Exhibit 10.18.2
SASM&F
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AMENDED AND RESTATED SECURITY DEPOSIT AGREEMENT
between
EME HOMER CITY GENERATION L.P.
and
THE BANK OF NEW YORK
as Collateral Agent
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Dated as of December __, 2001
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TABLE OF CONTENTS
PAGE
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ARTICLE I DEFINITIONS.........................................................2
Section 1.1 Defined Terms............................................2
Section 1.2 OTHER DEFINITIONAL PROVISIONS............................5
ARTICLE II AGREEMENT OF COLLATERAL AGENT; CREATION OF ACCOUNTS; GRANT OF
SECURITY INTERESTS.......................................6
Section 2.1 AGREEMENT OF COLLATERAL AGENT............................6
Section 2.2 CREATION OF ACCOUNTS AND SUBACCOUNTS.....................6
Section 2.3 DELIVERY OF REVENUES, ETC. TO COLLATERAL AGENT...........8
Section 2.4 SECURITY INTERESTS IN THE LESSEE ACCOUNTS................8
Section 2.5 SECURITIES ACCOUNTS......................................8
ARTICLE III DEPOSITS INTO ACCOUNTS............................................9
Section 3.1 REVENUE ACCOUNT..........................................9
Section 3.2 RECOVERY EVENT PROCEEDS ACCOUNT.........................10
Section 3.3 RESERVE ACCOUNT.........................................10
Section 3.4 EQUITY ACCOUNT..........................................10
Section 3.5 DEPOSITS IRREVOCABLE....................................10
ARTICLE IV TRANSFERS FROM ACCOUNTS...........................................11
Section 4.1 REVENUE ACCOUNT.........................................11
Section 4.2 RECOVERY EVENT PROCEEDS ACCOUNT.........................12
Section 4.3 SENIOR RENT PAYMENT ACCOUNT.............................13
Section 4.4 RESERVE ACCOUNT.........................................13
Section 4.5 PERMITTED INDEBTEDNESS ACCOUNT..........................13
Section 4.6 EQUITY ACCOUNT..........................................14
Section 4.7 SUPPLEMENTAL ACCOUNT....................................16
Section 4.8 SUBORDINATED RENT PAYMENT ACCOUNT.......................16
Section 4.9 SUBORDINATED RESERVE ACCOUNT............................17
Section 4.10 SUSPENDED DISTRIBUTIONS ACCOUNT.........................17
Section 4.11 DELIVERY OF REQUEST LETTERS.............................17
Section 4.12 SHORTFALL NOTICES.......................................17
Section 4.13 TRANSFERS FROM ACCOUNTS DURING A DEFAULT PERIOD.........17
Section 4.14 COLLATERAL AGENT'S CALCULATIONS.........................19
Section 4.15 INSUFFICIENT AMOUNTS....................................20
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ARTICLE V INVESTMENT.........................................................20
ARTICLE VI COLLATERAL AGENT..................................................21
Section 6.1 RIGHTS, DUTIES, ETC.....................................21
Section 6.2 RESIGNATION OR REMOVAL..................................22
ARTICLE VII DETERMINATIONS...................................................22
ARTICLE VIII MISCELLANEOUS...................................................22
Section 8.1 INDEMNIFICATION OF COLLATERAL AGENT.....................22
Section 8.2 WAIVER OF RIGHT OF SET-OFF..............................23
Section 8.3 TERMINATION.............................................23
Section 8.4 SEVERABILITY............................................24
Section 8.5 COUNTERPARTS............................................24
Section 8.6 AMENDMENTS..............................................24
Section 8.7 APPLICABLE LAW..........................................24
Section 8.8 NOTICES.................................................24
Section 8.9 BENEFIT OF SECURITY DEPOSIT AGREEMENT...................24
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AMENDED AND RESTATED SECURITY DEPOSIT AGREEMENT, dated as of
December __, 2001 (this "AGREEMENT"), between EME HOMER CITY GENERATION L.P., a
Pennsylvania limited partnership ("EME HOMER City" or the "FACILITY LESSEE"),
and THE BANK OF NEW YORK, as collateral agent for the Secured Parties (as
defined below) (in such capacity, the "COLLATERAL AGENT").
RECITALS
A. Contemporaneously herewith, EME Homer City will enter into
a transaction pursuant to the Participation Agreements listed on SCHEDULE 1,
each by and among EME Homer City, the applicable Owner Lessor, ▇▇▇▇▇ Fargo
Bank Northwest, National Association, not in its individual capacity but solely
as Owner Manager, the Owner Participant, ▇▇▇▇▇ City Funding LLC, as Lender,
the Lease Indenture Trustee, the Security Agent and The Bank of New York, not
in its individual capacity but solely as Bondholder Trustee (as amended,
modified and supplemented and in effect from time to time, collectively, the
"PARTICIPATION AGREEMENTS") whereby EME Homer City will sell undivided
interests in its generating assets to the Owner Lessors and the Owner Lessors
will lease such undivided interests in its generating assets to EME Homer City
under the Facility Leases.
B. In consideration of the transactions contemplated by the
Participation Agreements, EME Homer City will be obligated to pay to the Secured
Parties the aggregate amount of all obligations owed by EME Homer City to the
Secured Parties under the Operative Documents (the "LEVERAGED LEASE
OBLIGATIONS").
C. In satisfaction of the requirements of the Secured Parties,
the Facility Lessee desires by this Agreement to provide interests in certain
Accounts as security for EME Homer City's obligations under the Participation
Agreements and the other Operative Documents.
D. In order to simplify administration of such Accounts and to
provide for the orderly enforcement of their respective rights, the Secured
Parties have appointed the Collateral Agent to serve as their common
representative, to be the beneficiary under any security interest intended to
benefit the Secured Parties, and to hold the liens created, or to be created,
under the Operative Documents.
E. The parties hereto desire by this Agreement (as defined
above) to provide for the receipt of Revenues and the application thereof to the
payment of Operating Expenses (as defined below) and Leveraged Lease Obligations
and for other purposes as described herein.
F. Pursuant to the Ownership and Operation Agreement, dated as
of December ___, 2001 (as amended, supplemented or otherwise modified from time
to time, the "Ownership and Operation Agreement"), among the Collateral Agent
and the Secured Parties, the Collateral Agent has agreed to serve as a common
collateral agent for all Secured Parties.
G. It is a condition precedent to the approval by the Secured
Parties of the transactions contemplated by the Operative Documents that the
Facility Lessee shall have executed and delivered this Agreement to the
Collateral Agent for the benefit of the Secured Parties.
H. The parties hereto desire to amend and restate the Security
Deposit Agreement, among Edison Mission Holdings Co., Edison Mission Finance
Co., ▇▇▇▇▇ City Property Holdings, Inc., Chestnut Ridge Energy Co., Mission
Energy Westside, Inc., EME Homer City Generation L.P. and United States Trust
Company of New York, as Collateral Agent, dated March 18, 1999 in its entirety
and release the liens granted therein as provided herein.
NOW, THEREFORE, in consideration of the foregoing premises and
for other good and valuable consideration, the receipt of which is hereby
acknowledged, each of the parties hereto hereby agrees that the Security Deposit
Agreement, dated March 18, 1999 is hereby amended and restated as follows:
ARTICLE I
DEFINITIONS
Section 1.1. Defined Terms. The following terms shall have the
meanings indicated:
"ACCOUNTS" means all accounts established pursuant to SECTION
2.2 of this Agreement.
"AMENDMENT DATE" means the date the Operative Documents are
executed.
"AUTHORIZED REPRESENTATIVE" means those of officers and
employees of the Facility Lessee whose signatures and incumbency shall have been
certified by the Facility Lessee to the Collateral Agent and each Owner Lessor's
Representative.
"COLLATERAL AGENT" has the meaning specified in the PREAMBLE.
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"COMPONENT A LETTER OF CREDIT" means a letter of credit that
may be delivered to the Collateral Agent at the election of a Owner Lessor in
total or partial satisfaction of the amount on deposit in the applicable
subaccount of the Equity Account in accordance with Section 4.6 hereof.
"DEFAULT PERIOD" means the period commencing on the date the
Collateral Agent receives a written notice from the Facility Lessee or any of
the Secured Parties stating that a Lease Default or a Lease Event of Default has
occurred and is continuing under any of the Facility Leases. Such notice shall
be deemed to have been delivered if a voluntary petition of Bankruptcy has been
filed under Title 11 of the United States Code (or any similar action has been
taken under the laws of any other jurisdiction) with respect to the Facility
Lessee.
"DEPOSITARY" means Bank of America NT&SA.
"EME HOMER CITY" has the meaning specified in the PREAMBLE.
"ENTITLEMENT ORDER" means "entitlement order" as defined in
Article 8 of the New York UCC.
"EQUITY ACCOUNT" has the meaning specified in SECTION 2.2.
"MONTHLY TRANSFER DATE" means the last Business Day of each
month.
"MOODY'S" means ▇▇▇▇▇'▇ Investors Service, Inc.
"NEW YORK UCC" means the Uniform Commercial Code as from time
to time in effect in the State of New York.
"NOTICE OF ACTION" has the meaning specified in the Lease
Indenture.
"OBLIGATIONS" means all obligations and liabilities of the
Facility Lessee which may arise under or in connection with the Operative
Documents or any other Transaction Document whether on account of Rent payment
obligations, reimbursement obligations, the unpaid principal of and interest on
Permitted Indebtedness, fees, indemnities, costs, expenses or otherwise
(including all fees and disbursements of counsel to the Collateral Agent and to
the Secured Parties that are required to be paid by the Facility Lessee pursuant
to the terms of any Transaction Document).
"OPERATING ACCOUNT" has the meaning specified in SECTION 2.2.
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"OPERATING EXPENSES" means, in respect of any period, all cash
amounts paid by the Facility Lessee in the conduct of its business during such
period, including premiums for insurance policies, fuel supply and
transportation costs, utilities, costs of maintaining, renewing and amending
Governmental Approvals, franchise, licensing, property, real estate and income
taxes, sales and excise taxes, general and administrative expenses, employee
salaries, wages and other employment-related costs, business management and
administrative services fees and other fees and expenses necessary for the
continued operation and maintenance of the Facility and the conduct of business
of EME Homer City.
"OPERATIVE DOCUMENTS" has the meaning specified in each of the
Participation Agreements.
"ORGANIC DOCUMENT" means, with respect to any Person that is a
corporation, its certificate of incorporation, its by-laws and all shareholder
agreements, voting trusts and similar arrangements applicable to any of its
authorized shares of capital stock, and, with respect to any Person that is a
limited partnership, its certificate of limited partnership and partnership
agreement.
"OWNER LESSOR'S REPRESENTATIVE" means each Person designated
as serving as indenture trustee, collateral agent, lenders' representative or in
any similar capacity for an Owner Lessor, provided however, that for as long as
the Lessor Notes of such Owner Lessor are outstanding, this term shall refer to
the Security Agent.
"PAYMENT DATES" means Rent Payment Dates and Permitted
Indebtedness Payment Dates.
"PERMITTED INDEBTEDNESS ACCOUNT" has the meaning set forth in
Section 2.2. hereof.
"PERMITTED INDEBTEDNESS PAYMENT DATE" means, with respect to
any Permitted Indebtedness, any date on which amounts are payable on such
Permitted Indebtedness.
"PLEDGED ACCOUNTS" means, collectively, the Revenue Account,
the Senior Rent Payment Account, the Recovery Event Proceeds Account and the
Equity Account.
"PROCEEDS" has the meaning specified in the New York UCC.
"RECOVERY EVENT" means any settlement of or payment of
$5,000,000 or more in respect of (a) any property or casualty insurance claim
relating to the Facility or any part thereof or (b) any seizure, condemnation,
confiscation or taking
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of, or requisition of title or use of, the Facility or any part thereof by any
Governmental Authority.
"RECOVERY EVENT PROCEEDS" means proceeds received in respect
of a Recovery Event (regardless of whether the amount thereof is less than
$5,000,000).
"RECOVERY EVENT PROCEEDS ACCOUNT" has the meaning specified in
Section 2.2.
"REQUEST LETTER" means each letter from time to time delivered
by an Authorized Representative of the Facility Lessee or by the Facility Lessee
to the Collateral Agent requesting the transfer and/or release of funds from one
or more Accounts or subaccounts, as applicable to or on behalf of the Facility
Lessee in accordance with the terms of this Security Deposit Agreement, each
such letter to be in such form acceptable to the Collateral Agent.
"REQUIRED SECURED PARTIES" has the meaning specified in the
Ownership and Operation Agreement.
"RESTORATION" means the replacement or restoration of the
Facility or any part thereof in respect of which the Facility Lessee or any of
the Owner Lessors have received Recovery Event Proceeds.
"RESTRICTED PAYMENTS" has the meaning specified in each of the
Participation Agreements.
"REVENUE ACCOUNT" has the meaning specified in SECTION 2.2.
"S&P" means Standard & Poor's Rating Group.
"SECURED PARTIES" means the Collateral Agent and the Owner
Lessors.
"SECURITIES INTERMEDIARY" has the meaning specified in SECTION
2.5.
"TRANSACTION DOCUMENTS" means the Operative Documents and each
indenture, loan agreement, underwriting agreement, security purchase agreement
or other document entered into in connection with any Permitted Indebtedness.
SECTION 1.2. OTHER DEFINITIONAL PROVISIONS.
(a) Unless otherwise defined in SECTION 1.1 hereof, each
capitalized term used in this Agreement and not otherwise defined herein shall
have the respective meaning set forth in Appendix A to the Participation
Agreements
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unless the context hereof shall otherwise require. The general provisions of
Appendix A to the Participation Agreements shall apply to terms used in this
Agreement and specifically defined herein. References to applicable Operative
Documents (or other agreements) shall mean Operative Documents (or other
agreements) as such term is defined in the Participation Agreement to which the
relevant Owner Lessor is a party.
ARTICLE II
AGREEMENT OF COLLATERAL AGENT;
CREATION OF ACCOUNTS; GRANT OF SECURITY INTERESTS
SECTION 2.1. AGREEMENT OF COLLATERAL AGENT. The Collateral
Agent agrees to accept all cash, cash equivalents, instruments, investments and
other securities to be delivered to or held by the Collateral Agent pursuant to
the terms of this Agreement, and, from such cash, cash equivalents, instruments,
investments and other securities, to make the releases and transfers
contemplated by this Agreement as and when required in accordance with the terms
hereof. The Collateral Agent shall hold and safeguard the Accounts (other than
the Operating Account and the cash, cash equivalents, instruments, investments
and other securities on deposit therein) during the term of this Agreement in
accordance with the provisions hereof. The Collateral Agent shall treat the
cash, cash equivalents, instruments, investments and other securities in each
Pledged Account as pledged by the Facility Lessee to the Secured Parties, to be
held by the Collateral Agent, as agent of the Secured Parties, in trust in
accordance with the provisions hereof.
SECTION 2.2. CREATION OF ACCOUNTS AND SUBACCOUNTS.
(a) On or prior to the Amendment Date, (i) the Collateral
Agent shall establish in the corporate trust department of The Bank of New York,
a special, segregated and irrevocable trust account designated the "▇▇▇▇▇ City
Revenue Account" (the "REVENUE ACCOUNT") and (ii) the Collateral Agent shall
establish with the Depositary a special and segregated account designated the
"▇▇▇▇▇ City Operating Account" (the "OPERATING ACCOUNT").
(b) On or prior to the Amendment Date, the Collateral Agent
shall establish in the corporate trust department of The Bank of New York,
special, segregated and irrevocable trust accounts as follows:
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(i) one designated the "▇▇▇▇▇ City Recovery Event Proceeds
Account" (the "RECOVERY EVENT PROCEEDS ACCOUNT");
(ii) one designated the "▇▇▇▇▇ City Senior Rent Payment
Account" (the "SENIOR RENT PAYMENT ACCOUNT");
(iii) one designated the "▇▇▇▇▇ City Subordinated Rent Payment
Account" (the "SUBORDINATED RENT PAYMENT ACCOUNT");
(iv) one designated the "▇▇▇▇▇ City Reserve Account" (the
"RESERVE ACCOUNT");
(v) one designated the "▇▇▇▇▇ City Equity Account" (the
"EQUITY ACCOUNT");
(vi) one designated the "▇▇▇▇▇ City Supplemental Equity
Account" (the "SUPPLEMENTAL ACCOUNT");
(vii) one designated the "▇▇▇▇▇ City Suspended Distributions
Account" (the "SUSPENDED DISTRIBUTIONS ACCOUNT");
(viii) one designated the "▇▇▇▇▇ City Subordinated Reserve
Account" (the "SUBORDINATED RESERVE ACCOUNT");
(ix) one designated the "▇▇▇▇▇ City Distributions Account"
(the "DISTRIBUTIONS ACCOUNT"); and
(x) one designated the "▇▇▇▇▇ City Permitted Indebtedness
Account" (the "PERMITTED INDEBTEDNESS ACCOUNT").
(c) Each of the Accounts (other than the Revenue Account, the
Operating Account and the Permitted Indebtedness Account) shall be subdivided
into eight subaccounts, one subaccount for each Facility Lease. The Collateral
Agent shall maintain separate records for each subaccount. Amounts deposited
into or debited from such Accounts shall be deposited or debited from the
applicable subaccount as provided herein.
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SECTION 2.3 DELIVERY OF REVENUES, ETC. TO COLLATERAL AGENT.
The Facility Lessee shall cause all Revenues and Recovery Event Proceeds and all
cash, cash equivalents, instruments, investments and other securities in its
possession (excluding amounts received by the Facility Lessee as transfers from
the Operating Account or the Distributions Account in accordance with this
Agreement) to be delivered immediately to the Collateral Agent for deposit into
the Accounts pursuant to Article III. All such Revenues, cash, cash equivalents,
instruments, investments and other securities at any time on deposit in the
Accounts shall be held in the exclusive custody of the Collateral Agent for the
purposes and on the terms set forth in this Agreement.
SECTION 2.4 SECURITY INTERESTS IN THE LESSEE ACCOUNTS. In
order to secure the payment of the Obligations, and the performance and
observance by the Facility Lessee of all of its covenants, agreements and
obligations to the Secured Parties under the Transaction Documents, the Facility
Lessee hereby pledges and assigns to the Collateral Agent, and hereby grants in
favor of the Collateral Agent for the ratable benefit of the Secured Parties, a
security interest in all of the Facility Lessee's right, title and interest,
whether now owned or hereafter acquired and whether now existing or hereafter
coming into existence, in, to and under (i) all Revenues, (ii) the Revenue
Account, the Senior Rent Payment Account, the Recovery Event Proceeds Account,
the Equity Account and all cash, cash equivalents, instruments, investments and
other securities on deposit therein, (iii) all security entitlements with
respect to any and/or all of the foregoing and all Proceeds of the foregoing.
All Accounts (other than the Operating Account) and all cash, cash equivalents,
instruments, investments and other securities on deposit therein and security
entitlements with respect thereto shall, subject to the provisions of this
Agreement, be subject to the exclusive dominion and control of the Collateral
Agent, and the Collateral Agent shall have the sole and exclusive right to
withdraw or order a transfer of funds from such Accounts, and the Facility
Lessee hereby irrevocably appoints the Collateral Agent as its true and lawful
attorney, with full power of substitution, for the purpose of making any such
withdrawal or ordering any such transfer of funds from any such Account, which
appointment is coupled with an interest and is irrevocable. The Facility Lessee
shall not have any rights or powers with respect to any amounts in any of the
Accounts (other than the Operating Account) or any part thereof except (i) as
provided in the Investments section of this Security Deposit Agreement and (ii)
the right to have such amounts applied in accordance with the provisions of this
Security Deposit Agreement.
SECTION 2.5 SECURITIES ACCOUNTS. The parties hereto hereby
agree that:
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(a) the Accounts (other than the Operating Account) shall be
treated as "securities accounts" as such term is defined in Section 8-501 of the
New York UCC;
(b) The Bank of New York, in its capacity as "securities
intermediary" as such term is defined in Section 8-102(a)(14) of the New York
UCC (the "SECURITIES INTERMEDIARY"), shall, subject to the terms of this
Agreement, treat the Facility Lessee as the person entitled to exercise the
rights that comprise any financial assets credited to the Accounts;
(c) all property delivered to the Securities Intermediary,
pursuant to the terms of this Agreement, will be promptly credited to the
appropriate Account;
(d) all securities or other property underlying any financial
assets credited to such Accounts shall be registered in the name of the
Securities Intermediary, indorsed to the Securities Intermediary or in blank and
in no case will any financial asset credited to any Account be registered in the
name of the Facility Lessee, payable to the order of the Facility Lessee or
specially indorsed to the Facility Lessee except to the extent the forgoing have
been specially indorsed to the Securities Intermediary or in blank;
(e) each item of property (whether investment property,
financial asset, security, instrument or cash) credited to such Accounts shall
be treated as a "financial asset" within the meaning of Section 8-102(a)(9) of
the New York UCC; and
(f) if at any time the Securities Intermediary shall receive
an Entitlement Order issued by the Collateral Agent and relating to any of the
Pledged Accounts, the Securities Intermediary shall comply with such entitlement
order without further consent by the Facility Lessee or any other person. In the
event the Facility Lessee, if permitted to give any Entitlement Order with
respect to any Pledged Account and such order conflicts with or contradicts an
Entitlement Order issued by the Collateral Agent, the Securities Intermediary
shall always follow the Entitlement Orders issued by the Collateral Agent.
ARTICLE III
DEPOSITS INTO ACCOUNTS
SECTION 3.1 REVENUE ACCOUNT. The Facility Lessee agrees that
there shall be deposited into the Revenue Account all Revenues received by or on
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behalf of itself. If, notwithstanding the foregoing, the Facility Lessee
receives any Revenues, it shall immediately deliver such Revenues in the exact
form received (duly indorsed, if appropriate, in a manner satisfactory to the
Collateral Agent) to the Collateral Agent for deposit into the Revenue Account.
The Collateral Agent shall have the right to receive all Revenues directly from
the Persons owing the same. All Revenues received by the Collateral Agent shall
be deposited into the Revenue Account.
SECTION 3.2 RECOVERY EVENT PROCEEDS ACCOUNT. The Facility
Lessee agrees that there shall be deposited into the Recovery Event Proceeds
Account all Recovery Event Proceeds PROVIDED, that if the aggregate amount of
Recovery Event Proceeds with respect to a Recovery Event is less than $5
million, such proceeds shall be transferred to the Revenue Account if requested
pursuant to a Request Letter. If, notwithstanding the foregoing, the Facility
Lessee shall receive any such proceeds, it shall immediately deliver such
proceeds in the exact form received (duly endorsed, if appropriate, in a manner
satisfactory to the Collateral Agent) to the Collateral Agent for deposit into
the Recovery Event Proceeds Account. The Collateral Agent shall have the right
to receive all such proceeds directly from the Persons owing the same. All such
proceeds received by or on behalf of the Collateral Agent shall be deposited
into the Recovery Event Proceeds Account. Amounts deposited into the Recovery
Event Proceeds Account shall be credited to each subaccount thereof based upon
each Owner Lessor's Percentage of such deposited amounts.
SECTION 3.3 RESERVE ACCOUNT. The Facility Lessee agrees that
on the Amendment Date there shall be deposited into the Reserve Account the
proceeds from the sale of the Facility received pursuant to the Facility Deeds
and the Bills of Sale, in a total amount of up to $134 million. Such amount
shall be credited to each subaccount of the Reserve Account based upon each
Owner Lessor's Percentage of such deposited amount. No additional amounts shall
be deposited into the Reserve Account.
SECTION 3.4 EQUITY ACCOUNT. The Facility Lessee agrees that
any Component A Letter of Credit delivered to the Collateral Agent in accordance
with the terms of Section 4.6(b) hereof shall be deposited in the Equity Account
and all proceeds from a draw thereon shall be deposited in the applicable
subaccounts of the Equity Account based upon each Owner Lessor's Percentage of
such amount.
SECTION 3.5 DEPOSITS IRREVOCABLE. Any deposit made into the
Accounts hereunder shall be irrevocable and all cash, cash equivalents,
instruments, investments and other securities on deposit shall be held in trust
by the Collateral Agent, and applied solely as provided herein.
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ARTICLE IV
TRANSFERS FROM ACCOUNTS
SECTION 4.1 REVENUE ACCOUNT.
(a) Subject to Section 4.13, on each Monthly Transfer Date the
Collateral Agent shall transfer with respect to each Owner Lessor, such Owner
Lessor's Percentage of the funds on deposit in the Revenue Account in the
following amounts in the following order of priority:
FIRST, to the Operating Account, the amount certified in such
Request Letter to be such Owner Lessor's Percentage of the excess, if
any, of the aggregate amount of Operating Expenses then due and payable
or projected to become due and payable in the next succeeding month
over the balance then on deposit in the Operating Account; PROVIDED
THAT if the Annual Budget in effect for such Fiscal Year of the
Facility Lessee was determined in accordance with Section 5.14(b) or
5.14(c) of any Participation Agreement, then the amount withdrawn from
the Operating Account on any Monthly Transfer Date during such Fiscal
Year shall not exceed the amount set forth in such Annual Budget for
the immediately succeeding calendar month unless agreed to by the
Majority in Interest of the Owner Lessors except with respect to fuel
and emisson allowance costs which shall not be subject to the consent
or approval of the Owner Lessors;
SECOND, to the Collateral Agent, the applicable Owner Lessor's
Owner Manager, the Lease Indenture Trustee, the Security Agent and the
Bondholder Trustee, the amount certified in the Request Letter
delivered in connection with such Monthly Transfer Date to be the sum
of the unpaid fees, indemnities, costs and expenses then due and
payable to such Persons in respect of their respective services in such
capacities; PROVIDED THAT in the case of the Collateral Agent and the
Bondholder Trustee, such amount shall be such Owner Lessor's Percentage
of the sum of the unpaid fees, indemnities, costs and expenses of the
Collateral Agent and the Bondholder Trustee;
THIRD, into the applicable subaccount of the Senior Rent
Payment Account, an amount equal to (a) 1/6th of the aggregate amount
which is payable on or within six months following such Monthly
Transfer Date on account of Senior Rent (other than of the type
specified in clause (b) of the definition thereof) under such Owner
Lessor's Facility Lease and (b) the aggregate amount of all Senior Rent
of the type specified in clause (b) of the
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definition thereof, under such Owner Lessor's Facility Lease for which
will become due and payable prior to the next Monthly Transfer Date
together with the amount of all deficiencies, if any, with respect to
deposits required to be made in the applicable subaccount of the Senior
Rent Payment Account in all prior months, as certified in the Request
Letter;
FOURTH, subject to Section 4.13 hereof and to Section 6.9 of
the Participation Agreement, if applicable, and to the Operative
Documents applicable to the Persons entitled thereto, an amount equal
to all other Supplemental Rent (other than Excepted Payments) under the
applicable Facility Lease then due and payable to such Persons as
certified in the Request Letter;
FIFTH, into the Permitted Indebtedness Account, such Owner
Lessor's Percentage of an amount sufficient to repay in full the
Permitted Indebtedness then due, as certified in the Request Letter;
SIXTH, into the applicable subaccount of the Equity Account,
such Owner Lessor's Percentage of the balance remaining in the Revenue
Account.
(b) If, on any Monthly Transfer Date, such Owner Lessor's
Percentage of the funds on deposit in the Revenue Account are insufficient to
make in full any transfer required pursuant to clause FIRST, SECOND, THIRD,
FOURTH or FIFTH of Section 4.1(a), the Collateral Agent shall make such transfer
with funds then on deposit (in the following order of priority) (i) in the
applicable subaccount of each of the Supplemental Account, the Subordinated
Reserve Account (funds shall be transferred from the Subordinated Reserve
Account only with respect to clause FIRST, SECOND, THIRD and FOURTH), the
Subordinated Rent Payment Account or the Suspended Distributions Account, as
available and (ii) if an insufficiency thereupon remains, in the applicable
subaccount of the Equity Account.
SECTION 4.2 RECOVERY EVENT PROCEEDS ACCOUNT.
(a) Except as otherwise provided in Section 4.2(b) and subject
to Section 4.13, on each Monthly Transfer Date occurring after a Recovery Event
and until Restoration with respect thereto is completed, the Collateral Agent
shall transfer to the Facility Lessee, from the funds on deposit in each
subaccount of the Recovery Event Proceeds Account, such Owner Lessor's
Percentage of the amount certified in the Request Letter delivered in connection
with such Monthly Transfer Date to be the aggregate amount then due and payable
in respect of such Restoration.
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(b) Subject to Section 4.13, on any Rent Payment Date or
Termination Value Payment Date on which Rent or Termination Value under a
Facility Lease is required to be paid with any Recovery Event Proceeds, the
Collateral Agent shall transfer, from the funds on deposit in the applicable
subaccount of the Recovery Event Proceeds Account, the following amounts in the
following order of priority:
FIRST, to the applicable Owner Lessor under such Facility
Lease, the amount certified in the Request Letter delivered in
connection with such Rent Payment Date or Termination Value Payment
Date to be the amount then due and payable in respect of Senior Rent
under such Facility Lease (including premium and interest, if any); and
SECOND, to the applicable Owner Lessor, the amount certified
in such Request Letter to be the amount of the Component A of Basic
Lease Rent then due and payable under such Facility Lease.
SECTION 4.3 SENIOR RENT PAYMENT ACCOUNT. Subject to Section
4.13 hereof, on any Rent Payment Date for a Facility Lease, the Collateral Agent
shall transfer from funds on deposit in the applicable subaccount of the Senior
Rent Payment Account to the Security Agent on behalf of the applicable Owner
Lessor, the amount certified by the Facility Lessee in the Request Letter
delivered in connection with such Rent Payment Date to be payable with respect
to the Senior Rent and all Supplemental Rent (other than Excepted Payments)
under such Facility Lease on such date.
SECTION 4.4 RESERVE ACCOUNT. Subject to Section 4.13 hereof
and so long as no Lease Event of Default (other than a Rent Default Event) then
exists, on any Rent Payment Date for a Facility Lease, the Collateral Agent
shall transfer to the applicable Owner Lessor from funds on deposit in the
applicable subaccount of the Reserve Account the amount certified by the
Facility Lessee to be equal to the difference, if positive, between the amounts
payable with respect to the Component A of Basic Lease Rent under such Facility
Lease on such Rent Payment Date and the amounts that would be available under
Section 4.8, if any (and whether or not the conditions have been met under
Section 6.9 of the applicable Participation Agreement), after giving effect to
any transfers (with respect to such subaccount) to be made on such date pursuant
to Section 4.1 hereof for use in making payments with respect to the Component A
of Basic Lease Rent in accordance with the applicable Operative Documents.
SECTION 4.5 PERMITTED INDEBTEDNESS ACCOUNT. Subject to Section
4.13 hereof, on any date on which any amount of principal or premium of
Permitted
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Indebtedness is due and payable, after giving effect to all transfers to be made
on such date pursuant to Section 4.1, the Collateral Agent shall transfer to the
Persons that provide each class of Permitted Indebtedness, from the funds on
deposit in the Permitted Indebtedness Account, the aggregate amount of principal
and premium then due and payable to the Persons that provide each such class of
Permitted Indebtedness, as certified in the Request Letters delivered in
connection with such Monthly Transfer Date.
SECTION 4.6 EQUITY ACCOUNT.
(a) Subject to Section 4.13, on the date specified below the
Collateral Agent shall transfer, from the funds on deposit in each subaccount of
the Equity Account, the amount certified by the Facility Lessee in the Request
Letter delivered in connection with such date the following amounts in the
following order of priority:
FIRST, after giving effect to all transfers made pursuant to
Section 4.1 hereof on each Monthly Transfer Date, into the applicable
subaccount of the Supplemental Equity Account, if the conditions to the
payments of the Component A of Basic Lease Rent set forth in Section
6.9 of the applicable Participation Agreement (other than clause (a)
thereof) are not satisfied, in the amount by which the sum of (1) the
Owner Lessor's Percentage of the balance in the Revenue Account, plus
(2) the balances in the applicable subaccounts of the Senior Rent
Payment Account, the Equity Account and the Recovery Event Proceeds
Account exceeds the sum of all Basic Lease Rent and Supplemental Lease
Rent due and unpaid on that date and the average of the next two
aggregate payments of the Basic Lease Rent under the applicable
Facility Lease minus the Owner Lessor Percentage of $1 million, as
certified in the Request Letter; or
SECOND, on each Restricted Payment Date into the applicable
subaccount of the Subordinated Rent Payment Account, if the conditions
to the payments of the Component A of Basic Lease Rent are satisfied
pursuant to Section 6.9 of the applicable Participation Agreement, an
amount payable with respect to the Component A of Basic Lease Rent plus
all Excepted Payments, if any, due and payable under the applicable
Facility Lease on the Restricted Payment Date, together with the amount
of all deficiencies, if any, with respect to all payments required in
all prior months, as certified in the Request Letter;
THIRD, on each Restricted Payment Date if the conditions to
the payment of the Component A of Basic Lease Rent set forth in Section
6.9 of
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the applicable Participation Agreement are satisfied, into the
applicable subaccount of the Subordinated Reserve Account, an amount
equal to the difference, if positive, between the Reserve Requirement
under the applicable Facility Lease and the sum of the balances on
deposit in the applicable subaccounts of the Reserve Account and the
Subordinated Reserve Account; and
FOURTH, on each Restricted Payment Date if the conditions to
the payment of the Component A of Basic Lease Rent set forth in Section
6.9 of the applicable Participation Agreement are satisfied, the
balance remaining in the applicable subaccount of the Equity Account,
either into the Distributions Account for the making of Restricted
Payments if the conditions to making these payments as set forth in
Section 6.10 of the applicable Participation Agreement are satisfied or
into the applicable subaccount of the Suspended Distributions Account
if such conditions in Section 6.10 of the applicable Participation
Agreement are not satisfied.
(b) Upon the occurrence and during the continuance of a Rent
Default Event under a Facility Lease, the applicable Owner Lessor may from time
to time request and the Collateral Agent shall transfer from the applicable
subaccount of the Equity Account to such Owner Lessor, to the extent then on
deposit in such subaccount, an amount equal to the Component A of Basic Lease
Rent under such Facility Lease then past due (the "OVERDUE RENT"); PROVIDED,
that (i) as a condition to such transfer, such Owner Lessor shall cause to be
delivered to the Collateral Agent a standby letter of credit (the "COMPONENT A
LETTER OF CREDIT") issued in favor of the Collateral Agent by an Acceptable
Credit Provider for the account of a party other than ▇▇▇▇▇ City or any of the
Owner Lessors in the face amount equal the amount requested to be withdrawn,
PROVIDED, FURTHER, that any transfer of funds from such subaccount of the Equity
Account pursuant to this Section 4.6(a) shall not be deemed to constitute any
payment of Rent. If at any time after the delivery of a Component A Letter of
Credit the amount the Collateral Agent is then directed to transfer from such
subaccount of the Equity Account pursuant to the terms of this Agreement exceeds
cash then on deposit in such subaccount of the Equity Account (such excess
amount, the "SHORTFALL AMOUNT"), then the Collateral Agent shall draw on the
Component A Letter of Credit in an amount equal to the lesser of the Shortfall
Amount and the undrawn face amount of the Component A Letter of Credit and shall
deposit proceeds of such drawing into such subaccount of the Equity Account (for
application in accordance with the terms of this Security Deposit Agreement). If
pursuant to the terms thereof the Component A Letter of Credit becomes drawable
as a result of the failure of such Component A Letter of Credit to be extended
or failure to provide a replacement letter of credit within 30 days of a
downgrade of the applicable Acceptable Credit Provider, the Collateral
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Agent shall draw on the Component A Letter of Credit in an amount equal to the
undrawn face amount of the Component A Letter of Credit and shall deposit
proceeds of such drawing into such subaccount of the Equity Account (for
application in accordance with the terms of this Security Deposit Agreement).
(c) In addition, the Collateral Agent shall make transfers
from the funds on deposit in each subaccount of the Equity Account in accordance
with Sections 4.1(b) and 4.13(b).
(d) If, on any Restricted Payment Date the funds on deposit in
the applicable subaccount of the Equity Account are insufficient to make in full
any transfer required pursuant to clause SECOND of Section 4.6(a) and the
conditions to the payments of Component A of Basic Rent are satisfied pursuant
to Section 6.9 of the applicable Participation Agreement, the Collateral Agent
shall transfer into the applicable subaccount of the Subordinated Rent Account
the amount of such shortfall from funds then on deposit (in the following order
of priority) in the applicable subaccount of each of the Subordinated Reserve
Account or the Suspended Distributions Account, as available.
(e) The Reserve Requirement may be satisfied by Qualifying
Credit Support.
SECTION 4.7 SUPPLEMENTAL ACCOUNT. Subject to Sections 4.13 and
4.1(b) hereof, on each Monthly Transfer Date or Restricted Payment Date as
applicable, the Collateral Agent shall make transfers from the funds on deposit
in the applicable subaccount of the Supplemental Account in accordance with
Sections 4.1(b) and 4.6(d).
SECTION 4.8 SUBORDINATED RENT PAYMENT ACCOUNT. Subject to
Sections 4.13 and 4.1(b) hereof, if the conditions to the payments of the
Component A Portion of the Basic Lease Rent are satisfied pursuant to Section
6.9 of the applicable Participation Agreement, on each Restricted Payment Date
under such Participation Agreement, after giving effect to all transfers to be
made on such date pursuant hereto, the Collateral Agent shall transfer to the
applicable Owner Lessor, from funds on deposit in the applicable subaccount of
the Subordinated Rent Payment Account, the amount certified by the Facility
Lessee in the Request Letter delivered in connection with such payment to be (i)
payable with respect to the Component A of the Basic Lease Rent and all Excepted
Payments under the applicable Facility Lease and (ii) available for use in
making such payments on account of the Component A of Basic Lease Rent and
Excepted Payments in accordance with the terms of the applicable Operative
Documents.
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SECTION 4.9 SUBORDINATED RESERVE ACCOUNT. Subject to Sections
4.13 and 4.1(b) hereof and so long as no Lease Event of Default (other than a
Rent Default Event) then exists on each Restricted Payment Date under such
Participation Agreement, following a distribution in accordance with the terms
of Sections 4.8 and 4.4 hereof, if any (and whether or not the conditions have
been met under Section 6.9 of the applicable Participation Agreement), the
Collateral Agent shall transfer to the applicable Owner Lessor, from funds on
deposit in the applicable subaccount of the Subordinated Reserve Account, the
amount certified by the Facility Lessee in the Request Letter delivered in
connection with such Restricted Payment Date to be equal to the difference, if
positive, between the aggregate amount of the Component A of Basic Lease Rent
and Excepted Payments under the applicable Facility Lease due and the aggregate
amount of payments, if any, made on such Restricted Payment Date pursuant to
Sections 4.8 and 4.4 hereof.
SECTION 4.10 SUSPENDED DISTRIBUTIONS ACCOUNT. Subject to
Section 4.13 hereof, on each Monthly Transfer Date or Restricted Payment Date
(as applicable), the Collateral Agent shall make transfers from the funds on
deposit in the applicable subaccount of the Suspended Distributions Account in
accordance with Sections 4.1(b) and 4.6(d). Following the end of the Lease Term
of the applicable Facility Lease and the payment in full of all Rent,
Termination Value and other amounts due and owing from the Facility Lessee under
such Facility Lease and the other Operative Documents, the Collateral Agent
shall transfer, all the funds on deposit in the applicable subaccount of the
Suspended Distributions Account to the Facility Lessee.
SECTION 4.11 DELIVERY OF REQUEST LETTERS. Each Request Letter
to be delivered by the Facility Lessee pursuant to this Article IV shall be
delivered to the Collateral Agent not later than one day prior to the date that
the Collateral Agent is required to make any transfer specified therein. At the
time the Facility Lessee delivers to the Collateral Agent any Request Letter or
other written communication relating to any Account or subaccount of the
Accounts, the Facility Lessee shall deliver a copy thereof to each Owner Lessor
and its applicable Lease Indenture Trustee, Owner Participant and such Owner
Lessor's Representative.
SECTION 4.12 SHORTFALL NOTICES. Not later than the Business
Day preceding each date on which any transfer is to be made pursuant to this
Article IV, the Collateral Agent shall notify the applicable Owner Lessor and
its applicable Owner Participant if the amounts requested to be transferred on
such date in the Request Letter delivered in connection therewith exceed the
funds available in the applicable subaccounts of the relevant Accounts.
SECTION 4.13 TRANSFERS FROM ACCOUNTS DURING A DEFAULT PERIOD.
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(a) During a Default Period under a Facility Lease, the
Facility Lessee shall be entitled to issue Request Letters and otherwise direct
the transfer of funds from the applicable Accounts or subaccounts of the
Accounts pursuant to the other provisions of this Article IV until the
Collateral Agent receives a Notice of Action directing that action be taken
pursuant to Section 4.13(b).
(b) At any time after the Collateral Agent receives a Notice
of Action specifying that action be taken pursuant to this Section 4.13(b), the
Collateral Agent shall transfer (from the Accounts or applicable subaccounts in
the order set forth in Section 4.13(c)) the following amounts in the following
order of priority:
FIRST, to the Collateral Agent, the amount certified by the
Collateral Agent to be the sum of the unpaid fees, indemnities, costs
and expenses then due and payable for its services in such capacity;
SECOND, pro rata to (i) the applicable Owner Lessor, the
amount certified by such Owner Lessor to be the aggregate amount
(including premium and interest, if any) then due and payable in
respect of Senior Rent and Supplemental Lease Rent (other than Excepted
Payments) under the applicable Operative Documents and (ii) to extent
that the applicable Owner Lessor's Percentage of amounts then on
deposit in the Permitted Indebtedness Account are insufficient to pay
such amounts, to any Person who has provided Permitted Indebtedness in
the aggregate amount of the applicable Owner Lessor's Percentage of
such Permitted Indebtedness (including premium and interest, if any)
then due and payable;
THIRD, to the applicable Owner Lessor, the amount certified by
such Owner Lessor to be the aggregate amount of the Component A of
Basic Lease Rent , Component A of Termination Value and all other fees
and indemnities in respect thereof then due and payable in respect of
such Component A of Basic Lease Rent or Component A of Termination
Value under the applicable Facility Lease;
FOURTH, pro rata, to the Persons entitled thereto, an amount
equal to all other Supplemental Rent under the applicable Facility
Lease then due and payable to such Persons and all other sums due and
owing by the Facility Lessee to such Persons under any of the
applicable Operative Documents (as certified in writing by such
Persons); and
FIFTH, any surplus then remaining after the termination of the
applicable Facility Lease in accordance with its terms and the
satisfaction of all rents and fees thereunder, shall be paid to the
Facility Lessee or its
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successors or assigns or to whomsoever may be lawfully entitled to
receive the same or as a court of competent jurisdiction may direct.
(c) The amounts to be distributed pursuant to Section 4.13(b)
with respect to any Facility Lease shall be debited from the subaccounts in the
following order of priority:
FIRST, from the applicable subaccount of the Suspended
Distributions Account;
SECOND, from the applicable subaccount of the Subordinated
Reserve Account;
THIRD, from the applicable subaccount of the Supplemental
Account;
FOURTH, from the applicable subaccount of the Subordinated
Rent Payment Account;
FIFTH; from the applicable subaccount of the Reserve Account;
SIXTH, from the applicable subaccount of the Senior Rent
Payment Account;
SEVENTH, solely with respect to amounts distributed pursuant
to clauses FIRST through FOURTH of Section 4.13(b) above, up to an
amount equal to the amount then on deposit therein, from the applicable
subaccount of the Recovery Event Proceeds Account; and
EIGHTH, solely with respect to amounts distributed pursuant to
clauses FIRST through FOURTH of Section 4.13(b) above, up to an amount
equal to such Owner Lessor's Percentage of the amount then on deposit
therein, from the Revenue Account.
It is understood and agreed that no amount on deposit in any other subaccount of
any of the Accounts (nor, except as provided in clauses seventh and eighth
above, amounts on deposit in the Revenue Account or the applicable subaccount of
the Recovery Event Proceeds Account) shall be available for distributions to be
made pursuant to Section 4.13(b) with respect to such Facility Lease and the
applicable Operative Documents.
SECTION 4.14 COLLATERAL AGENT'S CALCULATIONS. In making the
determinations and allocations required by Section 4.13, the Collateral Agent
may rely upon information specified in any Request Letter and any certificate of
the
19
applicable Owner Lessor delivered to it, as applicable, and the Collateral
Agent shall have no liability to any of the Secured Parties for actions taken in
reliance on such information. All transfers and releases made by the Collateral
Agent pursuant to Section 4.13 shall be (subject to any decree of any court of
competent jurisdiction) final, and the Collateral Agent shall have no duty to
inquire as to the application by any Secured Party of any amounts distributed to
them.
SECTION 4.15 INSUFFICIENT AMOUNTS. Except as provided in
Sections 4.1(b) and 4.6(d) hereof, to the extent the applicable Owner Lessor
Percentage of the amounts on deposit in any Account (or, if the Account has
subaccounts, in the applicable subaccount) are insufficient to fully satisfy any
transfer requirement from such Account (or, if the Account has subaccounts, the
applicable subaccount) under this Article IV, such transfer shall be made to the
extent of the amounts on deposit in such Account (or, if the Account has
subaccounts, the applicable subaccount). In addition, if (i) any transfer
requirements from any Account (or, if the Account has subaccounts, the
applicable subaccount) in this Article IV share the same level of priority and
(ii) the funds equal to the applicable Owner Lessor Percentage of the funds in
such Account (or, if the Account has subaccounts, the funds in the applicable
subaccount) are insufficient to satisfy in full all such transfer requirements
which share such level of priority, such transfers shall be made on a pro rata
basis to the extent of the amounts on deposit in such Account (or, if the
Account has subaccounts, the funds in the applicable subaccount).
ARTICLE V
INVESTMENT
Cash held by the Collateral Agent in the Accounts shall not be
invested or reinvested except as provided below:
(a) cash held in the Accounts or applicable subaccounts shall
be invested and reinvested in Permitted Investments by the Collateral Agent who
shall make such Permitted Investments (i) except during a Default Period, at the
written direction of the Facility Lessee and (ii) during a Lease Default or
Lease Event of Default under a Facility Lease, in Permitted Investments selected
by the Collateral Agent unless specific investment instructions are given to the
Collateral Agent by the applicable Owner Lessor and in such case, to the extent
of amounts credited to applicable subaccounts;
(b) the Collateral Agent shall sell or liquidate all or any
designated part of the Permitted Investments held in any Account to the extent
credited to any subaccount at any time the proceeds thereof are required to make
a
20
release from any such subaccount or any transfer between subaccounts pursuant to
Article IV hereof; and
(c) all such Permitted Investments, the interest thereon, and
the net proceeds of the sale, liquidation or payment thereof, shall be held in
the appropriate Account and credited to the applicable subaccounts for the same
purposes as the cash used to purchase such Permitted Investments.
The Collateral Agent shall take such action as may be
necessary to perfect the security interest created by this Agreement in all
Permitted Investments held in any Pledged Account.
ARTICLE VI
COLLATERAL AGENT
SECTION 6.1 RIGHTS, DUTIES, ETC. The acceptance by the
Collateral Agent of its respective duties hereunder is subject to the following
terms and conditions which the parties to this Agreement hereby agree shall
govern and control with respect to the rights, duties, liabilities and
immunities of the Collateral Agent:
(a) it shall not be responsible or liable in any manner
whatever for soliciting any funds or for the sufficiency, correctness,
genuineness or validity of any funds or securities deposited with or held by it;
(b) it shall be protected in acting or refraining from acting
upon any written notice, certificate, instruction, request or other paper or
document, as to the due execution thereof and the validity and effectiveness of
the provisions thereof and as to the truth of any information therein contained,
which it in good faith believes to be genuine;
(c) it shall not be liable for any error of judgment or for
any act done or step taken or omitted except in the case of its gross
negligence, willful misconduct or bad faith;
(d) it may consult with and obtain advice from counsel of its
own choice in the event of any dispute or question as to the construction of any
provision hereof;
(e) it shall have no duties hereunder, except those which are
expressly set forth herein and in any modification or amendment hereof;
provided,
21
however, that no such modification or amendment hereof shall affect its duties
unless it shall have given its prior written consent thereto;
(f) it may execute or perform any duties hereunder either
directly or through administrative agents or attorneys selected with reasonable
care;
(g) it may engage or be interested in any financial or other
transactions with any party hereto and may act on, or as depositary, collateral
agent or administrative agent for, any committee or body of holders of
obligations of such Persons as freely as if it were not Collateral Agent
hereunder; and
(h) it shall not be obligated to take any action which in its
reasonable judgment would involve it in expense or liability unless it has been
furnished with reasonable indemnity.
SECTION 6.2 RESIGNATION OR REMOVAL. The Collateral Agent may
resign or be removed as set forth in Section 6.5 of the Amended and Restated
Guarantee and Collateral Agreement.
ARTICLE VII
DETERMINATIONS
In the event of any dispute as to any amount to be distributed
or paid by the Collateral Agent from the Accounts (or subaccounts), the
Collateral Agent is authorized and directed to retain in its possession without
liability to anyone all or any part of the amounts then on deposit in the
Accounts or subaccounts, until such dispute shall have been settled by mutual
agreement of the disputing parties or by a final order, decree or judgment of a
Federal or State court of competent jurisdiction located in the State of New
York (with respect to disputes in connection with amounts on deposit in the
Accounts or subaccounts), and time for an appeal has expired and no appeal has
been perfected, but the Collateral Agent shall be under no duty whatsoever to
institute or defend any such proceedings.
ARTICLE VIII
MISCELLANEOUS
SECTION 8.1 INDEMNIFICATION OF COLLATERAL AGENT. The Facility
Lessee assumes liability for, and agrees to indemnify, protect, save and keep
harmless each Owner Lessor, each Owner Lessor's Representative, each Owner
22
Participant, the Security Agent and the Collateral Agent and their respective
successors, assigns, agents and servants from and against, any and all claims,
liabilities, obligations, losses, damages, taxes, penalties, costs and expenses
(including reasonable attorneys' fees) that may be imposed on, incurred by, or
asserted against, at any time, such Owner Lessor, such Owner Lessor's
Representative, such Owner Participant, the Security Agent or the Collateral
Agent and in any way relating to or arising out of the execution and delivery of
this Agreement, the establishment of the Accounts and subaccounts, the
acceptance of deposits, the purchase or sale of Permitted Investments, the
retention of cash and Permitted Investments or the proceeds thereof and any
payment, transfer or other application of cash or Permitted Investments in
accordance with the provisions of this Agreement, or as may arise by reason of
any act, omission or error of the Collateral Agent made in good faith in the
conduct of its duties; except that the Facility Lessee shall not be required to
indemnify, protect, save and keep harmless the Collateral Agent or any Owner
Lessor, against its own gross negligence or willful misconduct. The indemnities
contained in this Section 8.1 shall survive the termination of this Agreement.
SECTION 8.2 WAIVER OF RIGHT OF SET-OFF. The Collateral Agent
waives, with respect to all of its existing and future claims against the
Facility Lessee, all existing and future rights of set-off and banker's liens
against the Accounts and subaccounts and all items (and proceeds thereof) that
come into its possession in connection with the Accounts.
SECTION 8.3 TERMINATION. The provisions of Articles III and IV
with respect to the applicable Accounts or subaccounts shall terminate on the
date on which the applicable Facility Lease shall terminate in accordance with
its terms and the Obligations under the applicable Transaction Documents shall
have been paid in full. Promptly after such termination, the applicable Owner
Lessor shall notify the Collateral Agent of such termination and the Collateral
Agent hereby agrees that at the time of such termination (x) the Owner Lessor's
Percentage of amounts or Permitted Investments in the Accounts or amounts and
Permitted Investments in the applicable subaccounts, as applicable, shall be
liquidated as soon as commercially prudent, (y) a reconciliation shall be made
of the distributions made from the applicable Accounts or subaccounts and any
necessary adjustments to the balances of such applicable Accounts or subaccounts
as a result of such reconciliation shall be made and (z) the applicable portion
of Owner Lessor's Percentage of the moneys in the applicable Accounts, subject
to the other Transaction Documents, or subaccounts (after giving effect to such
liquidation and such adjustments) shall, subject to other Transaction Documents,
be distributed to the Facility Lessee or as it may direct.
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SECTION 8.4 SEVERABILITY. If any one or more of the covenants
or agreements provided in this Agreement on the part of the parties hereto to be
performed should be determined by a court of competent jurisdiction to be
contrary to law, such covenant or agreement shall be deemed and construed to be
severable from the remaining covenants and agreements herein contained and shall
in no way affect the validity of the remaining provisions of this Agreement.
SECTION 8.5 COUNTERPARTS. This Agreement may be executed in
several counterparts, each of which shall be an original and all of which shall
constitute one and the same instrument.
SECTION 8.6 AMENDMENTS. The provisions of this Agreement and
other Transaction Documents may be amended, modified or waived if such
amendment, modification or waiver is in writing and is entered into in
accordance with the provisions of the Participation Agreement.
SECTION 8.7 APPLICABLE LAW. THIS AGREEMENT SHALL IN ALL
RESPECTS BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE
OF NEW YORK REGARDLESS OF ANY OTHER PROVISION IN ANY OTHER AGREEMENT, FOR
PURPOSES OF THE NEW YORK UCC, NEW YORK SHALL BE DEEMED TO BE THE SECURITIES
INTERMEDIARY'S JURISDICTION AND THE ACCOUNTS (AS WELL AS THE SECURITIES
ENTITLEMENTS RELATED THERETO) SHALL BE GOVERNED BY THE LAWS OF THE STATE OF NEW
YORK.
SECTION 8.8 NOTICES. Except as otherwise specifically provided
herein, all notices, consents, directions, approvals, instructions, requests and
other communications required or permitted by the terms hereof to be given to
any Person shall be in writing and shall be deemed to have been duly given or
made when delivered if delivered by hand or courier or when received if sent by
mail or telecopy, in each case addressed to the party to which such notice is
required or permitted to be given or made hereunder set forth below its
signature hereto, or such other address as may be specified from time to time by
such party in a notice to the other parties hereto.
SECTION 8.9 BENEFIT OF SECURITY DEPOSIT AGREEMENT
(a) This Security Deposit Agreement shall inure to the benefit
of, and be enforceable by, the parties hereto and their respective successors
and permitted assigns, and no other Person shall be entitled to any of the
benefits of this Security Deposit Agreement.
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(b) Notwithstanding the foregoing, in order to secure the
Lessor Notes of each Owner Lessor, such Owner Lessor will assign and grant a
first priority security interest in favor of its applicable Lease Indenture
Trustee in and to all of such Owner Lessor's right, title and interest in, to
and under this Security Deposit Agreement (other than to the extent relating to
Excepted Payments and the rights to enforce and collect the same). The Facility
Lessee hereby consents to such assignment and to the creation of such Lien and
security interest and acknowledges receipt of copies of the Lease Indenture, it
being understood that such consent shall not affect any requirement or the
absence of any requirement for any consent of the Facility Lessee under any
other circumstances. Unless and until the Collateral Agent shall have received
written notice from the Lease Indenture Trustee that the Lien of the applicable
Lease Indenture has been fully discharged, the applicable Security Agent shall
have the right (i) to directly receive for application in accordance with the
terms of the applicable Lease Indenture all amounts payable or otherwise
distributable under this Agreement to the applicable Owner Lessor (other than in
respect of the Excepted Payments) and (ii) to exercise the rights of such Owner
Lessor under this Security Deposit Agreement (other than with respect to
Excepted Payments and the rights to enforce and collect the same) to the extent
set forth in and subject to the exceptions set forth in the applicable Lease
Indenture.
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IN WITNESS WHEREOF, the parties hereto have each caused this
Agreement to be duly executed by their duly authorized officers, all as of the
day and year first above written.
EME HOMER CITY GENERATION L.P.
By:
By:
-------------------------------------------
Name:
Title:
Address for Notices:
▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
THE BANK OF NEW YORK, as Collateral Agent
By:
-------------------------------------------
Name:
Title:
Address for Notices:
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
26