EXHIBIT 10.38
EXECUTION COPY
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PARTICIPATION AGREEMENT
Among
HANOVER COMPRESSOR COMPANY,
as Lessee,
HANOVER EQUIPMENT TRUST 1999A,
a Delaware business trust,
as Lessor,
SOCIETE GENERALE FINANCIAL CORPORATION
and FBTC LEASING CORP.,
as Investors,
THE MANAGING AGENTS NAMED IN SCHEDULE 1 HERETO,
THE CHASE MANHATTAN BANK,
as Agent for the
Lenders
and
THE LENDERS PARTIES HERETO
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Dated as of June 15, 1999
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TABLE OF CONTENTS
Page
SECTION 1. THE LOANS ................................................. 1
1.1 Loans. ........................................................... 1
1.2 Credit Agreement. ................................................ 1
1.3 Collateral For Loans. ............................................ 1
1.4 Guarantee. ....................................................... 1
SECTION 2. INVESTOR CONTRIBUTION ..................................... 2
2.1 Investor Contribution ............................................ 2
SECTION 3. SUMMARY OF THE TRANSACTIONS ............................... 2
3.1 Operative Agreements ............................................. 2
3.2 Equipment Purchase and Lease. .................................... 2
3.3 Aggregate Tranche A Percentage; Tranche A Percentage ............. 3
SECTION 4. THE CLOSINGS .............................................. 3
4.1 Initial Closing Date ............................................. 3
4.2 Subsequent Closing Dates ......................................... 3
4.3 Trust Company Authorization ...................................... 3
SECTION 5. FUNDING OF ADVANCES ....................................... 3
5.1 General .......................................................... 3
5.2 Procedures for Funding ........................................... 3
SECTION 6. CONDITIONS OF THE CLOSING ................................. 4
6.1 General Conditions to the Investors' and the Lenders' Obligations
to Make Loans and Investor Contributions ......................... 4
6.2 Conditions to the Investors' and the Lenders' Obligations to Make
Advances to pay Equipment Acquisition Costs ...................... 8
SECTION 7. REPRESENTATIONS AND WARRANTIES ............................ 9
7.1 Representations and Warranties of the Investors on the Initial
Closing Date...................................................... 9
7.2 Representations and Warranties of Lessor on the Initial Closing
Date.............................................................. 11
7.3 Representations and Warranties of the Lessee on the Initial
Closing Date...................................................... 13
7.4 Representations and Warranties of the Trust Company on the Initial
Closing Date ..................................................... 13
7.5 Representations and Warranties of the Lessee on Equipment Closing
Dates............................................................. 14
7.6 Representations and Warranties of the Lessor on Equipment Closing
Dates............................................................. 17
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SECTION 8. PAYMENT OF CERTAIN EXPENSES ............................... 18
8.1 Transaction Expenses ............................................. 18
8.2 Brokers' Fees and Stamp Taxes .................................... 19
8.3 Certain Fees and Expenses ........................................ 19
8.4 Credit Agreement and Related Obligations ......................... 19
8.5 Commitment Fees .................................................. 20
8.6 Overdue Rate ..................................................... 20
8.7 Continuous Perfection of Security Interests. ..................... 20
8.8 Oklahoma Equipment Subleases. .................................... 20
SECTION 9. OTHER COVENANTS AND AGREEMENTS ............................ 20
9.1 Covenants of the Trust and the Investors and the Trust Company ... 20
9.2 Repayment of Certain Amounts on Maturity Date .................... 22
9.3 Amendment of Certain Documents ................................... 23
9.4 Proceeds of Casualty ............................................. 23
SECTION 10. CREDIT AGREEMENT ......................................... 24
10.1 Lessee's Credit Agreement Rights ................................ 24
SECTION 11. TRANSFER OF INTEREST ..................................... 25
11.1 Restrictions on Transfer ........................................ 25
11.2 Effect of Transfer .............................................. 25
SECTION 12. INDEMNIFICATION .......................................... 26
12.1 General Indemnity ............................................... 26
12.2 General Tax Indemnity ........................................... 27
SECTION 13. MISCELLANEOUS ............................................ 31
13.1 Survival of Agreements .......................................... 31
13.2 No Broker, etc. ................................................. 31
13.3 Notices ......................................................... 31
13.4 Counterparts .................................................... 33
13.5 Amendments and Termination ...................................... 33
13.6 Headings, etc. .................................................. 33
13.7 Parties in Interest ............................................. 33
13.8 GOVERNING LAW ................................................... 33
13.9 Severability .................................................... 34
13.10 Liability Limited .............................................. 34
13.11 Rights of Lessee ............................................... 34
13.12 Further Assurances ............................................. 34
13.13 Successors and Assigns ......................................... 34
13.14 No Representation or Warranty .................................. 35
13.15 Highest Lawful Rate ............................................ 35
13.16 Waiver ......................................................... 36
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Annex A Rules of Usage and Definitions
Schedules
Schedule 1 Managing Agents
Exhibits
Exhibit A Form of Assignment of Leases and Consent to Assignment
Exhibit B Form of Security Agreement
Exhibit C Form of Guarantee
Exhibit D Form of Requisition
Exhibit E-1 Form of Opinion of Counsel to Lessee and Guarantor
Exhibit E-2 Form of Opinion of Counsel to Lessor and Trust Company
Exhibit E-3 Form of Opinion of Local Counsel to Lessee and Guarantor
Exhibit F Equipment Closing Certificate
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PARTICIPATION AGREEMENT, dated as of June 15, 1999 (this "Agreement"),
among HANOVER COMPRESSOR COMPANY, a Delaware corporation (the "Lessee"); HANOVER
EQUIPMENT TRUST 1999A, a Delaware business trust (the "Trust" or the "Lessor");
THE CHASE MANHATTAN BANK, a New York banking corporation, as agent (in such
capacity, the "Agent") for the Lenders; SOCIETE GENERALE FINANCIAL CORPORATION,
a Delaware corporation, and FBTC LEASING CORP., a New York corporation, as
investors (the "Investors"); WILMINGTON TRUST COMPANY, in its individual
capacity, and each of the financial institutions listed on the signature pages
hereof (each, a "Lender"; collectively, the "Lenders"). Capitalized terms used
but not otherwise defined in this Agreement shall have the meanings set forth in
Annex A hereto.
Preliminary Statement
In consideration of the mutual agreements herein contained and other
good and valuable consideration, receipt of which is hereby acknowledged, the
parties hereto hereby agree as follows:
SECTION 1. THE LOANS
1.1 Loans. The Lenders have agreed to make loans to the Lessor in an
aggregate principal amount of up to $194,000,000 in order for the Lessor to
acquire the Equipment and to pay other Equipment Acquisition Costs, and in
consideration of the receipt of the proceeds of such Loans, the Lessor will
issue the Tranche A Notes and the Tranche B Notes.
1.2 Credit Agreement. The Loans shall be made and the Notes shall be
issued pursuant to the Credit Agreement. Pursuant to this Agreement and the
Credit Agreement, the Loans will be made to the Lessor from time to time at the
request of the Lessee.
1.3 Collateral For Loans. The Loans and the obligations of the Lessor
under the Credit Agreement shall be secured by, inter alia, (i) a first priority
assignment of the Lease, granted pursuant to the Assignment of Lease and
consented to by the Lessee pursuant to the Consent to Assignment (in each case
in the respective forms set forth on Exhibit A hereto), and (ii) a first
priority security interest in each piece of Equipment pursuant to a Security
Agreement in the form set forth on Exhibit B hereto.
1.4 Guarantee. The obligations of the Lessor under the Credit Agreement
shall be guaranteed by the Guarantors to the extent provided in the Guarantee
(in the form attached hereto as Exhibit C).
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SECTION 2. INVESTOR CONTRIBUTION
2.1 Investor Contribution. Subject to the terms and conditions of this
Agreement, and in reliance on the representations and warranties of each of the
parties hereto contained herein or made pursuant hereto, on each Closing Date,
the Investors shall make an investment in the Lessor (each, an "Investor
Contribution") in an amount equal to 3% of the amount of the Advance requested
by the Lessee in the Requisition for such Closing Date. The aggregate amount of
Investor Contributions made by the Investors shall not exceed the Investor
Commitment. The Lessor shall use the Investor Contributions to pay a portion of
the Equipment Acquisition Costs simultaneously and pro rata with the Loans
advanced by the Lenders. The Lessee shall have the right to prepay the Investor
Contribution, in connection with the exercise by the Lessee of its right to
direct the Lessor to prepay the Loans in accordance with Section 10.1(e).
SECTION 3. SUMMARY OF THE TRANSACTIONS
3.1 Operative Agreements. On the Initial Closing Date, each of the
respective parties thereto shall execute and deliver this Agreement, the Lease,
the Security Agreement, the Notes, the Guarantee, the Credit Agreement, the
Assignment of Lease, the Consent to Assignment, and such other documents,
instruments, certificates and opinions of counsel as agreed to by the parties
hereto.
3.2 Equipment Purchase and Lease. (a) On each Equipment Closing Date and
subject to the terms and conditions of this Agreement and the Credit Agreement
(i) the Investors will make an Investor Contribution in accordance with Section
2 hereof, (ii) the Lenders will make Loans in accordance with Section 5 hereof
and the terms and provisions of the Credit Agreement, which Loans will be
secured by the Security Agreement executed and delivered by the Lessor and
joined in by the Lessee, (iii) the Lessor will purchase all right, title and
interest of Lessee in and to each piece of Equipment to be purchased on such
Equipment Closing Date and (iv) the Lessor will simultaneously lease all of its
right, title and interest in such Equipment to the Lessee by executing and
delivering a Lease Supplement.
(b) On each Equipment Closing Date, the Lessee shall certify to the
Agent on the Equipment Closing Certificate the Tranche A Percentage for each
piece of Equipment being acquired on such Equipment Closing Date. The Tranche A
Percentage so certified shall be the Tranche A Percentage for such piece of
Equipment for the duration of the Term.
3.3 Aggregate Tranche A Percentage; Tranche A Percentage. (a)
Notwithstanding any other provision of this Agreement or the other Operative
Agreements, the Lessee agrees that in no event shall the Lessee specify a piece
of Equipment for the Lessor to acquire and lease pursuant
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to the execution and delivery of a Lease Supplement if the Aggregate Tranche A
Percentage after giving effect to the acquisition and lease pursuant to the
execution and delivery of a Lease Supplement of such Equipment would be less
than 82.45%.
(b) Notwithstanding any other provision of this Agreement or the other
Operative Agreements, the Lessee agrees that in no event shall the Lessee
specify a piece of Equipment for the Lessor to acquire and lease pursuant to the
execution and delivery of a Lease Supplement if the Tranche A Percentage with
respect to such Equipment would be less than 82.45%.
SECTION 4. THE CLOSINGS
4.1 Initial Closing Date. All documents and instruments required to be
delivered on the Initial Closing Date shall be delivered at the offices of
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, 425 Lexington Avenue, New York, New York, or at such
other location as may be determined by the Agent and the Lessee.
4.2 Subsequent Closing Dates. The Lessee shall deliver to the Lessor,
the Investors and the Agent a Requisition appropriately completed, in connection
with each Closing Date.
4.3 Trust Company Authorization. The Investors agree that, with respect
to each Closing Date, the satisfaction or waiver of the conditions contained in
Section 6 hereof shall constitute, without further act, authorization and
direction by both Investors to the Trust Company to take on behalf of the Lessor
the actions specified in Section 2.1 of the Trust Agreement.
SECTION 5. FUNDING OF ADVANCES
5.1 General. To the extent funds have been made available to the Lessor
as Loans and Investor Contributions, the Lessor will: (i) acquire the Equipment
in accordance with the terms of this Agreement and the other Operative
Agreements; (ii) on behalf of the Lessee, pay Transaction Expenses; and (iii)
pay all other Equipment Acquisition Costs.
5.2 Procedures for Funding. (a) Not less than three Business Days prior
to each proposed Closing Date (other than the Initial Closing Date), the Lessee
shall deliver to the Investors and the Agent, a requisition (a "Requisition"),
appropriately completed, in the form of Exhibit D hereto.
(b) Each Requisition shall: (i) be irrevocable; and (ii) request funds
in an amount of at least $200,000 (or such lesser amounts as shall be equal to
the total aggregate of the Available
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Commitments plus the Available Investor Commitment at such time) for the payment
of Equipment Acquisition Costs or other Equipment Acquisition Costs which have
previously been incurred and were not the subject of and funded pursuant to a
prior Requisition, in each case as specified in the Requisition.
(c) So long as no Default or Event of Default has occurred and is
continuing and subject to the Lessor and the Agent having each received the
materials required by Section 6.1 and/or 6.2, as applicable, on each Closing
Date (i) the Lenders shall make Loans to the Lessor in an aggregate amount equal
to 97% of the funds specified in any Requisition, up to an aggregate principal
amount equal to the Available Commitments; (ii) the Investors shall make an
Investor Contribution in an amount equal to 3% of the funds specified in any
Requisition, up to an amount equal to the Available Investor Commitment; and
(iii) the total amount of such Loans and Investor Contribution made on such date
shall be used to pay the Equipment Acquisition Costs.
(d) Notwithstanding anything to the contrary in this Agreement, (i) the
Lenders shall not be required to make Loans with respect to a piece of Equipment
in an aggregate amount in excess of 97% of the amount allocated to such piece of
Equipment in the Requisition, and (ii) the Investors shall not be required to
make Investor Contributions with respect to a piece of Equipment in an aggregate
amount in excess of 3% of the amount allocated to such piece of Equipment in the
Requisition.
SECTION 6. CONDITIONS OF THE CLOSINGS AND ADVANCES
6.1 General Conditions to the Investors' and the Lenders' Obligations to
Make Loans and Investor Contributions. The agreement of each Lender to make
Loans, and the Investors to make Investor Contributions, is subject to the
satisfaction or waiver, immediately prior to or concurrently with the making of
such Loans and Investor Contribution, of the following conditions precedent:
(a) Operative Agreements. Each of the Operative Agreements entered into
on the Initial Closing Date or subsequently on an Equipment Closing Date shall
have been duly authorized, executed, acknowledged and delivered by the parties
thereto and shall be in full force and effect, and no event of default
thereunder or default under Section 17.1(a) or (b) of the Lease shall exist
(both before and after giving effect to the transactions contemplated by the
Operative Agreements), and the Agent and the Investors shall have received a
fully executed copy of each of the Operative Agreements (other than the Notes of
which the Agent shall have received the originals thereof);
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(b) Taxes. All taxes, fees and other charges in connection with the
execution, delivery, and, where applicable, recording, filing and registration
of the Operative Agreements shall have been paid or provisions for such payment
shall have been made to the reasonable satisfaction of the Agent and both
Investors;
(c) Governmental Approvals. All necessary (or, in the reasonable opinion
of the Agent, the Investors and their respective counsel, advisable)
Governmental Actions, in each case required by any law or regulation enacted,
imposed or adopted on or after the date hereof or by any change in fact or
circumstances since the date hereof, shall have been obtained or made and be in
full force and effect;
(d) Insurance. The Agent and the Investors shall have received evidence
in form and substance reasonably satisfactory to them that all of the
requirements of Section 14 of the Lease shall have been satisfied (which
evidence shall include a report from a reputable insurance broker certifying
that all such requirements have been satisfied and otherwise in form and
substance satisfactory to Agent and both Investors);
(e) Legal Requirements. The transactions contemplated by the Operative
Agreements do not and will not violate in any respect any Legal Requirements
that would reasonably be expected to have a Material Adverse Effect and do not
and will not subject the Agent, any Lender or the Investors to any adverse
regulatory prohibitions or constraints;
(f) Corporate Proceedings of the Lessee and Each Guarantor. On the
Initial Closing Date, the Agent and the Investors shall have received a copy of
the resolutions or minutes, in form and substance satisfactory to the Agent and
both Investors, of the Board of Directors of the Lessee and each Guarantor
authorizing the execution, delivery and performance of this Agreement, the
Guarantee and the other Operative Agreements to which it is a party, certified
by the Secretary or an Assistant Secretary of the Lessee or of such Guarantor as
of the Initial Closing Date, which certificate shall be in form and substance
reasonably satisfactory to the Agent and both Investors and shall state that the
resolutions or minutes thereby certified have not been amended, modified,
revoked or rescinded;
(g) Lessee and Guarantor Incumbency Certificate. On the Initial Closing
Date, the Agent and the Investors shall have received a certificate of the
Lessee and each Guarantor, dated the Initial Closing Date, as to the incumbency
and signature of the officers of the Lessee and each Guarantor executing any
Operative Agreement reasonably satisfactory in form and substance to the Agent
and both Investors, executed by the President or any Vice President and the
Secretary or any Assistant Secretary of the Lessee or of such Guarantor;
(h) [Reserved]
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(i) Corporate Proceedings of the Trust Company. On the Initial Closing
Date, the Agent, the Investors and the Lessee shall have received a copy of the
resolutions, in form and substance reasonably satisfactory to the Agent, both
Investors and the Lessee, of the Board of Directors of the Trust Company
authorizing the execution, delivery and performance of the Operative Agreements
to which it is a party, certified by the Secretary or an Assistant Secretary of
the Trust Company as of the Initial Closing Date, which certificate shall be in
form and substance satisfactory to the Agent, both Investors and the Lessee and
shall state that the resolutions thereby certified have not been amended,
modified, revoked or rescinded;
(j) Trust Company Incumbency Certificate. On the Initial Closing Date,
the Agent, both Investors and the Lessee shall have received a certificate of
the Trust Company, dated the Initial Closing Date, as to the incumbency and
signature of the officers of the Trust Company executing any Operative
Agreement, satisfactory in form and substance to the Agent, both Investors and
the Lessee, executed by the President or any Vice President, Assistant Vice
President, or a duly authorized Trust Officer and the Secretary or any Assistant
Secretary of the Trust Company;
(k) Corporate Documents. (i) The Agent and both Investors shall have
received true and complete copies of the certificate of incorporation and by-
laws of the Lessee, certified as of the Initial Closing Date as complete and
correct copies thereof by the Secretary or an Assistant Secretary of the Lessee;
(ii) The Agent and the Lessee shall have received true and complete
copies of the articles of incorporation and by-laws of each of the Investors,
certified as of the Initial Closing Date as complete and correct copies thereof
by the Secretary or an Assistant Secretary of each of the Investors;
(l) Consents, Licenses and Approvals. All consents, authorizations and
filings required in order to allow Lessee to consummate the transaction
contemplated by this Agreement shall have been obtained and be in full force and
effect, except to the extent the failure to obtain or maintain any such consent,
authorization or filing would not individually or in the aggregate have a
Material Adverse Effect;
(m) Fees. The Agent and the Arranger shall have received the fees to be
paid on the Initial Closing Date pursuant to the Fee Letter which fees shall not
be paid using the proceeds of the Loans or Investor Contributions;
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(n) Legal Opinions. (i) The Agent and the Investors shall have received
the executed legal opinion of ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, counsel to the Lessee and each
Guarantor, substantially in the form of Exhibit E-1 hereto;
(ii) The Agent, the Lessee and the Investors shall have received the
executed legal opinion of Morris, James, Hitchens & ▇▇▇▇▇▇▇▇, counsel to the
Lessor and the Trust Company, substantially in the form of Exhibit E-2 hereto;
and
(iii) The Agent, the Lessee, and the Investors shall have received
the executed legal opinions of (a) ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ L.L.P., (b) Hinkle, Cox,
▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, L.L.P. and (c) Mock, Schwabe, Waldo, Elder, ▇▇▇▇▇▇ &
▇▇▇▇▇▇, local counsel to the Lessee and the Guarantors in (a) Texas and
Louisiana, (b) New Mexico and (c) Oklahoma, respectively, substantially in the
form of Exhibit E-3 hereto;
(o) Actions to Perfect Liens. The Agent shall have received evidence in
form and substance satisfactory to it that all filings, recordings,
registrations and other actions, including the filing of duly executed Lender
Financing Statements and Lessor Financing Statements, necessary or, in the
opinion of the Agent or the Investors, desirable to perfect the Liens created by
the Security Documents shall have been completed;
(p) Lien Searches. The Agent and the Investors shall have received the
results of a recent search by a Person reasonably satisfactory to the Agent, of
the Uniform Commercial Code, judgement and tax lien filings which may have been
filed in each State in which any Equipment is located with respect to personal
property of the Lessee, and the results of such search shall be satisfactory to
the Agent and both Investors;
(q) Representations and Warranties. The representations and warranties
of the Lessor, the Lessee, the Investors and the Guarantor contained herein and
in each of the other Operative Agreements shall be true and correct in all
material respects on and as of each Closing Date as if made on and as of each
Closing Date (unless such representations and warranties specifically refer to
another date);
(r) Performance of Operative Agreements. The parties hereto (other than
the Investors or the Lenders) shall have performed in all material respects
their respective agreements contained herein and in the other Operative
Agreements on or prior to each such Closing Date; and
(s) Default. There shall not have occurred and be continuing any Default
or Event of Default and no Default or Event of Default will have occurred after
giving effect to the Advance requested by such Requisition.
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6.2 Conditions to the Investors' and the Lenders' Obligations to Make
Advances to pay Equipment Acquisition Costs.
The obligations of the Investors to make each Investor Contribution, and
of the Lenders to make Loans to the Lessor, on an Equipment Closing Date for the
purpose of providing funds to the Lessor necessary to acquire a piece of
Equipment are subject to the satisfaction or waiver of the following conditions
precedent:
(a) Requisition. The Agent and the Investors shall have received a fully
executed counterpart of the Requisition dated as of the Equipment Closing Date
(but delivered at least three Business Days prior to the Equipment Closing Date
other than on the Initial Closing Date), appropriately completed
(b) ▇▇▇▇ of Sale. There shall have been delivered to the Lessor, a ▇▇▇▇
of sale (the "▇▇▇▇ of Sale"), in form and substance reasonably acceptable to the
Agent, with respect to each piece of Equipment being purchased on such Equipment
Closing Date, conveying title to such piece of Equipment to the Lessor, subject
only to the Permitted Exceptions;
(c) Title. The Lessor shall have good and valid title to the Equipment
being acquired on such Equipment Closing Date subject only to the Permitted
Exceptions, and the Lessor shall have granted the security interest pursuant to
the Security Agreement with respect to the Equipment;
(d) Lease Supplement. The Lessee shall have delivered a Lease Supplement
executed by the Lessee and the Lessor with respect to all Equipment being
acquired on such Equipment Closing Date to the Agent;
(e) Security Agreement Supplement. The Lessee shall have delivered a
supplement to the Security Agreement executed by the Lessor and Lessee with
respect to each piece of Equipment being acquired on such Equipment Closing Date
to the Agent that is not already subject to the Security Agreement. The Lien of
the Security Agreement, as supplemented, shall conform to the representations
and warranties set forth in Section 7.5(f);
(f) Supplement to Assignment of Lease. The Lessee shall have executed
and delivered an original Supplement to Assignment of Lease executed by the
Lessor with respect to each piece of Equipment being acquired on such Equipment
Closing Date that is not already subject to the Assignment of Lease;
9
(g) Appraisal. The Agent and the Investors shall have received an
Appraisal of the Equipment being acquired on such Equipment Closing Date and
such Appraisal shall be in form and substance acceptable to the Agent, both
Investors and the Lessor;
(h) Default. There shall not have occurred and be continuing any Default
or Event of Default and no Default or Event of Default will have occurred after
giving effect to the Advance requested by such Requisition;
(i) Local Opinions. With respect to each piece of Equipment being
acquired on such Equipment Closing Date
(i)the Agent and the Investors shall have received the executed
legal opinion of local counsel to the Lessee and the Guarantors in the state in
which such Equipment is located, substantially in the form of Exhibit E-3
hereto;
(ii) the Agent, the Lessee and the Investors shall have received the
executed legal opinion of counsel to Lessor and the Trust Company, substantially
in the form of Exhibit E-2 hereto; and
(iii) the Agent and the Investors shall have received the executed
legal opinion of counsel to Lessee and the Guarantors, substantially in the form
of Exhibit E-1 hereto.
SECTION 7. REPRESENTATIONS AND WARRANTIES
7.1 Representations and Warranties of the Investors on the Initial
Closing Date. Each of the Investors represents and warrants to each of the other
parties hereto as of the Initial Closing Date as follows:
(a) Due Organization, etc. It is a duly organized and validly existing
corporation in good standing under the laws of its state of incorporation and
has the power and authority to carry on its business as now conducted and to
enter into and perform its obligations under this Agreement, each Operative
Agreement to which it is a party and each other agreement, instrument and
document executed and delivered by it on the Closing Date in connection with or
as contemplated by each such Operative Agreement to which it is or will be a
party.
(b) Authorization; No Conflict. The execution, delivery and performance
of each Operative Agreement to which it is a party has been duly authorized by
all necessary action on its part and neither the execution and delivery thereof
by the Investor, nor the consummation of the transactions contemplated thereby
by the Investor, nor compliance by it with any of the terms and provisions
thereof (i) requires or will require any approval of
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(which approval has not been obtained) the shareholders of, or approval or
consent of any Person, (ii) contravenes or will contravene any Legal Requirement
applicable to or binding on it as of the date hereof, (iii) does or will
contravene or result in any breach of or constitute any default under, or result
in the creation of any Lessor Lien upon the Equipment, its articles of
incorporation or by-laws, any indenture, mortgage, chattel mortgage, deed of
trust, conditional sales contract, bank loan or credit agreement or other
agreement or instrument to which it or its properties may be bound or (iv) does
or will require any Governmental Action by any Governmental Authority other than
any Governmental Action required solely due to the nature of the Equipment.
(c) Enforceability, etc. Each Operative Agreement to which it is a party
has been duly executed and delivered by it and constitutes, or upon execution
and delivery will constitute, a legal, valid and binding obligation enforceable
against it in accordance with the terms thereof except as enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting the enforcement of creditors' rights generally and by
general equitable principles (whether enforcement is sought by proceedings in
equity or at law).
(d) ERISA. The Investor is making the Investor Contribution contemplated
to be made by it hereunder for its own account and with its general corporate
assets in the ordinary course of its business, and no part of such amount
constitutes (i) "plan assets" under 29 CFR 2510.3-101 or (ii) assets of a
"governmental plan" as defined under Section 3(32) of ERISA.
(e) Litigation. To its knowledge, no litigation, investigation or
proceeding of or before any arbitrator or Governmental Authority is pending or
threatened by or against the Investor (a) with respect to any of the Operative
Agreements or any of the transactions contemplated hereby or thereby, or (b)
which would reasonably be expected to have a material adverse effect on the
assets, liabilities, operations, business or financial condition of the
Investor.
(f) Lessor Liens. The Equipment is free and clear of Lessor Liens
attributable to the Investors.
7.2 Representations and Warranties of Lessor on the Initial Closing
Date. Lessor represents and warrants to each of the other parties hereto as of
the Initial Closing Date as follows:
(a) Due Organization, etc. Lessor is a duly organized and validly
existing business trust in good standing under the laws of the State of Delaware
and has the power and authority to carry on its business as now conducted and to
enter into and perform its
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obligations under this Agreement, each Operative Agreement to which it is a
party and each other agreement, instrument and document executed and delivered
by it on the Closing Date in connection with or as contemplated by each such
Operative Agreement.
(b) Authorization; No Conflict. The execution, delivery and performance
of each Operative Agreement to which it is a party has been duly authorized by
all necessary action on its part and neither the execution and delivery thereof
by the Lessor, nor the consummation of the transactions contemplated thereby by
the Lessor, nor compliance by it with any of the terms and provisions thereof
(i) requires or will require any approval of (which approval has not been
obtained) any party or approval or consent of any Person, (ii) contravenes or
will contravene any Legal Requirement applicable to or binding on it as of the
date hereof, (iii) does or will contravene or result in any breach of or
constitute any default under, or result in the creation of any Lessor Lien upon
the Equipment or the Trust Agreement, any indenture, mortgage, chattel mortgage,
deed of trust, conditional sales contract, bank loan or credit agreement or
other agreement or instrument to which it or its properties may be bound or (iv)
does or will require any Governmental Action by any Governmental Authority.
(c) Enforceability, etc. Each Operative Agreement to which it is a party
has been duly executed and delivered by it and constitutes, or upon execution
and delivery will constitute, a legal, valid and binding obligation enforceable
against it in accordance with the terms thereof except as enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting the enforcement of creditors' rights generally and by
general equitable principles (whether enforcement is sought by proceedings in
equity or at law).
(d) Litigation. No litigation, investigation or proceeding of or before
any arbitrator or Governmental Authority is pending or threatened by or against
the Lessor (a) with respect to any of the Operative Agreements or any of the
transactions contemplated hereby or thereby, or (b) which would reasonably be
expected to have a material adverse effect on the assets, liabilities,
operations, business or financial condition of the Lessor.
(e) Assignment. Lessor has not assigned or transferred any of its right,
title or interest in or under the Lease, any other Operative Agreement or any
Equipment, except in accordance with the other Operative Agreements.
(f) No Default. The Lessor is not in default under or with respect to
any of its Contractual Obligations in any respect which would reasonably be
expected to have a material adverse effect on the assets, liabilities,
operations, business or financial condition of the Lessor. No Default or Event
of Default attributable to it has occurred and is continuing.
12
(g) Use of Proceeds. The proceeds of the Loans and the Investor
Contribution shall be applied by the Lessor solely in accordance with the
provisions of the Operative Agreements.
(h) Chief Place of Business. The Lessor's chief place of business, chief
executive office and office where the documents, accounts and records relating
to the transactions contemplated by this Agreement and each other Operative
Agreement are kept are located at ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇
▇▇▇▇▇-▇▇▇▇.
(i) Federal Reserve Regulations. The Lessor is not engaged principally
in, and does not have as one of its most important activities, the business of
extending credit for the purpose of purchasing or carrying any margin stock
(within the meaning of Regulation U of the Board), and no part of the proceeds
of the Loans will be used by it, directly or indirectly, to purchase or carry
any margin stock or to extend credit to others for the purpose of purchasing or
carrying any such margin stock or for any purpose that violates, or is
inconsistent with, the provisions of Regulations of the Board, including but not
limited to, T, U or X of the Board.
(j) Investment and Holding Company Status. The Lessor is not (i) an
"investment company" as defined in, or subject to regulation under the
Investment Company Act of 1940 or (ii) a "holding company" as defined in, or
subject to regulation under, the Public Utility Holding Company Act of 1935.
(k) Securities Act. Neither the Lessor nor any Person authorized by the
Lessor to act on its behalf has offered or sold any interest in the Equipment or
the Notes, or in any similar security or interest relating to the Equipment, or
in any security the offering of which for the purposes of the Securities Act
would be deemed to be part of the same offering as the offering of the
aforementioned securities to, or solicited any offer to acquire any of the same
from, any Person other than, in the case of the Notes, the Agent, and neither
the Lessor nor any Person authorized by the Lessor to act on its behalf will
take any action which would subject the issuance or sale of any interest in the
Equipment or the Notes to the provisions of Section 5 of the Securities Act or
require the qualification of any Operative Agreement under the Trust Indenture
Act of 1939, as amended.
(l) ERISA. The Lessor is making the Lessor Contribution contemplated to
be made by it hereunder in the ordinary course of its business, and no part of
such amount constitutes (i) "plan assets" under 29 CFR 2510.3-101 or (ii) assets
of a "governmental plan" as defined under Section 3(32) of ERISA.
(m) Lessor Liens. The Equipment is free and clear of all Lessor Liens.
13
7.3 Representations and Warranties of the Lessee on the Initial Closing
Date. Each of the representations and warranties of the Guarantors set forth in
Section 9 of the Guaranty are hereby incorporated by reference as if made by
Lessee pursuant to the terms of this Agreement and shall for all purposes be
deemed to have been made by Lessee hereunder on the Initial Closing Date.
7.4 Representations and Warranties of the Trust Company on the Initial
Closing Date. The Trust Company represents and warrants to each of the other
parties hereto that:
(a) Due Organization, etc. It is a banking corporation duly organized
and validly existing and in good standing under the laws of the State of
Delaware and has the power and authority to enter into and perform its
obligations under the Trust Agreement and has the corporate power and authority
to act as the trustee under the Trust Agreement and to enter into and perform
the obligations under each of the other Operative Agreements to which Trust
Company or the Trust, as the case may be, is or will be a party and each other
agreement, instrument and document to be executed and delivered by it on or
before the Initial Closing Date in connection with or as contemplated by each
such Operative Agreement to which the Trust Company or the Trust, as the case
may be, is or will be a party.
(b) Authorization; No Conflict. The execution, delivery and performance
of each Operative Agreement to which it is a party, either in its individual
capacity or (assuming due authorization, execution and delivery of the Trust
Agreement by both Investors) as the Trust, as the case may be, has been duly
authorized by all necessary action on its part and neither the execution and
delivery thereof, nor the consummation of the transactions contemplated thereby,
nor compliance by it with any of the terms and provisions thereof (i) does or
will require any approval or consent of any Person (ii) does or will contravene
any current United States federal law, governmental rule or regulation relating
to its banking or trust powers, (iii) does or will contravene or result in any
breach of or constitute any default under, or result in the creation of any Lien
upon any of its property under, its charter or by-laws, or any indenture,
mortgage, chattel mortgage, deed of trust, conditional sales contract, bank loan
or credit agreement or other agreement or instrument to which it is a party or
by which it or its properties may be bound or affected or (iv) does or will
require any Governmental Action by any Governmental Authority.
(c) Trust Agreement Enforceability, etc. The Trust Agreement and,
assuming the Trust Agreement is the legal, valid and binding obligation of both
Investors, each other Operative Agreement to which Trust Company or the Trust,
as the case may be, is a party have been, or on or before the Closing Date will
be, duly executed and delivered by Trust Company or the Trust, as the case may
be, and the Trust Agreement and each such other Operative Agreement to the
extent entered into by the Trust Company constitutes, or upon
14
execution and delivery will constitute, a legal, valid and binding obligation
enforceable against Trust Company in accordance with the terms thereof except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditors' rights generally and by general equitable principles (whether
enforcement is sought by proceedings in equity or at law).
(d) Litigation. No litigation, investigation or proceeding of or before
any arbitrator or Governmental Authority is pending or threatened by or against
the Trust Company with respect to any of the Operative Agreements or any of the
transactions contemplated hereby or thereby.
(e) Liens. The Trust Estate is free and clear of Lessor Liens
attributable to the Trust Company, and there are no Liens affecting the title of
the Trust to the Equipment or resulting from any act or claim against the Trust
Company arising out of any event or condition not related to the ownership,
leasing use or operation of the Equipment or any other transaction contemplated
by this Agreement or any of the other Operative Agreements, including any Lien
resulting from the nonpayment by the Trust Company of any Taxes imposed or
measured by its net income.
7.5 Representations and Warranties of the Lessee on Equipment Closing
Dates. The Lessee hereby represents and warrants as of each Equipment Closing
Date as follows:
(a) Representations and Warranties. The representations and warranties
of the Lessee and the Guarantor set forth herein and in each of the other
Operative Agreements are true and correct in all material respects on and as of
such Equipment Closing Date as if made on and as of such Equipment Closing Date
(unless such representations and warranties specifically refer to another date).
The Lessee and each Guarantor are in compliance in all material respects with
their respective obligations under the Operative Agreements and there exists no
Lease Default or Lease Event of Default.
(b) No Default. No Default or Event of Default attributable to Lessee
will occur as a result of, or after giving effect to, the Advance requested by
the Requisition on such Equipment Closing Date.
(c) Authorization by the Lessee. The execution and delivery of each
Lease Supplement and other Operative Agreement delivered by the Lessee on such
Equipment Closing Date and the performance of the obligations of the Lessee
under each such Lease Supplement and other Operative Agreements have been duly
authorized by all requisite corporate action of the Lessee.
15
(d) Execution and Delivery by the Lessee. Each Lease Supplement and
other Operative Agreement delivered on such Equipment Closing Date by the Lessee
have been duly executed and delivered by the Lessee.
(e) Valid and Binding Obligations. Each Lease Supplement and other
Operative Agreement delivered by the Lessee on such Equipment Closing Date is a
legal, valid and binding obligation of the Lessee, enforceable against the
Lessee in accordance with its respective terms except as enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting the enforcement of creditors' rights generally and by
general equitable principles (whether enforcement is sought by proceedings in
equity or at law).
(f) Filing of UCC Financing Statements and Priority of Liens. The UCC
Financing Statements with respect to the Equipment being acquired on such
Equipment Closing Date have been fully executed and delivered to the Agent on
the Equipment Closing Date or have been filed with the appropriate Governmental
Authorities so that the liens created pursuant to each of the Security Agreement
and the Lease (together with the Assignment of Lease) constitutes a valid and
perfected security interest on each applicable piece of Equipment located
thereon in an amount not less than the Equipment Cost with respect to such
Equipment subject, in all cases, to the Lessee's right to relocate the
Equipment.
(g) Insurance Coverage. The Lessee maintains insurance coverage for each
piece of Equipment being acquired by the Lessor on such Equipment Closing Date
which meets the requirements of Section 14.1 of the Lease and all of such
coverage is in full force and effect.
(h) Legal Requirements. Each piece of Equipment being acquired by the
Lessor on such Equipment Closing Date complies in all material respects with all
Legal Requirements (including all zoning and land use laws and Environmental
Laws).
(i) Consents, etc. All material consents, licenses and permits required
by all Legal Requirements for operation of each piece of Equipment being
acquired on such Equipment Closing Date have been obtained and are in full force
and effect.
(j) Environmental Matters.
(1) The Equipment being acquired on such Equipment Closing Date does
not contain any Hazardous Substances in amounts or concentrations which (i)
constitute a material violation of, or (ii) would reasonably be expected to give
rise to material liability under, any Environmental Law.
16
(2) The Equipment being acquired on such Equipment Closing Date is
in compliance in all material respects with all applicable Environmental Laws.
(3) Neither the Lessee nor any of its Subsidiaries has received any
notice of violation, alleged violation, non-compliance, liability or potential
liability regarding any material non-compliance with Environmental Laws with
regard to the Equipment being acquired on such Equipment Closing Date, nor does
the Lessee have knowledge that any such notice will be received or is being
threatened.
(4) Hazardous Substances have not been transported or discharged
from the Equipment being acquired on such Equipment Closing Date so as to create
a material violation of any Environmental Law, nor have any Hazardous Substances
been generated, treated, or used with respect to the Equipment being acquired on
such Equipment Closing Date so as to create a material violation of any
applicable Environmental Law.
(5) No judicial proceeding or governmental or administrative action
is pending or, to the best knowledge of the Lessee, threatened, under any
Environmental Law to which the Lessee or any Subsidiary is or, to Lessee's
knowledge, will be named as a party with respect to the Equipment being acquired
on such Equipment Closing Date, nor are there any consent decrees or other
decrees, consent orders, administrative orders or other orders, or other
administrative or judicial requirements outstanding under any Environmental Law
with respect to the Equipment being acquired on such Equipment Closing Date.
(6) There has been no release or threat of release of Hazardous
Substances at or from the Equipment being acquired on such Equipment Closing
Date, or arising from or related to the operations of the Lessee or any
Subsidiary in connection with the Equipment being acquired on such Equipment
Closing Date, in violation of or in amounts or in a manner that would reasonably
be expected to give rise to any material liability under any Environmental Laws.
(k) Location of the Equipment. Each piece of Equipment being acquired on
such Equipment Closing Date is located within the United States or on lands
covered by leases under the exclusive jurisdiction of the United States of
America pursuant to the Outer Continental Shelf Lands Act, as amended, 43 U.S.C.
(S) (S) 1331, et seq. (1986).
(l) Conditions Precedent in Operative Agreements. All conditions
precedent contained in this Agreement and in the other Operative Agreements
required to be satisfied by Lessee
17
relating to the acquisition of a piece of Equipment by the Lessor have been
satisfied in full or waived by the Agent and the Lessee.
(m) ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ The acquisition of the Equipment being acquired on
such Equipment Closing Date does not conflict with, violate or require the
consent of, any Governmental Authority under the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust
Improvements Act of 1976, as amended.
7.6 Representations and Warranties of the Lessor on Equipment Closing
Dates. The Lessor hereby represents and warrants as of each Equipment Closing
Date as follows:
(a) Representations and Warranties; No Default. The representations and
warranties of the Lessor set forth herein and in each of the other Operative
Agreements are true and correct in all material respects on and as of such
Equipment Closing Date as if made on and as of such Equipment Closing Date
(unless such representations and warranties specifically refer to another date).
The Lessor is in compliance with its respective obligations under the Operative
Agreements and there exists no Default or Event of Default under any of the
Operative Agreements. No Default or Event of Default attributable to the Lessor
will occur as a result of, or after giving effect to, the Advance requested by
the Requisition on such Equipment Closing Date.
(b) Authorization by the Lessor. The execution and delivery of each
Lease Supplement, Security Agreement, Supplement to Assignment of Lease and
other Operative Agreement delivered by the Lessor on such Equipment Closing Date
and the performance of the obligations of the Lessor under each such Lease
Supplement, Security Agreement Supplement to the Assignment of Lease and other
Operative Agreement have been duly authorized by all requisite action of the
Lessor.
(c) Execution and Delivery by the Lessor. Each Lease Supplement,
Security Agreement, Supplement to the Assignment of Lease and other Operative
Agreement delivered by the Lessor on such Equipment Closing Date have been duly
executed and delivered by the Lessor.
(d) Valid and Binding Obligations. Each Lease Supplement, Security
Agreement, Supplement to the Assignment of Lease and other Operative Agreement
delivered by the Lessor on such Equipment Closing Date is a legal, valid and
binding obligation of the Lessor, enforceable against the Lessor in accordance
with its terms except as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting the enforcement
of creditors' rights generally and by general equitable principles (whether
enforcement is sought by proceedings in equity or at law).
18
(e) Conditions Precedent in Operative Agreements. All conditions
precedent contained in this Agreement and in the other Operative Agreements to
be satisfied by the Lessor relating to the acquisition of a piece of Equipment
by the Lessor have been satisfied in full.
SECTION 8. PAYMENT OF CERTAIN EXPENSES
Lessee agrees, for the benefit of the Investors, the Trust Company, the
Lessor, the Agent and each of the Lenders, to:
8.1 Transaction Expenses. (a) On the Initial Closing Date, pay, or cause
to be paid, all reasonable fees, expenses and disbursements of one counsel to
each of the Lessor, the Trust Company, the Agent, and the Investors in
connection with the transactions contemplated by the Operative Agreements and
incurred in connection with such Initial Closing Date, including all Transaction
Expenses, and all other reasonable expenses in connection with such Initial
Closing Date, including all expenses relating to all fees, taxes and expenses
for the recording, registration and filing of documents.
(b) On each Equipment Closing Date, pay, or cause to be paid, all
reasonable fees, expenses and disbursements of each of the Lessor's, the Trust
Company's, the Agent's and the Investors' counsel in connection with the
transactions contemplated by the Operative Agreements and incurred in connection
with such Equipment Closing Date, including all Transaction Expenses arising
from such Equipment Closing Date, and all other reasonable expenses in
connection with such Equipment Closing Date, including all expenses relating to
each Appraisal, and all fees, taxes and expenses for the recording, registration
and filing of documents.
8.2 Brokers' Fees and Stamp Taxes. Pay or cause to be paid brokers' fees
with respect to brokers retained by or with the prior written consent of Lessee
and any and all stamp, transfer and other similar taxes, fees and excises, if
any, including any interest and penalties, which are payable in connection with
the transactions contemplated by this Agreement and the other Operative
Agreements.
8.3 Certain Fees and Expenses. Pay or cause to be paid (i) the initial
and annual Trust Company's fee and all expenses of the Trust Company and any
necessary co-trustees (including reasonable counsel fees and expenses) or any
successor owner trustee, for acting as trustee under the Trust Agreement, (ii)
all costs and expenses incurred by the Lessee, the Agent, the Investors, the
Trust Company or the Lessor in entering into any future amendments or
supplements with respect to any of the Operative Agreements, whether or not such
amendments or supplements are ultimately entered into, or giving or withholding
of waivers of consents hereto or thereto, which have been requested by the
Lessee, and (iii) all costs and expenses incurred by the Lessor, the Lessee, the
19
Investors, the Trust Company or the Agent in connection with any purchase of any
Equipment by the Lessee pursuant to Section 20 of the Lease.
8.4 Credit Agreement and Related Obligations. (a) Pay, on or prior to
the due date thereof, all costs, fees, indemnities, expenses and other amounts
(other than principal and interest on the Loans, but including breakage costs
and interest on overdue amounts pursuant to Section 2.14 of the Credit Agreement
or otherwise) required to be paid by the Lessor under any Operative Agreement.
(b) Pay to the Agent all fees specified in the Fee Letter at the time
and in the manner required by the Fee Letter, which fees may not be paid by
using the proceeds of the Loans or the Investor Contribution.
(c) Pay to the Lessor promptly after receipt of notice therefor any
additional amounts payable to the Investors in respect of the Investor
Contribution under Sections 2.13, 2.14 and 2.15 of the Credit Agreement (it
being agreed that the Investors are, for purposes of this Agreement,
beneficiaries of the provisions of Sections 2.13, 2.14 and 2.15 of the Credit
Agreement).
8.5 Commitment Fees. (a) Pay to the Agent for the account of each Lender
the Commitment Fee on each Commitment Fee Payment Date.
(b) Pay to the Investors the Investor Commitment Fee on each Commitment
Fee Payment Date in accordance with each investor's pro rata portion of the
Available Investor Commitment.
(c) The Commitment Fee and the Investor Commitment Fee shall be
calculated on the basis of a 365- (or 366-, as the case may be) day year for the
actual days elapsed. If all or a portion of the Commitment Fee or the Investor
Commitment Fee shall not be paid when due, such overdue amount shall bear
interest, payable by the Lessee on demand, at a rate per annum equal to the
applicable Overdue Rate, from the date of such non-payment until such amount is
paid in full (as well after as before judgment).
8.6 Overdue Rate. If all or a portion of the Investor Yield, the
Investor Contribution or any other amount owed to the Investors shall not be
paid when due, such overdue amount shall bear interest, payable on demand, at a
rate per annum equal to the applicable Overdue Rate, from the date of such non-
payment until such amount is paid in full (as well after as before judgment).
8.7 Continuous Perfection of Security Interests. If the Officer's
Certificate required to be delivered by Lessee pursuant to Section 10.3(b) of
the Lease shall indicate that any of
20
the Equipment has been relocated, then Lessee will provide to the Agent,
together with the Officer's Certificate, evidence in form and substance
satisfactory to Agent that all filings, recordings, registrations and other
actions, including the filing of duly executed Lender Financing Statements and
Lessor Financing Statements, necessary or, in the reasonable opinion of the
Agent, desirable to perfect the Liens granted by the Security Documents shall
have been completed.
8.8 Oklahoma Equipment Subleases. With respect to any leases or other
agreements entered into by Lessee with respect to Equipment located in the State
of Oklahoma ("Oklahoma Subleases"), Lessee shall, within 90 days of the Initial
Closing Date (or the date any Oklahoma Sublease is subsequently entered into),
undertake to file, in accordance with 60 Okla. Stat. 1991 (S) 319, et. seq., the
original Oklahoma Sublease instrument or a true copy thereof in the chattel
mortgage records of the office of the county clerk in the county where the
Equipment is located and provide Agent with reasonably satisfactory evidence of
Lessee's compliance with this Section 8.8.
SECTION 9. OTHER COVENANTS AND AGREEMENTS
9.1 Covenants of the Trust and the Investors and the Trust Company. Each
of the parties hereby agrees that so long as this Agreement is in effect:
(a) Discharge of Liens. Each of the Investors, the Trust and the Trust
Company, in its individual capacity, will not create or permit to exist at any
time, and will, at its own cost and expense, promptly take such action as may be
necessary duly to discharge, or to cause to be discharged, all Lessor Liens on
the Equipment attributable to it or any of its Affiliates; provided, however,
that the Investor, the Trust and the Trust Company shall not be required to so
discharge any such Lessor Lien while the same is being contested in good faith
by appropriate proceedings diligently prosecuted so long as such proceedings
shall not cause Lessee or any other party hereto to be in default under any of
the Operative Documents and shall not involve any material danger of impairment
of the Liens of the Security Documents or of the sale, forfeiture or loss of,
and shall not materially interfere with the use or disposition of, the Equipment
or title thereto or any interest therein or the payment of Rent.
(b) Trust Agreement. Without prejudice to any right under the Trust
Agreement of the Trust Company to resign, or the Investors' right under the
Trust Agreement to remove the institution acting as Trustee, each of the
Investors and the Trust Company hereby agrees with the Lessee and the Agent (i)
not to terminate or revoke the trust created by the Trust Agreement except as
permitted by the Trust Agreement, (ii) not to amend, supplement, terminate or
revoke or otherwise modify any provision of the Trust Agreement without the
prior written consent of any party adversely affected by such amendment and in
any event with prior notice to the Lessee and (iii) to comply with all of the
terms of the Trust Agreement, the nonperformance of which would adversely affect
such
21
party. The Trust Company will provide each party hereto with a copy of any
amendment to the Trust Agreement within thirty (30) days after such amendment is
effective.
(c) Successor Trust Company. The Trust Company or any successor may
resign or be removed by both Investors as owner trustee, a successor owner
trustee may be appointed, and a corporation may become the owner trustee under
the Trust Agreement, only in accordance with the provisions of Section 8 of the
Trust Agreement and with the consent of the Lessee, which consent shall not be
unreasonably withheld or delayed.
(d) Indebtedness; Other Business. The Trust shall not contract for,
create, incur or assume any indebtedness, or enter into any business or other
activity, or hold title to any assets other than pursuant to or under the
Operative Agreements.
(e) No Violation. Neither the Investors nor the Trust Company will
instruct the Trust to take any action in violation of the terms of any Operative
Agreement.
(f) No Voluntary Bankruptcy. Neither the Investors nor the Trust shall
(i) commence, consent to, approve of or acquiesce to any case, proceeding or
other action under any existing or future law of any jurisdiction, domestic or
foreign, relating to bankruptcy, insolvency, reorganization, arrangement,
winding-up, liquidation, dissolution, composition or other relief with respect
to it or its debts, or (ii) seek appointment of a receiver, trustee, custodian
or other similar official for it or for all or any substantial part of its
assets, or make a general assignment for the benefit of its creditors; and
neither the Investors nor the Trust shall take any action in furtherance of, or
indicating its consent to, approval of, or acquiescence in, any of the acts set
forth in this paragraph.
(g) Change of Chief Place of Business. The Trust shall give prompt prior
notice to the Lessee and the Agent if the Trust's chief place of business or
chief executive office, or the office where the records concerning the accounts
or contract rights relating to the Equipment are kept, shall cease to be located
at the address set forth in Section 7.2(h) or if it shall change its name.
(h) Loan Documents. Provided that no Lease Event of Default is
continuing, none of the Lenders, the Trust Company, the Lessor, the Agent nor
the Investors shall consent to or permit any material amendment, supplement,
waiver or other modification of the terms and provisions of the Credit
Agreement, the Notes or the Security Documents which would reasonably be
expected to adversely impact the Lessee, in each case without the prior written
consent of the Lessee.
(i) Disposition of Assets. The Trust shall not convey, sell, lease,
assign, transfer or otherwise dispose of any of its property, business or
assets, whether now owned or hereafter acquired, except to the extent expressly
authorized by the Operative Agreements.
22
(j) Compliance with Operative Agreements. It shall at all times observe
and perform all of the covenants, conditions and obligations required to be
performed by it under each Operative Agreement to which it is a party.
(k) Tax Reporting. No party hereto other than the Lessee will file (or
permit to be filed) any tax return taking the position that such party (or its
affiliates) is the owner of the Equipment for federal, state or local tax
purposes.
9.2 Repayment of Certain Amounts on Maturity Date. The Investors, the
Lessor and the Agent hereby agree that if (i) on the Maturity Date (after giving
effect to all payments made by the Lessee under the Lease and the application of
all sales proceeds pursuant to Section 8 of the Credit Agreement) there remains
any outstanding principal or accrued and unpaid interest under the Tranche B
Notes (the aggregate amount of such outstanding principal, the "Tranche B
Deficit") and (ii) during the Marketing Period the Lessor or the Investors have
received any Marketing Period Equity Return, then on the Maturity Date the
Investors shall ratably pay to the Agent an amount up to the amount of the
Tranche B Deficit to be applied pursuant to Section 8 of the Credit Agreement,
but in no event greater than the Marketing Period Equity Return received by both
Investors.
9.3 Amendment of Certain Documents. The Agent, for itself and on behalf
of the Lenders, hereby agrees for the benefit of the Trust and the Investors
that it will not amend, alter or otherwise modify, or consent to any amendment,
alteration or modification of, the Lease (including the definitions of any terms
used in such document) without the prior written consent of the Trust and both
Investors, as the case may be, if such amendment, alteration or modification
would adversely affect the interests of the Trust or the Investors. Provisions
requiring consent, include any amendment, alteration or modification that would
release the Lessee from any of its obligations in respect of the payment of
Basic Rent, Supplemental Rent, Termination Value, Maximum Residual Guarantee
Amount or the Purchase Option Price or any other payments in respect of the
Equipment as set forth in the Lease, or amend the provisions of Section 8 of the
Credit Agreement, or reduce the amount of, or change the time or manner of
payment of, obligations of the Lessee as set forth in the Lease, or create or
impose any obligation on the part of the Trust or the Investors under the Lease,
or extend or shorten the duration of the Term, or modify the provisions of this
Section 9.3.
9.4 Proceeds of Casualty. Subject to Section 15 of the Lease, the Lessor
and the Investors agree, for the benefit of the Agent and the Lenders, that if
at any time either the Lessor or the either of the Investors receives any
proceeds as a result, directly or indirectly, of any Casualty or Condemnation
with respect to the Equipment which the Lessor is entitled to retain and hold in
accordance with the terms of the Lease, the Lessor and both Investors agree that
they will promptly deposit such amounts in an account with the Agent. The Lessor
and the Investors also agree that they will execute and deliver such documents
and instruments as the Agent may request in order to
23
grant the Agent, for the benefit of the Lenders, a valid and perfected, first
priority security interest in such proceeds.
9.5 Intercreditor Agreement. The Lessee, the Agent, the Lenders, the
Investors and the Lessor hereby agree and confirm that the provisions of Section
8 of the Credit Agreement are intended to constitute an intercreditor agreement
and a subordination agreement under Section 510 of the Bankruptcy Code or any
similar provision therein.
9.6 Appraisal. The Lessee agrees that on or prior to any Replacement
Equipment Closing Date, and upon the written request of the Required Lenders or
both Investors, the Lessee shall provide to the Agent and the Investors an
Appraisal of the Replacement Equipment, such Appraisal in form and substance
satisfactory to the Agent and both Investors; provided, the Lessee is not
required to provide more than one such Appraisal in any twelve month period.
SECTION 10. CREDIT AGREEMENT
10.1 Lessee's Credit Agreement Rights. Notwithstanding anything to the
contrary contained in the Credit Agreement, the Agent, the Lenders, the Lessee,
the Investors and the Trust hereby agree that:
(a) the Lessee shall have the right to give the notices referred to in
Section 2.3 of the Credit Agreement;
(b) the Lessee shall have the right to convert or continue Loans in
accordance with Section 2.6 of the Credit Agreement;
(c) the Lessee shall receive copies of all notices delivered to the
Lessor under the Credit Agreement and the other Operative Agreements and such
notices shall not be effective until received by Lessee;
(d) the Lessee shall have the right to select Interest Periods in
accordance with the terms of the Credit Agreement;
(e) the Lessee shall have the right to give notice of prepayment of the
Loans in accordance with the Credit Agreement, provided that if the Lessee shall
give notice of prepayment of the Loans, the Lessee shall prepay a pro rata
portion of the Investor Contribution;
(f) the Lessee shall have the right to cure, to the extent susceptible
to a cure, any Credit Agreement Default or Credit Agreement Event of Default of
the Lessor;
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(g) the Lessee shall have the right to approve any successor Agent
pursuant to Section 7.9 of the Credit Agreement;
(h) the Lessee shall have the right, on behalf of the Lessor, to select
any Person or Persons (including the Lessee) to whom funds may be paid at the
discretion of the Lessor in accordance with Sections 8.1 and 8.2 of the Credit
Agreement;
(i) the Lessee shall have the right to consent to any assignment by a
Lender, if required pursuant to Section 9.7 of the Credit Agreement;
(j) the Lessee shall have the right to request that another lending
office be designated pursuant to Section 2.15(a) of the Credit Agreement;
(k) Lessee shall have the right to cause a Lender to assign its rights
and delegate its obligation under the Credit Agreement pursuant to Section 2.16
of the Credit Agreement;
(l) the Lessee shall have the obligation to notify the Agent of the
amounts or information specified in Section 5.8 of the Credit Agreement; and
(m) without limiting the foregoing clauses (a) through (l), and in
addition thereto, (x) the Trust shall not exercise any right under the Credit
Agreement without giving the Lessee at least fifteen (15) Business Days' prior
written notice (or such shorter period as may be required but in no case less
than five (5) Business Days) and, following such notice, the Trust shall take
such action, or forbear from taking such action, as the Lessee shall direct and
(y) the Lessee shall have the right to exercise any other right of the Trust
under the Credit Agreement upon not less than two (2) Business Days' prior
written notice from the Lessee to the Trust. Notwithstanding the foregoing, both
Investors shall retain the exclusive right to direct the Trust with respect to
the exercise of the Excepted Rights.
SECTION 11. TRANSFER OF INTEREST
11.1 Restrictions on Transfer. Neither of the Investors may, directly or
indirectly, assign, convey or otherwise transfer any of its right, title or
interest in or to the Trust Estate or the Trust Agreement nor shall there be any
change in control of either of the Investors without the consent of the Agent
and the Lessee, which consent shall not be unreasonably withheld or delayed. Any
transfer by either of the Investors as above provided, shall be effected
pursuant to an agreement in form and substance reasonably satisfactory to the
Agent, the Investors, the Trust Company, the Lessee and their respective
counsel.
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11.2 Effect of Transfer. From and after any transfer effected in
accordance with this Section 11, the transferor shall be released, to the extent
of such transfer, from its liability hereunder and under the other documents to
which it is a party in respect of obligations to be performed on or after the
date of such transfer; provided, however, that any transferor Investor shall
remain liable under the Trust Agreement to the extent that the transferee
Investor shall not have assumed the obligations of the transferor Investor
thereunder. Upon any transfer by either of the Investors as above provided, any
such transferee shall assume the obligations of the same entity, and the Lessor
or Investor, as the case may be, and shall be deemed the "same entity", as the
case may be, for all purposes of such documents and each reference herein to the
transferor shall thereafter be deemed a reference to such transferee for all
purposes, except as provided in the preceding sentence. Notwithstanding any
transfer of all or a portion of the transferor's interest as provided in this
Section 11, the transferor shall be entitled to all benefits accrued and all
rights vested prior to such transfer including rights to indemnification under
any such document.
SECTION 12. INDEMNIFICATION
12.1 General Indemnity. The Lessee, hereby assumes liability for and
agrees to defend, indemnify and hold harmless each Indemnified Person on an
After Tax Basis from and against any Claims which may be imposed on, incurred by
or asserted against an Indemnified Person in any way relating to or arising out
of (a) the financing, refinancing, purchase, acceptance, rejection, ownership,
design, delivery, acceptance, nondelivery, leasing, subleasing, possession, use,
operation, repair, modification, transportation, condition, sale, return,
repossession (whether by summary proceedings or otherwise), or any other
disposition of the Equipment or any part thereof; (b) any latent or other
defects in any piece of Equipment whether or not discoverable by an Indemnified
Person or the Lessee; (c) a violation of Environmental Laws, Environmental
Claims or other loss of or damage relating to the Equipment; (d) the Operative
Agreements, or any transaction contemplated thereby; (e) any breach by the
Lessee of any of its representations or warranties under the Operative
Agreements or failure by the Lessee to perform or observe any covenant or
agreement to be performed by it under any of the Operative Agreements; and (f)
personal injury, death or property damage relating to the Equipment, including
Claims based on strict liability in tort; but in any event excluding (v) Claims
to the extent such Claims arise solely out of the gross negligence or willful
misconduct of such Indemnified Person, (w) Claims to the extent such Claims
arise solely out of events occurring after Lessee's discharge of all its
obligations under the Lease or (x) any Taxes including any Claim (or any portion
of a Claim) made upon an Indemnified Person by a third party that at its origin
is based upon a Tax (other than amounts necessary to make any payments hereunder
on an After Tax Basis, where the Lessee is otherwise specifically required to
make such payments on an After Tax Basis), (y) legal proceedings commenced
against an Indemnified Person by any security holder or creditor solely in its
capacity as such, or (z) legal proceedings commenced against an Indemnified
Person by any other Indemnified Person or by any transferee of an Indemnified
Person.
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The Lessee shall be entitled to control, and shall assume full responsibility
for the defense of any Claim; provided, however, that the Trust, the Trust
Company, the Agent and the Investors named in such Claim, may each retain
separate counsel at the expense of the Lessee in the event of and to the extent
of an actual conflict or a potential conflict. The Lessee and each Indemnified
Person agree to give each other prompt written notice of any Claim hereby
indemnified against but the giving of any such notice by an Indemnified Person
shall not be a condition to the Lessee's obligations under this Section 12.1,
except to the extent failure to give such notice materially prejudices Lessee's
rights hereunder or with respect to the defense or settlement of such Claim.
After an Indemnified Person has been fully indemnified for a Claim pursuant to
this Section 12.1, and so long as no Lease Event of Default shall have occurred
and be continuing, the Lessee shall be subrogated to any right of such
Indemnified Person with respect to such Claim. None of the Indemnified Persons
shall settle a Claim without the prior written consent of the Lessee, which
consent shall not be unreasonably withheld or delayed.
12.2 General Tax Indemnity. (a) The Lessee shall pay and assume
liability for, and does hereby agree to indemnify, protect and defend the
Equipment and all Tax Indemnitees, and hold them harmless against, all
Impositions on an After Tax Basis.
(b) Provided that no Default or Event of Default has occurred and is
continuing, if any Tax Indemnitee obtains a refund or a reduction in a liability
(but only if such reduction relates to a Tax not otherwise indemnifiable
hereunder and has not been taken into account in determining the amount of a
payment on an After Tax Basis) as a result of any Imposition paid or reimbursed
by the Lessee (in whole or in part), such Tax Indemnitee shall promptly pay to
the Lessee the lesser of (x) the amount of such refund or reduction in liability
and (y) the amount previously so paid or advanced by the Lessee, in each case
net of reasonable expenses not already paid or reimbursed by the Lessee.
(c)(i) Subject to the terms of Section 12.2(g), the Lessee shall pay or
cause to be paid all Impositions directly to the taxing authorities where
feasible and otherwise to the Tax Indemnitee, as appropriate, and the Lessee
shall at its own expense, upon such Tax Indemnitee's reasonable request, furnish
to such Tax Indemnitee copies of official receipts or other satisfactory proof
evidencing such payment.
(ii) In the case of Impositions for which no contest is conducted
pursuant to Section 12.2(g) and which the Lessee pays directly to the taxing
authorities, the Lessee shall pay such Impositions prior to the latest time
permitted by the relevant taxing authority for timely payment. In the case of
Impositions for which the Lessee reimburses a Tax Indemnitee, the Lessee shall
do so within twenty (20) days after receipt by the Lessee of demand by such Tax
Indemnitee describing in reasonable detail the nature of the Imposition and the
basis for the demand (including the computation of the amount payable), but in
no event shall the Lessee be required to pay such reimbursement prior
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to 15 days before the latest time permitted by the relevant taxing authority for
timely payment. In the case of Impositions for which a contest is conducted
pursuant to Section 12.2(g), the Lessee shall pay such Impositions or reimburse
such Tax Indemnitee for such Impositions, to the extent not previously paid or
reimbursed pursuant to subsection (a), prior to the latest time permitted by the
relevant taxing authority for timely payment after conclusion of all contests
under Section 12.2(g).
(iii) Impositions imposed with respect to a piece of Equipment for a
billing period during which the Lease expires or terminates with respect to such
Equipment (unless the Lessee has exercised the Purchase Option with respect to
the Equipment) shall be adjusted and prorated on a daily basis between the
Lessee and the Lessor, whether or not such Imposition is imposed before or after
such expiration or termination and each party shall pay or reimburse the other
for each party's pro rata share thereof.
(iv) At the Lessee's request, the amount of any indemnification payment
by the Lessee pursuant to subsection (a) shall be verified and certified by an
independent public accounting firm mutually acceptable to the Lessee and the Tax
Indemnitee. The fees and expenses of such independent public accounting firm
shall be paid by the Lessee unless such verification shall result in an
adjustment in the Lessee's favor of 10% or more of the payment as computed by
such Tax Indemnitee, in which case such fee shall be paid by such Tax
Indemnitee.
(d)(i) The Lessee shall be responsible for preparing and filing any real
and personal property or ad valorem tax returns in respect of the Equipment. In
case any other report or tax return shall be required to be made with respect to
any obligations of the Lessee under or arising out of subsection (a) and of
which the Lessee has knowledge, the Lessee, at its sole cost and expense, shall
notify the relevant Tax Indemnitee of such requirement and (except if such Tax
Indemnitee notifies the Lessee that such Person intends to file such report or
return) (A) to the extent required or permitted by and consistent with Legal
Requirements, make and file in its own name such return, statement or report;
and (B) 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 the Lessee under or arising out of subsection
(a), provide such Tax Indemnitee at the Lessee's expense with information
sufficient to permit such return, statement or report to be properly made with
respect to any obligations of the Lessee under or arising out of subsection (a).
Such Tax Indemnitee shall, upon the Lessee's request and at the Lessee's
expense, provide any data maintained by such Tax Indemnitee (and not otherwise
within the control of the Lessee) with respect to the Equipment which the Lessee
may reasonably require to prepare any required tax returns or reports;
(e) If as a result of the payment or reimbursement by the Lessee of any
expenses of a Tax Indemnitee or the payment of any Transaction Expenses incurred
in connection with the
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transactions contemplated by the Operative Agreements, any Tax Indemnitee, shall
suffer a net increase in any federal, state or local income tax liability, the
Lessee shall indemnify such Tax Indemnitees (without duplication of any
indemnification required by subsection (a)) on an After Tax Basis for the amount
of such increase. The calculation of any such net increase shall take into
account any current or future tax savings realized or reasonably expected to be
realized by such Tax Indemnitees, in respect thereof, as well as any interest,
penalties and additions to tax payable by such Tax Indemnitees, in respect
thereof;
(f) As between the Lessee and the Lessor, the Lessee shall be
responsible for, and the Lessee shall indemnify and hold harmless the Trust
Company in its individual capacity and as the Lessor (without duplication of any
indemnification required by subsection (a)) on an After Tax Basis against, any
obligation for United States withholding taxes imposed in respect of the
interest payable on the Notes or the Certificates to the extent, but only to the
extent, Lessor has actually paid funds to a taxing authority with respect to
such withholding taxes (and, if the Lessor receives a demand for such payment
from any taxing authority, the Lessee shall discharge such demand on behalf of
the Lessor);
(g)(i) If a written claim is made against any Tax Indemnitee or if any
proceeding shall be commenced against such Tax Indemnitee (including a written
notice of such proceeding), for any Impositions, such Tax Indemnitee shall
promptly notify Lessee in writing and shall not take action with respect to such
claim or proceeding without the consent of Lessee for thirty (30) days after the
receipt of such notice by Lessee; provided, that, in the case of any such claim
or proceeding, if action shall be required by law or regulation to be taken
prior to the end of such 30-day period, such Tax Indemnitee shall, in such
notice to Lessee, inform Lessee, and no action shall be taken with respect to
such claim or proceeding without the consent of Lessee before the end of such
shorter period; provided, further, that the failure of such Tax Indemnitee to
give the notices referred to this sentence shall not diminish Lessee's
obligation hereunder except to the extent such failure materially adversely
affects Lessee in contesting all or part of such claim.
(ii) If, within thirty (30) days of receipt of such notice from the Tax
Indemnitee (or such shorter period as the Tax Indemnitee has noticed Lessee is
required by law or regulation for the Tax Indemnitee to commence such contest),
Lessee shall request in writing that such Tax Indemnitee contest such
Imposition, the Tax Indemnitee shall, at the expense of Lessee, in good faith
conduct and control such contest (including, without limitation, by pursuit of
appeals) relating to the validity, applicability or amount of such Impositions
(provided, however, that (A) if such contest can be pursued independently from
any other proceeding involving a tax liability of such Tax Indemnitee, the Tax
Indemnitee, at Lessee's request, shall allow Lessee to conduct and control such
contest and (B) in the case of any contest that Lessee is not entitled to
control, the Tax Indemnitee may request Lessee to conduct and control such
contest if possible or permissible under applicable law or regulation) by, in
the sole discretion of the Person conducting and controlling such contest, (1)
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resisting payment thereof, (2) not paying the same except under protest, if
protest is necessary and proper, (3) if the payment be made, using reasonable
efforts to obtain a refund thereof in appropriate administrative and judicial
proceedings, or (4) taking such other action as is reasonably requested by
Lessee from time to time.
(iii) The party controlling any contest shall consult in good faith with
the non-controlling party and shall keep the non-controlling party reasonably
informed as to the conduct of such contest; provided that all decisions
ultimately shall be made in the sole discretion of the controlling party. The
parties agree that an Tax Indemnitee may at any time decline to take further
action with respect to the contest of any Imposition and may settle such contest
if such Tax Indemnitee shall waive its rights to any indemnity from Lessee that
otherwise would be payable in respect of such claim (and any future claim by any
taxing authority with respect to other taxable periods that are based, in whole
or in part, upon the resolution of such claim) and shall pay to Lessee any
amount previously paid or advanced by Lessee pursuant to this Section 12.2 by
way of indemnification or advance for the payment of an Imposition, and no other
then future liability of the Lessee is likely with respect to such Imposition.
(iv) Notwithstanding the foregoing provisions of this Section 12.2, a
Tax Indemnitee shall not be required to take any action and Lessee shall not be
permitted to contest any Impositions in its own name or that of the Tax
Indemnitee unless (A) Lessee shall have agreed to pay and shall pay to such Tax
Indemnitee on demand and on an After Tax Basis all reasonable costs, losses and
expenses that such Tax Indemnitee actually incurs in connection with contesting
such Impositions, including, without limitation, all reasonable legal,
accounting and investigatory fees and disbursements, (B) in the case of a claim
that must be pursued in the name of an Tax Indemnitee (or an Affiliate thereof),
the amount of the potential indemnity (taking into account all similar or
logically related claims that have been or could be raised in any audit
involving such Tax Indemnitee for which Lessee may be liable to pay an indemnity
under this Section 12.2) is more than $25,000, unless the pursuit of such
contest is in a manner mutually satisfactory to the Tax Indemnitee and the
Lessee, but in no event shall such right prevent the Lessee from prosecuting or
continuing such contest, (C) the Tax Indemnitee shall have reasonably determined
that the action to be taken will not result in any material danger of sale,
forfeiture or loss of any piece of Equipment, or any part thereof or interest
therein, will not interfere with the payment of Rent, and will not result in
risk of criminal liability, (D) if such contest shall involve the payment of the
Imposition prior to the contest, Lessee shall provide to the Tax Indemnitee an
interest-free advance in an amount equal to the Imposition that the Tax
Indemnitee is required to pay (with no additional net after-tax cost to such Tax
Indemnitee), (E) in the case of a claim that must be pursued in the name of an
Tax Indemnitee (or an Affiliate thereof), Lessee shall have provided to such Tax
Indemnitee an opinion of independent tax counsel selected by the Lessee and
reasonably satisfactory to such Tax Indemnitee stating that a reasonable basis
exists to contest such claim (or, in the case of an appeal of an adverse
determination, an opinion of such counsel to the effect that there is
substantial authority for the position asserted in such appeal) and
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(F) no Event of Default shall have occurred and be continuing. In no event shall
a Tax Indemnitee be required to appeal an adverse judicial determination to the
United State Supreme Court. In addition, a Tax Indemnitee shall not be required
to contest any claim in its name (or that of an Affiliate) if the subject matter
thereof shall be of a continuing nature and shall have previously been decided
adversely by a court of competent jurisdiction pursuant to the contest
provisions of this Section 12.2, unless there shall have been a change in law
(or interpretation thereof) and the shall Tax Indemnitee have received, at the
Lessee's expense, an opinion of independent tax counsel selected by the Lessee
and reasonably acceptable to the Tax Indemnitee stating that as a result of such
change in law (or interpretation thereof), it is more likely than not that the
Tax Indemnitee will prevail in such contest.
SECTION 13. MISCELLANEOUS
13.1 Survival of Agreements. The representations, warranties, covenants,
indemnities and agreements of the parties provided for in the Operative
Agreements, and the parties' obligations under any and all thereof, shall
survive the execution and delivery of this Agreement, the transfer of the
Equipment to the Trust, any disposition of any interest of the Trust in the
Equipment or any interest of the Investors in the Trust, the payment of the
Notes and any disposition thereof and shall be and continue in effect
notwithstanding any investigation made by any party and the fact that any party
may waive compliance with any of the other terms, provisions or conditions of
any of the Operative Agreements. Except as otherwise expressly set forth herein
or in other Operative Agreements, the indemnities of the parties provided for in
the Operative Agreements shall survive the expiration or termination of any
thereof.
13.2 No Broker, etc. Each of the parties hereto represents to the others
that it has not retained or employed any broker, finder or financial adviser to
act on its behalf in connection with this Agreement, nor has it authorized any
broker, finder or financial adviser retained or employed by any other Person so
to act, except for the Arranger, the fees of which shall be paid by the Lessee
in accordance with the Fee Letter. Any party who is in breach of this
representation shall indemnify and hold the other parties harmless from and
against any liability arising out of such breach of this representation.
13.3 Notices. All notices, requests and demands to or upon the
respective parties hereto to be effective shall be in writing (including by
facsimile transmission), and, unless otherwise expressly provided herein, shall
be deemed to have been duly given or made (a) when delivered by hand, (b) one
Business Day after delivery to a nationally recognized courier service
specifying overnight delivery, (c) three Business Days after being deposited in
the mail, certified or registered, postage prepaid, or (d) in the case of
facsimile notice, when sent and receipt has been confirmed,
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addressed as follows in the case of the Lessee, the Trust, the Trust Company and
the Agent, and as set forth in Schedule 1.1 of the Credit Agreement in the case
of the Lenders:
If to the Lessee, to it at: Hanover Compressor Company
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: Chief Financial Officer
Telecopy No.: ▇▇▇-▇▇▇-▇▇▇▇
With a copy to: ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇
Sears Tower, Suite 5800
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇.
Pucker
Telecopy No.: ▇▇▇-▇▇▇-▇▇▇▇
If to the Trust, to it at: Hanover Equipment Trust 1999A
c/o Wilmington Trust Company
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Corporate Trust Administration
Telecopy No.: ▇▇▇-▇▇▇-▇▇▇▇
If to the Investors, to them at: Societe Generale Financial Corporation
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Telecopy No.: ▇▇▇-▇▇▇-▇▇▇▇
FBTC Leasing Corp.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
Telecopy No.: ▇▇▇-▇▇▇-▇▇▇▇
If to the Trust Company, to it at: Wilmington Trust Company
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Corporate Trust Administration
Telecopy No.: ▇▇▇-▇▇▇-▇▇▇▇
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If to the Agent, to it at: The Chase Manhattan Bank
Loan and Agency Services Group
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Telecopy No.: ▇▇▇-▇▇▇-▇▇▇▇
and
Credit and Lending
The Chase Manhattan Bank
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇
Telecopy No.: ▇▇▇-▇▇▇-▇▇▇▇
From time to time any party may designate a new address for purposes of notice
hereunder by notice to each of the other parties hereto.
13.4 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.
13.5 Amendments and Termination. Neither this Agreement nor any of the
terms hereof may be terminated, amended, supplemented, waived or modified except
by an instrument in writing signed by the party against which the enforcement of
the termination, amendment, supplement, waiver or modification shall be sought.
This Agreement may be terminated by an agreement signed in writing by the Trust,
both Investors, the Lessee, the Agent and the Lenders. Notwithstanding the
foregoing provisions to the contrary, in the case of the Lenders, the action of
the Required Lenders shall control, except as otherwise provided in Section 9.1
of the Credit Agreement.
13.6 Headings, etc.. The Table of Contents and headings of the various
Sections and Subsections of this Agreement are for convenience of reference only
and shall not modify, define, expand or limit any of the terms or provisions
hereof.
13.7 Parties in Interest. Except as expressly provided herein, none of
the provisions of this Agreement are intended for the benefit of any Person
except the parties hereto.
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13.8 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED
AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
13.9 Severability. Any provision of this Agreement that is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
13.10 Liability Limited. The Lessee and the Investors each acknowledge
and agree that the Trust Company is (except as otherwise expressly provided
herein or therein) entering into this Agreement and the other Operative
Agreements to which it is a party (other than the Trust Agreement), solely in
its capacity as trustee under the Trust Agreement and not in its individual
capacity and that Trust Company shall not be liable or accountable under any
circumstances whatsoever in its individual capacity for or on account of any
statements, representations, warranties, covenants or obligations stated to be
those of the Trust, except for its own gross negligence or willful misconduct
and as otherwise expressly provided herein or in the other Operative Agreements.
13.11 Rights of Lessee. Notwithstanding any provision of the Operative
Agreements, if at any time all obligations (i) of the Trust under the Credit
Agreement and the Security Documents and (ii) of the Lessee under the Operative
Agreements have in each case been satisfied or discharged in full, then the
Lessee shall be entitled to (a) terminate the Lease (to the extent not
previously terminated) and (b) receive all amounts then held under the Operative
Agreements and all proceeds with respect to the Equipment. Upon the fulfillment
of the obligations contained in clauses (i) and (ii) above, the Lessor shall
transfer to the Lessee all of its right, title and interest in and to the
Equipment (to the extent not previously transferred to the Lessee in accordance
with the Lease) and any amounts or proceeds referred to in the foregoing clause
(b) shall be paid over to the Lessee.
13.12 Further Assurances. The parties hereto shall promptly cause to be
taken, executed, acknowledged or delivered, at the sole expense of the Lessee
(other than with respect to the removal of Lessor Liens), all such further acts,
conveyances, documents and assurances as the other parties may from time to time
reasonably request in order to carry out and effectuate the intent and purposes
of this Agreement, the other Operative Agreements and the transactions
contemplated hereby and thereby (including, without limitation, the preparation,
execution and filing of any and all Uniform Commercial Code financing statements
and other filings or registrations which the parties hereto may from time to
time request to be filed or effected). The Lessee, at its own expense, shall
take such action as may be reasonably requested in order to maintain and protect
all security interests provided for hereunder or under any other Operative
Agreement.
34
13.13 Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
assigns.
13.14 No Representation or Warranty. Nothing contained herein, in any
other Operative Agreement or in any other materials delivered to the Lessee in
connection with the transactions contemplated hereby or thereby shall be deemed
a representation or warranty by the Agent or the Arranger or any of their
Affiliates as to the proper accounting treatment or tax treatment that should be
afforded to the Lease and the Lessor's ownership of the Equipment and the Agent
expressly disclaims any representation or warranty with respect to such matters.
13.15 Highest Lawful Rate. It is the intention of the parties hereto
conform strictly to applicable usury laws and, anything herein to the contrary
notwithstanding, the obligations of the Lessee, the Lessor or the Investors or
any other party under any Operative Agreement, shall be subject to the
limitation that payments of interest or of other amounts constituting interest
shall not be required to the extent that receipt thereof would be in excess of
the Highest Lawful Rate, or otherwise contrary to provisions of law applicable
to the recipient limiting rates of interest which may be charged or collected by
the recipient. Accordingly, if the transactions or the amount paid or otherwise
agreed to be paid for the use, forbearance or detention of money under this
Agreement, the Lease and any other Operative Agreement would exceed the Highest
Lawful Rate or otherwise be usurious with respect to the recipient of any such
amount, then, in that event, notwithstanding anything to the contrary in this
Agreement, the Lease or any other Operative Agreement, it is agreed as follows
as to the recipient of any such amount:
(a) the provisions of this Section 13.15 shall govern and control over
any other provision in this Agreement, the Lease and any other Operative
Agreement and each provision set forth therein is hereby so limited;
(b) the aggregate of all consideration which constitutes interest that
is contracted for, charged or received under this Agreement, the Lease, or any
other Operative Agreement shall under no circumstances exceed the maximum amount
of interest allowed by any Requirement of Law (such maximum lawful interest
rate, if any, with respect to such Lender herein called the "Highest Lawful
Rate"), and all amounts owed under this Agreement, the Lease and any other
Operative Agreement shall be held subject to reduction and (i) the amount of
interest which would otherwise be payable to the recipient hereunder and under
the Lease, the Loan Documents and any other Operative Agreement, shall be
automatically reduced to the amount allowed under any Requirement of Law and
(ii) any unearned interest paid in excess of the Highest Lawful Rate shall be
credited to the payor by the recipient (or, if such consideration shall have
been paid in full, refunded to the payee);
35
(c) all sums paid, or agreed to be paid for the use, forbearance and
detention of the money under this Agreement, the Lease, or any other Operative
Agreement shall, to the extent permitted by any Requirement of Law, be
amortized, prorated, allocated and spread throughout the full term of such
indebtedness until payment in full so that the actual rate of interest is
uniform throughout the full term thereof; and
(d) if at any time the interest, together with any other fees, late
charges and other sums payable pursuant to or in connection with this Agreement,
the Lease, and any other Operative Agreement executed in connection herewith or
therewith, and deemed interest under any Requirement of Law exceeds that amount
which would have accrued at the Highest Lawful Rate, the amount of interest and
any such fees, charges and sums to accrue to the recipient of such interest,
fees, charges and sums pursuant to the Operative Agreement shall be limited,
notwithstanding anything to the contrary in the Operative Agreement to that
amount which would have accrued at the Highest Lawful Rate for the recipient,
but any subsequent reductions, as applicable, shall not reduce the interest to
accrue pursuant to the Operative Agreement below the recipient's Highest Lawful
Rate until the total amount of interest payable to the recipient (including all
consideration which constitutes interest) equals the amount of interest which
would have been payable to the recipient (including all consideration which
constitutes interest), plus the amount of fees which would have been received
but for the effect of this Section 13.15.
13.16 Waiver. EACH PARTY HERETO FOR THE BENEFIT OF THE PARTIES HERETO
AND THE GUARANTORS HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE EXTENT
NOT PROHIBITED BY LAW, ANY RIGHT IT MAY HAVE TO CLAIM OR RECOVER IN ANY LEGAL
ACTION OR PROCEEDING PURSUANT TO THE OPERATIVE AGREEMENTS ANY SPECIAL,
EXEMPLARY, PUNITIVE, INDIRECT OR CONSEQUENTIAL DAMAGES.
36
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective officers thereunto duly authorized as of the
day and year first above written.
HANOVER COMPRESSOR COMPANY, as Lessee
By: ____________________________________
Name:
Title:
HANOVER EQUIPMENT TRUST 1999A
By: Wilmington Trust Company, not individually
but solely as Trustee
By: ____________________________________
Name:
Title:
THE CHASE MANHATTAN BANK, as Agent and as
a Lender
By: ____________________________________
Name:
Title:
WILMINGTON TRUST COMPANY, in its individual
capacity, only to the extent expressly set
forth herein
By: ____________________________________
Name:
Title:
SOCIETE GENERALE FINANCIAL CORPORATION as an
Investor
By: ____________________________________
Name:
Title:
FBTC LEASING CORP., as an Investor and as a
Lender
By: ____________________________________
Name:
Title:
ABN AMRO BANK N.V., as a Managing Agent and a
Lender
By: ____________________________________
Name:
Title:
THE BANK OF NOVA SCOTIA, as a Managing Agent
By: ____________________________________
Name:
Title:
BANK OF SCOTLAND, as a Lender
By: ____________________________________
Name:
Title:
PARIBAS, as a Lender
By: ____________________________________
Name:
Title:
By: ____________________________________
Name:
Title:
FUJI BANK, LIMITED, as a Managing Agent and a
Lender
By: ____________________________________
Name:
Title:
BANKERS TRUST COMPANY, as a Lender
By: ____________________________________
Name:
Title:
COMERICA BANK, as a Lender
By: ____________________________________
Name:
Title:
CREDIT LYONNAIS NEW YORK BRANCH, as a Lender
By: ____________________________________
Name:
Title:
DG BANK DEUTSCHE GENOSSENSCHAFTSBANK AG,as a
Lender
By: ____________________________________
Name:
Title:
THE FIRST NATIONAL BANK OF CHICAGO, as a
Managing Agent and a Lender
By: ____________________________________
Name:
Title:
FUJI BANK, LIMITED, as a Lender
By: ____________________________________
Name:
Title:
THE INDUSTRIAL BANK OF JAPAN, LTD., NEW YORK
BRANCH, as a Lender
By: ____________________________________
Name:
Title:
SUNTRUST BANK, ATLANTA, as a Lender
By: ____________________________________
Name:
Title:
SOCIETE GENERALE, SOUTHWEST AGENCY, as a
Managing Agent and a Lender
By: ____________________________________
Name:
Title:
▇▇▇▇▇ FARGO BANK (TEXAS) N.A., as a Lender
By: ____________________________________
Name:
Title:
Schedule 1
MANAGING AGENTS
ABN AMRO Bank, N.V.
Bank of Nova Scotia
FNB - Chicago/Bank One
Fuji Bank
Societe Generale
EXHIBIT D TO THE
PARTICIPATION AGREEMENT
FORM
REQUISITION
HANOVER COMPRESSOR COMPANY (the "Lessee"), submits this Requisition and
certifies, represents and warrants to each of the Lessor, Investors, The Chase
Manhattan Bank, as agent (in such capacity, the "Agent"), and each of the
financial institutions from time to time parties to the Credit Agreement (the
"Lenders") dated as of June __, 1999, as follows (capitalized terms used in this
Requisition and not otherwise defined herein shall have the meaning assigned to
such terms in Annex A to the Participation Agreement dated as of June __, 1999,
among the Lessee, the Lessor, the Investor, the Agent and the Lenders) in each
case as of the date hereof:
1. Amount. (a) The total amount of the Advance requested by this
Requisition is $[ ]. The Advance will be comprised of Loans totalling $[ $[ ]
(97% of the amount requested) and an Investor Contribution in the amount of $[ ]
(3% of the amount requested).
(b) The total amounts of the Available Commitments and the Available
Investor Commitment (after giving effect to the amount requested by this
Requisition) are $[ ] and $[ ], respectively.
2. Date of Advance. The Lessee requests that the Advance be made on [ ].
3. Type of Loan and Contribution. The Lessee requests that the Loans be
made as [Eurodollar Rate] [ABR Rate] Loans.
4. Interest Period for Eurodollar Loans. [ ] months.
5. Proceeds. The Lessee represents and warrants that the proceeds of the
Advance shall be used solely to pay the Equipment Acquisition Costs and
Transaction Expenses with respect to the Equipment identified in this
Requisition.
6. Representations and Warranties. The Lessee hereby represents and
warrants as follows in each case as of the date hereof:
2
(a) The representations and warranties of the Lessee and the Guarantors
set forth in the Operative Agreements are true and correct in all material
respects on and as of the date hereof. The Lessee and the Guarantors are in
compliance with their respective obligations under the Operative Agreements and
there exists no Default or Event of Default (other than a Borrower Default)
under any of the Operative Agreements. No Default or Event of Default (other
than a Borrower Default) will occur under any of the Operative Agreements as a
result of the Advance requested by this Requisition.
(b) Attached to this Requisition is a schedule identifying the Equipment
which is the subject of this Requisition.
(c) All conditions precedent contained in the Participation Agreement
and in the other Operative Agreements relating to the acquisition of the
Equipment by the Lessor have been satisfied in full.
7. Indemnity. The Lessee agrees to indemnify and hold harmless each of
the Trust, the Trust Company, the Investors, the Agent and the Lenders and each
director, officer, employee, agent, shareholder, partner or holder of beneficial
interest thereof (each, an "indemnified person") against, and to reimburse each
indemnified person, upon its demand, for, any losses, claims, damages,
liabilities or other expenses ("Losses") to which such indemnified person may
become subject insofar as such Losses arise out of or in any way relate to the
breach by the Lessee of any representation or warranty contained in this
Requisition or any untrue statement made in this Requisition, including, without
limitation, Losses consisting of reasonable legal or other expenses incurred in
connection with investigating, defending or participating in any legal
proceeding relating to any of the foregoing (whether or not such indemnified
person is a party thereto); provided, however, that no such indemnification will
be required for any losses to the extent such losses arise solely out of the
gross negligence or willful misconduct of such indemnified person.
8. Survival. The agreements, statements, representation and warranties
contained in this Requisition shall survive and remain effective until the Loans
and all other obligations under the Credit Agreement and the other Operative
Agreements are paid or otherwise satisfied in full by the Lessee and the Lessee,
as applicable.
Date: ___________ HANOVER COMPRESSOR COMPANY
By: ______________________________
Name:
Title:
EXHIBIT F TO
PARTICIPATION AGREEMENT
FORM OF EQUIPMENT CLOSING CERTIFICATE
Pursuant to that certain Participation Agreement, dated as of June __,
1999, among Hanover Compressor Company, as Lessee (the "Lessee"), Hanover
Equipment Trust 1999A, as Lessor, The Chase Manhattan Bank, as Agent, the
Investors, the Trust Company and the Lenders named therein, the undersigned, a
[ ] of Lessee, does hereby certify on behalf of Lessee as follows (capitalized
terms used herein shall have the meanings ascribed thereto in the Participation
Agreement):
(a) The Tranche A Percentage for the Equipment being acquired on the
date hereof is [ ]%.
(b) The Aggregate Tranche A Percentage for all Equipment after giving
effect to the acquisition of the Equipment being acquired on the date hereof is
[ ]%.
IN WITNESS WHEREOF, I have signed my name this ____ day of June, 1999.
HANOVER COMPRESSOR COMPANY
By: ______________________________
Name:
Title: