EXHIBIT 4.2
PARTICIPATION AGREEMENT
Dated as of November 8, 2001
among
ENERGY RESOURCE TECHNOLOGY, INC.
Lessee, Construction Agent and Guarantor
CAL DIVE INTERNATIONAL, INC.
as Parent Guarantor
CAL DIVE/GUNNISON BUSINESS TRUST NO. 2001-1, through
WILMINGTON TRUST COMPANY,
not in its individual capacity, except as expressly provided
herein, but solely as trustee under the Trust Agreement dated as of the
date hereof,
Owner Trustee and Lessor
THE PERSONS NAMED ON SCHEDULE I HERETO,
as Certificate Holders
BANK ONE, NA,
and the various financial institutions
party to the Loan Agreement from time to time as
the Tranche A and Tranche B Lenders
and
BANK ONE, NA,
Agent
----------
Synthetic Lease Financing of Gunnison Platform
BANC ONE CAPITAL MARKETS, INC.
Lead Arranger
PARTICIPATION AGREEMENT
THIS PARTICIPATION AGREEMENT (this "PARTICIPATION AGREEMENT") dated as
of November 8, 2001 is entered into by and among ENERGY RESOURCE TECHNOLOGY,
INC., a Delaware corporation, as Lessee, Construction Agent and Guarantor
(together with its permitted successors and assigns, in its capacity as Lessee,
the "LESSEE", in its capacity as Construction Agent, and in its capacity as
Guarantor; CAL DIVE INTERNATIONAL, INC. a Minnesota corporation, as Parent
Guarantor; WILMINGTON TRUST COMPANY, a Delaware banking corporation, not in its
individual capacity except as expressly provided herein, but solely as trustee
under the Trust Agreement (in such capacity, together with its successors and
permitted assigns under the Trust Agreement the "OWNER TRUSTEE"); CAL
DIVE/GUNNISON BUSINESS TRUST NO. 2001-1-1, a Delaware business trust (the
"LESSOR"); the Persons named on Schedule I hereto (together with their
respective permitted successors, assigns and transferees), each as owners of an
undivided beneficial interest in the Lessor ("CERTIFICATE HOLDERS"); BANK ONE,
NA (with its principal office in Chicago, Illinois) and various financial
institutions party to the Loan Agreement from time to time as the Tranche A
Lenders and various financial institutions party to the Loan Agreement from time
to time as the Tranche B Lenders thereunder (together with each of their
permitted successors and assigns, the "LENDERS"); and BANK ONE, NA (with its
principal office in Chicago, Illinois), in its capacity as Agent (together with
its successors and assigns in such capacity from time to time, the "AGENT") for
the Lenders;
WITNESSETH:
WHEREAS, pursuant to the terms and provisions of the Trust Agreement
(which is substantially in the form of Exhibit A hereto), the Certificate
Holders have authorized the Owner Trustee to take certain actions with respect
to the transactions contemplated hereby for the purpose of providing financing
for the construction of a production platform known as the Gunnison Platform
(the "Platform").
WHEREAS, Lessor shall own a twenty percent (20%) undivided beneficial
interest in the Platform (such undivided interest being referred to as the
"Property") and as such, subject to the terms of this Agreement and the other
Operative Documents, shall provide financing for the Construction Costs relating
to the Platform in accordance with the terms of the Operative Documents in a
maximum aggregate amount of $67,000,000 (the "Aggregate Commitment"). Subject to
the terms and conditions of this Agreement and other Operative Documents,
94.076745% of the Aggregate Commitment (i.e $63,031,419, in the aggregate) will
be provided through Advances made by the Lenders and 5.923255% of the Aggregate
Commitment (i.e. $3,968,581, in the aggregate) will be provided through Advances
made by the Certificate Holders. The Construction Costs are equal to
approximately 20% of the total cost of construction of the Platform.
WHEREAS, the remaining cost of construction of the Platform will be
provided pursuant to a separate financing arrangement by ▇▇▇▇-▇▇▇▇▇ (the
"▇▇▇▇-▇▇▇▇▇ Financing") and pursuant to a separate financing or purchase
arrangement by CXY Energy Offshore Inc. (fka Nexen Petroleum Offshore U.S.A.
Inc.). Funds provided through the ▇▇▇▇-▇▇▇▇▇ Financing will represent
approximately 50% of the total cost of construction of the Platform and funds
provided
Participation Agreement
by, or for the benefit of, CXY Energy Offshore Inc. will represent approximately
30% of the total cost of construction of the Platform.
WHEREAS, the finance parties under the ▇▇▇▇-▇▇▇▇▇ Financing will,
subject to the terms and conditions of the documents evidencing that
transaction, provide ▇▇▇▇-▇▇▇▇▇ Oil & Gas Corporation with financing in the
maximum aggregate amount of $157,000,000 (the "▇▇▇▇-▇▇▇▇▇ Commitment"). Subject
to the terms and condition of the documents evidencing the ▇▇▇▇-▇▇▇▇▇ Financing,
approximately 95.54% of the ▇▇▇▇-▇▇▇▇▇ Commitment (i.e $150,000,000, in the
aggregate) will be provided through loan advances made by the lenders under that
facility and approximately 4.46% of the ▇▇▇▇-▇▇▇▇▇ Commitment (i.e. $7,000,000,
in the aggregate) will be provided through loan advances made by the certificate
holders under that facility.
WHEREAS, pursuant to the financing arrangements set forth and
contemplated by the terms of this Agreement, (i) Lessee, as Construction Agent,
shall cause the construction of the Platform and shall apply Advances from
Lessor to pay the costs thereof, (ii) Lessee and Parent Guarantor shall grant to
Lessor such rights in and to the Governmental Leases and the Site (each as
defined in Appendix A) and provide such other covenants of support as are set
forth in Section 8(d)(xix) in connection therewith, and (iii) Lessee shall lease
the Property from the Lessor for the Basic Term pursuant to that certain Lease
Agreement and Mortgage and Deed of Trust (which is substantially in the form of
Exhibit B hereto) dated of even date herewith (the "Lease").
WHEREAS, the Certificate Holders are willing personally to provide a
portion of the funding of the costs of undertaking and completing those actions
set forth above;
WHEREAS, the Lessor wishes to obtain, and the Lenders are willing to
provide, financing of the remaining portion of the funding of the costs of
undertaking and completing those actions set forth above;
WHEREAS, the Lessee contemplates leasing from the Lessor the Property;
and
WHEREAS, to secure such financing, the Lenders will have, to the extent
provided in the Operative Documents, the benefit of a Lien from the Lessor on
the Lessor's right, title and interest in the Property and on substantially all
of the Lessor's rights against the Lessee under the Lease and against the
Construction Agent under the Construction Agency Agreement;
NOW, THEREFORE, in consideration of the mutual agreements contained in
this Participation Agreement and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
SECTION 1. DEFINITIONS; INTERPRETATION
Unless the context shall otherwise require, capitalized terms used and
not defined herein shall have the meanings assigned thereto in Appendix A hereto
for all purposes hereof; and the rules of interpretation set forth in Appendix A
hereto shall apply to this Participation Agreement.
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2
SECTION 2. DOCUMENTATION DATE; AVAILABILITY DATE.
(a) DOCUMENTATION DATE. The Documentation Date (the "Documentation
Date") shall occur on the earliest date on which the following conditions
precedent shall have been satisfied:
(i) PARTICIPATION AGREEMENT. This Participation Agreement
shall have been duly authorized, executed and delivered by the parties
hereto.
(ii) LEASE. The Lease shall have been duly authorized,
executed and delivered by the parties thereto.
(iii) CONSTRUCTION AGENCY AGREEMENT; CONSTRUCTION DOCUMENTS
ASSIGNMENT. The Construction Agency Agreement and the Construction
Documents Assignment shall have been duly authorized, executed and
delivered by the parties thereto.
(iv) CONSTRUCTION AGENCY AGREEMENT ASSIGNMENT. The
Construction Agency Agreement Assignment shall have been duly
authorized, executed and delivered by the Lessor, as assignor, in favor
of the Agent, and consented to and acknowledged by the Construction
Agent.
(v) LOAN AGREEMENT. The Loan Agreement shall have been duly
authorized, executed and delivered by the parties thereto.
(vi) ASSIGNMENT OF LEASES AND RENTS. The Assignment of Leases
and Rents shall have been duly authorized, executed and delivered by
the Lessor, as assignor, in favor of the Agent, and consented to and
acknowledged by the Lessee.
(vii) FEES. The Lessee shall have paid in full all fees then
due and payable pursuant to the Fee Letter.
(viii) OTHER OPERATIVE DOCUMENTS. The other Operative
Documents to be delivered in connection with the Documentation Date
shall have been duly authorized, executed and delivered by the parties
thereto.
(ix) OTHER CONDITIONS PRECEDENT. The conditions precedent set
forth in Section 9(a) shall have been satisfied or waived by the
applicable parties as set forth therein.
(b) AVAILABILITY DATE. For purposes of this Participation Agreement and
the other Operative Documents, the "AVAILABILITY DATE" shall mean the date, on
or after the Documentation Date, on which all the conditions precedent set forth
in Section 9(b) shall have been satisfied or waived by the applicable parties as
set forth therein, on or after which Advances may be made pursuant to Funding
Requests (as defined in Section 3(c)) subject to the terms of this Agreement.
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3
SECTION 3. FUNDING OF ADVANCES
(a) CERTIFICATE HOLDERS' COMMITMENT. (i) Subject to the conditions and
terms hereof, the Certificate Holders shall cause the Lessor to take the
following actions at the written request of the Lessee from time to time during
the Commitment Period:
(1) the Lessor shall make Advances (out of funds
provided by the Participants) to the Construction Agent for
the purpose of financing the Allocated Construction Costs of
the Platform; and
(2) the Lessor shall lease the Property to the Lessee
under the Lease. Notwithstanding any other provision hereof,
the Lessor shall not be obligated to make any Advance with
respect to the Platform if, after giving effect thereto, (i)
the aggregate outstanding amounts of the Tranche A Loans,
Tranche B Loans and the Equity Amounts would exceed the
aggregate Commitments of the Tranche A Lenders, the Tranche B
Lenders and the Certificate Holders, or (ii) the remaining
Allocated Estimated Construction Costs at such time exceed the
remaining aggregate amount of undisbursed Commitments.
(ii) Subject to the conditions and terms hereof, each
Certificate Holder severally agrees that it shall personally make
available at the request of the Lessee from time to time during the
Commitment Period, on each Funding Date an amount (each an "EQUITY
AMOUNT") in immediately available funds equal to such Certificate
Holder's applicable Commitment Percentage of the amount of the Advance
being funded on such Funding Date. Notwithstanding any other provision
hereof, no Certificate Holder shall be obligated to make available any
Equity Amount if, after giving effect to the proposed Equity Amount,
the outstanding aggregate amount of such Certificate Holder's Equity
Amounts would exceed such Certificate Holder's Commitment.
(b) LENDERS' COMMITMENT. Subject to the conditions and terms hereof,
each Lender severally shall make Loans to the Lessor at the request of the
Lessee for the purpose of financing Allocated Construction Costs from time to
time during the Commitment Period, on each Funding Date in an amount in
immediately available funds equal to each such Lender's applicable Commitment
Percentage of the amount of the Advance being funded on such Funding Date, as
provided in the Loan Agreement. Notwithstanding any other provision hereof, no
Lender shall be obligated to make any Loan if, after giving effect to the
proposed Loan, the outstanding aggregate amount of such Lender's Loans would
exceed such Lender's Commitment.
(c) PROCEDURES FOR ADVANCES. (i) With respect to each funding of an
Advance, the Lessee shall give the Lessor and the Agent prior written notice not
later than 10:00 a.m., Chicago time, three (3) Business Days (unless waived)
prior to the proposed Funding Date and, in the case of the first Funding Date
two (2) Business Days prior to such Funding Date pursuant to an irrevocable
Funding Request substantially in the form of Exhibit I (a "FUNDING REQUEST"),
specifying the proposed Funding Date, the amount of Advance requested and such
other information and documents as required pursuant to the terms of this
Agreement. Except for the final Funding Request, each Funding Request shall be
in an amount at least equal to $1,000,000 and in multiples of $100,000 if in
excess of such amount. Lessee shall request one (1) Funding
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4
Date per month and be allowed a maximum of 2 separate LIBOR tranches at any one
time. The proceeds of each funding will be used to pay the Construction Agent
for accrued but unpaid Allocated Construction Costs (including, without
limitation, Construction Period Interest, Construction Period Yield,
Construction Period Fees, Construction Period Indemnity Amounts and Transaction
Expenses); and the Funding Date therefor shall be a date on or before the
applicable Scheduled Payment Date; provided, however, that if the Lessee fails
to duly and timely submit a Funding Request which provides for the payment of
Construction Period Interest, Construction Period Yield, Construction Period
Fees, Construction Period Indemnity Amounts or Transaction Expenses on the
applicable Scheduled Payment Date, the Lessee hereby irrevocably authorizes and
directs the Agent (at its option) to cause the Participants to fund to the
Participants such amounts as may be necessary to pay in full all such amounts.
(i) Upon satisfaction or waiver of the conditions precedent to
such Advance set forth in Section 9(c), the Lessee, as Construction
Agent, shall pay (or cause the Operator to pay) Allocated Construction
Costs with the funds provided by the Certificate Holders and the
Lenders for such Advance. The transfer by any Participant of its
portion of an Advance shall evidence such Participant's satisfaction
that the conditions precedent to such Advance have been met or waived.
Except as set forth above and as the parties may otherwise agree in
writing, Advances shall be made solely to provide the Lessee or the
Construction Agent with funds with which to pay Allocated Construction
Costs.
(ii) All remittances made by the Participants for the funding
of any Advance shall be made on the applicable Funding Date in
immediately available Federal funds by wire transfer to the accounts
specified in the applicable Funding Request. Subject to the prior
satisfaction of all of the applicable conditions set forth in Section
9, the Participants will use reasonable efforts to fund the applicable
Advance prior to 2:00 p.m., Chicago time, on such Funding Date.
(iii) In no event will the total Property Balance at any time
exceed (i) the Construction Cost as set forth in the Approved Budget,
in the aggregate whether under construction or completed and still
subject to the Lease, or (ii) the Fair Market Sales Value of the
Platform expected upon Completion, as set forth in the Appraisal.
(iv) In no event shall the Lenders or Certificate Holders be
required to make, and the Lenders and the Certificate Holders shall
have no obligation to, fund any Advance or portion thereof which is to
be allocated to Cost Overruns.
(d) CAPITALIZATION OF CERTAIN AMOUNTS DURING CONSTRUCTION PERIOD.
During the Construction Period, on each date which is three (3) Business Days
prior to any Payment Date, Lessee shall be deemed to have requested in Advance
in an amount equal to the applicable Construction Period Interest, Construction
Period Yield, Construction Period Fees and Construction Period Indemnity and
Supplemental Rent Amounts which have accrued or are due, as the case may be. The
Funding Date with respect to each such Advance for such Construction Period
Interest, Construction Period Yield, Construction Period Fees and Construction
Period Indemnity and Supplemental Rent Amounts shall be the relevant Payment
Date (subject to the terms and conditions for an Advance set forth in this
Participation Agreement) and the proceeds of such Advance shall be applied to
pay such amounts (and will be deemed to satisfy any
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5
corresponding Rent payment obligation). On each such Funding Date as to which
such an Advance is being made, the Construction Costs shall be increased by an
amount equal to the Construction Period Interest, the Construction Period Yield,
the Construction Period Fees and Construction Period Indemnity and Supplemental
Rent Amounts so funded; provided, however, that if any such Advance hereunder
would exceed the Available Commitment of a Participant, such Participant shall
not have any obligation to make any such Advance.
(e) NON-FUNDING LENDER. In the event that any Lender (a "DEFAULTING
LENDER") fails to make available on a Funding Date an amount equal to such
Lender's applicable Commitment Percentage of the amount of the Advance required
by the terms hereof to be funded on such Funding Date (a "DEFAULTED AMOUNT"), or
Agent determines that a Lender will become a Defaulting Lender on the applicable
Funding Date, Agent shall promptly notify Lessee thereof and Lessee shall have
the option, except in respect of any Advance pursuant to the preceding paragraph
(d) and without in any way waiving the occurrence of any Default, to postpone
the funding of the entire Advance or the portion thereof representing the
Defaulted Amount (provided, however, that such postponement shall in no event
relieve Lessee of its obligation to pay as Rent any Break Costs suffered or
incurred by any Participant, but Lessee may offset any such costs against
amounts otherwise payable by it, under the Operative Documents or otherwise, to
the Defaulting Lender). Whether or not such option is exercised, the Agent may
elect to have the Defaulting Lender replaced with a new Lender reasonably
acceptable to Lessee, and Agent and the Defaulting Lender shall cooperate (at
the cost of the Defaulting Lender) in replacing such Defaulting Lender.
Notwithstanding the existence of any Defaulting Lender, each other Lender (each,
a "NON-DEFAULTING LENDER") shall timely fund its respective portion of the
applicable Advance as required.
(f) NON-FUNDING CERTIFICATE HOLDER. In the event that any Certificate
Holder (a "DEFAULTING CERTIFICATE HOLDER") fails to make available on a Funding
Date an amount equal to such Certificate Holder's applicable Commitment
Percentage (also a "DEFAULTED AMOUNT"), or Agent determines that a Certificate
Holder will become a Defaulting Certificate Holder on the applicable Funding
Date, Agent shall promptly notify Lessee thereof and Lessee shall have the
option, except in respect of any Advance pursuant to the preceding paragraph (d)
and without in any way waiving the occurrence of any Default, to postpone the
funding of the entire Advance or the portion thereof representing the Defaulted
Amount (provided, however, that such postponement shall in no event relieve
Lessee of its obligation to pay as Supplemental Rent any Break Costs suffered or
incurred by any Participant, but Lessee may offset any such costs against
amounts otherwise payable by it, under the Operative Documents or otherwise, to
the Defaulting Certificate Holder). Whether or not such option is exercised,
Lessor or Agent may elect to have the Defaulting Certificate Holder replaced
with a new Certificate Holder reasonably acceptable to Lessee and Agent and the
Defaulting Certificate Holder shall cooperate (at the cost of the Defaulting
Certificate Holder), in replacing such Defaulting Certificate Holder.
Notwithstanding the existence of any Defaulting Certificate Holder, each other
Certificate Holder (each, "NON-DEFAULTING CERTIFICATE HOLDER") shall timely fund
its portion of the applicable Advance.
(g) ADDITIONAL RIGHTS OF LESSEE. In the case of any Defaulted Amounts
Lessee shall have the additional rights provided under Section 22.
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6
SECTION 4. YIELD; INTEREST; FACILITY FEES
(a) YIELD. (i) The amount of the Equity Amounts outstanding from time
to time shall accrue yield ("YIELD") at the Yield Rate, calculated using the
actual number of days elapsed and, when the Yield Rate is determined by
reference to the LIBO Rate (Reserve Adjusted) or the Alternate Base Rate not
based upon the Prime Rate, a 360-day year basis and, when the Yield Rate is
determined by reference to the Alternate Base Rate based upon the Prime Rate, a
365- (or, if applicable, 366-) day year basis. If all or any portion of the
Equity Amounts, any Yield payable thereon or any other amount payable to any
Certificate Holders, Lessor or Owner Trustee hereunder shall not be paid when
due (whether at stated maturity, acceleration thereof or otherwise), such
overdue amount shall bear interest at a rate per annum which is equal to the
Overdue Rate.
(i) The Lessee shall, pursuant to the Assignment of Leases and
Rents, deposit in the Account the Equity Basic Rent (determined on the
basis of accrued Yield due in accordance with clause (i) above) and all
other amounts due with respect to the Equity Amounts payable by the
Lessee under the Lease from time to time.
(ii) During the Construction Period, subject to Section 4(c)
and the terms and conditions set forth in this Participation Agreement
with respect to Advances, Yield shall accrue on outstanding Equity
Amounts and shall be funded monthly by the Lenders and the Certificate
Holders pursuant to Section 3(a) and (b). During the Basic Term, such
Yield shall be paid as a component of Basic Rent.
(b) INTEREST ON LOANS
(i) The amount of each Loan shall accrue interest at the
applicable rate set forth in the Loan Agreement, calculated using the
actual number of days elapsed and, when the interest on the Loans is
determined by reference to the LIBO Rate (Reserve Adjusted) or the
Alternate Base Rate not based upon the Prime Rate, a 360-day year basis
and, when such interest is determined by reference to the Alternate
Base Rate based upon the Prime Rate, a 365- (or, if applicable, 366-)
day year basis. If all or any portion of the Loans, any interest
payable thereon or any other amount payable to any Lender, or the Agent
hereunder shall not be paid when due (whether at stated maturity,
acceleration thereof or otherwise), such overdue amount shall bear
interest at a rate per annum which is equal to the Overdue Rate.
(ii) The Lessee shall, pursuant to the Assignment of Leases
and Rents, deposit in the Account the Lender Basic Rent (determined on
the basis of amounts due in accordance with clause (i) above) and all
other amounts due with respect to the Loans payable by the Lessee under
the Lease from time to time.
(iii) During the Construction Period, subject to Section 4(c)
and the terms and conditions set forth in this Participation Agreement
with respect to Advances, interest shall accrue on outstanding Loans
and shall be paid as an Advance in accordance with the Approved Budget.
During the Basic Term, such interest shall be paid as a component of
Basic Rent.
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7
(c) PREPAYMENTS OF LOANS AND EQUITY AMOUNTS. In the event that the
Lessee pays the Property Balance to the Lessor in connection with the Lessee's
purchase of the Property in accordance with Sections 6, 11 or 16 of the Lease,
the Lessor will prepay the entire outstanding principal amount of the Loans and
Equity Amounts (or portion thereof so paid in the case of Section 11 or 6(e) of
the Lease). Each of the Participants and the Lessor hereby acknowledge that its
Loans or Equity Amounts, as the case may be, may be so prepaid without any
prepayment premium other than Break Costs and other amounts pursuant to Section
4(e)(iii).
(d) FACILITY FEES; OTHER FEES. The Lessee agrees to pay the fees set
forth in this Section 4(d); provided that during the Construction Period such
fees shall be paid only out of the proceeds of an Advance in accordance with the
Approved Budget, and shall not represent direct recourse obligations of the
Lessee (except to the extent the Lessee is obligated to pay the Property
Balance).
(i) COMMITMENT FEES. The Lessee agrees to pay to each Tranche
A Lender, each Tranche B Lender and each Certificate Holder for the
Construction Period (including any portion of such Construction Period
when any Participant's Commitment is suspended by reason of the
Lessee's inability to satisfy any condition of Section 9), a facility
fee (collectively, the "COMMITMENT FEES") at a per annum rate equal to
the Applicable Facility Fee Percentage on each Participant's Available
Commitment. The Commitment Fees shall be payable by the Lessee in
arrears with respect to each monthly period (or portion thereof, for
the first and last such periods) following the Documentation Date on
the first day of each month (provided, however, that if such day is not
a Business Day, such payment shall be due on the immediately preceding
Business Day in the full amount due on such first day), commencing
December 1, 2001 through and including the first day immediately
following the expiration of the Construction Period, and shall be
determined on the basis of the daily average Available Commitments
during each such monthly period. The Commitment Fees shall be computed
on the basis of the actual number of days (including the first day but
excluding the last day) occurring during the period for which such
Commitment Fees are payable over a year of 360 days.
(ii) OTHER FEES. The Lessee agrees to pay the following fees
in the amounts and at the times as provided in the Fee Letter and in
accordance with the Approved Budget: (x) to the Agent, for its own
account, the Annual Administration Fees, (y) to the Arranger, for its
own account, the Arrangement Fee, and (z) to the Arranger, for its own
account, the Structuring Fee; provided, that, during the Construction
Period, such fees shall be paid from the proceeds of Advances.
(e) INTEREST AND YIELD PROTECTION.
(i) Alternate Rate of Interest. If prior to the commencement
of any Interest Period for an Advance with interest or Yield determined
by reference to the LIBO Rate (Reserve Adjusted):
(1) the Agent determines (which determination shall
be conclusive absent manifest error) that adequate and
reasonable means do not exist for
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8
ascertaining the LIBO Rate (Reserve Adjusted) or the LIBO
Rate, as applicable, for such Interest Period; or
(2) the Agent is advised by any Participant or
Participants that because of a change in circumstances
affecting the eurocurrency market generally the LIBO Rate
(Reserve Adjusted) or the LIBO Rate, as applicable, for such
Interest Period will not adequately and fairly reflect the
cost to such Participants (or Participant) of making or
maintaining their Loans or Equity Amounts (or its Loan or
Equity Amount) for such Interest Period; then the Agent shall
give notice thereof to the Lessee and the Participants by
telephone or telecopy as promptly as practicable thereafter
and, until the Agent notifies the Lessee and the Participants
that the circumstances giving rise to such notice no longer
exist, (i) any Funding Request that requests the conversion or
continuation of an Advance with interest determined by
reference to the LIBO Rate (Reserve Adjusted) shall be
ineffective, (ii) if any Funding Request requests an Advance
with interest determined by reference to the LIBO Rate
(Reserve Adjusted), such Advance shall be made as an Alternate
Base Rate Advance and (iii) any Funding Request by the Lessee
for an Advance with interest determined by reference to the
LIBO Rate (Reserve Adjusted) shall be ineffective; provided,
however, that if the circumstances giving rise to such notice
do not affect all the Participants, then requests by the
Lessee for an Advance with interest determined by reference to
the LIBO Rate (Reserve Adjusted) may be made to Participants
that are not affected thereby.
(ii) Increased Costs.
(1) If any Change in Law shall:
(a) impose, modify or deem applicable any
reserve, special deposit or similar requirement
against assets of, deposits with or for the account
of, or credit extended by, any Participant (except
any such reserve requirement reflected in the LIBO
Rate (Reserve Adjusted)); or
(b) impose on any Participant or the London
interbank market any other condition affecting this
Agreement or Advances made by such Participant under
this Agreement and the result of any of the foregoing
shall be to increase the cost to such Participant of
making, funding or maintaining any such Loan or
Equity Amount (or of maintaining its obligation to
make any such Loan or Equity Amount) or to reduce the
amount of any sum received or receivable by such
Participant hereunder (whether of principal,
interest, Equity Amount, Yield or otherwise), then
the Lessee will pay to such Participant such
additional amount or amounts as will compensate such
Participant for such additional costs incurred or
reduction suffered.
(2) If any Participant determines that any Change in
Law regarding capital requirements has or would have the
effect of reducing the rate of return on such Participant's
capital or on the capital of such Participant's holding
company,
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9
if any, as a consequence of this Agreement or the Loans or
Equity Amounts made, funded or created by, such Participant,
to a level below that which such Participant or such
Participant's holding company could have achieved but for such
Change in Law (taking into consideration such Participant's
policies and the policies of such Participant's holding
company with respect to capital adequacy), then from time to
time the Lessee will pay to such Participant such additional
amount or amounts as will compensate such Participant or such
Participant's holding company for any such reduction suffered.
(3) A certificate of a Participant setting forth the
amount or amounts necessary to compensate such Participant or
its holding company, as the case may be, as specified in
paragraph (1) or (2) of this Subsection shall be delivered to
the Lessee and shall be conclusive absent manifest error. The
Lessee shall pay such Participant the amount shown as due on
any such certificate within 10 days after receipt thereof.
(4) Failure or delay on the part of any Participant
to demand compensation pursuant to this Subsection shall not
constitute a waiver of such Participant's right to demand such
compensation; provided, however, that the Lessee shall not be
required to compensate a Participant pursuant to this
Subsection for any increased costs or reductions incurred more
than three months prior to the date that such Participant
notifies the Lessee of the Change in Law giving rise to such
increased costs or reductions and of such Participant's
intention to claim compensation therefor; provided further
that, if the Change in Law giving rise to such increased costs
or reductions is retroactive, then the three-month period
referred to above shall be extended to include the period of
retroactive effect thereof.
(iii) Break Funding Payments. In the event of (1) the payment
of any principal of any Loan or Equity Amount other than on the last
day of an Interest Period applicable thereto (including as result of an
Event of Default), (2) the conversion of any Loan or Equity Amount
other than on the last day of the Interest Period applicable thereto,
(3) the failure to borrow, convert, continue or prepay any Loan or
Equity Amount on the date specified in any notice delivered pursuant
hereto (regardless of whether such notice is permitted to be revocable
and is revoked in accordance herewith), or (4) the assignment of any
Loan or Equity Amount other than on the last day of the Interest Period
applicable thereto as a result of a request by Lessee then, in any such
event, the Lessee shall compensate each Participant for the loss, costs
and expense attributable to such event, including, without limitation,
Break Costs and any costs associated with the termination by any
Participant of any foreign currency exchange arrangements. The loss to
any Participant attributable to any such event shall be deemed to
include an amount determined by such Participant to be equal to the
excess, if any, of (i) the amount of interest that such Participant
would pay for a deposit equal to the principal amount of such Loan or
Equity Amount for the period from the date of such payment, conversion,
failure or assignment to the last day of the then current Interest
Period for such Loan (or, in the case of a failure to borrow, convert
or continue, the duration of the Interest Period that would have
resulted from such borrowing, conversion or continuation) if the
interest
Participation Agreement
10
rate payable on such deposit were equal to the LIBO Rate (Reserve
Adjusted) for such Interest Period, over (ii) the amount of interest
that such Participant would earn on such principal amount for such
period if such Participant were to invest such principal amount for
such period at the interest rate that would be bid by such Participant
(or an Affiliate of such Participant) for dollar deposits from other
banks in an eurodollar market at the commencement of such period. A
certificate of any Participant setting forth any amount or amounts that
such Participant is entitled to receive pursuant to this Subsection
shall be delivered to the Lessee and shall be conclusive absent
manifest error. The Lessee shall pay such Participant the amount shown
as due on any such certificate within 10 days after receipt thereof.
(1) Mitigation Obligations; Replacement of
Participants. (1) If any Participant requests compensation
under Section 4(e)(ii)(1), or if the Lessee is required to pay
any additional amount thereunder to any Participant, then such
Participant shall use reasonable efforts to designate a
different lending office for funding or booking its Loans or
Equity Amounts hereunder or to assign its rights and
obligations hereunder to another of its offices, branches or
affiliates, if, in the judgment of such Participant, such
designation or assignment (i) would eliminate or reduce
amounts payable pursuant to Section 4(e)(ii)(1) in the future
and (ii) would not subject such Participant to any
unreimbursed cost or expense and would not otherwise be
disadvantageous to such Participant. The Lessee hereby agrees
to pay all reasonable costs and expenses incurred by any
Participant in connection with any such designation or
assignment.
(2) If any Participant requests compensation under
Section 4(e)(ii) or if any Participant defaults in its
obligation to fund Loans or Equity Amounts hereunder, then the
Lessee may, at its sole expense and effort, upon notice to
such Participant and the Agent, require such Participant to
assign and delegate, without recourse, all its interests,
rights and obligations under this Agreement to an assignee
that shall assume such obligations (which assignee may be
another Participant, if a Participant accepts such
assignment); provided, however, that (i) the Lessee shall have
received the prior written consent of the Agent, which consent
shall not unreasonably be withheld, (ii) such Participant
shall have received payment of an amount equal to the
outstanding principal of its Loans or outstanding Equity
Balance (as applicable), accrued interest or Yield thereon,
accrued fees and all other amounts payable to it hereunder
(including Break Costs), from the assignee (to the extent of
such outstanding principal or Equity Balance and accrued
interest or Yield and fees) or the Lessee (in the case of all
other amounts) and (iii) in the case of any such assignment
resulting from a claim for compensation under Section
4(e)(ii), such assignment will result in a reduction in such
compensation or payments. A Participant shall not be required
to make any such assignment and delegation if, prior thereto,
as a result of a waiver by such Participant or otherwise, the
circumstances entitling the Lessee to require such assignment
and delegation cease to apply.
(iv) If it becomes illegal for any Participant to continue its
participation in the transaction contemplated by the Operative
Documents (the "OVERALL TRANSACTION"), the
Participation Agreement
11
Participant shall give notice promptly to the Agent, Certificate
Holders, Owner Trustee, each other Participant and the Lessee
(including in such notice reasonable details as to the basis of such
illegality). Each Participant agrees for the benefit of the Lessee and
(in the case of a Lender) the Certificate Holders, if so required by
the Lessee, to consult in good faith with the Lessee and such other
parties and to use its reasonable best efforts to avoid such illegality
(including by assigning its rights hereunder and under the other
Operative Documents to an Affiliate or branch of the Participant, and
providing that such Affiliate or branch shall assume its obligations
hereunder and thereunder); provided, however, that such Participant
shall not in this connection be obligated to take any action which
would be materially prejudicial to the operations of the Participant;
provided further, however, that the portion of the Loan or Equity
Amount held by such Participant shall be prepaid on or prior to the
date (the "ILLEGALITY PREPAYMENT DATE") which is the earlier of the
180th day subsequent to the giving by such Participant of such notice
and the date upon which the Participant is obligated under Applicable
Law to terminate its participation in the Overall Transaction if such
illegality has not been avoided or the portion of the Loan or Equity
Amount held by such Participant has not been prepaid prior to the
Illegality Prepayment Date.
(v) During the Construction Period, any amounts payable
pursuant to this Section 4(e) will be paid only from proceeds of the
Advances in accordance with the Approved Budget; provided, that, in
accordance with Section 14(a)(12) hereof, the Construction Agent has
indemnified Lessor with respect to any such amounts or costs.
(f) NOTICE OF YIELD AND INTEREST.
(i) The Agent shall deliver to the Lessee from time to time
written notice of the amount of Basic Rent and the due date therefor
(i) promptly (and in any event within three (3) Business Days) after
the commencement of each LIBO period, and (ii) promptly (and in any
event within three (3) Business Days) after determination of Accrued
Interest and Yield determined by reference to the Alternate Base Rate.
(ii) During the Basic Term, subject to Section 4(e) hereof, on
or before 10:00 a.m., Chicago time, on the date that is three (3)
Business Days prior to the expiration of any Interest Period, Lessee
shall, from time to time, upon written notice to the Lessor and the
Agent, select whether or not interest and Yield will accrue at the
Alternate Base Rate or the LIBO Rate. If Lessee's selects the LIBO
Rate, Lessee shall also select the term of the next succeeding Interest
Period. If Lessee does not specify the length of any Interest Period as
set forth in the immediately preceding sentence, then Lessee shall be
deemed to have a selected the then expiring Interest Period. During the
Construction Period, the Lessee shall be allowed to maintain a maximum
of two (2) separate LIBOR tranches at any time; provided, that only (1)
LIBOR tranche shall exist upon the expiration of the Construction
Period. During the Basic Term, the Lessee shall be allowed to maintain
only one (1) LIBOR tranche.
Participation Agreement
12
SECTION 5. CERTAIN INTENTIONS OF THE PARTIES; DISCLOSURE; DISTRIBUTIONS
(i) NATURE OF TRANSACTION. (i) The parties hereto intend that
(1) for financial accounting purposes with respect to the Lessee, the
Lessor will be treated as the owner and the lessor of the Property,
including the Equipment, and the Lessee will be treated as the lessee
of the Property, including the Equipment, and (2) for all other
purposes, including Federal and all state and local income tax
purposes, state real estate and commercial law, bankruptcy and
Environmental Law purposes, (x) the Lease will be treated as a
financing arrangement, (y) the Participants will be deemed lenders
making loans to the Lessee in an amount equal to the sum of the Equity
Amounts and the outstanding principal amount of the Loans, which loans
are secured by the Property, and (z) the Lessee will be treated as the
owner of the Property and will be entitled to all tax benefits
ordinarily available to an owner of property like the Property for such
tax purposes. Nevertheless, the Lessee acknowledges and agrees that
neither the Lessor nor any of the Participants has made any
representations or warranties to the Lessee concerning the tax,
accounting or legal characteristics of the Operative Documents and that
the Lessee has obtained and relied upon such tax, accounting and legal
advice concerning the Operative Documents as it deems appropriate.
(ii) Specifically, without limiting the generality of clause
(i), the parties hereto intend and agree that in the event of any
insolvency or receivership proceedings or a petition under the United
States bankruptcy laws or any other applicable insolvency laws or
statute of the United States of America or any State or Commonwealth
thereof affecting the Lessee, the Lessor or the Participants or any
collection actions, the transactions evidenced by the Operative
Documents are loans made to the Lessee by the Participants in each case
as unrelated third party lenders.
(b) AMOUNTS DUE UNDER LEASE. Anything else herein or elsewhere to the
contrary notwithstanding, it is the intention of the Lessee, the Certificate
Holders, the Owner Trustee, the Lessor and the Lenders that: (1) the amount and
timing of installments of Basic Rent due and payable from time to time from the
Lessee under the Lease shall be equal to the aggregate payments due and payable
as interest on the Loans and Yield on the Equity Amounts on each Payment Date,
subject to Section 4(c); (2) if the Lessee becomes obligated or otherwise elects
to purchase the Property under the Lease, the Loans, the Equity Amounts, all
interest, Yield and Facility Fees thereon and all other obligations of the
Lessee owing to the Lessor, the Certificate Holders, the Owner Trustee and the
Lenders shall be paid in full by the Lessor out of funds paid to the Lessor by
the Lessee; (3) if the Lessee properly elects the Sale Option with respect to
the Property, the Lessee shall only be required to pay to the Participants the
proceeds of the sale of the Property, the Final Rent Payment and any amounts due
pursuant to Sections 13 and 14 hereof and Section 6(d) of the Lease (which
aggregate amounts may be less than the Property Balance), together with any
accrued Basic Rent and Supplemental Rent then due and owing; and (4) upon an
Event of Default resulting in an acceleration of the Lessee's obligation to
purchase the Property under the Lease, the amounts then due and payable by the
Lessee under the Lease shall include all amounts necessary to pay in full the
Property Balance, plus all other amounts then due from the Lessee to the
Participants under the Operative Documents.
Participation Agreement
13
(c) DISCLOSURE. The parties hereto agree that none of them is limited
in any way by an express or implied understanding or agreement with or for the
benefit of any person who would be treated as a tax shelter promoter (within the
meaning of Internal Revenue Code Section 6111(d)) (a "Promoter") from disclosure
of the structure or tax aspects (within the meaning of Treas. Reg.
Section 301.6111-2T(c)(1)) of the transaction which is the subject of this
Participation Agreement. Furthermore, no party hereto who would be treated as a
Promoter (x) claims, knows, or has reason to know, (y) knows or has reason to
know that any other person (other than the parties hereto) claims or (z) will
cause another person to claim, that the transaction which is the subject of this
Participation Agreement is proprietary to any person other than the parties
hereto or is otherwise protected from disclosure of the foregoing by others.
(d) DISTRIBUTION.
(i) Subject to Section 5(d)(vii)(4), each payment of Basic
Rent (and any payment of interest on overdue installments of Basic
Rent) received by the Agent shall be distributed by the Agent to the
Participants, pro rata in accordance with, and for application to, the
Tranche A Lender Basic Rent, Tranche B Lender Basic Rent and Equity
Basic Rent then due, as well as any overdue interest due to each such
Participant (to the extent permitted by Applicable Law).
(ii) Subject to Section 5(d)(vii)(4), any payment received by
the Lessor or the Agent as a result of:
(1) the purchase of any Property in connection with
the Lessee's exercise of its option under Section 6(b) or 6(e)
of the Lease (or the Construction Agent's exercise of its
option under Section 5.4 of the Construction Agency
Agreement), or
(2) the Lessee failing to fulfill one or more of the
conditions to the exercise of the Sale Option pursuant to
Section 6(d) of the Lease and the Lessor's receipt of the
Property Balance from the Lessee pursuant to Section 6(d)(3)
of the Lease;
shall be promptly remitted by the Lessor to the Agent (if received by the
Lessor) and in each case, shall be distributed by the Agent to pay in full the
Participant Balance of each Participant.
(iii) The payment by the Lessee of Final Rent Payment and all
Supplemental Rent due in accordance with Section 6(d)(3) of the Lease
upon the Lessee's exercise of the Sale Option and the payment by the
Lessee of the Construction Recourse Amount in accordance with Section
5.2 of the Construction Agency Agreement shall be promptly remitted by
the Lessor (if received by the Lessor) to the Agent, and shall be
distributed by the Agent in the following amounts and order of
priority: first, so much of such payments or amounts as shall
constitute Supplemental Rent, to the Persons entitled thereto in
accordance with Section 5(d)(v); and second, to the Tranche A Lenders
for application to pay in full the Tranche A Loan Balance of each
Tranche A Lender, and in the case where the amount so distributed shall
be insufficient to pay in full as aforesaid, then pro rata among the
Tranche A Lenders without priority of one Tranche A Lender
Participation Agreement
14
over the other in the proportion that each such Participant's Tranche A
Loan Balance bears to the aggregate Tranche A Loan Balances of all
Tranche A Lenders, and third, to the Tranche B Lenders for application
to pay in full the Tranche B Loan Balance of each Tranche B Lender, and
in the case where the amount so distributed shall be insufficient to
pay in full as aforesaid, then pro rata among the Tranche B Lenders
without priority of one Tranche B Lender over the other in the
proportion that each such Participant's Tranche B Loan Balance bears to
the aggregate Tranche B Loan Balances of all Tranche B Lenders, and
fourth, to the Certificate Holders for application to pay in full the
Equity Balance, and in the case where the amounts so distributed shall
be insufficient to pay in full as aforesaid, then pro rata among
Certificate Holders without priority of one Certificate Holder over the
other in the proportion that each such Participant's Equity Balance
bears to the aggregate Equity Balances of all Certificate Holders.
(iv) Any payments received as proceeds from the sale of the
Property sold pursuant to the Lessee's exercise of the Sale Option
pursuant to Section 6(c) of the Lease and any payment received as
proceeds from the sale of the Property sold pursuant to Section 5.2 of
the Construction Agency Agreement or sold by the Agent on behalf of the
Participants (after netting out payment of Closing Costs and reasonable
costs and expenses incurred by the Agent in connection with such sale
and the payment to the then existing or prior Participants, the Lessor
or Wilmington Trust Company of amounts payable to them pursuant to any
expense reimbursement or indemnification provisions of the Operative
Documents), shall be promptly remitted by the Lessor (if received by
the Lessor) to the Agent, and shall be distributed by the Agent in the
funds so received in the following order of priority: first, to the
Lenders which funded any Loan Excluded Amounts, for application to pay
in full the Loan Excluded Amounts of each such Lender, and in the case
where the amounts so distributed shall be insufficient to pay in full
as aforesaid, then pro rata among such Lenders without priority of one
such Lender over the other in the proportion that each such Lender's
portion of Loan Excluded Amounts bears to the aggregate Loan Excluded
Amounts of all such Lenders; second, to the Tranche B Lenders for
application to pay in full the Tranche B Loan Balance of each Tranche B
Lender, and in the case where the amount so distributed shall be
insufficient to pay in full as aforesaid, then pro rata among the
Tranche B Lenders without priority of one Tranche B Lender over the
other in the proportion that each such Participant's Tranche B Loan
Balance bears to the aggregate Tranche B Loan Balances of all Tranche B
Lenders, and third, to the Tranche A Lenders for application to pay in
full the Tranche A Loan Balance of each Tranche A Lender, and in the
case where the amount so distributed shall be insufficient to pay in
full as aforesaid, then pro rata among the Tranche A Lenders without
priority of one Tranche A Lender over the other in the proportion that
each such Participant's Tranche A Loan Balance bears to the aggregate
Tranche A Loan Balances of all Tranche A Lenders, and fourth, to the
Certificate Holders, personally, for application to pay in full the
Equity Balance, and in the case where the amounts so distributed shall
be insufficient to pay in full as aforesaid, then pro rata among
Certificate Holders without priority of one Certificate Holder over the
other in the proportion that each such Participant's Equity Balance
bears to the aggregate Equity Balances of all Certificate Holders and
fifth, the balance, if any, shall be promptly distributed to, or as
directed by, the Lessee.
Participation Agreement
15
(v) All payments of Supplemental Rent received by the Lessor
shall promptly be remitted to the Agent. All payments of Supplemental
Rent received by the Agent (excluding any amounts payable pursuant to
the preceding provisions of this Section 5(d), other than clause
"first" of Section 5(d)(iii)) shall be distributed promptly by the
Agent upon receipt thereof to the Persons entitled thereto pursuant to
the Operative Documents.
(vi) Notwithstanding any other provision of this Section 5(d),
any Excepted Payment received at any time by the Lessor or the Agent
shall be promptly remitted by the Lessor (if received by the Lessor) to
the Agent, and shall be distributed by the Agent to the Person entitled
to receive such Excepted Payment pursuant to the Operative Documents.
(1) (1)All amounts received by the Lessor or the
Agent in connection with any sale or reletting of all or any
part of the Property after the occurrence of a Lease Event of
Default shall be promptly remitted by the Lessor (if received
by the Lessor) to the Agent, and shall be distributed by the
Agent in the following order of priority: first, so much of
such payments or amounts as shall be required to pay the then
existing or prior Participants, the Lessor and Wilmington
Trust Company the amounts payable to them pursuant to any
expense reimbursement or indemnification provisions of the
Operative Documents and reimbursement of Costs of Carry shall
be distributed to each such Person without priority of one
over the other in accordance with the amount of such payment
or payments payable to each such Person; second, to the
Lenders which funded any Loan Excluded Amounts, for
application to pay in full the Loan Excluded Amounts of each
such Lender, and in the case where the amounts so distributed
shall be insufficient to pay in full as aforesaid, then pro
rata among such Lenders without priority of one such Lender
over the other in the proportion that each such Lender's
portion of Loan Excluded Amounts bears to the aggregate Loan
Excluded Amounts of all such Lenders; third, to the Tranche B
Lenders for application to pay in full the Tranche B Loan
Balance of each Tranche B Lender, and in the case where the
amounts so distributed shall be insufficient to pay in full as
aforesaid, then pro rata among the Tranche B Lenders without
priority of one Tranche B Lender over the other in the
proportion that each such Participant's Tranche B Loan Balance
bears to the aggregate Tranche B Loan Balances of all Tranche
B Lenders; fourth, to the Tranche A Lenders for application to
pay in full the Tranche A Loan Balance of each Tranche A
Lender, and in the case where the amounts so distributed shall
be insufficient to pay in full as aforesaid, then pro rata
among the Tranche A Lenders without priority of one Tranche A
Lender over the other in the proportion that each such
Participant's Tranche A Loan Balance bears to the aggregate
Tranche A Loan Balances of all Tranche A Lenders; fifth, to
the Certificate Holders for application to pay in full the
Equity Balance and in the case where the amounts so
distributed shall be insufficient to pay in full as aforesaid,
then pro rata among the Certificate Holders without priority
of one Certificate Holder over the other in the proportion
that each such Participant's Equity Balance bears to the
aggregate Equity Balances of all Certificate Holders; and
sixth, the balance, if any, of such payment or amounts
remaining thereafter shall be promptly distributed to, or as
directed by, (i) the Lessee for any surplus
Participation Agreement
16
realized at any foreclosure sale of the Property or otherwise
realized in connection with the exercise of remedies under the
Lease or (ii) in any other case, pro rata among the
Participants.
(2) All payments received and amounts realized by the
Lessor or the Agent in connection with any Casualty or
Condemnation after the occurrence of a Lease Event of Default
shall be promptly remitted by the Lessor (if received by the
Lessor) to the Agent and shall be distributed by the Agent in
accordance with Section 5(d)(vii)(3).
(3) All payments received and amounts realized (other
than payments or amounts described in clause (1) above) by the
Lessor or the Agent after the occurrence of a Lease Event of
Default shall be promptly remitted by the Lessor (if received
by the Lessor) to the Agent and shall be distributed by the
Agent in the following order of priority: first, so much of
such payments or amounts as shall be required to pay the then
existing or prior Participants, the Lessor and Wilmington
Trust Company the amounts payable to them pursuant to any
expense reimbursement or indemnification provisions of the
Operative Documents shall be distributed to each such
Participant without priority of one over the other in
accordance with the amount of such payment or payments payable
to each such Person; second, to the Tranche A Lenders, pro
rata in accordance with, and for application to, the Tranche A
Loan Balance of each Tranche A Lender (first to the payment of
interest (pro rata based upon the aggregate amount of interest
then outstanding), and then to principal, in each case pro
rata), and third to the Tranche B Lenders, pro rata in
accordance with, and for application to, the Tranche B Loan
Balance of each Tranche B Lender (first to the payment of
interest (pro rata based upon the aggregate amount of interest
then outstanding), and then to principal, in each case pro
rata), and fourth, to the Certificate Holders, pro rata in
accordance with, and for application to, the Equity Balance of
each Certificate Holder (first to the payment of Yield (pro
rata based upon the aggregate amount of Yield then
outstanding), and then to principal, in each case pro rata),
and fifth, after payment in full of the Participant Balances
and all other amounts due and owing, the balance, if any, of
such payment or amounts remaining thereafter shall be promptly
distributed to, or as directed by, the Lessee.
(4) During the occurrence and continuance of a Lease
Event of Default, all amounts (other than Excepted Payments)
received or realized by the Lessor or the Agent shall be
promptly remitted by the Lessor (if received by the Lessor) to
the Agent and all such amounts otherwise distributable by the
Agent pursuant to Sections 5(d)(i), 5(d)(ii) and 5(d)(ix)
shall be distributed by the Agent as provided for in clauses
(1), (2) and (3) above.
(5) (1)Subject to Sections 5(d)(viii)(2) and
5(d)(viii)(3), any payment received by the Lessor or the Agent
for which no provision as to the application thereof is made
in the Operative Documents or elsewhere in this Section 5(d)
shall be promptly remitted by the Lessor (if received by the
Lessor) to the Agent
Participation Agreement
17
and shall be distributed by the Agent as follows: first, to
the Tranche A Lenders for application to pay in full the
Tranche A Loan Balance of each Tranche A Lender, and in the
case where the amount so distributed shall be insufficient to
pay in full as aforesaid, then pro rata among the Tranche A
Lenders without priority of one Tranche A Lender over the
other in the proportion that each such Participant's Tranche A
Loan Balance bears to the aggregate Tranche A Loan Balances of
all Tranche A Lenders, and second, to the Tranche B Lenders
for application to pay in full the Tranche B Loan Balance of
each Tranche B Lender, and in the case where the amount so
distributed shall be insufficient to pay in full as aforesaid,
then pro rata among the Tranche B Lenders without priority of
one Tranche B Lender over the other in the proportion that
each such Participant's Tranche B Loan Balance bears to the
aggregate Tranche B Loan Balances of all Tranche B Lenders,
and third, to the Certificate Holders for application to pay
in full the Equity Balance, and in the case where the amounts
so distributed shall be insufficient to pay in full as
aforesaid, then pro rata among Certificate Holders without
priority of one Certificate Holder over the other in the
proportion that each such Participant's Equity Balance bears
to the aggregate Equity Balances of all Certificate Holders.
(6) Except as otherwise provided in Section
5(d)(vii), all payments received and amounts realized by the
Lessor or the Agent under the Lease or otherwise with respect
to the Property, or any proceeds thereof to the extent
received or realized at any time after an indefeasible payment
in full of the Participant Balances of all of the Participants
and any other amounts due and owing to the Participants, the
Lessor or Wilmington Trust Company, shall be promptly remitted
by the Lessor (if received by the Lessor) to the Agent and
shall be distributed forthwith by the Agent in the order of
priority set forth in Section 5(d)(vii)(3), except that such
payment shall be distributed omitting clause "second" of such
Section 5(d)(vii)(3).
(7) Any payment received by the Lessor or the Agent
for which provision as to the application thereof is made in
an Operative Document but not elsewhere in this Section 5(d)
shall be promptly remitted by the Lessor (if received by the
Lessor) to the Agent and shall be distributed forthwith by the
Agent to the Person and for the purpose for which such payment
was made in accordance with the terms of such Operative
Document.
(vii) Subject to Section 5(d)(vii)(4), any amounts payable to
the Lessor or the Agent as a result of a Casualty or Condemnation
pursuant to Section 11 of the Lease shall be promptly remitted by the
Lessor (if received by the Lessor) to the Agent and shall be
distributed by the Agent as follows:
(1) all amounts that are to be applied to the
purchase price of the Property in accordance with Section 11
and Section 6 of the Lease shall be distributed by the Agent
in accordance with Section 5(d)(ii).
Participation Agreement
18
(2) all amounts payable to the Lessee for the repair
of damage caused by such Casualty or Condemnation in
accordance with Section 11(b) of the Lease shall be
distributed to, or as directed by, the Lessee.
(viii) To the extent any payment made to any Participant is
insufficient to pay in full the Participant Balance of such
Participant, then each such payment shall first be applied to accrued
interest or Yield and then to principal or the Equity Amounts, as
applicable.
(ix) Notwithstanding anything to the contrary contained in
this Section 5(d), any payments received by the Agent in connection
with the Partial Option Closing pursuant to Section 24 of this
Participation Agreement shall be distributed by the Agent in the
following order of priority: first, an amount equal to all Other
Amounts, all Excluded Amounts and all costs and expenses payable by or
on behalf of Lessee pursuant to clause (z) of Section 24(a)(v) of this
Participation Agreement shall be distributed by the Agent to the
Persons entitled to those amounts pursuant to the Operative Documents;
second, an amount equal to (x) the Partial Option Percentage of all
accrued but unpaid interest on the aggregate of all Loans and (y) the
Partial Percentage of all accrued but unpaid Yield on the aggregate of
all Equity Amounts for the period from the last Payment Date and
through and including the Partial Option Closing Date shall be
distributed by the Agent to the Participants, in accordance with, and
for application to the payment of such amounts; and third, an amount
equal to the Partial Option Percentage of the aggregate Participant
Balance of all Participants shall be distributed by the Agent to the
Participants, pro rata in accordance with and for application to the
payment of such amounts.
SECTION 6. REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF THE PARTICIPANTS
(a) REPRESENTATIONS AND WARRANTIES. Each Participant hereby represents
and warrants as to itself to the other Participants and the Lessee that:
(i) STATUS; DUE ORGANIZATION. It (i) is either a corporation
duly organized and validly existing in good standing under the laws of
the State of Delaware or a commercial bank, branch or agency of a
foreign bank or other similar financial institution, or an Affiliate
thereof and (ii) has all requisite power and authority to enter into,
and perform its obligations under, each of the Operative Documents to
which it is or will become a party.
(ii) DUE AUTHORIZATION; ENFORCEABILITY. Each of the Operative
Documents to which it is or will become a party has been duly
authorized by all appropriate corporate action, and has been or will be
executed and delivered by it, and, assuming due authorization,
execution and delivery by the other parties thereto, constitutes or
will constitute upon the due execution thereof the Participant's legal,
valid and binding obligation, enforceable against it in accordance with
its terms, except as enforceability thereof may be limited by (i)
bankruptcy, insolvency, reorganization, moratorium or other similar
laws affecting enforcement of creditors' rights generally and (ii)
general
Participation Agreement
19
principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law).
(iii) NO VIOLATION. The execution and delivery by the
Participant of each of the Operative Documents to which it is or will
become a party are not, and the performance by the Participant of its
obligations under each, do not and will not contravene its Organic
Documents or any Applicable Law applicable to the Participant (it being
understood that the Participant makes no representation or warranty
relating to the nature of the Property or any part thereof or any
Applicable Law relating thereto), and do not and will not contravene
any provision of, or constitute a default under, any indenture,
mortgage or other material contract or other instrument to which the
Participant is a party or by which it or its property is bound or
require the consent or approval of, the giving of notice to, the
registration with or the taking of any action in respect of or by, any
Governmental Authority or other Person (it being understood that the
Participant makes no representation or warranty relating to the nature
of the Property or any part thereof or any Applicable Law relating
thereto), except such as have been obtained, given or accomplished.
(iv) NO LITIGATION. There are no pending or, to the knowledge
of the Participant, threatened actions or proceedings by or before any
court or administrative agency or other Governmental Authority to which
the Participant is or will become a party which (i) involves any of the
transactions contemplated hereunder or by any of the Operative
Documents or (ii) if determined adversely to it, would reasonably be
likely to materially adversely affect its ability to perform its
obligations under each of the Operative Documents to which the
Participant is or will become a party.
(v) PERFORMANCE DOES NOT CREATE LIENS. The performance by the
Participant of its obligations under each of the Operative Documents to
which the Participant is or will become a party do not subject the
Trust Estate to any Lien (other than the Liens created by the Operative
Documents) under any indenture, mortgage, contract or other instrument
to which the Participant is a party or by which the Participant is
bound.
(vi) ERISA. It is not and will not be making its Loans or
funding Equity amounts hereunder, and is not performing its obligations
under the Operative Documents with the assets of any "employee benefit
plan" (as defined in Section 3(3) of ERISA) which is subject to Title I
of ERISA or "plan" (as defined in Section 4975(e)(1) of the Code).
(vii) THIRD PARTY FEES. It has not authorized or employed any
Person to act as agent, broker, finder, financial advisor or otherwise
in connection with the transactions contemplated by the Operative
Documents other than the Agent and its Affiliates, including the
Arranger.
(b) ADDITIONAL REPRESENTATIONS AND WARRANTIES. Each Certificate Holder
additionally represents, warrants and agrees:
Participation Agreement
20
(i) ACQUISITION FOR INVESTMENT. It is acquiring its interest
in the Trust Estate, including the trust certificates, for its own
account for investment and not with a view to, or for sale in
connection with, any distribution thereof, but subject, nevertheless,
to any requirement of law that the disposition of its property shall at
all times be within its control.
(ii) NO OFFERING. Neither such Certificate Holder nor anyone
acting on its behalf has offered, directly or indirectly, any interest
in the Trust Estate, including the trust certificates, for sale to, or
solicited any offer to acquire any of the same from, anyone (it being
understood that neither the Lessee nor any other Person has been
authorized to act on behalf of any Certificate Holder in connection
with any such offer or solicitation).
(iii) LESSOR LIENS. The Property is free of Lessor Liens
attributable to such Certificate Holder.
(iv) CONSOLIDATED CAPITALIZATION. During the Construction
Period, such Certificate Holder has stockholders equity (or the
equivalent) (on a consolidated basis) of at least $5,000,000.
(v) INVESTMENT COMPANY. Such Certificate Holder is not an
"investment company" or a company "controlled" by an "investment
company" within the meaning of the Investment Company Act of 1940, as
amended.
(vi) TRANSFER AND ASSIGNMENTS. Any transfer or assignment of
its interest in the Trust Estate (including the trust certificates)
shall be subject to, and shall be effected in accordance with, the
terms and provisions of Section 12.
(vii) TRANSFERS. It will not transfer its interest in the
Trust or the Trust Estate, including the trust certificates, except as
expressly provided in Section 8.1 of the Trust Agreement.
(viii) LESSOR LIENS. It will not directly or indirectly
create, incur, assume or suffer to exist any Lessor Liens attributable
to it on the Trust Estate. It will, at its own cost and expense,
promptly take such action as may be necessary to discharge fully all
such Lessor Liens on the Trust Estate, other than Lessor Liens being
contested by a Permitted Contest. It shall make restitution to the
Trust Estate for any diminution in the value of the Trust Estate as a
result of its failure to discharge any such Lessor Liens. It shall
promptly, and in no event later than thirty days after its Certificate
Holder Officer shall have obtained actual knowledge of the attachment
of any Lessor Lien for which it is responsible, notify the Lessee and
the Owner Trustee of the attachment of such Lessor Lien and the
particulars thereof. The term "CERTIFICATE HOLDER OFFICER" shall mean
an officer of each Certificate Holder having responsibility for the
administration of such Certificate Holder's interest in the Operative
Documents.
(ix) SOURCE OF FUNDS. The investment in the Trust Estate to be
made by such Certificate Holder will be made from equity held by such
Certificate Holder, or if such funds are to be borrowed by such
Certificate Holder, such borrowing is recourse to such
Participation Agreement
21
Certificate Holder and such Certificate Holder's knowledge, it has
assets (other than its interest in the Overall Transaction) to pay in
full such debt and all amounts due with respect thereto when due.
(c) COVENANTS OF THE PARTICIPANTS. Each of the Participants hereby
agrees as follows so long as this Participation Agreement is in effect:
(i) NO CREATION OF LESSOR LIENS. It will not create, incur,
assume or suffer to exist any Lessor Lien attributable to such
Participant upon the Lease or any of the Property;
(ii) REMOVAL OF LESSOR LIENS. It will remove any Lessor Lien
created or incurred by it and use its best efforts to remove any Lessor
Lien attributable to it assumed or suffered to exist by it upon the
Lease or any of the Property (other than the Lender Mortgage and such
other Liens as are contemplated by any of the Operative Documents);
provided, however, that any action taken pursuant to this clause (ii)
shall not limit the Lessee's rights or remedies under any of the
Operative Documents.
(iii) QUIET ENJOYMENT. It will not, through its own actions or
inactions, interfere with the peaceful and quiet enjoyment of the use
or nonuse of the Property by the Lessee in accordance with the terms of
the Lease, it being understood and agreed by the parties hereto that
the rights of the Lessee under this Section 6(c)(iii) shall not be
impaired by the Certificate Holders' breach of any covenant, agreement
or condition contained in any Operative Document to which such Person
is a party, or any misrepresentation or breach of warranty by such
Person or, to the maximum extent permitted by Applicable Law, the
bankruptcy or insolvency of any such Person or the appointment of a
trustee, receiver, liquidator, custodian or other similar official with
respect to such Person or any substantial part of such Person's
property.
(iv) AMENDMENT. For so long as no Lease Event of Default shall
have occurred and be continuing, it will not (and will not direct the
Agent or the Lessor to) amend or modify any Operative Document to which
the Lessee is not a party in a manner which is adverse to the Lessee
without its prior consent.
(d) COVENANTS OF THE AGENT. The Agent hereby agrees that upon repayment
in full of all Loans, the Agent shall execute and deliver to the Lessee a
release of the Lender Mortgage, releases of the Construction Agency Agreement
Assignment and Assignment of Leases and Rents and releases of all other Liens
created by the Operative Documents, and termination statements for any UCC
Financing Statements relating to the Property which are then of record naming
the Agent as secured party or assignee thereof.
(e) COVENANTS OF THE CERTIFICATE HOLDERS. Each Certificate Holder
hereby agrees that so long as this Participation Agreement is in effect (unless
a Lease Event of Default shall have occurred and be continuing) until expiration
or earlier termination of the Lease, it will not, and will not cause or direct
the Owner Trustee to, terminate the Trust Agreement without the prior written
consent of the Lessee.
Participation Agreement
22
SECTION 7. REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF WILMINGTON TRUST
COMPANY AND OWNER TRUSTEE
(a) WILMINGTON TRUST COMPANY REPRESENTATIONS AND WARRANTIES. Wilmington
Trust Company hereby represents and warrants in its individual capacity that:
(i) DUE ORGANIZATION. Wilmington Trust Company (i) is a
Delaware banking corporation duly organized and validly existing in
good standing under the laws of the State of Delaware, and (ii) has the
power and authority to enter into and perform its obligations under the
Trust Agreement and to serve as trustee thereunder.
(ii) TRUST AGREEMENT; PARTICIPATION AGREEMENT. Each of the
Trust Agreement and this Participation Agreement (insofar as Wilmington
Trust Company is a party thereto and hereto) has been duly executed and
delivered by Wilmington Trust Company and, assuming due authorization,
execution and delivery by the other parties thereto, the Trust
Agreement and this Participation Agreement constitute Wilmington Trust
Company's legal, valid and binding obligations, enforceable against it
in accordance with their respective terms, except as enforceability
thereof may be limited by (i) bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting enforcement of creditors'
rights generally and (ii) general principles of equity (regardless of
whether such enforceability is considered in a proceeding in equity or
at law).
(iii) DUE AUTHORIZATION. Each Operative Document to which
Wilmington Trust Company is or will become a party has been duly
authorized, and has been or will be duly executed and delivered by
Wilmington Trust Company.
(iv) NO VIOLATION. Assuming due authorization, execution and
delivery of the Trust Agreement by the Certificate Holders, the
execution and delivery by either the Owner Trustee or Wilmington Trust
Company, of each Operative Document to which the Owner Trustee or
Wilmington Trust Company, as the case may be, is or will become a
party, are not, and the performance by the Owner Trustee or Wilmington
Trust Company, as the case may be, of their obligations under each, is
not, and will not be, inconsistent with the Organic Documents of
Wilmington Trust Company and, taking into account the responsibilities
of the Owner Trustee, do not and will not contravene the provisions of
Applicable Law of the United States or Delaware (including any rules
and regulations of governmental agencies and authorities thereto and
therein and any judgment or order applicable to Wilmington Trust
Company) governing the banking and trust powers of Wilmington Trust
Company or result in any violation of or conflict with or constitute a
default under, or subject the Trust Estate or any of the Property to
any Lien of, any indenture, mortgage or other agreement or instrument
to which Wilmington Trust Company is a party or by which Wilmington
Trust Company or its properties are bound, or, taking into account the
responsibilities of the Owner Trustee, require the consent or approval
of, the giving of notice to, the registration with or the taking of any
action in respect of or by, any Federal or State agency, authority or
Person governing the banking and trust powers of Wilmington Trust
Company or any other local Governmental Authority of the State of
Delaware, except such as have been obtained, given or accomplished.
Participation Agreement
23
(v) NO LITIGATION. There is no action, suit, investigation or
proceeding by or before any court, arbitrator, administrative agency or
other Governmental Authority pending or, to the knowledge of Wilmington
Trust Company, threatened against or affecting Wilmington Trust Company
or any of its properties which (i) involves any of the transactions
contemplated hereunder or by any of the Operative Documents or (ii)
affects its ability to perform its respective obligations under the
Operative Documents to which it is or will become a party.
(vi) LESSOR LIENS. There are no Lessor Liens arising by,
through or under Wilmington Trust Company, other than relating to or in
connection with the Operative Documents.
(vii) SECURITIES. Wilmington Trust Company has not offered
directly or indirectly any interests in the Trust Estate or any part
thereof, including the trust certificates, for issue or sale to, or
solicited any offer to acquire any of the same from, anyone, other than
as contemplated in the Operative Documents.
(b) WILMINGTON TRUST COMPANY AGREEMENTS. Wilmington Trust Company
hereby agrees that:
(i) LESSOR LIENS. Wilmington Trust Company will not directly
or indirectly create, incur, assume or suffer to exist any Lessor Liens
attributable to it on the Trust Estate not resulting from or related to
the transactions contemplated by the Operative Documents. Wilmington
Trust Company will, at its own cost and expense, promptly take such
action as may be necessary to discharge duly all such Lessor Liens on
any part of the Trust Estate attributable to Wilmington Trust Company
other than Lessor Liens being contested by a Permitted Contest.
Wilmington Trust Company shall make restitution to the Trust Estate for
any diminution in the value of the Trust Estate as a result of its
failure to discharge any such Lessor Liens attributable to Wilmington
Trust Company. It shall promptly, and in no event later than thirty
(30) days after an Owner Trustee Officer shall have obtained actual
knowledge of the attachment of any such Lessor Lien for which it is
responsible, notify the Lessee and the Certificate Holders of the
attachment of such Lien and the particulars thereof. The term "OWNER
TRUSTEE OFFICER" shall mean an officer in the Corporate Trust
Administration department of the Owner Trustee having responsibility
for the administration of Wilmington Trust Company's and the Owner
Trustee's interest in the Operative Documents.
(ii) NO ISSUANCE. Wilmington Trust Company agrees that neither
Wilmington Trust Company nor anyone acting on its behalf has offered or
will offer any interests in the Trust Estate or any part thereof
(including the trust certificates) or any securities similar thereto
for issue or sale to, or has solicited or will solicit any offer to
acquire any of the same from, anyone so as to bring the issuance and
sale of the interests in the Trust Estate (including the trust
certificates) within the provisions of Section 5 of the Securities Act
or any similar provisions under any applicable state "blue sky" or
similar state securities laws.
Participation Agreement
24
(c) OWNER TRUSTEE AND TRUST REPRESENTATIONS AND WARRANTIES. The Owner
Trustee and the Trust hereby represent and warrant on the date hereof that:
(i) DUE ORGANIZATION. Assuming the due authorization,
execution and delivery of the Trust Agreement by the Certificate
Holders, the Owner Trustee has the power and authority under the Trust
Agreement to enter into and perform its obligations under each
Operative Document to which the Owner Trustee is or will become a party
(ii) DUE AUTHORIZATION; ENFORCEABILITY. Assuming due
authorization, execution and delivery of the Trust Agreement by the
Participants and Wilmington Trust Company, each Operative Document
(other than the Trust Agreement) to which the Trust or the Owner
Trustee is or will become a party constitutes or will constitute upon
the due execution thereof a legal, valid and binding obligation of the
Owner Trustee and the Trust, enforceable against the Owner Trustee and
the Trust, in accordance with its terms, except as enforceability
thereof may be limited by (i) bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting enforcement of creditors'
rights generally and (ii) general principles of equity (regardless of
whether such enforceability is considered in a proceeding in equity or
at law).
(iii) NO LIENS. On each Funding Date, the Property to be
acquired with all or a portion of the Advances made on such Funding
Date shall be free and clear of Lessor Liens arising by, through or
under the Owner Trustee (other than Permitted Liens).
(iv) CHIEF EXECUTIVE OFFICE. The principal place of business
and chief executive office (as such term is used in Article 9 of the
Uniform Commercial Code) of Owner Trustee and the Trust is located in
Wilmington, Delaware.
(v) DUE ORGANIZATION. The Trust has been duly formed and is
validly existing and in good standing as a statutory business trust
under the laws of the State of Delaware, and has the power and
authority to enter into and perform its obligations under each of the
Operative Documents, including this Participation Agreement and the
Lease to which it is or is to become a party.
(vi) ASSIGNMENT. It has not assigned or transferred any of its
right, title or interest in or under the Lease or the Construction
Agency Agreement except in accordance with the Operative Documents.
(vii) USE OF PROCEEDS. The proceeds of the Loans and the
Equity Amounts shall be applied by the Trust in its capacity as the
Lessor solely in accordance with the provisions of the Operative
Documents.
(viii) SECURITIES ACT. Neither the Trust in its capacity as
the Lessor nor any Person authorized by the Trust to act on its behalf
has offered or sold any interest in the Notes or Equity Amounts, or in
any similar security relating to the Property, or in any security the
offering of which for the purposes of the Securities Act of 1933, as
amended, would be deemed to be part of the same offering as the
offering of the aforementioned securities to, or solicited any offer to
acquire any of the same from, any Person other than, in the case of the
Notes, the Lenders, and neither the Trust in its capacity as the
Participation Agreement
25
Lessor nor any Person authorized by the Trust to act on its behalf will
take any action which would subject the issuance or sale of any
interest in the Notes or Equity Amounts to the provisions of Section 5
of the Securities Act.
(ix) FEDERAL RESERVE REGULATIONS. The Trust is not engaged
principally in, and does not have as one of its important activities,
the business of extending credit for the purpose of purchasing or
carrying any margin stock (within the meaning of Regulation U of the
F.R.S. Board), and no part of the proceeds of the Loans or the Equity
Amounts will be used by it to purchase or carry any margin stock or to
extend credit to others for the purpose of purchasing or carrying any
such margin stock or for any purpose that violates, or is inconsistent
with, the provisions of Regulation G, T, U or X of the F.R.S. Board.
Terms for which meanings are provided in F.R.S. Board Regulation G, T,
U or X or any regulations substituted therefor, as from time to time in
effect, are used in this clause (9) with such meanings.
(x) INVESTMENT COMPANY ACT. The Trust is not an "investment
company" or a company controlled by an "investment company" within the
meaning of the Investment Company Act of 1940, as amended.
(d) OWNER TRUSTEE AND TRUST AGREEMENTS. Owner Trustee and the Trust
agree that:
(i) LESSOR LIENS. The Owner Trustee and the Trust will not
directly or indirectly create, incur, assume or suffer to exist any
Lessor Liens arising by, through or under it on the Trust Estate. The
Owner Trustee shall, at the cost and expense of the Trust Estate,
promptly take such action as may be necessary to discharge duly all
Lessor Liens attributable to it on any part of the Trust Estate, other
than Lessor Liens being contested by a Permitted Contest. The Owner
Trustee shall make restitution to the Trust Estate for any diminution
in the value of the Trust Estate as a result of its failure to
discharge any Lessor Liens attributable to it.
(ii) NOTICES. In the event any claim with respect to any
liabilities is filed against the Owner Trustee or the Trust, the Owner
Trustee shall promptly notify the Certificate Holders and the Lessee
thereof.
(iii) TITLE. On the Documentation Date and each Funding Date
the Trust will take whatever interest in the Trust Estate and whatever
rights to and interests in the Lease as were granted or conveyed to it,
free and clear of any Lessor Liens attributable to it.
(iv) INTENTIONALLY OMITTED.
(v) TRUST AGREEMENT. The Owner Trustee agrees that (unless a
Lease Event of Default shall have occurred and be continuing) until
expiration or earlier termination of the Lease, it will not terminate
the Trust Agreement without the prior written consent of the Lessee.
Participation Agreement
26
SECTION 8. REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF LESSEE, CONSTRUCTION
AGENT, GUARANTOR AND PARENT GUARANTOR
(a) GENERAL REPRESENTATIONS AND WARRANTIES. Each of the Lessee (in its
capacity as Lessee, Construction Agent and Guarantor) and the Parent Guarantor
hereby represents and warrants to each of the other parties hereto that:
(i) DUE ORGANIZATION. Lessee is a corporation duly organized
and validly existing in good standing under the laws of either the
State of Delaware. Parent Guarantor is a corporation duly organized and
validly existing in good standing under the laws of the State of
Minnesota. Each of the Lessee and Parent Guarantor (i) has all
requisite corporate power and authority to own, hold under lease and
operate its properties and to carry on its business as now conducted
and as presently proposed to be conducted and to enter into, and
perform its obligations under, each of the Operative Documents to which
it is or will become a party, and (ii) has duly qualified and is
authorized to do business and is in good standing as a foreign
corporation in the State of Texas and in each state or other
jurisdiction where a failure to so qualify would have a Material
Adverse Effect.
(ii) DUE AUTHORIZATION; ENFORCEABILITY. Each of the Operative
Documents to which it is or will become a party has been or will be,
when executed and delivered, duly authorized by all appropriate
corporate action, and has been or will be executed and delivered by the
Lessee or Parent Guarantor, as the case may be, and, assuming due
authorization, execution and delivery by the other parties thereto,
constitutes or will constitute upon the due execution thereof the
Lessee's or Parent Guarantor's, as the case may be, legal, valid and
binding obligation, enforceable against it in accordance with its
terms, except as enforceability thereof may be limited by (i)
bankruptcy, insolvency, reorganization, moratorium or other similar
laws affecting enforcement of creditors' rights generally and (ii)
general principles of equity (regardless of whether such enforceability
is considered in a proceeding in equity or at law).
(iii) NO VIOLATION. The execution and delivery by the Lessee
or Parent Guarantor, as the case may be, of each of the Operative
Documents to which it is or will become a party are not, and the
performance by each of the Lessee and Parent Guarantor of its
obligations under each will not be, inconsistent with its Organic
Documents, do not and will not contravene any Applicable Law of the
United States of America, the State of Illinois, the State of Delaware
or the State of Minnesota applicable to the Lessee or the Parent
Guarantor, as the case may be, or the transactions contemplated by the
Operative Documents, and do not and will not contravene any provision
of, or constitute a default under, any indenture, mortgage or other
material contract or other instrument to which the Lessee or Parent
Guarantor, as the case may be, is a party or by which it or its
property is bound or require the consent or approval of, the giving of
notice to, the registration with or the taking of any action in respect
of or by, any Governmental Authority or other Person, except such as
have been obtained, given or accomplished or such as will, pursuant to
paragraph (iv) below, be obtained, given or accomplished not later than
the dates required by Applicable Law.
Participation Agreement
27
(iv) GOVERNMENTAL ACTIONS. The Lessee or Parent Guarantor, as
the case may be, has made or will make all filings, recordings and
registrations required by any Governmental Authority in connection
with, and has obtained or will obtain, all Governmental Actions
necessary or appropriate for the performance by the Lessee or the
Parent Guarantor, as the case may be, of the transactions contemplated
hereby and by the other Operative Documents which are then or
theretofore required by Applicable Law; the Lessee or Parent Guarantor,
as the case may be, will make all filings, recordings and registrations
required by any Governmental Authority in connection with, and will
obtain, all material Governmental Actions necessary or appropriate for
the performance by the Lessee or Parent Guarantor, as the case may be,
of the transactions contemplated hereby and by the other Operative
Documents not later than the dates required by Applicable Law.
(v) NO LITIGATION. There are no pending or, to the best
knowledge of the Lessee or Parent Guarantor, as the case may be,
threatened actions or proceedings by or before any court or
administrative agency or other Governmental Authority to which the
Lessee or Parent Guarantor, as the case may be, is or may become a
party which (i) involves any of the transactions contemplated hereunder
or by any of the Operative Documents or (ii) if determined adversely to
it, would reasonably be likely to materially adversely affect the
Lessee's or Parent Guarantor's ability to perform its obligations under
each of the Operative Documents to which it is or will become a party.
(vi) PERFORMANCE. Neither the Lessee nor the Parent Guarantor
is in violation of any Applicable Law the violation of which is
reasonably likely materially and adversely to affect the transactions
contemplated by this Participation Agreement and the other Operative
Documents or which would materially adversely affect Lessee's or Parent
Guarantor's ability to perform its obligations under each of the
Operative Documents.
(vii) NO ADVERSE CONTRACTS OR APPLICABLE LAW. Neither the
Lessee nor the Parent Guarantor is a party to, or bound by, any
contract or agreement or instrument, or subject to any charter or other
corporate restriction or any Applicable Laws which materially and
adversely affects the transactions contemplated by this Participation
Agreement or the Operative Documents or which would materially
adversely affect its ability to perform its obligations under each of
the Operative Documents.
(viii) TAXES. All tax returns required to be filed by the
Lessee or the Parent Guarantor in any jurisdiction have been filed
where the failure to so file would have a Material Adverse Effect, and
all Taxes upon the Lessee or the Parent Guarantor, as the case may be,
or upon any of its properties, income or franchises, which are shown on
such returns to be due and payable have been paid, other than Taxes (i)
which are being contested in good faith by appropriate proceedings
which have the effect of staying the enforcement of the lien for such
Taxes and the sale, forfeiture or other loss of the Property during the
pendency of such contest, (ii) for which none of the Lessor, the Owner
Trustee, the Agent and the Participants shall be subject to any risk of
criminal liability or material civil liability by virtue of the matters
being contested or such proceedings, and (iii) for which the Lessee or
the Parent Guarantor, as the case may be, in
Participation Agreement
28
accordance with prudent practice, has set aside adequate reserves for
the payment thereof and has provided evidence reasonably acceptable to
the Agent, the Lessor and the Participants of such reserves. No
material controversy in respect of additional income taxes due is
pending or, to the knowledge of the Lessee threatened, which
controversy if determined adversely would materially and adversely
affect the financial condition of the Lessee or the Parent Guarantor.
(ix) INVESTMENT COMPANY ACT. Neither the Lessee nor the Parent
Guarantor is an "investment company" or a company "controlled" by an
"investment company", within the meaning of the Investment Company Act
of 1940, as amended.
(x) DISCLOSURE. Neither the financial statements referred to
in Section 8(A)(XVIII) nor any written statement furnished by or on
behalf of the Lessee or the Parent Guarantor, as the case may be, in
connection with the negotiation of the Lease or any other Operative
Document contains any untrue statement of a material fact or omits a
material fact necessary to make the statements contained therein or
herein not misleading. There is no fact known to Lessee or the Parent
Guarantor that has not been disclosed in writing to the other parties
hereto that materially and adversely affects the ability of Lessee or
the Parent Guarantor to perform its obligations under the Operative
Documents.
(xi) HOLDING COMPANY. Neither the Lessee nor the Parent
Guarantor is subject to regulation as a "holding company", an
"affiliate" of a "holding company" or a "subsidiary company" of a
"holding company", within the meaning of the Public Utility Holding
Company Act of 1935, as amended.
(xii) ERISA. The execution and delivery by the Lessee and the
Parent Guarantor of the Operative Documents to which it is or will
become a party, will not involve any prohibited transaction within the
meaning of ERISA or Section 4975 of the Code. The representations by
the Lessee and the Parent Guarantor in this paragraph is made in
reliance upon and subject to the accuracy of the representations of the
Participants in Section 6(a)(vi) hereof as to the source of funds for
the Participant's Loans or Equity Amounts, as applicable.
(xiii) PATENTS AND TRADEMARKS. Each of the Lessee and the
Parent Guarantor owns or possesses or has the right to use all the
patents, patent rights, trademarks, service marks, trade names,
copyrights, licenses and similar rights necessary for the performance
of its obligations under the Operative Documents, without any conflict
known to it with the actual or asserted rights of others which
materially and adversely affect the Lessee's or the Parent Guarantor's
ability to perform its obligations under the Operative Documents to
which it is or will become a party. It is understood and agreed by the
parties hereto that no interest in any trademark, trade name, copyright
or service ▇▇▇▇ of the Lessee or an Affiliate thereof is being conveyed
or transferred to the Owner Trustee or any other Person pursuant to any
Operative Document.
(xiv) REGULATORY JURISDICTION. None of the Participants or
Owner Trustee or Wilmington Trust Company will become, (i) solely by
reason of entering into this
Participation Agreement
29
Participation Agreement or the other Operative Documents or (except
with respect to the exercise by any Person of any control over the
Property upon the occurrence of a Lease Event of Default or the
expiration or other termination of the Lease) the consummation of any
of the transactions contemplated hereby or thereby, subject to
regulation by any Governmental Authority which regulates or otherwise
has jurisdiction over any facilities for the retail distribution of
petroleum products; or (ii) except for regulation the applicability of
which depends on the existence of facts in addition to the ownership of
the Property upon the exercise of remedies under the Lease or upon the
expiration of the Lease, subject to ongoing regulation of its
operations by any Governmental Authority.
(xv) PRIVATE OFFERING. Neither the Lessee, the Parent
Guarantor, nor any Person authorized to act on Lessee's or Parent
Guarantor's behalf has offered, either directly or indirectly, the
Notes or any interest in the Trust Estate (including the trust
certificates) for sale to, or solicited offers to buy any thereof from
or otherwise approached or negotiated with respect thereto with any
prospective purchaser, other than the Participants. Neither the Lessee
nor the Parent Guarantor has authorized or employed any Person to act
as agent, broker, finder, financial advisor or otherwise in connection
with the offering of interests in the Notes or the Trust Estate
(including the trust certificates).
(xvi) NO DEFAULTS. No Lease Default or Lease Event of Default
has occurred and is continuing.
(xvii) FEES. Neither the Lessee, the Parent Guarantor, nor any
Person authorized or employed by the Lessee or the Parent Guarantor as
agent or otherwise has taken any action the effect of which would be to
cause the Certificate Holders, the Trust Estate, or the Owner Trustee
to be liable for any brokers', finders', agents', or advisors' fees or
commissions or costs of any nature or kind claimed by or on behalf of
brokers, finders, agents or advisors in respect of the transactions
contemplated by the Operative Documents.
(xviii) FINANCIAL STATEMENTS. The consolidated annual
financial statements of the Parent Guarantor and its Consolidated
Subsidiaries, certified by ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, independent certified
public accountants, for the year ended December 31, 2000 and the
consolidated un-audited financial statements of the Parent Guarantor
and its Subsidiaries, including the Lessee, for the period from January
1, 2001 to June 30, 2001 (collectively, the "Financial Reports")
present fairly, in all material respects, the financial condition of
the Parent Guarantor and its Consolidated Subsidiaries, as of the dates
indicated therein and the results of operations and changes in
financial position or, if applicable, changes in cash flow for the
periods therein specified subject, in the case of interim financial
statements, to year-end adjustment. Since June 30, 2001, there has been
no material adverse change in the financial condition of the Lessee or
the Parent Guarantor, as the case may be.
(xix) The pro forma financial statements of the Parent
Guarantor and its Consolidated Subsidiaries, dated as of October, 2001
present fairly on a pro forma basis the financial position of the
Parent Guarantor and its Consolidated Subsidiaries as of such
Participation Agreement
30
date and the pro forma financial results for the periods covered
thereby, and are based on good faith assumptions believed by the
management of the Parent Guarantor to be reasonable at the time made.
(xx) CHIEF EXECUTIVE OFFICE. The principal place of business
and chief executive office (as such term is used in Article 9 of the
Uniform Commercial Code) of the Lessee and the Parent Guarantor is
located at ▇▇▇ ▇ ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇
▇▇▇▇▇. The federal employer identification number of the Lessee is
▇▇-▇▇▇▇▇▇▇ and the organizational identification number of the Lessee,
as designated by the State of Delaware is 2310719.
(xxi) USE OF LOANS AND PROCEEDS. No part of any Advance will
be used directly or indirectly for the purpose of purchasing or
carrying, or for payment in full or in part of indebtedness that was
incurred for the purposes of purchasing or carrying, any margin
security as such term is defined in Section 207.2 of Regulation G of
the F.R.S. Board (12 C.F.R., Chapter II, Part 207).
(xxii) REGULATIONS T, U AND X. No proceeds of any of the
Advances will be used for a purpose which violates, or would be
inconsistent with, F.R.S. Board Regulation T, U or X. Terms for which
meanings are provided in F.R.S. Board Regulation T, U or X or any
regulations substituted therefor, as from time to time in effect, are
used in this clause (xxi) with such meanings.
(xxiii) GOVERNMENTAL LEASES. The Governmental Leases remain in
full force and effect and neither the Lessee nor the Parent Guarantor
is aware of any fact or circumstance which could have a Material
Adverse Effect on the ability of the Lessee or any licensee of same to
exercise its rights and enjoy the benefits of such Governmental Leases
including, without limitation, locating the Platform on the Site.
(xxiv) JOINT OPERATING AGREEMENT. The Joint Operating
Agreement is in full force and effect, and the Lessee and, to Lessee's
knowledge, ▇▇▇▇-▇▇▇▇▇ Oil & Gas Corporation and Nexen Petroleum
Offshore U.S.A. Inc., are in compliance with the terms thereof in all
material respects. The Development Plan and the current Annual
Operating Plan (as each of those terms are defined in the Joint
Operating Agreement) are each in full force and effect.
(xxv) AMENDMENTS. Neither the Joint Operating Agreement, the
Development Plan or the current Annual Operating Plan (as each of those
terms are defined in the Joint Operating Agreement) has been amended
except as expressly permitted pursuant to the terms of this Agreement.
(xxvi) POLICIES OF INSURANCE. All Policies of Insurance
required to be obtained pursuant to the terms of this Agreement or the
Lease are in full force and effect and the Lessee is in compliance with
all Insurance Requirements in connection therewith.
(xxvii) PERFECTION. Lessee has taken or is in the process of
taking all action as is necessary to cause the perfection of the
security interest of the Lenders in the Trust Estate including the
actions set forth in Exhibit M.
Participation Agreement
31
(xxviii) PERFECTION. INFORMATION. All Certificates, financial
statements and other information as is required to be delivered to the
Lessor and/or the Participants in connection with the satisfaction of
the conditions precedent with respect to the Documentation Date is true
and accurate in all material respects and there has been no material
adverse change in such Certificates, financial statements or other
information since the date thereof.
(xxix) INFORMATION PROVIDED TO CONSULTANTS. All information
and materials which have been provided by the Lessee in connection with
the Platform and the Overall Transaction to the Appraiser, the
Construction Consultant, the Engineering Consultant, the Environmental
Consultant, the Reserve Engineer and the Insurance Consultant in
connection with the reports to be delivered by them is true and
accurate in all material respects on the date as of which such
information and materials are dated or certified and are not incomplete
by omitting to state any fact necessary to make such information (taken
as a whole) not misleading at such time in light of the circumstances
under which such information was provided.
(xxx) OWNERSHIP OF LESSEE SHARES. Parent Guarantor owns 100%
of the issued and outstanding stock of the Lessee.
(b) AVAILABILITY DATE REPRESENTATIONS AND WARRANTIES. As of the
Availability Date, each of the Lessee (in its capacity as Lessee, Construction
Agent and Guarantor) and the Parent Guarantor hereby represents and warrants to
each of the other parties hereto that:
(i) REPRESENTATIONS AND WARRANTIES. The representations and
warranties of the Lessee and the Parent Guarantor in the Operative
Documents and in Section 8(a) hereof are true and accurate on and as of
such Availability Date, as though made on and as of such Availability
Date (or, if stated to relate to an earlier date, shall have been true
and accurate as of such earlier date). No Event of Default has occurred
and is continuing and no Default of which the Lessee or the Parent
Guarantor has knowledge and that has not been previously disclosed to
the Participants has occurred and is continuing under the Lease or the
Construction Agency Agreement or any other Operative Document.
(ii) DUE AUTHORIZATION; ENFORCEABILITY. Each of the Operative
Documents to which it is or will become a party with respect to the
Availability Date has been or will be, when executed and delivered,
duly authorized by all appropriate corporate action, and has been or
will be executed and delivered by the Lessee or the Parent Guarantor,
as the case may be, and, assuming due authorization, execution and
delivery by the other parties thereto, constitutes or will constitute
upon the due execution thereof the Lessee's or Parent Guarantor's, as
the case may be, legal, valid and binding obligation, enforceable
against it in accordance with its terms, except as enforceability
thereof may be limited by (i) bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting enforcement of creditors'
rights generally and (ii) general principles of equity (regardless of
whether such enforceability is considered in a proceeding in equity or
at law).
(iii) NO VIOLATION. The execution and delivery by the Lessee
or Parent Guarantor, as the case may be, of each of the Operative
Documents to which it is or will
Participation Agreement
32
become a party with respect to the Availability Date are not, and the
performance by the Lessee or Parent Guarantor, as the case may be, of
its obligations under each will not be, inconsistent with its Organic
Documents, do not and will not contravene any Applicable Law of the
United States of America, the State of Illinois, the State of Delaware,
the State of Minnesota or any jurisdiction applicable to the Lessee or
the Parent Guarantor, as the case may be, or the Property or the
transactions contemplated by the Operative Documents, and do not and
will not contravene any provision of, or constitute a default under,
any indenture, mortgage or other material contract or other instrument
to which the Lessee or the Parent Guarantor, as the case may be, is a
party or by which it or its property is bound or require the consent or
approval of, the giving of notice to, the registration with or the
taking of any action in respect of or by, any Governmental Authority or
other Person, except such as have been obtained, given or accomplished
or such as will, pursuant to paragraph (iv) below, be obtained, given
or accomplished not later than the dates required by Applicable Law.
(iv) GOVERNMENTAL ACTIONS. The Lessee or the Parent Guarantor,
as the case may be, has made or will make all filings, recordings and
registrations required by any Governmental Authority in connection
with, and has obtained or will obtain, all Governmental Actions
necessary or appropriate for the construction and commercial operation
and use of the Platform and the performance by the Lessee of the
transactions contemplated hereby and by the other Operative Documents
which are then or theretofore required by Applicable Law; the Lessee or
the Parent Guarantor, as the case may be, will make all filings,
recordings and registrations required by any Governmental Authority in
connection with, and will obtain, all material Governmental Actions
necessary or appropriate for the construction and commercial operation
and use of the Platform and the performance by the Lessee or the Parent
Guarantor, as the case may be, of the transactions contemplated hereby
and by the other Operative Documents not later than the dates required
by Applicable Law.
(v) PERFORMANCE. Neither the Lessee nor the Parent Guarantor
is in violation of any Applicable Law the violation of which is
reasonably likely materially and adversely to affect the Platform or
the transactions contemplated by this Participation Agreement and the
other Operative Documents or which would materially adversely affect
the Lessee's or the Parent Guarantor's ability to perform its
obligations under each of the Operative Documents.
(vi) CONSTRUCTION CONTRACTS. The Lessee has delivered to the
Lessor copies of all Construction Contracts in effect as of the
Availability Date and all such Construction Contracts do not differ
materially from the most recent drafts of such Construction Contracts
delivered to the Lessor.
(vii) APPROVED BUDGET. The Approved Budget remains in full
force and effect, there has been no material change in the Approved
Budget since the date of approval by the Participants, and the Lessee
is not aware of any fact or circumstance which could have a Material
Adverse Effect on the ability of the Construction Agent to cause the
construction of the Platform within the parameters set forth in the
Approved Budget.
Participation Agreement
33
(c) FUNDING DATE REPRESENTATIONS AND WARRANTIES. As of each Funding
Date, on which an Advance is made and with respect to the Platform and/or the
Property, each of the Lessee (in its capacity as Lessee, Construction Agent and
Guarantor) and the Parent Guarantor represents and warrants that:
(i) REPRESENTATIONS AND WARRANTIES. The representations and
warranties of the Lessee and the Parent Guarantor, as the case may be,
in the Operative Documents and in Section 8(a) and Section 8(b) hereof
are true and accurate on and as of such Funding Date, as though made on
and as of such Funding Date (or, if stated to relate to an earlier
date, shall have been true and accurate as of such earlier date). No
Event of Default has occurred and is continuing and no Default of which
the Lessee or the Parent Guarantor has knowledge and that has not been
previously disclosed to the Participants has occurred and is continuing
under the Lease or the Construction Agency Agreement or any other
Operative Document. No Default or Event of Default under the Lease or
the Construction Agency Agreement or, to the knowledge of the Lessee,
any other Operative Document, will occur as a result of, or after
giving effect to, the Advance requested by the Funding Request on such
date.
(ii) SUPPORT AGREEMENTS. The ownership and use of the Property
by the Trust, the Owner Trustee or the Certificate Holders does not
require the execution by, or assignment to, any such party of any
easement, utility, maintenance or other support agreements.
(iii) APPLICABLE LAWS. The Platform and the commercial
operation thereof for its intended purposes and use thereof are and/or
will be in compliance with all Applicable Laws, including, without
limitation, zoning, planning, building, occupational safety and health
laws and Environmental Laws of any Governmental Authority (other than
in connection with the business of banking or which may be applicable
to activity or transactions of the Participants not relating to the
Operative Documents) having jurisdiction over the Platform, the
Property, the Trust, the Owner Trustee, the Lessor or the Lessee other
than such non-compliance that would not, individually or in the
aggregate, (i) have a Material Adverse Effect, or (ii) impose any
material penalty on, or result in the imposition of any criminal
liability on, any Indemnified Person. All requirements thereof
necessary for the use, occupancy and operation of the Platform which
are then or theretofore required by Applicable Laws have been satisfied
in all material respects.
(iv) NO TAXES. No sales, use, transfer, documentation, real
estate or similar taxes, fees or other charges are payable with respect
to the Platform or the Property under the laws of any State or any
governmental subdivision thereof in which Platform or the Property is
located in connection with (A) the entering into, or performance under,
or enforcement of any Operative Document with respect thereto or (B)
the lease to the Lessee of the Property, except such taxes, fees and
other charges as have been paid or will be paid by the Lessee when due
or are included in Estimated Allocated Construction Cost or Transaction
Expenses.
Participation Agreement
34
(v) NO EVENTS OF LOSS. Except as disclosed in writing to the
Certificate Holders in accordance with the Operative Documents, no
Event of Loss with respect to the Platform has occurred and no event or
condition has occurred which would, with the passage of time or the
giving of notice, or both, constitute an Event of Loss with respect to
the Platform.
(vi) ADVANCE. The amount of the Advance requested represents
amounts owed by the Lessee or Construction Agent in respect of
Allocated Construction Costs or Transaction Expenses, as the case may
be, incurred prior to the date of such Advance and for which the Lessee
has not previously been reimbursed by an Advance or represent amounts
with respect to Facility Fees. The conditions precedent to such Advance
and the related Equity Amount and Loans set forth in Section 9 have
been satisfied or waived by the Participants.
(vii) CONSTRUCTION OF PROPERTY, DESCRIPTION OF AND TITLE TO
PROPERTY. On the Funding Date, all material approvals of any
Governmental Authority necessary for the construction operation of the
Platform have been received and are in full force and effect with
respect to work performed or to be performed in connection with the
Advance to be made on such Funding Date. On each Funding Date, after
giving effect to the transactions contemplated hereby, the Trust will
have good and marketable title to and ownership of Property related to
the Advance made in connection with such Funding Date, subject to no
Title Defects, free and clear of all Liens, except Permitted Liens.
(viii) COMPLIANCE WITH ENVIRONMENTAL PROTECTION REQUIREMENTS.
On the Funding Date (except as disclosed in the Environmental Audits
delivered by Lessee to the Certificate Holders, Lessor and the Lenders)
and during the Lease Term, the Platform is in compliance in all
material respects with all Environmental Laws which are applicable to
the Platform including, without limitation, Environmental Laws
pertaining to design and performance standards and quality criteria for
air, water and reclamation, and the use, storage, disposal and
transportation of Hazardous Substances. Lessee shall cause asbestos to
be abated as required in connection with its Construction of the
Platform, as applicable.
(ix) INFORMATION PROVIDED TO CONSTRUCTION CONSULTANT. All
information and materials which have been provided by the Lessee to the
Construction Consultant in connection with the Construction Consultant
Report delivered in connection with the Funding Date is true and
accurate in all material respects on the date as of which such
information and materials are dated or certified and are not incomplete
by omitting to state any fact necessary to make such information (taken
as a whole) not misleading at such time in light of the circumstances
under which such information was provided.
(x) ENVIRONMENTAL LAWS. Except as described in the
Environmental Audit delivered by the Lessee to the Certificate Holders,
the Lessor and the Lenders, to the best of the Lessee's and Parent
Guarantor's knowledge:
(1) there are no pending or threatened claims,
complaints, notices or requests for information relating to
the Platform or the Property received by the
Participation Agreement
35
Lessee or the Parent Guarantor with respect to any alleged
violation of any Environmental Law, which may reasonably be
expected to have a material adverse effect on the financial
condition, operations, assets, business or properties of the
Lessee or the Parent Guarantor or which may reasonably be
expected to have a material adverse effect on the Platform or
the Property, and
(2) there are no pending or threatened complaints,
notices or inquiries to the Lessee or the Parent Guarantor
relating to the Platform or the Property regarding potential
liability of the Lessee or the Parent Guarantor under any
Environmental Law, which may reasonably be expected to have a
material adverse effect on the financial condition,
operations, assets, business or properties of the Lessee or
the Parent Guarantor.
(xi) PLATFORM. The contemplated use of the Platform by the
Lessee and its respective agents, assignees, employees, lessees,
licensees and tenants will comply in all material respects with all
Requirements of Law (including, without limitation, all zoning and land
use laws and Environmental Laws) and Insurance Requirements.
(xii) PLANS AND SPECIFICATIONS. There is no action, suit or
proceeding (including any proceeding in condemnation or eminent domain
or under any Environmental Law) pending or, to the best knowledge of
the Lessee or the Parent Guarantor, threatened with respect to the
Platform which adversely affects the title to, or materially and
adversely affects the use, operation or value of, the Platform or the
Property. With respect to the Platform, all material licenses,
approvals, authorizations, consents, permits (including, without
limitation, building, demolition and environmental permits, licenses,
approvals, authorizations and consents), easements and rights-of-way,
including dedication, required for (x) the use, treatment, storage,
transport, disposal or disposition of any Hazardous Substance on, at,
under or from the Platform during the construction thereof, and (y)
construction of such Platform in accordance with the related Plans and
Specifications and the Construction Agency Agreement have either been
obtained from the appropriate Governmental Authorities having
jurisdiction or from private parties, as the case may be, or will be
obtained from the appropriate Governmental Authorities having
jurisdiction or from private parties, as the case may be, prior to the
time required by such Governmental Authority or private party.
(xiii) INSURANCE. The Lessee has obtained insurance coverage
covering the Property which meets the requirements of Section 12 of the
Lease, and such coverage is in full force and effect. The Lessee
carries insurance with reputable insurers in respect of the Property
and its Material Assets, in such manner, in such amounts and against
such risks as is customarily maintained by the Lessee or its Affiliates
that own or operate similar properties.
(xiv) CONSTRUCTION MILESTONES. Each Construction Milestone
required to have been completed prior to the Funding Date is
substantially complete and each Construction Milestone required to have
been completed in connection with previous Advances on previous Funding
Dates remains substantially complete.
Participation Agreement
36
(d) AGREEMENTS. The Lessee hereby agrees that:
(i) INFORMATION. During the Lease Term, the Lessee and/or the
Parent Guarantor, as the case may be, shall furnish to the Agent, the
Participants and the Owner Trustee:
(1) promptly upon a Responsible Employee of the
Lessee becoming aware of the existence of a Lease Default, or
Lease Event of Default, written notice specifying the nature
of such Lease Default or Lease Event of Default and what
action the Lessee is taking or proposes to take with respect
thereto;
(2) within 120 days after the close of each Fiscal
Year of the Parent Guarantor, an audited consolidated balance
sheet and consolidated statements of retained earnings and
cash flows of the Parent Guarantor and its Consolidated
Subsidiaries at the end of such Fiscal Year, together with an
audited consolidated statement of income of the Parent
Guarantor and its Consolidated Subsidiaries for such Fiscal
Year, setting forth in each case in comparative form the
figures for the previous Fiscal Year and accompanied by an
opinion of a firm of independent certified public accountants
of recognized national standing stating that such audited
financial statements present fairly in all material respects
the financial condition of the companies being reported upon
and have been prepared in accordance with GAAP and that the
audit by such accountants in connection with such audited
financial statements has been made in accordance with
generally accepted auditing standards;
(3) within sixty (60) days after the close of each of
the first three quarters of each Fiscal Year of the Parent
Guarantor, an unaudited consolidated balance sheet and
consolidated statements of cash flows of the Parent Guarantor
and its Consolidated Subsidiaries, at and as of the end of
such year-to-date period, together with an unaudited
consolidated statement of income of the Parent Guarantor and
its Consolidated Subsidiaries, for such year-to-date period,
setting forth in each case in comparative form the amount for
the corresponding period of the preceding Fiscal Year (for the
balance sheet, the comparative period shall be the end of the
preceding Fiscal Year), all in reasonable detail;
(4) promptly upon their becoming available, one copy
of each financial statement, report, or proxy statement sent
by the Parent Guarantor to its shareholders generally, and of
each regular or periodic report filed by the Parent Guarantor
with any securities exchange or with the Securities and
Exchange Commission or any successor agency;
(5) promptly, and in any event within ten (10) days,
notice to the Agent of any amendment to the Joint Operating
Agreement;
(6) from time to time, such other financial
information as Certificate Holders, Owner Trustee or the Agent
may reasonably request; and
Participation Agreement
37
(7) together with the financial statements delivered
pursuant to clauses (ii) and (iii) above, a certificate
substantially in the form of Exhibit N attached hereto (and
with no exceptions set forth therein other than those
acceptable to the Agent and the Required Participants) from
the Chief Financial Officer of the Parent Guarantor, which
shall, in addition, show a calculation of the financial
covenants set forth in Section 8(d)(vii);
(ii) PLATFORM COSTS AND ALLOCATED CONSTRUCTION COSTS; USE OF
ADVANCES. The Lessee, as Construction Agent, will maintain a record of
the Property Balance and the Allocated Construction Cost, and shall
certify the same periodically to the Lessor, the Agent and the
Participants from time to time upon request. In no event shall the
Lessee or Construction Agent use the proceeds of the Advances for any
purpose other than paying or reimbursing Allocated Construction Costs.
(iii) OFFICER'S CERTIFICATE. During the Lease Term with
respect to the Property, within sixty (60) days after each quarterly
period ending on each of March 31, June 30, September 30, within one
hundred twenty (120) days after the end of each Fiscal Year of the
Parent Guarantor and on December 31 of each year, the Lessee shall
deliver to the Certificate Holders, the Agent and the Owner Trustee a
certificate in the form of Exhibit C hereto of a Responsible Employee
of the Lessee stating that such Responsible Employee has reviewed the
required insurance coverages, the relevant terms of the Lease and the
other Operative Documents and has made, or caused to be made, under
such Responsible Employee's supervision, a review of the transactions
and conditions of the Lessee from the beginning of the fiscal period
stated in such request to the date of the certificate and (i) that such
review has not disclosed the existence during such period of any
condition or event which constitutes a Lease Default or Lease Event of
Default or, if any such condition exists, specifying the nature and
period of existence and what action the Lessee has taken or proposes to
take with respect thereto, and (ii) certifying as to the satisfaction
of the financial covenants set forth in (vii) below, and providing a
schedule of the calculations and data used in determining such
compliance.
(iv) DEFENSE OF TITLE. The Lessee will, at all times, at its
own cost and expense, warrant and defend that the title of the Trust or
the Owner Trustee, as the case may be, to the Property is free and
clear of Liens, except for Permitted Liens.
(v) LIENS. The Lessee will not, directly, or indirectly,
create, incur, assume or suffer to exist any Liens on the Property,
except for Lessor Liens, and further except for Liens being contested
by a Permitted Contest.
(vi) NON-DISCRIMINATION. The Lessee will operate and otherwise
deal with the Platform and the Property using the Lessee's same general
business practices as are applicable generally to its owned and leased
properties which are similar to such Platform or such Property.
(vii) COVENANTS. The Parent Guarantor shall, and shall cause
each of its Subsidiaries and the Lessee shall, and shall cause each of
its Subsidiaries, to observe and perform the covenants set forth in
SCHEDULE IV attached hereto.
Participation Agreement
38
(viii) SPECIAL EVENTS. The Lessee will not permit or suffer to
occur any Special Events.
(ix) ERISA. Neither the Lessee nor the Parent Guarantor will,
in the future, cause directly or indirectly any employee benefit plan
(other than a governmental plan) with respect to which it or one of its
Affiliates is a party in interest, all within the meaning of ERISA, to
become a party to any of the Operative Documents or to have any
interest in any of the transactions contemplated thereby, directly or
indirectly. As used in this Section, the terms "EMPLOYEE BENEFIT PLAN"
and "PARTY IN INTEREST" shall have the meanings assigned to them in
ERISA.
(x) NO ISSUANCE. The Lessee and the Parent Guarantor agree
that neither the Lessee nor anyone acting on its behalf will offer any
interests in the Trust Estate (including the trust certificates) or any
part thereof or any securities similar thereto for issue or sale to, or
solicit any offer to acquire any of the same from, anyone so as to
bring the issuance and sale of the interests in the Trust Estate
(including the trust certificates) within the provisions of Section 5
of the Securities Act or any similar provisions under any applicable
state "blue sky" or similar state securities laws.
(xi) GOVERNMENTAL LEASES. The Lessee agrees to duly and timely
perform all obligations under each Governmental Lease (including,
without limitation, the payment of all royalties or other amounts due
thereunder from time to time) and to comply with all provisions of such
Governmental Leases. The Lessee will forward to Lessor, and the Agent
and the Participants all copies of all notices delivered to any party
to the Governmental Leases within ten days of receipt or dispatch, as
the case may be.
(xii) LESSEE'S COVENANT TO NOTIFY OF RELOCATION. Each of the
Lessee and the Parent Guarantor covenants and agrees to give the Owner
Trustee and the Certificate Holders at least 30 days' prior written
notice of any relocation of its chief executive office, principal place
of business or the place where its records concerning the Platform or
the Property is located.
(xiii) CORPORATE FRANCHISES. Each of the Lessee and the Parent
Guarantor covenants and agrees that it will at all times maintain its
corporate existence and all material franchises and qualifications in
good standing and at all times comply in all respects with any
Applicable Law, rule, regulation, order or decree applicable to Lessee
or its operations or properties the failure to comply with which, in
each case or in the aggregate, would have a Material Adverse Effect
upon Lessee.
(xiv) COMPLETION AND OPERATION. Lessee covenants and agrees
that the Platform shall be operated for the use intended by the Lessee
upon the Lessor's Completion of the Platform. Lessee shall deliver to
the Certificate Holders and the Owner Trustee, on or before the Outside
Completion Date applicable to the Platform, a certificate of a
Responsible Employee of the Lessee stating that such Platform is
operating for the use intended by the Lessee and all Construction has
been completed on or before such date.
Participation Agreement
39
(xv) COMPLIANCE WITH ENVIRONMENTAL PROTECTION REQUIREMENTS;
ACCESS TO ENVIRONMENTAL AUDITS. During the Lease Term, the Lessee will
cause the Platform to be in compliance in all material respects with
all Environmental Laws which are applicable to the Platform including,
without limitation, Environmental Laws pertaining to design and
performance standards and quality criteria for air, water and
reclamation, and the use, storage, disposal and transportation of
Hazardous Substances. During the Lease Term, the Lessee shall furnish
to the Agent, the Participants and the Owner Trustee, any Environmental
Audits and all environmental reports, filings or notices (given or
received by it) related to the Platform which are obtained or made by
it.
(xvi) CREATION AND MAINTENANCE OF LIEN. The Lessee will obtain
and maintain on behalf of the Lessor and the Lenders a first priority
perfected security interest in the Property located on the Construction
Sites or the Site or, to the extent practicable, while in transit
between such locations and in the Construction Documents, subject to
Permitted Liens. The Lessee will deliver and/or file or cause to be
delivered and/or filed such opinions, registrations, supplements or
other documents as shall be necessary to evidence and confirm the lien
of the Lessor and the Lenders or as shall otherwise be reasonably
confirmed by the Agent, including, without limitation, such
documentation as is reasonably necessary to perfect the security
interests of the Lessor and the Agent in the ▇▇▇▇ of lading or
substantially equivalent document with respect to the Platform while in
transit from Finland to Texas or Louisiana and from Texas or Louisiana
to its intended location in Garden Banks Block 668. During the
Construction Period, Lessee agrees that any and all filings of
financing statements, mortgages, deeds of trust of other security
documents shall be updated quarterly with revised schedules so as to
reflect progress of the construction or otherwise, all of such
documents to be in form and substance satisfactory to the Lessor, the
Agent and the Participants.
(xvii) CHARACTERIZATION OF PROPERTY. The parties hereto intend
that the Platform be characterized as personalty and not as real
estate. The Lessee hereby agrees that it shall not contest such
characterization in a court of law or otherwise.
(xviii) SUPPORT ARRANGEMENTS. If the Lease is terminated and
the Property is not purchased by the Lessee, the Lessee will provide
commercially reasonable and customary support to the Lessor in
connection with Lessor's ownership of the Platform reasonably required
by the Lessor including, without limitation, the right to access the
Platform and the Site, all items necessary to use the Platform and
realize value from the Platform (including pipeline access), but not
including an obligation to (a) dedicate reserves beyond those provided
in the amendment to the Joint Operating Agreement pertaining to the
Platform, (b) obtain Governmental Actions which are not obtainable with
commercially reasonable efforts or (c) provide items or service which
are readily available to the Lessor in the market. In connection with
items provided by Lessee, Lessor shall pay Lessee the fair market value
of such items upon delivery. The Lessor's right to the support
arrangements shall survive termination of the Lease and is assignable
by the Lessor to third parties.
(xix) JOINT OPERATING AGREEMENT PLATFORM AMENDMENT. (a) The
Lessee will observe and perform its obligations under the Joint
Operating Agreement, including, (x)
Participation Agreement
40
causing an Annual Operating Plan and the Development Plan (as each of
those terms are defined in the Joint Operating Agreement) to remain in
full force and effect at all times and (y) complying with the terms of
the Second Amendment to the Joint Operating Agreement pertaining to the
Platform (commonly known as the "PLATFORM AMENDMENT") on and after the
date such Platform Amendment is effective, (b) the Lessee will not
waive or amend any provisions of the Joint Operating Agreement relating
to the Platform without the written consent of the Agent and the
Required Participants if such proposed waiver or amendment would have a
Material Adverse Effect on their interests therein and herein, and (c)
for the purposes of Section 14.5.1 of the Platform Amendment, voting
rights in respect of the Operator shall be as set forth in such Section
14.5.1.
(xx) INSURANCE. The Lessee will comply with the provisions
relating to insurance set forth in the Lease and will not without the
written consent of the Agent materially alter insurance coverage with
respect to the Platform from that set forth in the Insurance
Consultant's Report.
(xxi) OWNERSHIP OF LESSEE SHARES. The Lessee shall cause
Parent Guarantor, and Parent Guarantor shall continue to own, 100% of
the issued and outstanding stock of Lessee.
SECTION 9. CONDITIONS PRECEDENT TO DOCUMENTATION DATE, AVAILABILITY DATE AND
ADVANCES
(a) CONDITIONS PRECEDENT TO THE DOCUMENTATION DATE. The obligations of
the Lessor, the Participants and the Agent to enter into the Operative Documents
on the Documentation Date, are subject to each of the following conditions
precedent, with all documents to be in form and substance acceptable to the
Agent and the Participants:
(i) CORPORATE PROCEEDINGS. Each of the Participants, the
Agent, the Owner Trustee and the Lessee shall have received evidence of
the corporate existence and the incumbency of officers, and copies of
such corporate resolutions and authorizations, of each of the other
parties as each such party shall reasonably request.
(ii) OPINION OF COUNSEL FOR LESSEE AND PARENT GUARANTOR. Each
of the Participants, the Agent and the Owner Trustee shall have
received a favorable opinion, dated such date, addressed to each of
them from ▇▇▇▇ ▇▇▇▇▇▇, in-house counsel to the Lessee and Parent
Guarantor (which opinions shall be substantially in the form of Exhibit
D-1 and F-1, respectively), ▇▇▇▇▇▇ ▇▇▇▇▇▇ L.L.P., special local
Louisiana counsel of the Lessee and Parent Guarantor, ▇▇▇▇▇▇▇ &
Indrenius, special Finland counsel to the Lessee and Parent Guarantor
(which opinions shall be substantially in the form of Exhibits, F-2,
and F-3 hereto, respectively).
(iii) OPINION OF COUNSEL FOR OWNER TRUSTEE. Each of the
Certificate Holders and the Lessee shall have received a favorable
opinion, dated such date addressed to each of them from Morris, James,
Hitchens & ▇▇▇▇▇▇▇▇, LLP, special counsel for Wilmington
Participation Agreement
41
Trust Company and the Owner Trustee, which opinion shall be
substantially in the form of Exhibit E hereto.
(iv) ILLEGALITY. There is no Applicable Law which would make
it illegal for the Certificate Holders, the Owner Trustee, or the
Lessee to participate in any of the transactions contemplated by the
Operative Documents.
(v) DOCUMENTS IN FULL FORCE AND EFFECT. Each of this
Participation Agreement and each of the Operative Documents delivered
on the Documentation Date shall be in form and substance reasonably
satisfactory to the Agent, the Lessee, the Participants and the Owner
Trustee, shall be in full force and effect on the Documentation Date,
and an executed counterpart of each thereof shall have been delivered
to each such party.
(vi) NO DEFAULT. No Default or Event of Default shall have
occurred and be continuing on the Documentation Date.
(vii) GOVERNMENTAL ACTIONS. There shall be no Governmental
Actions by, from or with any Governmental Authority that are necessary
or, in the reasonable opinion of the Agent, the Lessee, any Participant
or the Owner Trustee, advisable (i) in connection with the due
execution, delivery and performance by the parties to each of the
Operative Documents of such Operative Documents to which it is or will
become a party or with respect to the transactions contemplated hereby
or thereby except for Governmental Actions which are not then required
to be obtained under Applicable Law, and (ii) so that none of the
Participants, the Agent, Owner Trustee or Wilmington Trust Company will
become, (x) solely by reason of entering into this Participation
Agreement or the other Operative Documents or (except with respect to
the exercise by any Person of any control over the Platform or the
Property upon the occurrence of a Lease Event of Default or the
expiration or other termination of the Lease) the consummation of any
of the transactions contemplated hereby or thereby, subject to
regulation by any Governmental Authority which regulates or otherwise
has jurisdiction over any facilities for the retail distribution of
petroleum products; or (y) except for regulation the applicability of
which depends on the existence of facts in addition to the ownership of
the Platform or the Property upon the exercise of remedies under the
Lease or upon the expiration of the Lease, subject to ongoing
regulation of its operations by any Governmental Authority.
(viii) NO LITIGATION. There shall be no legal action, suit,
investigation or proceeding by or before any Governmental Authority
pending or threatened against or affecting each of the Lessee, Parent
Guarantor or any of its respective properties, which materially and
adversely affects any of the transactions contemplated by this
Participation Agreement or the other Operative Documents or the ability
of the Lessee or the Parent Guarantor, as the case may be, to perform
its obligations hereunder or under the other Operative Documents.
(ix) NO VIOLATION. The Lessee shall be in compliance with all
Applicable Laws the violation of which is reasonably likely to affect
materially and adversely the
Participation Agreement
42
transactions contemplated by this Participation Agreement and the other
Operative Documents, including, without limitation, all Environmental
Laws.
(x) REPRESENTATIONS AND WARRANTIES. The representations and
warranties of each of the Participants, Wilmington Trust Company, the
Owner Trustee and the Lessee contained herein or in any other Operative
Document executed and delivered on or prior to such date shall be true
and accurate on and as of the Documentation Date, as though made on and
as of such date (or, if stated to have been made as of an earlier date,
shall have been true and accurate as of such date).
(b) CONDITIONS TO THE AVAILABILITY DATE. The occurrence of the
Availability Date and, therefore, the obligation of the Certificate Holders to
fund any Equity Amount and the obligation of each Lender to make any Loan, are
subject to satisfaction or waiver of the following conditions precedent, with
all documents to be in form and substance acceptable to the Agent and the
Participants:
(i) DOCUMENTATION DATE CONDITIONS PRECEDENT. The conditions
precedent set forth in Section 9(a) (except Sections 9(a)(ii), (iii)
and, except as to the Lessee, (x)) shall have been satisfied or waived
on and as of such Availability Date it being understood that such
conditions precedent shall be applied to the Availability Date by
replacing the term "Documentation Date" in Section 9(a) with the term
"Availability Date."
(ii) TAXES. All Taxes, if any, due and payable on or prior to
the Availability Date in connection with the execution, delivery,
recording and filing or performance of the Operative Documents and in
connection with the consummation of the transactions contemplated
thereby shall have been paid in full on or prior to the Availability
Date.
(iii) APPRAISAL. The Appraisal of the Platform shall (a) be
delivered to each Participant, the Lessor, the Agent and the Owner
Trustee at least one (1) week prior to the Availability Date, and (b)
be in form and substance satisfactory to the Participants.
(iv) RECORDATION. The Lessor, the Certificate Holders and the
Lenders shall have received evidence reasonably satisfactory to it that
the Lender Mortgages and, Assignment of Leases and Rents and other
security documentation as agreed by the parties hereto have been, or
are being, recorded (or satisfactory arrangements have been made for
prompt recordation) in a manner sufficient to properly secure each of
their interests therein and fees payable in connection therewith have
been paid by Lessee.
(v) EVIDENCE OF INSURANCE. The Agent, the Lessor and the
Certificate Holders shall have received evidence that the insurance
maintained by the Lessee with respect to the Platform satisfies the
requirements set forth in Section 12 of the Lease, setting forth the
respective coverage, limits of liability, carrier, policy number and
period of coverage.
(vi) GOVERNMENTAL LEASES. Permission is hereby granted to the
Lessor by the Lessee to locate the Property on the Site.
Participation Agreement
43
(vii) SUPPLEMENTAL OPINIONS OF COUNSEL OF LESSEE. On or prior
to the applicable Availability Date, the Lessee shall have delivered to
the Agent, each Participant and the Lessor (i) a supplement to each of
the opinions of in-house counsel to the Lessee and Parent Guarantor,
(ii) a supplement to the opinion of ▇▇▇▇▇▇ ▇▇▇▇▇▇ L.L.P., special
Louisiana counsel to the Lessee and the Parent Guarantor, (iii) a
supplement to the opinion of ▇▇▇▇▇▇▇ & Indrenius, special Finland
counsel to the Lessee and the Parent Guarantor, and (iv) a supplement
to the opinion of applicable counsel (or new opinion of applicable
local counsel, each acceptable to the Agent and the Certificate
Holders) hereto, which supplements, opinions and questionnaires shall
cover matters required by the Agent.
(viii) UCC FINANCING STATEMENTS. Lessee and Lessor shall have
executed and submitted for filing or recording, as applicable, Uniform
Commercial Code financing statements (which may be in the form of
amendments to existing financing statements) with respect to the
Property and the Trust Estate.
(ix) OTHER DOCUMENTS. The Lessee shall have delivered or
caused to be delivered such other documents as the Lessor and Agent may
reasonably request.
(x) PLANS AND SPECIFICATIONS; CONSTRUCTION SCHEDULE;
CONSTRUCTION MILESTONES. On or prior to the applicable Availability
Date, the Lessee shall have delivered to the Agent the Plans and
Specifications, a schedule for Construction completion for the
Platform, and the Construction Milestones, certified by the
Construction Agent;
(xi) CONSTRUCTION BUDGET. On or prior to the applicable
Availability Date, the Lessee shall have delivered to the Agent the
Approved Budget for the Platform, certified by the Construction Agent;
and
(xii) CONSTRUCTION CONTRACT. On or prior to the applicable
Funding Date, the Lessee shall have delivered to the Agent the
Construction Contract and any Material Construction Contracts for the
Construction of the Platform which are in existence, which Construction
Contract and Material Construction Contracts and the contractors party
thereto shall have been approved by the Required Participants, and
under which Construction Contracts, the cost of design of the Platform,
including, without limitation, the applicable Plans and Specifications
and the Construction Cost of such Platform in accordance with such
Plans and Specifications shall not exceed the Approved Budget.
(xiii) REPORTS. The following reports shall (a) have been
delivered to each Participant, the Lessor, the Agent and the Owner
Trustee at least one (1) week prior to the Availability Date, and (b)
shall be in form and substance satisfactory to the Participants: the
Reserve Report, a Construction Consultant's Report, the Insurance
Consultant's Report, and the Environmental Consultant's Report and the
Engineering Report.
(xiv) CONSTRUCTION CONSULTANT CERTIFICATE. The Construction
Consultant shall deliver to the Lessor and the Agent a certificate to
the effect that the Approved Budget, the schedule for Construction and
the Construction Milestones conform with prudent
Participation Agreement
44
industry practice and are not unreasonable in the context of the
construction of a production platform of a type similar to the
Platform.
(xv) SECTION 8(B) REPRESENTATIONS AND WARRANTIES. The
representations and warranties of the Lessee set forth in Section 8(b)
shall be true and accurate on and as of such Availability Date.
(xvi) REPRESENTATIONS AND WARRANTIES. The representations and
warranties of the Lessee and the Parent Guarantor contained herein or
in any other Operative Document executed and delivered on or prior to
such date shall be true and accurate on and as of such Availability
Date, as though made on and as of such date (or, if stated to have been
made as of an earlier date, shall have been true and accurate as of
such date) and each of the Certificate Holders, Wilmington Trust
Company, the Owner Trustee, the Agent and the lessee shall have
received an Officer's Certificate, dated such date, to such effect from
each of such parties. All documents and instruments required to be
delivered on the Availability Date shall be delivered at the offices of
▇▇▇▇▇, ▇▇▇▇▇ & ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇
▇▇▇▇▇, or at such other location as may be determined by the Agent and
the Lessee.
(c) CONDITIONS PRECEDENT TO EACH ADVANCE. The obligations of the
Participants to make an Advance on each Funding Date, the obligation of the
Certificate Holders to fund the related Equity Amount on each Funding Date and
the obligation of the Lenders to make the related Loan on such Funding Date are
subject to satisfaction or waiver of the following conditions precedent, with
all documents to be in form and substance acceptable to the Agent and the
Participants:
(i) AVAILABILITY DATE CONDITIONS PRECEDENT. The Availability
Date shall have occurred and the conditions precedent set forth in
Section 9(b)(i), (ii), and, except as to the Lessee, (ix) shall have
been satisfied or waived on as of such Funding Date, it being
understood that such conditions precedent shall be applied to such
Funding Date by replacing the term "Availability Date" in such Section
9(b) with the term "Funding Date", as applicable.
(ii) FUNDING REQUEST. Each of the Agent and the Certificate
Holders shall have received a fully executed counterpart of the
applicable Funding Request, executed by the Lessee, in accordance with
Section 3(c). Each of the delivery of a Funding Request and the
acceptance by the Lessee of the proceeds of such Advance shall
constitute a representation and warranty by the Lessee and the Parent
Guarantor that on the applicable Funding Date (both immediately before
and after giving effect to the making of such Advance and the
application of the proceeds thereof), the statements made in Section
8(c) are true and correct.
(iii) CONSTRUCTION CERTIFICATE. With respect to any Allocated
Construction Costs to be paid or reimbursed using the proceeds of such
Advance, the Certificate Holders and Agent shall have received, at
least three (3) days prior to the applicable Funding Date, a
Construction Certificate in the form of Exhibit J hereto (a
"CONSTRUCTION CERTIFICATE"), together with all attachments thereto.
Participation Agreement
45
(iv) GOVERNMENTAL PERMITS, ETC. The Certificate Holders and
Agent shall have received evidence satisfactory to it that all permits,
licenses and consents required by any Governmental Authority in
connection with the Construction for which the Advance is being
requested have been obtained and are in full force and effect on the
applicable Funding Date.
(v) FEES. The Certificate Holders shall have received all fees
due and payable pursuant to the Fee Letter, and each Participant shall
have received all Facility Fees due and payable pursuant to Section
4(d).
(vi) EVENT OF DEFAULT. There shall not have occurred and be
continuing any Lease Event of Default, and no Lease Event of Default
will have occurred after giving effect to the making of the Advance
requested by such Funding Request.
(vii) AVAILABLE COMMITMENTS. After giving effect to the
applicable Advance, the condition set forth in the last sentence of
Section 3(a) shall not be violated.
(viii) CONSTRUCTION COSTS. After giving effect to the
applicable Advance, the Allocated Estimated Construction Costs as yet
unpaid of completing the Construction pursuant to the Construction
Documents shall not exceed the Available Commitments and shall be in
accordance with the Approved Budget.
(ix) CONSTRUCTION CONSULTANT'S REPORT. The Agent and the
Certificate Holders shall have received a Construction Consultant's
Report in connection with such Funding Date in form and substance
satisfactory to each of them and, if the Advance is to occur during the
months of March, June, September and December, commencing March, 200_,
such Consultant's Report shall include a more detailed quarterly review
of the Construction activities and progress.
(x) OTHER FUNDING. Funds in respect of the aggregate amount of
construction costs of the Platform not contemplated to be financed
pursuant to the terms of the Operative Documents shall have been
advanced (or otherwise provided) in an amount at least equal to the
Allocated Construction Costs to be funded pursuant to the Advance
requested pursuant to such Funding Request.
(xi) EVIDENCE AS TO COSTS AND EXPENSES. Delivery to the Agent
and the Lessor of evidence, in form and substance satisfactory to the
Agent and the Lessor, to support the Allocated Construction Costs and
Transaction Expenses to be funded pursuant to such Funding Request.
SECTION 10. COMPLETION DATE CONDITIONS; APPRAISAL; TAKE-OUT
(a) COMPLETION DATE. The Completion Date with respect to the Platform
shall be deemed to have occurred for purposes of the Operative Documents on the
earliest date on which each of the following events shall have occurred:
Participation Agreement
46
(1) the Construction relating to the Platform shall
have been substantially completed in accordance with the Plans
and Specifications and all Applicable Law;
(2) the Platform shall be ready for occupancy and
operation for its intended purpose in accordance with the
Plans and Specifications, as evidenced by the issuance of the
applicable approved "Structural Permit" and a Facilities
Permit" by the Minerals Management Service for the Platform
contemplated by the Plans and Specifications; and
(3) the Lessor and the Agent shall have received a
Completion Certificate from the Construction Agent
substantially in the form of Exhibit G hereto (a "COMPLETION
CERTIFICATE").
(b) REAPPRAISAL UPON COMPLETION. Within sixty (60) days from the
Completion Date for the Platform, the Agent shall obtain, at Lessee's sole cost
and expense, a new Appraisal of the Property taking into account such Completion
(the "COMPLETION APPRAISAL") which Completion Appraisal shall be delivered to
the Agent within sixty (60) days after the Completion Date. Such Completion
Appraisal shall use methodology similar to that of the Appraisal delivered in
connection with the Availability Date, with appropriate changes in assumptions
and taking into account the terms of Joint Operating Agreement, as amended. In
the event such Completion Appraisal shall conclude that the Fair Market Sales
Value of the Platform upon such Completion, multiplied by Lessor's Percentage
Undivided Interest, is less than the Property Balance (such amount, a "FMV
SHORTFALL"), Lessee shall make a special lease payment of Supplemental Rent to
the Agent equal to such FMV Shortfall.
Such Completion Appraisal shall also specify the expected Fair Market
Sales Value of the Property as of the date which is the fifth anniversary of
commencement of the Interim Term, applying a straight line depreciation method.
The excess of the Fair Market Sales Value as of the Completion Date over the
projected Fair Market Sales Value as of such fifth anniversary shall be
amortized on a straight line basis over the time period from the commencement of
the Basic Term to the Expiration Date (assuming the Lease Term is not earlier
terminated) and shall be paid annually as Supplemental Rent on each anniversary
of the Completion Date and on the last day of the Lease Term.
(c) TAKE-OUT FINANCING. Notwithstanding anything to the contrary
contained in this Participation Agreement or the other Operative Documents, if,
on or prior to the 90th day following the Completion Date (the "TAKE-OUT DATE"),
the Lessee does not purchase the Property pursuant to and in accordance with the
provisions of Section 6(e) of the Lease, the Applicable Margins set forth in
Schedule II hereto shall be increased by 50 basis points.
SECTION 11. TRANSFERS OF LENDERS' INTERESTS
(a) PERMITTED ASSIGNMENTS. Any Lender may, in the ordinary course of
its business and in accordance with Applicable Law, at any time assign to one or
more banks or other entities ("Transferees") all or any part of its rights and
obligations under the Operative Documents or the Property. Such assignment shall
be substantially in the form of Exhibit L-1 or in such other form
Participation Agreement
47
as may be agreed to by the parties thereto. During the Construction Period, the
consent of the Lessee shall be required prior to an assignment becoming
effective with respect to a Transferee which is not a Participant or an
Affiliate thereof; provided, however, that if an Event of Default has occurred
and is continuing, the consent of the Lessee shall not be required; provided,
further, that participations in Loans shall not require the consent of the
Lessee. The consent of the Agent shall be required prior to an assignment
becoming effective with respect to a Transferee which is not a Participant or an
Affiliate thereof. The consent of Lessee and Agent shall not be unreasonably
withheld or delayed. Each such assignment with respect to a Transferee which is
not a Participant or an Affiliate thereof shall (unless each of the Lessee and
the Agent otherwise consents) be in an amount not less than the lesser of (i)
$5,000,000 or (ii) the remaining amount of the assigning Lender's Commitment
(calculated as at the date of such assignment) or outstanding Loans (if the
applicable Commitment has been terminated).
(b) EFFECT; EFFECTIVE DATE. Upon (i) delivery to the Agent of an
assignment, together with any consents required by Section 11(a), and (ii)
payment of a $4,000 fee to the Agent for processing such assignment (unless such
fee is waived by the Agent), such assignment shall become effective on the
effective date specified in such assignment. The assignment shall contain a
representation by the Transferee to the effect that none of the consideration
used to make the purchase of the Commitment and Loans under the applicable
assignment agreement constitutes "plan assets" as defined under ERISA and that
the rights and interests of the Transferee in and under the Operative Documents
or the Property will not be "plan assets" under ERISA. On and after the
effective date of such assignment, such Transferee shall for all purposes be a
Lender party to this Agreement and any other Operative Document executed by or
on behalf of the Lenders and shall have all the rights and obligations of a
Lender under the Operative Documents, to the same extent as if it were an
original party hereto, and no further consent or action by the Lessee, the
Lenders or the Agent shall be required to release the transferor Lender with
respect to the percentage of the aggregate Commitments and Loans assigned to
such Transferee. Upon the consummation of any assignment to a Transferee
pursuant to this Section 11(b), the transferor Lender, the Agent and the Lessee
shall, if the transferor Lender or the Transferee desires that its Loans be
evidenced by Notes, make appropriate arrangements so that new Notes or, as
appropriate, replacement Notes are issued to such transferor Lender and new
Notes or, as appropriate, replacement Notes, are issued to such Transferee, in
each case in principal amounts reflecting their respective Commitments, as
adjusted pursuant to such assignment.
(c) RIGHTS OF TRANSFEREES. Each of the Lessee and the Lessor
acknowledges and agrees that each Transferee, for purposes of Sections 13 and
14, shall be considered a Lender; provided, however, that each of the Lessee and
the Lessor shall have no greater liability to any Transferee than it would have
had to the applicable Lender, except as reflected in amounts necessary to
indemnify such Person on an After-Tax Basis.
(1) WITHHOLDING TAXES; DISCLOSURE OF INFORMATION;
PLEDGE UNDER REGULATION A.If any Lender (or the assignee in
any Note, each a "Transferee") is organized under the laws of
any jurisdiction other than the United States or any State
thereof, then such Participant or Transferee, as applicable,
shall (as a condition precedent to acquiring or participating
in such Loan and so long as it shall be legally entitled to an
exemption from withholding as a continuing
Participation Agreement
48
obligation to the Lessor and the Lessee), furnish on a timely
basis to the Agent, the Lessor and the Lessee in duplicate,
for each taxable year of such Lender or Transferee during the
Lease Term of the Lease, a properly completed and executed
copy of either Internal Revenue Service Form W-8ECI or
Internal Revenue Service Form W8-BEN or Internal Revenue
Service Form W-9 and any additional form (or such other form)
as is necessary to claim complete exemption from United States
withholding taxes (wherein such Lender or Transferee claims
entitlement to complete exemption from United States
withholding taxes on all payments hereunder), and provide on a
timely basis to the Agent, the Lessor and the Lessee a new
Internal Revenue Service Form W-8ECI or Internal Revenue
Service Form W-8BEN or Internal Revenue Service Form W-9 and
any such additional form (or any successor form or forms) upon
the expiration or obsolescence of any previously delivered
form and comparable statements in accordance with applicable
United States laws and regulations and amendments duly
executed and completed by such Lender or Transferee, and to
comply from time to time with all applicable United States
laws and regulations with regard to such withholding tax
exemption. By its acceptance of a participation or assignment
of a Lender's Note, each Transferee shall be deemed bound by
the provisions set forth in this Section 11.
(2) Any Lender may, in connection with any assignment
or participation or proposed assignment or participation
pursuant to this Section 11, disclose to the assignee or
participant or proposed assignee or participant any
information relating to the Lessee.
(3) Anything in this Section 11 to the contrary
notwithstanding, any Lender may assign and pledge all or any
portion of the Notes held by it to any Federal Reserve Bank,
the United States Treasury or to any other financial
institution as collateral security pursuant to Regulation A of
the F.R.S. Board and any operating circular issued by the
Federal Reserve System and/or the Federal Reserve Bank or
otherwise.
SECTION 12. TRANSFERS OF CERTIFICATE HOLDERS' INTEREST
(a) ASSIGNMENTS. All or any part of the interest of any Certificate
Holder in, to or under this Participation Agreement, the other Operative
Documents, the Property or the Trust may be assigned or transferred by such
Certificate Holder at any time, subject, during the Construction Period, to the
consent of Lessee, which consent shall not be unreasonably withheld, to (i) any
Affiliate of such Certificate Holder, (ii) any other Participant or any
Affiliate of any such other Participant, or (iii) with the consent of the Agent
(such consent not to be unreasonably withheld), to any other Person; provided,
however, that (A) prior to a Lease Event of Default, no interest shall be
assigned to Lessee or any Affiliate of Lessee; (B) except as provided in (C)
below, each such assignment is in an amount equal to not less than twenty
percent (20%) of the sum of the aggregate amount of the Available Equity
Commitments and the outstanding Equity Amounts of all Certificate Holders (the
"PERMITTED EQUITY ASSIGNMENT AMOUNT"); (C) with respect to an assignment to a
Lender or an Affiliate of a Lender, each such assignment is in an amount equal
to not less than the product of (x) the sum of the Available Equity Commitment,
if
Participation Agreement
49
any, and outstanding Equity Amounts of the assignor Certificate Holder and (y)
the fraction, expressed as a decimal, obtained by dividing the sum of the
Available Loan Commitments and outstanding principal amount of Loans of such
Lender by the sum of the aggregate amounts of the Available Loan Commitments and
Loans of all Lenders; and (D) in any event, the assignor Certificate Holder
retains an interest equal to not less than the Permitted Equity Assignment
Amount; and, provided, further, that notice is given to the Owner Trustee and
(A) each assignment or transfer shall comply with all applicable securities
laws; and (B) the assignee, if it is not a Participant immediately prior to such
assignment, will deliver to the Agent a completed administrative questionnaire
in form and substance acceptable to the Agent. Notwithstanding the above,
participations in Certificates shall not require the consent of the Lessee. The
Agent shall receive an administrative fee of $4,000 from the applicable
transferor or transferee in connection with any assignment or participation
under this Section 12. Each assignee or transferee acknowledges that the
obligations to be performed from and after the date of such transfer or
assignment under this Participation Agreement and all other Operative Documents
are its obligations, including the obligations imposed by this Section 12(a)
(and the transferor and transferee Participant shall deliver to the Lessee and
the Lessor an Assignment Agreement, in substantially the form of Exhibit L-2,
executed by the assignee or transferee) and further represents and warrants to
each Participant and the Lessee as set forth in Section 6 and that:
(i) it has a net worth or combined capital and surplus of not
less than $5,000,000 (or shall provide a guaranty of its obligations
under the Operative Documents from a Person which has such net worth or
combined capital and surplus);
(ii) it has the requisite power and authority to accept such
assignment or transfer;
(iii) it will not transfer any interest in the Trust unless
the proposed transferee makes the foregoing representations and
covenants;
(iv) it will not take any action with respect to such interest
in the Trust that would violate any applicable securities laws;
(v) it will not assign or transfer any interest in the Trust
except in compliance with this Section 12; and
(vi) it is not and will not be funding, and is not and will
not be performing its obligations under the Operative Documents with
the assets of any "employee benefit plan" (as defined in Section 3(3)
of ERISA) which is subject to Title I of ERISA or "plan" (as defined in
Section 4975(e)(1) of the Code).
(b) RIGHTS OF TRANSFEREES. Each of the Lessee and the Lessor
acknowledges and agrees that each Transferee, for purposes of Sections 13 and
14, shall be considered a Certificate Holder and Section 13.2 of the Trust
Agreement shall be amended accordingly to reflect the notice address of such
Transferee; provided, however, that each of the Lessee and the Lessor shall have
no greater liability to any Transferee than it would have had to the applicable
Certificate Holder transferor, except as reflected in amounts necessary to
indemnify such Person on an After-Tax Basis.
Participation Agreement
50
(c) Withholding Taxes; Disclosure of Information; Pledge Under
Regulation A
(1) If any Certificate Holder (or the assignee of any
Equity Amount, each also a "TRANSFEREE") is organized under
the laws of any jurisdiction other than the United States or
any State thereof, then such Participant or Transferee, as
applicable, shall (as a condition precedent to acquiring or
participating in such Equity Amount and so long as it shall be
legally entitled to an exemption from withholding as a
continuing obligation to the Lessor and the Lessee), furnish
on a timely basis to the Agent, the Lessor and the Lessee in
duplicate, for each taxable year of such Certificate Holder or
Transferee during the Lease Term of the Lease, a properly
completed and executed copy of either Internal Revenue Service
Form W-8ECI or Internal Revenue Service Form W-8BEN or
Internal Revenue Service Form W-9 and any additional form (or
such other form) as is necessary to claim complete exemption
from United States withholding taxes (wherein such Lender, the
Lessor or Transferee claims entitlement to complete exemption
from United States withholding taxes on all payments
hereunder), and provide on a timely basis to the Agent, the
Lessor and the Lessee a new Internal Revenue Service Form
W-8ECI or Internal Revenue Service Form W-8BEN or Internal
Revenue Service Form W-9 and any such additional form (or any
successor form or forms) upon the expiration or obsolescence
of any previously delivered form and comparable statements in
accordance with applicable United States laws and regulations
and amendments duly executed and completed by such Certificate
Holder or Transferee, and to comply from time to time with all
applicable United States laws and regulations with regard to
such withholding tax exemption. By its acceptance of a
participation or assignment of all or any portion of a
Certificate Holder's Equity Amounts, each Transferee shall be
deemed bound by the provisions set forth in this Section 12.
(2) Any Certificate Holder may, in connection with
any assignment or participation or proposed assignment or
participation pursuant to this Section 12, disclose to the
assignee or participant or proposed assignee or participant
any information relating to the Lessee.
(3) Anything in this Section 12 to the contrary
notwithstanding, any Certificate Holder may assign and pledge
all or any portion of its interest in the Trust held by it to
any Federal Reserve Bank, the United States Treasury or to any
other financial institution as collateral security pursuant to
Regulation A of the F.R.S. Board and any operating circular
issued by the Federal Reserve System and/or the Federal
Reserve Bank or otherwise.
SECTION 13. GENERAL TAX INDEMNITY
(a) TAX INDEMNITEE DEFINED. For purposes of this Section 13, "TAX
INDEMNITEE" means (x) each Participant, the Lessor and the Affiliates of each of
the foregoing, Wilmington Trust Company and the Owner Trustee, both in its
individual capacity and as trustee, and each of their respective successors,
assigns, servants, agents, officers, directors and employees and the Trust
Estate, and (y) except with respect to any Taxes relating to the Platform or the
Property
Participation Agreement
51
during the Construction Period, each Lender and its Affiliates, and each of
their respective successors, assigns, servants, agents, officers, directors and
employees.
(b) TAXES INDEMNIFIED. The Lessee agrees to pay promptly when due, and
will indemnify and hold harmless each Tax Indemnitee on an After-Tax Basis
against, all taxes, fees, withholdings, and governmental charges attributable to
the transactions contemplated herein including all license, recording,
documentary, registration and other fees and all taxes (including, without
limitation, income, adjusted gross income, gross receipts, franchise, net worth,
capital, sales, rental, use, value added, property (tangible and intangible), ad
valorem, excise and stamp taxes), fees, levies, imposts, recording duties,
charges, assessments or withholdings of any nature whatsoever, together with any
assessments, penalties, fines, additions to tax or interest thereon
(individually, a "TAX" and collectively called "TAXES"), however imposed
(whether imposed upon any Tax Indemnitee, the Lessee, or all or any part of the
Platform or the Property or any payment made in connection with the transactions
contemplated hereunder), by any Federal, state or local government or taxing
authority in the United States of America, or by any government or taxing
authority of a foreign country, of any political subdivision or taxing authority
thereof or by a territory or possession of the United States of America or an
international taxing authority, upon or with respect to, based upon or measured
by:
(1) the Platform or the Property or any part thereof;
(2) the location, replacement, conditioning,
refinancing, control, purchase, repossession, improvement,
maintenance, redelivery, manufacture, acquisition, purchase,
ownership, acceptance, rejection, delivery, non-delivery,
leasing (including the Governmental Leases), subleasing,
transportation, insuring, inspection, registration, assembly,
abandonment, preparation, installation, possession, use,
operation, return, presence, storage, repair, transfer of
title, modification, rebuilding, import, export, alteration,
addition, replacement, assignment, overhaul, transfer or
registration, imposition of any lien, sale or other
disposition of the Platform or the Property or any part
thereof or interest therein;
(3) the rentals, receipts or earnings arising from
the Operative Documents or from the purchase, ownership,
delivery, leasing (including the Governmental Leases),
possession, use, operation, return, storage, transfer of
title, sale or other disposition of the Sites or any part
thereof;
(4) any or all of the Operative Documents;
(5) the income or other proceeds received with
respect to the Property, held by the Owner Trustee under the
Trust Agreement; or
(6) otherwise with respect to or by reason of the
transactions described in or contemplated by the Operative
Documents.
(c) TAXES EXCLUDED. The indemnity provided for in paragraph 13(b) above
shall not extend to any of the following (in each case, except in the case of
Taxes otherwise indemnifiable under the Operative Documents, additional amounts
necessary to indemnify a Tax Indemnitee for such Taxes on an After-Tax Basis):
Participation Agreement
52
(1) Federal income taxes;
(2) in the case of each Tax Indemnitee which is a
Lender, (i) net income taxes and (ii) other taxes that would
not have been incurred but for such Indemnitee or a person
related thereto being organized in the jurisdiction imposing
such taxes or conducting activities therein that are unrelated
to the contemplated transactions;
(3) in the case of each Certificate Holder, (i) net
income taxes other than net income taxes imposed by
jurisdictions in which such Indemnitee is not otherwise
subject to such taxes to the extent such net income taxes
exceed the net income taxes that would have been payable if
the Lease had been treated as a secured loan and (ii) other
taxes that would not have been incurred but for such
Indemnitee or a person related thereto being organized in the
jurisdiction imposing such taxes or conducting activities
therein that are unrelated to the contemplated transactions;
(4) in the case of the Lessor, income, franchise,
conduct of business or similar taxes that are imposed on the
Lessor and not the Certificate Holders and that, if imposed on
the Certificate Holders, would not have been indemnified
against (including all Taxes imposed on Lessor by any taxing
authority as a result of being treated as an entity other than
a "flow-through" entity or a "disregarded" entity, but subject
to the final "notwithstanding" provision at the end of this
Section 13(c));
(5) Taxes imposed on or measured by the net or gross
income, excess profits, receipts, minimum or alternative
minimum taxable income, capital, net worth, tax preferences,
accumulated earnings or capital gains of a Tax Indemnitee or
that are conduct of business, doing business or franchise
Taxes of such Tax Indemnitee (other than any Taxes which are,
or are in the nature of, sales, use, transfer, excise, rental,
license, ad valorem or property Taxes imposed by reason of the
location, use, operation or presence of the Property or any
part thereof or a Person which is the Lessee, any sublessee,
any sub-sublessee, assignee or any other Person using through
any of the foregoing (including any Affiliate of any of the
foregoing, but excluding the Lessor, any Participant or any
Affiliate of any such excluded Person) (each, a "LESSEE
PERSON") in such jurisdiction or the fact that any payment by
a Lessee Person contemplated by the Operative Documents is
made from such jurisdiction) ("INCOME TAXES") imposed by the
United States or any state or local government or taxing
authority within the United States or by any governmental or
taxing authority of a foreign country, or any political
subdivision or taxing authority thereof, or by any
international taxing authority); provided, however, provisions
of this clause (5) relating to Income Taxes shall not exclude
from the indemnity described in this Section 13 any state or
local Income Taxes (other than Taxes based on or measured by
net income) imposed by reason of the location, use, operation
or presence of any Improvement or any part thereof in any
state in which the Platform or the Property is located, other
than any other state which such Tax Indemnitee agrees in
writing (on or prior to any
Participation Agreement
53
Improvements becoming subject to the Operative Documents) is
excluded from the indemnity otherwise implied by the proviso
to this clause 5;
(6) Taxes arising out of or measured by acts,
omissions, events or periods of time (or any combination of
the foregoing) which occur after (and are not attributable to
acts, omissions or events occurring contemporaneously with or
prior to) the payment in full of all amounts payable by the
Lessee pursuant to and in accordance with the Operative
Documents, or the earlier discharge in full of the Lessee's
payment obligations under and in accordance with the Lease and
the other Operative Documents, and the earliest of (x) the
expiration of the Lease Term and return of the Property in
accordance with the return provisions of the Lease, (y) the
termination of the Lease in accordance with the applicable
provisions of the Lease and return or disposition of the
Property in accordance with the Lease, or (z) the termination
of the Lease in accordance with the applicable provisions of
the Lease and the transfer of all right, title and interest in
the Property to the Lessee pursuant to its exercise of any of
its purchase options (other than sales or other transfer taxes
as imposed thereon) except that, notwithstanding anything to
the contrary, Taxes incurred in connection with the exercise
of any remedies following the occurrence of a Lease Event to
Default shall not be excluded from the indemnity;
(7) Taxes imposed on a Tax Indemnitee as a result of
the willful misconduct or gross negligence of such Tax
Indemnitee (other than gross negligence or willful misconduct
not actually committed by but instead imputed to, such
Indemnitee by reason of such Tax Indemnitee's participation in
the transactions and entering into the Operative Documents) or
the breach by any Tax Indemnitee of any representation,
warranty or covenant set forth in the Operative Documents;
(8) Taxes imposed on a Tax Indemnitee which became
payable by reason of any transfer or disposition by such Tax
Indemnitee of any interest in some or all of the Platform or
the Property, the Operative Documents, any other Tax
Indemnitee or the Trust Estate other than (A) Taxes that
result from transfers or dispositions which occur while a
Lease Event of Default has occurred and is continuing or (B)
Taxes that result from any transfer or disposition to the
Lessee or at the Lessee's direction pursuant to the terms of
the Lease (other than Section 19(b) thereof if clause (A) of
this Section 13(c)(8) is not applicable);
(9) Taxes imposed upon the Owner Trustee with respect
to any trustee's fees for services rendered in its capacity as
trustee;
(10) Taxes that have been included in Allocated
Construction Cost or Transaction Expenses;
(11) Taxes that would not have been imposed but for
the situs of organization of a Tax Indemnitee, the place of
business of a Tax Indemnitee or the activities of a Tax
Indemnitee that are unrelated to the transactions
Participation Agreement
54
contemplated by the Operative Documents, in each case, in the
jurisdiction imposing such Taxes (other than any such place of
business or activities attributable to any Lessee Person's
activities or the use, location, operation or registration of
the Property or any part thereof in such jurisdiction);
(12) Taxes that result from a failure by a Tax
Indemnitee to comply with any certification or other procedure
reasonably required by any applicable law as a condition to
any exemption from, or reduction of, such Tax to which such
Tax Indemnitee would be entitled, so long as (a) Lessee shall
have notified such Tax Indemnitee promptly of such
requirement, (b) no such procedure would expose such Tax
Indemnitee, in its good faith determination, to any materially
adverse consequences and (c) such failure is not due to
Lessee's failure to provide information reasonably requested
or reasonable assistance in complying with such requirement,
it being understood that all certification requirements with
respect to United States withholding taxes shall be deemed to
be reasonably required and the foregoing clauses (a) through
(c) shall be deemed to have been satisfied by the Lessee;
(13) Except with respect to the additional amount
necessary to indemnify Taxes, otherwise required to be
indemnified under the Operative Documents on an After-Tax
Basis, on an After-Tax Basis, Taxes imposed on or against or
payable by a transferee of a Tax Indemnitee to the extent of
the excess of such Taxes over the amount of such Taxes which
would have been imposed and indemnified hereunder had there
not been a transfer by the original Tax Indemnitee from which
such transferee derives its interest in the Property, any part
thereof, such Indemnitee or the Operative Documents, other
than a transfer following a Lease Event of Default; and
(14) Taxes imposed on Lessor that arise as a result
of Lessor not being considered a US Person as defined in
7701(a)(30) of the Code, except if as a result of a change in
a US tax law or treaty. Notwithstanding any of the exclusions
otherwise set forth in Section 13(c)(1) through (14), the
indemnity set forth in Section 13(b) shall apply to any Texas
franchise taxes imposed on or with respect to the Lessor if:
(x) the Lessor is a Delaware business trust and (i) files its
relevant Texas tax returns and reports in a manner consistent with such
status or (ii) files its relevant Texas tax returns and reports in a
manner inconsistent with such status as the result of, or in response
to, any act, omission or breach of any representation, warranty or
covenant of a Lessee Person;
(y) any Lessee Person prepares or files a Filing (within the
meaning of Section 13(g) pursuant to Section 13(g)) in a manner
inconsistent with the status of the Lessor as a Delaware business
trust; or
(z) the Lessor changes its status from that of a Delaware
business trust as the result of, or in response to, any act, omission
or breach of any representation, warranty or
Participation Agreement
55
covenant of a Lessee Person or in connection with the exercise of any
remedies following the occurrence of a Lease Event of Default.
(d) PAYMENTS TO THE LESSEE.
(1) If any Tax Indemnitee or any Affiliate of any Tax
Indemnitee actually shall realize a Tax benefit (whether by
way of deduction, credit, allocation or apportionment or
otherwise) with respect to a Tax not indemnifiable hereunder
which would not have been realized but for any Tax, Claim or
other cost or expense with respect to which Lessee has
reimbursed or indemnified such Tax Indemnitee on an After-Tax
Basis pursuant to the Operative Documents, which benefit was
not previously taken into account in determining the amount of
the Lessee's payment to such Tax Indemnitee, such Tax
Indemnitee shall pay to the Lessee, on an After-Tax Basis, an
amount equal to the amount of such Tax benefit; provided,
however, that no payment shall be made as long as a Payment
Default or a Lease Event of Default is continuing; provided
further, however, that no Tax Indemnitee shall be required to
pay to the Lessee any Tax benefit to the extent such payment
is greater than the amount of such Taxes, Claims, costs or
expenses in respect of which the reimbursement or
indemnification was paid by Lessee, reduced by all prior
payments by such Tax Indemnitee under this Section 13(d) in
respect of such amount; any payment to the Lessee which is so
limited shall, to the extent of such unpaid excess, be carried
over and shall be available to offset any future obligations
of the Lessee under this Section 13). If such repaid Tax
benefit is thereafter lost, the additional Tax payable shall
be treated as a Tax indemnifiable hereunder without regard to
the exclusions set forth in Section 13 (other than clause
(c)(7)).
(2) Upon receipt by a Tax Indemnitee of a refund or
credit of all or part of any Taxes paid or indemnified against
by the Lessee, which refund or credit was not previously taken
into account in determining the amount of the Lessee's payment
to such Tax Indemnitee, such Tax Indemnitee shall pay to the
Lessee, on an After-Tax Basis, an amount equal to the amount
of such refund, plus any interest received by or credited to
such Tax Indemnitee with respect to such refund; provided,
however, that no such payment shall be made as long as a
Payment Default or a Lease Event of Default is continuing.
(3) The Tax Indemnitee will, at the Lessee's expense,
pursue refunds and tax benefits that would result in any such
payments to the Lessee, but only if the Tax Indemnitee has
been notified in writing by the Lessee that such refunds or
tax benefits are available.
(e) PROCEDURES. Any amount payable to a Tax Indemnitee pursuant to
paragraph 13(b) shall be paid within thirty (30) days after receipt of a written
demand therefor from such Tax Indemnitee accompanied by a written statement
describing in reasonable detail the basis for such indemnity and the computation
of the amount so payable, provided, however, that such amount need not be paid
prior to the later of (i) the date on which such Taxes are due or (ii) in the
case of amounts which are being contested pursuant to paragraph 13(f) hereof,
the time
Participation Agreement
56
such contest (including all appeals permitted hereunder) is finally resolved;
provided, further, that with respect to Taxes of a recurring nature, the Tax
Indemnitee shall only be required to provide one such written notice. Any amount
payable to the Lessee pursuant to paragraph 13(d) shall be paid within twenty
(20) days of the day on which a return (including estimated tax returns) is
filed reflecting such Tax benefit or promptly after the Tax Indemnitee actually
receives a refund giving rise to a payment under paragraph 13(d), and shall be
accompanied by a written statement by the Tax Indemnitee setting forth in
reasonable detail the basis for computing the amount of such payment. Within
thirty (30) days following the Lessee's receipt of any computation from the Tax
Indemnitee, the Lessee may request that an accounting firm reasonably acceptable
to the Lessee determine whether such computations of the Tax Indemnitee are
correct. Such accounting firm shall be requested to make the determination
contemplated by this paragraph 13(e) within thirty (30) days of its selection.
In the event such accounting firm shall determine that such computations are
incorrect, such firm shall determine what it believes to be the correct
computations. The Tax Indemnitee shall cooperate with such accounting firm and
supply it with all information necessary to permit it to accomplish such
determination. The computations of such accounting firm shall be final, binding
and conclusive upon the parties and the Lessee shall have no right to inspect
the books, records or tax returns of the Tax Indemnitee to verify such
computation or for any other purpose. All fees and expenses of the accounting
firm payable under this Section 13(e) shall be borne by the Lessee, except that
if such accounting firm's computation shall result in a decrease in the amount
due from, or an increase in the amount payable to, the Lessee by more than the
greater of 5% of the amount claimed by the Tax Indemnitee or $10,000, then the
Tax Indemnitee shall bear the cost of such accounting firm.
(f) CONTEST. If any claim shall be made against any Tax Indemnitee or
if any proceeding shall be commenced against any Tax Indemnitee (including a
written notice of such proceeding) for any Tax as to which the Lessee may have
an indemnity obligation, or if any Tax Indemnitee shall determine that any Tax
as to which the Lessee may have an indemnity obligation may be payable, such Tax
Indemnitee shall promptly notify the Lessee in writing and shall not take any
action with respect to such claim, proceeding or Tax without the consent of the
Lessee for thirty (30) days after receipt of such notice by the Lessee unless
the failure to take action could result in the imposition of penalties or fines
or material danger of sale, forfeiture or loss of, or the creation of any Lien
on, the Platform or the Property or any portion thereof or interest therein;
provided, however, that any failure to provide such notice shall not relieve the
Lessee of any obligation to indemnify any Tax Indemnitee hereunder unless the
Lessee is materially adversely affected as a result of such failure and such
failure arises out of or is caused by the misconduct or negligence (excluding
imputed negligence) of such Tax Indemnitee; provided, further, however, that if
such Tax Indemnitee shall be required by law or regulation to take action with
respect to any such claim, proceeding or Tax prior to the end of such thirty
(30) day period such Tax Indemnitee shall, in such notice to the Lessee, so
inform the Lessee and such Tax Indemnitee shall not take any action with respect
to such claim, proceeding or Tax without the consent of the Lessee before the
date on which such Tax Indemnitee shall be required to take action. If, within
thirty (30) days after its receipt of such notice (or such shorter period
referred to in the preceding sentence), the Lessee shall request in writing that
such Tax Indemnitee contest the imposition of such Tax, the Tax Indemnitee
shall, at the expense of the Lessee, in good faith contest (including by pursuit
of appeals, excluding any requirement to appeal to the U.S. Supreme Court), and
shall not settle without the Lessee's consent, or if such contest can be pursued
independently from any other proceeding involving a Tax liability of such
Participation Agreement
57
Tax Indemnitee (a "LESSEE-CONTROLLED CONTEST"), the Tax Indemnitee shall allow
the Lessee to contest (in its own name, if permitted by law to do so) the
validity, applicability or amount of such Tax (other than U.S. withholding or
net income Taxes indemnifiable hereunder) by, in the sole discretion of the
Person conducting such contest:
(1) resisting payment thereof;
(2) not paying the same except under protest, if
protest shall be necessary and proper; or
(3) if payment shall be made, using reasonable
efforts to obtain a refund thereof in appropriate
administrative and judicial proceedings; provided, however,
that in no event shall such Tax Indemnitee be required to
contest (or permit the Lessee to contest) the imposition of
any Tax for which the Lessee may be obligated unless: (t) if a
Payment Default or a Lease Event of a Default shall have
occurred and be continuing, Lessee shall either (I) provide
security for such tax indemnity obligations that is reasonably
acceptable to such Tax Indemnitee or (II) pay such Tax, (u) in
the case of net income Taxes indemnifiable hereunder, the
amount of the claim and all future related claims exceeds
$25,000, (v) in the case of net income and U.S. withholding
Taxes indemnifiable hereunder, the Lessee shall have delivered
to the Certificate Holders an opinion of tax counsel chosen by
the Lessee and reasonably acceptable to the Certificate
Holders to the effect that there is a reasonable basis to
contest such claim, (w) in the case of a Lessee-Controlled
Contest, the Lessee shall have acknowledged in writing its
liability hereunder if the contest is unsuccessful; provided
that such acknowledgment shall be of no force and effect if
the final determination of the contest clearly articulates
that the cause of the unfavorable disposition is one for which
the Lessee is not otherwise liable hereunder, (x) the Lessee
shall have agreed to pay such Tax Indemnitee all costs and
expenses that such Tax Indemnitee shall incur in connection
with contesting such claim (including all reasonable legal and
accounting fees and disbursements and internally allocated
time charges), (y) the Certificate Holders shall have
reasonably determined that action to be taken will not result
in any material danger of sale, forfeiture or loss of the
Platform or any portion thereof or interest therein, and (z)
if such contest shall involve payment of the claim, the Lessee
shall advance the amount thereof, plus interest, penalties and
additions to Tax with respect thereto, to such Tax Indemnitee
on an interest-free basis and on an After-Tax Basis to such
Tax Indemnitee. The party in control of any contest shall
consult in good faith and cooperate with the other party
regarding the conduct of any contest and the Tax Indemnitee
shall allow the Lessee to attend all hearings at which
unrelated issues are not discussed and to comment upon all
related submissions in such Tax Indemnitee-controlled contests
and vice versa. Notwithstanding the above, a Tax Indemnitee
may settle and will not be required to contest the imposition
of any Taxes if such Tax Indemnitee shall waive its right to
indemnity with respect to such Taxes and all future related
Taxes and shall have paid to the Lessee any and all funds paid
by the Lessee to such Tax Indemnitee with regard to such
contested amount (other than those described in clause (x) of
this Section 13(f)) plus any
Participation Agreement
58
interest which the Lessee paid on such funds. Any contest by
the Lessee or at the Lessee's request shall be subject to the
following requirements: (i) such contest shall be conducted in
good faith by appropriate proceedings which have the effect of
staying the enforcement of the lien for such Taxes and the
sale, forfeiture or other loss of the Platform during the
pendency of such contest, (ii) none of the Lessor, the Owner
Trustee, the Agent and the Participants shall be subject to
any risk of criminal liability or material civil liability by
virtue of the matters being contested or such proceedings, and
(iii) the Lessee, in accordance with prudent practice, has set
aside adequate reserves for the payment thereof and has
provided evidence reasonably acceptable to the Agent, the
Lessor and the Participants of such reserves.
(g) REPORTS. In the event any report, return or statement or any
certification or procedure (a "FILING") with respect to Taxes is required to be
made with respect to any Tax that may be subject to indemnification under this
Section 13, the Lessee will, at the Lessee's expense, either prepare and file
such Filing or, if it shall not be permitted to file the same, it will notify
each Tax Indemnitee of such reporting requirements, prepare such Filing in such
manner as shall be reasonably satisfactory to each Tax Indemnitee and deliver
the same to each Tax Indemnitee within a reasonable period prior to the date the
same is to be filed; provided, however, that the relevant Tax Indemnitees shall
have furnished the Lessee, at the Lessee's request and expense, within a
reasonable time, with such information, not within the control of (nor
reasonably available to) the Lessee, in such Tax Indemnitee's control (or which
is reasonably available to such Tax Indemnitee) and is necessary to complete
such Filing.
(h) NON-PARTIES. If a Tax Indemnitee is not a party to this Agreement,
Lessee may require the Tax Indemnitee to agree in writing, in a form reasonably
acceptable to Lessee, to the terms of this Section 13 prior to making any
payment to such Tax Indemnitee under this Section 13.
(i) SURVIVAL. The provisions of this Section 13 shall continue in full
force and effect, notwithstanding the expiration or termination of any Operative
Document, until all obligations hereunder have been met and all liabilities
hereunder paid in full.
(j) CONSTRUCTION PERIOD. Notwithstanding the foregoing, during the
Construction Period, (i) the Lessor, in lieu of the Lessee, shall indemnify all
Lender Indemnitees under this Section 13, to the same extent that the Lessee is
obligated to so indemnify such parties absent the provisions of this subsection
(j), (ii) the Lessee will indemnify the Lessor for all obligations of the Lessor
under this subsection (j), and (iii) the Lessor hereby assigns to each of the
Lender Indemnitees the Lessor's right to indemnification by the Lessee under
this subsection (j) to the extent of any claim by the respective Lender
Indemnitee under this Section 13. Any indemnification by the Lessor shall be
subject to all of the provisions of this Section 13 to the same extent as
applicable to indemnification by the Lessee under this Section 13.
SECTION 14. GENERAL INDEMNITY
(a) INDEMNIFICATION. The Lessee does hereby assume liability for, and
does hereby agree to indemnify, defend, protect, save and keep harmless, on an
After-Tax Basis, each
Participation Agreement
59
Indemnified Person from and against any and all liabilities, obligations,
losses, damages, penalties, claims (including, without limitation, claims
involving strict or absolute liability in tort, warranty claims, claims based on
negligence, products liability or statutory liability or claims for enforcement,
cleanup, removal, response, remedial or other actions or damages, contribution,
indemnification, cost recovery, compensation or injunctive relief pursuant to
any Environmental Law or alleged injury or threat of injury, to health, safety,
the environment or natural resources), actions, suits, costs, expenses and
disbursements (including, without limitation, reasonable legal fees and expenses
and Owner Trustee's Expenses) of any kind and nature whatsoever (all of the
foregoing being referred to as "CLAIMS") which may be imposed on, incurred by or
asserted against such Indemnified Person, whether or not such Indemnified Person
shall also be indemnified as to any such Claim by any other Person, in any way
relating to or arising out of:
(1) this Participation Agreement or any other
Operative Document, or any document contemplated hereby or
thereby; or the execution, delivery or performance or
non-performance or enforcement of any of the terms of this
Participation Agreement or any other Operative Document by the
Lessee, the Parent Guarantor, the Owner Trustee or the
Participants or any other Person;
(2) the Platform, the Property or any part thereof or
the purchase, manufacture, design, financing, refinancing,
construction, acceptance, rejection, ownership, acquisition,
delivery, non-delivery, occupancy, lease, ground lease,
sublease, rental, preparation, installation, modification,
substitution, possession, use, non-use, operation,
maintenance, condition, registration, repair, transportation,
transfer of title, any action taken by Lessee or requested by
Lessee under Section 8(d) of the Lease, abandonment, rental,
importation, exportation, sale (including, without limitation,
any sale pursuant to the Lease), retirement, return, storage
or other disposition of the Platform, the Property or any part
thereof or any accident in connection therewith (including,
without limitation, latent and other defects, whether or not
discoverable, whether preexisting or not and any Claim for
patent, trademark or copyright infringement) or the failure of
the Platform to be located wholly within the Site;
(3) the performance of any labor or services or the
furnishing of any materials or other property in respect of
the Platform or any part thereof by or on behalf of or with
the knowledge of the Lessee or any Affiliate;
(4) any negligence or tortious acts on the part of
the Lessee or any Affiliate or any agents, contractors,
sublessee, franchisees, licensees or invitees thereof;
(5) any alterations, changes, modifications, new
construction or demolition of the Platform or any part
thereof;
(6) any violation of law; or any breach of any
covenant, warranty or representation in any Operative Document
or any certificate required to be delivered pursuant to any
Operative Document by the Lessee or any Affiliate;
Participation Agreement
60
(7) subject to the accuracy of any Certificate
Holder's representation in Section 7(b) concerning acquisition
for investment, to the extent permitted by Applicable Law, the
offer, issue, sale, purchase or delivery of any interest in
the Trust Estate (including the trust certificates) or the
Trust Agreement or any similar interest or in any way
resulting from or arising out of the Trust Agreement and the
Trust Estate (including Claims arising under or resulting from
applicable Federal, state or foreign securities laws or common
law);
(8) the imposition of any Lien on the Platform or the
Property (other than Permitted Liens or Lessor Liens) or the
enforcement of any agreement, restriction or legal requirement
affecting the Platform or the Property;
(9) a disposition of the Property or any part thereof
in connection with a termination of the Lease pursuant to
Section 16 of the Lease and, after the Construction Period,
Section 11 of the Lease;
(10) subject to the accuracy of any Participant's
representation set forth in Section 6(a)(vi) concerning ERISA,
as to such Participant, the transactions contemplated by the
Lease or by any other Operative Document, in respect of the
application of Parts 4 and 5 of Subtitle B of Title I of ERISA
and any prohibited transaction described in Section 4975(c) of
the Code;
(11) the presence, Release or threat of Release into
the environment of any Hazardous Substances; the presence on,
under or around the Property, wherever located, of any
Hazardous Substances, or any Releases, threats of Release or
discharges of any Hazardous Substances on, under, around or
from any Sites, irrespective of when such presence, Release,
threat of Release or discharge of Hazardous Substances
occurred or originated; any activity carried on or undertaken
on or off the Platform in connection with the handling,
treatment, removal, storage, decontamination, clean-up,
transport or disposal of any Hazardous Substances (including,
without limitation, from any corrective action plan and the
development and implementation thereof); any residual
contamination on, under, around or from the Platform and
affecting any natural resources or any property of others; in
any and all such circumstances irrespective of whether any of
such activities were undertaken in accordance with Applicable
Law, or whether claims with respect thereto are made pursuant
to Environmental Law;
(12) in its capacity as Construction Agent, the
amounts and costs referred to in Section 4(e)(iii); provided
that, in connection with the indemnification obligations
described in this sub-paragraph 12, Lessor also hereby
indemnifies the Participants on a non-recourse basis with
respect to such amounts or costs; or
(13) the misapplication of insurance or condemnation
proceeds by the Construction Agent, the Operator, the Lessee
or any other Construction Agency Person.
Participation Agreement
61
DURING THE LEASE TERM OF THE PROPERTY, THE LESSEE AGREES THAT NEITHER THE
CERTIFICATE HOLDERS NOR THE OWNER TRUSTEE (INCLUDING WILMINGTON TRUST COMPANY,
INDIVIDUALLY) SHALL BE LIABLE TO THE LESSEE FOR ANY CLAIM CAUSED DIRECTLY OR
INDIRECTLY BY THE INADEQUACY OF SUCH PROPERTY OR ANY PART THEREOF FOR ANY
PURPOSE OR ANY DEFICIENCY OR DEFECT THEREIN OR ANY FAILURE OF TITLE WITH RESPECT
THERETO (OTHER THAN BY VIRTUE OF LESSOR LIENS OR THE GROSS NEGLIGENCE OR WILLFUL
MISCONDUCT OF THE CERTIFICATE HOLDERS OR THE OWNER TRUSTEE) OR THE USE OR
MAINTENANCE THEREOF OR ANY REPAIRS, SERVICING OR ADJUSTMENTS THERETO OR ANY
DELAY IN PROVIDING OR FAILURE TO PROVIDE ANY THEREOF OR ANY INTERRUPTION OR LOSS
OF SERVICE OR USE THEREOF OR ANY LOSS OF BUSINESS, ALL OF WHICH SHALL BE THE
RISK AND RESPONSIBILITY OF THE LESSEE.
(b) SURVIVAL. Unless otherwise expressly provided in the Operative
Documents, the obligations, agreements, rights and liabilities of the Lessee,
the Owner Trustee and each Indemnified Person arising under this Section shall
continue in full force and effect, notwithstanding the expiration or other
termination of the Lease or this Participation Agreement. Until all obligations
have been met, all liabilities arising under this Section 14 shall be
enforceable by the Lessee, the Owner Trustee and each Indemnified Person and
their successors, assigns and agents.
(c) CERTAIN EXCEPTIONS. Notwithstanding the foregoing, the Lessee shall
not assume liability for or indemnify, defend, protect, save and keep harmless
pursuant to Section 14(a) hereof (i) any Indemnified Person from and against any
Claims to the extent arising out of any act, occurrence or omission (other than
(x) an act or omission of, or an occurrence caused by, or attributable to, the
Lessee or (y) for the Property, if the Lessee shall duly exercise and consummate
the Sale Option with respect to the Property, occurring during or attributable
to any period ending on or before the consummation of such Sale Option) on,
under, in or from the Property after the Return Date with respect to the
Property; (ii) any Indemnified Person for any Claim that is a Tax or a loss of
Tax benefits or the costs and expenses of contesting any Tax or loss of tax
benefits, except to provide indemnification under this Section 14 on an
After-Tax Basis; (iii) any Indemnified Person for any Claim to the extent it
results from the material incorrectness of, or any failure on the part of such
Indemnified Person to comply with, any representation, warranty, agreement or
covenant of such Indemnified Person in favor of the Lessee in any Operative
Document unless such failure to comply resulted in whole or in part from any
default by the Lessee under any Operative Document; provided, however, that the
material incorrectness of, or the failure of any Indemnified Person to comply
with, any such representation, warranty, agreement or covenant shall not affect
the rights of any other Indemnified Person hereunder; (iv) any Indemnified
Person for any Claim to the extent resulting from acts which would constitute
the willful misconduct or gross negligence of such Indemnified Person or a
related Indemnified Person; (it being agreed that for purposes of this clause
(iv) the Owner Trustee shall be deemed a related Indemnified Person of the
Certificate Holders only to the extent it acts on the written instructions of
the Certificate Holders) provided that: (A) negligence or gross negligence or
willful misconduct will not be imputed to such Indemnified Person, the
Certificate Holders or any related Indemnified Person solely as a result
Participation Agreement
62
of the Owner Trustee's ownership the Property; (B) the willful misconduct or
gross negligence of an Indemnified Person shall not affect the rights of any
other Indemnified Person hereunder; and (C) with respect to the Owner Trustee,
it shall not constitute willful misconduct or gross negligence of Wilmington
Trust Company to rely on the written instructions of the Certificate Holders;
(v) any Indemnified Person for an offer, sale or other disposition of all or
part of an interest in the Trust Estate, any Equity Certificate or any Note by
Certificate Holders or Owner Trustee (other than to Lessee or an Affiliate of
Lessee or as the result of or during a Lease Event of Default or an Event of
Loss); (vi) any Indemnified Person for any Claim to the extent resulting from
the imposition of any Lessor Lien; or (vii) any Indemnified Person for
Transaction Costs to the extent Lessee is liable therefor under this Section 14.
The indemnities set forth in this Section shall not constitute a
guarantee, representation or warranty to any Indemnified Person of or as to the
value or useful life of the Platform or the Property.
(d) CLAIMS PROCEDURE. An Indemnified Person shall, after obtaining
actual knowledge thereof, promptly notify Lessee of any Claim as to which
indemnification is sought (unless Lessee theretofore has notified such
Indemnified Person of such Claim); provided, however, that the failure to give
such notice shall not release Lessee from any of its obligations under this
Section 14, except to the extent that failure to give notice of any action, suit
or proceeding against such Indemnified Person is shown to increase Lessee's
liability under such Claim from that which would have existed if the failure to
give notice had not occurred. Subject to the following paragraph, Lessee agrees
to defend such Claim and shall at its sole cost and expense be entitled to
control, and shall assume full responsibility for, the defense of such Claim;
provided, however, that Lessee shall keep the Indemnified Person that is the
subject of such proceeding fully apprised of the status of such proceeding and
shall provide such Indemnified Person with all information with respect to such
proceeding as such Indemnified Person reasonably requests; and provided,
further, that in the event Lessee fails to defend such Claim, Lessee shall pay
the reasonable costs and expenses (including reasonable legal fees and expenses)
of the Indemnified Person in defending such Claim. Where the Lessee is obligated
hereunder to pay the expenses of an Indemnified Person or Indemnified Persons,
the Lessee shall not be liable for the fees and expenses of more than one
counsel in each relevant jurisdiction for each of (A) the Certificate Holders
and (B) the Owner Trustee. Notwithstanding any of the foregoing to the contrary,
Lessee shall not be entitled to control and assume responsibility for the
defense of such Claim if (1) a Lease Default or Lease Event of Default exists,
and the Indemnified Person notifies Lessee that it is no longer permitted to
control the defense of such Claim, (2) such proceeding involves any material
danger of the sale, forfeiture or loss of, or the creation of any Lien (other
than any Permitted Lien or bonded liens which would become liens under item (vi)
of the definition of Permitted Liens) on, the Platform or the Property, (3) in
the good faith opinion of such Indemnified Person, there exists an actual or
potential conflict of interest such that it is advisable for such Indemnified
Person to retain control of such proceeding or (4) such Claim or liability
involves a risk of criminal actions or liability to such Indemnified Person. In
the circumstances described in clauses (1) through (4), the Indemnified Person
shall be entitled to control and assume responsibility for the defense of such
Claim or liability at the expense of Lessee. In addition, any Indemnified
Person, at its own expense, may (A) participate in any proceeding controlled by
Lessee pursuant to this Section 14(d) and (B) employ separate counsel. Lessee
may in any event participate in all such proceedings at its own cost. Nothing
Participation Agreement
63
contained in this Section 14(d) shall be deemed to require an Indemnified Person
to contest any Claim or to assume responsibility for or control of any judicial
proceeding with respect thereto.
(e) SUBROGATION. If a Claim indemnified by Lessee under this Section 14
is paid in full by Lessee and/or an insurer under a policy of insurance
maintained by Lessee, or if payment of the Claim has otherwise been provided for
in full in a manner reasonably satisfactory to the Indemnified Person, Lessee
and/or such insurer, as the case may be, shall be subrogated to the extent of
such payment (or provision) to the rights and remedies of the Indemnified Person
(other than under insurance policies maintained by such Indemnified Person) on
whose behalf such Claim was paid (or provided for) with respect to the act or
event giving rise to such Claim. So long as no Payment Default and no Lease
Event of Default exists, if an Indemnified Person receives any refund, in whole
or in part, with respect to any Claim paid by Lessee hereunder, it shall
promptly pay over the amount refunded (but not in excess of the amount Lessee or
any of its insurers has paid in respect of such Claim paid or payable by such
Indemnified Person on account of such refund) to Lessee; provided, however, if
any Payment Default or Lease Event of Default exists, any such refund shall be
retained by, or paid over to, the Lessor to be held and applied against amounts
payable by the Lessee hereunder and under the other Operative Documents.
(f) INSURED CLAIMS. In the case of any Claim indemnified by the Lessee
hereunder which is covered by a policy of insurance maintained by or for the
benefit of the Lessee, each Indemnified Person agrees to cooperate, at the
expense of the Lessee, with the insurers in the exercise of their rights to
investigate, defend or compromise such Claim as may be required to retain the
benefits of such insurance with respect to such Claim (but the failure to do so
shall not relieve the Lessee of its obligation to indemnify such Indemnified
Person except to the extent that the Lessee or its insurer is materially
prejudiced as a result of such failure).
(g) WAIVER OF CERTAIN CLAIMS. Lessee hereby waives and releases any
Claim now or hereafter existing against any Indemnified Person out of death or
personal injury to personnel of Lessee (including its directors, officers,
employees, agents and servants), loss or damage to property of Lessee or its
Affiliates, of the loss of use of any property of Lessee or its Affiliates,
which may result from or arise out of the condition, use or operation of the
Platform or the Property during the Lease Term and the Renewal Term, if any,
including, without limitation, any latent or patent defect whether or not
discoverable.
(h) CONSENT. Unless a Lease Default or a Lease Event of Default exists,
the Lessee shall not be liable hereunder for any settlement of any loss, claim,
damage, liability or action effected without its consent.
(i) CONSTRUCTION PERIOD. Notwithstanding the foregoing, during the
Construction Period, with respect to all matters described in Section 14(a)
other than those described in subparagraph (11) of Section 14(a):(i) the Lessor,
in lieu of the Lessee, shall indemnify all Lender Indemnitees under this Section
14, to the same extent that the Lessee is obligated to so indemnify such parties
absent the provisions of this subsection (i), (ii) the Lessee will indemnify the
Lessor for all obligations of the Lessor under this subsection (i), and (iii)
the Lessor hereby assigns to each of the Lender Indemnitees the Lessor's right
to indemnification by the Lessee under this subsection (i) to the extent of any
claim by the respective Lender Indemnitee under
Participation Agreement
64
this Section 14. Any indemnification by the Lessor shall be subject to all of
the provisions of this Section 14 to the same extent as applicable to
indemnification by the Lessee under this Section 14. Amounts payable during the
Construction Period in payment of the indemnifications provided by the Lessee in
Section 14(a) above (other than those described in subparagraph (11) of Section
14(a)) are limited to those matters as shall arise in connection with an act or
failure to act on the part of the Construction Agent or a Construction Agency
Person.
SECTION 15. TRANSACTION EXPENSES
The Lessee agrees, for the benefit of the Lessor, the Certificate
Holders and the Lenders, that:
(a) TRANSACTION EXPENSES.
(1) The Lessee shall pay, or cause to be paid, from
time to time all Transaction Expenses in respect of the
transactions on the Documentation Date, the Availability Date
and each Funding Date; provided, however, that if the Lessee
has not received written invoices therefor at least five (5)
Business Days prior to such date, such Transaction Expenses
shall be paid within thirty (30) days after the Lessee has
received written invoices therefor. Transaction Expenses may,
subject to the conditions hereof (including without limitation
the last sentence of Section 3(a)(1)), be paid with the
proceeds of an Advance.
(2) The Lessee shall pay or cause to be paid all
Transaction Expenses incurred by the Agent, the Lessor, any
Lender or any Certificate Holder in entering into any future
amendments or supplements with respect to any of the Operative
Documents, whether or not such amendments or supplements are
ultimately entered into, or giving or withholding of waivers
of consents hereto or thereto, in each case which have been
requested by or approved by the Lessee, all Transaction
Expenses incurred by the Lessee, the Lessor, the Agent, the
Lenders or the Certificate Holders in connection with any
purchase of the Property by the Lessee or other Person
pursuant to Section 6 of the Lease and all Transaction
Expenses incurred by any of the other parties hereto in
respect of enforcement of any of their rights or remedies
against the Lessee or any other Affiliate of the Lessee in
respect of the Operative Documents.
(b) BROKERS' FEES AND STAMP TAXES. The Lessee shall pay or cause to be
paid any fees and any and all stamp, transfer and other similar taxes, fees and
excises, if any, including any interest and penalties, which are payable in
connection with the transactions contemplated by this Participation Agreement
and the other Operative Documents.
SECTION 16. CONSENT TO JURISDICTION; WAIVER OF JURY TRIAL; SERVICE OF PROCESS
(a) CHOICE OF LAW. The parties hereto hereby irrevocably each (i) agree
that any legal or equitable action, suit or proceeding against the Lessee
arising out of or relating to this Participation Agreement or any other
Operative Document governed by the Laws of the State of Illinois or any
transaction contemplated hereby or thereby or the subject matter of any of the
Participation Agreement
65
foregoing may be instituted in any state court of competent jurisdiction in the
State of Illinois or Federal court in Chicago, Illinois, (ii) to the extent
permitted by Applicable Law, waives any objection which it may now or hereafter
have to the venue of any such action, suit or proceeding, including, without
limitation, inconvenient forum and (iii) submits itself to the jurisdiction of
any state court of competent jurisdiction in the State of Illinois or Federal
court in Chicago, Illinois for purposes of any such action, suit or proceeding.
Nothing contained in this Section shall be deemed to affect the rights of the
Certificate Holders, Lenders, the Agent or the Owner Trustee to serve process in
any other manner permitted by law or to commence legal proceedings or otherwise
proceed against the Lessee in any other jurisdiction.
(b) CONSENT TO JURISDICTION. THE PARTIES HERETO HEREBY IRREVOCABLY
SUBMIT TO THE NON-EXCLUSIVE JURISDICTION OF ANY UNITED STATES FEDERAL OR
ILLINOIS STATE COURT SITTING IN CHICAGO, ILLINOIS IN ANY ACTION OR PROCEEDING
ARISING OUT OF OR RELATING TO ANY OPERATIVE DOCUMENTS AND SUCH PARTIES HEREBY
IRREVOCABLY AGREE THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING MAY BE
HEARD AND DETERMINED IN ANY SUCH COURT AND IRREVOCABLY WAIVE ANY OBJECTION IT
MAY NOW OR HEREAFTER HAVE AS TO THE VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING
BROUGHT IN SUCH A COURT OR THAT SUCH COURT IS AN INCONVENIENT FORUM. NOTHING
HEREIN SHALL LIMIT THE RIGHT OF THE AGENT, ANY LENDER OR ANY CERTIFICATE HOLDER
TO BRING PROCEEDINGS AGAINST THE LESSEE OR THE CONSTRUCTION AGENT IN THE COURTS
OF ANY OTHER JURISDICTION. ANY JUDICIAL PROCEEDING BY THE LESSEE OR THE
CONSTRUCTION AGENT AGAINST THE AGENT, ANY LENDER OR ANY CERTIFICATE HOLDER OR
ANY AFFILIATE OF THE AGENT, ANY LENDER OR ANY CERTIFICATE HOLDER INVOLVING,
DIRECTLY OR INDIRECTLY, ANY MATTER IN ANY WAY ARISING OUT OF, RELATED TO, OR
CONNECTED WITH ANY OPERATIVE DOCUMENT SHALL BE BROUGHT ONLY IN A COURT IN
CHICAGO, ILLINOIS UNLESS THE AGENT, SUCH LENDER, SUCH CERTIFICATE HOLDER OR SUCH
AFFILIATE SHALL OTHERWISE AGREE.
(c) WAIVER OF JURY TRIAL. THE PARTIES HERETO VOLUNTARILY AND
INTENTIONALLY WAIVE ANY RIGHTS THEY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF
ANY LITIGATION BASED HEREON OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH,
THIS PARTICIPATION AGREEMENT OR ANY OTHER OPERATING DOCUMENT, OR ANY COURSE OF
CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF
ANY OF THE PARTIES HEREUNTO AND THEREUNTO. THE PARTIES HEREUNTO HEREBY AGREE
THAT THEY WILL NOT SEEK TO CONSOLIDATE ANY SUCH LITIGATION WITH ANY OTHER
LITIGATION IN WHICH A JURY TRIAL HAS NOT OR CANNOT BE WAIVED. THE PROVISIONS OF
THIS SECTION 16 HAVE BEEN FULLY NEGOTIATED BY THE PARTIES HERETO AND SHALL BE
SUBJECT TO NO EXCEPTIONS.
(d) SERVICE OF PROCESS. Each of the Lessee, the Construction Agent, the
Guarantor and the Parent Guarantor hereby agrees that service of all writs,
process and summonses in any such suit, action or proceeding brought in the
State of Illinois may be made upon CT Corporation System (the "PROCESS AGENT"),
presently located at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇
Participation Agreement
66
60604 and each of the Lessee, the Construction Agent, the Guarantor and the
Parent Guarantor hereby irrevocably appoints the Process Agent its true and
lawful attorney-in-fact in its name, place and stead to accept such service of
any and all such writs, process and summonses, and agrees that the failure of
the Process Agent to give any notice of any such service of process to the
Lessee, the Construction Agent, the Guarantor or the Parent Guarantor, as the
case may be, shall not impair or affect the validity of such service or of any
proceeding. Each of the Lessee, the Construction Agent, the Guarantor and the
Parent Guarantor hereby further irrevocably consents to the service of process
in any such suit, action or proceeding in said courts by the transmitting
thereof by the Agent, the Lenders or the Certificate Holders or their respective
assignees by facsimile, telex or telegram, to the Lessee, the Construction
Agent, the Guarantor or the Parent Guarantor, as the case may be, addressed as
provided herein if such process is actually received by such party. Nothing
herein shall in any way be deemed to limit the ability of the Agent, the Lenders
or the Certificate Holders or their respective assignees to serve any such
writs, process or summonses in any manner permitted by Applicable Law or to
obtain jurisdiction over the Lessee, the Construction Agent, the Guarantor or
the Parent Guarantor, as the case may be, in such other jurisdictions, and in
such manner, as may be permitted by Applicable Law. Each of the Lessee, the
Construction Agent, the Guarantor and the Parent Guarantor agrees that a final
judgment in any such suit, action or proceeding shall be conclusive and may be
enforced in other jurisdictions by any suit on the judgment or in any other
manner provided by Applicable Law. Each of the Lessee, the Construction Agent,
the Guarantor and the Parent Guarantor agrees to pay, as and when due, all fees
and costs of the Process Agent from time to time.
SECTION 17. LIMITATIONS OF LIABILITY OF OWNER TRUSTEE
It is expressly understood and agreed by and among the parties hereto
that, except as otherwise expressly provided herein or therein, each of this
Participation Agreement and the other Operative Documents is executed by
Wilmington Trust Company, not individually or personally but solely as Owner
Trustee under the Trust Agreement in the exercise of the power and authority
conferred and vested in it as such Owner Trustee, that each and all of the
representations, undertakings and agreements herein or therein made on the part
of the Owner Trustee or the Trust are intended not as personal representations,
undertakings and agreements by Wilmington Trust Company, or for the purpose or
with the intention of binding Wilmington Trust Company, personally, but are made
and intended for the purpose of binding only the Trust Estate, that nothing
herein contained shall be construed as creating any liability of Wilmington
Trust Company, or any incorporator or any past, present or future subscriber to
the capital stock of, or stockholder, officer or director of Wilmington Trust
Company, to perform any covenant either express or implied contained herein or
in the other Operative Documents to which the Owner Trustee or the Trust is a
party, and that so far as Wilmington Trust Company is concerned, any Person
shall look solely to the Trust Estate for the performance of any obligation
hereunder or thereunder or under any of the instruments referred to herein or
therein; provided, however, that nothing contained in this Section shall be
construed to limit in scope or substance the general corporate liability of
Wilmington Trust Company, expressly provided (i) to the Certificate Holders
under the Trust Agreement, (ii) in respect of those representations, warranties,
agreements and covenants of Wilmington Trust Company expressly set forth in
Section 7(a) hereof or in any Operative Document to which it is a party or (iii)
pursuant to the Trust Agreement, for the gross negligence or willful misconduct
of Wilmington Trust Company
Participation Agreement
67
or to exercise the same degree of care and skill as is customarily exercised by
similar institutions in the receipt and disbursement of moneys actually received
by it in accordance with terms of the Operative Documents under similar
circumstances.
SECTION 18. LIMITATION OF LIABILITY OF CERTIFICATE HOLDERS
The Certificate Holders shall not have any obligation or duty to Owner
Trustee, the Lessee, Wilmington Trust Company or to others with respect to the
transactions contemplated hereby, or for any loss arising under the Operative
Documents in respect of a Title Defect, except those obligations or duties of
Certificate Holders expressly set forth in this Participation Agreement and the
other Operative Documents and the Certificate Holders shall not be liable for
performance by any other party of such other party's obligations or duties
hereunder or thereunder. Without limiting the generality of the foregoing, under
no circumstances whatsoever shall the Certificate Holders be liable for any
action or inaction on the part of Owner Trustee in connection with the
transactions contemplated herein, whether or not such action or inaction is
caused by the willful misconduct or gross negligence of Owner Trustee, unless
such action or inaction is taken upon the written instructions of the
Certificate Holders or in violation of the covenants of the Certificate Holders
in the Operative Documents.
SECTION 19. NOTICES
All communications, demands, notices and consents provided for herein
shall be given in writing (either by mail, reputable overnight courier, personal
delivery or by telecopier) and shall become effective, if given by personal
delivery or telecopier, when given, if given by overnight courier, on the first
Business Day after delivery to said courier, all fees therefor prepaid, and if
given by mail, five (5) days after deposit in the United States mail, with
proper postage for first-class mail prepaid, addressed: (i) if to the
Certificate Holders, at their respective Designated Offices set forth on
Schedule III; (ii) if to the Owner Trustee, at Wilmington Trust Company, ▇▇▇▇▇▇
Square North, ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, telecopier
number (▇▇▇) ▇▇▇-▇▇▇▇ Attention: Corporate Trust Administration; (iii) if to the
Lessee or Parent Guarantor, at ▇▇▇ ▇. ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇., ▇▇▇▇▇ ▇▇▇,
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, telecopier number (▇▇▇) ▇▇▇-▇▇▇▇, Attention: Chief
Financial Officer; or (iv) if to the Agent or the Lenders at their respective
Designated Offices set forth on Schedule III, or at such other address as any
party hereto may from time to time designate by notice duly given in accordance
with the provisions of this Section to the other parties hereto. In accordance
with Section 14.5.9 of the Joint Operating Agreement, the parties hereto
acknowledge that the Agent shall give notice to the IPS Parties (as defined in
the Joint Operating Agreement) of the occurrence of an Event of Default
hereunder.
SECTION 20. SURVIVAL OF REPRESENTATIONS; BINDING EFFECT
All agreements, representations and warranties contained in this
Participation Agreement, or in any agreement, document or certificate delivered
pursuant hereto or in connection herewith shall survive the execution and
delivery of this Participation Agreement and the expiration or other termination
of this Participation Agreement and shall be considered relied upon by each
other party hereto regardless of any knowledge or investigation made by or on
behalf of any such party. All agreements, representations and warranties in this
Participation Agreement shall bind
Participation Agreement
68
the party making the same and its successors and permitted assigns and shall
inure to the benefit of each party for whom made and all their respective
successors and permitted assigns and all Indemnified Persons.
SECTION 21. THE AGENT
(a) APPOINTMENT; NATURE OF RELATIONSHIP. The Agent is hereby appointed
by each of the Participants as its contractual representative hereunder and
under each other Operative Document, and each of the Participants irrevocably
authorizes the Agent to act as the contractual representative of such
Participant with the rights and duties expressly set forth herein and in the
other Operative Documents. The Agent agrees to act as such contractual
representative upon the express conditions contained in this Section 21.
Notwithstanding the use of the defined term "Agent," it is expressly understood
and agreed that the Agent shall not have any fiduciary responsibilities to any
Participant by reason of this Participation Agreement or any other Operative
Document and that the Agent is merely acting as the contractual representative
of the Participants with only those duties as are expressly set forth in this
Participation Agreement and the other Operative Documents. In its capacity as
the Participants' contractual representative, the Agent (i) does not hereby
assume any fiduciary duties to any of the Participants, (ii) is a
"representative" of the Participants within the meaning of Section 9-105 of the
Uniform Commercial Code and (iii) is acting as an independent contractor, the
rights and duties of which are limited to those expressly set forth in this
Agreement and the other Operative Documents. Each of the Participants hereby
agrees to assert no claim against the Agent on any agency theory or any other
theory of liability for breach of fiduciary duty, all of which claims each
Participant hereby waives.
(b) POWERS. The Agent shall have and may exercise such powers under the
Operative Documents as are specifically delegated to the Agent by the terms of
each thereof, together with such powers as are reasonably incidental thereto.
The Agent shall have no implied duties to the Participants, or any obligation to
the Participants to take any action thereunder except any action specifically
provided by the Operative Documents to be taken by the Agent.
(c) GENERAL IMMUNITY. Neither the Agent nor any of its directors,
officers, agents or employees shall be liable to the Lessee, the Lessor, the
Participants or any Participant for any action taken or omitted to be taken by
it or them hereunder or under any other Operative Document or in connection
herewith or therewith except to the extent such action or inaction is determined
in a final non-appealable judgment by a court of competent jurisdiction to have
arisen from the gross negligence or willful misconduct of such Person.
(d) NO RESPONSIBILITY FOR RECITALS, ETC. Neither the Agent nor any of
its directors, officers, agents or employees shall be responsible for or have
any duty to ascertain, inquire into, or verify (a) any statement, warranty or
representation made in connection with any Operative Document or any advances
thereunder; (b) the performance or observance of any of the covenants or
agreements of any obligor under any Operative Document, including, without
limitation, any agreement by an obligor to furnish information directly to each
Participant; (c) the satisfaction of any condition specified in Article IV,
except receipt of items required to be delivered solely to the Agent; (d) the
existence or possible existence of any Default or Event of Default; (e) the
validity, enforceability, effectiveness, sufficiency or genuineness of any
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69
Operative Document or any other instrument or writing furnished in connection
therewith; (f) the value, sufficiency, creation, perfection or priority of any
Lien in any collateral security; or (g) the financial condition of the Lessee or
any guarantor of any of the Obligations or of any of the Lessee's or any such
guarantor's respective Subsidiaries. The Agent shall have no duty to disclose to
the Participants information that is not required to be furnished by the Lessee
to the Agent at such time, but is voluntarily furnished by the Lessee to the
Agent (either in its capacity as Agent or in its individual capacity).
(e) ACTION ON INSTRUCTIONS OF PARTICIPANTS. The Agent shall in all
cases be fully protected in acting, or in refraining from acting, hereunder and
under any other Operative Document in accordance with written instructions
signed by the Required Participants (or all Participants to the extent required
by Section 23(c)), and such instructions and any action taken or failure to act
pursuant thereto shall be binding on all of the Participants. The Participants
hereby acknowledge that the Agent shall be under no duty to take any
discretionary action permitted to be taken by it pursuant to the provisions of
this Participation Agreement or any other Operative Document unless it shall be
requested in writing to do so by the Required Participants. The Agent shall be
fully justified in failing or refusing to take any action hereunder and under
any other Operative Document unless it shall first be indemnified to its
satisfaction by the Participants pro rata against any and all liability, cost
and expense that it may incur by reason of taking or continuing to take any such
action.
(f) EMPLOYMENT OF AGENTS AND COUNSEL. The Agent may execute any of its
duties as Agent hereunder and under any other Operative Document by or through
employees, agents, and attorneys in fact and shall not be answerable to the
Participants, except as to money or securities received by it or its authorized
agents, for the default or misconduct of any such agents or attorneys in fact
selected by it with reasonable care. The Agent shall be entitled to advice of
counsel concerning the contractual arrangement between the Agent and the
Participants and all matters pertaining to the Agent's duties hereunder and
under any other Operative Document.
(g) RELIANCE ON DOCUMENTS; COUNSEL. The Agent shall be entitled to rely
upon any Note, notice, consent, certificate, affidavit, letter, telegram,
statement, paper or document believed by it to be genuine and correct and to
have been signed or sent by the proper person or persons, and, in respect to
legal matters, upon the opinion of counsel selected by the Agent, which counsel
may be employees of the Agent.
(h) AGENT'S REIMBURSEMENT AND INDEMNIFICATION. The Participants agree
to reimburse and indemnify the Agent ratably in proportion to their respective
Commitments (or, if the Commitments have been terminated, in proportion to their
Commitments immediately prior to such termination) (i) for any amounts not
reimbursed by the Lessee for which the Agent is entitled to reimbursement by the
Lessee under the Operative Documents, (ii) for any other expenses incurred by
the Agent on behalf of the Participants, in connection with the preparation,
execution, delivery, administration and enforcement of the Operative Documents
(including, without limitation, for any expenses incurred by the Agent in
connection with any dispute between the Agent and any Participant or between two
or more of the Participants) and (iii) for any liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
of any kind and nature whatsoever which may be imposed on, incurred by or
asserted against the Agent in any way relating to or arising out of the
Operative Documents or
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70
any other document delivered in connection therewith or the transactions
contemplated thereby (including, without limitation, for any such amounts
incurred by or asserted against the Agent in connection with any dispute between
the Agent and any Participant or between two or more of the Participants), or
the enforcement of any of the terms of the Operative Documents or of any such
other documents, provided that no Participant shall be liable for any of the
foregoing to the extent any of the foregoing is found in a final non-appealable
judgment by a court of competent jurisdiction to have resulted from the gross
negligence or willful misconduct of the Agent. The obligations of the
Participants under this Section 21(h) shall survive payment of the Obligations
and termination of this Participation Agreement.
(i) NOTICE OF DEFAULT. The Agent shall not be deemed to have knowledge
or notice of the occurrence of any Default or Event of Default hereunder unless
the Agent has received written notice from a Participant or the Lessee referring
to this Agreement describing such Default or Event of Default and stating that
such notice is a "notice of default". In the event that the Agent receives such
a notice, the Agent shall give prompt notice thereof to the Participants.
(j) RIGHTS AS A PARTICIPANT. In the event the Agent is a Participant,
the Agent shall have the same rights and powers hereunder and under any other
Operative Document with respect to its Commitment and its Loans as any
Participant and may exercise the same as though it were not the Agent, and the
term "Participant" or "Participants" shall, at any time when the Agent is a
Participant, unless the context otherwise indicates, include the Agent in its
individual capacity. The Agent and its Affiliates may accept deposits from, lend
money to, and generally engage in any kind of trust, debt, equity or other
transaction, in addition to those contemplated by this Agreement or any other
Operative Document, with the Lessee or any of its Subsidiaries in which the
Lessee or such Subsidiary is not restricted hereby from engaging with any other
Person. The Agent, in its individual capacity, is not obligated to remain a
Participant.
(k) PARTICIPANT CREDIT DECISION. Each Participant acknowledges that it
has, independently and without reliance upon the Agent, the Arranger or any
other Participant and based on the financial statements prepared by the Lessee
and such other documents and information as it has deemed appropriate, made its
own credit analysis and decision to enter into this Participation Agreement and
the other Operative Documents. Each Participant also acknowledges that it will,
independently and without reliance upon the Agent, the Arranger or any other
Participant and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking or
not taking action under this Participation Agreement and the other Operative
Documents.
(l) SUCCESSOR AGENT. The Agent may resign at any time by giving written
notice thereof to the Participants and the Lessee, such resignation to be
effective upon the appointment of a successor Agent or, if no successor Agent
has been appointed, forty-five days after the retiring Agent gives notice of its
intention to resign (subject, during the Construction Period, to the consent of
the Lessee unless a Lease Event of Default or Payment or Bankruptcy Default
shall have occurred and be continuing). The Agent may be removed at any time
with or without cause by written notice received by the Agent from the Required
Participants, such removal to be effective on the date specified by the Required
Participants. Upon any such resignation or removal, the Required Participants
shall have the right to appoint, on behalf of the Lessee and the Participants, a
successor Agent. If no successor Agent shall have been so appointed by the
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71
Required Participants within thirty days after the resigning Agent's giving
notice of its intention to resign, then the resigning Agent may appoint, on
behalf of the Lessee and the Participants, a successor Agent. Notwithstanding
the previous sentence, the Agent may at any time without the consent of the
Lessee or any Participant, appoint any of its Affiliates which is a commercial
bank as a successor Agent hereunder. If the Agent has resigned or been removed
and no successor Agent has been appointed, the Participants may perform all the
duties of the Agent hereunder and the Lessee shall make all payments in respect
of the Obligations to the applicable Participant and for all other purposes
shall deal directly with the Participants. No successor Agent shall be deemed to
be appointed hereunder until such successor Agent has accepted the appointment.
Any such successor Agent shall be a commercial bank having capital and retained
earnings of at least $100,000,000. Upon the acceptance of any appointment as
Agent hereunder by a successor Agent, such successor Agent shall thereupon
succeed to and become vested with all the rights, powers, privileges and duties
of the resigning or removed Agent. Upon the effectiveness of the resignation or
removal of the Agent, the resigning or removed Agent shall be discharged from
its duties and obligations hereunder and under the Operative Documents. After
the effectiveness of the resignation or removal of an Agent, the provisions of
this Section 21 shall continue in effect for the benefit of such Agent in
respect of any actions taken or omitted to be taken by it while it was acting as
the Agent hereunder and under the other Operative Documents. In the event that
there is a successor to the Agent by merger, or the Agent assigns its duties and
obligations to an Affiliate pursuant to this Section 21(l), then the term "Prime
Rate" as used in this Agreement shall mean the prime rate, base rate or other
analogous rate of the new Agent.
(m) AGENT'S FEE. The Lessee agrees to pay to the Agent, for its own
account, the fees agreed to by the Lessee and the Agent pursuant to the Fee
Letter and the Agent's reasonable fees, costs and expenses for the performance
of Agent's obligations hereunder; provided, that during the Construction Period
such fees, costs and expenses shall be paid only out of proceeds of an Advance
in accordance with the Approved Budget and such amounts shall not, during the
Construction Period, represent direct recourse obligations of the Lessee.
(n) DELEGATION TO AFFILIATES. The Lessee and the Participants agree
that the Agent may delegate any of its duties under this Participation Agreement
to any of its Affiliates. Any such Affiliate (and such Affiliate's directors,
officers, agents and employees) which performs duties in connection with this
Agreement shall be entitled to the same benefits of the indemnification, waiver
and other protective provisions to which the Agent is entitled under Section 13
and 14.
(o) EXECUTION OF COLLATERAL DOCUMENTS. The Participants hereby empower
and authorize the Agent to execute and deliver to the Lessee on their behalf any
security documents and all related financing statements and any financing
statements, agreements, documents or instruments as shall be necessary or
appropriate to effect the purposes of the Operative Documents.
(p) COLLATERAL RELEASES. The Participants hereby empower and authorize
the Agent to execute and deliver to the Lessee on their behalf any agreements,
documents or instruments as shall be necessary or appropriate to effect any
releases of Collateral which shall be permitted by the terms hereof or of any
other Operative Document or which shall otherwise have been
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72
approved by the Required Participants (or, if required by the terms of Section
22(c), all of the Participants) in writing.
SECTION 22. LESSEE DIRECTIONS; REPLACEMENT OF PARTICIPANTS
Each of the Participants, Lessor and Lessee hereby agree that, so long
as no Default or Event of Default exists:
(a) Agent, with the approval of Lessee (acting reasonably), shall have
the right to replace any Certificate Holder or any Lender with respect to which
(i) the right to pay interest by reference to LIBO Rate shall be suspended under
Section 4(e), or (ii) there is or could be any claim to reimbursement or
compensation under Section 4;
(b) Agent, with the approval of Lessee (acting reasonably), shall have
the right to replace any Certificate Holder or any Lender that breached its
obligations under Section 3 to fund a Certificate Amount or make a Loan.
(c) Agent hereby grants Lessee the right to exercise any right of
Lessor under Section 22(b) upon not less than (3) Business Days' prior written
notice from Lessee to Certificate Trustee and the Agent, unless Agent objects to
such exercise within two (2) Business Days of receipt of such notice and Lessor
agrees in its notice of objection to comply with Section 22(b); provided that
notwithstanding the exercise of rights by the Lessee under this paragraph (c),
any new Certificate Holder nominated by the Lessee is subject to the reasonable
approval of the Agent.
SECTION 23. MISCELLANEOUS
(a) COUNTERPART EXECUTION. This Participation Agreement may be executed
in any number of counterparts and by the different parties hereto on separate
counterparts, each of which, when so executed and delivered, shall be an
original, but all such counterparts shall together constitute but one and the
same instrument.
(b) GOVERNING LAW. THE OPERATIVE DOCUMENTS (OTHER THAN THOSE CONTAINING
A CONTRARY EXPRESS CHOICE OF LAW PROVISION) SHALL BE CONSTRUED IN ACCORDANCE
WITH THE INTERNAL LAWS (INCLUDING, WITHOUT LIMITATION, 735 ILCS SECTION 105/5-1
ET SEQ, BUT OTHERWISE WITHOUT REGARD TO THE CONFLICT OF LAWS PROVISIONS) OF THE
STATE OF ILLINOIS, BUT GIVING EFFECT TO FEDERAL LAWS APPLICABLE TO NATIONAL
BANKS.
(c) AMENDMENTS, SUPPLEMENTS, WAIVERS. Neither this Participation
Agreement nor any of the terms hereof may be amended, supplemented, waived or
modified orally, or terminated in any manner whatsoever except by written
instrument signed by the Lessee (if such action adversely affects the Lessee),
the Agent, majority (by Loan Balance) of the Lenders, majority (by Tranche A
Loan Balance) of the Tranche A Lenders (if such action adversely affects the
Tranche A Lenders), majority (by Tranche B Loan Balance) of the Tranche B
Lenders (if such action adversely affects the Tranche B Lenders), majority (by
Equity Amount) of the Certificate Holders (if such action adversely affects the
Certificate Holders) and the Owner
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73
Trustee (if such action adversely affects the Owner Trustee) and Wilmington
Trust Company (if such action adversely affects Wilmington Trust Company);
provided, however, that the following actions may not be taken without the
consent of the applicable party:
(1) any action which will modify the timing or amount
of any payment to such party;
(2) any action which requires the consent of such
party in its sole discretion if such party has not provided
its consent (including, without limitation, consents under the
provisions of Section 13(f) above and any action that will
result in an increase in any party's maximum Commitment);
(3) any action which will modify any of the
provisions of this Section 23(c), change the definition of
"Required Participants" or modify or waive any provision of
any Operative Document requiring action by any of the
foregoing, or release any collateral (except as otherwise
specifically provided in any Operative Document);
(4) any action which will reduce, modify, amend or
waive any indemnities in favor of any Participant, the Agent
or the Owner Trustee;
(5) modify, amend, waive or supplement any of the
provisions of Sections 11, 12, 14, 15 or 16 of the Lease;
(6) consent to any assignment of the Lease or other
Operative Document releasing the Lessee or Parent Guarantor
from its obligations thereunder or changing the absolute and
unconditional character of such obligations;
(7) permit the creation of any Lien on the Platform,
the Property or any part thereof except as contemplated by the
Operative Documents, or deprive any Participant of the benefit
of the security interest and lien encumbering the Platform or
the Property.
Notwithstanding the foregoing, whether or not a Lease Event of Default shall
have occurred and be continuing, the parties hereto agree that no modification
to an Operative Document to which the Lessee is not a party will increase the
obligations of the Lessee or of the Construction Agent without the prior written
consent of the Lessee.
(d) HEADINGS. The headings of the sections and paragraphs of this
Participation Agreement and the table of contents have been inserted for
convenience of reference only and shall not affect the construction or
interpretation of this Participation Agreement.
(e) BUSINESS DAY. If the date on which any payment is to be made
pursuant to this Participation Agreement or any other Operative Document is not
a Business Day, then (except as otherwise expressly provided herein of in any
other applicable Operative Document) the payment otherwise payable on such date
shall be payable on the next succeeding Business Day, and, except as may
otherwise be required by the Lease, without any additional amount accruing
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74
with respect thereto, with the same force and effect as if made on the date when
such payment is due.
(f) REPRODUCTION OF DOCUMENTS. This Participation Agreement, all
documents constituting exhibits hereto, and all documents relating hereto
received by a party hereto, including, without limitation, (a) consents, waivers
and modifications that may hereafter be executed, (b) documents received by
Certificate Holders in connection with Owner Trustee's purchase of the Property,
and (c) financial statements, certificates, and other information previously or
hereafter furnished to Certificate Holders or Owner Trustee may be reproduced by
the party receiving the same by any photographic, photostatic, microfilm or
other similar process. Each party hereto agrees and stipulates that, to the
extent permitted by law, any such reproduction shall be admissible in evidence
as the original itself in any judicial or administrative proceeding (whether or
not such reproduction was made by such party in the regular course of business)
and that, to the extent permitted by law, any enlargement, facsimile, or further
reproduction of such reproduction shall likewise be admissible in evidence.
(g) OPINIONS. The parties to this Participation Agreement hereby
acknowledge that they have irrevocably instructed their respective counsel to
deliver to and for the benefit of the addressees thereof, the opinions of such
counsel referred to in and required by Section 9 and Section 13(f) of this
Participation Agreement.
(h) SURVIVAL OF AGREEMENTS. All agreements, indemnities,
representations and warranties contained in this Participation Agreement or in
any agreement, document or certificate delivered pursuant hereto following or in
connection herewith shall survive the execution and delivery of this
Participation Agreement and the expiration or other termination of this
Participation Agreement
(i) ENFORCEMENT. Any provision of this Participation Agreement which
may be determined by competent authority to be prohibited or unenforceable in
any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction. To the extent permitted by Applicable Law, the Lessee hereby
waives any provision of law which renders any provision hereof prohibited or
unenforceable in any respect.
(j) ENTIRE AGREEMENT. This Participation Agreement, together with the
other Operative Documents, represents the entire agreement of the parties hereto
with respect to the subject matter hereof and supersedes any and all prior
understandings.
(k) CONFIDENTIALITY. Without limiting the provisions of Section 5(c),
the Agent and the Lessee each agree that the existence of the Operative
Documents (other than the Operative Documents which are intended by the parties
to be filed of record) and the terms and conditions hereof are confidential and
may not be disclosed by either party (the "DISCLOSING PARTY") to any third party
(expressly excluding the Participants, the Owner Trustee and any other party to
any of the Operative Documents), without the other party's prior written
consent, except to the extent that such disclosure (i) is required by law,
regulation, supervisory authority, or other applicable judicial or governmental
order, (ii) was or becomes generally available to the public other than as
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75
a result of a disclosure by the Disclosing Party, (iii) is made in connection
with the services to be provided by the Agent pursuant to the Operative
Documents, (iv) is made on a confidential basis to either party's Subsidiaries
and Affiliates and, on a need to know basis, its and their respective attorneys,
accountants, consultants and tax or other advisors (collectively, "RELATED
PARTIES") or (v) is made on a confidential basis to any assignee or potential
assignee of a Lender or Certificate Holder.
(i) HIGHEST LAWFUL RATE. (i) It is the intention of the
parties hereto to conform strictly to applicable usury laws and,
anything herein to the contrary notwithstanding, the obligations of (x)
Lessee to Certificate Holders under this Agreement and the Lease, (y)
Owner Trustee to the Certificate Holders under the Trust Agreement and
the Certificates and to the Lenders under the Loan Agreement and the
Notes and (z) either Lessee, Lessor or Owner Trustee or any other party
under any other Operative Documents, shall be subject to the limitation
that payments of interest or of other amounts constituting interest
under applicable law shall not be required to the extent that receipt
thereof would be in excess of the Highest Lawful Rate (as defined
below), or otherwise contrary to provisions of law applicable to the
recipient limiting rates of interest which may be charged or collected
by the recipient. Accordingly, if the transactions or the amount paid
or otherwise agreed to be paid for the use, forbearance or detention of
money under this Participation Agreement, the Lease, the Trust
Agreement, the Certificates, the Loan Agreement, the Notes or any other
Operative Document would exceed the Highest Lawful Rate or otherwise be
usurious under Applicable Law (including without limitation the federal
and state laws of the United States of America, or of any other
jurisdiction whose laws may be mandatorily applicable) with respect to
the recipient of any such amount, then, in the event, notwithstanding
anything to the contrary in this Participation Agreement, the Lease,
the Trust Agreement, the Certificates, the Loan Agreement, the Notes or
any other Operative Document, it is agreed at followings as to the
recipient of any such amount:
(ii) the provisions of this Section 23(l) shall govern and
control over any other provision in this Participation Agreement, the
Lease, the Trust Agreement, the Certificates, the Loan Agreement, the
Notes or any other Operative Document and each provision set forth
therein is hereby so limited;
(iii) the aggregate of all consideration which constitutes
interest under Applicable Law that is contracted for, charged or
received under this Participation Agreement, the Lease, the Trust
Agreement, the Certificates, the Loan Agreement, the Notes or any other
Operative Documents shall under no circumstances exceed the maximum
amount of interest allowed by Applicable Law (such maximum lawful
interest rate, if any, with respect to such recipient herein called the
"HIGHEST LAWFUL RATE"), and all amounts owed under this Participation
Agreement, the Lease, the Trust Agreement, the Certificates, the Loan
Agreement, the Notes or any other Operative Document shall be held
subject to reduction and (i) the amount of interest which would
otherwise be payable to the recipient hereunder and under the Lease,
the Trust Agreements, the Certificates, the Loan Agreement, the Notes
and any other Operative Documents, shall be automatically reduced to
the amount allowed under Applicable Law and (ii) any unearned
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76
interest paid in excess of the Highest Lawful Rate shall be credited to
the payor by the recipient (or, if such consideration shall have been
paid in full, refunded to the payor);
(iv) all sums paid, or agreed to be paid for the use,
forbearance and detention of the money under this Participation
Agreement, the Lease, the Trust Agreement, the Certificates, the Loan
Agreement, the Notes or any other Operative Documents shall, to the
extent permitted by Applicable Law, be amortized, prorated, allocated
and spread throughout the full term of such indebtedness until payment
in fill so that the actual rate of interest is uniform throughout the
full term thereof;
(v) if at any time the interest, together with any fees, late
charges and other sums payable pursuant to or in connection with this
Participation Agreement, the Lease, the Trust Agreement, the
Certificates, the Loan Agreement, the Notes or any other Operative
Document, and deemed interest under Applicable Law, exceeds that amount
which would have accrued at the Highest Lawful Rate, the amount of
interest any such fees, charges and sums to accrue to the recipient of
such interest, fees, charges and sums pursuant to the Operative
Documents shall be limited, notwithstanding anything to the contrary in
the Operative Documents to that amount which would have accrued at the
Highest Lawful Rate for the recipient, but any subsequent reductions,
as applicable, shall not reduce the interest to accrue pursuant to the
Operative Documents below the recipient's Highest Lawful Rate until the
total amount of interest payable to the recipient (including all
considerations which constitute interest) equals the amount of interest
which would have been payable to the recipient (including all
consideration which constitutes interest) plus the amount of fees which
would have been received but for the effect of this Section 23(l).
(l) ACCOUNTING CHANGES. Although neither Lessor, the Agent, any
Certificate Holder, nor any Lender makes any representation or warranty with
respect to the Lessee's accounting treatment of this transaction, in the event
that Lessee shall determine that any change in the applicable rules and
interpretations of the Financial Accounting Standards Board and/or the
Securities Exchange Commission (the "LEASE ACCOUNTING RULES") will preclude the
Lessee (or raise a substantial question as to whether the Lessee is precluded)
from continuing to account for this Lease as an operating lease with
substantially the same financial accounting benefits as before the change in
Lease Accounting Rules, then the Lessee shall so notify the Lessor and the Agent
in writing of such determination; and (i) Lessee may attempt to renegotiate the
structure of the transaction contemplated by the Operative Documents (provided
that nothing contained in this Section 23(m) shall require any Person to agree
to any new structure); or (ii) Lessee may elect (by delivery of irrevocable
written notice of such election to the Lessor and the Agent) to purchase all of
the Property or to cause all of the Property to be transferred to a third party
transferee designated by Lessee (such purchase or transfer to be consummated on
a date (the "ACCOUNTING CHANGE TRANSFER DATE") specified by Lessee in such
notice and in any event within sixty (60) days after the date of such notice).
On the Accounting Change Transfer Date (whether the Property is to be purchased
by Lessee or transferred to a third party), Lessee shall pay or cause to be paid
to Lessor an amount equal to the Property Balance. Upon receipt of such amount,
Lessor shall transfer to Lessee (or to the third party designated by Lessee) all
of Lessor's right, title and interest in and to the Property in accordance with
the Transfer Protocol and the Expiration Date shall be deemed to have occurred
on the date of such transfer.
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77
SECTION 24. PARTIAL PURCHASE OPTION. Notwithstanding any other provision to the
contrary contained in the Operative Documents and subject to the fulfillment of
each of the conditions set forth in Section 24(a) below, Lessee shall have the
one (1) time option (the "Partial Purchase Option") to cause to be purchased by
a third party purchaser which is not an Affiliate of the Lessee (the "Partial
Option Purchaser") up to (but not more than) 50% of the Property for an amount
equal to the portion (expressed as a percentage of the Property) (the "Partial
Option Percentage") of the Property that Lessee has elected to purchase pursuant
to the Partial Purchase Option (the "Partial Option Property") multiplied by the
Property Balance as of Partial Option Closing Date (the "Partial Option Purchase
Price").
(a) The Lessee's effective exercise and consummation of the Partial
Purchase Option shall be subject to the due and timely fulfillment of each of
the following conditions:
(i) The Lessee shall provide the Agent with a written notice
of its election to exercise the Partial Purchase Option which notice
shall specify (x) the date (the "Partial Option Closing Date") upon
which the Partial Purchase Option is expected to be consummated (the
"Partial Option Closing"); (y) the identity of the Partial Option
Purchaser; and (z) the Partial Option Property; provided, that (i) the
Partial Purchase Option must be consummated prior to the date that is
365 days prior to the Lease Termination Date; and (ii) the Partial
Option Closing Date shall not be less than thirty (30) days nor more
than ninety (90) days after the date that Agent receives Lessee's
written notice of its election to exercise the Partial Purchase Option;
(ii) No Event of Default or Default shall exist on the date of
the exercise of the Partial Purchase Option, and no Default or Event of
Default shall exist at any time between the date of such exercise and
the Partial Option Closing;
(iii) The Lessee shall have provided to the Agent a true,
correct and complete copy of the agreement of purchase and sale (the
"Partial Option Purchase Agreement"), pursuant to which Lessee has
agreed to cause to be sold to the Partial Option Purchaser and such
Partial Option Purchaser has agreed to purchase, the Partial Option
Property;
(iv) The Lessee shall have provided the Agent with evidence
that ▇▇▇▇-▇▇▇▇▇ and Nexen Petroleum Offshore U.S.A., Inc. have each
consented to (i) the Partial Option Purchase Agreement and the
transaction contemplated by the Partial Option Purchase Agreement and
(ii) the admission of the Partial Option Purchaser as a party to the
Joint Operating Agreement;
(v) The Lessee shall have paid or caused to be paid to the
Agent (for distribution pursuant to Section 5(d)(xi)), out of Lessee's
or the Partial Option Purchaser's funds (and not from Advances), the
sum of (x) the Partial Option Purchase Price, (y) all Excluded Amounts
and (z) all costs and expenses incurred by the Agent, the Lessor, the
Owner Trustee and the Participants in connection with the Partial
Option Closing and the preparation, execution and delivery of the
documents evidencing Partial Purchase Option transaction (including the
matters described in Section 24(a)(vi) and Section 24(b), including,
all reasonable attorneys' fees and expenses incurred in connection with
such transaction; and
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(vi) The Lessee shall have provided the Agent with such other
documents, instruments, information, agreements, consents, opinions of
counsel and assurances, including, without limitation, any amendments
to the Joint Operating Agreement or any of the Construction Documents,
as may from time to time be reasonably requested by the Agent in
connection with the Partial Purchase Option.
(b) Subject to the satisfaction of each of the conditions set forth in
Section 24(a), at the Closing, the Lessor shall transfer to the Partial Option
Purchaser by a quitclaim ▇▇▇▇ of sale, all of the Lessor's right, title and
interest in and to the Partial Option Property on an "as is" "where is" and
"with all faults" basis, without representation or warranty. Lessor and the
Agent, as appropriate, shall also execute and deliver any appropriate and
required partial releases of the Liens of (v) the Assignment of Leases and
Rents, (w) the Lender Mortgage, (x) the Memorandum of Lease, (y) related UCC
Financing Statements and (z) such other Operative Documents as Lessee shall
reasonably require. Each of the foregoing documents and instruments shall be
acceptable, in form and substance, to the Lessor and the Agent.
(c) Lessee acknowledges and agrees that if for any reason the Partial
Purchase Option Closing is not consummated on the Partial Option Closing Date
then, the portion of the Property Balance equal to the Partial Option Purchase
Price will accrue interest or Yield, as the case may be, at the Alternate Base
Rate until such time as Lessee elects or is otherwise able to convert such rate
of interest or Yield to the LIBO Rate pursuant to the Operative Documents.
SECTION 25. SALE OF WORKING INTEREST. Lessee covenants and agrees that it shall
not directly or indirectly sell, convey, assign, transfer, encumber, or alienate
all or any portion of its Working Interest (as defined in the Joint Operating
Agreement); provided, that: (a) Lessee may sell a portion of its Working
Interest to the Partial Option Purchaser in conjunction with the consummation of
the Partial Purchase Option under Section 24 of this Participation Agreement (it
being understood and agreed that Lessee shall only be entitled to sell to the
Partial Option Purchaser a percentage of its Working Interest that is equal to
and in the same proportion as the Partial Option Percentage); and (b) Lessee may
sell its Working Interest contemporaneously with its purchase of the Property
pursuant to Section 6(e) of the Lease.
[SIGNATURE PAGE FOLLOWS]
Participation Agreement
79
IN WITNESS WHEREOF, the parties hereto have each caused this
Participation Agreement to be duly executed by their respective officers
hereunto duly authorized as of the date first above written.
ENERGY RESOURCE TECHNOLOGY, INC., a
Delaware corporation, as Lessee,
Construction Agent and Guarantor
BY:
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NAME:
------------------------------------
TITLE:
-----------------------------------
CAL DIVE INTERNATIONAL, INC., a Minnesota
corporation, as Parent Guarantor
BY:
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NAME:
------------------------------------
TITLE:
-----------------------------------
Participation Agreement
CAL DIVE/GUNNISON BUSINESS TRUST NO.
2001-1-1, a Delaware business trust, as
Lessor and Owner Trustee
BY:
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NAME:
------------------------------------
TITLE:
-----------------------------------
Wilmington Trust Company, not in its
individual capacity, but solely as
trustee of CAL DIVE/GUNNISON Business
Trust No. 2001-1-1
BY:
--------------------------------------
NAME:
------------------------------------
TITLE:
-----------------------------------
WILMINGTON TRUST COMPANY, a Delaware
banking corporation, not in its
individual capacity, except to the extent
expressly provided herein, but solely as
Owner Trustee
BY:
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NAME:
------------------------------------
TITLE:
-----------------------------------
Participation Agreement
BANK ONE, NA, as a Lender and as Agent
for the Lenders
BY:
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▇▇▇ ▇▇▇▇▇
Director, Capital Markets
BANC ONE LEASING SERVICES CORP., as a
Certificate Holder
BY:
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▇▇▇▇▇▇▇ ▇▇▇▇
President
Participation Agreement