1
EXHIBIT 4.4
================================================================================
ASSIGNMENT AND SECURITY AGREEMENT
between
CEDAR BRAKES I, L.L.C.
as Issuer,
and
BANKERS TRUST COMPANY,
as Trustee
DATED AS OF SEPTEMBER 26, 2000
================================================================================
2
TABLE OF CONTENTS
Page
----
1. DEFINITIONS...............................................................1
2. GRANT OF SECURITY INTEREST................................................2
3. DELIVERY OF COLLATERAL....................................................6
4. REPRESENTATIONS AND WARRANTIES............................................6
5. COVENANTS AND AGREEMENTS..................................................7
6. THE ISSUER'S OBLIGATIONS..................................................9
7. REMEDIES; RIGHTS UPON EVENT OF DEFAULT....................................9
8. APPLICATION OF PROCEEDS..................................................10
9. ASSIGNMENT OF PERMITS....................................................11
10. SECURITY INTEREST ABSOLUTE..............................................11
11. THE TRUSTEE APPOINTED ATTORNEY-IN-FACT..................................11
12. THE TRUSTEE MAY PERFORM.................................................12
13. NO DUTY ON THE TRUSTEE'S PART; LIMITATION ON THE TRUSTEE'S OBLIGATIONS..13
14. REASONABLE CARE.........................................................13
15. ROLE OF THE TRUSTEE.....................................................14
16. ABSENCE OF FIDUCIARY RELATION...........................................14
17. SURVIVAL OF REPRESENTATIONS AND WARRANTIES..............................14
18. NOTICES.................................................................14
19. NO WAIVER; CUMULATIVE REMEDIES..........................................15
20. SEVERABILITY............................................................15
21. EXCULPATORY PROVISIONS; RELIANCE BY THE TRUSTEE.........................15
22. AMENDMENT...............................................................16
23. SUCCESSORS AND ASSIGNS..................................................16
24. CAPTIONS................................................................16
i
3
25. APPLICABLE LAW; SUBMISSION TO JURISDICTION..............................16
26. COUNTERPARTS............................................................17
27. CONTINUING SECURITY INTEREST; TERMINATION...............................17
28. PAYMENTS SET ASIDE......................................................17
Exhibit A: Assigned Agreements
ii
4
ASSIGNMENT AND SECURITY AGREEMENT
This ASSIGNMENT AND SECURITY AGREEMENT (this "Agreement"),
dated as of September 26, 2000, is made by and between CEDAR BRAKES I, L.L.C., a
limited liability company organized and existing under the laws of the State of
Delaware, having its principal executive offices at 1001 Louisiana Street,
Houston, Texas 77002 (the "Issuer"); and Bankers Trust Company, a New York
banking corporation, as trustee (together with its successors and permitted
assigns in such capacity, the "Trustee").
WHEREAS, the Issuer has duly authorized the execution and
delivery of an indenture, dated as of September 26, 2000 (the "Indenture"), to
provide for the creation and issuance of 8.50% senior secured bonds due 2014 in
the aggregate principal amount of $310,600,000 (the "Bonds");
WHEREAS, the Trustee has agreed to act as trustee under the
Indenture on the terms and conditions set forth therein; and
WHEREAS, the Bonds are to be secured by the Collateral (as
defined below) pursuant to the terms and conditions set forth herein in order to
induce the purchase of the Bonds.
NOW, THEREFORE, the parties hereto agree as follows:
1. Definitions.
(a) Unless otherwise defined herein or unless the context
otherwise requires, capitalized terms defined in the Indenture shall have the
same meanings when used in this Agreement;
(b) all other terms used herein and not otherwise defined
herein which are defined in Articles 8 or 9 of the Uniform Commercial Code (as
the same may be in effect in the State of New York or any other applicable
jurisdiction, the "Code") shall have their respective meanings as therein
defined;
(c) In addition, wherever used in this Agreement, unless the
context otherwise requires, the following terms shall have the meanings opposite
them:
"Assigned Agreements" shall have the meaning ascribed to such term in
Section 2 hereof;
"Code" shall have the meaning ascribed to such term in
Section 1(b) hereof;
"Collateral" shall have the meaning ascribed to such term in
Section 2 hereof;
"Obligations" shall have the meaning ascribed to such term in
Section 2(c) hereof;
5
"Security Interest" shall have the meaning ascribed to such term in
Section 2 hereof;
(d) the words "herein," "hereof" and "hereunder" and other
words of similar import refer to this Agreement as a whole and not to any
particular Article, Section or other subdivision;
(e) all references in this Agreement to "Articles,"
"Sections," "Exhibits" and other subdivisions of this Agreement are to the
designated articles, sections and other subdivisions of, and the exhibits to,
this Agreement, and all references to this Agreement include its Exhibits;
(f) unless otherwise expressly specified or the context
otherwise requires, all references in this Agreement or any Exhibit to any
agreement, contract or document (including this Agreement) shall include
reference to all exhibits to such agreement, contract or document;
(g) unless otherwise expressly specified or the context
otherwise requires, any agreement, contract or document defined or referred to
herein shall mean such agreement, contract or document as in effect as of the
date hereof, as the same may thereafter be amended, supplemented or otherwise
modified from time to time in accordance with the terms thereof and hereof;
(h) unless otherwise expressly specified or the context
otherwise requires, pronouns having a masculine or feminine gender shall be
deemed to include the other;
(i) any reference to any Person shall include its permitted
successors and assigns in accordance with the terms of this Agreement and the
other Financing Documents and, in the case of any Governmental Agency, any
Person succeeding to its functions and capacities; and
(j) the term "including" denotes an example and not a
limitation.
2. Grant of Security Interest.
(a) Collateral. As security for the prompt and complete
payment and performance when due (whether at stated maturity, by acceleration or
otherwise) of any and all of the Obligations now existing or hereafter arising
and the due performance and compliance by the Issuer with all of the terms,
conditions, and agreements contained in the Indenture and the other Financing
Documents, the Issuer hereby collaterally assigns, pledges, hypothecates and
transfers to the Trustee (for the equal and proportionate benefit of the
Holders), and grants and creates a continuing lien on and security interest (the
"Security Interest") in favor of the Trustee (for the equal and proportionate
benefit of the Holders) in, all right, title and interest of the Issuer in, to
and under the following, whether now existing or hereafter acquired
(collectively, the "Collateral"):
2
6
(i) the Material Agreements (and the general intangibles and
contract rights thereunder), including, without limitation, the Material
Agreements listed on Exhibit A, as each may be amended, supplemented, replaced,
or otherwise modified from time to time (such Material Agreements, as amended,
supplemented, replaced, or otherwise modified, being individually referred to
herein as an "Assigned Agreement" and collectively referred to herein as the
"Assigned Agreements"), including, without limitation (A) all rights of the
Issuer to receive moneys due and to become due under or pursuant to the Assigned
Agreements, (B) all rights of the Issuer to receive proceeds of any performance
or payment bond, insurance, indemnity, warranty or guaranty with respect to the
Assigned Agreements, (C) all claims of the Issuer for damages arising out of or
for breach of or default under the Assigned Agreements, and (D) all rights of
the Issuer to take any action to terminate, amend, supplement, modify or waive
performance of the Assigned Agreements, to perform thereunder and to compel
performance and otherwise exercise all remedies thereunder;
(ii) all "certificated securities", "uncertificated
securities", "security accounts" (including, without limitations, the Accounts
established under Article 5 of the Indenture which are maintained as securities
accounts, as provided in the Account Control Agreement), "security entitlements"
and other "investment property" (as such terms are defined in the Code) together
with all certificates, passbooks, and confirmations evidencing any of the
foregoing, all cash, certificates of deposit, securities, security entitlements,
and other property on deposit therein or credited thereto, all rights to payment
or withdrawal therefrom, and all income, profits, gains, and interest thereon;
(iii) (A) to the extent not included in the descriptions under
(ii) above, each account established under the Indenture with respect to the
Bonds including, without limitation, the Accounts, and all sums of money, from
any source whatsoever, now or hereafter transferred to and comprising such
accounts, including, without limitation, all credit balances therein, any and
all funds, cash, investments, instruments and securities at any time on deposit
in such accounts, and any and all interest and dividends or other income derived
from any such monies, credit balances, funds, cash, investments, instruments and
securities, and (B) all statements, certificates, passbooks and instruments
representing such accounts and all other property from time to time received,
receivable or otherwise distributed in respect of or in exchange for such
accounts;
(iv) all Government Approvals which have been issued, obtained
or maintained, or have otherwise been created on behalf of the Issuer;
(v) all general intangibles (as such term is defined in the
Code) now or hereafter owned by the Issuer, including, without limitation, all
trademarks, trademark applications, trademark registrations, trade names,
fictitious business names, business names, business identifiers, prints, labels,
trade styles and service marks (whether or not registered), trade dress,
including logos and/or designs, copyrights, patents, patent applications,
goodwill of the Issuer's business symbolized by any of the foregoing, trade
secrets, license rights, license agreements, franchises, and any rights to tax
refunds to which the Issuer is now or hereafter may be entitled;
3
7
(vi) all of the Issuer's currently existing and future
accounts receivable and contract rights; and all agreements, rights, interests,
inventory, goods, chattel paper, documents, instruments, fixtures, trade
fixtures, consumer goods, money and other assets owned by the Issuer on the date
hereof or hereafter arising or acquired, including, without limitation, any
right, title or interest of the Issuer under any indemnity, warranty or guaranty
and any rents, revenues, incomes and profits;
(vii) to the extent not included in the foregoing, all
proceeds, products and accessions of and to any and all of the foregoing
Collateral, including, without limitation, "proceeds," as defined in Section
9-306(1) of the Code, including, without limitation, whatever is received upon
any collection, exchange, sale or other disposition of any of the Collateral,
and any property into which any of the Collateral is converted, whether cash or
non-cash proceeds, and any and all other amounts paid or payable under chattel
paper or other general intangibles or in connection with any of the Collateral;
provided, however, that (i) any of the Government Approvals which by their terms
or by operation of law would become void, voidable, terminable or revocable or
would constitute a breach or default thereunder or under any applicable law if
pledged or assigned hereunder or if a security interest therein were granted
hereunder are expressly excepted and excluded from the lien and terms of this
Agreement to the extent necessary to avoid such voidness, voidability,
terminability or revocability or breach or default and (ii) any distributions,
payments or releases (whether in the form of cash, instruments, assets or
otherwise) properly made to the Issuer pursuant to Section 502(b)(vii) of the
Indenture, as long as such distribution, payment or release is made in
accordance with the Indenture, shall be released from the Security Interest
granted hereunder and shall no longer be part of the Collateral upon the making
of such distribution, payment or release; and provided, further, that in the
event any such Government Approvals would no longer become void, voidable,
terminable or revocable or would no longer constitute a breach or default
thereunder or under any applicable law if pledged or assigned hereunder or if a
security interest therein were granted hereunder, then such Governmental
Approvals will automatically, without further action by the Trustee or the
Issuer, be included and subject to the lien and the terms of this Agreement.
(b) Sufficiency of Collateral Description. It is the intention
of the Issuer that the description of the Collateral set forth in Section 2(a)
be sufficient to enable the Trustee, on behalf of the Holders, upon exercise of
its remedies set forth in this Agreement and the other Financing Documents, to
take possession of, and foreclose upon, all of the right, title and interest of
the Issuer in and to, without limitation, the Material Agreements, the
Government Approvals, the Accounts, the insurance obtained by the Issuer, and
any monies payable to or accruing in favor of the Issuer, and to enable the
Trustee or its designee to sell or otherwise dispose of the entire interest of
the Issuer in and to such assets or any part thereof, in each case upon the
occurrence and during the continuance of an Event of Default and subject to the
limitations set forth in this Agreement and the other Financing Documents.
(c) Obligations. This Agreement secures, in accordance with
the provisions hereof, the following obligations, now existing or hereafter
arising (collectively, the "Obligations"):
4
8
(i) payment and performance of each and every obligation,
indebtedness, covenant, agreement, and liability of the Issuer, of
every kind and character, now or hereafter existing, owed to the
Trustee or the Holders under the Bonds, the Indenture or any other
Financing Document, in each case whether for principal, Make-Whole
Premium, if any, interest, fees, expenses or otherwise pursuant
thereto, and any amendments or supplements thereto, extensions or
renewals thereof or replacements therefor;
(ii) payment of all sums advanced in accordance herewith or in
accordance with any other Financing Document by or on behalf of the
Holders, to protect, retake, hold, prepare for sale or lease or
otherwise dispose of or realize upon any of the Collateral purported to
be covered hereby or thereby, including, without limitation, any fees
and expenses arising due to the failure of the Issuer to perform or
observe any provision of the Bonds and any other Financing Document,
with interest thereon at a rate per annum equal to the default interest
rate specified in Section 309 of the Indenture from the date of demand
therefor;
(iii) performance of every obligation, covenant and agreement
of the Issuer contained in any agreement now or hereafter executed by
the Issuer and the Trustee which expressly states that the obligations
thereunder are secured by this Agreement or any other Security
Document; and
(iv) payment of all sums, with interest thereon at a rate per
annum equal to the default interest rate specified in Section 309 of
the Indenture from the date of demand therefor, that become due and
payable pursuant to the terms of this Agreement or any other Financing
Document;
in each case whether direct or indirect, joint or several, absolute or
contingent, liquidated or unliquidated, now or hereafter existing, renewed or
restructured, reinstated, created or incurred, and including, without
limitation, all indebtedness of the Issuer under any instrument now or hereafter
evidencing or securing any of the foregoing (including, in each and every case,
the payment of amounts which would become due but for the operation of the
automatic stay under Section 362(a) of the Bankruptcy Code, 11 U.S.C. Section
62(a)).
3. Delivery of Collateral. All sums of money, funds and cash,
from time to time constituting the Collateral, together with all certificates,
instruments, investments and securities representing or evidencing the
Collateral, shall be delivered to, dealt with and held by the Trustee pursuant
to the terms of the Indenture, the other Financing Documents, and the terms
hereof, as the case may be. All such certificates, investments, securities and
instruments shall be in suitable form for transfer by delivery or otherwise, or
shall be accompanied by duly executed instruments of transfer or assignment in
blank, all in form and substance satisfactory to the Trustee.
4. Representations and Warranties. The Issuer hereby
represents and warrants as follows:
(a) The Issuer is a limited liability company duly organized,
validly existing and in good standing under the laws of State of Delaware and is
in good standing in all jurisdictions
5
9
where necessary in light of its business or properties and has all requisite
power and authority to conduct its business, to own its properties and to
execute and deliver, and perform its obligations under, this Agreement.
(b) The execution, delivery and performance by the Issuer of
this Agreement have been duly authorized by all necessary action, and do not and
will not (i) require any consent or approval of its board of directors,
managers, members or any other Person that has not been obtained, (ii) violate
any provision of its certificate of formation or operating agreement, or any
law, rule, regulation, order, writ, judgment, injunction, decree or award having
applicability to it, the violation of which could reasonably be expected to have
a material adverse effect on its ability to perform its obligations under this
Agreement, (iii) result in a breach of or constitute a default under any
agreement relating to the management of its affairs or any indenture or loan or
credit agreement or other agreement, lease or instrument to which it is a party
or by which it or its properties may be bound or affected, the breach of which
could reasonably be expected to have a material adverse effect on the Issuer's
ability to perform its obligations under this Agreement.
(c) This Agreement has been duly executed and delivered and is
in full force and effect and constitutes the legal, valid and binding obligation
of the Issuer enforceable in accordance with its terms except as the
enforceability hereof may be limited by general principles of equity and by
applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting the rights of creditors generally.
(d) There is no pending or, to the Issuer's knowledge,
threatened, action or proceeding affecting the Issuer before any court,
governmental agency, regulatory body or arbitrator, which could affect its
ability to perform its obligations under, or which purports to affect the
legality, validity or enforceability of, this Agreement.
(e) Title; No Other Liens. The Issuer is the legal and
beneficial owner of the Collateral in existence on the date hereof and will be
the sole owner of the Collateral hereafter acquired, free and clear of any and
all Liens or claims of others (other than Liens permitted under Section 1201 of
the Indenture), and the Issuer has full power and authority to grant the Liens
and security interests in and to the Collateral hereunder. Except with respect
to Liens permitted under Section 1201 of the Indenture, and otherwise as
required or permitted under this Agreement, no security agreement, financing
statement or other public notice with respect to all or any part of the
Collateral is on file or of record in any public office.
(f) Chief Executive Office and Principal Place of Business.
The Issuer's chief executive office and principal place of business and the
place where the Issuer's records concerning the Collateral are kept is: 1001
Louisiana Street, Houston, Texas 77002. The Issuer's name on its Certificate of
Formation is Cedar Brakes I, L.L.C., and the Issuer is a limited liability
company organized under the laws of the State of Delaware.
(g) Perfection. On or prior to the date hereof, all filings
will have been made and taken as may be necessary to perfect any Security
Interest granted or purported to be granted hereby to the extent any such
Security Interest may be perfected by the making of such filings. On or prior to
the date hereof, all other action necessary or requested by the Trustee to
protect and perfect the Security Interest in each item of the Collateral will
have been duly taken. Upon
6
10
the making of such filings and the taking of such actions, and subject to
applicable requirements pertaining to the making of supplemental or continuation
filings, this Agreement will constitute a valid and continuing Lien on and
perfected Security Interest in the Collateral in favor of the Trustee for the
benefit of the Holders and will be superior and prior to the rights of all other
persons in and to the Collateral subject to no other Lien (other than Liens
permitted under Section 1201 of the Indenture).
5. Covenants and Agreements. The Issuer hereby covenants and
agrees that it shall faithfully observe and fulfill, and shall cause to be
observed and fulfilled, each and all of the following covenants until all
Obligations have been indefeasibly paid and performed in full:
(a) Perfection. On or prior to the date hereof, the Issuer
shall make all filings as may be necessary to perfect any Security Interest
granted or purported to be granted hereby, to the extent any such Security
Interest may be perfected by the making of such filings and shall take all other
action necessary or requested by the Trustee to protect and perfect the Security
Interest in each item of the Collateral.
(b) Notice of Adverse Claims. Unless and to the extent that
the Issuer has already provided such notice to the Trustee pursuant to the
Indenture or any other Financing Document, the Issuer shall, promptly and in no
event later than five (5) days after the Issuer becomes aware of or should have
become aware of any information related to any adverse claim against the
Collateral, deliver to the Trustee notice of each such claim.
(c) Further Assurances. The Issuer shall, from time to time at
the Issuer's expense, and upon reasonable request by the Trustee on behalf of
the Holders, promptly execute and deliver all further instruments and documents,
and take all further action, that may be necessary or reasonably advisable, or
that the Trustee reasonably determines may be necessary in order to perfect and
protect any Security Interest granted or purported to be granted hereby or to
enable the Trustee to exercise and enforce its rights and remedies hereunder
with respect to the Collateral. Without limiting the generality of the
foregoing, the Issuer shall (i) if any Collateral shall be evidenced by a
promissory note or other instrument, deliver and pledge to the Trustee hereunder
such note or instrument duly endorsed and accompanied by duly executed
instruments of transfer or assignment, all in form and substance reasonably
satisfactory to the Trustee and (ii) execute and file such financing and
continuation statements, or amendments thereto, and such other instruments,
endorsements and notices, as may be necessary or reasonably advisable, or that
the Trustee reasonably determines may be necessary, in order to perfect and
preserve the Security Interest granted or purported to be granted hereby,
including, without limitation, consents, assignments, notices and other
documentation reasonably requested by the Trustee.
(d) Fees and Expenses. The Issuer shall upon demand pay to the
Trustee the amount of any and all reasonable outside costs and expenses
(including, without limitation, the reasonable fees and expenses of its counsel,
any special consultants reasonably engaged, and any local counsel who might
reasonably be retained by them, in connection with the transactions contemplated
hereby), which the Trustee or the Holders may incur in connection with (i) the
sale of, collection from, or other realization upon, any of the Collateral
pursuant to the exercise or enforcement of any of the rights of the Trustee or
the Holders hereunder, or (ii) the exercise of its rights under this Agreement,
or (iii) the execution, delivery and performance of this Agreement,
7
11
any agreement supplemental hereto and, subject to Section 5(b), any instruments
of further assurance. Any amounts payable by the Issuer pursuant to this Section
5(d) shall be payable on demand and shall constitute Obligations together with
interest thereon at the default interest rate specified in Section 309 of the
Indenture from the date of demand thereof.
(e) Filing Fees, Taxes, etc. The Issuer shall pay all filing,
registration and recording fees or re-filing, re-registration and re-recording
fees, and all federal state, county and municipal stamp taxes and other similar
taxes, duties, imposts, assessments and charges arising out of or in connection
with the execution and delivery of this Agreement, any agreement supplemental
hereto and, subject to Section 5(b), any instruments of further assurance.
(f) Maintenance of Records; Inspection. At all times the
Issuer shall keep and maintain at its own cost and expense complete records of
the Collateral. Such records will be kept at the Issuer's principal place of
business set forth in Section 4(c). The Issuer shall furnish to the Trustee
statements and schedules further identifying and describing the Collateral and
such other reports in connection with the Collateral as the Trustee may
reasonably request, all in reasonable detail. Subject to Section 1108 of the
Indenture, the Trustee may inspect the Collateral.
(g) Limitation on Liens on the Collateral. The Issuer shall
not create, incur or permit to exist, shall defend the Collateral against, and
shall take such other action as is necessary to remove, any Lien or claim on or
to the Collateral, other than the Security Interest and Liens permitted under
Section 1201 of the Indenture, and shall defend the right, title and interest of
the Trustee in and to any of the Collateral against the claims and demands of
all Persons whomsoever other than with respect to Liens permitted under Section
1201 of the Indenture.
(h) Indemnification. The Issuer shall defend, indemnify and
hold harmless the Trustee, and its respective officers, directors, employees,
agents and advisors authorized in accordance with the terms of the Indenture,
from and against any and all costs, expenses, disbursements, liabilities,
obligations, losses, damages, injunctions, judgments, suits, actions, causes of
action, fines, penalties, claims and demands, of every kind or nature
(including, without limitation, reasonable attorneys' fees and expenses) (herein
collectively called the "Indemnified Liabilities") which are occasioned by or
result from or in connection with any of the terms, agreements, or covenants to
be performed by the Issuer under this Agreement or under any Assigned Agreement,
other than Indemnified Liabilities to the extent resulting from the Trustee's
gross negligence or willful misconduct. The provisions of 5(d), (e) and (h)
shall survive the termination of this Agreement.
6. The Issuer's Obligations. (a) All payments received by the
Issuer under or in connection with any of the Collateral shall be held by the
Issuer in trust for the Trustee, shall be segregated from other funds of the
Issuer and shall, forthwith upon receipt by the Issuer, be turned over to the
Trustee or its designee in the same form as received by the Issuer (duly
endorsed by the Issuer to the Trustee, if requested), and (b) any and all such
payments so received by the Trustee or its designee (whether from the Issuer or
otherwise) shall be deposited into the Collections Account or upon and during
the continuance of an Event of Default be applied, subject only to the relevant
provisions of the Indenture and this Agreement and as otherwise may
8
12
be required by applicable law, in whole or in part by the Trustee or its
designee in the manner specified in Section 7 hereof, unless otherwise consented
to by the Trustee.
7. Remedies; Rights Upon Event of Default. Upon the occurrence
and during the continuance of an Event of Default, the Trustee, for the benefit
of and on behalf of the Holders, may do one or more of the following:
(a) make such payments and do such acts as the Trustee may
deem necessary to protect, perfect or continue the perfection of the Security
Interest, including, without limitation, paying, purchasing, contesting or
compromising any Lien which is, or purports to be, prior to or superior to the
Security Interest granted hereunder, and commencing, appearing or otherwise
participating in or controlling any action or proceeding purporting to affect
the Security Interest in or ownership of the Collateral;
(b) foreclose on the Collateral as herein provided or in any
manner permitted by law and exercise any and all of the rights and remedies
conferred upon the Trustee or the Holders either concurrently or in such order
as the Trustee may determine without affecting the rights or remedies to which
the Trustee or the Holders may be entitled under the Indenture or any other
Financing Document. The Issuer hereby waives, to the extent permitted by
applicable law and except as expressly provided in Section 7(e) below, notice
and judicial hearing in connection with the Trustee's taking possession or
collection, recovery, receipt, appropriation, repossession, retention, set-off,
sale, leasing, conveyance, assignment, transfer or other disposition of or
realization upon any or all of the Collateral, including, without limitation,
any and all prior notice and hearing for any prejudgment remedy or remedies and
any such right which the Issuer would otherwise have under the constitution or
any statute or other law of the United States of America or of any state;
(c) require the Issuer to, and the Issuer hereby agrees that
it shall, at its expense and upon request of the Trustee, forthwith assemble all
or part of the Collateral as directed by the Trustee and make it available to
the Trustee at a location designated by the Trustee;
(d) without notice or demand or legal process (to the extent
permitted by applicable law), enter upon any premises of the Issuer and take
possession of the Collateral;
(e) 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 Trustee's offices or elsewhere, at such time or times, for
cash, on credit or for future delivery, and at such price or prices and upon
such other terms as the Trustee may deem commercially reasonable. The Issuer
agrees that, to the extent notice of sale shall be required by law, at least
twenty (20) Business Days' notice to the Issuer of the time and the place of any
public sale or the time after which any private sale is to be made shall
constitute reasonable notification. At any sale of the Collateral, if permitted
by law, the Trustee may bid (which bid may be, in whole or in part, in the form
of cancellation of indebtedness) for the purchase of the Collateral or any
portion thereof for the account of the Trustee on behalf of the Holders. The
Trustee shall not be obligated to make any sale of the Collateral regardless of
notice of sale having been given. The Trustee may adjourn any public or private
sale from time to time by announcement at the time and place fixed therefor, and
9
13
such sale may, without further notice, be made at the time and place to which it
was so adjourned. The Trustee shall incur no liability as a result of the manner
of sale of the Collateral, or any part thereof, at any private sale conducted in
a commercially reasonable manner. The Issuer hereby waives, to the extent
permitted by applicable law, any claims against the Trustee arising by reason of
the fact that the price at which the Collateral, or any part thereof, may have
been sold at a private sale was less than the price which might have been
obtained at public sale or was less than the aggregate amount of the
Obligations, even if the Trustee accepts the first offer received which the
Trustee deems to be commercially reasonable under the circumstances and does not
offer the Collateral to more than one offeree. To the full extent permitted by
law, the Issuer shall have the burden of proving that any such sale of the
Collateral was conducted in a commercially unreasonable manner. To the extent
permitted by law, the Issuer hereby specifically waives all rights of
redemption, stay or appraisal which they have or may have under any law now
existing or hereafter enacted. The Issuer authorizes the Trustee, at any time
and from time to time, to execute, in connection with a sale of the Collateral
pursuant to the provisions of this Agreement, any endorsements, assignments or
other instruments of conveyance or transfer with respect to the Collateral; and
(f) 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 after default under the Code.
8. Application of Proceeds. The net proceeds of any
foreclosure, collection, recovery, receipt, appropriation, realization or sale
of the Collateral shall be applied in the manner specified in Section 711 of the
Indenture.
9. Assignment of Permits. The Issuer shall, upon the
occurrence and during the continuance of an Event of Default at the request of
the Trustee, contemporaneously with and at any other time following any
foreclosure by the Trustee on any part of the Collateral, assign, transfer or
otherwise furnish to the Trustee or to any transferee of the interest of the
Trustee (to the extent so assignable or transferable), all of the Issuer's
rights and interest in, to and under all Governmental Approvals. Upon the
request of the Trustee upon the occurrence and during the continuance of an
Event of Default following foreclosure by the Trustee on the Collateral, the
Issuer agrees to use its reasonable efforts to assist the Trustee in renewing or
extending in the name of the Trustee or otherwise obtaining the benefits of all
of the Government Approvals and other rights referred to in the immediately
preceding sentence to the extent that such Government Approvals and other rights
shall not be assignable or transferable.
10. Security Interest Absolute. All the rights of the Trustee
and the Holders hereunder and the Security Interest and all obligations of the
Issuer hereunder shall be absolute and unconditional irrespective of:
(i) any lack of validity or enforceability of any of the
Financing Documents or any of the Collateral or any other agreement or
instrument relating thereto;
(ii) any change in the time, manner or place of payment of, or
in any other term of, all or any of the Obligations, or any other amendment or
waiver of or any consent to any
10
14
departure from any Financing Document or any of the Collateral or any other
agreement or instrument related thereto;
(iii) any exchange or release of any Collateral or any other
collateral, or the non-perfection of any of the Security Interest, or any
release or amendment or waiver of or consent to or departure from any guaranty,
for all or any of the Obligations; or
(iv) to the full extent permitted by law, any other
circumstance that might otherwise constitute a defense available to, or a
discharge of, the Issuer or any third-party pledgor with respect to payment in
full of the Obligations.
11. The Trustee Appointed Attorney-in-Fact.
(a) Powers. The Issuer hereby irrevocably constitutes and
appoints the Trustee and any officer or agent thereof, with full power of
substitution, as its true and lawful attorney-in-fact (which appointment as
attorney-in-fact shall be coupled with an interest), with full authority in the
place and stead of the Issuer and in the name of the Issuer or otherwise, from
time to time upon the occurrence and during the continuance of an Event of
Default in the Trustee's discretion, to take any action and to execute any and
all documents and instruments which the Trustee may deem necessary or advisable
to accomplish the purposes of this Agreement in a commercially reasonable manner
to the extent required by the Code, without notice to the Issuer, including,
without limitation:
(i) to receive, endorse and collect all instruments made
payable to the Issuer representing any dividends, interest payments or
other distributions constituting Collateral or any part thereof and to
give full discharge for the same and to file any claim or to take any
other action or proceeding in any court of law or equity or otherwise
deemed appropriate by the Trustee for the purpose of collecting any and
all of such dividends, payments or other distributions;
(ii) to enforce the rights of the Issuer under any provision
of any Assigned Agreement;
(iii) to pay or discharge taxes and liens levied or placed on
the Collateral; and
(iv) (A) to direct any party liable for any payment under or
with respect to any of the Collateral to make payment of any and all
moneys due or to become due thereunder or with respect thereto directly
to the Trustee or as the Trustee shall direct, (B) to ask or demand
for, collect, receive payment of and receipt for, any and all moneys,
claims and other amounts due or to become due at any time in respect of
or arising out of any Collateral, (C) to commence and prosecute any
suits, actions or proceedings at law or in equity in any court of
competent jurisdiction to collect the Collateral or any part thereof
and to enforce any other right in respect of any Collateral, (D) to
defend any suit, action or proceeding brought against the Issuer with
respect to any Collateral, (E) to settle, compromise or adjust any
suit, action or proceeding described in clauses (C) and (D) above and,
in connection therewith, to give such discharges or releases as the
Trustee may deem appropriate, (F) generally, to sell, transfer, pledge
and make any agreement with
11
15
respect to or otherwise deal with any of the Collateral as fully and
completely as though the Trustee were the absolute owner thereof for
all purposes, and (G) to do, at the Trustee's option and at the
Issuer's expense, at any time, or from time to time, all acts and
things which the Trustee deems necessary to protect, preserve or
realize upon the Collateral and the Security Interest granted herein
and to effectuate the intent of this Agreement, all as fully and
effectively as the Issuer might do.
(b) Other Powers. The Issuer further authorizes the Trustee,
at any time and from time to time to (i) execute, in connection with any sale
permitted to be made by the Trustee hereunder, any endorsements, assignments or
other instruments of conveyance or transfer with respect to the Collateral, (ii)
communicate in its own name with any party to any agreement or instrument
included in the Collateral, at any reasonable time, with regard to any matter
relating to such agreement or instrument and (iii) to the full extent permitted
by applicable law, file one or more financing or continuation statements, and
amendments thereto, or such other filings or instruments as may be necessary to
perfect and maintain the Security Interest in each item of the Collateral,
relative to all or any part of the Collateral without the signatures of the
Issuer provided that the Trustee shall give notice to the Issuer promptly after
taking any action described in this Section 11(b) (but failure to give such
notice shall not subject the Trustee to liability).
12. The Trustee May Perform. Upon the occurrence and during
the continuance of an Event of Default, with prior notice to the Issuer, the
Trustee, without releasing the Issuer from any obligation, covenant or condition
hereof, itself may (but shall be under to obligation to) make any payment or
perform, or cause the performance of, any such obligation, covenant, condition
or agreement or any other action in such manner and to such extent as the
Trustee may deem necessary to protect, perfect or continue the perfection of the
Security Interest. Any costs or expenses incurred by the Trustee in connection
with the foregoing shall be governed by the Indenture, shall constitute a part
of the Obligations secured by the Security Documents, shall bear interest at a
rate per annum equal to the default interest rate specified in Section 309 of
the Indenture and shall be payable by the Issuer upon demand by the Trustee.
13. No Duty on the Trustee's Part; Limitation on the Trustee's
Obligations.
(a) No Duty on the Trustee's Part. The powers conferred on the
Trustee hereunder are solely to protect the Trustee's and the Holders' interests
in the Collateral and shall not impose any duty upon the Trustee to exercise any
such powers, including, but not limited to, with respect to any calls,
conversions, maturities, tenders or other matters relative to any Collateral, or
as to the taking of any necessary steps to preserve rights against any parties
or other rights pertaining to such Collateral. The Trustee shall be accountable
only for amounts that it receives as a result of the exercise of such powers.
(b) Limitations on Obligations. Except as provided in the next
sentence, anything herein to the contrary notwithstanding, the Issuer shall
remain liable under the Assigned Agreements and any other agreements included in
the Collateral to the extent set forth therein to perform all of its duties and
obligations thereunder to the same extent as if this Agreement had not been
executed. The exercise by the Trustee of any of the rights or remedies hereunder
shall not release the Issuer from any of its duties or obligations under the
Assigned Agreements or any other agreements included in the Collateral unless
expressly assumed by the Trustee in writing.
12
16
All of the Collateral is hereby assigned to the Trustee solely as security, and
the Trustee shall have no duty, liability or obligation whatsoever with respect
to any of the Collateral, including, but not limited to, the filing of any
continuation statements, unless the Trustee so elects in writing consistent with
its rights under this Agreement or fails to act in a commercially reasonable
manner to the extent required by the Code.
14. Reasonable Care. In the case of an Event of Default, the
Trustee shall exercise the same degree of care and skill hereunder as a prudent
man exercises or would exercise in connection with similar transactions for his
own account. Without limiting the generality of the foregoing and except as
otherwise provided by applicable law, the Trustee shall not be required to
marshall any collateral, including, without limitation, the Collateral subject
to the Security Interest created hereby and any guaranties of the Obligations,
or to resort to any item of Collateral or guaranties in any particular order;
and all of the Trustee's rights hereunder and in respect of such Collateral and
guaranties shall be cumulative and in addition to all other rights, however
existing or arising. To the extent that the Issuer lawfully may, the Issuer
hereby (a) agrees that it will not invoke any law relating to the marshaling of
collateral which might cause delay in or impede the enforcement of the Trustee's
rights under this Agreement or under any other instrument evidencing any of the
Obligations or under which any of the Obligations is outstanding or by which any
of the Obligations is secured or guaranteed and (b) irrevocably waives the
benefits of all laws and any and all rights to equity of redemption or other
rights of redemption that they may have in equity or at law with respect to the
Collateral.
15. Role of the Trustee. The rights, duties, liabilities and
immunities of the Trustee and its appointment and replacement hereunder shall be
governed by this Agreement, the Indenture and the relevant provisions contained
in the other Financing Documents.
16. Absence of Fiduciary Relation. The Trustee undertakes to
perform or to observe only such of its agreements and obligations as are
specifically set forth in this Agreement or any other Financing Document, and no
implied agreements, covenants or obligations with respect to the Issuer, any
Affiliate of the Issuer or any other party to any of the Assigned Agreements
shall be read into this Agreement against the Trustee. The Trustee is not a
fiduciary of and shall not owe or be deemed to owe any fiduciary duty to the
Issuer, any Affiliate of the Issuer or any other party to any of the Assigned
Agreements, except as otherwise specifically required by applicable law.
17. Survival. All agreements, representations and warranties
made herein or incorporated by reference herein shall survive the execution and
delivery of this Agreement and the other Financing Documents and repayment of
the Obligations, and shall be deemed to be material and to have been relied upon
by the Trustee, regardless of any investigation made by or on behalf of any of
the Trustee.
18. Notices. Any notice, request or other communication to be
given or made under this Agreement shall be in writing and, unless otherwise
specified herein, may be delivered by hand, airmail, facsimile or established
courier service to each party hereto at its respective address specified below
or at such other address as it may notify the other parties hereto from time to
time, and will be effective upon receipt or, in the case of delivery to the
correct address by
13
17
hand or by established courier service, upon refusal to accept delivery or, in
the case of delivery by facsimile, upon receipt by the sender of electronic
confirmation of facsimile transmission.
For the Issuer:
Cedar Brakes I, L.L.C.
1001 Louisiana Street
Houston, Texas 77002
Attention: President
Facsimile: (713) 420-2131
For the Trustee:
Bankers Trust Company
4 Albany Street
New York, New York 10006
Attention: Manager, Project Finance
Facsimile: 212-669-0772
19. No Waiver; Cumulative Remedies. By exercising or failing
to exercise any of its rights, options or elections hereunder (without also
expressly waiving the same in writing), the Trustee shall not be deemed to have
waived any breach or default on the part of the Issuer or to have released the
Issuer from any of its obligations secured hereby. No failure on the part of the
Trustee to exercise, and no delay in exercising (without also expressly waiving
the same in writing) any right, power or privilege hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise of any such right,
power or privilege preclude any other or further exercise thereof, or the
exercise of any other right, power or privilege. The remedies provided herein
are cumulative and not exclusive of any remedies provided by law. The Trustee,
acting on behalf of the Holders, shall have all of the rights and remedies
granted under the Indenture or any other Financing Document, and available at
law or in equity, and these same rights and remedies may be pursued separately,
successively or concurrently against the Issuer or any Collateral, at the
discretion of the Trustee. The application of the Collateral to satisfy the
Obligations pursuant to the terms hereof shall not operate to release the Issuer
from its Obligations until payment in full of any deficiency has been made in
cash.
20. Severability. Should any clause, sentence, paragraph,
subsection, or Section of this Agreement be judicially declared to be invalid,
unenforceable or void, such decision will not have the effect of invalidating or
voiding the remainder of this Agreement, and the parties hereto agree that the
part or parts of this Agreement so held be invalid, unenforceable or void will
be deemed to have been stricken here by the parties hereto, and the remainder
will have the same force and effect as if stricken part or parts has never been
included herein.
14
18
21. Exculpatory Provisions; Reliance By the Trustee.
(a) Exculpatory Provisions. Neither the Trustee, nor any of
its officers, directors, employees, agents, attorneys-in-fact or affiliates,
shall be liable to the Issuer for any action taken or omitted to be taken by
them under or in connection with this Agreement, except for their own gross
negligence or willful misconduct, or responsible in any manner to any Person for
any recitals, statements, representations or warranties made by the Issuer or
any officer thereof contained in this Agreement or in any certificate, report,
statement or other document referred to or provided for in, or received by the
Trustee under or in connection with, this Agreement or for the value, validity,
effectiveness, genuineness, enforceability or sufficiency of this Agreement or
for any failure of the Issuer to perform any of the Obligations. The Trustee
shall not be under any obligation to any Person to ascertain or to inquire as to
the observance or performance of any of the agreements contained in, or
conditions of, this Agreement or to inspect the properties or records of the
Issuer.
(b) Reliance by the Trustee. The Trustee shall be entitled to
conclusively rely, and shall be fully protected in relying, upon any note,
writing, resolution, notice, consent, certificate, affidavit, letter, cablegram,
telegram, telecopy, telex or teletype message, statement, order or other
document or conversation believed by it to be genuine and correct and to have
been signed, sent or made by the proper Person or Persons and upon advice and
statements of legal counsel (including, without limitation, counsel to the
Issuer), independent accountants and other experts selected by the Trustee. The
Trustee shall have no obligation to any Person to act or refrain from acting or
exercising any of its rights under this Agreement.
22. Amendment. Any amendment or waiver of, or any consent
given under, any provision of this Agreement shall be in writing and, in the
case of an amendment, signed by the parties hereto.
23. Successors and Assigns. This Agreement binds and benefits
the respective successors and assignees of the parties. However, the Issuer may
not assign or delegate any of its rights or obligations under this Agreement
without the prior consent of the Trustee.
24. Captions. The captions, headings and table of contents
used in this Agreement are for convenience only and do not and shall not be
deemed to affect, limit, amplify or modify the terms and provisions hereof.
25. Applicable Law; Submission to Jurisdiction. (a) This
Agreement shall be governed by, and construed in accordance with, the laws of
the State of New York (without giving effect to the principles thereof relating
to conflicts of law except Section 5-1401 of the New York General Obligations
Law).
(b) The Issuer consents to the non-exclusive jurisdiction of
any court of the State of New York or any United States federal court sitting in
the Borough of Manhattan, New York City, New York, United States, and any
appellate court from any thereof, and waives any immunity from the jurisdiction
of such courts over any suit, action or proceeding that may be brought in
connection with this Agreement. The Issuer irrevocably waives, to the fullest
extent permitted by law, any objection to any suit, action, or proceeding that
may be brought in
15
19
connection with this Agreement in such courts whether on the grounds of venue,
residence or domicile or on the ground that any such suit, action or proceeding
has been brought in an inconvenient forum. The Issuer agrees that final judgment
in any such suit, action or proceeding brought in such court shall be conclusive
and binding upon the Issuer and may be enforced in any court to the jurisdiction
of which the Issuer is subject by a suit upon such judgment.
(c) The Issuer agrees that service of all writs, process and
summonses in any suit, action or proceeding brought in connection with this
Agreement against the Issuer, or with respect to its property and assets, in any
court of the State of New York or any United States federal court sitting in the
Borough of Manhattan, New York City may be made upon CT Corporation System at
111 Eighth Avenue, 13th Floor, New York, NY 10011, whom the Issuer appoints as
its authorized agent for service of process. The Issuer represents and warrants
that CT Corporation System has agreed to act as the Issuer's agent for service
of process. The Issuer agrees that such appointment shall be irrevocable so long
as any of the Bonds remain outstanding or until the irrevocable appointment by
the Issuer of a successor in New York City as its authorized agent for such
purpose and the acceptance (on terms reasonably satisfactory to the Trustee) of
such appointment by such successor. The Issuer further agrees to take any and
all action, including the filing of any and all documents and instruments, that
may be necessary to continue such appointment in full force and effect as
aforesaid. If CT Corporation System shall cease to act as the Issuer's agent for
service of process, the Issuer shall appoint without delay another such agent
and provide prompt written notice to the Trustee of such appointment. With
respect to any such action in any court of the State of New York or any United
States federal court in the Borough of Manhattan, New York City, service of
process upon CT Corporation System, as the authorized agent of the Issuer for
service of process, and written notice of such service to the Issuer, shall be
deemed in every respect, effective service of process upon the Issuer. Without
prejudice to the foregoing, the Issuer hereby irrevocably consents to the
service of process out of any of the aforementioned courts in any such action or
proceeding by the mailing of copies thereof by registered or certified mail,
postage prepaid, to the Issuer at the address of its principal office specified
in the first paragraph of this Agreement or at any other address previously
furnished in writing to the Trustee by the Issuer.
(d) Nothing in this Section shall affect the right of any
party to serve legal process in any other manner permitted by law or affect the
right of any party to bring any action or proceeding against any other party or
its property in the courts of other jurisdictions.
26. Counterparts. This Agreement may be executed in several
counterparts, each of which is an original, but all of which together constitute
one and the same agreement.
27. Continuing Security Interest; Termination. This Agreement
shall create a continuing assignment, pledge and first priority security
interest in the Collateral and shall remain in full force and effect for the
benefit of the Trustee until (i) the indefeasible payment in full of all
Obligations to be paid, and performance in full of all Obligations to be
performed, as determined by the Trustee, or (ii) defeasance of the Bonds in
compliance with the provisions of Article Fourteen of the Indenture. Upon the
termination of this Agreement in accordance with clause (i) or (ii) above, the
Trustee shall, upon the request and at the expense of the Issuer, execute and
deliver to the Issuer such documents and take such other actions as the Issuer
shall reasonably
16
20
request to evidence such termination or expiration and the release of the
Collateral from the Security Interest created hereunder.
28. Payments Set Aside. To the extent that the Issuer or any
other Person on behalf of the Issuer makes a payment or payments of the
Obligations to the Trustee, or the Trustee enforces the Security Interest or
exercises the right of set-off, and such payment or payments or the proceeds of
such enforcement or set-off or any part thereof are subsequently invalidated,
declared to be fraudulent or preferential, set aside and/or required to be
repaid to a trustee, receiver or any other party under any bankruptcy law, state
or federal law, common law or equitable cause, then to the extent of such
recovery, the Obligations or any part thereof originally intended to be
satisfied, and this Agreement and all Liens, rights and remedies therefor, shall
be revived and continued in full force and effect as if such payment had not
been made or such enforcement or set-off had not occurred.
17
21
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed as of the day and year first written above.
CEDAR BRAKES I, L.L.C.
as Issuer
By: /s/ Thomas G. Kilgore
----------------------
Name: Thomas G. Kilgore
Title: Attorney in Fact
BANKERS TRUST COMPANY
as Trustee
By: /s/ Richard L. Buckwalter
-------------------------
Name: Richard L. Buckwalter
Title: Vice President
18
22
EXHIBIT A
ASSIGNED AGREEMENTS
1. Purchase and Sale Agreement
2. Amended and Restated Power Purchase Agreement
3. Power Services Agreement
4. Administrative Services Agreement
5. Funding Agreement
6. EPEC Guaranty
7. Consent
8. EPEC Consent
9. EPM Consent
10. PSE&G Consent