EXHIBIT 4.9
EXECUTION VERSION
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COLLATERAL TRUST AND INTERCREDITOR AGREEMENT
dated as of March 23, 2004
among
CALPINE CALGEN HOLDINGS, INC.,
CALPINE GENERATING COMPANY, LLC,
THE GUARANTORS PARTY HERETO FROM TIME TO TIME,
WILMINGTON TRUST FSB,
as Trustee under the Indentures,
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ SENIOR FUNDING, INC.,
as Term Loan Administrative Agent under the Term Loan Agreements,
THE BANK OF NOVA SCOTIA,
as Revolving Loan Administrative Agent under the Revolving Loan Agreement,
and
WILMINGTON TRUST COMPANY,
as Collateral Agent
and
EACH OF THE OTHER PERSONS PARTY HERETO FROM TIME TO TIME
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TABLE OF CONTENTS
Page
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ARTICLE 1. DEFINITIONS; PRINCIPLES OF CONSTRUCTION............................................... 5
SECTION 1.1 Defined Terms................................................................. 5
SECTION 1.2 Rules of Interpretation....................................................... 35
ARTICLE 2. THE TRUST ESTATES..................................................................... 36
SECTION 2.1 Declaration of First Priority Trust........................................... 36
SECTION 2.2 Declaration of Second Priority Trust.......................................... 37
SECTION 2.3 Declaration of Third Priority Trust........................................... 38
SECTION 2.4 Declaration of Other Junior Lien Trust........................................ 39
SECTION 2.5 Priority of Liens............................................................. 40
SECTION 2.6 Special Rights in Insolvency Proceedings...................................... 45
SECTION 2.7 Collateral Shared Equally and Ratably Within Each Class....................... 46
ARTICLE 3. OBLIGATIONS AND POWERS OF COLLATERAL AGENT............................................ 46
SECTION 3.1 Undertaking of the Collateral Agent........................................... 46
SECTION 3.2 Release or Subordination of Liens............................................. 48
SECTION 3.3 Remedies Upon Actionable Default.............................................. 48
SECTION 3.4 Application of Proceeds..:.................................................... 48
SECTION 3.5 Powers of the Collateral Agent................................................ 50
SECTION 3.6 Documents and Communications.................................................. 50
SECTION 3.7 For Sole and Exclusive Benefit of Holders of Secured Obligations.............. 51
SECTION 3.8 Additional Secured Debt....................................................... 51
SECTION 3.9 Priming Lien Obligations...................................................... 52
ARTICLE 4. VOTING AND INTERCREDITOR MATTERS...................................................... 52
SECTION 4.1 Voting......................................................................... 52
SECTION 4.2 Intercreditor Decisions........................................................ 53
ARTICLE 5. OBLIGATIONS ENFORCEABLE BY THE COMPANY AND THE OTHER OBLIGORS......................... 54
SECTION 5.1 Release of Liens.............................................................. 54
SECTION 5.2 Delivery of Copies to Secured Debt Representatives............................ 56
SECTION 5.3 Collateral Agent not Required to Serve, File or Record........................ 56
ARTICLE 6. IMMUNITIES OF THE COLLATERAL AGENT.................................................... 56
SECTION 6.1 No Implied Duty.............................................................. 56
SECTION 6.2 Appointment of Agents and Advisors............................................ 56
SECTION 6.3 Other Agreements.............................................................. 57
SECTION 6.4 Solicitation of Instructions.................................................. 57
SECTION 6.5 Limitation of Liability....................................................... 57
SECTION 6.6 Documents in Satisfactory Form................................................ 57
SECTION 6.7 Entitled to Rely.............................................................. 57
SECTION 6.8 Secured Debt Default.......................................................... 58
SECTION 6.9 Actions by Collateral Agent................................................... 58
SECTION 6.10 Security or Indemnity in favor of the Collateral Agent........................ 58
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SECTION 6.11 Rights of the Collateral Agent................................................ 58
SECTION 6.12 Limitations on Duty of Collateral Agent in Respect of Collateral.............. 58
SECTION 6.13 Assumption of Rights, Not Assumption of Duties................................ 59
SECTION 6.14 No Liability for Clean Up of Hazardous Materials.............................. 60
ARTICLE 7. RESIGNATION AND REMOVAL OF THE COLLATERAL AGENT....................................... 60
SECTION 7.1 Resignation or Removal of Collateral Agent.................................... 60
SECTION 7.2 Appointment of Successor Collateral Agent..................................... 60
SECTION 7.3 Succession.................................................................... 61
ARTICLE 8. MISCELLANEOUS PROVISIONS.............................................................. 61
SECTION 8.1 Amendment..................................................................... 61
SECTION 8.2 Further Assurances............................................................ 62
SECTION 8.3 Successors and Assigns........................................................ 64
SECTION 8.4 Delay and Waiver.............................................................. 65
SECTION 8.5 Notices....................................................................... 65
SECTION 8.6 Entire Agreement.............................................................. 66
SECTION 8.7 Compensation; Expenses........................................................ 66
SECTION 8.8 Indemnity..................................................................... 67
SECTION 8.9 Severability.................................................................. 68
SECTION 8.10 Headings...................................................................... 68
SECTION 8.11 Obligations Secured........................................................... 68
SECTION 8.12 Governing Law................................................................. 68
SECTION 8.13 Consent to Jurisdiction....................................................... 68
SECTION 8.14 Waiver of Jury Trial.......................................................... 69
SECTION 8.15 Counterparts.................................................................. 69
SECTION 8.16 Effectiveness................................................................. 69
SECTION 8.17 Additional Obligors........................................................... 69
SECTION 8.18 Continuing Nature of this Agreement........................................... 70
SECTION 8.19 Insolvency.................................................................... 70
SECTION 8.20 Rights and Immunities of Secured Debt Representatives......................... 70
SECTION 8.21 No Recourse Against Obligors.................................................. 70
EXHIBIT A: Form of Collateral Trust Joinder
EXHIBIT B: Form of PPA Recognition Agreement
EXHIBIT C: Form of Shared Facilities Arrangement Recognition Agreement
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This COLLATERAL TRUST AND INTERCREDITOR AGREEMENT (this "Agreement"),
dated as of March 23, 2004, is entered into by and among:
(1) Calpine CalGen Holdings, Inc., a Delaware corporation (the
"Parent");
(2) Calpine Generating Company, LLC, a Delaware limited liability
company (the "Company"):
(3) the Guarantors (as defined below) from time to time party
hereto;
(4) Wilmington Trust FSB, as (a) trustee under the First Priority
Indenture (as defined below) (together with its successors and permitted assigns
in such capacity, the "First Priority Trustee"), (b) trustee under the Second
Priority Indenture (as defined below) (together with its successors and
permitted assigns in such capacity, the "Second Priority Trustee") and (c)
trustee under the Third Priority Indenture (as defined below) (together with its
successors and permitted assigns in such capacity, the "Third Priority Trustee"
and, together with the First Priority Trustee and the Second Priority Trustee,
the "Trustees");
(5) ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Senior Funding, Inc., as (a) administrative agent
under the First Priority Term Loan Agreement (as defined below) (together with
its successors and assigns in such capacity, the "First Priority Term Loan
Administrative Agent") and (b) administrative agent under the Second Priority
Term Loan Agreement (as defined below) (together with its successors and
permitted assigns in such capacity, the "Second Priority Term Loan
Administrative Agent");
(6) The Bank of Nova Scotia, as the administrative agent under the
Revolving Loan Agreement (as defined below) (together with its successors and
permitted assigns in such capacity, the "Revolving Loan Administrative Agent"):
(7) Wilmington Trust Company, as collateral agent (together with its
successors and permitted assigns in such capacity, the "Collateral Agent"): and
(8) each other Person which becomes a party hereto by executing and
delivering a Collateral Trust Joinder.
The Parent, the Company, the Guarantors and all future Obligors (as defined
below) that become a party hereto in accordance with the terms hereof are
collectively referred to herein as the "CalGen Companies."
RECITALS
A. Certain defined terms used in this Agreement are defined in
Article 1 below.
B. The Company intends to:
(1) issue, together with CalGen Finance Corp. ("CalGen
Finance"), as co-issuer, on a non-recourse basis, (a) $235,000,000 in
aggregate principal amount of its
[Collateral Trust Agreement - Calpine CalGen]
First Priority Secured Floating Rate Notes due 2009 (the "First Priority
Notes"), pursuant to the First Priority Indenture (the "First Priority
Indenture"), dated as of the date hereof, among the Company, CalGen
Finance, the Guarantors and the First Priority Trustee, (b) $640,000,000
in aggregate principal amount of its Second Priority Secured Floating Rate
Notes due 2010 (the "Second Priority Notes"), pursuant to the Second
Priority Indenture (the "Second Priority Indenture"), dated as of the date
hereof, among the Company, CalGen Finance, the Guarantors and the Second
Priority Trustee, and (c) $680,000,000 in aggregate principal amount of
its Third Priority Secured Floating Rate Notes due 2011 (the "Third
Priority Floating Rate Notes") and $150,000,000 in aggregate principal
amount of its 11 1/2 % Third Priority Secured Notes due 2011 (the "Third
Priority Fixed Rate Notes" and, together with the Third Priority Floating
Rate Notes, the "Third Priority Notes" and, together with the First
Priority Notes and the Second Priority Notes, the "Notes") pursuant to the
Third Priority Indenture (the "Third Priority Indenture" and, together
with the First Priority Indenture and the Second Priority Indenture, the
"Indentures"), dated as of the date hereof, among the Company, CalGen
Finance, the Guarantors and the Third Priority Trustee;
(2) borrow (a) $600,000,000 in aggregate principal amount of
first priority secured institutional term loans due 2009 (the "First
Priority Term Loans") pursuant to the Credit and Guarantee Agreement (the
"First Priority Term Loan Agreement"), dated as of the date hereof, among
the Company, the Guarantors, the First Priority Term Loan Administrative
Agent and the lenders, arrangers and other agents party thereto, and (b)
$100,000,000 in aggregate principal amount of second priority secured
institutional term loans due 2010 (the "Second Priority Term Loans" and,
together with the First Priority Term Loans, the "Term Loans") pursuant to
the Credit and Guarantee Agreement (the "Second Priority Term Loan
Agreement" and, together with the First Priority Term Loan Agreement, the
"Term Loan Agreements"), dated as of the date hereof, among the Company,
the Guarantors, the Second Term Loan Administrative Agent and the lenders,
arrangers and other agents party thereto; and
(3) enter into the Amended and Restated Credit Agreement (the
"Revolving Loan Agreement"), dated as of the date hereof, among the
Company, the Guarantors, the Revolving Loan Administrative Agent and the
lenders, arrangers and other agents party thereto, which provides for the
borrowing on a non-recourse basis of up to $200,000,000 in aggregate
principal amount of first priority secured revolving loans (the "Revolving
Loans").
C. (1) The Company intends to secure the Notes, the Term Loans,
the Revolving Loans and all other Secured Obligations (as defined herein) with
security interests in the Pledged Collateral (as defined in the Member Interest
Pledge Agreement, dated as of the date hereof, among the Company, CalGen
Expansion Company, LLC and the Collateral Agent), and in the Article 9
Collateral (as defined in the Security Agreement, dated as of the date hereof,
among the Company, the Guarantors and the Collateral Agent) (the "Company
Collateral"): (2) the Parent intends to secure all Secured Obligations with a
pledge of its membership interests in the Company (the "Parent Collateral"); (3)
each Guarantor (as defined herein) intends to Guarantee all Secured Obligations
and to secure such Guarantee with security interests in the Article 9 Collateral
(the "Guarantor Collateral" and, together with the Company Collateral, the
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Parent Collateral and any future collateral granted to the Collateral Agent as
security for the Secured Obligations, the "Collateral").
D. Pursuant to the terms of the Indentures, the Term Loan Agreements
and the Revolving Loan Agreement, the Company may from time to time incur
additional indebtedness or obligations secured with security interests in or
other liens on the Collateral.
E. This Agreement sets forth (1) the terms on which the CalGen
Companies and the Secured Debt Representatives party hereto have appointed the
Collateral Agent as trustee for the present and future holders of the Secured
Obligations to (a) receive, hold, maintain, administer, and enforce (i) all
Security Documents, and (ii) all interests, rights, powers and remedies of the
Collateral Agent hereunder and thereunder, and (b) distribute the proceeds of
the Collateral in a manner consistent with the priority of liens granted under
the Security Documents and described herein and (2) various intercreditor
arrangements among the holders of Notes, the lenders of Term Loans, the lenders
of Revolving Loans and future holders of secured indebtedness or other
obligations.
AGREEMENT
NOW THEREFORE, in consideration of the premises and the mutual agreements
herein set forth, the receipt and sufficiency of which are hereby acknowledged,
the parties hereto hereby agree as follows:
ARTICLE 1. DEFINITIONS; PRINCIPLES OF CONSTRUCTION
SECTION 1.1 Defined Terms. The following terms will have the following
meanings:
"Act of Required Debtholders" means, as to any matter at any time:
(1) at any time prior to the Discharge of First Priority Lien
Obligations and prior to the Remedy Bar Lift Trigger Date, a
direction in writing delivered to the Collateral Agent by or with
the written consent of the holders of more than 50% of the First
Priority Lien Debt as determined in accordance with Article 4;
(2) at any time prior to the Discharge of First Priority Lien
Obligations and after the Remedy Bar Lift Trigger Date, a direction
in writing delivered to the Collateral Agent by or with the written
consent of either the holders of more than 50% of the First Priority
Lien Debt or the holders of more than 50% of the Second Priority
Lien Debt, each as determined in accordance with Article 4; provided
that if the Collateral Agent receives conflicting instructions from
or on behalf of the holders of First Priority Lien Debt and the
holders of Second Priority Lien Debt (it being understood that the
holders of First Priority Lien Debt may give such conflicting
instructions), the Collateral Agent shall follow the instructions of
the holders of First Priority Lien Debt and the Act of Required
Debtholders shall be deemed to be the instructions received from or
on behalf of the holders of First Priority Lien Debt;
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(3) at any time after the Discharge of First Priority Lien
Obligations but prior to the Discharge of Second Priority Lien
Obligations, a direction in writing delivered to the Collateral
Agent by or with the written consent of the holders of more than 50%
of the Second Priority Lien Debt as determined in accordance with
Article 4:
(4) at any time after the Discharge of First Priority Lien
Obligations and the Discharge of Second Priority Lien Obligations, a
direction in writing delivered to the Collateral Agent by or with
the written consent of the holders of more than 50% of the Third
Priority Lien Debt as determined in accordance with Article 4; and
(5) unless otherwise agreed in writing by the holders of Other
Junior Lien Debt, at any time after the Discharge of First Priority
Lien Obligations, the Discharge of Second Priority Lien Obligations
and the Discharge of Third Priority Lien Obligations, a direction in
writing delivered to the Collateral Agent by or with the written
consent of the holders of more than 50% of the Other Junior Lien
Debt as determined in accordance with Article 4.
For this purpose, Secured Debt registered in the name of, or beneficially owned
by, the Company or any Affiliate of the Company will be deemed not to be
outstanding.
"Actionable Default" means:
(1) prior to the Discharge of First Priority Lien Obligations and
prior to the Remedy Bar Lift Trigger Date, the occurrence of any event of
default under any First Priority Lien Document, the result of which is
that:
(a) the holders of First Priority Lien Debt under such First
Priority Lien Document have the right to declare all of the Secured
Obligations thereunder to be due and payable prior to the stated
maturity thereof; or
(b) such Secured Obligations automatically become due and
payable prior to the stated maturity thereof;
(2) prior to the Discharge of First Priority Lien Obligations and
after the Remedy Bar Lift Trigger Date, the occurrence of any event of
default under any First Priority Lien Document or under any Second
Priority Lien Document, the result of which is that:
(a) the holders of First Priority Lien Debt or the Second
Priority Lien Debt under such First Priority Lien Document or Second
Priority Lien Document, as the case may be, have the right to
declare all of the Secured Obligations thereunder to be due and
payable prior to the stated maturity thereof; or
(b) such Secured Obligations automatically become due and
payable prior to the stated maturity thereof;
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(3) after the Discharge of First Priority Lien Obligations but
prior to the Discharge of Second Priority Lien Obligations, the
occurrence of any event of default under any Second Priority Lien
Document, the result of which is that:
(a) the holders of Second Priority Lien Debt under such
Second Priority Lien Document have the right to declare all of
the Secured Obligations thereunder to be due and payable prior
to the stated maturity thereof; or
(b) such Secured Obligations automatically become due
and payable prior to the stated maturity thereof;
(4) at any time after the Discharge of First Priority Lien
Obligations and the Discharge of Second Priority Lien Obligations,
the occurrence of any event of default under any Third Priority Lien
Document, the result of which is that:
(a) the holders of Third Priority Lien Debt under such
Third Priority Lien Document have the right to declare all of
the Secured Obligations thereunder to be due and payable prior
to the stated maturity thereof; or
(b) such Secured Obligations automatically become due
and payable prior to the stated maturity thereof; and
(5) unless otherwise agreed in writing by the holders of Other
Junior Lien Debt, at any time after the Discharge of First Priority
Lien Obligations, the Discharge of Second Priority Lien Obligations
and the Discharge of Third Priority Lien Obligations, the occurrence
of any event of default under any Other Junior Lien Document, the
result of which is that:
(a) the holders of Other Junior Lien Debt under such
Other Junior Lien Document have the right to declare all of
the Secured Obligations thereunder to be due and payable prior
to the stated maturity thereof; or
(b) such Secured Obligations automatically become due
and payable prior to the stated maturity thereof.
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For purposes of this definition, "control,"
as used with respect to any Person, means the possession, directly or
indirectly, of the power to direct or cause the direction of the management or
policies of such Person, whether through the ownership of voting securities, by
agreement or otherwise; provided, that beneficial ownership of 1 0% or more of
the voting stock of a Person will be deemed to be control. For purposes of this
definition, the terms "controlling," "controlled by" and "under common control
with" have correlative meanings.
"Agreement" has the meaning set forth in the preamble to this Agreement.
"Beneficial Owner" has the meaning assigned to such term in Rule 13d-3 and
Rule 13d-5 under the Exchange Act, except that in calculating the beneficial
ownership of any particular
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"person" (as that term is used in Section 13(d)(3) of the Exchange Act), such
"person" will be deemed to have beneficial ownership of all securities that such
"person" has the right to acquire by conversion or exercise of other securities,
whether such right is currently exercisable or is exercisable only after the
passage of time. The terms "Beneficially Owns" and "Beneficially Owned" have a
corresponding meaning.
"Business Day" means any day that is neither a Saturday or Sunday nor a
legal holiday on which the commercial banks are authorized or required to be
closed in New York, New York.
"CalGen Finance" has the meaning set forth in the recitals to this
Agreement.
"Calpine" means Calpine Corporation, a Delaware corporation.
"CalGen Companies" has the meaning set forth in the preamble to this
Agreement
"Capital Lease Obligation" means, at the time any determination is to be
made, the amount of the liability in respect of a capital lease that would at
that time be required to be capitalized on a balance sheet in accordance with
GAAP, and the Stated Maturity thereof shall be the date of the last payment of
rent or any other amount due under such lease prior to the first date upon which
such lease may be prepaid by the lessee without payment of a penalty.
"Capital Stock" means:
(a) in the case of a corporation, corporate stock;
(b) in the case of an association or business entity, any and all
shares, interests, participations, rights or other equivalents (however
designated) of corporate stock;
(c) in the case of a partnership or limited liability company,
partnership interests (whether general or limited) or membership
interests; and
(d) any other interest or participation that confers on a Person the
right to receive a share of the profits and losses of, or distributions of
assets of, the issuing Person, but excluding from all of the foregoing any
debt securities convertible into Capital Stock, whether or not such debt
securities include any right of participation with Capital Stock.
"Cash Equivalents" means:
(1) United States dollars;
(2) securities issued or directly and fully guaranteed or insured by
the United States government (or any agency or instrumentality thereof),
the Canadian government (or any agency or instrumentality thereof) or the
government of a member state of the European Union (or any agency or
instrumentality thereof), in each case the payment of which is backed by
the full faith and credit of the United States, Canada or the relevant
8
member state of the European Union, as the case may be, and having
maturities of not more than six months from the date of acquisition;
(3) certificates of deposit and eurodollar time deposits with
maturities of six months or less from the date of acquisition, bankers'
acceptances with maturities not exceeding six months and overnight bank
deposits, in each case, with any lender party to the Credit Facilities or
any domestic commercial bank having capital and surplus in excess of
$500.0 million and a Thomson Bank Watch (or successor rating agency)
Rating of "B" or better;
(4) repurchase obligations with a term of not more than seven days
for underlying securities of the types described in clauses (2) and (3)
above entered into with any financial institution meeting the
qualifications specified in clause (3) above;
(5) overnight deposits with entities whose unsecured commercial
paper or other unsecured short-term debt obligations, have, at the time of
such deposit, credit ratings of at least P-1 (or its equivalent) or higher
from ▇▇▇▇▇'▇ Investors Service, Inc. and A-1 (or its equivalent) or higher
from Standard & Poor's Ratings Group; and
(6) investments in money market funds or money market mutual funds
which have, at the time of such investments, credit ratings of at least
P-1 (or its equivalent) or higher from ▇▇▇▇▇'▇ Investors Service, Inc. and
A-1 (or its equivalent) or higher from Standard & Poor's Ratings Group.
"Class" means (1) in the case of First Priority Lien Debt, every Series of
First Priority Lien Debt, taken together, (2) in the case of Second Priority
Lien Debt, every Series of Second Priority Lien Debt, taken together, (3) in the
case of Third Priority Lien Debt, every Series of Third Priority Lien Debt,
taken together, and (4) in the case of Other Junior Lien Debt, every Series of
Other Junior Lien Debt, taken together.
"Closing Date" means March 23, 2004.
"Closing Date Facilities" means the electric generating facilities
(including any electric generating facilities under construction) owned by
Baytown Energy Center, LP; ▇▇▇▇▇▇▇▇ Energy LLC; Channel Energy Center, LP;
Columbia Energy LLC; Corpus Christi Cogeneration LP; Decatur Energy Center, LLC;
Delta Energy Center, LLC, Freestone Power Generation, LP; Goldendale Energy
Center, LLC, Los Medanos Energy Center, LLC; ▇▇▇▇▇▇ Energy Center, LLC; Calpine
▇▇▇▇▇ Power, L.P.; Pastoria Energy Facility, LLC and Zion Energy LLC.
"Collateral" has the meaning set forth in the recitals to this Agreement.
"Collateral Agent" has the meaning set forth in the preamble to this
Agreement.
"Collateral Trust Joinder" means an agreement substantially in the form of
Exhibit A to this Agreement.
"Company" has the meaning set forth in the preamble to this Agreement.
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"Company Collateral" has the meaning set forth in the recitals to this
Agreement.
"Credit Facilities" means one or more debt facilities or commercial paper
facilities, in each case with banks or other institutional lenders providing for
revolving credit loans, term loans, receivables financing (including through the
sale of receivables to such lenders or to special purpose entities formed to
borrow from such lenders against such receivables) or letters of credit, in each
case, as amended, restated, modified, renewed, refunded, replaced or refinanced
(including by means of sales of debt securities to institutional investors) in
whole or in part from time to time.
"Discharge of First Priority Lien Obligations" means the occurrence of all
of the following:
(1) termination of all commitments to extend credit that would
constitute First Priority Lien Debt;
(2) payment in full in cash of the principal of and interest
and premium (if any) (or defeasance in accordance with the applicable
Secured Debt Document if such document provides for a release of Liens on
the Collateral upon such defeasance) on all First Priority Lien Debt
(other than any undrawn letters of credit);
(3) discharge or cash collateralization (at 102.5% of the
aggregate undrawn amount) of all outstanding letters of credit
constituting First Priority Lien Debt; and
(4) payment in full in cash of all other First Priority Lien
Obligations that are outstanding and unpaid at the time the First Priority
Lien Debt is paid in full in cash (other than any obligations for taxes,
costs, indemnifications, reimbursements, damages and other liabilities in
respect of which no claim or demand for payment has been made at such
time).
"Discharge of Second Priority Lien Obligations" means the occurrence of
all of the following:
(1) termination of all commitments to extend credit that would
constitute Second Priority Lien Debt;
(2) payment in full in cash of the principal of and interest
and premium (if any) (or defeasance in accordance with the applicable
Secured Debt Document if such document provides for a release of Liens on
the Collateral upon such defeasance) on all Second Priority Lien Debt
(other than any undrawn letters of credit);
(3) discharge or cash collateralization (at 102.5% of the
aggregate undrawn amount) of all outstanding letters of credit
constituting Second Priority Lien Debt; and
(4) payment in full in cash of all other Second Priority Lien
Obligations that are outstanding and unpaid at the time the Second
Priority Lien Debt is
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paid in full in cash (other than any obligations for taxes, costs,
indemnifications, reimbursements, damages and other liabilities in respect
of which no claim or demand for payment has been made at such time).
"Discharge of Senior Priority Lien Obligations" means (1) with respect to
the Second Priority Lien Debt, the Discharge of First Priority Lien Obligations,
(2) with respect to the Third Priority Lien Debt, the Discharge of First
Priority Lien Obligations and the Discharge of Second Priority Lien Obligations,
and (3) with respect to Other Junior Priority Lien Debt, the Discharge of First
Priority Lien Obligations, the Discharge of Second Priority Lien Obligations and
the Discharge of Third Priority Lien Obligations.
"Discharge of Third Priority Lien Obligations" means the occurrence of all
of the following:
(1) termination of all commitments to extend credit that
would constitute Third Priority Lien Debt;
(2) payment in full in cash of the principal of and interest
and premium (if any) (or defeasance in accordance with the applicable
Secured Debt Document if such document provides for a release of Liens on
the Collateral upon such defeasance) on all Third Priority Lien Debt
(other than any undrawn letters of credit);
(3) discharge or cash collateralization (at 102.5% of the
aggregate undrawn amount) of all outstanding letters of credit
constituting Third Priority Lien Debt; and
(4) payment in full in cash of all other Third Priority Lien
Obligations that are outstanding and unpaid at the time the Third Priority
Lien Debt is paid in full in cash (other than any obligations for taxes,
costs, indemnifications, reimbursements, damages and other liabilities
in respect of which no claim or demand for payment has been made at such
time).
"Equally and Ratably" means, in reference to sharing of Liens or proceeds
thereof as between Secured Parties of the same Class, that such Liens or
proceeds:
(1) will be allocated and distributed first to the Secured Debt
Representative for each outstanding Series of Secured Debt within that
Class, for the account of the holders of such Series of Secured Debt,
ratably in proportion to the principal of, and interest and premium (if
any) and reimbursement obligations (contingent or otherwise) with respect
to letters of credit, if any, outstanding (whether or not drawings have
been made under such letters of credit) on, each outstanding Series of
Secured Debt within that Class when the allocation or distribution is
made, and thereafter
(2) will be allocated and distributed (if any remain after payment
in full of all of the principal of, and interest and premium (if any) and
reimbursement obligations (contingent or otherwise) with respect to
letters of credit, if any, outstanding (whether or not drawings have been
made under such letters of credit) on, all outstanding Secured Obligations
within that Class) to the Secured Debt Representative for each outstanding
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Series of Secured Obligations within that Class, for the account of the
holders of any remaining Secured Obligations within that Class, ratably
in proportion to the aggregate unpaid amount of such remaining Secured
Obligations within that Class due and demanded (with written notice to
the applicable Secured Debt Representative and the Collateral Agent)
prior to the date such distribution is made.
"Equity Interests" means Capital Stock, and all warrants, options or other
rights to acquire Capital Stock (but excluding any debt security that is
convertible into, or exchangeable for, Capital Stock).
"Excluded Assets" means:
(1) the fixtures and equipment relating to any Facility if, to the
extent that and for so long as (A) the ownership or operation of such
Facility is regulated by any federal or slate regulatory authority and (B)
under the law applicable to such regulatory authority the grant of a
security interest in such fixtures and equipment is prohibited or a
security interest in such fixtures and equipment may be granted only after
completion of a filing with, or receipt of consent from, such regulatory
authority which has not been effectively completed or received; provided,
that (i) such fixtures and equipment will be an Excluded Asset only to the
extent and for so long as the conditions set forth in clauses (A) and (B)
in this clause (1) are and remain satisfied and to the extent such assets
otherwise constitute Collateral, will cease to be an Excluded Asset, and
will become subject to the security interests granted to the Collateral
Agent under the Security Documents, immediately and automatically at such
time as such conditions cease to exist, including by reason of the
effective completion of any required filing or effective receipt of any
required regulatory approval, and (ii) unless prohibited by law, the
proceeds of any sale, lease or other disposition of any such fixtures or
equipment that are Excluded Assets shall not be an Excluded Asset and
shall at all times be and remain subject to the security interests granted
to the Collateral Agent under the Security Documents, except as such
proceeds are applied and used by the Company or any other Obligor in the
ordinary course of business and in accordance with the Secured Debt
Documents;
(2) with respect to personal property, any contract, agreement,
lease, license, permit, franchise, power, authority or right if, to the
extent that and for so long as (A) the grant of a security interest
therein constitutes or would result in the abandonment, invalidation or
unenforceability of such contract, agreement, lease, license, permit,
franchise, power, authority or right or the termination of or a default
under the instrument or agreement by which such contract, agreement,
lease, license, permit, franchise, power, authority or right is governed
and (B) such abandonment, invalidation, unenforceability, termination or
default is not rendered ineffective pursuant to Sections 9-406, 9-407, 9-
408 or 9-409 of the Uniform Commercial Code (or any successor provisions)
of any relevant jurisdiction or any other applicable law (including the
United States bankruptcy code); provided, that (i) such contract,
agreement, lease, license, permit, franchise, power, authority or right
will be an Excluded Asset only to the extent and for so long as the
conditions set forth in clauses (A) and (B) of this clause (2) are and
remain satisfied and to the extent that such assets otherwise constitute
Collateral, will cease to be an Excluded Asset, and will become subject to
the security interests granted to the Collateral
12
Agent under the Security Documents, immediately and automatically at such
time as such conditions cease to exist, including by reason of any waiver
or consent under the applicable instrument or agreement, and (ii) the
proceeds of any sale, lease or other disposition of any such contract,
agreement, lease, license, permit, franchise, power, authority or right
that is or becomes an Excluded Asset shall not be an Excluded Asset and
shall at all times be and remain subject to the security interests granted
to the Collateral Agent under the Security Documents, except as such
proceeds are applied and used by the Company or any other Obligor in the
ordinary course of business and in accordance with the Secured Debt
Documents;
(3) with respect to any real property, any lease, license, permit,
franchise, power, authority or tight if, to the extent that and for so
long as the grant of a security interest therein constitutes or would
result in the abandonment, invalidation or unenforceability of such lease,
license, permit, franchise, power, authority or right or the termination
of or a default under the instrument or agreement by which such lease,
license, permit, franchise, power, authority or right is governed;
provided, that such lease, license, permit, franchise, power, authority or
right will be an Excluded Asset only to the extent and for as long as the
condition set forth above is and remains satisfied and to the extent such
assets otherwise constitute Collateral, will cease to be an Excluded
Asset, and will become subject to the security interests granted to the
Collateral Agent under the Security Documents except as such proceeds are
applied and used by the Company or any other Obligor in the ordinary
course of business and in accordance with the Secured Debt Documents;
(4) any Excluded Subsidiary Securities;
(5) any property or assets owned by the Excluded Subsidiary;
(6) any Expansion Assets; provided, that any Expansion Assets will
be Excluded Assets only if and for so long as the limitations imposed by
the debt instruments of Calpine and its Subsidiaries on the ability to
▇▇▇▇▇ ▇ ▇▇▇▇ on such Expansion Assets to secure the Secured Obligations
continue to be applicable, as determined in good faith by the Company; and
(7) the Company's rights under or with respect to the Working
Capital Facility.
"Excluded Subsidiary" means Goldendale Energy Center, LLC.
"Excluded Subsidiary Securities" means Equity Interests of any Subsidiary
of the Company, other than the Equity Interests in CalGen Expansion Company.
"Expansion Assets" means the assets (including real property rights,
contractual rights, rights under permits, other general intangibles and other
ancillary rights) added to a Facility in connection with the addition of
capacity to, or other expansion of, such Facility; provided, that such Expansion
Assets are not necessary for the operation of such Facility or any other
Facility (other than the Expansion Assets themselves), are readily
distinguishable from such Facility and can be removed or separated from such
Facility, dismantled or operated independently of the
13
operation of the Facility without impairing such Facility or any other Facility
in any material respect.
"Expansion Debt" means Indebtedness incurred for the purpose of financing
the development construction or purchase of, or repairs, improvements or
additions to, Expansion Assets relating to one or more Facilities, including any
Indebtedness existing at the time such Expansion Assets are acquired, whether or
not such Indebtedness is incurred in connection with, or in contemplation of,
the acquisition of such Expansion Assets; provided, that such Indebtedness was
incurred to finance the development, construction or purchase of, or repairs,
improvements or additions to, such Expansion Assets.
"Facilities" means the Closing Date Facilities and any other electric
generating facilities acquired or constructed after the Closing Date described
in the definition of Permitted Business; provided, that any Facility disposed of
in accordance with the terms hereof shall from and after the date of any such
disposition be deemed not to be a Facility hereunder from and after the date of
such disposition.
"Fair Market Value" means the value that would be paid by a willing buyer
to a willing seller in a transaction not involving distress or necessity of
either party, (1) determined in good faith by an officer of the Company and
evidenced by an Officer's Certificate delivered to the Collateral Agent, if such
value is less than or equal to $10.0 million, or (2) determined in good faith by
the Board of Directors of the Company and evidenced by a resolution delivered to
the Collateral Agent, if such value is greater than $10.0 million.
"First Priority Debt Representative" means:
(a) in the case of the Revolving Loan Agreement, the Revolving
Loan Administrative Agent;
(b) in the case of the First Priority Term Loan Agreement, the
First Priority Term Loan Administrative Agent;
(c) in the case of the First Priority Notes, the First Priority
Trustee;
(d) in the case of Hedging Obligations incurred to manage or hedge
interest rate risk with respect to First Priority Lien Debt, the
counterparties to the agreements governing such Hedging Obligations; or
(e) in the case of any other Series of First Priority Lien Debt,
the trustee, agent or other representative of the holders of such Series
of First Priority Lien Debt that (1) is appointed as a First Priority Debt
Representative (for purposes related to the administration of the Security
Documents) pursuant to the credit agreement, indenture or other agreement
governing such Series of First Priority Lien Debt and (2) has executed a
Collateral Trust Joinder.
"First Priority Debt Sharing Confirmation" means, as to any Series of
First Priority Lien Debt, the written agreement of the holders of such Series of
First Priority Lien Debt, as set forth in the credit agreement, indenture or
other agreement governing such Series of First Priority Lien
14
Debt, for the enforceable benefit of all holders of each other existing and
future Series of First Priority Lien Debt, each existing and future First
Priority Debt Representative and the Collateral Agent, that (1) all First
Priority Lien Obligations will be and are secured Equally and Ratably by all
Liens at any time granted by the Company or any other Obligor to secure any
Obligations in respect of such Series of First Priority Lien Debt, whether or
not upon property otherwise constituting Collateral, (2) all such Liens will be
enforceable by the Collateral Agent for the benefit of all holders of First
Priority Lien Obligations Equally and Ratably, and (3) the holders of
Obligations in respect of such Series of First Priority Lien Debt are bound by
the provisions in this Agreement relating to the order of application of
proceeds from enforcement of such Liens, and consent to and direct the
Collateral Agent to perform its obligations under this Agreement.
"First Priority Indenture" has the meaning set forth in the recitals to
this Agreement.
"First Priority Lien" means a Lien granted by a Security Document to the
Collateral Agent, for the benefit of the First Priority Secured Parties, upon
any property of the Company or any other Obligor to secure First Priority Lien
Obligations.
"First Priority Lien Debt" means:
(1) the First Priority Notes issued on the Closing Date;
(2) Indebtedness under the First Priority Term Loan Agreement
incurred on the Closing Date;
(3) Indebtedness under the Revolving Loan Agreement;
(4) Hedging Obligations incurred to hedge or manage interest rate
risk with respect to First Priority Lien Debt having an aggregate notional
amount not to exceed, together with the aggregate notional amount of any
outstanding Hedging Obligations constituting Second Priority Lien Debt,
$500.0 million;
(5) Indebtedness under any other Credit Facility that is secured
by a First Priority Lien; and
(6) any other Indebtedness the net proceeds of which are used to
refund, refinance, replace, defease, discharge or otherwise acquire or
retire any other First Priority Lien Debt;
provided, that in the case of any Indebtedness referred to in clause (3), (4),
(5) or (6) of this definition:
(a) such Indebtedness was permitted to be incurred and so secured
under each applicable Secured Debt Document (or the lenders under such
Indebtedness obtained an Officer's Certificate at the time of incurrence
to the effect that such Indebtedness was permitted to be incurred and so
secured under each applicable Secured Debt Document);
(b) on or before the date on which such Indebtedness is incurred
by the Company or the applicable Subsidiary, such Indebtedness is
designated by the Company,
15
in an Officer's Certificate delivered to each First Priority Debt
Representative and the Collateral Agent, as "First Priority Lien Debt" for
the purposes of this Agreement and the other First Priority Lien
Documents;
(c) such Indebtedness is governed by an agreement that includes a
First Priority Sharing Confirmation, a Lien Priority Confirmation, and an
agreement by the holder of such Indebtedness and the applicable First
Priority Debt Representative to vote with respect to such Indebtedness in
accordance with Article 4 of this Agreement; and
(d) all requirements set forth in this Agreement as to the
confirmation, grant or perfection of the Collateral Agent's Liens to
secure such Indebtedness and all Obligations in respect thereof are
satisfied (and the satisfaction of such requirements will be conclusively
established if the Company delivers to the Collateral Agent an Officer's
Certificate stating that such requirements have been satisfied and that
such Indebtedness is "First Priority Lien Debt").
"First Priority Lien Documents" means the First Priority Indenture, the
First Priority Notes, the First Priority Term Loan Agreement, the Revolving Loan
Agreement, each First Priority Sharing Confirmation, the Security Documents,
each agreement evidencing any other Series of First Priority Lien Debt and all
other agreements governing, securing or relating to any First Priority Lien
Obligations.
"First Priority Lien Obligations" means the First Priority Lien Debt and
all other Obligations in respect of First Priority Lien Debt.
"First Priority Notes" has the meaning set forth in the recitals to this
Agreement.
"First Priority Secured Parties" means the holders of First Priority Lien
Obligations and the First Priority Debt Representatives.
"First Priority Term Loan Administrative Agent" has the meaning set forth
in the recitals to this Agreement.
"First Priority Term Loan Agreement" has the meaning set forth in the
recitals to this Agreement.
"First Priority Term Loans" has the meaning set forth in the recitals to
this Agreement.
"First Priority Trust Estate" has the meaning given in Section 2.1.
"First Priority Trustee" has the meaning set forth in the recitals to this
Agreement.
"First Priority Voting Group" has the meaning given in Section 4.1.
"GAAP" means generally accepted accounting principles set forth in the
statements and pronouncements of the Financial Accounting Standards Board or
such other statements by such other entity as have been approved by a
significant segment of the accounting profession, which are in effect on the
applicable date of determination.
16
"Guarantee" means a guarantee other than by endorsement of negotiable
instruments for collection in the ordinary course of business, direct or
indirect, in any manner including, by way of a pledge of assets or through
letters of credit or reimbursement agreements in respect thereof, of all or any
part of any Indebtedness (whether arising by virtue of partnership arrangements,
or by agreements to keep-well, to purchase assets, goods, securities or
services, to take or pay or to maintain financial statement conditions or
otherwise).
"Guarantor Collateral" has the meaning set forth in the recitals to this
Agreement.
"Guarantors" means:
(a) CalGen Expansion Company; CPN Freestone, LLC; Calpine
Freestone, LLC; Freestone Power Generation LP; Calpine Freestone Energy
GP, LLC; Calpine Freestone Energy, LP; Calpine Power Equipment LP; Calpine
Channel Energy Center LP, LLC; Calpine Channel Energy Center GP, LLC;
Channel Power GP, LLC; Channel Power, LP; Channel Energy Center, LP;
CalGen Equipment Finance Holdings, LLC; CalGen Project Equipment Finance
Company One, LLC; CalGen Project Equipment Finance Company Three LLC;
CalGen Equipment Finance Company, LLC; Nueces Bay Energy LLC; Calpine
Northbrook Southcoast Investors, LLC; Calpine Corpus Christi Energy GP,
LLC; Calpine Corpus Christi Energy, LP; Corpus Christi Cogeneration LP;
Zion Energy LLC; Los Medanos Energy Center, LLC; ▇▇▇▇▇▇ Energy Center,
LLC; ▇▇▇▇▇▇▇▇ Energy LLC; Decatur Energy Center, LLC; Calpine ▇▇▇▇▇ Power
I, LLC; Calpine ▇▇▇▇▇ Power II, LLC; Calpine ▇▇▇▇▇ Power, L.P.; Calpine
Baytown Energy Center LP, LLC; Calpine Baytown Energy Center GP, LLC;
Baytown Energy Center, LP; Baytown Power GP, LLC; Baytown Power, LP;
Columbia Energy LLC; Delta Energy Center, LLC; CalGen Project Equipment
Finance Company Two, LLC; Pastoria Energy Facility L.L.C.; and Calpine
Pastoria Holdings, LLC; and
(b) any other Subsidiary of the Company that becomes a Guarantor
under any Secured Debt Document;
and their respective successors and assigns.
"Hedging Obligations" means, with respect to any specified Person, the
obligations of such Person under:
(1) interest rate swap agreements (whether from fixed to floating
or from floating to fixed), interest rate cap agreements and interest rate
collar agreements;
(2) other agreements or arrangements designed to manage interest
rate risk; and
(3) other agreements or arrangements designed to protect such
Person against fluctuations in currency exchange rates or commodity
prices;
in each case to the extent permitted to be incurred under the Secured Debt
Documents.
17
"Indebtedness" means, with respect to any specified Person, any
indebtedness of such Person (excluding accrued expenses and trade payables),
whether or not contingent:
(1) in respect of borrowed money;
(2) evidenced by bonds, notes, debentures or similar instruments
or letters of credit (or reimbursement agreements in respect thereof);
(3) in respect of bankers' acceptances;
(4) representing Capitalized Lease Obligations;
(5) representing the balance deferred and unpaid of the purchase
price of any property or services due more than six months after such
property is acquired or such services are completed; or
(6) representing any Hedging Obligations,
if and to the extent any of the preceding items (other than letters of credit
and Hedging Obligations) would appear as a liability upon a balance sheet of the
specified Person prepared in accordance with GAAP. In addition, the term
"Indebtedness" includes all Indebtedness of others secured by a Lien on any
asset of the specified Person (whether or not such Indebtedness is assumed by
the specified Person) and, to the extent not otherwise included, the Guarantee
by the specified Person of any Indebtedness of any other Person.
"Indemnified Liabilities" means any and all liabilities (including all
environmental liabilities), obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements of any kind or nature
whatsoever with respect to the execution, delivery, performance, administration
or enforcement of this Agreement or any of the other Security Documents,
including any of the foregoing relating to the use of proceeds of any Secured
Debt or the violation of, noncompliance with or liability under, any law
(including environmental laws) applicable to or enforceable against the Company
or any of its Subsidiaries or any of the Collateral and all reasonable costs and
expenses (including reasonable fees and expenses of legal counsel selected by
the Indemnitee) incurred by any Indemnitee in connection with any claim, action,
investigation or proceeding in any respect relating to any of the foregoing,
whether or not suit is brought.
"Indemnitee" has the meaning set forth in Section 8.8(a).
"Indentures" has the meaning set forth in the recitals to this Agreement.
"Index Based Gas Sales and Power Purchase Agreement" means the Index Based
Gas Sale and Power Purchase Agreement, dated as of the Closing Date, among
Calpine Energy Services, L.P., the Company and its Subsidiaries party thereto.
18
"Insolvency Proceeding" means:
(1) any proceeding for the reorganization, recapitalization or
adjustment or marshalling of the assets or liabilities of the Company or
any other Obligor, any receivership or assignment for the benefit of
creditors relating to the Company or any other Obligor or any similar case
or proceeding relative to the Company or any other Obligor or its
creditors, as such, including any case under Title 11 of the United States
Code or any comparable foreign law equivalent, or any successor bankruptcy
law, in each case whether or not voluntary;
(2) any liquidation, dissolution, marshalling of assets or
liabilities or other winding up of or relating to the Company or any other
Obligor, in each case whether or not voluntary and whether or not
involving bankruptcy or insolvency; or
(3) any other proceeding of any type or nature in which
substantially all claims of creditors of the Company or any other Obligor
are determined and any payment or distribution is or may be made on
account of such claims.
"Junior Priority Debt Documents" mean each agreement evidencing Junior
Priority Lien Obligations, the Security Documents and all other agreements
governing, securing or relating to Junior Priority Lien Obligations.
"Junior Priority Debt Representatives" means (x) with respect to the First
Priority Lien Debt, the Second Priority Debt Representatives, the Third Priority
Debt Representatives and the Other Junior Debt Representatives, (y) with respect
to the Second Priority Lien Debt, the Third Priority Debt Representatives and
the Other Junior Debt Representatives and (z) with respect to the Third Priority
Lien Debt, the Other Junior Debt Representatives.
"Junior Priority Lien" means (x) with respect to the First Priority
Secured Parties, the Second Priority Lien, the Third Priority Lien and the Other
Junior Liens, (y) with respect to the Second Priority Secured Parties, the Third
Priority Lien and the Other Junior Liens and (z) with respect to the Third
Priority Secured Parties, the Other Junior Liens.
"Junior Priority Lien Obligations" means, with respect to a Junior
Priority Secured Party, the Obligations owed to such Person.
"Junior Priority Secured Parties" means (x) with respect to the First
Priority Secured Parties, the Second Priority Secured Parties, the Third
Priority Secured Parties and the Other Junior Secured Parties, (y) with respect
to the Second Priority Secured Parties, the Third Priority Secured Parties and
the Other Junior Secured Parties, and (z) with respect to the Third Priority
Secured Parties, the Other Junior Secured Parties.
"Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset,
whether or not filed, recorded or otherwise perfected under applicable law,
including any conditional sale or other title retention agreement, any lease in
the nature thereof, any option or other agreement to sell or give a security
interest in and any filing of or agreement to give any financing statement under
the Uniform Commercial Code (or equivalent statutes) of any jurisdiction.
19
"Lien Priority Confirmation" means:
(1) as to any Series of First Priority Lien Debt, the written
agreement of the holders of such Series of First Priority Lien Debt, as
set forth in the credit agreement, indenture or other agreement governing
such Series of First Priority Lien Debt, for the enforceable benefit of
all holders of each existing and future holders of Permitted Prior Liens
and the Collateral Agent, to be bound by the provisions of this Agreement;
(2) as to any Series of Second Priority Lien Debt, the written
agreement of the holders of such Series of Second Priority Lien Debt, as
set forth in the credit agreement, indenture or other agreement governing
such Series of Second Priority Lien Debt, for the enforceable benefit of
all holders of each existing and future Series of First Priority Lien
Debt, each existing and future First Priority Debt Representative and the
Collateral Agent, to be bound by the provisions of this Agreement;
(3) as to any Series of Third Priority Lien Debt, the written
agreement of the holders of such Series of Third Priority Lien Debt, as
set forth in the credit agreement, indenture or other agreement governing
such Series of Third Priority Lien Debt, for the enforceable benefit of
all holders of each existing and future Series of First Priority Lien
Debt, each existing and future Series of Second Priority Lien Debt, each
existing and future First Priority Debt Representative, each existing and
future Second Priority Debt Representative and the Collateral Agent, to be
bound by the provisions of this Agreement; and
(4) as to any Series of Other Junior Lien Debt, the written
agreement of the holders of such Series of Other Junior Lien Debt, as set
forth in the credit agreement, indenture or other agreement governing such
Series of Other Junior Lien Debt, for the enforceable benefit of all
holders of each existing and future Series of First Priority Lien Debt,
each existing and future Series of Second Priority Lien Debt, each
existing and future Series of Third Priority Lien Debt, each existing and
future First Priority Debt Representative, each existing and future Second
Priority Debt Representative, each existing and future Third Priority Debt
Representative and the Collateral Agent, to be bound by the provisions of
this Agreement.
"New Secured Debt" has the meaning given in Section 3.8.
"Notes" has the meaning set forth in the recitals to this Agreement.
"Notice of Actionable Default" means a written notice given to the
Collateral Agent stating that an Actionable Default has occurred and is
continuing.
"Obligations" means, with respect to any Indebtedness of any Person
(collectively, without duplication):
(1) all debt, financial liabilities and obligations of such Person
of whatsoever nature and howsoever evidenced (including principal,
interest, fees, reimbursement obligations, cash cover obligations,
penalties, indemnities and legal and other expenses, whether due after
acceleration or otherwise) to the providers or holders of such
20
Indebtedness or to any agent, trustee or other representative of such
providers or holders of such Indebtedness under or pursuant to each
agreement, document or instrument evidencing, securing, guaranteeing or
relating to such Indebtedness, financial liabilities or obligations
relating to such Indebtedness (including Secured Debt Documents applicable
to such Indebtedness (if any)), in each case, direct or indirect, primary
or secondary, fixed or contingent, now or hereafter arising out of or
relating to any such agreement, document or instrument;
(2) any and all sums paid or advanced by the Collateral Agent or
any other Person in order to preserve the Collateral or any other
collateral securing such Indebtedness or to preserve the Liens and
security interests in the Collateral or any other collateral securing such
Indebtedness; and
(3) the costs and expenses of collection and enforcement of the
obligations referred to in clauses (1) and (2), including:
(a) the costs and expenses of retaking, holding, preparing
for sale or lease, selling or otherwise disposing of or realizing on
any Collateral or any other collateral;
(b) the costs and expenses of any exercise by the Collateral
Agent or any other Person of its rights under the Security Documents
or any other security documents; and
(c) reasonable attorneys' fees and expenses and court costs.
"Obligor" means each Calpine Company and each other Person (if any) that
at any time provides collateral security for any Secured Debt Obligations.
"Officer's Certificate" means a certificate with respect to compliance
with a condition or covenant provided for in this Agreement, signed on behalf of
the Company by one officer of the Company, who must be the Chairman of the
Board, Chief Executive Officer, the President, the Chief Financial Officer, the
Treasurer, an Assistant Treasurer, the Controller, the Secretary or a Vice
President, including:
(1) a statement that the Person making such certificate or opinion
has read such covenant or condition;
(2) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions
contained in such certificate or opinion are based;
(3) a statement that, in the opinion of such Person, he or she has
made such examination or investigation as is necessary to enable him or
her to express an informed opinion as to whether or not such covenant or
condition has been satisfied; and
(4) a statement as to whether or not, in the opinion of such
Person, such condition or covenant has been satisfied.
21
"Other Junior Debt Representative" means the trustee, agent or other
representative for the holders of a Series of Other Junior Lien Debt that (1) is
appointed as an Other Junior Debt Representative (for purposes related to the
administration of the Security Documents) pursuant to the credit agreement,
indenture or other agreement governing such Other Junior Lien Debt and (2) has
executed a Collateral Trust Joinder.
"Other Junior Lien" means a Lien granted by a Security Document to the
Collateral Agent, for the benefit of the Other Junior Secured Parties, upon any
property of the Company or any other Obligor to secure Other Junior Lien
Obligations.
"Other Junior Lien Debt" means:
(1) Expansion Debt that is secured by a Lien on the Capital Stock
of CalGen Expansion Company, LLC; provided, that any such Capital Stock
must be part of the Collateral and any such Liens must be junior to all
First Priority Liens, Second Priority Liens and Third Priority Liens in
accordance with the terms hereof;
(2) Expansion Debt that is secured by a Lien on property and
assets of the Person incurring such Expansion Debt other than Expansion
Assets; provided, that all such property and assets must be part of the
Collateral and any such Liens must be junior to all First Priority Liens,
Second Priority Liens and Third Priority Liens in accordance with the
terms hereof; and
(3) Third Party Subordinated Indebtedness secured by the property
and assets of the Company; provided, that all such property and assets
must be part of the Collateral and any such Liens must be junior to all
First Priority Liens, Second Priority Liens and Third Priority Liens in
accordance with the terms hereof;
provided, that in the case of any Indebtedness referred to in clause (1), (2) or
(3) of this definition:
(a) such Indebtedness was permitted to be incurred and so secured
under each applicable Secured Debt Document (or the lenders under such
Indebtedness obtained an Officer's Certificate at the time of incurrence
to the effect that such Indebtedness was permitted to be incurred and so
secured under each applicable Secured Debt Document);
(b) on or before the date on which such Indebtedness is incurred
by the Company or the applicable Subsidiary, such Indebtedness is
designated by the Company, in an Officer's Certificate delivered to each
Other Junior Debt Representative and the Collateral Agent, as "Other
Junior Lien Debt" for the purposes of this Agreement and the other Other
Junior Lien Documents;
(c) such Indebtedness is governed by an agreement that includes an
Other Junior Lien Sharing Confirmation, a Lien Priority Confirmation, and
an agreement by the holder of such Indebtedness and the applicable First
Priority Debt Representative to vote with respect to such Indebtedness in
accordance with Article 4 of this Agreement; and
22
(d) all requirements set forth in this Agreement as to the
confirmation, grant or perfection of the Collateral Agent's Liens to
secure such Indebtedness and all Obligations in respect thereof are
satisfied (and the satisfaction of such requirements will be conclusively
established if the Company delivers to the Collateral Agent an Officer's
Certificate stating that such requirements have been satisfied and that
such Indebtedness is "Other Junior Lien Debt").
"Other Junior Lien Debt Sharing Confirmation" means, as to any Series of
Other Junior Lien Debt, the written agreement of the holders of such Series of
Other Junior Lien Debt, as set forth in the indenture or other agreement
governing such Series of Other Junior Lien Debt, for the enforceable benefit of
all holders of each other existing and future Series of Other Junior Lien Debt,
each existing and future Other Junior Debt Representative and the Collateral
Agent, (1) setting forth the priority of such Series of Other Junior Lien Debt
in relation to all Other Junior Lien Obligations with respect to sharing of
proceeds of Collateral, voting and other matters under this Agreement, and (2)
providing that the holders of Obligations in respect of such Series of Other
Junior Lien Debt are bound by the provisions in this Agreement relating to the
order of application of proceeds from enforcement of such Liens, and consent to
and direct the Collateral Agent to perform its obligations under this Agreement.
"Other Junior Lien Documents" means each agreement evidencing Other Junior
Lien Debt and all other agreements governing, securing or relating to any Other
Junior Lien Obligations.
"Other Junior Lien Obligations" means the Other Junior Lien Debt and all
other Obligations in respect of Other Junior Lien Debt.
"Other Junior Lien Trust Estate" has the meaning given in Section 2.4.
"Other Junior Secured Parties" means the holders of Other Junior Lien
Obligations and the Other Junior Debt Representatives.
"Parent" has the meaning set forth in the preamble to this Agreement.
"Parent Collateral" has the meaning set forth in the recitals to this
Agreement.
"Permitted Business" means the ownership, construction, operation and
maintenance of the Closing Date Facilities and any substantially similar
electric generating facilities located in the United States, together with any
related assets or facilities, including gas pipelines supplying natural gas to
such generating facilities, electric transmission lines carrying energy
generated from such generating facilities, and any related gas or electric
interconnection facilities.
"Permitted Counterparty Lien" means a Lien in favor of a counterparty
under a PPA; provided, that the following conditions are satisfied:
(1) the counterparty is not an Affiliate of the Company;
(2) the Lien does not secure any Indebtedness and (a) is granted
solely to secure the performance obligations of the Company or the
applicable Subsidiary under
23
the PPA and/or any obligation of the Company or the applicable Subsidiary
to make a termination payment under the PPA upon the occurrence of the
event described in clause (3) (c) (i) below in this definition or the
termination by the counterparty upon the occurrence of any of the events
described in clause (3)(c)(ii) below in this definition, or (b) creates
rights designed to enable the counterparty to assume operational control
of the relevant Facility or Facilities (e.g., step-in rights) or otherwise
continue performance of the Company's or the applicable Subsidiary's
obligations under the PPA;
(3) the counterparty can exercise its rights with respect to the
Lien only (a) for so long as the counterparty remains current with respect
to all of its payment obligations under the PPA and is not otherwise in a
continuing default under the PPA, (b) if the counterparty continues to
acknowledge the existence of the Liens securing the Secured Obligations
(unless and until Liens securing the Secured Obligations are eliminated in
connection with a foreclosure of the Permitted Counterparty Liens as
contemplated by clause (4) of this definition) and (c) if either (i) the
Company or the applicable Subsidiary has terminated, rejected or
repudiated the PPA (including, without limitation, any rejection or
similar act by or on behalf of the Company or the applicable Subsidiary in
connection with any bankruptcy proceeding) or (ii) the Company or the
applicable Subsidiary has intentionally breached its obligations under the
PPA; provided, that the following actions will be considered an
intentional breach by the Company or the applicable Subsidiary under the
PPA: (A) the Company or the applicable Subsidiary provides or delivers
capacity or energy to a third party if the Company or the applicable
Subsidiary is required under the PPA to provide or deliver such capacity
or energy to the counterparty; (B) the Company or the applicable
Subsidiary fails to operate or attempt to operate one or more of the
relevant Facilities at a time when the Company or the applicable
Subsidiary was required under the PPA to operate or attempt to operate
such Facility or Facilities and such operation or attempted operation is
not prevented by force majeure, forced outage or other events or
circumstances outside the reasonable control of the Person responsible
therefor; (C) any failure by the Company or the applicable Subsidiary to
comply with any provisions of the PPA designed to enable the counterparty
to assume operational control of the relevant Facility or Facilities
(e.g., step-in rights) or otherwise take actions necessary to continue
performance of the Company's or the applicable Subsidiary's obligations
under the PPA, in each case to the extent the Company or the applicable
Subsidiary is then capable of complying with such provisions; or (D) any
failure by the Company or the applicable Subsidiary to pay to the
counterparty any amount due and payable in accordance with the terms and
conditions of the PPA; and
(4) the counterparty's exercise of its rights with respect to the
Lien is limited to (a) the taking of actions pursuant to any provisions of
the PPA designed to enable the counterparty to assume operational control
of the relevant Facility or Facilities (e.g., step-in rights) or
otherwise necessary to continue performance of the Company's or the
applicable Subsidiary's obligations under the PPA or (b) the recovery of
any termination payment due under the PPA upon the occurrence of the event
described in clause (3) (c) (i) above in this definition or the
termination by the counterparty upon the occurrence of any of the events
described in clause (3) (c) (ii) above in this definition.
24
"Permitted Prior Liens" means:
(1) Liens directly on Expansion Assets to secure Expansion Debt
used to finance such Expansion Assets and other Expansion Assets owned by
the Person incurring such Expansion Debt (including any rights of such
Person under Shared Facilities Arrangements);
(2) obligations under Shared Facilities Arrangements, to the
extent such obligations constitute Liens, and Liens on Shared Facilities
securing the applicable Obligor's obligations under Shared Facilities
Arrangements;
(3) Liens existing on the Closing Date and set forth on a schedule
to a First Priority Lien Document in effect on the Closing Date;
(4) Permitted Counterparty Liens;
(5) to the extent constituting Liens, obligations of the Company
or its Subsidiaries under, or restrictions imposed by, any PPA Recognition
Agreement; and
(6) Liens that arise by operation of law and are not voluntarily
granted, to the extent under applicable law such Liens are entitled to
priority over the Liens granted by the Security Documents.
"Person" means any individual, corporation, partnership, joint venture,
association, joint-stock company, trust, unincorporated organization, limited
liability company or government or other entity.
"PPA" means an agreement (including a tolling agreement, fuel conversion
services agreement or other similar agreement) entered into by the Company or
any of its Subsidiaries for the sale of capacity or energy (and services
ancillary or related thereto) from one or more of the Facilities.
"PPA Recognition Agreement" means an agreement by the Collateral Agent, on
behalf of the holders of Secured Obligations, substantially in the form of
Exhibit B, (a) to assume, directly or indirectly (through any agent or
Affiliate), the rights and obligations of the Company and any of its
Subsidiaries under the WECC Fixed Price Gas Sale and Power Purchase Agreement in
the event of a foreclosure, or the exercise or enforcement of the Collateral
Agent's interests, rights, powers and remedies in respect of the Collateral
under this Agreement or any other Security Document, and (b) not to reject the
WECC Fixed Price Gas Sale and Power Purchase Agreement in any Insolvency
Proceeding (subject to applicable law and the discretion of the bankruptcy
court), in each case so long as Calpine Energy Services, L.P. (or its successor
or permitted assignee) is not in default under the WECC Fixed Price Gas Sale and
Power Purchase Agreement or the Index Based Gas Sale and Power Purchase
Agreement.
"Priming Lien" means a Lien or other obligation described in clause (a),
(b), (d) or (e) of the definition of "Permitted Prior Liens."
25
"Priming Lien Obligations" means obligations secured by a Priming Lien;
provided, that (1) such Priming Lien and obligations were permitted to be
incurred under each applicable Secured Debt Document (or the beneficiaries of
such Liens or obligations obtained an Officer's Certificate of the Company to
such effect), and (2) all requirements set forth in this Agreement as to the
confirmation of such Priming Lien and obligations are satisfied (and the
satisfaction of such requirements and the other provisions of this clause (2)
will be conclusively established if the Company delivers to the Collateral Agent
an Officer's Certificate stating that such requirements and other provisions
have been satisfied and that such obligations are "Priming Lien Obligations").
"Priming Lien Secured Parties" means the holders of Priming Lien
Obligations.
"Remedy Bar Lift Trigger Date" means, at any time prior to the Discharge
of First Priority Lien Obligations and after the occurrence of an event of
default as defined in and under any Second Priority Lien Document, the earlier
of (x) the date that is 180 days after the occurrence of such event of default
and (y) the date of the commencement of any Insolvency Proceeding in respect of
the Company or any Obligor.
"Responsible Officer" means, with respect to the Collateral Agent or any
Secured Debt Representative, any officer within the corporate trust department
of the Collateral Agent or such Secured Debt Representative, as the case may be,
including any managing director, director, vice president, assistant vice
president, associate, trust officer or any other officer of the Collateral Agent
or such Secured Debt Representative, as the case may be, who customarily
performs functions similar to those performed by the Persons who at the time
will be such officers, respectively, or to whom any corporate trust matter is
referred because of such Person's knowledge of and familiarity with the
particular subject and who will have direct responsibility for the
administration of this Agreement.
"Revolving Loan Administrative Agent" has the meaning set forth in the
recitals to this Agreement.
"Revolving Loan Agreement" has the meaning set forth in the recitals to
this Agreement.
"Revolving Loans" has the meaning set forth in the recitals to this
Agreement.
"Second Priority Debt Representative" means:
(a) in the case of the Second Priority Term Loan Agreement, the
Second Priority Term Loan Administrative Agent;
(b) in the case of the Second Priority Notes, the Second Priority
Trustee;
(d) in the case of Hedging Obligations incurred to manage or hedge
interest rate risk with respect to Second Priority Lien Debt, the
counterparties to the agreements governing such Hedging Obligations; or
(e) in the case of any other Series of Second Priority Lien Debt,
the trustee, agent or other representative of the holders of such Series
of Second Priority Lien Debt
26
that (1) is appointed as a Second Priority Debt Representative (for
purposes related to the administration of the Security Documents) pursuant
to the credit agreement, indenture or other agreement governing such
Series of Second Priority Lien Debt and (2) has executed a Collateral
Trust Joinder.
"Second Priority Debt Sharing Confirmation" means, as to any Series of
Second Priority Lien Debt, the written agreement of the holders of such Series
of Second Priority Lien Debt, as set forth in the indenture or other agreement
governing such Series of Second Priority Lien Debt, for the enforceable benefit
of all holders of each other existing and future Series of Second Priority Lien
Debt, each existing and future Second Priority Debt Representative and the
Collateral Agent, that (1) all Second Priority Lien Obligations will be and are
secured Equally and Ratably by all Liens at any time granted by the Company or
any other Obligor to secure any Obligations in respect of such Series of Second
Priority Lien Debt, whether or not upon property otherwise constituting
Collateral, (2) all such Liens will be enforceable by the Collateral Agent for
the benefit of all holders of Second Priority Lien Obligations Equally and
Ratably, and (3) the holders of Obligations in respect of such Series of Second
Priority Lien Debt are bound by the provisions in this Agreement relating to the
order of application of proceeds from enforcement of such Liens, and consent to
and direct the Collateral Agent to perform its obligations under this Agreement.
"Second Priority Indenture' has the meaning set forth in the recitals to
this Agreement.
"Second Priority Lien Documents" means the Second Priority Indenture, the
Second Priority Notes, the Second Priority Term Loan Agreement, each Second
Priority Sharing Confirmation, the Security Documents, each agreement evidencing
any other Series of Second Priority Lien Debt and all other agreements
governing, securing or relating to any Second Priority Lien Obligations.
"Second Priority Lien" means a Lien granted by a Security Document to the
Collateral Agent, for the benefit of the Second Priority Secured Parties, upon
any property of the Company or any other Obligor to secure Second Priority Lien
Obligations.
"Second Priority Lien Debt" means:
(1) the Second Priority Notes issued on the Closing Date;
(2) Indebtedness under the Second Priority Term Loan Agreement
incurred on the Closing Date;
(3) Hedging Obligations incurred to hedge or manage interest rate
risk with respect to Second Priority Lien Debt having an aggregate
notional amount not to exceed, together with the aggregate notional amount
of any outstanding Hedging Obligations constituting First Priority Lien
Debt, $500.0 million;
(4) Indebtedness under any other Credit Facility that is secured
by a Second Priority Lien; and
27
(5) any other Indebtedness the net proceeds of which are used to
refund, refinance, replace, defease, discharge or otherwise acquire or
retire any other Second Priority Lien Debt or any First Priority Lien
Debt;
provided, that in the case of any Indebtedness referred to in clause (3), (4) or
(5) of this definition:
(a) such Indebtedness was permitted to be incurred and so secured
under each applicable Secured Debt Document (or the lenders under such
Indebtedness obtained an Officer's Certificate at the time of incurrence
to the effect that such Indebtedness was permitted to be incurred and so
secured under each applicable Secured Debt Document);
(b) on or before the date on which such Indebtedness is incurred
by the Company or the applicable Subsidiary, such Indebtedness is
designated by the Company, in an Officer's Certificate delivered to each
Second Priority Debt Representative and the Collateral Agent, as "Second
Priority Lien Debt" for the purposes of this Agreement and the other
Second Priority Lien Documents;
(c) such Indebtedness is governed by an agreement that includes a
Second Priority Sharing Confirmation, a Lien Priority Confirmation, and an
agreement by the holder of such Indebtedness and the applicable Second
Priority Debt Representative to vote with respect to such Indebtedness in
accordance with Article 4 of this Agreement; and
(d) all requirements set forth in this Agreement as to the
confirmation, grant or perfection of the Collateral Agent's Liens to
secure such Indebtedness and all Obligations in respect thereof are
satisfied (and the satisfaction of such requirements will be conclusively
established if the Company delivers to the Collateral Agent an Officer's
Certificate stating that such requirements have been satisfied and that
such Indebtedness is "Second Priority Lien Debt").
"Second Priority Lien Obligations" means the Second Priority Lien Debt and
all other Obligations in respect of Second Priority Lien Debt.
"Second Priority Notes" has the meaning set forth in the recitals to this
Agreement.
"Second Priority Secured Parties" means the holders of Second Priority
Lien Obligations and the Second Priority Debt Representatives.
"Second Priority Term Loan Administrative Agent" has the meaning set forth
in the recitals to this Agreement.
"Second Priority Term Loan Agreement" has the meaning set forth in the
recitals to this Agreement.
"Second Priority Term Loans" has the meaning set forth in the recitals to
this Agreement.
"Second Priority Trust Estate" has the meaning set forth in Section 2.2.
28
"Second Priority Trustee" has the meaning set forth in the recitals to
this Agreement.
"Second Priority Voting Group" has the meaning given in Section 4.1.
"Secured Debt" means First Priority Lien Debt, Second Priority Lien Debt,
Third Priority Lien Debt and Other Junior Lien Debt.
"Secured Debtholder" means, at any time, a Person that is at that time the
holder of any Secured Debt or has any commitment with respect to any Secured
Debt or the issuance of any letters of credit under any Secured Debt Document or
the making of any loans under any Secured Debt Document.
"Secured Debt Default" means any event or condition which, under the terms
of any Secured Debt Document, causes, or permits holders of Secured Debt
outstanding thereunder (with or without the giving of notice or lapse of time,
or both, and whether or not notice has been given or time has lapsed) to cause,
the Secured Debt outstanding thereunder to become immediately due and payable.
"Secured Debt Documents" means the First Priority Lien Documents, the
Second Priority Lien Documents, the Third Priority Lien Documents and the Other
Junior Lien Documents.
"Secured Debt Representative" means each First Priority Debt
Representative, each Second Priority Debt Representative, each Third Priority
Debt Representative and each Other Junior Debt Representative.
"Secured Obligations" means the First Priority Lien Obligations, the
Second Priority Lien Obligations, the Third Priority Lien Obligations and the
Other Junior Lien Obligations.
"Secured Obligations Termination Date" means the date on which all Secured
Obligations (including all interest accrued thereon after the commencement of
any Insolvency Proceeding at the rate, including any applicable post-default
rate, specified in the applicable Secured Debt Documents, even if such interest
is not enforceable, allowable or allowed as a claim in such proceeding) have
been paid in full in cash (and/or defeased in accordance with the applicable
Secured Debt Documents), all commitments to extend credit under all Secured Debt
Documents have terminated or expired and all outstanding letters of credit
issued pursuant to any Secured Debt Documents have been cancelled, terminated or
cash collateralized at 102.5% of the aggregate undrawn amount.
"Secured Parties" means the First Priority Secured Parties, the Second
Priority Secured Parties, the Third Priority Secured Parties and the Other
Junior Secured Parties.
"Security Documents" means this Agreement and all other security
agreements, pledge agreements, collateral assignments, mortgages, collateral
agency agreements, control agreements, deeds of trust or other grants or
transfers for security executed and delivered by the Company or any other
Obligor creating (or purporting to create) a Lien upon Collateral in favor of
the Collateral Agent, for the benefit of the Secured Parties, in each case, as
amended, supplemented, amended and restated or otherwise modified and in effect
from time to time in accordance with its terms.
29
"Senior Priority Debt Representatives" means (x) with respect to the
Second Priority Lien Debt, the First Priority Debt Representatives, (y) with
respect to the Third Priority Lien Debt, the First Priority Debt Representatives
and the Second Priority Debt Representatives, and (z) with respect to the Other
Junior Lien Debt, the First Priority Debt Representatives, the Second Priority
Debt Representatives and the Third Priority Debt Representatives.
"Senior Priority Lien" means (x) with respect to the Second Priority
Secured Parties, Permitted Prior Liens and First Priority Liens, (y) with
respect to the Third Priority Secured Parties, Permitted Prior Liens, First
Priority Liens and Second Priority Liens, and (z) with respect to the Other
Junior Secured Parties, Permitted Prior Liens, First Priority Liens, Second
Priority Liens and Third Priority Liens.
"Senior Priority Lien Documents" each agreement evidencing Senior Priority
Lien Obligations, the Security Documents and all other agreements governing,
securing or relating to any Senior Priority Lien Obligations.
"Senior Priority Lien Obligations" means, with respect to a Senior
Priority Secured Party, the Obligations owed to such Person.
"Senior Priority Secured Parties" means (x) with respect to the Second
Priority Secured Parties, the First Priority Secured Parties, (y) with respect
to the Third Priority Secured Parties, the First Priority Secured Parties and
the Second Priority Secured Parties, and (z) with respect to the Other Junior
Secured Parties, the First Priority Secured Parties, the Second Priority Secured
Parties and the Third Priority Secured Parties.
"Series of First Priority Lien Debt" means, severally, the Indebtedness
incurred under the Revolving Loan Agreement, the Indebtedness incurred under the
First Priority Term Loan Agreement, the First Priority Notes and each other
issue or series of First Priority Lien Debt incurred under one or more related
documents.
"Series of Second Priority Lien Debt" means, severally, the Indebtedness
incurred under the Second Priority Term Loan Agreement, the Second Priority
Notes and each other issue or series of Second Priority Lien Debt incurred under
one or more related documents.
"Series of Other Junior Lien Debt" means, severally, each issue or series
of Other Junior Lien Debt incurred under one or more related documents.
"Series of Third Priority Lien Debt" means, severally, the Third Priority
Notes and each other issue or series of Third Priority Lien Debt incurred under
one or more related documents.
"Series of Secured Debt" means, severally, each Series of First Priority
Lien Debt, each series of Second Priority Lien Debt, each Series of Third
Priority Lien Debt and each Series of Other Junior Lien Debt.
"Shared Facilities" means equipment, facilities, pipelines, permits, real
estate rights, entitlements or other property that are shared or jointly used,
owned or operated the Company or any of its Subsidiaries and any owner of
Expansion Assets.
30
"Shared Facilities Arrangement" means any arrangement that provides for
the sharing, joint operation or use, common ownership, leasing or contingent use
of Shared Facilities between the Company or any of its Subsidiaries and any
owner of Expansion Assets or "Toll Party" (as defined below in this definition),
and/or their respective lenders, including (a) agreements for the sharing or
joint use or operation of Shared Facilities, (b) ownership of undivided
interests in Shared Facilities as tenants in common or other similar forms of
joint ownership, (c) leasing of Shared Facilities by the Company or any of its
Subsidiaries to an owner of Expansion Assets, (d) ownership of Shared Facilities
by a single purpose entity formed solely to own the Shared Facilities and owned
by the Company or any of its Subsidiaries or jointly owned by the Company or any
of its Subsidiaries and the owner of the Expansion Assets, (e) tolling
agreements between the Company or any of its Subsidiaries and any other Person
(the "Toll Party") with respect to a Facility's steam turbine, (f) granting of
conditional or unconditional real estate rights for the construction,
installation or use of Shared Facilities, (g) Liens on the Shared Facilities or
interests therein to secure any such arrangement; provided, that the Company
will deliver to the Collateral Agent an Officer's Certificate to the effect
that, and, with respect to items (3) and (4) below, a nationally recognized
independent engineer will deliver a report concluding that (subject to customary
assumptions and qualifications):
(1) the ownership, operation, leasing or use of such Shared
Facilities by the owner of Expansion Assets (including the use of the
steam turbine by the Toll Party) cannot unreasonably interfere with or
otherwise materially adversely affect the operation of the Facility;
(2) the owner of the Facility (or another entity on such owner's
behalf) continues to operate and maintain the Facility and the Shared
Facilities;
(3) the costs of operating and maintaining the Shared Facilities
are shared by the owner of the Facility and the owner of the Expansion
Assets or the Toll Party, as applicable, on an equitable basis;
(4) the Shared Facilities and the entitlements related thereto are
sufficient to fully serve both the Facility and the Expansion Assets or
the Toll Party, as applicable, or, to the extent the Shared Facilities or
the entitlements related thereto are insufficient to fully serve both the
Facility and the Expansion Assets or the Toll Party, as applicable, the
Facility will have priority with respect to such Shared Facilities or
entitlements, so long as the Facility is operated within the requirements,
operating restrictions and other limitations associated with such Shared
Facilities or entitlements;
(5) the holder of the Expansion Assets or the Toll Party, as
applicable, will not have any rights with respect to the sale or other
disposition of, or exercise of remedies with respect to the Facility, so
long as the Shared Facilities remain subject to the Shared Facilities
Arrangements;
(6) each party waives the defense that an adequate remedy exists
at law and affords the other party (and its lenders or agents on behalf of
such lenders) the right to specifically enforce the agreement; and
31
(7) the owner of the Expansion Assets or the Toll Party, as
applicable, cannot prevent a dismantling of the Facility and the receipt
by the holders of the Secured Debt of the proceeds of the sale thereof, so
long as (a) such owner or Toll Party, as applicable, is given an option to
purchase the Shared Facilities at their Fair Market Value, as determined
by appraisal, prior to dismantling of the Facility, (h) such owner or Toll
Party, as applicable, is given a right of first refusal to acquire the
Shared Facilities in the event they are offered for sale in connection
with the dismantling of the Facility, and (c) the owner of the Facility
cooperates with the owner of the Expansion Assets or the Toll Party, as
applicable, in accommodating the continued use and operation of the
Expansion Assets and the Shared Facilities to the maximum extent
reasonably possible notwithstanding the dismantling of the Facility,
including providing reasonable periods for and cooperating in the
modification of the Shared Facilities.
"Shared Facilities Arrangement Recognition Agreement" means, with respect
to any Shared Facilities Arrangement, an agreement by the Collateral Agent, on
behalf of the holders of Secured Obligations, substantially in the form of
Exhibit C, with such modifications as will not result in such agreement being
prohibited by any Secured Debt Document, as certified by the Company in an
Officer's Certificate delivered to the Collateral Agent, (a) to assume, directly
or indirectly (through any agent or Affiliate), the rights and obligations of
the Company and any of its Subsidiaries under such Shared Facilities Arrangement
in the event of a foreclosure, or the exercise or enforcement of the Collateral
Agent's interests, rights, powers and remedies in respect of the Collateral
under this Agreement or any other Security Document, (b) to recognize the rights
of the owners of the Expansion Assets and the holders of the Expansion Debt
under such Shared Facilities Arrangements, including in the event of a
foreclosure of any of the Liens described in this Agreement, and (c) not to
reject such Shared Facilities Arrangement in any Insolvency Proceeding (subject
to applicable law and the discretion of the bankruptcy court).
"Subsidiary" means, with respect to any specified Person:
(1) any corporation, association or other business entity of which
more than 50% of the total voting power of shares of capital stock
entitled (without regard to the occurrence of any contingency and after
giving effect to any voting agreement or stockholders' agreement that
effectively transfers voting power) to vote in the election of directors,
managers or trustees of the corporation, association or other business
entity is at the time owned or controlled, directly or indirectly, by that
Person or one or more of the other Subsidiaries of that Person (or a
combination thereof); and
(2) any partnership (a) the sole general partner or the managing
general partner of which is such Person or a Subsidiary of such Person or
(b) the only general partners of which are that Person or one or more
Subsidiaries of that Person (or any combination thereof).
"Term Loan Agreements" has the meaning set forth in the recitals to this
Agreement.
"Term Loans" has the meaning set forth in the recitals to this Agreement.
32
"Third Party Subordinated Indebtedness" means Indebtedness loaned to the
Company by a Person other than an Affiliate of the Company; provided, that such
Indebtedness (a) is contractually subordinated in right of payment and in all
other respects to the Secured Obligations on the terms required by the Secured
Debt Documents, (b) does not provide for mandatory redemption or other
redemption thereof until at least six months after final stated maturity of all
Secured Obligations, (c) provides for payment of interest thereon in the form of
cash or additional Third Party Subordinated Indebtedness having a principal
amount equal to the amount of interest due (i.e., "pay-in-kind"), and (d) is
otherwise in the form required by the Secured Debt Documents.
"Third Priority Debt Representative" means:
(a) in the case of the Third Priority Notes, the Third Party
Trustee;
(b) in the case of Hedging Obligations incurred to manage or hedge
interest rate risk with respect to Third Priority Lien Debt, the
counterparties to the agreements governing such Hedging Obligations; or
(c) in the case of any other Series of Third Priority Lien Debt,
the trustee, agent or other representative of the holders of such Series
of Third Priority Lien Debt that (1) is appointed as a Third Priority Debt
Representative (for purposes related to the administration of the Security
Documents) pursuant to the credit agreement, indenture or other agreement
governing such Series of Third Priority Lien Debt and (2) has executed a
Collateral Trust Joinder.
"Third Priority Debt Sharing Confirmation" means, as to any Series of
Third Priority Lien Debt, the written agreement of the holders of that Series of
Third Priority Lien Debt, as set forth in the indenture or other agreement
governing that Series of Third Priority Lien Debt, for the enforceable benefit
of all holders of each other existing and future Series of Third Priority Lien
Debt, each existing and future Third Priority Debt Representative and the
Collateral Agent, that (1) all Third Priority Lien Obligations will be and are
secured Equally and Ratably by all Liens at any time granted by the Company or
any other Obligor to secure any Obligations in respect of such Series of Third
Priority Lien Debt, whether or not upon property otherwise constituting
Collateral, (2) all such Liens will be enforceable by the Collateral Agent for
the benefit of all holders of Third Priority Lien Obligations Equally and
Ratably, and (3) the holders of Obligations in respect of such Series of Third
Priority Lien Debt are bound by the provisions in this Agreement relating to the
order of application of proceeds from enforcement of such Liens, and consent to
and direct the Collateral Agent to perform its obligations under this Agreement.
"Third Priority Floating Rate Notes" has the meaning set forth in the
recitals to this Agreement.
"Third Priority Fixed Rate Notes" has the meaning set forth in the
recitals to this Agreement.
"Third Priority Indenture" has the meaning set forth in the recitals to
this Agreement.
33
"Third Priority Lien" means a Lien granted by a Security Document to the
Collateral Agent, for the benefit of the Third Priority Secured Parties, upon
any property of the Company or any other Obligor to secure Third Priority Lien
Obligations.
"Third Priority Lien Debt" means:
(1) the Third Priority Notes issued on the Closing Date;
(2) any other Indebtedness the net proceeds of which are used to
refund, refinance, replace, defease, discharge or otherwise acquire or
retire any other Third Priority Lien Debt or any First Priority Lien Debt
or Second Priority Lien Debt; and
(3) Hedging Obligations incurred to hedge or manage interest rate
risk with respect to Third Priority Lien Debt having a notional amount not
to exceed the aggregate principal amount of outstanding Third Priority
Lien Debt;
provided, that in the case of any Indebtedness referred to in clause (2) or (3)
of this definition:
(a) such Indebtedness was permitted to be incurred and so secured
under each applicable Secured Debt Document (or the lenders under such
Indebtedness obtained an Officer's Certificate at the time of incurrence
to the effect that such Indebtedness was permitted to be incurred and so
secured under each applicable Secured Debt Document);
(b) on or before the date on which such Indebtedness is incurred
by the Company or the applicable Subsidiary, such Indebtedness is
designated by the Company, in an Officer's Certificate delivered to each
Third Priority Debt Representative and the Collateral Agent, as "Third
Priority Lien Debt" for the purposes of this Agreement and the other Third
Priority Lien Documents;
(c) such Indebtedness is governed by an agreement that includes a
Third Priority Sharing Confirmation, a Lien Priority Confirmation, and an
agreement by the holder of such Indebtedness and the applicable Third
Priority Debt Representative to vote with respect to such Indebtedness in
accordance with Article 4 of this Agreement; and
(d) all requirements set forth in this Agreement as to the
confirmation, grant or perfection of the Collateral Agent's Liens to
secure such Indebtedness and all Obligations in respect thereof are
satisfied (and the satisfaction of such requirements will be conclusively
established if the Company delivers to the Collateral Agent an Officer's
Certificate stating that such requirements have been satisfied and that
such Indebtedness is "Third Priority Lien Debt").
"Third Priority Lien Documents" means the Third Priority Indenture, the
Third Priority Notes, each Third Priority Sharing Confirmation, the Security
Documents, each agreement evidencing any other Series of Third Priority Lien
Debt and all other agreements governing, securing or relating to any Third
Priority Lien Obligations.
"Third Priority Lien Obligations" means Third Priority Lien Debt and all
other Obligations in respect of Third Priority Lien Debt.
34
"Third Priority Notes" has the meaning set forth in the recitals to this
Agreement.
"Third Priority Secured Parties" means the holders of Third Priority Lien
Obligations and the Third Priority Debt Representatives.
"Third Priority Trust Estate" has the meaning set forth in Section 2.3.
"Third Priority Trustee" has the meaning set forth in the preamble to this
Agreement.
"Trust Estates" has the meaning set forth in Section 2.4 of this
Agreement.
"Trustees" has the meaning set forth in the preamble to this Agreement.
"UCC" means the Uniform Commercial Code as in effect in the State of New
York or any other applicable jurisdiction.
"WECC Fixed Price Gas Sale and Power Purchase Agreement" means the WECC
Fixed Price Gas Sale and Power Purchase Agreement, dated as of the Closing Date,
among Calpine Energy Services, L.P., the Company and its Subsidiaries party
thereto.
"Voting Group" means the First Priority Voting Group or the Second
Priority Voting Group, as applicable.
"Working Capital Facility" means the Working Capital Facility Agreement,
dated as of the Closing Date, among Calpine, CalGen Holdings and the Company.
SECTION 1.2 Rules of Interpretation.
(a) All terms used in this Agreement that are defined in Article 9
of the UCC and not otherwise defined herein has the meanings therein set forth.
(b) Unless otherwise indicated, any reference to any agreement or
instrument will be deemed to include a reference to that agreement or instrument
as assigned, amended, supplemented, amended and restated, or otherwise modified
and in effect from time to time or replaced in accordance with the terms of this
Agreement.
(c) The use in this Agreement or any of the other Security
Documents of the word "include" or "including," when following any general
statement, term or matter, will not be construed to limit such statement, term
or matter to the specific items or matters set forth immediately following such
word or to similar items or matters, whether or not nonlimiting language (such
as "without limitation" or "but not limited to" or words of similar import) is
used with reference thereto, but will be deemed to refer to all other items or
matters that fall within the broadest possible scope of such general statement,
term or matter. The word "will" shall be construed to have the same meaning and
effect as the word "shall."
(d) References to "Sections" and "clauses" will be to Sections and
clauses, respectively, of this Agreement unless otherwise specifically provided.
35
(e) References to "Articles" will be to Articles of this Agreement
unless otherwise specifically provided.
(f) References to "Exhibits" and "Schedules" will be to Exhibits
and Schedules, respectively, to this Agreement unless otherwise specifically
provided.
(g) This Agreement, the other Security Documents and any documents
or instruments delivered pursuant hereto will be construed without regard to the
identity of the party who drafted it. Each and every provision of this
Agreement, the other Security Documents and any instruments and documents
entered into and delivered in connection therewith will be construed as though
the parties participated equally in the drafting thereof. Consequently, each of
the parties acknowledges and agrees that any rule of construction that a
document is to be construed against the drafting party will not be applicable
either to this Agreement or the other Security Documents and any instruments and
documents entered into and delivered in connection with this Agreement or any of
the other Security Documents.
ARTICLE 2. THE TRUST ESTATES
SECTION 2.1 Declaration of First Priority Trust.
TO SECURE the payment of the First Priority Lien Obligations and in
consideration of and subject to the mutual agreements set forth in this
Agreement, each of the Obligors hereby grants to the Collateral Agent, and the
Collateral Agent hereby accepts and agrees to hold, in trust under this
Agreement for the benefit of all present and future holders of First Priority
Lien Obligations, all of such Obligor's right, title and interest in, to and
under all Collateral granted to the Collateral Agent under any Security Document
for the benefit of the First Priority Secured Parties, together with all of the
Collateral Agent's right, title and interest in, to and under the Security
Documents, and all interests, rights, powers and remedies of the Collateral
Agent thereunder or in respect thereof and all cash and non-cash proceeds
thereof (collectively, the "First Priority Trust Estate");
The Collateral Agent and its successors and assigns under this Agreement
will hold the First Priority Trust Estate in trust for the benefit solely and
exclusively of all present and future holders of First Priority Lien Obligations
as security for the payment of all present and future First Priority Lien
Obligations;
PROVIDED, that if at any time:
(1) all Liens granted in favor of the First Priority Secured
Parties by any and all of the Security Documents have been released as
provided in Section 5.1;
(2) the Collateral Agent holds no other property in trust as part
of the First Priority Trust Estate;
(3) no monetary obligation (other than indemnification and other
contingent obligations not then due and payable) is outstanding and
payable under this Agreement to the Collateral Agent or any of its
co-trustees, agents or sub-agents (whether in an individual or
representative capacity); and
36
(4) the Company delivers to the Collateral Agent an Officer's
Certificate stating that all Liens of the Collateral Agent have been
released in compliance with all applicable provisions of the First
Priority Lien Documents and that the Obligors are not required by any
First Priority Lien Document to grant or maintain any Lien upon any
property to secure the First Priority Lien Obligations, then the first
priority trust arising hereunder will terminate, except that,
notwithstanding such termination, all provisions set forth in Sections 8.7
and 8.8 hereof enforceable by the Collateral Agent or any of its
co-trustees, agents or sub-agents (whether in an individual or
representative capacity) or any other Indemnitees will remain enforceable
in accordance with their terms;
AND THE PARTIES FURTHER DECLARE AND COVENANT that the First Priority Trust
Estate will be held and distributed by the Collateral Agent subject to the
further agreements herein.
SECTION 2.2 Declaration of Second Priority Trust.
TO SECURE the payment of the Second Priority Lien Obligations and in
consideration of and subject to the mutual agreements set forth in this
Agreement, each of the Obligors hereby grants to the Collateral Agent, and the
Collateral Agent hereby accepts and agrees to hold, in trust under this
Agreement for the benefit of all present and future holders of Second Priority
Lien Obligations, all of such Obligor's right, title and interest in, to and
under all Collateral granted to the Collateral Agent under any Security Document
for the benefit of the Second Priority Secured Parties, together with all of the
Collateral Agent's right, title and interest in, to and under the Security
Documents, and all interests, rights, powers and remedies of the Collateral
Agent thereunder or in respect thereof and all cash and non-cash proceeds
thereof (collectively, the "Second Priority Trust Estate");
The Collateral Agent and its successors and assigns under this Agreement
will hold the Second Priority Trust Estate in trust for the benefit solely and
exclusively of all present and future holders of Second Priority Lien
Obligations as security for the payment of all present and future Second
Priority Lien Obligations;
PROVIDED, that if at any time:
(1) all Liens granted in favor of the Second Priority Secured
Parties by any and all of the Security Documents have been released as
provided in Section 5.1;
(2) the Collateral Agent holds no other property in trust as part
of the Second Priority Trust Estate;
(3) no monetary obligation (other than indemnification and other
contingent obligations not then due and payable) is outstanding and
payable under this Agreement to the Collateral Agent or any of its
co-trustees, agents or sub-agents (whether in an individual or
representative capacity); and
(4) the Company delivers to the Collateral Agent an Officer's
Certificate stating that all Liens of the Collateral Agent have been
released in compliance with all applicable provisions of the Second
Priority Lien Documents and that the Obligors are not required
37
by any Second Priority Lien Document to grant or maintain any Lien upon
any property to secure the Second Priority Lien Obligations, then the
second priority trust arising hereunder will terminate, except that,
notwithstanding such termination, all provisions set forth in Sections 8.7
and 8.8 hereof enforceable by the Collateral Agent or any of its
co-trustees, agents or sub-agents (whether in an individual or
representative capacity) or any other Indemnitees will remain enforceable
in accordance with their terms;
AND THE PARTIES FURTHER DECLARE AND COVENANT that the Second Priority
Trust Estate will be held and distributed by the Collateral Agent subject to the
further agreements herein.
SECTION 2.3 Declaration of Third Priority Trust.
TO SECURE the payment of the Third Priority Lien Obligations and in
consideration of and subject to the mutual agreements set forth herein, each of
the Obligors hereby grants to the Collateral Agent, and the Collateral Agent
hereby accepts and agrees to hold, in trust under this Agreement for the benefit
of all present and future holders of Third Priority Lien Obligations, all of
such Obligor's right, title and interest in, to and under all Collateral granted
to the Collateral Agent under any Security Document for the benefit of the Third
Priority Secured Parties, together with all of the Collateral Agent's right,
title and interest in, to and under the Security Documents, and all interests,
rights, powers and remedies of the Collateral Agent thereunder or in respect
thereof and all cash and non-cash proceeds thereof (collectively, the "Third
Priority Trust Estate");
The Collateral Agent and its successors and assigns under this Agreement
will hold the Third Priority Trust Estate in trust for the benefit solely and
exclusively of all present and future holders of Third Priority Lien Obligations
as security for the payment of all present and future Third Priority Lien
Obligations;
PROVIDED, that if at any time:
(1) all Liens granted in favor of the Third Priority Secured
Parties by any and all of the Security Documents have been released as
provided in Section 5.1;
(2) the Collateral Agent holds no other property in trust as part
of the Third Priority Trust Estate;
(3) no monetary obligation (other than indemnification and other
contingent obligations not then due and payable) is outstanding and
payable under this Agreement to the Collateral Agent or any of its
co-trustees, agents or sub-agents (whether in an individual or
representative capacity); and
(4) the Company delivers to the Collateral Agent an Officer's
Certificate stating that all Liens of the Collateral Agent have been
released in compliance with all applicable provisions of the Third
Priority Lien Documents and that the Obligors are not required by any
Third Priority Lien Document to grant or maintain any Lien upon any
property to secure the Third Priority Lien Obligations, then the third
priority trust arising hereunder will terminate, except that,
notwithstanding such termination, all provisions set forth in
38
Sections 8.7 and 8.8 hereof enforceable by the Collateral Agent or any of
its co-trustees, agents or sub-agents (whether in an individual or
representative capacity) or any other Indemnitee will remain enforceable
in accordance with their terms;
AND THE PARTIES FURTHER DECLARE AND COVENANT that the Third Priority Trust
Estate will be held and distributed by the Collateral Agent subject to the
further agreements herein.
SECTION 2.4 Declaration of Other Junior Lien Trust.
TO SECURE the payment of the Other Junior Lien Obligations and in
consideration of and subject to the mutual agreements set forth herein, each of
the Obligors hereby grants to the Collateral Agent, and the Collateral Agent
hereby accepts and agrees to hold, in trust under this Agreement for the benefit
of all present and future holders of Other Junior Lien Obligations, all of such
Obligor's right, title and interest in, to and under all Collateral granted to
the Collateral Agent under any Security Document for the benefit of the Other
Junior Secured Parties, together with all of the Collateral Agent's right, title
and interest in, to and under the Security Documents, and all interests, rights,
powers and remedies of the Collateral Agent thereunder or in respect thereof and
all cash and non-cash proceeds thereof (collectively, the "Other Junior Lien
Trust Estate," and together with the First Priority Trust Estate, the Second
Priority Trust Estate and the Third Priority Trust Estate, the "Trust
Estates");
The Collateral Agent and its successors and assigns under this Agreement
will hold the Other Junior Lien Trust Estate in trust for the benefit solely and
exclusively of all present and future holders of Other Junior Lien Obligations
as security for the payment of all present and future Other Junior Lien
Obligations;
PROVIDED, that if at any time:
(1) all Liens granted in favor of the Other Junior Secured Parties
by any and all of the Security Documents have been released as provided in
Section 5.1;
(2) the Collateral Agent holds no other property in trust as part
of the Other Junior Lien Trust Estate;
(3) no monetary obligation (other than indemnification and other
contingent obligations not then due and payable) is outstanding and
payable under this Agreement to the Collateral Agent or any of its
co-trustees, agents or sub-agents (whether in an individual or
representative capacity); and
(4) the Company delivers to the Collateral Agent an Officer's
Certificate stating that all Liens of the Collateral Agent have been
released in compliance with all applicable provisions of the Other Junior
Lien Documents and that the Obligors are not required by any Other Junior
Lien Document to grant or maintain any Lien upon any property to secure
the Other Junior Lien Obligations, then the other junior lien trust
arising hereunder will terminate, except that, notwithstanding such
termination, all provisions set forth in Sections 8.7 and 8.8 hereof
enforceable by the Collateral Agent or any of its co-trustees,
39
agents or sub-agents (whether in an individual or representative capacity)
or any other Indemnitee will remain enforceable in accordance with their
terms;
AND THE PARTIES FURTHER DECLARE AND COVENANT that the Other Junior Lien
Trust Estate will be held and distributed by the Collateral Agent subject to the
further agreements herein.
SECTION 2.5 Priority of Liens.
(a) Notwithstanding anything else contained herein or in any other
Security Document, it is the intent of the parties hereto that:
(1) this Agreement and the Security Documents create four
separate and distinct Trust Estates and Liens: the First Priority Trust
Estate and Lien securing the payment and performance of the First Priority
Lien Obligations, the Second Priority Trust Estate and Lien securing the
payment and performance of the Second Priority Lien Obligations, the Third
Priority Lien Trust Estate and Lien securing the payment and performance
of the Third Priority Lien, and the Other Junior Lien Trust Estate and
Lien securing the payment and performance of the Other Junior Lien
Obligations;
(2) (w) the Liens securing the First Priority Lien
Obligations are subject and subordinate to the Liens securing the Priming
Lien Obligations, (x) the Liens securing the Second Priority Lien
Obligations are subject and subordinate to the Liens securing the Priming
Lien Obligations and the Liens securing the First Priority Lien
Obligations, (y) the Liens securing the Third Priority Lien Obligations
are subject and subordinate to the Liens securing the Priming Lien
Obligations, the Liens securing the First Priority Lien Obligations and
the Liens securing the Second Priority Lien Obligations and (z) the Liens
securing the Other Junior Lien Obligations are subject and subordinate to
the Liens securing the Priming Lien Obligations, the Liens securing the
First Priority Lien Obligations, the Liens securing the Second Priority
Lien Obligations and the Liens securing the Third Priority Lien
Obligations; and
(3) subject to the provisions of this Agreement relating to
the rights to proceeds of the sale of property subject to the Liens
described herein and, if applicable, the Priming Liens, any sale of
property pursuant to a Lien described hereunder or, if applicable, a
Priming Lien, will extinguish all Liens junior to the Lien pursuant to
which such sale was made, and any property so sold will be sold free and
clear of all such junior Liens.
(b) The parties hereto agree that, in no event will:
(1) with respect to Collateral that is subject to a Lien in
favor of any Priming Lien Secured Parties, the First Priority Debt
Representatives or any First Priority Secured Parties have a Lien on or
security interest in such Collateral that is not subject and subordinate
to the Priming Lien of any Priming Lien Secured Parties;
(2) the Second Priority Debt Representatives or any Second
Priority Secured Parties have a Lien on or security interest in any
Collateral that is not subject and
40
subordinate to the Priming Lien of any Priming Lien Secured Parties and
the First Priority Lien of the First Priority Secured Parties;
(3) the Third Priority Debt Representatives or any Third
Priority Secured Parties have a Lien on or security interest in any
Collateral that is not subject and subordinate to the Priming Lien of any
Priming Lien Secured Parties, the First Priority Lien of the First
Priority Secured Parties and the Second Priority Lien of the Second
Priority Secured Parties; or
(4) the Other Junior Debt Representatives or any Other
Junior Secured Parties have a Lien on or security interest in any
Collateral that is not subject and subordinate to the Priming Lien of any
Priming Lien Secured Parties, the First Priority Lien of the First
Priority Secured Parties, the Second Priority Lien of the Second Priority
Secured Parties and the Third Priority Lien of the Third Priority Secured
Parties.
(c) Whether or not any Insolvency Proceeding has been commenced by
or against any Obligor:
(1) the Junior Priority Secured Parties will not:
(A) request judicial relief, in an Insolvency
Proceeding or in any other court, that would hinder, delay, limit or
prohibit the lawful exercise or enforcement of any right or remedy
otherwise available to the Senior Priority Secured Parties in
respect of the Collateral or that would limit, invalidate, avoid or
set aside any Senior Priority Lien or subordinate any Senior
Priority Liens to any Junior Priority Liens or grant Junior Priority
Liens equal ranking to any Senior Priority Liens;
(B) oppose or otherwise contest any motion for relief
from the automatic stay or for any injunction against foreclosure or
enforcement of Senior Priority Liens made by any Senior Priority
Secured Parties in any Insolvency Proceedings;
(C) oppose or otherwise contest any lawful exercise by
any Senior Priority Secured Parties of the right to credit bid
Senior Priority Lien Debt at any sale in foreclosure of Senior
Priority Liens; or
(D) oppose or otherwise contest any other request for
judicial relief made in any court by any Senior Priority Secured
Party relating to the lawful enforcement of any Senior Priority Lien
against the Collateral;
provided, however, that notwithstanding the foregoing, both before and during an
Insolvency Proceeding, the Junior Priority Secured Parties may take any actions
and exercise any and all rights that would otherwise be available to a holder of
unsecured claims, including, without limitation, the commencement of Insolvency
Proceedings against any Obligor in accordance with applicable law; provided
further, however, that the Junior Priority Secured Parties may not challenge the
validity, enforceability, perfection or priority of the Senior Priority Liens;
and
41
(2) prior to the Remedy Bar Lift Trigger Date, subject to
the rights of any holders of Permitted Prior Liens, including any Priming
Lien Secured Parties, the First Priority Secured Parties will have the
exclusive right to enforce rights and exercise remedies with respect to
any Collateral that is part of the First Priority Trust Estate, regardless
of whether such Collateral may also be part of the Second Priority Trust
Estate, the Third Priority Trust Estate or the Other Junior Lien Trust
Estate. Notwithstanding the foregoing, subject to the rights of any
holders of Permitted Prior Liens, including any Priming Lien Secured
Parties, the Second Priority Secured Parties may enforce rights, exercise
remedies and take actions:
(A) without any condition or restriction whatsoever,
at any time after the Discharge of First Priority Lien Obligations;
(B) subject to the Collateral Agent's obligation to
comply with the Act of Required Debtholders, to instruct the
Collateral Agent to foreclose upon and otherwise enforce Second
Priority Liens at any time after the Remedy Bar Lift Trigger Date;
(C) as necessary to redeem (subject to the prior
Discharge of First Priority Lien Obligations) any Collateral in a
creditor's redemption permitted by law or to deliver any notice or
demand necessary to enforce any right to claim, take or receive
proceeds of Collateral remaining after the Discharge of First
Priority Lien Obligations in the event of foreclosure or other
enforcement of any prior Lien;
(D) as necessary to perfect or establish the priority
(subject to Senior Priority Liens) of the Second Priority Liens upon
any Collateral; or
(E) as necessary to create, prove, preserve or protect
(but not enforce) the Second Priority Liens upon any Collateral.
(3) after the Remedy Bar Lift Trigger Date, subject to the
rights of any holders of Permitted Prior Liens, including any Priming Lien
Secured Parties, and further subject to the Collateral Agent's obligations to
comply with the Act of Required Debtholders, the First Priority Secured Parties
and the Second Priority Secured Parties will have the exclusive right to
instruct the Collateral Agent to enforce rights and exercise remedies with
respect to any Collateral that is part of the First Priority Trust Estate or the
Second Priority Trust Estate, regardless of whether such Collateral may also be
part of the Third Priority Trust Estate or the Other Junior Lien Trust Estate.
Notwithstanding the foregoing, subject to the rights of any holders of Permitted
Prior Liens, including any Priming Lien Secured Parties:
(A) the Third Priority Secured Parties may enforce
rights, exercise remedies and take actions:
(a) without any condition or restriction
whatsoever, at any time after the Discharge of First Priority
Lien Obligations and the Discharge of Second Priority Lien
Obligations;
42
(b) as necessary to redeem (subject to the prior
Discharge of First Priority Lien Obligations and Discharge of
Second Priority Lien Obligations) any Collateral in a
creditor's redemption permitted by law or to deliver any
notice or demand necessary to enforce any right to claim, take
or receive proceeds of Collateral remaining after the
Discharge of First Priority Lien Obligations and Discharge of
Second Priority Lien Obligations in the event of foreclosure
or other enforcement of any prior Lien;
(c) as necessary to perfect or establish the
priority (subject to Senior Priority Liens) of the Third
Priority Liens upon any Collateral; or
(d) as necessary to create, prove, preserve or
protect (but not enforce) the Third Priority Liens upon any
Collateral.
(B) the Other Junior Secured Parties may enforce
rights, exercise remedies and take actions:
(a) without any condition or restriction
whatsoever, at any time after the Discharge of First Priority
Lien Obligations, the Discharge of the Second Priority Lien
Obligations and the Discharge of Third Priority Lien
Obligations;
(b) as necessary to redeem (subject to the prior
Discharge of First Priority Lien Obligations, the Discharge of
Second Priority Lien Obligations and the Discharge of Third
Priority Lien Obligations) any Collateral in a creditor's
redemption permitted by law or to deliver any notice or demand
necessary to enforce any right to claim, take or receive
proceeds of Collateral remaining after the Discharge of First
Priority Lien Obligations, the Discharge of Second Priority
Lien Obligations and the Discharge of Third Priority Lien
Obligations in the event of foreclosure or other enforcement
of any prior Lien;
(c) as necessary to perfect or establish the
priority (subject to Senior Priority Liens) of the Other
Junior Liens upon any Collateral; or
(d) as necessary to create, prove, preserve or
protect (but not enforce) the Other Junior Liens upon any
Collateral.
(d) In exercising rights and remedies with respect to the
Collateral, subject to the rights of any holders of Permitted Prior Liens,
including any Priming Lien Secured Parties, the First Priority Secured Parties
and, after the Remedy Bar Lift Trigger Date, but subject to the Collateral
Agent's obligation to comply with the Act of Required Debtholders, the Second
Priority Secured Parties, may enforce (or refrain from enforcing) the provisions
of the Security Documents and exercise (or refrain from exercising) remedies
thereunder or any such rights and remedies available at law or in equity, all in
such order and in such manner as they may determine in the exercise of their
sole and exclusive discretion, including:
43
(1) the exercise or forbearance from exercise of all rights
and remedies in respect of the Collateral and/or the applicable Liens;
(2) the enforcement or forbearance from enforcement of any
Lien in respect of the Collateral;
(3) the exercise or forbearance from exercise of rights and
powers of a holder of shares of stock included in the Collateral to the
extent provided in the Security Documents;
(4) the acceptance of the Collateral in full or partial
satisfaction of the applicable Obligations; and
(5) the exercise or forbearance from exercise of all rights
and remedies of a secured lender under the UCC or any similar law of any
applicable jurisdiction or in equity.
(e) The parties hereto agree that:
(1) Prior to the Discharge of First Priority Lien
Obligations, the Second Priority Secured Parties and the Collateral Agent
may not assert or enforce any right of marshalling accorded to a junior
lienholders, as against the First Priority Secured Parties (in their
capacity as priority lienholders), under equitable principles.
(2) Prior to the Discharge of First Priority Lien
Obligations and the Discharge of Second Priority Lien Obligations, the
Third Priority Secured Parties and the Collateral Agent may not assert or
enforce any right of marshalling accorded to a junior lienholders, as
against the First Priority Secured Parties or the Second Priority Secured
Parties (each, in their capacity as priority lienholders), under equitable
principles.
(3) Prior to the Discharge of First Priority Lien
Obligations, the Discharge of Second Priority Lien Obligations and the
Discharge of Third Priority Lien Obligations, the Other Junior Secured
Parties and the Collateral Agent may not assert or enforce any right of
marshalling accorded to a junior lienholders, as against the First
Priority Secured Parties, the Second Priority Secured Parties or the Third
Priority Secured Parties (each, in their capacity as priority
lienholders), under equitable principles.
(f) Except for payments received free from the Senior Priority
Liens as provided in Section 2.5(g), subject to the rights of any holders of
Permitted Prior Liens, including any Priming Lien Secured Parties, (i) all
proceeds of Collateral received by any Junior Priority Debt Representative, the
Collateral Agent or any holder of Junior Priority Liens at any time prior to the
Discharge of Senior Priority Lien Obligations, will be held by such Junior
Priority Debt Representative, the Collateral Agent or such holder, as the case
may be, for the account of the holders of Senior Priority Liens and remitted to
the applicable Senior Priority Debt Representative in accordance with the terms
of the Senior Priority Debt Documents.
(g) Except for payments that are made from or constitute proceeds
of property subject to Senior Priority Liens and that are received by any Junior
Priority Debt Representative
44
or the Collateral Agent or any holder of Junior Priority Lien Obligations at any
time prior to the Discharge of Senior Priority Lien Obligations and after (i)
the commencement of any Insolvency Proceeding in respect of the Company or any
other Obligor or (ii) any Junior Priority Debt Representative and the Collateral
Agent have received written notice from any Senior Priority Debt Representative
stating that (A) any Senior Priority Lien Debt has become due and payable in
full (whether at maturity, upon acceleration or otherwise) or (B) the holders of
Senior Priority Liens have become entitled to and desire to enforce any or all
of the Priority Liens by reason of a default under any Senior Priority Debt
Document:
(1) no payment of money (or the equivalent of money) made by
the Company or any other Obligor to any Junior Priority Debt
Representative, the Collateral Agent or any other holder of Junior
Priority Lien Obligations (including, without limitation, payments and
prepayments made for application to Junior Priority Lien Obligations and
all other payments and deposits made pursuant to any provision of the
Junior Priority Debt Document) will in any event be the subject to the
foregoing provisions of this Section 2.5; and
(2) all payments permitted to be received under this Section
2.5(g) will be received by the applicable Junior Priority Debt
Representative, the Collateral Agent and other holders of Junior Priority
Lien Obligations free from the Senior Priority Liens and all other Liens
except the Junior Priority Liens.
SECTION 2.6 Special Rights in Insolvency Proceedings.
(a) If in any Insolvency Proceeding, the holders of Senior
Priority Lien Obligations consent to any order:
(1) for use of cash collateral;
(2) approving a debtor-in-possession financing secured by a
Lien that is senior to or pari passu with all Senior Priority Liens upon
any property of the estate in such Insolvency Proceeding;
(3) granting any relief on account of Senior Priority Lien
Obligations as adequate protection (or its equivalent) for the benefit of
the holders of Senior Priority Lien Obligations in the Collateral subject
to Senior Priority Liens; or
(4) relating to a sale of assets of the Company or any other
Obligor that provides, to the extent the assets sold are to be free and
clear of Liens, that all Senior Priority Liens and Junior Priority Liens
will attach to the proceeds of the sale;
then the Junior Priority Secured Parties, in their capacity as holders or
representatives of secured claims, will not oppose or otherwise contest the
entry of such order, so long as none of the Senior Priority Secured Parties in
any respect opposes or otherwise contests any request made by any Junior
Priority Secured Party for the grant to the Collateral Agent, for the benefit of
any Junior Priority Secured Parties, of a Junior Priority Lien upon any property
on which a Lien is (or is to be) granted under such order to secure the Senior
Priority Lien Obligations, co-extensive in all
45
respects with, but subordinated (as set forth in Section 2.5 of this Agreement,
as applicable) to, all such Senior Priority Liens on such property.
Notwithstanding the foregoing, the Junior Priority Secured Parties
may oppose or contest any such order approving a sale of assets or bidding
procedures for any sale of assets on any grounds that may be asserted by a
holder of unsecured claims.
(b) The Junior Priority Secured Parties will not file or prosecute
in any Insolvency Proceeding any motion for adequate protection (or any
comparable request for relief) based upon their interest in the Collateral under
any Junior Priority Liens, except that:
(1) (a) they may freely seek and obtain relief granting a
junior Lien co-extensive in all respects with, but subordinated (as set
forth Section 2.5 of this Agreement, as applicable) to, all Liens granted
in the Insolvency Proceeding to, or for the benefit of, the holders of
Senior Priority Lien Obligations; or (b) they may object to the
confirmation of any plan of reorganization or similar dispositive
restructuring plan that may have been filed by a party in interest and
appear and be heard at the confirmation hearing on such plan; and
(2) they may freely seek and obtain any relief upon a motion
for adequate protection (or any comparable relief), without any condition
or restriction whatsoever, at any time after the Discharge of Senior
Priority Lien Obligations.
(c) If in any Insolvency Proceeding, debt obligations of the
reorganized debtor secured by Liens on any property of the reorganized debtor
are distributed both on account of Senior Priority Lien Obligations and on
account of Junior Priority Lien Obligations, then, to the extent that the debt
obligations distributed on account of the Senior Priority Lien Obligations and
on account of the Junior Priority Lien Obligations are secured by Liens on the
same property, the provisions of Section 2.5 of this Agreement will survive the
distribution of those debt obligations pursuant to the plan and will apply with
like effect to the Liens securing those debt obligations.
SECTION 2.7 Collateral Shared Equally and Ratably Within Each Class.
Unless otherwise agreed in writing by the affected parties, the parties to this
Agreement agree that the payment and satisfaction of all of the Secured
Obligations within each Class will be secured Equally and Ratably by the
security interests established in favor of the Collateral Agent for the benefit
of the Secured Parties belonging to such Class. It is understood and agreed that
nothing in this Section 2.7 is intended to alter the priorities among Secured
Parties belonging to different Classes as provided in Section 2.5 hereof.
ARTICLE 3. OBLIGATIONS AND POWERS OF COLLATERAL AGENT
SECTION 3.1 Undertaking of the Collateral Agent.
(a) Subject to, and in accordance with, this Agreement, the
Collateral Agent will, for the benefit solely and exclusively of the present and
future Secured Parties:
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(1) accept, enter into, hold, maintain, administer and
enforce all Security Documents, including all Collateral subject thereto,
and all security interests created thereunder, perform its obligations
under the Security Documents and protect, exercise and enforce the
interests, rights, powers and remedies granted or available to it under,
pursuant to or in connection with the Security Documents;
(2) take all lawful and commercially reasonable actions
permitted under the Security Documents that it may deem necessary or
advisable to protect or preserve its interest in the Collateral subject
thereto and such interests, rights, powers and remedies;
(3) deliver and receive notices pursuant to the Security
Documents;
(4) sell, assign, collect, assemble, foreclose on, institute
legal proceedings with respect to, or otherwise exercise or enforce the
rights and remedies of a secured party (including a mortgagee, trust deed
beneficiary and insurance beneficiary or loss payee) with respect to the
Collateral under the Security Documents and its other interests, rights,
powers and remedies;
(5) remit as provided in Section 3.4 all cash proceeds
received by the Collateral Agent from the collection, foreclosure or
enforcement of its interest in the Collateral under the Security Documents
or any of its other interests, rights, powers or remedies;
(6) execute and deliver amendments to the Security Documents
as from time to time authorized and directed by an Act of Required
Debtholders accompanied by an Officer's Certificate to the effect that the
amendment was permitted by each applicable Secured Debt Document; and
(7) release any Lien granted to it by any Security Document
upon any Collateral if and as required by Section 5.1(b).
(b) Each party to this Agreement acknowledges and consents to the
undertaking of the Collateral Agent set forth in Section 3.1(a) and agrees to
each of the other provisions of this Agreement applicable to it.
(c) Notwithstanding anything to the contrary contained in this
Agreement, the Collateral Agent will not commence any exercise of remedies or
any foreclosure actions or otherwise take any action or proceeding against any
of the Collateral (other than actions as necessary to prove, protect or preserve
the Liens securing the Secured Obligations) unless and until it shall have
received a Notice of Actionable Default, and then only in accordance with the
provisions of this Agreement.
(d) Notwithstanding anything to the contrary contained in this
Agreement, after the Remedy Bar Lift Trigger Date, if the Collateral Agent
receives conflicting instructions from the First Priority Debt Representatives
and the Second Priority Debt Representatives, the Collateral Agent shall follow
the instructions of the First Priority Debt Representatives.
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SECTION 3.2 Release or Subordination of Liens. The Collateral Agent will
not release or subordinate any Lien of the Collateral Agent or consent to the
release or subordination of any Lien of the Collateral Agent, except:
(a) as directed by an Act of Required Debtholders accompanied by
an Officer's Certificate to the effect that the release or subordination was
permitted by each applicable Secured Debt Document;
(b) as required by Article 5;
(c) as ordered pursuant to applicable law under a final and
nonappealable order or judgment of a court of competent jurisdiction;
(d) for the subordination of the Junior Priority Liens to the
Senior Priority Liens; or
(e) as required by Section 3.9.
SECTION 3.3 Remedies Upon Actionable Default. If the Collateral Agent at
any time receives a Notice of Actionable Default, the Collateral Agent will
promptly deliver written notice thereof to each Secured Debt Representative.
Thereafter, the Collateral Agent may await direction by an Act of Required
Debtholders and will act, or decline to act, as directed by an Act of Required
Debtholders, in the exercise and enforcement of the Collateral Agent's
interests, rights, powers and remedies in respect of the Collateral or under the
Security Documents or applicable law and, following the initiation of such
exercise of remedies, the Collateral Agent will act, or decline to act, with
respect to the manner of such exercise of remedies as directed by an Act of
Required Debtholders. Unless it has been directed to the contrary by an Act of
Required Debtholders, the Collateral Agent in any event may (but will not be
obligated to) take or refrain from taking such action with respect to any
Actionable Default as it may deem advisable and in the best interest of the
holders of Secured Obligations.
SECTION 3.4 Application of Proceeds.
(a) Notwithstanding anything to the contrary contained herein, the
Collateral Agent will apply the proceeds of any collection, sale, foreclosure or
other realization upon any Collateral in the following order of application:
FIRST, to the payment of all amounts payable under this Agreement on
account of the Collateral Agent's fees and any reasonable legal fees,
costs and expenses or other liabilities of any kind incurred by the
Collateral Agent, the Trustees or any co-trustee or agent in connection
with any Security Document;
SECOND, to the repayment of Indebtedness (other than Secured Debt)
and other obligations (including any Priming Lien Obligations) secured by
a Permitted Prior Lien on the Collateral sold or realized upon;
THIRD, to the respective First Priority Debt Representatives for
application to the payment of all outstanding First Priority Lien Debt and
any other First Priority Lien
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Obligations, or to be held by the respective First Priority Debt
Representatives pending such application, in such order as is set forth in
the First Priority Lien Documents (or, if not so provided, as directed in
writing by all of the First Priority Debt Representatives) in an amount
sufficient to pay in full in cash all outstanding First Priority Lien Debt
and all other First Priority Lien Obligations (including all interest
accrued thereon after the commencement of any Insolvency Proceeding at the
rate, including any applicable post-default rate, specified in the First
Priority Lien Documents, even if such interest is not enforceable,
allowable or allowed as a claim in such proceeding, and including the
discharge or cash collateralization (at 102.5% of the aggregate undrawn
amount) of all outstanding letters of credit constituting First Priority
Lien Debt);
FOURTH, to the respective Second Priority Debt Representatives for
application to the payment of all outstanding Second Priority Lien Debt
and any other Second Priority Lien Obligations, or to be held by the
respective Second Priority Debt Representatives pending such application,
in such order as is set forth in the Second Priority Lien Documents (or,
if not so provided, as directed in writing by all of the Second Priority
Debt Representatives) in an amount sufficient to pay in full in cash all
outstanding Second Priority Lien Debt and all other Second Priority Lien
Obligations (including all interest accrued thereon after the commencement
of any Insolvency Proceeding at the rate, including any applicable
post-default rate, specified in the Second Priority Lien Documents, even
if such interest is not enforceable, allowable or allowed as a claim in
such proceeding, and including the discharge or cash collateralization (at
102.5% of the aggregate undrawn amount) of all outstanding letters of
credit constituting Second Priority Lien Debt);
FIFTH, to the respective Third Priority Debt Representatives for
application to the payment of all outstanding Third Priority Lien Debt and
any other Third Priority Lien Obligations, or to be held by the respective
Third Priority Debt Representatives pending such application, in such
order as is set forth in the Third Priority Lien Documents (or, if not so
provided, as directed in writing by all of the Third Priority Debt
Representatives) in an amount sufficient to pay in full in cash all
outstanding Third Priority Lien Debt and all other Third Priority Lien
Obligations (including all interest accrued thereon after the commencement
of any bankruptcy, Insolvency Proceeding at the rate, including any
applicable post-default rate, specified in the Third Priority Lien
Documents, even if such interest is not enforceable, allowable or allowed
as a claim in such proceeding, and including the discharge or cash
collateralization (at 102.5% of the aggregate undrawn amount) of all
outstanding letters of credit constituting Third Priority Lien Debt);
SIXTH, to the Other Junior Debt Representatives for application to
such Other Junior Lien Obligations Equally and Ratably, until all such
Other Junior Lien Obligations have been paid in full in cash or the cash
amount held by such Other Junior Debt Representatives in respect of such
Other Junior Lien Obligations is sufficient to pay all such Other Junior
Lien Obligations; and
SEVENTH, any surplus remaining after the payment in full in cash of
all of the Secured Obligations entitled to the benefit of such Collateral
will be paid to the Company
49
or such other applicable Obligor, as the case may be, or its successors or
assigns, or as a court of competent jurisdiction may direct.
(b) If any Junior Priority Debt Representative or any holder of a
Junior Priority Lien Obligation collects or receives any proceeds in respect of
the Junior Priority Lien Obligations that should have been applied to the
payment of obligations secured by a Permitted Prior Lien, including any Priming
Lien Obligations, or the Senior Lien Obligations in accordance with clause(a)
above and a Responsible Officer of such Junior Priority Debt Representative
shall have received written notice, or shall have actual knowledge, of the same
prior to such Junior Priority Debt Representative's distribution of such
proceeds, whether after the commencement of an Insolvency Proceeding or
otherwise, such Junior Priority Debt Representative or such holder, as the case
may be, will forthwith deliver the same to the Collateral Agent, for the account
of the holders of such obligations secured by a Permitted Prior Lien or Senior
Priority Lien Obligations, in the form received, duly indorsed to the Collateral
Agent, for the account of such holders to be applied in accordance with clause
(a) above. Until so delivered, such proceeds will be held by such Junior
Priority Debt Representative or such holder of a Junior Priority Lien
Obligation, as the case may be, for the benefit of the holders of obligations
secured by a Permitted Prior Lien, including any Priming Lien Obligations, and
the applicable Senior Priority Lien Obligations and shall be deemed to be
segregated from other funds and property held by such Junior Priority Debt
Representative or such holder of a Junior Priority Lien Obligation, as the case
may be.
SECTION 3.5 Powers of the Collateral Agent.
(a) The Collateral Agent is irrevocably authorized and empowered
to enter into and perform its obligations and protect, perfect, exercise and
enforce its interest, rights, powers and remedies under the Security Documents
and applicable law and in equity and to act as set forth in this Article 3 or as
requested in any lawful directions given to it from time to time in respect of
any matter by an Act of Required Debtholders.
(b) Without limiting the provisions of Section 6.2, the Collateral
Agent may act through agents and Affiliates to the extent necessary to perform
its obligations hereunder; provided, that if the Collateral Agent elects to act
through an agent or Affiliate of the Collateral Agent, such agent or Affiliate
shall have agreed in writing to act in accordance with the standards and
obligations applicable to the Collateral Agent under this Agreement.
(c) No Secured Debt Representative, Secured Debtholder or other
holder of Secured Obligations will have any liability whatsoever for any act or
omission of the Collateral Agent.
SECTION 3.6 Documents and Communications. The Collateral Agent will permit
each Secured Debt Representative and each Secured Debtholder during normal
business hours upon reasonable written notice from time to time to inspect and
copy, at the cost and expense of the party requesting such copies, any and all
Security Documents and other documents, notices, certificates, instructions or
written communications received by the Collateral Agent in its capacity as such.
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SECTION 3.7 For Sole and Exclusive Benefit of Holders of Secured
Obligations. The Collateral Agent will accept, hold, administer and enforce all
Liens at any time transferred or delivered to it and all other interests,
rights, powers and remedies at any time granted to or enforceable by the
Collateral Agent and all other property of the Trust Estates solely and
exclusively for the benefit of the present and future holders of present and
future Secured Obligations, and will distribute all proceeds received by it in
realization thereon or from enforcement thereof solely and exclusively pursuant
to the provisions of Section 3.4.
SECTION 3.8 Additional Secured Debt.
(a) The Collateral Agent will perform its undertakings set forth
in Section 3.1 (a) with respect to each holder of Secured Obligations of a
Series of Secured Debt that is issued or incurred after the date hereof that:
(1) holds Secured Obligations that are identified as First
Priority Lien Debt, Second Priority Lien Debt, Third Priority Lien Debt or
Other Junior Lien Debt in accordance with the procedures set forth in
Section 3.8(b): and
(2) signs, through its designated Secured Debt
Representative identified pursuant to Section 3.8(b). a Collateral Trust
Joinder and a Lien Priority Confirmation and an agreement by the holders
thereof and the applicable Secured Party Debt Representative to vote with
respect to such Indebtedness in accordance with this Agreement.
(b) The Company or other applicable Obligor will be permitted to
designate as additional Secured Debtholders hereunder each Person who is, or who
becomes, the registered holder of First Priority Lien Debt, Second Priority Lien
Debt, Third Priority Lien Debt or Other Junior Lien Debt incurred by the Company
or such other Obligor after the date of this Agreement in accordance with the
terms of the Secured Debt Documents. The Company or other applicable Obligor may
effect such designation by delivering to the Collateral Agent, with copies to
each previously identified Secured Debt Representative, each of the following:
(1) An Officer's Certificate stating that:
(A) the Company or such other Obligor intends to incur
additional Secured Debt ("New Secured Debt") which will either be
(w) First Priority Lien Debt permitted by each applicable Secured
Debt Document to be secured by a First Priority Lien on a pari passu
basis with all previously existing First Priority Lien Debt, (x)
Second Priority Lien Debt permitted by each applicable Secured Debt
Document to be secured by a Second Priority Lien on a pari passu
basis with all previously existing Second Priority Lien Debt, (y)
Third Priority Lien Debt permitted by each applicable Secured Debt
Document to be secured with a Third Priority Lien on a pari passu
basis with all previously existing Third Priority Lien Debt or (z)
Other Junior Lien Debt permitted by each applicable Secured Debt
Document to be secured with an Other Junior Lien on a pari passu
basis with all previously existing Other Junior Lien Debt or as has
51
otherwise been agreed by the affected parties with respect to such
Other Junior Lien Debt; and
(2) evidence that the Company or such other Obligor has duly
authorized, executed (if applicable) and recorded (or caused to be
recorded) in each appropriate governmental office all relevant filings and
recordations to ensure that the New Secured Debt is secured by the
Collateral;
(3) a written notice specifying the name and address of the
Secured Debt Representative for such series of New Secured Debt for
purposes of Section 8.5.
Notwithstanding the foregoing, nothing in this Agreement will be construed to
allow the Company or any other Obligor to incur additional Indebtedness unless
otherwise permitted by the terms of the Secured Debt Documents.
SECTION 3.9 Priming Lien Obligations.
(a) The Collateral Agent will, subject to the provisions of
Article 6. execute such agreements, certificates, filings and other documents as
are reasonably requested by the Company or its Subsidiaries in order to
recognize or establish the priority of the Priming Lien Obligations, including
execution of Shared Facilities Arrangement Recognition Agreements, PPA
Recognition Agreements, subordination agreements (including subordination
agreements in recordable form), amendments or modification to financing
statements and any agreements necessary or appropriate to establish the
seniority of Permitted Counterparty Liens, upon receipt of the Officer's
Certificate referred to in the definition of "Priming Lien Obligations" herein,
which Officer's Certificate shall direct the Collateral Agent to take the
actions so requested by the Company. The Company may record or file any such
agreements, certificates or other documents in the public records as necessary
or appropriate. Notwithstanding the foregoing, nothing in this Agreement will be
construed to allow the Company or any other Obligor to incur additional
Indebtedness or grant additional Liens unless otherwise permitted by the terms
of the Secured Debt Documents.
(b) The holders of Priming Lien Obligations, and their respective
successors and assigns, are intended third party beneficiaries of this
agreement.
ARTICLE 4. VOTING AND INTERCREDITOR MATTERS
SECTION 4.1 Voting.
(a) In connection with any Act of Required Debtholders or other
decision by Secured Debtholders under this Agreement:
(1) the votes of each Series of Secured Debt entitled to
vote thereon shall be cast in the manner provided by, and in accordance
with the decision of the holders of such Series of Secured Debt made
pursuant to, the terms of the corresponding Secured Debt Documents,
52
(2) if the First Priority Notes and the First Priority Term
Loans are entitled to vote thereon, the votes of the First Priority Notes
and the First Priority Term Loans shall be aggregated and cast as a single
block (the "First Priority Voting Group") by the First Priority Trustee
and the First Priority Term Loan Administrative Agent, in accordance with
the decision of more than 50% of the holders of First Priority Notes and
First Priority Term Loans, with each such Series of Secured Debt casting
its votes as a single block in accordance with the decision of the holders
of such Series of Secured Debt made pursuant to the terms of the
corresponding Secured Debt Documents; and
(3) if the Second Priority Notes and the Second Priority
Term Loans are entitled to vote thereon, the votes of the Second Priority
Notes and the votes of the Second Priority Term Loans shall be aggregated
and cast as a single block (the "Second Priority Voting Group") by the
Second Priority Trustee and the Second Priority Term Loan Administrative
Agent, in accordance with the decision of more than 50% of the holders of
Second Priority Notes and Second Priority Term Loans, with each such
Series of Secured Debt casting its votes as a single block in accordance
with the decision of the holders of such Series of Secured Debt made
pursuant to the terms of the corresponding Secured Debt Documents.
(b) Each Voting Group or Series of Secured Debt entitled to vote
in connection with an Act of Required Debtholders or as otherwise set forth in
this Agreement, shall have the following number of votes to cast in connection
with such vote:
(1) if such vote is in connection with an exercise of
remedies, the number of votes equal to the aggregate outstanding principal
amount of Secured Debt held by such Voting Group or Series of Secured
Debt, as applicable (including outstanding letters of credit whether or
not then available or drawn); and
(2) if such vote is in connection with any other action, the
number of votes equal to the aggregate outstanding principal amount of
Secured Debt held by such Voting Group or Series of Secured Debt, as
applicable (including outstanding letters of credit whether or not then
available or drawn), plus the aggregate amount of unfunded commitments to
extend credit which, when funded, would constitute Secured Debt under such
Voting Group or Series of Secured Debt, as applicable.
For purposes of the foregoing, any Secured Debt registered in the
name of, or Beneficially Owned by, the Company or any Affiliate of the Company
will be deemed not to be outstanding.
(c) In calculating the percentage of holders of Secured Debt
consenting to, approving, waiving or otherwise providing direction with respect
to any decision hereunder, the number of votes cast in favor of such decision
shall be divided by the total number of votes entitled to be cast with respect
to such decision.
SECTION 4.2 Intercreditor Decisions.
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(a) No amendment or supplement to any Secured Debt Document that
changes the date, amount or method of calculation of the payment of principal
of, or interest or premium, if any, on, any Secured Debt, in a way that
adversely affects the rights of any holder of Secured Debt, will become
effective without the consent of the Secured Debt Representative for each other
Series of Secured Debt (other than the Other Junior Debt Representatives).
(b) Except as set forth in clause (a) above, the holders of a
Series of Secured Debt and the Secured Debt Representative therefor may, at any
time and from time to time, without the consent of or notice to any other Series
of Secured Debt or Secured Debt Representative and without impairing or
releasing the obligations of any person under this Agreement, (1) amend any
agreement related solely to such Series of Secured Debt in accordance with the
terms thereof, (2) release anyone liable in any manner under or in respect of
the obligations owing in connection with such Series of Secured Debt (but only
in respect of such obligations) and (3) waive any provisions of any agreement
related solely to such Series of Secured Debt.
ARTICLE 5. OBLIGATIONS ENFORCEABLE BY THE COMPANY AND THE OTHER OBLIGORS
SECTION 5.1 Release of Liens.
(a) The Collateral Agent's Liens upon the Collateral will be
released pursuant to Section 5.l(b) below:
(1) in whole, upon (A) payment in full and discharge of all
outstanding Secured Debt and all other Secured Obligations that are
outstanding at the time all of the Secured Debt is paid in full and
discharged and (B) termination or expiration of all commitments to extend
credit under all Secured Debt Documents and the cancellation or
termination or cash collateralization (at 102.5% of the aggregate undrawn
amount) of all outstanding letters of credit issued pursuant to any
Secured Debt Documents;
(2) as to any Collateral that is sold, transferred or
otherwise disposed of by the Company or any other Obligor to a Person that
is not (either before or after such sale, transfer or disposition) the
Company or any other Obligor in a transaction or other circumstance that
is permitted by all of the Secured Debt Documents, at the time of such
sale, transfer or other disposition or to the extent of the interest sold,
transferred or otherwise disposed of; provided, that the Collateral
Agent's Liens upon the Collateral will not be released if the sale,
transfer or other disposition is subject to any covenant in a Secured Debt
Document regarding mergers, consolidations and sales of all or
substantially all assets;
(3) as to any Collateral other than Collateral being
released pursuant to clauses (1) or (2) of this paragraph, if (A) consent
to the release of that Collateral has been given by the requisite
percentage or number of holders of each Series of Secured Debt at the time
outstanding as provided for in the applicable Secured Debt Documents, and
(B) the Company has delivered an Officer's Certificate to the Collateral
Agent certifying that all such necessary consents have been obtained; and
54
(4) as to any Excluded Assets that are wrongfully included
with the Collateral or as to any Collateral that becomes Excluded Assets.
(b) The Collateral Agent agrees for the benefit of the Company and
the other Obligors that if the Collateral Agent at any time receives:
(1) an Officer's Certificate stating that (A) the signing
officer has read Article 5 of this Agreement and understands the
provisions and the definitions relating hereto, (B) such officer has made
such examination or investigation as is necessary to enable him or her to
express an informed opinion as to whether or not the conditions precedent
in this Agreement and all other Secured Debt Documents, if any, relating
to the release of the Collateral have been complied with and (C) in the
opinion of such officer, such conditions precedent, if any, have been
complied with;
(2) the proposed instrument or instruments releasing such
Lien as to such property in recordable form, if applicable; and
(3) (x) prior to the Discharge of First Priority Lien
Obligations, the written confirmation of each First Priority Debt
Representative, (y) prior to the Discharge of Second Priority Lien
Obligations, the written confirmation of each Second Priority Debt
Representative or (z) prior to the Discharge of Third Priority Lien
Obligations, the written confirmation of each Third Priority Debt
Representative (such confirmation to be given following receipt of, and
based solely on, the Officer's Certificate described in clause (i) above)
that, in its view, such release is permitted by Section 5.1(a) and the
respective Secured Debt Documents governing the Secured Obligations the
holders of which such Secured Debt Representative represents;
then the Collateral Agent will execute (with such acknowledgements and/or
notarizations as are required) and deliver such release to the Company or other
applicable Obligor on or before the later of (x) the date specified in such
request for such release and (y) the fifth Business Day after the date of
receipt of the items required by this Section 5.1(b) by the Collateral Agent
(c) The Collateral Agent hereby agrees that in the case of any
release pursuant to clause (2) of Section 5.1 (a), if the terms of any such
sale, transfer or other disposition require the payment of the purchase price to
be contemporaneous with the delivery of the applicable release, then, at the
request of the Company or other applicable Obligor, the Collateral Agent will
either be present at the closing of such transaction or will deliver the release
under customary escrow arrangements that permit such contemporaneous payment and
delivery of the release.
(d) Each Secured Debt Representative hereby agrees that:
(1) as soon as reasonably practicable after receipt of an
Officer's Certificate from the Company pursuant to Section 5.1(b)(l) it
will, to the extent required by such Section, either provide (A) the
written confirmation required by Section 5.l(b)(3). (B) a written
statement that such release is not permitted by Section 5.1 (a) or (C) a
request for further information from the Company reasonably necessary to
determine whether the proposed release is permitted by Section 5.1 (a) and
55
after receipt of such information such Secured Debt Representative will as
soon as reasonably practicable either provide the written confirmation or
statement required pursuant to clause (A) or (B), as applicable; and
(2) within one Business Day of the receipt by it of any
notice from the Collateral Agent pursuant to Section 3.3. such Secured
Debt Representative will deliver a copy of such notice to each registered
holder of the Series of Secured Debt for which it acts as Secured Debt
Representative.
SECTION 5.2 Delivery of Copies to Secured Debt Representatives. The
Company will deliver to each Secured Debt Representative a copy of each
Officer's Certificate delivered to the Collateral Agent pursuant to Section 5.
l(b), together with copies of all documents delivered to the Collateral Agent
with such Officer's Certificate. The Secured Debt Representatives will not be
obligated to take notice thereof or to act thereon, subject to Section 5.1 (d).
SECTION 5.3 Collateral Agent not Required to Serve, File or Record. The
Collateral Agent is not required to serve, file, register or record any
instrument creating, initially perfecting, or, except as otherwise set forth
herein, releasing or subordinating its security interest in any Collateral.
ARTICLE 6. IMMUNITIES OF THE COLLATERAL AGENT
SECTION 6.1 No Implied Duty. The Collateral Agent (i) will not have any
duties or responsibilities except those expressly assumed by it in this
Agreement and the other Security Documents; (ii) shall not be required to take
any action which is contrary to applicable law or any provision of this
Agreement or the other Security Documents; (iii) shall not be responsible to any
Secured Party for any recitals, statements, representations or warranties
contained in this Agreement or in any of the other Security Documents, or in any
certificate or other document referred to or provided for in, or received by any
of them under, this Agreement or any of the other Security Documents, or for the
value, validity, effectiveness, genuineness, enforceability, perfection or
sufficiency of this Agreement or any of the other Security Documents or any
other document referred to or provided for herein or therein or for any failure
by any Calpine Company or any other Person to perform any of its obligations
hereunder or thereunder; (iv) shall not be required to initiate or conduct any
litigation or collection proceedings hereunder or under any other Security
Document unless it shall have received written direction authorized by an Act of
Required Debtholders; and (v) shall not be responsible for any action taken or
omitted to be taken by it hereunder or under any other Security Document or
under any other document or instrument referred to or provided for herein or
therein in connection herewith or therewith, except for its own gross negligence
or willful misconduct.
SECTION 6.2 Appointment of Agents and Advisors. The Collateral Agent may
execute any of the trusts or powers hereunder or perform any duties hereunder
either directly or by or through agents, attorneys, accountants, appraisers or
other experts or advisors selected by it in good faith as it may reasonably
require and will not be responsible for any misconduct or negligence on the part
of any of them.
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SECTION 6.3 Other Agreements. The Collateral Agent has accepted and is
bound by the Security Documents executed by the Collateral Agent as of the date
of this Agreement and, as directed by an Act of Required Debtholders, the
Collateral Agent may execute additional Security Documents delivered to it after
the date of this Agreement, provided, however, that such additional Security
Documents do not adversely affect the rights, privileges, benefits and
immunities of the Collateral Agent. The Collateral Agent will not otherwise be
bound by, or be held obligated by, the provisions of any credit agreement,
indenture or other agreement governing Secured Debt (other than this Agreement
and the other Security Documents).
SECTION 6.4 Solicitation of Instructions.
(a) The Collateral Agent may at any time solicit and conclusively
rely upon (if relied upon in good faith) written confirmatory instructions, in
the form of an Act of Required Debtholders, an Officer's Certificate or an order
of a court of competent jurisdiction, as to any action that it may be requested
or required to take, or that it may propose to take, in the performance of any
of its obligations under this Agreement or any Security Document.
(b) No written direction given to the Collateral Agent by an Act
of Required Debtholders that in the sole judgment of the Collateral Agent
imposes, purports to impose or might reasonably be expected to impose upon the
Collateral Agent any obligation or liability not set forth in or arising under
this Agreement or the other Security Documents will be binding upon the
Collateral Agent unless the Collateral Agent elects, at its sole option, to
accept such direction.
SECTION 6.5 Limitation of Liability. The Collateral Agent will not be
responsible or liable for any action taken or omitted to be taken by it
hereunder or under any other Security Document, except for its own gross
negligence, bad faith or willful misconduct as determined by a court of
competent jurisdiction.
SECTION 6.6 Documents in Satisfactory Form. The Collateral Agent will be
entitled to require that all agreements, certificates, opinions, instruments and
other documents at any time submitted to it, including those expressly provided
for in this Agreement, be delivered to it in a form and with substantive
provisions reasonably satisfactory to it.
SECTION 6.7 Entitled to Rely. The Collateral Agent may conclusively rely
upon any certificate, notice or other document (including any facsimile)
reasonably believed by it to be genuine and correct and to have been signed or
sent by or on behalf of the proper Person or Persons and need not investigate
any fact or matter stated in any such document. The Collateral Agent may seek
and rely upon any judicial order or judgment, upon any advice, opinion or
statement of legal counsel, independent consultants and other experts selected
by it in good faith and upon any certification, instruction, notice or other
writing delivered to it by the Company or any other Obligor in compliance with
the provisions of this Agreement or delivered to it by any Secured Debt
Representative as to the Secured Debtholders for whom it acts, without being
required to determine the authenticity thereof or the correctness of any fact
stated therein or the propriety or validity of service thereof. The Collateral
Agent may act in reliance upon any instrument comporting with the provisions of
this Agreement or any signature reasonably believed by it to be genuine and may
assume that any Person purporting to give notice or receipt
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or advice or make any statement or execute any document in connection with the
provisions hereof has been duly authorized to do so. To the extent an Officer's
Certificate or an opinion of counsel is required or permitted under this
Agreement to be delivered to the Collateral Agent in respect of any matter, the
Collateral Agent may rely conclusively on such Officer's Certificate or opinion
of counsel as to such matter.
SECTION 6.8 Secured Debt Default. The Collateral Agent will not be
required to inquire as to the occurrence or absence of any Secured Debt Default
and will not be affected by or required to act upon any notice or knowledge as
to the occurrence of any Secured Debt Default unless and until it receives a
Notice of Actionable Default.
SECTION 6.9 Actions by Collateral Agent. As to any matter not expressly
provided for by this Agreement, the Collateral Agent will act or refrain from
acting as directed by an Act of Required Debtholders and will be fully protected
if it does so; provided, however, that the Collateral Agent shall not be
required to take any action which shall expose the Collateral Agent to personal
liability or which is contrary to this Agreement, any other Security Document or
applicable law.
SECTION 6.10 Security or Indemnity in favor of the Collateral Agent. The
Collateral Agent will not be required to advance or expend any funds or
otherwise incur any financial liability in the performance of its duties or the
exercise of its powers or rights hereunder unless it has been provided with
security or indemnity reasonably satisfactory to it against any and all
liability or expense which may be incurred by it by reason of taking or
continuing to take such action.
SECTION 6.11 Rights of the Collateral Agent. In the event there is any
bona fide, good faith disagreement between the other parties to this Agreement
or any of the other Security Documents resulting in adverse claims being made in
connection with Collateral held by the Collateral Agent and the terms of this
Agreement or any of the other Security Documents do not unambiguously mandate
the action the Collateral Agent is to take or not to take in connection
therewith under the circumstances then existing, or the Collateral Agent is in
doubt as to what action it is required to take or not to take hereunder, it will
be entitled to refrain from taking any action (and will incur no liability for
doing so) until directed otherwise in writing by a request signed by each
Secured Debt Representative or by order of a court of competent jurisdiction.
SECTION 6.12 Limitations on Duty of Collateral Agent in Respect of
Collateral.
(a) Beyond the exercise of reasonable care in the custody of
Collateral in its possession, the Collateral Agent will have no duty as to any
Collateral in its possession or control or in the possession or control of any
agent or bailee or any income thereon or as to preservation of rights against
prior parties or any other rights pertaining thereto and the Collateral Agent
will not be responsible for filing any financing or continuation statements or
recording any documents or instruments in any public office at any time or times
or otherwise perfecting or maintaining the perfection of any security interest
in the Collateral. The Collateral Agent will be deemed to have exercised
reasonable care in the custody of the Collateral in its possession if the
Collateral is accorded treatment substantially equal to that which it accords
its own property, and the Collateral Agent will not be liable or responsible for
any loss or
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diminution in the value of any of the Collateral by reason of the act or
omission of any carrier, forwarding agency or other agent or bailee selected by
the Collateral Agent in good faith.
(b) The Collateral Agent will not be responsible for the
existence, genuineness or value of any of the Collateral or for the validity,
perfection, priority or enforceability of the Liens in any of the Collateral,
whether impaired by operation of law or by reason of any action or omission to
act on its part hereunder, except to the extent such action or omission
constitutes gross negligence, bad faith or willful misconduct as determined by a
court of competent jurisdiction on the part of the Collateral Agent, for the
validity or sufficiency of the Collateral or any agreement or assignment
contained therein, for the validity of the title of any Obligor to the
Collateral, for insuring the Collateral or for the payment of taxes, charges,
assessments or Liens upon the Collateral or otherwise as to the maintenance of
the Collateral. The Collateral Agent hereby disclaims any representation or
warranty to the present and future holders of the Secured Obligations concerning
the perfection of the Liens and security interests granted hereunder or in the
value of any of the Collateral.
SECTION 6.13 Assumption of Rights, Not Assumption of Duties.
Notwithstanding anything to the contrary contained herein:
(1) each of the parties thereto will remain liable under
each of the Security Documents (other than this Agreement) to the extent
set forth therein to perform all of their respective duties and
obligations thereunder to the same extent as if this Agreement had not be
executed;
(2) the exercise by the Collateral Agent of any of its
rights, remedies or powers hereunder will not release such parties from
any of their respective duties or obligations under the other Security
Documents; and
(3) the Collateral Agent will not be obligated to perform
any of the obligations or duties of any of the parties thereunder other
than at the Collateral Agent.
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SECTION 6.14 No Liability for Clean Up of Hazardous Materials. In the
event that the Collateral Agent is required to acquire title to an asset for any
reason, or take any managerial action of any kind in regard thereto, in order to
carry out any fiduciary or trust obligation for the benefit of another, which in
the Collateral Agent's sole discretion may cause the Collateral Agent to be
considered an "owner or operator" under any environmental laws or otherwise
cause the Collateral Agent to incur, or be exposed to, any environmental
liability or any liability under any other federal, state or local law, the
Collateral Agent reserves the right, instead of taking such action, either to
resign as Collateral Agent or to arrange for the transfer of the title or
control of the asset to a court appointed receiver. The Collateral Agent will
not be liable to any Person for any environmental liability or any environmental
claims or contribution actions under any federal, state or local law, rule or
regulation by reason of the Collateral Agent's actions and conduct as
authorized, empowered and directed hereunder or relating to any kind of
discharge or release or threatened discharge or release of any hazardous
materials into the environment.
ARTICLE 7. RESIGNATION AND REMOVAL OF THE COLLATERAL AGENT
SECTION 7.1 Resignation or Removal of Collateral Agent. Subject to the
appointment of a successor Collateral Agent as provided in Section 7.2 and the
acceptance of such appointment by the successor Collateral Agent:
(a) the Collateral Agent may resign at any time by giving not less
than 30 days' notice of resignation to each Secured Debt Representative and the
Company, and
(b) the Collateral Agent may be removed at any time, with or
without cause, by an Act of Required Debtholders. Upon such removal, the Company
shall promptly pay the Collateral Agent for all of its accrued and unpaid fees
and expenses incurred in accordance with this Agreement and the other Security
Documents.
SECTION 7.2 Appointment of Successor Collateral Agent. Upon any such
resignation or removal, a successor Collateral Agent may be appointed by an Act
of Required Debtholders with, so long as no Secured Debt Default has occurred
and is continuing, the consent of the Company (which consent shall not be
unreasonably withheld). If no successor Collateral Agent has been so appointed
and accepted such appointment within 30 days after the predecessor Collateral
Agent gave notice of resignation or was removed, the retiring Collateral Agent
may (at the expense of the Company), at its option, appoint a successor
Collateral Agent, or petition a court of competent jurisdiction for appointment
of a successor Collateral Agent, which must be a bank or trust company:
(1) authorized to exercise corporate trust powers;
(2) having a combined capital and surplus of at least $50.0
million; and
(3) maintaining an office in New York, New York. The Collateral
Agent will fulfill its obligations hereunder until a successor Collateral
Agent meeting the requirements of this Section 7.2 has accepted its
appointment as Collateral Agent and the provisions of Section 7.3 have
been satisfied.
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SECTION 7.3 Succession. When the Person so appointed as successor
Collateral Agent accepts such appointment:
(1) such Person will succeed to and become vested with all the
rights, powers, privileges and duties of the predecessor Collateral Agent,
and the predecessor Collateral Agent will be discharged from its duties
and obligations hereunder; and
(2) the predecessor Collateral Agent will promptly transfer all
Liens and collateral security and other property of the Trust Estates
within its possession or control to the possession or control of the
successor Collateral Agent and will execute instruments and assignments as
may be necessary or desirable or reasonably requested by the successor
Collateral Agent to transfer to the successor Collateral Agent all Liens,
interests, rights, powers and remedies of the predecessor Collateral Agent
in respect of the Security Documents or the Trust Estates.
Thereafter the predecessor Collateral Agent will remain entitled to enforce the
immunities granted to it in Article 6 and the provisions of Sections 8.7 and
8.8.
ARTICLE 8. MISCELLANEOUS PROVISIONS
SECTION 8.1 Amendment.
(a) No amendment or supplement to the provisions of this Agreement
or any other Security Document (to which the Collateral Agent is a party) will
be effective without the approval of the Collateral Agent acting as directed by
an Act of Required Debtholders, except that:
(1) any amendment or supplement that has the effect solely
of adding or maintaining Collateral, securing additional Secured Debt that
was otherwise permitted by the terms of the Secured Debt Documents to be
secured by the Collateral or preserving or perfecting the Liens thereon or
the rights of the Collateral Agent therein, or adding or maintaining any
guarantee, will become effective when executed and delivered by the
Company or any other applicable Obligor party thereto and the Collateral
Agent;
(2) no amendment or supplement that reduces, impairs or
adversely affects the right of any Secured Debtholder (A) to vote its
outstanding Secured Debt as to any matter described as subject to an Act
of Required Debtholders (or amends the provisions of this clause (2) or
the definitions of "Act of Required Debtholders" or "Actionable Default")
(B) to share in the order of application described in Section 3.4 in the
proceeds of enforcement of or realization on any Collateral, in each case
that has not been released in accordance with the provisions described in
Section 5.1, (C) to require that Liens securing Secured Obligations be
released only as set forth in the provisions described in Section 5.1, (D)
to enforce the rights set forth in Article 2 or (E) to vote in the manner
set forth in Article 4 will, in the case of clauses (A) through (E),
become effective without the consent of the requisite percentage or number
of holders of each Series of Secured Debt so affected under the applicable
Secured Debt Document; and
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(3) no amendment or supplement that imposes any obligation
upon the Collateral Agent or any Secured Debt Representative or adversely
affects the rights of the Collateral Agent or any Secured Debt
Representative, respectively, in its capacity as such will become
effective without the consent of the Collateral Agent or such Secured Debt
Representative, respectively.
The Collateral Agent will enter into any such amendment or supplement if it has
received an Officer's Certificate to the effect that such amendment or
supplement will not result in a breach of any provision or covenant contained in
any of the Secured Debt Documents. Prior to executing any amendment or
supplement pursuant to this Section 8.1, the Collateral Agent will be entitled
to receive an opinion of counsel of the Company to the effect that the execution
of such document is authorized or permitted hereunder, and with respect to
amendments adding Collateral, an opinion of counsel of the Company addressing
customary perfection, and if such additional Collateral consists of equity
interests of any Person, priority, matters with respect to such additional
Collateral. Notwithstanding the foregoing, any amendment, supplement or other
agreement regarding the provisions of the Security Documents that releases
Collateral will be effective only in accordance with the requirements set forth
in Section 5.1.
(b) Unless agreed to by an Act of Required Debtholders, no
Security Document that secures Junior Priority Lien Obligations may be amended,
supplemented or otherwise modified or entered into to the extent that such
amendment, supplement or modification, or the terms of any such new Security
Document, would not be permitted under the terms of this Agreement or the Senior
Priority Debt Documents. The Junior Priority Secured Parties agree that each
Security Document that secures Junior Priority Lien Obligations (but not Senior
Priority Lien Obligations) will include the following language:
"Notwithstanding anything herein to the contrary, the lien and security
interest granted to the Collateral Agent pursuant to this Agreement and the
exercise of any right or remedy by such Collateral Agent hereunder are subject
to the provisions of the Collateral Trust and Intercreditor Agreement, dated as
of March 23,2004 (the "Collateral Trust and Intercreditor Agreement") among
Calpine CalGen Holdings, Inc., a Delaware corporation, Calpine Generating
Company, LLC, a Delaware limited liability company, the Guarantors from time to
time party thereto, the Secured Debt Representatives from time to time party
thereto, Wilmington Trust Company (or any successor thereto or assignee thereof,
as collateral agent and each other Person which becomes a party thereto by
executing and delivering a Collateral Trust Joinder, as amended, supplemented,
amended and restated or otherwise modified and in effect from time to time. In
the event of any conflict between the terms of the Collateral Trust and
Intercreditor Agreement and this Agreement, the terms of the Collateral Trust
and Intercreditor Agreement will govern;"
provided, however, that if the jurisdiction in which any such Junior Priority
Debt Document will be filed prohibits the inclusion of the language above or
would prevent a document containing such language from being recorded, the
Junior Priority Debt Representatives and the Senior Priority Debt
Representatives agree, prior to such Junior Priority Debt Document being entered
into, to negotiate in good faith replacement language stating that the lien and
security interest granted under such Junior Priority Debt Document is subject to
the provisions of this Agreement.
SECTION 8.2 Further Assurances.
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(a) The Company and each of the other Obligors will do or cause to
be done all acts and things that may be required, or that the Collateral Agent
from time to time may reasonably request, to assure and confirm that the
Collateral Agent holds, for the benefit of the holders of Secured Obligations,
duly created and enforceable and perfected Liens upon the Collateral, including
after-acquired Collateral and any property or assets that become Collateral
pursuant to the definition thereof after the date hereof, subject only to such
exceptions as may be contemplated by the Secured Debt Documents. If the Company
or any other Obligor at any time acquired any real property or leasehold or
other interest in real property that is not covered by the mortgages in favor of
the Collateral Agent that are executed in connection with the issuance of the
Secured Debt, then within 45 days after such acquisition, the Company or such
Obligor will execute, deliver and record an additional mortgage or a supplement
to such mortgages, reasonably satisfactory in form and substance to the
Collateral Agent, subjecting such real property or leaseholder other interest in
real property to the Lien created by such mortgages or, if an additional
mortgage, creating Lien in favor of the Collateral Agent to secure the Secured
Obligations.
(b) Upon the reasonable request of the Collateral Agent or any
Secured Debt Representative at any time and from time to time, the Company and
each of the other Obligors will promptly execute, acknowledge and deliver such
security documents, instruments, certificates, notices and other documents, and
take such other actions as may be reasonably required, or that the Collateral
Agent may reasonably request, to create, perfect, protect, assure or enforce the
Liens and benefits intended to be conferred, in each case as contemplated by the
Secured Debt Documents.
(c) Upon the request of the Collateral Agent, the Company and the
other Obligors will permit the Collateral Agent to visit and inspect any of the
Collateral and examine and, at the Company's expense, make abstracts from any of
its books and records relating to any of the Collateral at any reasonable time
and as often as may reasonably be requested.
(d) The Company and the Guarantors:
(1) will keep their properties adequately insured at all
times by financially sound and reputable insurers, which, in the case of
any insurance on any mortgaged property, are licensed to do business in
the States where the applicable mortgaged property is located;
(2) maintain such other insurance, to such extent and
against such risks (and with such deductibles, retentions and exclusions),
including fire and other risks insured against by extended coverage and
coverage for acts of terrorism, as is customary with companies of the same
or similar size engaged in the same or similar businesses operating in the
same or similar locations, including public liability insurance against
claims for personal injury or death or property damage occurring upon, in,
about or in connection with the use of any properties owned, occupied or
controlled by them;
(3) maintain such other insurance as may be required by law;
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(4) maintain title insurance on all real property Collateral
insuring the Collateral Agent's Lien on that property, subject only to
liens ranking senior in priority that are permitted by each of the Secured
Debt Documents and other exceptions to title approved by the Collateral
Agent; provided that no title insurance need be maintained on any
particular parcel of real property having a Fair Market Value of less than
$5.0 million and, provided, further, that the Company and the Guarantors
shall not be required to maintain title insurance in excess of $50.0
million for each Facility; and
(5) maintain such other insurance as may be required by the
Security Documents.
(e) Upon the request of the Collateral Agent, the Company and the
Guarantors will furnish to the Collateral Agent full information as to their
property and liability insurance carriers. Holders of Secured Obligations, as a
class, will be named as additional insureds, with a waiver of subrogation, on
all insurance policies of the Company and the other Obligors and the Collateral
Agent will be named as loss payee, with 30 day notice of cancellation or
material change, on all property insurance policies of the Company and the other
Obligors.
(f) Without limiting the generality of the foregoing, (1) in the
event the limitations imposed by the debt instruments of Calpine and the
Obligors on the ability of the Excluded Subsidiary to be an Obligor and to grant
Liens on its property and assets to secure the Secured Obligations are at any
time no longer applicable, as determined in good faith by the Company, the
Excluded Subsidiary shall take all such actions and execute all such documents
as may be necessary to become an Obligor and to grant Liens on its property and
assets to secure the Secured Obligations, and (2) in the event the limitations
imposed by the debt instruments of Calpine and its Subsidiaries on the ability
of the Company and the Obligors to grant Liens on Expansion Assets constituting
Excluded Assets to secure the Secured Obligations are at any time no longer
applicable, as determined in good faith by the Company, such Person shall take
all such actions and execute all such documents as may be necessary to grant
Liens on such Expansion Assets to secure the Secured Obligations.
(g) In the event that after the date of this Agreement, a
Subsidiary of the Company is added as a Guarantor pursuant to any Secured Debt
Document, the Company shall cause such Guarantor or Guarantors to comply with
the provisions hereof and to execute a Collateral Trust Joinder and deliver such
Collateral Trust Joinder to the Collateral Agent.
SECTION 8.3 Successors and Assigns.
(a) Except as provided in Section 6.2, the Collateral Agent may
not, in its capacity as such, delegate any of its duties or assign any of its
rights hereunder, and any attempted delegation or assignment of any such duties
or rights will be null and void. All obligations of the Collateral Agent
hereunder will inure to the sole and exclusive benefit of, and be enforceable
by, each Secured Debt Representative and each present and future holder of
Secured Obligations, each of whom will be entitled to enforce this Agreement as
a third party beneficiary hereof, and all of their respective successors and
assigns.
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(b) Neither the Company nor any other Obligor may delegate any of
its duties or assign any of its rights hereunder, and any attempted delegation
or assignment of any such duties or rights will be null and void. All
obligations of the Company and the other Obligors hereunder will inure to the
sole and exclusive benefit of, and be enforceable by, the Collateral Agent, each
Secured Debt Representative and each present and future holder of Secured
Obligations, each of whom will be entitled to enforce this Agreement as a third
party beneficiary hereof, and all of their respective successors and assigns.
SECTION 8.4 Delay and Waiver. No failure to exercise, no course of dealing
with respect to the exercise of, and no delay in exercising, any right, power or
remedy arising under this Agreement or any of the other Security Documents will
impair any such right, power or remedy or operate as a waiver thereof. No single
or partial exercise of any such right, power or remedy will preclude any other
or future exercise thereof or the exercise of any other right, power or remedy.
The remedies herein are cumulative and are not exclusive of any remedies
provided by law.
SECTION 8.5 Notices. Any communications, including notices and
instructions, between the parties hereto or notices provided herein to be given
may be given to the following addresses:
If to the Collateral Agent: Wilmington Trust Company
▇▇▇▇▇▇ Square North
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
If to the Company or any other Obligor:
▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: General Counsel
Fax: (▇▇▇)▇▇▇-▇▇▇▇
If to the Revolving Loan Administrative Agent:
The Bank of Nova Scotia
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Loan Administration
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
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If to the Term Loan Administrative Agents:
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Senior Funding, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇
Fax: (▇▇▇)▇▇▇-▇▇▇▇
If to the Trustees: Wilmington Trust FSB
▇▇▇▇▇▇ Square North
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇
Fax: (▇▇▇)▇▇▇-▇▇▇▇
and if to any other Secured Debt Representative, to such address as it may
specify by written notice to the parties named above.
Each notice hereunder will be in writing and may be personally served or
sent by facsimile or United States mail or courier service and will be deemed to
have been given when delivered in Person or by courier service and signed for
against receipt thereof, upon receipt of facsimile, or three business days after
depositing it in the United States mail with postage prepaid and properly
addressed. Each party may change its address for notice hereunder to any other
location within the continental United States by giving written notice thereof
to the other parties as set forth in this Section 8.5.
Promptly following any Discharge of First Priority Lien Obligation, each
First Priority Debt Representative with respect to each applicable Series of
First Priority Lien Debt that is so discharged will provide written notice of
such discharge to the Collateral Agent and to each other Secured Debt
Representative. Promptly following any Discharge of Second Priority Lien
Obligation, each Second Priority Debt Representative with respect to each
applicable Series of Second Priority Lien Debt that is so discharged will
provide written notice of such discharge to the Collateral Agent and to each
other Secured Debt Representative. Promptly following any Discharge of Third
Priority Lien Obligation, each Third Priority Debt Representative with respect
to each applicable Series of Third Priority Lien Debt that is so discharged will
provide written notice of such discharge to the Collateral Agent and to each
other Secured Debt Representative.
SECTION 8.6 Entire Agreement. This Agreement states the complete agreement
of the parties relating to the undertaking of the Collateral Agent set forth
herein and supersedes all oral negotiations and prior writings in respect of
such undertaking.
SECTION 8.7 Compensation; Expenses. The Obligors jointly and severally
agree to pay, promptly upon demand:
(1) such compensation to the Collateral Agent and its agents,
co-agents and sub-agents as the Company and the Collateral Agent may agree
in writing from time to time;
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(2) all reasonable costs and expenses incurred in the preparation,
execution, delivery, filing, recordation, administration or enforcement of
this Agreement or any other Security Document or any consent, amendment,
waiver or other modification relating thereto;
(3) all reasonable fees, expenses and disbursements of legal
counsel and any auditors, accountants, consultants or appraisers or other
professional advisors and agents engaged by the Collateral Agent or any
Secured Debt Representative incurred in connection with the negotiation,
preparation, closing, administration, performance or enforcement of this
Agreement and the other Security Documents or any consent, amendment,
waiver or other modification relating thereto and any other document or
matter requested by the Company;
(4) all reasonable costs and expenses of creating, perfecting,
releasing or enforcing the Collateral Agent's security interests in the
Collateral, including filing and recording fees, expenses and taxes, stamp
or documentary taxes, search fees, and title insurance premiums;
(5) all other reasonable costs and expenses incurred by the
Collateral Agent or any Secured Debt Representative in connection with the
negotiation, preparation and execution of the Security Documents and any
consents, amendments, waivers or other modifications thereto and the
transactions contemplated thereby or the exercise of rights or performance
of obligations by the Collateral Agent thereunder; and
(6) after the occurrence of any Secured Debt Default, all costs
and expenses incurred by the Collateral Agent or any Secured Debt
Representative in connection with the preservation, collection,
foreclosure or enforcement of the Collateral subject to the Security
Documents or any interest, right, power or remedy of the Collateral Agent
or in connection with the collection or enforcement of any of the Secured
Obligations or the proof, protection, administration or resolution of any
claim based upon the Secured Obligations in any Insolvency Proceeding,
including all fees and disbursements of attorneys, accountants, auditors,
consultants, appraisers and other professionals engaged by the Collateral
Agent or the Secured Debt Representatives.
The agreements in this Section 8.7 will survive repayment of all other Secured
Obligations and the removal or resignation of the Collateral Agent.
SECTION 8.8 Indemnity.
(a) The Obligors jointly and severally agree to defend, indemnify,
pay and hold harmless the Collateral Agent, each Secured Debt Representative,
each Secured Debtholder and each of their respective Affiliates and each and (in
each case) all of their respective directors, officers, partners, trustees,
employees, attorneys and agents, and (in each case) their respective heirs,
representatives, successors and assigns (each of the foregoing, an "Indemnitee")
from and against any and all Indemnified Liabilities; provided, no Indemnitee
will be entitled to indemnification hereunder with respect to any Indemnified
Liability to the extent such
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Indemnified Liability is found by a final and nonappealable decision of a court
of competent jurisdiction to have resulted from the gross negligence or willful
misconduct of such Indemnitee.
(b) All amounts due under Section 8.8(a) will be payable upon
demand.
(c) To the extent that the undertakings to defend, indemnify, pay
and hold harmless set forth in Section 8.8(a) may be unenforceable in whole or
in part because they are violative of any law or public policy, each of the
Obligors will contribute the maximum portion that it is permitted to pay and
satisfy under applicable law to the payment and satisfaction of all Indemnified
Liabilities incurred by Indemnitees or any of them.
(d) No Obligor will ever assert any claim against any Indemnitee,
on any theory of liability, for any lost profits or special, indirect or
consequential damages or (to the fullest extent a claim for punitive damages may
lawfully be waived) any punitive damages arising out of, in connection with, or
as a result of, this Agreement or any other Secured Debt Document or any
agreement or instrument or transaction contemplated hereby or relating in any
respect to any Indemnified Liability, and each of the Obligors hereby forever
waives, releases and agrees not to ▇▇▇ upon any claim for any such lost profits
or special, indirect, consequential or (to the fullest extent lawful) punitive
damages, whether or not accrued and whether or not known or suspected to exist
in its favor.
(e) The agreements in this Section 8.8 will survive repayment of
all other Secured Obligations and the removal or resignation of the Collateral
Agent.
SECTION 8.9 Severability. If any provision of this Agreement is invalid,
illegal or unenforceable in any respect or in any jurisdiction, the validity,
legality and enforceability of such provision in all other respects and of all
remaining provisions, and of such provision in all other jurisdictions, will not
in any way be affected or impaired thereby.
SECTION 8.10 Headings. Section headings herein have been inserted for
convenience of reference only, are not to be considered a part of this Agreement
and will in no way modify or restrict any of the terms or provisions hereof.
SECTION 8.11 Obligations Secured. All obligations of the Obligors set
forth in or arising under this Agreement will be Secured Obligations and are
secured by all Liens granted by the Security Documents.
SECTION 8.12 Governing Law. The internal law of the State of New York will
govern and be used to construe this Agreement without giving effect to
applicable principles of conflicts of law to the extent that the application of
the laws of another jurisdiction would be required thereby.
SECTION 8.13 Consent to Jurisdiction. All judicial proceedings brought
against any party hereto arising out of or relating to this Agreement or any of
the other Security Documents may be brought in any state or federal court of
competent jurisdiction in the State, County and City of New York. By executing
and delivering this Agreement, each Obligor, for itself and in connection with
its properties, irrevocably:
68
(1) accepts generally and unconditionally the nonexclusive
jurisdiction and venue of such courts;
(2) waives any defense of forum non conveniens;
(3) agrees that service of all process in any such proceeding in any
such court may be made by registered or certified mail, return receipt
requested, to such party at its address provided in accordance with
Section 8.5;
(4) agrees that service as provided in clause (3) above is
sufficient to confer personal jurisdiction over such party in any such
proceeding in any such court and otherwise constitutes effective and
binding service in every respect; and
(5) agrees each party hereto retains the right to serve process in
any other manner permitted by law or to bring proceedings against any
party in the courts of any other jurisdiction.
SECTION 8.14 Waiver of Jury Trial. Each party to this Agreement waives its
rights to a jury trial of any claim or cause of action based upon or arising
under this Agreement or any of the other Security Documents or any dealings
between them relating to the subject matter of this Agreement or the intents and
purposes of the other Security Documents. The scope of this waiver is intended
to be all-encompassing of any and all disputes that may be filed in any court
and that relate to the subject matter of this Agreement and the other Security
Documents, including contract claims, tort claims, breach of duty claims and all
other common law and statutory claims. Each party to this Agreement acknowledges
that this waiver is a material inducement to enter into a business relationship,
that each party hereto has already relied on this waiver in entering into this
Agreement, and that each party hereto will continue to rely on this waiver in
its related future dealings. Each party hereto further warrants and represents
that it has reviewed this waiver with its legal counsel and that it knowingly
and voluntarily waives its jury trial rights following consultation with legal
counsel. This waiver is irrevocable, meaning that it may not be modified either
orally or in writing (other than by a mutual written waiver specifically
referring to this Section 8.14 and executed by each of the parties hereto), and
this waiver will apply to any subsequent amendments, renewals, supplements or
modifications of or to this Agreement or any of the other Security Documents or
to any other documents or agreements relating thereto. In the event of
litigation, this Agreement may be filed as a written consent to a trial by the
court.
SECTION 8.15 Counterparts. This Agreement may be executed in any number of
counterparts, each of which when so executed and delivered will be deemed an
original, but all such counterparts together will constitute but one and the
same instrument.
SECTION 8.16 Effectiveness. This Agreement will become effective upon the
execution of a counterpart hereof by each of the parties hereto and receipt by
each party of written notification of such execution and written or telephonic
authorization of delivery thereof.
SECTION 8.17 Additional Obligors. The Company will cause each of its
Subsidiaries that becomes an Obligor or is required by any Secured Debt Document
to become a party to this Agreement to become a party to this Agreement, for all
purposes of this Agreement, by causing
69
such Subsidiary to execute and deliver to the parties hereto a Collateral Trust
Joinder, whereupon such Subsidiary will be bound by the terms hereof to the same
extent as if it had executed and delivered this Agreement as of the date hereof
The Company agrees to provide each Secured Debt Representative with a copy of
each Collateral Trust Joinder executed and delivered pursuant to this Section.
SECTION 8.18 Continuing Nature of this Agreement. This Agreement,
including the subordination provisions hereof, will be reinstated if at any time
any payment or distribution in respect of any of the Senior Priority Lien
Obligations is rescinded or must otherwise be returned in an Insolvency
Proceeding or otherwise by any of the Senior Priority Secured Parties or any
representative of any such party (whether by demand, settlement, litigation or
otherwise). In the event that all or any part of a payment or distribution made
with respect to the Senior Priority Lien Obligations is recovered from any of
the Senior Priority Secured Parties in an Insolvency Proceeding or otherwise
(and whether by demand, settlement, litigation or otherwise), any payment or
distribution received by any of the Junior Priority Secured Parties with respect
to the Junior Priority Lien Obligations from the proceeds of any Collateral or
any title insurance policy required by any real property mortgage at any time
after the date of the payment or distribution that is so recovered, whether
pursuant to a right of subrogation or otherwise, will be deemed to have been
received by the Junior Priority Secured Parties in trust as property for the
Senior Priority Secured Parties and the Junior Priority Secured Parties will
forthwith deliver such payment or distribution to the Collateral Agent, for the
benefit of the Senior Priority Secured Parties, for application to the Senior
Priority Lien Obligations (in accordance with Section 3.4) until such Senior
Priority Lien Obligations have been paid in full in cash and all commitments in
respect of Senior Priority Lien Obligations have been terminated.
SECTION 8.19 Insolvency. This Agreement will be applicable both before and
after the commencement of any Insolvency Proceeding by or against any Obligor.
The relative rights, as provided for in this Agreement, will continue after the
commencement of any such Insolvency Proceeding on the same basis as prior to the
date of the commencement of any such case, as provided in this Agreement.
SECTION 8.20 Rights and Immunities of Secured Debt Representatives. The
Secured Debt Representatives will be entitled to all of the rights, protections,
immunities and indemnities set forth in the credit agreement, indenture or other
agreement governing the applicable Secured Debt with respect to which such
Person is acting or will act as representative, in each case as if specifically
set forth herein. In no event will any Secured Debt Representative be liable for
any act or omission on the part of the Obligors or the Collateral Agent
hereunder.
SECTION 8.21 No Recourse Against Obligors. NOTWITHSTANDING ANYTHING TO THE
CONTRARY SET FORTH IN THIS AGREEMENT, THE FIRST PRIORITY NOTES, THE SECOND
PRIORITY NOTES, THE THIRD PRIORITY NOTES, THE FIRST PRIORITY TERM LOANS, THE
SECOND PRIORITY TERM LOANS, THE REVOLVING LOANS AND ALL RELATED GUARANTEES ARE
NON-RECOURSE SECURED OBLIGATIONS OF THE COMPANY AND THE GUARANTORS, AS
APPLICABLE. THE ONLY RECOURSE A HOLDER OF THE NOTES, THE TERM LOANS, THE
REVOLVING LOANS AND ALL RELATED GUARANTEES WILL HAVE WITH RESPECT TO THE PAYMENT
OF PRINCIPAL OF, OR INTEREST OR PREMIUM ON, ANY OF THE
70
FOREGOING OBLIGATIONS WILL BE ENFORCEMENT OF ITS RIGHTS AGAINST THE COLLATERAL
PURSUANT TO THIS AGREEMENT AND THE RELATED SECURITY DOCUMENTS AND, WITH RESPECT
TO THE NOTES, THE ENFORCEMENT OF RIGHTS AGAINST CALGEN FINANCE.
[signature page follows]
71
IN WITNESS WHEREOF, the parties hereto have caused this Collateral Trust
and Intercreditor Agreement to be executed by their respective officers or
representatives as of the day and year first above written.
CALPINE CALGEN HOLDINGS, INC.,
By: /s/ ▇▇▇▇▇ ▇▇▇▇
-------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇
Title: Vice President
CALPINE GENERATING COMPANY, LLC,
By: /s/ ▇▇▇▇▇ ▇▇▇▇
-------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇
Title: Vice President
[Collateral Trust Agreement - Calpine CalGen]
THE GUARANTORS:
CALGEN EXPANSION COMPANY, LLC
CPN FREESTONE, LLC
CALPINE FREESTONE, LLC
CALPINE FREESTONE ENERGY GP, LLC
CALPINE CHANNEL ENERGY CENTER LP, LLC
CALPINE CHANNEL ENERGY CENTER GP, LLC
CHANNEL POWER GP, LLC
CALGEN EQUIPMENT FINANCE HOLDINGS, LLC
CALGEN PROJECT EQUIPMENT FINANCE COMPANY ONE, LLC
CALGEN PROJECT EQUIPMENT FINANCE COMPANY THREE LLC
CALGEN EQUIPMENT FINANCE COMPANY, LLC
NUECES BAY ENERGY LLC
CALPINE NORTHBROOK SOUTHCOAST INVESTORS, LLC
CALPINE CORPUS CHRISTI ENERGY GP, LLC
ZION ENERGY LLC
LOS MEDANOS ENERGY CENTER, LLC
▇▇▇▇▇▇ ENERGY CENTER, LLC
▇▇▇▇▇▇▇▇ ENERGY LLC
DECATUR ENERGY CENTER, LLC
CALPINE ▇▇▇▇▇ POWER I, LLC
CALPINE ▇▇▇▇▇ POWER II, LLC
CALPINE BAYTOWN ENERGY CENTER LP, LLC
CALPINE BAYTOWN ENERGY CENTER GP, LLC
BAYTOWN POWER GP, LLC
COLUMBIA ENERGY LLC
DELTA ENERGY CENTER, LLC
CALGEN PROJECT EQUIPMENT FINANCE COMPANY TWO, LLC
PASTORIA ENERGY FACILITY L.L.C.
CALPINE PASTORIA HOLDINGS, LLC
Executing this Agreement on behalf of and so as to
bind each of the limited liability companies named
above under the caption "The Guarantors"
By: /s/ ▇▇▇▇▇ ▇▇▇▇
-------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇
Title: Vice President
[Collateral Trust Agreement - Calpine CalGen]
THE GUARANTORS:
FREESTONE POWER GENERATION LP
CALPINE FREESTONE ENERGY, LP
CALPINE POWER EQUIPMENT LP
CHANNEL POWER, LP
CHANNEL ENERGY CENTER, LP
CALPINE CORPUS CHRISTI ENERGY, LP
CORPUS CHRISTI COGENERATION LP
CALPINE ▇▇▇▇▇ POWER, L.P.
BAYTOWN ENERGY CENTER, LP
BAYTOWN POWER, LP
Executing this Agreement on behalf of and so as
to bind each of the limited partnerships named
above under the caption "The Guarantors"
By: /s/ ▇▇▇▇▇ ▇▇▇▇
-------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇
Title: Vice President
[Collateral Trust Agreement - Calpine CalGen]
WILMINGTON TRUST FSB,
as Trustee under the Indentures,
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Vice President
[Collateral Trust Agreement - Calpine CalGen]
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ SENIOR FUNDING, INC.,
as Term Loan Administrative Agent
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
-------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: Managing Director
[Collateral Trust Agreement - Calpine CalGen]
THE BANK OF NOVA SCOTIA,
as Revolving Loan Administrative Agent
By: /s/ ▇▇▇▇▇ ▇'▇▇▇▇▇
-------------------------------
Name: ▇▇▇▇▇ ▇'▇▇▇▇▇
Title: Managing Director
[Collateral Trust Agreement - Calpine CalGen]
WILMINGTON TRUST COMPANY,
as Collateral Agent
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Authorized Signer
[Collateral Trust Agreement - Calpine CalGen]
EXHIBIT A
to Collateral Trust and Intercreditor Agreement
[FORM OF]
COLLATERAL TRUST JOINDER
The undersigned,____________________________, a_______________________,
hereby agrees to become party as [an Obligor] [a First Priority Debt
Representative] [a Second Priority Debt Representative] [a Third Priority Debt
Representative] under the Collateral Trust and Intercreditor Agreement dated as
of March, by and among Calpine CalGen Holdings, Inc., a Delaware corporation,
Calpine Generating Company, LLC, a Delaware limited liability company, the
Guarantors from time to time party hereto, the Secured Debt Representatives from
time to time party thereto, Wilmington Trust Company (or any successor thereto
or assignee thereof), as collateral agent and each other Person which becomes a
party hereto by executing and delivering a Collateral Trust Joinder, and to be
bound by the terms of said Collateral Trust and Intercreditor Agreement as fully
as if the undersigned had executed and delivered said Collateral Trust and
Intercreditor Agreement as of the date thereof.
The provisions of Article 8 of said Collateral Trust and Intercreditor
Agreement will apply with like effect to this Collateral Trust Joinder.
IN WITNESS WHEREOF, the undersigned has executed and delivered this
Joinder as of ____________________, 20_____.
[________________________________________]
By:_______________________________________
Name:
Title:
EXHIBIT A
EXHIBIT B
to Collateral Trust and Intercreditor Agreement
[FORM OF]
WECC FIXED PRICE GAS SALE AND POWER PURCHASE AGREEMENT
RECOGNITION AGREEMENT
This Recognition Agreement (this "Agreement") is entered into as
of _______________, ____, by and between [Wilmington Trust Company] [NAME OF ANY
SUCCESSOR TO OR PERMITTED ASSIGN OF WILMINGTON TRUST COMPANY], in its capacity
as Collateral Agent under the Collateral Trust Agreement (as defined below)
(together with its successors and permitted assigns in such capacity, the
"Collateral Agent") and [Calpine Energy Services, L.P.] [ANY SUCCESSOR TO OR
PERMITTED ASSIGN OF CALPINE ENERGY SERVICES, L.P. UNDER THE WECC FIXED PRICE GAS
SALE AND POWER PURCHASE AGREEMENT] as beneficiary hereunder (the "Power
Purchaser").
RECITALS
WHEREAS, the Power Purchaser is party to that certain WECC Fixed Price Gas
Sale and Power Purchase Agreement, dated as of March 23, 2004 (the "WECC Fixed
Price PPA"), among Power Purchaser, Calpine Generating Company, LLC (the
"Company"), Delta Energy Center, LLC and Los Medanos Energy Center, LLC,
pursuant to which the Power Purchaser has agreed to provide gas to, and purchase
power from, the Company;
WHEREAS, the Collateral Agent is party to that certain Collateral Trust
and Intercreditor Agreement, dated as of March 23, 2004 (the "Collateral Trust
Agreement"), by and among the Collateral Agent, Calpine CalGen Holdings, Inc.,
the Company, the Guarantors from time to time party thereto and the Secured Debt
Representatives from time to time party thereto under which the Collateral Agent
serves as collateral agent for the present and future holders of Secured
Obligations (as defined in the Collateral Trust Agreement) of the Company and
its Subsidiaries; and
WHEREAS, capitalized terms used but not otherwise defined herein shall
have the meanings set forth in the Collateral Trust Agreement as of the date
hereof or as amended in accordance with the terms thereof;
NOW, THEREFORE, the parties agree as follows:
1. Recognition of WECC Fixed Price PPA. Pursuant to Section 3.9 of the
Collateral Trust Agreement, the Collateral Agent, on behalf of the holders of
Secured Obligations, agrees (a) to assume, directly or indirectly (through an
Agent or Affiliate), the rights and obligations of the Company and any of its
Subsidiaries under the WECC Fixed Price PPA in the event of a foreclosure, or
the exercise or enforcement of the Collateral Agent's interests, rights, powers
and remedies in respect of the Collateral, under the Collateral Trust Agreement
or any other Security Document, and (b) not to reject the WECC Fixed Price PPA
in any Insolvency Proceeding (subject to applicable law and the discretion of
the bankruptcy court), in each case so long as the Power Purchaser (or its
successor or permitted assignee under the WECC Fixed Price PPA) is
EXHIBIT B
not in default under the WECC Fixed Price PPA or the Index Based Gas Sale and
Power Purchase Agreement.
2. Subsequent Owners. The Collateral Agent further agrees, on behalf of
the holders of Secured Obligations, that any sale of [INSERT NAME OF PROJECTS
SERVICING WECC FIXED PRICE PPA] (the "Project") shall be expressly subject to
the rights and obligations of Power Purchaser under this Agreement. Each
subsequent owner of the Project, including, as applicable, the Collateral Agent
by virtue of foreclosure of its Lien on the Project, shall succeed to the
obligations of the Collateral Agent and the holders of Secured Obligations
hereunder. Each subsequent owner of the Project shall assume such obligations
and shall take all actions reasonably necessary to cure any existing defaults
hereunder that are capable of being cured, including, in the event that the WECC
Fixed Price PPA has been rejected, avoided or otherwise terminated in violation
of this Agreement, by entering into a replacement agreement with the Power
Purchaser (or its successor or permitted assignee under the WECC Fixed Price
PPA) on terms that are no less advantageous to the Power Purchaser (or its
successor or permitted assignee under the WECC Fixed Price PPA).
3. Severability. If any provision of this Agreement is invalid, illegal
or unenforceable in any respect or in any jurisdiction, the validity, legality
and enforceability of such provision in all other respects and of all remaining
provisions, and of such provision in all other jurisdictions, will not in any
way be affected or impaired thereby.
4. Headings. Section headings herein have been inserted for convenience
of reference only, are not to be considered a part of this Agreement and will in
no way modify or restrict any of the terms or provisions hereof.
5. Governing Law. The internal law of the State of New York will govern
and be used to construe this Agreement without giving effect to applicable
principles of conflicts of law to the extent that the application of the laws of
another jurisdiction would be required thereby.
6. Further Assurances. Whenever requested to do so by the other party,
each party hereto shall execute, acknowledge and deliver any further
conveyances, assignments, confirmations, satisfactions, releases, powers of
attorney, instruments of further assurance, approvals, consents and any further
instruments or documents that are necessary, expedient or proper to complete any
conveyances, transfers, sales and assignments contemplated by this Agreement. In
addition, each party hereto shall do any other acts and execute, acknowledge and
deliver any requested documents in order to carry out the intent and purpose of
this Agreement.
7. Successors and Assigns. This Agreement shall be binding upon, and
inure to the benefit of, both parties and their respective successors and
assigns.
8. Counterparts. This Agreement may be executed in any number of
counterparts, each of which when so executed and delivered will be deemed an
original, but all such counterparts together will constitute but one and the
same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers or representatives as of the day and year
first above written.
WILMINGTON TRUST COMPANY,
as Collateral Agent
By: _________________________________
Name:
Title:
[POWER PURCHASER],
as Power Purchaser
By: _________________________________
Name:
Title:
[_________________________________]
By: _____________________
Name:
Title:
EXHIBIT C
to Collateral Trust and Intercreditor Agreement
[FORM OF]
SHARED FACILITIES ARRANGEMENT RECOGNITION AGREEMENT
THIS RECOGNITION AGREEMENT (the "Agreement"), dated as
of_______________________________, is made by and among [NAME OF OWNER OF
FACILITY THAT IS SUBJECT TO SHARING ARRANGEMENT] ("Facility Owner"), [NAME OF
OWNER OF EXPANSION ASSETS] ("Expansion Owner"), [Wilmington Trust Company] [NAME
OF ANY SUCCESSOR TO OR PERMITTED ASSIGNS OF WILMINGTON TRUST COMPANY], in its
capacity as Collateral Agent under the Collateral Trust Agreement (as defined
below) (together with its successors and permitted assigns in such capacity, the
"Collateral Agent"), and [NAME OF LENDER TO EXPANSION OWNER OR AGENT THEREFOR]
("Expansion Lender"). (The Facility Owner, the Expansion Owner, the Collateral
Agent and the Expansion Lender are each referred to herein as a "Party" and
collectively as the "Parties".)
RECITALS
WHEREAS, Facility Owner is the owner of that certain electric generating
facility and related assets described on Exhibit A attached hereto (the
"Facility");
WHEREAS, Expansion Owner is the owner of those certain assets, equipment
and facilities described on Exhibit B attached hereto (the "Expansion Assets");
WHEREAS, the Collateral Agent is party to that certain Collateral Trust
and Intercreditor Agreement, dated as of March 23,2004 (the "Collateral Trust
Agreement"), by and among the Collateral Agent, Calpine CalGen Holdings, Inc.,
the Company, the Guarantors from time to time party thereto and the Secured Debt
Representatives from time to time party thereto under which the Collateral Agent
serves as collateral agent for the present and future holders of Secured
Obligations (as defined in the Collateral Trust Agreement) of the Company and
its Subsidiaries;
WHEREAS, Expansion Lender has provided the financing to Expansion Owner
for the [development, construction and operation] of the Expansion Assets
pursuant to that certain [_______________________] dated as of [__________] (the
"Expansion Loan Agreement");
WHEREAS, Facility Owner and Expansion Owner have entered into that certain
[Shared Facilities Agreement dated as of ________] (the "Shared Facilities
Agreement") pursuant to which Facility Owner and Expansion Owner will share the
use of certain [assets, equipment and facilities] described therein (the "Shared
Facilities"); [MODIFY AS APPROPRIATE TO ADDRESS EASEMENTS AND OTHER REAL
PROPERTY INTERESTS.] and
WHEREAS, the Parties have agreed that notwithstanding the foreclosure of
Collateral Agent's interest in the Facility or other transfer of title to the
Facility to or at the direction of Collateral Agent or the foreclosure of
Expansion Lender's interest in the Expansion Assets or other transfer of title
to the Expansion Assets to or at the direction of Expansion Lender, the
EXHIBIT C
rights and interests of the other Parties under the Shared Facilities Agreement
and in the Shared Facilities shall survive and continue.
WHEREAS, capitalized terms used but not otherwise defined herein shall
have the meanings set forth in the Collateral Trust Agreement as of the date
hereof or as amended in accordance with the terms thereof;
NOW, THEREFORE, in consideration of the premises and for other good and
valuable consideration, the Parties agree as follows:
1. Definitions. In addition to other terms defined herein, the
following capitalized terms shall have the meanings set forth below.
"Affiliate" has the meaning given such term in the Collateral Trust
Agreement.
"Insolvency Proceeding" has the meaning given such term in the Collateral
Trust Agreement.
"Fair Market Value" means the fair market value of the asset or property
in question, taking into account all restrictions or limitations on its use,
including any restrictions or limitations hereunder or under the Shared
Facilities Agreement, as determined by an independent qualified appraiser
reasonably acceptable to all Parties.
"Lender" or "Lenders" means each of Collateral Agent and Expansion Lender,
or both of them collectively.
"Project" means the Facility or the Expansion Assets, as the context
requires.
"Project Owner" means the Facility Owner or the Expansion Owner, as
applicable, or its successors and assigns.
"Related Assets" has the meaning defined in Section 7(a).
"Related Security Documents" means (i) with respect to the Secured Debt
Documents, all security agreements, pledge agreements, mortgages, deeds of trust
and similar agreements creating a lien or charge on the Facility or any part
thereof or interest therein, including contracts and general intangibles related
thereto, or securing any obligation under the Secured Debt Documents, and (ii)
with respect to the Expansion Loan Agreement, all security agreements, pledge
agreements, mortgages, deeds of trust and similar agreements creating a lien or
charge on the Expansion Assets or any part thereof or interest therein,
including contracts and general intangibles related thereto, or securing any
obligation under the Expansion Loan Agreement.
2. Interests of Lenders. Facility Owner may, without the prior consent
of any other Party, assign its rights and interests in and to the Shared
Facilities and under the Shared Facilities Agreement to Collateral Agent and to
any lender or lenders refinancing the debt under the Secured Debt Documents, and
Expansion Owner may, without the prior consent of any other Party, assign its
rights and interests in and to the Shared Facilities and under the Shared
Facilities
Agreement to Expansion Lender and to any lender or lenders refinancing the debt
under the Expansion Loan Agreement. Each Party agrees to cooperate with the
other Parties in good faith to execute such consents to assignment as may
reasonably be requested by any Party hereto or its successors or assigns
(including any refinancing lenders, as applicable), provided that the rights and
obligations of the Parties hereunder, under the Shared Facilities Agreement or
in and to the Shared Facilities shall not be modified or impaired by such
consent other than in connection with granting such lender reasonable cure
rights and other customary lender protective provisions.
3. Recognition of Shared Facilities Agreement. Each of the Parties
hereby acknowledges, recognizes and consents to the Shared Facilities Agreement
and the rights and obligations of the respective parties thereto under the
Shared Facilities Agreement and agrees that such Party's ownership of or
interest in the Facility or the Expansion Assets, as the case may be, is subject
to the rights and interests of the other Parties in and to the Shared Facilities
under the Shared Facilities Agreement.
4. Subsequent Owners. All sales of the Projects shall be expressly
subject to the rights and obligations of the Parties hereunder and under the
Shared Facilities Agreement. Each subsequent owner of the Facility and the
Expansion Assets, including, as applicable, Collateral Agent by virtue of
foreclosure of its lien on the Facility and Expansion Lender by virtue of
foreclosure of its lien on the Expansion Assets, shall succeed to the rights and
obligations of Facility Owner or Expansion Owner, as applicable, in and to the
Shared Facilities, including all rights and obligations under the Shared
Facilities Agreement. Each subsequent owner of the Facility and the Expansion
Assets shall assume (in the case of the Collateral Agent, directly or indirectly
through any agent or Affiliate) the rights and obligations of the owner of such
property, as applicable, under the Shared Facilities Agreement and shall cure
any existing defaults under the Shared Facilities Agreement by the Party to
whose interest it succeeded that are capable of being cured.
5. Subordination of Lender's Interests. Each of Collateral Agent and
Expansion Lender each hereby intentionally and unconditionally subordinate their
respective rights under the Secured Debt Documents and the Expansion Loan
Agreement, as applicable, and all Related Security Documents, with respect to
the Shared Facilities and under the Shared Facilities Agreement, to the rights
and interests of the Parties in and to the Shared Facilities and under the
Shared Facilities Agreement, including all renewals, modifications, replacements
and extensions thereof. The Shared Facilities Agreement and the rights and
obligations of the Parties thereunder and in and to the Shared Facilities shall
not be affected by and shall survive a foreclosure of any Related Security
Document. Subject to the foregoing, nothing herein shall affect, hinder or
impair (i) the right of Collateral Agent to exercise any of its rights or
remedies under the Secured Debt Documents or the Related Security Documents or
(ii) the right of Expansion Lender to exercise any of its rights or remedies
under the Expansion Loan Agreement or the Related Security Documents.
6. Right To Cure Defaults. Each Lender shall have the right, but not
the obligation, to cure any or all defaults of a Party to, or in respect of the
Project on which such Lender has a lien under, the Shared Facilities Agreement.
In the event of a default by Facility Owner or Expansion Owner under the Shared
Facility Agreement (such party being the "Defaulting
Party"), the other party (the "Non-Defaulting Party") shall give written notice
of such default to the Defaulting Party's Lender, and such Lender shall have a
period of thirty (30) days, in the case of a default resulting from the failure
to pay any amounts due and owing, or ninety (90) days, in the case of other
defaults, after receipt of such notice to cure such default; provided, however,
that if such non-monetary default cannot reasonably be cured in such ninety (90)
day period, the Defaulting Party's Lender shall have such additional period of
time not to exceed an additional one hundred eighty (180) days as may reasonably
be necessary to cure such default, including time to acquire possession or
control of the Facility or the Expansion Assets, as applicable, if (i) the
default is reasonably capable of being cured, (ii) such Lender commences such
cure promptly within such ninety (90) day period and thereafter diligently
prosecutes such cure to completion, and (iii) the failure to complete such cure
within such ninety (90) day period does not have and would not reasonably be
expected to have a material adverse effect on the Non-Defaulting Party or the
Project owned by the Non-Defaulting Party.
7. Rights If Project Is Dismantled.
(a) Each Party hereto agrees that, in the event it elects to dismantle
or otherwise break up its Project or the Project on which it has a lien, it will
first offer to the Project Owner of the other Project and its Lender the right
to purchase any portion of such Project that may comprise, be a part of or be
necessary for the use, operation or maintenance of the Shared Facilities (with
respect to the Project being dismantled or broken up, the "Related Assets") at
the Fair Market Value of such property or asset. Prior to dismantling or
breaking up the Project, the Project Owner or its Lender shall give the Project
Owner of the other Project and its Lender written notice thereof and shall, in
such notice, offer to sell the Related Assets to such Project Owner and its
Lender. Such Project Owner and its Lender shall have a reasonable period of
time, but not less than ninety (90) days, after receipt of such notice to decide
whether or not it will exercise such right to purchase the Related Assets and
shall notify the Project Owner of the Project to be dismantled or broken up and
its lender in writing of its decision within such period. Any such offer, once
accepted, shall be binding on all applicable Parties. Any dispute regarding the
Fair Market Value of the Related Assets shall be resolved by arbitration in
accordance with the then applicable Commercial Arbitration Rules of the American
Arbitration Association at an arbitration held in the city nearest the Facility
and the Expansion Assets in which the American Arbitration Association has an
office, or in such other location as the Parties may agree.
(b) Without limiting any Party's rights under Section 7(a) above, if a
Project Owner or its Lender desires to sell any Related Assets, any such sale to
a third party shall be subject to a right of first refusal in favor of the other
Project Owner, who shall have the right to purchase such Related Assets for the
same price and on the same terms as the prospective purchaser thereof; provided,
however, that if the prospective purchaser of such Related Assets proposes to
pay any portion of such purchase price by a note or other extension of credit
supported by a guarantee, letter of credit or other credit support, the other
Project Owner shall have the right to substitute a guarantee or letter of credit
from another party with the same or better credit rating or to pay such amount
in cash. Upon agreement with a prospective purchaser on the terms and conditions
of the purchase and sale of the Related Assets, the selling Project Owner shall
offer in writing to sell such Related Assets to the other Project Owner for the
same price and on the same terms as agreed with the prospective purchaser
thereof. The other Project Owner (or its Lender
acting on its behalf) shall have the right to purchase such Related Assets on
such terms and conditions (including the proviso to the second preceding
sentence), free and clear of any claims of the selling Project Owner, its Lender
or the prospective purchaser. If the other Project Owner (or its Lender acting
on its behalf) elects to exercise such right of first refusal, it shall so
notify the selling Project Owner in writing within ninety (90) days after
receipt of the written offer from the selling Project Owner. Failure to so
notify the selling Project Owner within such ninety (90) day period shall be
considered a rejection of such offer by the other Project Owner. Any and all
offers or agreements by the selling Project Owner to sell any Related Assets to
a third party shall be subject to the right of refusal set forth in this Section
7(b), whether or not it is so stated in the offer or agreement to sell such
Related Assets.
8. Insolvency Proceedings.
(a) In the event of an Insolvency Proceeding with respect to any Party
hereto, none of the other Parties will take any action in such Insolvency
Proceeding to reject, terminate or otherwise set aside this Agreement or the
Shared Facilities Agreement or to hinder, impair or contest the rights of any
Party under this Agreement or the Shared Facilities Agreement, the validity or
priority of any liens or security interests securing a Party's rights under this
Agreement or the Shared Facilities Agreement or the exercise of remedies by any
Party to enforce its rights under this Agreement or the Shared Facilities
Agreement.
(b) In the event that this Agreement or the Shared Facilities Agreement
is rejected by a trustee or debtor-in-possession in any Insolvency Proceeding,
and if, within forty-five (45) days after any other Party hereto (or their
respective successors or assigns or any person or entity claiming under or
through such Party) acquires sufficient title to the interests in the Shared
Facilities previously held by the Party that rejected this Agreement or the
Shared Facilities Agreement, any other Party hereto shall so request, each Party
hereto (or their respective successors and assigns, as applicable) will execute,
deliver and record (if applicable) new agreements on the same terms and
conditions as this Agreement and/or the Shared Facilities Agreement, as
applicable, for the remaining term of such agreement before giving effect to
such termination.
9. Specific Enforcement. Each Party hereto agrees that the rights and
obligations under this Agreement and under the Shared Facilities Agreement are
unique and that they may be specifically enforced, regardless of the
availability or potential availability of other remedies. Without limiting the
generality of the foregoing, each Party expressly waives the adequacy of a
remedy at law as a defense or objection to specific enforcement of this
Agreement or of the Shared Facilities Agreement.
10. Further Assurances. Each Party agrees to cooperate with the other
Parties in good faith and to execute and deliver all further instruments and
documents and to take all further actions as may reasonably be necessary to
implement this Agreement or to carry out the intent of the Parties hereunder.
11. Successors and Assigns. Except as otherwise provided herein, no
Party may assign its rights or interests hereunder without the prior written
consent of the other Parties;
provided, however, that any party may assign its rights and interests hereunder
to an Affiliate of such Party that succeeds to all of the assigning Party's
interests in the applicable Project (or, in the case of the Collateral Agent, to
any agent or to any successor or assign permitted under the Collateral Trust
Agreement), so long as such assignee assumes all of the assignor's rights and
obligations under this Agreement and the Shared Facilities Agreement. Subject to
the foregoing, this Agreement shall bind and benefit the successors and assigns
of each of the Parties.
12. Notices. All notices required or permitted hereunder shall be given
in writing and shall be delivered to the Party or Parties to which it is
addressed by hand, by private courier or by first class United States mail,
postage prepaid, at the following addresses or such other addresses as any Party
may designate by like notice.
[INSERT NOTICE ADDRESSES]
13. Amendments. No amendment or modification of this Agreement shall be
valid or binding on the Parties unless such amendment or modification is in
writing and is executed by each of the Parties affected thereby.
14. Governing Law. This Agreement shall be governed by the laws of the
State of [INSERT STATE IN WHICH FACILITY AND EXPANSION ASSETS ARE LOCATED].
15. Waiver of Consequential Damages. Notwithstanding anything herein to
the contrary, no Party or its Affiliates shall be liable to any other Party or
its Affiliates for any consequential, incidental, special, indirect, exemplary
or punitive damages of any nature, whether sought in contract or in tort and
regardless of rules relating to strict liability, comparative or contributory
negligence, or intentional or willful misconduct.
16. Memorandum. The Parties agree to execute and acknowledge a
memorandum of this Agreement in recordable form that may be recorded by any
Party in the [Official Records] of [INSERT COUNTY AND STATE OR OTHER APPROPRIATE
REFERENCE].
IN WITNESS WHEREOF, THE Parties have executed this Agreement as of the day
and year first above written.
[INSERT APPROPRIATE SIGNATURES]