EXHIBIT 4.39
STOCK PLEDGE AGREEMENT
(Pledge of Capital Stock of Conejo, Niguel and San Felipe)
by
CALENERGY OPERATING COMPANY
(as Pledgor)
in favor of
CHEMICAL TRUST COMPANY OF CALIFORNIA
(as Collateral Agent)
Dated as of June 20, 1996
TABLE OF CONTENTS
Page
Definitions..................................................................................................3
Grant of Security Interest...................................................................................3
Representations and Warranties...............................................................................4
Covenants and Agreements.....................................................................................5
Pledgor's Obligations Upon Event of Default..................................................................7
Remedies; Rights Upon Event of Default.......................................................................7
Application of Proceeds......................................................................................9
Security Interest Absolute...................................................................................9
Collateral Agent Appointed Attorney-in-Fact..................................................................9
Collateral Agent May Perform.................................................................................10
No Duty on Collateral Agent's Part,..........................................................................11
Reasonable Care..............................................................................................11
Role of Collateral Agent.....................................................................................11
Waiver of Trial by Jury......................................................................................11
Notices......................................................................................................12
Absence of Fiduciary Relation................................................................................12
Survival of Representations and Warranties...................................................................12
No Waiver; Cumulative Remedies...............................................................................12
Severability.................................................................................................12
Exculpatory Provisions; Reliance by Collateral Agent.........................................................13
Amendment....................................................................................................13
Successors and Assigns.......................................................................................13
Number and Gender............................................................................................14
Subrogation, etc.............................................................................................14
Captions.....................................................................................................14
Applicable Law...............................................................................................14
Continuing Security Interest; Termination....................................................................14
Payments Set Aside...........................................................................................14
Counterparts.................................................................................................15
Non-Recourse.................................................................................................15
i
STOCK PLEDGE AGREEMENT
(Pledge of Capital Stock of Conejo, Niguel and San Felipe)
This STOCK PLEDGE AGREEMENT (this "Pledge Agreement"), dated
as of June 20, 1996, is entered into by CALENERGY OPERATING COMPANY, a
Delaware corporation ("Pledgor"), in favor of CHEMICAL TRUST COMPANY OF
CALIFORNIA, a California corporation, as collateral agent (together with its
successors and assigns, the "Collateral Agent"), on behalf of and for the
benefit of the Secured Parties and Salton Sea Funding Corporation, a Delaware
Corporation ("Funding Corporation").
W I T N E S S E T H:
WHEREAS, Pledgor owns all of the issued and outstanding
capital stock of each of Conejo Energy Company, a California corporation
("Conejo"), Niguel Energy Company, a California corporation ("Niguel"), and
San Felipe Energy Company, a California corporation ("San Felipe"); and
WHEREAS, Funding Corporation is a corporation established
for the sole purpose of making loans to the Guarantors (as hereinafter
defined) from the proceeds of the issuance of notes and bonds (collectively,
the "Securities") in its individual capacity as principal and as agent acting
on behalf of Salton Sea Brine Processing L.P., a California limited
partnership ("SSBP"), Salton Sea Power Generation L.P., a California limited
partnership ("SSPG"), Fish Lake Power Company, a Delaware corporation ("Fish
Lake," and together with SSBP and SSPG, the "Salton Sea Guarantors"), Pledgor,
Conejo, Niguel, San Felipe, Del Ranch, L.P., a California limited partnership
("Del Ranch"), Elmore, L.P., a California limited partnership ("Elmore"),
Leathers, L.P., a California limited partnership ("Leathers"), Vulcan/BN
Geothermal Power Company, a Nevada general partnership ("Vulcan"), BN
Geothermal, Inc., a Delaware corporation ("BNG"), and Vulcan Power Company, a
Nevada corporation ("VPC," and together with Pledgor, Conejo, Niguel, San
Felipe, Del Ranch, Elmore, Leathers, Vulcan and BNG, the "Partnership
Guarantors"), and Salton Sea Royalty Company, a Delaware corporation ("Royalty
Guarantor", and together with the Salton Sea Guarantors and the Partnership
Guarantors, the "Guarantors"), pursuant to the Trust Indenture, dated as of
July 21, 1995, as the same may be amended, modified, or supplemented,
including pursuant to that certain Second Supplemental Trust Indenture, dated
as of even date herewith (as so amended, modified and supplemented, the
"Indenture"), between Funding Corporation and Collateral Agent, as trustee
("Trustee"); and
WHEREAS, the principal and interest payments on the
Securities will be serviced by repayment of loans made by Funding Corporation
to the Guarantors and guaranteed by the Guarantors, subject to the conditions
set forth in the Indenture; and
WHEREAS, Funding Corporation has (a) on July 21, 1995 issued
and sold Securities in the principal amount of $475 Million (the "Initial
Issuance") and (b) simultaneously with the execution and delivery of this
Agreement issued and sold Securities in the principal amount of $135 Million
(the "Additional Issuance"); and
WHEREAS, Funding Corporation has used a portion of the
proceeds from the Initial Issuance and intends to use the proceeds from the
Additional Issuance to make loans to the Partnership Guarantors in the
aggregate outstanding amount of $189,956,000, as of the date hereof, portions
of which will be used for the following purposes: (a) approximately $96
Million to refinance all existing
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project-level indebtedness of the Partnership Projects, (b) approximately $15
Million to fund certain capital improvements to the Partnership Projects and the
Salton Sea Projects, and (c) approximately $23 Million to fund a portion of the
purchase price for the acquisition by certain of the Partnership Guarantors of
the 50% interest in each of the Partnership Projects previously owned by a third
party; and
WHEREAS, Pledgor anticipates benefiting directly and
indirectly from the making of the loan pursuant to the Partnership Credit
Agreement and is, therefore, willing to enter into this Pledge Agreement in
accordance with the terms hereof.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual covenants
contained herein, and for other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, and in order to induce the
Funding Corporation to enter into the Partnership Credit Agreement, the
parties hereto hereby agree as follows:
Definitions. Unless otherwise defined herein, all capitalized
terms shall have the meanings set forth in Exhibit A to the Indenture, which
Exhibit A is hereby incorporated by reference. All references to sections,
schedules and exhibits in or to this Pledge Agreement are to sections, schedules
and exhibits in or to this Pledge Agreement, unless otherwise specified. The
words "hereof," "herein" and "hereunder" and words of similar import when used
in this Pledge Agreement shall refer to this Pledge Agreement as a whole and not
to any particular provision of this Pledge Agreement. For purposes of this
Pledge Agreement, all other terms used herein and not otherwise defined herein
which are defined in Article 9 of the Uniform Commercial Code (as the same may
be in effect in the State of California or any other applicable jurisdiction,
the "Code"), shall have their respective meanings as therein defined.
Grant of Security Interest.
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 (as defined below) now existing or
hereafter arising, and howsoever evidenced, Pledgor hereby collaterally assigns,
conveys, mortgages, pledges, hypothecates and transfers to Collateral Agent, and
grants and creates a lien on and first priority security interest (the "Security
Interest") in favor of Collateral Agent, for the equal and ratable benefit of
the Secured Parties and the Funding Corporation, in all right, title and
interest of Pledgor in and to all of the issued and outstanding capital stock
of each of Conejo, Niguel and San Felipe, whether now existing or hereafter
acquired (collectively, the "Stock"), including, without limitation, the Stock
described in Schedule 2.1 hereto, and all proceeds thereof, including, without
limitation, dividends and other property received and receivable by Pledgor in
connection with the Stock, other than dividends and other distributions made
by Conejo, Niguel or San Felipe in compliance with the other Financing
Documents (the Stock and such proceeds to be referred to herein collectively
as the "Collateral").
Obligations. This Pledge Agreement secures, in
accordance with the provisions hereof, the following obligations, now existing
or hereafter arising (collectively, the "Obligations"):
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payment and performance of the Partnership Guarantors'
obligations under the Partnership Credit Agreement and the Partnership
Guarantee, and each and every obligation, indebtedness, covenant and agreement
of Pledgor under any of the Financing Documents to which it is a party,
including, without limitation, this Pledge Agreement, the Intercreditor
Agreement and any amendments or supplements thereto, extensions or renewals
thereof or replacements therefor; and
performance of every obligation, covenant and agreement of
Pledgor contained in any agreement now or hereafter executed by Pledgor which
recites that the obligations thereunder are secured by this Pledge Agreement;
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 Pledgor under any instrument now or hereafter
evidencing or securing any of the foregoing.
Representations and Warranties. Pledgor hereby represents and
warrants as follows:
Organization and Existence. Pledgor owns all of the
issued and outstanding capital stock of each of Conejo, Niguel and San Felipe.
Pledgor is a corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware. Pledgor is duly qualified to do
business and is in good standing in the State of California and each other
jurisdiction in which the character of the properties owned or leased by it or
in which the transaction of its business as presently conducted or proposed to
be conducted makes such qualification necessary or desirable. Pledgor has full
corporate power and authority to own its property and to carry on its business
as now being conducted and as proposed to be conducted.
Authority, Enforceability. Pledgor has full
corporate power and authority to enter into and perform this Pledge Agreement
and the entering into and performance of such agreement by Pledgor has been duly
authorized by all proper and necessary corporate action. This Pledge Agreement,
when executed and delivered by Pledgor and any other party hereto, will
constitute the legal, valid and binding obligation of Pledgor, enforceable in
accordance with its terms.
Title: No Other Liens. Pledgor 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 except for Permitted Liens, and Pledgor has full
corporate power and authority to grant the liens and security interests in and
to the Collateral hereunder. Except with respect to the Secured Parties and the
Funding Corporation and as required under this Pledge 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, and no lien
or security interest on or in the Collateral has been registered in the
registration books maintained by Conejo, Niguel or San Felipe in which all
capital stock of Conejo, Niguel and San Felipe, respectively, is recorded,
except such as may have been filed in favor of Collateral Agent for the
benefit of the Secured Parties and the Funding Corporation pursuant to this
Pledge Agreement.
Collateral. All of the Collateral constituting
shares of capital stock are and such future collateral will be validly issued,
fully paid and nonassessable securities of Conejo, Niguel and San Felipe. The
Collateral includes all of the issued and outstanding shares of capital stock of
each of Conejo, Niguel and San Felipe. Except for the Collateral, there are no
outstanding options, warrants or other rights to subscribe for or purchase
voting or non-voting capital stock of Conejo, Niguel or San Felipe, nor any
notes, bonds, debentures or other evidences of indebtedness that (1) are at any
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time convertible into capital stock of Conejo, Niguel or San Felipe, or (2) have
or at any time would have voting rights with respect to Conejo, Niguel or San
Felipe.
Perfection; Registration of Lien. Financing
statements or other appropriate instruments have been filed or deposited for
filing pursuant to the Code in such public offices 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 filing of a financing
statement. All other action by Pledgor and, to Pledgor's knowledge, by any other
Person necessary or desirable to perfect the Security Interest in each item of
the Collateral has been duly taken. Subject to the requirements contained in the
Code with respect to the filing of continuation statements, this Pledge
Agreement constitutes a valid and continuing Lien on and perfected Security
Interest (subject only to Permitted Liens) in the Collateral in favor of
Collateral Agent for the equal and ratable benefit of the Secured Parties and
the Funding Corporation, superior and prior to the rights of all Persons
(subject only to Permitted Liens), whether the Collateral subject to the
Security Interest is now owned by Pledgor or is hereafter acquired.
No Default. Pledgor is not in default in the
performance, observance or fulfillment of any of the material obligations,
covenants or conditions applicable to Pledgor contained in any Financing
Document to which it is a party.
Chief Executive Office and Principal Place of
Business. Pledgor's chief executive office and principal place of business and
the place where Pledgor's records concerning the Collateral are kept is:
Blackstone Center
302 South 36th Street, Suite 400-C
Omaha, Nebraska 68131
Covenants and Agreements. Pledgor hereby covenants
and agrees that Pledgor shall faithfully observe and fulfill, and shall cause to
be observed and fulfilled, each and all of the following covenants until all
Obligations to be paid or performed by Pledgor and the other Partnership
Guarantors under the Financing Documents to which it is a party have been paid
and performed in full:
Further Assurances. Pledgor shall, from time to
time at Pledgor's expense, and upon request by Collateral Agent on behalf of the
Secured Parties and the Funding Corporation, promptly execute and deliver all
further instruments and documents, and take all further action that may be
reasonably necessary or advisable, or that Collateral Agent reasonably
determines may be necessary, in order to perfect and protect the Security
Interest granted or purported to be granted hereby or to enable Collateral Agent
to exercise and enforce its rights and remedies hereunder with respect to the
Collateral.
Stock Certificates. Pledgor shall promptly deliver
to Collateral Agent all originals of certificates and other documents,
instruments and agreements evidencing the Collateral which are now held or
hereafter received by Pledgor, together with such blank stock powers executed
by Pledgor as Collateral Agent may request.
Stock Issuance. Pledgor shall not, except as
expressly permitted by the Financing Documents, vote to enable, or take any
other action to permit, Conejo, Niguel or San Felipe to issue any stock.
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Certificated Interest. If Pledgor shall become
entitled to receive or shall receive any certificate, instrument, option or
rights, whether as an addition to, in substitution of, or in exchange for the
Collateral or any part thereof, or otherwise, Pledgor shall accept any such
certificate, instrument, option or rights as Collateral Agent's agent, shall
hold them in trust for Collateral Agent, and shall deliver them forthwith to
Collateral Agent in the exact form received, with Pledgor's endorsement when
necessary, or accompanied by duly executed instruments of transfer or assignment
in blank or, if requested by Collateral Agent, an additional pledge agreement or
security agreement executed and delivered by Pledgor, all in form and substance
reasonably satisfactory to Collateral Agent, to be held by Collateral Agent,
subject to the terms hereof, as further Collateral for the Obligations.
Change in Location, Name, Etc. Pledgor may change
the location of its chief executive office, principal place of business or the
office where such records are kept to another location in the United States
after giving Collateral Agent thirty (30) days' advance written notice of such
change. Without the prior written consent of Collateral Agent, Pledgor shall not
adopt any trade name or fictitious business name.
Limitation on Liens on the Collateral. Pledgor
shall not create, incur or permit to exist, shall defend the Collateral now
owned or hereafter acquired by it against, and shall take such other action as
is necessary to remove, any Lien or claim on or to the Collateral, other than
Permitted Liens, and shall defend the right, title and interest of Collateral
Agent in and to any of the Collateral against the claims and demands of all
Persons whomsoever.
Bankruptcy Filing, etc. Pledgor shall not authorize
or permit Conejo, Niguel or San Felipe (i) to commence a voluntary case or other
proceeding seeking liquidation, reorganization or other relief with respect to
Conejo, Niguel or San Felipe, as applicable, or their respective debts under any
bankruptcy, insolvency or other similar law now or hereafter in effect or
seeking the appointment of a trustee, receiver, liquidator, custodian or other
similar official of Conejo, Niguel or San Felipe, as applicable, or any
substantial part of their respective properties or (ii) to consent to any such
relief or to the appointment of or taking possession by any such official in an
involuntary case or other proceeding commenced against Conejo, Niguel or San
Felipe or (iii) to make a general assignment for the benefit of their
respective creditors. Neither Pledgor nor any of its Affiliates shall commence
or join with any other Person (other than the Secured Parties and Funding
Corporation) in commencing any proceeding against Conejo, Niguel or San Felipe
under any bankruptcy, reorganization, liquidation or insolvency law or statute
now or hereafter in effect in any jurisdiction.
Obligations. Pledgor acknowledges and agrees that
its rights to receive any payments from Conejo, Niguel and San Felipe, or
arising out of or in connection with Pledgor's interests in Conejo, Niguel and
San Felipe, shall be payable by Conejo, Niguel or San Felipe, as applicable,
only from funds available to Conejo, Niguel and San Felipe, respectively, upon
distributions pursuant to the Depositary Agreement or any other provision of the
Indenture expressly providing for distribution, payment or release of funds to
Conejo, Niguel or San Felipe, as the case may be, and only so long as such
distribution, payment or release is made in accordance with the Depositary
Agreement and the Indenture. Pledgor also agrees that any distributions made by
Conejo, Niguel or San Felipe to Pledgor that do not comply with the Depositary
Agreement and the Indenture shall be restored to Conejo, Niguel or San Felipe,
as the case may be, by Pledgor by deposit into an account designated by
Collateral Agent, promptly upon demand by Collateral Agent or Conejo, Niguel or
San Felipe or upon Pledgor becoming aware of receipt of such non-complying
distribution.
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Governmental Authority Requirement. Pledgor shall
not take or omit to take (or suffer such taking or omission of) any action
(unless ordered to do so by a competent Governmental Authority having
jurisdiction) in respect of Pledgor or Conejo, Niguel or San Felipe and their
respective businesses if, as a consequence directly or indirectly of such action
or omission, Conejo, Niguel, San Felipe or Pledgor becomes subject to regulation
by any Governmental Authority as a "public utility," an "electric utility," an
"electric utility holding company," a "public utility holding company" or a
subsidiary or affiliate of any of the foregoing under PUHCA, FPA or PURPA, or as
a "holding company" within the meaning of PUHCA.
Indemnification. Pledgor shall defend, indemnify
and hold harmless Collateral Agent and each of the other Secured Parties and the
Funding Corporation and their officers, directors and employees, 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 attorney's fees and expenses) which are
occasioned by or result from any (i) failure by Pledgor to perform any of the
terms, agreements, or covenants to be performed by Pledgor under this Pledge
Agreement and (ii) proceeding or action to enforce brought by Collateral Agent
pursuant to this Pledge Agreement or which arise out of any such agreement
unless due solely to the gross negligence or willful misconduct of Collateral
Agent. This indemnity and any other obligations of Pledgor under any of the
Financing Documents shall be made only against, and shall be limited to the
extent of, the Collateral pledged hereunder.
Pledgor's Obligations Upon Event of Default. If an
Event of Default under the Partnership Credit Agreement or the Partnership
Guarantee shall occur and be continuing (a) all payments received by Pledgor
under or in connection with any of the Collateral shall be held by Pledgor in
trust for Collateral Agent, shall be segregated from other funds of Pledgor and
shall, forthwith upon receipt by Pledgor, be turned over to Collateral Agent or
its designee in the same form as received by Pledgor (duly endorsed by Pledgor
to Collateral Agent, if requested), and (b) any and all such payments so
received by Collateral Agent or its designee (whether from Pledgor or otherwise)
may, in the sole discretion of Collateral Agent or its designee, be held by
Collateral Agent or such designee as collateral security for, and/or then or at
any time thereafter be applied, subject only to the relevant provisions of the
Intercreditor Agreement and Depositary Agreement or as otherwise may be required
by applicable law, in whole or in part by Collateral Agent or its designee in
the manner specified in Section 7.
Remedies; Rights Upon Event of Default. Until an
Event of Default shall have occurred and be continuing under the Partnership
Credit Agreement or the Partnership Guarantee and Collateral Agent shall have
given notice to Pledgor of Collateral Agent's intent to exercise its rights
pursuant to Subparagraph 6.5 below, Pledgor shall be permitted (a) to receive
all dividends paid on Stock (other than dividends paid in additional capital
stock unless such additional capital stock is pledged to Collateral Agent for
the benefit of Collateral Agent and the Secured Parties and the Funding
Corporation pursuant to a Pledge Agreement in the form of this Pledge Agreement)
which are permitted by the Financing Documents and (b) to exercise all voting
and corporate rights with respect to the such capital stock. Upon the occurrence
and during the continuance of an Event of Default under the Partnership Credit
Agreement or the Partnership Guarantee, Collateral Agent, for the equal and
ratable benefit of and on behalf of the Secured Parties and the Funding
Corporation, may, subject to the provisions of the Intercreditor Agreement and
the other Financing Documents, do one or more of the following:
declare, without presentment, demand, protest or
notice of any kind, all of which Pledgor hereby expressly waives, the entire
amount of Obligations to be immediately due and payable,
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whereupon all of such Obligations declared due and payable shall be and become
immediately due and payable; provided, however, if, with respect to the
Partnership Guarantors, an Event of Default occurs pursuant to Section 5.1 of
the Partnership Credit Agreement, then the acceleration provided for in this
Section 6.1 shall be deemed to have been made upon the occurrence of such Event
of Default without declaration or any other action by Collateral Agent;
upon notice to Pledgor, which notice need not be in
writing, make such payments and do such acts as Collateral Agent may deem
necessary to protect, perfect or continue the perfection of the Secured Parties'
and the Funding Corporation's Security Interest in the Collateral, 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 Secured Parties'
and the Funding Corporation's Security Interest in or ownership of the
Collateral;
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 Secured Parties and the Funding Corporation by the Security
Documents either concurrently or in such order as Collateral Agent may determine
without affecting the rights or remedies to which the Secured Parties and the
Funding Corporation may be entitled under any Security Documents. Pledgor hereby
waives, to the extent permitted by applicable law, notice and judicial hearing
in connection with Collateral Agent'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 Pledgor would otherwise have under the constitution
or any statute or other law of the United States of America or of any state;
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 Collateral Agent's offices or elsewhere, at such time or times,
for cash, on credit or for future delivery, and at a commercially reasonable
price or prices and on other commercially reasonable terms. Pledgor agrees that,
to the extent notice of sale shall be required by law, at least ten (10) days'
notice to Pledgor 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, Collateral Agent 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 Collateral Agent on behalf of the Secured Parties and the Funding
Corporation. Collateral Agent shall not be obligated to make any sale of the
Collateral regardless of notice of sale having been given. Collateral 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. Collateral Agent 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.
Pledgor hereby waives, to the extent permitted by applicable law, any claims
against Collateral Agent 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 Collateral Agent accepts
the first offer received which Collateral Agent in good faith 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,
Pledgor 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, Pledgor hereby specifically waives all rights of redemption, stay or
appraisal which it has or may have under any law now existing or hereafter
enacted. Pledgor authorizes
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Collateral Agent, at any time and from time to time, to execute, in connection
with a sale of the Collateral pursuant to the provisions of this Pledge
Agreement, any endorsements, assignments or other instruments of conveyance or
transfer with respect to the Collateral;
upon notice to Pledgor, register the Collateral in
the name of Collateral Agent or its nominee as pledgee or otherwise take such
action as Collateral Agent shall in its sole discretion deem necessary or
desirable with respect to the Collateral, and Collateral Agent or its nominee
may thereafter, in its sole discretion, without notice, exercise all voting,
consent, managerial and other rights relating to the Collateral and exercise any
and all rights of conversion, exchange, subscription or any other rights,
privileges or options pertaining to the Collateral as if it were the absolute
owner thereof, including, without limitation, all rights of Pledgor, including,
without limitation, the right to (i) receive all permitted distributions, if
any, made for the account of Pledgor and (ii) exchange any and all of the
Collateral upon the merger, consolidation, reorganization, recapitalization or
other readjustment of Conejo, Niguel or San Felipe, all without liability except
to account for property actually received by Collateral Agent, but Collateral
Agent shall have no duty to exercise any of the aforesaid rights, privileges
or options and shall not be responsible for any failure to do so or delay in
so doing; and
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.
Application of Proceeds. The net proceeds of any
foreclosure, collection, recovery, receipt, appropriation, realization or sale
of the Collateral shall be applied in the order of priority specified in the
Intercreditor Agreement. If all Obligations and any other amounts due under this
Pledge Agreement and the Intercreditor Agreement have been indefeasibly paid,
satisfied and discharged in full, any surplus then remaining shall be paid to
Pledgor, if it is lawfully entitled to receive the same or shall be paid to
whomsoever a court of competent jurisdiction may direct.
Security Interest Absolute. All the rights of
Collateral Agent and any of the other Secured Parties and the Funding
Corporation hereunder and the Security Interest and all obligations of Pledgor
hereunder shall be absolute and unconditional irrespective of:
any lack of validity or enforceability of the
Project Documents or the Financing Documents or any other agreement or
instrument relating thereto;
any change in the time, manner or place of payment
of, or in any other term of, all or any of the Obligations, or any other
amendment or waiver of or any consent to any departure from the Project
Documents or the Financing Documents;
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;
to the full extent permitted by law, any other
circumstance that might otherwise constitute a defense available to, or a
discharge of, Pledgor or any third party pledgor; or
the failure by Pledgor to fulfill its obligations
under this Pledge Agreement.
Collateral Agent Appointed Attorney-in-Fact.
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Powers. Pledgor hereby irrevocably constitutes and
appoints Collateral Agent and any officer or agent thereof, with full power of
substitution, as Pledgor's 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 Pledgor and in the name of Pledgor or otherwise, from
time to time upon the occurrence and during the continuance of any Event of
Default under the Partnership Credit Agreement or the Partnership Guarantee in
Collateral Agent's discretion, to take any action and to execute any and all
documents and instruments which Collateral Agent may deem necessary or advisable
to accomplish the purposes of this Pledge Agreement, without notice to Pledgor,
including, without limitation:
to exercise all rights, powers and privileges to the
same extent Pledgor shall have been entitled under applicable law, including,
without limitation, all voting rights of Pledgor as holder of capital stock of
Conejo, Niguel and San Felipe;
to receive, endorse and collect all instruments made
payable to Pledgor representing any interest payment or other distribution in
respect of the 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 Collateral Agent for
the purpose of collecting any and all of such dividends, payments or other
distributions;
to pay or discharge taxes and liens levied or placed
on the Collateral; and
(a) to direct any party liable for any payment in
respect of or arising out of any of the Collateral to make payment of any and
all moneys due or to become due in connection therewith directly to Collateral
Agent or as Collateral Agent shall otherwise direct, (b) to ask or make 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 Pledgor
with respect to any Collateral, (e) to settle, compromise or adjust any suit,
action or proceeding described in clause (d) above and, in connection therewith,
to give such discharges or releases as Collateral Agent acting in good faith may
deem appropriate and (f) generally, to sell, transfer, pledge and make any
agreement with respect to or otherwise deal with any of the Collateral as
fully and completely as though Collateral Agent were the absolute owner
thereof for all purposes, and (g) to do, at Collateral Agent's option and at
Pledgor's expense, at any time, or from time to time, all acts and things
which Collateral Agent acting in good faith deems necessary to protect,
preserve or realize upon the Collateral and the Security Interest granted
herein and to effect the intent of this Pledge Agreement, all as fully and
effectively as Pledgor might do.
Other Powers. Pledgor further authorizes Collateral
Agent, at any time and from time to time (i) to execute, in connection with any
sale provided for hereunder, any endorsements, assignments or other instruments
of conveyance or transfer with respect to the Collateral and (ii) to the full
extent permitted by applicable law, to file one or more financing or
continuation statements, and amendments thereto, relative to all or any part of
the Collateral without the signature of Pledgor.
Collateral Agent May Perform. Upon the occurrence
and during the continuance of an Event of Default under the Partnership Credit
Agreement or the Partnership Guarantee, Collateral Agent, without releasing
Pledgor from any obligation, covenant or condition hereof, itself may make any
payment or perform, or cause the performance of, any such obligation, covenant,
condition or
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agreement or any other action in such manner and to such extent as Collateral
Agent may deem necessary to protect, perfect or continue the perfection of the
Secured Parties' and the Funding Corporation's Security Interest in the
Collateral. Any costs or expenses incurred by Collateral Agent in connection
with the foregoing shall be governed by the Indenture and the Financing
Documents, and constitute Obligations secured hereby.
No Duty on Collateral Agent's Part, Limitation on
Collateral Agent's Obligations.
No Duty on Collateral Agent's Part. The powers
conferred on Collateral Agent hereunder are solely to protect Collateral Agent's
interests in the Collateral and shall not impose any duty upon it to exercise
any such powers. Collateral Agent shall be accountable only for amounts that it
actually receives as a result of the exercise of such powers.
Limitations on Obligations. Without limiting the
effectiveness of Section 30 hereof, anything herein to the contrary
notwithstanding, Pledgor shall remain liable under any Project Document or
Financing Document to which it is a party to the extent set forth therein to
perform all of its duties and obligations thereunder, to the same extent as if
this Pledge Agreement had not been executed. The exercise by Collateral Agent of
any of the rights or remedies hereunder shall not release Pledgor from any of
its duties or obligations under any Project Document or Financing Document to
which it is a party. All of the Collateral is hereby assigned to Collateral
Agent solely as security, and Collateral Agent shall have no duty, liability or
obligation whatsoever with respect to any of the Collateral, unless Collateral
Agent so elects in writing consistent with its rights under this Pledge
Agreement.
Reasonable Care. Collateral Agent shall exercise
the same degree of care hereunder as it exercises in connection with similar
transactions for its own account. Collateral Agent shall be deemed to have
exercised reasonable care in the custody and preservation of the Collateral in
its possession if the Collateral is accorded treatment substantially equal to
that which Collateral Agent accords or would accord collateral held by
Collateral Agent in similar transactions for its own account. Without limiting
the generality of the foregoing and except as otherwise provided by applicable
law, Collateral Agent 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 Collateral
Agent'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 Pledgor lawfully may, Pledgor hereby (a) agrees that it will
not invoke any law relating to the marshalling of collateral
which might cause delay in or impede the enforcement of Collateral Agent's
rights under this Pledge 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 it may have in equity or at law with
respect to the Collateral.
Role of Collateral Agent. The rights, duties,
liabilities and immunities of Collateral Agent and its appointment and
replacement hereunder shall be governed by the Intercreditor Agreement.
Waiver of Trial by Jury. WITH REGARD TO THIS PLEDGE
AGREEMENT, EACH OF PLEDGOR AND COLLATERAL AGENT HEREBY WAIVES THE RIGHT TO A
TRIAL BY JURY IN ANY ACTION OR PROCEEDING AND FOR ANY COUNTERCLAIM THEREIN.
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Notices. All notices, demands, requests and other
communications required or permitted hereunder shall be in writing, and shall be
given and deemed to have been given in accordance with Section 6.1 of the
Partnership Credit Agreement and the information set forth immediately below
shall apply to Pledgor:
Blackstone Center
302 South 36th Street, Suite 400-C
Omaha, Nebraska 68131
Absence of Fiduciary Relation. Collateral Agent undertakes to
perform or to observe only such of its agreements and obligations as are
specifically set forth in this Pledge Agreement, the Intercreditor Agreement or
any other Security Document, and no implied agreements, covenants or obligations
with respect to Pledgor, any Affiliate of Pledgor or any other party to the
Partnership Agreement or any other Project Document or Security Document to
which Pledgor is a party shall be read into this Pledge Agreement against
Collateral Agent or any of the Secured Parties and the Funding Corporation;
neither Collateral Agent nor any of the Secured Parties and the Funding
Corporation in its and their capacity as such is a fiduciary of and shall not
owe or be deemed to owe any fiduciary duty to Pledgor, any Affiliate of Pledgor
or any other party to any Project Document or Financing Document to which
Pledgor is a party, except as otherwise specifically required by law.
Survival of Representations and Warranties. All agreements,
representations and warranties made herein shall survive the execution and
delivery of this Pledge 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 Collateral Agent and any of the other Secured Parties and
the Funding Corporation, regardless of any investigation made by or on behalf of
any of Collateral Agent and any of the other Secured Parties and the Funding
Corporation. Notwithstanding anything in this Pledge Agreement or implied by law
to the contrary, the agreements and obligations of Pledgor set forth in Section
4.8 shall survive until the payment or prepayment in full of the Obligations and
the termination of this Pledge Agreement in accordance with Section 27 hereof.
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), Collateral Agent, on behalf of the
Secured Parties and the Funding Corporation, shall not be deemed to have waived
any breach or default on the part of Pledgor or to have released Pledgor from
any of its obligations secured hereby. No failure on the part of Collateral
Agent 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. Collateral
Agent, acting on behalf of the Secured Parties and the Funding Corporation,
shall have all of the rights and remedies granted under the Intercreditor
Agreement or any Financing Document, and available at law or in equity, and
these same rights and remedies may be pursued separately, successively or
concurrently against Pledgor or any Collateral, at the discretion of Collateral
Agent.
Severability. Any provision of this Pledge
Agreement which is prohibited, unenforceable or not authorized in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition, unenforceability or non-authorization, without invalidating
the remaining provisions hereof or affecting the validity, enforceability or
legality of such provision in any other
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jurisdiction. Where provisions of any law or regulation resulting in such
prohibition or unenforceability may be waived they are hereby waived by Pledgor
and Collateral Agent to the full extent permitted by law so that this Pledge
Agreement shall be deemed a valid, binding agreement, and the Security Interest
created hereby shall constitute a continuing first lien on and first perfected
security interest in the Collateral, in each case enforceable in accordance with
its terms.
Exculpatory Provisions; Reliance by Collateral
Agent.
Exculpatory Provisions. Neither Collateral Agent,
Funding Corporation nor any other Secured Party, nor any of their respective
officers, directors, employees, agents, attorneys-in-fact or affiliates (the
"Exculpated Parties") shall be liable to Pledgor for any action taken or omitted
to be taken by it or them under or in connection with this Pledge Agreement or
any other Project Document or Financing Document to which Pledgor is a party,
except for the Exculpated Parties' own gross negligence or willful misconduct,
or responsible in any manner to any Person for any recitals, statements,
representations or warranties made by Pledgor or any officer thereof contained
in this Pledge Agreement or any other Project Document or Financing Document to
which Pledgor is a party or in any certificate, report, statement or other
document referred to or provided for in, or received by Collateral Agent,
Funding Corporation or any other Secured Party under or in connection with, this
Pledge Agreement or any other Project Document or Financing Document to which
Pledgor is a party or for the value, validity, effectiveness, genuineness,
enforceability or sufficiency of this Pledge Agreement or any other Project
Document or Financing Document to which Pledgor is a party or for any failure of
Pledgor to perform any of the Obligations. Neither Collateral Agent, Funding
Corporation nor any other Secured Party shall 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 Pledge Agreement or any
other Project Document or Financing Document to which Pledgor is a party, or
to inspect the properties or records of Pledgor.
Reliance by Collateral Agent. Collateral Agent
shall be entitled to 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
Pledgor), independent accountants and other experts selected by Collateral
Agent. Collateral Agent shall have no obligation to any Person to act or refrain
from acting or exercising any of its rights under this Pledge Agreement.
Amendment. No modification or waiver of any of the
provisions of this Pledge Agreement shall be binding on Collateral Agent, except
as expressly set forth in a writing duly signed and delivered by Collateral
Agent and which is otherwise in accordance with Section 6.2 of the Partnership
Credit Agreement.
Successors and Assigns. This Pledge Agreement shall
be binding upon and inure to the benefit of Pledgor and Collateral Agent for the
benefit of the Secured Parties and the Funding Corporation and their respective
successors and assigns. In the event of any assignment or transfer by the
Funding Corporation or any other Secured Party of any instrument evidencing all
or any part of the Obligations, the holder of such instrument shall, subject to
the Partnership Credit Agreement and the Partnership Guarantee, be entitled to
the benefits of this Pledge Agreement.
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Number and Gender. Whenever used in this Pledge
Agreement, the singular number shall include the plural and the plural the
singular, and the use of any gender shall be applicable to all genders.
Subrogation, etc. Notwithstanding any payment or
payments made by Pledgor or the exercise by Collateral Agent of any of the
remedies provided under this Pledge Agreement or any of the Financing Documents,
Pledgor shall have no claim (as defined in 11 U.S. C. ss. 101 (5)) of
subrogation to any of the rights of the Secured Parties and the Funding
Corporation against Conejo, Niguel and San Felipe, Pledgor or any Collateral or
guaranty held by the Secured Parties and the Funding Corporation for the
satisfaction of any of the Obligations, nor shall Pledgor have any claims (as
defined in 11 U.S.C. ss. 101 (5)) for reimbursement, indemnity, exoneration or
contribution from Conejo, Niguel and San Felipe in respect of payments made by
Pledgor hereunder. Notwithstanding the foregoing, if any amount shall be paid to
Pledgor on account of such subrogation, reimbursement, indemnity, exoneration or
contribution rights at any time, such amount shall be held by Pledgor in trust
for the Secured Parties and the Funding Corporation, segregated from other funds
of Pledgor, and shall be turned over to Collateral Agent for the benefit of the
Secured Parties and the Funding Corporation, in the exact form received by
Pledgor (duly endorsed by Pledgor to Collateral Agent for the benefit of the
Secured Parties and the Funding Corporation, if required), to be applied against
such amounts in such order as Collateral Agent may elect.
Captions. The captions, headings and table of
contents used in this Pledge Agreement are for convenience only and do not and
shall not be deemed to affect, limit, amplify or modify the terms and provisions
hereof.
Applicable Law. This Pledge Agreement shall be
governed by, and construed and interpreted in accordance with, the laws of the
State of California.
Continuing Security Interest; Termination. This
Pledge Agreement shall create a continuing assignment, pledge and first priority
Security Interest in the Collateral, subject only to Permitted Liens, and shall
remain in full force and effect for the benefit of Collateral Agent and the
other Secured Parties and the Funding Corporation until all Obligations to be
paid or performed by Partnership Guarantors under the Partnership Credit
Agreement and the Partnership Guarantee have been paid and performed in full.
Upon the happening of such event, the Security Interest granted hereby shall
terminate. Upon such termination, Collateral Agent shall, upon the request and
at the expense of Pledgor, execute and deliver to Pledgor such documents as
Pledgor shall reasonably request to evidence such termination or expiration.
Payments Set Aside. To the extent that Pledgor or
the Partnership Guarantors or any other Person on behalf of Pledgor or the
Partnership Guarantors makes a payment or payments to Collateral Agent and/or
any other Secured Party, or Collateral Agent and/or any other Secured Party
enforce the Security Interests or Collateral Agent exercises its 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 Pledge 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.
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Counterparts. This Pledge Agreement may be executed
in any number of counterparts, each of which shall be an original, with the same
effect as if the signatures thereto and hereto were upon the same instrument.
Non-Recourse. Notwithstanding any other provision
hereof, Collateral Agent agrees that its only remedy hereunder shall be to
proceed against the Collateral and that there shall be no recourse to the
Pledgor, its shareholders, officers, directors or employees.
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IN WITNESS WHEREOF, the parties hereto have caused this
Pledge Agreement to be duly executed as of the day and year first written
above.
CALENERGY OPERATING COMPANY,
a Delaware corporation
By: /s/ John G. Sylvia
------------------------------
Name: John G. Sylvia
------------------------------
Title: Senior Vice President
------------------------------
CHEMICAL TRUST COMPANY OF CALIFORNIA,
a California corporation,
as Collateral Agent
By: /s/ Rose Maravilla
------------------------------
Name: R. I. Maravilla
------------------------------
Title: Assistant Vice President
------------------------------
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Schedule 2.1
Stock
Percentage of
Stock Outstanding
Issuer Certificate No. No. of Shares Shares
- ------ -------------- ------------- ------------
Conejo 3 100 100%
Niguel 3 100 100%
San Felipe 3 100 100%