Exhibit 4.7
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PLEDGE AND COLLATERAL AGREEMENT
made by
EDISON MISSION HOLDINGS CO.,
in favor of
THE BANK OF NEW YORK,
as successor to
UNITED STATES TRUST COMPANY OF NEW YORK,
as Collateral Agent
Dated as of December __, 2001
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TABLE OF CONTENTS
PAGE
SECTION 1. DEFINED TERMS..........................................................................................2
1.1 DEFINITIONS.....................................................................................2
1.2 OTHER DEFINITIONAL PROVISIONS...................................................................3
SECTION 2. PLEDGE; GRANT OF SECURITY INTEREST.....................................................................3
SECTION 3. REPRESENTATIONS AND WARRANTIES.........................................................................4
3.1 DUE ORGANIZATION................................................................................5
3.2 DUE AUTHORIZATION; ENFORCEABILITY, ETC..........................................................5
3.3 NON-CONTRAVENTION...............................................................................5
3.4 CONSENTS........................................................................................5
3.5 LITIGATION......................................................................................6
3.6 DEFENSES........................................................................................6
3.7 REGULATIONS.....................................................................................6
3.8 OTHER CONTRACTS.................................................................................6
3.9 TITLE; NO OTHER LIENS...........................................................................6
3.10 PERFECTED FIRST PRIORITY LIENS..................................................................6
3.11 CHIEF EXECUTIVE OFFICE..........................................................................7
3.12 INVESTMENT PROPERTY.............................................................................7
SECTION 4. COVENANTS..............................................................................................7
4.1 MAINTENANCE OF EXISTENCE........................................................................7
4.2 PAYMENT OF TAXES................................................................................7
4.3 BANKRUPTCY......................................................................................8
4.4 DELIVERY OF CERTIFICATED SECURITIES.............................................................8
4.5 MAINTENANCE OF PERFECTED SECURITY INTEREST FURTHER DOCUMENTATION................................8
4.6 CHANGES IN LOCATIONS, NAME, ETC.................................................................8
4.7 NOTICES.........................................................................................9
4.8 INVESTMENT PROPERTY.............................................................................9
SECTION 5. REMEDIAL PROVISIONS...................................................................................10
5.1 INVESTMENT PROPERTY...........................................................................10
5.2 PROCEEDS TO BE TURNED OVER TO COLLATERAL AGENT.................................................11
5.3 DEPOSITS; APPLICATION OF PROCEEDS..............................................................11
5.4 CODE AND OTHER REMEDIES........................................................................12
5.5 PLEDGED SHARES.................................................................................12
5.8 WAIVER; DEFICIENCY.............................................................................13
SECTION 6. THE COLLATERAL AGENT..................................................................................13
6.1 COLLATERAL AGENT'S APPOINTMENT AS ATTORNEY-IN-FACT, ETC........................................13
6.2 DUTY OF COLLATERAL AGENT.......................................................................15
6.3 EXECUTION OF FINANCING STATEMENTS..............................................................15
6.4 AUTHORITY OF COLLATERAL AGENT..................................................................15
SECTION 7. MISCELLANEOUS.........................................................................................16
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7.1 AMENDMENTS IN WRITING..........................................................................16
7.2 NOTICES........................................................................................16
7.3 NO WAIVER BY COURSE OF CONDUCT; CUMULATIVE REMEDIES............................................16
7.4 SUCCESSORS AND ASSIGNS.........................................................................16
7.5 SET-OFF........................................................................................17
7.6 COUNTERPARTS...................................................................................17
7.7 SEVERABILITY...................................................................................17
7.8 SECTION HEADINGS...............................................................................17
7.9 INTEGRATION....................................................................................18
7.10 GOVERNING LAW..................................................................................18
7.11 SUBMISSION TO JURISDICTION; WAIVERS............................................................18
7.12 ACKNOWLEDGMENTS. THE PLEDGOR HEREBY ACKNOWLEDGES THAT:........................................19
7.13 RELEASES.......................................................................................19
7.14 CONTINUING ASSIGNMENT; PLEDGE AND SECURITY INTEREST; RELEASE...................................19
7.15 EXPENSES.......................................................................................20
7.16 WAIVER OF JURY TRIAL...........................................................................22
SCHEDULES
Schedule 1........Notice Addresses
Schedule 2........Investment Property
Schedule 3........Perfection Matters
Schedule 4........Jurisdictions of Organization and Chief Executive Offices
Schedule 5........Participation Agreements
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PLEDGE AND COLLATERAL AGREEMENT, dated as of December __,
2001, made by EDISON MISSION HOLDINGS CO., a California corporation ( "EDISON
MISSION HOLDINGS," the " PLEDGOR") in favor of The Bank of New York, as
successor to UNITED STATES TRUST COMPANY 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 Generation,
L.P., a Pennsylvania limited partnership ("EME HOMER CITY") will enter into a
transaction pursuant to the Participation Agreements listed on SCHEDULE 5 (as
amended, modified and supplemented and in effect from time to time,
collectively, the "PARTICIPATION AGREEMENTS") whereby EME Homer City will sell
the undivided interests in its generating assets to the Owner Lessor and the
Owner Lessor will lease such undivided interests in the generating assets to EME
Homer City under the Facility Lease.
B. In consideration of the transactions contemplated by each
of 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 Pledgors desire by this Agreement and the other Security Documents (as
defined below) to provide collateral as security for EME Homer City's
obligations under Participation Agreements and the other Operative Documents (as
defined below).
D. In order to simplify administration of such collateral and
to provide for the orderly enforcement of their respective rights, the Secured
Parties (as defined below) have appointed the Collateral Agent to serve as their
common representative, to be the beneficiary under any pledge intended to
benefit the Secured Parties, and to hold the liens created, or to be created,
under the Operative Documents.
E. EME Homer City is a member of an affiliated group of
companies that includes the Pledgor. The Pledgor will derive substantial direct
and indirect benefit from the sale-leaseback transaction.
F. It is a condition precedent to the approval by the Secured
Parties of the transactions contemplated by the Operative Documents that the
Pledgor shall have executed and delivered this Agreement to the Collateral Agent
for the benefit of the Secured Parties.
NOW, THEREFORE, in consideration of the premises, the Pledgor
hereby agrees with the Collateral Agent, for the benefit of the Secured Parties,
as follows:
SECTION 1. DEFINED TERMS
1.1 DEFINITIONS. (a) Unless otherwise defined herein, terms
defined in each Participation Agreement and used herein shall have the meanings
given to them in each Participation Agreement.
(b) The following terms shall have the following meanings:
"AGREEMENT": this Pledge and Collateral Agreement, as the same
may be amended, supplemented or otherwise modified from time to time.
"CAPITAL STOCK": any and all shares, interests, participations
or other equivalents (however designated) of capital stock of a corporation, any
and all equivalent ownership interests in a Person (other than a corporation)
and any and all warrants, rights or options to purchase any of the foregoing.
"CERTIFICATED SECURITY": the collective reference to (i) any
"certificated security" as defined in Section 8-102 of the New York UCC and (ii)
all limited liability company certificates, partnership interest certificates
and certificated options therefor that may be issued or granted by any Issuer.
"COLLATERAL": as defined in Section 2(a).
"COLLATERAL ACCOUNT": any collateral account established by
the Collateral Agent as provided in SECTION 5.2.
"FACILITY LEASE": as defined in each Participation Agreement.
"INVESTMENT PROPERTY": the collective reference to (i) all
"investment property" as such term is defined in Section 9-115 of the New York
UCC and (ii) whether or not constituting "investment property" as so defined,
all Pledged Shares.
"ISSUERS": MEW as issuer of the Investment Property.
"LEASE EVENT OF DEFAULT": as defined in each Participation
Agreement.
"LEASE INDENTURE TRUSTEE": as defined in each Participation
Agreement.
"LEVERAGED LEASE OBLIGATIONS": as defined in the recitals.
"MEW": Mission Energy Westside, Inc., a California
corporation.
"MAJORITY IN INTEREST OF OWNER LESSORS": the holders of at
least 51% of all Undivided Interests (as defined in any Participation Agreement)
still subject to a Facility Lease.
"NEW YORK UCC": the Uniform Commercial Code as from time to
time in effect in the State of New York.
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"PERSON": any natural person, corporation, partnership,
limited liability company, firm, association, trust, government, governmental
agency or other entity, whether acting in an individual, fiduciary or other
capacity.
"PLEDGED SHARES": the shares of Capital Stock of MEW, together
with any other shares, stock certificates, options or rights of any nature
whatsoever in respect of the Capital Stock of MEW that may be issued or granted
to, or held by, the Pledgor while this Agreement is in effect.
"PROCEEDS": all "proceeds" as such term is defined in Section
9-306(1) of the New York UCC and, in any event, shall include all dividends or
other income from the Investment Property, collections thereon or distributions
or payments with respect thereto.
"SECURED PARTIES": the Collateral Agent, the Owner Lessors and
the Owner Participant.
"SECURITIES ACT": the Securities Act of 1933, as amended.
1.2 OTHER DEFINITIONAL PROVISIONS. (a) The words "hereof",
"herein" and "hereunder" and words of similar import when used in this Agreement
shall refer to this Agreement as a whole and not to any particular provision of
this Agreement, and section, schedule, appendix and exhibit references are to
this Agreement unless otherwise specified.
(b) Each reference in this Agreement to an Operative Document
or other agreement shall be deemed to refer to such Operative Document or other
agreement as the same may be amended, supplemented or otherwise modified from
time to time.
(c) Any term defined by reference to an agreement, instrument
or other document shall have the meaning so assigned to it whether or not such
agreement, instrument or document is in effect.
(d) Each reference in this Agreement to a Person shall be
deemed to include such Person's successors and assigns.
(e) Each reference in this Agreement to a Requirement of Law
shall be deemed to refer to such Requirement of Law as the same may be amended,
supplemented or otherwise modified from time to time.
(f) The meanings given to terms defined herein shall be
equally applicable to both the singular and plural forms of such terms.
SECTION 2. PLEDGE; GRANT OF SECURITY INTEREST
(a) As collateral security for the prompt and complete payment
and performance when due (whether at stated maturity, by acceleration or
otherwise) by EME Homer City of all EME Homer City's Leveraged Lease
Obligations, the Pledgor hereby pledges and grants to the Collateral Agent for
the benefit of the Secured Parties a pledge of and a first priority continuing
security interest in, all of the Pledgor's right, title and interest in, to and
under the
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following property, whether now owned by the Pledgor or hereafter acquired and
whether now existing or hereafter coming into existence (all being collectively
referred to herein as the "COLLATERAL"):
(1) all shares of capital stock of MEW (the "PLEDGED
SHARES"), the certificates representing the Pledged Shares,
and all cash dividends, stock dividends, cash, instruments,
chattel paper, warrants, options and other rights, property or
proceeds and products from time to time received, receivable
or otherwise distributed in respect of or in exchange for any
or all of the Pledged Shares now or hereafter owned by the
Pledgor;
(2) additional shares of capital stock of MEW at any
time acquired by the Pledgor whether by stock split, stock
dividend, transfer, new issuance or any other manner (any such
additional shares or membership interests shall constitute
part of the Pledged Shares) whether voting or non-voting, and
all securities convertible into and warrants, options and
other rights to acquire any shares of capital stock of MEW,
and the certificates or other instruments representing such
additional shares, warrants, options or rights, and all cash
dividends, stock dividends, cash, instruments, chattel paper,
and any other rights, property or proceeds and products from
time to time received, receivable or otherwise distributed in
respect of or in exchange for any or all of the foregoing;
(3) all other claims of any kind or nature, and any
instruments, certificates, chattel paper or other writings
evidencing such claims, whether in contract or tort and
whether arising by operation of law, consensual agreement or
otherwise, at any time acquired by Pledgor in respect of any
or all of the foregoing against MEW;
(4) all books and records relating to any of the
foregoing;
(5) all interests in substitution for or in addition to
any of the foregoing, any certificates representing or
evidencing such interests, and all cash, securities,
distributions and other property at any time and from time to
time received, receivable or otherwise distributed in respect
of or in exchange for any or all of the foregoing; and
(6) all Proceeds of and to any of the property of the
Pledgor described in the preceding clauses of this Section.
SECTION 3. REPRESENTATIONS AND WARRANTIES
The Pledgor hereby represents and warrants, with respect to
itself and its Collateral, to the Collateral Agent and each Secured Party that:
3.1 DUE ORGANIZATION. The Pledgor (i) is duly organized,
validly existing and in good standing under the law of the jurisdiction of its
formation, and has the capacity and
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power to enter into this Agreement, to perform its obligations hereunder and
thereunder and to consummate the transactions contemplated hereby and thereby,
(ii) is duly qualified to do business and in good standing in each other
jurisdiction where the character of its properties or the nature of its
activities makes such qualification necessary, (iii) has the requisite power to
own its Collateral, and (iv) possesses all Governmental Approvals required for
its ownership of its Collateral.
3.2 DUE AUTHORIZATION; ENFORCEABILITY, ETC. The Pledgor has
taken all necessary corporate or other action, as the case may be, to authorize
the transactions contemplated by this Agreement. This Agreement has been duly
executed and delivered by the Pledgor and constitutes the legal, valid and
binding obligations of the Pledgor enforceable in accordance with its terms,
(except as the enforceability thereof may be limited by bankruptcy, insolvency,
reorganization or other laws affecting the enforcement of creditors' rights
generally and general equitable principles).
3.3 NON-CONTRAVENTION. Neither the execution and delivery of
this Agreement nor compliance with any of the terms and provisions hereof (i)
contravenes any Requirement of Law, binding on or affecting the Pledgor, any
law, order, writ, judgment, injunction, decree, determination, or award
applicable to the Pledgor or Governmental Approvals applicable to the Pledgor or
any of its respective properties or other assets, except where such
contravention could not reasonably be expected to have a Material Adverse
Effect, (ii) conflicts with, breaches or contravenes the provisions of the
organizational documents of the Pledgor or under any mortgage, indenture or
other contract, agreement or instrument to which the Pledgor is a party or by
which the Pledgor or its property is bound, or (iii) results in the creation or
imposition of any Liens (other than those created hereunder) upon any of the
property or assets of the Pledgor under, or in a condition or event that
constitutes (or that, upon notice or lapse of time or both, would constitute) an
event of default with respect to any contractual obligations of the Pledgor.
3.4 CONSENTS. Except for the actions contemplated herein or in
Section 4.6 of the Participation Agreement, no consent of any other Person and
no authorization, approval, or other action by, and no notice to or filing with,
any Person or Governmental Authority is required (i) for the pledge of the
Collateral by the Pledgor pursuant to this Agreement, (ii) for the execution,
delivery or performance of this Agreement by the Pledgor, (iii) for the
perfection or maintenance of the security interest created hereby (including the
first priority nature of such security interest) or (iv) for the exercise by the
Owner Lessor, the Owner Participant, or so long as the Lien of the Lease
Indenture has not been discharged or released, the Security Agent, of the voting
or other rights provided for in this Agreement or the remedies in respect of
such Collateral pursuant to this Agreement or as provided by any Requirement of
Law, except those which have been duly obtained or made and, in the case of
maintenance of perfection, the filing of continuation statements under the
Uniform Commercial Code.
3.5 LITIGATION. There are no actions, suits or proceedings at
law or in equity by or before any Governmental Authority now pending or, to the
Pledgor's Actual Knowledge, threatened against or affecting the Pledgor or any
of its properties or rights which could reasonably be expected to have a
Material Adverse Affect on the right or ability of the Pledgor to fulfill its
obligations hereunder, or which questions or challenges the validity of this
Agreement or any of the transactions contemplated hereby.
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3.6 DEFENSES. To the Actual Knowledge of the Pledgor, no
Pledged Shares pledged hereunder are subject to any defense, offset or
counterclaim, nor have any of the foregoing been asserted or alleged against the
Pledgor by any Person. As of the Closing Date, there are no certificates,
instruments, documents or other writings of MEW which evidence any Pledged
Shares other than the stock certificate evidencing the Pledged Shares (the
"STOCK CERTIFICATE") the original of which has been delivered to the Lease
Indenture Trustee at the Closing.
3.7 REGULATIONS. None of the Collateral pledged hereunder
constitutes margin stock, as defined in Regulation T, U and X of the Board of
Governors of the Federal Reserve System or any regulations substituted therefor,
as from time to time in effect, are used in this Section 3 without meaning.
3.8 OTHER CONTRACTS. The Pledgor is not a party to any
outstanding agreement, option or contract to sell all or any portion of the
Collateral. No part of the Collateral is subject to the terms of any agreement
restricting the sale or transfer of such Collateral. No Person has any right to
purchase or terminate any or all of the interests of the Pledgor in the
Collateral, except pursuant to the terms of this Agreement.
3.9 TITLE; NO OTHER LIENS. Except for the security interest
granted to the Collateral Agent pursuant to this Agreement, the Pledgor owns
each item of the Collateral free and clear of any and all Liens or claims of
others. No financing statement or other public notice with respect to all or any
part of the Collateral is on file or of record in any public office, except such
as have been filed in favor of the Collateral Agent pursuant to this Agreement
or as are permitted by the Operative Documents.
3.10 PERFECTED FIRST PRIORITY LIENS. The security interests
granted pursuant to this Agreement upon completion of the filings and other
actions specified on SCHEDULE 3 (which, in the case of all filings and other
documents referred to on said SCHEDULE, have been delivered to the Collateral
Agent in completed and duly executed form) will (a) constitute valid and
enforceable perfected security interests in all of the Collateral in favor of
the Collateral Agent as collateral security for EME Homer City's Leveraged Lease
Obligations to the extent that a security interest may be perfected by filing
and/or the other actions specified on SCHEDULE 3, and (b) are prior to all other
Liens on the Collateral in existence on the date hereof except for Liens
permitted by the Operative Documents and which have priority over the Liens on
the Collateral by operation of law.
3.11 CHIEF EXECUTIVE OFFICE. On the date hereof, the Pledgor's
jurisdiction of organization and the location of the Pledgor's chief executive
office or sole place of business are specified on SCHEDULE 4.
3.12 INVESTMENT PROPERTY. (a) The shares of Pledged Shares
pledged by the Pledgor hereunder constitute all the issued and outstanding
shares of all classes of the Capital Stock of the Issuer owned by the Pledgor.
(b) All the shares of the Pledged Shares have been duly and
validly issued and are fully paid and nonassessable.
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(c) The Pledgor is the record and beneficial owner of, and has
good and marketable title to, the Collateral pledged by it hereunder, free of
any and all Liens or options in favor of, or claims of, any other Person, except
the security interest created by this Agreement.
SECTION 4. COVENANTS
The Pledgor covenants and agrees with the Collateral Agent and
the Secured Parties that, from and after the date of this Agreement until the
Leveraged Lease Obligations shall have been paid in full:
4.1 MAINTENANCE OF EXISTENCE. The Pledgor shall preserve and
maintain its corporate existence and all of its rights, privileges and
franchises that are necessary for the fulfillment of its obligations under this
Agreement.
4.2 PAYMENT OF TAXES. The Pledgor shall pay, before any fine,
penalty, interest or cost attaches thereto, all taxes, assessments and other
governmental or non-governmental charges or levies now or hereafter assessed or
levied against the Collateral or upon the Liens provided for herein provided
that no such tax, assessment, governmental charge or levy need be paid if being
contested in good faith by appropriate actions promptly initiated and diligently
conducted and if (i) adequate reserves consistent with GAAP requirements (or
other security arrangements reasonably satisfactory to the Lenders and the Owner
Participant) are established and maintained in an amount sufficient to pay any
such taxes, assessments or other charges, accrued interest thereon and potential
penalties or other costs relating thereto, or other adequate provision for the
payment thereof shall have been made, and (ii) any tax, assessment or other
charge determined to be due, together with any interest or penalties thereon, is
immediately paid after resolution of such contest.
4.3 BANKRUPTCY. The Pledgor shall not authorize, seek to cause
or permit MEW to commence a voluntary case or other proceeding seeking
liquidation, reorganization or other relief with respect to MEW or its
respective debts under any bankruptcy, insolvency or other similar law now or
hereafter in effect or seeking the appointment of a trustee, receiver,
liquidator, custodian or other similar official of it or any substantial part of
its property or to consent to any such relief or to the appointment of or taking
possession by any such official in an involuntary case or other proceeding
commenced against it, or to make a general assignment for the benefit of
creditors.
4.4 DELIVERY OF CERTIFICATED SECURITIES. If any amount payable
under or in connection with any of the Collateral shall be or become evidenced
by any Certificated Security, such Certificated Security shall be immediately
delivered to the Collateral Agent, duly indorsed in a manner satisfactory to the
Collateral Agent, to be held as Collateral pursuant to this Agreement.
4.5 MAINTENANCE OF PERFECTED SECURITY INTEREST FURTHER
DOCUMENTATION. (a) The Pledgor shall take any and all actions that may be
necessary or, in the reasonable discretion of the Collateral Agent, prudent to
maintain the security interest created by this Agreement as a perfected security
interest having at least the priority described in Section 3.2 and shall defend
such security interest against the claims and demands of all Persons whomsoever.
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(b) At any time and from time to time, upon the written
request of the Collateral Agent, and at the sole expense of the Pledgor, the
Pledgor will promptly and duly execute and deliver, and have recorded, such
further instruments and documents and take such further actions as the
Collateral Agent may reasonably request for the purpose of obtaining or
preserving the full benefits of this Agreement and of the rights and powers
herein granted, including (i) filing any financing or continuation statements
under the Uniform Commercial Code (or other similar laws) in effect in any
jurisdiction with respect to the security interests created hereby and (ii) in
the case of Investment Property, and any other relevant Collateral, taking any
actions necessary to enable the Collateral Agent to obtain "control" (within the
meaning of the applicable Uniform Commercial Code) with respect thereto
4.6 CHANGES IN LOCATIONS, NAME, ETC. The Pledgor will not,
except upon 30 days' prior written notice to the Collateral Agent and delivery
to the Collateral Agent of all additional executed financing statements and
other documents reasonably requested by the Collateral Agent to maintain the
validity, perfection and priority of the security interests provided for herein:
(i) change its jurisdiction of organization or the
location of its chief executive office or sole place of
business from that referred to in SECTION 3.3; or
(ii) change its name, identity or corporate structure to
such an extent that any financing statement filed by the
Collateral Agent in connection with this Agreement would
become misleading.
4.7 NOTICES. The Pledgor will advise the Collateral Agent
promptly, in reasonable detail, of: ----------------
(a) any Lien (other than security interests created hereby or
Liens permitted under the Operative Documents) on any of the Collateral which
could reasonably be expected to have a material adverse effect on the ability of
the Collateral Agent to exercise any of its remedies hereunder; and
(b) of the occurrence of any other event which could
reasonably be expected to have a material adverse effect on the aggregate value
of the Collateral or on the security interests created hereby.
4.8 INVESTMENT PROPERTY. (a) If the Pledgor shall become
entitled to receive or shall receive any certificate (including any certificate
representing a stock dividend or a distribution in connection with any
reclassification, increase or reduction of capital or any certificate issued in
connection with any reorganization), option or rights in respect of the capital
stock in the Issuer, whether in addition to, in substitution of, as a conversion
of, or in exchange for, any of the Pledged Shares, as the case may be, or
otherwise in respect thereof, the Pledgor shall accept the same as the agent of
the Collateral Agent and the Secured Parties, hold the same in trust for the
Collateral Agent and the Secured Parties and deliver the same forthwith to the
Collateral Agent in the exact form received, duly indorsed by the Pledgor to the
Collateral Agent, if required, together with an undated stock power or power of
transfer, as the case may
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be, covering such certificate duly executed in blank by the Pledgor and with, if
the Collateral Agent so requests, signature guaranteed, to be held by the
Collateral Agent, subject to the terms hereof as additional collateral security
for the Leveraged Lease Obligations. Any sums paid upon or in respect of the
Investment Property upon the liquidation or dissolution of the Issuer shall be
paid over to the Collateral Agent to be held by it hereunder as additional
collateral security for the Leveraged Lease Obligations, and in case any
distribution of capital shall be made on or in respect of the Investment
Property or any property shall be distributed upon or with respect to the
Investment Property pursuant to the recapitalization or reclassification of the
capital of the Issuer or pursuant to the reorganization thereof, the property so
distributed shall, unless otherwise subject to a perfected security interest in
favor of the Collateral Agent, be delivered to the Collateral Agent to be held
by it hereunder as additional collateral security for the Leveraged Lease
Obligations. If any sums of money or property so paid or distributed in respect
of the Investment Property shall be received by the Pledgor, the Pledgor shall,
until such money or property is paid or delivered to the Collateral Agent, hold
such money or property in trust for the Secured Parties, segregated from other
funds of the Pledgor, as additional collateral security for the Leveraged Lease
Obligations.
(b) Without the prior written consent of the Collateral Agent,
the Pledgor will not (i) vote to enable, or take any other action to permit, any
Issuer to issue any stock, partnership interests or other equity securities of
any nature or to issue any other securities convertible into or granting the
right to purchase or exchange for any stock or other equity securities of any
nature of the Issuer, (ii) sell, assign, transfer, exchange, or otherwise
dispose of, or grant any option with respect to, any Collateral, except pursuant
to a transaction expressly permitted by each Participation Agreement, (iii)
create, incur or permit to exist any Lien or option in favor of or any claim of
any Person with respect to, any of the Collateral, or any interest therein,
except for the security interests created by this Agreement or (iv) enter into
any agreement or undertaking restricting the right or ability of the Pledgor or
the Collateral Agent to sell, assign or transfer any of the Collateral.
(c) MEW hereby agrees that (i) it will be bound by the terms
of this Agreement relating to the Investment Property issued by it and will
comply with such terms insofar as such terms are applicable to it, (ii) it will
notify the Collateral Agent promptly in writing of the occurrence of any of the
events described in SECTION 4.5(a) with respect to the Investment Property
issued by it and (iii) the terms of SECTION 5.1(b) shall apply to it, MUTATIS
MUTANDIS, with respect to all actions that may be required of it pursuant to
SECTION 5.1(b) with respect to the Investment Property issued by it.
SECTION 5. REMEDIAL PROVISIONS
5.1 INVESTMENT PROPERTY. (a) Unless a Lease Event of Default
shall have occurred and be continuing and the Collateral Agent shall have given
notice to the Pledgor of the Collateral Agent's intent to exercise its
corresponding rights pursuant to SECTION 5.1(b), the Pledgor shall be permitted
to receive all cash dividends paid in respect of the Pledged Shares, to the
extent permitted in the Participation Agreement, and to exercise all voting and
corporate rights with respect to the Investment Property; PROVIDED, HOWEVER,
that no vote shall be cast or corporate right exercised or other action taken
which, in the Collateral Agent's reasonable
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judgment, would impair the Collateral or which would be inconsistent with or
result in any violation of any provision of any Operative Document.
(b) If a Lease Event of Default shall occur and be continuing
and the Collateral Agent shall give notice of its intent to exercise such rights
to the Pledgor, (i) the Collateral Agent shall have the right to receive any and
all cash dividends, distributions, payments or other Proceeds paid in respect of
the Investment Property and make application thereof to the Leveraged Lease
Obligations in such order as the Collateral Agent may determine, (ii) any or all
of the Investment Property shall be registered in the name of the Collateral
Agent or its nominee, and (iii) the Collateral Agent or its nominee may
thereafter exercise (x) all voting, corporate and other rights pertaining to
such Investment Property at any meeting of shareholders or partners of the
Issuer or otherwise and (y) any and all rights of conversion, exchange and
subscription and any other rights, privileges or options pertaining to such
Investment Property as if it were the absolute owner thereof (including, without
limitation, the right to exchange at its discretion any and all of the
Investment Property upon the merger, consolidation, reorganization,
recapitalization or other fundamental change in the corporate or partnership
structure of any Issuer, or upon the exercise by the Pledgor or the Collateral
Agent of any right, privilege or option pertaining to such Investment Property,
and in connection therewith, the right to deposit and deliver any and all of the
Investment Property with any committee, depositary, transfer agent, registrar or
other designated agency upon such terms and conditions as the Collateral Agent
may determine), all without liability except to account for property actually
received by it, but the Collateral Agent shall have no duty to the Pledgor to
exercise any such right, privilege or option and shall not be responsible for
any failure to do so or delay in so doing.
5.2 PROCEEDS TO BE TURNED OVER TO COLLATERAL AGENT. If a Lease
Event of Default shall occur and be continuing, all Proceeds received by the
Pledgor consisting of cash, checks and other near-cash items shall be held by
the Pledgor in trust for the Collateral Agent, segregated from other funds of
the Pledgor, and shall, forthwith upon receipt by the Pledgor, be turned over to
the Collateral Agent in the exact form received by the Pledgor (duly indorsed by
the Pledgor to the Collateral Agent, if required). All Proceeds received by the
Collateral Agent hereunder shall be held by the Collateral Agent in the
Collateral Account maintained under its sole dominion and control. All Proceeds
while held by the Collateral Agent in the Collateral Account (or by the Pledgor
in trust for the Collateral Agent and the Secured Parties) shall continue to be
held as collateral security for all the Leveraged Lease Obligations and shall
not constitute payment thereof until applied as provided in SECTION 5.3.
5.3 DEPOSITS; APPLICATION OF PROCEEDS. Upon the creation of
any Collateral Account, the Collateral Agent shall also establish 8 subaccounts
of such Collateral Account, one subaccount with respect to each Facility Lease.
All deposits into the Collateral Account shall be credited to each subaccount
based upon such Owner Lessor's Percentage of such deposited amount. If a Lease
Event of Default under a Participation Agreement shall have occurred and be
continuing, at any time thereafter at the Collateral Agent's election, the
Collateral Agent may apply all or any part of Proceeds held in the applicable
subaccount of the Collateral Account in payment of the applicable Leveraged
Lease Obligations, and any part of such funds which the Collateral Agent elects
not so to apply and deems not required as collateral security for any Leveraged
Lease Obligations shall be paid over from time to time by the Collateral Agent
to the
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Pledgor or to whomsoever may be lawfully entitled to receive the same. Any
balance of such Proceeds in a subaccount remaining after applicable Leveraged
Lease Obligations shall have been paid in full shall be paid over to the Pledgor
or to whomsoever may be lawfully entitled to receive the same. It is
acknowledged and agreed that sums on deposit in any subaccount of the Collateral
Account shall be held for the benefit of the applicable Owner Lessor (as
collateral for the Leveraged Lease Obligations under the applicable Facility
Lease and the applicable Operative Documents and shall not constitute collateral
for, and shall not be applied to the repayment of, any obligations of the
Facility Lessee owing to any other Owner Lessor under any other Facility Lease
(or applicable Operative Documents).
5.4 CODE AND OTHER REMEDIES. Subject to Article XIV of the
Participation Agreement, if a Lease Event of Default shall occur and be
continuing, the Collateral Agent, on behalf of the Secured Parties, may
exercise, in addition to all other rights and remedies granted to them in this
Agreement and in any other instrument or agreement securing, evidencing or
relating to the Leveraged Lease Obligations, all rights and remedies of a
secured party under the New York UCC or any other applicable law. Without
limiting the generality of the foregoing, the Collateral Agent, without demand
of performance or other demand, presentment, protest, advertisement or notice of
any kind (except any notice required by law referred to below) to or upon the
Pledgor or any other Person (all and each of which demands, defenses,
advertisements and notices are hereby waived), may in such circumstances
forthwith collect, receive, appropriate and realize upon the Collateral, or any
part thereof, and/or may forthwith sell, lease, assign, give option or options
to purchase, or otherwise dispose of and deliver the Collateral or any part
thereof (or contract to do any of the foregoing), in one or more parcels at
public or private sale or sales, at any exchange, broker's board or office of
the Collateral Agent or any Secured Party or elsewhere upon such terms and
conditions as it may deem advisable and at such prices as it may deem best, for
cash or on credit or for future delivery without assumption of any credit risk.
The Collateral Agent or any Secured Party shall have the right upon any such
public sale or sales, and, to the extent permitted by law, upon any such private
sale or sales, to purchase the whole or any part of the Collateral so sold, free
of any right or equity of redemption in the Pledgor, which right or equity is
hereby waived and released. The Pledgor further agrees, at the Collateral
Agent's request, to assemble the Collateral and make it available to the
Collateral Agent at places which the Collateral Agent shall reasonably select,
whether at the Pledgor's premises or elsewhere. The Collateral Agent shall apply
the net proceeds of any action taken by it pursuant to this SECTION 5.4, after
deducting all reasonable costs and expenses of every kind incurred in connection
therewith or incidental to the care or safekeeping of any of the Collateral or
in any way relating to the Collateral or the rights of the Collateral Agent and
the Secured Parties hereunder (including, without limitation, reasonable
attorneys' fees and disbursements) and after crediting such proceeds to the
subaccounts of the Collateral Account in accordance with Section 5.3, to the
payment in whole or in part of the applicable Leveraged Lease Obligations, in
such order as the Collateral Agent may elect, and only after such application
and after the payment by the Collateral Agent of any other amount required by
any provision of law, including, without limitation, Section 9-504(l)(c) of the
New York UCC, need the Collateral Agent account for the surplus, if any, to the
Pledgor. To the extent permitted by applicable law, the Pledgor waives all
claims, damages and demands it may acquire against the Collateral Agent or any
Secured Party arising out of the exercise by them of any rights hereunder. If
any notice of a proposed sale or other disposition of Collateral shall be
required by law, such notice shall be deemed reasonable and proper if given at
least 10 days before such sale or other disposition.
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5.5 PLEDGED SHARES. (a) The Pledgor recognizes that the
Collateral Agent may be compelled to resort to one or more private sales of the
Pledged Shares to a restricted group of purchasers which will be obliged to
agree, among other things, to acquire such securities for their own account for
investment and not with a view to the distribution or resale thereof. The
Pledgor acknowledges and agrees that any such private sale may result in prices
and other terms less favorable than if such sale were a public sale and,
notwithstanding such circumstances, agrees that any such private sale shall be
deemed to have been made in a commercially reasonable manner. The Collateral
Agent shall be under no obligation to delay a sale of any of the Pledged Shares,
as the case may be, for the period of time necessary to permit the Issuer
thereof to register such securities for public sale under the Securities Act, or
under applicable state securities laws, even if the Issuer would agree to do so.
(b) The Pledgor agrees to use its best efforts to do or cause
to be done all such other acts as may be necessary to make such sale or sales of
all or any portion of the Pledged Shares, as the case may be, pursuant to this
SECTION 5.5, valid and binding and in compliance with any and all other
applicable Requirements of Law. The Pledgor further agrees that a breach of any
of the covenants contained in this SECTION 5.5 will cause irreparable injury to
the Collateral Agent and the Secured Parties, that the Collateral Agent and the
Secured Parties have no adequate remedy at law in respect of such breach and, as
a consequence, that each and every covenant contained in this SECTION 5.5 shall
be specifically enforceable against the Pledgor, and the Pledgor hereby waives
and agrees not to assert any defenses against an action for specific performance
of such covenants except for a defense that no Lease Event of Default has
occurred.
5.7 DIRECTION OF SECURED PARTIES. The Majority in Interest of
Owner Lessors shall be entitled to give and refrain from giving consents and
directions to the Collateral Agent on behalf of all the Secured Parties (and all
Secured Parties shall be bound by such action).
5.8 WAIVER; DEFICIENCY. The Pledgor waives and agrees not to
assert any rights or privileges which it may acquire under Section 9-112 of the
New York UCC.
SECTION 6. THE COLLATERAL AGENT
6.1 COLLATERAL AGENT'S APPOINTMENT AS ATTORNEY-IN-FACT, ETC.
(a) The Pledgor 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 with full irrevocable power and authority in the
place and stead of the Pledgor and in the name of the Pledgor or in its own
name, for the purpose of carrying out the terms of this Agreement, to take any
and all appropriate action and to execute any and all documents and instruments
which may be necessary or desirable to accomplish the purposes of this
Agreement, and, without limiting the generality of the foregoing, the Pledgor
hereby gives the Collateral Agent the power and right, on behalf of the Pledgor,
without notice to or assent by the Pledgor, to do any or all of the following:
(i) in the name of the Pledgor or its own name, or
otherwise, file any claim or take any other action or
proceeding in any court of law or equity or otherwise deemed
appropriate by the Collateral Agent for the purpose of
collecting any and all such moneys due with respect to any
other Collateral whenever payable;
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(ii) pay or discharge taxes and Liens levied or placed
on or threatened against the Collateral, effect any repairs or
any insurance called for by the terms of this Agreement and
pay all or any part of the premiums therefor and the costs
thereof,
(iii) execute, in connection with any sale provided for
in SECTION 5.5 or 5.6, any indorsements, assignments or other
instruments of conveyance or transfer with respect to the
Collateral; and
(iv) (1) direct any party liable for any payment under
any of the Collateral to make payment of any and all moneys
due or to become due thereunder directly to the Collateral
Agent or as the Collateral Agent shall direct; (2) ask or
demand for, collect, and receive payment of and receipt for,
any and all moneys, claims and other amounts due or to become
due at any time in respect of or arising out of any
Collateral; (3) commence and prosecute any suits, actions or
proceedings at law or in equity in any court of competent
jurisdiction to collect the Collateral or any portion thereof
and to enforce any other right in respect of any Collateral;
(4) defend any suit, action or proceeding brought against the
Pledgor with respect to any Collateral; (5) 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; and (6) generally,
sell, transfer, pledge and make any agreement with respect to
or otherwise deal with any of the 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 the Pledgor's expense, at any time, or from
time to time, all acts and things which the Collateral Agent
deems necessary to protect, preserve or realize upon the
Collateral and the Collateral Agent's and the Secured Parties'
security interests therein and to effect the intent of this
Agreement, all as fully and effectively as the Pledgor might
do.
Anything in this SECTION 6.1(a) to the contrary
notwithstanding, the Collateral Agent agrees that it will not exercise any
rights under the power of attorney provided for in this SECTION 6.1(a) unless a
Lease Event of Default shall have occurred and be continuing.
(b) If a Lease Event of Default shall have occurred and be
continuing, if the Pledgor fails to perform or comply with any of its agreements
contained herein, the Collateral Agent, at its option, but without any
obligation so to do, may perform or comply, or otherwise cause performance or
compliance, with such agreement.
(c) The expenses of the Collateral Agent incurred in
connection with actions undertaken as provided in this SECTION 6.1, together
with interest thereon at a rate per annum equal to the highest rate per annum at
which interest would then be payable on any category of past due Rent under the
Participation Agreement, from the date of payment by the Collateral Agent to the
date reimbursed by the Pledgor, shall be payable by the Pledgor to the
Collateral Agent on demand.
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(d) The Pledgor 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.
6.2 DUTY OF COLLATERAL AGENT. The Collateral Agent's sole duty
with respect to the custody, safekeeping and physical preservation of the
Collateral in its possession, under Section 9-207 of the New York UCC or
otherwise, shall be to deal with it with the same degree of care as the
Collateral Agent deals with similar property for its own account. Neither the
Collateral Agent, any Secured Party nor any of their respective officers,
directors, employees or agents shall be liable for failure to demand, collect or
realize upon any of the Collateral or for any delay in doing so or shall be
under any obligation to sell or otherwise dispose of any Collateral upon the
request of the Pledgor or any other Person or to take any other action
whatsoever with regard to the Collateral or any part thereof. The powers
conferred on the Collateral Agent and the Secured Parties hereunder are solely
to protect the Collateral Agents and the Secured Parties' interests in the
Collateral and shall not impose any duty upon the Collateral Agent or any
Secured Party to exercise any such powers. The Collateral Agent and the Secured
Parties shall be accountable only for amounts that they actually receive as a
result of the exercise of such powers, and neither they nor any of their
officers, directors, employees or agents shall be responsible to the Pledgor for
any act or failure to act hereunder, except for (i) their own gross negligence
or willful misconduct or (ii) breach of their obligations under this Agreement.
6.3 EXECUTION OF FINANCING STATEMENTS. Pursuant to Section
9-402 of the New York UCC and any other applicable law, the Pledgor authorizes
the Collateral Agent to file or record financing statements and other filing or
recording documents or instruments with respect to the Collateral without the
signature of the Pledgor in such form and in such offices as the Collateral
Agent determines appropriate to perfect the security interests of the Collateral
Agent under this Agreement. A photographic or other reproduction of this
Agreement shall be sufficient as a financing statement or other filing or
recording document or instrument for filing or recording in any jurisdiction.
6.4 AUTHORITY OF COLLATERAL AGENT. The Pledgor and each
Secured Party by accepting the benefits of this Agreement acknowledges that the
rights and responsibilities of the Collateral Agent under this Agreement with
respect to any action taken by the Collateral Agent or the exercise or
non-exercise by the Collateral Agent of any option, voting right, request,
judgment or other right or remedy provided for herein or resulting or arising
out of this Agreement shall, as between the Collateral Agent and the Secured
Parties, be governed by the Operative Documents and by such other agreements
with respect thereto as may exist from time to time among them, but, as between
the Collateral Agent and the Pledgor, the Collateral Agent shall be conclusively
presumed to be acting as agent for the Secured Parties with full and valid
authority so to act or refrain from acting, and the Pledgor shall not be under
any obligation, or entitlement, to make any inquiry respecting such authority.
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SECTION 7. MISCELLANEOUS
7.1 AMENDMENTS IN WRITING. None of the terms or provisions of
this Agreement may be waived, amended, supplemented or otherwise modified except
in writing and in accordance with the Participation Agreement.
7.2 NOTICES. All notices and other communications to any party
hereto shall be in writing or by facsimile and addressed, delivered or
transmitted to such party at its address or facsimile number set forth on
Schedule 1 or at such other address or facsimile number as may be designated by
such party in a notice to the other parties.
7.3 NO WAIVER BY COURSE OF CONDUCT; CUMULATIVE REMEDIES.
Neither the Collateral Agent nor any Secured Party shall by any act (except by a
written instrument pursuant to SECTION 7.1), delay, indulgence, omission or
otherwise be deemed to have waived any right or remedy hereunder or to have
acquiesced in any Lease Event of Default. No failure to exercise, nor any delay
in exercising, on the part of the Collateral Agent or any Secured Party, any
right, power or privilege hereunder shall operate as a waiver thereof. No single
or partial exercise of any right, power or privilege hereunder shall preclude
any other or further exercise thereof or the exercise of any other right, power
or privilege. A waiver by the Collateral Agent or any Secured Party of any right
or remedy hereunder on any one occasion shall not be construed as a bar to any
right or remedy which the Collateral Agent or such Secured Party would otherwise
have on any future occasion. The rights and remedies herein provided are
cumulative, may be exercised singly or concurrently and are not exclusive of any
other rights or remedies provided by law.
7.4 SUCCESSORS AND ASSIGNS. (a) This Agreement shall be
binding upon the successors and assigns of the Pledgor and shall inure to the
benefit of the Collateral Agent and the Secured Parties and their successors and
assigns; PROVIDED that the Pledgor may not assign, transfer or delegate any of
its rights or obligations under this Agreement without the prior written consent
of the Collateral Agent.
(b) 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 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 Lease Indenture Trustee shall have the right to exercise the rights
of such Owner Lessor under this 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 in each case to the exceptions set forth in the applicable Lease
Indenture.
7.5 SET-OFF. The Pledgor hereby irrevocably authorizes the
Collateral Agent and each Secured Party at any time and from time to time (i)
upon the occurrence of a Lease
15
Event of Default of the kind described in Section 16 of the Facility Lease or
(ii) upon the occurrence and continuance beyond the applicable grace period, if
any, of any other Lease Event of Default and with the consent of the Secured
Parties, without notice to the Pledgor, any such notice being expressly waived
by the Pledgor, to set-off and appropriate and apply any and all deposits
(general or special, time or demand, provisional or final), in any currency, and
any other credits, indebtedness or claims, in any currency, in each case whether
direct or indirect, absolute or contingent, matured or unmatured, at any time
held or owing by the Collateral Agent or such Secured Party to or for the credit
or the account of the Pledgor, or any part thereof in such amounts as the
Collateral Agent or such Secured Party may elect, against and on account of the
obligations and liabilities of the Pledgor to the Collateral Agent or such
Secured Party hereunder and claims of every nature and description of the
Collateral Agent or such Secured Party against the Pledgor, in any currency,
whether arising hereunder, under the Participation Agreement, any other
Operative Document or otherwise, as the Collateral Agent or such Secured Party
may elect, whether or not the Collateral Agent or any Secured Party has made any
demand for payment and although such obligations, liabilities and claims may be
contingent or unmatured. The Collateral Agent and each Secured Party shall
notify the Pledgor promptly of any such set-off and the application made by the
Collateral Agent or such Secured Party of the proceeds thereof, PROVIDED that
the failure to give such notice shall not affect the validity of such set-off
and application. The rights of the Collateral Agent and each Secured Party under
this SECTION 7.5 are in addition to other rights and remedies (including,
without limitation, other rights of set-off) which the Collateral Agent or such
Secured Party may have.
7.6 COUNTERPARTS. This Agreement may be executed by one or
more of the parties to this Agreement on any number of separate counterparts
(including by telecopy), and all of said counterparts taken together shall be
deemed to constitute one and the same instrument.
7.7 SEVERABILITY. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
7.8 SECTION HEADINGS. The Section headings used in this
Agreement are for convenience of reference only and are not to affect the
construction hereof or be taken into consideration in the interpretation hereof.
7.9 INTEGRATION. The Security Documents represent the
agreement of the Pledgor, the Collateral Agent and the Secured Parties with
respect to the subject matter hereof and thereof, and there are no promises,
undertakings, representations or warranties by the Collateral Agent or any
Secured Party relative to subject matter hereof and thereof not expressly set
forth or referred to in the Security Documents. The Security Documents supersede
any and all prior agreements and understandings, oral or written, relative or
with respect to the subject matter hereof, and there are no promises,
undertakings, representations or warranties by the Collateral Agent or any
Secured Party relative to the subject matter hereof not expressly set forth or
referred to herein or in the other Security Documents.
16
7.10 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
7.11 SUBMISSION TO JURISDICTION; WAIVERS. The Pledgor (and,
with respect to paragraph (e) below only, the Collateral Agent and each of the
Secured Parties) hereby irrevocably and unconditionally:
(a) submits for itself and its property in any legal action or
proceeding relating to the Operative Documents to which it is a party, or for
recognition and enforcement of any judgment in respect thereof, to the
non-exclusive general jurisdiction of the Courts of the State of New York, the
courts of the United States of America for the Southern District of New York,
and appellate courts from any thereof;
(b) consents that any such action or proceeding may be brought
in such courts and waives any objection that it may now or hereafter have to the
venue of any such action or proceeding in any such court or that such action or
proceeding was brought in an inconvenient court and agrees not to plead or claim
the same;
(c) agrees that service of process in any such action or
proceeding may be effected by mailing a copy thereof by registered or certified
mail (or any substantially similar form of mail), postage prepaid, to the
Pledgor at its address referred to in SECTION 7.2 or at such other address of
which the Collateral Agent shall have been notified pursuant thereto;
(d) agrees that nothing herein shall affect the right to
effect service of process in any other manner permitted by law or shall limit
the right to ▇▇▇ in any other jurisdiction; and
(e) waives, to the maximum extent not prohibited by law, any
right it may have to claim or recover in any legal action or proceeding referred
to in this Section any special, exemplary, punitive or consequential damages.
7.12 ACKNOWLEDGMENTS. The Pledgor hereby acknowledges that:
(a) it has been advised by counsel in the negotiation,
execution and delivery of the Security Documents to which it is a party;
(b) either the Collateral Agent nor any Secured Party has any
fiduciary relationship with or duty to the Pledgor arising out of or in
connection with any Security Documents, and the relationship between the
Pledgor, on the one hand, and the Collateral Agent and Secured Parties, on the
other hand, in connection herewith or therewith is solely that of debtor and
creditor; and
(c) no joint venture is created by any Security Document or
otherwise exists by virtue of the transactions contemplated hereby among the
Secured Parties or among the Pledgor and the Secured Parties.
7.13 RELEASES. (a) At such time as the Leveraged Lease
Obligations shall have been paid in full, the Collateral shall automatically be
released from the Liens created hereby,
17
and this Agreement and all obligations (other than those expressly stated to
survive such termination) of the Collateral Agent and the Pledgor hereunder
shall terminate, all without delivery of any instrument or performance of any
act by any party, and all rights to the Collateral shall revert to the Pledgor.
At the request and sole expense of the Pledgor following any such termination,
the Collateral Agent shall deliver to the Pledgor any Collateral held by the
Collateral Agent hereunder, and execute and deliver to the Pledgor such
documents as the Pledgor shall reasonably request to evidence such termination.
(b) If any of the Collateral shall be sold, transferred or
otherwise disposed of by the Pledgor in a transaction permitted by the
Participation Agreement (and the Indenture, if any Securities have been issued),
then the Collateral Agent, at the request and reasonable and sole expense of the
Pledgor, shall execute and deliver to the Pledgor all releases or other
documents reasonably necessary or desirable for the release of the Liens created
hereby on such Collateral. At the request and reasonable and sole expense of the
Pledgor , the Pledgor shall be released from its obligations hereunder in the
event that all the Capital Stock of the Pledgor shall be sold, transferred or
otherwise disposed of in a transaction permitted by the Participation Agreement;
PROVIDED that Pledgor shall have delivered to the Collateral Agent, at least ten
Business Days prior to the date of the proposed release, a written request for
release and the terms of the sale or other disposition in reasonable detail,
including the price thereof and any expenses in connection therewith, together
with a certification by the Pledgor stating that such transaction is in
compliance with the Operative Documents.
7.14 CONTINUING ASSIGNMENT; PLEDGE AND SECURITY INTEREST;
RELEASE.
This Agreement shall create a continuing pledge, assignment
of, hypothecation of and security interest in the Collateral and shall (A)
remain in full force and effect until the payment in full of the Leverage Lease
Obligations (PROVIDED that, if the Owner Lessor reasonably determines that there
is a material risk of the Facility Lessee being subject to bankruptcy
proceedings, the pledge under this Agreement shall remain in full force and
effect until all such payments shall have become irrevocable) and the expiration
or termination of the Facility Lease, (B) be binding upon the Pledgor, its
successors and assigns, provided, that a Pledgor may not transfer or assign any
or all of its rights or obligations hereunder without the prior written consent
of the Owner Lessor, and (C) inure to the benefit of, and be enforceable by the
Owner Lessor and its successors, transferees and assigns. Without limiting the
generality of the foregoing clause (C), the Owner Lessor may assign or otherwise
transfer all or any portion of its rights in the Obligations to the extent and
in the manner provided in the Operative Documents, and such assignee shall
thereupon become vested with all the benefits in respect thereof granted to the
Owner Lessor herein or otherwise; the parties acknowledge that, pursuant to the
Lease Indenture, the Owner Lessor pledges its rights hereunder to the Lease
Indenture Trustee as security for its obligations under the Lease Indenture;
accordingly, for as long as the Lien of the Collateral Documents remains in
effect, the Lease Indenture Trustee may exercise the Owner Lessor's rights
hereunder in accordance with, and to the extent set forth in, the Lease
Indenture.
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7.15 EXPENSES.
(a) The Pledgor agrees to pay or reimburse the Owner Lessor,
on an After-Tax Basis, the Owner Participant and so long as the Lien of the
Lease Indenture has not been released or discharged, the Security Agent and each
Noteholder, for, any and all reasonable fees, costs and expenses of whatever
kind or nature incurred in connection with the creation, preservation or
protection of the Liens on, and security interest in, the Collateral pledged by
it hereunder, including, without limitation, all reasonable fees and taxes in
connection with the recording or filing of instruments and documents in public
offices, payment or discharge of any taxes or Liens upon or in respect of such
Collateral and all other reasonable fees, costs and expenses in connection with
protecting, maintaining or preserving such the Collateral, the Owner Lessor's
and, the Lease Indenture Trustee's interest therein, whether through judicial
proceedings or otherwise, or in defending or prosecuting any actions, suits or
proceedings arising out of or relating to such Collateral. If and to the extent
that the obligations of the Pledgor under this Section 7.15 are unenforceable
for any reason, the Pledgor hereby agrees to make the maximum contribution to
the payment and satisfaction of such obligations which is permissible under
applicable law.
7.16 SECURITY INTEREST ABSOLUTE.
(a) The obligations of the Pledgor under this Agreement are
independent of the Obligations and a separate action or actions may be brought
and prosecuted against the Pledgor to enforce this Agreement, irrespective of
whether any action is brought against another pledgor or any guarantor of the
Obligations or whether another pledgor or any guarantor of the Obligations is
joined in any such action or actions. All rights of the Owner Lessor and the
pledge, hypothecation and security interest hereunder, and all obligations of
the Pledgor hereunder, shall be absolute and unconditional, to the extent
permitted by Requirements of Law, irrespective of:
(i) any lack of validity or enforceability of any
Operative Document or any other agreement or instrument
relating thereto;
(ii) any change in the time, manner or place of payment
of or in any other term of, all or any of the Obligations, or
any other amendment or waiver of or any consent to any
departure from any Operative Document, including, without
limitation, any increase in the Obligations resulting from the
extension of additional credit to the Facility Lessee;
(iii) any taking, exchange, release or non-perfection of
any other collateral, or any taking, release or amendment or
waiver of, or consent to departure from any guaranty, for all
or any of the Obligations;
(iv) any manner of application of the Collateral, or
proceeds thereof, to all or any of the Obligations, or any
manner of sale or other disposition of any other collateral
for all or any of the Obligations;
(v) any change, restructuring or termination of the
structure or existence of the Facility Lessee; or
19
(vi) any other circumstances which might otherwise
constitute a defense available to, or a discharge of, the
Facility Lessee or a third party grantor of a security
interest.
The Pledgor hereby waives, to the maximum extent permitted by law (i) all rights
under any law limiting remedies, including recovery of a deficiency, under an
obligation secured by a mortgage or deed of trust on real property if the real
property is sold under a power of sale contained in the mortgage, and all
defenses based on any loss whether as a result of any such sale or otherwise, of
Pledgor's right to recover any amount from the Facility Lessee or MEW, whether
by right of subrogation or otherwise; (ii) all rights under any law to require
the Owner Lessor to pursue the Facility Lessee, or any other Person, any
security which Owner Lessor may hold, or any other remedy before proceeding
against the Pledgor; (iii) all rights of reimbursement or subrogation, all
rights to enforce any remedy that the Owner Lessor may have against the Facility
Lessee, and all rights to participate in any security held by the Owner Lessor
until the Obligations have been paid and performed in full; (iv) all rights to
require the Owner Lessor to give any notices of any kind, including, without
limitation, notices of nonpayment, nonperformance, protest, dishonor, default,
delinquency or acceleration, or to make any presentments, demands or protests,
except as set forth herein or expressly provided in the Participation Agreement;
(v) all rights to assert the bankruptcy or insolvency of the Facility Lessee as
a defense hereunder or as the basis for rescission hereof; (vi) all rights under
any law purporting to reduce the Pledgor's obligations hereunder if the
Obligations are reduced; (vii) all defenses based on the disability or lack of
authority of the Facility Lessee or any Person, the repudiation of the Operative
Documents by the Facility Lessee or any Person, the failure by the Owner Lessor
to enforce any claim against the Facility Lessee, or the unenforceability in
whole or in part of any Operative Documents; (viii) all suretyship and
guarantor's defenses generally; (ix) all rights to insist upon, plead or in any
manner whatever claim or take the benefit or advantage of, any appraisal,
valuation, stay, extension, marshalling of assets, redemption or similar law, or
exemption, whether now or at any time hereafter in force, which may delay,
prevent or otherwise affect the performance by the Pledgor of its obligations
under, or the enforcement by the Owner Lessor of, this Agreement; (x) any
requirement on the part of the Owner Lessor to mitigate the damages resulting
from any default; and (xi) except as otherwise specifically set forth herein,
all rights of notice and hearing of any kind prior to the exercise of rights by
the Owner Lessor upon the occurrence and during the continuation of a Lease
Event of Default to repossess with judicial process or to replevy, attach or
levy upon the Collateral. To the extent permitted by law, the Pledgor waives the
posting of any bond otherwise required of the Owner Lessor in connection with
any judicial process or proceeding to obtain possession of, replevy, attach, or
levy upon the Collateral, to enforce any judgment or other security for the
Obligations, to enforce any judgment or other court order entered in favor of
Owner Lessor, or to enforce by specific performance, temporary restraining
order, preliminary or permanent injunction, this Agreement or any other
agreement or document between the Pledgor and the Owner Lessor. The Pledgor
further agrees that upon the occurrence and during the continuation of a Lease
Event of Default, the Collateral Agent may elect to nonjudicially or judicially
foreclose against any real or personal property security it holds for the
Obligations or any part thereof, or to exercise any other remedy against MEW, or
the Facility Lessee, any security or any guarantor, even if the effect of that
action is to deprive the Pledgor of the right to collect reimbursement from MEW,
or the Facility Lessee for any sums paid by the Pledgor to the Collateral Agent.
20
7.16 WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY
IRREVOCABLY AND UNCONDITIONALLY WAIVES TRIAL BY JURY IN ANY LEGAL ACTION OR
PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER FINANCING DOCUMENT AND FOR
ANY COUNTERCLAIM THEREIN.
21
IN WITNESS WHEREOF, each of the undersigned has caused this Agreement to be
duly executed and delivered as of the date first above written.
EDISON MISSION HOLDINGS CO.
By: _____________________________________
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Vice President and Treasurer
MISSION ENERGY WESTSIDE, INC.
By: _____________________________________
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Vice President and Treasurer
Acknowledged and Agreed as of the date hereof:
THE BANK OF NEW YORK, as successor to
UNITED STATES TRUST COMPANY OF
NEW YORK, as Collateral Agent
By:
-----------------------------------------------
Name: ▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Authorized Signer
22
SCHEDULE 1 to
PLEDGE AND COLLATERAL AGREEMENT
NOTICE ADDRESSES
EDISON MISSION HOLDINGS CO.
MISSION ENERGY WESTSIDE, INC.
▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: Treasurer
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
23
SCHEDULE 2 to
PLEDGE AND COLLATERAL AGREEMENT
DESCRIPTION OF INVESTMENT PROPERTY
PART A
PLEDGED SHARES:
ISSUER CLASS OF STOCK STOCK CERTIFICATE NO. NO. OF SHARES
------ -------------- --------------------- -------------
Mission Energy Westside, Inc. Common 2 100
24
SCHEDULE 3 to
PLEDGE AND COLLATERAL AGREEMENT
FILINGS AND OTHER ACTIONS
REQUIRED TO PERFECT SECURITY INTERESTS
UNIFORM COMMERCIAL CODE FILINGS
PLEDGOR UCC FILING OFFICES
------- ------------------
Mission Energy Westside, Inc. California Secretary of State
Pennsylvania Secretary of State
Indiana County, PA
25
ACTIONS WITH REGARD TO PLEDGED SHARES
1) Deliver stock certificates, accompanied by undated stock powers duly
indorsed in blank, of Mission Energy Westside, Inc.
26
SCHEDULE 4 to
PLEDGE AND COLLATERAL AGREEMENT
LOCATION OF JURISDICTION OF ORGANIZATION AND CHIEF EXECUTIVE OFFICE
PLEDGOR JURISDICTION LOCATION
------- ------------ --------
Mission Energy Westside, Inc. CA ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
27
SCHEDULE 5 to
PLEDGE AND COLLATERAL AGREEMENT
1. The Participation Agreement dated as of December __, 2001 by and among EME
Homer City Generation, L.P., a Pennsylvania limited partnership, as
Facility Lessee; ▇▇▇▇▇ City OL1, a Delaware limited liability company, as
Owner Lessor; ▇▇▇▇▇ Fargo Bank Northwest, National Association, both in
its individual capacity and solely as Owner Manager; General Electric
Capital Corporation, a Delaware corporation, as Owner Participant; ▇▇▇▇▇
City Funding LLC, a Delaware limited liability company, as Lender; The
Bank of New York (as successor to United States Trust Company of New
York), both in its individual capacity and solely as Lease Indenture
Trustee; The Bank of New York (as successor to United States Trust Company
of New York), both in its individual capacity and solely as Security
Agent; and The Bank of New York (as successor to United States Trust
Company of New York), both in its individual capacity and solely as
Bondholder Trustee.
2. The Participation Agreement dated as of December __, 2001 by and among EME
Homer City Generation, L.P., a Pennsylvania limited partnership, as
Facility Lessee; ▇▇▇▇▇ City OL2, a Delaware limited liability company, as
Owner Lessor; ▇▇▇▇▇ Fargo Bank Northwest, National Association, both in
its individual capacity and solely as Owner Manager; General Electric
Capital Corporation, a Delaware corporation, as Owner Participant; ▇▇▇▇▇
City Funding LLC, a Delaware limited liability company, as Lender; The
Bank of New York (as successor to United States Trust Company of New
York), both in its individual capacity and solely as Lease Indenture
Trustee; The Bank of New York (as successor to United States Trust Company
of New York), both in its individual capacity and solely as Security
Agent; and The Bank of New York (as successor to United States Trust
Company of New York), both in its individual capacity and solely as
Bondholder Trustee.
3. The Participation Agreement dated as of December __, 2001 by and among EME
Homer City Generation, L.P., a Pennsylvania limited partnership, as
Facility Lessee; ▇▇▇▇▇ City OL3, a Delaware limited liability company, as
Owner Lessor; ▇▇▇▇▇ Fargo Bank Northwest, National Association, both in
its individual capacity and solely as Owner Manager; General Electric
Capital Corporation, a Delaware corporation, as Owner Participant; ▇▇▇▇▇
City Funding LLC, a Delaware limited liability company, as Lender; The
Bank of New York (as successor to United States Trust Company of New
York), both in its individual capacity and solely as Lease Indenture
Trustee; The Bank of New York (as successor to United States Trust Company
of New York), both in its individual capacity and solely as Security
Agent; and The Bank of New York (as successor to United States Trust
Company of New York), both in its individual capacity and solely as
Bondholder Trustee.
4. The Participation Agreement dated as of December __, 2001 by and among EME
Homer City Generation, L.P., a Pennsylvania limited partnership, as
Facility Lessee; ▇▇▇▇▇ City OL4, a Delaware limited liability company, as
Owner Lessor; ▇▇▇▇▇ Fargo Bank Northwest, National Association, both in
its individual capacity and solely as Owner Manager; General Electric
Capital Corporation, a Delaware corporation, as Owner
28
Participant; ▇▇▇▇▇ City Funding LLC, a Delaware limited liability company,
as Lender; The Bank of New York (as successor to United States Trust
Company of New York), both in its individual capacity and solely as Lease
Indenture Trustee; The Bank of New York (as successor to United States
Trust Company of New York), both in its individual capacity and solely as
Security Agent; and The Bank of New York (as successor to United States
Trust Company of New York), both in its individual capacity and solely as
Bondholder Trustee.
5. The Participation Agreement dated as of December __, 2001 by and among EME
Homer City Generation, L.P., a Pennsylvania limited partnership, as
Facility Lessee; ▇▇▇▇▇ City OL5, a Delaware limited liability company, as
Owner Lessor; ▇▇▇▇▇ Fargo Bank Northwest, National Association, both in
its individual capacity and solely as Owner Manager; General Electric
Capital Corporation, a Delaware corporation, as Owner Participant; ▇▇▇▇▇
City Funding LLC, a Delaware limited liability company, as Lender; The
Bank of New York (as successor to United States Trust Company of New
York), both in its individual capacity and solely as Lease Indenture
Trustee; The Bank of New York (as successor to United States Trust Company
of New York), both in its individual capacity and solely as Security
Agent; and The Bank of New York (as successor to United States Trust
Company of New York), both in its individual capacity and solely as
Bondholder Trustee.
6. The Participation Agreement dated as of December __, 2001 by and among EME
Homer City Generation, L.P., a Pennsylvania limited partnership, as
Facility Lessee; ▇▇▇▇▇ City OL6, a Delaware limited liability company, as
Owner Lessor; ▇▇▇▇▇ Fargo Bank Northwest, National Association, both in
its individual capacity and solely as Owner Manager; General Electric
Capital Corporation, a Delaware corporation, as Owner Participant; ▇▇▇▇▇
City Funding LLC, a Delaware limited liability company, as Lender; The
Bank of New York (as successor to United States Trust Company of New
York), both in its individual capacity and solely as Lease Indenture
Trustee; The Bank of New York (as successor to United States Trust Company
of New York), both in its individual capacity and solely as Security
Agent; and The Bank of New York (as successor to United States Trust
Company of New York), both in its individual capacity and solely as
Bondholder Trustee.
7. The Participation Agreement dated as of December __, 2001 by and among EME
Homer City Generation, L.P., a Pennsylvania limited partnership, as
Facility Lessee; ▇▇▇▇▇ City OL7, a Delaware limited liability company, as
Owner Lessor; ▇▇▇▇▇ Fargo Bank Northwest, National Association, both in
its individual capacity and solely as Owner Manager; General Electric
Capital Corporation, a Delaware corporation, as Owner Participant; ▇▇▇▇▇
City Funding LLC, a Delaware limited liability company, as Lender; The
Bank of New York (as successor to United States Trust Company of New
York), both in its individual capacity and solely as Lease Indenture
Trustee; The Bank of New York (as successor to United States Trust Company
of New York), both in its individual capacity and solely as Security
Agent; and The Bank of New York (as successor to United States Trust
Company of New York), both in its individual capacity and solely as
Bondholder Trustee.
29
8. The Participation Agreement dated as of December __, 2001 by and among EME
Homer City Generation, L.P., a Pennsylvania limited partnership, as
Facility Lessee; ▇▇▇▇▇ City OL8, a Delaware limited liability company, as
Owner Lessor; ▇▇▇▇▇ Fargo Bank Northwest, National Association, both in
its individual capacity and solely as Owner Manager; General Electric
Capital Corporation, a Delaware corporation, as Owner Participant; ▇▇▇▇▇
City Funding LLC, a Delaware limited liability company, as Lender; The
Bank of New York (as successor to United States Trust Company of New
York), both in its individual capacity and solely as Lease Indenture
Trustee; The Bank of New York (as successor to United States Trust Company
of New York), both in its individual capacity and solely as Security
Agent; and The Bank of New York (as successor to United States Trust
Company of New York), both in its individual capacity and solely as
Bondholder Trustee.
30