Exhibit 10.31
PARTNERSHIP INTEREST PLEDGE AGREEMENT
Dated as of May 28, 1999
Among
ESCA, LLC
a Delaware limited liability company,
NEW CLOC COMPANY, LLC,
a Delaware limited liability company,
and
U.S. BANK TRUST NATIONAL ASSOCIATION,
as Collateral Agent
TABLE OF CONTENTS
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Page
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PREFACE.................................................................. 1
1. DEFINITIONS........................................................... 2
2. ASSIGNMENT, PLEDGE AND GRANT OF SECURITY INTEREST..................... 2
3. DOCUMENTS............................................................. 3
4. EVENTS OF DEFAULT..................................................... 4
5. REMEDIES.............................................................. 4
6. REMEDIES CUMULATIVE; DELAY NOT WAIVER................................. 7
7. COVENANTS AND REPRESENTATIONS OF PLEDGORS............................. 7
8. CERTAIN CONSENTS AND WAIVERS.......................................... 10
9. BORROWER'S CONSENTS AND COVENANTS..................................... 11
10. ATTORNEY-IN-FACT..................................................... 11
11. PLACE OF BUSINESS; LOCATION OF RECORDS............................... 12
12. PERFECTION; FURTHER ASSURANCES....................................... 12
13. CONTINUING ASSIGNMENT AND SECURITY INTEREST;
TRANSFER OF LOANS.................................................. 13
14. LIABILITY............................................................ 13
15. ATTORNEYS' FEES...................................................... 13
16. SEVERABILITY......................................................... 14
17. SUCCESSORS AND ASSIGNS............................................... 14
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18. HEADINGS............................................................. 14
19. GOVERNING LAW........................................................ 14
20. TIME................................................................. 14
21. REFERENCES TO OTHER DOCUMENTS........................................ 14
22. REINSTATEMENT........................................................ 14
23. STATUTE OF LIMITATIONS............................................... 15
24. ENTIRE AGREEMENT..................................................... 15
25. COUNTERPARTS......................................................... 15
26. WAIVER OF JURY TRIAL................................................. 15
27. REGARDING THE COLLATERAL AGENT....................................... 15
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COSO FINANCE PARTNERS
PARTNERSHIP INTEREST PLEDGE AGREEMENT
This Partnership Interest Pledge Agreement ("Agreement"), dated as of May 28,
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1999, is entered into by and among COSO FINANCE PARTNERS, a California general
partnership ("Borrower,"), ESCA, LLC, a Delaware limited liability company
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("ESCA"), NEW CLOC COMPANY, LLC, a Delaware limited liability company ("NEW
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CLOC") (each of ESCA and NEW CLOC a "Pledgor," and, collectively, the
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"Pledgors"), and U.S. BANK TRUST NATIONAL ASSOCIATION in its capacity as
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collateral agent ("Collateral Agent") for U.S. BANK TRUST NATIONAL ASSOCIATION
in its capacity as trustee ("Trustee") for the holders of all senior secured
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notes issued pursuant to that certain Indenture dated as of May 28, 1999 (the
"Indenture"), among Borrower, Trustee, COSO ENERGY DEVELOPERS, a California
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general partnership ("BLM"), COSO POWER DEVELOPERS, a California general
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partnership ("Navy II"), and CAITHNESS COSO FUNDING CORP., a Delaware
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corporation (the "Issuer") (such notes, the "Senior Secured Notes" and the
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holders thereof, the "Holders of the Senior Secured Notes").
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PREFACE
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A. Issuer has, as of the date of this Agreement, issued $413,000,000 of the
Senior Secured Notes, the proceeds of which will be used to make loans to
Borrower, BLM and Navy II.
B. ESCA and NEW CLOC are general partners in Borrower pursuant to that certain
General Partnership Agreement of COSO FINANCE PARTNERS, as amended and restated
as of May 28, 1999 (the "Partnership Agreement").
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C. Pursuant to a Guarantee dated as of even date herewith (the "Guarantee"),
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Borrower has guaranteed to Trustee and the Holders of the Senior Secured Notes
the payment and performance of Issuer's obligations under the Senior Secured
Notes and the Indenture.
D. As a condition precedent to the sale of the Senior Secured Notes, the
Borrower and Pledgors are required to have executed this Agreement as security
for the payment and performance of Borrower's obligations under the Guarantee.
AGREEMENT
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In consideration of the premises herein and for other good and valuable
consideration, the receipt and adequacy of which are hereby acknowledged,
Borrower and Pledgors hereby agree with Collateral Agent for the benefit of
Trustee and the Holders of the Senior Secured Notes and the Permitted Additional
Senior Lenders, if any, as follows:
1. Definitions.
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(a) Unless otherwise defined, all capitalized terms used herein which
are defined in the Indenture shall have their respective meanings therein
defined, and all terms, defined in the UCC shall have the respective meanings
given to those terms in the UCC.
(b) "UCC" shall mean the Uniform Commercial Code as the same may, from
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time to time, be in effect in the State of New York; provided, however, in the
event that, by reason of mandatory provisions of law, any or all of the
attachment, perfection or priority of the 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, the term "UCC" shall mean the Uniform Commercial
Code as in effect in such other jurisdiction for purposes of the provisions
hereof relating to such attachment, perfection or priority and for purposes of
definitions related to such provisions.
(c) "Qualifying Facility" shall mean a qualifying small power
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production facility in accordance with PURPA and the rules and regulations of
FERC under PURPA relating thereto.
(d) "FPA" shall mean the Federal Power Act of 1925, as amended.
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(e) "PUHCA" shall mean the Public Utility Holding Company Act of 1935,
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as amended.
(f) "PURPA" shall mean the Public Utility Regulatory Policies Act of
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1978, as amended, and the regulations promulgated thereunder.
2. Assignment, Pledge and Grant of Security Interest.
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(a) To secure the timely payment and performance of the Obligations
(as defined below), each Pledgor hereby assigns and pledges to Collateral Agent
for the benefit of the Trustee, the Holders of the Senior Secured Notes and all
Permitted Additional Senior Lenders, if any, and grants to Collateral Agent for
the benefit of the Trustee, the Holders of the Senior Secured Notes and all
Permitted Additional Senior Lenders, if any, a security interest in all the
estate, right, title and interest of each such Pledgor, now owned or hereafter
acquired, in, to and under any and all of the following (the "Collateral"):
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Such Pledgor's partnership interest in Borrower, including without
limitation such Pledgor's (i) rights to receive all income, gain, profit,
loss or other items allocated or distributed to such Pledgor under the
Partnership Agreement, (ii) rights to receive all distributions of any
nature whatsoever by Borrower with respect to such partnership interest;
provided that the Collateral shall not include any Restricted Payments made
pursuant to the terms of the Deposit and Disbursement Agreement, (iii)
capital or ownership interest, including capital accounts, in Borrower, and
all accounts, deposits or credits of any kind with Borrower, (iv) voting
rights in or rights to control or direct the affairs of Borrower, (v)
right, title and interest, as a partner in Borrower, in or to any and all
of
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Borrower's assets or properties, (vi) other rights, title and interest in
or to Borrower, and all rights to receive income, profit or other
distributions from Borrower, of any nature whatsoever, in each case, as
such rights are derived from such Pledgor's partnership interests in
Borrower, (vii) claims for damages arising out of or for breach of or
default relating to the Collateral, and (viii) rights to terminate, amend,
supplement, modify or waive performance under the Partnership Agreement, to
perform thereunder and to compel performance and otherwise exercise all
remedies thereunder, along with all of the proceeds of any of the above and
all "general intangibles" (as such term is defined in the UCC) constituting
any of the above.
(b) This Agreement and all of the Collateral secure the payment and
performance of Borrower's obligations under the Guarantee, including, but not
limited to, the payment of all amounts owed to Collateral Agent, Trustee, the
Holders of the Senior Secured Notes and the Permitted Additional Senior Lenders,
if any, of every kind and description (whether or not evidenced by any note or
instrument and whether or not for the payment of money), direct or indirect,
absolute or contingent, due or to become due, now existing or hereafter arising,
pursuant to the terms of the Guarantee, including all interest, fees, charges,
expenses, attorney's fees and accountant's fees (all such obligations being
herein called the "Obligations").
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3. Documents.
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(a) At any time and from time to time upon the request of Collateral
Agent, each Pledgor will (i) deliver and pledge to Collateral Agent, endorsed
and/or accompanied by such evidence of assignment and transfer, in such form and
substance as Collateral Agent may request, any and all instruments, documents,
chattel paper and/or general intangibles relating to the Collateral as
Collateral Agent may specify; (ii) give, execute, deliver, file and/or record
any notice, statement, instrument, document, agreement or other papers that may
be reasonably necessary, as Collateral Agent may reasonably request, in order to
create, preserve, perfect or validate the assignment and security interest
granted pursuant hereto or to enable Collateral Agent to exercise and enforce
its rights hereunder or with respect to such assignment and security interest;
and (iii) keep and stamp or otherwise ▇▇▇▇ any and all documents and its
individual books and records relating to Collateral in such manner as Collateral
Agent may require.
(b) Pledgor agrees that, from time to time, at the expense of Pledgor,
Pledgor will promptly execute and deliver all further instruments and documents,
and take all further action that may be necessary or required, or that
Collateral Agent may reasonably request, in order to perfect and protect the
assignment and security interest granted or intended to be granted hereby or to
enable the Collateral Agent to exercise and enforce its rights and remedies
hereunder with respect to any Collateral. Without limiting the generality of
the foregoing, Pledgor will execute and file such financing or continuation
statements or amendments thereto and such other instruments, endorsements or
notices as may be necessary or required, or as the Collateral Agent may
reasonably request, in order to perfect and preserve the assignments and
security interests granted or purported to be granted hereby. Notwithstanding
the foregoing, Collateral Agent shall have no obligation in respect of filing
such statements or the perfection or preservation of such security interests.
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(c) If any default by any Pledgor under the Partnership Agreement
shall occur, Collateral Agent shall, at its option, be permitted (but shall not
be obligated) to remedy any such default by giving written notice of such intent
to Borrower and the relevant Pledgor. Collateral Agent shall have a period of
sixty (60) days after giving such notice in which to cure such default. In the
event that any such default (except monetary defaults) shall not be reasonably
curable within such 60-day period, neither Borrower nor any Person acting on
behalf of Borrower, including without limitation a general partner of Borrower,
shall exercise any remedies thereunder if Collateral Agent shall, within such 60
day period, initiate action to cure such default and proceed diligently to the
curing thereof. Any cure by Collateral Agent of a Pledgor's default under the
Partnership Agreement shall not be construed as an assumption by Collateral
Agent, Trustee, any of the Holders of the Senior Secured Notes or any Permitted
Additional Senior Lender of any obligations, covenants or agreements of any
Pledgor under the Partnership Agreement, and neither Collateral Agent, Trustee,
nor any Permitted Additional Senior Lender shall be liable for any action taken
pursuant to this Section 3(c) to cure any such default. This Agreement shall not
be deemed to release or to affect in any way the obligations of any Pledgor
under the Partnership Agreement.
4. Events of Default. The occurrence and continuance of any of the
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following events ("Events of Default") whatever the reason for such Event of
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Default and whether it shall be voluntary or involuntary or be effected by
operation of law or pursuant to any judgment, decree or order of any court or
any order, rule or regulation of any administrative or governmental body, shall
constitute an Event of Default hereunder and shall entitle Collateral Agent
(subject to the Indenture) to exercise any and all of its rights and remedies
hereunder or at law:
(a) the occurrence (whether as a result of acts or omissions by
Borrower or the Issuer) of an Event of Default under the Indenture; or
(b) the failure on the part of a Pledgor to observe or perform any
covenant, condition or agreement on its part to be observed or performed under,
or the breach of any representation or warranty of a Pledgor contained in, this
Agreement or the Partnership Agreement and such failure continues uncured for 30
or more days from the date a Responsible Officer of such Pledgor receives notice
thereof from the Collateral Agent; provided that if such Pledgor commences and
diligently pursues efforts to cure such default within such 30-day period, such
Pledgor may continue to effect such cure of the default and such default will
not be deemed an Event of Default for an additional 60 days so long as such
Pledgor is diligently pursuing such cure.
5. Remedies.
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(a) If any Event of Default has occurred and is continuing, Collateral
Agent shall have the right, at its election, but not the obligation, to do any
of the following, with respect to the defaulting Pledgor: (i) subject to Section
5(e) below and applicable law, vote or exercise any and all of such Pledgor's
rights or powers under the Partnership Agreement, including any rights or powers
to manage or control Borrower; (ii) subject to Section 5(e) and applicable law
demand, ▇▇▇ for, collect or receive any money or property at any time payable to
or receivable by such Pledgor on account of or in exchange for all or any part
of the Collateral; (iii) institute and prosecute any
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action at law or suit in equity or other proceeding to collect or enforce any
Obligations or rights hereunder or in the Collateral, including specific
enforcement of any covenant or agreement contained herein or in the Partnership
Agreement, or to foreclose or enforce the security interest in all or any part
of the Collateral granted herein, or to enforce any other legal or equitable
right vested in it by this Agreement or by law; (iv) sell or otherwise dispose
of any or all of the Collateral or cause all or any part of the Collateral to be
sold or otherwise disposed of in one or more sales or transactions, at such
prices as Collateral Agent may deem commercially reasonable, and for cash or on
credit or for future delivery, without assumption of any credit risk, at any
broker's board or at public or private sale, without demand of performance or
notice of intention to sell or of time or place of sale (except such notice
which under applicable law cannot be waived), and any Holder of the Senior
Secured Notes, any Permitted Additional Senior Lender, or any other Person may
be the purchaser of any or all of the Collateral so sold and thereafter hold the
same absolutely free from any claim or right of whatsoever kind, including any
equity of redemption, of such Pledgor or Borrower, any such demand, notice or
right and equity being hereby expressly waived and released (to the extent
permitted by applicable law); (v) incur expenses, including reasonable
attorneys' fees, consultants' fees, and other costs appropriate to the exercise
of any right or power under this Agreement; (vi) perform any obligation of such
Pledgor hereunder or under the Partnership Agreement; (vii) secure the
appointment of a receiver for such Pledgor (to the extent and in the manner
permitted by applicable law); or (viii) exercise any other or additional rights
or remedies granted to a secured party under the UCC. If, pursuant to applicable
law, prior notice of any such action is required to be given to such Pledgor or
Borrower, such Pledgor and Borrower hereby acknowledges and agrees that the
minimum time required by such applicable law, or if no minimum is specified, ten
(10) Business Days, shall be deemed a reasonable notice period.
(b) In addition to the foregoing remedies, Collateral Agent (subject
to Section 3(c)) may, but shall not be obligated to, cure any Event of Default
and incur reasonable fees, costs and expenses in doing so, in which event
Borrower or the relevant Pledgor shall immediately reimburse Collateral Agent on
demand for all such fees, costs and expenses, together with interest on the
total amount at a rate equal to the "Prime Rate" of Bankers Trust Company, as
such rate is announced from time to time, plus one percent (1%) (the "Default
Rate"). Subject to the such Pledgor's rights described in paragraph (c) below to
contest certain claims, taxes, assessments, charges, liens and encumbrances,
Collateral Agent shall be the sole judge of the validity of any adverse claims,
taxes, assessments, charges, liens or encumbrances pertaining to the Collateral,
and the amount to be paid in satisfaction thereof, and of the necessity
therefor, provided Collateral Agent shall be under no obligation to do any such
acts or to make any such payments.
(c) Each Pledgor may contest in good faith any taxes, assessments and
other governmental charges in connection with the Collateral and, in such event,
may permit the taxes, assessments or other charges so contested to remain unpaid
during any period, including appeals, when such Pledgor is in good faith
contesting the same, so long as (i) reserves have been established in an amount
sufficient to pay any such taxes, assessments or other charges, accrued interest
thereon and potential penalties or other costs relating thereto, or other
adequate provision for the payment thereof shall have been made, (ii)
enforcement of the contested tax, assessment or other charge is effectively
stayed for the entire duration of such contest, and (iii) any tax, assessment or
other charge determined to be due, together with any interest or penalties
thereon, is
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immediately paid after resolution of such contest. Additionally, each Pledgor
may contest in good faith Liens for any tax, assessment or other governmental
charge, by appropriate proceedings, so long as (i) such proceedings shall not
involve any substantial danger of the sale, forfeiture or loss of the
Collateral, title thereto or any interest therein, or (ii) in connection with
such proceedings a bond or other security has been posted or provided in such
manner and amount as to provide that any taxes, assessments or other charges
determined to be due will be promptly paid in full when such contest is
determined.
(d) All reasonable costs and expenses (including without limitation
agents' and reasonable attorneys' fees and expenses) incurred by Collateral
Agent, Trustee, any Holder of the Senior Secured Notes or Permitted Additional
Senior Lender in connection with exercising any remedy provided for herein or at
law, curing any Event of Default or performing any of a Pledgor's agreements
contained herein or in the Partnership Agreement or in respect of any part of
the Collateral, together with interest thereon computed at the Default Rate from
the date on which such costs or expenses are incurred to the date of payment
thereof, shall constitute indebtedness secured by this Agreement and shall be
paid by such Pledgor or the Borrower to Collateral Agent, Trustee such Holder of
the Senior Secured Notes or such Permitted Additional Senior Lender, as the case
may be, on demand.
(e) So long as no Event of Default has occurred and is continuing,
each Pledgor reserves the right to exercise all of its rights under the
Partnership Agreement (except as limited by the Indenture) and to receive all
income and other distributions and payments from the Borrower in respect of the
Collateral. Notwithstanding any other term or provision of this Agreement, each
Pledgor shall be entitled to receive and retain for its own benefit and use all
distributions and other payments paid by the Borrower to such Pledgor in respect
of the Collateral prior to the occurrence of an Event of Default.
(f) The net proceeds of any foreclosure, collection, recovery,
receipt, appropriation, realization or sale of the Collateral shall be applied
in the order of priority specified in Section 5.10 of the Indenture. If all
Obligations and any other amounts due under this Agreement have been
indefeasibly paid, satisfied and discharged in full, any surplus then remaining
shall be paid to Pledgors, if they are lawfully entitled to receive the same, or
shall be paid to whomsoever a court of competent jurisdiction may direct.
(g) The Collateral Agent shall not be deemed to make any
representations as to the value or condition of the Collateral and shall incur
no liability in respect thereof.
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6. Remedies Cumulative; Delay Not Waiver. No right, power or remedy
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herein conferred upon or reserved to Collateral Agent, Trustee, the Holders of
the Senior Secured Notes or the Permitted Additional Senior Lenders, if any, is
intended to be exclusive of any other right, power or remedy, and every such
right, power and remedy shall, to the extent permitted by law, be cumulative and
in addition to every other right, power and remedy given hereunder or now or
hereafter existing at law or in equity or otherwise. The assertion or employment
of any right or remedy hereunder shall not prevent the concurrent assertion or
employment of any other appropriate right or remedy. No delay or omission of
Collateral Agent to exercise any right or power accruing upon the occurrence and
during the continuance of any Event of Default as aforesaid shall impair any
such right or power or shall be construed to be a waiver of any such Event of
Default or an acquiescence therein. Every power and remedy given by this
Agreement may be exercised from time to time, and as often as shall be deemed
expedient, by Collateral Agent.
7. Covenants and Representations of Pledgors. Each Pledgor
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covenants, agrees and represents, solely with respect to itself, as follows:
(a) Pledgor will perform and comply, in all material respects, with
all obligations and conditions on its part to be performed hereunder, under the
Partnership Agreement or with respect to the Collateral.
(b) Pledgor (i) is a limited liability company duly organized, validly
existing and in good standing under the laws of the State of Delaware and has
all requisite power and authority under the laws of its state of organization to
enter into the Partnership Agreement and to perform its obligations thereunder
and to consummate the transactions contemplated thereby; (ii) is duly qualified,
authorized to do business and in good standing in each jurisdiction where the
character of its properties or the nature of its activities makes such
qualification necessary; (iii) has all requisite power and authority (W) to
carry on its business as now being conducted and as proposed to be conducted by
it, (X) to execute, deliver and perform this Agreement and the Partnership
Agreement to which it is a party, in its individual capacity, (Y) to take all
action as may be necessary to consummate the transactions contemplated
thereunder, and (Z) to grant liens and security interest provided for in this
Agreement; and (iv) has all requisite power and authority under the Partnership
Agreement to execute and deliver, on behalf of Borrower, each Financing Document
to which Borrower is a party.
(c) Pledgor has (i) taken all necessary action to authorize the
execution, delivery and performance of the Partnership Agreement and this
Agreement and each Financing Document to which it is a party; and (ii) duly
executed and delivered the Partnership Agreement and this Agreement and each
Financing Document to which it is a party. Neither any Pledgor's execution and
delivery of this Agreement and the other Financing Documents to which it is a
party nor its consummation of the transactions contemplated thereby nor its
compliance with the terms thereof (i) does or will contravene the Partnership
Agreement, the articles of incorporation or formation documents of such Pledgor
or any other requirements of law applicable to or binding on such Pledgor or any
of its properties, (ii) does or will contravene or result in any breach of or
constitute any default under, or result in or require the creation of any Lien
(other than Permitted Liens) upon any of its property under, any agreement or
instrument to which it is a
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party or by which it or any of its properties may be bound or affected or (iii)
does or will require the consent or approval of any Person which has not already
been obtained.
(d) The Partnership Agreement has been duly authorized, executed and
delivered by such Pledgor, has not been amended or otherwise modified, and is in
full force and effect and is binding upon and enforceable against such Pledgor
in accordance with its terms. There exists no default under the Partnership
Agreement by such Pledgor.
(e) This Agreement is the legal, valid and binding obligation of such
Pledgor, enforceable against such Pledgor in accordance with its terms, except
to the extent the enforceability may be limited by applicable bankruptcy,
insolvency, moratorium, reorganization or other similar laws affecting the
enforcement of creditors' rights generally and subject to general equitable
principles.
(f) Pledgor has not executed and is not aware of any effective
financing statement, security agreement or other instrument similar in effect
covering all or any part of the Collateral on file in any recording office,
except such as may have been filed pursuant to this Agreement or the other
Financing Documents or pursuant to the documents evidencing Permitted Liens.
(g) Pledgor is the lawful owner of and has full right, title and
interest in and to, the Collateral, subject to no mortgages, liens, charges, or
encumbrances of any kind other than as granted pursuant to the Partnership
Agreement, and has full power and lawful authority to pledge, assign and grant a
security interest in the Collateral granted by it hereunder. Pledgor will, so
long as any Obligations shall be outstanding, warrant and defend its title to
the Collateral against any claims and demands which may affect to a material
extent its title to, or the Collateral Agent's right or interest in, such
Collateral.
(h) Pledgor will not directly or indirectly create, incur, assume or
suffer to exist any Liens on or with respect to any part of the Collateral other
than the rights and interests of the Collateral Agent, the Trustee, the Holders
of the Senior Secured Notes and the Permitted Additional Senior Lenders, if any,
hereunder, Permitted Liens and rights of Pledgors under the Partnership
Agreement. Pledgor will at its own cost and expense promptly take such action
as may be necessary to discharge any such liens not so permitted.
(i) Pledgor has not assigned any of its rights under the Partnership
Agreement or any of the Collateral except as provided in this Agreement.
(j) Any action or proceeding to enforce the rights granted or to
protect or preserve the Collateral under this Agreement may be taken by
Collateral Agent either in Pledgor's name or in Collateral Agent's name, as
Collateral Agent may deem necessary.
(k) Without the prior written consent of Collateral Agent, or as
otherwise permitted by the Indenture, Pledgor shall not (i) terminate or make
any material modification or amendment of the Partnership Agreement (unless
required, in the opinion of Pledgor, to maintain the Project as a "qualifying
facility"), (ii) fail to deliver to Collateral Agent a copy of each
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demand or notice received or given by it relating to the Partnership Agreement
and which could reasonably be expected to have a material adverse effect upon
the Collateral or Collateral Agent's rights therein, or (iii) sell, contract to
sell, assign, transfer or dispose of any of the Collateral.
(l) Pledgor shall give to Collateral Agent prompt written notice of
any material default, event of default or event which with the giving of notice
or the passage of time or both might become an event of default (however
"default" or "event of default" may be defined) under the Partnership Agreement,
whether by Borrower, such Pledgor, or any other Person, of which such Pledgor
has actual knowledge or has received notice.
(m) If a Pledgor in its capacity as a partner, whether general or
limited, as applicable, receives any income or distribution of money or property
of any kind in respect of the Collateral from the Borrower while an Event of
Default has occurred and is continuing, such Pledgor shall hold such income or
distribution of money or property as trustee for and shall deliver the same to
Collateral Agent.
(n) Pledgor will, at all times, keep accurate and complete records of
the Collateral. Pledgor shall, at all times on three (3) Business Days' notice,
permit representatives of Collateral Agent at any time during normal business
hours of such Pledgor to inspect and make abstracts from such Pledgor's books
and records pertaining to the Collateral. Upon the occurrence and continuance of
any Event of Default, at Collateral Agent's request, Pledgor shall promptly
deliver any and all such records to Collateral Agent.
(o) Pledgor will give prompt notice in writing to Collateral Agent of
any change in the location of the place of business where correspondence,
notices or proceeds in connection with the Collateral are received or located or
of any change in the location of the place of business where records concerning
Collateral are kept.
(p) Pledgor is not, and will not, as a result of becoming a general
partner of Borrower, be or become, or cause Borrower to be or become or to be
deemed by any Governmental Authority to be, solely as a result of the
construction, ownership, leasing or operation of the Project, the sale of
electricity therefrom or the entering into of any Financing Document or any
transaction contemplated thereby, a "utility" or subject to or not exempt from
regulation under the FPA (other than such regulation contemplated under 18
C.F.R. (S) 292.601(e)) or the PUHCA (other than Section 9(a)(2) of PUHCA) or
under state laws and regulations respecting the rates or the financial or
organizational regulation of public or electric utilities except as a Qualifying
Facility under PURPA.
(q) Pledgor will not do anything or cause, suffer or permit anything
to be done, including without limitation sale or other transfer of a Pledgor's
partnership interest in Borrower or of any stock, partnership interest or other
ownership interest in any Pledgor (other than the exercise by others of remedies
under the Financing Documents), which may cause the Project to lose its status
as a Qualifying Facility.
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(r) Pledgor shall not register, or permit the Borrower to register,
any other secured party as a "registered owner" (as defined in Section 8-301 of
the New York UCC) of any partnership interest in Borrower.
8. Certain Consents and Waivers.
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(a) Each Pledgor hereby consents to each of the other Pledgors
entering into this Agreement in favor of Collateral Agent for the benefit of the
Trustee, the Holders of the Senior Secured Notes and the Permitted Additional
Senior Lenders, if any. Each Pledgor specifically agrees that such action may,
among other things, assign or delegate to Collateral Agent rights to cure
defaults under the Partnership Agreement, to exercise voting rights and other
rights to manage or control the Borrower, and to act as such other Pledgor's
attorney-in-fact in a manner similar to the assignment and delegation of such
rights provided herein. Each Pledgor (to the extent permitted by applicable
law) agrees that it will recognize and accept such assignment and delegation and
the exercise of such rights by Collateral Agent in connection with this
Agreement and agrees that any option or rights of any Pledgor to acquire any of
the Collateral from any other Pledgor pursuant to the Partnership Agreement
shall be subordinate to any right of the Trustee in the Collateral created
hereunder.
(b) Each Pledgor hereby waives, to the maximum extent permitted by law
(i) all rights under any law limiting remedies, including recovery of a
deficiency, under an obligation secured by a deed of trust on real property if
the real property is sold under a power of sale contained in the deed of trust,
and all defenses based on any loss whether as a result of any such sale or
otherwise, of Pledgor's right to recover any amount from Borrower, whether by
right of subrogation or otherwise; (ii) all rights under any law to require
Collateral Agent to pursue Borrower or any other Person, any security which
Collateral Agent may hold, or any other remedy before proceeding against
Pledgor; (iii) all rights of reimbursement or subrogation, all rights to enforce
any remedy that Collateral Agent, the Trustee, the Holders of the Senior Secured
Notes or the Permitted Additional Senior Lenders, if any, may have against
Borrower, and all rights to participate in any security held by Collateral Agent
until the Obligations have been paid and the covenants of the Indenture have
been performed in full; (iv) all rights to require Collateral Agent to give any
notices of any kind, including without limitation notices of nonpayment,
nonperformance, protest, dishonor, default, delinquency or acceleration, or to
make any presentments, demands or protests, except as expressly provided herein
and in the Indenture; (v) all rights to assert the bankruptcy or insolvency of
Borrower as a defense hereunder or as the basis for rescission hereof; (vi) all
rights under any law purporting to reduce Pledgors' Obligations hereunder if
Borrower's Obligations are reduced; (vii) all defenses based on the disability
or lack of authority of Borrower or any Person, the repudiation of the
Guarantees or any related Financing Documents by Borrower or any Person, the
failure by Collateral Agent, the Trustee, the Holders of the Senior Secured
Notes or any Permitted Additional Senior Lender, if any, to enforce any claim
against Borrower, or the unenforceability in whole or in part of any Financing
Document; (viii) all suretyship and guarantor's defenses generally; (ix) all
rights to insist upon, plead or in any manner whatever claim or take the benefit
or advantage of, any appraisal, valuation, stay, extension, marshaling of
assets, redemption or similar law, or exemption, whether now or at any time
hereafter in force, which may delay, prevent or otherwise affect the performance
by Pledgor or its obligations under, or the enforcement
10
by Collateral Agent of, this Agreement; (x) any requirement on the part of
Collateral Agent, Trustee, the Holders of the Senior Secured Notes or any
Permitted Additional Senior Lender, if any, to mitigate the damages resulting
from any default; and (xi) except as otherwise specifically set forth herein,
all rights of notice and hearing of any kind prior to the exercise of rights by
Collateral Agent upon the occurrence and during the continuation of an Event of
Default to repossess with judicial process or to replevy, attach or levy upon
the Collateral. To the extent permitted by applicable law, each Pledgor waives
the posting of any bond otherwise required of Collateral Agent in connection
with any judicial process or proceeding to obtain possession of, replevy,
attach, or levy upon the Collateral, to enforce any judgment or other security
for the Obligations, to enforce any judgment or other court order entered in
favor of Collateral Agent, or to enforce by specific performance, temporary
restraining order, preliminary or permanent injunction, this Agreement or any
other agreement or document between any Pledgor, Collateral Agent, Trustee, the
Holders of the Senior Secured Notes or any Permitted Additional Senior Lender,
if any. Each Pledgor further agrees that upon the occurrence and continuance of
an Event of Default, Collateral Agent may elect to nonjudicially or judicially
foreclose against any real or personal property security it holds for the
Obligations or any part thereof, or to exercise any other remedy against
Borrower, any security or any guarantor, even if the effect of that action is to
deprive a Pledgor of the right to collect reimbursement from Borrower for any
sums paid by such Pledgor to Collateral Agent, Trustee or any Holder of the
Senior Secured Notes or any Permitted Additional Senior Lender, if any.
(c) If Collateral Agent may, under applicable law, proceed to realize
its benefits under any of the Financing Documents giving Collateral Agent a Lien
upon any Collateral, whether owned by any Borrower, any Pledgor or by any other
Person, either by judicial foreclosure or by nonjudicial sale or enforcement,
Collateral Agent may, at its sole option, determine which of its remedies or
rights it may pursue without affecting any of the rights and remedies of
Collateral Agent under this Agreement. In the event Collateral Agent shall bid
at any foreclosure or trustee's sale or at any private sale permitted by law or
the Financing Documents, Collateral Agent may bid all or less than the amount of
Obligations. To the extent permitted by applicable law, the amount of the
successful bid at any such sale, whether Collateral Agent or any other party is
the successful bidder, shall be conclusively deemed to be the fair market value
of the Collateral and the difference between such bid amount and the remaining
balance of the Obligations shall be conclusively deemed to be the amount of the
Obligations.
9. Borrower's Consent and Covenants. Borrower hereby consents to
--------------------------------
the assignment of and grant of a security interest in the Collateral to
Collateral Agent and to the exercise by Collateral Agent of all rights and
powers assigned or delegated to Collateral Agent by each Pledgor hereunder,
including without limitation the rights upon and during an Event of Default to
exercise such Pledgor's voting rights and other rights under the Partnership
Agreement to manage or control Borrower, subject to the notice and other
requirements of applicable law. Borrower further agrees to perform all
covenants and obligations herein which, by their express or implied terms, are
to be performed by Borrower.
10. Attorney-in-Fact. Each Pledgor hereby irrevocably constitutes
----------------
and appoints Collateral Agent its true and lawful attorney-in-fact to enforce
all rights of Pledgor with respect to the Collateral, including without
limitation, the right to vote, demand, receive and enforce Pledgor's
11
rights with respect to the Collateral, and to give appropriate receipts,
releases and satisfactions for and on behalf of and in the name of the Pledgor
or, at the option of Collateral Agent, in the name of Collateral Agent, with the
same force and effect as Pledgor could do if this Agreement had not been made;
provided, however, Collateral Agent shall not exercise such rights except upon
-------- -------
the occurrence and during the continuation of an Event of Default. This power of
attorney is a power coupled with an interest and shall be irrevocable.
11. Place of Business; Location of Records.
--------------------------------------
(a) Unless Collateral Agent is otherwise notified, the place of
business and chief executive office of each respective Pledgor is and all
records of each respective Pledgor concerning the Collateral are and will be
located at the following addresses:
ESCA, LLC
▇/▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.▇., ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ Avenue of the Americas
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
New CLOC Company, LLC
▇/▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.▇., ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ Avenue of the Americas
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
(b) All notices required or permitted under the terms and provisions
hereof shall be in writing and any such notice shall be effective if given in
accordance with the provisions of Section 10.02 of the Indenture. Notices to
each Pledgor may be given at the address of Borrower set forth in such Section
10.02 above. Notices to Collateral Agent shall be given to Collateral Agent c/o
Trustee at its address set forth in such Section 10.02.
12. Perfection; Further Assurances.
------------------------------
(a) Each Pledgor agrees that from time to time, it will promptly
execute and deliver all instruments and documents as required by Section 3(a)
hereof. Without limiting the generality of the foregoing, each Pledgor will (i)
deliver the Collateral or any part thereof to Collateral Agent, as Collateral
Agent may request, accompanied by such duly executed instruments of transfer or
assignment as Collateral Agent may request, and (ii) execute and file such
financing or continuation statements, or amendments thereto, and such other
instruments, endorsements or notices, as may be reasonably necessary in order to
perfect and preserve the assignments and security interests granted or purported
to be granted hereby.
(b) Each Pledgor shall pay all filing, registration and recording fees
and all refiling, re-registration and re-recording fees, and all reasonable
expenses incident to the execution and acknowledgment of this Agreement, any
instruments of further assurance, and (except as otherwise provided in the
Indenture) all federal, state, county and municipal stamp taxes and other taxes,
duties, imports, assessments and charges arising out of or in connection with
the execution
12
and delivery of this Agreement, any agreement supplemental hereto, any financing
statements, and any instruments of further assurance.
(c) Each Pledgor shall give Collateral Agent at least forty-five (45)
days prior written notice before it changes the location of its place of
business and chief executive office and shall at the expense of Borrower execute
and deliver such instruments and documents as may be required by Collateral
Agent to maintain a prior perfected security interest in the Collateral.
13. Continuing Assignment and Security Interest; Transfer of Loans.
--------------------------------------------------------------
This Agreement shall create a continuing pledge and assignment of and security
interest in the Collateral and shall (i) remain in full force and effect until
payment in full of the Obligations, (ii) be binding upon Borrower, Pledgors, and
their respective successors and assigns, and (iii) inure, together with the
rights and remedies provided herein, to the benefit of Collateral Agent, the
Holders of the Senior Secured Notes, the Permitted Additional Senior Lenders, if
any, and their respective successors, transferees and assigns. Without limiting
the generality of the foregoing, but subject to Section 2.06 of the Indenture,
any of the Holders of the Senior Secured Notes and the Permitted Additional
Senior Lenders, if any, may assign or otherwise transfer all or any part of or
interest in their Senior Secured Notes to any other Person to the extent
permitted by and in accordance with the Indenture, and such other Person shall
thereupon become vested with all or an appropriate part of the benefits in
respect thereof granted to the Holders of the Senior Secured Notes herein or
otherwise. The release of the security interest in any or all of the Collateral,
the taking or acceptance of additional security, or the resort by Collateral
Agent to any security it may have in any order it may deem appropriate, shall
not affect the liability of any person on the Obligations. Upon the payment and
performance in full of the Obligations, the security interest granted hereby
shall terminate and all rights to the Collateral shall revert to Pledgors. Upon
any such termination, Collateral Agent shall, at Pledgors' expense, execute and
deliver to Pledgors such documents as Borrower or Pledgors shall reasonably
request to evidence such termination. If this Agreement shall be terminated or
revoked by operation of law, Pledgors will indemnify and save Collateral Agent,
the Trustee, the Holders of the Senior Secured Notes and the Permitted
Additional Senior Lenders, if any, harmless from any loss which may be suffered
or incurred by Collateral Agent, Trustee, the Holders of the Senior Secured
Notes and the Permitted Additional Senior Lenders, if any, in acting hereunder
prior to the receipt by Collateral Agent, its successors, transferees or assigns
of written notice of such termination or revocation.
14. Liability. The obligations hereunder are subject to the
---------
limitations set forth in Section 6.11 of the Credit Agreement, the provisions of
which are hereby incorporated by reference.
15. Attorneys' Fees. In the event any legal action or proceeding
---------------
(including without limitation any of the remedies provided for herein or at law)
is commenced to enforce or interpret this Agreement or any provision thereof,
the prevailing party shall be entitled to recover its reasonable attorneys' fees
and other reasonable costs and expenses incurred therein from the losing party,
and, if a judgment or award is entered in any such action or proceeding, such
attorneys' fees and other costs and expenses may be made a part of such judgment
or award.
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16. Severability. Any provision of this Agreement which is
------------
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
17. Successors and Assigns. All covenants and agreements contained
----------------------
herein shall be binding upon, and inure to the benefit of, the parties and their
respective successors and assigns; provided, however, that such Pledgor or
Borrower shall cause its assignee to pledge the assigned Collateral to the
Collateral Agent pursuant to an agreement in substantially the form of this
Agreement.
18. Headings. The headings of the various sections herein are for
--------
convenience of reference only and shall not define or limit any of the terms or
provisions hereof.
19. Governing Law. This Agreement, including all matters of
-------------
construction, validity, performance and the creation, validity, enforcement or
priority of the lien of, and security interests created by, this Agreement in or
upon the Collateral shall be governed by the laws of the State of New York,
without reference to conflicts of law (other than Section 5-1401 of the New York
General Obligations Law), except as required by mandatory provisions of law and
except to the extent that the validity or perfection of the lien and security
interest hereunder, or remedies hereunder, in respect of any particular
Collateral are governed by the laws of a jurisdiction other than the State of
New York.
20. Time. Time is of the essence of this Agreement.
----
21. References to Other Documents. All defined terms used in this
-----------------------------
Agreement which refer to other documents shall be deemed to refer to such other
documents as they may be amended, supplemented or replaced from time to time,
provided such documents were not amended in breach of a covenant contained in
any agreement to which any Pledgor, Borrower, Collateral Agent or Trustee is a
party.
22. Reinstatement. This Agreement shall continue to be effective or
-------------
be reinstated, as the case may be, if at any time any amount received by
Collateral Agent in respect of the Obligations is rescinded or must otherwise be
restored or returned by Collateral Agent upon the insolvency, bankruptcy,
reorganization, liquidation of any Pledgor or Borrower or upon the dissolution
of, or appointment of any intervenor or conservator of, or trustee or similar
official for any Pledgor or Borrower or any substantial part of any Pledgor's or
Borrower's assets, or otherwise, all as though such payments had not been made.
23. Statute of Limitations. Each Pledgor hereby waives the right to
----------------------
plead any statute of limitations as a defense to any indebtedness or obligation
hereunder or secured hereby to the full extent permitted by law.
14
24. Entire Agreement. This Agreement, together with any other
----------------
agreement executed in connection herewith, is intended by the parties as a final
expression of their agreement and is intended as a complete and exclusive
statement of the terms and condition thereof.
25. Counterparts. This Agreement may be executed in one or more
------------
counterparts, each of which shall be deemed an original but all of which shall
together constitute one and the same agreement.
26. Waiver of Jury Trial. EACH PLEDGOR, BORROWER AND COLLATERAL
--------------------
AGENT HEREBY KNOWINGLY, VOLUNTARILY, AND INTENTIONALLY WAIVE ANY RIGHTS THEY MAY
HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON, OR ARISING
OUT OF, UNDER, OR IN CONNECTION WITH, THIS AGREEMENT OR ANY OTHER COLLATERAL
DOCUMENTS OR FINANCING DOCUMENT, OR ANY COURSE OF CONDUCT, COURSE OF DEALING,
STATEMENTS (WHETHER VERBAL OR WRITTEN), OR ACTIONS OF THE COLLATERAL AGENT,
BORROWER OR ANY PLEDGOR. THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE
COLLATERAL AGENT TO ENTER INTO THIS AGREEMENT.
27. Regarding the Collateral Agent. The Collateral Agent shall be
------------------------------
afforded all of the rights, powers, protections, immunities and indemnities set
forth in that certain Security Agreement dated as of the date hereof between
Borrower and Collateral Agent as if the same were specifically set forth herein.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
15
IN WITNESS WHEREOF, Pledgors, Borrower and Collateral Agent have
caused this Partnership Interest Pledge Agreement to be duly executed by their
partners and officers thereunto duly authorized, as of the day and year first
above written.
New CLOC Company, LLC,
a Delaware limited liability company,
its Managing General Partner
By: /s/ ▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
----------------------------
▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Executive Vice President
ESCA, LLC,
a Delaware limited liability company,
its General Partner
By: /s/ ▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
----------------------------
▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Executive Vice President
U.S. BANK TRUST NATIONAL ASSOCIATION,
as Collateral Agent
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
---------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
-----------------
Title: Trust Officer
-------------
16
ACCEPTED AND AGREED
-------------------
COSO FINANCE PARTNERS,
a California general partnership
New CLOC Company, LLC,
a Delaware limited liability company,
its Managing General Partner
By: /s/ ▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
---------------------------------
▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Executive Vice President
ESCA, LLC,
a Delaware limited liability company,
its General Partner
By: /s/ ▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
---------------------------------
▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Executive Vice President
17