EXECUTION VERSION
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PLEDGE AND SECURITY AGREEMENT
Dated as of December 31, 2004
by and between
ORMESA LLC,
a Delaware limited liability company
and
UNION BANK OF CALIFORNIA, N.A.,
in its capacity as Collateral Agent
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PLEDGE AND SECURITY AGREEMENT
This PLEDGE AND SECURITY AGREEMENT (this "Agreement"), dated as of
December 31, 2004, is made by and between ORMESA LLC, a Delaware limited
liability company (together with its permitted successors and assigns, the
"Obligor"), and UNION BANK OF CALIFORNIA, N.A., in its capacity as the
Collateral Agent for the Noteholders described below (in such capacity, the
"Collateral Agent").
R E C I T A L S:
A. Ormat Funding Corp., a Delaware corporation (the "Note Issuer"),
Union Bank of California, N.A., in its capacity as the Trustee, Obligor, and
ORNI 1 LLC, a Delaware limited liability company, ORNI 2 LLC, a Delaware limited
liability company, ORNI 7 LLC, a Delaware limited liability company, OrMammoth,
Inc., a Delaware corporation, ▇▇▇▇▇ Power Partners, a Nevada general
partnership, Steamboat Development Corp., a Utah corporation, and Steamboat
Geothermal LLC, a Delaware limited liability company (collectively with the
Obligor, the "Subsidiary Guarantors"), have entered into the Indenture, dated as
of February 13, 2004 (the "Indenture"), pursuant to which the Note Issuer issued
the 8.25% Senior Secured Notes (collectively, the "Notes"), and Union Bank of
California, N.A. was appointed the Trustee on behalf of the holders of the Notes
(collectively, the "Noteholders").
B. The date hereof is the Ormesa Support Date (as defined in the
Indenture) and pursuant to Section 4.38 of the Indenture Obligor is required to
provide a lien on substantially all of its property in favor of the Collateral
Agent.
C. Obligor will derive substantial direct and indirect benefit from the
Notes.
NOW, THEREFORE, in consideration of the foregoing premises and for
other good and valuable consideration, the receipt and adequacy of which are
hereby acknowledged, Obligor hereby agrees with Collateral Agent as follows:
ARTICLE I
DEFINITIONS
Section 1.01. Certain Defined Terms.
(a) Each capitalized term used and not otherwise defined
herein shall have the meaning assigned to such term (whether directly
or by reference to another agreement or document) in Article I of the
Indenture. The Rules of Construction set forth in Section 1.04 of the
Indenture are hereby incorporated by reference as if fully set forth
herein.
(b) In addition to the terms defined in the Indenture, the
preamble and the recitals, the following terms shall have the following
respective meanings:
"Account" has the meaning assigned to the term "account" in the Uniform
Commercial Code.
"Bank" has the meaning assigned to the term "bank" in the Uniform
Commercial Code.
"Capital Stock" of any Person shall mean any and all shares, interests,
rights to purchase, warrants, options, participations or other equivalents of or
interest in (however designated) the common or preferred equity or equity or
preference share capital of such Person, including, without limitation,
partnership interests and limited liability company membership interests.
"Certificated Security" has the meaning assigned to the term
"certificated security" in the Uniform Commercial Code.
"Chattel Paper" has the meaning assigned to the term "chattel paper" in
the Uniform Commercial Code.
"Collateral" has the meaning assigned to that term in Section 2.01.
"Collateral Accounts" has the meaning assigned to that term in the
Depositary Agreement.
"Commercial Tort Claim" has the meaning assigned to the term
"commercial tort claim" in the Uniform Commercial Code.
"Control" with respect to Deposit Accounts, Investment Property,
Electronic Chattel Paper or Letter-of-Credit Rights, means "control" as such
term is used with respect to such types of Collateral in the Uniform Commercial
Code.
"Copyright Collateral" shall mean all Copyrights, whether now owned or
hereafter acquired by Obligor.
"Copyrights" shall mean, collectively, (a) all copyrights, copyright
registrations and applications for copyright registrations, (b) all renewals and
extensions of all copyrights, copyright registrations and applications for
copyright registration and (c) all rights, now existing or hereafter coming into
existence, (i) to all income, royalties, damages and other payments (including
in respect of all past, present or future infringements) now or hereafter due or
payable under or with respect to any of the foregoing, (ii) to ▇▇▇ for all past,
present and future infringements with respect to any of the foregoing and (iii)
otherwise accruing under or pertaining to any of the foregoing throughout the
world.
"Deposit Account" has the meaning assigned to the term "deposit
account" in the Uniform Commercial Code.
"Discharge Date" shall mean the date when the outstanding principal of
the notes and other amounts payable to the Noteholders under the Indenture have
been paid in full.
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"Document" has the meaning assigned to the term "document" in the
Uniform Commercial Code.
"Electronic Chattel Paper" has the meaning assigned to the term
"electronic chattel paper" in the Uniform Commercial Code.
"Equipment" has the meaning assigned to the term "equipment" in the
Uniform Commercial Code.
"Fixtures" has the meaning assigned to the term "fixtures" in the
Uniform Commercial Code.
"General Intangibles" has the meaning assigned to the term "general
intangibles" in the Uniform Commercial Code.
"Goods" has the meaning assigned to the term "goods" in the Uniform
Commercial Code.
"Instrument" has the meaning assigned to the term "instrument" in the
Uniform Commercial Code.
"Intellectual Property" shall mean all Copyright Collateral, all Patent
Collateral and all Trademark Collateral, together with (a) all inventions,
processes, production methods, proprietary information, know how and trade
secrets; (b) all licenses or user or other agreements granted to Obligor with
respect to any of the foregoing, in each case whether now or hereafter owned or
used, (c) all information, customer lists, identification of suppliers, data,
plans, blueprints, specifications, designs, drawings, recorded knowledge,
surveys, engineering reports, test reports, manuals, materials standards,
processing standards, performance standards, catalogs, computer and automatic
machinery software and programs; (d) all field repair data, sales data and other
information relating to sales or service of products now or hereafter
manufactured; (e) all accounting information and all media in which or on which
any information or knowledge or data or records may be recorded or stored and
all computer programs used for the compilation or printout of such information,
knowledge, records or data; (f) all Governmental Approvals now held or hereafter
obtained by Obligor in respect of any of the foregoing; and (g) all causes of
action, claims and warranties now owned or hereafter acquired by Obligor in
respect of any of the foregoing. It is understood that Intellectual Property
shall include all of the foregoing owned or acquired by Obligor on a worldwide
basis.
"Inventory" has the meaning assigned to the term "inventory" in the
Uniform Commercial Code.
"Investment Property" has the meaning assigned to the term "investment
property" in the Uniform Commercial Code.
"Letter-of-Credit Right" has the meaning assigned to the term
"letter-of-credit right" in the Uniform Commercial Code.
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"Motor Vehicles" shall mean motor vehicles, tractors, trailers and
other like property, whether or not the title to any such property is governed
by a certificate of title or ownership.
"Ownership Collateral" has the meaning assigned to that term in Section
2.01(a)(iii).
"Patent Collateral" shall mean all Patents, whether now owned or
hereafter acquired by Obligor.
"Patents" shall mean, collectively, (a) all patents and patent
applications, (b) all reissues, divisions, continuations, renewals, extensions
and continuations-in-part of all patents or patent applications and (c) all
rights, now existing or hereafter coming into existence, (i) to all income,
royalties, damages, and other payments (including in respect of all past,
present and future infringements) now or hereafter due or payable under or with
respect to any of the foregoing, (ii) to ▇▇▇ for all past, present and future
infringements with respect to any of the foregoing and (iii) otherwise accruing
under or pertaining to any of the foregoing throughout the world, including all
inventions and improvements described or discussed in all such patents and
patent applications.
"Payment Intangible" has the meaning assigned to the term "payment
intangible" in the Uniform Commercial Code.
"Pledged Ownership Interests" has the meaning assigned to that term in
Section 2.0l(a)(i).
"Proceeds" has the meaning assigned to the term "proceeds" in the
Uniform Commercial Code.
"Secured Obligations" shall mean any and all indebtedness, liabilities,
and other obligations of the Note Issuer, Obligor and the Subsidiary Guarantors
(including, but not limited to, all such obligations in respect of principal,
interest (including post-petition interest), fees, indemnities, costs and other
expenses, whether due after acceleration or otherwise and whether incurred
before or after a bankruptcy of Obligor), of whatever nature and however
evidenced, owed to the Secured Parties under or pursuant to the Indenture and
each other Transaction Document, in each case, direct or indirect, primary or
secondary, fixed or contingent, now or hereafter arising out of or relating to
any such document.
"Security" has the meaning assigned to the term "security" in the
Uniform Commercial Code.
"Security Entitlement" has the meaning assigned to the term "security
entitlement" in the Uniform Commercial Code.
"Securities Intermediary" has the meaning assigned to the term
"securities intermediary" in the Uniform Commercial Code.
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"Trademark Collateral" shall mean all Trademarks, whether now owned or
hereafter acquired by Obligor. Notwithstanding the foregoing, Trademark
Collateral shall not include any Trademark which would be rendered invalid,
abandoned, void or unenforceable by reason of its being included as part of the
Trademark Collateral.
"Trademarks" shall mean, collectively, (a) all trade names, trademarks
and service marks, logos, trademark and service ▇▇▇▇ registrations and
applications for trademark and service ▇▇▇▇ registrations, (b) all renewals and
extensions of any of the foregoing and (c) all rights, now existing or hereafter
coming into existence, (i) to all income, royalties, damages and other payments
(including in respect of all past, present and future infringements) now or
hereafter due or payable under or with respect to any of the foregoing, (ii) to
▇▇▇ for all past, present and future infringements with respect to any of the
foregoing and (iii) otherwise accruing under or pertaining to any of the
foregoing throughout the world, together, in each case, with the product lines
and goodwill of the business connected with the use of, or otherwise symbolized
by, each such trade name, trademark and service ▇▇▇▇.
"Uniform Commercial Code" shall mean the Uniform Commercial Code as the
same may, from time to time, be in effect in the State of New York; provided,
however, in the event that, by reason of mandatory provisions of law, any or all
of the attachment, perfection or priority of the security interest in any
Collateral (as hereinafter defined) is governed by the Uniform Commercial Code
as in effect in a jurisdiction other than the State of New York, the term "UCC"
shall mean the Uniform Commercial Code as in effect in such other jurisdiction
for purposes of the provisions hereof relating to such attachment, perfection or
priority and for purposes of definitions related to such provisions.
ARTICLE II
THE COLLATERAL
Section 2.01. Grant. As collateral security for the prompt payment in
full when due (whether at stated maturity, upon acceleration, on any optional or
mandatory prepayment date or otherwise) and performance of the Secured
Obligations, Obligor hereby pledges and grants to the Collateral Agent, for the
benefit of the Secured Parties, and subject to the rules and regulations of the
Bureau of Land Management, as applicable with respect to certain Geothermal
Resource Leases to which Obligor is a party, a security interest in all of
Obligor's right, title and interest in and to (subject to any Permitted Liens)
the following property, whether now owned or in the future acquired by Obligor
and whether now existing or in the future coming into existence (all of the
property, assets and revenues described in this Section 2.01 being collectively,
the "Collateral"):
(a) (i) all of the Capital Stock in any Subsidiary identified
in Annex 5 now or hereafter owned by Obligor, in each case together
with all certificates (if any) evidencing the same (collectively, the
"Pledged Ownership Interests");
(ii) all shares, partnership interests, membership
interests, Securities, moneys or property representing a
dividend on any of the Pledged Ownership Interests, or
representing a distribution or return of capital upon or in
respect of the Pledged Ownership Interests, or resulting from
a split-up, revision,
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reclassification or other like change of the Pledged Ownership
Interests or otherwise received in exchange therefore, and any
subscription warrants, rights or options issued to the holders
of, or otherwise in respect of, the Pledged Ownership
Interests;
(iii) without affecting the obligations of Obligor
under any provision prohibiting that action under any
Transaction Document, in the event of any consolidation or
merger in which any Subsidiary Guarantor is not the surviving
Person, all ownership interests of any class or character in
the successor Person (unless that successor Person is Obligor
itself) formed by or resulting from that consolidation or
merger (collectively, and together with the property described
in clauses (i) and (ii) above, the "Ownership Collateral");
(b) all Accounts;
(c) all Deposit Accounts;
(d) all Documents;
(e) all Chattel Paper, including Electronic Chattel Paper;
(f) all Instruments (including each Instrument evidenced by an
intercompany note listed in Annex 6);
(g) all Equipment;
(h) all Fixtures;
(i) all Inventory;
(j) all Goods not covered by the preceding clauses of this
Section 2.01;
(k) all Letter-of-Credit Rights;
(l) all Intellectual Property;
(m) all Investment Property;
(n) all Commercial Tort Claims arising out of, relating to or
in connection with all or any part of the Inventory, Equipment or
Documents of Obligor;
(o) all Payment Intangibles and Software not covered by the
preceding clauses of this Section 2.01;
(p) to the extent assignable, all General Intangibles not
covered by the preceding clauses of this Section 2.01;
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(q) all other tangible and intangible property of Obligor,
including the assets comprising the Projects, including all rights of
access to and inspection and use of all books, correspondence, credit
files, records, invoices, tapes, cards, computer runs and other papers
and documents in the possession or under the control of Obligor or any
computer bureau or service company from time to time acting for
Obligor;
(r) all Collateral Accounts including any sub-accounts within
such Collateral Accounts;
(s) all Project Documents to which Obligor is a party
(including the agreements and documents specified on the attached Annex
2) and, to the extent assignable, all other contracts, agreements,
leases and other similar instruments related to any Project and all
amounts payable to Obligor under any Project Documents;
(t) all Governmental Approvals required or obtained in
connection with the development and/or operation of any Project and/or
in connection with any transaction contemplated by the Indenture
(including the Governmental Approvals listed in Annex 3);
(u) the insurance policies maintained or required to be
maintained by Obligor or any other Person (to the extent of Obligor's
right, title and interest therein) under the Transaction Documents,
including any such policies insuring against loss of revenues by reason
of interruption of the operation of the applicable Project and all loss
proceeds and other amounts payable to Obligor thereunder; and
(v) all Proceeds and products in whatever form of all or any
part of the other Collateral, including all rents, profits, income and
benefits, substitutions and replacements of and to any of the
Collateral and all proceeds of insurance and all condemnation awards
and all other compensation for any event of loss with respect to all or
any part of the other Collateral (together with all rights to recover
and proceed with respect to the same), and all accessions to,
substitutions for and replacements of all or any part of the other
Collateral.
IT BEING UNDERSTOOD, HOWEVER, that (A) in the case of any of the foregoing that
consists of general or limited partnership interests in a general or limited
partnership, the security interest hereunder shall be deemed to be created only
to the maximum extent permitted under the applicable organizational instrument
pursuant to which such partnership is formed and (B) in no event shall the
security interest granted under this Section 2.01 attach to any lease, license,
contract, property rights, agreement or Government Approval to which any Obligor
is a party or any other part of the Collateral (or to any of its rights or
interests thereunder) if the grant of such security interest would constitute or
result in either (i) the abandonment, voiding, invalidation or unenforceability
of any right, title or interest of any Obligor therein or (ii) in a breach or
termination pursuant to the terms of, or a default under, any such lease,
license, contract, property rights, agreement or Government Approval (other
than, to the extent that any such term would be rendered ineffective pursuant to
Sections 9-406, 9-407, 9-408 or 9-409 of the Uniform Commercial Code).
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Notwithstanding the foregoing, Collateral shall not include all Capital Stock of
any Subsidiary of Obligor other than the Pledged Ownership Interests. To the
extent that Obligor is permitted under Section 3.8 of the Depositary Agreement
to receive Restricted Payments, upon receipt by Obligor of such disbursements
made pursuant to Section 3.8 of the Depositary Agreement, such cash or other
property distributed to Obligor shall automatically be released, without any
further action by the Collateral Agent, from any security interest that may have
been created in such cash or other property pursuant to the foregoing grant
clause.
Section 2.02. Obligations Unconditional. The obligations of Obligor in
this Agreement shall be continuing, irrevocable, primary, absolute and
unconditional irrespective of the value, genuineness, validity, regularity or
enforceability of any Financing Document or any other agreement or instrument
referred to therein, or any substitution, release or exchange of any guarantee
of or security for any of the Secured Obligations, and, to the fullest extent
permitted by applicable law, irrespective of any other circumstance whatsoever
that might otherwise constitute a legal or equitable discharge or defense of a
surety or guarantor, it being the intent of this Section 2.02 that the
obligations of Obligor hereunder shall be absolute and unconditional under any
and all circumstances. Without limiting the generality of the foregoing, it is
agreed that the occurrence of any one or more of the following shall not alter
or impair the liability of Obligor hereunder, which shall remain absolute and
unconditional as described above without regard to and not be released,
discharged or in any way affected (whether in full or in part) by:
(a) at any time or from time to time, without notice to
Obligor, the time for any performance of or compliance with any of the
Secured Obligations shall be extended, or such performance or
compliance shall be waived;
(b) any Financing Document shall be amended or modified or
there shall be a departure from, or waiver of, any of the terms of any
Financing Document;
(c) the maturity of any of the Secured Obligations shall be
accelerated, or any of the Secured Obligations shall be modified,
supplemented or amended in any respect, or any right under any
Financing Document or any other agreement or instrument referred to
therein shall be waived or any guarantee of any of the Secured
Obligations or any security therefore shall be released or exchanged in
whole or in part or otherwise dealt with;
(d) any lien granted to, or in favor of, the Collateral Agent
as security for any of the Secured Obligations shall fail to be
perfected; or
(e) any proceeding, voluntary or involuntary, involving the
bankruptcy, insolvency, receivership, reorganization, liquidation or
arrangement of Obligor or the Note Issuer or by any defense which
Obligor or the Note Issuer may have by reason of the order, decree or
decision of any court or administrative body resulting from any such
proceeding. Obligor acknowledges and agrees that the Secured
Obligations include interest on the Secured Obligations at the
applicable rate therefore under the Financing Documents which accrues
after the commencement of any such proceeding (or, if interest on any
portion of the Secured Obligations ceases to accrue by operation of law
by reason of the commencement of said proceeding, such Secured
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Obligations includes the interest which would have accrued on such
portion of the Secured Obligations if said proceedings had not been
commenced), since it is the intention of the parties that the amount of
the Secured Obligations secured pursuant to this Agreement should be
determined without regard to any rule of law or order which may relieve
Obligor or the Note Issuer of any portion of the Secured Obligations.
Obligor will permit any trustee in bankruptcy, receiver, debtor in
possession, assignee for the benefit of creditors or similar person to
pay the Collateral Agent, or allow the claim of the Collateral Agent in
respect of, interest which would have accrued after the date on which
such proceeding is commenced. Notwithstanding the above, so long as any
Secured Obligation shall remain outstanding, Obligor shall not, without
the prior written consent of the Collateral Agent, commence or join
with any other person in commencing any bankruptcy, reorganization or
insolvency proceedings of or against the Note Issuer.
Section 2.03. Waiver.
(a) Obligor hereby expressly waives promptness, diligence,
presentment, demand for payment or performance and protest; filing of
claims with any court; any proceeding to enforce any provision of the
Financing Documents; notice of acceptance of and reliance on this
Agreement by the Secured Parties, notice of the creation of any Secured
Obligations of the Note Issuer, and (except with respect to any notice
required by the Transaction Documents) any other notice whatsoever; any
requirement that the Collateral Agent exhausts any right, power or
remedy or proceed or take any other action against Obligor or the Note
Issuer under any Financing Document to which it is a party or any lien
or encumbrance on, or any claim of payment against, any property of
Obligor or the Note Issuer or any other agreement or instrument
referred to therein, or any other Person under any guarantee of, or
lien securing, or claim for payment of, any of the Secured Obligations;
any right to require a proceeding by the Collateral Agent first against
the Note Issuer whether to marshal any assets or to exhaust any right
or take any action against the Note Issuer or any other Person or any
collateral or otherwise, any diligence in collection or protection for
realization upon any Secured Obligation; any obligation hereunder or
any collateral security for any of the foregoing; any right of protest,
presentment, notice or demand whatsoever, and any claims of waiver,
release, surrender, alteration or compromise and all defenses,
set-off's counterclaims, recoupments, reductions, limitations,
impairments or terminations, whether arising hereunder or otherwise.
Obligor further waives (i) any requirement that any other Person be
joined as a party to any proceeding for the enforcement by the
Collateral Agent of any Secured Obligation and (ii) the filing of
claims by the Collateral Agent in the event of the receivership or
bankruptcy of the Note Issuer. The Collateral Agent shall have the
right to bring suit directly against Obligor with respect to the
obligations owed to the Collateral Agent hereunder either prior to or
concurrently with any lawsuit against, or without bringing any suit
against Obligor, the Note Issuer or any other Person.
(b) The enforceability and effectiveness of this Agreement and
the liability of Obligor, and the rights, remedies, powers and
privileges of the Collateral Agent, under this Agreement shall not be
affected, limited, reduced, discharged or
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terminated, and Obligor hereby expressly waives to the fullest extent
permitted by law any defense now or in the future arising, by reason
of:
(i) the illegality, invalidity or unenforceability of
all or any part of the Secured Obligations, any Financing
Document or any agreement, security document, guarantee or
other instrument relating to all or any part of the Secured
Obligations;
(ii) any disability or other defense with respect to
all of any part of the Secured Obligations of Obligor,
including the effect of any statute of limitations that may
bar the enforcement of all or any part of the Secured
Obligations;
(iii) the illegality, invalidity or unenforceability
of any security or guarantee for all or any part of the
Secured Obligations or the lack of perfection or continuing
perfection or failure of the priority of any lien or
encumbrance on any collateral for all or any part of the
Secured Obligations;
(iv) the cessation, for any cause whatsoever, of the
liability of any Person that is a guarantor of all or any part
of the Secured Obligations (other than, subject to Section
2.05, by reason of the full payment and performance of all
Secured Obligations);
(v) except as required by Section 5.01 hereof, any
failure of the Collateral Agent to give notice of sale or
other disposition of any collateral (including any notice of
any judicial or non-judicial foreclosure or sale of any
interest in real property serving as collateral for all or any
part of the Secured Obligations) for all or any part of the
Secured Obligations to the Note Issuer, Obligor or any other
Person or any defect in, or any failure by the Note Issuer,
Obligor or any other Person to receive, any notice that may be
given in connection with any sale or disposition of any
collateral;
(vi) any failure of the Collateral Agent to comply
with applicable laws in connection with the sale or other
disposition of any collateral for all or any part of the
Secured Obligations;
(vii) any judicial or non-judicial foreclosure or
sale of, or other election of remedies with respect to, any
interest in real property or other Collateral serving as
security for all or any part of the Secured Obligations, even
though such foreclosure, sale or election of remedies may
impair the subrogation rights of either the Note Issuer or
Obligor or may preclude the Note Issuer or Obligor from
obtaining reimbursement, contribution, indemnification or
other recovery from the other Subsidiary Guarantors, the Note
Issuer or any other Person and even though the Note Issuer or
Obligor may not, as a result of such foreclosure, sale or
election of remedies, be liable for any deficiency;
(viii) any act or omission of the Collateral Agent or
any other Person (other than payment of the Secured
Obligations) that directly or indirectly
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results in or aids the discharge or release of Obligor or any
part of the Secured Obligations or any security or guarantee
(including any letter of credit) for all or any part of the
Secured Obligations by operation of law or otherwise;
(ix) any law which provides that the obligation of a
surety or Obligor must neither be larger in amount nor in
other respects more burdensome than that of the principal or
which reduces a surety's or Obligor's obligation in proportion
to the principal obligation;
(x) any counterclaim, set-off or other claim which
Obligor has or alleges to have with respect to all or any part
of the Secured Obligations;
(xi) any failure of the Collateral Agent to file or
enforce a claim in any bankruptcy or other proceeding with
respect to any Person;
(xii) the election by the Collateral Agent, in any
bankruptcy proceeding of any Person, of the application or
non-application of Section 1111(b)(2) of the United States
Bankruptcy Code;
(xiii) any extension of credit or the grant of any
lien or encumbrance under ▇▇▇▇▇▇▇ ▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
Bankruptcy Code;
(xiv) any use of cash collateral under Section 363 of
the United States Bankruptcy Code;
(xv) any agreement or stipulation with respect to the
provision of adequate protection in any bankruptcy proceeding
of any Person;
(xvi) the avoidance of any lien or encumbrance in
favor of the Collateral Agent for any reason;
(xvii) any bankruptcy, insolvency, reorganization,
arrangement, readjustment of debt, liquidation or dissolution
proceeding commenced by or against any Person, including any
discharge of, or bar or stay against collecting, all or any
part of the Secured Obligations (or any interest on all or any
part of the Secured Obligations) in or as a result of any such
proceeding; or
(xviii) any action taken by the Collateral Agent that
is authorized by this Section 2.03(b) or otherwise in this
Agreement or by any other provision of any Financing Document
or any omission to take any such action.
Section 2.04. Reinstatement. The obligations of Obligor under this
Article II and the security interest in, and the lien on, the Collateral shall
be automatically reinstated if and to the extent that for any reason any payment
by or on behalf of Obligor in respect of the Secured Obligations is rescinded or
must be otherwise restored by any holder of any of the Secured Obligations or if
and to the extent that for any reason any payment by or on behalf of the Note
Issuer in respect of its obligations under the Indenture and the Senior Secured
Notes is rescinded or must be otherwise restored by any Noteholder, whether as a
result of any proceedings in
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bankruptcy or reorganization or otherwise. Obligor agrees that it will indemnify
the Collateral Agent on demand for all reasonable and reasonably documented
costs and expenses (including reasonable and reasonably documented fees of
counsel) incurred by the Collateral Agent in connection with such rescission or
restoration, including any such costs and expenses incurred in defending against
any claim alleging that such payment constituted a preference, fraudulent
transfer or similar payment under any bankruptcy, insolvency or similar law.
Section 2.05. Subrogation. Obligor shall be subrogated to all rights of
the Collateral Agent and the Secured Parties in respect of any amounts paid by
Obligor pursuant to the terms of this Agreement; provided, however, that Obligor
hereby waives all rights of subrogation or contribution, whether arising by
contract or operation of law (including, without limitation, any such right
arising under any bankruptcy, insolvency or other similar law) or otherwise by
reason of any payment by it pursuant to the provisions of this Article II. If
any amount shall be paid to Obligor on account of such subrogation rights at any
time prior to the payment, discharge or performance in full of the Secured
Obligations, such amount shall be held in trust for the benefit of the
Collateral Agent (if applicable) and shall forthwith be paid to the Collateral
Agent to be credited and applied upon and against the Secured Obligations, to
the extent then matured, in accordance with the terms of the relevant Financing
Documents or, to the extent not then matured or existing, be held by the
Collateral Agent as collateral security for such Secured Obligations.
Section 2.06. Remedies. Obligor agrees that, as between Obligor and the
Collateral Agent, any obligations of the Note Issuer to the Secured Parties
under any of the Financing Documents to which it is a party may be declared to
be forthwith due and payable notwithstanding any stay, injunction or other
prohibition (except any applicable prohibitions set forth in the Transaction
Documents) preventing such declaration (or such obligations from becoming
automatically due and payable) as against the Note Issuer and that, in the event
of such declaration (or such obligations being deemed to have become
automatically due and payable), such obligations shall forthwith be deemed to
have become due and payable for purposes of this Agreement. For the avoidance of
doubt, it is understood and agreed that any amount paid pursuant to the
immediately preceding sentence is intended to be applied to the payment or
prepayment (as the case may be) of the related obligations of the Note Issuer.
Each of the obligations of Obligor under this Agreement is separate and
independent of each other obligation of Obligor hereunder and separate and
independent of the Secured Obligations, and Obligor agrees that a separate
action or actions may be brought and prosecuted by the Collateral Agent against
Obligor to enforce this Agreement, irrespective of whether any action is brought
by the Collateral Agent against the Note Issuer under any relevant Financing
Document or whether the Note Issuer is joined in any such action or actions.
Section 2.07. Continuing Obligation. The obligation provided in this
Article II is a continuing obligation and shall apply to all Secured Obligations
whenever arising.
Section 2.08. [Intentionally Omitted].
Section 2.09. Intellectual Property. For the purpose of enabling the
Collateral Agent to exercise its rights, remedies, powers and privileges under
Section 5.01 at that time or times as the Collateral Agent is lawfully entitled
to exercise those rights, remedies, powers and
13
privileges, and for no other purpose, Obligor hereby grants to the Collateral
Agent, to the extent assignable or licensable, an irrevocable, non-exclusive
license (exercisable without payment of royalty or other compensation to
Obligor) to use, assign, license or sublicense any of the Intellectual Property
of Obligor, together with reasonable access to all media in which any of the
licensed items may be recorded or stored and to all computer programs used for
the compilation or printout of those items.
Section 2.10. Perfection. Obligor authorizes the Collateral Agent to
file such financing statements and continuation statements in such offices as
are or shall be necessary or as the Collateral Agent may determine to be
appropriate to create, perfect and establish the priority of the liens granted
by this Agreement in any and all of the Collateral, to preserve the validity,
perfection or priority of the liens granted by this Agreement in any and all of
the Collateral or to enable the Collateral Agent to exercise its remedies,
rights, powers and privileges under this Agreement. Concurrently with the
execution and delivery of this Agreement, Obligor shall (i) deliver to the
Collateral Agent any and all certificates for all Certificated Securities,
including those identified in Annex 5, duly endorsed in blank; (ii) with respect
to any part of the Ownership Collateral that constitutes an uncertificated
security Obligor shall cause any issuer thereof to register the Collateral Agent
as the registered owner of such security; (iii) deliver to the Collateral Agent
any and all Instruments, endorsed or accompanied by such instruments of
assignment and transfer in such form and substance as the Collateral Agent may
reasonably request; (iv) cooperate with the Collateral Agent in obtaining, and
take such other actions as are necessary or that the Collateral Agent may
reasonably request in order for them to obtain Control with respect to all
Deposit Accounts, Investment Property, Electronic Chattel Paper and
Letter-of-Credit Rights included in the Collateral, including (to the extent
reasonably requested by the Collateral Agent) (A) in the case of any Deposit
Account for which the Collateral Agent is not the Bank at which that Deposit
Account is maintained, using commercially reasonable efforts to cause the Bank
to enter into an agreement in such form as the Collateral Agent may in its
reasonable discretion accept and (B) in the case of any Security Entitlement,
using commercially reasonable efforts to cause the relevant Securities
Intermediary to enter into an agreement in such form as the Collateral Agent may
in its reasonable discretion accept; (v) cause the Collateral Agent (to the
extent requested by the Collateral Agent) to be listed as the lienholder on all
certificates of title or ownership relating to Motor Vehicles in the name of
Obligor and deliver to the Collateral Agent originals of all such certificates
of title or ownership for the Motor Vehicles together with the odometer
statements for each respective Motor Vehicle; (vi) cause the Collateral Agent to
be listed as the lienholder on any certificate of title or ownership for any
other Equipment covered by a certificate of title or ownership; and (vii) take
all such other actions, and authenticate or sign and file or record such other
records or instruments, as are necessary or as the Collateral Agent may
reasonably request to perfect and establish the priority of the liens granted by
this Agreement in any and all of the Collateral or to enable the Collateral
Agent to exercise its remedies, rights, powers and privileges under this
Agreement, including, without limitation, causing any or all of the Collateral
to be transferred of record into the name of the Collateral Agent as such (and
the Collateral Agent agrees that if any Collateral is transferred into its name,
the Collateral Agent will thereafter promptly give to Obligor copies of any
notices and communications received by it with respect to the Collateral pledged
by Obligor hereunder).
Section 2.11. Preservation and Protection of Security Interests.
Obligor shall:
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(a) upon the acquisition after the date of this Agreement by
Obligor of any Certificated Securities, Instruments, Deposit Accounts,
other Investment Property, Electronic Chattel Paper, Letter-of Credit
Rights, Motor Vehicles or other Equipment covered by a certificate of
title or ownership promptly (x) take such action with respect to that
Collateral as is specified for that type of Collateral in Section 2.10
and (y) take all such other actions, and authenticate or sign and file
or record such other records or instruments, as are necessary or as the
Collateral Agent may reasonably request to create, perfect and
establish the priority of the liens granted by this Agreement in any
and all the Collateral, to preserve the validity, perfection or
priority of the liens granted by this Agreement in any and all of the
Collateral or to enable the Collateral Agent to exercise its remedies,
rights, powers and privileges under this Agreement;
(b) upon Obligor's acquiring, or otherwise becoming entitled
to the benefits of, any Copyright (or copyrightable material), Patent
(or patentable invention), Trademark (or associated goodwill) or other
Intellectual Property or upon or prior to Obligor's filing, either
directly or through the Collateral Agent, any licensee or any other
designee, of any application with any governmental authority for any
Copyright, Patent, Trademark or other Intellectual Property, in each
case after the date of this Agreement, execute and deliver such
contracts, agreements and other instruments as the Collateral Agent may
reasonably request to create, perfect and establish the priority of the
liens granted by this Agreement in that and any related Intellectual
Property; and
(c) whether with respect to Collateral as of the date of this
Agreement or Collateral in which Obligor acquires rights in the future,
authorize, give, authenticate, execute, deliver, file or record any and
all financing statements, notices, contracts, agreements or other
records or instruments, obtain any and all Governmental Approvals, and
take all such other actions, as are necessary or as the Collateral
Agent may reasonably request to create, perfect and establish the
priority of the liens granted by this Agreement in any and all the
Collateral, to preserve the validity, perfection or priority of the
liens granted by this Agreement in any and all of the Collateral or to
enable the Collateral Agent to exercise and enforce its remedies,
rights, powers and privileges under this Agreement, including causing
any or all of the Ownership Collateral to be transferred of record into
the name of the Collateral Agent or its nominee (and the Collateral
Agent agrees that if any Security is transferred into its name or the
name of its nominee, the Collateral Agent shall thereafter promptly
give to Obligor copies of any notices and communications received by it
with respect to that Security); and
(d) furnish to the Collateral Agent from time to time
statements and schedules further identifying and describing the
Collateral pledged by hereunder and such other reports in connection
with the Collateral pledged by Obligor hereunder as the Collateral
Agent may reasonably request, all in reasonable detail.
Section 2.12. Attorney-in-Fact.
(a) Subject to Obligor's rights under Sections 2.13 through
2.16, Obligor hereby irrevocably constitutes and appoints the
Collateral Agent and any officer or agent thereof, with full power of
substitution, as its true and lawful attorney-in-fact
15
with full irrevocable power and authority in the place and stead of
Obligor and in the name of Obligor or in its own name, for the purpose
of carrying out the provisions of this Agreement upon the occurrence
and during the continuation of an Event of Default, to (x) take any
appropriate action and to execute any document or instrument that may
be necessary or desirable to accomplish the purposes of this Agreement,
(y) preserve the validity, perfection and priority of the liens granted
by this Agreement, and (z) exercise its rights, remedies, powers and
privileges under this Agreement. This appointment as attorney-in-fact
is irrevocable and coupled with an interest. Without limiting the
generality of the foregoing, Obligor hereby gives the Collateral Agent
the power and right, on behalf of Obligor, without notice to or assent
by Obligor, upon the occurrence and during the continuation of any
Event of Default (i) to ask, demand, collect, ▇▇▇ for, recover, receive
and give receipt and discharge for amounts due and to become due under
and in respect of all or any part of the Collateral, (ii) to, in the
name of Obligor or its own name, or otherwise, take possession of,
receive and indorse and collect any check, Account, Chattel Paper,
draft, note, acceptance or other Instrument for the payment of moneys
due under any Account or General Intangible, (iii) to file any claims
or take any action or proceeding that the Collateral Agent may deem
necessary or advisable for the collection of all or any part of the
Collateral, (iv) to execute, in connection with any sale or disposition
of the Collateral under Article V, any endorsements, assignments, bills
of sale or other instruments of conveyance or transfer with respect to
all or any part of the Collateral, (v) in the case of any Intellectual
Property, execute and deliver, and have recorded, any agreement,
instrument, document or paper as the Collateral Agent may request to
evidence the Collateral Agent's security interest in such Intellectual
Property and the goodwill and General Intangibles of Obligor relating
thereto or represented thereby, (vi) pay or discharge taxes and Liens
levied or placed on or threatened against the Collateral (other than
Permitted Liens), effect any repair or pay or discharge any insurance
called for by the terms of this Agreement (including all or any part of
the premiums therefor and the costs thereof), (vii) execute, in
connection with any sale provided for in Article V, any endorsement,
assignment or other instrument of conveyance or transfer with respect
to the collateral; and (viii) (A) direct any party liable for any
payment under any Collateral to make payment of any moneys due or to
become due thereunder directly to the Collateral Agent or as the
Collateral Agent shall direct, (B) ask or demand for, collect, and
receive payment of and receipt for, any moneys, claims and other
amounts due or to become due at any time in respect of or arising out
of any Collateral, (C) sign and indorse any invoice, freight or express
▇▇▇▇, ▇▇▇▇ of lading, storage or warehouse receipt, draft against
debtors, assignment, verification, notice and other document in
connection with any Collateral, (D) commence and prosecute any suit,
action or proceeding at law or in equity in any court of competent
jurisdiction to collect any Collateral and to enforce any other right
in respect of any Collateral, (E) defend any suit, action or proceeding
brought against Obligor with respect to any Collateral, (F) settle,
compromise or adjust any such suit, action or proceeding and, in
connection therewith, give such discharges or releases as the
Collateral Agent may deem appropriate, (G) assign any Copyright, Patent
or Trademark (along with the goodwill of the business to which any such
Trademark pertains) throughout the world for such term or terms, on
such conditions, and in such manner as the Collateral Agent shall in
its sole discretion determine, including the execution and filing of
any document necessary to effectuate or
16
record such assignment and (H) generally, sell, transfer, pledge and
make any agreement with respect to or otherwise deal with any
Collateral as fully and completely as though the Collateral Agent were
the absolute owner thereof for all purposes, and do, at the Collateral
Agent's option and Obligor's expense, at any time, or from time to
time, all acts and things that the Collateral Agent reasonably deems
necessary to protect, preserve or realize upon the Collateral and the
Collateral Agent's and the other Secured Parties' security interests
therein and to effect the intent of this Agreement, all as fully and
effectively as Obligor might do.
(b) Without limiting the rights and powers of the Collateral
Agent under Section 2.12(a), Obligor hereby appoints the Collateral
Agent as its attorney-in-fact, effective the date of this Agreement and
terminating upon the Discharge Date, for the purpose of, upon the
occurrence and during the continuation of an Event of Default, (i)
executing on behalf of Obligor title or ownership applications for
filing with appropriate state agencies to enable Motor Vehicles now
owned or in the future acquired by Obligor to be retitled and the
Collateral Agent to be listed as lien holder as to those Motor
Vehicles, (ii) filing such applications with such state agencies, and
(iii) executing such other documents and instruments on behalf of, and
taking such other action in the name of, Obligor as the Collateral
Agent may deem necessary or advisable to accomplish the purposes of
this Agreement (including the purpose of creating in favor of the
Collateral Agent a perfected lien on the Motor Vehicles and exercising
the rights, remedies, powers and privileges of the Collateral Agent
under Section 5.01). This appointment as attorney-in-fact is
irrevocable and coupled with an interest.
(c) Without limiting the rights and powers of the Collateral
Agent under Section 2.12(a), Obligor hereby appoints the Collateral
Agent as its attorney-in-fact, effective the date of this Agreement and
terminating upon the Discharge Date, at the Collateral Agent's option,
but without any obligation so to do, for the purpose of performing,
executing, and filing all such contracts, agreements and other
documents as are contemplated by Section 2.11(b). This appointment as
attorney-in-fact is irrevocable and coupled with an interest.
(d) The expenses of the Collateral Agent incurred in
connection with actions undertaken as provided in this Section 2.12,
together with interest thereon at a rate per annum equal to the rate
per annum at which interest would then be payable on past due Notes
under the Indenture, from the date of payment by the Collateral Agent
to the date reimbursed by Obligor, shall be payable by Obligor to the
Collateral Agent on demand and shall constitute Secured Obligations and
be secured by the Liens of the Collateral Documents.
(e) Obligor hereby ratifies all that said attorneys shall
lawfully do or cause to be done by virtue hereof. All powers,
authorizations and agencies contained in this Agreement are coupled
with an interest and are irrevocable until this Agreement is terminated
and the security interests created hereby are released.
Section 2.13. Special Provisions Relating to Securities.
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(a) So long as no Event of Default has occurred and is
continuing, Obligor shall have the right to exercise all voting,
consensual and other powers of ownership pertaining to all Ownership
Collateral for all purposes not inconsistent with the terms of any
Transaction Document, provided that Obligor shall not vote the
Ownership Collateral in any manner that is inconsistent with the terms
of any Transaction Document; and the Collateral Agent shall, at
Obligor's expense, execute and deliver to Obligor or cause to be
executed and delivered to Obligor all such proxies, powers of attorney,
dividend and other orders and other instruments, without recourse, as
Obligor may reasonably request for the purpose of enabling Obligor to
exercise the rights and powers that it is entitled to exercise pursuant
to this Section 2.13(a).
(b) So long as no Event of Default has occurred and is
continuing, Obligor shall be entitled to receive and retain any
dividends on all Ownership Collateral paid in cash.
(c) If any Event of Default has occurred and is continuing,
and whether or not the Collateral Agent exercises any available right
to declare any Secured Obligation due and payable or seeks or pursues
any other right, remedy, power or privilege available to it under
applicable law, this Agreement or any other Transaction Document, all
dividends and other distributions on all Ownership Collateral shall be
paid directly to an account designated by the Collateral Agent and
retained by it in such account as part of the Collateral, subject to
the terms of the Transaction Documents, and, if the Collateral Agent so
requests, Obligor shall execute and deliver to the Collateral Agent
appropriate additional dividend, distribution and other orders and
instruments to that end, provided that if the applicable Event of
Default is cured, any such dividend or distribution paid to the
Collateral Agent prior to that cure shall, upon request of Obligor
(except to the extent applied to the Secured Obligations), be returned
by the Collateral Agent to Obligor.
Section 2.14. Instruments. So long as no Event of Default has occurred
and is continuing, Obligor may retain for collection in the ordinary course of
business any Instruments obtained by it, and the Collateral Agent will, promptly
upon the request, and at the expense of, Obligor, make appropriate arrangements
for making any Instruments pledged by Obligor available to Obligor for purposes
of presentation, collection or renewal. Any such arrangement shall be effected,
to the extent deemed appropriate by the Collateral Agent, against a trust
receipt or like document.
Section 2.15. Use of Collateral. So long as no Event of Default has
occurred and is continuing, Obligor shall be entitled to use and possess the
Collateral, subject to the rights, remedies, powers and privileges of the
Collateral Agent under Articles II and V.
Section 2.16. Rights and Obligations.
(a) No reference in this Agreement to proceeds or to the sale
or other disposition of Collateral shall authorize Obligor to pledge,
sell or otherwise dispose of any Collateral except to the extent
otherwise expressly permitted by the terms of any
18
Transaction Document. The Collateral Agent shall not be required to
take steps necessary to preserve any rights against prior parties to
any part of the Collateral.
(b) Obligor shall remain liable to perform its duties and
obligations under the contracts and agreements included in the
Collateral in accordance with their respective terms to the same extent
as if this Agreement had not been executed and delivered. The exercise
by the Collateral Agent of any right, remedy, power or privilege in
respect of this Agreement shall not release Obligor from any of its
duties and obligations under those contracts and agreements. The
Collateral Agent shall not have any duty, obligation or liability under
those contracts and agreements or in respect to any Governmental
Approval included in the Collateral by reason of this Agreement or any
other Transaction Document, nor shall the Collateral Agent be obligated
to perform any of the duties or obligations of Obligor under any such
contract or agreement or any such Governmental Approval or to take any
action to collect or enforce any claim (for payment) under any such
contract or agreement or Governmental Approval.
(c) No lien granted by this Agreement in Obligor's right,
title and interest in any contract, agreement or Governmental Approval
shall be deemed to be a consent by the Collateral Agent to any such
contract, agreement or Governmental Approval.
Section 2.17. Release of Collateral. Upon the Discharge Date, or the
date of any sale or conveyance of a motor vehicle or any other portion of the
Collateral for which Obligor is entitled, pursuant to the terms and conditions
of the Indenture, to sell or otherwise convey free and clear of the Liens of the
Transaction Documents, and upon the request of, and at the expense of, Obligor,
the Collateral Agent will execute and deliver to Obligor such instruments as
Obligor reasonably requests to remove the notation of the Collateral Agent as
lienholder on any certificate of title for any Motor Vehicle or any other
certificate of title or other financing statement with respect to such
applicable portion of the Collateral; provided that in connection with such sale
or conveyance, any such instruments shall be delivered, and the release shall be
effective, only upon receipt by the Collateral Agent of a certificate from
Obligor stating that the Motor Vehicle or other such portion of the Collateral
the lien on which is to be released is to be sold or conveyed in accordance with
the terms and conditions of the Indenture.
Section 2.18. Commercial Tort Claims. Obligor agrees that, if it shall
acquire any interest in any Commercial Tort Claim (whether from another Person
or because such Commercial Tort Claim shall have come into existence), (i)
Obligor shall, immediately upon such acquisition, deliver to the Collateral
Agent, in each case in form and substance satisfactory to the Collateral Agent,
a notice of the existence and nature of such Commercial Tort Claim and deliver a
supplement to Annex 4 containing a specific description of such Commercial Tort
Claim, certified by Obligor as true, correct and complete, (ii) the provisions
of Section 2.01 shall apply to such Commercial Tort Claim (and Obligor
authorizes the Collateral Agent to supplement such annex with a description of
such Commercial Tort Claim if Obligor fails to deliver the supplement described
in clause (i)), and (iii) Obligor shall execute and deliver to the Collateral
Agent, in each case in form and substance satisfactory to the Collateral Agent,
any certificate, agreement and other document, and take all other action, deemed
by the Collateral Agent to be reasonably necessary or appropriate for the
Collateral Agent to obtain, on behalf of
19
the Secured Parties, a first-priority, perfected security interest in all such
Commercial Tort Claims. Any supplement to Annex 4 delivered pursuant to this
Section 2.18 shall become part of such Annex 4 for all purposes hereunder.
Section 2.19. Termination. Upon the occurrence of the Discharge Date,
all liens granted hereunder shall be deemed terminated, and the Collateral Agent
shall forthwith cause to be assigned, transferred and delivered, against receipt
but without any recourse, warranty or representation whatsoever, any remaining
Collateral and money received in respect of the Collateral, to or on the order
of Obligor. The Collateral Agent shall also execute and deliver to Obligor, at
Obligor's expense, upon the occurrence of the Discharge Date such Uniform
Commercial Code termination statements and other documentation as shall be
reasonably requested by Obligor to effect the termination and release of the
liens created under this Agreement. The security interest created hereby and the
other liens created by the Transaction Documents shall also be released with
respect to any portion of the Collateral that is sold, transferred or otherwise
disposed of in compliance with the terms and conditions of the Transaction
Documents.
ARTICLE III
REPRESENTATIONS
As of the date hereof Obligor represents and warrants to the Collateral
Agent as follows:
Section 3.01. Organization; Validity.
(a) Annex 1 correctly sets forth Obligor's full and correct
legal name, type of organization, jurisdiction of organization,
organizational identification number (if applicable), chief executive
office and mailing address as of the date of this Agreement.
(b) Obligor has not (i) changed its location (as defined in
Section 9-307 of the Uniform Commercial Code), (ii) previously changed
its name except as set forth on Annex 1 and (iii) previously become a
"new debtor" (as defined in the Uniform Commercial Code) with respect
to a currently effective security agreement entered into by another
Person except as set forth on Annex 1.
Section 3.02. Title. Obligor is the sole beneficial owner of the
Collateral in which it purports to ▇▇▇▇▇ ▇ ▇▇▇▇ pursuant to this Agreement, and
the Collateral is free and clear of all liens (subject to any Permitted Liens)
and the lien granted by this Agreement has attached and constitutes a perfected
security interest in all of the Collateral prior to all other liens and
encumbrances.
Section 3.03. Pledged Ownership Interests.
(a) The Pledged Ownership Interests identified in Annex 5 are
duly authorized, validly existing, fully paid and non-assessable, and
none of the Pledged Ownership Interests is subject to any contractual
restriction, or any restriction under the organizational documents of
any Subsidiary Guarantor, upon the transfer of such Pledged
20
Ownership Interests (except for any such restriction contained in any
Transaction Document). Such Pledged Ownership Interests exist in a
certificated form.
(b) The Pledged Ownership Interests identified in Annex 5
constitute all of the issued and outstanding membership interests or
other interests of any class or character in any Subsidiary Guarantor
owned by Obligor (whether or not registered in the name of Obligor),
and Annex 5 correctly identifies the issuer of such Pledged Ownership
Interests and the respective number (and registered owners) of the
interests identified in Annex 5.
(c) No Person other than Obligor is the registered owner of
the Pledged Ownership Interests.
Section 3.04. Intercompany Notes. The intercompany notes identified in
Annex 6 constitute all of the outstanding intercompany notes payable to Obligor.
Section 3.05. Confirmation. Obligor hereby makes the representations
and warranties specified to be applicable to Obligor in Section 2 of the Note
Purchase Agreement, and each such representation and warranty is hereby
incorporated by reference in this Agreement, mutatis mutandis, as a direct
representation and warranty of Obligor with respect to itself.
ARTICLE IV
COVENANTS
Until the Discharge Date, Obligor agrees that, from time to time upon
the written request of the Collateral Agent, Obligor will execute and deliver
such further documents and do such other acts and things as the Collateral Agent
may reasonably request in order fully to effect the purposes of this Agreement.
Obligor agrees to observe and perform during the period commencing on the date
hereof and ending on the Discharge Date each of the covenants specified to be
applicable to Obligor in Article IV of the Indenture, and each such covenant and
agreement is hereby incorporated by reference in this Agreement, mutatis
mutandis, as a direct obligation, covenant and agreement of Obligor with respect
to itself.
ARTICLE V
REMEDIES
Section 5.01. Events of Default, Etc. Without limiting the rights,
powers and privileges of the Collateral Agent under Article II, if any Event of
Default shall have occurred and be continuing:
(a) The Collateral Agent in its discretion may require Obligor
to, and Obligor shall, assemble the Collateral owned by it at such
place or places, reasonably convenient to both the Collateral Agent and
Obligor, designated in the Collateral Agent's request;
(b) The Collateral Agent in its discretion may make any
reasonable compromise or settlement it deems desirable with respect to
any of the Collateral and
21
may extend the time of payment, arrange for payment in installments, or
otherwise modify the terms of, all or any part of the Collateral;
(c) The Collateral Agent in its discretion may, in its name or
in the name of Obligor or otherwise, demand, ▇▇▇ for, collect or
receive any money or property at any time payable or receivable on
account of or in exchange for all or any part of the Collateral, but
shall be under no obligation to do so;
(d) The Collateral Agent in its discretion may, upon ten (10)
Business Days' prior written notice to Obligor of the time and place,
with respect to all or any part of the Collateral which shall then be
or shall thereafter come into the possession, custody or control of the
Collateral Agent or any of its agents, sell, lease or otherwise dispose
of all or any part of such Collateral, at such place or places as the
Collateral Agent deems best, for cash, for credit or for future
delivery (without thereby assuming any credit risk) and at public or
private sale, without demand of performance or notice of intention to
effect any such disposition or of time or place of any such sale
(except such notice as is required above or by applicable statute and
cannot be waived), and the Collateral Agent or any other Person may be
the purchaser, lessee or recipient of any or all of the Collateral so
disposed of at any public sale (or, to the extent permitted by law, at
any private sale) and thereafter hold the same absolutely, free from
any claim or right of whatsoever kind, including any right or equity of
redemption (statutory or otherwise), of Obligor, any such demand,
notice and right or equity being hereby expressly waived and released.
The Collateral Agent may, without notice or publication, adjourn any
public or private sale or cause the same to be adjourned from time to
time by announcement at the time and place fixed for the sale, and such
sale may be made at any time or place to which the sale may be so
adjourned;
(e) The Collateral Agent shall have, and in its discretion may
exercise, all of the rights, remedies, powers and privileges with
respect to the Collateral of a secured party under the Uniform
Commercial Code (whether or not the Uniform Commercial Code is in
effect in the jurisdiction where such rights, remedies, powers and
privileges are asserted) and such additional rights, remedies, powers
and privileges to which a secured party is entitled under the laws in
effect in any jurisdiction where any rights, remedies, powers and
privileges in respect of this Agreement or the Collateral may be
asserted, including the right, to the maximum extent permitted by law,
to exercise all voting, consensual and other powers of ownership
pertaining to the Collateral as if the Collateral Agent were the sole
and absolute owner of the Collateral (and Obligor agrees to take all
such action as may be appropriate to give effect to such right);
(f) The Collateral Agent in its discretion may, to the full
extent provided by law, have a court having jurisdiction appoint a
receiver, which receiver shall take charge and possession of and
protect, preserve, replace and repair the Collateral or any part
thereof, and manage and operate the same, and receive and collect all
rents, income, receipts, royalties, revenues, issues and profits
therefrom. Obligor irrevocably consents and shall be deemed to have
hereby irrevocably consented to the appointment thereof, and upon such
appointment, Obligor shall immediately deliver possession of such
Collateral to the receiver. Obligor also irrevocably consents to the
entry of an order
22
authorizing such receiver to invest upon interest any funds held or
received by the receiver in connection with such receivership. The
Collateral Agent shall be entitled to such appointment as a matter of
right, if it shall so elect, without the giving of notice to any other
party and without regard to the adequacy of the security of the
Collateral; and
(g) The Collateral Agent in its discretion may enforce one or
more remedies hereunder, successively or concurrently, and such action
shall not operate to estop or prevent the Collateral Agent from
pursuing any other or further remedy which it may have hereunder or by
law, and any repossession or retaking or sale of the Collateral
pursuant to the terms hereof shall not operate to release Obligor until
full and final payment of any deficiency has been made. Obligor shall
reimburse the Collateral Agent upon demand for, or the Collateral Agent
may apply any proceeds of Collateral to, the costs and expenses
(including reasonable attorneys' fees, transfer taxes and any other
charges) incurred by the Collateral Agent in connection with any sale,
disposition, repair, replacement, alteration, addition, improvement or
retention of any Collateral hereunder.
The proceeds of, and other realization upon, the Collateral by virtue of the
exercise of remedies under this Section 5.01 shall be applied in accordance with
Section 5.04.
Section 5.02. Deficiency. If the proceeds of, or other realization
upon, the Collateral by virtue of the exercise of remedies under Section 5.01
are insufficient to cover the costs and expenses of such exercise and the
payment in full of the Secured Obligations, Obligor shall remain liable for any
deficiency.
Private Sale.
(a) The Collateral Agent shall not incur any liability as a
result of the sale, lease or other disposition of all or any part of
the Collateral at any private sale pursuant to Section 5.01 conducted
in a commercially reasonable manner. Obligor hereby waives any claims
against the Collateral Agent arising by reason of the fact that the
price at which the Collateral may have been sold at such a private sale
was less than the price which might have been obtained at a public sale
or was less than the aggregate amount of the Secured Obligations, even
if the Collateral Agent accepts the first offer received and does not
offer the Collateral to more than one offeree.
(b) Obligor recognizes that, by reason of certain prohibitions
contained in the Securities Act of 1933 and applicable state securities
laws, the Collateral Agent may be compelled, with respect to any sale
of all or any part of the Collateral, to limit purchasers to those who
will agree, among other things, to acquire the Collateral for their own
account, for investment and not with a view to distribution or resale.
Obligor acknowledges that any such private sales may be at prices and
on terms less favorable to the Collateral Agent than those obtainable
through a public sale without such restrictions, and, notwithstanding
such circumstances, agree that any such private sale shall be deemed to
have been made in a commercially reasonable manner and that the
Collateral Agent shall have no obligation to engage in public sales and
no obligation to delay the sale of any Collateral for the period of
time necessary to permit the respective issuer of such Collateral to
register it for public sale.
23
Section 5.03. Application of Proceeds. The Proceeds of, or other
realization upon, all or any part of the Collateral by virtue of the exercise of
remedies under Section 5.01 and any other cash at the time held by the
Collateral Agent under this Article V, shall be applied by the Collateral Agent
in accordance with the terms and provisions of the Collateral Agency Agreement.
ARTICLE VI
MISCELLANEOUS PROVISIONS
Section 6.01. Notices. All notices and other communications provided
for herein (including, without limitation, any modifications of, or waivers or
consents under, this Agreement) shall be given or made in writing (which may be
by telecopier with confirmation of receipt) delivered to the intended recipient
at the address set forth in Section 10.02 of the Indenture or Annex 1, as
applicable; or, as to any party, at such other address as shall be designated by
such party in a notice to each other party. Except as otherwise provided in this
Agreement, all such communications shall be deemed to have been duly given when
transmitted by telecopier or personally delivered or, in the case of a mailed
notice, upon receipt, in each case given or addressed as aforesaid.
Section 6.02. Amendments. Except as otherwise expressly provided in
this Agreement, any provision of this Agreement may be amended or modified only
by an instrument in writing signed by Obligor and the Collateral Agent and
(except for this Section 6.02) any provision of this Agreement may be waived in
writing only by the Collateral Agent.
Section 6.03. Successors and Assigns. This Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors and permitted assigns of the parties to this Agreement; provided,
however, that (a) Obligor may not assign or transfer any of its respective
rights or interest in or under this Agreement or delegate any of its obligations
under this Agreement without the prior written consent of the Collateral Agent
and (b) the Collateral Agent shall transfer or assign its rights under this
Agreement in connection with a resignation or removal of such Person from its
respective capacity in accordance with the terms of this Agreement.
Section 6.04. Survival. All agreements, statements, representations and
warranties made by Obligor herein or in any certificate or other instrument
delivered by Obligor or on its behalf under this Agreement shall be considered
to have been relied upon by the Collateral Agent and shall survive the execution
and delivery of this Agreement and the other Transaction Documents until the
earlier to occur of(i) termination thereof; and (ii) the Discharge Date, in each
case, regardless of any investigation made by or on behalf of the Collateral
Agent.
Section 6.05. 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 Obligor 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.
24
Section 6.06. 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 6.07. Captions. The headings of the several articles and
sections and sub sections 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 6.08. 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 6.09. Governing Law; Submission to Jurisdiction and Venue;
Waiver of Jury Trial.
(a) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK
APPLICABLE TO CONTRACTS MADE AND TO BE PERFORMED IN SUCH STATE.
(b) Submission to Jurisdiction. Section 10.09 of the Indenture
is hereby incorporated by reference as if fully set forth in this
Agreement, and Obligor confirms its consent and submission to
jurisdiction and venue.
(c) EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT
PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY
IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY
(WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY
HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY
OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER
PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE
FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES
HERETO HAVE BEEN INDUCED TO ENTER THIS AGREEMENT BY, AMONG OTHER
THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.
(d) NO CLAIM MAY BE MADE BY ANY PARTY HERETO AGAINST ANY OTHER
PARTY HERETO OR ANY OF ITS SUCCESSORS IN INTEREST OR ITS AFFILIATES,
DIRECTORS, OFFICERS, EMPLOYEES, ATTORNEYS OR AGENTS OF ANY OF ANY OF
THEM FOR ANY SPECIAL, INDIRECT, CONSEQUENTIAL OR PUNITIVE DAMAGES IN
RESPECT OF ANY CLAIM FOR BREACH OF CONTRACT OR ANY OTHER THEORY OF
LIABILITY ARISING OUT OF OR RELATING TO, OR ANY ACT, OMISSION OR EVENT
25
OCCURRING IN CONNECTION WITH THIS AGREEMENT OR ANY OTHER TRANSACTION
DOCUMENT OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT OR THE
OTHER TRANSACTION DOCUMENTS, AND EACH PARTY HERETO HEREBY WAIVES,
RELEASES AND AGREES NOT TO ▇▇▇ UPON ANY CLAIM FOR ANY SUCH DAMAGES,
WHETHER OR NOT ACCRUED AND WHETHER OR NOT KNOWN OR SUSPECTED TO EXIST
IN ITS FAVOR.
Section 6.10. Entire Agreement. This Agreement, together with any other
agreement executed in connection with this Agreement, is intended by the parties
as a final expression of their agreement as to the matters covered by this
Agreement and is intended as a complete and exclusive statement of the terms and
conditions of such agreement.
Section 6.11. Independent Obligations. Obligor's obligations under this
Agreement are independent of those of any other Person. The Collateral Agent may
bring a separate action against Obligor without first proceeding against any
other Person or any other security held by the Collateral Agent and without
pursuing any other remedy.
Section 6.12. Expenses. Obligor agrees to pay or to reimburse the
Collateral Agent for all costs and expenses (including reasonable attorney's
fees and expenses) that may be incurred by the Collateral Agent in any effort to
enforce any of the provisions of Article II or Article V, or any of the
obligations of Obligor in respect of the Collateral or in connection with (a)
the preservation of the liens on, or the rights of the Collateral Agent to the
Collateral pursuant to this Agreement or (b) any actual or attempted sale,
lease, disposition, exchange, collection, compromise, settlement or other
realization in respect of, or care of, the Collateral, including all such costs
and expenses (and reasonable attorney's fees and expenses) incurred in any
bankruptcy, reorganization, workout or other similar proceeding.
(SIGNATURES TO FOLLOW)
26
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed and delivered by their respective authorized
officers as of the date first written above.
OBLIGOR:
ORMESA LLC,
a Delaware limited liability company
By: ORMAT FUNDING CORP.,
a Delaware corporation
Its: Sole Member and Manager
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
-----------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: President
COLLATERAL AGENT:
----------------
UNION BANK OF CALIFORNIA, N.A.
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇
---------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇
Title: Vice President
ANNEX 1
Organization and Chief Executive Office of Obligor
Obligor's Legal Name, Type and Jurisdiction of Organization, and Organizational
Identification Number:
Ormesa LLC, a Delaware limited liability company, organizational ID#2986688.
Obligor's Chief Executive Office and Mailing Address:
Ormesa LLC
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: President
ANNEX 2
PROJECT DOCUMENTS
OG I Power Purchase Agreement
OG II Power Purchase Agreement
Ormesa Operation and Maintenance Agreement
Consolidated OG I Plant Connection Agreements
OG I Transmission Service Agreement
OG II Plant Connection Agreement
OG II Transmission Service Agreement
Ormesa-BLM Geothermal Resources Lease CA 964
Ormesa-BLM Geothermal Resources Lease CA 966
Ormesa-BLM Geothermal Resources Lease CA 1903
Ormesa-BLM Geothermal Resources Lease CA 6217
Ormesa-BLM Geothermal Resources Lease CA 6218
Ormesa-BLM Geothermal Resources Lease CA 6219
Ormesa-BLM Geothermal Resources ▇▇▇▇▇ ▇▇ ▇▇▇▇▇
Ormesa-BLM Site License CA 17129
Ormesa-BLM Site License CA 22405
Ormesa-BLM Site License CA 24678
Ormesa-BLM Site License CA 22079
Ormesa-BLM Site ▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇
IID Water Supply Agreement
ANNEX 3
GOVERNMENT APPROVALS
Air Permits issued by the Imperial County Air Pollution Control District and the
U.S. Environmental Protection Agency:
OGI PTO 1716G Geothermal (Plant & 21 ▇▇▇▇▇)
PTO 2570A Petroleum Storage (Gas Tank)
OGIE PTO 1942H Geothermal Power Plant
PTO 2371A Geothermal ▇▇▇▇▇ / 7
OGII PTO 1883E Geothermal Power Plant & ▇▇▇▇▇
PTO 2424A Misc. (Sand Blasting)
PTO 2755A Combustion (Electric Gen. and Fire Pump)
OGIH PTO 2047D Geothermal Power Plant
PTO 2370C Geothermal ▇▇▇▇▇ / 8
GEM PTO 2002G Geothermal Power Plant
PTO 2132D Geothermal ▇▇▇▇▇ (39 ▇▇▇▇▇)
Permit No. ▇-▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇ Regional Water Board Waste Discharge Orders (WDO):
OGI 00-103* 7A132035403
OGIE 00-102* 7A132035404
OGII 00-090* 7A132035301
OGIH 00-085* 7A132035401
GEM 00-101* 7A132040013
*As amended by R7-2002-0140 and R7-2003-0137
Federal Communications Commission:
OGII Radio Station License Number 9904D125452 Call Sign: WPNY538
U.S. Environmental Protection Agency (USEPA) Region 9:
OGI RCRA EPA ID Number CA 0000138271
OGII RCA EPA ID Number CAD983613449
GEM RCRA EPA ID Number CAR000045096
California Board of Equalization (BOE) Hazardous Waste Generator Account:
OGI HA EF 36-057873
OGII HA EF 38-057602
GEM HA EF 36-051259
Imperial County Department of Planning Commission Conditional Use Permits (CUP):
OGIE & OGIE Aug. 14, 1988 (No Number) Conditional Use Permit (CUP)
approved and issued for five
Groundwater ▇▇▇▇▇ to be utilized
for cooling tower makeup.
OGII April 8, 1985 No. 711-85 Conditional Use Permit (CUP)
Approved and issued for three
Groundwater ▇▇▇▇▇ to be utilized
for cooling tower makeup.
ANNEX 4
COMMERCIAL TORT CLAIMS
None.
ANNEX 5
PLEDGE OWNERSHIP INTERESTS
None.
ANNEX 6
INTERCOMPANY NOTES
None.