EXHIBIT 4.42
PARTNERSHIP INTEREST PLEDGE AGREEMENT
(Pledge of Partnership Interests in Elmore)
by
MAGMA POWER COMPANY,
CALENERGY OPERATING COMPANY
and
NIGUEL ENERGY COMPANY
(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 ................................................ 3
2. Grant of Security Interest ................................. 3
3. Representations and Warranties ............................. 4
4. Covenants and Agreements ................................... 5
5. Pledgor's Obligations Upon Event of Default ................ 7
6. Remedies; Rights Upon Event of Default ..................... 7
7. Application of Proceeds .................................... 9
8. Security Interest Absolute ................................. 9
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 ............................................ 11
13. Role of Collateral Agent ................................... 11
14. Waiver of Trial by Jury .................................... 11
15. Notices .................................................... 11
16. Absence of Fiduciary Relation .............................. 12
17. Survival of Representations and Warranties ................. 12
18. No Waiver; Cumulative Remedies ............................. 12
19. Severability ............................................... 13
20. Exculpatory Provisions; Reliance by Collateral Agent ....... 13
21. Amendment .................................................. 14
22. Successors and Assigns ..................................... 14
23. Number and Gender .......................................... 14
24. Subrogation, etc ........................................... 14
25. Captions ................................................... 14
26. Applicable Law ............................................. 14
27. Continuing Security Interest; Termination .................. 14
28. Payments Set Aside ......................................... 15
29. Counterparts ............................................... 15
30. Non-Recourse ............................................... 15
PARTNERSHIP INTEREST PLEDGE AGREEMENT
(Pledge of Partnership Interests in Elmore)
This PARTNERSHIP INTEREST PLEDGE AGREEMENT (this "Pledge
Agreement"), dated as of June 20, 1996, is entered into by MAGMA POWER
COMPANY, a Nevada corporation ("Magma"), CALENERGY OPERATING COMPANY, a
Delaware corporation ("CEOC"), and NIGUEL ENERGY COMPANY, a California
corporation ("Niguel," and together with Magma and CEOC, 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, Magma, CEOC and Niguel own a 10%, 40% and 50% partnership
interest, respectively, in Elmore, L.P., a California limited partnership
("Elmore"); 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"), CEOC, Niguel, Elmore, Del Ranch, L.P., a
California limited partnership ("Del Ranch"), Leathers, L.P., a California
limited partnership ("Leathers"), Vulcan/BN Geothermal Power Company, a Nevada
general partnership ("Vulcan"), Conejo Energy Company, a California
corporation ("Conejo"), San Felipe Energy Company, a California corporation
("San Felipe"), and BN Geothermal, Inc., a Delaware corporation ("BNG"),
Vulcan Power Company, a Nevada corporation ("VPC," and together with Del
Ranch, Elmore, Leathers, Vulcan, Conejo, Niguel, San Felipe, BNG and CEOC, 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:
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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.
.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"):
.1. its partnership interest in Elmore and all of its
rights under the Amended and Restated Limited Partnership Agreement of
Elmore, dated as of March 14, 1988, among Magma, CEOC and Niguel (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
Elmore and all of its rights to property, assets, partnership interests
and distributions under the Partnership Agreement);
.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 Elmore and its rights
under the Partnership Agreement; and
.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. Obligations. This Pledge Agreement secures, in accordance
with the provisions hereof, the following obligations, now existing or
hereafter arising (collectively, the "Obligations"):
.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
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.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:
.1. Organization and Existence. Elmore is a limited
partnership in which Magma owns a 10% limited partnership interest, Niguel
owns a 10% limited and a 40% general partnership interest, and CEOC owns a 40%
general partnership interest. Magma is a corporation duly organized, validly
existing and in good standing under the laws of the State of Nevada. CEOC is a
corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware. Niguel is a corporation duly organized, validly
existing and in good standing under the laws of the State of California. Each
of Magma, CEOC and Niguel 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.
.2. Authority, Enforceability. Pledgor has full corporate
power and authority to enter into and perform the Partnership Agreement and
this Pledge Agreement and the 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. 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 Elmore in which all
partnership interests of Elmore 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.
.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
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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.
.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.
.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-C
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:
.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.
.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.
.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
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notice of such change. Without the prior written consent of Collateral Agent,
Pledgor shall not adopt any trade name or fictitious business name.
.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.
.5. Bankruptcy Filing, etc. Pledgor shall not authorize or
permit Elmore (i) to commence a voluntary case or other proceeding seeking
liquidation, reorganization or other relief with respect to Elmore or Elmore'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 Elmore or any substantial part of
Elmore'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 Elmore or (iii) to make a general assignment for
the benefit of Elmore'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 Elmore under any
bankruptcy, reorganization, liquidation or insolvency law or statute now or
hereafter in effect in any jurisdiction.
.6. Obligations. Pledgor acknowledges and agrees that its
rights to receive any payments from Elmore, or arising out of or in connection
with Pledgor's interests in Elmore or its rights under the Partnership
Agreement, shall be payable by Elmore only from funds available to Elmore upon
distributions pursuant to the Depositary Agreement or any other provision of
the Indenture expressly providing for distribution, payment or release of
funds to Elmore, 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 Elmore to Pledgor that do not
comply with the Depositary Agreement and the Indenture shall be restored to
Elmore by Pledgor by deposit into an account designated by Collateral Agent,
promptly upon demand by Collateral Agent or Elmore or upon Pledgor becoming
aware of receipt of such non-complying distribution.
.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 Elmore and their respective businesses if, as a
consequence directly or indirectly of such action or omission, Elmore 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.
.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
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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:
.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;
.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;
.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
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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;
.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 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;
.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 Elmore, 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. 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.
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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:
.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;
.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;
.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;
.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
.5. the failure by any of the Pledgors to fulfill its
obligations under this Pledge Agreement.
9. Collateral Agent Appointed Attorney-in-Fact.
.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:
.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 Elmore;
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.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;
.3. to pay or discharge taxes and liens levied or placed on
the Collateral; and
.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
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.
.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,
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Limitation on Collateral Agent's Obligations.
.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.
.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
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:
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If to Magma:
Blackstone Center
302 South 36th Street, Suite 400
Omaha, Nebraska 68131
If to CEOC:
Blackstone Center
302 South 36th Street, Suite 400-C
Omaha, Nebraska 68131
If to Niguel:
Blackstone Center
302 South 36th Street, Suite 400-H
Omaha, Nebraska 68131
15. 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.
16. 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.
17. 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,
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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.
18. 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.
19. Exculpatory Provisions; Reliance by Collateral Agent.
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.
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.
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20. 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.
21. 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.
22. 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.
23. 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 Elmore,
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 Elmore 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.
24. 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.
25. Applicable Law. This Pledge Agreement shall be governed by, and
construed and interpreted in accordance with, the laws of the State of
California.
26. 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.
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27. 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.
28. 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.
29. 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.
MAGMA POWER COMPANY,
a Nevada corporation
By: /s/ John G. Sylvia
----------------------
Name: John G. Sylvia
-----------------------
Title: Senior Vice President
------------------------
CALENERGY OPERATING COMPANY,
a Delaware corporation
By: /s/ John G. Sylvia
----------------------
Name: John G. Sylvia
-----------------------
Title: Senior Vice President
------------------------
NIGUEL ENERGY COMPANY,
a California 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: Rose Maravilla
-----------------------
Title: Assistant Vice President
------------------------
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