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SALE AND SERVICING AGREEMENT
AMONG
HATTIESBURG GAS STORAGE COMPANY
SELLER
HATTIESBURG INDUSTRIAL GAS SALES COMPANY
SERVICER AND SELLER
AND
FRGC OWNER TRUST
DATED AS OF NOVEMBER 21, 1995
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TABLE OF CONTENTS
PAGE
ARTICLE I
CERTAIN DEFINITIONS . . . . . . . . . . . . 1
SECTION 1.1 Definitions. . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE II
CONVEYANCE OF PURCHASED CONTRACT RECEIVABLES;
ORIGINAL ISSUANCE OF CERTIFICATES. . . . . . . . . 2
SECTION 2.1 Conveyance of Purchased Contract
Receivables. . . . . . . . . . . . . . . . . . . . . . . 2
SECTION 2.2 Payment of Purchase Price. . . . . . . . . . . . . . . . 3
SECTION 2.3 Acceptance by Trust. . . . . . . . . . . . . . . . . . . 3
SECTION 2.4 No Repurchase. . . . . . . . . . . . . . . . . . . . . . 4
SECTION 2.5 Certain Allocations. . . . . . . . . . . . . . . . . . . 4
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE SELLER
AND THE SERVICER. . . . . . . . . . . . . 4
SECTION 3.1 Representations and Warranties as to the
Receivables. . . . . . . . . . . . . . . . . . . . . . . 4
SECTION 3.2 Other Representations and Warranties . . . . . . . . . . 4
ARTICLE IV
ADMINISTRATION AND SERVICING OF RECEIVABLES . . . . . . 9
SECTION 4.1 Duties of the Servicer . . . . . . . . . . . . . . . . . 9
SECTION 4.2 Servicing Procedures . . . . . . . . . . . . . . . . . . 10
SECTION 4.3 Payment of Certain Expenses by Servicer. . . . . . . . . 10
SECTION 4.4 Annual Statement as to Compliance. . . . . . . . . . . . 10
SECTION 4.5 Access to Certain Documentation
and Information Regarding Purchased
Contract Receivables . . . . . . . . . . . . . . . . . . 11
SECTION 4.6 Information Provided to Rating Agency. . . . . . . . . . 11
SECTION 4.7 Compensation . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 4.8 Delivery of Financial Statements . . . . . . . . . . . . 12
SECTION 4.9 Other Information. . . . . . . . . . . . . . . . . . . . 13
SECTION 4.10 Notices. . . . . . . . . . . . . . . . . . . . . . . . . 13
ARTICLE V
COVENANTS OF THE SERVICER AND OTHERS; REMEDIES . . . . . 13
SECTION 5.1 Covenants of the Servicer. . . . . . . . . . . . . . . . 13
SECTION 5.2 Remedies . . . . . . . . . . . . . . . . . . . . . . . . 16
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Page
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ARTICLE VI
LIABILITIES OF SERVICER AND OTHERS . . . . . . . . 17
SECTION 6.1 Liability of Servicer; Indemnities . . . . . . . . . . . 17
SECTION 6.2 Limitation on Liability of Servicer,
Seller and Others. . . . . . . . . . . . . . . . . . . . 18
SECTION 6.3 Delegation of Duties . . . . . . . . . . . . . . . . . . 19
SECTION 6.4 Servicer Not to Resign . . . . . . . . . . . . . . . . . 19
ARTICLE VII
DEFAULT . . . . . . . . . . . . . . . 19
SECTION 7.1 Servicer Default . . . . . . . . . . . . . . . . . . . . 19
SECTION 7.2 Trustee to Act; Appointment of Successor . . . . . . . . 19
SECTION 7.3 Notification to Investor
Certificateholders . . . . . . . . . . . . . . . . . . . 20
ARTICLE VIII
TERMINATION . . . . . . . . . . . . . . 20
SECTION 8.1 Termination. . . . . . . . . . . . . . . . . . . . . . . 20
ARTICLE IX
MISCELLANEOUS PROVISIONS. . . . . . . . . . . 20
SECTION 9.1 Waiver and Amendment . . . . . . . . . . . . . . . . . . 20
SECTION 9.2 Protection of Title to Owner Trust Estate. . . . . . . . 21
SECTION 9.3 Notices. . . . . . . . . . . . . . . . . . . . . . . . . 23
SECTION 9.4 Governing Law. . . . . . . . . . . . . . . . . . . . . . 23
SECTION 9.5 Severability of Provisions . . . . . . . . . . . . . . . 23
SECTION 9.6 Assignment . . . . . . . . . . . . . . . . . . . . . . . 23
SECTION 9.7 Third-Party Beneficiaries. . . . . . . . . . . . . . . . 23
SECTION 9.8 Separate Counterparts. . . . . . . . . . . . . . . . . . 23
SECTION 9.9 Headings and Cross-References. . . . . . . . . . . . . . 23
SECTION 9.10 No Petition Covenants. . . . . . . . . . . . . . . . . . 23
SECTION 9.11 Limitation of Liability of the
Owner Trustee. . . . . . . . . . . . . . . . . . . . . . 24
SECTION 9.12 Treatment of Transaction by Seller . . . . . . . . . . . 24
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Schedule 1 - List of Eligible Obligors
Schedule 2 - Schedule of Contracts
Schedule 3 - Schedule of Purchased Contract Receivables
Schedule 4 - Schedule of Liquidated Damages and Fixed Percentage
Schedule 5 - [Intentionally omitted]
Schedule 6 - Description of Business Interruption
Insurance
Schedule 7 - Description of Storage Facilities
Exhibit A - Form of FRGC Guarantee
Exhibit B - [Intentionally omitted]
Exhibit C - Form of Collateral Sharing and Security
Agreement
Exhibit D - [Intentionally omitted]
Exhibit E - [Intentionally omitted]
Exhibit F - Form of Deed of Trust, Security Agreement
and Fixture Filing
APPENDIX A - Defined Terms and Rules of Construction
APPENDIX B - Notice Addresses and Procedures
APPENDIX C - Closing Conditions
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SALE AND SERVICING AGREEMENT, dated as of November 21, 1995, by and
among Hattiesburg Gas Storage Company, a Delaware general partnership ("HGSC"),
Hattiesburg Industrial Gas Sales Company, a Delaware corporation ("HIG" or the
"Servicer" and together with HGSC, the "Seller"), and FRGC Owner Trust, a
Delaware business trust (the "Trust").
WHEREAS, the Seller desires to sell to the Trust, and the Trust
desires to purchase from the Seller, the Purchased Contract Receivables in
consideration of the payment of the Purchase Price, and the Servicer desires to
perform the servicing obligations set forth herein for and in consideration of
the fees and other benefits set forth in this Agreement;
WHEREAS, HGSC is a beneficial owner of the Purchased Contract
Receivables;
WHEREAS, HIG is joining in this Agreement as Seller solely to evidence
the transfer and assignment of its rights, if any, in the Purchased Property as
a result of its being the signatory to the Contracts;
WHEREAS, Crystal Oil Company, the ultimate parent of the Seller, has
agreed, under certain circumstances and subject to certain limitations, to pay
certain amounts payable by Seller in the event of a bankruptcy of the Seller;
and
WHEREAS, the Seller, the Servicer and the Trust wish to set forth the
terms pursuant to which the Purchased Contract Receivables are to be sold by the
Seller to the Trust and serviced by the Servicer;
NOW, THEREFORE, in consideration of the premises and of the mutual
terms and covenants contained herein, the parties hereto agree as follows:
ARTICLE I
CERTAIN DEFINITIONS
SECTION 1.1 DEFINITIONS. Certain capitalized terms used in the
above recitals and in this Agreement shall have the respective meanings assigned
to them in Part I of APPENDIX A to this Agreement. All references herein to
"the Agreement" or "this Agreement" are to this Sale and Servicing Agreement as
it may be amended, supplemented or modified from time to time, the exhibits
hereto and the capitalized terms used herein which are defined in such
APPENDIX A, and all references herein to Articles, Sections and subsections are
to Articles, Sections or subsections of this Agreement unless otherwise
specified. The rules of construction set forth in Part II of such APPENDIX A
shall be applicable to this Agreement.
ARTICLE II
CONVEYANCE OF PURCHASED CONTRACT RECEIVABLES;
ORIGINAL ISSUANCE OF CERTIFICATES
SECTION 2.1 CONVEYANCE OF PURCHASED CONTRACT RECEIVABLES. In
consideration of the Trust's payment of the Purchase Price pursuant to
Section 2.2, the Seller hereby sells, transfers, assigns and otherwise conveys
to the Trust, WITHOUT RECOURSE other than as expressly provided herein, all
right, title and interest of the Seller in, to and under:
(a) the Purchased Contract Receivables and all monies paid or to be
paid thereon and due or to be due thereunder;
(b) all guarantees, insurance and other agreements or arrangements of
the Obligors, or on behalf of the Obligors, of whatever character
supporting or securing payment of any Purchased Contract Receivable whether
pursuant to the Contracts or otherwise; and
(c) all proceeds of any and all of the foregoing (the assets
described in clauses (a) through (c) being collectively referred to herein
as the "PURCHASED PROPERTY").
It is the intention of the Seller that the transfer and assignment contemplated
by this Agreement shall constitute a sale of the Purchased Contract Receivables
from the Seller to the Trust and the beneficial interest in and title to the
Purchased Property shall not be part of the Seller's estate in the event of the
filing of a bankruptcy petition, or the taking of any similar action, by or
against the Seller under any bankruptcy, insolvency or similar law. The Seller
and the Trust agree that the transfer and assignment contemplated by this
Agreement is intended to be a sale and disposition of all of the Seller's
rights, title and interest in the Purchased Property and will be treated as a
sale for Federal income tax purposes. The Seller agrees to confirm such sale to
any Person inquiring about the Purchased Contract Receivables. Notwithstanding
the foregoing, in the event a court of competent jurisdiction determines that
such transfer and assignment did not constitute such a sale or that such
beneficial interest is part of the Seller's estate, then the Seller shall be
deemed to have granted to the Trust a first priority perfected security interest
in all of the Seller's right, title and interest in, to and under the Purchased
Property, and the Seller hereby grants such security interest. For purposes of
such grant, this Agreement shall constitute a security agreement under the UCC.
Notwithstanding the assignment of the Purchased Property set forth in
this Section 2.1, the Seller does not hereby assign any other rights under the
Contracts or delegate any of its duties or obligations under the Contracts or
the Purchased Property to the Trust or the Owner Trustee and neither the Trust
nor the Owner Trustee accepts such duties or obligations. The foregoing
assignment, set-over and conveyance does not constitute and is not intended to
result in a creation or an assumption by the Trust, the Trustee or any Investor
Certificateholder of any obligation of the Seller or any other Person in
connection with the Purchased Property or under
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any agreement or instrument relating thereto, including, without limitation, any
obligation to any Obligor.
In connection with such assignment, the Seller agrees to record and
file, at its own expense, any financing statements (and continuation statements
with respect to such financing statements when applicable) or, where applicable,
registrations in the appropriate records with respect to the Purchased Property,
in each case meeting the requirements of applicable law in such manner and in
such jurisdictions as are necessary to perfect and maintain perfection of the
assignment of the Purchased Property to the Trust, and to deliver a file-stamped
copy or certified statement of such financing statement or registration or other
evidence of such filing or registration to the Owner Trustee on or prior to the
date of issuance of any Certificates. The Owner Trustee shall be under no
obligation whatsoever to file such financing statement, or a continuation
statement to such financing statement, or to make any other filing or other
registration under the UCC, other relevant legislation or similar statute in
connection with such transfer.
In connection with such assignment, the Seller further agrees, at its
own expense, on or prior to the Closing Date (a) to indicate, or to cause to be
indicated, in its records that the Purchased Contract Receivables have been
conveyed to the Trust pursuant to this Agreement and (b) to deliver or cause to
be delivered to the Owner Trustee a true and complete list of all Purchased
Contract Receivables transferred to the Trust specifying for each group of
Purchased Contract Receivables, as of the Cut-Off Date, (i) the identification
or reference number assigned to such Purchased Contract Receivables by the
Seller and (ii) the amount of such Purchased Contract Receivables. Such list
shall be marked as Schedule 3 to this Agreement and is hereby incorporated into
and made a part of this Agreement.
The Seller shall advise the Obligors of the transfer and assignment to
the Trust of the Purchased Contract Receivables hereunder and instruct the
Obligors that future payments thereon shall be made to the Lockbox and the
Lockbox Account or the Collection Account. The Seller shall not revoke or
otherwise change such instructions to the Obligors prior to the termination of
this Agreement without notifying the Rating Agency and obtaining the prior
written approval of the Trust acting through the Owner Trustee pursuant to
Section 9.4 of the Trust Agreement. Any actions taken by the Servicer with
respect to the Purchased Contract Receivables shall be deemed that as agent for
the Trust and not that as the owner of the Purchased Contract Receivables or as
principal.
SECTION 2.2 PAYMENT OF PURCHASE PRICE. Upon fulfillment of the
Closing Conditions, the Purchase Price for the Purchased Property shall be paid
by the Trust to HGSC by wire transfer of immediately available funds to an
account designated by the Seller in writing to the Trust.
SECTION 2.3 ACCEPTANCE BY TRUST. The Trust hereby accepts the
Purchased Property and agrees to hold such consideration upon the trust set
forth in the Trust Agreement for the benefit of Certificateholders, subject to
the terms and conditions of the Trust Agreement and this Agreement. The Trust
hereby agrees and
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accepts the appointment and authorization of the Servicer under Section 4.1.
The Trust acknowledges that, except as expressly provided herein, the Purchased
Property is being acquired without recourse and that all risks with respect to
the payment and collection of the Purchased Property shall be that of the Trust
and not of the Seller.
SECTION 2.4 NO REPURCHASE. The Seller shall not have any right or
obligation under this Agreement, by implication or otherwise, to repurchase from
the Trust any Purchased Property or to rescind or otherwise retroactively effect
any purchase of any Purchased Property.
SECTION 2.5 CERTAIN ALLOCATIONS. The Seller agrees that, unless
otherwise specified by the Owner Trustee, any payment received in respect of a
Contract during any Monthly Period by the Obligors thereunder shall first be
allocated to the Purchased Contract Receivables under that Contract due during
such Monthly Period and then to any other amount due under such Contract during
such Monthly Period. The Trust agrees that any payments received in respect of
a Contract that are not in respect of or allocated to a Purchased Contract
Receivable shall, subject to the terms and conditions of the Collateral Sharing
and Security Agreement, promptly be remitted back to the Seller.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE SELLER
AND THE SERVICER
SECTION 3.1 REPRESENTATIONS AND WARRANTIES AS TO THE RECEIVABLES.
Each of the Seller and HIG (in its capacity as Servicer) hereby represents and
warrants to the Trust, for the benefit of the Investor Certificateholders, that
as of the Closing Date (i) each Obligor is an Eligible Obligor, (ii) each
Purchased Contract Receivable is an Eligible Receivable and (iii) with respect
to each Contract, each statement set forth in the definition of Eligible
Receivable relating to the Contract is true and correct.
SECTION 3.2 OTHER REPRESENTATIONS AND WARRANTIES. Each of the
Seller and HIG (in its capacity as Servicer and Operator) represents and
warrants to the Trust for the benefit of the Investor Certificateholders as of
the Closing Date as follows:
(a) HIG (i) is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware, (ii) has the
corporate power and authority, and the legal right, to own and operate its
property, to lease the property it operates as lessee and to conduct the
business in which it is currently engaged, (iii) has all licenses necessary
to service the Purchased Contract Receivables pursuant to this Agreement,
(iv) is duly qualified as a foreign corporation and in good standing under
the laws of each jurisdiction where its ownership, lease or operation of
property or the conduct of its business requires such qualification, except
to the extent that the failure to be so qualified and in good standing
would not have a Material Adverse Effect and (v) is in compliance with all
Requirements of Law except to the extent that the failure
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to comply therewith would not, individually or in the aggregate, have a
Material Adverse Effect; HGSC (i) is a general partnership organized and
existing under the laws of the State of Delaware, (ii) has the full
partnership power and authority, and the legal right, to own and operate
its property, to lease the property it operates as lessee and to conduct
the business in which it is currently engaged, and (iii) is in compliance
with all Requirements of Law except to the extent that the failure to
comply therewith would not, individually or in the aggregate, have a
Material Adverse Effect.
(b) It (i) has the corporate or partnership power and authority to
make, deliver and perform each Basic Trust Document to which it is a party,
(ii) has taken all necessary action to authorize the execution, delivery
and performance of each Basic Trust Document to which it is a party and
(iii) has duly executed and delivered each Basic Trust Document to which it
is a party.
(c) The execution, delivery and performance of each Basic Trust
Document to which it is a party will not violate any Requirement of Law or
Contractual Obligation of it except for violations that would not have a
Material Adverse Effect, and will not result in, or require, the creation
or imposition of any Lien (other than Permitted Liens and Liens created by
the Basic Documents) on any of its properties or revenues pursuant to any
such Requirement of Law or Contractual Obligation.
(d) Each Basic Trust Document to which it is a party and each Contract
constitutes the legal, valid and binding obligation of it enforceable
against it in accordance with its terms, except as enforceability may be
limited by bankruptcy, insolvency, reorganization or other similar laws
affecting the enforcement of creditors' rights in general and by general
principles of equity, regardless of whether such enforceability is
considered in a proceeding in equity or at law.
(e) No Purchased Contract Receivable has been sold, transferred,
assigned or pledged to any Person other than the Trust; immediately prior
to the conveyance of the Purchased Contract Receivables pursuant to this
Agreement, the Seller had good and marketable title thereto, free of any
Lien; and, upon execution and delivery of this Agreement by the parties
hereto, the Trust shall have all of the right, title and interest of the
Seller in, to and under the Purchased Contract Receivables free of any Lien
other than Permitted Liens and Liens created pursuant to the Basic
Documents.
(f) Each of the audited consolidated balance sheet, statement of
operations, statement of stockholders' equity and statement of cash flows
of FRGC for each of the two fiscal years ended December 31, 1993 and 1994,
and the two fiscal years ended December 31, 1993 and 1992, the audited
consolidated balance sheet of FRGC as of June 19, 1995, the unaudited
consolidated balance sheet, statement of operations and statement of cash
flows of FRGC for the three-month period ended March 31, 1995, and the
unaudited consolidated balance sheet and statement of operations of FRGC
for the nine-month period
-5-
ended September 30, 1995, respectively, have been prepared in accordance
with GAAP applied on a consistent basis throughout the periods involved
(except for the unaudited financial statements which are subject to normal
year-end adjustments and purchase price adjustments as a result of
Crystal's acquisition of FRGC and which do not contain footnote
disclosures) and each fairly presents the consolidated financial position
of FRGC and its Subsidiaries at the respective dates thereof and the
consolidated results of their operations and changes in cash flows for the
periods indicated.
(g) Since June 19, 1995, there has been no development or
event which has had or could reasonably be expected to have a Material
Adverse Effect.
(h) No proceeds of the issuance of any Investor Certificates
will be used by it to purchase or carry any margin stock (as defined in
Regulations U and G of the Board of Governors of the Federal Reserve
System, as in effect from time to time). It is in compliance with all
applicable regulations of the Board of Governors of the Federal Reserve
System (including, without limitation, Regulations U and G with respect to
"margin stock").
(i) Upon formation of the Trust, and immediately following
its acquisition of the Purchased Contract Receivables pursuant to this
Agreement, none of the FRGC Parties nor the Trust will be an "investment
company" within the meaning of, or subject to regulation under, the
Investment Company Act of 1940 and the rules and regulations thereunder.
(j) Each of Crystal and the FRGC Parties has filed or caused
to be filed all tax returns which, to its knowledge, are required to be
filed and have paid all taxes shown to be due and payable on said returns
or on any assessments made against it or any of its property and all other
taxes, fees or other charges imposed on it or any of its property by any
Governmental Authority (other than any the amount or validity of which are
currently being contested in good faith by appropriate proceedings and with
respect to which reserves in conformity with GAAP have been provided on its
books), except where the failure to file or to pay such taxes, fees or
other charges would not, individually or in the aggregate, have a Material
Adverse Effect; no tax Lien has been filed, and, to its knowledge, no claim
is being asserted, with respect to any such tax, fee or other charge,
except for such claims which would not, individually or in the aggregate,
have a Material Adverse Effect. Except for the Federal income tax
liabilities of FRGC, which have been determined through 1991, the Federal
income tax liabilities of the FRGC Parties have not been finally determined
by the Internal Revenue Service for any period.
(k) It has good record and indefeasible title in fee simple
to, or a valid leasehold interest in, or other valid right to use, all its
real property, and good title to, or a valid leasehold interest in, or
other valid right to use, all its other property, and none of such property
is subject to any Lien other than (i) Permitted Liens and (ii) the Liens
created pursuant to the Basic Documents.
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(l) It is not in default under or with respect to any of its
Contractual Obligations except for such defaults which, individually or in
the aggregate, would not have a Material Adverse Effect.
(m) It has previously delivered to the Trust true and
correct copies of each Contract (including any amendments thereto); and the
terms other than price, volumes and payment dates of the Contracts as they
relate to the Purchased Contract Receivables are the same in all material
respects as the terms set forth in the Contracts attached to the Private
Placement Memorandum with respect to the offer and sale of the Investor
Certificates.
(n) It has not within the last twelve months made any
transfer or incurred any obligation with actual intent to hinder, delay or
defraud any entity to which it was or may become indebted and it has not
transferred any material property without receiving reasonably equivalent
value for any such transfer or obligation. Both immediately prior to and
immediately after the transactions occurring on the Closing Date, (i) the
fair value of its assets at a fair valuation exceeds its debts and
liabilities, subordinated, contingent or otherwise; (ii) the present fair
salable value of its property is greater than the amount that will be
required to pay its probable liability on its debts and other liabilities,
subordinated, contingent or otherwise, as such debts and liabilities become
absolute and matured; (iii) it is reasonably expected to be able to pay its
debts and liabilities, subordinated, contingent or otherwise, as such debts
and liabilities become absolute and matured; and (iv) it will not have
unreasonably small capital with which to conduct the business in which it
is engaged as such business is now conducted and is proposed to be
conducted. For all purposes of clauses (i) through (iv) above, the amount
of contingent liabilities at any time shall be computed as the amount that,
in the light of all the facts and circumstances existing at such time,
represents the amount that can reasonably be expected to become an actual
or matured liability.
(o) Except for any other FRGC Party, it has no Subsidiaries.
(p) The Servicer has in place procedures pursuant to the
Basic Trust Documents that are either necessary or advisable to ensure the
timely collection of the Purchased Contract Receivables.
(q) The Servicer has in force business interruption
insurance with respect to the Storage Facilities as described in Schedule 6
hereto (the "Business Interruption Insurance").
(r) The office at which it keeps its records concerning the
Purchased Contract Receivables is located at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇. Since June 19, 1995, its chief executive office has been
located at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ and is the place
where it is "located" for the purposes of Section 9-103(3)(d) of the UCC of
each jurisdiction the laws of which govern the transfer of the Purchased
Contract Receivable hereunder. From January 1, 1995 until June 19, 1995,
its chief executive office was "located"
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in Dallas, Texas for the purposes of Section 9-103(3)(d) of the UCC as in
effect in the State of Texas. The taxpayer identification number of HGSC
is ▇▇-▇▇▇▇▇▇▇ and of HIG is ▇▇-▇▇▇▇▇▇▇.
(s) Its legal name is as set forth in this Agreement. It
has no trade names, fictitious names, assumed names or "doing business as"
names.
(t) Schedule 3 accurately sets forth the Collected Amounts
scheduled to come due after the Cut-off Date with respect to the Purchased
Contract Receivables.
(u) No action, claim or proceeding is pending and, to its
knowledge, no investigation is pending or threatened that would adversely
affect the payment or enforceability of the Purchased Contract Receivables.
(v) No consents or filings with any Governmental Authority
or approvals by any Governmental Authority that have not been made or
obtained are required for the execution, delivery and performance of the
Basic Trust Documents to which it is a party.
(w) There are no pending or, to its knowledge, threatened
actions, suits or proceedings against any FRGC Party that would adversely
affect the transactions contemplated by the Basic Trust Documents to which
it is a party, and there is no injunction, writ, restraining order or other
similar order in effect that adversely affects any of the FRGC Parties'
performance of the agreements and transactions contemplated by the Basic
Trust Documents to which it is a party.
(x) All of the FRGC Parties' pension and profit sharing
plans have been fully funded in accordance with the applicable FRGC
Parties' obligations.
(y) Each Contract is a legal, valid and binding obligation
and contract, as the case may be, of the FRGC Party thereto, enforceable
against such party in accordance with its terms, except as enforceability
may be limited by bankruptcy, insolvency, reorganization or similar laws
affecting the enforcement of creditors' rights in general and by general
principles of equity, regardless of whether such enforceability is
considered in a proceeding in equity or at law, and except as to any
material provision of any Contract the lack of enforceability of which
would not affect the enforceability of the payment obligations of the
Obligors thereunder in respect of any Purchased Contract Receivable.
(z) Upon the completion of the sale of the Purchased
Contract Receivables, the Trust's ownership therein will be reflected on
the books and records of the Seller.
The representations and warranties set forth in this Article III
shall survive the transfer and assignment of the Purchased Property to the
Trust.
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ARTICLE IV
ADMINISTRATION AND SERVICING OF RECEIVABLES
SECTION 4.1 DUTIES OF THE SERVICER. The Servicer is hereby appointed
and authorized to act as agent for the Trust and in such capacity shall manage,
service, administer and, subject to Section 4.2, make collections on the
Purchased Contract Receivables for the benefit of the Trust and the
Certificateholders prudently and in accordance with customary and usual
servicing procedures and applicable law and, to the extent not inconsistent with
the foregoing, to exercise that degree of skill and care it uses in servicing
assets held for its own account. The Servicer hereby accepts such appointment
and authorization and agrees to perform the duties of Servicer with respect to
the Purchased Contract Receivables set forth herein. The Servicer's duties
shall include posting of all payments, responding to inquiries of Obligors on
the Purchased Contract Receivables, investigating and collecting delinquencies,
reporting tax information to Obligors, managing the collateral, accounting for
collections and furnishing monthly and annual statements to the Trust pursuant
to the Trust Agreement, generating federal income tax information and performing
the other duties specified herein. Subject to the provisions of Section 4.2,
the Servicer shall follow its historical policies and procedures and shall have
full power and authority, acting alone, to do any and all things, consistent
with the terms of the Basic Trust Documents, in connection with such managing,
servicing, administration and collection that it may deem necessary or
desirable.
In fulfilling its obligations hereunder, the Servicer shall at any
time and from time to time (i) be authorized to review and obtain copies of all
information provided to the Trust with respect to the Purchased Contract
Receivables, (ii) be entitled to receive copies of all statements, notices and
reports regarding the Collection Account and Investment Account, (iii) be
entitled to obtain any and all information regarding deposits, withdrawals and
transfers to and from the Collection Account and Investment Account and the
current balances therein and (iv) be entitled to obtain such other reasonable
information and documentation it deems necessary or desirable to perform the
servicing and administrative duties required of it under this Agreement.
Without limiting the generality of the foregoing, the Servicer is
hereby authorized to commence in the name of the Trust or the Owner Trustee or,
to the extent necessary, in its own name, a legal proceeding to enforce any
Purchased Contract Receivable, or to commence or participate in a legal
proceeding (including a bankruptcy proceeding) relating to or involving any
Purchased Contract Receivable. If the Servicer commences or participates in
such a legal proceeding in its own name, the Trust shall thereupon be deemed to
have automatically assigned such Purchased Contract Receivable to the Servicer
solely for purposes of commencing or participating in any such proceeding as a
party or claimant, and the Servicer is hereby authorized and empowered by the
Trust to execute and deliver in the Servicer's name any notices, demands,
claims, complaints, responses, affidavits or other documents or instruments in
connection with any such proceeding. The Owner Trustee, upon the written
request of the Servicer, shall furnish the Servicer with any powers of attorney
and other documents and take any other steps which the Servicer may deem
necessary or appropriate to enable the Servicer to carry out its servicing and
administrative duties
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under this Agreement. Except to the extent required by the preceding two
sentences, the authority and rights granted to the Servicer in this Section 4.1
shall be nonexclusive and shall not be construed to be in derogation of the
retention by the Trust of equivalent authority and rights.
SECTION 4.2 SERVICING PROCEDURES.
(a) On or immediately following the Closing Date, the Servicer shall
instruct all Obligors to make payments in respect of the Purchased Contract
Receivables to the Collection Account. If any future collections are received
in a Lockbox, they shall within one Business Day of receipt thereof, be
deposited in a Lockbox Account. In the event that any payments in respect of
the Purchased Contract Receivables are made directly to the Seller or the
Servicer, including, without limitation, any employees thereof or independent
contractors employed thereby, the Seller or the Servicer, as the case may be,
shall, as soon as reasonably practicable but in no event more than two Business
Days after receipt thereof, deposit such amounts in the Lockbox Account or
Collection Account.
(b) The Servicer shall use reasonable efforts to collect all payments
called for under the terms and provisions of the Purchased Contract Receivables
as and when the same shall become due, and shall follow such collection
practices, policies and procedures as are consistent with past practices and as
it follows with respect to comparable contract receivables that it services for
itself or others.
(c) The Servicer shall not take any action to cause any Purchased
Contract Receivable to be evidenced by any instrument (as defined in the UCC as
in effect in the State of New York) except in connection with its enforcement
or collection of a Purchased Contract Receivable, in which event the Servicer
shall deliver such instrument to the Owner Trustee as soon as reasonably
practicable but in no event more than five days after receipt thereof.
SECTION 4.3 PAYMENT OF CERTAIN EXPENSES BY SERVICER. Subject to any
limitations on the Servicer's liability hereunder, the Servicer shall be
required to pay all expenses incurred by it in connection with its activities
under this Agreement or any other Basic Document (including reasonable fees and
disbursements of the Trust, the Owner Trustee and independent accountants, taxes
imposed on the Servicer, expenses incurred in connection with distributions and
reports to Investor Certificateholders and all other fees and expenses not
expressly stated under this Agreement to be for the account of the Investor
Certificateholders, but excluding federal, state and local income and franchise
taxes, if any, of the Trust or any Investor Certificateholder).
SECTION 4.4 ANNUAL STATEMENT AS TO COMPLIANCE. The Servicer shall
deliver to the Owner Trustee, each Investor Certificateholder and the Rating
Agency, on or before March 31 of each year, beginning March 31, 1996, an
officer's certificate signed by the President or any Vice President of the
Servicer, dated as of such date, stating that (i) a review of the activities of
the Servicer during the prior calendar year (or, with respect to the first such
certificate, such period as shall have elapsed from the Closing Date to the end
of the prior calendar year) and of its performance under this
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Agreement and the other Basic Trust Documents has been made under such officer's
supervision and (ii) to such officer's knowledge, based on such review, the
Servicer has fulfilled in all material respects all its obligations under this
Agreement and the other Basic Trust Documents throughout such period, or, if
there has been a default in the fulfillment of any such obligation, specifying
each such default known to such officer and the nature and status thereof and
remedies therefor being pursued.
SECTION 4.5 ACCESS TO CERTAIN DOCUMENTATION AND INFORMATION
REGARDING PURCHASED CONTRACT RECEIVABLES. Each of the FRGC Parties shall
provide to the Owner Trustee and the Investor Certificateholders reasonable
access to the documentation regarding the Purchased Contract Receivables and to
their respective officers, employees and accountants. Each of the FRGC Parties
shall also permit the representatives of each Certificateholder that is an
Institutional Investor:
(a) If no default of an FRGC Party under any of the Basic Trust
Documents shall have occurred and be continuing, at the expense of such
holder and upon reasonable prior notice to the FRGC Parties, to visit the
principal executive office of the FRGC Parties, to discuss the affairs, finances
and accounts of the FRGC Parties as they relate to their respective obligations
under the Basic Trust Documents with their respective officers, and (with the
consent of the FRGC Parties, which consent shall not be unreasonably withheld)
their respective independent public accountants, and (with the consent of any
FRGC Party, which consent shall not be unreasonably withheld) to visit the other
offices and properties of the FRGC Parties, all at such reasonable times and as
often as may be reasonably requested in writing; and
(b) If a default of an FRGC Party under any of the Basic Trust
Documents shall have occurred and be continuing for more than 30 days, at
the expense of the FRGC Parties to visit and inspect any of the offices or
properties of the FRGC Parties, to examine all their respective books of
account, records, reports and other papers, to make copies and extracts
therefrom, and to discuss their affairs, finances and accounts with their
respective officers and independent public accountants (and by this provision
the FRGC Parties authorize said accountants to discuss the affairs, finances and
accounts of the FRGC Parties), all at such times and as often as may be
requested.
SECTION 4.6 INFORMATION PROVIDED TO RATING AGENCY. In addition to
receiving any information or documents required to be delivered to the Rating
Agency pursuant to any Basic Trust Document, the Rating Agency may request in
writing to the Servicer, and the Servicer shall deliver, reasonable additional
information necessary to the Rating Agency to monitor the Investor Certificates.
Promptly, but in no event later than five Business Days, after obtaining
knowledge of an Insolvency Event with respect to any FRGC Party, the Servicer
shall deliver to the Rating Agency (with a copy to the Investor
Certificateholders and the Owner Trustee) notice of such Insolvency Event. The
Servicer agrees to maintain and pay for the retention of the Rating Agency
pursuant to the agreement between Crystal and the Rating Agency dated August 31,
1995. Failure by the Servicer to comply with the terms of this Section 4.6
shall constitute a default hereunder only of the Servicer and the sole remedy
available to the Owner Trustee shall be replacement of the Servicer as provided
in Article VII.
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SECTION 4.7 COMPENSATION. As compensation for its services
hereunder, the Servicer shall be specially allocated income equal to the
reinvestment income earned on the temporary investment of the funds on deposit
in the Collection Account prior to their distribution to the Certificateholders
on each Distribution Date (such amount, the "REINVESTMENT INCOME"). The
Reinvestment Income shall be distributed to the Servicer on each Distribution
Date pursuant to the terms of the Trust Agreement.
SECTION 4.8 DELIVERY OF FINANCIAL STATEMENTS.
The Servicer shall furnish to the Trust, each Investor
Certificateholder and the Rating Agency:
(i) as soon as available, but in any event not later than
105 days after the end of each fiscal year of FRGC ending on or after
December 31, 1995, the consolidated balance sheet of FRGC and its
consolidated Subsidiaries as at the end of such year and the related
consolidated statements of earnings and retained earnings and cash flow
statements, which shall be audited by a nationally recognized accounting
firm; and
(ii) as soon as available, but in any event not later than 55
days after the end of each of the first three quarterly periods of each
fiscal year of FRGC beginning with the first fiscal quarter of 1996, the
unaudited consolidated balance sheet of FRGC and its consolidated
Subsidiaries as at the end of such quarter and the related unaudited
consolidated statements of earnings and retained earnings and cash flow
statements of FRGC and its consolidated Subsidiaries for such quarter, and
the portion of the fiscal year through the end of such quarter;
setting forth in each case in comparative form the figures for the corresponding
periods in the previous fiscal quarter or fiscal year, as the case may be, all
in reasonable detail, prepared in accordance with GAAP applicable to quarterly
or annual financial statements generally; provided that footnote disclosure
shall not be required for quarterly financial statements. The quarterly and
annual financial statements shall be certified by a Responsible Officer of FRGC
that such consolidated statements fairly present the financial condition of FRGC
and its consolidated Subsidiaries as at the dates indicated and the results of
their operations and cash flows for the periods indicated, subject, in the case
of interim statements, to changes resulting from audit and normal year-end
adjustment. The annual financial statements shall also be accompanied by an
opinion thereon of independent certified public accountants of recognized
national standing, which opinion shall state that such financial statements
present fairly, in all material respects, the financial position of FRGC and its
consolidated subsidiaries and their results of operations and cash flows and,
except as set forth therein, have been prepared in conformity with GAAP, and
that the examination of such accountants in connection with such financial
statements has been made in accordance with generally accepted auditing
standards, and that such audit provides a reasonable basis for the opinion in
the circumstances.
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SECTION 4.9 OTHER INFORMATION.
(a) The Servicer and the Seller agree to provide to the
Trust and each Investor Certificateholder, with reasonable promptness, such
additional data and information as may reasonably be requested relating to the
business, operations, affairs, financial condition, assets and properties of the
FRGC Parties, the Contracts and the ability of any of the FRGC Parties to
perform their respective obligations under any of the Basic Trust Documents.
(b) The Servicer shall furnish to the Trust, the Rating
Agency and each Investor Certificateholder within five Business Days of the
filing thereof a copy of each Annual Report on Form 10-K, Quarterly Report on
Form 10-Q and Current Report on Form 8-K that may be filed by Crystal with the
Securities and Exchange Commission pursuant to the Securities Exchange Act of
1934, as amended, for so long as Crystal shall be subject to such filing
obligations or until such earlier date that FRGC shall cease to be a Subsidiary
of Crystal.
SECTION 4.10 NOTICES. The Servicer or the Seller shall
furnish to the Trust, each Investor Certificateholder and the Rating Agency,
promptly, and in any event within five days, after obtaining knowledge of the
occurrence of any default by any FRGC Party of any covenant, or breach of any
representation and warranty of any FRGC Party, under any Basic Trust Document, a
written notice specifying the nature and existence thereof and what action the
applicable FRGC Party is taking or proposes to take with respect thereto.
ARTICLE V
COVENANTS OF THE SERVICER AND OTHERS; REMEDIES
SECTION 5.1 COVENANTS OF THE SERVICER AND OTHERS. Until
such time as all required distributions have been made on the Investor
Certificates pursuant to the terms of Section 5.2(d) and (e) of the Trust
Agreement, each of the Seller and HIG (in its capacity as Servicer and Operator)
covenants, for the benefit of the Trust, the Owner Trustee and the Investor
Certificateholders, as follows:
(i) it will not voluntarily or involuntarily terminate or
permit the termination of, or take any action which would permit the
Obligors to terminate, any of the Contracts;
(ii) it will not voluntarily or involuntarily take any action
(including, without limitation, by agreeing to any amendment, modification
or waiver of any provision of any Contract which would result in the
reduction, or change the terms, of the Purchased Contract Receivables)
which would permit the Obligors to reduce or affect in a manner adverse to
the Trust their obligations under the Purchased Contract Receivables,
including, without limitation, by way of setoff or otherwise;
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(iii) it will not, without the consent of the Owner Trustee at
the direction of the Majority Certificateholders, consent to an assignment
by an Obligor which releases such Obligor from its obligations with respect
to a Purchased Contract Receivable;
(iv) it will operate the Storage Facilities in a good and
prudent manner, consistent with its historical practices;
(v) it will perform its obligations under the Contracts in
all material respects;
(vi) other than the Notes and the obligations relating
thereto, it will not incur, assume or become liable for any Indebtedness,
or assume or guarantee any Indebtedness of any Person;
(vii) it will not voluntarily or involuntarily create, grant
or permit to exist any Liens on any of its property or assets other than
(1) Permitted Liens, (2) Liens in the form of sales or leases of assets
permitted pursuant to Section 5.1(xv) and (3) Liens created pursuant to any
of the Basic Documents as executed and delivered at the closing of the
transactions contemplated hereby;
(viii) it will not at any time prior to June 2000 expand or
make any material additions or capital improvements to the Storage
Facilities that would result in a reduction in the contractual rates for
the Purchased Contract Receivables provided under the Contracts;
(ix) it will not enter into contracts with respect to the
Storage Facilities which (1) would prohibit or otherwise impose any
material cost on the Trust in selling or foreclosing on the Storage
Facilities in the event that the Servicer fails to pay Liquidated Damages
pursuant to Section 5.2(a) or (2) would bind a subsequent purchaser of the
Storage Facilities acquired in a foreclosure or sale unless the receivables
under such contracts in the case of clause (2) are assigned as additional
security to the Trust and the Indenture Trustee pursuant to the Collateral
Sharing and Security Agreement;
(x) it will not engage in any business other than (w) the
operation of the Storage Facilities, (x) the provision of transportation
and storage services relating to or in connection with the Storage
Facilities, (y) any expansion or additions to the Storage Facilities or its
operations or to the transportation and storage services provided in
connection with the Storage Facilities or (z) the provision of management
or operational services for other Persons at facilities located in the
Petal Dome area in Mississippi provided that such management and
operational services would not have a Material Adverse Effect, it being
understood that the Seller or the Servicer may, subject to the foregoing
limitations and the other provisions of this Agreement, increase the
storage capacity of the Storage Facilities, expand or ▇▇▇▇▇ new caverns on
or under the property where the Storage Facilities are currently located
(it being understood that no storage facilities outside such location will
be acquired by it), construct,
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acquire or expand new or existing pipelines and related equipment which may
connect directly or indirectly to the Storage Facilities or enhance the
services provided at the Storage Facilities and enter into joint ventures
and partnerships with respect to the storage, transportation or delivery of
natural gas and other hydrocarbons to the extent that such joint ventures
and partnerships do not create a Lien on the Storage Facilities and are
reasonably related to the operations of the Storage Facilities;
(xi) except as expressly contemplated by the Basic Trust
Documents, the Servicer will service the Purchased Contract Receivables in
accordance with its historical practices and policies;
(xii) it will maintain its corporate existence separate and
apart from any other entity except that, subject to the terms of the Trust
Agreement, any of FRGC, the Servicer and HGSC may merge with each other and
HGSC may liquidate and dissolve as long as (1) either FRGC or HIG holds
individually or together the assets of HGSC immediately following the
liquidation, (2) no default under this Agreement would exist following any
such action and (3) any successor entity in any such action explicitly
assumes the liabilities of its predecessor entity (and a copy of any such
assumption agreement is delivered to the Investor Certificateholders, the
Owner Trustee and the Rating Agency);
(xiii) it will (1) comply with all Requirements of Law, (2)
perform its Contractual Obligations and (3) promptly pay its taxes and
other liabilities as they become due and payable except, in each case, for
such non-compliance, non-performance or non-payment which would not,
individually or in the aggregate, have a Material Adverse Effect;
(xiv) it will maintain Business Interruption Insurance (which
shall name the Trust as loss payee thereunder in respect of its interests
in the Purchased Contract Receivables) of the type and in the amount set
forth in Schedule 6 hereto and to the extent such insurance is not
available on a reasonable basis or sufficient to cover all Force Majeure
Events under a Contract for the entire time that such Force Majeure Event
exists, it will self insure against such Force Majeure Event and make such
payments to the Trust as a loss payee as may be necessary to compensate the
Trust as the holder of the Purchased Contract Receivables for all losses
arising from such Force Majeure Event that are not otherwise covered by
Business Interruption Insurance;
(xv) an FRGC Party will at all times own all the material
assets constituting the Storage Facilities; PROVIDED, however, this
provision will not restrict the sale of movable equipment that is not
necessary for the operation of the Storage Facilities, sales and loans of
base gas in the ordinary course of business and modifications and
terminations of the leases and other agreements that would not have a
Material Adverse Effect;
(xvi) except for the payment of dividends on shares of its
capital stock, distributions with respect to its partnership interests,
repurchases of shares of
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its capital stock, issuances of new classes or series of its capital stock,
the lending of funds to Crystal or any of its Affiliates, the lending or
borrowing of funds between or among the FRGC Parties or other transactions
between or among the FRGC Parties, it will not engage in any material
transaction with an Affiliate that is not on substantially the same terms
as would reasonably be expected to be obtained on an arm's length basis
with an unaffiliated third party;
(xvii) HGSC will not pay any distributions to the extent such
distributions would decrease its Consolidated Net Worth below the Initial
Required Net Worth; and
(xviii) it will not enter into any speculative hedge contracts.
SECTION 5.2 REMEDIES.
(a) In the event the Seller or HIG breaches any of the covenants set
forth in Section 5.1 (whether voluntarily or involuntarily, including, without
limitation, as a result of or in connection with a bankruptcy proceeding
involving the Seller or HIG, but except as provided in Section 5.2(e)) or any of
the representations and warranties of the Seller or HIG set forth in Article III
is not true and correct as of the Closing Date, in each case in a manner which
materially and adversely affects any Purchased Contract Receivable, if the
Seller or HIG, as the case may be, fails to remedy such breach or correct any
such representation or warranty within 30 days after receiving written notice
from the Owner Trustee or any Investor Certificateholder, then, upon the request
of the Owner Trustee or the Majority Certificateholders, HGSC and HIG shall be
jointly and severally obligated to pay as liquidated damages ("LIQUIDATED
DAMAGES") to the Trust immediately the Liquidated Damages Amount for such
Purchased Contract Receivable. The remedies set forth in this Section 5.2(a)
shall be in addition to, and not in limitation of, any other remedies the Owner
Trustee may have under applicable law, provided that except as set forth in
paragraph (b) below and Section 7.1, in the event that the Seller or HIG fully
performs its obligations under this paragraph (a)in respect of any breach, then
the remedies set forth herein shall be the sole remedy available to the Owner
Trustee in respect of such breach.
(b) HGSC hereby confirms the appointment of HIG as Operator of the
Storage Facilities on behalf of HGSC. In the event HGSC or HIG breaches any of
the covenants set forth in the Basic Trust Documents (but only to the extent
such covenant relates to the operation of the Storage Facilities), and such
breach is not remedied or cured within 45 calendar days of receipt of written
notice thereof from the Trust, or in the event there shall have occurred and be
continuing an Insolvency Event with respect to HIG, HIG agrees if requested
pursuant to the provisions of the Collateral Sharing and Security Agreement, to
resign as Operator and HIG and HGSC agree that a substitute operator of the
Storage Facilities may be engaged by the Collateral Trustee pursuant to Section
13 of the Collateral Sharing and Security Agreement.
(c) As collateral security for the prompt and complete payment of
Liquidated Damages if and when due pursuant to Section 5.2(a) and the amounts
required to be paid by Seller pursuant to Section 5.1(xiv), contemporaneously
herewith
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the Seller has granted to the Collateral Trustee a security interest in the
Storage Facilities, the Contracts and certain other collateral. In the event
the Seller shall fail to pay any Liquidated Damages when due or any amounts
required to be paid pursuant to Section 5.1(xiv) and such failure shall be
continuing, the Owner Trustee may, in addition to any other remedy available to
it, cause the Collateral Trustee to (i) institute
proceedings from time to time for the complete or partial foreclosure of the
Shared Collateral and the Mortgage Collateral under the Collateral Sharing and
Security Agreement and Mortgage or (ii) exercise any other right or remedy or
take any other action permitted to be taken by the Collateral Trustee following
such event.
(d) As additional security for its obligation to pay Liquidated
Damages and the amounts required to be paid by the Seller pursuant to Section
5.1(xiv) ("ADDITIONAL SECURITY"), contemporaneously herewith HGSC has granted
to the Collateral Trustee a security interest in the distributions and other
funds receivable in respect of the Residual Certificate.
(e) In the event there occurs an Event of Force Majeure, the proceeds
of the Business Interruption Insurance maintained by the Seller and the other
amounts, if any, required to be paid by the Seller pursuant to Section 5.1(xiv)
shall be paid to the Trust in respect of any installment (or portion thereof) of
any Purchased Contract Receivables with respect to which the Obligor has not
made such payment as a result of such Event of Force Majeure. Such proceeds
shall be paid to the Collection Account and considered part of the Collected
Amount. Subject to the Seller's compliance with Section 5.1(xiv), any such
Event of Force Majeure shall not constitute a default under this Agreement
or require the payment of any Liquidated Damages.
ARTICLE VI
LIABILITIES OF SERVICER AND OTHERS
SECTION 6.1 LIABILITY OF SERVICER; INDEMNITIES.
(a) The Servicer shall be liable in accordance with this Agreement
only to the extent of the obligations in this Agreement specifically
undertaken by the Servicer. Such obligations shall include the following:
(i) The Servicer shall indemnify, defend and hold harmless the
Owner Trustee and the Trust from and against any taxes that may at any
time be asserted against the Owner Trust or the Trust with respect to the
transactions contemplated in this Agreement, including any sales, gross
receipts, general corporation, tangible personal property, privilege or
license taxes (but not including any taxes asserted with respect to
ownership of the Purchased Contract Receivables or Purchased Property, or
federal or other income taxes arising out of distributions on the
Certificates, or any fees or other compensation payable to the Owner Trust
or the Trust) and costs and expenses in defending against the same;
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(ii) The Servicer shall indemnify, defend and hold harmless
the Owner Trustee, the Trust and any Investor Certificateholder from and
against any and all costs, expenses, losses, claims, damages and
liabilities to the extent that such cost, expense, loss, claim, damage or
liability arose out of, or was imposed upon the Owner Trustee, the Trust or
such Investor Certificateholder through the negligence, willful misfeasance
or bad faith of the Servicer in the performance of its duties under this
Agreement and the other Basic Documents or by reason of reckless disregard
of its obligations and duties under any of the Basic Documents; and
(iii) The Servicer shall indemnify, defend and hold harmless
the Owner Trustee and Wilmington Trust Company, in its individual capacity,
and its agents, officers, directors and employees, from and against all
costs, expenses, losses, claims, damages and liabilities arising out of or
incurred in connection with the acceptance, administration or performance
by, or action or inaction of, the Owner Trustee of the trusts and duties
contained in this Agreement, the Trust Agreement and the other Basic Trust
Documents, including the administration of the Owner Trust Estate, except
in each case to the extent that such cost, expense, loss, claim, damage or
liability: (A) is due to the willful misfeasance, bad faith or negligence
(except for errors in judgment) of the Person seeking to be indemnified, or
(B) to the extent otherwise payable to the Owner Trustee, arises from the
Owner Trustee's breach of any of its representations or warranties set
forth in Section 9.6 of the Trust Agreement.
(b) Indemnification under this Section 6.1 shall survive the
resignation or removal of the Owner Trustee or the termination of this Agreement
and shall include reasonable fees and expenses of counsel and expenses of
litigation. If the Servicer has made any indemnity payments pursuant to this
Section 6.1 and the recipient thereafter collects any of such amounts from
others, the recipient shall promptly repay such amounts collected to the
Servicer, without interest.
SECTION 6.2 LIMITATION ON LIABILITY OF SERVICER, SELLER AND OTHERS.
Neither the Seller, the Servicer nor any of the directors, officers, employees,
agents or Affiliates of the Seller or the Servicer shall be under any liability
to the Trust or the Investor Certificateholders, except as specifically provided
in this Agreement, for any action taken or for refraining from the taking of any
action pursuant to this Agreement or any of the Basic Trust Documents or for
errors in judgment; PROVIDED, HOWEVER, that this provision shall not protect the
Seller or the Servicer for any liability for breach of its obligations hereunder
or the Seller, the Servicer or any such Person against any liability that would
otherwise be imposed by reason of willful misfeasance, bad faith or negligence
(except for errors in judgment) in the performance of duties or by reason of
reckless disregard of obligations and duties under this Agreement or any of the
Basic Documents. The Seller and the Servicer and any director, officer,
employee or agent of the Seller or the Servicer may rely in good faith on the
advice of counsel or on any document of any kind PRIMA FACIE properly executed
and submitted by any Person respecting any matters arising under this Agreement.
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SECTION 6.3 DELEGATION OF DUTIES. The Servicer may, at any time
without notice or consent, delegate any duties under this Agreement to any of
the other FRGC Parties. The Servicer may at any time perform specific duties
as Servicer through sub-contractors who are in the business of servicing
receivables comparable to the Purchased Contract Receivables; PROVIDED, HOWEVER,
that no such delegation shall relieve the Servicer of its responsibility with
respect to such duties.
SECTION 6.4 SERVICER NOT TO RESIGN. Subject to the provisions of
Section 7.2, the Servicer shall not resign from the obligations and duties
imposed on it by this Agreement as Servicer except upon a determination that
the performance of its duties under this Agreement is no longer permissible
under applicable law. Any such determination permitting the resignation of the
Servicer shall be evidenced by an Opinion of Counsel to such effect delivered to
the Owner Trustee.
ARTICLE VII
DEFAULT
SECTION 7.1 SERVICER DEFAULT. In the event HIG shall reach any of
the covenants in this Agreement (but only to the extent such covenant relates
to the servicing of the Purchased Contract Receivables) and such breach shall
be continuing and shall not be remedied or cured within 45 calendar days of
receipt of written notice thereof from the Owner Trustee or any Investor
Certificateholder, or in the event there shall have occurred and be continuing
an Insolvency Event with respect to HIG, the Owner Trustee or the Majority
Certificateholders by notice given in writing to the Servicer may, in addition
to the other rights and remedies available in a court of law or equity to
damages, injunctive relief and specific performance (which other rights and
remedies shall not be available in the case of a breach of Section 4.6),
terminate all of the rights and obligations of the Servicer under this Agreement
or appoint a successor servicer, and HIG agrees to pay the reasonable fees and
expenses of such successor servicer. Unless otherwise provided in the notice,
on or after receipt by HIG of such written notice, all authority and power of
the Servicer under this Agreement shall pass to and be vested in the Owner
Trustee pursuant to and under this Section 7.1. The Owner Trustee is hereby
authorized and empowered to execute and deliver, on behalf of HIG, as attorney-
in-fact or otherwise, any and all documents and other instruments, and to do or
accomplish all other acts or things necessary or appropriate to effect the
purposes of such notice of termination, whether to complete the transfer and
endorsement of the Purchased Contract Receivables and related documents, or
otherwise. In such case, HIG agrees to cooperate with the Owner Trustee in
effecting the termination of the responsibilities and rights of HIG as the
Servicer under this Agreement, including the transfer to the Owner Trustee for
administration by it of all cash amounts that shall at the time be held by the
Servicer for deposit, or that shall have been deposited by the Servicer in the
Collection Account or thereafter received with respect to the Purchased Contract
Receivables that shall at that time be held by the Servicer.
SECTION 7.2 TRUSTEE TO ACT; APPOINTMENT OF SUCCESSOR. Unless
otherwise provided in the notice, on and after the time the Servicer receives a
notice
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of termination pursuant to Section 7.1, the Owner Trustee shall appoint a
successor servicer, who shall succeed to the Servicer in its capacity as
servicer under this Agreement and the transactions set forth or provided for in
this Agreement, and shall be subject to all the responsibilities, restrictions,
duties and liabilities relating thereto placed on the Servicer by the terms and
provisions of this Agreement; PROVIDED, HOWEVER, that the predecessor servicer
shall remain liable for, and the successor servicer shall have no liabilities
for, any indemnification obligations of the Servicer arising as a result of
acts, omissions or occurrences during the period in which the predecessor
servicer was the Servicer; and PROVIDED, FURTHER, that HIG shall remain liable
for all such indemnification obligations of the Servicer without regard to
whether it is still Servicer hereunder. As compensation therefor, such
successor servicer shall be entitled to the Reinvestment Income which the
Servicer would have been entitled under this Agreement if no such notice of
termination had been given. Any such successor servicer (i) shall have a net
worth of not less than $5 million and (ii) shall have a regular business that
includes the servicing of similar receivables. In the event the Owner Trustee
deems the Reinvestment Income to be insufficient compensation for the successor
servicer's duties and obligations hereunder, such successor servicer shall be
entitled to such additional fee as such successor servicer and the Owner Trustee
shall mutually agree, which additional fee shall be payable from amounts
otherwise distributable to the Residual Certificateholder pursuant to Article V
of the Trust Agreement. The Owner Trustee and such successor servicer shall
take such action, consistent with this Agreement, as shall be necessary to
effectuate any such succession.
SECTION 7.3 NOTIFICATION TO INVESTOR CERTIFICATEHOLDERS. Upon any
termination of, or appointment of a successor to, the Servicer pursuant to this
Article VII, the Owner Trustee shall give prompt written notice thereof to the
Investor Certificateholders and the Rating Agency.
ARTICLE VIII
TERMINATION
SECTION 8.1 TERMINATION. This Agreement (other than Section 6.1)
shall terminate and be of no further force or effect upon the termination of
the Trust Agreement pursuant to Section 10.1(a) thereof.
ARTICLE IX
MISCELLANEOUS PROVISIONS
SECTION 9.1 WAIVER AND AMENDMENT.
(a) This Agreement may be amended, or any provision hereof may be
waived, from time to time by the Seller, the Servicer and the Owner Trustee with
the consent of the Majority Certificateholders (which consent, whether given
pursuant to this Section 9.1 or pursuant to any other provision of this
Agreement, shall be conclusive and binding on all Investor Certificateholders
and on all future holders of Investor Certificates and of any Investor
Certificate issued upon the transfer thereof
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or in exchange thereof or in lieu thereof whether or not notation of such
consent is made upon the Investor Certificates) for the purpose of adding any
provisions to or changing in any manner or eliminating or waiving compliance
with any of the provisions of this Agreement, or of modifying in any manner the
rights of the Investor Certificateholders; PROVIDED, HOWEVER, that no such
amendment or waiver without the consent of each Investor Certificateholder at
the time outstanding shall (i) change in any manner the amount of, or accelerate
or delay the timing of, collections of payments on the Purchased Contract
Receivables, (ii) change the aforesaid percentage required to consent to any
such amendment or waiver, (iii) change the obligation of the Seller to pay
Liquidated Damages pursuant to Section 5.2(a), (iv) change the obligation of the
Seller to make payments pursuant to Section 5.1(xiv) or (v) amend any provision
of this Agreement(including Section 9.6) which requires actions taken under such
provision to have the consent of greater than the Majority Certificateholders,
without the consent of the number of Investor Certificateholders described in
such Section.
(b) Prior to the execution of any such amendment or waiver, the
Owner Trustee shall furnish written notification of the substance of such
amendment or waiver to the Investor Certificateholders and the Rating Agency.
(c) Promptly after the execution of any such amendment or waiver,
the Owner Trustee shall furnish a copy of such amendment or waiver to each
Investor Certificateholder and the Rating Agency.
(d) The particular form of any proposed amendment or waiver shall be
required to be provided to the Investor Certificateholders in connection with
any request for an amendment or waiver. The manner of obtaining such
amendments or waivers (and any other consents of Investor Certificateholders
provided for in this Agreement) and of evidencing the authorization of the
execution thereof by Investor Certificateholders shall be subject to such
reasonable requirements as the Owner Trustee may prescribe.
(e) Prior to the execution of any amendment or waiver to this
Agreement, the Owner Trustee shall be entitled to receive and rely upon an
Opinion of Counsel stating that the execution of such amendment or waiver is
authorized or permitted by this Agreement and that all conditions precedent to
the execution and delivery of such amendment or waiver have been satisfied. The
Owner Trustee may, but shall not be obligated to, enter into any such amendment
which affects the Owner Trustee's own rights, duties or immunities under this
Agreement or otherwise.
SECTION 9.2 PROTECTION OF TITLE TO OWNER TRUST ESTATE.
(a) The Seller shall execute and file such financing statements and
cause to be executed and filed such continuation and other statements, all in
such manner and in such places as may be required by law fully to preserve,
maintain and protect the interest of the Investor Certificateholders and the
Owner Trustee under this Agreement in the Purchased Contract Receivables and
the other Purchased Property. The Seller shall deliver (or cause to be
delivered) to the Owner Trustee file-stamped
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copies of, or filing receipts for, any document filed as provided above, as soon
as available following such filing.
(b) The Seller shall not change its name, identity or corporate
structure in any manner that would make any financing statement or
continuation statement filed in accordance with paragraph (a) above seriously
misleading within the meaning of Section 9-402(7) of the UCC, unless it shall
have given the Owner Trustee at least 30 days prior written notice thereof.
(c) The Seller shall give the Owner Trustee at least 30 days prior
written notice of any relocation of its chief executive office if, as a result
of such relocation, the applicable provisions of the UCC would require the
filing of any amendment of any previously filed financing or continuation
statement or of any new financing statement. The Servicer shall at all times
maintain each office from which it services any Purchased Contract Receivables
and its principal executive office within the United States of America.
(d) The Servicer shall maintain accounts and records as to each
Purchased Contract Receivable accurately and in sufficient detail to permit the
reader thereof to know as of a reasonably recent date the status of such
Purchased Contract Receivable, including payments made and payments owing (and
the nature of each).
(e) The Servicer shall maintain its records so that, from and after
the time of sale under this Agreement of the Purchased Contract Receivables to
the Trust, the Servicer's records that refer to any Purchased Contract
Receivable indicate clearly that such Purchased Contract Receivable is owned
by the Trust.
(f) The Servicer shall deliver to the Owner Trustee promptly after
the execution and delivery of this Agreement and of each amendment thereto, an
Opinion of Counsel either (i) stating that, in the opinion of such counsel, all
financing statements and continuation statements have been executed and filed
that are necessary fully to preserve and protect the interest of the Owner
Trustee in the Purchased Contract Receivables, and reciting the details of such
filings or referring to prior Opinions of Counsel in which such details are
given, or (ii) stating that, in the opinion of such counsel, no such action is
necessary to preserve and protect such interest.
(g) The Servicer shall deliver to the Owner Trustee, on or before
April 30 of each year, beginning in 1997, an Opinion of Counsel either
(i) stating that, in the opinion of such counsel, all financing statements and
continuation statements have been executed and filed that are necessary fully to
preserve and protect the interest of the Owner Trustee in the Purchased Contract
Receivables and the other property transferred to the Owner Trustee hereunder,
and to preserve and protect the interest of the Collateral Trustee in the Shared
Collateral and the Mortgage Collateral, and reciting the details of such filings
or referring to prior Opinions of Counsel in which such details are given, or
(ii) stating that, in the opinion of such counsel, no further action is
necessary to preserve and protect such interest.
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SECTION 9.3 NOTICES. All demands, notices and communications upon or
to the Servicer, the Owner Trustee, the Investor Certificateholders or the
Rating Agency under this Agreement shall be delivered as specified in APPENDIX
B hereto.
SECTION 9.4 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY,
CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK,
EXCLUDING CHOICE-OF-LAW PRINCIPLES OF THE LAWS OF SUCH STATE THAT WOULD REQUIRE
THE APPLICATION OF THE LAWS OF A JURISDICTION OTHER THAN SUCH STATE; PROVIDED,
HOWEVER THAT THE DUTIES AND IMMUNITIES OF THE OWNER TRUSTEE HEREUNDER SHALL BE
GOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE
STATE OF DELAWARE AND, INSOFAR AS THE LAWS OF ANOTHER STATE GOVERN THE
PERFECTION OF THE TRUST'S INTERESTS IN THE PURCHASED CONTRACT RECEIVABLES, IT IS
AGREED THAT TO THE EXTENT REQUIRED BY THE LAWS OF SUCH OTHER STATE, THE LAWS OF
SUCH OTHER STATE SHALL APPLY TO ENFORCEMENT OF THE POWER OF SALE OR OTHER RIGHTS
AND REMEDIES CREATED HEREIN WITH RESPECT TO SUCH PURCHASED CONTRACT RECEIVABLES.
SECTION 9.5 SEVERABILITY OF PROVISIONS. If any one or more of the
covenants, agreements, provisions or terms of this Agreement shall be for any
reason whatsoever held invalid, then such covenants, agreements, provisions
or terms shall be deemed severable from the remaining covenants, agreements,
provisions or terms of this Agreement and shall in no way affect the validity or
enforceability of the other provisions of this Agreement or of the Certificates
or the rights of the holders thereof.
SECTION 9.6 ASSIGNMENT. Notwithstanding anything to the contrary
contained in this Agreement, this Agreement may not be assigned by the Servicer
without the prior written consent of the Supermajority Certificateholders. The
Servicer shall provide notice of any such assignment to the Rating Agency.
SECTION 9.7 THIRD-PARTY BENEFICIARIES. This Agreement shall be
binding upon the parties hereto and their respective successors and permitted
assigns and inure to the benefit of the parties hereto, the Investor
Certificateholders and their respective successors and assigns. Except as
otherwise provided in Section 6.1 or in this Article IX, no other Person shall
have any right or obligation hereunder.
SECTION 9.8 SEPARATE COUNTERPARTS. This Agreement may be executed by
the parties hereto in separate counterparts, each of which when so executed and
delivered shall be an original, but all such counterparts shall together
constitute but one and the same instrument.
SECTION 9.9 HEADINGS AND CROSS-REFERENCES. The various headings in
this Agreement are included for convenience only and shall not affect the
meaning or interpretation of any provision of this Agreement.
SECTION 9.10 NO PETITION COVENANTS. Notwithstanding any prior
termination of this Agreement, the Servicer shall not, prior to the date
which is one year and one day after the final distribution with respect to the
Investor Certificates acquiesce, petition or otherwise invoke or cause the Trust
to invoke the process of any court or government authority for the purpose of
commencing or sustaining a case
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against the Trust under any federal or state bankruptcy, insolvency or similar
law or appointing a receiver, liquidator, assignee, trustee, custodian,
sequestrator or other similar official of the Trust or any substantial part of
its property, or ordering the winding up or liquidation of the affairs of the
Trust.
SECTION 9.11 LIMITATION OF LIABILITY OF THE OWNER TRUSTEE.
Notwithstanding anything contained herein to the contrary, this Agreement has
been executed by Owner Trustee not in its individual capacity but solely in its
capacity as Owner Trustee of the Trust and in no event shall the Owner Trustee
in its individual capacity or, except as expressly provided in the Trust
Agreement, as Owner Trustee of the Trust have any liability for the
representations, warranties, covenants, agreements or other obligations of the
Trust hereunder or in any of the certificates, notices or agreements delivered
pursuant hereto, as to all of which recourse shall be had solely to the assets
of the Trust. For all purposes of this Agreement, in the performance of its
duties or obligations hereunder or in the performance of any duties or
obligations of the Trust hereunder, the Owner Trustee shall be subject to, and
entitled to the benefits of, the terms and provisions of Article IX of the Trust
Agreement.
SECTION 9.12 TREATMENT OF TRANSACTION BY SELLER. Notwithstanding the
fact that the transfer and assignment contemplated by this Agreement constitutes
a sale to the Trust of all of the Seller's right, title and interest in the
Purchased Contract Receivables and will be treated as such for Federal income
tax purposes, the parties hereto acknowledge and agree that such transfer and
assignment may be treated in a different manner as deemed appropriate by the
Seller for regulatory and state tax purposes.
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IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed by their respective officers as of the day and
year first above written.
HATTIESBURG GAS STORAGE COMPANY
By: HATTIESBURG INDUSTRIAL GAS
SALES COMPANY,
its General Partner
By: /s/ ▇. ▇. ▇▇▇▇▇▇
----------------------------
▇. ▇. ▇▇▇▇▇▇, Vice President
HATTIESBURG INDUSTRIAL GAS SALES
COMPANY
By: /s/ ▇. ▇. ▇▇▇▇▇▇
----------------------------
▇. ▇. ▇▇▇▇▇▇, Vice President
FRGC OWNER TRUSTEE
By: WILMINGTON TRUST COMPANY,
not in its individual capacity
but solely as Owner Trustee
By: /s/ W. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
------------------------------
Name: W. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
----------------------------
Title: Financial Services Officer
----------------------------
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