified in SECTION 2.2.
"FACILITY LESSEE PROVIDED LETTER OF CREDIT" has the meaning provided
in SECTION 4.6(B)(II).
"LIEN RELEASE DATE" means the date on which all amounts payable in
respect of the Lessor Notes have been paid in full and the Lien of the Lease
Indenture has been released in accordance with the terms thereof.
"LIMITATION PERIOD" means each period (a) commencing on a first
Restricted Payment Date on which the condition contained in Section 6.9(c)(i)
of the applicable Participation Agreement is not satisfied and which
immediately succeeds a Restricted Payment Date on which such condition was
satisfied and (b) ending on the first subsequent Restricted Payment Date on
which the condition contained in Section 6.9(c)(i) of the applicable
Participation Agreement is satisfied.
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"MONTHLY TRANSFER DATE" means the last Business Day of each month.
"MOODY'S" means ▇▇▇▇▇'▇ Investors Service, Inc.
"NEW YORK UCC" means the Uniform Commercial Code as from time to
time in effect in the State of New York.
"NOTICE OF ACTION" has the meaning specified in the Lease Indenture.
"OBLIGATIONS" means all obligations and liabilities of the Facility
Lessee which may arise under or in connection with the Operative Documents or
any other Transaction Document whether on account of Rent payment obligations,
reimbursement obligations, the unpaid principal of and interest on Permitted
Indebtedness, fees, indemnities, costs, expenses or otherwise (including all
fees and disbursements of counsel to the Collateral Agent and to the Secured
Parties that are required to be paid by the Facility Lessee pursuant to the
terms of any Transaction Document).
"OPERATING ACCOUNT" has the meaning specified in SECTION 2.2.
"OPERATING EXPENSES" means, in respect of any period, all cash
amounts paid by the Facility Lessee in the conduct of its business during such
period, including premiums for insurance policies, fuel supply and
transportation costs, utilities, costs of maintaining, renewing and amending
Governmental Approvals, franchise, licensing, property, real estate and income
taxes, sales and excise taxes, general and administrative expenses, employee
salaries, wages and other employment-related costs, business management and
administrative services fees and other fees and expenses necessary for the
continued operation and maintenance of the Facility and the conduct of business
of EME Homer City.
"OPERATIVE DOCUMENTS" has the meaning specified in each of the
Participation Agreements.
"ORGANIC DOCUMENT" means, with respect to any Person that is a
corporation, its certificate of incorporation, its by-laws and all shareholder
agreements, voting trusts and similar arrangements applicable to any of its
authorized shares of capital stock, and, with respect to any Person that is a
limited partnership, its certificate of limited partnership and partnership
agreement.
"OWNER LESSOR'S REPRESENTATIVE" means each Person designated as
serving as indenture trustee, collateral agent, lenders' representative or in
any similar
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capacity for an Owner Lessor, provided however, that for as long as the Lessor
Notes of such Owner Lessor are outstanding, this term shall refer to the
Security Agent.
"PAYMENT DATES" means Rent Payment Dates and Permitted Indebtedness
Payment Dates.
"PERMITTED INDEBTEDNESS ACCOUNT" has the meaning set forth in
Section 2.2 hereof.
"PERMITTED INDEBTEDNESS PAYMENT DATE" means, with respect to any
Permitted Indebtedness, any date on which amounts are payable on such Permitted
Indebtedness.
"PLEDGED ACCOUNTS" means, collectively, the Revenue Account, the
Senior Rent Payment Account, the Recovery Event Proceeds Account and the Equity
Account.
"PROCEEDS" has the meaning specified in the New York UCC.
"RECOVERY EVENT" means any settlement of or payment of $5,000,000
or more in respect of (a) any property or casualty insurance claim relating to
the Facility or any part thereof or (b) any seizure, condemnation, confiscation
or taking of, or requisition of title or use of, the Facility or any part
thereof by any Governmental Authority.
"RECOVERY EVENT PROCEEDS" means proceeds received in respect of a
Recovery Event (regardless of whether the amount thereof is less than
$5,000,000).
"RECOVERY EVENT PROCEEDS ACCOUNT" has the meaning specified in
Section 2.2.
"REQUEST LETTER" means each letter from time to time delivered by an
Authorized Representative of the Facility Lessee or by the Facility Lessee to
the Collateral Agent requesting the transfer and/or release of funds from one or
more Accounts or subaccounts, as applicable to or on behalf of the Facility
Lessee in accordance with the terms of this Security Deposit Agreement, each
such letter to be in such form acceptable to the Collateral Agent.
"REQUIRED SECURED PARTIES" has the meaning specified in the
Ownership and Operation Agreement.
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"RESTORATION" means the replacement or restoration of the Facility
or any part thereof in respect of which the Facility Lessee or any of the Owner
Lessors have received Recovery Event Proceeds.
"RESTRICTED PAYMENT BLOCKAGE DATE" means any date on which the
Facility Lessee would not be permitted to make a Component A Payment pursuant to
Section 6.9 of the applicable Participation Agreement (other than as a result of
the failure to satisfy the condition set forth in Section 6.9(a) of the
applicable Participation Agreement.
"RESTRICTED PAYMENT BLOCKAGE PERIOD" means each Limitation Period,
provided that in no event shall any such period exceed eighteen months.
"RESTRICTED PAYMENTS" has the meaning specified in each of the
Participation Agreements.
"REVENUE ACCOUNT" has the meaning specified in SECTION 2.2.
"S&P" means Standard & Poor's Rating Group.
"SECURED PARTIES" means the Collateral Agent and the Owner Lessors.
"SECURITIES INTERMEDIARY" has the meaning specified in SECTION 2.5.
"SENIOR RENT RESERVE AMOUNT" means, on any date with respect to
an applicable Facility Lease, the sum of the aggregate amount of Senior Rent
due and unpaid on that date and the lesser of (i) the amount of the second
succeeding payment of Senior Rent (other than of the type specified in clause
(b) of the definition thereof) under such Facility and (ii) the aggregate of
all amounts transferred into the Equity Accounts pursuant to Section 4.1(a)
during Limitation Periods (and regardless of whether any such amounts
thereafter remain on deposit in the Equity Account) Lease.
"SPECIAL RESERVE BALANCE" means, with respect to the calculation of
the Modified Senior Rent Service Coverage Ratio for any period, the sum of (a)
the amount on deposit (or, in the case of the projected Modified Senior Rent
Service Coverage Ratio, projected to be on deposit) in the applicable subaccount
of the Supplemental Account on the last day of such period, (b) the amount
deposited (or, in the case of the projected Modified Senior Rent Service
Coverage Ratio, projected to be deposited) into the applicable subaccount of the
Equity Account during the Limitation Period in which the last day of such
calculation period occurs but only to the extent such amount remains (or is
projected to remain) on deposit in the applicable subaccount of the Equity
Account on the last day of such calculation period, (c) the amount deposited
(or, in the case of the projected Modified Senior Rent Service Coverage Ratio,
projected to be deposited) into the applicable subaccount of the Additional
Reserve Account during the Limitation Period in which
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the last day of such calculation period occurs but only to the extent such
amount remains (or is projected to remain) on deposit in the applicable
subaccount of the Additional Reserve Account on the last day of such calculation
period, (d) the amount on deposit (or, in the case of the projected Modified
Senior Rent Service Coverage Ratio, projected to be on deposit) in the
applicable subaccount of the Subordinated Rent Payment Account on the last day
of such period and (e) the amount on deposit (or, in the case of the projected
Modified Senior Rent Service Coverage Ratio, projected to be on deposit) in the
applicable subaccount of the Subordinated Reserve Account on the last day of
such period.
"TRANSACTION DOCUMENTS" means the Operative Documents and each
indenture, loan agreement, underwriting agreement, security purchase agreement
or other document entered into in connection with any Permitted Indebtedness.
SECTION 1.2.OTHER DEFINITIONAL PROVISIONS.
(a) Unless otherwise defined in SECTION 1.1 hereof, each capitalized
term used in this Agreement and not otherwise defined herein shall have the
respective meaning set forth in Appendix A to the Participation Agreements
unless the context hereof shall otherwise require. The general provisions of
Appendix A to the Participation Agreements shall apply to terms used in this
Agreement and specifically defined herein. References to applicable Operative
Documents (or other agreements) shall mean Operative Documents (or other
agreements) as such term is defined in the Participation Agreement to which the
relevant Owner Lessor is a party.
ARTICLE II
AGREEMENT OF COLLATERAL AGENT;
CREATION OF ACCOUNTS; GRANT OF SECURITY INTERESTS
SECTION 2.1 AGREEMENT OF COLLATERAL AGENT. The Collateral Agent
agrees to accept all cash, cash equivalents, instruments, investments and other
securities to be delivered to or held by the Collateral Agent pursuant to the
terms of this Agreement, and, from such cash, cash equivalents, instruments,
investments and other securities, to make the releases and transfers
contemplated by this Agreement as and when required in accordance with the terms
hereof. The Collateral Agent shall hold and safeguard the Accounts (other than
the Operating Account and the cash, cash equivalents, instruments, investments
and other securities on deposit therein) during the term of this Agreement in
accordance with the provisions hereof. The Collateral Agent shall treat the
cash, cash equivalents, instruments, investments
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and other securities in each Pledged Account as pledged by the Facility Lessee
to the Secured Parties, to be held by the Collateral Agent, as agent of the
Secured Parties, in trust in accordance with the provisions hereof.
SECTION 2.2 CREATION OF ACCOUNTS AND SUBACCOUNTS.
(a) On or prior to the Amendment Date, (i) the Collateral Agent
shall establish in the corporate trust department of The Bank of New York, a
special, segregated and irrevocable trust account designated the "▇▇▇▇▇ City
Revenue Account" (the "REVENUE ACCOUNT") and (ii) the Collateral Agent shall
establish with the Depositary a special and segregated account designated the
"▇▇▇▇▇ City Operating Account" (the "OPERATING ACCOUNT").
(b) On or prior to the Amendment Date, the Collateral Agent shall
establish in the corporate trust department of The Bank of New York, special,
segregated and irrevocable trust accounts as follows:
(i) one designated the "▇▇▇▇▇ City Recovery Event
Proceeds Account" (the "RECOVERY EVENT PROCEEDS ACCOUNT");
(ii) one designated the "▇▇▇▇▇ City Senior Rent Payment
Account" (the "SENIOR RENT PAYMENT ACCOUNT");
(iii) one designated the "▇▇▇▇▇ City Subordinated Rent
Payment Account" (the "SUBORDINATED RENT PAYMENT ACCOUNT");
(iv) one designated the "▇▇▇▇▇ City Reserve Account"
(the "RESERVE ACCOUNT");
(v) one designated the "▇▇▇▇▇ City Equity Account" (the
"EQUITY ACCOUNT");
(vi) one designated the "▇▇▇▇▇ City Supplemental Equity
Account" (the "SUPPLEMENTAL ACCOUNT");
(vii) one designated the "▇▇▇▇▇ City Suspended
Distributions Account" (the "SUSPENDED DISTRIBUTIONS ACCOUNT");
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(viii) one designated the "▇▇▇▇▇ City Subordinated
Reserve Account" (the "SUBORDINATED RESERVE ACCOUNT");
(ix) one designated the "▇▇▇▇▇ City Distributions
Account" (the "DISTRIBUTIONS ACCOUNT");
(x) one designated the "▇▇▇▇▇ City Permitted
Indebtedness Account" (the "PERMITTED INDEBTEDNESS ACCOUNT"); and
(xi) one designated the "▇▇▇▇▇ City Additional Debt
Service Reserve Account" (the "ADDITIONAL RESERVE ACCOUNT").
(c) Each of the Accounts (other than the Revenue Account, the
Operating Account and the Permitted Indebtedness Account) shall be subdivided
into eight subaccounts, one subaccount for each Facility Lease. The Collateral
Agent shall maintain separate records for each subaccount. Amounts deposited
into or debited from such Accounts shall be deposited or debited from the
applicable subaccount as provided herein.
SECTION 2.3 DELIVERY OF REVENUES, ETC. TO COLLATERAL AGENT. The
Facility Lessee shall cause all Revenues and Recovery Event Proceeds and all
cash, cash equivalents, instruments, investments and other securities in its
possession (excluding amounts received by the Facility Lessee as transfers from
the Operating Account or the Distributions Account in accordance with this
Agreement) to be delivered immediately to the Collateral Agent for deposit into
the Accounts pursuant to Article III. All such Revenues, cash, cash equivalents,
instruments, investments and other securities at any time on deposit in the
Accounts shall be held in the exclusive custody of the Collateral Agent for the
purposes and on the terms set forth in this Agreement.
SECTION 2.4 SECURITY INTERESTS IN THE LESSEE ACCOUNTS. In order to
secure the payment of the Obligations, and the performance and observance by the
Facility Lessee of all of its covenants, agreements and obligations to the
Secured Parties under the Transaction Documents, the Facility Lessee hereby
pledges and assigns to the Collateral Agent, and hereby grants in favor of the
Collateral Agent for the ratable benefit of the Secured Parties, a security
interest in all of the Facility Lessee's right, title and interest, whether now
owned or hereafter acquired and whether now existing or hereafter coming into
existence, in, to and under (i) all Revenues, (ii) the Revenue Account, the
Senior Rent Payment Account, the Recovery Event Proceeds Account, the Equity
Account and all cash, cash
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equivalents, instruments, investments and other securities on deposit therein,
(iii) all security entitlements with respect to any and/or all of the foregoing
and all Proceeds of the foregoing. All Accounts (other than the Operating
Account) and all cash, cash equivalents, instruments, investments and other
securities on deposit therein and security entitlements with respect thereto
shall, subject to the provisions of this Agreement, be subject to the exclusive
dominion and control of the Collateral Agent, and the Collateral Agent shall
have the sole and exclusive right to withdraw or order a transfer of funds from
such Accounts, and the Facility Lessee hereby irrevocably appoints the
Collateral Agent as its true and lawful attorney, with full power of
substitution, for the purpose of making any such withdrawal or ordering any such
transfer of funds from any such Account, which appointment is coupled with an
interest and is irrevocable. The Facility Lessee shall not have any rights or
powers with respect to any amounts in any of the Accounts (other than the
Operating Account) or any part thereof except (i) as provided in the Investments
section of this Security Deposit Agreement, (ii) the right to have such amounts
applied in accordance with the provisions of this Security Deposit Agreement,
and (iii) the right described in Section 4.6(b)(ii).
SECTION 2.5 SECURITIES ACCOUNTS. The parties hereto hereby agree
that:
(a) the Accounts (other than the Operating Account) shall be treated
as "securities accounts" as such term is defined in Section 8-501 of the New
York UCC;
(b) The Bank of New York, in its capacity as "securities
intermediary" as such term is defined in Section 8-102(a)(14) of the New York
UCC (the "SECURITIES INTERMEDIARY"), shall, subject to the terms of this
Agreement, treat the Facility Lessee as the person entitled to exercise the
rights that comprise any financial assets credited to the Accounts;
(c) all property delivered to the Securities Intermediary, pursuant
to the terms of this Agreement, will be promptly credited to the appropriate
Account;
(d) all securities or other property underlying any financial assets
credited to such Accounts shall be registered in the name of the Securities
Intermediary, indorsed to the Securities Intermediary or in blank and in no case
will any financial asset credited to any Account be registered in the name of
the Facility Lessee, payable to the order of the Facility Lessee or specially
indorsed to the Facility Lessee except to the extent the forgoing have been
specially indorsed to the Securities Intermediary or in blank;
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(e) each item of property (whether investment property, financial
asset, security, instrument or cash) credited to such Accounts shall be treated
as a "financial asset" within the meaning of Section 8-102(a)(9) of the New York
UCC; and
(f) if at any time the Securities Intermediary shall receive an
Entitlement Order issued by the Collateral Agent and relating to any of the
Pledged Accounts, the Securities Intermediary shall comply with such entitlement
order without further consent by the Facility Lessee or any other person. In the
event the Facility Lessee, if permitted to give any Entitlement Order with
respect to any Pledged Account and such order conflicts with or contradicts an
Entitlement Order issued by the Collateral Agent, the Securities Intermediary
shall always follow the Entitlement Orders issued by the Collateral Agent.
ARTICLE III
DEPOSITS INTO ACCOUNTS
SECTION 3.1 REVENUE ACCOUNT. The Facility Lessee agrees that there
shall be deposited into the Revenue Account all Revenues and all proceeds of
Permitted Indebtedness received by or on behalf of itself. If, notwithstanding
the foregoing, the Facility Lessee receives any Revenues or proceeds of
Permitted Indebtedness, it shall immediately deliver such Revenues in the exact
form received (duly indorsed, if appropriate, in a manner satisfactory to the
Collateral Agent) to the Collateral Agent for deposit into the Revenue Account.
The Collateral Agent shall have the right to receive all Revenues directly from
the Persons owing the same. All Revenue and proceeds of Permitted Indebtedness
received by the Collateral Agent shall be deposited into the Revenue Account.
SECTION 3.2 RECOVERY EVENT PROCEEDS ACCOUNT. The Facility Lessee
agrees that there shall be deposited into the Recovery Event Proceeds Account
all Recovery Event Proceeds PROVIDED, that if the aggregate amount of Recovery
Event Proceeds with respect to a Recovery Event is less than $5 million, such
proceeds shall be transferred to the Revenue Account if requested pursuant to a
Request Letter. If, notwithstanding the foregoing, the Facility Lessee shall
receive any such proceeds, it shall immediately deliver such proceeds in the
exact form received (duly endorsed, if appropriate, in a manner satisfactory to
the Collateral Agent) to the Collateral Agent for deposit into the Recovery
Event Proceeds Account. The Collateral Agent shall have the right to receive all
such proceeds directly from the Persons owing the same. All such proceeds
received by or on behalf of the Collateral Agent shall be deposited into the
Recovery Event Proceeds
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Account. Amounts deposited into the Recovery Event Proceeds Account shall be
credited to each subaccount thereof based upon each Owner Lessor's Percentage of
such deposited amounts.
SECTION 3.3 RESERVE ACCOUNT. The Facility Lessee agrees that on the
Amendment Date there shall be deposited into the Reserve Account the proceeds
from the sale of the Facility received pursuant to the Facility Deeds and the
Bills of Sale, in a total amount of up to $134 million. Such amount shall be
credited to each subaccount of the Reserve Account based upon each Owner
Lessor's Percentage of such deposited amount. No additional amounts shall be
deposited into the Reserve Account.
SECTION 3.4 EQUITY ACCOUNT, SUPPLEMENTAL ACCOUNT AND ADDITIONAL
RESERVE ACCOUNT. The Facility Lessee agrees that any Component A Letter of
Credit or Facility Lessee Provided Letter of Credit delivered to the
Collateral Agent in accordance with the terms of Section 4.6(b) hereof shall
be deposited in the applicable subaccounts of Equity Account the Additional
Reserves Account or the Supplemental Account and all proceeds from a draw
thereon shall be deposited in the applicable subaccounts of Equity Account
the Additional Reserve Account or the Supplemental Account based upon each
Owner Lessor's Percentage of such amount in accordance with the terms of
section 4.7(b).
SECTION 3.5 DEPOSITS IRREVOCABLE. Any deposit made into the Accounts
hereunder shall be irrevocable and all cash, cash equivalents, instruments,
investments and other securities on deposit shall be held in trust by the
Collateral Agent, and applied solely as provided herein.
ARTICLE IV
TRANSFERS FROM ACCOUNTS
SECTION 4.1 REVENUE ACCOUNT.
(a) Subject to Section 4.13, on each Monthly Transfer Date the
Collateral Agent shall transfer with respect to each Owner Lessor, such Owner
Lessor's Percentage of the funds on deposit in the Revenue Account in the
following amounts in the following order of priority:
FIRST, to the Operating Account, the amount certified in such
Request Letter to be such Owner Lessor's Percentage of the excess, if any,
of the
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aggregate amount of Operating Expenses then due and payable or projected
to become due and payable in the next succeeding month over the balance
then on deposit in the Operating Account; PROVIDED that if the Annual
Budget in effect for such Fiscal Year of the Facility Lessee was
determined in accordance with Section 5.14(b) or 5.14(c) of any
Participation Agreement, then the amount withdrawn from the Operating
Account on any Monthly Transfer Date during such Fiscal Year shall not
exceed the amount set forth in such Annual Budget for the immediately
succeeding calendar month unless agreed to by the Majority in Interest of
the Owner Lessors except with respect to fuel and emission allowance costs
which shall not be subject to the consent or approval of the Owner
Lessors;
SECOND, to the Collateral Agent, the applicable Owner Lessor's Owner
Manager, the Lease Indenture Trustee, the Security Agent and the
Bondholder Trustee, the amount certified in the Request Letter delivered
in connection with such Monthly Transfer Date to be the sum of the unpaid
fees, indemnities, costs and expenses then due and payable to such Persons
in respect of their respective services in such capacities; PROVIDED THAT
in the case of the Collateral Agent and the Bondholder Trustee, such
amount shall be such Owner Lessor's Percentage of the sum of the unpaid
fees, indemnities, costs and expenses of the Collateral Agent and the
Bondholder Trustee;
THIRD, into the applicable subaccount of the Senior Rent Payment
Account, an amount equal to (a) 1/6th of the aggregate amount which is
payable on or within six months following such Monthly Transfer Date on
account of Senior Rent (other than of the type specified in clause (b) of
the definition thereof) under such Owner Lessor's Facility Lease and (b)
the aggregate amount of all Senior Rent of the type specified in clause
(b) of the definition thereof, under such Owner Lessor's Facility Lease
for which will become due and payable prior to the next Monthly Transfer
Date together with the amount of all deficiencies, if any, with respect to
deposits required to be made in the applicable subaccount of the Senior
Rent Payment Account in all prior months, as certified in the Request
Letter;
FOURTH, subject to Section 4.13 hereof and to Section 6.9 of the
Participation Agreement, if applicable, and to the Operative Documents
applicable to the Persons entitled thereto, an amount equal to all other
Supplemental Rent (other than Excepted Payments) under the applicable
Facility Lease then due and payable to such Persons as certified in the
Request Letter;
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FIFTH, into the Permitted Indebtedness Account, such Owner Lessor's
Percentage of an amount sufficient to repay in full the Permitted
Indebtedness then due, as certified in the Request Letter;
SIXTH, into the applicable subaccount of the Equity Account, such
Owner Lessor's Percentage of the balance remaining in the Revenue Account.
(b) If, on any Monthly Transfer Date, such Owner Lessor's Percentage
of the funds on deposit in the Revenue Account are insufficient to make in full
any transfer required pursuant to clause FIRST, SECOND, THIRD, FOURTH or FIFTH
of Section 4.1(a), the Collateral Agent shall make such transfer with funds then
on deposit (in the following order of priority) (i) in the applicable subaccount
of each of the Supplemental Account, the Subordinated Reserve Account (funds
shall be transferred from the Subordinated Reserve Account only with respect to
clause FIRST, SECOND, THIRD and FOURTH), the Subordinated Rent Payment Account,
the Suspended Distributions Account, the Additional Reserve Account (funds shall
be transferred from the Additional Reserve Account only with respect to clause
SECOND and THIRD), the Equity Account (funds shall be transferred from the
Equity Account only with respect to clause SECOND and THIRD ) or the Reserve
Account (funds shall be transferred from the Reserve Account only with respect
to clause FIRST, second and THIRD), as available.
SECTION 4.2 RECOVERY EVENT PROCEEDS ACCOUNT.
(a) Except as otherwise provided in Section 4.2(b) and subject to
Section 4.13, on each Monthly Transfer Date occurring after a Recovery Event and
until Restoration with respect thereto is completed, the Collateral Agent shall
transfer to the Facility Lessee, from the funds on deposit in each subaccount of
the Recovery Event Proceeds Account, such Owner Lessor's Percentage of the
amount certified in the Request Letter delivered in connection with such Monthly
Transfer Date to be the aggregate amount then due and payable in respect of such
Restoration.
(b) Subject to Section 4.13, on any Rent Payment Date or Termination
Value Payment Date on which Rent or Termination Value under a Facility Lease is
required to be paid with any Recovery Event Proceeds, the Collateral Agent shall
transfer, from the funds on deposit in the applicable subaccount of the Recovery
Event Proceeds Account, the following amounts in the following order of
priority:
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FIRST, to the applicable Owner Lessor under such Facility Lease, the
amount certified in the Request Letter delivered in connection with such
Rent Payment Date or Termination Value Payment Date to be the amount then
due and payable in respect of Senior Rent under such Facility Lease
(including premium and interest, if any); and
SECOND, to the applicable Owner Lessor, the amount certified in such
Request Letter to be the amount of the Component A of Basic Lease Rent
then due and payable under such Facility Lease.
SECTION 4.3 SENIOR RENT PAYMENT ACCOUNT
Subject to Section 4.13 hereof, on any Rent Payment Date for a
Facility Lease, the Collateral Agent shall transfer from funds on deposit in the
applicable subaccount of the Senior Rent Payment Account to the Security Agent
on behalf of the applicable Owner Lessor, the amount certified by the Facility
Lessee in the Request Letter delivered in connection with such Rent Payment Date
to be payable with respect to the Senior Rent and all Supplemental Rent (other
than Excepted Payments) under such Facility Lease on such date.
SECTION 4.4 RESERVE ACCOUNT. Subject to Sections 4.13 and 4.1(b)
hereof and so long as no Lease Event of Default (other than a Rent Default
Event) then exists, on any Rent Payment Date for a Facility Lease, the
Collateral Agent shall transfer to the applicable Owner Lessor from funds on
deposit in the applicable subaccount of the Reserve Account the amount certified
by the Facility Lessee to be equal to the difference, if positive, between the
amounts payable with respect to the Component A of Basic Lease Rent under such
Facility Lease on such Rent Payment Date and the amounts that would be available
under Section 4.8, if any (and whether or not the conditions have been met under
Section 6.9 of the applicable Participation Agreement), after giving effect to
any transfers (with respect to such subaccount) to be made on such date pursuant
to Section 4.1 hereof for use in making payments with respect to the Component A
of Basic Lease Rent in accordance with the applicable Operative Documents.
SECTION 4.5 PERMITTED INDEBTEDNESS ACCOUNT. Subject to Section 4.13
hereof, on any date on which any amount of principal or premium of Permitted
Indebtedness is due and payable, after giving effect to all transfers to be made
on such date pursuant to Section 4.1, the Collateral Agent shall transfer to the
Persons that provide each class of Permitted Indebtedness, from the funds on
deposit in the Permitted Indebtedness Account, the aggregate amount of principal
and premium then due and payable to the Persons that provide each such class of
Permitted Indebtedness, as certified in the Request Letters delivered in
connection with such Monthly Transfer Date.
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SECTION 4.6 EQUITY ACCOUNT.
(a) Subject to Section 4.13, on the date specified below the
Collateral Agent shall transfer, from the funds on deposit in each subaccount of
the Equity Account, the amount certified by the Facility Lessee in the Request
Letter delivered in connection with such date the following amounts in the
following order of priority:
FIRST, after giving effect to all transfers made pursuant to Section
4.1 hereof, on each Monthly Transfer Date either (a) which is also a
Restricted Payment Blockage Date occurring prior to the Additional Reserve
Period or (b) which occurs during the Additional Reserve Period, into the
applicable subaccount of the Supplemental Account, the amount, if any, by
which the sum of the balance in the applicable subaccount of the
Senior Rent Payment Account and the balance in the applicable subaccount
of the Equity Account immediately prior to giving effect to the
transfer contemplated by this clause FIRST exceeds the applicable
Senior Rent Reserve Amount.
SECOND, on each Monthly Transfer Date either (a) which is also a
Restricted Payment Blockage Date occurring prior to the Additional Reserve
Period or (b) which occurs during the Additional Reserve Period, into the
applicable subaccount of the Additional Reserve Account the amount by
which the sum of (1) the Owner Lessor's Percentage of the balance in the
Revenue Account and (2) the balances in the applicable subaccounts of the
Senior Rent Payment Account, the Equity Account (immediately prior to
giving effect to the transfer contemplated by this clause SECOND) and the
Recovery Event Proceeds Account exceeds the sum of all the Basic Lease
Rent and Supplemental Lease Rent due and unpaid on that date and the
average of the next two aggregate payments of the Basic Lease Rent, in
each case, under the applicable Facility Lease minus the Owner Lessor's
Percentage of $1 million, as certified in the Request Letter;
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THIRD, on each Restricted Payment Date which does not occur during
the Additional Reserve Period if the conditions to the payments of the
Component A of Basic Lease Rent are satisfied pursuant to Section 6.9 of
the applicable Participation Agreement, into the applicable subaccount of
the Subordinated Rent Payment Account, an amount payable with respect to
the Component A of Basic Lease Rent plus all Excepted Payments, if any,
due and payable under the applicable Facility Lease on the Restricted
Payment Date, together with the amount of all deficiencies, if any, with
respect to all payments required in all prior months, as certified in the
Request Letter;
FOURTH, on each Restricted Payment Date which does not occur during
the Additional Reserve Period if the conditions to the payment of the
Component A of Basic Lease Rent set forth in Section 6.9 of the applicable
Participation Agreement are satisfied, into the applicable subaccount of
the Subordinated Reserve Account, an amount equal to the difference, if
positive, between the Reserve Requirement under the applicable Facility
Lease and the sum of the balances on deposit in the applicable subaccounts
of the Reserve Account and the Subordinated Reserve Account; and
FIFTH, on each Restricted Payment Date which does not occur during
the Additional Reserve Period if the conditions to the payment of the
Component A of Basic Lease Rent set forth in Section 6.9 of the applicable
Participation Agreement are satisfied, the balance remaining in the
applicable subaccount of the Equity Account, either into the Distributions
Account for the making of Restricted Payments if the conditions to making
these payments as set forth in Section 6.10 of the applicable
Participation Agreement are satisfied or into the applicable subaccount of
the Suspended Distributions Account if such conditions in Section 6.10 of
the applicable Participation Agreement are not satisfied.
(b) The amount withdrawn from the applicable subaccounts of the
Equity Account, the Supplemental Account or the Additional Reserve Account shall
be in the manner and priority provided herein:
(i) First, upon the occurrence and during the continuance of a
Rent Default Event under a Facility Lease, the applicable Owner
Lessor may from time to time request and the Collateral Agent shall
transfer from the applicable subaccounts (in the following order of
priority) of the Supplemental Account, the Equity Account and the
Additional Reserve Account to such Owner Lessor, to the extent then
on deposit in such subaccount, an amount equal to the Component A of
Basic Lease Rent under such Facility Lease then
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past due (the "OVERDUE RENT"); PROVIDED, that (i) as a condition to
such transfer, such Owner Lessor shall cause to be delivered to the
Collateral Agent a standby letter of credit in form reasonably
satisfactory to the Collateral Agent (the "COMPONENT A LETTER OF
CREDIT") issued in favor of the Collateral Agent by an Acceptable
Credit Provider for the account of a party other than ▇▇▇▇▇ City or
any of the Owner Lessors in the face amount equal the amount
requested to be withdrawn, PROVIDED, FURTHER, that any transfer of
funds from such subaccount of the Letter of Credit Accounts pursuant
to this Section 4.6(b) shall not be deemed to constitute any
payment of Rent. If at any time after the delivery of a Component A
Letter of Credit the amount the Collateral Agent is then directed
to transfer from such subaccount of the Equity Account pursuant to
the terms of this Agreement exceeds cash then on deposit in such
subaccount of the Letter of Credit Accounts (such excess amount,
the "SHORTFALL AMOUNT"), then the Collateral Agent shall draw on
the Component A Letter of Credit in an amount equal to the lesser
of the Shortfall Amount and the undrawn face amount of the
Component A Letter of Credit and shall deposit the proceeds of such
drawing into the applicable subaccount of the Letter of Credit
Accounts (for application in accordance with the terms of this
Security Deposit Agreement). If pursuant to the terms thereof the
Component A Letter of Credit becomes drawable as a result of the
failure of such Component A Letter of Credit to be extended or
failure to provide a replacement letter of credit within 30 days
of a downgrade of the applicable Acceptable Credit Provider, the
Collateral Agent shall draw on the Component A Letter of Credit in
an amount equal to the undrawn face amount of the Component A
Letter of Credit and shall deposit the proceeds of such drawing
into such subaccount of the Letter of Credit Accounts (for
application in accordance with the terms of this Security Deposit
Agreement).
(ii) Second, so long as no Lease Event of Default has occurred
and is continuing, the Facility Lessee may from time to time request
and the Collateral Agent shall transfer from the applicable
subaccount of the Equity Account to the Facility Lessee, to the
extent cash is then on deposit in such subaccount, an amount
equal to the funds specified in such request; PROVIDED, that (i) as
a condition to such transfer, the Facility Lessee shall cause to be
delivered to the Collateral Agent a standby letter of credit in form
reasonably satisfactory to the Collateral Agent (the "FACILITY
LESSEE PROVIDED LETTER OF Credit") issued in favor of the Collateral
Agent by an Acceptable Credit Provider for the account of
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a party other than the Facility Lessee or any of the Owner Lessors
in the face amount equal to the amount requested to be withdrawn. If
at any time after the delivery of a Facility Lessee Provided Letter
of Credit the amount the Collateral Agent is then directed to
transfer from such subaccount of the Equity Account pursuant to the
terms of this Security Deposit Agreement exceeds cash then on
deposit in such subaccount of the Equity Account, as applicable
(such excess amount, the "FACILITY LESSEE PROVIDED SHORTFALL
AMOUNT"), then the Collateral Agent shall draw on the Facility
Lessee Provided Letter of Credit in an amount equal to the lesser
of the Facility Lessee Provided Shortfall Amount and the undrawn
face amount of the Facility Lessee Provided Letter of Credit
and shall deposit the proceeds of such drawing into such subaccount
of the Equity Account, as required (for application in
accordance with the terms of this Security Deposit Agreement). If
pursuant to the terms thereof the Facility Lessee Provided Letter of
Credit becomes drawable as a result of the failure of such Facility
Lessee Provided Letter of Credit to be extended or failure to
provide a replacement letter of credit within 30 days of a downgrade
of the applicable Acceptable Credit Provider, the Collateral Agent
shall draw on the Facility Lessee Provided Letter of Credit in an
amount equal to the undrawn face amount of the Facility Lessee
Provided Letter of Credit and shall deposit the proceeds of such
drawing into such applicable subaccount of the Equity Account or in
such applicable subaccount of the Equity Account (for
application in accordance with the terms of this Security Deposit
Agreement).
(c) In addition, the Collateral Agent shall make transfers from the
funds on deposit in each subaccount of the Equity Account in accordance with
Sections 4.1(b) and 4.13(b).
(d) If, on any Restricted Payment Date the funds on deposit in the
applicable subaccount of the Equity Account are insufficient to make in full any
transfer required pursuant to clause THIRD of Section 4.6(a) and the conditions
to the payments of Component A of Basic Rent are satisfied pursuant to Section
6.9 of the applicable Participation Agreement, the Collateral Agent shall
transfer into the applicable subaccount of the Subordinated Rent Account the
amount of such shortfall from funds then on deposit (in the following order of
priority) in the applicable subaccount of each of the Supplement Account, the
Subordinated Reserve Account or the Suspended Distributions Account, as
available.
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(f) The Reserve Requirement may be satisfied by Qualifying Credit
Support.
SECTION 4.7 SUPPLEMENTAL ACCOUNT AND ADDITIONAL RESERVE ACCOUNT. (a)
Subject to Sections 4.13 and 4.1(b) hereof, on each Monthly Transfer Date or
Restricted Payment Date as applicable, the Collateral Agent shall make transfers
from the funds on deposit in the applicable subaccount of each of the
Supplemental Account and the Additional Reserve Account in accordance with
Sections 4.1(b) and 4.6(d).
(b) On each Monthly Transfer Date and immediately prior to making
the transfers contemplated by Section 4.6, the Collateral Agent shall
transfer all funds on deposit in each subaccount of the Additional Reserve
Account into the applicable subaccount of the Equity Account.
(c) On the Lien Release Date, all amounts on deposit in the
subaccounts of the Additional Reserve Account shall be transferred to the
Revenue Account.
(d) After giving effect to all transfers contemplated by Section
4.6, on each Restricted Payment Date which occurs during the Additional Reserve
Period, from funds on deposit in the applicable subaccount of the Supplemental
Account, the amount certified by the Facility Lessee in the Request Letter
delivered in connection with such date the following amounts in the following
order of priority:
FIRST, on each Restricted Payment Date if (a) such Restricted
Payment Date does not occur during a Restricted Payment Period and (b) the
conditions to the payments of Component A of Basic Lease Rent are satisfied
pursuant to Section 6.9 of the applicable Participation Agreement, into the
applicable subaccount of the Subordinated Rent Payment Account, an amount
payable with respect to the Component A of Basic Lease Rent plus all Excepted
Payments, if any, due and payable under the applicable Facility Lease on the
Restricted Payment Date, together with the amount of all deficiencies, if any,
with respect to all payments required in all prior months, as certified in the
Request Letter;
SECOND, on each Restricted Payment Date if (a) such Restricted
Payment Date does not occur during a Restricted Payment Period and (b) the
conditions to the payment of Component A of Basic Lease Rent set forth in
Section
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6.9 of the applicable Participation Agreement are satisfied, into the applicable
subaccount of the Subordinated Reserve Account, an amount equal to the
difference, if positive, between the Reserve Requirement under the applicable
Facility Lease and the sum of the balances on deposit in the applicable
subaccounts of the Reserve Account and the Subordinated Reserve Account; and
THIRD, on each Restricted Payment Date if (a) such Restricted
Payment Date does not occur during a Restricted Payment Period and (b) the
conditions to the payment of Component A of Basic Lease Rent set forth in
Section 6.9 of the applicable Participation Agreement are satisfied, the balance
remaining in the applicable subaccount of the Equity Account, either into the
Distributions Account for the making of Restricted Payments if the conditions to
making these payments as set forth in Section 6.10 of the applicable
Participation Agreement are satisfied or into the applicable subaccount of the
Suspended Distributions Account if such conditions in Section 6.10 of the
applicable Participation Agreement are not satisfied.
SECTION 4.8 SUBORDINATED RENT PAYMENT ACCOUNT. Subject to Sections
4.13 and 4.1(b) hereof, if the conditions to the payments of Component A Portion
of the Basic Lease Rent are satisfied pursuant to Section 6.9 of the applicable
Participation Agreement, on each Restricted Payment Date under such
Participation Agreement, after giving effect to all transfers to be made on such
date pursuant hereto, the Collateral Agent shall transfer to the applicable
Owner Lessor, from funds on deposit in the applicable subaccount of the
Subordinated Rent Payment Account, the amount certified by the Facility Lessee
in the Request Letter delivered in connection with such payment to be (i)
payable with respect to the Component A of the Basic Lease Rent and all Excepted
Payments under the applicable Facility Lease and (ii) available for use in
making such payments on account of the Component A of Basic Lease Rent and
Excepted Payments in accordance with the terms of the applicable Operative
Documents.
SECTION 4.9 SUBORDINATED RESERVE ACCOUNT. Subject to Sections 4.13
and 4.1(b) hereof and so long as no Lease Event of Default (other than a Rent
Default Event) then exists on each Restricted Payment Date under such
Participation Agreement, following a distribution in accordance with the terms
of Sections 4.8 and 4.4 hereof, if any (and whether or not the conditions have
been met under Section 6.9 of the applicable Participation Agreement), the
Collateral Agent shall transfer to the applicable Owner Lessor, from funds on
deposit in the applicable subaccount of the Subordinated Reserve Account, the
amount certified by the Facility Lessee in the Request Letter delivered in
connection with such Restricted Payment Date to be equal to the difference, if
positive, between the aggregate amount of the Component A of Basic Lease Rent
and Excepted Payments under the applicable Facility Lease
21
due and the aggregate amount of payments, if any, made on such Restricted
Payment Date pursuant to Sections 4.8 and 4.4 hereof.
SECTION 4.10 SUSPENDED DISTRIBUTIONS ACCOUNT. Subject to Section
4.13 hereof, on each Monthly Transfer Date or Restricted Payment Date (as
applicable), the Collateral Agent shall make transfers from the funds on deposit
in the applicable subaccount of the Suspended Distributions Account in
accordance with Sections 4.1(b) and 4.6(d). Following the end of the Lease Term
of the applicable Facility Lease and the payment in full of all Rent,
Termination Value and other amounts due and owing from the Facility Lessee under
such Facility Lease and the other Operative Documents, the Collateral Agent
shall transfer, all the funds on deposit in the applicable subaccount of the
Suspended Distributions Account to the Facility Lessee.
SECTION 4.11 DELIVERY OF REQUEST LETTERS. Each Request Letter to be
delivered by the Facility Lessee pursuant to this Article IV shall be delivered
to the Collateral Agent not later than one day prior to the date that the
Collateral Agent is required to make any transfer specified therein. At the time
the Facility Lessee delivers to the Collateral Agent any Request Letter or other
written communication relating to any Account or subaccount of the Accounts, the
Facility Lessee shall deliver a copy thereof to each Owner Lessor and its
applicable Lease Indenture Trustee, Owner Participant and such Owner Lessor's
Representative.
SECTION 4.12 SHORTFALL NOTICES. Not later than the Business Day
preceding each date on which any transfer is to be made pursuant to this Article
IV, the Collateral Agent shall notify the applicable Owner Lessor and its
applicable Owner Participant if the amounts requested to be transferred on such
date in the Request Letter delivered in connection therewith exceed the funds
available in the applicable subaccounts of the relevant Accounts.
SECTION 4.13 TRANSFERS FROM ACCOUNTS DURING A DEFAULT PERIOD.
(a) During a Default Period under a Facility Lease, the Facility
Lessee shall be entitled to issue Request Letters and otherwise direct the
transfer of funds from the applicable Accounts or subaccounts of the Accounts
pursuant to the other provisions of this Article IV until the Collateral Agent
receives a Notice of Action directing that action be taken pursuant to Section
4.13(b).
(b) At any time after the Collateral Agent receives a Notice of
Action specifying that action be taken pursuant to this Section 4.13(b), the
Collateral Agent shall transfer (from the Accounts or applicable subaccounts in
the order set forth in Section 4.13(c)) the following amounts in the following
order of priority:
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FIRST, to the Collateral Agent, the amount certified by the
Collateral Agent to be the sum of the unpaid fees, indemnities, costs and
expenses then due and payable for its services in such capacity;
SECOND, pro rata to (i) the applicable Owner Lessor, the amount
certified by such Owner Lessor to be the aggregate amount (including
premium and interest, if any) then due and payable in respect of Senior
Rent and Supplemental Lease Rent (other than Excepted Payments) under the
applicable Operative Documents and (ii) to extent that the applicable
Owner Lessor's Percentage of amounts then on deposit in the Permitted
Indebtedness Account are insufficient to pay such amounts, to any Person
who has provided Permitted Indebtedness in the aggregate amount of the
applicable Owner Lessor's Percentage of such Permitted Indebtedness
(including premium and interest, if any) then due and payable;
THIRD, to the applicable Owner Lessor, the amount certified by such
Owner Lessor to be the aggregate amount of the Component A of Basic Lease
Rent , Component A of Termination Value and all other fees and indemnities
in respect thereof then due and payable in respect of such Component A of
Basic Lease Rent or Component A of Termination Value under the applicable
Facility Lease;
FOURTH, pro rata, to the Persons entitled thereto, an amount equal
to all other Supplemental Rent under the applicable Facility Lease then
due and payable to such Persons and all other sums due and owing by the
Facility Lessee to such Persons under any of the applicable Operative
Documents (as certified in writing by such Persons); and
FIFTH, any surplus then remaining after the termination of the
applicable Facility Lease in accordance with its terms and the
satisfaction of all rents and fees thereunder, shall be paid to the
Facility Lessee or its successors or assigns or to whomsoever may be
lawfully entitled to receive the same or as a court of competent
jurisdiction may direct.
(c) The amounts to be distributed pursuant to Section 4.13(b) with
respect to any Facility Lease shall be debited from the subaccounts in the
following order of priority:
FIRST, from the applicable subaccount of the Suspended Distributions
Account;
SECOND, from the applicable subaccount of the Subordinated
Reserve Account;
23
THIRD, from the applicable subaccount of the Supplemental Account;
FOURTH, from the applicable subaccount of the Subordinated Rent
Payment Account;
FIFTH; from the applicable subaccount of the Reserve Account;
SIXTH, from the applicable subaccount of the Additional Reserve
Account;
SEVENTH, from the applicable subaccount of the Equity Account;
EIGHTH, from the applicable subaccount of the Senior Rent Payment
Account;
NINTH, solely with respect to amounts distributed pursuant to
clauses FIRST through FOURTH of Section 4.13(b) above, up to an amount
equal to the amount then on deposit therein, from the applicable
subaccount of the Recovery Event Proceeds Account; and
TENTH, solely with respect to amounts distributed pursuant to
clauses FIRST through FOURTH of Section 4.13(b) above, up to an amount
equal to such Owner Lessor's Percentage of the amount then on deposit
therein, from the Revenue Account.
It is understood and agreed that no amount on deposit in any other subaccount of
any of the Accounts (nor, except as provided in clauses seventh and eighth
above, amounts on deposit in the Revenue Account or the applicable subaccount of
the Recovery Event Proceeds Account) shall be available for distributions to be
made pursuant to Section 4.13(b) with respect to such Facility Lease and the
applicable Operative Documents.
SECTION 4.14 COLLATERAL AGENT'S CALCULATIONS. In making the
determinations and allocations required by Section 4.13, the Collateral Agent
may rely upon information specified in any Request Letter and any certificate of
the applicable Owner Lessor delivered to it, as applicable, and the Collateral
Agent shall have no liability to any of the Secured Parties for actions taken in
reliance on such information. All transfers and releases made by the Collateral
Agent pursuant to Section 4.13 shall be (subject to any decree of any court of
competent jurisdiction) final, and the Collateral Agent shall have no duty to
inquire as to the application by any Secured Party of any amounts distributed to
them.
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SECTION 4.15 INSUFFICIENT AMOUNTS. Except as provided in Sections
4.1(b) and 4.6(d) hereof, to the extent the applicable Owner Lessor Percentage
of the amounts on deposit in any Account (or, if the Account has subaccounts, in
the applicable subaccount) are insufficient to fully satisfy any transfer
requirement from such Account (or, if the Account has subaccounts, the
applicable subaccount) under this Article IV, such transfer shall be made to the
extent of the amounts on deposit in such Account (or, if the Account has
subaccounts, the applicable subaccount). In addition, if (i) any transfer
requirements from any Account (or, if the Account has subaccounts, the
applicable subaccount) in this Article IV share the same level of priority and
(ii) the funds equal to the applicable Owner Lessor Percentage of the funds in
such Account (or, if the Account has subaccounts, the funds in the applicable
subaccount) are insufficient to satisfy in full all such transfer requirements
which share such level of priority, such transfers shall be made on a pro rata
basis to the extent of the amounts on deposit in such Account (or, if the
Account has subaccounts, the funds in the applicable subaccount).
ARTICLE V
INVESTMENT
Cash held by the Collateral Agent in the Accounts shall not be
invested or reinvested except as provided below:
(a) cash held in the Accounts or applicable subaccounts shall be
invested and reinvested in Permitted Investments by the Collateral Agent who
shall make such Permitted Investments (i) except during a Default Period, at the
written direction of the Facility Lessee and (ii) during a Lease Default or
Lease Event of Default under a Facility Lease, in Permitted Investments selected
by the Collateral Agent unless specific investment instructions are given to the
Collateral Agent by the applicable Owner Lessor and in such case, to the extent
of amounts credited to applicable subaccounts;
(b) the Collateral Agent shall sell or liquidate all or any
designated part of the Permitted Investments held in any Account to the extent
credited to any subaccount at any time the proceeds thereof are required to make
a release from any such subaccount or any transfer between subaccounts pursuant
to Article IV hereof; and
(c) all such Permitted Investments, the interest thereon, and the
net proceeds of the sale, liquidation or payment thereof, shall be held in the
appropriate Account and credited to the applicable subaccounts for the same
purposes as the cash used to purchase such Permitted Investments.
25
The Collateral Agent shall take such action as may be necessary to
perfect the security interest created by this Agreement in all Permitted
Investments held in any Pledged Account.
ARTICLE VI
COLLATERAL AGENT
SECTION 6.1 RIGHTS, DUTIES, ETC. The acceptance by the Collateral
Agent of its respective duties hereunder is subject to the following terms and
conditions which the parties to this Agreement hereby agree shall govern and
control with respect to the rights, duties, liabilities and immunities of the
Collateral Agent:
(a) it shall not be responsible or liable in any manner whatever for
soliciting any funds or for the sufficiency, correctness, genuineness or
validity of any funds or securities deposited with or held by it;
(b) it shall be protected in acting or refraining from acting upon
any written notice, certificate, instruction, request or other paper or
document, as to the due execution thereof and the validity and effectiveness of
the provisions thereof and as to the truth of any information therein contained,
which it in good faith believes to be genuine;
(c) it shall not be liable for any error of judgment or for any act
done or step taken or omitted except in the case of its gross negligence,
willful misconduct or bad faith;
(d) it may consult with and obtain advice from counsel of its own
choice in the event of any dispute or question as to the construction of any
provision hereof;
(e) it shall have no duties hereunder, except those which are
expressly set forth herein and in any modification or amendment hereof;
provided, however, that no such modification or amendment hereof shall affect
its duties unless it shall have given its prior written consent thereto;
(f) it may execute or perform any duties hereunder either directly
or through administrative agents or attorneys selected with reasonable care;
(g) it may engage or be interested in any financial or other
transactions with any party hereto and may act on, or as depositary, collateral
agent
26
or administrative agent for, any committee or body of holders of obligations of
such Persons as freely as if it were not Collateral Agent hereunder; and
(h) it shall not be obligated to take any action which in its
reasonable judgment would involve it in expense or liability unless it has been
furnished with reasonable indemnity.
SECTION 6.2 RESIGNATION OR REMOVAL. The Collateral Agent may resign
or be removed as set forth in Section 6.5 of the Amended and Restated Guarantee
and Collateral Agreement.
ARTICLE VII
DETERMINATIONS
In the event of any dispute as to any amount to be distributed or
paid by the Collateral Agent from the Accounts (or subaccounts), the Collateral
Agent is authorized and directed to retain in its possession without liability
to anyone all or any part of the amounts then on deposit in the Accounts or
subaccounts, until such dispute shall have been settled by mutual agreement of
the disputing parties or by a final order, decree or judgment of a Federal or
State court of competent jurisdiction located in the State of New York (with
respect to disputes in connection with amounts on deposit in the Accounts or
subaccounts), and time for an appeal has expired and no appeal has been
perfected, but the Collateral Agent shall be under no duty whatsoever to
institute or defend any such proceedings.
ARTICLE VIII
MISCELLANEOUS
SECTION 8.1 INDEMNIFICATION OF COLLATERAL AGENT. The Facility Lessee
assumes liability for, and agrees to indemnify, protect, save and keep harmless
each Owner Lessor, each Owner Lessor's Representative, each Owner Participant,
the Security Agent and the Collateral Agent and their respective successors,
assigns, agents and servants from and against, any and all claims, liabilities,
obligations, losses, damages, taxes, penalties, costs and expenses (including
reasonable attorneys' fees) that may be imposed on, incurred by, or asserted
against, at any time, such Owner Lessor, such Owner Lessor's Representative,
such Owner Participant, the Security Agent or the Collateral Agent and in any
way relating to or arising out of the execution and delivery of this Agreement,
the establishment of the Accounts and subaccounts, the acceptance of
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deposits, the purchase or sale of Permitted Investments, the retention of cash
and Permitted Investments or the proceeds thereof and any payment, transfer or
other application of cash or Permitted Investments in accordance with the
provisions of this Agreement, or as may arise by reason of any act, omission or
error of the Collateral Agent made in good faith in the conduct of its duties;
except that the Facility Lessee shall not be required to indemnify, protect,
save and keep harmless the Collateral Agent or any Owner Lessor, against its own
gross negligence or willful misconduct. The indemnities contained in this
Section 8.1 shall survive the termination of this Agreement.
SECTION 8.2 WAIVER OF RIGHT OF SET-OFF. The Collateral Agent waives,
with respect to all of its existing and future claims against the Facility
Lessee, all existing and future rights of set-off and banker's liens against the
Accounts and subaccounts and all items (and proceeds thereof) that come into its
possession in connection with the Accounts.
SECTION 8.3 TERMINATION. The provisions of Articles III and IV with
respect to the applicable Accounts or subaccounts shall terminate on the date on
which the applicable Facility Lease shall terminate in accordance with its terms
and the Obligations under the applicable Transaction Documents shall have been
paid in full. Promptly after such termination, the applicable Owner Lessor shall
notify the Collateral Agent of such termination and the Collateral Agent hereby
agrees that at the time of such termination (x) the Owner Lessor's Percentage of
amounts or Permitted Investments in the Accounts or amounts and Permitted
Investments in the applicable subaccounts, as applicable, shall be liquidated as
soon as commercially prudent, (y) a reconciliation shall be made of the
distributions made from the applicable Accounts or subaccounts and any necessary
adjustments to the balances of such applicable Accounts or subaccounts as a
result of such reconciliation shall be made and (z) the applicable portion of
Owner Lessor's Percentage of the moneys in the applicable Accounts, subject to
the other Transaction Documents, or subaccounts (after giving effect to such
liquidation and such adjustments) shall, subject to other Transaction Documents,
be distributed to the Facility Lessee or as it may direct.
SECTION 8.4 SEVERABILITY. If any one or more of the covenants or
agreements provided in this Agreement on the part of the parties hereto to be
performed should be determined by a court of competent jurisdiction to be
contrary to law, such covenant or agreement shall be deemed and construed to be
severable from the remaining covenants and agreements herein contained and shall
in no way affect the validity of the remaining provisions of this Agreement.
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SECTION 8.5 COUNTERPARTS. This Agreement may be executed in several
counterparts, each of which shall be an original and all of which shall
constitute one and the same instrument.
SECTION 8.6 AMENDMENTS. The provisions of this Agreement and other
Transaction Documents may be amended, modified or waived if such amendment,
modification or waiver is in writing and is entered into in accordance with the
provisions of the Participation Agreement.
SECTION 8.7 APPLICABLE LAW. THIS AGREEMENT SHALL IN ALL RESPECTS BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK
REGARDLESS OF ANY OTHER PROVISION IN ANY OTHER AGREEMENT, FOR PURPOSES OF THE
NEW YORK UCC, NEW YORK SHALL BE DEEMED TO BE THE SECURITIES INTERMEDIARY'S
JURISDICTION AND THE ACCOUNTS (AS WELL AS THE SECURITIES ENTITLEMENTS RELATED
THERETO) SHALL BE GOVERNED BY THE LAWS OF THE STATE OF NEW YORK.
SECTION 8.8 NOTICES. Except as otherwise specifically provided
herein, all notices, consents, directions, approvals, instructions, requests and
other communications required or permitted by the terms hereof to be given to
any Person shall be in writing and shall be deemed to have been duly given or
made when delivered if delivered by hand or courier or when received if sent by
mail or telecopy, in each case addressed to the party to which such notice is
required or permitted to be given or made hereunder set forth below its
signature hereto, or such other address as may be specified from time to time by
such party in a notice to the other parties hereto.
SECTION 8.9 BENEFIT OF SECURITY DEPOSIT AGREEMENT
(a) This Security Deposit Agreement shall inure to the benefit of,
and be enforceable by, the parties hereto and their respective successors and
permitted assigns, and no other Person shall be entitled to any of the benefits
of this Security Deposit Agreement.
(b) Notwithstanding the foregoing, in order to secure the Lessor
Notes of each Owner Lessor, such Owner Lessor will assign and grant a first
priority security interest in favor of its applicable Lease Indenture Trustee in
and to all of such Owner Lessor's right, title and interest in, to and under
this Security Deposit Agreement (other than to the extent relating to Excepted
Payments and the rights to enforce and collect the same). The Facility Lessee
hereby consents to such assignment and to the creation of such Lien and security
interest and acknowledges receipt of copies of the Lease Indenture, it being
understood that such consent shall
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not affect any requirement or the absence of any requirement for any consent of
the Facility Lessee under any other circumstances. Unless and until the
Collateral Agent shall have received written notice from the Lease Indenture
Trustee that the Lien of the applicable Lease Indenture has been fully
discharged, the applicable Security Agent shall have the right (i) to directly
receive for application in accordance with the terms of the applicable Lease
Indenture all amounts payable or otherwise distributable under this Agreement to
the applicable Owner Lessor (other than in respect of the Excepted Payments) and
(ii) to exercise the rights of such Owner Lessor under this Security Deposit
Agreement (other than with respect to Excepted Payments and the rights to
enforce and collect the same) to the extent set forth in and subject to the
exceptions set forth in the applicable Lease Indenture.
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IN WITNESS WHEREOF, the parties hereto have each caused this
Agreement to be duly executed by their duly authorized officers, all as of the
day and year first above written.
EME HOMER CITY GENERATION L.P.
By:
By:
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Name:
Title:
Address for Notices:
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THE BANK OF NEW YORK, as Collateral Agent
By:
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Name:
Title:
Address for Notices:
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