FIRST AMENDMENT PLEDGE AGREEMENT
THIS FIRST AMENDMENT PLEDGE AGREEMENT (this "Pledge Agreement"), dated as
of May 9, 2002, made by Calpine Corporation, a Delaware corporation (the
"Borrower"), in favor of The Bank of Nova Scotia, as agent (together with any
successor(s) thereto in such capacity, the "Agent") for each of the Lender
Parties (as defined below).
W I T N E S S E T H:
WHEREAS, pursuant to that certain Credit Agreement, dated as of March 8,
2002 (together with all amendments and other modifications, if any, from time to
time thereafter made thereto, the "2002 Credit Agreement"), among the Borrower,
the various financial institutions as are or may become parties hereto
(collectively, the "2002 Lenders"), The Bank of Nova Scotia and Bayerische
Landesbank Girozentrale, as Lead Arrangers and Bookrunners on the Revolving
Facility, Salomon Smith Barney Inc. and Deutsche Banc Alex. Brown Inc., as Lead
Arrangers and Bookrunners on the Term B Facility, The Bank of Nova Scotia, as
Joint Administrative Agent and Funding Agent, Citicorp USA, Inc., as Joint
Administrative Agent, Bank of America, National Association and Credit Suisse
First Boston, Cayman Islands Branch as Lead Arrangers and Syndication Agents for
the Revolving Facility and TD Securities (USA) Inc. as Lead Arranger for the
Revolving Facility, the Lenders have extended Commitments to make Loans and to
issue Letters of Credit to the Borrower; and
WHEREAS, pursuant to that certain Second Amended and Restated Credit
Agreement, dated as of May 23, 2000 (together with all amendments and other
modifications, if any, from time to time made thereto, the "2000 Credit
Agreement" and together with the 2002 Credit Agreement, the "Credit
Agreements"), among the Borrower, the various financial institutions as are or
may become parties thereto (collectively, the "2000 Lenders" and together with
the 2002 Lenders, the "Lenders"), Bayerische Landesbank Girozentrale as
co-arranger and syndication agent for the 2000 Lenders and The Bank of Nova
Scotia as lead arranger and administrative agent for the 2000 Lenders; and
WHEREAS, as a condition precedent to the effectiveness of that certain
First Amendment to Credit Agreement, dated as of even date herewith, the
Borrower is required to execute and deliver this Pledge Agreement; and
WHEREAS, the Borrower has duly authorized the execution, delivery and
performance of this Pledge Agreement; and
WHEREAS, it is in the best interests of the Borrower to execute this Pledge
Agreement inasmuch as the Borrower will derive substantial direct and indirect
benefits from the Loans made and Letters of Credit issued from time to time to
the Borrower by the Lenders pursuant to the Credit Agreements;
NOW THEREFORE, for good and valuable consideration the receipt of which is
hereby acknowledged, and in order to induce the Lenders to make Loans (including
the initial Loans) and to issue Letters of Credit for the account of the
Borrower pursuant to the Credit Agreements, the Borrower agrees, for the benefit
of each Lender Party, as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1. Certain Terms. The following terms (whether or not
underscored) when used in this Pledge Agreement, including its preamble and
recitals, shall have the following meanings (such definitions to be equally
applicable to the singular and plural forms thereof):
"Agent" is defined in the preamble.
"Borrower" is defined in the preamble.
"Collateral" is defined in Section 2.1.
"Credit Agreements" is defined in the second recital.
"Distributions" means all stock dividends, liquidating dividends, shares of
stock resulting from (or in connection with the exercise of) stock splits,
reclassifications, warrants, options, non-cash dividends, mergers,
consolidations, and all other distributions (whether similar or dissimilar to
the foregoing) on or with respect to any Pledged Shares or other shares of
capital stock constituting Collateral, but shall not include Dividends.
"Dividends" means cash dividends and cash distributions with respect to any
Pledged Shares or other Pledged Property made in the ordinary course of business
and not a liquidating dividend.
"Lender Party" means, as the context may require, any Lender, Issuer or the
Agent and each of its respective successors, transferees and assigns under
either of the Credit Agreements.
"Lenders" is defined in the second recital.
"Pledge Agreement" is defined in the preamble.
"Pledged Property" means all Pledged Shares and all other pledged shares of
capital stock, all other securities, all assignments of any amounts due or to
become due, all other instruments which are now being delivered by the Borrower
to the Agent or may from time to time hereafter be delivered by the Borrower to
the Agent for the purpose of pledge under this Pledge Agreement or any other
Loan Document, and all proceeds of any of the foregoing.
"Pledged Share Issuer" means each Person identified in Attachment 1 hereto
as the issuer of the Pledged Shares identified opposite the name of such Person.
"Pledged Shares" means all shares of capital stock of any Pledged Share
Issuer which are delivered by the Borrower to the Agent as Pledged Property
hereunder.
"Secured Obligations" is defined in Section 2.2.
"Securities Act" is defined in Section 6.2.
"U.C.C." means the Uniform Commercial Code as in effect in the State of New
York.
SECTION 1.2. Definitions. Unless otherwise defined herein or the context
otherwise requires, terms used in this Pledge Agreement, including its preamble
and recitals, have the meanings provided in the Credit Agreements.
SECTION 1.3. U.C.C. Definitions. Unless otherwise defined herein or the
context otherwise requires, terms for which meanings are provided in the U.C.C.
are used in this Pledge Agreement, including its preamble and recitals, with
such meanings.
ARTICLE II
PLEDGE
SECTION 2.1. Grant of Security Interest. The Borrower hereby pledges,
hypothecates, assigns, charges, mortgages, delivers, and transfers to the Agent,
for its benefit and the ratable benefit of each of the Lender Parties, and
hereby grants to the Agent, for its benefit and the ratable benefit of the
Lender Parties, a continuing security interest in, all of the following property
(the "Collateral"):
(a) all issued and outstanding shares of capital stock of each Pledged
Share Issuer identified in Attachment ----------- 1 hereto; -
(b) and the certificates representing the Pledged Shares and all
dividends, cash, instruments and other property from time to time received,
receivable or otherwise distributed in respect of or in exchange for any or
all of the Pledged Shares;
(c) all additional shares of stock of any issuer of the Pledged Shares
from time to time acquired by the Borrower in any manner, and the
certificates representing such additional shares, and all dividends, cash,
instruments and other property from time to time received, receivable or
otherwise distributed in respect of or in exchange for any or all of such
shares;
(d) all other Pledged Shares issued from time to time;
(e) all other Pledged Property, whether now or hereafter delivered to
the Agent in connection with this Pledge Agreement;
(f) all Dividends, Distributions, interest, and other payments and
rights with respect to any Pledged Property; and
(g) all proceeds of any of the foregoing.
SECTION 2.2. Security for Obligations. This Pledge Agreement secures the
payment and performance in full of all Obligations of the Borrower now or
hereafter existing under the Credit Agreements, the Notes, each Letter of Credit
and each other Loan Document to which the Borrower is or may become a party,
whether for principal, interest, costs, fees, expenses, or otherwise, and all
obligations of the Borrower now or hereafter existing under this Pledge
Agreement and each other Loan Document to which it is or may become a party (all
such obligations of the Borrower being the "Secured Obligations").
SECTION 2.3. Delivery of Pledged Property. All certificates or instruments
representing or evidencing any Collateral, including all Pledged Shares, shall
be delivered to and held by or on behalf of the Agent pursuant hereto, shall be
in suitable form for transfer by delivery, and shall be accompanied by all
necessary instruments of transfer or assignment, duly executed in blank.
SECTION 2.4. Intentionally Omitted.
SECTION 2.5. Continuing Security Interest; Transfer of Note. This Pledge
Agreement shall create a continuing security interest in the Collateral and
subject to Section 8.1.9 of the Credit Agreement shall
(a) remain in full force and effect until payment in full of all
Secured Obligations and the termination of all Commitments,
(b) be binding upon the Borrower and its successors, transferees and
assigns, and
(c) inure, together with the rights and remedies of the Agent
hereunder, to the benefit of the Agent and each other Lender Party.
Without limiting the foregoing clause (c), any Lender may assign or otherwise
transfer (in whole or in part) any right or obligation under the Loan Documents
to any other Person or entity, and such other Person or entity shall thereupon
become vested with all the rights and benefits in respect thereof granted to
such Lender under any Loan Document (including this Pledge Agreement) or
otherwise, subject, however, to any contrary provisions in such assignment or
transfer, and to the provisions of Section 11.11 of each of the Credit
Agreements. Upon the indefeasible payment in full, in cash, of all Secured
Obligations and the termination of all Commitments, the security interest
granted herein shall terminate and all rights to the Collateral shall revert to
the Borrower. Upon any such termination, the Agent will, at the Borrower's sole
expense, deliver to the Borrower, without any representations, warranties or
recourse of any kind whatsoever, all certificates and instruments representing
or evidencing all Pledged Shares, together with all other Collateral held by the
Agent hereunder, and execute and deliver to the Borrower such documents as the
Borrower shall reasonably request to evidence such termination.
SECTION 2.6. Security Interest Absolute. All rights of the Agent and the
security interests granted to the Agent hereunder, and all obligations of the
Borrower hereunder, shall be absolute and unconditional, irrespective of
(a) any lack of validity or enforceability of either of the Credit
Agreements, any Note or any other Loan Document,
(b) the failure of any Lender Party or any holder of any Note
(i) to assert any claim or demand or to enforce any right or
remedy against the Borrower, any other Obligor or any other Person
under the provisions of either of the Credit Agreements, any Note, any
other Loan Document or otherwise, or
(ii) to exercise any right or remedy against any other guarantor
of, or collateral securing, any Obligations of the Borrower or any
other Obligor,
(c) any change in the time, manner or place of payment of, or in any
other term of, all or any of the Obligations or any other extension,
compromise or renewal of any Obligation of the Borrower or any other
Obligor,
(d) any reduction, limitation, impairment or termination of any
Obligations of the Borrower or any other Obligor for any reason, including
any claim of waiver, release, surrender, alteration or compromise, and
shall not be subject to (and the Borrower hereby waives any right to or
claim of) any defense or setoff, counterclaim, recoupment or termination
whatsoever by reason of the invalidity, illegality, nongenuineness,
irregularity, compromise, unenforceability of, or any other event or
occurrence affecting, any Obligations of the Borrower, any other Obligor or
otherwise,
(e) any amendment to, rescission, waiver, or other modification of, or
any consent to departure from, any of the terms of either of the Credit
Agreements, any Note or any other Loan Document,
(f) any addition, exchange, release, surrender or non-perfection of
any collateral (including the Collateral), or any amendment to or waiver or
release of or addition to or consent to departure from any guaranty, for
any of the Obligations, or
(g) any other circumstances which might otherwise constitute a defense
available to, or a legal or equitable discharge of, the Borrower, any other
Obligor, any surety or any guarantor.
SECTION 2.7. Subrogation, etc. The Borrower will not exercise any rights
which it may acquire by reason of any payment made hereunder, whether by way of
subrogation, reimbursement or otherwise until the prior indefeasible payment in
full, in cash, of all Obligations of the Borrower and each other Obligor. Any
amount paid to the Borrower on account of any payment made hereunder prior to
the payment in full of all Obligations of the Borrower and each other Obligor
shall be held in trust for the benefit of the Lender Parties and each holder of
a Note and shall immediately be paid to the Lender Parties and each holder of a
Note and credited and applied against the Obligations of the Borrower and each
other Obligor, whether matured or unmatured, in accordance with the terms of the
Credit Agreements; provided, however, that if
(a) the Borrower has made payment to the Lender Parties and each
holder of a Note of all or any part of the Obligations of the Borrower or
any other Obligor, and
(b) all Obligations of the Borrower and each other Obligor have been
indefeasibly paid in full, in cash, and all Commitments have been
permanently terminated, each Lender Party and each holder of a Note agrees
that, at the Borrower's request, the Lender Parties and the holders of the
Notes will execute and deliver to the Borrower appropriate documents
(without recourse and without representation or warranty and at the sole
cost and expense of Borrower) necessary to evidence the transfer by
subrogation to the Borrower of an interest in the Obligations of the
Borrower and each other Obligor resulting from such payment by the
Borrower. In furtherance of the foregoing, for so long as any Obligations
or Commitments remain outstanding, the Borrower shall refrain from taking
any action or commencing any proceeding against the Borrower or any other
Obligor (or its successors or assigns, whether in connection with a
bankruptcy proceeding or otherwise) to recover any amounts in respect of
payments made under this Pledge Agreement to any Lender Party or any holder
of a Note.
SECTION 2.8. Waiver of Subrogation. Until such time as the Obligations have
been indefeasibly paid in full, in cash, and the Commitments have been
terminated, the Borrower hereby irrevocably waives any claim or other rights
which it may now or hereafter acquire against the Borrower or any other Obligor
that arise from the existence, payment, performance or enforcement of the
Borrower's obligations under this Pledge Agreement or any other Loan Document,
including any right of subrogation, reimbursement, exoneration, or
indemnification, any right to participate in any claim or remedy of the Lender
Parties against the Borrower or any other Obligor or any collateral which the
Agent now has or hereafter acquires, whether or not such claim, remedy or right
arises in equity, or under contract, statute or common law, including the right
to take or receive from the Borrower or any other Obligor, directly or
indirectly, in cash or other property or by set-off or in any manner, payment or
security on account of such claim or other rights. If any amount shall be paid
to the Borrower in violation of the preceding sentence and the Obligations shall
not have been indefeasibly paid in full, in cash, and the Commitments have not
been terminated, such amount shall be deemed to have been paid to the Borrower
for the benefit of, and held in trust for, the Lender Parties, and shall
forthwith be paid to the Lender Parties to be credited and applied upon the
Obligations, whether matured or unmatured. The Borrower acknowledges that it
will receive direct and indirect benefits from the financing arrangements
contemplated by the Credit Agreements and that the waiver set forth in this
Section is knowingly made in contemplation of such benefits.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
SECTION 3.1. Warranties, etc. The Borrower represents and warrants unto
each Lender Party, as at the date of each pledge and delivery hereunder
(including each pledge and delivery of Pledged Shares) by the Borrower to the
Agent of any Collateral, as set forth in this Article.
SECTION 3.1.1 Ownership, No Liens, etc. The Borrower is the legal and
beneficial owner of, and has good and marketable title to (and has full right
and authority to pledge and assign) such Collateral, free and clear of all
liens, security interests, options, or other charges or encumbrances, except any
lien or security interest granted pursuant hereto in favor of the Agent.
SECTION 3.1.2 Valid Security Interest. The delivery of such Collateral to
the Agent is effective to create a valid, perfected, first priority security
interest in such Collateral and all proceeds thereof, securing the Secured
Obligations. No filing or other action will be necessary to perfect or protect
such security interest.
SECTION 3.1.3 As to Pledged Shares. In the case of any Pledged Shares
constituting such Collateral, all of such Pledged Shares are duly authorized and
validly issued, fully paid, and non-assessable, and constitute all of the issued
and outstanding shares of capital stock entitled to vote in the election of the
Board of Directors of each Pledged Share Issuer.
ARTICLE IV
COVENANTS
SECTION 4.1. Protect Collateral; Further Assurances, etc. The Borrower will
not sell, assign, transfer, pledge, or encumber in any other manner the
Collateral (except in favor of the Agent hereunder and as otherwise expressly
permitted by the Credit Agreements. The Borrower will warrant and defend the
right and title herein granted unto the Agent in and to the Collateral (and all
right, title, and interest represented by the Collateral) against the claims and
demands of all Persons whomsoever. The Borrower agrees that at any time, and
from time to time, at the expense of the Borrower, the Borrower will promptly
execute and deliver all further instruments, and take all further action, that
may be necessary or desirable, or that the Agent may reasonably request, in
order to perfect and protect any security interest granted or purported to be
granted hereby or to enable the Agent to exercise and enforce its rights and
remedies hereunder with respect to any Collateral.
SECTION 4.2. Stock Powers, etc. The Borrower agrees that all Pledged Shares
(and all other shares of capital stock constituting Collateral) delivered by the
Borrower pursuant to this Pledge Agreement will be accompanied by duly executed
undated blank stock powers, or other equivalent instruments of transfer
acceptable to the Agent. The Borrower will, from time to time upon the request
of the Agent, promptly deliver to the Agent such stock powers, instruments, and
similar documents, satisfactory in form and substance to the Agent, with respect
to the Collateral as the Agent may reasonably request and will, from time to
time upon the request of the Agent after the occurrence of any Event of Default,
promptly transfer any Pledged Shares or other shares of common stock
constituting Collateral into the name of any nominee designated by the Agent.
SECTION 4.3. Continuous Pledge. Subject to Section 2.4, the Borrower will,
at all times, keep pledged to the Agent pursuant hereto all Pledged Shares and
all other shares of capital stock constituting Collateral, all Dividends and
Distributions with respect thereto, and all other Collateral and other
securities, instruments, proceeds, and rights from time to time received by or
distributable to the Borrower in respect of any Collateral.
SECTION 4.4. Voting Rights; Dividends, etc. The Borrower agrees after any
Event of Default shall have occurred and be continuing and the Agent has
notified the Borrower of the Agent's intention to exercise its voting power
under this Section 4.4
(i) the Agent may exercise (to the exclusion of the Borrower) the
voting power and all other incidental rights of ownership with respect
to any Pledged Shares or other shares of capital stock constituting
Collateral and the Borrower hereby grants the Agent an irrevocable
proxy, exercisable under such circumstances, to vote the Pledged
Shares and such other Collateral; and
(ii) promptly to deliver to the Agent such additional proxies and
other documents as may be necessary to allow the Agent to exercise
such voting power.
The Agent agrees that unless an Event of Default shall have occurred and be
continuing and the Agent shall have given the notice referred to in Section
4.4(b), the Borrower shall have the exclusive voting power with respect to any
shares of capital stock (including any of the Pledged Shares) constituting
Collateral and the Agent shall, upon the written request of the Borrower,
promptly deliver such proxies and other documents, if any, as shall be
reasonably requested by the Borrower which are necessary to allow the Borrower
to exercise voting power with respect to any such share of capital stock
(including any of the Pledged Shares) constituting Collateral; provided,
however, that no vote shall be cast, or consent, waiver, or ratification given,
or action taken by the Borrower that would impair any Collateral or be
inconsistent with or violate any provision of the Credit Agreements or any other
Loan Document (including this Pledge Agreement).
SECTION 4.5. Additional Undertakings. The Borrower will not, without the
prior written consent of the Agent take or omit to take any action the taking or
the omission of which would result in any impairment or alteration of any
obligation of the maker of any instrument constituting Collateral.
ARTICLE V
THE AGENT
SECTION 5.1. Agent Appointed Attorney-in-Fact. The Borrower hereby
irrevocably appoints the Agent the Borrower's attorney-in-fact, with full
authority in the place and stead of the Borrower and in the name of the Borrower
or otherwise, from time to time in the Agent's discretion, to take any action
and to execute any instrument which the Agent may deem necessary or advisable to
accomplish the purposes of this Pledge Agreement, including without limitation:
(a) after the occurrence and continuance of an Event of Default, to
ask, demand, collect, sue for, recover, compromise, receive and give
acquittance and receipts for moneys due and to become due under or in
respect of any of the Collateral;
(b) to receive, endorse, and collect any drafts or other instruments,
documents and chattel paper, in connection with clause (a) above; and
(c) to file any claims or take any action or institute any proceedings
which the Agent may deem necessary or desirable for the collection of any
of the Collateral or otherwise to enforce the rights of the Agent with
respect to any of the Collateral.
The Borrower hereby acknowledges, consents and agrees that the power of attorney
granted pursuant to this Section is irrevocable and coupled with an interest.
SECTION 5.2. Agent May Perform. If the Borrower fails to perform any
agreement contained herein, the Agent may itself perform, or cause performance
of, such agreement, and the reasonable expenses of the Agent incurred in
connection therewith shall be payable by the Borrower pursuant to Section 6.4.
SECTION 5.3. Agent Has No Duty. The powers conferred on the Agent hereunder
are solely to protect its interest (on behalf of the Lender Parties) in the
Collateral and shall not impose any duty on it to exercise any such powers.
Except for reasonable care of any Collateral in its possession and the
accounting for moneys actually received by it hereunder, the Agent shall have no
duty as to any Collateral or responsibility for (a) ascertaining or taking
action with respect to calls, conversions, exchanges, maturities, tenders or
other matters relative to any Pledged Property, whether or not the Agent has or
is deemed to have knowledge of such matters, or (b) taking any necessary steps
to preserve rights against prior parties or any other rights pertaining to any
Collateral.
SECTION 5.4. Reasonable Care. The Agent is required to exercise reasonable
care in the custody and preservation of any of the Collateral in its possession;
provided, however, the Agent shall be deemed to have exercised reasonable care
in the custody and preservation of any of the Collateral, if it takes such
action for that purpose as the Borrower reasonably requests in writing at times
other than upon the occurrence and during the continuance of any Event of
Default, but failure of the Agent to comply with any such request at any time
shall not in itself be deemed a failure to exercise reasonable care.
ARTICLE VI
REMEDIES
SECTION 6.1. Certain Remedies. If any Event of Default shall have occurred
and be continuing:
(a) The Agent may exercise in respect of the Collateral, in addition
to other rights and remedies provided for herein or otherwise available to
it, all the rights and remedies of a secured party on default under the
U.C.C. (whether or not the U.C.C. applies to the affected Collateral) and
also may, without notice except as specified below, sell the Collateral or
any part thereof in one or more parcels at public or private sale, at any
of the Agent's offices or elsewhere, for cash, on credit or for future
delivery, and upon such other terms as the Agent may deem commercially
reasonable. The Borrower agrees that, to the extent notice of sale shall be
required by law, at least ten days' prior notice to the Borrower of the
time and place of any public sale or the time after which any private sale
is to be made shall constitute reasonable notification. The Agent shall not
be obligated to make any sale of Collateral regardless of notice of sale
having been given. The Agent may adjourn any public or private sale from
time to time by announcement at the time and place fixed therefor, and such
sale may, without further notice, be made at the time and place to which it
was so adjourned.
(b) The Agent may
(i) transfer all or any part of the Collateral into the name of
the Agent or its nominee, with or without disclosing that such
Collateral is subject to the lien and security interest hereunder,
(ii) notify the parties obligated on any of the Collateral to
make payment to the Agent of any amount due or to become due
thereunder,
(iii) enforce collection of any of the Collateral by suit or
otherwise, and surrender, release or exchange all or any part thereof,
or compromise or extend or renew for any period (whether or not longer
than the original period) any obligations of any nature of any party
with respect thereto,
(iv) endorse any checks, drafts, or other writings in the
Borrower's name to allow collection of the Collateral,
(v) take control of any proceeds of the Collateral, and
(vi) execute (in the name, place and stead of the Borrower)
endorsements, assignments, stock powers and other instruments of
conveyance or transfer with respect to all or any of the Collateral.
SECTION 6.2. Securities Laws. If the Agent shall determine to exercise its
right to sell all or any of the Collateral pursuant to Section 6.1, the Borrower
agrees that, upon request of the Agent, the Borrower will, at its own expense:
(a) execute and deliver, and cause each issuer of the Collateral
contemplated to be sold and the directors and officers thereof to execute
and deliver, all such instruments and documents, and do or cause to be done
all such other acts and things, as may be necessary or, in the opinion of
the Agent, advisable to register such Collateral under the provisions of
the Securities Act of 1933, as from time to time amended (the "Securities
Act"), and to cause the registration statement relating thereto to become
--------------- effective and to remain effective for such period as
prospectuses are required by law to be furnished, and to make all
amendments and supplements thereto and to the related prospectus which, in
the opinion of the Agent, are necessary or advisable, all in conformity
with the requirements of the Securities Act and the rules and regulations
of the Securities and Exchange Commission applicable thereto;
(b) use its best efforts to qualify the Collateral under the state
securities or "Blue Sky" laws and to obtain all necessary governmental
approvals for the sale of the Collateral, as requested by the Agent;
(c) cause each such issuer to make available to its security holders,
as soon as practicable, an earnings statement that will satisfy the
provisions of Section 11(a) of the Securities Act; and
(d) do or cause to be done all such other acts and things as may be
necessary to make such sale of the Collateral or any part thereof valid and
binding and in compliance with applicable law.
SECTION 6.3. Compliance with Restrictions. The Borrower agrees that in any
sale of any of the Collateral whenever an Event of Default shall have occurred
and be continuing, the Agent is hereby authorized to comply with any limitation
or restriction in connection with such sale as it may be advised by counsel is
necessary in order to avoid any violation of applicable law (including
compliance with such procedures as may restrict the number of prospective
bidders and purchasers, require that such prospective bidders and purchasers
have certain qualifications, and restrict such prospective bidders and
purchasers to persons who will represent and agree that they are purchasing for
their own account for investment and not with a view to the distribution or
resale of such Collateral), or in order to obtain any required approval of the
sale or of the purchaser by any governmental regulatory authority or official,
and the Borrower further agrees that such compliance shall not result in such
sale being considered or deemed not to have been made in a commercially
reasonable manner, nor shall the Agent be liable nor accountable to the Borrower
for any discount allowed by the reason of the fact that such Collateral is sold
in compliance with any such limitation or restriction.
SECTION 6.4. Application of Proceeds. All cash proceeds received by the
Agent in respect of any sale of, collection from, or other realization upon, all
or any part of the Collateral may thereafter be applied (after payment of any
amounts payable to the Agent pursuant to Article III of the Credit Agreements
and Section 6.4) in whole or in part by the Agent against, all or any part of
the Secured Obligations in such order as the Agent shall elect.
Any surplus of such cash or cash proceeds held by the Agent and remaining
after payment in full of all the Secured Obligations, and the termination of all
Commitments, shall be paid over to the Borrower or to whomsoever may be lawfully
entitled to receive such surplus.
SECTION 6.5. Indemnity and Expenses. The Borrower hereby indemnifies and
holds harmless the Agent from and against any and all claims, losses, and
liabilities arising out of or resulting from this Pledge Agreement (including
enforcement of this Pledge Agreement), except claims, losses, or liabilities
resulting from the Agent's gross negligence or willful misconduct. Upon demand,
the Borrower will pay to the Agent the amount of any and all reasonable
expenses, including the reasonable fees and disbursements of its counsel and of
any experts and agents, which the Agent may incur in connection with:
(a) the administration of this Pledge Agreement, the Credit Agreements
and each other Loan Document;
(b) the custody, preservation, use, or operation of, or the sale of,
collection from, or other realization upon, any of the Collateral;
(c) the exercise or enforcement of any of the rights of the Agent
hereunder; or
(d) the failure by the Borrower to perform or observe any of the
provisions hereof.
ARTICLE VII
MISCELLANEOUS PROVISIONS
SECTION 7.1. Loan Document. This Pledge Agreement is a Loan Document
executed pursuant to the Credit Agreements and shall (unless otherwise expressly
indicated herein) be construed, administered and applied in accordance with the
terms and provisions thereof.
SECTION 7.2. Amendments, etc. No amendment to or waiver of any provision of
this Pledge Agreement nor consent to any departure by the Borrower herefrom
shall in any event be effective unless the same shall be in writing and signed
by the Agent, and then such waiver or consent shall be effective only in the
specific instance and for the specific purpose for which it is given.
SECTION 7.3. Protection of Collateral. The Agent may from time to time, at
its option, perform any act which the Borrower agrees hereunder to perform and
which the Borrower shall fail to perform after being requested in writing so to
perform (it being understood that no such request need be given after the
occurrence and during the continuance of an Event of Default) and the Agent may
from time to time take any other action which the Agent reasonably deems
necessary for the maintenance, preservation or protection of any of the
Collateral or of its security interest therein.
SECTION 7.4. Addresses for Notices. All notices and other communications
provided for hereunder shall be in writing (including telegraphic communication)
and, if to the Borrower, mailed or telegraphed or delivered to it at the address
set forth below its signature hereto, if to the Agent, mailed or delivered to
it, addressed to it at the address of the Agent specified in the 2002 Credit
Agreement or, as to either party, at such other address as shall be designated
by such party in a written notice to each other party complying as to delivery
with the terms of this Section. All such notices and other communications shall,
when mailed or telegraphed, respectively, be effective when deposited in the
mails or delivered to the telegraph company, respectively, addressed as
aforesaid.
SECTION 7.5. Section Captions. Section captions used in this Pledge
Agreement are for convenience of reference only, and shall not affect the
construction of this Pledge Agreement.
SECTION 7.6. Severability. Wherever possible each provision of this Pledge
Agreement shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Pledge Agreement shall be
prohibited by or invalid under such law, such provision shall be ineffective to
the extent of such prohibition or invalidity, without invalidating the remainder
of such provision or the remaining provisions of this Pledge Agreement.
SECTION 7.7. Governing Law, Entire Agreement, etc. THIS PLEDGE AGREEMENT
SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE
STATE OF NEW YORK, EXCEPT TO THE EXTENT THAT THE VALIDITY OR PERFECTION OF THE
SECURITY INTEREST HEREUNDER, OR REMEDIES HEREUNDER, IN RESPECT OF ANY PARTICULAR
COLLATERAL ARE GOVERNED BY THE LAWS OF A JURISDICTION OTHER THAN THE STATE OF
NEW YORK. THIS PLEDGE AGREEMENT AND THE OTHER LOAN DOCUMENTS CONSTITUTE THE
ENTIRE UNDERSTANDING AMONG THE PARTIES HERETO WITH RESPECT TO THE SUBJECT MATTER
HEREOF AND SUPERSEDE ANY PRIOR AGREEMENTS, WRITTEN OR ORAL, WITH RESPECT
THERETO.
SECTION 7.8. Forum Selection and Consent to Jurisdiction. ANY LITIGATION
BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH, THIS PLEDGE
AGREEMENT, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER
VERBAL OR WRITTEN) OR ACTIONS OF THE LENDER PARTIES OR THE BORROWER SHALL BE
BROUGHT AND MAINTAINED EXCLUSIVELY IN THE COURTS OF THE STATE OF NEW YORK OR IN
THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK;
PROVIDED, HOWEVER, THAT ANY SUIT SEEKING ENFORCEMENT AGAINST ANY COLLATERAL OR
OTHER PROPERTY MAY BE BROUGHT, AT THE AGENT'S OPTION, IN THE COURTS OF ANY
JURISDICTION WHERE SUCH COLLATERAL OR OTHER PROPERTY MAY BE FOUND. THE BORROWER
HEREBY EXPRESSLY AND IRREVOCABLY SUBMITS TO THE JURISDICTION OF THE COURTS OF
THE STATE OF NEW YORK AND OF THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN
DISTRICT OF NEW YORK FOR THE PURPOSE OF ANY SUCH LITIGATION AS SET FORTH ABOVE
AND IRREVOCABLY AGREES TO BE BOUND BY ANY JUDGMENT RENDERED THEREBY IN
CONNECTION WITH SUCH LITIGATION. THE BORROWER FURTHER IRREVOCABLY CONSENTS TO
THE SERVICE OF PROCESS BY REGISTERED MAIL, POSTAGE PREPAID, OR BY PERSONAL
SERVICE WITHIN OR WITHOUT THE STATE OF NEW YORK. THE BORROWER HEREBY EXPRESSLY
AND IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION
WHICH IT MAY HAVE OR HEREAFTER MAY HAVE TO THE LAYING OF VENUE OF ANY SUCH
LITIGATION BROUGHT IN ANY SUCH COURT REFERRED TO ABOVE AND ANY CLAIM THAT ANY
SUCH LITIGATION HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. TO THE EXTENT THAT
THE BORROWER HAS OR HEREAFTER MAY ACQUIRE ANY IMMUNITY FROM JURISDICTION OF ANY
COURT OR FROM ANY LEGAL PROCESS (WHETHER THROUGH SERVICE OR NOTICE, ATTACHMENT
PRIOR TO JUDGMENT, ATTACHMENT IN AID OF EXECUTION OR OTHERWISE) WITH RESPECT TO
ITSELF OR ITS PROPERTY, THE BORROWER HEREBY IRREVOCABLY WAIVES SUCH IMMUNITY IN
RESPECT OF ITS OBLIGATIONS UNDER THIS PLEDGE AGREEMENT.
SECTION 7.9. Waiver of Jury Trial. THE LENDER PARTIES AND THE BORROWER
HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHTS THEY MAY HAVE
TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON, OR ARISING OUT OF,
UNDER, OR IN CONNECTION WITH, THIS PLEDGE AGREEMENT, OR ANY COURSE OF CONDUCT,
COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF THE
LENDER PARTIES OR THE BORROWER. THE BORROWER ACKNOWLEDGES AND AGREES THAT IT HAS
RECEIVED FULL AND SUFFICIENT CONSIDERATION FOR THIS PROVISION (AND EACH OTHER
PROVISION OF EACH OTHER LOAN DOCUMENT TO WHICH IT IS A PARTY) AND THAT THIS
PROVISION IS A MATERIAL INDUCEMENT FOR THE LENDER PARTIES ENTERING INTO THE
CREDIT AGREEMENTS AND EACH SUCH OTHER LOAN DOCUMENT.
IN WITNESS WHEREOF, the parties hereto have caused this Pledge Agreement to
be duly executed and delivered by their respective officers thereunto duly
authorized as of the day and year first above written.
CALPINE CORPORATION
By:_____________________________________________
Name:___________________________________________
Title:__________________________________________
Address: 50 West San Fernando Avenue
San Jose, CA 95113
Facsimile No.: (408) 995-0505
Attention: Senior Vice President-Finance
THE BANK OF NOVA SCOTIA
By:_____________________________________________
Name:___________________________________________
Title:__________________________________________
Address: 580 California Street
Suite 2100
San Francisco, CA 94111
Facsimile No.: (415) 397-0791
Attention: Jon Burckin
with a copy to:
The Bank of Nova Scotia
600 Peachtree Street, N.E.
Suite 2700
Atlanta, GA 30308
Attention: Hilma Gabbidon
Administrative Agent
Loan Administration
Facsimile No.: (404) 888-8998
ATTACHMENT 1
to
Pledge Agreement
Pledged Shares
- --------------
Pledged Share Issuer Common Stock
- -------------------- ------------
Authorized Outstanding % of Shares
Shares Shares Pledged
---------- ----------- -----------
Calpine CCFC II Holdings, Inc. 1000 1000 100%
Calpine Central, Inc. 1000 1000 100%
Calpine Eastern Corporation 1000 1000 100%
Calpine Dighton, Inc. 1000 1000 100%
CPN Auburndale, Inc. 1000 1000 100%
Calpine Auburndale, Inc. 1000 1000 100%
Calpine Gordonsville, Inc. 1000 1000 100%
Calpine Rumford, Inc. 100 100 100%
Calpine Rumford I, Inc. 1000 1000 100%
Calpine Tiverton, Inc. 100 100 100%
Calpine Tiverton I, Inc. 100 100 100%
Calpine Northeast Marketing, Inc. 100 100 100%
Venture Acquisition Company 1000 1000 100%
Calpine Northbrook Energy Corporation of Maine, Inc. 1000 1000 100%
Androscoggin Energy, Inc. 1000 1000 100%
Calpine Project Holdings, Inc. 1000 1000 100%
Calpine Sumas, Inc. 1000 1000 100%
Northwest Cogeneration, Inc. 1000 1000 100%
Calpine King City 1, Inc. 1000 1000 100%
Calpine King City 2, Inc. 1000 1000 100%
Calpine Gilroy 1, Inc. 1000 1000 100%
Calpine Gilroy 2, Inc. 1000 1000 100%
Sutter Dryers, Inc. 1000 1000 100%
Calpine Metcalf EPC, Inc. 1000 1000 100%
Goldendale Energy, Inc. 100 100 100%
Bellingham Cogen, Inc. 1000 1000 100%
GATX/Calpine Agnews, Inc. 3000 3000 100%
Calpine Agnews, Inc. 1000 1000 100%
Calpine Power Company 1000 1000 100%
Calpine Vapor, Inc. 1000 1000 100%
Modoc Power, Inc. 1000 1000 100%
Santa Rosa Energy Company 1000 1000 100%
Geysers Finance Company 100,000 100,000 100%
Calpine Thermal Power, Inc. 1000 1000 100%
Calpine Operations Management Company, Inc. 1000 1000 100%
Calpine Fuels Corporation 1000 1000 100%
CPN Pipeline Company 1000 1000 100%
Calpine Eastern Holdings, Inc. 1000 1000 100%
Calpine c*Power, Inc. 1000 1000 100%
WRMS Engineering, Inc. 100,000 100,000 100%
CPN Cascade, Inc. 1000 1000 100%
CPN Telephone Flat, Inc. 1000 1000 100%
Anderson Springs Energy Company 1000 1000 100%
Calpine Sonoma, Inc. 1000 1000 100%
Calpine California Holdings, Inc. 1000 1000 100%