EXHIBIT 4.11
================================================================================
PLEDGE AND SECURITY AGREEMENT
dated as of March 2, 1999
between
CE GENERATION, LLC,
as Pledgor
and
CHASE MANHATTAN BANK AND TRUST COMPANY,
NATIONAL ASSOCIATION,
as Collateral Agent
================================================================================
TABLE OF CONTENTS
Page
ARTICLE 1 DEFINED TERMS; PRINCIPLES OF CONSTRUCTION
Section 1.1 Defined Terms......................................1
ARTICLE 2 PLEDGE
Section 2.1 Pledged Collateral.................................2
Section 2.2 Delivery of Stock Collateral.......................3
Section 2.3 Pledgor's Rights...................................3
Section 2.4 Secured Parties Not Liable.........................5
Section 2.5 Attorney-in-Fact...................................5
Section 2.6 Collateral Agent May Perform.......................6
Section 2.7 Reasonable Care....................................6
Section 2.8 Security Interest Absolute.........................6
ARTICLE 3 REPRESENTATIONS AND WARRANTIES
Section 3.1 Pledged Shares.....................................7
Section 3.2 Ownership of Pledged Collateral....................7
Section 3.3 Nature of Security Interest........................7
Section 3.4 Consents, etc......................................7
Section 3.5 Chief Executive Office.............................7
ARTICLE 4 COVENANTS
Section 4.1 Sale of Pledged Collateral.........................8
Section 4.2 No Other Liens.....................................8
Section 4.3 Issuance of Shares.................................8
Section 4.4 Chief Executive Office.............................8
Section 4.5 Supplements; Further Assurances, etc...............9
Section 4.6 Stock Certificates.................................9
Section 4.7 Records; Statements and Schedules..................9
Section 4.8 Bankruptcy.........................................9
ARTICLE 5 EXERCISE OF REMEDIES UPON AN EVENT OF DEFAULT
Section 5.1 Remedies Generally................................10
Section 5.2 Sale of Pledged Collateral........................10
Section 5.3 Purchase of Pledged Collateral....................11
Section 5.4 Application of Proceeds...........................11
Section 5.5 Expenses..........................................12
i
ARTICLE 6 MISCELLANEOUS PROVISIONS
Section 6.1 Notices...........................................12
Section 6.2 Continuing Security Interest......................12
Section 6.3 Release...........................................12
Section 6.4 Reinstatement.....................................13
Section 6.5 Independent Security..............................13
Section 6.6 Amendments........................................13
Section 6.7 Successors and Assigns............................14
Section 6.8 Third Party Beneficiaries.........................14
Section 6.9 Survival..........................................14
Section 6.10 No Waiver; Remedies Cumulative....................14
Section 6.11 Counterparts......................................14
Section 6.12 Headings Descriptive..............................15
Section 6.13 Severability......................................15
Section 6.14 Governing Law; Submission to Jurisdiction
and Venue; Waiver of Jury Trial...................15
Section 6.15 Entire Agreement..................................16
Section 6.16 Non-Recourse......................................16
ii
PLEDGE AND SECURITY AGREEMENT
This PLEDGE AND SECURITY AGREEMENT (this "Agreement"), dated as of
March 2, 1999, is made by CE Generation, LLC ("CE Generation"), a Delaware
limited liability company ("Pledgor"), to Chase Manhattan Bank and Trust
Company, National Association, as Collateral Agent (together with its successors
in such capacity, the "Collateral Agent") for the Secured Parties (as defined in
the Indenture referred to below) under the Collateral Agency and Intercreditor
Agreement, dated as of the date hereof (the "Intercreditor Agreement"), among
CE Generation, the Assignors (as defined in the Indenture referred to below),
the Collateral Agent, Chase Manhattan Bank and Trust Company, National
Association, as trustee (together with its successors in such capacity, the
"Trustee") and as depositary bank (together with its successors in such
capacity, the "Depositary Bank"), and the other Secured Parties.
W I T N E S S E T H :
WHEREAS, CE Generation is issuing $400,000,000 in principal amount of
its 7.416% Senior Secured Bonds Due December 15, 2018 (the "Initial Securities")
pursuant to the Indenture, dated as of the date hereof (the "Indenture"),
between CE Generation and the Trustee;
WHEREAS, Pledgor owns one hundred percent (100%) of the outstanding
capital stock of each of Falcon Seaboard Resources, Inc., a Texas corporation,
and California Energy Development Corporation, a Delaware corporation (each a
"Pledged Company" and, collectively the "Pledged Companies");
WHEREAS, it is a condition precedent to the issuance of the Securities
under the Indenture that Pledgor execute and deliver this Agreement;
NOW, THEREFORE, in consideration of the foregoing premises and for
other good and valuable consideration, the receipt and adequacy of which are
hereby acknowledged, the undersigned hereby agree as follows:
ARTICLE 1
DEFINED TERMS; PRINCIPLES OF CONSTRUCTION
Section 1.1 Defined Terms. Unless otherwise defined herein, terms
defined in the Indenture shall have such defined meanings when used herein.
1
ARTICLE 2
PLEDGE
Section 2.1 Pledged Collateral. (a) As collateral security for the
prompt and complete payment and performance when due, whether at stated
maturity, by acceleration or otherwise (including the payment of amounts which
would become due but for the operation of the automatic stay under Section
362(a) of the Bankruptcy Code, 11 U.S.C. (Section) 362(a)), of all of the
Secured Obligations, whether now existing or hereafter arising and howsoever
evidenced, Pledgor hereby pledges, grants, assigns, hypothecates, transfers and
delivers to the Collateral Agent, for its benefit and the benefit of the other
Secured Parties, a first priority security interest in the following, whether
now existing or hereafter from time to time acquired (collectively, the "Pledged
Collateral"):
(i) all of Pledgor's right, title and interest in and
to all shares (the "Pledged Shares") of capital stock described in
Schedule I hereto and the certificates, if any, representing the
Pledged Shares, and all dividends, cash, instruments and other property
from time to time received, receivable or otherwise distributed in
respect of or in exchange for any or all of the Pledged Shares;
(ii) all additional shares (the "Additional Shares")
of capital stock of any issuer of any Pledged Shares from time to time
acquired by Pledgor in any manner (including, without limitation, any
shares of preferred stock issued by any such issuer) and the
certificates, if any, representing such additional shares), and all
dividends, cash, instruments and other property from time to time
received, receivable or otherwise distributed in respect of or in
exchange for any or all of such shares (the certificates representing
the shares referred to in clause (i) above and this clause (ii), the
"Stock Collateral");
(iii) all other rights appurtenant to the property
described in clauses (i) and (ii) above (including, without limitation,
voting rights, to the extent provided in Section 2.3(b)); and
(iv) all proceeds of any and all of the foregoing,
and in addition, all dividends, distributions, cash, instruments and
other property or proceeds, from time to time received, receivable or
otherwise distributed in respect of or in exchange for any or all of
the foregoing.
2
(b) As used herein, the term "proceeds" shall be construed in its
broadest sense and shall include whatever is received or receivable when any of
the Stock Collateral, or any proceeds thereof, is sold, collected, exchanged or
otherwise disposed of, whether voluntarily or involuntarily, and shall include,
without limitation, all rights to payment, including interest and premiums,
with respect to any of the Stock Collateral or any proceeds thereof.
(c) Notwithstanding the foregoing, monies distributed from the
Distribution Suspense Account in accordance with the requirements of the
Depositary Agreement shall be released from the security interests created
hereunder and shall not constitute Pledged Collateral.
Section 2.2 Delivery of Stock Collateral. All certificates or
instruments representing or evidencing the Stock Collateral shall be delivered
to and held by or on behalf of the Collateral Agent pursuant hereto and shall be
in suitable form for transfer by delivery, or shall be accompanied by duly
executed instruments of transfer or assignment in blank, all in form and
substance satisfactory to the Collateral Agent. The Collateral Agent shall have
the right, at any time in its discretion and without notice to Pledgor to
transfer to or to register in its name or in the name of any of its nominees any
or all of the Stock Collateral. In addition, the Collateral Agent shall have the
right at any time to exchange certificates or instruments representing or
evidencing any of the Stock Collateral for certificates or instruments of
smaller or larger denominations.
Section 2.3 Pledgor's Rights.
(a) Distributions. Unless an Event of Default shall have occurred
and be continuing, Pledgor shall be entitled to receive and retain any and all
distributions paid in respect of the Stock Collateral in compliance with the
terms of the other Financing Documents; provided, however, that any and all
(i) distributions paid or payable in respect of any
Stock Collateral (whether paid in cash, securities or other property)
in connection with (A) any partial or total liquidation or dissolution
of any of any Pledged Company, (B) any distribution of capital of any
Pledged Company, (C) any recapitalization or reclassification of the
capital of any Pledged Company or (D) any reorganization of any Pledged
Company, and
3
(ii) all property (whether cash, securities or other
property) paid, payable or otherwise distributed in redemption of, or
in exchange for, the property described in clause (i) immediately
above,
shall be, and shall be forthwith delivered to the Collateral Agent to hold as,
Stock Collateral and shall, if received by Pledgor, be received in trust for the
benefit of the Collateral Agent, be segregated from the other property or funds
of Pledgor, be forthwith delivered to the Collateral Agent as Stock Collateral
in the same form as so received (with any necessary endorsement) and, if elected
by Pledgor, applied to the payment of the Secured Obligations. Upon the
occurrence and during the continuance of an Event of Default, all rights of
Pledgor to receive the distributions which it would otherwise be authorized to
receive and retain pursuant to the preceding sentence shall cease, and all such
rights shall thereupon become vested in the Collateral Agent which shall
thereupon have the sole right to receive and hold as Stock Collateral such
distributions.
(b) Other Rights. Unless an Event of Default shall have occurred and
be continuing, Pledgor shall be entitled to exercise all voting and other rights
with respect to the Stock Collateral; provided, however, that no vote shall be
cast, right exercised or other action taken which could materially impair the
Stock Collateral or which would be inconsistent with or result in any violation
of any provision of this Agreement or any other Financing Document. Upon the
occurrence and during the continuance of an Event of Default, all voting and
other rights of Pledgor with respect to the Stock Collateral which Pledgor
would otherwise be entitled to exercise pursuant to the terms of this Agreement
shall cease, and all such rights shall be vested in the Collateral Agent which
shall thereupon have the sole right to exercise such rights.
(c) Turnover. All distributions and other amounts which are received
by Pledgor contrary to the provisions of this Agreement shall be received in
trust for the benefit of the Collateral Agent, shall be segregated from other
funds of Pledgor and shall be forthwith paid over to the Collateral Agent as
Stock Collateral in the same form as so received (with any necessary
endorsement).
(d) Proxies, etc. Pledgor shall, if necessary to permit the
Collateral Agent to exercise the voting and other rights which it may be
entitled to exercise pursuant to clause (b) above and to receive all dividends
and distributions which it may be entitled to receive under clause (a) above,
execute and deliver to the Collateral Agent, from time to time and upon written
notice of the Collateral Agent, appropriate proxies, dividend payment orders
and other instruments as the Collateral
4
Agent may reasonably request. The foregoing shall not in any way limit the
Collateral Agent's power and authority granted pursuant to Section 2.5.
Section 2.4 Secured Parties Not Liable. None of the Collateral Agent,
any other Secured Party or any of their respective directors, officers,
employees or agents shall have any obligations or liability under or with
respect to any Pledged Collateral by reason of or arising out of this Agreement,
except as set forth in Section 9-207 of the Uniform Commercial Code as in effect
from time to time in the State of New York, or the receipt by the Collateral
Agent of any payment relating to any Pledged Collateral, nor shall any of the
Collateral Agent, any other Secured Party or any of their respective directors,
officers, employees or agents be obligated in any manner to (a) perform any of
the obligations of Pledgor under or pursuant to any agreement to which Pledgor
is a party, (b) make any payment or to inquire as to the nature or sufficiency
of any payment or performance with respect to any Pledged Collateral, (c)
present or file any claim or collect the payment of any amounts or take any
action to enforce any performance with respect to the Pledged Collateral or (d)
take any other action whatsoever with respect to the Pledged Collateral.
Section 2.5 Attorney-in-Fact. (a) Pledgor hereby appoints the
Collateral Agent, on behalf of the Secured Parties, or any Person, officer or
agent whom the Collateral Agent may designate, as its true and lawful
attorney-in-fact and proxy, with full irrevocable power and authority in the
place and stead of Pledgor and in the name of Pledgor or in its own name, at
Pledgor's cost and expense, from time to time upon the occurrence and during the
continuance of an Event of Default in the Collateral Agent's reasonable
discretion to take any action and to execute any instrument which the
Collateral Agent may reasonably deem necessary or advisable to enforce its
rights under this Agreement, including, without limitation, authority to
receive, endorse and collect all instruments made payable to Pledgor
representing any distribution, interest payment or other payment in respect of
the Pledged Collateral or any part thereof to be paid over to the Collateral
Agent pursuant to Section 2.3(c) and to give full discharge for the same, and to
vote or grant any consent in respect of the Pledged Shares authorized by Section
2.3(b).
(b) Pledgor hereby ratifies all that said attorney shall lawfully do
or cause to be done by virtue hereof, in each case pursuant to the powers
granted hereunder. Pledgor hereby acknowledges and agrees that the Collateral
Agent shall have no fiduciary duties to Pledgor and Pledgor hereby waives any
claims or rights of a beneficiary of a fiduciary relationship hereunder.
5
Section 2.6 Collateral Agent May Perform. If Pledgor fails to perform
any agreement contained herein after receipt of a written request to do so from
the Collateral Agent, the Collateral Agent may itself perform, or cause
performance of, such agreement, and the reasonable expenses of the Collateral
Agent, including the reasonable fees and expenses of its counsel, incurred in
connection therewith shall be payable by Pledgor under Section 5.5; provided
that if a bankruptcy, insolvency or similar event shall have occurred with
respect to Pledgor, the notice described in this Section 2.6 shall not be
required and shall be deemed to have been delivered upon the failure of Pledgor
to perform such agreement.
Section 2.7 Reasonable Care. The Collateral Agent shall be deemed to
have exercised reasonable care in the custody and preservation of the Pledged
Collateral in its possession if the Pledged Collateral is accorded treatment
substantially equivalent to that which the Collateral Agent accords its own
property of the type of which the Pledged Collateral consists, it being
understood that the Collateral Agent shall have no responsibility for (a)
ascertaining or taking action with respect to calls, conversions, exchanges,
maturities, tenders or other matters relative to any Pledged Collateral,
whether or not the Collateral Agent has or is deemed to have knowledge of such
matters, or (b) taking any necessary steps to preserve rights against any
parties with respect to any Pledged Collateral.
Section 2.8 Security Interest Absolute. All rights of the Collateral
Agent and security interests hereunder, and all obligations of Pledgor
hereunder, shall be absolute and unconditional irrespective of:
(a) any lack of validity or enforceability of any of the
Financing Documents or any other agreement or instrument relating
thereto (other than against the Collateral Agent);
(b) any change in the time, manner or place of payment of, or
in any other term of, all or any of the Secured Obligations, or any
other amendment or waiver of or any consent to any departure from the
Financing Documents or any other agreement or instrument relating
thereto;
(c) any exchange, release or non-perfection of any other
collateral, or any release or amendment or waiver of or consent to any
departure from any guaranty, for all or any of the Secured Obligations;
or
(d) any other circumstance which might otherwise constitute a
defense available to, or a discharge of, Pledgor.
6
ARTICLE 3
REPRESENTATIONS AND WARRANTIES
Pledgor represents and warrants, as of the date of this Agreement and
the Closing Date, as follows, which representations and warranties shall survive
the execution and delivery of this Agreement and the making and repayment of the
Secured Obligations:
Section 3.1 Pledged Shares. The Pledged Shares (a) have been duly
authorized and validly issued, (b) are fully paid and non-assessable and (c)
constitute all of the issued and outstanding shares of stock of each of the
Pledged Companies.
Section 3.2 Ownership of Pledged Collateral. Pledgor is the sole legal
and beneficial owner of the Pledged Shares, free and clear of any Lien other
than the Lien created pursuant to this Agreement.
Section 3.3 Nature of Security Interest. The pledge and grant of the
Pledged Collateral pursuant to this Agreement creates a valid and perfected
first priority security interest in the Pledged Collateral in favor of the
Collateral Agent, acting on behalf of the Secured Parties, securing the payment
of all of the Secured Obligations.
Section 3.4 Consents, etc. No consent, authorization, approval, or
other action by, and no notice to or filing with, any governmental authority is
required either (i) for the pledge by Pledgor of the Collateral owned by Pledgor
pursuant to this Agreement or for the due execution, delivery or performance of
this Agreement by Pledgor, or (ii) for the exercise by the Collateral Agent of
the voting or other rights provided for in this Agreement or of the remedies in
respect of the Collateral pursuant to this Agreement, except as may be required
in connection with the disposition of the Stock Collateral by laws affecting the
offering and sale of the securities generally.
Section 3.5 Chief Executive Office. The chief executive office of
Pledgor and the office where Pledgor keeps its records concerning the Pledged
Collateral is located at:
CE Generation, LLC
▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
7
ARTICLE 4
COVENANTS
Pledgor hereby covenants and agrees from and after the date of this
Agreement until the termination of this Agreement in accordance with the
provisions of Section 6.3:
Section 4.1 Sale of Pledged Collateral. Except as otherwise permitted
by the Financing Documents, Pledgor shall not sell or otherwise dispose of, or
grant any option or warrant with respect to, any of the Pledged Collateral;
provided, however, that Pledgor shall be permitted to sell or otherwise dispose
of the Pledged Collateral if such sale or other disposition is contemplated by
the other Financing Documents.
Section 4.2 No Other Liens. Pledgor shall not create, incur or permit
to exist, shall defend the Pledged Collateral against and shall take such other
action as is necessary to remove, any Lien or claim on or to the Pledged
Collateral (other than Permitted Liens), and shall defend the right, title and
interest of the Collateral Agent in and to any of the Pledged Collateral against
the claims and demands of all Persons whomsoever.
Section 4.3 Issuance of Shares. Pledgor agrees that it will cause each
of the Pledged Companies not to issue to Pledgor any shares of stock or other
securities in addition to or in substitution for the Pledged Shares, except (i)
if pledged to the Collateral Agent or (ii) with the written consent of the
Collateral Agent.
Section 4.4 Chief Executive Office. Pledgor shall not establish a new
location for its chief executive office or change its name until (i) it has
given to the Collateral Agent not less than thirty (30) days prior written
notice of its intention so to do, clearly describing such new location or
specifying such new name, as the case may be, and (ii) with respect to such new
location or such new name, as the case may be, it shall have taken all action,
satisfactory to the Collateral Agent, to maintain the security interest of the
Collateral Agent in the Pledged Collateral intended to be granted hereby at all
times fully perfected and in full force and effect.
Section 4.5 Supplements; Further Assurances, etc. Pledgor shall at any
time and from time to time, at the expense of Pledgor, promptly execute and
deliver all further instruments and documents, and take all further action, that
may be necessary or desirable, or that the Collateral Agent may reasonably
request, in order to perfect and protect any security interest granted or
purported to be granted hereby or to
8
enable the Collateral Agent to exercise and enforce its rights and remedies
hereunder with respect to any Pledged Collateral.
Section 4.6 Stock Certificates. Pledgor shall deliver all certificates
or other documents representing the Pledged Collateral to the Collateral Agent
with all necessary stock transfer or other powers duly indorsed in blank. In the
event Pledgor obtains possession of any other stock certificates, or other
securities or instruments forming a part of the Pledged Collateral, Pledgor
shall promptly deliver same to the Collateral Agent together with all necessary
stock transfer or other powers duly indorsed in blank. Prior to any such
delivery, any Pledged Collateral in Pledgor's possession shall be held by
Pledgor in trust for the Collateral Agent.
Section 4.7 Records; Statements and Schedules. Pledgor shall keep and
maintain, at its own cost and expense, records of the Pledged Collateral,
including, but not limited to, records of all payments received with respect
thereto, and Pledgor shall make the same available to the Collateral Agent for
inspection at Pledgor's chief executive office, at Pledgor's own cost and
expense, at any and all times upon reasonable prior notice and at reasonable
times. Pledgor shall furnish to the Collateral Agent from time to time
statements and schedules further identifying and describing the Pledged
Collateral and such other reports in connection with the Pledged Collateral as
the Collateral Agent may reasonably request, all in reasonable detail.
Section 4.8 Bankruptcy. Pledgor shall not authorize or permit any
Pledged Company to (a) commence a voluntary case or other proceeding seeking
liquidation, reorganization or other relief with respect to any Pledged Company
or any such Pledged Company's debts under any bankruptcy, insolvency or similar
law now or hereafter in effect or seeking the appointment of a trustee,
receiver, liquidator, custodian or other similar official of any Pledged Company
or any substantial part of any such Pledged Company's property, (b) to consent
to any such relief or to the appointment of or taking possession by any such
official in an involuntary case or other proceeding commenced against any
Pledged Company or (c) make a general assignment for the benefit of any Pledged
Company's creditors. Pledgor shall not commence or join with any other Person
(other than the Collateral Agent) in commencing any proceeding against any
Pledged Company under any bankruptcy, reorganization, liquidation or insolvency
law or statute now or hereafter in effect in any jurisdiction.
ARTICLE 5
EXERCISE OF REMEDIES UPON AN EVENT OF DEFAULT
9
Section 5.1 Remedies Generally. If an Event of Default shall have
occurred and be continuing, the Collateral Agent may exercise, in addition to
all other rights and remedies granted in this Agreement and in any other
instrument or agreement securing, evidencing or relating to the Secured
Obligations, all rights and remedies of a secured party under the Uniform
Commercial Code in effect from time to time in any relevant jurisdiction and all
other rights and remedies available at law or in equity.
Section 5.2 Sale of Pledged Collateral. (a) Without limiting the
generality of Section 5.1, the Collateral Agent may in its sole discretion,
without notice except as specified below, sell the Pledged Collateral or any
part thereof in one or more parcels at public or private sale or at any of the
Collateral Agent's Office or elsewhere, for cash, on credit or for future
delivery, and at such price or prices and upon such other terms as the
Collateral Agent may reasonably deem commercially reasonable, irrespective of
the impact of any such sales on the market price of the Pledged Collateral at
any such sale. Each purchaser at any such sale shall hold the property sold
absolutely, free from any claim or right on the part of Pledgor, and Pledgor
hereby waives (to the extent permitted by law) all rights of redemption, stay
and/or appraisal which it now has or may at any time in the future have under
any rule of law or statute now existing or hereafter enacted. The Collateral
Agent agrees to provide at least ten (10) days' notice to Pledgor of the time
and place of any public sale or the time after which any private sale is to be
made and the Pledgor agrees that such ten (10) days' notice to Pledgor shall
constitute reasonable notification. The Collateral Agent shall not be obligated
to make any sale of Pledged Collateral regardless of notice of sale having been
given. The Collateral Agent may adjourn any public or private sale from time to
time by announcement at the time and place fixed therefor, and such sale may,
without further notice, be made at the time and place to which it was so
adjourned. Assuming that such sales are made in compliance with federal and
state securities Laws and the Uniform Commercial Code, the Collateral Agent
shall incur no liability as a result of the sale of the Pledged Collateral, or
any part thereof, at any public or private sale. Pledgor hereby waives any
claims against the Collateral Agent arising by reason of the fact that the price
at which any Pledged Collateral may have been sold at such a private sale, if
commercially reasonable, was less than the price which might have been obtained
at a public sale, even if the Collateral Agent accepts the first offer received
and does not offer such Pledged Collateral to more than one offeree.
(b) Pledgor recognizes that the Collateral Agent may elect in its
sole discretion to sell all or any part of the Stock Collateral to one or more
purchasers in
10
privately negotiated transactions in which the purchasers will be obligated to
agree, among other things, to acquire the Stock Collateral for their own
account, for investment and not with a view to the distribution or resale
thereof. Pledgor acknowledges that any such private sales may be at prices and
on terms less favorable than those obtainable through a public sale (including,
without limitation, a public offering made pursuant to a registration statement
under the Securities Act of 1933, as amended (the "Securities Act")), and
Pledgor and the Collateral Agent agree that such private sales shall be made in
a commercially reasonable manner and that the Collateral Agent has no obligation
to engage in public sales and no obligation to delay sale of any Stock
Collateral to permit the issuer thereof to register the Stock Collateral for a
form of public sale requiring registration under the Securities Act. If the
Collateral Agent determines to exercise its right to sell any or all of the
Stock Collateral, upon written request, Pledgor shall, from time to time,
furnish to the Collateral Agent all such information as the Collateral Agent may
request in order to determine the number of shares and other instruments
included in the Stock Collateral which may be sold by the Collateral Agent as
exempt transactions under the Securities Act and rules of the Securities and
Exchange Commission thereunder, as the same are from time to time in effect.
Section 5.3 Purchase of Pledged Collateral. Any purchaser of all or any
part of the Pledged Collateral shall, upon any such purchase, acquire good title
to the Pledged Collateral so purchased, free of the security interests created
by this Agreement.
Section 5.4 Application of Proceeds. (a) The Collateral Agent shall
apply any proceeds from time to time held by it and the net proceeds of any
collection, recovery, receipt, appropriation, realization or sale with respect
to the Pledged Collateral in accordance with the relevant provisions of the
Intercreditor Agreement. For avoidance of doubt, it is understood that Pledgor
shall remain liable to the extent of any deficiency between the amount of
proceeds of the Pledged Collateral and the aggregated amount of the Secured
Obligations.
Section 5.5 Expenses. Pledgor shall upon demand pay to the Collateral
Agent the amount of any and all reasonable expenses, including the reasonable
fees and expenses of its counsel and of any experts and agents, and any transfer
taxes, in each case payable upon sale of the Pledged Collateral, which the
Collateral Agent may incur in connection with (a) the custody or preservation
of, or the sale of, collection from or other realization upon, any of the
Pledged Collateral pursuant to the exercise or enforcement of any of the rights
of the Collateral Agent hereunder or (b) the failure by Pledgor to perform or
observe any of the provisions hereof, together
11
with interest thereon from the date of demand at the rate per annum equal to the
Default Rate. Any amount payable by Pledgor pursuant to this Section 5.5 shall
be payable on demand and shall constitute Secured Obligations secured hereby.
ARTICLE 6
MISCELLANEOUS PROVISIONS
Section 6.1 Notices. Except as otherwise expressly provided herein, all
notices, requests and demands to or upon the respective parties hereto shall be
deemed to have been duly given when delivered by hand, or five days after being
deposited in the United States mail, postage prepaid, or, in the case of telex
notice, when sent, answerback received, or, in the case of telecopy notice, when
sent, or, in the case of a nationally recognized overnight courier service, one
Business Day after delivery to such courier service, addressed, in the case of
each party hereto, at its address specified below its signature hereto or to
such other address as may be designated by any party in a written notice to the
other parties hereto.
Section 6.2 Continuing Security Interest. This Agreement shall create a
continuing security interest in the Pledged Collateral until the release thereof
pursu ant to Section 6.3.
Section 6.3 Release. Upon the indefeasible payment in full of the
Secured Obligations in cash or cash equivalents, the Collateral Agent, upon the
request, and at the expense, of Pledgor, shall execute and deliver all such
documentation necessary to release the security interest created pursuant to
this Agreement.
Section 6.4 Reinstatement. This Agreement shall continue to be
effective or be reinstated, as the case may be, if at any time any amount
received by the Collateral Agent or any other Secured Party hereunder or
pursuant hereto is rescinded or must otherwise be restored or returned by the
Collateral Agent or such Secured Party upon the insolvency, bankruptcy,
dissolution, liquidation or reorganization of Pledgor or any Pledged Company or
upon the appointment of any intervenor or conservator of, or trustee or similar
official for, Pledgor or any Pledged Company or any substantial part of
Pledgor's or any Pledged Company's assets, or upon the entry of an order by any
court avoiding the payment of such amount, or otherwise, all as though such
payments had not been made.
12
Section 6.5 Independent Security. The security provided for in this
Agreement shall be in addition to and shall be independent of every other
security which the Secured Parties may at any time hold for any of the Secured
Obligations hereby secured, whether or not under the Security Documents. The
execution of any other Security Document shall not modify or supersede the
security interest or any rights or obligations contained in this Agreement and
shall not in any way affect, impair or invalidate the effectiveness and validity
of this Agreement or any term or condition hereof. Pledgor hereby waives its
right to plead or claim in any court that the execution of any other Security
Document is a cause for extinguishing, invalidating, impairing or modifying the
effectiveness and validity of this Agreement or any term or condition contained
herein. The Collateral Agent shall be at liberty to accept further security from
Pledgor or from any third party and/or release such security without notifying
Pledgor and without affecting in any way the obligations of Pledgor under the
Security Documents or the other Financing Documents. The Collateral Agent shall
determine if any security conferred upon the Secured Parties under the Security
Documents shall be enforced by the Collateral Agent, as well as the sequence of
securities to be so enforced. Notwithstanding the foregoing, this Agreement is
subject to the Intercreditor Agreement.
Section 6.6 Amendments. No waiver, amendment, modification or
termination of any provision of this Agreement, or consent to any departure by
Pledgor therefrom, shall in any event be effective without the prior written
consent of the Collateral Agent and none of the Pledged Collateral shall be
released without the written consent of the Collateral Agent. Any such waiver
or consent shall be effective only in the specific instance and for the
specific purpose for which given.
Section 6.7 Successors and Assigns. This Agreement shall be binding
upon Pledgor and its successors and assigns and shall inure to the benefit of
the Collateral Agent and the other Secured Parties and its successors and
assigns. Pledgor may not assign or otherwise transfer any of their respective
rights or obligations under this Agreement without the written consent of the
Collateral Agent.
Section 6.8 Third Party Beneficiaries. The agreements of the parties
hereto are intended to benefit the Secured Parties and their respective
successors and assigns.
13
Section 6.9 Survival. All agreements, statements, representations and
warranties made by Pledgor herein or in any certificate or other instrument
delivered by Pledgor or on its behalf under this Agreement shall be considered
to have been relied upon by the Collateral Agent and the other Secured Parties
and shall survive the execution and delivery of this Agreement and the other
Financing Documents until termination thereof or the indefeasible payment in
full in cash or cash equivalents of all of the Secured Obligations regardless of
any investigation made by the Collateral Agent or the other Secured Parties or
made on their behalf.
Section 6.10 No Waiver; Remedies Cumulative. No failure or delay on the
part of the Collateral Agent in exercising any right, power or privilege
hereunder and no course of dealing between Pledgor and the Collateral Agent
shall operate as a waiver thereof; nor shall any single or partial exercise of
any right, power or privilege hereunder preclude any other or further exercise
thereof or the exercise of any other right, power or privilege hereunder or
thereunder. The rights and remedies herein expressly provided are cumulative and
not exclusive of any rights or remedies which the Collateral Agent would
otherwise have.
Section 6.11 Counterparts. This Agreement may be executed in any number
of counterparts and by the different parties hereto on separate counterparts,
each of which when so executed and delivered shall be an original, but all of
which shall together constitute one and the same instrument.
Section 6.12 Headings Descriptive. The headings of the several Sections
and subsections of this Agreement are inserted for convenience only and shall
not in any way affect the meaning or construction of any provision of this
Agreement.
Section 6.13 Severability. In case any provision contained in or
obligation under this Agreement shall be invalid, illegal or unenforceable in
any jurisdiction, the validity, legality and enforceability of the remaining
provisions or obligations, or of such provision or obligation in any other
jurisdiction, shall not in any way be affected or impaired thereby.
Section 6.14 Governing Law; Submission to Jurisdiction and Venue;
Waiver of Jury Trial. (a) THIS AGREEMENT IS A CONTRACT MADE UNDER THE LAWS OF
THE ▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ AND SHALL FOR ALL PURPOSES BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF SUCH STATE WITHOUT
REGARD TO THE CONFLICT OF LAW RULES THEREOF (OTHER THAN SECTION 5-1401 OF THE
NEW YORK GENERAL OBLIGATIONS LAW).
14
(b) Any legal action or proceeding against Pledgor with respect to
this Agreement may be brought in the courts of the State of New York in the
County of New York or of the United States for the Southern District of New York
and, by execution and delivery of this Agreement, Pledgor hereby irrevocably
accepts for itself and in respect of its property, generally and
unconditionally, the jurisdiction of the aforesaid courts. Pledgor agrees that a
judgment, after exhaustion of all available appeals, in any such action or
proceeding shall be conclusive and binding upon Pledgor and may be enforced in
any other jurisdiction by a suit upon such judgment, a certified copy of which
shall be conclusive evidence of the judgment. Pledgor hereby irrevocably
designates, appoints and empowers CT Corporation System, with offices on the
date hereof at ▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, as its designee,
appointee and agent to receive and accept for and on its behalf service of any
and all legal process, summons, notices and documents which may be served in any
such action or proceeding. If for any reason such designee, appointee and agent
shall cease to be available to act as such, Pledgor agrees to designate a new
designee, appointee and agent in New York City on the terms and for the purposes
of this provision satisfactory to the Collateral Agent. Pledgor further
irrevocably consents to the service of process out of any of the aforementioned
courts in any such action or proceeding by the mailing of copies thereof by
registered or certified mail, postage prepaid, to Pledgor at its address
referred to in Section 6.1, such service to become effective thirty (30) days
after such mailing. Nothing herein shall affect the right of the Collateral
Agent to serve process in any other manner permitted by law or to commence legal
proceedings or otherwise proceed against Pledgor in any other jurisdiction.
(c) Pledgor hereby irrevocably waives any objection which it may now
or hereafter have to the laying of venue of any of the aforesaid actions or
proceedings arising out of or in connection with this Agreement or any other
Financing Document brought in the courts referred to in clause (b) above and
hereby further irrevocably waives and agrees not to plead or claim in any such
court that any such action or proceeding brought in any such court has been
brought in an inconvenient forum.
(d) WITH REGARD TO THIS AGREEMENT, PLEDGOR AND THE COLLATERAL AGENT
HEREBY WAIVE THE RIGHT TO A TRIAL BY JURY.
15
Section 6.15 Entire Agreement. This Agreement, together with any other
agreement executed in connection herewith, is intended by the parties as a final
expression of their agreement as to the matters covered hereby and is intended
as a complete and exclusive statement of the terms and conditions thereof.
Section 6.16 Non-Recourse. Notwithstanding any other provision hereof,
the Collateral Agent agrees that its only remedy hereunder shall be to proceed
against the Collateral and that there shall be no recourse hereunder against the
Pledgor, its shareholders or employees.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]
16
IN WITNESS WHEREOF, the parties hereto have caused this Pledge and
Security Agreement to be duly executed and delivered by their officers thereunto
duly authorized as of the date first above written.
CE GENERATION, LLC
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Executive Vice President
Address for Notices:
--------------------
CE Generation, LLC
▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
CHASE MANHATTAN BANK AND TRUST
COMPANY, NATIONAL ASSOCIATION,
as Collateral Agent
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
--------------------------------
Name: ▇.▇. ▇▇▇▇▇▇▇▇▇
Title: Assistant Vice President
Address for Notices:
--------------------
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, #▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Signature Page to Pledge Agreement (FSRI Stock and CEDC Stock)
SCHEDULE I
PLEDGED SHARES
--------------
All of the shares of capital stock of Falcon Seaboard Resources,
Inc., a Texas corporation.
All of the shares of capital stock of California Energy Development
Corporation, a Delaware corporation.