SECURITY AGREEMENT
among
AES CHINA GENERATING CO. LTD.,
BANKERS TRUST COMPANY,
as Trustee
and
BANKERS TRUST COMPANY,
as Collateral Agent
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Dated as of December 19, 1996
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TABLE OF CONTENTS
Page
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ARTICLE 1
DEFINITIONS
SECTION 1.01. DEFINITIONS.............................................. 1
SECTION 1.02. OTHER DEFINITIONS........................................ 4
SECTION 1.03. GENERIC TERMS............................................ 4
ARTICLE 2
THE COLLATERAL
SECTION 2.01. GRANT OF SECURITY INTEREST IN THE COLLATERAL............. 4
SECTION 2.02. PRIORITY................................................. 5
SECTION 2.03. THE SECURED PARTY'S INTEREST............................. 5
SECTION 2.04. NO TRANSFER OF DUTIES.................................... 6
SECTION 2.05. PERFECTION OF SECURITY INTEREST.......................... 6
SECTION 2.06. MAINTENANCE OF COLLATERAL................................ 7
SECTION 2.07. TERMINATION DATE AND RELEASE OF RIGHTS................... 8
ARTICLE 3
THE COLLATERAL ACCOUNTS
SECTION 3.01. ESTABLISHMENT OF THE COLLATERAL ACCOUNTS................. 8
SECTION 3.02. DEPOSITS IN THE COLLATERAL ACCOUNTS...................... 9
SECTION 3.03. MAINTENANCE OF THE DEBT SERVICE RESERVE ACCOUNT.......... 9
SECTION 3.04. INVESTMENT OF FUNDS IN THE COLLATERAL ACCOUNTS........... 10
SECTION 3.05. GENERAL PROVISIONS REGARDING THE COLLATERAL ACCOUNTS..... 11
SECTION 3.06. DISTRIBUTIONS FROM THE DEBT SERVICE RESERVE ACCOUNT...... 12
SECTION 3.07. DISTRIBUTION FROM THE SEPCIAL PROCEEDS ACCOUNT........... 12
ARTICLE 4
COVENANTS OF THE COMPANY
SECTION 4.01. PRESERVATION OF COLLATERAL............................... 13
SECTION 4.02. OPTIONS AS TO COLLATERAL................................. 13
SECTION 4.03. NOTICES.................................................. 14
SECTION 4.04. WAIVER OF STAY OR EXTENSION LAWS; MARSHALING OF ASSETS... 14
SECTION 4.05. NONINTERFERENCE, ETC. ................................... 14
SECTION 4.06. COMPANY CHANGES.......................................... 14
ARTICLE 5
REMEDIES ON OCCURRENCE OF AN INDENTURE DEFAULT
SECTION 5.01. LIQUIDATION AND SALE OF COLLATERAL....................... 15
SECTION 5.02. WAIVER OF AN INDENTURE DEFAULT........................... 16
i
SECTION 5.03. RESTORATION OF RIGHTS AND REMEDIES....................... 16
SECTION 5.04. NO REMEDY EXCLUSIVE...................................... 17
ARTICLE 6
THE SECURED PARTY
SECTION 6.01. APPOINTMENT.............................................. 17
SECTION 6.02. SECURED PARTY'S AUTHORITY................................ 17
SECTION 6.03. DEGREE OF CARE........................................... 17
ARTICLE 7
THE COLLATERAL AGENT
SECTION 7.01. APPOINTMENT AND POWERS................................... 18
SECTION 7.02. PERFORMANCE OF DUTIES.................................... 18
SECTION 7.03. LIMITATION ON LIABILITY.................................. 19
SECTION 7.04. RELIANCE UPON DOCUMENTS.................................. 19
SECTION 7.05. SUCCESSOR COLLATERAL AGENT............................... 20
SECTION 7.06. INDEMNIFICATION.......................................... 22
SECTION 7.07. COMPENSATION AND REIMBURSEMENT........................... 22
SECTION 7.08. REPRESENTATIONS AND WARRANTIES OF THE COLLATERAL AGENT... 22
SECTION 7.09. WAIVER OF SET-OFFS....................................... 23
ARTICLE 8
MISCELLANEOUS
SECTION 8.01. FURTHER ASSURANCES....................................... 23
SECTION 8.02. WAIVER................................................... 24
SECTION 8.03. AMENDMENTS............................................... 24
SECTION 8.04. SEVERABILITY............................................. 24
SECTION 8.05. NOTICES; PAYMENTS AND TRANSFERS OF FUNDS................. 24
SECTION 8.06. TERMS OF THIS AGREEMENT.................................. 26
SECTION 8.07. ASSIGNMENT; THIRD-PARTY RIGHTS........................... 26
SECTION 8.08. CONSENT OF SECURED PARTY................................. 26
SECTION 8.09. TRIAL BY JURY WAIVED..................................... 26
SECTION 8.10. GOVERNING LAW............................................ 26
SECTION 8.11. CONSENT TO JURISDICTION.................................. 26
SECTION 8.12. COUNTERPARTS............................................. 27
SECTION 8.13. HEADINGS................................................. 27
ii
SECURITY AGREEMENT, dated as of December 19, 1996, among AES China
Generating Co. Ltd., a corporation organized under the laws of Bermuda (the
'Company'), Bankers Trust Company, a New York banking corporation, in its
capacity as Trustee (as defined below) under the Indenture (as defined below),
and Bankers Trust Company, a New York banking corporation, in its capacity as
collateral agent (the 'Collateral Agent').
R E C I T A L S
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WHEREAS, the Company proposes to issue U.S.$180,000,000 aggregate
principal amount of its 10 1/8 % Notes due 2006 (the 'Notes');
WHEREAS, the Notes are being issued pursuant to an Indenture, dated as
of the date hereof (as amended or supplemented from time to time in accordance
with the terms thereof, the 'Indenture'), among the Company and Bankers Trust
Company, as trustee (together with its permitted successors thereunder and any
successor trustee appointed pursuant to the provisions thereof, the 'Trustee');
WHEREAS, as security for the payment and performance of all of the
obligations of the Company now or hereafter existing under this Agreement, the
Notes and the Indenture, the Company has agreed to grant a security interest in
all of its right, title and interest in and to the Collateral (as defined
herein) on the terms and conditions set forth herein.
A G R E E M E N T S
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NOW THEREFORE, in consideration of the premises, and for other good and
valuable consideration, the adequacy, receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree for the benefit of the Trustee on
behalf of the Noteholders as follows:
ARTICLE 1
DEFINITIONS
SECTION 1.01. DEFINITIONS. Capitalized terms used herein without
definition are used as defined in the Indenture. In addition, the following
terms shall have the following meanings:
'APPROVED DEPOSITARY' means The Depository Trust Company and its
successors.
'AUTHORIZED OFFICERS' means (i) with respect to the Company, Authorized
Officers as defined in the Indenture and (ii) with respect to the Trustee or the
Collateral Agent, Trust Officers as defined in the Indenture.
'CLOSING DATE' means December 19, 1996.
'COLLATERAL ACCOUNTS' means the Debt Service Reserve Account and the
Special Proceeds Account.
'COLLATERAL AGENT' means Bankers Trust Company in its capacity as
collateral agent on behalf of the Secured Party, including its successors in
interest, until a successor Person shall have become the Collateral Agent
pursuant to Section 7.05, and thereafter 'Collateral Agent' shall mean such
successor Person.
'COLLATERAL MANAGEMENT RIGHTS' means the powers and rights granted to
the Secured Party in Section 6.02.
'DEBT PAYMENT RESERVE' means, on any date, an amount equal to the
aggregate amount of interest due and payable on the Notes on the next succeeding
Interest Payment Date.
'DOLLAR,' 'DOLLAR' and '$' means the lawful currency of the United
States.
'ELIGIBLE ACCOUNT' means a Dollar denominated demand deposit account
that (i) is maintained with a depository institution or trust company, the
principal offices of which are located in the Borough of Manhattan, The City and
State of New York, and which is organized and existing under the laws of the
United States or the State of New York and subject to supervision and
examination by U.S. federal or New York State banking authorities and the
long-term unsecured debt obligations of which are assigned a rating of 'A-' or
higher by S&P and 'A3' or higher by Moody's or the short-term unsecured debt
obligations of which are assigned a rating of 'A-1' by S&P and 'P-1' by Moody's
or (ii) is a segregated Dollar denominated trust account with the Collateral
Agent.
'ENFORCEMENT EXPENSES' means all reasonable costs, expenses, attorneys'
fees and disbursements, accountants' fees and disbursements, fees and
disbursements of financial and technical advisors and all other sums expended or
incurred by the Collateral Agent in connection with the exercise of any duty,
obligation, right, power, option, privilege or remedy under this Agreement,
including, without limitation, in connection with (i) the protection or
preservation of any Collateral, (ii) any action, litigation or proceeding
relating to any of the Collateral, and (iii) the foreclosure on, and acquisition
or sale of, the Collateral or any portion thereof.
'INDENTURE DEFAULT' means 'Event of Default' as defined in the
Indenture.
'INTERIM RESERVE' means an amount equal to all scheduled payments of
interest on the Notes due and payable on or prior to June 15, 1998.
'LIQUIDATION PROCEEDS' means all cash or other property received by the
Collateral Agent (without making any deduction for Enforcement Expenses) which
represents proceeds from the sale or other disposition of any of the Collateral.
'NOTEHOLDER' means the registered holder of any Note pursuant to the
terms thereof and the Indenture.
'PAYMENT DATE' means any date on which interest on the Notes is due and
payable.
'PRC' means the Peoples's Republic of China.
'SECURED PARTY' means the Trustee, acting for the benefit of the
Noteholders, the Trustee in its individual capacity and the Collateral Agent, as
their respective interests may appear.
'SECURITY INTEREST' means the Lien on and security interest in the
Collateral granted pursuant to Section 2.01(a).
'TERMINATION DATE' means the earlier of (i) the date on which all
amounts payable on the Notes and pursuant to the Indenture and this Agreement
have been paid in full and (ii) the date on which the Company shall have
satisfied the provisions of Section 7.03 or 7.04 of the Indenture.
'U.S.' or 'UNITED STATES' means the United States of America.
'UNCERTIFICATED U.S. GOVERNMENT SECURITY' means any Dollar Permitted
Investment which is issued in the form of an entry made on the records of a
Federal Reserve Bank.
SECTION 1.02. OTHER DEFINITIONS.
TERMS DEFINED IN SECTION
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Collateral......................................................2
Collateral Agent.........................................Preamble
Company..................................................Preamble
Debt Service Reserve Account..............................3.01(a)
Dollar Permitted Investments.................................3.04
Indenture................................................Recitals
Maturing Securities..........................................3.04
Notes....................................................Recitals
Notices......................................................8.05
Secured Obligations..........................................2.03
Secured Party's Interest.....................................2.03
Special Proceeds Account..................................3.01(b)
Trustee..................................................Recitals
SECTION 1.03. GENERIC TERMS. The terms 'hereof,' 'herein' or
'hereunder,' unless otherwise modified by more specific reference, shall refer
to this Agreement in its entirety. Unless otherwise indicated in context, the
terms 'Article' or 'Section' shall refer to an Article or Section of this
Agreement. The definition of a term shall include the singular, the plural, the
past, the present, the future, the active and the passive forms of such term.
ARTICLE 2
THE COLLATERAL
SECTION 2.01. GRANT OF SECURITY INTEREST IN THE COLLATERAL
(a) In order to secure the full and punctual payment of, and the
performance of all of the Secured Obligations, the Company hereby assigns,
grants, pledges, transfers and conveys to the Collateral Agent, for the benefit
of the Secured Party, on behalf of the Noteholders, all of its right, title and
interest, including, to the fullest extent permitted by law, all rights, powers
and options (but none of the obligations, except to the extent required by law)
in and to, and hereby grants to the Collateral Agent, for the benefit of the
Secured Party, on behalf of the Noteholders, a lien on, and security interest
in, all of such party's right, title and interest in and to the following assets
(all being collectively referred to as the 'Collateral'):
(i) the Collateral Accounts and all amounts on deposit
therein at any time, including all amounts deposited therein on the
Closing Date;
(ii)all of the Company's right, title and interest in and to
investments (including Dollar Permitted Investments) made with proceeds
of the property described in clause (i) above or made with amounts on
deposit in the Collateral Accounts; and
(iii) all distributions, revenues, products, substitutions,
benefits, profits and proceeds, in whatever form, of any of the
foregoing including, without limitation, any monies, agreements or
securities received by the Collateral Agent in accordance with Section
7.02 or 7.03 of the Indenture.
(b) In order to effectuate the provisions and purposes of this
Agreement, including the perfection of the Security Interest in the Collateral
granted pursuant to Section 2.01(a), the Company shall take such steps as are
necessary or reasonably requested by the Collateral Agent or the Secured Party
for the preservation, protection, perfection, maintenance or continuation of
such Security Interest, including, but not limited to, the execution and filing
of appropriate financing statements or notices regarding the granting of a Lien
on the Collateral in the United States, Hong Kong, the PRC or Bermuda.
SECTION 2.02. PRIORITY. The Company intends the Security Interest in
favor of the Secured Party to be prior to all other Liens in respect of the
Collateral and will take all actions necessary to obtain and maintain, in favor
of the Collateral Agent, for the benefit of the Secured Party, a first priority
lien on, and a first priority perfected security interest in, the Collateral.
Subject to the provisions hereof specifying the rights and powers of the Secured
Party from time to time to control certain specified matters relating to the
Collateral, the Secured Party shall have all of the rights, remedies and
resources with respect to the Collateral afforded a secured party under the
Uniform Commercial Code of the State of New York and all other applicable law in
addition to, and not in limitation of, the other rights, remedies and recourse
granted to the Secured Party by this Agreement or any other law relating to the
creation and perfection of liens on, and security interests in, the Collateral.
SECTION 2.03. THE SECURED PARTY'S INTEREST. The 'Secured Party's
Interest' shall mean the interest of the Trustee in the Collateral, to secure
the full and punctual payment of all amounts from time to time owing by the
Company to the Noteholders, the Trustee and the Collateral Agent, and the
performance by the Company of all of its other obligations from time to time
owing to the Noteholders, the Trustee, and the Collateral Agent under this
Agreement, the Notes and the Indenture (collectively, the 'Secured Obligations')
including, without duplication, the following:
(a) the payment of the principal of the Notes, together with all
interest and Additional Amounts, if any, thereon and any other amounts payable
with respect thereto as provided therein or in the Indenture;
(b) the payment of all other amounts payable to, and the performance of
all other obligations owing to, the Noteholders, the Trustee and the Collateral
Agent pursuant to the terms of this Agreement, the Notes and the Indenture,
including, without limitation, all reasonable costs, expenses, attorneys' fees
and disbursements, accountants' fees and disbursements and other sums, fees and
disbursements expended or incurred by the Trustee or any of its officers,
directors, employees or agents (including the Collateral Agent) in connection
with the exercise by the Trustee or any such officers, directors, employees or
agents, pursuant to this Agreement, the Notes or the Indenture, of any duty,
obligation, right, power, option, privilege or remedy as collateral assignee of
the Collateral, hereunder or under the Notes, to the extent not previously
recovered by the Trustee, including, without limitation, all reasonable
attorneys' fees and expenses and all other reasonable and necessary amounts paid
or advanced from time to time by the Trustee or any of its agents (A) in
connection with (1) the protection or preservation of the Security Interest, (2)
the enforcement of any rights or remedies hereunder or under the Notes and (3)
any action, litigation or proceeding relating to this Agreement or the Notes, or
the Collateral or any portion thereof; and (B) by reason of or in connection
with the acquisition, ownership or sale of the Collateral or any portion
thereof.
The Secured Party's Interest, and all right, title and interest of the
Secured Party in, to and under the Collateral and this Agreement shall continue
until terminated pursuant to Section 2.07.
Section 2.04. No Transfer of Duties. The Security Interest is granted
as security only and shall not impose any obligation on the Secured Party or the
Collateral Agent to perform or observe any term, covenant, condition or
agreement of the Company herein or with respect to any of the Collateral or
impose any liability on the Secured Party or the Collateral Agent for any act or
omission on the part of the Company relating hereto or thereto or for any breach
of any representation or warranty on the part of the Company contained herein or
therein or made in connection herewith or therewith.
SECTION 2.05. PERFECTION OF SECURITY INTEREST.
(a) Upon each investment of funds in the Collateral Accounts in Dollar
Permitted Investments which consist of Uncertificated U.S. Government
Securities, the Collateral Agent shall cause such Uncertificated U.S. Government
Securities to be held by the Collateral Agent as Collateral under this
Agreement.
(b) Upon each investment of funds in the Collateral Accounts in Dollar
Permitted Investments other than Uncertificated U.S. Government Securities or
securities which have been deposited with an Approved Depositary, the Collateral
Agent shall (i) cause the securities or other instruments evidencing such Dollar
Permitted Investments (A) in the case of instruments, to be issued in the name
of the Collateral Agent or its nominee and (B) to be delivered to the Collateral
Agent either in suitable form for transfer by delivery or accompanied by duly
executed instruments of transfer or assignment in blank, with signatures
appropriately guaranteed, to be held by the Collateral Agent as Collateral under
this Agreement, and (ii) in the case of any Dollar Permitted Investment
described in clause (c) of the definition thereof, (A) cause the securities
underlying such obligation to be delivered to the Collateral Agent either in
suitable form for transfer by delivery or accompanied by duly executed
instruments of transfer or assignment in blank, with signatures appropriately
guaranteed, to be held by the Collateral Agent as Collateral under this
Agreement, and (B) notify the counterparty to such obligation that such
obligation is subject to the Lien of this Agreement.
(c) Upon each investment of funds in the Collateral Accounts in Dollar
Permitted Investments which have been deposited with an Approved Depositary, the
Collateral Agent shall cause the Approved Depositary to make appropriate entries
to the account of the Collateral Agent on the books of such Approved Depositary
to reflect the transfer of all securities which have been deposited with such
Approved Depositary to the Collateral Agent and to deliver to the Collateral
Agent a written confirmation of the book-entry transfer of such securities into
such account, to be held by the Collateral Agent as Collateral under this
Agreement.
(d) If required for the validity or perfection of the Security Interest
herein, on or prior to the Closing Date, the Company shall file in Bermuda any
registration statements that are necessary in connection with the execution and
delivery of this Agreement and the granting and perfection of the Security
Interest hereunder. The Company shall promptly notify the Collateral Agent of
any filings made pursuant to this Section 2.05(d) and deliver to the Collateral
Agent copies of such filings pursuant to the notice provisions set forth in
Section 8.05.
SECTION 2.06. MAINTENANCE OF COLLATERAL.
(a) SAFEKEEPING BY THE COLLATERAL AGENT. The Collateral Agent agrees to
maintain all Collateral received by it and all records and documents relating
thereto at the office of the Collateral Agent specified in Section 8.05. The
Collateral Agent shall keep all Collateral and documentation related thereto in
its possession separate and apart from all other property that it is holding in
its possession and from its own general assets and shall maintain accurate
records pertaining to the Dollar Permitted Investments, the Collateral Accounts
and all other Collateral in such a manner as shall enable the Secured Party and
the Company to verify the accuracy of such record keeping. The Collateral
Agent's books and records shall at all times show that the Collateral in its
possession is held by the Collateral Agent as agent of the Secured Party and is
not the property of the Collateral Agent. The Collateral Agent will promptly
report to the Trustee and the Company any failure on its part to hold the
Collateral as provided in this subsection 2.06(a) and will promptly take
appropriate action to remedy any such failure.
(b) ACCESS. The Collateral Agent shall permit each of the Company and
the Trustee, or its duly authorized representatives, attorneys, auditors or
designees, to inspect the Collateral in the possession of or otherwise under the
control of the Collateral Agent pursuant hereto at such reasonable times during
normal business hours as the Company or the Trustee may reasonably request with
prior written notice.
SECTION 2.07. TERMINATION DATE AND RELEASE OF RIGHTS. On the
Termination Date, the rights, remedies, powers, duties, authority and
obligations conferred on the Collateral Agent and the Secured Party pursuant to
this Agreement shall terminate and be of no further force and effect, and all
rights, remedies, powers, duties, authority and obligations of the Collateral
Agent and the Secured Party with respect to the Collateral shall be
automatically released. On the Termination Date, the Collateral Agent and the
Trustee will, at the expense of the Company, (i) execute such instruments of
transfer and release, in recordable form if necessary, in favor of the Company
as the Company may reasonably request, (ii) deliver any Collateral in its
possession to the Company or its designee, and (iii) otherwise transfer and
release the lien of this Agreement and transfer and release and deliver to the
Company or its designee the Collateral.
ARTICLE 3
THE COLLATERAL ACCOUNTS
SECTION 3.01. ESTABLISHMENT OF THE COLLATERAL ACCOUNTS.
(a) DEBT SERVICE RESERVE ACCOUNT. The Collateral Agent shall, on or
prior to the Closing Date, establish, in the Borough of Manhattan, The City and
State of New York, a segregated account, which shall be an Eligible Account,
designated 'Debt Service Reserve Account - Bankers Trust Company, as Collateral
Agent under the Security Agreement dated as of December 19, 1996 with AES China
Generating Co. Ltd., et al.' (the 'Debt Service Reserve Account').
The Collateral Agent shall not commingle funds in the Debt Service
Reserve Account with any other moneys and shall hold all moneys deposited from
time to time in the Debt Service Reserve Account and all investments made with
such moneys as part of the Collateral.
(b) SPECIAL PROCEEDS ACCOUNT. Prior to the delivery to it by the
Company of any Special Proceeds, the Collateral Agent shall establish, in the
Borough of Manhattan, The City and State of New York, a segregated account,
which shall be an Eligible Account, designated 'Special Proceeds Account
-Bankers Trust Company, as Collateral Agent under the Security Agreement dated
as of December 19, 1996 with AES China Generating Co. Ltd., et al.' (the
'Special Proceeds Account').
The Collateral Agent shall not commingle funds in the Special Proceeds
Account with any other moneys and shall hold all moneys deposited in the Special
Proceeds Account and all investments made with such moneys as part of the
Collateral.
SECTION 3.02. DEPOSITS IN THE COLLATERAL ACCOUNTS.
(a) On the Closing Date, the Company shall transfer to the Collateral
Agent for deposit by the Collateral Agent in the Debt Service Reserve Account an
amount equal to the Interim Reserve and the Debt Payment Reserve. Thereafter,
the Collateral Agent shall deposit in the Debt Service Reserve Account all
interest, principal and premium payments from Dollar Permitted Investments made
by the Collateral Agent with respect to the Collateral held in the Debt Service
Reserve Account.
(b) The Company shall transfer an amount equal to Special Proceeds to
the Collateral Agent for deposit in the Special Proceeds Account. If the Company
receives any Special Proceeds, such proceeds shall be deemed to have been
received in trust for the benefit of the Collateral Agent and shall be
transferred to the Collateral Agent for deposit in the Collateral Accounts as
soon as practicable. Thereafter, the Collateral Agent shall deposit in the
Special Proceeds Account all interest, principal and premium payments from
Dollar Permitted Investments made by the Collateral Agent with respect to the
Collateral held in the Special Proceeds Account.
SECTION 3.03. MAINTENANCE OF THE DEBT SERVICE RESERVE ACCOUNT. From the
Closing Date until June 15, 1998, the Company shall maintain on deposit with the
Collateral Agent an amount in the Debt Service Reserve Account in Dollars at
least equal to the sum of (i) the Interim Reserve, less the aggregate amount of
interest paid to Holders on all prior Interest Payment Dates, and (ii) the Debt
Payment Reserve. After June 15, 1998, and on or prior to the Stated Maturity of
the Notes, the Company shall be required to maintain on deposit in the Debt
Service Reserve Account an amount in Dollars at least equal to the Debt Payment
Reserve except that if funds in the Debt Service Reserve Account have been
withdrawn by the Collateral Agent and paid to the Trustee to pay interest due on
any Interest Payment Date, the Company shall have a period of 90 days after any
Interest Payment Date to make additional deposit into the Debt Service Reserve
Account such that the balance on deposit therein is at least equal to the Debt
Payment Reserve.
SECTION 3.04. INVESTMENT OF FUNDS IN THE COLLATERAL ACCOUNTS.
(a) So long as no Indenture Default shall have occurred and be
continuing, all funds in the Collateral Accounts shall be invested and
reinvested by the Collateral Agent in Dollar Permitted Investments in accordance
with written instructions given to the Collateral Agent by the Company or, in
the absence of such instructions, in the types of obligations as set forth in
clause (a) of the definition of 'Dollar Permitted Investments' in the Indenture,
provided, however, that if any Indenture Default shall have occurred and be
continuing, the Collateral Agent shall invest funds in the Collateral Accounts
in Dollar Permitted Investments only in accordance with the written instructions
of the Trustee. If no written direction with respect to the Collateral Accounts
is received by the Collateral Agent during any period in which an Indenture
Default has occurred and is continuing, investment of funds in the Collateral
Accounts shall be made in the types of Dollar Permitted Investments that were
held by the Collateral Agent immediately prior to the occurrence of such
Indenture Default. All income or other gain from the investment of moneys
deposited in each Collateral Account shall be deposited in such Collateral
Account immediately upon receipt, and any loss resulting from the investment of
moneys deposited in either Collateral Account shall be charged to such
Collateral Account. Each investment made in the Debt Service Reserve Account
pursuant to this Section 3.04(a) on any date shall mature not later than the
Payment Date next succeeding the day such investment is made; provided, that if,
on the date of any investment, the Collateral Agent holds in the Debt Service
Reserve Account Dollar Permitted Investments maturing not later than the next
succeeding Payment Date ('Maturing Securities') and the aggregate principal and
interest payable on such Maturing Securities would be sufficient to pay all
amounts due on the Secured Obligations on such Payment Date, the Collateral
Agent shall invest any remaining funds in the Debt Service Reserve Account in
Dollar Permitted Investments which mature not later than the next succeeding
Payment Date for which Maturing Securities are insufficient to pay all amounts
then due on the Secured Obligations.
(b) Prior to or contemporaneously with the making of any investment
pursuant to Section , the Collateral Agent shall take such steps as may be
necessary to comply with the applicable provisions of Section 2.05.
SECTION 3.05. GENERAL PROVISIONS REGARDING THE COLLATERAL ACCOUNTS.
(a) Promptly upon the establishment (initially or upon any relocation)
of the Debt Service Reserve Account and the Special Proceeds Account, the
Collateral Agent shall advise the Company and the Trustee in writing of the name
of the officer of such depository institution who is responsible for overseeing
such Collateral Account, the Collateral Account number and the individuals whose
names appear on the signature cards for such Collateral Account, if applicable.
(b) Prior to the deposit of any funds therein pursuant hereto, the
Company shall cause each depository institution with which a Collateral Account
is established (including the Collateral Agent) to execute and deliver to the
Trustee an irrevocable written agreement, in form and substance satisfactory to
the Trustee, waiving, to the extent permitted under applicable law, (i) any
banker's or other statutory or similar Lien and (ii) any right of set-off or
other similar right under applicable law with respect to the Collateral Account
held by it and agreeing to notify the Company, the Collateral Agent and the
Trustee of any charge or claim against or with respect to the Collateral Account
held by it. The Collateral Agent shall give the Company and the Trustee prior
written notice of any change in the depositary institution in which any
Collateral Account is established or in any related Collateral Account
information. Anything herein to the contrary notwithstanding, unless consented
to by the Trustee in advance and in writing, the Collateral Agent shall not have
any right to change the depositary institution in which any Collateral Account
is established.
(c) On or before each Payment Date, the Collateral Agent shall prepare
a collateral report containing a description of the Collateral and setting forth
in reasonable detail the principal balance, as of the last day of the
immediately preceding month, of the Dollar Permitted Investments and shall
furnish copies of such report to the Trustee and the Company.
(d) If at any time either Collateral Account ceases to be an Eligible
Account, the Collateral Agent shall establish, in accordance with the
requirements of Section, a successor Collateral Account thereto which shall be
an Eligible Account at a depository institution acceptable to the Trustee.
(e) Any investment of funds in the Collateral Accounts shall be made in
accordance with Section in the name of the Collateral Agent or in the name of
any nominee of the Collateral Agent. Subject to the other provisions hereof, the
Collateral Agent shall have sole control over each such investment and the
income thereon, and any certificate or other instrument evidencing any such
investment, if any, shall be delivered directly to the Collateral Agent,
together with each document of transfer, if any, necessary to transfer title to
such investment to the Collateral Agent in a manner which complies with Section
2.05 and this section 3.05.
(f) All moneys on deposit in the Collateral Accounts, together with any
Dollar Permitted Investments in which such moneys may be invested or reinvested,
and any gains from such investments, shall constitute Collateral hereunder
subject to the Security Interest of the Collateral Agent for the benefit of the
Secured Party.
(g) Subject to Section 7.03, the Collateral Agent shall not be liable
for any loss on any Dollar Permitted Investment, except for losses attributable
to the failure of the Collateral Agent to comply with its obligations hereunder
or to make payments on Dollar Permitted Investments as to which the Collateral
Agent, in its commercial capacity, is obligated.
SECTION 3.06. DISTRIBUTIONS FROM THE DEBT SERVICE RESERVE ACCOUNT.
Unless an Indenture Default shall have occurred and be continuing, on each
Payment Date, the Collateral Agent shall withdraw and distribute funds from the
Debt Service Reserve Account in the following priorities:
FIRST, the Collateral Agent shall transfer to the Trustee in accordance
with Section an amount equal to the amount of interest due and payable
on the Notes on such Payment Date; provided that on each Payment Date
after June 15, 1998, the Collateral Agent shall only transfer such
amount if and to the extent it has received notice from the Trustee
that the Trustee has not received an amount from the Company that is
sufficient to pay the full amount of interest payable on such Payment
Date.
SECOND, the Collateral Agent shall transfer to the Trustee in
accordance with Section for release to the Company any amounts held by
the Collateral Agent in excess of the amounts required to be held by
the Collateral Agent pursuant to Section.
SECTION 3.07. DISTRIBUTION FROM THE SPECIAL PROCEEDS ACCOUNT. In the
event of a Special Proceeds Offer, the Collateral Agent shall transfer to the
Trustee in accordance with Section all funds in the Special Proceeds Account for
application by the Trustee in accordance with and subject to the provisions of
Section 3.12 and Article 10 of the Indenture.
ARTICLE 4
COVENANTS OF THE COMPANY
SECTION 4.01. PRESERVATION OF COLLATERAL. Subject to the rights, powers
and authorities granted to the Collateral Agent and the Secured Party in this
Agreement, the Company shall take such action as is necessary with respect to
the Collateral in order to preserve, maintain and service such Collateral and to
permit (subject to the rights of the Secured Party) the Collateral Agent to
perform its obligations with respect to such Collateral as provided herein. The
Company will do, execute, acknowledge and deliver, or cause to be done,
executed, acknowledged and delivered, such instruments of transfer or take such
other steps or actions as may be necessary, or reasonably required by the
Trustee, to perfect the Security Interest granted hereunder in the Collateral,
to ensure that such Security Interest rank prior to all other Liens and to
preserve the priority of such Security Interest and the validity and
enforceability thereof. Upon a delivery or substitution of Collateral, the
Company shall, to the fullest extent possible, take such actions as are
necessary and appropriate and that may be taken by the Company to create for the
benefit of the Collateral Agent a valid first priority security interest in the
Collateral so delivered and to deliver such Collateral to the Collateral Agent,
free and clear of any other Lien, together with satisfactory assurances thereof,
and to pay any reasonable costs incurred by the Secured Party, the Collateral
Agent, the Company (including its agents) or otherwise in connection with such
delivery.
SECTION 4.02. OPINIONS AS TO COLLATERAL. Not more than 90 days nor less
than 30 days prior to each date on which the Company proposes to take any action
contemplated by Section 4.06, the Company shall, at its own cost and expense,
furnish to the Trustee and the Collateral Agent an Opinion of Counsel either (i)
stating that, in the opinion of such counsel, such action has been taken with
respect to the recording, filing, rerecording, amendment and refiling of this
Agreement, any supplements and any other requisite documents and with respect to
the execution, filing, refiling or amendment of any financing statements and
continuation statements as are necessary to perfect, maintain and protect the
Security Interest of the Collateral Agent, on behalf of the Secured Party, in
the Collateral against all creditors of and purchasers from the Company, and
that such security Interest shall remain valid, effective and of a first
priority, and reciting the details of such action, or (ii) stating that, in the
opinion of such counsel, no such action is necessary to maintain such perfected
Security Interest. Such Opinion of Counsel shall describe each recording,
filing, rerecording, amendment and refiling of this Agreement, any supplements
and any other requisite documents and the execution and filing or refiling as
amended of any financing statements and continuation statements that will, in
the opinion of such counsel, be required to perfect, maintain and protect the
Security Interest of the Collateral Agent, on behalf of the Secured Party for a
period, if applicable, specified in the Opinion, continuing until a date not
earlier than 18 months from the date of such Opinion.
SECTION 4.03. NOTICES. In the event the Company acquires knowledge of
the occurrence and continuance of any Indenture Default or any event which, with
the giving of notice or lapse of time, or both, would become an Indenture
Default, the Company shall immediately give written notice thereof to the
Collateral Agent and the Trustee, setting forth the details thereof and the
action which the Company is taking or proposes to take with respect thereto.
SECTION 4.04. WAIVER OF STAY OR EXTENSION LAWS; MARSHALING OF ASSETS.
The Company covenants, to the fullest extent permitted by applicable law, that
it will not at any time insist on, plead, or in any manner whatsoever claim or
take the benefit or advantage of, any appraisement, valuation, stay, extension
or redemption law wherever enacted, now or at anytime hereafter in force, in
order to prevent or hinder the enforcement of this Agreement or any sale of the
Collateral or any part thereof, or the possession thereof by any purchaser at
any sale under Article 7; and the Company, to the fullest extent permitted by
applicable law, for itself and all who may claim under it, hereby waives the
benefit of all such laws, and covenants that it will not hinder, delay or impede
the execution of any power herein granted to the Secured Party or the Collateral
Agent, but will suffer and permit the execution of every such power as though no
such law had been enacted. The Company, for itself and all who may claim under
it, waives, to the fullest extent permitted by applicable law, all right to have
the Collateral marshaled upon any foreclosure or other disposition thereof.
SECTION 4.05. NONINTERFERENCE, ETC. The Company shall not (i) waive or
alter any of its rights under the Collateral (or any agreement or instrument
relating thereto) without the prior written consent of the Trustee; or (ii) fail
to pay any tax, assessment, charge or fee levied or assessed against the
Collateral, or fail to defend any action, if such failure to pay or defend may
be reasonably likely to adversely affect the priority or enforceability of the
Company's right, title or interest in and to the Collateral or the Collateral
Agent's Security Interest in the Collateral.
SECTION 4.06. COMPANY CHANGES
(a) CHANGE IN NAME, STRUCTURE, ETC. The Company shall not change its
name, identity, or corporate or legal structure in any manner unless, prior to
such change, such party shall have effected any necessary or appropriate
recordations of assignments or amendments thereto and filings of financing
statements or amendments thereto and shall have delivered to the Collateral
Agent and the Trustee an Opinion of Counsel of the type described in Section
4.02.
(b) RELOCATION OF COMPANY. The Company shall give the Trustee and the
Collateral Agent at least 15 Business Days prior written notice of any
relocation of its principal executive office. If the Company relocates (i) its
principal executive office or principal place of business from Beijing, PRC, or
(ii) the locations where it keeps or holds any Collateral from New York, New
York or any records relating to any Collateral from Beijing, PRC, it shall give
prior notice thereof to the Trustee and the Collateral Agent in accordance with
Section 8.05 and shall effect whatever appropriate recordations and filings are
necessary and shall provide an Opinion of Counsel to the Trustee and the
Collateral Agent, to the effect described in Section 4.06.
ARTICLE 5
REMEDIES ON OCCURRENCE OF AN INDENTURE DEFAULT
SECTION 5.01. LIQUIDATION AND SALE OF COLLATERAL. If an Indenture
Default has occurred and is continuing:
(a) The Trustee may exercise any and all Collateral Management Rights
and, in connection therewith, in its sole discretion, may elect to preserve all
or part of the Collateral and direct the Collateral Agent to collect and convert
into cash all or any part of the Collateral. If the Trustee directs the
Collateral Agent to collect and convert into cash all or any part of the
Collateral, the Collateral Agent shall sell, assign and deliver for cash the
whole or any part of the Collateral for cash, at public or private sale, in such
manner and upon such terms and conditions as the Trustee shall have directed in
writing; provided that, prior to any such sale, the Collateral Agent, on behalf
of the Secured Party, shall have given notice to the Company that it has been
directed by the Trustee to liquidate all or any part of the Collateral and shall
have given such other notices and taken such other steps as the Trustee has
advised the Collateral Agent in writing or as are required by law or regulation
to be given or taken prior to the sale of such property. Any sale shall be
conducted in a commercially reasonable manner. To the extent permitted by
applicable law, the Collateral Agent shall be authorized at any sale made under
this Section 5.01 (if the Trustee deems it advisable and directs the Collateral
Agent to do so) to restrict the prospective bidders or purchasers to Persons to
whom such sale may be made without registration under any applicable securities
laws. The Trustee and the Collateral Agent shall be entitled to obtain from the
Company all records and documentation in the possession of the Company
pertaining to any Collateral. Upon consummation of any such sale, the Trustee,
or the Collateral Agent acting on behalf of and at the direction of the Trustee,
shall have the right to assign, transfer, endorse and deliver to the purchaser
or purchasers thereof, free and clear of any Lien, the Collateral, or any
portion thereof or any interest therein, so sold. To facilitate the foregoing,
the Company hereby irrevocably appoints and empowers the Trustee and the
Collateral Agent, or either one acting alone, as its agents and
attorneys-in-fact, with full power of substitution, for the purpose of
executing, assigning and delivering and doing all things necessary to transfer
title to the Collateral, or any part thereof, in connection with a sale thereof
pursuant hereto. Each purchaser at any such sale shall hold the property
purchased by it absolutely free from any claim or right on the part of the
Company and the Secured Party; and the Company hereby irrevocably waives, to the
fullest extent permitted by applicable law, all rights of redemption, stay,
marshaling of assets or appraisal that the Company now has or may at any time in
the future have under applicable law or statute now existing or hereafter
enacted.
(b) In the event of any sale, collection, conversion or other
disposition into cash of the Collateral, or any part thereof, after deducting
any actual costs and expenses incurred in connection with any such disposition,
the Collateral Agent shall distribute the proceeds thereof to the Trustee for
distribution in accordance with the priorities set forth in the Indenture.
(c) The Collateral Agent and the Trustee, as the case may be, may
exercise the powers and rights granted by this Section 5.01, without notice or
demand to the Company, except as provided in Section 5.01(a).
SECTION 5.02. WAIVER OF AN INDENTURE DEFAULT. The Trustee, as Secured
Party, shall have the sole right to give effect hereunder to any waiver of an
Indenture Default pursuant to Section 5.04 of the Indenture by means of a
writing setting forth the terms, conditions and extent of such waiver, signed by
such Secured Party and delivered to the Collateral Agent and the Company. Any
such writing shall be binding on the Collateral Agent. Unless such writing
expressly provides to the contrary, the effect of any such writing shall extend
only to the specified event or occurrence which gave rise to the Indenture
Default so waived and not to any other similar event or occurrence which occurs
subsequent to the date of such waiver.
SECTION 5.03. RESTORATION OF RIGHTS AND REMEDIE. If the Collateral
Agent or the Secured Party has instituted a proceeding to enforce any right or
remedy under this Agreement, and such proceeding has been discontinued or
abandoned for any reason or has been determined adversely to the Collateral
Agent or the Secured Party, then and in every such case the Company, the
Collateral Agent and the Secured Party shall, subject to any determination in
such proceeding, be restored severally and respectively to their former
positions hereunder, and thereafter all rights and remedies of the Collateral
Agent and the Secured Party hereunder shall, subject to any determination in
such proceeding, continue as though no such proceeding had been instituted.
SECTION 5.04. NO REMEDY EXCLUSIVE. No right or remedy herein conferred
on or reserved to the Collateral Agent or the Secured Party hereunder is
intended to be exclusive of any other right or remedy, and every right or remedy
shall, to the extent permitted by law, be cumulative and in addition to every
other right and remedy given hereunder or now or hereafter existing at law, in
equity or otherwise; and each and every right, power and remedy, whether
specifically herein given or otherwise existing, may be exercised from time to
time and as often and in such order as may be deemed expedient by the Collateral
Agent or the Secured Party, and the exercise of any right, power or remedy shall
not be construed to be a waiver of the right to exercise at the same time or
thereafter any other right, power or remedy.
ARTICLE 6
THE SECURED PARTY
SECTION 6.01. APPOINTMENT. From and after the Closing Date until the
Termination Date, the Trustee shall be the Secured Party hereunder. No party
dealing with the Secured Party in connection with the exercise of its rights or
duties hereunder shall have any obligation to determine the right, power and
authority of the Secured Party to exercise such rights or the compliance of such
exercise with the provisions hereof, and each and every party may conclusively
rely on the existence of such right, power, authority and compliance.
SECTION 6.02. SECURED PARTY'S AUTHORIT. The Company hereby irrevocably
appoints the Secured Party its true and lawful attorney, with full power of
substitution, in the name of the Company, the Secured Party or otherwise, but at
the expense of the Company, to the extent permitted by law to exercise, at any
time and from time to time while any Indenture Default has occurred and is
continuing, any and all of the following powers with respect to all or any of
the Collateral: (i) to demand, sue for, collect, receive and give acquittance
for any and all monies due or to become due upon or by virtue thereof, (ii) to
settle, compromise, compound, prosecute or defend any action or proceeding with
respect thereto, (iii) to sell, transfer, assign or otherwise deal with the same
or the proceeds thereof, and (iv) to extend the time of payment of any or all
thereof and to make any allowance or other adjustments with respect thereto;
provided that the foregoing powers and rights shall be exercised in accordance
with the provisions of Article 5 and Article 7.
SECTION 6.3. DEGREE OF CARE. Notwithstanding any term or provision of
this Agreement, the Secured Party shall incur no liability to the Company for
any action taken or omitted by the Secured Party in connection with the
Collateral, except for any gross negligence or wilfull misconduct on the part of
the Secured Party. The Secured Party shall be protected and shall incur no
liability to any such party in relying on the accuracy, acting in reliance on
the contents, and assuming the genuineness, of any notice, demand, certificate,
signature, instrument or other document believed by the Secured Party to be
genuine and to have been duly executed by the appropriate signatory, and (absent
manifest error or actual knowledge to the contrary) the Secured Party shall not
be required to make any independent investigation with respect thereto. The
Secured Party shall, at all times, be free independently to establish to its
reasonable satisfaction the existence or nonexistence, as the case may be, of
any fact the existence or nonexistence of which shall be a condition to the
exercise or enforcement of any right or remedy under this Agreement.
ARTICLE 7
THE COLLATERAL AGENT
SECTION 7.01. APPOINTMENT AND POWERS. Subject to the terms and
conditions hereof, the Secured Party hereby appoints Bankers Trust Company as
the Collateral Agent, and Bankers Trust Company hereby accepts such appointment
and agrees to act as Collateral Agent for the Secured Party, to maintain custody
and possession of the Collateral and to perform the other duties of the
Collateral Agent in accordance with the provisions of this Agreement. The
Secured Party hereby authorizes the Collateral Agent to take such action on its
behalf, and to exercise such rights, remedies, powers and privileges hereunder,
as the Secured Party may direct and as are specifically authorized to be
exercised by the Collateral Agent by the terms hereof, together with such
actions, rights, remedies, powers and privileges as are reasonably incidental
thereto. The Collateral Agent shall act on and in compliance with the
instructions of the Secured Party given in accordance with Section 8.05 promptly
following receipt of such instructions. Receipt of such instructions shall not
be a condition to the exercise by the Collateral Agent of its express duties
hereunder, except where this Agreement provides that the Collateral Agent is
permitted to act only following and in accordance with such instructions.
SECTION 7.02. PERFORMANCE OF DUTIES. Subject to the requirements of
this Agreement, the Collateral Agent may perform any of its duties hereunder by
or through agents, shall be entitled to consult with counsel and financial
advisors concerning matters pertaining to the agencies hereby created or its
duties hereunder and shall not be liable for actions taken, or omitted to be
taken, in good faith and in accordance with the advice of such counsel or
financial advisors. The Collateral Agent shall have no duties or
responsibilities except those expressly set forth in this Agreement or as
directed by the Secured Party in accordance with Section 8.05. The Collateral
Agent shall not be required to take any discretionary actions hereunder, except
(i) at the direction and expense of the Secured Party given pursuant to Section
8.05 or (ii) as provided in Article 4 and Sections 3.05 and 3.06. The
relationship between the Collateral Agent and the Secured Party is that of agent
and principal only, and nothing herein shall be deemed to constitute the
Collateral Agent a trustee for the Secured Party or impose on the Collateral
Agent any obligations other than those for which express provision is made
herein.
SECTION 7.3. LIMITATION ON LIABILITY. Neither the Collateral Agent nor
the Secured Party, nor any of their respective directors, officers or employees,
shall be liable for any action taken or omitted to be taken by it or them
hereunder, or in connection herewith, except that each of the Collateral Agent
and the Secured Party shall be liable for its own gross negligence or wilfull
misconduct; nor shall the Collateral Agent or the Secured Party be responsible
for the validity, effectiveness, value, sufficiency or enforceability against
the Company of this Agreement or the Collateral (or any part thereof).
Notwithstanding any term or provision of this Agreement, the Collateral Agent
shall incur no liability to the Company for any action taken or omitted by the
Collateral Agent in connection with the Collateral, except for the negligence or
wilfull misconduct on the part of the Collateral Agent, and, further, shall
incur no liability to the Secured Party except for a breach of the terms of this
Agreement or for gross negligence or wilfull misconduct in carrying out its
duties to the Secured Party. The Collateral Agent shall be protected and shall
incur no liability to any such party in relying upon the written instructions of
the Secured Party and in relying upon the accuracy, acting in reliance upon the
contents, and assuming the genuineness of any notice, demand, certificate,
signature, instrument or other document reasonably believed by the Collateral
Agent to be genuine and to have been duly executed by the appropriate signatory,
and (absent actual knowledge to the contrary) the Collateral Agent shall not be
required to make any independent investigation with respect thereto. The
Collateral Agent may consult with qualified counsel, financial advisors or
accountants and shall not be liable for any action taken or omitted to be taken
by it hereunder in good faith and in accordance with the advice of such counsel,
financial advisors or accountants. The Collateral Agent shall not be under any
obligation to exercise any of the remedial rights or powers vested in it by this
Agreement unless it shall have received reasonable security or indemnity
satisfactory to the Collateral Agent against the costs, expenses and liabilities
which might be incurred by it.
None of the provisions contained in this Agreement shall require the
Collateral Agent to expend or risk its own funds or otherwise incur personal
financial liability in the performance of any of its duties or in the exercise
of any of its rights or powers, if there shall be reasonable ground for
believing that the repayment of such funds or adequate indemnity against such
liability is not reasonably assured to it.
SECTION 7.04. RELIANCE UPON DOCUMENTS. In the absence of bad faith or
gross negligence on its part, the Collateral Agent shall be entitled to rely on
any communication, instrument, paper or other document reasonably believed by it
to be genuine and correct and to have been signed or sent by the proper Person
or Persons and shall have no liability in acting, or omitting to act, where such
action or omission to act is in reasonable reliance upon any statement or
opinion contained in any such document or instrument.
SECTION 7.05. SUCCESSOR COLLATERAL AGENT.
(a) MERGER. Any Person into which the Collateral Agent may be converted
or merged, or with which it may be consolidated, or to which it may sell or
transfer its trust business and assets as a whole or substantially as a whole,
or any Person resulting from any such conversion, merger, consolidation, sale or
transfer to which the Collateral Agent is a party, shall (provided it is
otherwise qualified to serve as the Collateral Agent hereunder) be and become a
successor Collateral Agent hereunder and be vested with all of the title to and
interest in the Collateral and all of the trusts, powers, discretions,
immunities, privileges and other matters as was its predecessor without the
execution or filing of any instrument or any further act, deed or conveyance on
the part of any of the parties hereto, anything herein to the contrary
notwithstanding.
(b) RESIGNATION. The Collateral Agent and any successor Collateral
Agent may resign only with the prior written consent of the Trustee and shall
give not less than 60 days' prior written notice of any such permitted
resignation by registered or certified mail to the Trustee and the Company;
provided, that such resignation shall take effect only upon the date which is
the latest of (i) the effective date of the appointment of a successor
Collateral Agent and the acceptance in writing by such successor Collateral
Agent of such appointment and of its obligation to perform its duties hereunder
in accordance with the provisions hereof, (ii) delivery of the Collateral in the
possession of the Collateral Agent (or its New York agent) to such successor to
be held in accordance with the procedures specified in Article 2 and (iii)
receipt by the Trustee and the Company of an Opinion of Counsel to the effect
described in Section 4.02. Notwithstanding the preceding sentence, if by the
contemplated date of resignation specified in the written notice of resignation
delivered as described above no successor Collateral Agent or temporary
successor Collateral Agent has been appointed Collateral Agent or becomes the
Collateral Agent pursuant to Section 7.05(d) below, the resigning Collateral
Agent may petition a court of competent jurisdiction in Borough of Manhattan,
The City of New York, for the appointment of a successor.
(c) REMOVAL. The Collateral Agent may be removed by the Trustee at any
time upon 60 days' notice, with or without cause, by an instrument or concurrent
instruments in writing delivered to the Collateral Agent and the Company. A
temporary successor may be removed at any time to allow a successor Collateral
Agent to be appointed pursuant to Section 7.05(d). Any removal pursuant to this
subsection 7.05(c) shall take effect only upon the date which is the latest of
(i) the effective date of the appointment of a successor Collateral Agent and
the acceptance in writing by such successor Collateral Agent of such appointment
and of its obligation to perform its duties hereunder in accordance with the
provisions hereof, (ii) delivery of the Collateral in the possession of the
Collateral Agent to such successor to be held in accordance with the procedures
specified in Article 2 and (iii) receipt by the Trustee and the Company of an
Opinion of Counsel to the effect described in Section 4.02.
(d) ACCEPTANCE BY SUCCESSOR. Any successor Collateral Agent shall be a
bank or trust company (i) having its principal office in the Borough of
Manhattan, The City of New York, or in such other jurisdiction as the Secured
Party may approve and (ii) having a combined capital and surplus of at least
US$500,000,000. If such bank or trust company publishes reports of condition at
least annually, pursuant to law or to the requirements of a Federal, State or
District of Columbia supervising or examining authority, then for the purposes
of this subsection 7.05(d) the combined capital and surplus of such bank or
trust company shall be deemed to be its combined capital and surplus as set
forth in its most recent report of condition so published. The Secured Party
shall have the sole right to appoint a successor Collateral Agent, subject only
to the requirements set forth in the preceding sentence and to the approval of
the Company, which approval shall not be unreasonably withheld. If the Company
and the Secured Party shall not have agreed within ten days on the selection of
a successor Collateral Agent, the Secured Party shall have the right to appoint
a temporary successor to act as the Collateral Agent. If by the 90th day after
appointment of such temporary successor Collateral Agent, the Secured Party and
the Company shall have remained unable to agree on the selection of a successor
Collateral Agent, such temporary successor shall automatically become the
successor Collateral Agent hereunder. Every temporary or permanent successor
Collateral Agent appointed hereunder shall execute, acknowledge and deliver to
its predecessor and to the Trustee and the Company an instrument in writing
accepting such appointment hereunder; and the relevant predecessor shall
execute, acknowledge and deliver such other documents and instruments as will
effectuate the delivery of all Collateral in the possession of the Collateral
Agent to the successor Collateral Agent to be held in accordance with the
procedures specified in Articles 2 and 3, whereupon such successor, without any
further act, deed or conveyance, shall become fully vested with all the estates,
properties, rights, powers, duties and obligations of its predecessor. Such
predecessor shall, nevertheless, on the written request of the Trustee or the
Company, execute and deliver an instrument transferring to such successor all
the estates, properties, rights and powers of such predecessor hereunder. Every
predecessor Collateral Agent shall assign, transfer and deliver all Collateral
held by it as Collateral Agent hereunder to its successor as Collateral Agent.
Should any instrument in writing from the Company be reasonably required by a
successor Collateral Agent for more fully and certainly vesting in such
successor the estates properties, rights, powers, duties and obligations vested
or intended to be vested hereunder in the Collateral Agent, any and all such
written instruments shall, at the request of the temporary or permanent
successor Collateral Agent, be forthwith executed, acknowledged and delivered by
the Company. The designation of any successor Collateral Agent and the
instrument or instruments removing any Collateral Agent and appointing a
successor hereunder, together with all other instruments provided for herein,
shall be maintained with the records relating to the Collateral and, to the
extent required by applicable law, filed or recorded by the successor Collateral
Agent in each place where such filing or recording is necessary to effect the
transfer of the Collateral to the successor Collateral Agent or to protect the
Security Interest granted hereunder.
SECTION 7.06. INDEMNIFICATION. The Company shall indemnify the
Collateral Agent, its officers, directors, employees and agents for, and hold
the Collateral Agent, its officers, directors, employees and agents harmless
against, any claim, loss, liability or reasonable expense (including all
reasonable costs, expenses, attorneys' fees and disbursements) arising out of or
in connection with the Collateral Agent's acting as Collateral Agent hereunder,
except such loss, liability or expense as shall result from the negligence or
wilfull misconduct of the Collateral Agent or its officers, directors, employees
or agents. The obligation of the Company under this Section 7.06 shall survive
the termination of this Agreement and the resignation or removal of the
Collateral Agent.
SECTION 7.07. COMPENSATION AND REIMBURSEMENT. The Company agrees (i) to
pay to the Collateral Agent, from time to time, such compensation as may be
agreed in writing by the Company and the Collateral Agent for all services
rendered by it hereunder and (ii) to reimburse the Collateral Agent on request
for all reasonable expenses, disbursements and advances incurred or made by the
Collateral Agent in accordance with any provision of, or carrying out its duties
and obligations under, this Agreement (including the reasonable compensation and
fees and the reasonable expenses and disbursements of its agents, any
independent certified public accountants and counsel retained by it), except any
expense, disbursement or advance resulting from the negligence or wilfull
misconduct of the Collateral Agent.
SECTION 7.08. REPRESENTATIONS AND WARRANTIES OF THE COLLATERAL AGENT.
The Collateral Agent represents and warrants to the Company and to the Secured
Party as follows:
(a) DUE ORGANIZATION. The Collateral Agent is a New York banking
corporation, duly organized, validly existing and in good standing under the
laws of the United States, is duly authorized and licensed under applicable law
to conduct its business as presently conducted and meets the eligibility
requirements set forth in the first sentence of Section 7.05(d).
(b) CORPORATE POWER. The Collateral Agent has all requisite right,
power and authority to execute and deliver this Agreement and to perform all of
its duties hereunder and thereunder.
(c) DUE AUTHORIZATION. The execution and delivery by the Collateral
Agent of this Agreement, and the performance by the Collateral Agent of its
duties hereunder and thereunder, have been duly authorized by all necessary
corporate proceedings; and no further approvals or filings, including any
governmental approvals, are required for the valid execution and delivery by the
Collateral Agent, or the performance by the Collateral Agent, of this Agreement.
(d) VALID AND BINDING AGREEMENT. The Collateral Agent has duly executed
and delivered this Agreement and this Agreement constitutes a valid and binding
obligation of the Collateral Agent, enforceable against the Collateral Agent in
accordance with its terms, except as (i) such enforceability may be limited by
bankruptcy, insolvency, reorganization and similar laws relating to or affecting
the enforcement of creditors' rights generally and (ii) rights of acceleration
and the availability of equitable remedies may be limited by equitable
principles of general applicability.
SECTION 7.09. WAIVER OF SET-OFFS. The Collateral Agent hereby expressly
waives any and all rights of set-off that the Collateral Agent may otherwise at
any time have under applicable law with respect to any Collateral Account and
agrees that amounts in the Collateral Accounts shall at all times be held and
applied solely in accordance with the provisions of Article 3 and the other
provisions of this Agreement.
ARTICLE 8
MISCELLANEOUS
SECTION 8.01. FURTHER ASSURANCES. Each party hereto shall take such
action and deliver such instruments to any other party hereto, in addition to
the actions and instruments specifically provided for herein, as may be
reasonably requested or required to effectuate the purpose or provisions of this
Agreement or to confirm or perfect any transaction described or contemplated
herein. Within 20 days after the date hereof, the Company shall (i) take such
actions and deliver, file and record such instruments as may be necessary to
amend any financing statements relating to the Collateral which do not identify
the Secured Party, so that such financing statements identify the Secured Party
as such and so that the benefits thereof inure to the Secured Party and (ii)
furnish to the Secured Party copies of such instruments and evidence of the
filing and recording thereof.
SECTION 8.02. WAIVER. Any waiver by any party of any provision of this
Agreement or any right, remedy or option hereunder shall only prevent and estop
such party from thereafter enforcing such provision, right, remedy or option if
such waiver is given in writing and only as to the specific instance and for the
specific purpose for which such waiver was given. The failure or refusal of any
party hereto to insist in any one or more instances, or in a course of dealing,
on the strict performance of any of the terms or provisions of this Agreement by
any party hereto or the partial exercise of any right, remedy or option
hereunder shall not be construed as a waiver or relinquishment of any such term
or provision, but the same shall continue in full force and effect.
SECTION 8.03. AMENDMENTS. No amendment of this Agreement shall be
effective unless the same shall have been made or consented to in writing by
each of the parties hereto.
SECTION 8.04. SEVERABILITY. In the event that any provision of this
Agreement or the application thereof to any party hereto or to any circumstance
or in any jurisdiction governing this Agreement shall, to any extent, be invalid
or unenforceable under any applicable statute, regulation or rule of law, then
such provision shall be deemed inoperative to the extent that it is invalid or
unenforceable; and the remainder of this Agreement, and the application of any
such invalid or unenforceable provision to the parties, jurisdictions or
circumstances other than to whom or to which it is held invalid or
unenforceable, shall not be affected thereby, nor shall the same affect the
validity or enforceability of any other provision of this Agreement. The parties
hereto further agree that the holding by any court of competent jurisdiction
that any remedy pursued by the Collateral Agent or the Secured Party hereunder
is unavailable or unenforceable shall not affect in any way the ability of the
Collateral Agent or the Secured Party to pursue any other remedy available to
it.
SECTION 8.05. NOTICES; PAYMENTS AND TRANSFERS OF FUNDS. (i) All
notices, demands, certificates, requests, instructions and communications
hereunder ('notices') shall be in writing and shall be effective (a) five
Business Days after delivery to an air courier, or (b) on the date personally
delivered to an Authorized Officer of the party to which sent, or (c) on the
date transmitted by legible facsimile transmission upon written confirmation of
receipt and (ii) all payments and transfers of funds made by or on behalf of any
party hereto to any other party hereto pursuant to the terms hereof shall be
made by delivery of an official bank check in, or wire transfer of, immediately
available funds, in all cases addressed and sent to the recipient as follows:
If to the Company:
AES China Generating Co. Ltd.
9/F Allied Capital Resources Building
32-38 Ice House Street
Hong Kong
Attention: Chief Financial Officer
Telephone: (852) 2842-5111
Facsimile: (852) 2842-1673
Wire transfer instructions:
If to the Trustee:
Bankers Trust Company
Four Albany Street
New York, New York 10006
Attention: Corporate Trust and Agency Group/Debt
Adminstration
Telephone: (212) 250-6573
Facsimile: (212) 250-0933
Wire transfer instructions:
If to the Collateral Agent:
Bankers Trust Company
Four Albany Street
New York, New York 10006
Attention: Corporate Trust and Agency Group/Debt
Adminstration
Telephone: (212) 250-6573
Facsimile: (212) 250-0933
Wire transfer instructions:
Any notices or documents sent by facsimile to the Collateral Agent
shall be promptly followed by an original copy thereof sent by mail. A copy of
each notice given hereunder to any party hereto shall also be given to each of
the other parties hereto. Each party hereto may, by notice given in accordance
herewith to each of the other parties hereto, designate any further or different
address to which subsequent notices shall be sent.
SECTION 8.06. TERMS OF THIS AGREEMENT. This Agreement shall take effect
on the Closing Date and shall continue in effect until the Termination Date. On
the Termination Date, this Agreement shall terminate, all obligations of the
parties hereunder shall cease and terminate and, subject to Section 2.07, the
Collateral, if any, held hereunder and not to be used or applied in discharge of
any obligations of the Company in respect of the Secured Obligations or
otherwise under this Agreement, shall be released to and in favor of the
Company, provided that the provisions of Sections 7.06 and 7.07 shall survive
any termination of this Agreement and the release or transfer of any Collateral
upon such termination.
SECTION 8.07. ASSIGNMENT; THIRD-PARTY RIGHTS. This Agreement shall be a
continuing obligation of the Company and shall (i) be binding upon the Company
and its respective successors and assigns and (ii) be binding upon and inure to
the benefit of and be enforceable by the Secured Party and the Collateral Agent,
and by their respective successors, transferees and assigns. The Company may not
assign this Agreement, or delegate any of its duties hereunder, without the
prior written consent of the Trustee and the Collateral Agent, provided that no
such consent shall be required in the case of a merger, consolidation,
amalgamation or other transaction effected in accordance with Article 4 of the
Indenture.
SECTION 8.08. CONSENT OF SECURED PARTY. In the event that the Secured
Party's consent is required under the terms hereof, it is understood and agreed
that, except as otherwise provided expressly herein, the determination whether
to grant or withhold such consent shall be made solely by the Secured Party in
its sole discretion.
SECTION 8.09. TRIAL BY JURY WAIVED. Each of the parties hereto waives,
to the fullest extent permitted by law, any right it may have to a trial by jury
in respect of any litigation arising directly or indirectly out of, under or in
connection with this Agreement, the Notes or the Indenture or any of the
transactions contemplated hereunder or thereunder. Each of the parties hereto
(a) certifies that no representative, agent or attorney of any other party has
represented, expressly or otherwise, that such other party would not, in the
event of litigation, seek to enforce the foregoing waiver and (b) acknowledges
that it has been induced to enter into this Agreement, the Notes and the
Indenture to which it is a party by, among other things, this waiver.
SECTION 8.10. GOVERNING LAW. This agreement shall be governed by and
construed in accordance with the laws of the State of New York, without regard
to the principles of conflicts of law thereof.
SECTION 8.11. CONSENT TO JURISDICTION. The Company hereby irrevocably
submits to the non-exclusive jurisdiction of the United States District Court
for the Southern District of New York, any court in the State of New York
located in the city and county of New York, and any appellate court from any
thereof, in any action, suit or proceeding brought against it and related to or
in connection with this Agreement, the Notes or the Indenture or the
transactions contemplated hereunder or thereunder or for recognition or
enforcement of any judgment and each of the parties hereto irrevocably and
unconditionally agrees that all claims in respect of any such suit or action or
proceeding may be heard or determined in such New York State court or, to the
extent permitted by law, in such federal court. Each of the parties hereto
agrees that a final judgment in any such action, suit or proceeding shall be
conclusive and may be enforced in other jurisdictions by suit on the judgment or
in any other manner provided by law. To the extent permitted by applicable law,
each of the parties hereby waives and agrees not to assert by way of motion, as
a defense or otherwise in any such suit, action or proceeding, any claim that it
is not personally subject to the jurisdiction of such courts, that the suit,
action or proceeding is brought in an inconvenient forum, that the venue of the
suit, action or proceeding is improper or that this Agreement or the subject
matter hereof may not be litigated in or by such courts. The Company hereby
irrevocably appoints and designates The Prentice-Hall Corporation System, Inc.
having an address at the date hereof at 375 Hudson Street, New York, New York
10014-3660 as its true and lawful attorney and duly authorized agent for
acceptance of service of legal process. The Company agrees that service of such
process on The Prentice-Hall Corporation System, Inc., shall constitute personal
service of such process upon the Company. Nothing contained in this Agreement
shall limit or affect the rights of any party hereto to serve process in any
other manner permitted by law or (other than the Company) to commence legal
proceedings relating to this Agreement against the Company or its property in
the courts of any jurisdiction.
SECTION 8.12. COUNTERPARTS. This Agreement may be executed in two or
more counterparts by the parties hereto, and each such counterpart shall be
considered an original and all such counterparts shall constitute one and the
same instrument.
SECTION 8.13. HEADINGS. The headings of sections and paragraphs and the
Table of Contents contained in this Agreement are provided for convenience only.
They form no part of this Agreement and shall not affect its construction or
interpretation.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date set forth on the first page hereof. AES CHINA GENERATING CO. LTD.
By: /s/ Jeffrey A. Safford
----------------------------
Jeffrey A. Safford
Vice President, Chief Financial
Officer and Secretary
BANKERS TRUST COMPANY,
as Trustee under the Indenture
By: /s/ Dorothy Robinson
----------------------------
Dorothy Robinson
Assistant Secretary
BANKERS TRUST COMPANY,
as Collateral Agent
By: /s/ Dorothy Robinson
----------------------------
Dorothy Robinson
Assistant Secretary
Security Agreement - AES China Generating Co. Ltd. and Bankers Trust Co.
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