EXHIBIT 4.41
PARTNERSHIP INTEREST PLEDGE AGREEMENT
(Pledge of Partnership Interests in Vulcan)
by
VULCAN POWER COMPANY
and
BN GEOTHERMAL INC.
(as Pledgor)
in favor of
CHEMICAL TRUST COMPANY OF CALIFORNIA
(as Collateral Agent)
Dated as of June 20, 1996
TABLE OF CONTENTS
Page
----
1. Definitions ..................................................... 2
2. Grant of Security Interest ...................................... 2
3. Representations and Warranties .................................. 3
4. Covenants and Agreements ........................................ 4
5. Pledgor's Obligations Upon Event of Default ..................... 6
6. Remedies; Rights Upon Event of Default .......................... 6
7. Application of Proceeds ......................................... 8
8. Security Interest Absolute ...................................... 8
9. Collateral Agent Appointed Attorney-in-Fact ..................... 9
10. Collateral Agent May Perform .................................... 10
11. No Duty on Collateral Agent's Part,
Limitation on Collateral Agent's Obligations .................... 10
12. Reasonable Care ................................................. 10
13. Role of Collateral Agent ........................................ 11
14. Waiver of Trial by Jury ......................................... 11
15. Notices ......................................................... 11
16. Absence of Fiduciary Relation ................................... 11
17. Survival of Representations and Warranties ...................... 12
18. No Waiver; Cumulative Remedies .................................. 12
19. Severability .................................................... 12
20. Exculpatory Provisions; Reliance by Collateral Agent ............ 13
21. Amendment ....................................................... 13
22. Successors and Assigns .......................................... 13
23. Number and Gender ............................................... 13
24. Subrogation, etc. ............................................... 14
25. Captions ........................................................ 14
26. Applicable Law .................................................. 14
27. Continuing Security Interest; Termination ....................... 14
28. Payments Set Aside .............................................. 14
29. Counterparts .................................................... 14
30. Non-Recourse .................................................... 15
PARTNERSHIP INTEREST PLEDGE AGREEMENT
(Pledge of Partnership Interests in Vulcan)
This PARTNERSHIP INTEREST PLEDGE AGREEMENT (this "Pledge
Agreement"), dated as of June 20, 1996, is entered into by VULCAN POWER
COMPANY, a Nevada corporation ("VPC") and BN GEOTHERMAL INC., a Delaware
corporation ("BNG," and together with VPC, the "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 Funding Corporation.
W I T N E S S E T H:
WHEREAS, VPC and BNG each own a 50% partnership interest in
Vulcan/BN Geothermal Power Company, a Nevada general partnership ("Vulcan");
and
WHEREAS, Salton Sea Funding Corporation, a Delaware
corporation (the "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"), VPC, BNG, Vulcan,
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"), Conejo Energy Company, a California
corporation ("Conejo"), Niguel Energy Company, a California corporation
("Niguel"), San Felipe Energy Company, a California corporation ("San
Felipe"), and CalEnergy Operating Company, a Delaware corporation ("CEOC," and
together with Del Ranch, Elmore, Leathers, Vulcan, Conejo, Niguel, San Felipe,
BNG and VPC, 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 "New Issuance"); and
WHEREAS, Funding Corporation has used a portion of the
proceeds from the Initial Issuance and intends to use the proceeds from the
New 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
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:
1. 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.
2. Grant of Security Interest.
2.1 . 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, to and
under the following, whether now existing or hereafter acquired (the
"Collateral"):
2.1.1. its partnership interest in Vulcan
and all of its rights under the Partnership Agreement of Vulcan,
dated as of August 30, 1985, among VPC and BNG (the "Partnership
Agreement") (including, without limitation, to the extent assignable
or transferable, all of its right, title and interest as a partner to
participate in the operation or management and control of Vulcan and
all of its rights to property, assets, partnership interests and
distributions under the Partnership Agreement);
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2.1.2. all present and future rights of
Pledgor to receive any payment of money or other distribution or
payment arising out of or in connection with its partnership interest
in Vulcan and its rights under the Partnership Agreement; and
2.1.3. to the extent not otherwise
included, all proceeds, products and accessions of and to any and all
of the foregoing, including, without limitation, "proceeds" as
defined in Section 9-306(1) of the Code, including whatever is
received upon any sale, exchange, collection or other disposition of
any of the Collateral, and any property into which any of the
Collateral is converted, whether cash or noncash proceeds, and any
and all other amounts paid or payable under or in connection with any
of the Collateral.
2.2. Obligations. This Pledge Agreement secures,
in accordance with the provisions hereof, the following obligations, now
existing or hereafter arising (collectively, the "Obligations"):
2.2.1. 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
2.2.2. 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.
3. Representations and Warranties. Pledgor hereby represents
and warrants as follows:
3.1. Organization and Existence. Vulcan is a
general partnership in which VPC owns a 50% general partnership interest and
BNG owns a 50% general partnership interest. VPC is a corporation duly
organized, validly existing and in good standing under the laws of the State
of Nevada. BNG is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware. Each of VPC and BNG 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.
3.2. Authority, Enforceability. Pledgor has full
corporate power and authority to enter into and perform the Partnership
Agreement and this Pledge Agreement and the
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entering into and performance of each such agreement by Pledgor has been duly
authorized by all proper and necessary corporate action. Each such agreement,
when executed and delivered by Pledgor and any other party thereto, will
constitute the legal, valid and binding obligations of Pledgor, enforceable in
accordance with its respective terms.
3.3. 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 book maintained by Vulcan in which all
partnership interests of Vulcan are 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.
3.4. 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.
3.5. 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 the Partnership
Agreement or any Financing Document to which it is a party.
3.6. 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-E
Omaha, Nebraska 68131
4. 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 the Partnership Guarantors under the
Financing Documents to which they are a party have been paid and performed in
full:
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4.1. Further Assurances. Pledgor shall, from time
to time at the Partnership Guarantors' 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.
4.2. 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.
4.3. 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.
4.4. 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.
4.5 Bankruptcy Filing, etc. Pledgor shall not
authorize or permit Vulcan (i) to commence a voluntary case or other
proceeding seeking liquidation, reorganization or other relief with respect to
Vulcan or Vulcan's 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 Vulcan or any substantial
part of Vulcan's property 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 Vulcan or (iii) to make a general
assignment for the benefit of Vulcan's 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
Vulcan under any bankruptcy, reorganization, liquidation or insolvency law or
statute now or hereafter in effect in any jurisdiction.
4.6. Obligations. Pledgor acknowledges and agrees
that its rights to receive any payments from Vulcan, or arising out of or in
connection with Pledgor's interests in Vulcan or its rights under the
Partnership Agreement, shall be payable by Vulcan only from funds available to
Vulcan upon distributions pursuant to the Depositary Agreement or any other
provision of the Indenture expressly providing for distribution, payment or
release of funds to Vulcan, and only so long
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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 Vulcan to Pledgor that do not comply with the Depositary
Agreement and the Indenture shall be restored to Vulcan by Pledgor by deposit
into an account designated by Collateral Agent, promptly upon demand by
Collateral Agent or Vulcan or upon Pledgor becoming aware of receipt of such
non-complying distribution.
4.7. 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 Vulcan and their respective businesses
if, as a consequence directly or indirectly of such action or omission, Vulcan
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.
4.8. 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.
5. 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 the 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.
6. Remedies; Rights Upon Event of Default. Upon the
occurrence and during the continuance of an Event of Default under the
Partnership Credit Agreement or 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:
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6.1 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, 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;
6.2 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;
6.3 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;
6.4 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
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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 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;
6.5 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 under the
Partnership Agreement, including, without limitation, the right to (i) receive
all permitted distributions, if any, made for the account of Pledgor under the
Partnership Agreement and (ii) exchange any and all of the Collateral upon the
merger, consolidation, reorganization, recapitalization or other readjustment
of Vulcan, 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
6.6 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.
7. 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.
8. 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:
8.1. any lack of validity or enforceability of the
Project Documents or the Partnership Agreement or the Financing
Documents or any other agreement or instrument relating thereto;
8.2. 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, the Partnership Agreement or the
Financing Documents;
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8.3. 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;
8.4. 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
8.5 the failure by any of the Pledgors to fulfill
its obligations under this Pledge Agreement.
9. Collateral Agent Appointed Attorney-in-Fact.
9.1. 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:
9.1.1. to exercise all partnership
rights, powers and privileges to the same extent Pledgor shall have
been entitled under the Partnership Agreement and in accordance with
applicable law, including, without limitation, all voting rights of
Pledgor as partner of Vulcan;
9.1.2. 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;
9.1.3. to pay or discharge taxes and liens
levied or placed on the Collateral; and
9.1.4. (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
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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.
9.2. 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.
10. 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 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.
11. No Duty on Collateral Agent's Part,
Limitation on Collateral Agent's Obligations.
11.1. 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.
11.2. Limitations on Obligations. Without limiting
the effectiveness of Section 30 hereof, anything herein to the contrary
notwithstanding, Pledgor shall remain liable under the Partnership Agreement
and any other 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 the Partnership Agreement or any other 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.
12. 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
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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.
13. 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.
14. 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.
15. 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:
If to VPC:
Blackstone Center
302 South 36th Street, Suite 400-E
Omaha, Nebraska 68131
If to BNG:
Blackstone Center
302 South 36th Street, Suite 400-J
Omaha, Nebraska 68131
16. 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
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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.
17. 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 4.6 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.
18. 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.
19. 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 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.
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20. Exculpatory Provisions; Reliance by Collateral Agent.
20.1. Exculpatory Provisions. Neither Collateral
Agent, the 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, the Partnership 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, the Partnership 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, the Partnership 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, the Partnership 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, the
Partnership Agreement or any other Project Document or Financing Document to
which Pledgor is a party, or to inspect the properties or records of Pledgor.
20.2. 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.
21. 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.
22. 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.
23. 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.
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24. 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 Vulcan, 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 Vulcan
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.
25. 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.
26. Applicable Law. This Pledge Agreement shall be governed
by, and construed and interpreted in accordance with, the laws of the State of
California.
27. 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.
28. 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.
29. 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.
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30. 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.
VULCAN POWER COMPANY,
a Nevada corporation
By: /s/ John G. Sylvia
Name: John G. Sylvia
Title: Senior Vice President
BN GEOTHERMAL INC.,
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: Rose Maravilla
Name: R.I. Maravilla
Title: Assistant Vice President
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