EXHIBIT 4.7
ESCROW DEPOSIT AGREEMENT
Between
CALIFORNIA ENERGY COMPANY, INC.
And
BANK OF AMERICA NATIONAL TRUST AND SAVINGS
ASSOCIATION,
as Escrow Agent
Dated March 3, 1994
TABLE OF CONTENTS
Page
Recitals . . . . . . . . . . . 1
SECTION 1. Effectiveness of Agreement. . . . . . . . . . . . 2
SECTION 2. Appointment of the Escrow Agent . . . . . . . . . 3
SECTION 3. Escrow Account. . . . . . . . . . . . . . . . . . .3
SECTION 4. Deposit of Funds. . . . . . . . . . . . . . . . . .4
SECTION 5. Investment. . . . . . . . . . . . . . . . . . . . .4
SECTION 6. Deposit and Reinvestment of Funds . . . . . . . . .5
SECTION 7. Payments on Notes . . . . . . . . . . . . . . . . .5
SECTION 8. Irrevocable Deposit; Prior Charge Over Other
Charges and Claims; Relinquishment of Rights
of the Company . . . . . . . . . . . . . .6
SECTION 9. Liability of Escrow Agent . . . . . . . . . . . . .6
SECTION 10. Termination; Income From Government Obligations . .7
SECTION 11. Payment . . . . . . . . . . . . . . . . . . . . . .8
SECTION 12. Fees and Expenses . . . . . . . . . . . . . . . . .8
SECTION 13. Defeasance. . . . . . . . . . . . . . . . . . . . .9
SECTION 14. Benefit of Agreement; Amendments. . . . . . . . . .9
SECTION 15. Controversies . . . . . . . . . . . . . . . . . . 10
SECTION 16. Indemnification of Escrow Agent . . . . . . . . . 10
SECTION 17. Investment Instructions . . . . . . . . . . . . . 11
SECTION 18. Backup Withholding. . . . . . . . . . . . . . . . 12
SECTION 19. Resignation of Escrow Agent . . . . . . . . . . . 12
SECTION 20. Governing Law . . . . . . . . . . . . . . . . . . 13
SECTION 21. Counterparts. . . . . . . . . . . . . . . . . . . 13
SECTION 22. Section Headings. . . . . . . . . . . . . . . . . 13
Exhibit A Defeasance Agreement
Exhibit B Government Obligations
Exhibit C Defeasance Requirements
Exhibit D Fee Schedule
Exhibit E Form W-9
ESCROW DEPOSIT AGREEMENT
This Escrow Deposit Agreement (the "Agreement"), dated
March 3, 1994, between California Energy Company, Inc. (the "the Company")
and Bank of America National Trust and Savings Association, as Escrow
Agent, and as agent of the Company in connection with the purchase of
Government Obligations (defined herein) (the "Escrow Agent").
W I T N E S S E T H:
WHEREAS, the Company and Principal Mutual Life Insurance
Company(the "Lender") are parties to a Note Purchase Agreement, dated March
15, 1988, as amended to date (as so amended, the "Note Purchase
Agreement"), pursuant to which the Company originally issued and sold to
the Lender $30,000,000 aggregate principal amount of its 12% Senior Notes
with Contingent Interest due 1995 (the "Notes"), of which $35,730,480
aggregate principal amount is outstanding as of the date hereof (consisting
of $30,000,000 of original principal and $5,730,480 interest on the Notes
which accrued prior to September 15, 1989 and remains unpaid);
WHEREAS, the Notes provide for, among other things,
interest on the unpaid principal balance thereof at the rate of 12% per
annum (herein referred to as "Basic Interest") and certain additional
interest on the Notes defined therein (and referred to herein) as
"Contingent Interest";
WHEREAS, the Company plans to incur certain "Indebtedness
for Money Borrowed" (as defined in the Note Purchase Agreement) and utilize
the proceeds thereof in a manner that requires a waiver or the termination
of certain covenants under the Note Purchase Agreement, and the Lender, as
the holder of 100% of the Notes, has agreed to enter into a Defeasance
Agreement in the form attached as Exhibit A (the "Defeasance Agreement");
WHEREAS, in connection with its agreement to execute the
Defeasance Agreement, the Lender has required the Company to provide for
the payment of the principal, premium, if any, and Basic Interest on the
Notes by irrevocably depositing with the Escrow Agent an amount sufficient
to pay and discharge the entire indebtedness on the Notes for the principal
thereof on March 15, 1995 (the "Stated Maturity Date") and for Basic
Interest payable semiannually on each March 15 and September 15 after the
Effectiveness Date (hereinafter defined) to and including the Stated
Maturity Date, as set forth more fully on Exhibit C hereto (the aggregate
of such principal and Basic Interest payments being hereinafter referred to
as the "Defeasance Requirements"); and
WHEREAS, the Company wishes to enter into this Agreement
to carry out the foregoing purposes.
NOW, THEREFORE, in consideration of the foregoing and of
the mutual covenants herein set forth, the Company and the Escrow Agent
agree as follows:
SECTION 1. Effectiveness of Agreement. This Agreement
shall be and become effective only upon the date after March 15, 1994 (the
"Effectiveness Date"), if any, of delivery of, and payment for, the
Company's ___% Senior Discount Notes due 2004. The Company shall provide
the Escrow Agent with at least two business days' notice of the
Effectiveness Date. If the Effectiveness Date has not occurred on or prior
to June 30, 1994 (the "Early Termination Date"), then this Agreement shall
terminate on the Early Termination Date and be of no further force or
effect.
SECTION 2. Appointment of the Escrow Agent. The Company
hereby designates and appoints Bank of America National Trust and Savings
Association as Escrow Agent to serve in accordance with the terms,
conditions and provisions of this Agreement, and Bank of America National
Trust and Savings Association hereby agrees to act as Escrow Agent, upon
the terms, conditions and provisions set forth in this Agreement.
SECTION 3. Escrow Account. Upon the Effectiveness Date,
there is hereby established with the Escrow Agent a separate and
irrevocable account designated the "California Energy Escrow Account" (the
"Escrow Account") to be funded in the manner set forth in Section 4 below
and held in the custody of the Escrow Agent as a special escrow fund,
separate and apart from all other funds of the Company or the Escrow Agent,
for the benefit of the holder(s) of the Notes from time to time (the
"Holders"). All moneys and Government Obligations set aside and held in
trust in the Escrow Account shall be applied to, and applied solely for,
the payment of the Defeasance Requirements as the same shall become due and
payable as provided herein. The Company hereby grants to the Holders a
security interest in the Escrow Account and the Escrow Agent agrees to act
as the agent of the Holders in connection therewith.
SECTION 4. Deposit of Funds. On the Effectiveness Date,
the Company will irrevocably deposit with the Escrow Agent in the Escrow
Account an amount of cash and/or "Government Obligations" (defined below)
necessary to pay the Defeasance Requirements when due.
SECTION 5. Investment. (a) The Escrow Agent shall
invest the funds deposited in the Escrow Account only in those marketable
direct obligations issued by the United States of America backed by the
full faith and credit of the United States of America which are listed on
Exhibit B attached hereto (the "Government Obligations") or otherwise in
accordance with such joint written instructions as the Company and all of
the Holders may, from time to time, provide (all such investments, the
"Escrowed Securities"). The Escrow Agent shall hold the Escrowed Securities
and the proceeds, if any, thereof at all times in the Escrow Account,
wholly segregated from other funds and securities on deposit with the
Escrow Agent. The Escrow Agent shall not commingle amounts in the Escrow
Account with other funds or securities of the Escrow Agent or the Company
and shall hold and dispose of the assets therein only as set forth herein.
(b) The Government Obligations shall mature as to
principal and interest in such amounts and at such times as set forth in
Exhibit B so as to assure, together with the cash, if any, held in the
Escrow Account, the availability of sufficient moneys to satisfy the
Defeasance Requirements.
(c) Cash on deposit in the Escrow Account, not
otherwise invested in Government Obligations, shall be held in a U.S.
dollar denominated deposit account at the Escrow Agent, unless the Company
and all of the Holders provide the Escrow Agent with joint written
instructions specifying other permitted investments.
(d) The Company is the owner of the Escrowed Securities
and other assets held by the Escrow Agent pursuant to this Agreement for
federal, state and local income tax purposes and any income generated by
such investments and assets will be includable in the gross income of the
Company.
SECTION 6. Deposit and Reinvestment of Funds. The Escrow
Agent agrees and is authorized (a) to deposit in the Escrow Account upon
receipt, all principal and interest and other income on and proceeds of the
Escrowed Securities, and (b) to reinvest such principal and interest and
income and proceeds in Government Obligations in accordance with Section 5
hereof.
SECTION 7. Payments on Notes. On the Stated Maturity
Date and respective Basic Interest payment dates for the Notes, the Escrow
Agent shall apply sufficient moneys, to the extent available, from the
matured principal of and interest on the Government Obligations held in the
Escrow Account, or other moneys held in such Account, to the payment of the
principal of and Basic Interest accrued on the Notes, as the same shall
become due on such dates.
SECTION 8. Irrevocable Deposit; Prior Charge Over Other
Charges and Claims; Relinquishment of Rights of the Company. (a) The
deposit of the moneys and Government Obligations in the Escrow Account
shall constitute an irrevocable deposit in trust solely for the payment of
the Defeasance Requirements on the Notes, and solely for the benefit of the
Holders pursuant to the terms of this Agreement. The Holders shall have a
prior charge over all other charges or claims whatsoever against all moneys
and Government Obligations, including the proceeds thereof and the interest
and income earned thereon, on deposit in the Escrow Account, until said
moneys, Government Obligations, proceeds, interest and income are paid out,
used or applied in accordance with this Agreement.
(b) The Company hereby agrees that it shall not have
any beneficial interest in or rights to any moneys or Government
Obligations, or proceeds thereof or interest or income earned thereon, on
deposit in the Escrow Account or payments made therefrom so long as any of
the Notes or any amounts owing to the Escrow Agent hereunder remain unpaid.
SECTION 9. Liability of Escrow Agent. In performing any
duties under this Agreement, the Escrow Agent shall not be liable to any
party for damages, losses or expenses, except for gross negligence or
willful misconduct on the part of the Escrow Agent. The Escrow Agent shall
not incur any such liability for (A) any act or failure to act made or
omitted in good faith, or (B) any action taken or omitted in reliance upon
any instrument, including any written statement or affidavit provided for
in this Agreement that the Escrow Agent shall in good faith believe to be
genuine, nor will the Escrow Agent be liable or responsible for forgeries,
fraud, impersonations or determining the scope of any representative
authority. In addition, the Escrow Agent may consult with legal counsel in
connection with the Escrow Agent's duties under this Agreement and shall be
fully protected in any act taken, suffered or permitted by him/her in good
faith in accordance with the advice of counsel. The Escrow Agent is not
responsible for determining and verifying the authority of any person
acting or purporting to act on behalf of any party to this Agreement.
SECTION 10. Termination; Income From Government
Obligations. (a) Except as set forth in Section 1, this Agreement shall
terminate when the principal of the Notes and Basic Interest thereon to the
Stated Maturity Date shall have been paid in the manner set forth in
Section 11 of this Agreement.
(b) After termination of this Agreement in accordance
with the provisions of subsection (a) of this Section 10, all income from
all Government Obligations in the hands of the Escrow Agent pursuant to
this Agreement which is not required for the payment of the Defeasance
Requirements or amounts owing to the Escrow Agent hereunder shall be paid
to the Company as and when requested in writing by the Company.
SECTION 11. Payment. (a) All amounts payable hereunder
to the Holders with respect to any Notes held by the Holders or its or
their nominee (without the necessity for any presentation or surrender
thereof or any notation of such payment thereon) shall be made by bank wire
transfer of Federal or other immediately available funds, providing
sufficient information to identify the source of the transfer and the
amount of interest, premium and/or principal, to such account as specified
by the Holder to the Escrow Agent in writing, which in the case of the
Lender, shall be to the following account, unless otherwise specified in
writing:
Principal Mutual Life Insurance
Company Account No. 014752
Norwest Bank Des Moines, N.A.
7th and Walnut Streets
Des Moines, Iowa 50304
ABA No. 0730 0022 8
Bond Number 1-B-22099
(b) The Lender agrees that in the event the Lender sells,
assigns or transfers any Notes, it will, prior to any such sale, assignment
or transfer promptly notify the Escrow Agent of the name and address of the
transferee of any Note so transferred.
SECTION 12. Fees and Expenses. It is understood that the
fees and usual charges agreed upon for services of the Escrow Agent shall
be considered compensation for ordinary services as contemplated by this
Agreement. In the event that the conditions of this Agreement are not
promptly fulfilled, or if the Escrow Agent renders any service not provided
for in this Agreement, or if the parties request a substantial modification
of its terms, or if any controversy arises, or if the Escrow Agent is made
a party to, or intervenes in, any litigation pertaining to this escrow or
its subject matter, the Escrow Agent shall be reasonably compensated for
such extraordinary services and reimbursed for all reasonable costs,
attorney's fees, including allocated costs of in-house counsel, and
expenses occasioned by such default, delay, controversy or litigation and
the Escrow Agent shall have the right to retain all documents and/or other
things of value at any time held by the Escrow Agent in this escrow until
such compensation, fees, costs and expenses are paid. The Company promises
to pay these sums upon demand in accordance with the fee schedule attached
hereto as Exhibit D.
SECTION 13. Defeasance. The Company and the Holders have
agreed that the Defeasance Agreement shall become effective on the
Effectiveness Date.
SECTION 14. Benefit of Agreement; Amendments. This
Agreement is made for the benefit of the Company and the Holders. This
Agreement shall not be repealed, revoked, altered or amended without the
written consent of the Company and all of the Holders and the written
consent of the Escrow Agent.
SECTION 15. Controversies. If any controversy arises
between the parties to this Agreement, or with any other party, concerning
the subject matter of this Agreement, its terms or conditions, the Escrow
Agent will not be required to determine the controversy or to take any
action regarding it. The Escrow Agent may hold all documents and funds and
may wait for settlement of any such controversy by final appropriate legal
proceedings or other means as, in the Escrow Agent's discretion, the Escrow
Agent may be required, despite what may be set forth elsewhere in this
Agreement. In such event, the Escrow Agent will not be liable for interest
or damage. Furthermore, the Escrow Agent may at its option, file an action
of interpleader requiring the parties to answer and litigate any claims and
rights among themselves. The Escrow Agent is authorized to deposit with
the clerk of the court all documents and funds held in escrow, except all
costs, expenses, charges and reasonable attorney fees incurred by the
Escrow Agent due to the interpleader action and which the parties jointly
and severally agree to pay. Upon initiating such action, the Escrow Agent
shall be fully released and discharged of and from all obligations and
liability imposed by the terms of this Agreement.
SECTION 16. Indemnification of Escrow Agent. The Company
and its respective successors and assigns agrees to indemnify and hold the
Escrow Agent harmless against any and all losses, claims, damages,
liabilities and expenses, including reasonable costs of investigation,
counsel, fees, including allocated costs of in-house counsel and
disbursements, that may be imposed on the Escrow Agent or incurred by the
Escrow Agent in connection with the performance of his/her duties under
this Agreement, including but not limited to any litigation arising from
this Agreement or involving its subject matter. The Escrow Agent shall
have a first lien on the property and papers held under this Agreement for
such compensation and expenses.
SECTION 17. Investment Instructions. For the purpose of
investing funds held in escrow, the Escrow Agent may accept and act upon
the joint written instructions of the Company and all of the Holders. The
parties shall indemnify and hold the Escrow Agent harmless from any and all
liability for acting on a joint written investment instruction purported to
be given by the Company and all the Holders. The Escrow Agent shall not be
responsible for the authenticity of any instructions or be in any way
liable for any unauthorized instruction or for acting on such an
instruction, whether or not the persons giving the instructions were, in
fact, authorized. In no event shall the Escrow Agent be liable to the
Company for any consequential, special, or exemplary damages, including but
not limited to lost profits, from any cause whatsoever arising out of, or
in any way connected with acting upon written instructions believed by the
Escrow Agent to be genuine.
The Escrow Agent will act upon investment instructions the
day that such instructions are received, provided the requests are
communicated within a sufficient amount of time to allow the Escrow Agent
to make the specified investment. Instructions received after an
applicable investment cutoff deadline will be treated as being received by
the Escrow Agent on the next business day, and the Escrow Agent shall not
be liable for any loss arising directly, or indirectly, in whole or in
part, from the inability to invest funds on the day the instructions are
received. The Escrow Agent shall not be liable for any loss incurred by
the actions of third parties or by any loss arising by error, failure or
delay in making of an investment which is caused by circumstances beyond
the Escrow Agent's reasonable control.
SECTION 18. Backup Withholding. The Escrow Agent and the
Company, as the case may be, shall provide all necessary information,
documentation or certification to the payor of interest, principal, premium
or other "reportable payments" made with respect to the Escrowed Securities
or other assets held by the Escrow Agent pursuant to this Agreement so that
such payments will not be subject to "backup withholding" tax under section
3406 of the Internal Revenue Code of 1986, as amended. Attached hereto as
Exhibit E is a properly and accurately prepared and duly executed Internal
Revenue Service Form W-9 certifying that the Company is exempt from "backup
withholding" tax.
SECTION 19. Resignation of Escrow Agent. The Escrow
Agent may resign at any time upon giving at least thirty (30) days' written
notice to the Company; provided, however, that no such resignation shall
become effective until the appointment of a successor escrow agent which
shall be accomplished as follows: The Company shall use its best efforts
to select a successor escrow agent within thirty (30) days after receiving
such notice. If the Company fails to select a successor escrow agent
within such time, the Escrow Agent shall have the right to appoint a
successor escrow agent authorized to do business in the state of
California. In each case, the successor escrow agent shall be reasonably
acceptable to all the Holders. The successor escrow agent shall execute
and deliver an instrument accepting such appointment and it shall, without
further acts, be vested with all the estates, properties, rights, powers
and duties of the predecessor escrow agent as if originally named as escrow
agent. The Escrow Agent shall be discharged from any further duties and
liability under this Agreement.
SECTION 20. Governing Law. This Agreement is to be
construed and interpreted according to California law.
SECTION 21. Counterparts. This Agreement may be executed
in several counterparts, all or any of which shall be regarded for all
purposes as one original and shall constitute and be but one and the same
instrument.
SECTION 22. Section Headings. The headings of the
several Sections hereof and the Table of Contents appended hereto shall be
solely for convenience of reference and shall not affect the meaning,
construction, interpretation or effect of this Agreement.
IN WITNESS WHEREOF, the parties have each caused this
Agreement to be executed by their duly authorized officers on the date
first above written.
CALIFORNIA ENERGY COMPANY, INC.
By
Name:
Title:
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION,
as Escrow Agent
By
Name:
Title:
ACKNOWLEDGED AND AGREED BY:
PRINCIPAL MUTUAL LIFE INSURANCE COMPANY
By
Name:
Title:
By
Name:
Title:
EXHIBIT A
Defeasance Agreement
EXHIBIT B
Government Obligations
Accrued
Type Coupon Maturity Par Amount Price Yield Interest Total Cost
TNOTE 4.250 8/31/94 1,394,000.0 100.296271* 3.588020 2,414.88* 1,400,544.90*
TNOTE 3.875 2/28/95 37,154,000.00 99.800470* 4.087660 58,684.14* 37,138,530.76*
------------- ---------- --------------
38,548,000.00 61,099.02* 38,539,095.66*
Cash: 797.65
Securities: 38,539,095.66
-------------
Total Cost: 38,539,893.31
* Approximate. Subject to change on Effectiveness Date.
EXHIBIT C
Defeasance Requirements
<TABLE
Date Principal Interest Total
9/15/94 -- $2,143,828.80 $ 2,143,828.80
3/15/95 $35,730,480 $2,143,828.80 $37,874,308.80
Portfolio Less: Cumulative
Date Principal Interest Total Income Requirement Balance
3/15/94 0.00 0.00 0.00 0.00 797.65
8/31/94 1,394,000.00 749,481.25 2,143,481.25 0.00 2,144,278.90
9/15/94 0.00 0.00 0.00 2,143,828.80 450.10
2/28/95 37,154,000.00 719,858.75 37,873,858.75 0.00 37,874,308.85
3/15/95 0.00 0.00 0.00 37,874,308.80 0.05
------------- ------------ ------------- -------------
38,548,000.00 1,469,340.00 40,014,340.00 40,018,137.60
Exhibit D
Fee Schedule
Exhibit E
Form W-9