Exhibit 10.27
RECORDING REQUESTED BY:
WHEN RECORDED RETURN TO:
The Law Offices of David E. Chanover
16776 Bernardo Center Drive
Suite 110B
San Diego, California 92128
Attention: David E. Chanover
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COSO TRANSMISSION LINE PARTNERS
(as Trustor)
to
CHICAGO TITLE INSURANCE COMPANY
(as Trustee)
for the use and benefit of
U.S. BANK TRUST NATIONAL ASSOCIATION
(as Beneficiary)
DEED OF TRUST, ASSIGNMENT OF RENTS,
FIXTURE FILING AND SECURITY AGREEMENT
(CTLP)
Dated: May 28, 1999
Location: County of Inyo
and County of Kern,
State of California
DEED OF TRUST, ASSIGNMENT OF RENTS,
FIXTURE FILING AND SECURITY AGREEMENT
(CTLP)
THIS DEED OF TRUST, ASSIGNMENT OF RENTS, FIXTURE FILING AND SECURITY
AGREEMENT (CTLP) (this "Deed of Trust") is made as of May 28, 1999, by COSO
TRANSMISSION LINE PARTNERS, a California general partnership whose address is
c/o Caithness Energy, L.L.C., 1114 Avenue of the Americas, 41st Floor, New York,
New York 10036, as trustor ("Trustor"), to CHICAGO TITLE INSURANCE COMPANY, a
Missouri corporation, whose address is 2425 West Shaw, Fresno, California 93711,
as trustee ("Trustee"), in favor of U.S. Bank Trust National Association, whose
address is One California Street, 4th Floor, San Francisco, California 94111, as
beneficiary ("Beneficiary") not in its individual capacity but solely as trustee
and collateral agent pursuant to the Indenture of even date herewith (the
"Indenture") among Beneficiary, Caithness Coso Funding Corp., as issuer (the
"Issuer"), Coso Energy Developers, ("CED"), Coso Finance Partners, a California
general partnership ("CFP") and Coso Power Developers, a California general
partnership ("CPD"), as guarantors. Unless otherwise defined herein,
capitalized terms shall have the meanings set forth in the Indenture, which is
hereby incorporated herein by this reference.
This Deed of Trust is given as additional security for the obligations of
the Issuer, CED, CPD and CFP under the Indenture, the Guarantees and the other
Financing Documents.
NOW, THEREFORE, in consideration of, and to secure the payment and
performance of the Obligations (as hereinafter defined) which Obligations may
increase, decrease and increase again from time to time and may be evidenced by
one or more notes, Trustor has given, granted, bargained, sold, alienated,
conveyed, confirmed and assigned, and by these presents does give, grant,
bargain, sell, alienate, convey, confirm and assign unto Trustee, its successors
and assigns, with general warranties of title as provided herein or under Civil
Code Section 1113 (but subject to Permitted Liens), in trust with power of sale
and right of entry and possession forever, for the benefit and security of
Beneficiary as Collateral Agent, all right, title and interest of Trustor in and
to the following property, assets, rights and interests, whether now owned or
hereafter acquired (such property, assets, rights and interests being
collectively referred to herein as the "Trust Property"):
(a) all of Trustor's right, title and interest in and to that certain
real property located in the County of Inyo, State of California and in the
County of Kern, State of California, described in Exhibit A attached hereto
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and by this reference incorporated herein (the "Transmission Line
Property"), and all of Trustor's right, title and interest in and to that
certain 230KV electric transmission line (and related improvements,
equipment and facilities) located on the Transmission Line Property (the
"Transmission Line");
(b) all of Trustor's right, title and interest in and under that
certain agreement described in Exhibit B attached hereto and by this
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reference incorporated herein (the "Navy Contract"), together with all
renewals, extensions, supplements, amendments, cancellations or
terminations thereof and all credits, deposits, options, privileges and
rights thereunder;
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(c) all of Trustor's right, title and interest in and to any (i)
easements, rights-of-way, licenses and entry rights, (ii) gores of land,
(iii) roads, streets, ways, alleys or passages, (iv) interests in land
lying in the bed of any street, road or avenue, whether opened or proposed,
on, near or adjoining the Transmission Line Property or any part thereof,
(v) sewer rights, (vi) air rights, (vii) waters, water courses, water
rights and powers, (viii) profits-a-prendre, minerals, geothermal
substances, oil, gas and other hydrocarbon substances, (ix) exploration,
development and production rights, and (x) all other estates, rights,
titles, interests, privileges, franchises, liberties, tenements,
hereditaments, consents, options, appendages and appurtenances of any
nature whatsoever, in any way belonging, relating or pertaining to or
connected with the Transmission Line Property, the Navy Contract, the
Improvements or any other of the Trust Property, or any part thereof,
together with all renewals, extensions, supplements or amendments thereof;
(d) all leases (including oil, gas, geothermal and other mineral
leases), subleases, franchises, licenses, concessions, permits, power
purchase and other contracts and agreements affecting the use or occupancy
of the Transmission Line Property, the Navy Contract, the Improvements or
any other of the Trust Property, or any part thereof, now or hereafter
entered into, and any renewals or extensions thereof (hereinafter referred
to as the "Leases"); and the right to receive and apply the rents, issues,
profits, royalties, income, accounts receivable, revenues, deposits,
security deposits, receipts and other benefits of the Trust Property to the
extent of Trustor's interest therein, including, without limitation, the
proceeds of all hydrocarbons or other minerals produced from the Trust
Property, all delay royalties, rentals and bonuses from any oil, gas,
geothermal or other mineral lease, any revenues under any power purchase or
sale contracts and any amounts received from the U.S. Navy (collectively,
hereinafter referred to as the "Rents") to the payment of the Obligations;
(e) all of Trustor's right, title and interest in and to any and all
buildings, structures, improvements or fixtures of any kind, now or
hereafter erected or located on the Transmission Line Property or any part
thereof (the "Improvements");
(f) all facilities, machinery, equipment, apparatus, appliances,
fittings, goods, materials, supplies, and other items and property of every
kind and nature whatsoever owned by Trustor, or in which Trustor now or
hereafter has any right, title or interest, now or hereafter located in or
upon, or used in connection with the present or future development,
operation, occupancy or other utilization (whether temporarily or
permanently) of or activities on, the Transmission Line Property, any of
the other Trust Property or any part thereof, whether or not attached to or
installed in any Improvements, and all renewals, replacements and
substitutions thereof and additions thereto, including, without limitation,
any and all (i) wells, including production, injection, test, temperature
gradient and water wells, well casings, wellhead equipment, geothermal
resource gathering, injection and disposal systems, pipelines, pumps,
sumps, test holes, evaporation ponds and other facilities and equipment
used to produce, inject, store, transport or utilize geothermal substances
or condensate, (ii) overhead and underground electrical transmission,
distribution and collector lines and related systems, switchyards,
substations, transformers, energy storage facilities, conductors,
separators, circuit
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breakers, interconnection equipment, conduits, footings, towers, poles,
crossarms, guy lines, anchors and wires, (iii) overhead and underground
control, monitoring, communications and radio relay systems and
telecommunications equipment, (iv) roads, erosion control facilities,
dikes, signs and fences, (v) maps, plans, specifications, architectural,
engineering, construction or shop drawings, manuals or similar documents
and (vi) any other facilities, machinery, equipment, apparatus, fittings,
goods, materials, supplies, and other items and property associated with or
incidental to any of the foregoing or to the generation, conversion,
storage, switching, metering, step-up, step-down, transmission, conducting,
wheeling, sale or other use or conveyance of electricity (collectively, the
"Equipment"), as well as the right, title and interest of Trustor in and to
any of the Equipment which may be subject to any security agreements (as
defined in the Uniform Commercial Code of the State of California) superior
in lien to the lien of this Deed of Trust;
(g) all awards or payments, including interest thereon, and the right
to receive the same, which may be made with respect to the Trust Property,
whether from state fund sharing, from the exercise of the right of eminent
domain (including any transfer made in lieu of the exercise of said right),
from changes of grade of street or for any other injury to or decrease in
the value of the Trust Property now or hereafter located thereon, whether
direct or consequential, which said awards and payments are hereby assigned
to Beneficiary, and Beneficiary is hereby authorized to collect and receive
the proceeds thereof and to give proper receipts and acquittances therefor;
(h) all refunds or rebates of all taxes or charges in lieu of taxes,
assessments, water rates, sewer rents and other charges, including vault
charges and license or permit fees for the use of vaults, chutes and
similar areas on or adjoining the Transmission Line Property, now or
hereafter levied or assessed against the Trust Property (hereinafter
referred to as the "Taxes");
(i) all inventory, accounts, books, records and general intangibles
in whatever form and however stored, owned by Trustor, or in which Trustor
now or hereafter has any right, title or interest, now or hereafter located
upon, arising in connection with or concerning the Trust Property;
(j) all proceeds of and any unearned premiums on any insurance
policies now or hereafter covering the Trust Property, including, without
limitation, the right to receive the proceeds of any insurance, judgments
or settlements made in lieu thereof, for damage to the Trust Property or
for any defect in the title to the Trust Property or any part thereof;
(k) the right, in the name and on behalf of Trustor, to appear in and
defend any action or proceeding brought with respect to the Trust Property
and to commence any action or proceeding to protect the interest of
Beneficiary in the Trust Property;
(l) all of Trustor's right, title and interest in and to all plans
and specifications prepared for or relating to the design, development,
construction, management and use of Improvements or Equipment or other
development of the Trust Property (including,
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without limitation, all amendments, modifications, supplements, general
conditions and addenda thereof or thereto), and all studies, data and
drawings related thereto, and all contracts and agreements of Trustor
relating to the aforesaid plans and specifications or to the aforesaid
studies, data and drawings or to the design, development, construction,
management and use of Improvements, the Equipment or any of the other Trust
Property;
(m) all contracts with property managers, surveyors, real estate
advisors, consultants and brokers, geothermal energy advisors and
consultants, engineers, and other like agents and professionals that relate
to any part of the Trust Property, including without limitation, any
Improvements constructed or to be constructed on the Transmission Line
Property or any part thereof or any Equipment to be placed, installed, used
or stored on the Transmission Line Property or any part thereof, and all
maps, reports, surveys, tests and studies of or relating to any of the
Trust Property, owned by Trustor or in which Trustor has or shall have an
interest and now or hereafter in the possession of Trustor or any such
agent or professional;
(n) all present and future agreements, permits, licenses,
entitlements and approvals, as well as all modifications, supplements,
extensions and renewals thereof, now existing or hereafter made, in which
Trustor now or hereafter has an interest, relating to the use, development
and/or occupancy of the Transmission Line Property, the Improvements and/or
the Equipment;
(o) all the estate, right, title, interest, claim or demand of any
nature whatsoever of Trustor, either in law or in equity, in possession or
expectancy, in and to the Trust Property and in all replacements,
substitutes, renewals, betterments and extensions of and all additions to
any of the Improvements or Equipment, or any part thereof; and
(p) all products and proceeds of any of the Trust Property herein
described.
This Deed of Trust secures the following obligations which shall heretofore
and hereinafter collectively be referred to as the "Obligations":
(i) The payment of all indebtedness and the performance of all
obligations of CED, CPD and CFP as evidenced in Section 9 of the Indenture
entitled "Guarantees" and as further evidenced by that certain Notation of
Guarantee of even date herewith executed by CED, CPD and CFP, including,
without limitation, the guarantee of payment of (1) $110,000,000 6.80%
Senior Secured Notes due in 2001 and (2) $303,000,000 9.05% Senior Secured
Notes due in 2009 (collectively, the "Senior Secured Notes") issued by the
Issuer (the "Guarantees"); and
(ii) The satisfaction and performance of all other debts, obligations,
covenants, agreements and liabilities of Trustor to Trustee, Beneficiary
or any of the other Secured Parties or of CED, CPD, CFP or the Issuer to
Trustee, Beneficiary or any of the other Secured Parties, arising out of,
connected with or related to this Deed of Trust, the Guarantees, any of the
Financing Documents or any other agreement now or hereafter
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executed by CED, CPD, CFP, the Issuer or Trustor, and all amendments,
extensions, and renewals of the foregoing documents, whether now existing
or hereafter arising, voluntary or involuntary, absolute or contingent,
liquidated or unliquidated, and whether or not from time to time decreased
or extinguished and later increased, created, or incurred.
To protect the security of this Deed of Trust, Trustor covenants with and
represents and warrants to Trustee and Beneficiary as follows:
1. Warranty of Title. Trustor warrants its right, title or
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interest, as applicable, in and to the Transmission Line Property, the
Transmission Line, the Navy Contract, the Improvements, the Equipment and the
balance of the Trust Property and the validity and priority of the lien of this
Deed of Trust and the estate hereof against the claims and demands of all
Persons whomsoever, other than with respect to Permitted Liens. Trustor also
represents and warrants that (i) Trustor is now, and after giving effect to this
Deed of Trust, will be, in a solvent condition, (ii) the execution and delivery
of this Deed of Trust by Trustor does not constitute a "fraudulent conveyance"
within the meaning of Title 11 of the United States Code (the "Bankruptcy Code")
as now constituted or under any other applicable statute, and (iii) no
bankruptcy or insolvency proceedings are pending or contemplated by or, to the
best of Trustor's knowledge, against Trustor.
2. Notice. Trustor hereby requests that a copy of notice of default
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and notice of sale be mailed to it at the address set forth below, and such
address is also the mailing address of Trustor, as debtor, under the California
Uniform Commercial Code. Trustor hereby covenants to cure any default within
the time period required of the Issuer under the Financing Documents upon
receipt of notice of such default. Beneficiary's address given below is the
address for Beneficiary under the California Uniform Commercial Code. Any
notice, request, demand, statement, authorization, approval or consent made
hereunder shall be deemed given or furnished (i) when addressed to the party
intended to receive the same at the address of such party set forth below, and
delivered at such address or (ii) three (3) days after the same is deposited in
the United States mail as first class certified mail, return receipt requested,
postage prepaid:
If to Trustor:
Coso Transmission Line Partners
c/o Caithness Energy, L.L.C.
1114 Avenue of the Americas, 41st Floor
New York, New York 10036
Attention: President
If to Trustee:
Chicago Title Insurance Company
2425 West Shaw
Fresno, California 93711
Attention: Trust Department
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If to Beneficiary:
U.S. Bank Trust National Association
One California Street, Suite 400
San Francisco, California 94111
Attention: Trust Officer
3. Sale of Trust Property. This Deed of Trust hereby contains more
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than one power of sale and Beneficiary, in its sole discretion, may conduct one
or multiple foreclosure sales in connection herewith. If this Deed of Trust is
foreclosed, or the power of sale hereunder is exercised, the Trust Property, or
any interest therein, may, at the discretion of Beneficiary, be sold in one or
more parcels or in several interests or portions and in any order or manner.
4. No Credits on Account of the Obligations. Trustor will not claim
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or demand or be entitled to any credit or credits on account of the Obligations
for any part of the Taxes assessed against the Trust Property or any part
thereof, and no deduction shall otherwise be made or claimed from the taxable
value of the Trust Property, or any part thereof, by reason of this Deed of
Trust or the Obligations.
5. Offset, Counterclaims and Defenses. Any assignee of this Deed of
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Trust and the Obligations secured hereby shall take the same free and clear of
all offsets, counterclaims or defenses of any nature whatsoever which Trustor
may have against any assignor of this Deed of Trust and the Obligations secured
hereby, and no such offset, counterclaim or defense shall be interposed or
asserted by Trustor in any action or proceeding brought by any such assignee
upon this Deed of Trust or the Obligations secured hereby and any such right to
interpose or assert any such offset, counterclaim or defense in any such action
or proceeding is hereby expressly waived by Trustor.
6. Other Security for the Obligations. Trustor shall observe and
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perform all of the terms, covenants and provisions to be observed or performed
by Trustor contained in this Deed of Trust or otherwise executed and delivered
in connection with this Deed of Trust.
7. Preservation of Trust Property. Trustor shall do any and all
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acts which, from the character or use of the Trust Property, may be reasonably
necessary to protect and preserve the lien, the priority of the lien and the
security of Beneficiary granted herein, the specific enumerations herein not
excluding the general. Trustor shall maintain and preserve the Trust Property
in accordance with the requirements of the Indenture. Further, with respect to
the Navy Contract, Trustor hereby agrees as follows:
(a) not to amend, change, alter, cancel, surrender, release, waive,
supplement, terminate or modify, nor permit the amendment, change, alteration,
cancellation, surrender, release, waiver, supplement, termination, or
modification (each, an "Amendment") of the Navy Contract or the estate or rights
created thereby or any interest therein without the prior written consent of
Beneficiary. Consent to one Amendment shall not be deemed to be a waiver of the
right to require consent to other, future or successive Amendments. Any
Amendment, whether oral or in writing, made without the prior written consent of
Beneficiary, shall not be valid or effective;
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(b) to make all payments and to keep and perform promptly each and
every covenant, obligation and agreement of the lessee, transferee, grantee,
licensee or holder (as the case may be) in the Navy Contract, not to commit,
suffer or permit any default thereunder and not to take any action or omit to
take any action which would effect or permit the termination or cancellation of
the Navy Contract. Trustor shall take all actions necessary to keep the rights
under the Navy Contract unimpaired. Trustor shall promptly deliver to
Beneficiary copies of all material notices, demands or complaints received by
Trustor from the U.S. Navy, CED, CFP, CPD or any other third party in connection
with the Navy Contract, and promptly notify Beneficiary in writing with respect
to any default or alleged default by any party thereto (whether or not a notice
of default has been issued under the Navy Contract) and deliver to Beneficiary
within ten (10) business days of Trustor's receipt of any notice of default a
certificate executed by Trustor describing the default, the actions Trustor
intends to take to cure such default, the length of time Trustor expects to take
to cure such default and the status of any actions taken to cure such default.
Trustor shall also furnish to Beneficiary such other information as Beneficiary
may reasonably request concerning Trustor's performance of its covenants,
obligations and agreements under or with respect to the Navy Contract.
Beneficiary shall have the option but not the obligation to cure any such
default and to perform any or all of Trustor's obligations thereunder;
(c) that any subordination of the Navy Contract to any fee mortgage,
to any lease, or to any other interest, either orally or in writing, made
without the prior written consent of Beneficiary, shall not be valid or
effective;
(d) that if the Navy Contract is terminated prior to the natural
termination of its term by reason of default of Trustor thereunder, and if,
pursuant to any provision of the Navy Contract, or otherwise, Beneficiary or its
designee shall acquire from the U.S. Navy or any other third party, as the case
may be, a new contract, lease or right-of-way, then Trustor shall not have any
right, title or interest in or to such new contract, lease or right-of-way or
the estate created thereby; and
(e) that the provisions hereof shall be deemed to be obligations of
Trustor in addition to Trustor's obligations as lessee, grantee, transferee,
licensee or holder, as the case may be, with respect to any similar matters
contained in the Navy Contract, and the inclusion herein of any covenants and
agreements relating to similar matters as to which Trustor is obligated under
the Navy Contract shall not restrict or limit Trustor's duties and obligations
to keep and perform promptly all of its covenants, agreements and obligations as
lessee, grantee, transferee, licensee or holder, as the case may be, under the
Navy Contract; provided, however, that nothing in this Deed of Trust shall be
construed as requiring the taking of or the committing to take any action by
Trustor or Beneficiary which would cause a default under the Navy Contract.
8. Further Transfer of Trust Property. Without the prior written
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consent of Beneficiary being first had and obtained, Trustor shall not (a)
execute or deliver any pledge, security agreement, mortgage, deed of trust or
other instrument of hypothecation covering all or any portion of the Trust
Property or any interest therein or (b) sell, contract to sell, lease with
option to purchase, convey, alienate, transfer, sublease or otherwise dispose of
all or any portion of the Trust Property or any interest therein, in each case
whether voluntarily or involuntarily, by
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operation of law or otherwise. Consent to one such transaction shall not be
deemed to be a waiver of the right to require consent to future or successive
transactions. Beneficiary may grant or deny such consent in its sole discretion
and, if consent should be given, any such transfer shall be subject to this Deed
of Trust, and any such transferee shall assume all obligations hereunder and
agree to be bound by all provisions contained herein and therein. Such
assumption shall not, however, release Trustor from any liability under this
Deed of Trust without the written consent of Beneficiary.
9. Eminent Domain. In the event that any proceeding or action be
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commenced for the taking of the Trust Property, or any part thereof or interest
therein, for public or quasi-public use under the power of eminent domain,
condemnation or otherwise, or if the same be taken or damaged by reason of any
public improvement or condemnation proceedings, or in any other manner
(collectively, a "Condemnation"), or should Trustor receive any notice or other
information regarding such proceeding, action, taking or damage, Trustor shall
give prompt written notice thereof to Beneficiary. Beneficiary shall be
entitled to give or withhold its consent to any compromise or settlement in
connection with such taking or damage. All compensation, awards, damages,
rights of action and proceeds awarded to Trustor by reason of any such taking or
damage (the "Condemnation Proceeds") are hereby absolutely and unconditionally
assigned to Beneficiary, and Trustor agrees to execute such further assignments
of the Condemnation Proceeds as Beneficiary or Trustee may require. All such
Condemnation Proceeds shall be applied as provided in the Credit Agreements.
10. Assignment of Contracts. In addition to any other grant,
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transfer or assignment effectuated hereby, and without in any manner limiting
the generality of the grants given above, Trustor shall assign to Beneficiary,
as security for the Obligations, Trustor's interest in all agreements,
contracts, leases, licenses and permits affecting the Transmission Line Property
and Improvements in any manner whatsoever, such assignments to be made, if so
requested by Beneficiary, by instruments in form satisfactory to Beneficiary;
but no such assignment shall be construed as a consent by Beneficiary to any
agreement, contract, license or permit so assigned, or to impose upon
Beneficiary any obligations with respect thereto.
11. Anti-Merger. There shall be no merger of the Navy Contract or
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the estates or interests created thereby (collectively, the "Estate") with the
fee estate in the Transmission Line Property or any part thereof by reason of
any of those interests coming into common ownership, unless Beneficiary consents
in writing thereto. Further, if Trustor acquires any interest in the fee estate
to the Transmission Line Property or any part thereof, then the lien of this
Deed of Trust will simultaneously and without further action become extended to
encumber Trustor's interest in the fee estate in addition to remaining a lien on
the Estate, and Trustor agrees, upon request by Beneficiary and at no cost to
Beneficiary, to execute, acknowledge and deliver to Beneficiary all further
instruments and documents that Beneficiary believes to be appropriate to provide
further evidence of the lien of this Deed of Trust on such fee interest. Where
the lien of this Deed of Trust has been extended to cover any interest of
Trustor in the fee estate, then in the event of the exercise of any power of
sale under this Deed of Trust, Beneficiary will have the right to sell the
Estate and the fee interest of Trustor separately or together at the election of
Beneficiary.
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12. Documentary Stamps. If at any time the United States of America,
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any state thereof or any governmental subdivision of any such state, shall
require revenue or other stamps to be affixed to this Deed of Trust, or that any
taxes be paid in connection with this Deed of Trust, Trustor shall pay for the
same, with interest and penalties thereon, if any.
13. Right of Entry. Beneficiary, may at any reasonable time or times
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make or cause to be made entry upon and inspection of the Trust Property or any
part thereof in person or by agent.
14. Event of Default. The term "Event of Default," whenever used in
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this Deed of Trust, shall mean:
(a) any one or more of the events of default listed or otherwise
provided in the Indenture, the Guarantees or any of the other Financing
Documents, subject to such cure rights as may be expressly set forth therein
(whether any such event shall be voluntary or involuntary or come about or be
effected by operation of law or pursuant to or in compliance with any judgment,
decree or order of any court or any order, rule or regulation of any
administrative or governmental body);
(b) any representation or warranty made by Trustor in this Deed of
Trust or any Financing Document or any other representation, warranty or
statement in any certificate, financial statement or other document furnished to
Beneficiary or any other Person proves to have been untrue or misleading in any
material respect as of the time made, confirmed or furnished and the fact, event
or circumstance that gave rise to such inaccuracy has resulted in, or could
reasonably be expected to result in, a Material Adverse Effect and that fact,
event or circumstance continues uncured for thirty (30) or more days from the
date Trustor receives notice thereof from Beneficiary; provided that, if Trustor
commences and diligently pursues efforts to cure such fact, event or
circumstance within such 30-day period and delivers written notice to
Beneficiary thereof, Trustor may continue to effect such cure, and such
misrepresentation shall not be deemed an "Event of Default" for an additional
sixty (60) days so long as Trustor is diligently pursuing such cure;
(c) any failure to perform or observe any of the covenants or
agreements set forth in Section 46 hereof;
(d) except for the Events of Default described in Section 14(c)
hereof, any failure by Trustor to perform or observe any covenant or agreement
contained in this Deed of Trust, and such failure continues uncured for thirty
(30) or more days from the date Trustor receives notice thereof from
Beneficiary; provided that if Trustor commences and diligently pursues efforts
to cure such default within such 30-day period, Trustor may continue to effect
such cure of the default and such default will not be deemed an "Event of
Default" for an additional ninety (90) days so long as Trustor is diligently
pursuing such cure;
(e) any admission in writing by Trustor of its inability, or general
inability to pay its debts as the debts become due or the execution of a general
assignment for the benefit of creditors;
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(f) commencement by Trustor of any case, proceeding or other action
seeking reorganization, arrangement, adjustment, liquidation, dissolution or
composition of its or its debts under any applicable liquidation,
conservatorship, bankruptcy, moratorium, arrangement, adjustment, insolvency,
reorganization or similar laws affecting the rights or remedies of creditors
generally, as in effect from time to time ("Debtor Relief Law");
(g) Trustor, in any involuntary case, proceeding or other action
commenced against it which seeks to have an order for relief (injunctive or
otherwise) entered against it, as debtor, or seeks reorganization, arrangement,
adjustment, liquidation, dissolution or composition of it or its debts under any
Debtor Relief Law, (i) fails to obtain a dismissal of such case, proceeding or
other action within ninety (90) days of its commencement, or (ii) converts the
case from one chapter of the Bankruptcy Reform Act of 1978 , as amended, to
another chapter, or (iii) is the subject of any order for relief; or
(h) Trustor has a trustee, receiver, custodian or other official
appointed for or take possession of all or any part of its property or has any
court take jurisdiction of any of its property, which action remains undismissed
for a period of ninety (90) days.
15. Appointment of Receiver. Trustee or Beneficiary, in any action
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(or multiple actions) to foreclose this Deed of Trust or exercise the power of
sale granted under this Deed of Trust or upon the actual or threatened waste to
any part of the Trust Property or upon the occurrence of an Event of Default,
shall be at liberty, without notice, to apply for the appointment of a receiver,
and shall be entitled to the appointment of such receiver as a matter of right,
without regard to the value of the Trust Property as security for the
Obligations, or the solvency or insolvency of any Person then liable for the
payment of the Obligations.
16. Non-Waiver. The failure of Beneficiary to insist upon strict
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performance of any term of this Deed of Trust shall not be deemed to be a waiver
of any term of this Deed of Trust. Trustor shall not be relieved of Trustor's
obligation to pay and perform the Obligations at the time and in the manner
provided for in this Deed of Trust by reason of (i) failure to comply with any
request(s) of Trustor to take any action to foreclose this Deed of Trust or
otherwise enforce any of the provisions hereof, of the Financing Documents or of
any other mortgage, deed of trust, instrument or document securing or
guaranteeing the payment of the Obligations or a portion thereof, (ii) the
release, regardless of consideration, of the whole or any part of the Trust
Property or any other security for the Obligations, or (iii) any agreement or
stipulation between Beneficiary and any subsequent owner or owners of the Trust
Property or other Person extending the time of payment or otherwise modifying or
supplementing the terms of this Deed of Trust or the Financing Documents
evidencing, securing or guaranteeing payment of the Obligations or any portion
thereof, without first having obtained the consent of Trustor. Regardless of
consideration, and without the necessity for any notice to or consent by the
holder of any subordinate lien, encumbrance, right, title or interest in or to
the Trust Property, Beneficiary may release any Person at any time liable for
the payment of the Obligations or any portion thereof or all or any part of the
security held for the Obligations and may extend the time of payment or
otherwise modify the terms of the Financing Documents or this Deed of Trust,
including, without limitation, a modification of the interest rate payable on
the principal balance of the Obligations, without in any manner impairing or
affecting this Deed of Trust or the lien thereof or the priority of this Deed of
Trust, as so extended and modified, as security for the
11
Obligations over any such subordinate lien, encumbrance, right, title or
interest. Beneficiary may resort for the payment of the Obligations to any
other security held by Beneficiary in such order and manner as Beneficiary in
its discretion, may elect. Beneficiary may take action to recover the
Obligations, or any portion thereof, or to enforce any covenant hereof without
prejudice to the right of Beneficiary thereafter to foreclose this Deed of
Trust. Beneficiary shall not be limited exclusively to the rights and remedies
herein stated but shall be entitled to every additional right and remedy now or
hereafter afforded by law or equity. The rights of Beneficiary under this Deed
of Trust shall be separate, distinct and cumulative, and none shall be given
effect to the exclusion of the others. No act of Beneficiary shall be construed
as an election to proceed under any one provision herein to the exclusion of any
other provision.
17. Power of Sale. Upon the occurrence and during the continuance of
-------------
an Event of Default, Beneficiary may at any time, at its option and in its sole
discretion, declare the Obligations to be due and payable and the same shall
thereupon become immediately due and payable. Beneficiary may also do any or
all of the following; provided, however, that any of the following actions shall
be undertaken in a commercially reasonable manner and in accordance with
applicable law; and provided, further, that Beneficiary shall have no obligation
to do any of the following:
(a) Either in person or by agent, with or without bringing any action
or proceeding or by a receiver appointed by a court and without regard to the
adequacy of Beneficiary's security, enter upon and take possession of the Trust
Property or any part hereof and do any acts which Beneficiary deems necessary or
desirable to preserve the value, marketability or rentability of the Trust
Property or to increase the income therefrom or to protect the security hereof
and with or without taking possession of any of the Trust Property, sue for or
otherwise collect all Rents and profits including those past due and unpaid, and
apply the same, less costs and expenses of operation and collection including
attorneys' fees and expenses, upon the Obligations secured hereby with the
remainder, if any, to the Person or Persons legally entitled thereto. The
collection of Rents and profits and the application thereof shall not cure or
waive any Event of Default or notice thereof or invalidate any act done in
response thereto or pursuant to such notice.
(b) Bring an action in any court of competent jurisdiction to
foreclose this instrument or to enforce any of the covenants hereof.
(c) Exercise any or all of the remedies available to a secured party
under the Uniform Commercial Code.
(d) Beneficiary may elect to cause the Trust Property or any part
thereof to be sold under the power of sale herein granted in any manner
permitted by applicable law. In connection with any sale or sales hereunder,
Beneficiary may elect to treat any of the Trust Property which consists of a
right in action or which is property that can be severed from the real property
covered hereby or any improvements thereon without causing structural damage
thereto as if the same were personal property, and dispose of the same in
accordance with applicable law, separate and apart from the sale of real
property. Any sale of any personal property hereunder shall be conducted in any
manner permitted by Section 9501 or any other applicable sections of the
California Uniform Commercial Code. Where the Trust Property consists of real
12
and personal property or fixtures, whether or not such personal property is
located on or within the real property, Beneficiary may elect in its discretion
to exercise its rights and remedies against any or all of the real property,
personal property, and fixtures in such order and manner as is now or hereafter
permitted by applicable law. Without limiting the generality of the foregoing,
Beneficiary may at its sole and absolute discretion and without regard to the
adequacy of its security elect to proceed against any or all of the real
property, personal property and fixtures in any manner permitted under Section
9501(4)(a) of the California Uniform Commercial Code; and if Beneficiary elects
to proceed in the manner permitted under Section 9501(4)(a)(ii) of the
California Uniform Commercial Code, the power of sale herein granted shall be
exercisable with respect to all or any of the real property and fixtures covered
hereby, as designated by Beneficiary, and the Trustee is hereby authorized and
empowered to conduct any such sale of any real property and fixtures in
accordance with the procedures applicable to real property. Where the Trust
Property consists of real property and personal property, any reinstatement of
the Obligations, following the occurrence of an Event of Default and an election
by Beneficiary to accelerate the maturity of the Obligations, which is made by
Trustor or any other Person permitted to exercise the right of reinstatement
under Section 2924c of the California Civil Code or any successor statute,
shall, in accordance with the terms of California Uniform Commercial Code
Section 9501(4)(c)(iii), not prohibit Beneficiary from conducting a sale or
other disposition of any personal property or fixtures or from otherwise
proceeding against or continuing to proceed against any personal property or
fixtures in any manner permitted by the California Uniform Commercial Code; nor
shall any such reinstatement invalidate, rescind or otherwise affect any sale,
disposition or other proceeding held, conducted or instituted with respect to
any personal property or fixtures prior to such reinstatement. Any sums paid to
Beneficiary in effecting any reinstatement pursuant to Section 2924c of the
California Civil Code shall be applied to the Obligations and to Beneficiary's
and Trustee's reasonable costs and expenses in the manner required by such
Section 2924c. Should Beneficiary elect to sell any of the Trust Property which
is real property or which is personal property or fixtures that Beneficiary has
elected under Section 9501(4)(a)(ii) of the California Uniform Commercial Code
to sell together with real property in accordance with the laws governing a sale
of real property, such notice of default and election to sell shall be given as
may then be required by law. Thereafter, upon the expiration of such time and
the giving of such notice of sale as may then be required by law, at the time
and place specified in the notice of sale, Trustee shall sell such property, or
any portion thereof specified by Beneficiary, at public auction to the highest
bidder for cash in lawful money of the United States. Trustee may, and upon
request of Beneficiary shall, from time to time, postpone the sale by public
announcement thereof at the time and place noticed therefor. If the Trust
Property consists of several lots, parcels or interests, Beneficiary may
designate the order in which the same shall be offered for sale or sold. Should
Beneficiary desire that more than one such sale or other disposition be
conducted, Beneficiary may, at its option, cause the same to be conducted
simultaneously, or successively on the same day, or at such different days or
times and in such order as Beneficiary may deem to be in its best interest. Any
Person, including Trustor, Trustee or Beneficiary may purchase at the sale. In
the event Beneficiary elects to dispose of the Trust Property through more than
one sale, Trustor agrees to pay the costs and expenses of each such sale and of
any judicial proceedings wherein the same may be made, including reasonable
compensation to Trustee and Beneficiary, their agents and counsel, and to pay
all expenses, liabilities and advances made or incurred by Trustee in connection
with such sale or sales, together with interest on all such advances made by
Trustee at the interest rate then applicable to the indebtedness to which the
Financing
13
Documents apply. Upon any sale Trustee shall execute and deliver to the
purchaser or purchasers a deed or deeds conveying the property so sold but
without any covenant or warranty whatsoever express or implied, whereupon such
purchaser or purchasers shall be let into immediate possession, and the recitals
in any such deed or deeds of facts such as default, the giving of notice of
default and notice of sale, and other facts affecting the regularity or validity
of such sale or disposition, shall be conclusive proof of the truth of such
facts and any such deed or deeds shall be conclusive against all Persons as to
such facts recited therein.
(e) Exercise each of its other rights and remedies provided under the
Indenture, the Guarantees, the other Financing Documents or this Deed of Trust,
including, without limitation, any or all of the following:
(i) if the indebtedness is not paid on demand, take any and all steps
and institute any and all other proceedings that Beneficiary deems
necessary to enforce the indebtedness and obligations secured hereby and to
protect the lien of this Deed of Trust;
(ii) without assuming liability for the performance of any of
Trustor's obligations hereunder or under any Financing Document, enter and
take possession of the Trust Property or any part thereof, exclude Trustor
and all Persons claiming under Trustor whose claims are junior to this Deed
of Trust, wholly or partly therefrom, and use, operate, manage and control
the same either in the name of Trustor or otherwise as Beneficiary shall
deem best, and upon such entry, from time to time at the expense of Trustor
and the Trust Property, make all such repairs, replacements, alterations,
additions or improvements to the Trust Property or any part thereof as
Beneficiary may deem proper and, whether or not Beneficiary has so entered
and taken possession of the Trust Property or any part thereof, collect and
receive all the Rents and apply the same, to the extent permitted by law,
to the payment of all expenses which Beneficiary may be authorized to make
under this Deed of Trust, the remainder to be applied to the payment of the
Obligations until the same shall have been repaid in full; and if
Beneficiary demands or attempts to take possession of the Trust Property or
any portion thereof in the proper exercise of any rights hereunder, Trustor
shall promptly turn over and deliver complete possession thereto to
Beneficiary; and
(iii) personally or by agents, with or without entry, if Beneficiary
shall deem it advisable, proceed to protect and enforce its rights under
this Deed of Trust, by suit for specific performance of any covenant
contained herein or in any Financing Document or in aid of the execution of
any power granted herein or in any Financing Document, or for the
foreclosure of this Deed of Trust and the sale for cash of the Trust
Property under the judgment or decree of a court of competent jurisdiction,
or for the exercise of the power of sale granted under this Deed of Trust
or for the enforcement of any other right as Beneficiary shall deem most
effectual for such purpose; provided that in the event of a sale, by
--------
foreclosure or otherwise, of less than all of the Trust Property, this Deed
of Trust shall continue as a lien on, and security interest in, the
remaining portion of the Trust Property and Beneficiary shall not be
obligated to sell upon credit unless Beneficiary shall have expressly
consented in writing to a sale upon credit.
14
(f) Except as otherwise required by law, apply the net proceeds of any
foreclosure, collection, recovery, receipt, appropriation, realization or sale
of the Trust Property in the order of priority specified in the Indenture. If
all Obligations and any other amounts due under this Deed of Trust have been
indefeasibly paid, satisfied and discharged in full, any surplus then remaining
shall be paid to Trustor if Trustor is lawfully entitled to receive the same, or
shall be paid to whomsoever a court of competent jurisdiction may direct.
(g) Upon any sale or sales made under or by virtue of this section,
whether made under the power of sale or by virtue of judicial proceedings or of
a judgment or decree of foreclosure and sale, Beneficiary may bid for and
acquire the Trust Property or any part thereof. In lieu of paying cash for the
Trust Property, Beneficiary may make settlement for the purchase price by
crediting against the Obligations the sales price of the Trust Property, as
adjusted for the expenses of sale and the costs of the action and any other sums
for which Trustor is obligated to reimburse Trustee or Beneficiary under this
Deed of Trust.
18. Concerning the Trustee. Trustee shall be under no duty to take
----------------------
any action hereunder except as expressly required hereunder or by law, or to
perform any act which would involve Trustee in any expense or liability or to
institute or defend any suit in respect hereof, unless properly indemnified to
Trustee's reasonable satisfaction. Trustee, by acceptance of this Deed of
Trust, covenants to perform and fulfill the trusts herein created, being liable,
however, only for willful negligence or misconduct, and hereby waives any
statutory fee and agrees to accept reasonable compensation, in lieu thereof, for
any services rendered by Trustee in accordance with the terms hereof. Trustee
may resign at any time upon giving thirty (30) days' notice to Trustor and to
Beneficiary. Beneficiary may remove Trustee at any time or from time to time
and select a successor trustee. In the event of the death, removal,
resignation, refusal to act, or inability to act of Trustee, or in its sole
discretion for any reason whatsoever, Beneficiary may, without notice and
without specifying any reason therefor and without applying to any court, select
and appoint a successor trustee, by an instrument recorded wherever this Deed of
Trust is recorded, and all powers, rights, duties and authority of Trustee, as
aforesaid, shall thereupon become vested in such successor. Such substitute
trustee shall not be required to give bond for the faithful performance of the
duties of Trustee hereunder unless required by Beneficiary.
19. Trustee's Fees. Trustor shall pay all reasonable costs, fees and
--------------
expenses incurred by Trustee and Trustee's agents and counsel in connection with
the performance by Trustee of Trustee's duties hereunder, and all such costs,
fees and expenses shall be secured by this Deed of Trust.
20. Proceeds of Sale. Subject to the provisions of Section 49 of
----------------
this Deed of Trust, no sale or other disposition of all or any part of the Trust
Property shall be deemed to relieve Trustor of its obligations under this Deed
of Trust or any other Financing Document except and only to the extent the
proceeds are applied to the payment of the Obligations or such other
obligations. If the proceeds of sale, collection or other realization of or
upon the Trust Property are insufficient to cover the costs and expenses of such
realization and the payment in full of the Obligations, Trustor shall remain
liable for any deficiency.
15
21. Trustor as Tenant Holding Over. In the event of any such
------------------------------
foreclosure or other sale by Beneficiary, Trustor shall be deemed a tenant
holding over and shall forthwith deliver possession to the purchaser or
purchasers at such sale or be summarily dispossessed according to provisions of
law applicable to tenants holding over.
22. Leases. Beneficiary is authorized to subordinate this Deed of
------
Trust to any Leases and to foreclose this Deed of Trust subject to the rights of
any tenants of the Trust Property, if any, and the failure to so subordinate or
to make any such tenants parties to any such foreclosure or other proceedings
and to foreclose their rights will not be, nor be asserted to be by Trustor, a
defense to any proceedings instituted by Beneficiary to collect the Obligations.
23. Discontinuance of Proceedings. In case Beneficiary shall have
-----------------------------
proceeded to enforce any right, power or remedy under this Deed of Trust by
foreclosure, sale, entry or otherwise, and such proceeding shall have been
withdrawn, discontinued or abandoned for any reason, or shall have been
determined adverse to Beneficiary, then in every such case, to the fullest
extent permitted by law, (a) Trustor and Beneficiary shall be restored to their
former positions and rights, (b) all rights, powers and remedies of Beneficiary
shall continue as if no such proceeding had been taken, (c) each and every Event
of Default declared or occurring prior or subsequent to such withdrawal,
discontinuance or abandonment shall be or shall be deemed to be an independent
event of default and (d) neither the Obligations nor this Deed of Trust shall be
or shall be deemed to have been not reinstated or otherwise affected by such
withdrawal, discontinuance or abandonment; and to the fullest extent permitted
by law, Trustor hereby expressly waives the benefit of any statute or rule of
law now provided or which may hereafter conflict with the above.
24. No Reinstatement. If an Event of Default shall have occurred and
----------------
be continuing and Beneficiary shall have proceeded to enforce any right, power
or remedy permitted hereunder, then a tender of payment by Trustor or by anyone
on behalf of Trustor of any amount less than the amount necessary to satisfy the
Obligations in full, or the acceptance by Beneficiary of any such payment so
tendered, shall not constitute a reinstatement of this Deed of Trust or any
other document evidencing, securing or guaranteeing the Obligations.
25. Trustor's Waiver of Rights. Trustor hereby waives and releases,
--------------------------
to the maximum extent permitted by law, any rights, remedies or defenses which
Trustor might otherwise have (i) under California Code of Civil Procedure
Sections 726, 725a, 580a, 580b and 580d, California Civil Code Sections 2809,
2810, 2819, 2822, 2839, 2845, 2850, 2855, 2899 and 3433, under any anti-
deficiency provision of the Uniform Commercial Code, and under any future
judicial decisions or legislation, which statutes, future judicial decisions
and/or legislation might otherwise limit or condition Beneficiary's exercise of
certain of Beneficiary's rights and remedies in connection with the enforcement
of obligations secured by a lien on real property, including, without
limitation, Beneficiary's lien on the Trust Property or on any property
encumbered by other deeds of trust given to Beneficiary to secure obligations
under the Financing Documents (each, an "Additional Deed of Trust"), (ii) under
any laws now existing or hereafter enacted providing for any appraisal before
sale of a portion of the Trust Property or of the real property security of any
Additional Deed of Trust (the "Additional Deed of Trust Property"), (iii) to all
rights of redemption, valuation, appraisal, stay of execution, notice of
election to mature or any so-
16
called "Moratorium Laws", to declare due the Obligations, to marshalling in the
event of the foreclosure of the liens created under this Deed of Trust or under
any Additional Deed of Trust, or the exercise of the power of sale granted
hereunder or thereunder, (iv) pursuant to the defense of the statute of
limitations in any action hereunder or in any action for the collection or
performance of any Obligations secured hereby or any obligations secured by any
Additional Deed of Trust, (v) pursuant to any defense arising because of
Beneficiary's election, in any proceeding instituted under the Federal
Bankruptcy Code, of the application of Section 1111(b)(2) of the Federal
Bankruptcy Code, (vi) pursuant to any defense based upon any borrowing or grant
of a security interest under Section 364 of the Federal Bankruptcy Code, (vii)
under any law limiting remedies, including recovery of a deficiency, under an
obligation secured by a deed of trust on real property and/or a security
agreement on personal property (including, without limitation, the Trust
Property and the Additional Deed of Trust Property) if the real property and/or
personal property is sold under a power of sale contained in the deed of trust,
and all defenses based on any loss whether as a result of any such sale or
otherwise, of Trustor's right to recover any amount from the Issuer, whether by
right of subrogation or otherwise, (viii) under any law to require Beneficiary
to pursue the Issuer or any other Person, any security which Beneficiary may
hold, or any other remedy before proceeding against Trustor, (ix) to all rights
of reimbursement or subrogation, all rights to enforce any remedy that
Beneficiary, the Trustee, the Holders of the Senior Secured Notes or the
Permitted Additional Senior Lenders, if any, may have against the Issuer, or
against the Guarantors as obligors under the Partnership Notes, and all rights
to participate in any security held by Beneficiary until the Obligations have
been paid and the covenants of the Indenture have been performed in full, (x) to
all rights to assert the bankruptcy or insolvency of Issuer as a defense
hereunder or as the basis for rescission hereof, (xi) to all rights under any
law purporting to reduce Trustor's Obligations hereunder if Issuer's obligations
are reduced, (xii) all defenses based on the disability or lack of authority of
Issuer or any Person, the repudiation of the Guarantees or any related Financing
Documents by Issuer or any Person, the failure by Beneficiary, the Trustee, the
Holders of the Senior Secured Notes or any Permitted Additional Senior Lender,
if any, to enforce any claim against Issuer, or the unenforceability in whole or
in part of any Financing Document, (xiii) to all suretyship and guarantor's
defenses generally, (xiv) to all rights to insist upon, plead or in any manner
whatever claim or take the benefit or advantage of, any appraisal, valuation,
stay, extension, marshaling 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 Trustor of its obligations under, or the
enforcement by Beneficiary of, this Deed of Trust or any Additional Deed of
Trust, (xv) to any requirement on the part of Beneficiary, Trustee, the Holders
of the Senior Secured Notes or any Permitted Additional Senior Lender, if any,
to mitigate the damages resulting from any default (whether hereunder, under any
other Financing Document, under any Additional Deed of Trust or under any other
document or instrument); and (xvi) except as otherwise specifically set forth
herein, all rights of notice and hearing of any kind prior to the exercise of
rights by Beneficiary upon the occurrence and during the continuation of an
Event of Default to repossess with judicial process or to replevy, attach or
levy upon the Trust Property or any Additional Deed of Trust Property. To the
extent permitted by applicable law, Trustor waives the posting of any bond
otherwise required of Beneficiary in connection with any judicial process or
proceeding to obtain possession of, replevy, attach or levy upon the Trust
Property or any Additional Deed of Trust Property, to enforce any judgment or
other security for the Obligations, to enforce any judgment or other court order
entered in favor of Beneficiary, or to enforce by specific performance,
temporary
17
restraining order, preliminary or permanent injunction, this Deed of Trust, any
Additional Deed of Trust or any other agreement or document by which Trustor or
any other Person is bound and which is in whole or in part for the benefit of
Beneficiary, Trustee, the Holders of the Senior Secured Notes or any Permitted
Additional Senior Lender, if any. Trustor further agrees that upon the
occurrence and continuance of any Event of Default, Beneficiary may elect to
nonjudicially or judicially foreclose against any real or personal property
security (including, without limitation, under the Additional Deeds of Trust) it
holds for the Obligations or any part thereof, or to exercise any other remedy
against Issuer, any security or any guarantor, even if the effect of that action
is to deprive Trustor or any other Person of the right to collect reimbursement
from Issuer or any other Person for any sums paid to Beneficiary, Trustee, any
Holder of the Senior Secured Notes or any Permitted Additional Senior Lender, if
any. To the extent, if any, which such laws may be applicable, Trustor waives
and releases any right or defense which Trustor might otherwise have under such
provisions and under any other law of any applicable jurisdiction which might
limit or restrict the effectiveness or scope of any of Trustor's waivers or
releases hereunder. If any law referenced in this Section and now in force, of
which Trustor, Trustor's successors or assigns or any other Person might take
advantage despite this Section, shall hereafter be repealed or cease to be in
force, such law shall not thereafter be deemed to preclude the application of
this Section. Trustor warrants and agrees that each of the waivers and consents
set forth in this Deed of Trust is made voluntarily and unconditionally after
consultation with outside legal counsel and with full knowledge of its
significance and consequences, with the understanding that events giving rise to
any defense or right waived may diminish, destroy or otherwise adversely affect
the rights which Trustor otherwise may have against Beneficiary or any other
Person or against any collateral. If, notwithstanding the intent of the parties
that the terms of this Deed of Trust shall control in any and all circumstances,
any such waivers or consents are determined to be unenforceable under applicable
law, such waivers and consents shall be effective to the fullest extent
permitted by law.
26. Assignment of Rents. All of the Rents, whether now due, past due
-------------------
or to become due, and including all prepaid rents and security deposits, are
hereby absolutely, presently and unconditionally assigned, transferred, conveyed
and set over to Beneficiary to be applied by Beneficiary in payment of the
Obligations. It is understood and agreed that neither the foregoing assignment
of Rents to Beneficiary nor the exercise by Beneficiary of any of its rights or
remedies under this Deed of Trust shall be deemed to make Beneficiary a
"mortgagee-in-possession" or otherwise responsible or liable in any manner with
respect to the Trust Property or the use, occupancy, enjoyment, or operation of
all or any portion thereof, unless and until Beneficiary, in person or by agent,
assumes actual possession thereof. The appointment of a receiver for the Trust
Property by any court at the request of Beneficiary or by agreement with
Trustor, or the entering into possession of the Trust Property or any part
thereof by such receiver, also shall not be deemed to make Beneficiary a
mortgagee-in-possession or otherwise responsible or liable in any manner with
respect to the Trust Property or the use, occupancy, enjoyment or operation of
all or any portion thereof.
27. Security Agreement.
------------------
(a) This Deed of Trust is intended to be a security agreement
pursuant to the California Uniform Commercial Code for (i) any and all items of
personal property specified
18
above as part of the Trust Property that, under applicable law, may be subject
to a security interest pursuant to the California Uniform Commercial Code and
that are not effectively made part of the Transmission Line Property, and (ii)
any and all items of property specified above as part of the Trust Property
that, under applicable law, constitute fixtures and may be subject to a security
interest under Section 9313 of the California Uniform Commercial Code. Trustor
hereby grants Beneficiary a security interest in said property, and in all
additions thereto, substitutions therefor, and proceeds thereof, for the purpose
of securing the Obligations. For purposes of treating this Deed of Trust as a
security agreement, Beneficiary shall be deemed to be the secured party and
Trustor shall be deemed to be the debtor.
(b) Trustor maintains places of business in the State of California,
and Trustor will immediately notify Beneficiary in writing of any change in such
places of business.
(c) At the request of Beneficiary, Trustor shall join Beneficiary in
executing one or more financing statements and continuations and amendments
thereof pursuant to the UCC in form reasonably satisfactory to Beneficiary; and
Trustor will pay the cost of filing the same in all public offices wherever
filing is deemed by Beneficiary to be necessary. In the event Trustor fails to
execute such documents within five (5) business days after request by
Beneficiary, Trustor hereby authorizes Beneficiary to file such financing
statements and irrevocably constitutes and appoints Beneficiary, or any officer
of Beneficiary, as its true and lawful attorney-in-fact to execute the same on
behalf of Trustor.
(d) This Deed of Trust constitutes a financing statement filed as a
fixture filing under UCC (S) 9402(6) in the official records of Inyo County and
Kern County with respect to any and all fixtures included within the term "Trust
Property" and with respect to any goods or other personal property that may now
be or hereafter become such a fixture. This filing shall remain in effect as a
fixture filing until this Deed of Trust is released or satisfied of record or
its effectiveness otherwise terminates as to the Trust Property.
(e) Beneficiary has no responsibility for and does not assume any of,
Trustor's obligations or duties under any agreement or obligation which is part
of the Equipment or any obligation relating to the acquisition, preparation,
custody, use, enforcement or operation of any of the Trust Property.
(f) Trustor and Beneficiary agree that the filing of a financing
statement in the records normally having to do with personal property shall
never be construed as in any way derogating from or impairing this Deed of Trust
or the intention of the parties that everything used in connection with the
production of income from the Trust Property or adapted for use therein or which
is described or reflected in this Deed of Trust is, and at all times and for all
purposes and in all proceedings both legal or equitable shall be regarded as
part of the real estate subject to the lien hereof, irrespective of whether (i)
any such item is physically attached to improvements located on such real
property or (ii) any such item is referred to or reflected in any financing
statement so filed at any time. Similarly, the mention in any such financing
statement of (A) the rights in or to the proceeds of any casualty insurance
policy or (B) any award in eminent domain proceedings for taking or for loss of
value or for cause of action or proceeds thereof in connection with any damage
or injury to the Trust Property or any part thereof shall never be construed as
in any way altering any of the rights of Beneficiary as
19
determined by this instrument or impugning the priority of Beneficiary's lien
granted hereby or by any other recorded document, but such mention in such
financing statement is declared to be for the protection of Beneficiary in the
event any court shall at any time hold with respect to matters (A) and (B) above
that notice of Beneficiary's priority of interest, to be effective against a
particular class of persons, including, without limitation, the Federal
government and any subdivision or entity of the Federal government, must be
filed in the personal property records or other commercial code records.
28. Further Acts, etc. Trustor shall, at the cost of Trustor, and
-----------------
without expense to Beneficiary, execute, acknowledge and deliver all and every
such further acts, deeds, conveyances, financing statements, mortgages, deeds of
trust, assignments, notices of assignments, transfers and assurances as
Beneficiary shall from time to time require, for the better assuring, conveying,
assigning, transferring and confirming unto Beneficiary, the property and rights
hereby conveyed or assigned or intended now or hereafter so to be, or which
Trustor may be or may hereafter become bound to convey or assign to Beneficiary,
or for carrying out the intention or facilitating the performance of the terms
of this Deed of Trust or for filing, registering or recording this Deed of Trust
and, on demand, will execute and deliver and hereby authorizes Beneficiary to
execute in the name of Trustor to the extent they may lawfully do so, one or
more financing statements, chattel mortgages or comparable security instruments,
to evidence and perfect more effectively the lien hereof upon the Trust
Property.
29. Power of Attorney.
-----------------
(a) Trustor does hereby make, constitute and appoint Beneficiary its
true and lawful exclusive agent and attorney-in-fact for it, and in its name,
place and stead for the following purposes (collectively, the "Power of
Attorney"):
(i) in connection with or following one or more foreclosures
under this Deed of Trust judicially or by power(s) of sale or otherwise, or at
such time as Trustor shall be a debtor in proceedings under federal or state
bankruptcy law, to (1) apply to the U.S. Navy for assignment to it of the Navy
Contract and (2) subject to the prior approval of the U.S. Navy, if applicable,
to grant, bargain, sell, convey and assign Trustor's interest under the Navy
Contract to Beneficiary or to any other Person, for such price or prices, and on
such terms and conditions, as Trustor may deem proper, and in Trustor's name, to
make, execute, acknowledge and deliver a good and sufficient assignment, or
other instrument or instruments necessary to effect such sale, conveyance or
assignment;
(ii) to take all actions and exercise all rights and remedies
available to Trustor as holder of the Navy Contract, including, without
limitation, to (1) cure any defaults thereunder, (2) make rental, royalty or
other payments to the U.S. Navy, if applicable, on behalf of Trustor and/or (3)
act as operator, appoint another to act as operator or have a receiver appointed
to act as operator thereof; and
(iii) to request, demand, sue for, collect, recover, compromise,
settle and receive all monies that may become due and owing to Trustor by reason
of a sale, conveyance, assignment, taking for public use or other disposition of
Trustor's interest under the Navy Contract.
20
(b) Trustor hereby grants to Beneficiary full power and authority to
from time to time appoint a substitute to perform any of the acts that
Beneficiary is by this Power of Attorney authorized to perform, and the right to
revoke such appointment of substitution at any time.
(c) Trustor does hereby give and grant Beneficiary full power and
authority to do and perform all and every act and thing whatsoever requisite,
necessary or appropriate to be done in and about the Transmission Line Property
and/or with respect to the Navy Contract as fully to all interests and purposes
as Trustor might or could do if personally present, hereby ratifying all that
Beneficiary shall lawfully do or cause to be done by virtue of theses presents.
The powers and authority hereby conferred upon Beneficiary shall be applicable
to any and all interests in the Navy Contract now owned or hereafter acquired by
Trustor. Subject to the terms hereof, Beneficiary is empowered to determine in
its sole discretion the time when, purpose for, and manner in which any power
herein conferred upon it shall be exercised, and the conditions, provisions and
covenants of any instrument or document that may be executed by it pursuant
hereto, and in the acquisition or disposition of the Navy Contract, Beneficiary
shall have exclusive power to fix the terms thereof. This Power of Attorney is
coupled with an interest and cannot be revoked other than by recordation of a
statement of termination by Beneficiary hereunder.
30. Headings, etc. The headings, titles and captions of various
-------------
Sections of this Deed of Trust are for convenience of reference only and are not
to be construed as defining or limiting, in any way, the scope or intent of the
provisions hereof.
31. Filing of Deed of Trust, etc. Trustor forthwith upon the
----------------------------
execution and delivery of this Deed of Trust and thereafter, from time to time,
will cause this Deed of Trust, and any security instrument creating a lien or
evidencing or perfecting the lien hereof upon the Trust Property, or in the case
of personal property or fixtures, financing statements with respect thereto, and
each instrument of further assurance, to be filed, registered or recorded in
such manner and in such places as may be required by any present or future law
in order to publish notice of and fully to protect, preserve and perfect the
lien hereof upon, and the interest of Beneficiary in the Trust Property.
Trustor will pay all filing, registration or recording fees, and all expenses
incurred by Beneficiary incident to the preparation, execution and
acknowledgment of this Deed of Trust, any deed of trust or any mortgage or deed
of trust supplemental hereto, any security instrument with respect to the Trust
Property, any financing statement with respect to the Trust Property, and any
instrument of further assurance, and all federal, state, county and municipal
taxes, duties, imposts, assessments and charges arising out of or in connection
with the execution and delivery of this Deed of Trust, any mortgage or deed of
trust supplemental hereto, any security instrument with respect to the Trust
Property or any financing statement, continuation statement or other instrument
of further assurance. Trustor shall hold harmless and indemnify Beneficiary,
its successors and assigns, against any liability incurred by reason of the
imposition of any tax on the making and recording of this Deed of Trust.
32. Usury Laws. This Deed of Trust and the other Financing Documents
----------
are subject to the express condition that at no time shall Trustor be obligated
or required to pay interest at a rate which could subject the creditor of the
debt to either civil or criminal liability as a result of being in excess of the
maximum interest rate which Trustor is permitted by law to
21
contract or agree to pay. If by the terms of this Deed of Trust or the
Financing Documents, Trustor is at any time required or obligated to pay
interest at a rate in excess of such maximum rate, then such rate of interest
shall be deemed to be immediately reduced to such maximum rate and the interest
payable shall be computed at such maximum rate.
33. Recovery of Sums Required to Be Paid. Beneficiary shall have the
------------------------------------
right from time to time to take action to recover any sum or sums which
constitute a part of the Obligations as the same become due, without regard to
whether or not the balance of the Obligations shall be due, and without
prejudice to the right of Beneficiary thereafter to bring an action of
foreclosure, or any other action, for a default or defaults by Trustor existing
at the time such earlier action was commenced.
34. Authority. Trustor, and each of the undersigned acting on behalf
---------
of Trustor, hereby represents, warrants and covenants that it has full power,
authority and legal right to execute this Deed of Trust and to mortgage, give,
grant, bargain, sell, release, pledge, convey, confirm and assign the Trust
Property pursuant to the terms hereof and to keep and observe all of the terms
of this Deed of Trust on Trustor's part to be performed.
35. Invalidity of Certain Provisions. Every provision of this Deed
--------------------------------
of Trust is intended to be severable. In the event any term or provision hereof
is declared to be illegal, invalid or unenforceable for any reason whatsoever by
a court of competent jurisdiction, (i) such term or provision shall be construed
in such a manner as will allow such term or provision to be valid, provided that
such recasting shall be in accordance with the original intention of the
parties, and (ii) such illegality, invalidity or unenforceability shall not
affect the balance of the terms and provisions hereof, which terms and
provisions shall remain binding and enforceable. If the lien of this Deed of
Trust in invalid or unenforceable as to any part of the debt, or if the lien is
invalid or unenforceable as to any part of the Trust Property, the unsecured or
partially unsecured portion of the debt shall be completely paid prior to the
payment of the remaining and secured or partially secured portion of the debt,
and all payments made on the debt, whether voluntary or under foreclosure or
other enforcement action or procedure, shall be considered to have been first
paid on and applied to the full payment of that portion of the debt which is not
secured or fully secured by the lien of this Deed of Trust.
36. Duplicate Originals. This Deed of Trust may be executed in any
-------------------
number of duplicate originals and each such duplicate original shall be deemed
to constitute but one and the same instrument.
37. Waiver of Notice. Trustor shall not be entitled to any notices
----------------
of any nature whatsoever from Beneficiary except with respect to matters for
which this Deed of Trust or applicable law specifically and expressly provides
for the giving of notice to Trustor, and to the fullest extent permitted by law
Trustor hereby expressly waives the right to receive any notice from Beneficiary
with respect to any matter for which this Deed of Trust or applicable law does
not specifically and expressly provide for the giving of notice to Trustor.
38. No Oral Change. This Deed of Trust may only be modified, amended
--------------
or changed by an agreement in writing signed by Trustor and Beneficiary, and may
only be released, discharged or satisfied of record by an instrument in writing
signed by the Trustee or
22
its successors and assigns as directed by Beneficiary. No waiver of any term,
covenant or provision of this Deed of Trust shall be effective unless given in
writing by Beneficiary, and if so given by Beneficiary shall only be effective
in the specific instance in which given. Trustor acknowledges that this Deed of
Trust sets forth the entire agreement and understanding of Trustor and
Beneficiary with respect to the matters set forth herein and that no oral or
other agreements, understanding, representations or warranties exist with
respect to these matters other than those set forth in this Deed of Trust.
39. Absolute and Unconditional Obligation. Trustor acknowledges that
-------------------------------------
the Issuer's and each Guarantor's respective obligations to perform and pay the
Obligations in accordance with the Financing Documents are and shall at all
times continue to be absolute and unconditional in all respects, and shall at
all times be valid and enforceable irrespective of any other agreements or
circumstances of any nature whatsoever which might otherwise constitute a
defense to the obligations of Trustor under this Deed of Trust, to the
obligations of Issuer or Guarantors to perform and pay the Obligations or to the
obligations of any other Person relating to this Deed of Trust or the Financing
Documents, and to the fullest extent permitted by law Trustor absolutely,
unconditionally and irrevocably waives any and all right to assert any defense,
setoff, counterclaim or crossclaim of any nature whatsoever with respect to the
obligations of Trustor under this Deed of Trust or to the obligations of any
other Person relating to this Deed of Trust or the Financing Documents, or in
any action or proceeding brought by Beneficiary to collect the Obligations, or
any portion thereof, or to enforce, foreclose and realize upon the lien and
security interest created by this Deed of Trust or any other document or
instrument securing performance and repayment of the Obligations, in whole or in
part.
40. No Rights; No Set Off. All sums secured by this Deed of Trust
---------------------
shall be paid in accordance with the Indenture and the Guarantees, as
applicable, without counterclaim, setoff, deduction or defense and without
abatement, suspension, deferment, diminution or reduction, and the obligations
and liabilities of Trustor hereunder shall in no way be released, discharged or
otherwise affected (except as expressly provided herein) by reason of (i) any
claim which Trustor, the Issuer or any Guarantor has or might have against
Beneficiary, (ii) any default or failure on the part of Beneficiary to perform
or comply with any of the terms hereof or (iii) any other occurrence whatsoever,
whether similar or dissimilar to the foregoing and whether or not Trustor shall
have notice or knowledge of any of the foregoing.
41. Action Affecting the Trust Property.
-----------------------------------
(a) Trustor agrees to appear in and contest any action or proceeding
purporting to adversely affect the security hereof or the rights or powers of
Beneficiary, and to pay all costs and expenses of Beneficiary, including costs
of evidence of title and attorneys' fees and expenses, in any such action or
proceeding in which Beneficiary may appear.
(b) Beneficiary shall have the right to appear in and defend any
action or proceeding brought with respect to the Trust Property and to bring any
action or proceeding, in the name and on behalf of Trustor or Beneficiary, which
Beneficiary determines to be necessary or reasonably advisable to be brought to
protect its interest in the Trust Property if (i) Trustor fails to defend or
bring such action or proceeding, as appropriate, in a prompt and diligent
manner, or thereafter fails to proceed with diligence in the defense or
prosecution of the same, or (ii) an Event of Default shall have occurred and be
continuing.
23
42. Other Actions by Beneficiary. Except as hereinbefore expressly
----------------------------
provided, should (i) the Guarantors fail to make any payment or do any act as
and in the manner provided in the Guarantees, the Indenture or the other
Financing Documents, (ii) the Issuer fail to make any payment or do any act as
and in the manner provided for in the Indenture of the other Financing Documents
or (iii) Trustor fail to make any payment or do any act as and in the manner
provided in this Deed of Trust, then, after the expiration of any applicable
cure or grace period and as a result an Event of Default, Beneficiary, without
obligation so to do and without notice to or demand upon Trustor and without
releasing Trustor from any obligation, may make or do the same in such manner
and to such extent as Beneficiary may deem necessary to protect the security
hereof. In connection therewith (without limiting any general powers of
Beneficiary whether conferred herein or by law), Beneficiary shall have and is
hereby given the right, but not the obligation, (i) to the fullest extent
permitted by law, to make additions, alterations, repairs and improvements to
the Trust Property which it may consider necessary to keep the Trust Property in
good condition and repair and (ii) in exercising such powers, to pay necessary
expenses, including engagement of counsel or other necessary or desirable
consultants. Trustor shall, immediately upon demand therefor by Beneficiary,
pay all reasonable costs and expenses incurred by Beneficiary in connection with
the exercise by Beneficiary of the foregoing rights, including without
limitation, costs of evidence of title, court costs, appraisals, surveys and
attorneys' fees and expenses.
43. Remedies Not Exclusive. Subject to the limitations set forth in
----------------------
Section 49 of this Deed of Trust, Beneficiary shall be entitled to enforce
payment and performance of any indebtedness or obligations secured hereby and to
exercise all rights and powers granted under this Deed of Trust or any other
agreement or any laws now or hereafter in force, notwithstanding some or all of
the said indebtedness and obligations secured hereby may now or hereafter be
otherwise secured, whether by mortgage, deed of trust, pledge, lien, assignment
or otherwise. Subject to the limitations set forth in Section 49 of this Deed
of Trust, neither the acceptance of this Deed of Trust nor its enforcement,
whether by court action or pursuant to the power of sale or other powers herein
contained, shall prejudice or in any manner affect Beneficiary's right to
realize upon or enforce any other security now or hereafter held by Beneficiary,
it being agreed that Beneficiary shall be entitled to enforce this Deed of Trust
and any other security now or hereafter held by Beneficiary in such order and
manner as it may in its absolute discretion determine. No remedy herein
conferred upon or reserved to Beneficiary is intended to be exclusive of any
other remedy herein or by law provided or permitted, but each shall be
cumulative and shall be in addition to every other remedy given hereunder or now
or hereafter existing at law or in equity or by statute.
44. Relationship. Nothing contained in this Deed of Trust is
------------
intended to create, or shall in any event or under any circumstance be construed
as creating, a partnership, joint venture, tenancy-in-common, joint tenancy or
other relationship of any nature whatsoever between or among Beneficiary and
Trustor.
45. Indenture and Guarantees. This Deed of Trust is subject to all
------------------------
of the terms, covenants and conditions of the Guarantees, the Indenture and the
other Financing Documents, which Guarantees, Indenture and Financing Documents
and all of the terms, covenants and conditions thereof are by this reference
incorporated herein and made a part hereof with the same force and effect as if
set forth at length herein. All advances made and
24
all indebtedness arising and accruing under the Guarantees, the Indenture or any
Financing Document from time to time shall be secured hereby.
46. Additional Covenants.
--------------------
(a) Trustor shall not create, incur or suffer to exist any
Indebtedness. For purposes of this Section 46, "Indebtedness" shall mean, at
any date, without duplication, (i) all obligations of Trustor for borrowed
money, (ii) all obligations of Trustor evidenced by debentures, notes or other
similar instruments (excluding "deposit only" endorsements on checks payable to
the order of Trustor), (iii) all obligations of Trustor to pay the deferred
purchase price of property or services (except accounts payable and similar
obligations arising in the ordinary course of business), (iv) all obligations of
Trustor as lessee under capital leases to the extent required to be capitalized
on the books of Trustor in accordance with GAAP and (v) all obligations of
others of the type referred to in clauses (i) through (iv) above guaranteed by
Trustor, whether or not secured by a lien or other security interest on any
asset of Trustor;
(b) Trustor shall not directly or indirectly create, incur, assume or
suffer to exist any Liens of any kind on any asset now or hereafter acquired,
except Permitted Liens. For purposes of this Section 46, Permitted Liens shall
mean (i) mechanic's, workmen's, materialmen's, supplier's, construction or other
like Liens arising in the ordinary course of business and which have not become
the subject of any foreclosure or other action or proceeding, (ii) servitudes,
easements, rights-of-way, restrictions, minor defects or irregularities in title
and such other encumbrances or charges against real property or interests
therein as are of a nature generally existing with respect to properties of a
similar character and which will not in any material way interfere with the use
thereof and (iii) other Liens incidental to the conduct of Trustor's business or
the ownership of properties and assets which were not incurred in connection
with the borrowing of money or the obtaining of advances or credit (other than
vendor's liens for accounts payable in the ordinary course of business), and
which will not in the aggregate materially impair the use thereof in the
operation of its business.
(c) Trustor shall not contingently or otherwise be or become liable
in connection with any guarantee, except for endorsements and similar
obligations in the ordinary course of business and except as may be created by
this Deed of Trust or any other security given by Trustee to Beneficiary;
(d) Trustor (to the extent that it may lawfully do so) shall not at
any time insist upon, plead or in any manner whatsoever claim or take the
benefit or advantage of, any stay, extension or usury law wherever enacted, now
or at any time hereafter in force, that may affect the covenants contained in or
the performance of this Deed of Trust; and Trustor (to the extent that it may
lawfully do so) hereby expressly waives all benefit or advantage of any such
law, and covenants that it shall not, by resort to any such law, hinder, delay
or impede the execution of any power granted herein to Beneficiary, but shall
suffer and permit the execution of every such power as though no such law has
been enacted;
(e) Trustor shall pay, prior to delinquency, all material taxes,
assessments and governmental levies except such as are contested in good faith
and by appropriate proceedings and where the failure to effect such payment is
not adverse in any material respect to the Holders of the Senior Secured Notes;
25
(f) Trustor shall not enter into any transaction of merger or
consolidation, change its form of organization or its business, liquidate, wind-
up or dissolve itself or discontinue its business; and
(g) Trustor shall do or cause to be done all things necessary to
preserve and keep in full force and effect (i) its partnership existence, in
accordance with its respective organizational documents (as the same may be
amended from time to time) and (ii) its rights (charter and statutory), licenses
and franchises.
47. Business Purpose. Trustor hereby stipulates and warrants that
----------------
the loans secured hereby are commercial or business loans and are transacted
solely for the purpose of carrying on or acquiring a business or commercial
enterprise or for a proper business purpose under the laws of the jurisdiction
in which the Trust Property is located.
48. Time of the Essence. TIME IS OF THE ESSENCE with respect to each
-------------------
and every covenant, agreement and obligation of Trustor under this Deed of
Trust.
49. No Recourse. Beneficiary agrees that no officer, director,
-----------
employee or shareholder of Trustor nor any Affiliate of any such party
(collectively, the "Nonrecourse Parties") shall be personally liable for the
performance of any obligation contained in this Deed of Trust. Beneficiary
agrees that its rights shall be limited to proceeding against Trustor and the
security provided or intended to be provided pursuant to the Security Documents,
and that it shall have no right to proceed against the Nonrecourse Parties for
(a) the satisfaction of any monetary obligation of, or enforcement of any
monetary claim against, Trustor, (b) the performance of any obligation, covenant
or agreement arising under this Deed of Trust, or (c) any deficiency judgment
remaining after foreclosure of any property securing the obligations hereunder;
provided, however, that: (A) the foregoing provisions of this Section 49 shall
not constitute a waiver, release or discharge of any of the indebtedness, or of
any of the terms, covenants, conditions or provisions of this agreement or any
Financing Document, and the same shall continue until fully paid, discharged,
observed or performed; (B) the foregoing provisions of this Section 49 shall not
limit or restrict the right of Beneficiary or the holders of the Senior Secured
Notes to name Trustor or any other Person as a defendant in any action or suit
for a judicial foreclosure or for the exercise of any other remedy under or with
respect to this Deed of Trust or any Financing Document, or for injunction or
specific performance, so long as no judgment in the nature of a deficiency
judgment shall be enforced against any Nonrecourse Party, except as set forth in
this Section 49; (C) the foregoing provisions of this Section 49 shall not in
any way limit or restrict any right or remedy of Beneficiary, the holders of the
Senior Secured Notes or the Permitted Additional Senior Lenders, if any (or any
assignee or beneficiary thereof or successor thereto) with respect to, and all
of the Nonrecourse Parties shall remain fully liable to the extent that they
would otherwise be liable for their own actions with respect to, any fraud,
negligence or willful misrepresentation, or misappropriation of any amounts to
be deposited in the Revenue Account, Proceeds or any other earnings, revenues,
rents, issues, profits or proceeds that are subject to the Security Documents
that should or would have been paid as provided herein or paid or delivered to
the Depositary Agent, Beneficiary, the holders of the Senior Secured Notes or
the Permitted Additional Senior Lenders (or any assignee or beneficiary thereof
or successor thereto) towards any payment required under this Deed of Trust or
any Financing Document; (D) the foregoing provisions of this Section 49 shall
not affect or diminish
26
or constitute a waiver, release or discharge of any specific written obligation,
covenant or agreement in respect of the Project made by any of the Nonrecourse
Parties or any security granted by the Nonrecourse Parties as security for the
obligations of Trustor, the Guarantors or Issuer; and (E) nothing contained
herein shall limit the liability of (i) any Person who is a party to any Project
Document or has issued any certificate or statement in connection therewith with
respect to such liability as may arise by reason of the terms and conditions of
such Project Document, certificate or statement, or (ii) any Person rendering a
legal opinion, in each case under this clause (E) relating solely to such
liability of such Person as may arise under such referenced instrument,
agreement or opinion.
50. Severance of Counterclaims. In the event of foreclosure of this
--------------------------
Deed of Trust, any and all counterclaims filed by Trustor against Beneficiary to
the extent permitted by law, shall be severed by the court having jurisdiction
over the foreclosure action, for all purposes from the basic foreclosure action,
on an ex parte basis and without notice to Trustor. Trustor, by its execution
--------
and delivery hereof, hereby expressly consents and agrees to such severance.
51. WAIVER OF JURY TRIAL. AS AN INDEPENDENT COVENANT HEREOF, TRUSTOR
--------------------
HEREBY KNOWINGLY, VOLUNTARILY, INTENTIONALLY AND IRREVOCABLY WAIVES ANY RIGHT IT
MIGHT HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON, OR
ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS DEED OF TRUST OR ANY OF THE
FINANCING DOCUMENTS, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS
(WHETHER VERBAL OR WRITTEN) OR ACTIONS OF ANY PERSONS. THIS WAIVER IS A
MATERIAL INDUCEMENT FOR BENEFICIARY TO ACCEPT DELIVERY OF THIS DEED OF TRUST.
52. GOVERNING LAW. THIS DEED OF TRUST IS GOVERNED BY AND SHALL BE
-------------
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA.
53. Reimbursement; Attorneys' Fees. Trustor shall pay immediately,
------------------------------
without demand, after expenditure, all sums expended or expenses incurred by
Trustee and/or Beneficiary in enforcing the terms of this Deed of Trust,
including, without limitation, all attorneys' fees. As used herein, the terms
"attorneys' fees" or "attorneys' fees and costs" shall mean the fees and
expenses of counsel to Beneficiary, Trustee and the holders of the Senior
Secured Notes, which may include printing, photostating, duplicating and other
expenses, air freight charges, and fees billed for law clerks, paralegals,
librarians and others not admitted to the bar but performing services under the
supervision of an attorney. The terms "attorneys' fees" or "attorneys' fees and
costs" shall also include, without limitation, all such fees and expenses
incurred with respect to appeals, arbitrations and bankruptcy proceedings, and
whether or not any action or proceeding is brought with respect to the matter
for which said fees and expenses were incurred.
54. Shared Draftsmanship. If there is any ambiguity in the terms of
--------------------
this Deed of Trust, the doctrine of construction which holds that the language
of the document shall be construed against its drafter shall not apply, as all
parties have shared in the drafting of this Deed of Trust.
27
55. No Third Party Beneficiary. This Deed of Trust is for the sole
--------------------------
benefit of Beneficiary, or on behalf of the holders of the Senior Secured Notes,
as applicable, and the Permitted Additional Senior Lenders, and is not for the
benefit of any third party; and no third party shall gain any subrogation rights
against Trustor or in, to or with respect to any portion of the Trust Property
by reason of this Deed of Trust or the provisions hereof.
56. Security Only. This Deed of Trust is granted for security
-------------
purposes only. Accordingly, except as otherwise specifically provided in this
Deed of Trust, Beneficiary shall not enforce Trustor's rights with respect to
the Trust Property until such time as an Event of Default shall have occurred
and be continuing.
57. Release by Beneficiary. Upon the payment and performance in full
----------------------
of the Obligations, the security interest granted hereby shall terminate and all
rights to the Trust Property shall revert to Trustor. Upon any such
termination, Trustee shall, at Trustor's expense, execute and deliver to Trustor
such documents as Trustor shall reasonably request to evidence such termination.
If this Deed of Trust shall be terminated or revoked by operation of law,
Trustor will indemnify and save Trustee harmless from any loss which may be
suffered or incurred by Trustee in acting hereunder prior to the receipt by
Trustee, its successors, transferees or assigns of notice of such termination or
revocation.
58. Regarding Beneficiary.
---------------------
(a) Trustor hereby agrees to indemnify and hold harmless Beneficiary
and its directors, officers, agents and employees from and against any and all
claims, demands, losses, penalties, liabilities, costs, damages, injuries and
expenses, including, without limitation, reasonable attorneys' fees and
expenses, suffered or sustained by Beneficiary, either directly or indirectly,
relating to or arising out of any Environmental Law (as hereinafter defined),
including, without limitation, any judgment, award, settlement, attorneys' fees
and expenses and other costs or expenses incurred in connection with the defense
of any actual or threatened action, proceeding or claim. As used herein, the
term "Environmental Law" shall mean any and all federal, state, local and
foreign statutes, laws, regulations, ordinances, rules, judgments, orders,
decrees, permits, concessions, grants, franchises, licenses, agreements or other
governmental restrictions relating to the environment or health or to emissions,
discharges, releases or threatened releases of pollutants, contaminants,
chemicals or industrial, toxic or hazardous substances or wastes into the
environment, including, without limitation, ambient air, surface water, ground
water, or land, or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport, or handling of
pollutants, contaminants, chemicals, or industrial, toxic or hazardous
substances or wastes.
(b) The obligations of Trustor hereunder shall survive the
termination and release of this Deed of Trust or the earlier resignation or
removal of Beneficiary as trustee under the Indenture.
59. No Waiver. By accepting payment of any sum secured hereby after
---------
its due date or in an amount less than the sum due, Beneficiary does not waive
its rights to require prompt payment when due of all other sums so secured.
[Remainder of page intentionally left blank; signatures on next page]
28
IN WITNESS WHEREOF, Trustor has duly executed this Deed of Trust as of the
day and year first above written.
TRUSTOR: COSO TRANSMISSION LINE PARTNERS,
a California general partnership
By: Coso Energy Developers,
a California general partnership,
its General Partner
By: New Chip Company, LLC,
a Delaware limited liability company,
its Managing General Partner
By: /s/ Christopher T. McCallion
----------------------------
Christopher T. McCallion
Executive Vice President
By: Coso Power Developers,
a California general partnership,
its General Partner
By: New CTC Company, LLC,
a Delaware limited liability company,
its Managing General Partner
By: /s/ Christopher T. McCallion
----------------------------
Christopher T. McCallion
Executive Vice President
29
ACKNOWLEDGMENT
STATE OF New York )
----------------
)
COUNTY OF New York )
----------------
On May 28 , 1999, before me, [name of notary]
------------------ ------------------------------------
Notary Public, personally appeared Christopher T. McCallion personally known to
me (or proved to me on the basis of satisfactory evidence) to be the person
whose name is subscribed to the within instrument and acknowledged to me that he
executed the same in his authorized capacity, and that by his signature(s) on
the instrument the person(s), or the entity upon behalf of which the person
acted, executed the instrument.
WITNESS my hand and official seal.
/s/ signature of notary
- ------------------------------------------------------
Notary/Public
EXHIBIT A
Description of the Transmission Line Property
---------------------------------------------
THAT CERTAIN REAL PROPERTY LOCATED IN UNINCORPORATED AREAS OF THE COUNTIES OF
INYO AND KERN, STATE OF CALIFORNIA, DESCRIBED AS FOLLOWS:
PARCEL A:
PARCEL A OF THE COSO-INYOKERN TRANSMISSION LINE CORRIDOR BEGINS AT SURVEY
STATION 0+00 AT THE INYOKERN SUBSTATION IN THE SE1/4, SE1/4 OF SECTION 20, T26S,
R39E, IN KERN COUNTY, CALIFORNIA AND GOES NORTHERLY APPROXIMATELY 27 MILES
ENDING AT SURVEY STATION 1380+00 NWC/BLM GEOTHERMAL PLANT NO. 1 SWITCHYARD IN
SE1/4, NW1/4 OF SECTION 19, T22S, R39E IN INYO COUNTY, CALIFORNIA.
THE CORRIDOR FOR THE TRANSMISSION LINE IS THE EASTERN PORTION OF A COMMON
CORRIDOR WHICH IS A STRIP OF LAND 200 FEET WIDE OF WHICH 65 FEET OF THIS
CORRIDOR IS LOCATED TO THE LEFT (WESTERLY) OF THE 115 KV TRANSMISSION LINE
CENTERLINE AND 135 FEET IS LOCATED TO THE RIGHT (EASTERLY) OF THE 115 KV
TRANSMISSION LINE CENTERLINE FROM STATION 0+00 TO STATION 731+59.27. FROM
STATION 731+59.27 TO STATION 1245+11.06, THE CORRIDOR IS A STRIP OF LAND 250
FEET WIDE OF WHICH 100 FEET IS LOCATED TO THE LEFT (WESTERLY) AND 150 FEET IS
LOCATED TO THE RIGHT (EASTERLY) OF THE 115 KV TRANSMISSION LINE CENTERLINE.
FROM STATION 1245+11.06 TO STATION 1291+52.54, THE CORRIDOR IS A STRIP OF LAND
300 FEET WIDE OF WHICH 100 FEET OF THIS CORRIDOR IS LOCATED TO THE LEFT
(WESTERLY) AND 200 FEET IS LOCATED TO THE RIGHT (EASTERLY) OF THE 115 KV
TRANSMISSION LINE CENTERLINE. FROM STATION 1291+52.54 TO STATION 1380+00 THE
CORRIDOR IS A STRIP OF LAND 250 FEET WIDE OF WHICH 100 FEET IS LOCATED TO THE
LEFT (WESTERLY) AND 150 FEET IS LOCATED TO THE RIGHT (EASTERLY) OF THE 115 KV
TRANSMISSION LINE CENTERLINE.
THE TRANSMISSION CORRIDOR CENTERLINE IS DESCRIBED AS FOLLOWS:
SECTIONS 20, 17 (7 of record), 8, 5, AND 6 OF TOWNSHIP 26 SOUTH, RANGE 39 EAST
- ------------------------------------------------------------------------------
BEGINNING AT SURVEY STATION 0+00, WHICH IS LOCATED ON THE NORTH BOUNDARY FENCE
LINE OF THE INYOKERN SUBSTATION AND IS 400 FEET WEST, MORE OR LESS, AND 320 FEET
NORTH, MORE OR LESS, OF THE SE CORNER OF SECTION 20, T26S, R39E. THENCE, FROM
STATION 0+00, N2111'57"W A DISTANCE OF 255.00 FEET TO AN ANGLE POINT AT STATION
2+55.00; THENCE N1740'18"W A DISTANCE OF 21,637 FEET, MORE OR LESS, TO THE
LELITER ROAD CROSSING AT STATION 218+92 WHICH IS A POINT ON THE NORTH BOUNDARY
OF SECTION 6, T26S, R39E AND 1410 FEET WEST, MORE OR LESS, OF THE NE CORNER OF
SECTION 6, T26S, R39E.
Exhibit "A"
Page 1 of 4
SECTIONS 31, 30 AND 19 OF TOWNSHIP 25 SOUTH, RANGE 39 EAST
----------------------------------------------------------
THENCE, FROM STATION 218+92, N1740'18"W A DISTANCE OF 13,228 FEET TO STATION
351+20 WHICH IS A POINT ON THE WEST BOUNDARY OF SECTION 19, T25S, R39E AND IS
1960 FEET NORTH, MORE OR LESS, OF THE SW CORNER OF SECTION 19, T25S, R39E.
SECTIONS 24, 13, 12, 1 AND 2 OF TOWNSHIP 25 SOUTH, RANGE 38 EAST
----------------------------------------------------------------
THENCE, FROM STATION 351+20, N1740'18"W A DISTANCE OF 20,165 FEET, TO SURVEY
STATION 552+85 WHICH IS A POINT ON THE KERN AND INYO COUNTY LINE AND ON THE
NORTH BOUNDARY OF SECTION 2, T25S, R38E AND IS 540 FEET WEST, MORE OR LESS, OF
THE NE CORNER OF SECTION 2, T25S, R38E.
SECTIONS 35, 34, 27, 22, 15, 10 AND 3 OF TOWNSHIP 24 SOUTH, RANGE 38 EAST
-------------------------------------------------------------------------
THENCE, FROM STATION 552+85, N1740'18"W A DISTANCE OF 980.65 FEET TO AN ANGLE
POINT AT STATION 562+65.65; THENCE, N0032'59"E A DISTANCE OF 1849.86 FEET TO AN
ANGLE POINT AT STATION 581+15.51; THENCE N1855'43"W A DISTANCE OF 8200.72 FEET
TO AN ANGLE POINT AT STATION 663+16.23; THENCE N1749'44"W A DISTANCE OF 6844.77
FEET TO AN ANGLE POINT AT STATION 731+59.27; THENCE N0926'36"E A DISTANCE OF
13,279.45 FEET TO AN ANGLE POINT AT EQUATION STATION 864+40.45 BACK AND 873+76
AHEAD; THENCE N0743'29"E A DISTANCE OF 1460 FEET TO SURVEY STATION 888+39.76
WHICH IS A POINT ON THE NORTH BOUNDARY OF SECTION 3, T24S, R38E AND IS 1680 FEET
WEST, MORE OR LESS, OF THE NE CORNER OF SECTION 3, T24S, R38E.
SECTIONS 34, 27, 26, 23, 24, 13, 12 AND 1 OF TOWNSHIP 23 SOUTH, RANGE 38 EAST
-----------------------------------------------------------------------------
THENCE, FROM STATION 888+39.76, N0743'29"E A DISTANCE OF 5111.45 FEET TO AN
ANGLE POINT AT STATION 939+51.21; THENCE N3143'12"E A DISTANCE OF 9820.50 FEET
TO AN ANGLE POINT AT STATION 1037+71.71; THENCE N3114'47"E A DISTANCE OF
10,758.97 FEET TO AN ANGLE POINT AT STATION 1145+30.68; THENCE N1029'29"W A
DISTANCE OF 8780.38 FEET TO SURVEY STATION 1233+11.06 WHICH IS A POINT ON THE
NORTH BOUNDARY OF SECTION 1, T23S, R38E AND IS 1600 FEET WEST, MORE OR LESS, OF
THE NE CORNER OF SECTION 1, T23S, R38E.
SECTION 36 OF TOWNSHIP 22 SOUTH, RANGE 38 EAST
----------------------------------------------
THENCE, FROM STATION 1233+11.06, N1029'29"W A DISTANCE OF 1200.00 FEET TO AN
ANGLE POINT AT STATION 1245+11.06; THENCE N4308'19"E A DISTANCE OF 2718.94 FEET
TO SURVEY STATION 1272+30 WHICH IS A POINT ON THE EAST BOUNDARY OF SECTION 36,
T22S, R38E AND IS 2180 FEET SOUTH, MORE OR LESS, OF THE NE CORNER OF SECTION 36,
T22S, R38E.
SECTIONS 31, 30 AND 19 OF TOWNSHIP 22 SOUTH, RANGE 39 EAST
----------------------------------------------------------
Exhibit "A"
Page 2 of 4
THENCE, FROM STATION 1272+30, N4308'19"E A DISTANCE OF 1922.34 FEET TO AN ANGLE
POINT AT STATION 1291+52.34; THENCE N0645'07"E A DISTANCE OF 8634.99 FEET TO THE
END OF PARCEL A OF THE COSO-INYOKERN TRANSMISSION LINE CORRIDOR AT SURVEY
STATION 1380+00. THIS POINT IS LOCATED AT THE NWC-BLM GEOTHERMAL PLANT NO. 1
SWITCHYARD IN THE SE1/4, NW1/4 OF SECTION 19, T22S, R39E IN INYO COUNTY,
CALIFORNIA.
PARCEL B:
PARCEL B OF THE COSO-INYOKERN 230 KV TRANSMISSION LINE CORRIDOR BEGINS AT
STATION 0+00 AT BLM (WEST) GEOTHERMAL PLANT NO. 1 SWITCHYARD IN THE SE1/4, NW1/4
OF SECTION 19, T22S, R39E IN INYO COUNTY, CALIFORNIA AND EXTENDS TO STATION
77+57.20 BLM (EAST) GEOTHERMAL PLANT NO. 2 SWITCHYARD IN THE S1/2 OF SECTION 20,
T22S, R39E.
THIS PORTION OF THE CORRIDOR IS A STRIP OF LAND 100 FEET WIDE OF WHICH 50 FEET
OF THIS CORRIDOR IS LOCATED LEFT (NORTHERLY) AND 50 FEET IS LOCATED RIGHT
(SOUTHERLY) OF CENTERLINE OF THE CORRIDOR.
THE TRANSMISSION CENTERLINE IS DESCRIBED AS FOLLOWS:
SECTIONS 19 AND 20 OF TOWNSHIP 22 SOUTH, RANGE 39 EAST
------------------------------------------------------
BEGINNING AT SURVEY STATION 0+00, BLM (WEST) GEOTHERMAL PLANT NO. 1 SWITCHYARD,
WHICH IS LOCATED AT S52W 4035 FEET, MORE OR LESS, FROM THE NE CORNER OF SECTION
19, T22S, R39E; THENCE N8300'00"E, A DISTANCE OF 350.00 FEET TO AN ANGLE POINT
AT STATION 3+50.00; THENCE N4255'19"E A DISTANCE OF 469.21 FEET TO AN ANGLE
POINT AT STATION 8+19.21; THENCE N8434'06"E, A DISTANCE OF 1148.23 FEET TO AN
ANGLE POINT AT STATION 19+67.44; THENCE N7242'43"E A DISTANCE OF 1445.45 FEET TO
AN ANGLE POINT AT EQUATION STATION 34+12.89 BACK AND 34+12.04 AHEAD; THENCE
S5305'47"E A DISTANCE OF 2075.45 FEET TO AN ANGLE POINT AT STATION 54+87.49;
THENCE S0859'02"E A DISTANCE OF 1301.63 FEET TO AN ANGLE POINT AT STATION
67+89.12; THENCE S4229'52"E A DISTANCE OF 468.25 FEET TO AN ANGLE POINT AT
STATION 72+57.37; THENCE N4749'10"E A DISTANCE OF 359.83 FEET TO AN ANGLE POINT
AT STATION 76+17.20; THENCE N7615'19"E A DISTANCE OF 140.00 FEET TO THE A-FRAME
STRUCTURE AT STATION 77+57.20. THIS POINT IS LOCATED AT BLM (EAST) GEOTHERMAL
PLANT NO. 2 SWITCHYARD, S32W 5080 FEET, PLUS OR MINUS, FROM THE NE CORNER OF
SECTION 20, T22S, R39E IN INYO COUNTY, CALIFORNIA AND IS THE END OF PARCEL B
COSO-INYOKERN TRANSMISSION LINE CORRIDOR.
PARCEL C:
PARCEL C OF THE COSO-INYOKERN 230 KV TRANSMISSION LINE CORRIDOR BEGINS AT
STATION 0+00 AT BLM (EAST) GEOTHERMAL PLANT NO. 2 SWITCHYARD IN THE S1/2 OF
SECTION 20, T22S, R39E IN INYO COUNTY, CALIFORNIA AND EXTENDS TO STATION
70+58.51 NAVY II GEOTHERMAL PLANT SWITCHYARD IN SECTION 17, T22S, R39E.
Exhibit "A"
Page 3 of 4
THIS PORTION OF THE CORRIDOR IS A STRIP OF LAND 100 FEET WIDE OF WHICH 50 FEET
OF THIS CORRIDOR IS LOCATED LEFT (WESTERLY) AND 50 FEET IS LOCATED RIGHT
(EASTERLY) OF CENTERLINE OF THE CORRIDOR.
THE TRANSMISSION CENTERLINE IS DESCRIBED AS FOLLOWS:
SECTIONS 17 AND 20 OF TOWNSHIP 22 SOUTH, RANGE 39 EAST
------------------------------------------------------
BEGINNING AT SURVEY STATION 0+00, BLM (EAST) GEOTHERMAL PLANT NO. 2 SWITCHYARD,
WHICH IS LOCATED S32 W 5040 FEET, MORE OR LESS, FROM THE NE CORNER OF SECTION
20, T22S, R39E; THENCE N7658'47"W, A DISTANCE OF 76.36 FEET TO AN ANGLE POINT AT
STATION 0+76.36; THENCE N0646'21"W, A DISTANCE OF 2483.33 FEET TO AN ANGLE POINT
AT STATION 25+59.52; THENCE N1932'09"E, A DISTANCE OF 2513.26 FEET TO AN ANGLE
POINT AT STATION 50+72.82; THENCE N6357'16"W, A DISTANCE OF 1169.08 FEET TO AN
ANGLE POINT AT STATION 62+41.90; THENCE N1816'46"W, A DISTANCE OF 394.50 FEET TO
AN ANGLE POINT AT STATION 66+36.40; THENCE N3700'00"E, A DISTANCE OF 422.11 FEET
TO THE A-FRAME STRUCTURE AT STATION 70+58.51. THIS POINT IS LOCATED AT NAVY II
GEOTHERMAL PLANT SWITCHYARD, S42W 4580 FEET, PLUS OR MINUS, FROM THE NE CORNER
OF SECTION 17, T22S, R39E IN INYO COUNTY, CALIFORNIA AND IS THE END OF PARCEL C
COSO-INYOKERN TRANSMISSION LINE CORRIDOR.
Exhibit "A"
Page 4 of 4
EXHIBIT B
Description of the Navy Contract
--------------------------------
THAT CERTAIN CONTRACT NO. N62474-79-C-5382, DATED DECEMBER 6, 1979, BY
AND BETWEEN THE UNITED STATES OF AMERICA ACTING THROUGH THE DEPARTMENT OF THE
NAVY AND CALIFORNIA ENERGY COMPANY, INC., AS MODIFIED, AMENDED, ASSIGNED AND
RESTATED BY CONTRACT MODIFICATION P00004 DATED AS OF OCTOBER 19, 1983, A
MEMORANDUM OF WHICH WAS RECORDED ON MARCH 12, 1986 AS INSTRUMENT NO. 86-1043 OF
OFFICIAL RECORDS OF INYO COUNTY, CALIFORNIA, INCLUDING ALL MODIFICATIONS,
AMENDMENTS AND ASSIGNMENTS THERETO AND THEREOF MADE BEFORE THE EFFECTIVE DATE OF
THIS DEED OF TRUST AND ANY PERMITTED MODIFICATIONS, AMENDMENTS AND ASSIGNMENTS
THERETO AND THEREOF MADE AFTER THE EFFECTIVE DATE OF THIS DEED OF TRUST.