1
EXHIBIT 10.3
PARTICIPATION AGREEMENT
among
UNIVERSAL COMPRESSION, INC.
as Lessee
UNIVERSAL COMPRESSION HOLDINGS, INC.
as Guarantor
BRL UNIVERSAL EQUIPMENT 2001 A, L.P.
as Lessor
BANKERS TRUST COMPANY
and the other financial institutions listed on the signature pages
hereof as Tranche B Lenders
THE BANK OF NEW YORK,
not in its individual capacity but as Indenture Trustee, Paying Agent,
Transfer Agent and Registrar for the Tranche A Noteholders
BRL UNIVERSAL EQUIPMENT MANAGEMENT, INC.
as Lessor General Partner
BANKERS TRUST COMPANY
as Administrative Agent and Collateral Agent for
Tranche B Lenders and Indenture Trustee, on behalf of the
Tranche A Noteholders
DEUTSCHE BANC ALEX. ▇▇▇▇▇ INC.
as Arranger
THE BANK OF NOVA SCOTIA
as Syndication Agent for Tranche B Lenders
BANK ONE, NA
as Documentation Agent for Tranche B Lenders
and
FIRST UNION NATIONAL BANK
as Managing Agent
February 9, 2001
---------------------------------
UNIVERSAL COMPRESSION, INC.,
AS LESSEE OF
$427,000,000 OF
GAS COMPRESSION EQUIPMENT
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TABLE OF CONTENTS
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1. Definitions and Usage....................................................................................2
2. Representations and Warranties...........................................................................2
2.1. Lessee Representations and Warranties...........................................................2
2.2. Guarantor Representations and Warranties.......................................................10
2.3. Lessor Representations and Warranties For Benefit of All Parties...............................11
2.4. Lessor Representations and Warranties For Benefit of Indenture Trustee, Tranche B
Lenders, Administrative Agent and Collateral Agent.............................................12
2.5. Representations and Warranties of Lessor General Partner.......................................13
2.6. Tranche B Lenders Representations and Warranties...............................................14
2.7. Private Offering Representations; etc..........................................................15
2.8. Warranty Disclaimers...........................................................................15
3. Conditions Precedent....................................................................................16
3.2. Tranche B Lender Conditions....................................................................18
4. Commitments and Fundings................................................................................20
4.1. Tranche B Commitments..........................................................................20
4.2. Lessor Commitment to Purchase..................................................................20
4.3. Lease Supplements..............................................................................21
4.4. Rights in Equipment............................................................................21
5. Selection of Floating Lease Payment Period..............................................................21
6. Default Purchase Options and Cure Rights................................................................22
6.1. Right to Cure Certain Lease Events of Default..................................................22
6.2. Lessee Cure Right..............................................................................22
7. Security................................................................................................23
7.1. Security Interest..............................................................................23
7.2. Further Assurances.............................................................................25
7.3. Termination....................................................................................25
7.4. Other Security.................................................................................25
7.5. Power of Attorney..............................................................................25
7.6. Assignment of Rights...........................................................................26
7.7. Transfer of the Collateral by Collateral Agent.................................................26
7.8. No Segregation of Monies; No Interest..........................................................27
(i)
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7.9. Distribution of Moneys.........................................................................27
(a) Scheduled and End of Term Purchase Option Payments....................................27
(b) Prepayments...........................................................................27
(c) Payments after an End of Term Sale or Redelivery of Equipment.........................28
(d) Excepted Payments.....................................................................28
7.10. Payments after a Loan Event of Default.........................................................28
7.11. Application of Certain Other Payments..........................................................29
7.12. Other Payments.................................................................................29
7.13. Retention of Amounts by Collateral Agent.......................................................29
7.14. Exercise of Remedies...........................................................................29
7.14.1. Rights in Collateral..................................................................29
7.14.2. Delivery of Documents; Taking Possession of Collateral................................30
7.14.4. Possession of Collateral..............................................................30
7.14.5. Sale of Collateral....................................................................31
7.14.6. Discharge.............................................................................31
7.14.7. Appointment of Receiver...............................................................31
7.14.8. Redemption............................................................................31
7.14.9. Rights Cumulative; No Waiver..........................................................32
7.14.10. Termination of Proceedings............................................................32
7.15. No Commingling of Funds........................................................................32
7.16. Lessor Collateral..............................................................................32
7.17. Conflicts......................................................................................33
8. Guaranty................................................................................................33
9. Covenants...............................................................................................35
9.1. Lessor and Lessor General Partner Covenants....................................................35
9.2. Lessee Covenants for the Benefit of Indenture Trustee and Tranche A Noteholders................36
9.3. Lessee Covenants for the Benefit of Lessor and Tranche B Lenders...............................45
9.4. Covenant of Tranche B Lenders, Lessor, Administrative Agent and Collateral Agent and
Limited Partners...............................................................................56
10. Indemnities.............................................................................................56
10.1. Lessee General Indemnification.................................................................56
10.2. Exceptions to Lessee's General Indemnification.................................................58
10.3. Tax Indemnity..................................................................................59
10.3.1. General Indemnity.....................................................................59
10.3.2. Exceptions to Tax Indemnity...........................................................60
10.3.3. Payment of Taxes......................................................................61
10.3.4. Tax Filings...........................................................................61
10.3.5. Withholdings..........................................................................62
10.3.6. Tax Contests..........................................................................62
10.3.7. Special Tax Indemnity.................................................................64
10.4. Increased Costs, Illegality, etc. .............................................................64
(ii)
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10.5. Lessee Indemnity...............................................................................65
10.6. Survival.......................................................................................65
11. Administrative Agent and Collateral Agent...............................................................65
11.1. Authorization and Action of Administrative Agent...............................................65
11.2. Delegation of Duties...........................................................................67
11.3. Agent's Reliance, etc. ........................................................................67
11.4. Administrative Agent, Collateral Agent and Affiliates..........................................68
11.5. Credit Decisions...............................................................................68
11.6. Indemnification................................................................................68
11.7. Successor Administrative Agent and Collateral Agent; Termination of Agency.....................69
11.8. Registration...................................................................................69
12. Miscellaneous...........................................................................................70
12.1. Expenses.......................................................................................70
12.2. Amendments, Consents and Waivers...............................................................70
12.3. GOVERNING LAW; SUBMISSION TO JURISDICTION; VENUE; WAIVER OF JURY TRIAL.........................72
12.4. Notices........................................................................................73
12.5. Interests in the Equipment.....................................................................76
12.6. Descriptive Headings, etc. ....................................................................76
12.7. Benefit of Agreement; Assignment...............................................................76
12.8. Execution and Effectiveness....................................................................79
12.9. Survival.......................................................................................79
12.10. Severability...................................................................................79
12.11. No Broker......................................................................................79
12.12. Limited Recourse Against Limited Partners and Lessor General Partner...........................79
12.13. Consent and Agreement of Lessee and Guarantor..................................................80
(iii)
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APPENDICES, EXHIBITS AND SCHEDULES
APPENDIX A Definitions
SCHEDULE 1 Maximum Acquisition Cost
SCHEDULE 2 Notice Addresses and Payment Instructions
SCHEDULE 3 Subsidiaries
SCHEDULE 4 Insurance
SCHEDULE 5 Liabilities
SCHEDULE 6 Taxes
SCHEDULE 7 Titles, Etc.
SCHEDULE 8 Environmental Matters
SCHEDULE 9 Hedging Agreements
SCHEDULE 10 Negative Pledges
SCHEDULE 11 Debt
SCHEDULE 12 Liens
SCHEDULE 13 Investments, Loans and Advances
SCHEDULE 14 Transactions with Affiliates
EXHIBIT A-1 Form of ▇▇▇▇ of Sale
EXHIBIT A-2 Form of ▇▇▇▇ of Sale and Title Warranty
EXHIBIT B Form of Certificate of Sale/Leaseback Equipment Relating to
Lease Supplement
EXHIBIT C Form of Funding Notice and Instructions re Funds on Closing Date
SCHEDULE 1 Amounts to be Funded
EXHIBIT D Form of Compliance Certificate
(iv)
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This PARTICIPATION AGREEMENT, dated as of February 9, 2001
(together with all amendments and supplements hereto, this "Agreement") is among
UNIVERSAL COMPRESSION, INC., a Texas corporation ("Lessee"), UNIVERSAL
COMPRESSION HOLDINGS, INC., a Delaware corporation ("Guarantor"), BRL UNIVERSAL
EQUIPMENT 2001 A, L.P., a Delaware limited partnership ("Lessor"), THE BANK OF
NEW YORK, not in its individual capacity but solely as Indenture Trustee, Paying
Agent, Transfer Agent and Registrar for the Tranche A Noteholders ("Indenture
Trustee"), BANKERS TRUST COMPANY and the other financial institutions listed on
the signature pages hereof or that may hereafter become party hereto as Tranche
B Lenders, (each a "Tranche B Lender" and collectively "Tranche B Lenders") BRL
UNIVERSAL EQUIPMENT MANAGEMENT, INC., a Delaware corporation ("Lessor General
Partner"), BANKERS TRUST COMPANY, as Administrative Agent for Tranche B Lenders
and Indenture Trustee acting on behalf of the Tranche A Noteholders (in such
capacity, "Administrative Agent") and BANKERS TRUST COMPANY, as Collateral Agent
for Tranche B Lenders and Indenture Trustee acting on behalf of the Tranche A
Noteholders (in such capacity, "Collateral Agent").
WITNESSETH:
WHEREAS, Lessor has agreed to lease to Lessee certain natural
gas compressor equipment pursuant to an Equipment Lease Agreement of even date
herewith between Lessee and Lessor (the "Lease Agreement");
WHEREAS, Tranche A Noteholders have agreed to purchase Tranche
A Notes and Tranche B Lenders have agreed to make a loan or loans to Lessor
subject to the conditions, restrictions and limitations in this Agreement, the
Indenture, the Note Purchase Agreement, the Tranche A Notes, the Tranche B Loan
Agreement and the Tranche B Notes, each dated as of February 9, 2001, for the
purpose of financing Lessor's acquisition of the natural gas compressor
equipment to be leased under the Lease Agreement;
WHEREAS, Lessee is a subsidiary of Guarantor and to induce
Lessor to lease the natural gas compressor equipment to Lessee and to induce
Tranche A Noteholders to purchase Tranche A Notes and Tranche B Lenders to make
a loan or loans to Lessor, Guarantor has agreed to guarantee all of Lessee's
obligations under the Operative Documents;
WHEREAS, to induce Tranche A Noteholders to purchase Tranche A
Notes and Tranche B Lenders to make a loan or loans to Lessor, Lessor has agreed
to provide Collateral Agent on behalf of Tranche A Noteholders and Tranche B
Lenders and Indenture Trustee on behalf of Tranche A Noteholders certain
security in accordance with the terms hereof;
NOW, THEREFORE, in consideration of the premises and mutual
agreements contained herein, the parties hereto agree as follows:
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1. Definitions and Usage.
Unless the context otherwise requires, capitalized terms used
herein and not otherwise defined herein shall have the meanings set forth or
referred to in Appendix A which Appendix A also contains the rules of usage that
shall apply hereto.
2. Representations and Warranties.
2.1. Lessee Representations and Warranties. Lessee hereby
represents and warrants as of the Closing Date for the benefit of each other
party hereto as follows.
(a) Lessee (i) is a duly organized and validly existing
corporation in good standing under the laws of the jurisdiction of its
incorporation, (ii) has the corporate power and authority to own its property
and assets and to transact the business in which it is engaged and presently
proposes to engage and (iii) is duly qualified and is authorized to do business
and is in good standing in each jurisdiction where the ownership, leasing or
operation of its property or the conduct of its business requires such
qualifications except for failures to be so qualified which, individually or in
the aggregate, could not reasonably be expected to have a Material Adverse
Effect or a material adverse effect on Lessee's ability to perform its
obligations under the Operative Documents.
(b) Lessee has the corporate power and authority to execute,
deliver and perform the terms and provisions of each of the Operative Documents
to which it is party and has taken all necessary corporate action to authorize
the execution, delivery and performance by it of each of such Operative
Documents. Lessee has duly executed and delivered each of the Operative
Documents to which it is party, and each of such Operative Documents constitutes
its legal, valid and binding obligation enforceable in accordance with its
terms, except to the extent that the enforceability thereof may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other similar
laws generally affecting creditors' rights and by equitable principles
(regardless of whether enforcement is sought in equity or at law).
(c) Neither the leasing of the Equipment, the execution,
delivery or performance by Lessee of the Operative Documents to which it is a
party, nor compliance by it with the terms and provisions thereof, (i) will
contravene any provision of any law, statute, rule or regulation or any order,
writ, injunction or decree of any court or governmental instrumentality, (ii)
will, after giving effect to any waivers obtained by Lessee, conflict with or
result in any material breach of any of the terms, covenants, conditions or
provisions of, or constitute a default under, or result in the creation or
imposition of (or the obligation to create or impose) any Lien (other than
Permitted Liens) upon any of the property or assets of Lessee, pursuant to the
terms of any indenture, mortgage, deed of trust, credit agreement or loan
agreement, or any other material agreement, contract or instrument, to which
Lessee is a party or by which it or any of its property or assets is bound or to
which it may be subject or (iii) will violate any provision of the Certificate
of Incorporation or By-Laws of Lessee.
(d) No order, consent, approval, license, authorization or
validation of, or filing, recording or registration with (other than the filing
of the Lessee Financing Statements and
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except as have otherwise been obtained or made on or prior to the Closing Date),
or exemption by, any governmental or public body or authority, or any
subdivision thereof, is required to authorize, or is required in connection
with, (i) the execution, delivery and performance by Lessee of any Operative
Document to which it is a party or (ii) the legality, validity, binding effect
or enforceability against Lessee of any such Operative Document.
(e) There is no action, suit or other proceeding pending or,
to the best knowledge of Lessee, threatened, (i) with respect to the Revolver,
Senior Notes, Asset Backed Securities, Merger or the transactions contemplated
herein or (ii) that could reasonably be expected to result in a Material Adverse
Effect.
(f) There is no tax, levy, impost, deduction, charge or
withholding which may be imposed on or asserted against the Lessee Collateral or
any part thereof or any interest therein, or against Indenture Trustee, any
Tranche A Noteholder, any Tranche B Lender, Administrative Agent or Collateral
Agent either (i) on or by virtue of the execution or delivery of Operative
Documents or any other document contemplated thereby or (ii) on any payment to
be made by Lessee pursuant to the Operative Documents or any other document
contemplated thereby to which Lessee is a party.
(g) No Lease Default has occurred and is continuing.
(h) All representations and warranties of Lessee set forth in
the other Operative Documents are true and correct in all material respects.
(i) Lessee's chief executive office and its principal place of
business are located at ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇, and Lessee is
incorporated in the State of Texas.
(j) The transaction contemplated hereby (i) is not required to
be registered pursuant to Code Section 6111(d) or any regulation promulgated
thereunder or (ii) was properly and timely registered in accordance with Code
Section 6111(d) and any regulations promulgated thereunder as of the Closing
Date and the correct registration number was (or will be within ten (10)
Business Days of receipt by Lessee) provided to Lessor, Indenture Trustee and
each Tranche A Noteholder, and Tranche B Lender identified in the Operative
Documents on the Closing Date by name and address. Each party hereto hereby
agrees to provide to Lessee promptly after written request therefor any
information requested by Lessee on or prior to the Closing Date and necessary
for Lessee to register the transaction.
(k) For each Item of Equipment, immediately prior to giving
effect to the sale thereof to Lessor, the Seller thereof has good and marketable
title to such Item of Equipment.
(l) There are no Liens other than Permitted Liens and Lessor
Liens on any Item of Equipment, the proceeds of any Item of Equipment or the
insurance required under the Lease Agreement.
(m) Each Item of Equipment is personal property and not a
fixture attached to realty under Applicable Law.
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(n) Each Item of Equipment has permanently affixed thereto the
unit number or other identification number set forth therefor on the Lease
Supplement.
(o) The provisions of this Agreement and the Lease Supplement
are effective to create in favor of Lessor and Collateral Agent a legal, valid
and enforceable security interest in each Item of Equipment; Lessor and
Collateral Agent shall be entitled to all of the rights and benefits and
priorities provided to a holder of a perfected first priority Lien under
Applicable Law subject to no Liens other than Permitted Liens or Lessor Liens,
and all recordations and filings have been accomplished in each jurisdiction as
required by law to establish and perfect Lessor's and Collateral Agent's
respective rights in and to such Lessee Collateral or Lessor Collateral, as the
case may be, or due provision has been made therefor, and any giving of notice
or any other action to such end required by Applicable Law has been given or
taken.
(p) The provisions of this Agreement are effective to create
in favor of Collateral Agent a legal, valid and enforceable security interest in
all right, title and interest of Lessor in Lessor Collateral, and, in reliance
on the accuracy of the representation and warranty of Lessor in Section 2.4(b),
the filing of the financing statements executed by Lessor as debtor with the
Secretary of State for the States of Delaware and Texas and in the applicable
filing office(s) in each state in which Items of Equipment are located perfects
such security interest in the Lessor Collateral, subject to no Liens other than
Permitted Liens and Lessor Liens, and Collateral Agent shall be entitled to all
of the rights, benefits, and priorities provided to a holder of liens of such
type under Applicable Law.
(q) Each Item of Equipment is or will be within a reasonable
period of time in compliance with identification ▇▇▇▇ requirements of Section 15
of the Lease Agreement.
(r) Each Item of Equipment is in proper working order.
(s) No Event of Loss or event which with the passage of time
would become an Event of Loss has occurred with respect to any Item of
Equipment.
(t) No Item of Equipment is intended by Lessee to be
"equipment used in farming operations" as such terms are used in Section 9-401
of the New York Uniform Commercial Code or any correlative provision of any
other applicable state's Uniform Commercial Code and no Item of Equipment shall
be "goods covered by a certificate of title issued under a statute of this state
or of another jurisdiction under the law of which indication of a security
interest on the certificate is required as a condition of perfection" within the
meaning of Section 9-103 of the New York Uniform Commercial Code or any
correlative provision of any other applicable state's Uniform Commercial Code.
(u) The audited consolidated balance sheet of Guarantor and
its consolidated subsidiaries as at March 31, 2000 and the related consolidated
statement of income, stockholders' equity and cash flow of Guarantor and its
consolidated subsidiaries for the fiscal year ended on said date, with the
opinion thereon of Deloitte Touche heretofore furnished to Lessor, each Tranche
B Lender and Administrative Agent and the unaudited consolidated balance sheet
of Guarantor and its consolidated subsidiaries as at September 30, 2000 and
their related
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consolidated statements of income, stockholders' equity and cash flow of
Guarantor and its consolidated subsidiaries for the six (6) month period ended
on such date heretofore furnished to Administrative Agent, are complete and
correct and fairly present the consolidated financial condition of Guarantor and
its consolidated subsidiaries as at said dates and the results of its operations
for the fiscal year and the six (6) month period on said dates in all material
respects, all in accordance with GAAP, as applied on a consistent basis
(subject, in the case of the interim financial statements, to normal year-end
adjustments). Neither Lessee nor any Subsidiary has on the Closing Date any
material Debt, contingent liabilities, liabilities for taxes, unusual forward or
long-term commitments or unrealized or anticipated losses from any unfavorable
commitments, except as referred to or reflected or provided for in the Financial
Statements or in Schedule 5. Since March 31, 2000, there has been no change or
event having a Material Adverse Effect. Since the date of the Financial
Statements, neither the business nor the Properties of Lessee or any Subsidiary
have been materially and adversely affected as a result of any fire, explosion,
earthquake, flood, drought, windstorm, accident, strike or other labor
disturbance, embargo, requisition or taking of Property or cancellation of
contracts, permits or concessions by any Governmental Equity, riot, activities
of armed forces or acts of God or of any public enemy. Notwithstanding anything
contained herein to the contrary, the "Financial Statements" referenced in this
Section 2.1(u) and in Sections 9.3(f) and 9.3(h) shall mean the pro forma
financial statements contained in the Offering Memorandum dated February 6, 2001
and delivered by Lessor in connection with the issuance of the Tranche A Notes.
(v) ERISA.
(i) Lessee, each Subsidiary and each ERISA Affiliate
have complied in all material respects with ERISA and, where
applicable, the Code regarding each Plan.
(ii) Each Plan is, and has been, maintained in
substantial compliance with ERISA and, where applicable, the Code.
(iii) No act, omission or transaction has occurred
which could result in imposition on Lessee, any Subsidiary or any ERISA
Affiliate (whether directly or indirectly) of (i) either a civil
penalty assessed pursuant to section 502(c), (i) or (l) of ERISA or a
tax imposed pursuant to Chapter 43 of Subtitle D of the Code or (ii)
breach of fiduciary duty liability damages under section 409 of ERISA.
(iv) No Plan (other than a defined contribution plan)
or any trust created under any such Plan has been terminated since
September 2, 1974. No liability to the PBGC (other than for the payment
of current premiums which are not past due) by Lessee, any Subsidiary
or any ERISA Affiliate has been or is expected by Lessee, any
Subsidiary or any ERISA Affiliate to be incurred with respect to any
Plan. No ERISA Event with respect to any Plan has occurred.
(v) Full payment when due has been made of all
amounts which Lessee, any Subsidiary or any ERISA Affiliate is required
under the terms of each Plan or applicable law to have paid as
contributions to such Plan, and no accumulated funding
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deficiency (as defined in section 302 of ERISA and section 412 of the
Code), whether or not waived, exists with respect to any Plan.
(vi) The actuarial present value of the benefit
liabilities under each Plan which is subject to Title IV of ERISA does
not, as of the end of Lessee's most recently ended fiscal year, exceed
the current value of the assets (computed on a plan termination basis
in accordance with Title IV of ERISA) of such Plan allocable to such
benefit liabilities. The term "actuarial present value of the benefit
liabilities" shall have the meaning specified in section 4041 of ERISA.
(vii) None of Lessee, any Subsidiary or any ERISA
Affiliate sponsors, maintains, or contributes to an employee welfare
benefit plan, as defined in section 3(1) of ERISA, including, without
limitation, any such plan maintained to provide benefits to former
employees of such entities, that may not be terminated by Lessee, a
Subsidiary thereof or any ERISA Affiliate in its sole discretion at any
time without any material liability.
(viii) None of Lessee, any Subsidiary or any ERISA
Affiliate sponsors, maintains or contributes to, or has at any time in
the preceding six calendar years, sponsored, maintained or contributed
to, any Multiemployer Plan.
(ix) None of Lessee, any Subsidiary or any ERISA
Affiliate is required to provide security under section 401(a)(29) of
the Code due to a Plan amendment that results in an increase in current
liability for the Plan.
(x) Assuming the accuracy at all times of the
representation and warranty of each Tranche B Lender in Section 2.6 of
this Agreement, the execution and delivery of this Agreement will be
exempt from, or will not involve any transaction which is subject to,
the prohibitions of either Section 406 of ERISA or Section 4975 of the
Code and will not involve any transaction in connection with which a
penalty could be imposed under Section 502(i) of ERISA or a tax could
be imposed pursuant to Section 4975 of the Code.
(w) Taxes. Except as set out in Schedule 6, each of Lessee and
its Subsidiaries has filed all United States federal income tax returns and all
other tax returns which are required to be filed by them and have paid all
material taxes due pursuant to such returns or pursuant to any assessment
received by Lessee or any Subsidiary. The charges, accruals and reserves on the
books of Lessee and its Subsidiaries in respect of taxes and other governmental
charges are, in the opinion of Lessee, adequate. No tax lien has been filed and,
to the knowledge of Lessee, no claim is being asserted with respect to any such
tax, fee or other charge.
(x) Titles, etc.
(i) Except as set out in Schedule 7, Lessee and its
Subsidiaries have good and marketable title to its material properties
(i) except in cases where the failure to
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have said good and marketable title would not reasonably cause a
Material Adverse Effect and (ii) free and clear of all Liens, except
Liens permitted by Section 9.3(g).
(ii) All leases and agreements necessary for the
conduct of the business of Lessee and its Subsidiaries are valid and
subsisting, in full force and effect and there exists no default or
event or circumstance which with the giving of notice or the passage of
time or both would give rise to a default under any such lease or
leases, which would affect in any material respect the conduct of the
business of Lessee and its Subsidiaries.
(iii) The rights, Properties and other assets
presently owned, leased or licensed by Lessee or its Subsidiaries
including, without limitation, all easements and rights of way, include
all rights, Properties and other assets necessary to permit Lessee or
its Subsidiaries to conduct their business in all material respects in
the same manner as its business has been conducted prior to the Closing
Date.
(iv) All of the assets and Properties of Lessee or
its Subsidiaries thereof which are reasonably necessary for the
operation of its business are in good working condition and are
maintained in accordance with prudent business standards.
(y) No Material Misstatements. No written information,
statement, exhibit, certificate, document or report furnished to Administrative
Agent and the Tranche B Lenders (or any of them) by Lessee or any Subsidiary in
connection with the negotiation of this Agreement contained any material
misstatement of fact or omitted to state a material fact or any fact necessary
to make the statement contained therein not materially misleading in the light
of the circumstances in which made and with respect to Lessee and its
Subsidiaries taken as a whole. To Lessee's knowledge, there is no fact peculiar
to Lessee or any Subsidiary which has a Material Adverse Effect or in the future
is reasonably likely to have (so far as Lessee can now reasonably foresee) a
Material Adverse Effect and which has not been set forth in this Agreement or
the other documents, certificates and statements furnished to Administrative
Agent by or on behalf of Lessee or any Subsidiary or otherwise prior to, or on,
the Closing Date in connection with the transactions contemplated hereby.
(z) Investment Company Act. Neither Lessee nor any Subsidiary
is an "investment company" or a company "controlled" by an "investment company,"
within the meaning of the Investment Company Act of 1940, as amended.
(aa) Public Utility Holding Company Act. Neither Lessee nor
any Subsidiary is a "holding company," or a "subsidiary company" of a "holding
company," or an "affiliate" of a "holding company" or of a "subsidiary company"
of a "holding company," or a "public utility" within the meaning of the Public
Utility Holding Company Act of 1935, as amended.
(bb) Subsidiaries. Except as set forth on Schedule 3, Lessee
has no Subsidiaries.
(cc) Defaults. Neither Lessee nor any Subsidiary is in
material default nor has any event or circumstance occurred which, but for the
expiration of any applicable grace period
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or the giving of notice, or both, would constitute a material default under any
material agreement or instrument to which Lessee or any Subsidiary is a party or
by which Lessee or any Subsidiary is bound which default would have a Material
Adverse Effect.
(dd) Environmental Matters. Except (i) as provided in Schedule
8 or (ii) as would not have a Material Adverse Effect (or with respect to (c),
(d) and (e) below, where the failure to take such actions would not have a
Material Adverse Effect):
(i) Neither any Property of Lessee or any Subsidiary
nor the operations conducted thereon violate any order or requirement
of any court or Governmental Entity or any Environmental Law;
(ii) Without limitation of clause (a) above, no
Property of Lessee or any Subsidiary nor the operations currently
conducted thereon or, to the best knowledge of Lessee, by any prior
owner or operator of such Property or operation, are in violation of or
subject to any existing, pending or threatened action, suit,
investigation, inquiry or proceeding by or before any court or
Governmental Entity or to any remedial obligations under Environmental
Laws;
(iii) All notices, permits, licenses or similar
authorizations, if any, required to be obtained or filed in connection
with the operation or use of any and all Property of Lessee and each
Subsidiary, including without limitation past or present treatment,
storage, disposal or release of a hazardous substance or solid waste
into the environment, have been duly obtained or filed, and Lessee and
each Subsidiary are in compliance with the terms and conditions of all
such notices, permits, licenses and similar authorizations;
(iv) All hazardous substances, solid waste, and oil
and gas exploration and production wastes, if any, generated at any and
all Property of Lessee or any Subsidiary have in the past been
transported, treated and disposed of in accordance with Environmental
Laws and so as not to pose an imminent and substantial endangerment to
public health or welfare or the environment, and, to the best knowledge
of Lessee, all such transport carriers and treatment and disposal
facilities have been and are operating in compliance with Environmental
Laws and so as not to pose an imminent and substantial endangerment to
public health or welfare or the environment, and are not the subject of
any existing, pending or threatened action, investigation or inquiry by
any Governmental Entity in connection with any Environmental Law;
(v) Lessee has taken all steps reasonably necessary
to determine and has determined that no hazardous substances, solid
waste, or oil and gas exploration and production wastes, have been
disposed of or otherwise released and there has been no threatened
release of any hazardous substances on or to any Property of Lessee or
any Subsidiary except in compliance with Environmental Laws and so as
not to pose an imminent and substantial endangerment to public health
or welfare or the environment;
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14
(vi) To the extent applicable, all Property of Lessee
and each Subsidiary currently satisfies all design, operation, and
equipment requirements imposed by the OPA or scheduled as of the
Closing Date to be imposed by OPA during the term of the Lease
Agreement, and Lessee does not have any reason to believe that such
Property, to the extent subject to OPA, will not be able to maintain
compliance with the OPA requirements during the term of the Lease
Agreement; and
(vii) Neither Lessee nor any Subsidiary has any known
contingent liability in connection with any release or threatened
release of any oil, hazardous substance or solid waste into the
environment.
(ee) Compliance with the Law. Neither Lessee nor any
Subsidiary has violated any Governmental Requirement or failed to obtain any
license, permit, franchise or other governmental authorization necessary for the
ownership of any of its Properties or the conduct of its business, which
violation or failure would have (in the event such violation or failure were
asserted by any Person through appropriate action) a Material Adverse Effect.
(ff) Insurance. Schedule 4 attached hereto contains an
accurate and complete description of all material policies of fire, liability,
workmen's compensation and other forms of insurance owned or held by Lessee and
each Subsidiary. All such policies are in full force and effect, all premiums
with respect thereto covering all periods up to and including the date of the
closing have been paid, and no notice of cancellation or termination has been
received with respect to any such policy. Such policies are sufficient for
compliance with all requirements of law and of all agreements to which Lessee or
any Subsidiary is a party; are valid, outstanding and enforceable policies;
provide adequate insurance coverage in at least such amounts and against at
least such risks (but including in any event public liability) as are usually
insured against in the same general area by companies engaged in the same or a
similar business for the assets and operations of Lessee and each Subsidiary;
will remain in full force and effect through the respective dates set forth in
the binders for said insurance without the payment of additional premiums; and
will not in any way be affected by, or terminate or lapse by reason of, the
transactions contemplated by this Agreement. Neither Lessee nor any Subsidiary
has been refused any insurance with respect to its assets or operations, nor has
its coverage been limited below usual and customary policy limits, by an
insurance carrier to which it has applied for any such insurance or with which
it has carried insurance during the last three (3) years.
(gg) Hedging Agreements. Schedule 9 sets forth, as of the
Closing Date, a true and complete list of all Hedging Agreements (including
commodity price swap agreements, forward agreements or contracts of sale which
provide for prepayment for deferred shipment or delivery of oil, gas or other
commodities) of Lessee and each Subsidiary, the material terms thereof
(including the type, term, effective date, termination date and notional amounts
or volumes), the net ▇▇▇▇ to market value thereof, all credit support agreements
relating thereto (including any margin required or supplied), and the counter
party to each such agreement.
(hh) Restriction on Liens. Except as set forth on Schedule 10,
neither Lessee nor any of Subsidiary is a party to any agreement or arrangement
(other than the Operative Documents, the Revolver and the Security Instruments),
or subject to any order, judgment, writ
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or decree, which either restricts or purports to restrict its ability to grant
Liens to other Persons on or in respect of their respective assets or
Properties.
(ii) On and as of the date hereof, the Projections delivered
to Lessor, Administrative Agent and Tranche B Lenders prior to the date hereof
have been prepared in good faith and are based on reasonable assumptions, and
there are no statements or conclusions in the Projections which are based upon
or include information known to Lessee to be misleading in any material respect
or which fail to take into account material information known to Lessee
regarding the matters reported therein. On the date hereof, Lessee believes that
the Projections are reasonable and attainable, it being recognized by Lessor and
Tranche B Lenders, however, that projections as to future events are not to be
viewed as facts and that the actual results during the period or periods covered
by the Projections may differ from the projected results and that the
differences may be material.
(jj) Lessee has no knowledge of the falsity of, or any reason
to believe, any of the representations of Lessor and Co-Obligor contained in the
Note Purchase Agreement are untrue or incorrect in any material respect.
2.2. Guarantor Representations and Warranties. Guarantor
represents and warrants as of the Closing Date for the benefit of each party
hereto as follows.
(a) Guarantor (i) is a duly organized and validly existing
corporation in good standing under the laws of the jurisdiction of its
incorporation, (ii) has the corporate power and authority to own its property
and assets and to transact the business in which it is engaged and presently
proposes to engage and (iii) is duly qualified and authorized to do business and
is in good standing in each jurisdiction where the ownership, leasing or
operation of its property or the conduct of its business requires such
qualifications except for failures to be so qualified which, individually or in
the aggregate, could not reasonably be expected to have a Material Adverse
Effect.
(b) Guarantor has the corporate power and authority to
execute, deliver and perform the terms and provisions of each of the Operative
Documents to which it is party and has taken all necessary corporate action to
authorize the execution, delivery and performance by it of each of such
Operative Documents. Guarantor has duly executed and delivered each of the
Operative Documents to which it is party, and each of such Operative Documents
constitutes its legal, valid and binding obligation enforceable in accordance
with its terms, except to the extent that the enforceability thereof may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
other similar laws generally affecting creditors' rights and by equitable
principles (regardless of whether enforcement is sought in equity or at law).
(c) Neither the execution, delivery or performance by
Guarantor of the Operative Documents to which it is a party, nor compliance by
it with the terms and provisions thereof, (i) will contravene any provision of
any law, statute, rule or regulation or any order, writ, injunction or decree of
any court or governmental instrumentality, (ii) will, after giving effect to any
waivers obtained by Guarantor, conflict with or result in any material breach of
any of the terms, covenants, conditions or provisions of, or constitute a
default under, or result in the
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creation or imposition of (or the obligation to create or impose) any Lien
(other than Permitted Liens) upon any of the property or assets of Guarantor or
any of its Subsidiaries pursuant to the terms of any indenture, mortgage, deed
of trust, credit agreement or loan agreement, or any other material agreement,
contract or instrument, to which Guarantor or any of its Subsidiaries is a party
or by which it or any of its property or assets is bound or to which it may be
subject or (iii) will violate any provision of the Certificate of Incorporation
or By-Laws of Guarantor or any of its Subsidiaries.
(d) No order, consent, approval, license, authorization or
validation of, or filing, recording or registration with (except as have
otherwise been obtained or made on or prior to the Closing Date), or exemption
by, any governmental or public body or authority, or any subdivision thereof, is
required to authorize, or is required in connection with, (i) the execution,
delivery and performance by Guarantor of any Operative Document to which it is a
party or (ii) the legality, validity, binding effect or enforceability against
Guarantor of any such Operative Document.
(e) Guarantor has no knowledge of the falsity of, or any
reason to believe, any of the representations and warranties of Lessor and
Co-Obligor contained in the Note Purchase Agreement are untrue or incorrect in
any material respect.
2.3. Lessor Representations and Warranties For Benefit of All
Parties. Lessor hereby represents and warrants as of the date hereof and as of
the Closing Date for the benefit of each party hereto as follows:
(a) Lessor is a limited partnership duly established and
validly existing under the laws of the State of Delaware, has full power,
authority and legal right under such laws to execute, deliver and perform its
obligations under the Operative Documents to which it is a party.
(b) The leasing and financing of the Equipment, the execution
and delivery of the Operative Documents and the other related instruments,
documents and agreements to which Lessor is a party, and the compliance by
Lessor with the terms hereof and thereof and the payments and performance by
Lessor of any of its obligations hereunder and thereunder (i) have been duly and
legally authorized by all necessary action on the part of Lessor, (ii) are not
in contravention of, and will not result in a violation or breach of, any of the
terms of Lessor's Limited Partnership Agreement or Certificate of Limited
Partnership, (iii) will not violate or constitute a breach of any provision of
law, any order of any court or other agency of government, or any indenture,
agreement or other instrument to which Lessor is a party, or by or under which
Lessor or any of Lessor's property is bound, or be in conflict with, result in a
breach of, or constitute (with due notice and/or lapse of time) a default under
any such indenture, agreement or instrument, or result in the creation or
imposition of any Lien, other than Permitted Liens, upon any of Lessor's
property or assets and (iv) will not require, on the part of Lessor, the consent
or approval of, the giving of notice to, the registration with, or the taking of
any other action in respect of, any United States federal, state or local
governmental or public commission, board, authority or agency except for
filings, if any, made pursuant to any notice reporting requirement applicable to
it.
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(c) Each Operative Document to which Lessor is a party has
been executed by the duly authorized officer or officers of Lessor General
Partner and delivered to the other parties thereto and constitutes, or when
executed by the duly authorized officer or officers of Lessor General Partner
and delivered to the other parties thereto, will constitute, the legal, valid
and binding obligation of Lessor, enforceable in accordance with its terms
except as limited by any applicable bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting the enforcement of creditors' rights from
time to time in effect and by general principles of equity including those
applicable to the enforceability of the remedy of specific performance.
(d) There is no action, suit or other proceeding now pending
or, to Lessor's knowledge, threatened, against or affecting Lessor, in any court
or before any regulatory commission, board or other administrative governmental
agency (i) which will materially and adversely affect the interest of Lessor in
any Item of Equipment or any Operative Document, or the interest of Collateral
Agent in any such Item or any Operative Document or (ii) that could reasonably
be expected to materially and adversely affect the business, operations,
property, assets, liabilities, condition (financial or otherwise) or prospects
of Lessor.
(e) There is no tax, levy, impost, deduction, charge or
withholding which may be imposed on or asserted against the Lessor Collateral or
any part thereof or any interest therein, or against Indenture Trustee, any
Tranche A Noteholder, any Tranche B Lender, Administrative Agent or Collateral
Agent either (i) on or by virtue of the execution or delivery of Operative
Documents or any other document contemplated thereby or (ii) on any payment to
be made by Lessor pursuant to the Operative Documents or any other document
contemplated thereby to which Lessor is a party.
(f) Lessor has no indebtedness or other liabilities, whether
contingent or otherwise, other than its obligations under and as contemplated by
the Operative Documents.
(g) No Loan Default or Loan Event of Default not caused by a
Lease Default or Lease Event of Default has occurred and is continuing.
(h) Neither Lessor nor any Person authorized to act on its
behalf has directly or indirectly offered to sell any interests in the Lessor
Collateral, Tranche A Notes, Tranche B Notes or Equity Certificates or any
security similar thereto, to, or otherwise approved or negotiated with respect
thereto with anyone. Neither Lessor nor any Person authorized to act on its
behalf will so offer or sell in violation of Section 5 of the Securities Act of
1933, as amended, or any securities or blue sky law of any applicable
jurisdiction.
(i) The representations and warranties of Lessor in the Note
Purchase Agreement are true and correct in all material respects and Lessor has
complied with all of its covenants in the Note Purchase Agreement in all
material respects.
2.4. Lessor Representations and Warranties For Benefit of
Indenture Trustee, Tranche B Lenders, Administrative Agent and Collateral Agent.
Lessor hereby represents and warrants as of the date hereof and as of the
Closing Date for the benefit of Indenture Trustee, each Tranche B Lender,
Administrative Agent and Collateral Agent as follows:
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(a) No Lease Default or Lease Event of Default of which it has
knowledge has occurred and is continuing.
(b) Lessor's chief executive office and principal place of
business is located at ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇
and Lessor's records with respect to the transactions contemplated by the
Operative Documents are located at such address.
(c) Lessor is duly qualified and is authorized to do business
and is in good standing in each jurisdiction where ownership, leasing or
operation of its property or the conduct of its business requires such
qualifications except for failures to be so qualified which, individually or in
the aggregate, could not reasonably be expected to have a material adverse
effect on Lessor's ability to perform its obligations or exercise its rights
under the Operative Documents to which it is a party or on the business,
property, assets, liabilities, condition (financial or otherwise) or prospects
of Lessor.
(d) After giving effect to each ▇▇▇▇ of Sale therefor, Lessor
has good and marketable title to each Item of Equipment (including the parts and
components thereof) and the Lessor Collateral is free and clear of all Liens
other than Permitted Liens.
(e) The provisions of this Agreement are effective to create
in favor of Collateral Agent a legal, valid and enforceable security interest in
all right, title and interest of Lessor in the Lessor Collateral, and the filing
of the financing statements executed by Lessor as debtor with the Secretary of
State for the States of Delaware and Texas, and in the applicable filing
office(s) in each state in which Items of Equipment are located perfects such
security interest in the Lessor Collateral, subject to no Liens other than
Permitted Liens and Lessor Liens and Collateral Agent shall be entitled to all
of the rights, benefits, and priorities provided to a holder of liens of such
type under Applicable Law.
(f) Neither Lessor nor any Person authorized to act on its
behalf will permit any transfer of any interest in Lessor, directly or
indirectly, that would result in the Lessor being treated as a Publicly Traded
Partnership pursuant to Code Section 7704.
2.5. Representations and Warranties of Lessor General Partner.
Lessor General Partner represents and warrants that as of the date hereof and as
of the Closing Date for the benefit of each other party hereto as follows:
(a) It is duly organized under the laws of its jurisdiction of
incorporation, has full corporate power and authority and legal right under such
laws to execute, deliver and perform its obligations under the Operative
Documents to which it is a party and is qualified to do business in and is in
good standing in all material respects in, each jurisdiction in which the nature
of its business makes such qualification necessary, except where failure to be
so qualified and in good standing would not have a material adverse effect on
its ability to perform its obligations under the Operative Documents to which it
is a party.
(b) The execution and delivery of the Operative Documents and
the other related instruments, documents and agreements to which it is a party,
and the compliance by it
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with the terms hereof and thereof and the payments and performance by it of any
its obligations hereunder and thereunder (i) have been duly and legally
authorized by all necessary corporate action on its part, (ii) are not in
contravention of, and will not result in a violation or breach of, any of the
terms of its certificate of incorporation (or equivalent document), its by-laws
or any provisions relating to its capital stock, (iii) will not violate or
constitute a breach of any provision of law, any order of any court or other
agency of government, or any indenture, agreement or other instrument to which
it is a party, or by or under which it is bound, or be in conflict with, result
in a breach of, or constitute (with due notice and/or lapse of time) a default
under any such indenture, agreement or instrument, or result in the creation or
imposition of any Lien upon any of its property or assets and (iv) will not
require, on its part or any Affiliate's part thereof, the consent or approval
of, the giving of notice to, the registration with, or the taking of any other
action in respect of, any United State federal, state or local governmental or
public commission, board, authority or agency except for filings, if any, made
pursuant to any notice reporting requirement applicable to it.
(c) Each Operative Document to which it is a party has been
executed by its duly authorized officer or officers and delivered to the other
parties thereto and constitutes, or when executed by its duly authorized officer
or officers and delivered to the other parties thereto, such Operative Documents
will constitute, legal, valid and binding obligations enforceable in accordance
with their terms except as limited by any applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditors' rights from time to time in effect and by general principles of
equity including those applicable to the enforceability of the remedy of
specific performance.
(d) It is not in breach of any covenants or agreements made by
it in the Limited Partnership Agreement or in this Agreement.
(e) There are no actions, suits or proceedings pending or, to
the best of its knowledge, threatened before any court or by or before any other
Government Entity, or any arbitrator, which either individually or in the
aggregate, would have a material adverse effect on the Lessor Collateral or on
the right, power and authority or its ability to perform its obligations under
any Operative Document to which it is a party.
(f) There are no Lessor Liens attributable to it on the assets
of Lessor or on any part thereof, and the execution, delivery and performance by
it of the Operative Documents to which it is a party will not subject the assets
of Lessor to any Lessor Liens attributable to it.
(g) It does not have, has not used and shall not use the
assets of an "employee benefit plan" as defined in Section 3(3) of ERISA or a
"plan" as defined in Section 4975(e) of the Code to make any capital
contribution or other payment under the Operative Documents.
2.6. Tranche B Lenders Representations and Warranties. Each of
the Tranche B Lenders solely with respect to itself, severally represents and
warrants as of the date hereof and as of the Closing Date for the benefit of
each party hereto that it has not used and shall not use the assets of an
"employee benefit plan" as defined in Section 3(3) of ERISA or a "plan" as
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defined in Section 4975(e) of the Code to fund any Loan or make any other
payment under the Operative Documents.
2.7. Private Offering Representations; etc. Each of Lessee,
Guarantor and Lessor General Partner represents to each other party hereto that
(a) neither it, nor any of its Affiliates, nor anyone it has authorized or
employed to act on its behalf as agent, broker, dealer or otherwise in
connection with the offering or sale of (i) the Tranche A Notes or any similar
security or (ii) any interest in and to Lessor Collateral or any similar
security, as the case may be, has, directly or indirectly, offered any such
security for sale to, or solicited any offer to acquire any of the same from,
anyone, except that Lessee represents that it and its Affiliates have offered
Tranche A Notes and an interest in the Lessor Collateral to the Tranche A
Noteholders, Tranche B Lenders, Limited Partners, respectively, and, with
respect to an interest in the Lessor Collateral, to other "accredited investors"
as defined in Rule 501(a) of Regulation D promulgated pursuant to the Securities
Act of 1933, as amended, and (b) neither it nor anyone it has authorized to act
on its behalf has offered or sold, or will so offer to sell, (i) any Tranche A
Notes or any interest in and to the Lessor Collateral, or (ii) any securities
similar thereto, in violation of the provisions of Section 5 of the Securities
Act of 1933, as amended. The representations and warranties of each of the
parties pursuant to this Section 2.7 are several and not joint.
2.8. Warranty Disclaimers. EACH OF LESSOR, INDENTURE TRUSTEE,
TRANCHE B LENDER, ADMINISTRATIVE AGENT AND COLLATERAL AGENT AS APPLICABLE
DEMISE, LEASE AND FINANCE THE ITEMS OF EQUIPMENT HEREUNDER AS-IS AND WHERE-IS
WITH ALL FAULTS IF ANY AND IN WHATEVER CONDITION THEY MAY BE IN AND EXPRESSLY
DISCLAIMS AND MAKES NO REPRESENTATION OR WARRANTY, EITHER EXPRESSED OR IMPLIED,
AS TO THE DESIGN, CONDITION, QUALITY, CAPACITY, MERCHANTABILITY, DURABILITY,
SUITABILITY OR ITS FITNESS FOR ANY PARTICULAR PURPOSE, OR QUALIFICATION FOR ANY
PARTICULAR TRADE OR ANY OTHER MATTER CONCERNING, THE ITEMS OF EQUIPMENT. LESSEE
HEREBY WAIVES ANY CLAIM (INCLUDING ANY CLAIM BASED ON STRICT OR ABSOLUTE
LIABILITY IN TORT OR INFRINGEMENT) IT MIGHT HAVE AGAINST LESSOR, INDENTURE
TRUSTEE, ANY TRANCHE A NOTEHOLDER, INITIAL PURCHASER, TRANCHE B LENDER,
ARRANGER, ANY LIMITED PARTNER, LESSOR GENERAL PARTNER, ADMINISTRATIVE AGENT OR
COLLATERAL AGENT FOR ANY LOSS, DAMAGE (INCLUDING INCIDENTAL OR CONSEQUENTIAL
DAMAGE) OR EXPENSE CAUSED BY ANY ITEM OF EQUIPMENT EXCEPT TO THE EXTENT CAUSED
BY SUCH PARTY'S GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OR BY LESSEE'S LOSS OF
USE THEREOF FOR ANY REASON WHATSOEVER. LESSOR HEREBY WAIVES ANY CLAIM (INCLUDING
ANY CLAIM BASED ON STRICT OR ABSOLUTE LIABILITY IN TORT OR INFRINGEMENT) IT
MIGHT HAVE AGAINST LESSOR, INDENTURE TRUSTEE, ANY TRANCHE A NOTEHOLDER, INITIAL
PURCHASER, TRANCHE B LENDER, ARRANGER, ANY LIMITED PARTNER, LESSOR GENERAL
PARTNER, ADMINISTRATIVE AGENT OR COLLATERAL AGENT FOR ANY LOSS, DAMAGE
(INCLUDING INCIDENTAL OR CONSEQUENTIAL DAMAGE) OR EXPENSE CAUSED BY ANY ITEM OF
EQUIPMENT EXCEPT TO THE EXTENT CAUSED BY SUCH PARTY'S GROSS NEGLIGENCE OR
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WILLFUL MISCONDUCT OR LESSOR'S BREACH OF ITS COVENANT OF QUIET ENJOYMENT IN
SECTION 2 OF THE LEASE FOR ANY REASON WHATSOEVER.
3. Conditions Precedent.
3.1. Lessor Conditions. Lessor shall have no obligation to
acquire any Item of Equipment and subject them to the Lease Agreement unless on
or before the Closing Date each of the following conditions are fulfilled:
(a) There shall exist no Lease Default or Lease Event of
Default and all representations and warranties of Lessee and Guarantor contained
herein and in the other Operative Documents shall be true and correct in all
material respects.
(b) Each Item of Equipment is reasonably acceptable to Lessor.
(c) Each Item of Equipment is free of all Liens other than
Permitted Liens and Lessor Liens.
(d) The aggregate of the Acquisition Costs of each Item of
Equipment is less than or equal to the Maximum Acquisition Cost.
(e) Lessor and Administrative Agent shall have received a
Lessee Certificate, dated the Closing Date with respect to each Item and a
written description of the Lease Maintenance Practices as of the Closing Date,
each duly executed by a Responsible Officer of Lessee.
(f) Lessor shall have received this Agreement, the Lease
Agreement, the Lease Supplement, the Note Purchase Agreement for the sale of
Tranche A Notes in the aggregate equal to aggregate of Tranche A Components, the
Indenture, the Registration Rights Agreement, the Tranche B Loan Agreement, a
▇▇▇▇ of Sale for each Item of Equipment, the Closing Escrow Agreement, and the
Lessor Margin Letter in each case duly authorized, executed and delivered by
each other party thereto.
(g) All licenses, registrations, permits, consents and
approvals required by Applicable Laws or by any Governmental Entity (i) in
connection with Lessor's rights and interests in such Item of Equipment to the
extent such licenses, registrations, permits, consents or approvals are required
because of the nature of the Equipment and (ii) in connection with the delivery,
acquisition, use and operation of such Item of Equipment shall have been
obtained to the satisfaction of Lessor.
(h) Lessor shall have received from Lessee, in form and
substance satisfactory to Lessor, resolutions of the board of directors of
Lessee or other written evidence of appropriate corporate action, and the
certificate of incorporation and by-laws, each certified as of the Closing Date
by the secretary of Lessee, duly authorizing the execution, delivery and
performance of this Agreement, the Lease Agreement and each other document to be
delivered in connection therewith to which it is a party, together with an
incumbency certificate as to the person or persons authorized to execute and
deliver such documents on behalf of Lessee.
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(i) Lessor shall have received from Guarantor, in form and
substance satisfactory to Lessor, resolutions of the board of directors of
Guarantor or other written evidence of appropriate corporate action, and the
certificate of incorporation and by-laws, each certified by the secretary of
Guarantor as of the Closing Date, duly authorizing the execution, delivery and
performance of the Participation Agreement and each other document to be
delivered in connection therewith to which it is a party, together with an
incumbency certificate as to the person or persons authorized to execute and
deliver such documents on behalf of Guarantor.
(j) Lessor shall have received written opinions of Gardere
▇▇▇▇▇ ▇▇▇▇▇▇ LLP, counsel to Lessee and Guarantor, dated the Closing Date and
addressed to Lessor, Indenture Trustee, the Initial Purchasers, each Tranche B
Lender, Administrative Agent and Collateral Agent in form and substance
reasonably satisfactory to Lessor.
(k) Lessor shall have received a written opinion of ▇▇▇▇
▇▇▇▇▇▇▇, Esq., in-house counsel to Lessee and Guarantor, dated the Closing Date
and addressed to Lessor, Indenture Trustee, the Initial Purchasers, each Tranche
B Lender, Administrative Agent and Collateral Agent in form and substance
reasonably satisfactory to Lessor.
(l) Lessee shall have delivered a good standing certificate
dated within five (5) days of the Closing Date from the State of Texas and state
in which Lessee is incorporated and Guarantor shall have delivered a good
standing certificate dated within five (5) days of the Closing Date from the
State of Texas and state in which Guarantor is incorporated.
(m) Lessor shall have received for each Item of Equipment an
Appraisal dated within thirty (30) days of the Closing Date confirming that the
aggregate Acquisition Costs of such Item of Equipment and all other Items of
Equipment is less than or equal to both the aggregate Initial Fair Market Values
and the aggregate Residual Values of all Items of Equipment.
(n) Lessee shall have paid all of the reasonable costs and
expenses incurred by Lessor, Lessor General Partner, Indenture Trustee, Bankers
Trust Company as Tranche B Lender, Administrative Agent and Collateral Agent (in
each case including attorneys' fees), and required to be paid by Lessee under
the Operative Documents, in each case invoiced at least one day prior to the
Closing Date.
(o) Lessor and Administrative Agent shall have received at
least three (3) LIBOR Banking Days before the Closing Date a Funding Notice with
the amounts to be funded by each Tranche B Lender identified thereon executed
and delivered by Lessee.
(p) Lessor shall have received the proceeds of the Tranche A
Notes as contemplated by the Note Purchase Agreement.
(q) Lessor shall have received the proceeds of the Tranche B
Loans set forth in the Funding Notice.
(r) Lessor shall have received from Limited Partners any
amounts required of them in the Limited Partnership Agreement.
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(s) Lessor shall have received an insurance certificate in
form and substance satisfactory to Lessor confirming that the Equipment is
insured in accordance with the provisions of Section 20 of the Lease Agreement.
(t) Administrative Agent shall have received the payment of
all fees due on or before the Closing Date as set forth in the letter agreement
between Administrative Agent and Lessee.
(u) Lessee shall have executed and delivered to Administrative
Agent Lessee Financing Statements for each Item of Equipment for recordation in
Texas and in each state in which any Item of Equipment is located and, if the
law of such state requires financing statements to be filed in one or more local
jurisdictions within such state, in such local jurisdiction.
(v) Lessor shall have received at any time prior to the
Closing Date lien search results in form and substance reasonably acceptable to
it searching the Uniform Commercial Code records of, with respect to Guarantor,
the state of its incorporation and the State of Texas, and with respect to
Lessee, the state of its incorporation, the State of Texas, each state in which
an Item of Equipment is located, and in states that require filings in local
jurisdictions in order to perfect a security interest in an Item of Equipment,
each such local jurisdiction, each indicating that, after the filing of those
UCC release or termination statements, if any, executed and delivered by Lessee
and all other relevant Persons to Administrative Agent on or before the Closing
Date, the representations set forth in Section 2.1(l) will be accurate and
complete in all respects to the extent determinable from such searches.
(w) Lessor shall have received such other confirmatory
assignments, conveyances, financing and continuation statements, transfer
endorsements and other assurances or instruments other than estoppel
certificates or other agreements, certificates or other documents to be
delivered by any Sublessee or other Person (other than an Affiliate of Lessee)
which Lessor may reasonably request to perfect, preserve or protect Lessor's
security interest granted under Section 9 of the Lease Agreement, in form and
substance satisfactory to Lessor, as Lessor may reasonably request in writing at
least five (5) Business Days before the Closing Date.
(x) The Revolver shall have become effective and the Asset
Backed Securities shall have been issued.
The leasing of each Item of Equipment by Lessee hereunder
shall constitute a representation and warranty by Lessee as of the date such
leasing commences that the conditions contained in Section 3.1 have been
satisfied.
3.2. Tranche B Lender Conditions. No Tranche B Lender shall
have any obligation to make a Loan for the acquisition of any Item of Equipment
hereunder unless on or before the Closing Date each of the following conditions
are fulfilled:
(a) The conditions precedent to Lessor's obligation to lease
such Item of Equipment in accordance with the terms hereof (except for the
condition precedent set forth in
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Sections 3.1(q)) shall have been satisfied, without waiver or modification
(except as consented to by Administrative Agent), and such Tranche B Lender
shall have received copies of all documents and opinions with respect thereto.
(b) There shall exist no Loan Default or Loan Event of Default
and all representations and warranties of Lessor and Lessor General Partner
contained herein and in the other Operative Documents shall be true and correct.
(c) Each other Tranche B Lender shall have funded its pro rata
share of the Tranche B Loans based upon its Tranche B Commitment and the amount
of the Tranche B Loan to be made by such Tranche B Lender does not exceed its
Tranche B Commitment.
(d) Such Tranche B Lender shall have received original
counterparts (unless otherwise specified) in each case duly authorized, executed
and delivered by each other party thereto in form and substance satisfactory to
such Tranche B Lender and in full force and effect of this Agreement, the Quiet
Enjoyment and Indemnity Agreement (Tranche B), the Tranche B Loan Agreement and
its Tranche B Note and a copy of the Indenture.
(e) Such Tranche B Lender shall have received from Lessor, in
form and substance satisfactory to such Tranche B Lender, a copy of Lessor's
Certificate of Limited Partnership and the Limited Partnership Agreement, each
certified as of the Closing Date by the secretary of Lessor General Partner.
(f) Such Tranche B Lender shall have received from Lessor
General Partner, in form and substance satisfactory to such Tranche B Lender,
Lessor General Partner's Certificate of Incorporation, By-Laws, and resolutions
of its board of directors duly authorizing the execution, delivery and
performance of this Agreement, the Lease Agreement, and each other document to
be delivered in connection therewith to which it is a party, each certified as
of the Closing Date by the secretary of Lessor General Partner, together with an
incumbency certificate as to the person or persons authorized to execute and
deliver such documents on behalf of Lessor General Partner.
(g) Such Tranche B Lender shall have received written opinions
of counsel to Lessor and Lessor General Partner dated the Closing Date and
addressed to Indenture Trustee, the Initial Purchasers, each Tranche B Lender,
Administrative Agent, and Collateral Agent, in form and substance reasonably
acceptable to such Tranche B Lender.
(h) Each of Lessor and Lessor General Partner shall have
delivered a good standing certificate dated within ten (10) days of the Closing
Date from the State of Delaware.
(i) Administrative Agent shall have received, in each case
duly authorized, executed and delivered by Lessor in form and substance
satisfactory to Administrative Agent and in full force and effect, the Lessor
Financing Statements for such Item of Equipment for recordation in Delaware and
in each state in which any Item of Equipment is located and, if the law of such
state requires financing statements to be filed in local jurisdictions within
such state, in such local jurisdiction.
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(j) Administrative Agent shall have received such other
confirmatory assignments, conveyances, financing and continuation statements,
transfer endorsements and other assurances or instruments other than estoppel
certificates or other agreements, certificates or other documents to be
delivered by any Sublessee or other Person (other than an Affiliate of Lessee)
which Majority Lenders may reasonably request to perfect, preserve or protect
Collateral Agent's security interest granted hereunder, in form and substance
satisfactory to Majority Lenders as Majority Lenders may reasonably request in
writing at least five (5) Business Days before the Closing Date.
4. Commitments and Fundings.
4.1. Tranche B Commitments. Subject to and upon the terms and
conditions set forth in Section 3 for the benefit of Tranche B Lenders, each
Tranche B Lender agrees to make a single, non-revolving loan to Lessor on the
Closing Date in an aggregate principal amount up to the amount of its Tranche B
Commitment (each such loan, a "Tranche B Loan"). The aggregate of all Tranche B
Loans to be made by Tranche B Lenders on the Closing Date shall be equal to
$63,918,750. Each party hereto agrees that, except as provided below, no Tranche
B Lender shall be required to make any Tranche B Loan hereunder in an amount in
excess of its pro rata share (based upon the aggregate of the Tranche B
Commitments) of the aggregate Tranche B Components. Each Tranche B Lender's
obligation hereunder is several, such that the failure of any Tranche B Lender
to make a Tranche B Loan or satisfy any other obligation shall not relieve any
other Tranche B Lender of its obligations hereunder, and if any Tranche B Lender
shall fail to make a Tranche B Loan hereunder each other Tranche B Lender shall
make an additional Tranche B Loan in an amount equal to its pro rata share
(based upon the aggregate of the Tranche B Commitments of the non-defaulting
Tranche B Lenders) of the Tranche B Loan that was to have been made by the
defaulting Tranche B Lender, provided that the maximum aggregate amount of
Tranche B Loans that any Tranche B Lender shall be obligated to make shall not
exceed its Tranche B Commitment. Any Tranche B Loan made by another Tranche B
Lender of a portion of a Tranche B Loan to have been made by a defaulting
Tranche B Lender shall not relieve such defaulting Tranche B Lender of its
obligations hereunder. If the conditions to the obligations of any Tranche B
Lender specified in Section 3.2 have not been fulfilled or waived by it on or
before the Commitment Termination Date, such Tranche B Lender shall be relieved
of all further obligations to make any Loan. Nothing in this Section 4.1 shall
operate to relieve Lessor, Lessee or Guarantor from their respective obligations
under the Operative Documents or to waive any Tranche B Lender's rights against
Lessor, Lessee or Guarantor.
4.2. Lessor Commitment to Purchase. Subject to and upon the
terms and conditions herein set forth for the benefit of Lessor, Lessee may
cause Sellers to sell to Lessor on the Closing Date and in such event Lessor
agrees to buy for the Acquisition Cost thereof and lease to Lessee on the
Closing Date therefor certain natural gas compressor equipment. If the
conditions to the obligations of Lessor in Section 3.1 have not been fulfilled
or waived by it on or before the Commitment Termination Date, Lessor shall be
relieved of all further obligations to acquire from or lease to Lessee any
natural gas compressor equipment.
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4.3. Lease Supplements. Upon the sale and lease of an Item of
Equipment in accordance with Section 4.2 Lessee shall execute and deliver to
Lessor a Lease Supplement for such Item of Equipment which Lease Supplement upon
satisfaction of the conditions precedent in Section 3.1 shall thereafter be
executed by Lessor and a signed counterpart provided to Lessee. Upon execution
and delivery by Lessee of such Lease Supplement, such Item of Equipment shall
automatically become in accordance with this Section 4.3 subject to the Lease
Agreement and an "Item of Equipment" thereunder.
4.4. Rights in Equipment. Upon the execution and delivery by
Lessee of Lease Supplement relating to an Item of Equipment and satisfaction of
the other applicable conditions precedent set forth in Section 3, Lessor shall
have good and marketable title to such Item of Equipment subject only to
Permitted Liens and Lessor Liens and shall be obligated to pay or reimburse
Lessee in full for the Acquisition Cost of such Item of Equipment in accordance
with the provisions of this Agreement, provided that nothing in this Section 4.4
shall affect in any manner the respective rights and obligations of Lessor and
Lessee under the Lease Agreement or shall reduce or diminish any claim or remedy
for damages which Lessor or Lessee might assert for any breach or violation of
the terms of the Lease Agreement or of this Agreement.
5. Selection of Floating Lease Payment Period.
Provided no lease Event of Default shall have occurred and is
continuing, Lessee shall at least three (3) LIBOR Banking Days prior to each
Floating Payment Date (other than a Floating Payment Date in the third-month of
a six-month LIBOR Floating Lease Period) deliver to Lessor written irrevocable
notice of its election to have both the Applicable Equity Rate and the
Applicable Tranche B Rate components of Floating Lease Payments be based on
one-month, two-month, three-month, or six-month LIBOR or on the Alternate Rate
and Lessor shall promptly deliver notice of such election to Administrative
Agent. The Floating Lease Period based on one-month, two-month, three-month or
six-month LIBOR shall commence on such Floating Payment Date and shall end on
the calendar date corresponding to the first day of such Floating Lease Period
in the first, second, third or six month after such Floating Payment Date,
respectively; provided however, if such day is not a LIBOR Banking Day, then the
last day of such Floating Lease Period shall be the next LIBOR Banking Day,
provided further, if such next LIBOR Banking Day would be in the next calendar
month, then the last day of such Floating Lease Period shall be the immediately
preceding LIBOR Banking Day. The Floating Lease Period for Alternate Rate based
Floating Lease Payments shall commence on such Floating Payment Date and shall
end on the date specified for such in Lessee's notice of election, provided such
date shall not be more than ninety (90) days from such Floating Payment Date.
Lessee shall not make an election that would cause the new Floating Payment Date
resulting from such election to be later than the Scheduled Termination Date. If
Lessee fails to provide such notice of election at least three (3) LIBOR Banking
Days before any Floating Payment Date, Lessee shall be deemed to have elected a
one-month LIBOR based Applicable Equity Rate and Applicable Tranche B Rate. At
any time while a Lease Event of Default exists, the Floating Payment Period
shall be based on one-month LIBOR.
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6. Default Purchase Options and Cure Rights.
6.1. Right to Cure Certain Lease Events of Default.
(a) If Lessee shall fail to make any Lease Payment when the
same shall have become due, and if such failure of Lessee to make such Lease
Payment shall not constitute the third consecutive such failure, then Lessor,
any Tranche B Lender or Tranche B Lenders (the "Curing Party") may (but is not
obligated to) pay to Collateral Agent for the benefit of Secured Parties, at any
time prior to the earlier of the expiration of ten (10) Business Days after the
Curing Party shall have received notice from Administrative Agent of the failure
of Lessee to make such Lease Payment, an amount equal to the Lease Payment or
Lease Payments then due by reason of the failure of Lessee to pay such Lease
Payment (otherwise than by declaration of acceleration) on such Payment Date,
and such payment by the Curing Party shall be deemed to have cured any Loan
Event of Default which arose or would have arisen from such failure of Lessee.
(b) If Lessee shall fail to make any Supplemental Payment when
the same shall become due, or otherwise fail to perform any of its obligations
(other than the payment of a Lease Payment under the Lease Agreement) under any
Operative Document to which it is a party, which failure shall continue until
such time as such failure shall constitute a Lease Event of Default upon notice
to Lessee and can be cured by the payment of money, then a Curing Party may (but
is not obligated to) make such payment or perform such obligation through the
payment of money at any time prior to the expiration of ten (10) Business Days
after such Curing Party shall have received notice of the occurrence of any such
failure, and such payment or performance by such Curing Party shall be deemed to
have cured any Loan Event of Default which arose or would have arisen from such
failure of Lessee.
(c) Upon such payment or performance by a Curing Party, such
Curing Party shall (to the extent of such payment made by it and the costs and
expenses incurred in connection with such payments and performance thereof
together with interest thereon) be subrogated to the rights of Lessor and
Secured Parties to receive from Lessee the Lease Payment or Supplemental
Payment, as the case may be, paid by such Curing Party. If Collateral Agent
shall thereafter receive from Lessee such Lease Payment or Supplemental Payment,
Collateral Agent shall forthwith remit such payment to such Curing Party in
reimbursement for the funds so advanced by it.
(d) Until the expiration of the period during which the Curing
Party shall be entitled to exercise rights under Section 6.1(a) or (b) with
respect to any failure by Lessee referred to therein, neither Administrative
Agent, Collateral Agent, Indenture Trustee nor any Secured Party shall take or
commence any action it would otherwise be entitled to take or commence under the
Operative Documents as a result of such failure by Lessee.
6.2. Lessee Cure Right. Notwithstanding anything to the
contrary contained in this Agreement or any of the other Operative Documents,
each of Lessor, Indenture Trustee, each Tranche B Lender, Administrative Agent
and Collateral Agent hereby agrees with and for the benefit of Lessee as
follows:
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(a) Lessee shall have the right to satisfy any conditions
precedent set forth in Section 3.2 in the event that Lessor fails to do so on a
timely basis, to the extent such condition precedent may be satisfied by a party
other than Lessor and to the extent it may be satisfied without violating any
law, court order or contractual obligation applicable thereto.
(b) Lessee shall have the right, in place of Lessor, to cure
within the grace periods provided therefor, to the extent capable of cure by a
party other than Lessor, any Loan Default or Loan Event of Default.
(c) Copies of all notices from Indenture Trustee, any Secured
Party, Administrative Agent or Collateral Agent to Lessor hereunder or under the
Indenture or Tranche B Loan Agreement shall be sent to Lessee by the sending
party and no such notice shall be effective for any purpose hereunder or
thereunder unless sent to Lessee.
(d) Lessor will, promptly upon becoming aware of any Loan
Default or Loan Event of Default, other than a Loan Default or Loan Event of
Default arising from a Lease Default or Lease Event of Default, notify Lessee of
the occurrence of such Loan Default or Loan Event of Default.
(e) Each payment by Lessee or Guarantor to Collateral Agent
under the Operative Documents shall be deemed to constitute a payment to
Indenture Trustee, any Tranche A Noteholder, any Tranche B Lender,
Administrative Agent or Collateral Agent, as the case may be, of the
corresponding payment obligation owing by Lessor to such Indenture Trustee,
Tranche A Noteholder, Tranche B Lender, Administrative Agent or Collateral Agent
under any of the Operative Documents solely for the purpose of determining
amounts owed by Lessee under the Operative Documents.
7. Security.
7.1. Security Interest. For valuable consideration, and to
secure the due payment and performance of all principal of, premium, if any, and
interest on the Tranche A Notes and the Tranche B Loans, Premium, Makewhole, and
Breakage Costs, if any, and all indebtedness and other liabilities and
obligations, whether now existing or hereafter arising (including any
obligations to indemnify, reimburse or pay costs and/or expenses) of Lessor to
Indenture Trustee, any Secured Party, Administrative Agent or Collateral Agent
arising out of or in any way connected with the Operative Documents and all
instruments, agreements and documents executed, issued and delivered pursuant
thereto (collectively, the "Secured Obligations"), Lessor hereby assigns,
conveys, mortgages, pledges, hypothecates, transfers and sets over to Collateral
Agent, and grants to Collateral Agent, for the benefit of the Secured Parties, a
first Lien on and security interest in the rights, title and interest of Lessor
now held or hereafter acquired in and to the following, except for Excepted
Payments and Excepted Rights with respect thereto (collectively, the "Lessor
Collateral"):
(a) the Items of Equipment;
(b) all Subleases pertaining to the Items of Equipment;
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(c) any ▇▇▇▇ of Sale and all warranties (including, without
limitation, warranties of title, merchantability, fitness for a
particular purpose, quality and freedom from defects) and rights of
recourse against manufacturers, assemblers, sellers and others in
connection with the Items of Equipment;
(d) the Security Documents and all Lease Payments and
Supplemental Payments payable under this Agreement and the Lease
Agreement and all other sums payable thereunder;
(e) all accounts, contract rights, general intangibles and all
other property rights of any nature whatsoever arising out of or in
connection with this Agreement, the Lease Agreement or the Items of
Equipment, including, without limitation, Lease Payments, Supplemental
Payments and Lessee Collateral and any other payments due and to become
due under this Agreement, the Lease Agreement and the Subleases whether
as repayments, reimbursements, contractual obligations, indemnities,
damages or otherwise;
(f) all moneys now or hereafter paid or required to be paid to
Indenture Trustee or any Secured Party pursuant to any Operative
Document;
(g) all proceeds of Lessor Collateral including, without
limitation, all rentals, income and profits in respect of the Items of
Equipment, whether under the Lease Agreement or otherwise, all credits
granted by any manufacturer or vendor with respect to the return of any
Item of Equipment and the proceeds of any insurance payable with
respect to the Items of Equipment;
(h) all claims, rights, powers, or privileges and remedies of
Lessor under this Agreement and the Lease Agreement;
(i) all rights of Lessor under this Agreement and the Lease
Agreement to make determinations to exercise any election (including,
but not limited to, election of remedies) or option or to give or
receive any notice, consent, waiver or approval, together with full
power and authority to demand, receive, enforce, collect or receipt for
any of the foregoing or any property which is the subject of this
Agreement or the Lease Agreement, to enforce or execute any checks, or
other instruments or orders, to file any claims and to take any action
which (in the opinion of Collateral Agent) may be necessary or
advisable in connection with any of the foregoing; and
(j) all moneys and Permitted Investments held by Lessor as
security under Section 28.4.4 of the Lease Agreement.
provided, however, Collateral Agent agrees for the benefit of Lessor that so
long as no Loan Event of Default has occurred and is continuing, it will not
exercise any of the rights assigned to it under clauses (h) and (i) of this
Section 7, other than the right to receive amounts due under the Lease Agreement
and Section 9 of this Agreement, without the prior written consent of Lessor and
Administrative Agent.
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7.2. Further Assurances. For each Item of Equipment, Lessor
will, at Lessee's expense, make, execute, endorse, acknowledge, file and/or
deliver to Collateral Agent from time to time such confirmatory assignments,
conveyances, financing and continuation statements, transfer endorsements and
other assurances or instruments other than estoppel certificates or other
agreements, certificates and other documents to be delivered by any Sublessee or
other Person (other than an Affiliate of Lessee) which Administrative Agent may
reasonably request to perfect, preserve or protect Collateral Agent's security
interest granted hereunder. To the extent permitted by Applicable Law, Lessor
authorizes Collateral Agent to file any such financing and continuation
statements without the signature of Lessor and Lessor will pay all applicable
filing fees and related expenses. Lessor will, at Lessee's expense and upon the
request of Administrative Agent, qualify with the Texas Secretary of State to do
business in the State of Texas as a foreign limited partnership.
7.3. Termination. Upon the full and final discharge and
satisfaction of Lessor's obligations with respect to (i) all amounts owed under
the Operative Documents, (ii) all amounts owed under Sections 2.5.1 and 2.5.2 of
the Tranche B Loan Agreement and Article 3 or Sections 4.13, 4.14 or 7.01 of the
Indenture in relation to the purchase by Lessee of any Item of Equipment and
(iii) any Item of Equipment replaced in accordance with Section 13 of the Lease
Agreement, unless in the case of clause (ii) or (iii) a Lease Event of Default
shall have occurred and be continuing, the provisions of this Section 7 shall
terminate with respect to all Lessor Collateral or such Items of Equipment (as
applicable) and all right, title and interest of Collateral Agent in and to all
Lessor Collateral or such Items of Equipment (as applicable) and the proceeds
thereof shall revert to Lessor. Following payment or substitution in accordance
with the foregoing sentence, Lessor's obligations to Indenture Trustee, Secured
Parties, Administrative Agent and Collateral Agent in and to all Items of
Equipment or such Items of Equipment (as applicable) shall terminate. Upon the
occurrence and during the continuation of a Lease Event of Default, the
foregoing discharge shall be made only following satisfaction of all of Lessee's
obligations to purchase the Items of Equipment under Section 24(d) of the Lease
Agreement. Collateral Agent shall, at Lessor's expense, execute and deliver any
evidence of such release as Lessor may reasonably require and furnish to
Collateral Agent.
7.4. Other Security. To the extent that the obligations of
Lessor under any Operative Document are now or hereafter secured by property
other than Lessor Collateral or by the guarantee, endorsement or property of any
other Person, then at the written request of Administrative Agent, and in
accordance with its written instructions, Collateral Agent shall have the right
to pursue, relinquish, subordinate, modify or take any other action with respect
thereto, without in any way modifying or affecting any of Collateral Agent's
rights and remedies hereunder.
7.5. Power of Attorney. Lessor irrevocably authorizes
Collateral Agent and does hereby make, constitute and appoint Collateral Agent
and any officer of Collateral Agent, with full power of substitution, as
Lessor's true and lawful attorney-in-fact, with power, in its own name or in the
name of Lessor, to endorse any notes, checks, drafts, money orders, or other
instruments of payment (including payments payable under or in respect of any
policy of insurance) in respect of Lessor Collateral that may come into
possession of Collateral Agent; to sign and endorse any invoice, freight or
express ▇▇▇▇, ▇▇▇▇ of lading, storage or warehouse receipts,
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drafts against debtors, assignments, verifications and notices in connection
with accounts, and other documents relating to Lessor Collateral; to pay or
discharge Taxes, Liens, security interests or other encumbrances at any time
levied or placed on or threatened against Lessor Collateral; to demand, collect,
receipt for, compromise, settle and ▇▇▇ for monies due in respect of Lessor
Collateral; and generally, to do, at Collateral Agent's option and at Lessor's
expense, at any time, or from time to time, all acts and things which Collateral
Agent deems necessary to protect, preserve and realize upon Lessor Collateral
and Collateral Agent's security interests therein and in order to effect the
intent of the Operative Documents all as fully and effectually as Lessor might
or could do; and Lessor hereby ratifies all that said attorney shall lawfully do
or cause to be done by virtue hereof. This power of attorney shall be coupled
with an interest and irrevocable for the term of this Agreement and thereafter
as long as any of the obligations of Lessor under any Operative Document shall
be outstanding. The powers conferred on Collateral Agent hereunder are solely to
protect the security interest in Lessor Collateral and shall not impose any duty
upon Collateral Agent to exercise any such powers. Collateral Agent shall be
accountable only for amounts that it actually receives as a result of the
exercise of such powers and neither it nor any of its officers, directors or
employees shall be responsible to Lessor for any act or failure to act, except
for its own gross negligence or willful misconduct.
7.6. Assignment of Rights. Lessor agrees that the assignments
herein are irrevocable and it will not, while said assignments are in effect or
thereafter until Lessor has received from Administrative Agent notice of the
termination thereof, take any action as Lessor under the Lease Agreement or
otherwise which is inconsistent with this Agreement or make any other
assignment, designation or direction inconsistent herewith and that any
assignment, designation or direction inconsistent herewith shall be void. Lessor
and Collateral Agent agree that the following are, without limitation, rights,
powers, privileges, options, and benefits exclusively assigned by Lessor to
Collateral Agent (to the exclusion of Lessor) hereunder: (i) all of Lessor's
right to make claim for, receive, collect and receipt for (and to apply the same
to the payment of the principal of, Premium, Makewhole or Breakage Costs, if
any, and interest on the Tranche A Notes and Tranche B Loans) all rents, income,
revenues, issues, profits, insurance proceeds, condemnation awards, sales
proceeds and other sums payable or receivable under this Agreement and the Lease
Agreement or pursuant hereto or thereto, (ii) all of Lessor's right to make
waivers and agreements, to give and receive all notices and other instruments in
its capacity as Lessor under the Operative Documents, (iii) all of Lessor's
right to take action upon the happening of Lease Event of Default, including the
commencement, conduct and consummation of proceedings at law or in equity as
shall be permitted under any provision of the Lease Agreement or by law, and
(iv) all of Lessor's right to do all other things which Lessor is or may become
entitled to do under the Lease Agreement.
7.7. Transfer of the Collateral by Collateral Agent.
Collateral Agent, Indenture Trustee or any Secured Party may be a transferee of
Lessor Collateral or of any part thereof or of any interest therein at any sale
thereof, whether pursuant to foreclosure or power of sale or otherwise
hereunder, and may apply upon the transfer price the indebtedness secured hereby
owing to such transfer, to the extent of such transferee's distributive share of
the transfer price to the extent permitted by Applicable Law. Any such
transferee shall, upon any such transfer, acquire title to the properties so
transferred, free of the Lien of this Agreement.
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7.8. No Segregation of Monies; No Interest. Any monies paid to
or retained by Collateral Agent pursuant to any provision hereof and not then
required to be distributed to any party as provided in this Section 7 need not
be segregated in any manner except to the extent required by law, and may be
deposited under such general conditions as may be prescribed by law, without
interest.
7.9. Distribution of Moneys. Except as may be otherwise
provided in this Section 7 and for so long as no Loan Event of Default or Loan
Default resulting from any failure to make a payment under the Indenture or
Tranche B Loan has occurred and is continuing, all moneys received by Collateral
Agent shall be applied in accordance with this Section 7.9:
(a) Scheduled and End of Term Purchase Option Payments. Moneys
received by Collateral Agent constituting Lease Payments other than any payment
due under Section 29.1 or 29.2 of the Lease Agreement (including the payment of
interest on any such overdue amount), shall be applied without duplication (as
determined by Administrative Agent) on the date received by Collateral Agent:
First, to Indenture Trustee for the benefit of Tranche A
Noteholders and to each Tranche B Lender for all principal, interest,
Premium, Makewhole and Breakage, if any, due each such Person, in each
case on a pari passu basis;
Second, to each Lessor Indemnified Person on a pari passu
basis, all other amounts then due such Person under the Operative
Documents;
Third, to Lessor all amounts then due Lessor under Section 10;
Fourth, for the benefit of Lessor, to each Limited Partner on
a pari passu basis, for all amounts then due Limited Partners, under
the Limited Partnership Agreement and the Lessor Indemnity Agreement;
and
Fifth, the balance, if any, of such payment remaining
thereafter shall be distributed to Lessor to be distributed in
accordance with the Lease Agreement and Limited Partnership Agreement.
(b) Prepayments. Moneys received by Collateral Agent
constituting payment of Acquisition Cost with respect to any Early Purchase
Option under Section 28.4.1, 28.4.2 or 28.4.3 of the Lease Agreement shall be
applied without duplication (as determined by Administrative Agent) on the date
received by Collateral Agent:
First, to Indenture Trustee for the benefit of Tranche A
Noteholders and to each Tranche B Lender for all principal, interest,
Premium, Makewhole and Breakage Costs, if any, then due such Person in
each case on a pari passu basis, provided however, if the amount
received under Section 28.4.3 of the Lease Agreement is less than the
Equity Redemption Target or the Net Proceeds Redemption Target, as the
case may be, then the amounts to be paid to Tranche B Lenders hereunder
shall be reduced by the amount of such shortfall.;
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Second, for the benefit of Lessor, to each Limited Partner on
a pari passu basis for all amounts then due under the Limited
Partnership Agreement and its pro rata share (based upon the aggregate
Equity Contributions of all Limited Partners) of the Equity Component
of each Item of Equipment so purchased; and
Third, to each other party hereto in accordance with clauses
Second, Third and Fifth of Section 7.9(a).
(c) Payments after an End of Term Sale or Redelivery of
Equipment. All moneys received by Collateral Agent in accordance with Sections
28.3, 29.1 and 29.2 of the Lease Agreement shall be applied without duplication
(as determined by Administrative Agent) on the date received by Collateral
Agent:
First, to Indenture Trustee for the benefit of Tranche A
Noteholders for principal and interest due on the Tranche A Notes;
Second, to Tranche B Lenders on a pari passu basis for
principal and interest due on the Tranche B Loans; and
Third, to each other party hereto in accordance with clauses
Second through Fifth of Section 7.9(a).
(d) Excepted Payments. Moneys received by Collateral Agent
constituting Excepted Payments shall be paid promptly after receipt thereof to
the Persons entitled thereto in accordance with the Operative Documents.
7.10. Payments after a Loan Event of Default. All payments
received and all amounts held or realized by Collateral Agent (including any
amounts realized by Collateral Agent from the exercise of any remedies) after
the occurrence and during the continuance of a Loan Event of Default or Loan
Default resulting from any failure to make a payment under the Indenture or
Tranche B Loan, and all payments or amounts then held or thereafter received by
Collateral Agent hereunder or under the Operative Documents other than Excepted
Payments, shall, so long as such Loan Event of Default continues and shall not
have been waived in writing by (i) Indenture Trustee, acting on behalf of the
Tranche A Noteholders, in the event of a Tranche A Event of Default that is not
also a Tranche B Event of Default, (ii) Majority Tranche B Lenders in the event
of a Tranche B Event of Default that is not also a Tranche A Event of Default or
(iii) Indenture Trustee, acting on behalf of the Tranche A Noteholders, and
Majority Tranche B Lenders for any Loan Event of Default that is both a Tranche
A Event of Default and a Tranche B Event of Default, be applied on the date
received:
First, so much of such payments or amounts held or realized by
Collateral Agent as shall be required to reimburse Collateral Agent,
Administrative Agent and Indenture Trustee for any expenses not
reimbursed by Lessor in connection with the collection or distribution
of such amounts held or realized by Collateral Agent or in connection
with the expenses incurred in enforcing its remedies hereunder and
preserving Lessor Collateral including, without limitation, those
expenses contemplated under Section 12.1
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of this Agreement, shall be retained by Collateral Agent or paid to
Administrative Agent or Indenture Trustee, as the case may be; and
Second, to each other party hereto in accordance with clauses
First through Third of Section 7.9(a) with any amounts remaining to be
held as security for Lessor's and Lessee's obligations under the
Operative Documents for so long as any Event of Default has occurred
and is continuing and thereafter clauses Fourth and Fifth of Section
7.9(a).
7.11. Application of Certain Other Payments. Any payments
received by Indenture Trustee or any Secured Party for which provision as to the
application thereof is made in this Agreement or any other Operative Document
shall be applied forthwith to the purpose for which such payment was made in
accordance with the terms of this Agreement, or such other Operative Document.
7.12. Other Payments. Except as otherwise provided in Sections
7.9 and 7.10, (i) any payments received by Collateral Agent for which no
provision as to the application thereof is made in the Operative Documents, or
elsewhere in this Section 7, and (ii) all payments received and amounts realized
by Collateral Agent with respect to Lessor Collateral (including, without
limitation, all amounts realized upon the sale, release or other disposition of
Lessor Collateral upon foreclosure of this Agreement), to the extent received or
realized at any time after payment in full of the amounts then due the parties
hereto shall be paid to Lessor or its designee.
7.13. Retention of Amounts by Collateral Agent. If at the time
of receipt by Collateral Agent of any payment or amount which would otherwise be
distributable to Lessor, there shall have occurred and be continuing a Loan
Default or a Loan Event of Default, Collateral Agent shall not distribute any
such amount to Lessor or its designee and shall hold it as security for Lessor's
obligations to Secured Parties under the Operative Documents until such time as
there shall not be continuing such Loan Default or Loan Event of Default.
7.14. Exercise of Remedies.
7.14.1. Rights in Collateral. If a Loan Event of
Default shall have occurred and be continuing, then and in every such case
Collateral Agent shall, upon written request by Administrative Agent or
Indenture Trustee, acting on behalf of the Tranche A Noteholders after a Tranche
A Event of Default, subject to Lessee's right of quiet enjoyment pursuant to
Section 2 of the Lease Agreement, exercise any or all of the rights and powers
and pursue any and all of the remedies pursuant to this Section 7.14, any and
all remedies under the other Security Documents, and any and all remedies
available to a secured party under the UCC or any other provision or law and, in
the event such Loan Event of Default is related to a Lease Event of Default,
subject to Lessee's rights to purchase the Items of Equipment pursuant to
Section 24 of the Lease Agreement, may take possession of all or any part of
Lessor Collateral and may exclude Lessor, and, subject to the terms of the Lease
Agreement, Lessee, any sublessee and all Persons claiming under any of them
wholly or partly therefrom; provided, however, Collateral Agent shall not sell
or re-lease the Equipment for a period of thirty (30) days after such Event of
Default during which time Lessor, Administrative Agent, Collateral Agent and any
Tranche B Lender may remarket the Equipment.
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7.14.2. Delivery of Documents; Taking Possession of
Collateral. Upon the occurrence of a Loan Event of Default, at the request of
Administrative Agent, Lessor shall promptly execute and deliver to Collateral
Agent such instruments of title and other documents as Administrative Agent may
deem necessary or advisable to enable Collateral Agent or a representative
designated by Collateral Agent, at such time or times and place or places as
Collateral Agent may specify, to obtain possession of all or any part of Lessor
Collateral to whose possession Collateral Agent shall at the time be entitled
hereunder. If Lessor shall for any reason fail to execute and deliver such
instruments and documents after the request by Collateral Agent, Collateral
Agent may (i) obtain a judgment conferring on Collateral Agent the right to
immediate possession and requiring Lessor to execute and deliver such
instruments and documents to Collateral Agent, to the entry of which judgment
Lessor hereby specifically consents, and (ii) pursue all or part of such Lessor
Collateral wherever it may be found and may enter any of the premises of Lessee
or Lessor wherever such Lessor Collateral may be or is purported to be and
search for such Lessor Collateral and take possession of and remove such Lessor
Collateral. All expenses of obtaining such judgment or of pursuing, searching
for and taking such property shall, until paid, be secured by the Lien of this
Agreement.
7.14.4. Possession of Collateral. Subject to the
proviso in Section 7.14.1, upon taking of possession pursuant hereto and at the
written request of Administrative Agent, Collateral Agent or a representative
designated by Collateral Agent may, from time to time, at the expense of Lessee,
make all such expenditures for maintenance, insurance, repairs, replacements and
alterations to any of Lessor Collateral, as it may deem appropriate and
commercially reasonable. In such case, Collateral Agent or a representative of
Collateral Agent shall have the right (but not the obligation) to maintain, use,
operate, store, lease, control or manage Lessor Collateral and to carry on the
business and to exercise all rights and powers of Lessor relating to Lessor
Collateral, as Administrative Agent shall deem best, including the right to
enter into any and all such agreements with respect to the maintenance, use,
operation, storage, leasing, control, management or disposition of Lessor
Collateral or any part thereof as Administrative Agent may determine; and
Collateral Agent shall be entitled to collect and receive directly all tolls,
rents (including Lease Payments and Supplemental Payments), revenues, issues,
income, products and profits of Lessor Collateral and every part thereof,
without prejudice, however, to the right of Secured Parties or Collateral Agent
under any provision of this Agreement to collect and receive all cash held by,
or required to be deposited with, Lessor hereunder. Such tolls, rents (including
Lease Payments and Supplemental Payments), revenues, issues, income, products
and profits shall be applied to pay the expenses of the use, operation, storage,
leasing, control, management or disposition of Lessor Collateral and of
conducting the business thereof, and of all maintenance, repairs, replacements,
alterations, additions and improvements, and to make all payments which
Collateral Agent may be required or may elect to make, if any, for Taxes,
assessments, insurance or other proper charges upon Lessor Collateral or any
part thereof (including the employment of engineers and accountants to examine,
inspect and make reports upon the properties and books and records of Lessor or
Lessee), and all other payments which Collateral Agent may be required or
authorized to make under any provision of this Agreement, as well as just and
reasonable compensation for the services of Collateral Agent, and of all Persons
properly engaged and employed by Collateral Agent.
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7.14.5. Sale of Collateral. Subject to the proviso in
Section 7.14.1, in addition, Collateral Agent may, in accordance with the
written instructions of Administrative Agent and, if any such transaction or
related series of transactions relates to Equipment with value in excess of
$30,000,000, the Indenture Trustee, sell, assign, transfer and deliver the
whole, or from time to time to the extent permitted by law, any part of Lessor
Collateral or any interest therein, at any private sale or public auction with
or without demand, advertisement or notice (except as herein required or as may
be required by law) of the date, time and place of sale and any adjustment
thereof for cash or credit or other property for immediate or future delivery
and for such price or prices and on such terms as Administrative Agent may
determine, or as may be required by law. It is agreed that ten (10) Business
Days' notice to Lessor of the date, time and place (and terms, in the case of a
private sale) of any proposed sale by Collateral Agent of Lessor Collateral or
any part thereof or interest therein is reasonable. Each of Administrative
Agent, Collateral Agent and any Secured Party may be a purchaser of Lessor
Collateral or any part thereof or any interest therein at any sale thereof,
whether pursuant to foreclosure or power of sale or otherwise. In accordance
with the written instructions of Administrative Agent, Collateral Agent may
apply against the purchase price therefor all or part of the amount then due
under the Secured Obligations. Collateral Agent shall, upon any such purchase,
acquire good title to the property so purchased, to the extent permitted by
Applicable Law, free of all rights of redemption.
7.14.6. Discharge. Upon any sale of Lessor Collateral
or any part thereof or interest therein, whether pursuant to foreclosure or
power of sale or otherwise, the receipt of the purchase money by the official
making the sale by judicial proceeding or by Collateral Agent shall be
sufficient discharge to the purchaser for the purchase money and neither such
official nor such purchaser shall be obliged to see to the application thereof.
7.14.7. Appointment of Receiver. If a Loan Event of
Default shall have occurred and be continuing, Collateral Agent shall, as a
matter of right, be entitled to appoint a receiver or trustee or representative
(who may be Collateral Agent or any successor or nominee thereof, or any Tranche
B Lender appointed by Collateral Agent) for all or any part of Lessor
Collateral, whether such receivership or agency or representation be incidental
to a proposed sale of Lessor Collateral or the taking of possession thereof, the
exercise of remedies under this Agreement or the Lease Agreement or otherwise,
and Lessor hereby consents to the appointment of such a receiver, trustee or
representative. Any receiver, trustee or representative appointed for all or any
part of Lessor Collateral shall be entitled to exercise all rights of Collateral
Agent under this Agreement and the other Operative Documents to the extent
provided in such appointment and shall be entitled to exercise all the powers
and pursue all the remedies of Collateral Agent hereunder with respect to Lessor
Collateral.
7.14.8. Redemption. Any sale of Lessor Collateral or
any part thereof or any interest therein, whether pursuant to foreclosure or
power of sale or otherwise hereunder, shall forever be a perpetual bar against
Lessor, after the expiration of the period, if any, during which Lessor shall
have the benefit of redemption laws which may not be waived pursuant to Section
7.14.5 and this Section 7.14.8. Subject to the provisions of this Agreement,
Lessor covenants (to the extent that it may lawfully do so) that it will not at
any time insist upon, or plead, or in any manner whatsoever claim or take the
benefit or advantage of, any appraisement,
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valuation, stay or extension law wherever enacted, nor at any time hereafter in
force, in order to prevent or hinder the enforcement of this Agreement or the
execution of any power granted herein to Secured Parties or Collateral Agent, or
the absolute sale of Lessor Collateral, or any part thereof, or the possession
thereof by any transfer at any sale under this Section 7.14; and Lessor for
itself and all who may claim under it, so far as it or any of them now or
thereafter lawfully do so, waives all right to have Lessor Collateral marshaled
upon any foreclosure hereof, and agrees that any court having jurisdiction to
foreclose this Agreement may order the sale of Lessor Collateral as an entirety.
7.14.9. Rights Cumulative; No Waiver. Each and every
right, power and remedy herein given to Secured Parties, Administrative Agent
and Collateral Agent specifically or otherwise in this Agreement shall be
cumulative and shall be in addition to every other right, power and remedy
herein specifically given or now or hereafter existing at law, in equity or by
statute, and each and every right, power and remedy whether specifically herein
given or otherwise existing may be exercised from time to time and as often and
in such order as may be deemed expedient by Administrative Agent or Collateral
Agent, and the exercise or the beginning of the exercise of any power or remedy
shall not be construed to be a waiver of the right to exercise at the same time
or thereafter any other right, power or remedy. No delay or omission by
Indenture Trustee, any Secured Party, Administrative Agent or Collateral Agent
in the exercise of any right, remedy or power or in the pursuance of any remedy
shall impair any such right, power or remedy or be construed to be a waiver of
any default on the part of Lessor, Lessee or Guarantor or to be an acquiescence
therein.
7.14.10. Termination of Proceedings. If
Administrative Agent, Indenture Trustee, Secured Parties or Collateral Agent
shall have instituted any proceeding to enforce any right, power or remedy under
this Agreement by foreclosure, entry or otherwise, and such proceedings shall
have been discontinued or abandoned for any reason or shall have been determined
adversely to Administrative Agent, Indenture Trustee, Secured Parties or
Collateral Agent, then and in every such case Lessor, Administrative Agent,
Indenture Trustee, Secured Parties, Collateral Agent, Lessee and Guarantor
shall, subject to any binding determination in such proceeding, be restored to
their former positions and rights hereunder with respect to Lessor Collateral,
and all rights, remedies and powers of Administrative Agent, Indenture Trustee,
Secured Parties and Collateral Agent shall continue as if no such proceedings
had been instituted.
7.15. No Commingling of Funds. If at any time during a Loan
Default or Loan Event of Default Lessor should receive any amounts payable by
Lessee under the Lease Agreement or by Guarantor under the Participation
Agreement other than Excepted Payments, or any other proceeds for or with
respect to Lessor Collateral, it will hold such amounts in trust for Collateral
Agent and not commingle such amounts with any other amounts belonging to or held
by Borrower, advise Collateral Agent of such receipt and promptly forward such
amounts directly to Collateral Agent.
7.16. Lessor Collateral. Upon the occurrence and continuance
of any Loan Event of Default, Lessor will immediately upon receipt of all
checks, drafts, cash or other remittances in payment of any of its accounts,
contract rights or general intangible constituting part of Lessor Collateral, or
in payment for any Lessor Collateral sold, transferred, leased or
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otherwise disposed of, or in payment or on account of its accounts, contracts,
contract rights, notes, drafts, acceptances, general intangibles, choses in
action and all other forms of obligation relating to any of Lessor Collateral so
sold, transferred or otherwise disposed of, deliver any such items to Collateral
Agent accompanied by a remittance report in form supplied or approved by
Collateral Agent, such items to be delivered to Collateral Agent in the same
form received, endorsed or otherwise assigned by Lessor where necessary to
permit collection of items and, regardless of the form of such endorsement,
Lessor hereby waives presentment, demand, notice of dishonor, protest and notice
of protest.
7.17. Conflicts. If any provision of this Section 7 conflicts
with any provision contained in any other Operative Document, such provision
contained in this Section 7 shall prevail.
8. Guaranty.
For the benefit of each Person to whom the Lessee owes any
payment or other obligation under the Operative Documents (each a "Guaranty
Party"), Guarantor irrevocably and unconditionally guarantees the full and
prompt payment when due (whether by acceleration or otherwise) of Lease
Payments, Supplemental Payments and any interest due thereon and of all
obligations and liabilities (including, without limitation, indemnities, fees
and interest thereon) of Lessee now existing or hereafter incurred under,
arising out of or in connection with this Agreement or any other Operative
Document and the due performance and compliance by Lessee with the terms of the
Lease Agreement and the Operative Documents binding on Lessee (all such
payments, interest, obligations and liabilities, collectively, the "Guaranteed
Obligations"). All payments by Guarantor under this guaranty shall be made on
the same basis as payments by Lessee under the Operative Documents. Guarantor
hereby waives notice of acceptance of this guaranty and notice of any liability
to which it may apply, and waives presentment, demand of payment, protest,
notice of dishonor or nonpayment of any such liability, suit or taking of other
action by an Guaranty Party against, and any other notice to, any party liable
thereon (including such Guarantor or any other guarantor). Any Guaranty Party
may at any time and from time to time unless otherwise prohibited under the
Operative Documents without the consent of, or notice to Guarantor, without
incurring responsibility to Guarantor and without impairing or releasing the
obligations of Guarantor hereunder, upon or without any terms or conditions and
in whole or in part:
(a) change the manner, place or terms of payment of, and/or
change or extend the time of payment of, renew or alter, any of the Guaranteed
Obligations, any security therefor, or any liability incurred directly or
indirectly in respect thereof, and the guaranty herein made shall apply to the
Guaranteed Obligations as so changed, extended, renewed or altered;
(b) sell, exchange, release, surrender, realize upon or
otherwise deal with in any manner and in any order any property by whomsoever at
any time pledged or mortgaged to secure, or howsoever securing, the Guaranteed
Obligations or any liability is (including any of those hereunder) incurred
directly or indirectly in respect thereof or hereof, and/or any offset there
against;
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(c) exercise or refrain from exercising any rights against
Lessee or others or otherwise act or refrain from acting;
(d) settle or compromise any of the Guaranteed Obligations,
any security therefor or any liability (including any of those hereunder)
incurred directly or indirectly in respect thereof or hereof;
(e) apply any sums by whomsoever paid or howsoever realized to
any liability or liabilities of Lessee to any Guaranty Party regardless of what
liabilities or liabilities of Lessee remain unpaid; and/or
(f) consent to or waive any breach of, or any act, omission or
default under, any of the Operative Documents or otherwise amend, modify or
supplement any of the Operative Documents or any of such other instruments or
agreements.
The obligations of Guarantor under this Section 8 are absolute
and unconditional and shall remain in full force and effect without regard to,
and shall not be released, suspended, discharged, terminated or otherwise
affected by, any circumstance or occurrence whatsoever, including,without
limitation (i) any action or inaction by any Guaranty Party; or (ii) any
invalidity, irregularity or unenforceability of all or part of the Guaranteed
Obligations or of any security therefor. The obligations under this Section 8
are primary obligations of Guarantor. If and to the extent that Guarantor makes
any payment to any Guaranty Party or to any other Person pursuant to or in
respect of this Section 8, any claim which Guarantor may have against Lessee by
reason thereof shall be subject and subordinate to the prior payment in full of
the Guaranteed Obligations.
The obligations under this Section 8 are continuing and all
liabilities to which they apply or may apply under the terms hereof shall be
conclusively presumed to have been created in reliance hereon. No failure or
delay on the part of any Guaranty Party in exercising any right, power or
privilege hereunder and no course of dealing between Guarantor, any Guaranty
Party or the holder of any Tranche A Note or Tranche B Note shall operate as a
waiver thereof; nor shall any single or partial exercise of any right, power or
privilege hereunder preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. The rights, powers and remedies
herein expressly provided are cumulative and not exclusive of any rights, powers
and remedies which any Guaranty Party would otherwise have. No notice to or
demand on Guarantor in any case shall entitle Guarantor to any other further
notice or demand in similar or other circumstances or constitute a waiver of the
rights of any Guaranty Party to any other or further action in any circumstances
without notice or demand.
This guaranty shall continue to be effective, or be
reinstated, as the case may be, if at any time payment, or any part thereof, or
of any of the Guaranteed Obligations is rescinded or must otherwise be restored
or returned by the Guaranty Parties upon the insolvency, bankruptcy,
dissolution, liquidation or reorganization of Lessee or Guarantor, or upon or as
a result of the appointment of a receiver, intervenor, or conservator of, or
trustee or similar officer for, Lessee or Guarantor or any substantial part of
its property, all as though such payment had not been made and any statute of
limitations in favor of Guarantor against any Guaranty Party relating to
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any such amount to be restored or returned shall be tolled, or deemed to have
been tolled, to the extent permitted by law, during the period from the date
such payment was made to such Guaranty Party until the date such Guaranty Party
so restores or returns such amount.
9. Covenants.
9.1. Lessor and Lessor General Partner Covenants. Each of
Lessor and Lessor General Partner covenants for the benefit of each other party
hereto (unless each shall have otherwise waived in writing compliance herewith)
during the term of this Agreement as follows:
(a) It shall take all actions as are required to keep the
representations and warranties made by it in Section 2.4 (with respect to
Lessor) and in Section 2.5 (with respect to Lessor General Partner) (except, in
the case of clause (b) of Section 2.4 (with respect to Lessor), if the location
of such office shall change, it shall provide each other party hereto with not
less than ten (10) days' prior written notice of such change), true and correct
in all material respects (but without regard to the date when such
representations and warranties were made or are expressed to be effective) until
such time as all of the obligations secured hereby have been paid in full.
(b) The proceeds of each Tranche A Note and Tranche B Loan
shall be used solely to finance Lessor's acquisitions of Items of Equipment in
accordance with the terms of this Agreement and for costs related to such
transactions. No part of the proceeds of any Tranche A Note or Tranche B Loan
will be used to purchase or carry any Margin Stock or to extend credit for the
purpose of purchasing or carrying any Margin Stock. Neither the issuing of any
Tranche A Note, the making of any Tranche B Loan nor the use of the proceeds
thereof will violate or be inconsistent with the provisions of Regulation T, U
or X of the Board of Governors of the Federal Reserve System.
(c) It shall comply in all material respects with all
Applicable Laws, rules, regulations and orders of any jurisdiction, such
compliance to include paying when due all Taxes imposed upon it or upon its
property by any Governmental Entity except to the extent contested in good faith
and for which adequate reserves have been segregated.
(d) It shall promptly take, and maintain the effectiveness of,
all action of the type referred to in clause (b) of Section 2.3 or otherwise
that may, from time to time, be necessary or appropriate under Applicable Law in
connection with the performance by Lessor of its obligations under the Operative
Documents, or the taking of any action hereby or thereby contemplated, or
necessary for the legality, validity, binding effect or enforceability of the
Operative Documents, or for the making of any payment or the transfer or
remittance of any funds by Lessor under the Operative Documents.
(e) It shall duly pay and discharge (i) immediately upon the
attachment thereof (A) in the case of Lessor General Partner, all Liens
attributable to Lessor General Partner (other than Permitted Liens) on any
Lessor Collateral, and (B) in the case of Lessor, all Liens other than Permitted
Liens on any Lessor Collateral, (ii) as and when due, all of its indebtedness
and other obligations before the time that any Lien attaches unless and only to
the extent that any such
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amounts are not yet due and payable or the validity thereof is being contested
in good faith by appropriate proceedings so long as such proceedings do not
involve any material danger of the sale, forfeiture or loss of the Items of
Equipment or any interest therein and Lessor maintains appropriate reserves with
respect thereto or has made adequate provision for the payment thereof, in
accordance with generally accepted accounting principles and approved by
Administrative Agent and (iii) all Taxes imposed upon or against it or its
property or assets, or upon any property leased by it, prior to the date on
which penalties attach thereto.
(f) It shall keep at all times books of record and account in
which full, true and correct entries will be made of all dealings or
transactions in relation to its business and affairs, and provide or cause to be
provided adequate protection against loss or damage to such books of record and
account.
(g) It shall not operate in a manner that would result in an
actual, constructive or substantive consolidation with Limited Partners or any
other Person other than Lessee or Lessor General Partner in the case of Lessor
or other than Lessee or Lessor in the case of Lessor General Partner, and in
such connection Lessor shall observe all limited partnership formalities,
maintain records separately and independently from those of Limited Partners or
other Person and enter into any transactions with Limited Partners only on an
arm's-length contractual basis.
(h) It shall not, and shall cause Co-Obligor not to, without
the consent of Indenture Trustee acting on behalf of Majority Tranche A
Noteholders, all Tranche B Lenders and Administrative Agent (i) enter into any
business other than its acquisition, leasing, financing and sale of the
Equipment, (ii) create, incur, assume or permit to exist any Tranche B
Indebtedness, except as expressly permitted by this Agreement, (iii) enter into,
or be a party to, any transaction with any Person, except the transactions set
forth in the Operative Documents and as expressly permitted thereby, (iv)
acquire any assets other than the Equipment and the rights of Lessor set forth
under the Operative Documents, or (v) make any investment in, guarantee the
obligations of, or make or advance money to any Person (other than capital
contributions to Co-Obligor for the sole purpose of maintaining Co-Obligor's
corporate existence), through the direct or indirect lending of money, holding
of securities or otherwise except the transactions set forth in the Operative
Documents and as expressly permitted thereby.
(i) It shall not wind up, liquidate or dissolve its affairs or
enter into any transaction of merger or consolidation, or convey, sell, lease
(substantially as a whole), or otherwise dispose of (whether in one or in a
series of transactions) its assets except as expressly permitted by this
Agreement.
(j) It shall notify Lessee of any Loan Event of Default except
any such Loan Event of Default caused by or related to a Lease Event of Default.
(k) It shall not claim ownership of any Item of Equipment on
any federal, state, local or foreign tax return or filing.
9.2. Lessee Covenants for the Benefit of Indenture Trustee and
Tranche A Noteholders. Lessee covenants and agrees solely for the benefit of
Lessor, Co-Obligor, Indenture
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Trustee and each Tranche A Noteholder (unless Indenture Trustee or Majority
Tranche A Noteholders shall otherwise waive in writing compliance herewith or
the Tranche A Notes shall have been defeased pursuant to and in accordance with
the terms of Article 7 of the Indenture) that on the Closing Date and thereafter
during the remaining term of this Agreement as follows:
(a) Limitation on Incurrence of Additional Indebtedness.
Lessee will not, and will not permit any of its Restricted Subsidiaries to,
directly or indirectly, create, incur, assume, guarantee, become liable,
contingently or otherwise, with respect to, or otherwise become responsible for
payment of (collectively, "incur") any Indebtedness (other than Permitted
Indebtedness); provided, however, that if no Tranche A Event of Default shall
have occurred and be continuing at the time of or as a consequence of the
incurrence of any such Indebtedness, Lessee and its Restricted Subsidiaries may
incur Indebtedness (including, without limitation, Acquired Indebtedness) if on
the date of the incurrence of such Indebtedness, after giving effect to the
incurrence thereof, the Consolidated Fixed Charge Coverage Ratio of Lessee is
greater than 2.25 to 1.0.
For purposes of determining compliance with this covenant, (i)
in the event that an item of Indebtedness meets the criteria of more than one of
the types of Indebtedness permitted by this covenant, Lessee in its sole
discretion will classify such item of Indebtedness and will only be required to
include the amount and type of each class of Indebtedness in the test specified
in the first paragraph of this covenant or in one of the clauses of the
definition of the term "Permitted Indebtedness", (ii) the amount of Indebtedness
(other than Indebtedness consisting of an Operating Lease Facility) issued at a
price which is less than the principal amount thereof shall be equal to the
amount of liability in respect thereof determined in accordance with GAAP, (iii)
Indebtedness incurred in connection with, or in contemplation of, any
transaction described in the definition of the term "Acquired Indebtedness"
shall be deemed to have been incurred by Lessee or one of its Restricted
Subsidiaries, as the case may be, at the time an acquired Person becomes such a
Restricted Subsidiary (or is merged into Lessee or such a Restricted Subsidiary)
or at the time of the acquisition of assets, as the case may be, (iv) the
maximum amount of Indebtedness that Lessee and its Restricted Subsidiaries may
incur pursuant to this covenant shall not be deemed to be exceeded, with respect
to any outstanding Indebtedness, due solely to the result of fluctuations in the
exchange rates of currencies, and (v) guarantees or Liens supporting
Indebtedness permitted to be incurred under this covenant may be issued or
granted if otherwise issued or granted in accordance with the terms of this
Section 9.2.
(b) Limitation on Restricted Payments. Lessee will not, and
will not cause or permit any of its Restricted Subsidiaries to, directly or
indirectly, (i) declare or pay any dividend or make any distribution (other than
dividends or distributions payable in Qualified Capital Stock of Lessee or in
options, warrants, or other rights to purchase such Qualified Capital Stock (but
excluding any debt security or Disqualified Capital Stock convertible into, or
exchangeable for, such Qualified Capital Stock)) on or in respect of shares of
Lessee's Capital Stock to holders of such Capital Stock, (ii) purchase, redeem
or otherwise acquire or retire for value any Capital Stock of Lessee or any
warrants, rights or options to purchase or acquire shares of any class of such
Capital Stock (in each case, other than in exchange for Qualified Capital Stock
of Lessee or options, warrants or other rights to purchase such Qualified
Capital Stock (but excluding any debt security, or Disqualified Capital Stock
convertible into, or exchangeable for, such Qualified
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Capital Stock)), (iii) make any principal payment on, purchase, defease, redeem,
prepay, decrease or otherwise acquire or retire for value, prior to any
scheduled final maturity, scheduled repayment or scheduled sinking fund payment,
any Indebtedness of Lessee that is subordinate or junior in right of payment to
Lessee's rental payment obligations under the Lease Agreement or (iv) make any
Investment (other than Permitted Investments) (each of the foregoing actions set
forth in clauses (i), (ii), (iii) and (iv) being referred to as a "Restricted
Payment"), if at the time of such Restricted Payment or immediately after giving
effect thereto, (A) a Tranche A Default or a Tranche A Event of Default shall
have occurred and be continuing or (B) Lessee is not able to incur at least
$1.00 of additional Indebtedness (other than Permitted Indebtedness) in
compliance with Section 9.2(a) or (C) the aggregate amount of Restricted
Payments (including such proposed Restricted Payment) made subsequent to the
Issue Date (the amount expended for such purposes, if other than in cash, being
the fair market value of such property as determined reasonably and in good
faith by the Board of Directors of Lessee) shall exceed the sum of: (1) 50% of
the cumulative Consolidated Net Income (or if cumulative Consolidated Net Income
shall be a loss, minus 100% of such loss) of Lessee earned subsequent to the
Issue Date and on or prior to the date the Restricted Payment occurs (the
"Reference Date") (treating such period as a single accounting period); plus (2)
100% of (x) the aggregate net cash proceeds and (y) the aggregate fair market
value (as determined in good faith by the Board of Directors of Lessee as
evidenced by a Board Resolution), of property other than cash, received by
Lessee from any Person (other than a Subsidiary of Lessee) from the issuance and
sale subsequent to the Issue Date and on or prior to the Reference Date of
Qualified Capital Stock of Lessee or options, warrants or other rights to
purchase such Qualified Capital Stock (but excluding any debt security or
Disqualified Capital Stock convertible into, or exchangeable for, such Qualified
Capital Stock); plus (3) without duplication of any amounts included in clause
(C)(2) above, 100% of the aggregate net cash proceeds of any equity contribution
received by Lessee from a holder of Lessee's Capital Stock (excluding, in the
case of clauses (C)(3) and (4), any net cash proceeds from an Equity Offering to
the extent used to purchase Equipment in accordance with Section 28.4.1 of the
Lease Agreement and in compliance with Section 3.03(b) of the Indenture; plus
(4) 100% of the aggregate net cash proceeds received by Lessee from any Person
(other than a Subsidiary of Lessee) from the issuance and sale (subsequent to
the Issue Date) of debt securities or shares of Disqualified Capital Stock that
have been converted into or exchanged for Qualified Capital Stock of Lessee,
together with the aggregate cash received by Lessee at the time of such
conversion or exchange; plus (5) without duplication, the sum of (a) the
aggregate amount returned in cash to Lessee or a Restricted Subsidiary of Lessee
on or with respect to Investments (other than Permitted Investments) made
subsequent to the Issue Date whether through interest payments, principal
payments, dividends or other distributions or payments, (b) the net cash
proceeds received by Lessee or any of its Restricted Subsidiaries from the
disposition of all or any portion of such Investments (other than to a
Subsidiary of Lessee) and (c) upon redesignation of an Unrestricted Subsidiary
as a Restricted Subsidiary, the fair market value of such Subsidiary; provided,
however, that the sum of clauses (a), (b) and (c) above shall not exceed the
aggregate amount of all such Investments made subsequent to the Issue Date; plus
(6) $15,000,000.
Notwithstanding the foregoing, the provisions set forth in the
immediately preceding paragraph do not prohibit: (i) the payment of any dividend
within sixty (60) days after the date of declaration of such dividend if the
dividend would have been permitted on the date of
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declaration; (ii) the acquisition of any shares of Capital Stock of Lessee,
either (A) solely in exchange for shares of Qualified Capital Stock of Lessee or
options, warrants, or other rights to purchase such Qualified Capital Stock
(other than any debt security or Disqualified Capital Stock convertible into, or
exchangeable for, such Qualified Capital Stock) or (B) through the application
of net proceeds of a substantially concurrent sale for cash (other than to a
Subsidiary of Lessee) of shares of Qualified Capital Stock of Lessee or options,
warrants, or other rights to purchase such Qualified Capital Stock (other than
any debt security or Disqualified Capital Stock convertible into, or
exchangeable for, such Qualified Capital Stock); (iii) the acquisition of any
Indebtedness of Lessee that is subordinate or junior in right of payment to
Lessee's rental payment obligations under the Lease Agreement either (A) solely
in exchange for shares of Qualified Capital Stock of Lessee, or options,
warrants, or other rights to purchase such qualified Capital Stock or (B)
through the application of net proceeds of a substantially concurrent sale for
cash (other than to a Subsidiary of Lessee) of (1) shares of Qualified Capital
Stock of Lessee or (2) Refinancing Indebtedness; (iv) dividends or payments to
Guarantor of cash to be immediately applied to repurchases by Guarantor of
Qualified Capital Stock of Guarantor or options to purchase such Qualified
Capital Stock from directors or employees or former directors or former
employees of Guarantor or any of its Subsidiaries or their authorized
representatives upon the death, disability or termination of employment of such
persons or pursuant to the terms of any customary agreement under which such
Qualified Capital Stock or options were issued, in an aggregate amount not to
exceed $1,000,000 plus any life insurance proceeds in any calendar year; (v) the
repurchase of any Indebtedness which is subordinated to Lessee's rental payment
obligations under the Lease Agreement at a purchase price not greater than 101%
of the principal amount of such Indebtedness in the event of a change of control
in accordance with provisions similar to Section 9.2(i) hereof; provided that,
prior to or simultaneously with the purchase, the Lessor has made the Change of
Control Offer as provided in the Indenture with respect to the Tranche A Notes
and has repurchased all Tranche A Notes validly tendered for payment in
connection with such Change of Control Offer; (vi) payments or distributions to
dissenting stockholders pursuant to applicable law, pursuant to or in connection
with a consolidation, merger or transfer of assets that complies with the
provisions of Section 9.2 hereof applicable to mergers, consolidating and
transfers of all or substantially all of the property and assets of Lessee,
(vii) any dividends or payments to Guarantor in respect of overhead expenses,
legal, accounting, commissions reporting and other professional fees and
expenses of Guarantor that are directly attributable to the operations of Lessee
and its restricted subsidiaries; (viii) payments to holders of Qualified Capital
Stock of Lessee or Guarantor (A) in lieu of the issuance of fractional shares of
Qualified Capital Stock of Lessee or Guarantor or (B) to redeem or repurchase
stock purchase of similar rights issued as a shareholder rights device; provided
that the payments made pursuant to this clause (viii) from the Issue Date
through the final stated maturity of the Tranche A Notes may not exceed
$2,000,000; and (ix) repurchases, acquisitions or retirements of shares of
Qualified Capital Stock of Lessee or Guarantor deemed to occur upon the exercise
of stock options or similar rights issued under employee benefits plans of
Lessee or Guarantor if such shares represent all or a portion of the exercise
price or are surrendered in connection with satisfying any income tax
obligation; provided that, except in the case of clauses (i) and (ii), no
Tranche A Default or Tranche A Event of Default shall have occurred and be
continuing or occur as a consequence of the actions or payments set forth
therein. In determining the aggregate amount of Restricted Payments made
subsequent to the Issue Date in accordance
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with clause (C) of the immediately preceding paragraph, amounts expended,
without duplication, pursuant to clauses (i), (ii)(B), (iv) through (vi) and
(viii) shall be included in such calculation.
Not later than ten (10) days after the date of making any
Restricted Payment (but not including any transaction described in the preceding
paragraph), Lessee shall deliver to Indenture Trustee an officers' certificate
stating that such Restricted Payment complies with Section 9.2 and setting forth
in reasonable detail the basis upon which the required calculations were
computed, which calculations may be based upon Lessee's latest available
internal quarterly financial statements.
(c) Limitation on Asset Sales. Lessee will not, and will not
permit any of its Restricted Subsidiaries to, consummate an Asset Sale unless
(i) Lessee or the applicable Restricted Subsidiary, as the case may be, receives
consideration at the time of such Asset Sale at least equal to the fair market
value of the assets sold or otherwise disposed of (as determined in good faith
by Lessee's Board of Directors) and (ii) at least 75% of the consideration
received by Lessee or the Restricted Subsidiary, as the case may be, from such
Asset Sale shall be in the form of cash or Cash Equivalents; provided that (A)
the amount of any liabilities of Lessee or any such Restricted Subsidiary (other
than liabilities that are by their terms subordinated to Lessee's rental payment
obligations under the Lease Agreement) that are assumed by the transferee of any
such assets and (B) the fair market value of any marketable securities received
by Lessee or any such Restricted Subsidiary in exchange for any such assets that
are promptly converted into cash shall be deemed to be cash for purposes of this
provision; and provided, further, that in no event shall the aggregate fair
market value at the time of receipt of consideration received by Lessee in a
form other than cash or Cash Equivalents exceed 15% of Lessee's Consolidated
Total Assets. In the event of an Asset Sale, Lessee shall apply, or cause such
Restricted Subsidiary to apply, the Net Cash Proceeds relating to such Asset
Sale within 720 days of receipt thereof either (A) to repay or prepay any
indebtedness under the Credit Agreement, and effect a permanent reduction
thereof, (B) to make an investment in either (x) properties and assets that
replace the properties and assets that were the subject of such Asset Sale or
(y) properties or assets that will be used in the business of Lessee and its
Restricted Subsidiaries as existing on the Issue Date or in businesses similar
or reasonably related thereto or in the capital stock of any entity a majority
of whose assets consists of the properties or assets described under (x) or (y)
("Replacement Assets"), or (C) to a combination of prepayment and investment
permitted by the immediately foregoing clauses (A) and (B). After the day on
which the aggregate amount of Net Cash Proceeds which have not been applied as
permitted in the immediately foregoing clauses (A), (B) and (C) of the next
preceding sentence (a "Net Proceeds Offer Amount") exceeds $15,000,000 (the "Net
Proceeds Offer Trigger Date"), Lessee shall make an offer to apply such Net Cash
Proceeds to purchase Equipment from Lessor at the Acquisition Cost thereof;
provided, Lessee shall have the option of applying a portion of the Net Proceeds
Offer Amount to the repurchase of any Indebtedness not subordinated to its
rental payment obligations under the Lease Agreement, pro rata based on the
amount of Tranche A Notes, the Tranche B Loans and the Equity Contributions
outstanding on the one hand, and the amount of such other Indebtedness
outstanding on the other hand. The purchase price for such other Indebtedness
will not exceed 100% of the principal amount thereof, plus accrued and unpaid
interest thereon. If Lessee elects to so repay such other Indebtedness, the
amount of Equipment purchased by it will be reduced by the amount of such other
Indebtedness so repurchased.
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If at any time any non-cash consideration received by Lessee
or any Restricted Subsidiary of Lessee, as the case may be, in connection with
any Asset Sale is converted into or sold or otherwise disposed of for cash
(other than interest received with respect to any such non-cash consideration),
then such conversion or disposition shall be deemed to constitute an Asset Sale
and the Net Cash Proceeds thereof shall be applied in accordance with this
covenant. To the extent that the aggregate principal amount of the Tranche A
Notes, the Tranche B Loans and the Equity Contributions repurchased is less than
the Net Proceeds Offer Amount, Lessee and its Restricted Subsidiaries may use
such deficiency for general corporate purposes. Upon completion of such Net
Proceeds Offer, the Net Proceeds Offer Amount will be reset to zero.
Notwithstanding the two (2) immediately preceding paragraphs,
Lessee and its Restricted Subsidiaries will be permitted to consummate an Asset
Sale without complying with the foregoing paragraphs to the extent (i) at least
80% of the consideration for such Asset Sale constitutes Replacement Assets and
(ii) such Asset Sale is for fair market value; provided that any consideration
not constituting Replacement Assets received by Lessee or any of its Restricted
Subsidiaries in connection with any Asset Sale permitted to be consummated under
this paragraph shall constitute Net Cash Proceeds subject to the provisions of
the preceding paragraph.
If at any time any non-cash consideration received by Lessee
or any Restricted Subsidiary of Lessee, as the case may be, in connection with
any Asset Sale is converted into or sold or otherwise disposed of for cash
(other than interest received with respect to any such non-cash consideration),
then such conversion or disposition shall be deemed to constitute an Asset Sale
and the Net Cash Proceeds thereof shall be applied in accordance with this
covenant. To the extent that the aggregate principal amount of Tranche A Notes,
tendered pursuant to such Net Proceeds Offer is less than the net Proceeds Offer
Amount allocable to the Tranche A Notes, Lessee and its Restricted Subsidiaries
may use such deficiency for general corporate purposes.
(d) Limitation on Dividend and Other Payment Restrictions
Affecting Subsidiaries. Lessee will not, and will not cause or permit any of its
Restricted Subsidiaries to, directly or indirectly, create or otherwise cause or
permit to exist or become effective any encumbrance or restriction on the
ability of any Restricted Subsidiary of Lessee to (i) pay dividends or make any
other distributions on or in respect of its Capital Stock; (ii) make loans or
advances or to pay any Indebtedness or other obligation owed to Lessee or any
other Restricted Subsidiary of Lessee; or (iii) transfer any of its property or
assets to Lessee or any other Restricted Subsidiary of Lessee, except for such
encumbrances or restrictions existing under or by reason of: (A) applicable law;
(B) a Securitized Operating Lease Facility; (C) the Credit Agreement; (D) any
agreement or instrument governing Acquired Indebtedness, which encumbrance or
restriction is not applicable to any Person, or the properties or assets of any
Person, other than the Person or the properties or assets of the Person so
acquired; (E) agreements existing on the Issue Date to the extent and in the
manner such encumbrances and restrictions are contemplated by such agreements;
(F) in the case of clause (iii) above: (1) agreements or instruments arising or
agreed to in the ordinary course of business that restrict in a customary manner
the subletting, assignment or transfer of any property or asset subject to a
lease, license, conveyance or other contract and (2) any transfer of, agreement
to transfer, option or right with respect to, or Lien on, any property or assets
of Lessee or any Restricted Subsidiary
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entered into in compliance with Section 9.2 hereof; (G) an agreement that has
been entered into for the sale or disposition of all or substantially all of the
Capital Stock of, or property and assets of, any Restricted Subsidiary of
Lessee; (H) provisions in agreements or instruments which prohibit the payment
of dividends or the making of other distributions with respect to any Capital
Stock of a Person other than on a pro rata basis; or (I) an agreement governing
Indebtedness incurred to Refinance the Indebtedness issued, assumed or incurred
pursuant to an agreement referred to in clause (B), (C), (D) or (E) above;
provided, however, that the provisions relating to such encumbrance or
restriction contained in any such Indebtedness are no less favorable to Lessee
or the relevant Restricted Subsidiary of Lessee in any material respect as
determined by the Board of Directors of Lessee in its reasonable and good faith
judgment than the provisions relating to such encumbrance or restriction
contained in agreements referred to in such clause (B), (C), (D) or (E). Nothing
contained in clause (iii) of this Section 9.2(d) shall prevent Lessee or any of
its Restricted Subsidiaries from creating, incurring, assuming or suffering to
exist any Lien created, incurred, assumed or suffered to exist in accordance
with the other terms of this Agreement.
(e) Limitation on Preferred Stock of Restricted Subsidiaries.
Lessee will not and will not permit any of its Restricted Subsidiaries to issue
any Preferred Stock (other than to Lessee or to a Wholly Owned Restricted
Subsidiary of Lessee) or permit any Person (other than Lessee or a Wholly Owned
Restricted Subsidiary of Lessee) to own any Preferred Stock of any Restricted
Subsidiary of Lessee; provided that the foregoing shall not prohibit (i) the
creation of a Lien in any such Preferred Stock under the Credit Agreement and
otherwise created in accordance with this Agreement or (ii) issuances of sales
to directors of directors' qualifying shares or issuances or sales to foreign
nationals of such Preferred Stock, in each case to the extent required by
applicable law.
(f) Limitation on Liens. Lessee will not, and will not cause
or permit any of its Restricted Subsidiaries to, directly or indirectly, create,
incur, assume or permit or suffer to exist any Liens of any kind against or upon
any property or assets of Lessee or any of its Restricted Subsidiaries whether
owned on the Issue Date or acquired after the Issue Date, or any proceeds
therefrom, or assign or otherwise convey any right to receive income or profits
therefrom except for (i) Liens existing as of the Issue Date (other than Liens
securing Indebtedness under the Credit Agreement) to the extent and in the
manner such Liens are in effect on the Issue Date and Liens to the extent
contemplated by the Operative Documents; (ii) Liens securing Indebtedness under
the Credit Agreement incurred pursuant to Section 9.2(a); (iii) Liens securing
an Operating Lease Facility, including Liens securing or relating to any
obligations with respect to such Operating Lease Facility or with respect to
guarantees provided to such Operating Lease Facilities; (iv) Liens of Lessee or
a Wholly Owned Restricted Subsidiary of Lessee on assets of any Restricted
Subsidiary of Lessee; (v) Liens securing Refinancing Indebtedness which is
incurred to Refinance any Indebtedness which has been secured by a Lien
permitted under this Agreement and which has been incurred in accordance with
the provisions of this Agreement; provided, however, that such Liens (1) are no
less favorable to the Tranche A Noteholders and are not more favorable to the
lienholders with respect to such Liens than the Liens in respect of the
Indebtedness being Refinanced and (2) do not extend to or cover any property or
assets of Lessee or any of its Restricted Subsidiaries not securing the
Indebtedness so Refinanced; and (vi) Tranche A Permitted Liens.
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(g) Merger, Consolidation and Sale of Assets. Lessee will not,
in a single transaction or series of related transactions, consolidate or merge
with or into any Person, or sell, assign, transfer, lease, convey or otherwise
dispose of (or cause or permit any Restricted Subsidiary of Lessee to sell,
assign, transfer, lease, convey or otherwise dispose of) all or substantially
all of Lessee's assets (determined on a consolidated basis for Lessee and
Lessee's Restricted Subsidiaries) whether as an entirety or substantially as an
entirety to any Person unless: (i) either (A) Lessee shall be the surviving or
continuing corporation or (B) the Person (if other than Lessee) formed by such
consolidation or into which Lessee is merged or the Person which acquires by
sale, assignment, transfer, lease, conveyance or other disposition the
properties and assets of Lessee and of Lessee's Restricted Subsidiaries
substantially as an entirety (the "Surviving Entity") (1) shall be a corporation
organized and validly existing under the laws of the United States or any State
thereof or the District of Columbia and (2) shall expressly assume all
obligations of Lessee under the Lease Agreement on the part of Lessee to be
performed or observed by Lessee; (ii) immediately after giving effect to such
transaction and the assumption contemplated by clause (i)(B)(2) above (including
giving effect to any Indebtedness and Acquired Indebtedness incurred in
connection with or in respect of such transaction), Lessee or such Surviving
Entity, as the case may be, (a) shall have a Consolidated Net Worth equal to or
greater than the Consolidated Net Worth of Lessee immediately prior to such
transaction, and (b) shall be able to incur at least $1.00 of additional
Indebtedness (other than Permitted Indebtedness) pursuant to Section 9.2(a);
(iii) immediately after giving effect to such transaction and the assumption
contemplated by clause (i)(B)(2) above (including, without limitation, giving
effect to any Indebtedness and Acquired Indebtedness incurred or anticipated to
be incurred and any Lien granted in connection with or in respect of the
transaction), no Tranche A Default or Tranche A Event of Default shall have
occurred or be continuing; and (iv) Lessee or the Surviving Entity shall have
delivered to Indenture Trustee an officers' certificate and an opinion of
counsel, each stating that such consolidation, merger, sale, assignment,
transfer, lease, conveyance or other disposition and that all conditions
precedent in this Agreement relating to such transaction have been satisfied.
(h) Limitations on Transactions with Affiliates.
(i) Lessee will not, and will not permit any of its
Restricted Subsidiaries to, directly or indirectly, enter into or
permit to exist any transaction or series of related transactions
(including, without limitation, the purchase, sale, lease or exchange
of any property or the rendering of any service) with, or for the
benefit of, any of its Affiliates (each an "Affiliate Transaction"),
other than (A) Affiliate Transactions permitted under paragraph (ii)
below and (B) Affiliate Transactions on terms that are no less
favorable than those that might reasonably have been obtained in a
comparable transaction at such time on an arm's-length basis from a
Person that is not an Affiliate of Lessee or such Restricted
Subsidiary. All Affiliate Transactions (and each series of related
Affiliate Transactions which are similar or part of a common plan)
involving aggregate payments or other property with a fair market value
in excess of $5,000,000 shall be approved by the unaffiliated members
of the Board of Directors of Lessee or such Restricted Subsidiary, as
the case may be, such approval to be evidenced by a Board Resolution
stating that such unaffiliated members of the Board of Directors has
determined that such transaction complies with the foregoing
provisions. If Lessee or any
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Restricted Subsidiary of Lessee enters into an Affiliate Transaction
(or a series of related Affiliate Transactions related to a common
plan) that involves an aggregate fair market value of more than
$10,000,000, Lessee or such Restricted Subsidiary, as the case may be,
shall, prior to the consummation thereof, obtain a favorable opinion as
to the fairness of such transaction or series of related transactions
to Lessee or the relevant Restricted Subsidiary, as the case may be,
from a financial point of view, from a nationally recognized firm
qualified to do the business for which it is engaged and file the same
with Indenture Trustee.
(ii) The restrictions set forth in clause (i) above
shall not apply to (A) reasonable fees and compensation paid to and
indemnity provided on behalf of, officers, directors, employees or
consultants of Lessee or any Restricted Subsidiary of Lessee as
determined in good faith by Lessee's Board of Directors or senior
management; (B) transactions exclusively between or among Lessee and
any of its Wholly Owned Restricted Subsidiaries or exclusively between
or among such Wholly Owned Restricted Subsidiaries, provided such
transactions are not otherwise prohibited by this Agreement; (C) any
agreement as in effect as of the Issue Date (including, but not limited
to, the ▇▇▇▇▇▇▇▇▇▇▇ Transition Services Agreement) or any amendment
thereto or any transaction contemplated thereby (including, but not
limited to, pursuant to any amendment thereto) in any replacement
agreement thereto so long as any such amendment or replacement
agreement is not more disadvantageous to the Tranche A Noteholders in
any material respect than the original agreement as in effect on the
Issue Date; (D) Restricted Payments permitted by Section 9.2(b); (E)
the Tax Sharing Agreement; (F) employment agreements with officers and
employees of Lessee and its Restricted Subsidiaries, in the ordinary
course of business; (G) loans and advances to employees not to exceed
$5,000,000 outstanding at any one time, in the ordinary course of
business; (H) arrangements with directors of Lessee existing on the
Issue Date as disclosed in the Offering Memorandum; (I) the Acquisition
of Gas Services International Ltd. and related entities including
International Pumps & Compressions Pty. Ltd. for consideration of
approximately $21 million, if consummated within six (6) months of the
Issue Date, and documents related thereto; and (J) the provision of
compression or related services to ▇▇▇▇▇▇▇▇▇▇▇ or any other Affiliate
in the ordinary course of business on market terms; provided, however,
that if aggregate payments or property involved in any such transaction
or series of related transactions exceeds $5,000,000, such transaction
or transactions shall be approved by the unaffiliated members of the
Board of Directors of Lessee.
(i) Change of Control. Upon a Change of Control, Lessee shall
comply with Section 28.4.3 of the Lease Agreement.
(j) Conduct of Business. Lessee and its Restricted
Subsidiaries will not engage in any businesses which are not the same, similar
or reasonably related to the businesses in which Lessee and its Restricted
Subsidiaries are engaged on the Issue Date.
(k) Reports to Indenture Trustee. Lessee will deliver to
Indenture Trustee within fifteen (15) days after the filing of the same with the
Commission, copies of the quarterly
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and annual reports and of the information, documents and other reports, if any,
which Lessee is required to file with the Commission pursuant to Section 13 or
15(d) of the Exchange Act. Further, notwithstanding that Lessee may not be
subject to the reporting requirements of Section 13 or 15(d) of the Exchange
Act, Lessee will provide Indenture Trustee and Tranche A Noteholders with such
annual reports and such information, documents and other reports specified in
Sections 13 and 15(d) of the Exchange Act.
(l) Lessee and Guarantor deliveries to Indenture Trustee.
Lessee and Guarantor will promptly deliver to Indenture Trustee the following:
(i) Any Opinions of Counsel, Board Resolutions or
other documents required to be delivered to Indenture Trustee pursuant
to Sections 9.2(a)-(k).
(ii) Notice to Indenture Trustee if either Lessee or
Guarantor become the beneficial owners of any Tranche A Notes.
(iii) An annual compliance certificate stating that
there is no Lease Default or Lease Event of Default.
(iv) Copies of all appraisals and Opinions of Counsel
required under the TIA, including without limitation those required
under Sections 9.02, 9.03, 9.04 and 9.05 of the Indenture.
(v) Prompt notice by Lessee to Indenture Trustee of a
Lease Default or Lease Event of Default.
(vi) Prompt notice by Lessee to Indenture Trustee of
the resignation or inability to act of Collateral Agent.
9.3. Lessee Covenants for the Benefit of Lessor and Tranche B
Lenders. Lessee covenants and agrees for the benefit of Lessor, Co-Obligor and
each Tranche B Lender that on the Closing Date therefore and thereafter during
the remaining term of this Agreement as follows:
(a) Reporting Requirements. Lessee shall deliver, or shall
cause to be delivered, to Lessor, Administrative Agent with sufficient copies of
each for each Tranche B Lender:
(i) Annual Financial Statements. As soon as available
and in any event within 120 days after the end of each fiscal year of
Guarantor, the audited consolidated and unaudited consolidating
statements of income, stockholders' equity, changes in financial
position and cash flow of Guarantor and its consolidated subsidiaries
for such fiscal year, and the related consolidated and consolidating
balance sheets of Guarantor and its consolidated subsidiaries as at the
end of such fiscal year, and setting forth in each case in comparative
form the corresponding figures for the preceding fiscal year, and
accompanied by the related opinion of independent public accountants of
recognized national standing acceptable to Administrative Agent which
opinion shall
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state that said financial statements fairly present the consolidated
and consolidating financial condition and results of operations of
Guarantor and its consolidated subsidiaries as at the end of, and for,
such fiscal year and that such financial statements have been prepared
in accordance with GAAP, except for such changes in such principles
with which the independent public accountants shall have concurred and
such opinion shall not contain a "going concern" or like qualification
or exception, and a certificate of such accountants stating that, in
making the examination necessary for their opinion, they obtained no
knowledge, except as specifically stated, of any Lease Default.
(ii) Quarterly Financial Statements. As soon as
available and in any event within 60 days after the end of each of the
first three fiscal quarterly periods of each fiscal year of Guarantor,
consolidated and consolidating statements of income, stockholders'
equity, changes in financial position and cash flow of Guarantor and
its consolidated subsidiaries for such period and for the period from
the beginning of the respective fiscal year to the end of such period,
and the related consolidated and consolidating balance sheets as at the
end of such period, and setting forth in each case in comparative form
the corresponding figures for the corresponding period in the preceding
fiscal year, accompanied by the certificate of a Responsible Officer,
which certificate shall state that said financial statements fairly
present the consolidated and consolidating financial condition and
results of operations of Guarantor and its consolidated subsidiaries in
accordance with GAAP, as at the end of, and for, such period (subject
to normal year-end audit adjustments).
(iii) Notice of Default, Etc. Promptly after Lessee
knows that any Lease Default or any Material Adverse Effect (Tranche B)
has occurred, a notice of such Lease Default or Material Adverse Effect
(Tranche B), describing the same in reasonable detail and the action
Lessee proposes to take with respect thereto and at Lessor's or any
Tranche B Lender's option, a copy of notice of such Lease Default.
(iv) Management Letters. Promptly after Lessee's or
any Subsidiaries' receipt thereof, a copy of any "management letter"
addressed to the Board of Directors of Lessee or such Subsidiary from
its certified public accountants and any internal control memoranda
relating thereto.
(v) SEC Filings, Etc. Promptly upon its becoming
available, each financial statement, report, notice or proxy statement
sent by Lessee to stockholders generally and each regular or periodic
report and any registration statement, prospectus or written
communication (other than transmittal letters) in respect thereof filed
by Lessee with or received by Lessee in connection therewith from any
securities exchange or the SEC or any successor agency.
(vi) Other Matters. From time to time such other
information regarding the business, affairs or financial condition of
Lessee or any Subsidiary (including, without limitation, any Plan or
Multiemployer Plan and any reports or other information required to be
filed under ERISA) as any Tranche B Lender or Administrative Agent may
reasonably request.
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(vii) Hedging Agreements. As soon as available and in
any event within ten (10) Business Days after each Quarterly Date, a
report, in form and substance satisfactory to Administrative Agent,
setting forth as of the last Business Day of such Quarterly Date a true
and complete list of all Hedging Agreements (including commodity price
swap agreements, forward agreements or contracts of sale which provide
for prepayment for deferred shipment or delivery of oil, gas or other
commodities) of Lessee and each Subsidiary, the material terms thereof
(including the type, term, effective date, termination date and
notional amounts or volumes), the net ▇▇▇▇ to market value therefor,
any new credit support agreements relating thereto not listed on
Schedule 9, any margin required or supplied under any credit support
document, and the counter party to each such agreement.
(viii) Labor Disputes. Promptly upon becoming aware
of any labor dispute which could reasonably be expected to have a
Material Adverse Effect (Tranche B), a notice of such dispute
describing same in detail and the action of Lessee proposes to take
with respect thereto.
Lessee will furnish to Administrative Agent, at the time it furnishes each set
of financial statements pursuant to paragraph (i) or (ii) above, a certificate
substantially in the form of Exhibit D executed by a Responsible Officer (i)
certifying as to the matters set forth therein and stating that no Lease Default
has occurred and is continuing (or, if any Lease Default has occurred and is
continuing, describing the same in reasonable detail), and (ii) setting forth in
reasonable detail the computations necessary to determine whether Lessee is in
compliance with Section 9.3(o)(i), (ii) and (iii) as of the end of the
respective fiscal quarter or fiscal year.
(b) Litigation. Lessee shall promptly give to Administrative
Agent notice of any litigation or governmental investigation or proceeding
pending against Lessee or any of its Subsidiaries which could reasonably be
expected to materially and adversely affect the business, operations, property,
assets, liabilities, condition (financial or otherwise) or prospects of Lessee
or any its Subsidiaries.
(c) Maintenance, Etc.
(i) Generally. Lessee shall and shall cause each
Subsidiary to (A) preserve and maintain its corporate existence and all
of its material rights, privileges, franchises, patents, trademarks,
copyrights and licenses, (B) keep books of record and account in which
full, true and correct entries will be made of all dealings or
transactions in relation to its business and activities, (C) comply
with all Governmental Requirements if failure to comply with such
requirements will have a Material Adverse Effect (Tranche B), (D) pay
and discharge all taxes, assessments and governmental charges or levies
imposed on it or on its income or profits or on any of its Property
prior to the date on which penalties attach thereto, except for any
such tax, assessment, charge or levy the payment of which is being
contested in good faith and by proper proceedings and against which
adequate reserves are being maintained, and (E) upon reasonable notice,
permit representatives of Administrative Agent or any Tranche B Lender,
during normal business hours, to examine, copy and make extracts from
its books and records, to inspect
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its Properties, and to discuss its business and affairs with its
officers, all to the extent reasonably requested by such Tranche B
Lender or Administrative Agent (as the case may be).
(ii) Proof of Insurance. Contemporaneously with the
delivery of the financial statements required by Section 9.3(a)(i) to
be delivered for each year, Lessee will furnish or cause to be
furnished to Administrative Agent and the Tranche B Lenders a
certificate of insurance coverage from the insurer in form and
substance satisfactory to Administrative Agent and, if requested, will
furnish Administrative Agent and the Tranche B Lenders copies of the
applicable policies.
(iii) Operation of Properties. Lessee will and will
cause each Subsidiary to operate its Properties or cause such
Properties to be operated in a careful and efficient manner in
accordance with the practices of the industry and in compliance with
all applicable contracts and agreements and in compliance in all
material respects with all Governmental Requirements.
(d) Environmental Matters.
(i) Establishment of Procedures. Lessee will and will
cause each Subsidiary to establish and implement such procedures as may
be reasonably necessary to continuously determine and assure that any
failure of the following does not have a Material Adverse Effect
(Tranche B): (A) all Property of Lessee and its Subsidiaries and the
operations conducted thereon and other activities of Lessee and its
Subsidiaries are in compliance with and do not violate the requirements
of any Environmental Laws, (B) no oil, hazardous substances or solid
wastes are disposed of or otherwise released on or to any Property
owned by any such party except in compliance with Environmental Laws,
(C) no hazardous substance will be released on or to any such Property
in a quantity equal to or exceeding that quantity which requires
reporting pursuant to Section 103 of CERCLA, and (D) no oil, oil and
gas exploration and production wastes or hazardous substance is
released on or to any such Property so as to pose an imminent and
substantial endangerment to public health or welfare or the
environment.
(ii) Notice of Action. Lessee will promptly notify
Administrative Agent and the Tranche B Lenders in writing of any
threatened action, investigation or inquiry by any Governmental Entity
of which Lessee has knowledge in connection with any Environmental Law,
excluding routine testing and corrective action.
(e) ERISA Information and Compliance. Lessee will promptly
furnish and will cause the Subsidiaries and any ERISA Affiliate to promptly
furnish to Administrative Agent with sufficient copies to the Tranche B Lenders
(i) promptly after the filing thereof with the United States Secretary of Labor,
the Internal Revenue Service or the PBGC, copies of each annual and other report
with respect to each Plan or any trust created thereunder, (ii) immediately upon
becoming aware of the occurrence of any ERISA Event or of any "prohibited
transaction," as described in section 406 of ERISA or in section 4975 of the
Code, in connection with any Plan or any trust created thereunder, a written
notice signed by a Responsible Officer specifying the
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nature thereof, what action Lessee, the Subsidiary or the ERISA Affiliate is
taking or proposes to take with respect thereto, and, when known, any action
taken or proposed by the Internal Revenue Service, the Department of Labor or
the PBGC with respect thereto, and (iii) immediately upon receipt thereof,
copies of any notice of the PBGC's intention to terminate or to have a trustee
appointed to administer any Plan. With respect to each Plan (other than a
Multiemployer Plan), Lessee will, and will cause each Subsidiary and ERISA
Affiliate to, (A) satisfy in full and in a timely manner, without incurring any
late payment or underpayment charge or penalty and without giving rise to any
lien, all of the contribution and funding requirements of section 412 of the
Code (determined without regard to subsections (d), (e), (f) and (k) thereof)
and of section 302 of ERISA (determined without regard to sections 303, 304 and
306 of ERISA), and (B) pay, or cause to be paid, to the PBGC in a timely manner,
without incurring any late payment or underpayment charge or penalty, all
premiums required pursuant to sections 4006 and 4007 of ERISA.
(f) Debt. Without the prior consent of the Majority Tranche B
Lenders, neither Lessee, Guarantor nor any Subsidiary will incur, create, assume
or permit to exist any Debt, except:
(i) Debt (including unfunded commitments) of Lessee
or Guarantor existing on the Closing Date which is reflected in the
Financial Statements or is disclosed in Schedule 11, and any renewals,
extensions, refinancings and modifications (but not increases) thereof;
(ii) accounts payable (for the deferred purchase
price of Property or services) from time to time incurred in the
ordinary course of business which, if greater than 90 days past the
invoice or billing date, are being contested in good faith by
appropriate proceedings if reserves adequate under GAAP shall have been
established therefor;
(iii) Debt of Lessee under Hedging Agreements which
are for bona fide business purposes and are not speculative; and
(iv) Operating Equipment Lease Obligations;
(v) other Debt of Lessee and its Domestic
Subsidiaries, incurred or assumed, not to exceed $35,000,000 in the
aggregate;
(vi) Debt evidenced by Capital Lease Obligations and
Purchase Money Debt, provided that in no event shall the aggregate
principal amount of Capital Lease Obligations and Purchase Money Debt
permitted by this clause (vi) exceed $30,000,000 at any time
outstanding;
(vii) Debt with respect to surety bonds, appeal bonds
or custom bonds required in the ordinary course of business or in
connection with the enforcement of rights or claims of the Lessee or
any of its Subsidiaries or in connection with judgments that do not
result in a Lease Default or a Lease Event of Default, provided that
the
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aggregate outstanding amount of all cash surety bonds, appeal bonds and
custom bonds permitted by this clause (vii) shall not at any time
exceed $5,000,000; and
(viii) Debt of any Foreign Subsidiary of Lessee or
Guarantor the proceeds of which Debt are used for such Foreign
Subsidiary's and/or their Foreign Subsidiaries' working capital and
general corporate purposes ("Foreign Subsidiary Indebtedness")
(ix) Debt for borrowed money assumed by Lessee or one
of its Subsidiaries, or of a Subsidiary of Lessee acquired, pursuant to
an acquisition or merger permitted pursuant to the terms of this
Agreement, provided that such Debt shall not exceed $65,000,000 in the
aggregate at any time and such Debt was not incurred in connection
with, or in anticipation or contemplation of such permitted acquisition
or merger; and provided further that the aggregate amount of Debt
permitted pursuant to this clause (ix) that has a scheduled maturity
date that is earlier than the Revolver shall not exceed $30,000,000.
(g) Liens. Without the prior written consent of the Majority
Tranche B Lenders, neither Lessee nor any Subsidiary will create, incur, assume
or permit to exist any Lien on any of its Properties (now owned or hereafter
acquired), except:
(i) Liens securing the payment of any Revolver
Indebtedness;
(ii) Excepted Liens;
(iii) Liens securing Capital Lease Obligations and
Purchase Money Debt allowed under Section 9.3(f)(vi), but only on the
Property under lease or purchased;
(iv) Liens on assets created in connection with the
ABS Operating Lease Facility, Liens on assets of any bankruptcy remote
subsidiaries created for the purpose and as a condition to an Operating
Equipment Lease Facility and its Liens securing Operating Equipment
Lease Obligations with respect to any Operating Equipment Lease
Facility and any guaranties thereof, provided that such Liens do not
extend to or cover any Property or assets of Lessee or any of its
Subsidiaries other than the Property subject to or pledged to such
Operating Equipment Leases, any Property or rights (including rights
under subleases) relating to such leased property and the equity
interests of the lessee in any such Operating Equipment Lease,
provided, however, that at the time of entering into (and immediately
after giving effect to) any such lease, no Lease Default shall have
occurred or be continuing under this Agreement;
(v) Liens disclosed on Schedule 12;
(vi) Liens arising out of Hedging Agreements with
lenders under the Revolver or Affiliates (Tranche B) thereof;
(vii) Liens relating to Debt permitted under Section
9.3(f)(v) provided that the aggregate amount of Debt by such Liens
shall not exceed $20,000,000;
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(viii) Liens on assets of Foreign Subsidiaries under
Foreign Credit Facilities (Tranche B); and
(ix) Liens securing acquired Debt permitted under
Section 9.3(f)(ix); provided, however, such Liens do not extend to or
cover any property other than the property or assets that secured such
Debt prior to the time it was acquired or assumed.
(h) Investments, Loans and Advances. Without the prior written
consent of the Majority Tranche B Lenders, neither Lessee nor any Subsidiary
will make or permit to remain outstanding any loans or advances to or
Investments (Tranche B) in any Person, except that, so long as no Lease Event of
Default has occurred and is continuing, the foregoing restriction shall not
apply to:
(i) Investments (Tranche B), loans or advances
reflected in the Financial Statements or which are disclosed to the
Lenders in Schedule 13;
(ii) accounts receivable arising in the ordinary
course of business;
(iii) direct obligations of the United States or any
agency thereof, or obligations guaranteed by the United States or any
agency thereof, in each case maturing within one year from the date of
creation thereof;
(iv) commercial paper maturing within one year from
the date of creation thereof rated in the highest grade by S&P or
Moody's;
(v) deposits maturing within one year from the date
of creation thereof with, including certificates of deposit issued by,
any Tranche B Lender or any office located in the United States of any
other bank or trust company which is organized under the laws of the
United States or any state thereof, has capital, surplus and undivided
profits aggregating at least $100,000,000.00 (as of the date of such
Tranche B Lender's or bank or trust company's most recent financial
reports) and has a short term deposit rating of no lower than A2 or P2,
as such rating is set forth from time to time, by S&P or Moody's,
respectively;
(vi) deposits in money market funds investing
exclusively in Investments (Tranche B) described in clause (iii), (iv)
or (v) above;
(vii) other Investments (Tranche B), loans or
advances not to exceed $100,000,000 in any one fiscal year or
$250,000,000 in the aggregate at any time outstanding; and
(viii) payroll advances and employee loans up to
$5,000,000.
(i) Dividends, Distributions and Redemptions. Without the
prior written consent of the Majority Tranche B Lenders, Lessee will not declare
or pay any dividend, purchase, redeem or otherwise acquire for value any of its
stock now or hereafter outstanding, return any capital to its stockholders or
make any distribution of its assets to its stockholders;
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except that so long as there shall exist no Lease Default or Lease Event of
Default (both before and after giving effect to the payment thereof) (i) Lessee
may pay cash dividends to Guarantor so long as the proceeds thereof are
immediately used by Guarantor to purchase shares of common stock or options to
purchase shares of common stock of Guarantor held by former employees of Lessee
following the termination of their employment by Lessee or any of its
Subsidiaries provided that the aggregate amount of cash dividends paid pursuant
to this Section 9.3(i)(i), not during any fiscal year of Lessee exceed
$7,500,000; or (ii) Lessee may make other distributions provided that the
aggregate amount of such distributions shall not exceed $5,000,000 during any
fiscal year.
(j) Nature of Business. Without the prior written consent of
the Majority Tranche B Lenders, neither Lessee nor any Subsidiary will allow any
material change to be made in the character of its business.
(k) Mergers, Etc. Without the prior written consent of the
Majority Tranche B Lenders, neither Lessee nor any Subsidiary will merge into or
with or consolidate with any other Person, or sell, lease or otherwise dispose
of (whether in one transaction or in a series of transactions) all or
substantially all of its Property or assets to any other Person except that (i)
any Subsidiary of Lessee may be merged into or consolidated with or sell, lease
or otherwise dispose of all or substantially all of its Property or assets to
(A) Lessee, so long as Lessee is the surviving business entity, or (B) another
Subsidiary of Lessee and (ii) Lessee may merge into or consolidate with any
Person provided, in each case (A) immediately thereafter and giving effect
thereto, no event shall occur and be continuing which constitutes a Lease
Default or Lease Event of Default and (B) Lessee is the surviving business
entity.
(l) Sales Proceeds. Without the prior written consent of the
Majority Tranche B Lenders, neither Lessee nor any Person acting on behalf of
Lessee has taken or will take any action which might cause any of the Operative
Documents to violate Regulation T, U or X or any other regulation of the Board
of Governors of the Federal Reserve System or to violate Section 7 of the
Exchange Act or any rule or regulation thereunder, in each case as now in effect
or as the same may hereinafter be in effect.
(m) ERISA Compliance. Without the prior written consent of the
Majority Tranche B Lenders, Lessee will not at any time:
(i) Engage in, or permit any Subsidiary or ERISA
Affiliate to engage in, any transaction in connection with which
Lessee, any Subsidiary or any ERISA Affiliate could be subjected to
either a civil penalty assessed pursuant to section 502(c), (i) or (l)
of ERISA or a tax imposed by Chapter 43 of Subtitle D of the Code;
(ii) Terminate, or permit any Subsidiary or ERISA
Affiliate to terminate, any Plan in a manner, or take any other action
with respect to any Plan, which could result in any liability to
Lessee, any Subsidiary or any ERISA Affiliate to the PBGC;
(iii) Fail to make, or permit any Subsidiary or ERISA
Affiliate to fail to make, full payment when due of all amounts which,
under the provisions of any Plan,
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agreement relating thereto or applicable law, Lessee, a Subsidiary or
any ERISA Affiliate is required to pay as contributions thereto;
(iv) Permit to exist, or allow any Subsidiary or
ERISA Affiliate to permit to exist, any accumulated funding deficiency
within the meaning of Section 302 of ERISA or section 412 of the Code,
whether or not waived, with respect to any Plan;
(v) Permit, or allow any Subsidiary or ERISA
Affiliate to permit, the actuarial present value of the benefit
liabilities under any Plan maintained by Lessee, any Subsidiary or any
ERISA Affiliate which is regulated under Title IV of ERISA to exceed
the current value of the assets (computed on a plan termination basis
in accordance with Title IV of ERISA) of such Plan allocable to such
benefit liabilities. The term "actuarial present value of the benefit
liabilities" shall have the meaning specified in section 4041 of ERISA;
(vi) Contribute to or assume an obligation to
contribute to, or permit any Subsidiary or ERISA Affiliate to
contribute to or assume an obligation to contribute to, any
Multiemployer Plan;
(vii) Acquire, or permit any Subsidiary or ERISA
Affiliate to acquire, an interest in any Person that causes such Person
to become an ERISA Affiliate with respect to Lessee, any Subsidiary or
any ERISA Affiliate if such Person sponsors, maintains or contributes
to, or at any time in the six-year period preceding such acquisition
has sponsored, maintained, or contributed to, (A) any Multiemployer
Plan, or (B) any other Plan that is subject to Title IV of ERISA under
which the actuarial present value of the benefit liabilities under such
Plan exceeds the current value of the assets (computed on a plan
termination basis in accordance with Title IV of ERISA) of such Plan
allocable to such benefit liabilities;
(viii) Incur, or permit any Subsidiary or ERISA
Affiliate to incur, a liability to or on account of a Plan under
sections 515, 4062, 4063, 4064, 4201 or 4204 of ERISA;
(ix) Contribute to or assume an obligation to
contribute to, or permit any Subsidiary or ERISA Affiliate to
contribute to or assume an obligation to contribute to, any employee
welfare benefit plan, as defined in section 3(1) of ERISA, including,
without limitation, any such plan maintained to provide benefits to
former employees of such entities, that may not be terminated by such
entities in their sole discretion at any time without any material
liability; or
(x) Amend or permit any Subsidiary or ERISA Affiliate
to amend, a Plan resulting in an increase in current liability such
that Lessee, any Subsidiary or any ERISA Affiliate is required to
provide security to such Plan under section 401(a)(29) of the Code.
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(n) Sale or Discount of Receivables. Without the prior written
consent of the Majority Tranche B Lenders, neither Lessee nor any Subsidiary
will discount or sell (with or without recourse) any of its notes receivable or
accounts receivable, except in the ordinary course of business.
(o) Certain Financial Covenants. Without the prior written
consent of the Majority Tranche B Lenders:
(i) Current Ratio. Lessee will not permit its ratio
of (A) Consolidated Current Assets to (B) Consolidated Current
Liabilities to be less than 1.0 to 1.0 at any time.
(ii) Total Debt to EBITDAR. Lessee will not permit
its Total Leverage Ratio as of the end of any Testing Period to be
greater than the ratios and for the periods indicated below:
Period Ratio
------ -----
Closing Date through 3/31/02 4.75 to 1.00
4/01/02 and at all times thereafter 4.50 to 1.00
(iii) Interest Coverage Ratio. Lessee will not permit
its Interest Coverage Ratio as of the end of any Testing Period to be
greater than the ratios and for the periods indicated below:
Period Ratio
------ -----
Closing Date through 3/31/02 2.00 to 1.00
4/01/02 through 3/31/04 2.25 to 1.00
4/01/04 and at all times thereafter 2.50 to 1.00
(iv) Test and Calculations of Financial Ratios. Until
the fiscal quarter beginning April 1, 2002, the financial ratios set
forth in clauses (i), (ii) and (iii) above will be tested on a
quarterly basis beginning March 31, 2001. Said financial ratios will be
calculated utilizing annualized results for the period from and
including the Closing Date through the applicable quarterly
determination date. From and including April 1, 2002 and at all times
thereafter, said financial ratios will be determined on a rolling
four-quarter basis.
(p) Sale of Properties. Without the prior written consent of
the Majority Tranche B Lenders, Lessee will not, and will not permit any
Subsidiary to, sell, assign, convey or otherwise transfer any Property; except
that Lessee and any Subsidiary:
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(i) may sell or otherwise dispose of any Property
which, in the reasonable judgment of such Person, is obsolete, worn out
or otherwise no longer useful in the conduct of such Person's business;
(ii) may sell or lease inventory or equipment to
their respective customers in the ordinary course of business; and
(iii) may dispose of Property necessary to effectuate
Operating Equipment Lease Facilities otherwise permitted hereby;
provided, however, 100% of the net proceeds received in connection with
any such disposition shall be used to prepay the outstanding principal
balance of the amounts borrowed under the Revolver on a dollar for
dollar basis.
(q) Environmental Matters. Without the prior written consent
of the Majority Tranche B Lenders, neither Lessee nor any Subsidiary will cause
or permit any of its Property to be in violation of, or do anything or permit
anything to be done which will subject any such Property to any remedial
obligations under any Environmental Law, assuming disclosure to the applicable
Governmental Entity of all relevant facts, conditions and circumstances, if any,
pertaining to such Property where such violations or remedial obligations would
have a Material Adverse Effect (Tranche B).
(r) Transactions with Affiliates. Without the prior written
consent of the Majority Tranche B Lenders, except for certain transition service
agreements entered into in conjunction with the Merger on or prior to the
Closing Date and disclosed to Administrative Agent and the Tranche B Lenders on
Schedule 14, neither Lessee nor any Subsidiary will enter into any transaction,
including, without limitation, any purchase, sale, lease or exchange of Property
or the rendering of any service, with any Affiliate (Tranche B) unless such
transactions are otherwise permitted under this Agreement, are in the ordinary
course of its business and are upon fair and reasonable terms no less favorable
to it than it would obtain in a comparable arm's length transaction with a
Person not an Affiliate (Tranche B).
(s) Subsidiaries. Without the prior written consent of the
Majority Tranche B Lenders, Lessee shall not, and shall not permit any
Subsidiary to, create any additional Subsidiaries except for (i) Subsidiaries
formed in connection with Operating Equipment Lease Facilities permitted
hereunder, (ii) Subsidiaries resulting from the Merger or from future mergers or
acquisitions permitted hereunder, and (iii) new Subsidiaries created by Lessee
in compliance with Section 9.3(h). Lessee shall not and shall not permit any
Subsidiary to sell or to issue any stock or ownership interest of a Subsidiary,
except to Lessee and except in compliance with Section 9.3(h).
(t) Negative Pledge Agreements. Without the prior written
consent of the Majority Tranche B Lenders, neither Lessee nor any Subsidiary
will create, incur, assume or permit to exist any contract, agreement or
understanding (other than this Agreement, the Revolver and the Security
Instruments) which in any way prohibits or restricts the granting, conveying,
creation or imposition of any Lien on any of its Property as may be required in
connection with this Agreement or restricts any Subsidiary from paying dividends
to Lessee, or
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which requires the consent of or notice to other Persons in connection
therewith, except for any such contract, agreement or understanding entered into
in connection with an Operating Equipment Lease Facility or otherwise existing
as of the Closing Date.
(u) Use of ERISA Assets. At no time shall Lessee use or
attempt to use any assets which would be deemed to be "plan assets" under the
"plan asset regulations" promulgated pursuant to ERISA to satisfy any or all
obligations under the Operative Documents.
9.4. Covenant of Tranche B Lenders, Lessor, Administrative
Agent and Collateral Agent and Limited Partners. If Lessor, any Tranche B
Lender, Administrative Agent or Collateral Agent is not a U.S. Person, it shall
provide, to Lessee and to any other party making payments to it under the
Operative Documents, on the Closing Date (or, if later at the time it becomes
Lessor, a Tranche B Lender, Administrative Agent or Collateral Agent, as the
case may be) and at such times as may be necessary thereafter under Applicable
Law as in effect on the Closing Date (including Section 1441 of the Code) and at
such other times as shall be reasonably requested by Lessee or any other party
making payments to it under the Operative Documents, a fully completed Internal
Revenue Service Form W-8 or successor form (including an appropriate Internal
Revenue Service Form W-8 completed as specified in Treasury Regulations section
1.1441-4(a)), along with any other forms or documents required to be attached to
such forms upon which Lessee or such other party can rely establishing that all
payments to each such Person under the Operative Documents can be made free and
clear of any requirement to withhold any United States federal income tax
therefrom; provided, however, that each such Person shall not be required to
provide such forms if, solely as a result of a change after the Closing Date in
Applicable Law as in effect on the Closing Date (or such later date) such Person
is not legally entitled to deliver such form. In the event of a failure to
provide any form as required under this Section 9.4 by any Tranche B Lender,
Lessor, Administrative Agent or Collateral Agent, the relevant party shall be
entitled to withhold from any payment made pursuant to the Operative Documents
to such Person the appropriate amount of federal income tax, notwithstanding the
provisions of the Operative Documents to the contrary and provided further, that
Lessee shall not have any indemnity obligation to such Person pursuant to
Section 10.3.5 hereof to the extent related to such failure.
10. Indemnities.
10.1. Lessee General Indemnification. Lessee hereby assumes
liability for, and does hereby agree to indemnify, protect, save, defend, and
hold harmless each Lessee Indemnified Person (and, with respect to clause (ix)
below, Arrangers) on an After-Tax Basis, from and against any and all
obligations, fees, expenses, costs, liabilities, losses, damages, penalties,
claims, demands, actions, suits, judgments and related costs and expenses,
including reasonable legal fees and expenses, of every kind and nature
whatsoever, imposed on, incurred by, or asserted against such Lessee Indemnified
Person (collectively, "Losses"), which relate in any way relate to or arise in
any way out of (i) the manufacture, construction, ordering, transfer, acceptance
or rejection, ownership, transfer of ownership, titling or re-titling,
registration or re-registration, delivery, leasing, subleasing, possession, use,
operation, maintenance, storage, removal, redelivery, repossession, mortgaging,
granting of any interest in, transfer of title to, acquisition, sale or other
application or disposition, disposition of licensing, documentation, of
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any Item of Equipment, or any part thereof, including, without limitation, any
of such as may arise from (A) loss or damage to any property or death or injury
to any Persons, (B) patent or latent defects in any Items of Equipment (whether
or not discoverable by Lessee or any Lessee Indemnified Person, (C) any claims
based on strict liability in tort or negligence, (D) any claims related to the
release of any substance into the environment and (E) any claims based on
patent, trademark, trade name or copyright infringement, or (ii) the Operative
Documents or the transactions contemplated hereby or thereby, or (iii) any
failure on the part of Lessee or Guarantor to perform or comply with any
Applicable Law, any of the terms of any Operative Document to which it is a
party or any instrument referred to or contemplated hereby or thereby or the
nonconformity of any Equipment with Applicable Law, or (iv) reliance on any
representation or warranty made or deemed made by Lessee or Guarantor or any of
their respective officers under or in connection with any Operative Document
which shall have been false or incorrect in any material respect when made or
deemed made or delivered, or (v) any repayment to Lessee by Lessor of any amount
previously distributed hereunder which amount such Person is required to repay,
or (vi) any investigation, litigation or proceeding related to any Operative
Document or the use of proceeds of Tranche A Notes, Tranche B Loans or Equity
Contributions or the ownership of the Tranche A Notes, Tranche B Notes or Equity
Certificates or in respect of the Lease Agreement, or (vii) the failure to vest
or maintain vested in Lessor and Collateral Agent or to transfer to Lessor or
Collateral Agent an undivided security interest in the Lessee Collateral or the
Lessor Collateral, respectively, including collections free and clear of Liens
to the extent required by the Operative Documents, or (viii) any agreement by
Lessor to pay any amounts under Section 6.5 of the Limited Partnership Agreement
or to indemnify any Person under the Lessor Indemnity Agreement, or (ix) the
engagement of the Appraiser with respect to the delivery of the Appraisal to be
delivered on or before the Closing Date. Lessee shall be subrogated to a Lessee
Indemnified Person's rights in any matter with respect to which Lessee has
actually reimbursed such Lessee Indemnified Person for amounts expended by it or
has actually paid such amounts directly pursuant to this Section 10.1. In case
any claim, action, suit or proceeding is made or brought against any Lessee
Indemnified Person in connection with any claim indemnified against hereunder,
such Lessee Indemnified Person will, promptly after receipt of notice of such
claim or the commencement of such action, suit or proceeding, notify Lessee
thereof, enclosing a copy of all papers served upon such Lessee Indemnified
Person, but failure to give such notice or to enclose such papers shall not
relieve Lessee from any liability hereunder unless such failure materially and
adversely affects Lessee's defense of such claim resulting in a material
increase in liability of Lessee in respect of such claim or preventing it from
reducing liability therefor, in which case Lessee shall not be required to
indemnify such Lessee Indemnified Person for the amount by which such liability
was increased or not reduced for failure to give such notice. Provided no Lease
Event of Default has occurred, Lessee will be entitled to participate in, and
assume the defense of, such claim, action, suit or proceeding, or cause the same
to be resisted or defended by counsel selected by Lessee and reasonably
acceptable to the Lessee Indemnified Person; provided, however, if such claim,
action, suit or proceeding involves any material risk of loss or forfeiture of
title to the Equipment (unless Lessee shall have posted a bond or other security
reasonably satisfactory to Administrative Agent in respect of such risk) or any
material risk of criminal penalty being assessed against any Lessee Indemnified
Person, upon such Lessee Indemnified Person's request, Lessee will at its
expense, cause such claim, action, suit or proceeding to be resisted or defended
by counsel selected by
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such Lessee Indemnified Person and reasonably acceptable to Lessee. After notice
from Lessee to such Lessee Indemnified Person of Lessee's election to so assume
the defense of such claim, action, suit or proceeding, Lessee will not be liable
to such Lessee Indemnified Person for any costs and expenses of any settlement
of such claim, action, suit or proceeding effected by such Lessee Indemnified
Person without the prior written consent of Lessee (which consent will not be
unreasonably withheld). Such Lessee Indemnified Person may participate at its
own expense in any such claim, action, suit or proceeding controlled by Lessee
pursuant hereto; provided such participation does not, in the opinion of
independent counsel appointed by Lessee, interfere with such control) and such
participation will not constitute a waiver of the indemnification provided in
this Section 10. In the event of any failure by Lessee to satisfy its
obligations under this Section 10.1, Lessee shall pay all reasonable costs and
expenses (including, without limitation, attorney's fees and expenses) incurred
by such Lessee Indemnified Person in connection with such action, suit or
proceeding. Additionally, if outside counsel to such Lessee Indemnified Person
determines that a conflict of interest exists between such Person and Lessee
regarding any Loss indemnified hereunder, Lessee agrees to pay the reasonable
fees and expenses of separate counsel for and as selected by such Lessee
Indemnified Person. The provisions of this Section 10.1, and the obligations of
Lessee under this Section 10.1, shall apply from the date of this Agreement
notwithstanding that the Term may not have commenced, and shall survive and
continue in full force and effect notwithstanding the expiration or earlier
termination of this Agreement, the Lease Agreement or any other Operative
Document in whole or in part, including the expiration of termination of the
Term with respect to any Item of Equipment, and are expressly made for the
benefit of, and shall be enforceable by Lessor.
10.2. Exceptions to Lessee's General Indemnification.
Notwithstanding the terms of Section 10.1, Lessee shall not be required to
indemnify any Lessee Indemnified Person under Section 10.1 for any of the
following: (i) any Loss to the extent resulting from the willful misconduct or
gross negligence of such Lessee Indemnified Person (it being understood that
Lessee shall be required to indemnify any Lessee Indemnified Person even if the
ordinary (but not gross) negligence of such Lessee Indemnified Person caused or
contributed to such Loss), (ii) any Loss resulting from Lessor Liens
attributable to such Lessee Indemnified Person, (iii) any Loss to the extent
attributable to acts or events occurring after the end of the Term, if any, so
long as no Lease Event of Default shall have occurred and be continuing and the
Equipment has either been purchased or redelivered in accordance with the terms
of Section 6.1, 28.2, 28.3 or 28.4 of the Lease Agreement, (iv) any Loss (other
than a Loss attributable to a Lease Event of Default) arising from a breach by
such Lessee Indemnified Person of any agreement entered into in connection with
the assignment or participation of any interest of such Lessee Indemnified
Person under the Lease Agreement or the other Operative Documents, (v) any Loss
to the extent arising or resulting from the failure of such Lessee Indemnified
Person to comply with laws applicable to financial institutions or their
affiliates generally or the failure of such Lessee Indemnified Person to file
any material notice, report, filing or other document required by any
Governmental Entity regulating banks or their affiliates in connection with such
Lessee Indemnified Person's execution of, and participation in the transactions
contemplated by, the Operative Documents except to the extent resulting from the
acts or omissions of Lessee or Guarantor, (vi) any other expense or Loss to the
extent expressly provided under any of the Operative Documents to be paid or
borne by such Lessee Indemnified Person at its own expense,
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(vii) any Loss to the extent resulting from the offer, sale, disposition or
transfer by such Lessee Indemnified Person of all or part of its interest in the
Operative Documents, other than a Loss arising as a result of the occurrence of
a Lease Event of Default, (viii) any Loss that is a Tax or based on a Tax, (ix)
any Loss to the extent resulting from any business, transaction or other
activity in which such Lessee Indemnified Person is engaged, which has no
relation to the transactions contemplated hereby or by any of the Operative
Documents, (x) any Loss resulting from a Tranche A Event of Default or Tranche B
Event of Default not attributable to a Lease Event of Default, (xi) any Loss
which is an ordinary and usual operating or overhead expense of such Lessee
Indemnified Person except expenses incurred relating to an Lease Event of
Default, (xii) any Loss in connection with any dispute between or among Lessee
Indemnified Persons other than Losses caused by a Lease Event of Default and
(xiii) any Loss arising under Section 406(a) of ERISA or Section 4975 of the
Code (a) as a result of Loans or funds advanced by Tranche B Lenders or Lessor
being deemed to be "plan assets" under the "plan asset regulations" promulgated
pursuant to ERISA or (b) as a result of a violation of Section 406(b) of ERISA
or Section 4975(c)(1) (E) or (F) of the Code by Tranche B Lenders or Lessor.
Section 10.1 shall be construed as an indemnity only and not a guaranty of
residual value of the Items of Equipment.
10.3. Tax Indemnity.
10.3.1. General Indemnity. Subject to the other
provisions of this Section 10.3, Lessee agrees to pay, defend and indemnify and
hold Lessor, Indenture Trustee, Administrative Agent and Collateral Agent and
their respective Affiliates, successors and assigns (including any consolidated
or combined group of which any such Person is a member) (each a "Tax
Indemnitee") harmless on an After-Tax Basis from any and all federal, state,
local and foreign taxes, excise taxes, fees, withholdings, levies, documentary
stamps, imposts, duties, assessments, penalties and charges of any kind and
nature whatsoever, together with any penalties, fines or interest thereon
(herein called "Taxes") howsoever imposed, whether levied or imposed upon or
asserted against a Tax Indemnitee, Lessee, any Item of Equipment, or any part
thereof, by any federal, state or local government or taxing authority in the
United States, or by any taxing authority of a foreign country or subdivision
thereof, upon or with respect to (i) the Items of Equipment, any Item of
Equipment or any part thereof, (ii) the manufacture, construction, ordering,
transfer, ownership, transfer of ownership, titling or re-titling, registration
or re-registration, delivery, leasing, subleasing, possession, use, operation,
maintenance, storage, removal, return, mortgaging, granting of any interest in,
transfers of title to, acquisition, sale or other disposition of licensing,
documentation, repossession, sale or other acquisition or disposition of the
Items of Equipment, any Item of Equipment or any part thereof, (iii) the
revenues, rent, receipts or earnings arising from any Item of Equipment or any
part thereof, (iv) any Operative Document, (v) any Lease Payment or Supplemental
Payment or any payment made to Lessor, Indenture Trustee or any Tranche A
Noteholder, any Tranche B Lender, by Lessor or Lessee pursuant to the Operative
Documents, or (vi) otherwise in respect of the Operative Documents or any
thereof or any transaction or transactions contemplated hereby or thereby.
Lessee further agrees to defend and indemnify and hold Lessor harmless on an
After-Tax Basis from any and all Taxes howsoever imposed, whether levied or
imposed upon or asserted against any Person by any federal, state or local
government or taxing authority in the United States, or by any taxing authority
of a foreign country or subdivision thereof against which Lessor has agreed to
indemnify such Person under the Lessor Indemnity Agreement.
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10.3.2. Exceptions to Tax Indemnity. Notwithstanding
anything to the contrary in Section 10.3.1, the following shall be excluded from
the indemnity provided under Section 10.3.1: (i) Taxes (other than Taxes that
are, or are in the nature of, sales, use, rental, value added, transfer or
property taxes) that are imposed on a Tax Indemnitee by the United States
federal government that are based on or measured by the gross or net income or
gross or net receipts, taxes based on capital gains and minimum taxes and any
and all withholding Taxes (which, for the avoidance of doubt, are dealt with in
Section 10.3.5 hereof) of such Person; provided, that this clause (i) shall not
be interpreted to prevent a payment from being made hereunder on an After-Tax
Basis if such payment is otherwise required to be so made; (ii) Taxes (other
than Taxes that are, or are in the nature of, sales, use, rental, value added,
transfer or property taxes) that are imposed on any Tax Indemnitee (other than
Lessor) by any state, local or foreign jurisdiction or taxing authority within
any state or local or foreign jurisdiction and that are net income taxes, or are
franchise taxes, any gross income or gross receipts taxes imposed in lieu of a
net income tax, taxes based on capital gains and minimum taxes and any and all
withholding Taxes (which, for the avoidance of doubt, are dealt with in Section
10.3.5 hereof) of such Person; provided that such Taxes shall not be excluded
under this clause (ii) to the extent such Taxes would have been imposed had the
location, possession or use of any Equipment in, the location or the operation
of Lessee, Lessor or Guarantor in, or Lessor's, Lessee's or Guarantor's making
payments under the Operative Documents from, the jurisdiction imposing such
Taxes been the sole connection between such Tax Indemnitee and the jurisdiction
imposing such Taxes, unless, however, such Tax Indemnitee would have been
subject to tax in such jurisdiction absent the transactions contemplated by the
Operative Documents; provided further, that Lessor is indemnified for all Taxes
excluded by this subsection (ii); provided further, that this clause (ii) shall
not be interpreted to prevent a payment from being made on an After-Tax Basis if
such payment is otherwise required to be so made; (iii) provided that all
amounts due from Lessee under the Operative Documents have been paid, any Tax to
the extent it relates to any act, event or omission that occurs after the
termination of the Lease Agreement and, if required, redelivery or sale of an
Item of Equipment in accordance with the terms of the Lease Agreement (but not
any Tax that is otherwise excluded herein or is imposed with respect to such
termination, redelivery or sale or to any period prior to such termination,
redelivery or sale); (iv) any Taxes which are imposed on a Tax Indemnitee as a
result of the gross negligence or willful misconduct of such Tax Indemnitee
itself, as determined by a court of competent jurisdiction (as opposed to gross
negligence or willful misconduct imputed to such Tax Indemnitee), but not Taxes
imposed as a result of ordinary negligence of such Tax Indemnitee; (v) Taxes
imposed on, or increased (under Applicable Law in effect on the date of the
transfer) as a result of a voluntary transfer by the Tax Indemnitee or any
transfer as a result of the bankruptcy of such Tax Indemnitee not caused by a an
Event of Default under Section 23(a) of the Lease Agreement of any Item of
Equipment or interest therein or any interest in or arising under any Operative
Document or any transactions contemplated thereby other than any such transfer
required by law or by the Operative Document, occurring pursuant to the exercise
of remedies during the continuance of a Lease Event of Default or requested by
Lessee; (vi) with respect to Lessor, any Tax that results from or would not have
been imposed but for the breach or inaccuracy of any representation set forth in
Section 2.3 or 2.4 hereof, as the case may be; (vii) any Tax to the extent
resulting in whole or in part from the failure of any Tax Indemnitee to file a
return that is proper and timely unless such failure results from the failure of
Lessee to perform its obligations
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under Section 10.3.4 hereof; and (viii) any Tax that results from or would not
have imposed but for the failure of any Tax Indemnitee, at Lessee's sole cost,
to provide any form, certificate or other document reasonably requested by,
prepared by and timely provided to such Tax Indemnitee by Lessee, legally able
to be provided by such Tax Indemnitee and necessary to avoid the imposition of
such Tax provided that such Tax Indemnitee reasonably determines that to so
provide such form, certificate or other document would have no adverse effect on
it.
10.3.3. Payment of Taxes. Subject to the terms of
Section 10.3.6, Lessee agrees to pay or cause to be paid all Taxes indemnified
pursuant to Section 10.3.1 directly to the taxing authorities where feasible and
otherwise to the Tax Indemnitee, as appropriate, and Lessee shall at its own
expense, upon such Tax Indemnitee's reasonable request, furnish to such Tax
Indemnitee copies of official receipts or other reasonably satisfactory evidence
of such payment. In the case of Taxes for which no contest is conducted pursuant
to Section 10.3.6 and which Lessee pays directly to the taxing authorities,
Lessee shall pay such Taxes prior to the latest time permitted by the relevant
taxing authority for timely payment. In the case of Taxes for which a Lessee
reimburses a Tax Indemnitee, Lessee shall do so within thirty (30) days after
receipt by Lessee of demand by such Tax Indemnitee describing in reasonable
detail the nature of the Tax and the basis for the demand (including without
limitation the computation of the amount payable), accompanied by receipts or
other reasonable evidence of payment of the Tax in respect of such demand. In
the case of Taxes for which a contest is conducted pursuant to Section 10.3.6
Lessee agrees to pay such Taxes or reimburse such Tax Indemnitee for such Taxes,
to the extent not previously paid or reimbursed pursuant to Section 10.3.1,
prior to the latest time permitted by the relevant taxing authority for timely
payment after conclusion of all contests hereunder.
At Lessee's written request, the amount of any
indemnification payment by Lessee pursuant to Section 10.3.1 shall be verified
and certified by the independent public accounting firm regularly engaged by
such Tax Indemnitee. The fees and expenses of such independent public accounting
firm shall be paid by Lessee unless such verification shall result in an
adjustment in Lessee's favor of five percent (5%) or more of the payment as
computed by the Tax Indemnitee, in which case such fee shall be paid by the Tax
Indemnitee.
10.3.4. Tax Filings. Lessee shall be responsible for
preparing and filing any real and personal property or ad valorem tax returns in
respect of the Equipment. In the case of any other report, statement or tax
return that shall be required to be made with respect to any Taxes which are
indemnified by Lessee pursuant to Section 10.3.1, Lessee, at its sole cost and
expense, shall notify the relevant Tax Indemnitee of such requirement and
(except if such Tax Indemnitee notifies Lessee that such Tax Indemnitee intends
to prepare and file such report or return) (i) to the extent required or
permitted by and consistent with filing requirements in the applicable
jurisdiction, make and file in Lessee's name such return, statement or report
and (ii) in the case of any other such return, statement or report required to
be made in the name of such Tax Indemnitee, advise such Tax Indemnitee of such
fact and prepare such return, statement or report for filing by such Tax
Indemnitee or, where such return, statement or report shall be required to
reflect items in addition to any obligations of Lessee under or arising out of
Section 10.3.1, provide such Tax Indemnitee at Lessee's expense with information
sufficient to permit such return, statement or report to be properly made with
respect to any obligations of Lessee under or arising out of Section 10.3.1.
Such Tax Indemnitee shall, upon Lessee's request and at
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Lessee's expense, provide any data not deemed confidential by such Tax
Indemnitee maintained by such Tax Indemnitee (and not otherwise available to or
within the control of Lessee) with respect to the Equipment which Lessee may
reasonably require to prepare any required Tax returns or reports.
10.3.5. Withholdings. As between Lessee on one hand,
and Lessor, Administrative Agent and Collateral Agent (each a "Withholding
Party") on the other hand, Lessee shall be responsible for, and Lessee shall
indemnify and hold harmless each Withholding Party on an After Tax Basis
against, any obligation for United States or foreign withholding taxes or
similar levies, imposts, charges, fees, deductions or withholdings
(collectively, "Withholdings") imposed in respect of any part of the Lease
Payments, interest or other amounts payable by Lessee or Lessor to any
Withholding Party, or with respect to any other payments under the Operative
Documents (all such payments being referred to herein as "Exempt Payments" to be
made without deduction, withholding or set off) (and, if any Withholding Party
receives a demand for such payment from any taxing authority or a Withholding is
otherwise required with respect to any Exempt Payment, Lessee shall discharge
such demand on behalf of such Withholding Party); provided, however, that the
obligation of Lessee under this Section 10.3.5 shall not apply to any
Withholdings that would not have been imposed but for such Withholding Party's
failure to comply with Section 9.4.
If a Tax Indemnitee or a Withholding Party or any
Affiliate with whom such Tax Indemnitee or a Withholding Party files a
consolidated tax return (or equivalent) subsequently receives the benefit in any
country of a tax credit, deduction or other allowance or reduction resulting
from Taxes or Losses with respect to which it or an Affiliate has received a
payment of an indemnity amount from Lessee under Section 10.1 or 10.3, such
Person will pay to Lessee such part of that benefit as in the sole discretion of
such Person will leave it (after such payment) in a position no more and no less
favorable than it would have been in if no additional payment had been required
to be paid, provided always that (i) such Person will determine in its sole
discretion, exercised in good faith, the amount and allocation of any such
benefit and of the date on which it is received and of any After-Tax Basis
calculation required with respect to payments to or from it, (ii) such Person
will have the absolute discretion as to the order and manner in which it employs
or claims tax credits and allowances available to it and (iii) such Person will
not be obliged to disclose to Lessee any information regarding its tax affairs
or tax computations.
10.3.6. Tax Contests. If a claim is made in writing
against any Tax Indemnitee for any Taxes which Lessee is required to pay or
indemnify against pursuant to Section 10.3.1, such Tax Indemnitee shall promptly
notify Lessee in writing, provided that, without prejudice to any rights or
claims for damages Lessee may have as a result of such failure, the failure to
so notify Lessee will not reduce Lessee's obligation under Section 10.3 except
if such failure precludes the contest of such claim. Subject to the next
sentence, if requested by Lessee in writing within thirty (30) days after
receipt by Lessee of a notice described in the preceding sentence, such Tax
Indemnitee and, if required or appropriate to prosecute such contest, any other
Tax Indemnitee, shall permit such Lessee, to contest in the name of Lessee, and
if such contest by such Lessee in the name of such Lessee is not permissible or
allowed, shall, at the request of Lessee, permit such Lessee to contest in the
name of the Tax Indemnitee
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and, if such contest by Lessee in the name of the Tax Indemnitee is not
permissible or allowed, shall, at the request of Lessee diligently contest in
good faith (including pursuing all administrative and judicial appeals) the
validity, applicability or amount of such Taxes in appropriate administrative or
judicial proceedings; provided that (i) prior to taking such action Lessee shall
have agreed to pay and shall have provided an undertaking reasonably acceptable
to such Tax Indemnitee with respect thereto or shall have paid each Tax
Indemnitee that is engaged in such contest in a satisfactory manner for all
out-of-pocket costs and expenses which such Tax Indemnitee may incur in
connection with contesting such claim, including, without limitation, all
reasonable legal and accountant's fees and disbursements and costs of
administrative and judicial proceedings, and the amount of any interest or
penalties which may be payable as a result of contesting such claim, (ii) if
such contest is to be initiated by the payment of, and the claiming of a refund
for, such Taxes (such election to be within the sole discretion of Lessee),
Lessee shall have advanced such Tax Indemnitee sufficient funds (on an
interest-free basis and on an After-Tax Basis) to make such payment, (iii) any
action to be taken will not result in a material risk of sale, forfeiture or
loss of Lessor's title to, or Lessor's or Collateral Agent's interest in, any
Item of Equipment unless Lessee shall have made provision against such risk in a
manner acceptable to such Tax Indemnitee in its sole discretion, (iv) such Tax
Indemnitee shall not have determined, based on an opinion of such Tax
Indemnitee's counsel, that such action is reasonably likely to result in adverse
consequences to the future tax liability of such Tax Indemnitee not indemnified
to such Tax Indemnitee's satisfaction and (v) Lessee shall have delivered to
such Tax Indemnitee a written acknowledgment of its liability hereunder for such
Taxes, provided that such acknowledgment shall not be binding on such Lessee if
the contest of such Taxes is resolved through a written opinion of an
adjudicator stating a basis for such resolution that demonstrates Lessee has no
liability to such Tax Indemnitee hereunder for such Taxes and provided further,
that such Lessee shall have no right to contest in the name of a Tax Indemnitee,
and such Tax Indemnitee shall itself contest, if the contest involves issues
with respect to which Lessee would not be required to indemnify such Tax
Indemnitee hereunder and which cannot be severed by reasonable efforts of such
Tax Indemnitee from all issues with respect to which Lessee would be liable
hereunder or the severance of which would adversely affect the position of such
Tax Indemnitee, and in any such contest such Tax Indemnitee may in its sole
discretion select the forum for such contest and determine in good faith the
manner in which such contest shall be conducted, including, without limitation,
the pursuit of appeals, but shall consult with Lessee and its counsel in good
faith with respect to such Lessee's interests with respect to contest. If a
claim for Taxes is made in writing against any Tax Indemnitee and such Tax
Indemnitee complies with its obligations under this Section 10.3.6, Lessee and
such Tax Indemnitee shall, for purposes of determining the amount, if any,
payable to such Tax Indemnitee under Section 10.3, be bound by the results of
any contest under this Section 10.3.6 (or by the final written assessment by the
relevant taxing authority, if Lessee elect not to contest under this Section
10.3.6) as to the amount of Tax due to the relevant taxing jurisdiction, the
validity and applicability of such Tax, and any stated reason as to the basis
for the imposition of such Tax contained in the final determination with respect
to such contest. If any Tax Indemnitee shall determine in its sole discretion
that it has either obtained a refund of or been granted a credit, deduction or
other allowance or reduction against Taxes for which Lessee is not obligated to
indemnify such Tax Indemnitee hereunder for amounts corresponding to all or any
part of any Taxes which Lessee shall have paid to any Tax Indemnitee or for
which Lessee shall have
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reimbursed any Tax Indemnitee hereunder, such Tax Indemnitee shall, provided
that no Lease Event of Default shall have occurred and be continuing, pay to
Lessee an amount which is equal to the sum of the amount of such refund or
credit, deduction or other allowance or reduction, plus any interest received
(or credited against Taxes for which Lessee is not obligated to indemnify such
Tax Indemnitee hereunder) on such refund fairly attributable to any Taxes paid
by such Lessee or with funds provided by Lessee prior to the receipt of such
refund, reduced by any Taxes incurred by such Tax Indemnitee by reason of the
receipt or accrual of such refund and interest, and increased by any tax benefit
realized by Tax Indemnitee as a result of any payment by such Tax Indemnitee
made pursuant to this sentence so as to return such Tax Indemnitee to the same
net after-tax position it would have been in if the Taxes so refunded or
credited had not been imposed; provided further, that a Tax Indemnitee shall not
be obligated to pay any Lessee an amount in excess of all amounts of Taxes (and
additional amounts described in Section 10.3) previously paid by Lessee pursuant
to Section 10.3 to such Tax Indemnitee, provided further, however, that such Tax
Indemnitee shall pay any amounts that it is not required to pay to Lessee solely
by reason of the foregoing proviso at such time as Lessee shall have made any
additional payments to such Indemnitee pursuant to Section 10.3 hereof equal to
such amounts, and if a Lease Event of Default shall have occurred and be
continuing, such Tax Indemnitee shall have the option of applying the amount
otherwise due any Lessee pursuant to this sentence against Lessee obligations
under any Operative Document or of holding such amount as security for Lessee
full performance of such obligations until the earlier of (x) the date all
obligations owed to such Tax Indemnitee under the Operative Documents have been
paid in full and (y) the curing of such Lease Event of Default, after which such
Tax Indemnitee shall pay such amount to Lessee. Any Tax Indemnitee shall be
entitled to settle any claim that is the subject of a contest hereunder without
the consent of Lessee provided that, in so doing, such Tax Indemnitee shall
waive any rights to indemnification by Lessee with respect to such settled claim
and any other claim the contest of which would be precluded as a result of such
settlement hereunder and shall repay to Lessee any amounts advanced to pay such
contested Taxes with interest actually received in respect thereof and release
any undertaking required hereunder.
10.3.7. Special Tax Indemnity. Lessee shall pay and
assume all liability for, and does hereby agree to indemnify each Tax Indemnitee
on an After Tax Basis for any tax, addition to tax, penalty, or other cost as a
result of the breach, inaccuracy or incorrectness of the representation found in
Section 2.1(j). Notwithstanding anything to the contrary in this Section 10.3.7,
Lessee shall not be obligated to indemnify any Tax Indemnitee pursuant to this
Section 10.3.7 in respect of any tax, penalty, or other cost that results from
or would not have occurred but for any failure by such Tax Indemnitee to provide
the information requested by Lessee in accordance with Section 2.1(j). Any claim
under this Section 10.3.7 shall be subject to the contest provisions of Section
10.3.6 (applied as if such claim were in respect of a Tax indemnified by Lessee
under Section 10.3.1) and the verification provisions of Section 10.3.3 (applied
as if the amount to be paid under this Section 10.3.7 was a payment required
under Section 10.3.1 hereof).
10.4. Increased Costs, Illegality, etc. Lessee hereby assumes
liability for, and does hereby agree to indemnify, protect, save, defend and
hold harmless Lessor on an After-Tax Basis, from and against any and all amounts
that Lessor is obligated to pay any Tranche B Lender
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under Section 2.7 of the Tranche B Loan Agreement or any Limited Partner under
Section 6.5 of the Limited Partnership Agreement.
Lessor shall promptly, or Administrative Agent may, give
notice (by telephone promptly confirmed in writing) to Lessee of each claim
under this Section 10.4 which written notice shall show in reasonable detail the
basis for the calculation thereof and shall, absent manifest error, be final and
conclusive and binding on all the parties hereto).. Lessee shall pay to Lessor,
or at Administrative Agent's direction, the Person to whom Lessor has obligation
to pay such amount, within fifteen (15) days of the earlier of Lessor's and
Administrative Agent's written request therefor, such amounts owed by Lessor to
such Person.
10.5. Lessee Indemnity. Lessee hereby assumes liability for,
and does hereby agree to indemnify, protect, save, defend, and hold harmless
Lessor on an After-Tax Basis from and against any and all Losses and each Tax
Indemnitee against any and all amounts owed by Lessor under the Loan Agreement
to the extent that there is a Lease Payment corresponding to the Loan payment
for which the indemnity is claimed under Section 10.2 hereof.
10.6. Survival. All obligations provided for in this Section
10 shall survive the resignation or removal of Administrative Agent or
Collateral Agent under Section 11.7, the sale of any Item of Equipment, any
termination of the Lease Agreement, the termination of this Agreement, and the
payment in full of the Tranche A Notes, the Tranche B Loans, the Equity
Certificates and all amounts arising under the Lease Agreement, Tranche A Notes,
Tranche B Loans and Limited Partnership Agreement.
11. Administrative Agent and Collateral Agent.
11.1. Authorization and Action of Administrative Agent.
(a) (i) Indenture Trustee for itself and on behalf of Tranche
A Noteholders and (ii) each Tranche B Lender hereby appoints and authorizes
Administrative Agent to take such action as agent on their behalf and to
exercise such powers under this Agreement and the other Operative Documents as
are delegated to Administrative Agent by the terms hereof and thereof, together
with such powers as are reasonably incidental thereto. Except as otherwise
provided in the Limited Partnership Agreement, Administrative Agent shall act
solely as agents for Indenture Trustee and Tranche B Lenders and does not assume
nor shall be deemed to assume any obligation or relationship of trust or agency
with any of Lessee, Lessor, or Guarantor. As to any matters not expressly
provided for by a Operative Document (including enforcement or collection of the
Tranche A Notes or Tranche B Loans), Administrative Agent shall not be required
nor authorized to exercise any discretion or take any action, but shall be
required to act or to refrain from acting (and shall be fully protected in so
acting or refraining from acting) upon the instructions of (i) Indenture Trustee
acting on behalf of Majority Tranche A Noteholders, and (ii) Majority Tranche B
Lenders, and such instructions shall be binding, in the case of instructions
under clause (i), upon Indenture Trustee and each Tranche A Noteholder and, in
the case of instructions under clause (ii), upon each Tranche B Lender;
provided, however, Administrative Agent shall not be required to take any action
which exposes it to personal liability or which is contrary to any Operative
Document or Applicable Law. Administrative
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Agent agrees to give to Indenture Trustee, and Tranche B Lenders prompt notice
of each notice given to it by Lessor or Lessee pursuant to the terms of this
Agreement; provided, however, Administrative Agent shall not be deemed to have
any notice of a Loan Default or Loan Event of Default unless it has received
notice of such from another party hereto. Administrative Agent may, with the
prior consent of Indenture Trustee acting on behalf of Majority Tranche A
Noteholders, or Majority Tranche B Lenders, as the case may be, agree to any
waiver or amendment of the Operative Documents on behalf of all Tranche A
Noteholders, or all Tranche B Lenders, as the case may be; provided, however,
Administrative Agent will not, without the prior consent of (i) Indenture
Trustee acting on behalf of all Tranche A Noteholders, and (ii) all Tranche B
Lenders, agree to any waiver or amendment that would (A) postpone the time or
times for payment of any amount payable under this Agreement or the Lease
Agreement or (B) reduce any Lease Payment payable under this Agreement or the
Lease Agreement. Administrative Agent will not, without the prior consent of (i)
Indenture Trustee on behalf of all Tranche A Noteholders and (ii) all Tranche B
Lenders, agree to any waiver or amendment that would, prior to the payment in
full of the Secured Obligations, release all or substantially all of the Lessor
Collateral from the Lien created by the Security Documents, other than in
accordance with the terms of the Operative Documents. Administrative Agent shall
pursue the remedies under the Operative Documents following a Loan Event of
Default in good faith and in a commercially reasonable manner and in accordance
with the instructions of Majority Tranche B Lenders provided, however,
Administrative Agent shall be under no obligation to pursue such remedies unless
such Majority Tranche B Lenders have offered to Administrative Agent security or
indemnity satisfactory to it as to the terms, coverage, duration, amount or
otherwise with respect to the costs, expenses and liabilities that may be
incurred by it in compliance with such written instructions, requests or
directions; provided further Administrative Agent shall not, without the consent
of (i) Indenture Trustee in accordance with the terms of the Indenture and (ii)
Majority Tranche B Lenders (A) approve any plan of reorganization or liquidation
arising out of a Lease Event of Default of the type described in Section 23(h)
of the Lease Agreement, a Tranche A Event of Default of the type described in
Sections 5.01(h) and (i) of the Indenture or a Tranche B Event of Default of the
type described in Section 5.1.4 of the Tranche B Loan Agreement (B) approve,
sell or cause the sale of Equipment in a single transaction or a series of
related transactions of Equipment with value in excess of $30,000,000 (other
than a sale in accordance with the terms of the Lease Agreement provided no
Lease Event of Default has occurred and is continuing). The appointment and
authority of Administrative Agent hereunder shall terminate upon the
indefeasible payment in full of all amounts owed Indenture Trustee, each Secured
Party, Administrative Agent and Collateral Agent under the Operative Documents.
(b) (i) Indenture Trustee, for itself and on behalf of Tranche
A Noteholders, and (ii) each Tranche B Lender hereby appoints and authorizes
Collateral Agent to take such action as agent on their behalf and to exercise
such powers under this Agreement and the other Operative Documents as are
delegated to Collateral Agent by the terms hereof and thereof, together with
such powers as are reasonably incidental thereto. Collateral Agent shall act
solely as agent for Indenture Trustee and Tranche B Lenders and does not assume
nor shall be deemed to assume any obligation or relationship of trust or agency
with any of Lessee, Lessor, Limited Partners, Lessor General Partner or
Guarantor. As to any matters not expressly provided for by a Operative Document
(including enforcement or collection of the Tranche A Notes or the Tranche
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B Loans), Collateral Agent shall not be required nor authorized to exercise any
discretion or take any action, but shall be required to act or to refrain from
acting (and shall be fully protected in so acting or refraining from acting)
upon the instructions of Administrative Agent acting on behalf of Secured
Parties, and such instructions shall be binding upon Indenture Trustee and all
Secured Parties; provided, however, Collateral Agent shall not be required to
take any action which exposes it to personal liability or which is contrary to
any Operative Document or Applicable Law. Collateral Agent agrees to give to
Indenture Trustee and Tranche B Lenders prompt notice of each notice given to it
by Lessor or Lessee pursuant to the terms of this Agreement; provided, however,
Collateral Agent shall not be deemed to have any notice of a Loan Default or
Loan Event of Default unless it has received notice of such from another party
hereto. Collateral Agent shall pursue the remedies of Secured Parties under the
Operative Documents following a Loan Event of Default in accordance with the
instructions of Administrative Agent; provided, however, Collateral Agent shall
be under no obligation to pursue such remedies unless one or more Tranche B
Lenders have offered to Collateral Agent security or indemnity satisfactory to
it as to the terms, coverage, duration, amount or otherwise with respect to the
costs, expenses and liabilities that may be incurred by it in compliance with
such written instructions, requests or directions. The appointment and authority
of Collateral Agent hereunder shall terminate upon the indefeasible payment in
full of all amounts owed Indenture Trustee, each Secured Party, Administrative
Agent and Collateral Agent under the Operative Documents.
(c) Lessor and Tranche B Lenders hereby designate
Administrative Agent, and Administrative Agent hereby agrees, to calculate the
interest due on the Tranche B Loans, the Equity Yield and the Floating Lease
Payments on each Floating Payment Date and give notice of such amounts to
Lessee, Lessor, and each Tranche B Lender at least two (2) Business Days before
such Floating Payment Date.
11.2. Delegation of Duties. Administrative Agent and
Collateral Agent may execute any of their duties under these Operative Documents
through agents or attorneys-in-fact and shall be entitled to advice of counsel
concerning all matters pertaining to such duties. Neither Administrative Agent
nor Collateral Agent shall be responsible for the negligence or misconduct of
any agents or attorneys-in-fact selected by it with reasonable care.
11.3. Agent's Reliance, etc. Neither Administrative Agent nor
Collateral Agent nor any of their respective directors, officers, agents or
employees shall be liable for any action taken or omitted by it or them under or
in connection with any Operative Document, except for its or their own gross
negligence or willful misconduct. Without limitation of the generality of the
foregoing, each of Administrative Agent and Collateral Agent (i) may consult
with legal counsel (including counsel for Lessee), independent public
accountants and other experts selected by it and shall not be liable for any
action taken or omitted in good faith by it in accordance with the advice of
such counsel, accountants or experts, (ii) makes no warranty or representation
to Indenture Trustee or Secured Parties and shall not be responsible to
Indenture Trustee or Secured Parties for any statements, warranties or
representations made in or in connection with any Operative Document, (iii)
shall not have any duty to ascertain or to inquire as to the performance or
observance of any of the terms, covenants or conditions of any Operative
Document on the part of Lessee or Lessor or to inspect the property (including
the books and records) of Lessee or Lessor, (iv) shall not be responsible to
Indenture Trustee or
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Secured Parties for the due execution, legality, validity, enforceability,
genuineness, sufficiency or value of any Operative Document or any other
instrument or document furnished pursuant thereto, and (v) shall incur no
liability under or in respect of any Operative Document by acting upon any
notice, consent, certificate or other instrument or writing (which may be by
fax, telegram, cable or telex) believed by it to be genuine and signed or sent
by the proper party or parties (including, but not limited to any notice,
consent, certification, other instrument or writing from Indenture Trustee
purportedly on behalf of Tranche A Noteholders or from Administrative Agent
purportedly on behalf of any Tranche A Noteholders or from Administrative Agent
purportedly on behalf of any Secured Parties. The permissive right of
Administrative Agent and Collateral Agent to take the actions permitted by this
Agreement shall not be construed as an obligation or duty to do so.
11.4. Administrative Agent, Collateral Agent and Affiliates.
With respect to any Tranche B Loans or Equity Contributions made by it, any
Tranche A Note purchased by it or any Equity Certificate held by it, each of
Administrative Agent and Collateral Agent shall have the same rights and powers
under each Operative Document as any other Tranche B Lender or Limited Partner
as the case may be and may exercise the same as though it were not an agent
hereunder. Administrative Agent and Collateral Agent and their respective
Affiliates may accept deposits from, lend money to, act as trustee under
indentures of, and generally engage in any kind of business with, Lessor, Lessee
or Guarantor, any of their Affiliates and any Person who may do business with or
own securities of Lessor, Lessee or Guarantor or any such Affiliate, all as if
Administrative Agent and Collateral Agent were not an agent hereunder and
without any duty to account therefor to any other party hereto.
11.5. Credit Decisions. Each Tranche B Lender acknowledges
that it has, independently and without reliance upon Administrative Agent or
Collateral Agent, and based on the financial statements of Lessee and Guarantor
and such other documents and information as it has deemed appropriate, made its
own credit analysis and decision to enter into this Agreement and the other
Operative Documents. Each Tranche B Lender also acknowledges that it will,
independently and without reliance upon Administrative Agent or Collateral
Agent, as the case may be 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 the Operative Documents.
11.6. Indemnification. Each Tranche B Lender agrees to
indemnify Administrative Agent and Collateral Agent, (to the extent not
reimbursed by Lessor or Lessee) ratably according to its pro rata share on the
aggregate outstanding balances of the Tranche B Loans ("Indemnity Pro Rata
Share"), from and against any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements of any
kind or nature whatsoever which may be imposed on, incurred by or asserted
against Administrative Agent or Collateral Agent in any way relating or arising
out of any Operative Document or any action taken or omitted by Administrative
Agent or Collateral Agent under any Operative Document in their capacities as
agents for such Person; provided that no Tranche B Lender shall be liable to
Administrative Agent or Collateral Agent hereunder for any portion of such
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements resulting from such Administrative Agent's or
such Collateral Agent's gross
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negligence or willful misconduct. Without limitation of the foregoing, each
Tranche B Lender agrees to reimburse Administrative Agent and Collateral Agent
ratably according to its Indemnity Pro Rata Share promptly upon demand for
out-of-pocket expenses (including counsel fees) incurred by Administrative Agent
or Collateral Agent in connection with the preparation, execution, delivery,
administration, modification, amendment or enforcement (whether through
negotiations, legal proceedings or otherwise) of, or legal advice in respect of
rights or responsibilities under, Operative Document in their capacities as
agents for such Person, to the extent that Administrative Agent or Collateral
Agent is not reimbursed for such expenses by Lessor or Lessee. Neither Lessee's
nor Lessor's indemnity obligations shall be reduced by this Section 11.6.
11.7. Successor Administrative Agent and Collateral Agent;
Termination of Agency. Administrative Agent and Collateral Agent may resign at
any time by giving at least fifteen (15) days written notice thereof to
Indenture Trustee, each Tranche B Lender, Lessor and Lessee, and each of
Administrative Agent and Collateral Agent may be removed at any time with or
without cause by Indenture Trustee acting on behalf of Majority Tranche A
Noteholders together with Majority Tranche B Lenders. Upon any resignation or
removal of Administrative Agent or Collateral Agent, Majority Tranche B Lenders
shall have the right with, provided no Lease Event of Default shall have
occurred and be continuing, the consent of Lessee (such consent not to be
unreasonably withheld or delayed) to appoint a successor Administrative Agent
who shall be reasonably acceptable to Lessee (it being understood and agreed
that any non-defaulting Tranche B Lender is deemed to be acceptable to Lessee)
and not objected to by Indenture Trustee on behalf of Majority Tranche A
Noteholders. If no successor Administrative Agent or Collateral Agent shall have
been so appointed by Majority Tranche B Lenders within thirty (30) days after
any such resignation of removal, the retiring Administrative Agent or Collateral
Agent may, appoint a successor Administrative Agent or Collateral Agent which
shall be a commercial bank organized under the laws of the United States of
America or of any State thereof and having a combined capital and surplus of at
least $100,000,000. Upon the acceptance of any appointment as Administrative
Agent or Collateral Agent hereunder by a successor Administrative Agent or
Collateral Agent, such successor Administrative Agent or Collateral Agent shall
thereupon succeed to and become vested with all the rights, powers, privileges
and duties of the retiring Administrative Agent or Collateral Agent, and the
obligations under each Operative Document. Any Administrative Agent or
Collateral Agent resigning in accordance with this Section 11.7 shall retain the
benefits of Section 11 as to any actions taken or omitted to be taken by it
while it was Administrative Agent or Collateral Agent.
11.8. Registration.
(a) Tranche A Notes. The Tranche A Notes shall be registered
in accordance with the terms of the Indenture.
(b) Tranche B Notes. Administrative Agent shall preserve
registration books identifying each Tranche B Lender's interest in the Tranche B
Notes and a list of the names and addresses of the holders of the Tranche B
Notes, which register and list shall be available to each Party hereto or their
respective representatives for inspection (the "Register"). Ownership of the
Tranche B Notes shall be proved by the Register. No transfer by any holder of a
Tranche B Note
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or any portion thereof shall be effective unless and until such transfer is made
upon the registration books maintained by Administrative Agent. Prior to due
presentment for registration of transfer of any Tranche B Note, Administrative
Agent, Collateral Agent, Lessee and Lessor shall deem and treat the Person in
whose name any Tranche B Note is registered as the absolute owner of such
Tranche B Note for the purpose of receiving payment of principal of, and
Breakage Costs, if any, and interest on such Tranche B Note and for all other
purposes whatsoever, whether or not such Tranche B Note is overdue, and neither
Administrative Agent, Collateral Agent, Lessor, nor Lessee shall be affected by
any notice to the contrary.
(c) Lease Agreement. Administrative Agent shall preserve
registration books identifying each Person holding any interest of Lessor in the
Lease Agreement and registering any assignment of such interest effected in
compliance with Section 12.7. Except for the interests of Collateral Agent
pursuant to the Operative Documents, no transfer by Lessor of any holder of
Lessor's interest in the Lease Agreement shall be effective unless and until
such transfer is made upon the registration books maintained by Administrative
Agent.
12. Miscellaneous.
12.1. Expenses. Lessee agrees to pay within ten (10) Business
Days of written notice thereof the reasonable fees and expenses (initial and
ongoing) of (i) Indenture Trustee for serving as Indenture Trustee to Tranche A
Noteholders, (ii) Lessor General Partner for serving as such and (iii) shall
reimburse Indenture Trustee, Lessor, Lessor General Partner, Bankers Trust
Company as a Tranche B Lender and Deutsche Bank AG, New York Branch as Limited
Partner, Administrative Agent and Collateral Agent for all of their respective
reasonable costs and expenses (including, without limitation, reasonable counsel
fees and disbursements) in connection with the negotiation, preparation,
execution and delivery of the Operative Documents and the issuance of the
Tranche A Notes, Tranche B Notes and Equity Certificates and the consummation of
the transactions contemplated thereby including the expenses of Lessor and
Co-Obligor for auditing, legal, filing fees and related expenses associated with
the registration of the Tranche A Notes, compliance with its obligations under
the Indenture and Registration Rights Agreement other than the payment of
principal or interest on the Tranche A Notes or other than as a result of a
Tranche A Event of Default not caused by or arising out of a Lease Event of
Default and compliance with TIA, the Securities Exchange Act and the Securities
Act. Lessee agrees to pay the reasonable fees and disbursements of special
counsel to each of Lessor, Lessor General Partner, Indenture Trustee,
Administrative Agent and Collateral Agent in connection with any amendments,
waivers or consents requested by Lessor, Lessee or Guarantor under any Operative
Document. Upon the occurrence and during the continuance of any Lease Event of
Default, Lessee agrees to pay or reimburse each of Indenture Trustee, each
Tranche A Noteholder, each Tranche B Lender, Lessor, Lessor General Partner,
Administrative Agent and Collateral Agent for reasonable costs and expenses of
counsel and of financial advisors as shall have been selected by such Person to
assist them in connection with such Lease Event of Default.
12.2. Amendments, Consents and Waivers.
(a) Except as otherwise expressly provided and subject to the
rights assigned by Lessor to Collateral Agent hereunder, neither this Agreement
nor any other Operative
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Document (other than the Limited Partnership Agreement) nor any terms hereof or
thereof may be amended, supplemented, waived or modified without the written
agreement and consent of the parties thereto and Lessee, provided that where the
consent of Indenture Trustee, or Tranche B Lenders is required, such consent
(except as provided below) may be given by (x) Indenture Trustee acting on
behalf of Majority Tranche A Noteholders, or (y) Administrative Agent acting on
behalf of Majority Tranche B Lenders, as the case may be, and any such consent
shall be binding in the case of clause (x) on Indenture Trustee and all Tranche
A Noteholders, and in the case of clause (y), on all Tranche B Lenders, provided
further, that no such amendment, modification, waiver or supplement shall, (i)
without the consent of a Tranche A Noteholder (A), extend the final scheduled
maturity of such Tranche A Note, or reduce the rate or extend the time of
payment of interest thereon (except (x) in connection with the waiver of
applicability of any post-default increase in interest rates and (y) that any
amendment or modification that is agreed to by Indenture Trustee acting on
behalf of Majority Tranche A Noteholders directly affected thereby to the
financial definitions in the Operative Documents shall not constitute a
reduction in the rate of interest or fees for purposes of this clause (A)
notwithstanding the fact that such amendment or modification would otherwise
actually result in such a reduction, so long as the primary purpose (as
determined in good faith by Lessee and Administrative Agent) of the respective
amendment or modification was not to decrease the pricing pursuant to this
Agreement and the other Operative Documents), or reduce the principal amount
thereof (except to the extent repaid in cash), (B) release all or substantially
all of Collateral Agent's interest in the Lessor Collateral (except as expressly
provided herein), (C) reduce the percentage specified in the definition of
Majority Tranche A Noteholders or (D) amend this Section 12.2 (other than
clauses (ii) through (vi) of this Section 12.2(a)), (ii) without the consent of
a Tranche B Lender (A) extend the final scheduled maturity of its Tranche B Loan
or extend the time of payment of interest thereon (except (x) in connection with
the waiver of applicability of any post-default increase in interest rates and
(y) that any amendment or modification that is agreed to by Administrative Agent
acting on behalf of Majority Tranche B Lenders directly affected thereby to the
financial definitions in the Operative Documents shall not constitute a
reduction in the rate of interest or fees for purposes of this clause (A),
notwithstanding the fact that such amendment or modification would otherwise
actually result in such a reduction, so long as the primary purpose (as
determined in good faith by Lessee and Administrative Agent) of the respective
amendment or modification was not to decrease the pricing pursuant to this
Agreement and the other Operative Documents), or reduce the principal amount
thereof (except to the extent repaid in cash), (B) release all or substantially
all of Collateral Agent's interest in the Lessor Collateral (except as expressly
provided herein), (C) reduce the percentage specified in the definition of
Majority Tranche B Lenders or (D) amend this Section 12.2 (other than clauses
(i) through (vi) of this Section 12.2(a)), (iii) without the consent of
Indenture Trustee, amend, modify or waive any provision relating to the rights
of Indenture Trustee, (iv) without the consent of Administrative Agent, amend,
modify or waive any provision relating to the rights or obligations of
Administrative Agent, (v) without the consent of Collateral Agent, amend, modify
or waive any provision relating to the rights or obligations of Collateral Agent
or (vi) without the consent of Lessor General Partner, amend, modify or waive
any provision relating to the rights or obligations of Lessor General Partner or
Lessor.
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(b) Notwithstanding anything to the contrary in Section 12(a)
above, (i) subject to clause (i) of Section 12.2(a), Lessee, Lessor and
Indenture Trustee acting on behalf of Majority Tranche A Noteholders may amend,
supplement, modify or waive any of the Lessee covenants set forth in Section 9.2
hereof and with the written consent of Lessor amend, supplement, modify or waive
any of the terms of the Indenture or Tranche A Notes in accordance with the
terms thereof and (ii) subject to clause (ii) of Section 12.2(a), Lessee, Lessor
and Administrative Agent acting on behalf of Majority Tranche B Lenders may
amend, supplement, modify or waive any of the Lessee covenants set forth in
Section 9.3 hereof, any of the terms of the Tranche B Loan Agreement and Tranche
B Notes, any of the terms of Sections 6, 10(b), 11 (except where any such
amendment, supplement, waiver or modification of maintenance obligations would
impair the value of any Item of Equipment in any material respect), 17, 28.3,
29.3 and 29.4 of the Lease Agreement. Administrative Agent agrees to deliver to
Indenture Trustee notice of any amendment of Section 11 of the Lease Agreement
made in accordance with this Section 12.2.(b).
(c) If, in connection with any proposed change, waiver,
discharge or termination to any of the provisions of this Agreement or any other
Operative Document, the consent of all Tranche B Lenders is required and the
consent of Majority Tranche B Lenders (but not all Tranche B Lenders) is
obtained, then Lessee shall have the right to replace each such non-consenting
Tranche B Lender (so long as all non-consenting Tranche B Lenders are so
replaced) with one or more Replacement Tranche B Lenders, pursuant to Section
12.7 so long as at the time of such replacement, each such Replacement Tranche B
Lender consents to the proposed change, waiver, discharge or termination;
provided however, no Tranche B Lender shall be obligated to assign its rights
hereunder unless all of its interest or the interest of any Affiliate thereof in
Lessor is assigned in accordance with the terms of the Limited Partnership
Agreement.
12.3. GOVERNING LAW; SUBMISSION TO JURISDICTION; VENUE; WAIVER
OF JURY TRIAL.
(a) THIS AGREEMENT AND THE OTHER OPERATIVE DOCUMENTS AND THE
RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER AND THEREUNDER SHALL, BE
CONSTRUED IN ACCORDANCE WITH AND BE GOVERNED BY THE LAW OF THE STATE OF NEW
YORK. ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY OTHER
OPERATIVE DOCUMENT MAY BE BROUGHT IN THE COURTS OF THE STATE OF NEW YORK OR OF
THE UNITED STATES FOR THE SOUTHERN DISTRICT OF NEW YORK, AND, BY EXECUTION AND
DELIVERY OF THIS AGREEMENT, EACH OF GUARANTOR AND LESSEE HEREBY IRREVOCABLY
ACCEPTS FOR ITSELF AND IN RESPECT OF ITS PROPERTY, GENERALLY AND
UNCONDITIONALLY, THE JURISDICTION OF THE AFORESAID COURTS. EACH OF GUARANTOR AND
LESSEE HEREBY IRREVOCABLY DESIGNATES, APPOINTS AND EMPOWERS CT CORPORATION
SYSTEM, WITH OFFICES ON THE DATE HEREOF AT ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇ AS ITS DESIGNEE, APPOINTEE AND AGENT TO RECEIVE, ACCEPT AND ACKNOWLEDGE
FOR AND ON ITS BEHALF, AND IN RESPECT OF ITS PROPERTY, SERVICE OF ANY AND ALL
LEGAL PROCESS, SUMMONS, NOTICES AND DOCUMENTS WHICH MAY BE SERVED IN ANY SUCH
ACTION OR PROCEEDING. IF FOR ANY REASON SUCH
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DESIGNEE, APPOINTEE AND AGENT SHALL CEASE TO BE AVAILABLE TO ACT AS SUCH, EACH
OF GUARANTOR AND LESSEE AGREES TO DESIGNATE A NEW DESIGNEE, APPOINTEE AND AGENT
IN NEW YORK CITY ON THE TERMS AND FOR THE PURPOSES OF THIS PROVISION
SATISFACTORY TO THE AGENT UNDER THIS AGREEMENT. EACH OF THE PARTIES HERETO
FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OUT OF ANY OF THE
AFOREMENTIONED COURTS IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF COPIES
THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO SUCH PARTY
HEREUNDER AT ITS ADDRESS SET FORTH OPPOSITE ITS SIGNATURE BELOW, SUCH SERVICE TO
BECOME EFFECTIVE THIRTY (30) DAYS AFTER SUCH MAILING. NOTHING HEREIN SHALL
AFFECT THE RIGHT OF ANY PARTY TO THIS AGREEMENT, TO SERVE PROCESS IN ANY OTHER
MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED
AGAINST ANY OTHER PARTY IN ANY OTHER JURISDICTION.
(b) EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES ANY
OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY OF
THE AFORESAID ACTIONS OR PROCEEDINGS ARISING OUT OF OR IN CONNECTION WITH THIS
AGREEMENT OR ANY OTHER OPERATIVE DOCUMENT BROUGHT IN THE COURTS REFERRED TO IN
CLAUSE (a) ABOVE AND HEREBY FURTHER IRREVOCABLY WAIVES AND AGREES NOT TO PLEAD
OR CLAIM IN ANY SUCH COURT THAT ANY SUCH ACTION OR PROCEEDING BROUGHT IN ANY
SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.
(c) EACH OF THE PARTIES TO THIS AGREEMENT HEREBY IRREVOCABLY
WAIVES ALL RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM
ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE OTHER OPERATIVE DOCUMENTS OR
THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.
12.4. Notices. All notifications, notices, demands, requests
and other communications herein provided for or made pursuant hereto shall be in
writing (including telegraphic, telex, telecopier or cable communication) and
mailed, telegraphed, telexed, telecopied, cabled or delivered via courier to the
addresses listed below. All such notices and communications shall, when mailed,
telegraphed, telexed, telecopied, or cabled or sent by overnight courier, be
effective when deposited in the mails, delivered to the telegraph company, cable
company or overnight courier, as the case may be, or sent by telex or
telecopier, except that notices and communications to Administrative Agent,
Lessor and Lessee shall not be effective until received by Administrative Agent,
Lessor or Lessee, as the case may be. A copy of all notices Lessee is required
to deliver under the Operative Documents shall be delivered to Indenture
Trustee, Administrative Agent and Collateral Agent. The initial address of the
parties hereto are as follows:
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to Lessee: Universal Compression, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
Senior Vice President & Chief Financial Officer
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telefax: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to
▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Senior Vice President & General Counsel
Universal Compression, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telefax: (▇▇▇) ▇▇▇-▇▇▇▇
to Guarantor: Universal Compression Holdings, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
Senior Vice President & Chief Financial Officer
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telefax: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to
▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Senior Vice President & General Counsel
Universal Compression, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telefax: (▇▇▇) ▇▇▇-▇▇▇▇
to Lessor: BRL Universal Equipment Management, Inc.
c/o BRL Universal Equipment Management, Inc.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇.
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
President
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telefax: (▇▇▇) ▇▇▇-▇▇▇▇
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with a copy to
Universal Compression, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
Senior Vice President & Chief Financial Officer
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telefax: (▇▇▇) ▇▇▇-▇▇▇▇
to Lessor General Partner: BRL Universal Equipment Management, Inc.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, President
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telefax: (▇▇▇) ▇▇▇-▇▇▇▇
to Indenture Trustee, on behalf The Bank of New York
of Tranche A Noteholders ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Corporate Trust Trustee
Administration
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telefax: (▇▇▇) ▇▇▇-▇▇▇▇
to Tranche B Lenders and See Schedule 2 hereto.
Limited Partners:
Administrative Agent: Bankers Trust Company
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, M.S. ▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telefax: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy of all notices and documents delivered in accordance with the Lease
Agreement or Sections 3.1 hereof to:
Deutsche Banc ▇▇▇▇ ▇▇▇▇▇
▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, Mail Stop 1411
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇., Director
Global Asset Finance and Leasing
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telefax: (▇▇▇) ▇▇▇-▇▇▇▇
-▇▇-
▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇: Bankers Trust Company
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇. ▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telefax: (▇▇▇) ▇▇▇-▇▇▇▇
12.5. Interests in the Equipment. The parties hereto intend
that (i) for financial accounting purposes with respect to Lessee, Lessor will
be treated as the owner and the lessor of each Item of Equipment and Lessee will
be treated as the lessee of each Item of Equipment and (ii) for all federal,
state and local income tax purposes, state sales, use and other transaction tax
purposes, (A) the Operative Documents will be treated as a financing
arrangement, (B) Lessor will be deemed a lender making loans to Lessee in an
amount equal to the sum of the aggregate of the outstanding Equity Contributions
and the outstanding principal amount of the Tranche A Notes and Tranche B Loans
and (C) Lessee will be treated as the owner of each Item of Equipment and will
be entitled to all tax benefits ordinarily available to an owner of equipment
like the Equipment for such tax purposes. Lessor shall take no action
inconsistent with the intention of the parties set forth in clause (ii)(C) of
this Section 12.5. Notwithstanding the intentions of the parties expressed
herein, each party hereto acknowledges and agrees that Lessor has not made, and
no other party hereto nor Arranger, any Tranche A Noteholder or Limited Partner
has made, any representations or warranties concerning the tax, accounting or
legal characteristics of the Operative Documents and that such party has
obtained and relied upon and agree that they will obtain and rely upon such tax,
accounting and legal advice from their own accountants and counsel concerning
the Operative Documents as they deems appropriate.
12.6. Descriptive Headings, etc. The descriptive headings used
in this Agreement are for convenience only and shall not be deemed to affect the
meaning or construction of any provision hereof.
12.7. Benefit of Agreement; Assignment. This Agreement shall
be binding upon and inure to the benefit of the parties hereto and their
respective successors and permitted assigns and in particular any holder from
time to time of any Tranche A Note or Tranche B Note. Subject to the following
proviso, neither Lessor, Lessee, Indenture Trustee, nor any Tranche B Lender
without the prior written consent of each other party hereto, may assign any or
all of its rights or obligations hereunder or under any other Operative Document
to which it is a party; provided, however,
(i) Lessor General Partner may at any time transfer
or assign any or all of its rights or obligations under the Operative
Documents in accordance with the provisions of Article 9 of the Limited
Partnership Agreement;
(ii) Indenture Trustee may at any time transfer or
assign any or all of its rights or obligations under the Operative
Documents in accordance with the provisions of Section 6.8 or 6.9 of
the Indenture;
(iii) Any Tranche B Lender may transfer, assign or
grant participations in its rights in the Operative Documents;
provided, however, such Tranche B Lender shall
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remain a "Tranche B Lender" for all purposes hereunder and the
transferee, assignee or participant, as the case may be, shall not
constitute a "Tranche B Lender" hereunder and, provided further, that
no Tranche B Lender shall transfer or grant any participation under
which the participant shall have rights to approve any amendment to or
waiver of this Agreement or any other Operative Document except to the
extent such amendment or waiver would (A) extend the final scheduled
maturity of any Tranche B Loan which such participant is participating,
or reduce the rate or extend the time of payment of interest or fees
thereon (except in connection with a waiver of applicability of any
post-default increase in interest rates) or reduce the principal amount
thereof, or increase the amount of the participant's participation over
the amount thereof then in effect (it being understood that a waiver of
any Loan Default or Loan Event of Default shall not constitute a change
in the terms of such participation, and that an increase in any Tranche
B Loan shall be permitted without the consent of any participant if the
participant's participation is not increased as a result thereof), (B)
consent to the assignment or transfer by Lessor or Lessee of any of its
rights and obligations under the Operative Documents or (C) release all
or substantially all of the Collateral under all of the Security
Documents (except as expressly provided in the Operative Documents)
securing the Tranche B Loans in which such participant is
participating. In the case of any such participation, the participant
shall not have any rights under any Operative Documents (the
participant's rights against such Tranche B Lender in respect of such
participation to be those set forth in the agreement executed by such
Tranche B Lender in favor of the participant relating thereto) and all
amounts payable by Lessor and Lessee under the Operative Documents
shall be determined as if such Tranche B Lender had not sold such
participation;
(iv) Notwithstanding the foregoing, any Tranche B
Lender (or any Tranche B Lender together with one or more other Tranche
B Lenders) may (A) assign all or a portion of its rights and
obligations under the Operative Documents to (x) its parent company
and/or any affiliate of such Tranche B Lender which is at least 50%
owned by such Tranche B Lender or its parent company or to one or more
Tranche B Lenders or (y) in the case of any Tranche B Lender that is a
fund that invests in loans, any other fund that invests in loans and is
managed or advised by the same investment advisor of such Tranche B
Lender or by an Affiliate of such investment advisor or (B) assign all,
or if less than all, a portion of outstanding principal balance equal
to at least $5,000,000 in the aggregate for the assigning Tranche B
Lender or assigning Tranche B Lenders of such Tranche B Loan and
related outstanding obligations hereunder or under the Tranche B Loan
Agreement to one or more Eligible Transferees (treating any fund that
invests in loans and any other fund that invests in loans and is
managed or advised by the same investment advisor of such fund or by an
Affiliate of such investment advisor as a single Eligible Transferee),
each of which assignees shall become a party to this Agreement and the
Tranche B Loan Agreement as a Tranche B Lender by execution of an
Assignment and Assumption Agreement, provided that (w) new Tranche B
Notes will be issued, at Lessee's expense, to such new Tranche B Lender
and to the assigning Tranche B Lender upon the request of such Person,
such new Tranche B Notes to be in conformity with the requirements of
Section 2.3 of the Tranche B Loan Agreement, (x) the consent of
Administrative Agent, Lessee and Lessor shall be required in connection
with any assignment to
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an Eligible Transferee pursuant to clause (B) above (which consents
shall not be unreasonably withheld), provided that the consent of
Lessor shall not be required at any time that a Loan Event of Default
has occurred and is continuing and the consent of Lessee shall not be
required at any time that a Lease Event of Default has occurred and is
continuing, (y) Administrative Agent shall receive for its own account
at the time of each such assignment, from the assigning or assignee
Tranche B Lender, the payment of a non-refundable assignment fee of
$3,500 and (z) promptly after such assignment, Lessor and Lessee shall
have received from Administrative Agent notice of any such assignment,
together with the copy of the Assignment and Assumption Agreement
relating thereto. To the extent of any assignment pursuant to this
Section 12.7, the assigning Tranche B Lender shall be relieved of its
obligations hereunder. At the time of each assignment pursuant to this
Section 12.7 to a Person which is not already a Tranche B Lender
hereunder and which is not a U.S. Person (as such term is defined in
Section 7701(a)(30) of the Code) for federal income tax purposes, the
respective assignee Tranche B Lender shall, to the extent legally
entitled to do so, provide to Lessor and Lessee, the forms described in
such Section 9.4 of the Participation Agreement. To the extent that an
assignment of all or any portion of a Tranche B Lender's interests
would, at the time of such assignment, result in additional increased
costs under Section 2.7 of the Tranche B Loan Agreement from those that
would have been incurred by the respective assigning Tranche B Lender
prior to such assignment, then Lessee shall not be obligated to pay
such incremental additional increased costs (although Lessee shall be
obligated to pay any other increased costs of the type described above
resulting from changes after the date of the respective assignment);
(v) Each Tranche B Lender shall provide written
notice to Administrative Agent of any assignment or participation by
such Tranche B Lender of any interest it may have under any Operative
Document. In the case of any participations, other than to which Lessee
otherwise consents, the right of any such participant to
indemnification or other amounts under Section 10 shall be limited to
amounts which would have been due had no such participation been
granted;
(vi) Notwithstanding any other provision in the
Operative Documents, any Tranche B Lender may at any time create a
security interest in, or pledge, all or any portion of its rights under
and interest in any of the Operative Documents in favor of any Federal
Reserve Bank in accordance with Regulation A of the Federal Reserve
Board or U.S. Treasury Regulation 31 CFR 203.14, and such Federal
Reserve Bank may enforce such pledge or security interest in any manner
permitted under Applicable Law; and
(vii) Provided no Lease Event of Default has occurred
and is continuing, on any Floating Payment Date after at least thirty
(30) days, but no more than sixty (60) days advance written notice to
each party hereto, Lessee may cause all, but not less than all Tranche
B Lenders to sell with recourse, representation or warranties their
rights and interests in the Tranche B Loans, to any financial
institutions selected by Lessee for an amount equal to (A) the
outstanding balance of such Person's Tranche B Loan plus (B) all
interest accrued on such amount plus (C) any Breakage Costs suffered by
such Person, plus (D) any other amount due such person under the
Operative Documents (the "Tranche
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B Transfer Amount") provided such financial institution purchases from
such Tranche B Lender (or any Affiliate thereof) any interest it or
such Affiliate may have in Lessor for an amount equal to (A) the
outstanding balance of such Person's Equity Contribution, plus (B) all
Equity Yield accrued on such amount plus (C) any Breakage Costs
suffered by such Person (the "Equity Transfer Amount"). Such sale or
sales shall become effective upon delivery of an Assignment and
Assumption Agreement and payment to each Tranche B Lender and, if
applicable, Limited Partner in immediately available funds its
respective Tranche B Transfer Amount or Equity Transfer Amount. Lessor
agrees to amend the Tranche B Margin as such replacement Tranche B
Lenders may agree.
12.8. Execution and Effectiveness. This Agreement may be
executed (i) in multiple counterparts, each of which shall be regarded as an
original and all of which shall constitute a single instrument and shall become
effective on the Closing Date when each of the parties hereto shall have signed
a copy hereof (whether the same or different copies) and (ii) by facsimile
signature and each such signature shall be treated in all respects as having the
same effect as an original signature.
12.9. Survival. Each of the representations, warranties,
terms, covenants, agreements and conditions contained in this Agreement shall
specifically survive the execution and delivery of this Agreement and the other
Operative Documents, the issuing of the Tranche A Notes and the making of the
Tranche B Loans and Equity Contributions and shall, unless otherwise expressly
provided therein, continue in full force and effect until the Tranche A Notes
and Tranche B Loans, together with interest thereon, the Equity Contributions
together with the Equity Yield and all other sums payable hereunder or
thereunder have been indefeasibly paid in full.
12.10. Severability. The provisions of this Agreement are
severable, and if any section or provision shall be held invalid or
unenforceable in whole or in part in any jurisdiction, then such invalidity or
unenforceability shall affect only such clause or provision, or part thereof, in
such jurisdiction and shall not in any manner affect such clause or provision in
any other jurisdiction, or any other clause or provision of this Agreement in
any jurisdiction.
12.11. No Broker. Each party hereto hereby represents and
warrants to the other parties that no broker other than Arranger (whose fees
shall be paid solely by Lessee) brought about the transactions contemplated
hereby and each party hereby agrees to indemnify (the "Indemnifying Party") and
hold each other party harmless from, any and all other liabilities and costs
(including, without limitation, costs of counsel) to any Person claiming
brokerage commissions or finder's fees as a result of any agreement with the
Indemnifying Party.
12.12. Limited Recourse Against Limited Partners and Lessor
General Partner. Without impairing any of the other rights, powers, privileges,
liens or security interests of Indenture Trustee, any Secured Party,
Administrative Agent or Collateral Agent pursuant to Operative Documents, except
for such Limited Partner's or Lessor General Partner's gross negligence, willful
misconduct, misrepresentations or fraud and as expressly provided in this
Agreement or any other Operative Document, and subject to the proviso below,
Indenture Trustee and each Secured Party agrees that as between it and each
Limited Partner or Lessor General Partner, no recourse shall be had with respect
to this Agreement or such other Operative Documents against Limited Partners or
Lessor General Partner, or any officer, director, employee, agent or Affiliate
thereof for amounts owed by Lessor under the Operative Documents; and no Limited
Partner or Lessor
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General Partner, or any officer, director, employee, agent or Affiliate thereof
shall have any personal liability for any amounts owed by Lessor under the
Operative Documents, notwithstanding any other provision of this Agreement or
the other Operative Documents. The Indenture Trustee Tranche B Lenders,
Administrative Agent and Collateral Agent each agree that the personal liability
of Lessor shall be strictly and absolutely limited to the Lessor Collateral and
no recourse for the payment of any amount due under this Agreement or any other
agreement contemplated hereby, or for any claim based thereon or otherwise in
respect thereof, shall be had against any other assets of Lessor, of Lessor
General Partner or any Limited Partner or any incorporator, shareholder,
partner, officer, director or Affiliate (past, present or future) or of any
successor corporation to Lessor General Partner or any Affiliate of either, it
being understood that the Borrower is a limited partnership formed for the
purpose of the transactions involved in and relating to this Agreement on the
express understanding aforesaid; provided, however, that nothing contained in
this Section 12.12 or elsewhere shall be construed to (i) prevent recourse to
and the enforcement against the Lessor Collateral of all liabilities,
obligations and undertakings contained in the Operative Documents, (ii) limit,
restrict, or impair the right of Indenture Trustee or any Secured Party to
accelerate the maturity of any Trance A Note or Tranche B Loan upon the
occurrence of a Loan Event of Default, (iii) prevent the bringing of an action
or obtaining a judgment against any Limited Partner or Lessor General Partner
for fraud, any breach of any of its representations, warranties or covenants
under any of the Operative Documents, or any negligent mishandling of funds or
any failure to apply any amounts received from any party hereto in accordance
with the terms of the Operative Documents, (iv) prevent the bringing of an
action or obtaining a judgment over Lessor to obtain jurisdiction over the
Lessor Collateral, Lessee or Guarantor; provided that no judgment or any such
action shall seek a deficiency judgment against Lessor or hold Lessor General
Partner, any Limited Partner or any incorporator, shareholder, partner, officer,
director of Lessor General Partner or any Limited Partner personally liable
therefor, or (v) prevent the bringing of an action or obtaining of a judgment to
foreclose the lien of this Agreement or Security Documents or otherwise realize
upon the Lessor Collateral or the sums due or to become due under the Lease
Agreement or the other Operative Documents to which any such Person is a party.
12.13. Consent and Agreement of Lessee and Guarantor. Lessee
and Guarantor hereby consent to the assignment set forth in Section 7. Lessor
and Collateral Agent hereby instruct, and Lessee and Guarantor agree, that until
further notified by Collateral Agent, Lessee, Guarantor and Lessor shall pay all
amounts payable by Lessee or Guarantor under the Operative Documents other than
Excepted Payments to the account of Collateral Agent or as Collateral Agent may
otherwise designate in a written notice to Lessee, Guarantor and Lessor. If
there is any disagreement between Administrative Agent and Lessor as to whether
any amount is an Excepted Payment, Lessor, Lessee and Guarantor shall abide by
Administrative Agent's determination with respect to such amount.
* * *
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IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed and delivered by their respective duly authorized
officers as of the date first above written.
UNIVERSAL COMPRESSION, INC.,
as Lessee
By /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
--------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
Title: Senior Vice President and
Chief Financial Officer
UNIVERSAL COMPRESSION HOLDINGS, INC.,
as Guarantor
By /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
--------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
Title: Senior Vice President and
Chief Financial Officer
BRL UNIVERSAL EQUIPMENT 2001 A, L.P.,
as Lessor
By BRL Universal Equipment Management,
Inc. Its General Partner
By /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: President
BRL UNIVERSAL EQUIPMENT MANAGEMENT, INC.
as Lessor General Partner
By /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: President
-Signature Page-
[Participation Agreement]
87
THE BANK OF NEW YORK,
not individually but as Indenture Trustee
for Tranche A Noteholders
By /s/ ▇▇▇▇ ▇. ▇▇▇▇▇
---------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇
Title: Vice President
BANKERS TRUST COMPANY,
as Tranche B Lender
By /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
---------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
Title: Director
FIRST UNION NATIONAL BANK,
as Tranche B Lender
By /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
---------------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: Vice President
BANK ONE, NA
(Main Office Chicago)
as Tranche B Lender
By /s/ J. ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇.
---------------------------------------
Name: J. ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇.
Title: First Vice President
THE BANK OF NOVA SCOTIA,
as Tranche B Lender
By /s/ M. D. ▇▇▇▇▇
---------------------------------------
Name: M. D. ▇▇▇▇▇
Title: Agent
-Signature Page-
[Participation Agreement]
88
BANKERS TRUST COMPANY,
as Administrative Agent
By /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
---------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
Title: Director
BANKERS TRUST COMPANY,
as Collateral Agent
By /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
---------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
Title: Director
-Signature Page-
[Participation Agreement]
89
SCHEDULE 1
MAXIMUM ACQUISITION COST
$427,000,000
TRANCHE B LENDERS
Aggregate Tranche B Commitments: $63,918,750
Tranche B Lender Tranche B Commitment ($)
---------------- ------------------------
1. Bankers Trust Company $19,959,375
2. First Union National Bank $27,959,375
3. Bank One $ 8,000,000
4. The Bank of Nova Scotia $ 8,000,000