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EXHIBIT 10.42
MASTER EQUIPMENT LEASE AGREEMENT
between
WILMINGTON TRUST COMPANY,
Not In Its Individual Capacity but solely as Trustee of
UNIVERSAL COMPRESSION TRUST (2000-1)
under the Trust Agreement dated as of May __, 2000,
as Lessor
and
UNIVERSAL COMPRESSION, INC.,
as Lessee
Dated as of May ___, 2000
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UNIVERSAL COMPRESSION, INC.
NATURAL GAS COMPRESSOR
Equipment Financing Facility
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TO THE EXTENT, IF ANY, THAT THIS DOCUMENT CONSTITUTES
CHATTEL PAPER UNDER THE UNIFORM COMMERCIAL CODE,
NO SECURITY INTEREST IN THIS DOCUMENT MAY BE CREATED
THROUGH THE TRANSFER AND POSSESSION OF ANY
COUNTERPART OTHER THAN COUNTERPART NO. 1.
COUNTERPART NO.___ OF ___ SERIALLY NUMBERED
MANUALLY EXECUTED COUNTERPARTS.
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TABLE OF CONTENTS
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1. Definitions..............................................................................................1
2. Agreement for Leasing of Equipment; Quiet Enjoyment......................................................1
3. Conditions Precedent.....................................................................................1
4. Delivery, Acceptance and Leasing of Equipment............................................................1
5. Term.....................................................................................................2
6. Return of Equipment......................................................................................2
6.1 Redelivery......................................................................................2
6.2 Storage.........................................................................................3
6.3 Timely Redelivery; Deemed Purchase Option.......................................................3
6.4 Specific Performance............................................................................3
7. Payments.................................................................................................4
7.1 Interim Rent Payment............................................................................4
7.2 Basic Rent Payment..............................................................................4
7.3 Availability Fee................................................................................4
7.4 Supplemental Payments...........................................................................4
7.5 Method of Payment...............................................................................4
7.6 Notification of Lease Payments..................................................................5
7.7 Business Day Convention.........................................................................5
7.8 Prepayments Limited.............................................................................5
8. Net Lease Agreement......................................................................................5
9. Grant of Security Interest; Equipment to be and Remain Personal Property.................................6
10. Use of Equipment; Compliance with Laws...................................................................7
11. Maintenance and Repair of Equipment......................................................................8
12. Alterations..............................................................................................9
13. Substitutions of Equipment...............................................................................9
14. Appraisals..............................................................................................11
15. Identification Marks....................................................................................11
(i)
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16. Inspection..............................................................................................11
17. Assignment and Leasing..................................................................................12
17.1 By Lessee......................................................................................12
17.2 Registration...................................................................................13
18. Liens...................................................................................................13
19. Loss, Damage or Destruction.............................................................................13
19.1 Risk of Loss, Damage or Destruction............................................................13
19.2 Payment of Casualty Loss Value Upon an Event of Loss...........................................14
19.3 Application of Payments Not Relating to an Event of Loss.......................................14
20. Insurance...............................................................................................15
21. NO LESSOR WARRANTIES....................................................................................16
22. Assignment of Manufacturer Warranties...................................................................16
23. Events of Default.......................................................................................16
24. Remedies Upon Default...................................................................................18
25. Lessor's Right to Perform for Lessee....................................................................20
26. Late Charges............................................................................................20
27. Notices.................................................................................................20
28. Lessee's Renewal, Transfer and Early Termination Options; Purchase Obligation...........................20
28.1 Renewal Option.................................................................................20
28.2 Lessee's End of Term Purchase Option...........................................................20
28.3 Third Party Sale of Equipment..................................................................21
28.3.1 Remarketing Obligations...............................................................21
28.3.2 Notice to Return Possession of Equipment..............................................21
28.3.3 Sale of Equipment to Third Party Buyer................................................22
28.4 Lessee's Early Purchase Option.................................................................22
28.5 Non Completion Purchase Obligation.............................................................22
29. End of Term Lease Payment Adjustment....................................................................23
29.1 Third Party Sale of Equipment..................................................................23
29.2 Lessee Payment.................................................................................23
30. GOVERNING LAW; SUBMISSION TO JURISDICTION; VENUE; WAIVER OF JURY TRIAL..................................24
31. Miscellaneous...........................................................................................25
(ii)
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32. Concerning Lessor.......................................................................................25
33. Execution and Effectiveness.............................................................................25
EXHIBIT A.........[Form of] Lease Agreement Supplement and Security Grant
EXHIBIT B.........[Form of] Notice of Substitution
(iii)
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MASTER EQUIPMENT LEASE AGREEMENT dated as of May ____, 2000 (herein, as
amended, supplemented and otherwise modified from time to time, called this
"Lease Agreement"), between WILMINGTON TRUST COMPANY, a Delaware banking
corporation not in its individual capacity, but solely as Trustee of UNIVERSAL
COMPRESSION TRUST (2000-1) under the Trust Agreement (the "Trust Agreement"),
dated as of May __, 2000 (together with its successors and assigns, "Lessor")
and UNIVERSAL COMPRESSION inc., a Texas corporation (together with its
successors and assigns, "Lessee").
In consideration of the mutual covenants and agreements set forth
herein and in the Participation Agreement dated as of May __, 2000 (the
"Participation Agreement") among Lessor, Lessee, Bankers Trust Company as
Administrative Agent ("Administrative Agent"), Bankers Trust Company as
Collateral Agent ("Collateral Agent"), Deutsche Bank AG, New York Branch, and
the other financial institutions that may become party thereto, as Certificate
Holders ("Certificate Holders"), and the Lenders named therein or that may
become party thereto ("Lenders"), the parties hereto agree as follows:
1. Definitions. Unless the context otherwise requires, capitalized
terms used herein and not otherwise defined herein shall have meanings set forth
or referred to in Appendix A to the Participation Agreement which Appendix A
also contains the rules of usage that shall apply hereto.
2. Agreement for Leasing of Equipment; Quiet Enjoyment. Subject to, and
upon all of the terms and conditions of this Lease Agreement, Lessor hereby
agrees to lease to Lessee and Lessee hereby agrees to lease from Lessor the
Items of Equipment for the Term. Lessor agrees that so long as no Lease Event of
Default has occurred and is continuing, it shall not take or cause to be taken
or authorize any Person to take any action (except for the creation of the Liens
created by operation of the Operative Documents), contrary to or interfering
with Lessee's or any Sublessee's right to peaceful possession, use and quiet
enjoyment of each Item of Equipment without any interference, hindrance,
ejection or molestation whatsoever; provided, however, nothing in this Section 2
shall prevent Lessor and its Assignees from exercising their inspection rights
in accordance with Section 16. Additionally, during the Term with respect to
each Item of Equipment, unless a Lease Event of Default shall exist and Lessee's
rights to use such Item of Equipment shall have been terminated pursuant to the
terms of this Lease Agreement, Lessee shall, except to the extent otherwise
expressly provided in the Operative Documents, be entitled to (a) receive,
enjoy, distribute and otherwise dispose of the income, royalties, payments,
recoveries and other proceeds with respect to (or included as a part of) such
Item without the consent or joinder of Lessor and (b) otherwise utilize,
license, consign, substitute and maintain such Item in a manner consistent with
the provisions of the Operative Documents including, without limitation, of
Sections 5, 10, 11, 12, 13, 17 and 22.
3. Conditions Precedent. Lessor shall have no obligation to lease any
Item of Equipment to Lessee unless each of the conditions set forth in Section 3
of the Participation Agreement are fulfilled to the satisfaction of, or waived
by, Lessor.
4. Delivery, Acceptance and Leasing of Equipment. Lessor shall not be
liable to Lessee for any failure or delay in the delivery of any Item of
Equipment to Lessee. Forthwith
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upon delivery of each Item of Equipment to Lessee, Lessee shall evidence its
acceptance of such Item of Equipment hereunder and of the condition of such Item
of Equipment by, executing and delivering to Lessor a Lease Agreement Supplement
for such Item, dated the first Funding Date of such Item. THE EXECUTION BY
LESSOR AND LESSEE OF A LEASE AGREEMENT SUPPLEMENT FOR AN ITEM OF EQUIPMENT SHALL
(a) EVIDENCE THAT SUCH ITEM IS LEASED UNDER, AND IS SUBJECT TO ALL OF THE TERMS,
PROVISIONS AND CONDITIONS OF, THIS LEASE AGREEMENT, AND (b) CONSTITUTE LESSEE'S
UNCONDITIONAL AND IRREVOCABLE ACCEPTANCE OF SUCH ITEM FOR ALL PURPOSES OF THIS
LEASE AGREEMENT.
5. Term. The Interim Term (if any) for each Item of Equipment shall
commence on the first Funding Date thereof, and, unless this Lease Agreement is
sooner terminated with respect to such Item of Equipment or all Items of
Equipment pursuant to the provisions hereof, shall end on the Basic Term
Commencement Date. The Basic Term for each Item of Equipment shall commence on
the Basic Term Commencement Date and, unless this Lease Agreement is sooner
terminated with respect to such Item of Equipment or all Items of Equipment
pursuant to the provisions hereof, shall end on the last day of such Basic Term.
6. Return of Equipment.
6.1 Redelivery. Upon the expiration or earlier termination of
the Term with respect to each Item of Equipment (unless Lessee has exercised its
transfer option with respect thereto pursuant to Section 28.2 or 28.4; or a
third party sale thereof acceptable to Lessor is consummated on the Termination
Date with respect thereto pursuant to Section 28.3 or Lessee is required to
purchase an Item of Equipment pursuant to Section 28.5), Lessee will, at its
expense, dismantle (to the extent necessary to ship such Item of Equipment),
surrender and deliver possession of each Item of Equipment to Lessor at the
Redelivery Location with a certificate executed by a Responsible Officer of
Lessee certifying that such Item of Equipment is in the condition required
hereunder, a copy of an inventory list for each Item and all then current plans,
specifications and operating, maintenance, and repair manuals and logs relating
to each Item that have been prepared or received by Lessee, and with respect to
any Item of Equipment which qualifies for or is subject to any manufacturer's
maintenance, repair or warranty policy, (i) if such manufacturer is Lessee or an
affiliate thereof Lessee shall cause such manufacturer to deliver to Lessor a
statement or certificate that has been signed by an authorized representative of
the manufacturer attesting to the availability of such maintenance, repair or
warranty policy and (ii) if the manufacturer is not Lessee nor an affiliate of
Lessee and generally provides its customers upon request a statement or
certificate attesting to the availability of such maintenance, repair or
warranty policy, then Lessee shall utilize its reasonable best efforts to obtain
from such manufacturer such a statement or certificate. At the time of such
return to Lessor, each Item of Equipment (and each part or component thereof)
shall (a) meet the original design specifications and operating standards of
such Item, (b) be in as good operating condition, state of repair and appearance
as when delivered to Lessee hereunder, and shall not have been subjected to
excess wear and tear; provided, that ordinary wear and tear as a result of
normal and customary usage is excepted; and provided, further that "ordinary
wear and tear" as used herein shall not be construed as permitting any material
broken, damaged or missing items or components of any Item of Equipment, and (c)
be in the condition required by Section 11 and with respect to any Item of
Equipment that qualifies for or is subject to any manufacturer's maintenance,
repair or
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warranty policy, such Item shall have been maintained and repaired in a manner
consistent with such policy, (d) have no missing or damaged components such that
its value, utility or remaining useful life will be reduced, (e) comply with all
laws and rules referred to in Sections 10 and 11, (f) have attached or affixed
thereto any addition, modification or improvement considered an accession
thereto as provided in Section 12 and (g) have had removed therefrom in a
workmanlike manner, (i) at Lessor's option, any addition, modification or
improvement which, as provided in Section 12, is owned by Lessee, and (ii) any
insignia or marking permitted pursuant to Section 9, and each Item of Equipment
(and each part or component thereof), shall be free and clear of all Liens,
other than Lessor Liens. All operating licenses and agreements pertinent to the
operation of each Item of Equipment, (other than non-transferable licenses to
use software), that are capable of being transferred, shall be fully
transferable upon the expiration of the Term to Lessor or its designee. Lessee
shall transfer any such transferable license or agreement upon return of the
Item of Equipment at Lessee's cost and expense. Each Item of Equipment that
qualifies for or is subject to any manufacturer's maintenance, repair or
warranty policy must be properly deinstalled in a manner consistent with such
policy and in such a way that the Item remains eligible for or subject to such
policy, as appropriate, and Lessee shall provide a certificate from a
Responsible Officer certifying that each Item of Equipment was deinstalled in a
manner consistent with such policy and remains eligible for or subject to such
policy, as appropriate. Upon deinstallation, each Item of Equipment shall be
secured properly for air or overland or other suitable transport. Each Item of
Equipment shall be delivered in the manner in which is customary for such Item
of Equipment. Lessee shall at its own expense, make repairs necessary to restore
each Item of Equipment to the condition required by this Section 6.1 prior to
redelivery hereunder. Upon redelivery, Lessee shall provide any additional
documentation reasonably requested by Lessor, at Lessor's cost, relating to the
redelivery of or Lessor's interest in each Item of Equipment.
6.2 Storage. For the purpose of delivering possession of any
Item of Equipment to Lessor as above required, Lessee shall at its own cost,
expense and risk cause each such Item of Equipment to be insured in accordance
with Section 20 and stored at the Redelivery Location identified therefor by
Lessor at the risk of Lessee without charge to Lessor for insurance, rent or
storage until all such Items of Equipment have been sold, leased or otherwise
disposed of by Lessor; provided, however, Lessee's obligations under this
Section 6.2 shall terminate with respect to each Item of Equipment one (1) year
after delivery of such Item to the Redelivery Location in the condition required
by Section 6.1; provided further that if Lessor sells the Equipment after the
Redelivery Date, Lessor shall reimburse Lessee for its reasonable out-of-pocket
costs and expenses incurred under this Section 6.2 to the extent that the
proceeds of any such sale exceed the aggregate of (a) the amounts owed by Lessor
to Lenders under the Participation Agreement and Loan Agreement, (b) the amount
equal to the aggregate daily Equity Component for all Items of Equipment
multiplied by the Equity Rate (calculated at the Overdue Rate) for each day
after the Termination Date until such subsequent sale, and (c) the expenses
incurred by Lessor in remarketing and selling the Equipment.
6.3 Timely Redelivery; Deemed Purchase Option. If Lessee has
not timely satisfied the obligations and conditions set forth in Section 6.1
with respect to the redelivery of each and every Item of Equipment, then Lessee
shall be deemed to have exercised the purchase
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option set forth in Section 28.2 hereof and Lessee shall pay to Lessor the
Purchase Option Amount with respect to all Items of Equipment.
6.4 Specific Performance. The provisions of this Section 6 are
of the essence of this Lease Agreement, and the parties hereto agree that,
Lessor shall be entitled to specific performance of the covenants of Lessee set
forth in this Section 6.
7. Payments.
7.1 Interim Rent Payment. Lessee hereby agrees to pay Lessor a
Lease Payment for each Item of Equipment in arrears on each Payment Date for
such Item during the Interim Term therefor, in an amount equal to the sum of (a)
an amount calculated by multiplying the Outstanding Debt Amount for such Item on
each day by the Debt Rate and (b) an amount calculated by multiplying the Equity
Component for such Item on each day by the Equity Rate, amounts due on a Payment
Date under this Section 7.1 being calculated for the number of days elapsed
since the immediately preceding Payment Date, or in the case of the first Lease
Payment for such Item, the first Funding Date therefor ("Interim Rent").
7.2 Basic Rent Payment. Lessee hereby agrees to pay Lessor a
Lease Payment for each Item of Equipment in arrears on each Payment Date during
the Basic Term therefor, in an amount equal to the sum of (a) an amount
calculated by multiplying the Outstanding Debt Amount for such Item on each day
by the Debt Rate, (b) an amount calculated by multiplying the Equity Component
for such Item on each day by the Equity Rate, amounts due on a Payment Date
under this Section 7.2 being calculated for the number of days elapsed since the
immediately preceding Payment Date, or in the case of the first Lease Payment
for such Item, the first Funding Date therefor.
7.3 Availability Fee. Lessee shall pay to Lessor on each
Payment Date during the Commitment Period and on the Basic Term Commencement
Date an availability fee ("Availability Fee"), which fee shall be calculated for
each day during the Commitment Period that has elapsed since the immediate
preceding Payment Date or, in the case of the first Payment Date, the date of
the Participation Agreement, as follows:
AFR X AAC X 1/360
where:
AFR = Availability Fee Rate for such date; and
AAC = Aggregate of the Certificate Holder Available
Commitments and the Lender Available
Commitments as of such date.
7.4 Supplemental Payments. Each Supplemental Payment shall be
due and Lessee agrees to pay to Lessor, or to whoever shall be entitled thereto
as expressly provided herein, all Supplemental Payments which are due from
Lessee, when such payments are specified
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to be paid pursuant to the terms of the Operative Documents, or if not so
specified, within five (5) Business Days of written demand therefor.
7.5 Method of Payment. All payments of Lease Payments and
Supplemental Payments and Availability Fees required to be made by Lessee to
Lessor (or, in the case of Supplemental Payments, any other Person entitled
thereto) shall be made in immediately available funds no later than [12:00 noon]
(New York time) on the date due to such account as shall be designated by Lessor
or such Assignee. Subject to the security assignment and the obligations of
Lessee with respect thereto in Section 9.7 of the Participation Agreement, all
payments of Lease Payments required to be made by Lessee to Lessor hereunder
shall be paid at the address or bank account as Lessor may hereafter designate
in writing to Lessee no less than three (3) Business Day before the date such
payments are due.
7.6 Notification of Lease Payments. At least two (2) Business
Days before each Payment Date, Lessor or its designee shall advise Lessee of the
total amount due on such Payment Date. No failure on the part of Administrative
Agent to provide a notice under this Section 7.6 shall release Lessee of any
obligation to make a payment in accordance herewith; provided, however, no Lease
Default shall occur and no interest at the Overdue Rate shall accrue with
respect to any non-payment of such amount until the later of the date such
payment is due and the date two (2) Business Days after such notice is given.
7.7 Business Day Convention. Unless otherwise provided herein,
any Lease Payment due in accordance with the terms hereof which is due on a date
which is not a LIBOR Banking Day shall be payable on the next succeeding LIBOR
Banking Day, unless such date falls in the next succeeding calendar month, in
which case such amounts shall be due on the immediately preceding LIBOR Banking
Day; and any other payment due in accordance with the terms herewith on a date
which is not a Business Day shall be payable on the next succeeding Business
Day.
7.8 Prepayments Limited. Except as may otherwise be provided
in this Lease Agreement, no Lease Payments or portion thereof may be prepaid.
8. Net Lease Agreement. This Lease Agreement is a net lease agreement.
Lessee acknowledges and agrees that its obligations hereunder, including,
without limitation, its obligations to pay Lease Payments, Availability Fees and
all Supplemental Payments payable hereunder, shall be unconditional and
irrevocable under any and all circumstances, shall not be subject to
cancellation, termination, modification or repudiation by Lessee, and shall be
paid and performed by Lessee (with respect to payments under Sections 28.2,
28.4, 28.5 and 29 and Availability Fees, without notice or demand and with
respect to Lease Payment amounts based on the Equity Rate and the Debt Rate,
without demand) and without any abatement, reduction, diminution, setoff,
defense (other than prior payment), counterclaim or recoupment whatsoever,
including, without limitation, any abatement, reduction, diminution, setoff,
defense (other than prior payment), counterclaim, withholding or recoupment due
or alleged to be due to, or by reason of, any past, present or future claims
which Lessee may have against Lessor, Certificate Holders, Trust Company, any
Assignee, any Lender, sublessee or assignee of Lessee, any manufacturer or
supplier of any Item of Equipment or any part thereof, or any other Person for
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any reason whatsoever, or any defect in any Item of Equipment or any part
thereof, or the condition, design, operation or fitness for use thereof, any
damage to, or any loss or destruction of, any Item of Equipment or any part
thereof, or any Liens or rights of others with respect to any Item of Equipment
or any part thereof, or any default or failure to pay by any sublessee or
assignee of Lessee, or any prohibition or interruption of or other restriction
against Lessee's use, operation, possession, maintenance, insurance, improvement
or return of any Item of Equipment thereof, for any reason whatsoever, or any
interference with such use, operation or possession by any Person, or any
default by Lessor in the performance of any of its obligations herein contained,
or any other indebtedness or liability, howsoever and whenever arising, of
Lessor, any Certificate Holders, Trust Company, any Assignee, any Lender, any
sublessee or assignee of Lessee, any other Person, or by reason of insolvency,
bankruptcy or similar proceedings by or against Lessor, Trust Company, any
Certificate Holders, any Assignee, any Lender, Lessee, any sublessee or assignee
of Lessee, or any other Person, or for any other reason whatsoever, whether
similar or dissimilar to any of the foregoing, any present or future law to the
contrary notwithstanding; it being the intention of the parties hereto that all
Lease Payments, Availability Fees and Supplemental Payments payable by Lessee
hereunder shall continue to be payable in all events and in the manner and at
the times herein provided, unless the obligation to pay the same shall be
terminated pursuant to the express provisions of this Lease Agreement; provided,
however if Lessee is required to make a payment to Lessor under Section 28 or 29
or an indemnity payment to a Certificate Holder pursuant to Section 10 of the
Participation Agreement and Lessee shall have previously incurred expenses in
the discharge of any Lessor Lien attributable to such Certificate Holder then
Lessee shall be entitled to deduct from the portion required to be paid to such
Certificate Holder of amounts due under Section 28 or 29 or payment of
indemnity, as the case may be, an amount sufficient to reimburse Lessee the cost
of discharging such Lessor Lien. Nothing contained in this Section 8 shall (a)
affect any claim, action or right that Lessee may have against Lessor or any
other Person, including pursuant to Section 2 nor (b) be considered as (i) a
guaranty of the fair market value or useful life of any Item upon the
commencement, expiration or termination of the Term with respect to an Item,
(ii) a prohibition of assertion of any claim against any manufacturer, supplier,
dealer, vendor, contractor, subcontractor or installer with respect to any Item
or any part thereof or (iii) a waiver by Lessee of any of its express rights
under any of the Operative Documents or of its right to assert and ▇▇▇ upon any
claims it may have against any Person in one or more separate actions.
9. Grant of Security Interest; Equipment to be and Remain Personal
Property. This Lease Agreement is a financing agreement intended as security.
Lessee hereby grants, bargains, assigns, transfers, conveys and pledges to
Lessor a security interest in and Lien upon all of its rights, title and
interest in, to and under the Equipment, the Subleases and Lessee's interest in
each manufacturer's, vendor's or dealer's warranty for the Equipment, and all
proceeds thereof (the "Lessee Collateral") as collateral security for the
payment and performance by Lessee of obligations owed to Lessor under the
Operative Documents. For each Item of Equipment, Lessee will, at its own
expense, make, execute, endorse, acknowledge, file and/or deliver to Lessor from
time to time such confirmatory assignments, conveyances, financing and
continuation statements, transfer endorsements, powers of attorney, notes,
reports and other assurances or instruments and take such further actions which
Lessor may reasonably request to perfect, preserve or protect Lessor's security
interest granted hereunder or which Lessor reasonably deems necessary or
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advisable in order to obtain the full benefits of the Liens created or intended
to be created hereunder, and will take such other actions reasonably requested
by Lessor to effectuate the intent of the Operative Documents. To the extent
permitted by Applicable Law, Lessee authorizes Lessor to file any such financing
and continuation statements without the signature of Lessee. Lessee will pay all
applicable filing fees and related expenses incurred in accordance with this
Section 9. Within the six-month period preceding the fifth anniversary1 of the
filing of any UCC personal property financing statements, Lessee will provide to
Lessor continuation statements with respect to the UCC financing statements
filed in connection herewith, will file the same in accordance with Applicable
Law, and promptly upon such filing will provide Lessor with written evidence
thereof.
Lessee irrevocably authorizes Lessor and does hereby make,
constitute and appoint Lessor and any officer of Lessor, with full power of
substitution, as Lessee's true and lawful attorney-in-fact, with power, in its
own name or in the name of Lessee, to endorse any notes, checks, drafts, money
orders, or other instruments of payment (including payments payable under or in
respect of any policy of insurance) in respect of Lessee Collateral that may
come into possession of Lessor; to sign and endorse any invoice, freight or
express ▇▇▇▇, ▇▇▇▇ of lading, storage or warehouse receipts, drafts against
debtors, assignments, verifications and notices in connection with accounts, and
other documents relating to Lessee Collateral; to pay or discharge Taxes, Liens,
security interests or other encumbrances at any time levied or placed on or
threatened against Lessee Collateral; to demand, collect, receipt for,
compromise, settle and ▇▇▇ for moneys due in respect of Lessee Collateral; and
generally, to do, at Lessor's option and at Lessee's expense, at any time, or
from time to time, all acts and things which Lessor deems necessary to protect,
preserve and realize upon Lessee's Collateral and Lessor's security interests
therein and in order to effect the intent of the Operative Documents all as
fully and effectually as Lessee might or could do; and Lessee hereby ratifies
all that said attorney shall lawfully do or cause to be done by virtue hereof,
provided, however Lessor agrees not to exercise and such power unless a Lease
Event of Default has occurred and is continuing. This power of attorney shall be
coupled with an interest and irrevocable for the term of this Agreement and
thereafter as long as any of the obligations of Lessee under any Operative
Documents shall be outstanding. The powers conferred on Lessor hereunder are
solely to protect its interest in Lessee Collateral and shall not impose any
duty upon Lessor to exercise any such powers. Lessor shall be accountable only
for amounts that it actually receives as a result of the exercise of such powers
and neither it nor any of its officers, directors or employees shall be
responsible to Lessee for any act or failure to act, except for its own gross
negligence or willful misconduct.
It is the intention and understanding of both Lessor and
Lessee, and Lessee shall take all such actions as may be required to assure,
that the Equipment shall be and at all times remain personal property,
notwithstanding the manner in which the Equipment may be attached or affixed to
realty.
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(1) Open issue re: end of term security.
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10. Use of Equipment; Compliance with Laws. Lessee agrees that each
Item of Equipment will be used and operated in compliance with any and all
insurance policy terms, conditions and provisions referenced in the Operative
Documents and in all material respects with all statutes, laws, ordinances,
rules and regulations of any federal, national, state or local governmental
body, agency or authority applicable to the use and operation of such Item of
Equipment, including, without limitation, environmental, noise and pollution
laws (including notifications and reports), and that each Item of Equipment will
be used and operated solely in the manner for which it was intended and in
accordance with the license or certificate, if any, provided by the manufacturer
thereof. Lessee agrees that no Item of Equipment shall be used by Lessee other
than in the subleasing of such Item to Lessee's customers and no Item of
Equipment shall be used or located at a location or outside of the contiguous
United States. Lessee shall use reasonable precautions to prevent loss or damage
to each Item of Equipment from fire and other hazards. Lessee shall not permit
any Item of Equipment to be moved from its location as of the initial Funding
Date therefor unless it has, at its own expense, made, executed, endorsed,
acknowledged, filed and/or delivered to Lessor such confirmatory assignments,
conveyances, financing and continuation statements, transfer endorsements,
powers of attorney, notes, reports or other assurances or instruments other than
estoppel certificates or other agreements, certificates or other documents to be
delivered by any Sublessee or other Person (other than an Affiliate of Lessee)
in possession of such Item of Equipment and has taken any actions necessary to
perfect, preserve and protect Lessor's security interest in such Item of
Equipment. Lessee shall not permit any Item of Equipment to be used in any
unlawful trade or in any manner that would violate any law that would expose
such Item of Equipment to penalty, forfeiture or capture. Lessee shall not
attach or incorporate any Item of Equipment to or in any other item of equipment
or other personal property or to or in any real property in a manner that could
give rise to the assertion of any Lien on such Item of Equipment by reason of
such attachment or the assertion of a claim that such Item of Equipment has
become a fixture and is subject to a Lien in favor of a third party. Lessee
shall comply in all material respects with environmental laws and maintain
liability insurance as required pursuant to the Operative Documents for all
Equipment.
11. Maintenance and Repair of Equipment. Lessee, at its sole cost and
expense, shall maintain (or caused to be maintained) each Item of Equipment (i)
in a manner consistent with such Lessee's maintenance practices applicable to
its other equipment of the same or similar type as such Item, so as to keep each
Item in good condition (ordinary wear and tear excepted), (ii) in all material
respects in compliance with Applicable Law, (iii) in compliance with the
manufacturer's maintenance standards and procedures and (iv) in all respects in
compliance with the insurance applicable to such Items of Equipment and subject,
however, to the provisions of Section 19 with respect to Loss, Damage or
Destruction; Lessee shall comply in all material respects with environmental
laws and maintain liability insurance as required pursuant to the Operative
Documents for all Equipment. Lessee agrees to prepare and deliver to Lessor and
any Assignee within a reasonable time prior to the required date of filing (or,
to the extent permissible, file on behalf of Lessor and any Assignee) any and
all reports (other than income tax returns) to be filed by Lessor or any
Assignee with any federal, national, state or other regulatory authority by
reason of the ownership by Lessor or any Assignee of any Item of Equipment or
the leasing thereof to Lessee to the extent any such reports are required
because of the nature of the Equipment. Lessee agrees to maintain all records,
logs and other materials required by any
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Governmental Entity having jurisdiction over any Item of Equipment or Lessee, to
be maintained in respect of such Item of Equipment. Lessee hereby waives any
right now or hereafter conferred by law to make repairs on the Equipment at the
expense of Lessor.
12. Alterations. In case any Item of Equipment (or any equipment, part
or appliance therein) is required to be altered, added to, replaced or modified
in order to comply with any insurance policies required pursuant to this Lease
Agreement or Applicable Law ("Required Alteration") pursuant to Sections 10 or
11, Lessee agrees to make such Required Alteration at its own expense and the
same shall, without further act, immediately be and become the property of, and
title shall vest in, Lessor free and clear of all Liens other than Lessor Liens
and Permitted Liens and subject to the terms of this Lease Agreement. Lessee may
make any optional renovation, improvement, addition, or alteration to any Item
of Equipment ("Optional Alteration") provided that with respect to each Item of
Equipment such Optional Alteration does not impair the value, use or remaining
useful life of such Item of Equipment. In the event an Optional Alteration is
readily removable without impairing the value, use or remaining useful life of
the Item of Equipment, and is not a part, item of equipment or appliance which
replaces any part, item of equipment or appliance originally incorporated or
installed in or attached to such Item of Equipment on the first Funding Date
therefor or any part, item of equipment or appliance in replacement of or
substitution for any such original part, item of equipment or appliance, any
such Optional Alteration shall be and remain the property of Lessee. To the
extent such Optional Alteration is not readily removable without impairing the
value, use or remaining useful life of an Item of Equipment to which such
Optional Alteration has been made, or is a part, item of equipment or appliance
which replaces any part, item of equipment or appliance originally incorporated
or installed in or attached to such Item of Equipment on the first Funding Date
therefor or any part, item of equipment or appliance in replacement of or
substitution for any such original part, item of equipment or appliance, the
same shall, without further act, immediately be and become the property of, and
title shall vest in, Lessor free and clear of all Liens other than Lessor Liens
and Permitted Liens and shall be subject to the terms of this Lease Agreement.
Any parts installed or replacements made by any Lessee upon any Item of
Equipment pursuant to its obligation to maintain and keep the Equipment in good
and serviceable operating condition and repair under Section 11 shall be
considered accessions to such Item of Equipment and ownership thereof or
security interest therein shall be immediately vested in Lessor. Except as
required or permitted by the provisions of this Section 12, Lessee shall not
modify an Item of Equipment without the prior written authority and approval of
Lessor.
13. Substitutions of Equipment.
(a) Notwithstanding any provision of any Operative Document to
the contrary and subject to the provisions of this Section 13, Lessee may at any
time, so long as no Lease Event of Default has occurred and is continuing
hereunder, substitute equipment of the type described in Schedule 1 of the
Participation Agreement ("Replacement Equipment") that (i) as of the date Lessee
delivers the Notice of Substitution defined below in Section 13(b) (the
"Substitute Date") has a Date of Manufacture or a Date of Overhaul no earlier
than two (2) years prior to the Substitution Date, (ii) is not subject to any
Liens other than Permitted Liens or Lessor Liens and (iii) has a fair market
value as of the Substitution Date and an estimated Residual
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Value equal to, or in excess of, the Casualty Loss Value and the Residual Value,
respectively, of the Item of Equipment that Lessee has elected to replace (the
"Replaced Equipment"); provided, however, the condition in clause (i) need not
be satisfied if (A) Lessee shall have delivered to Lessor and the Administrative
Agent with the Notice of Substitution an Appraisal confirming satisfaction of
the condition in clause (iii) or (B) as of the Substitution Date, the aggregate
Acquisition Costs for all Replacement Equipment that does not satisfy clause (i)
or for which no Appraisal has been delivered in accordance with clause (A) does
not exceed $1,500,000.
(b) On the first Business Day of each week after Lessee has,
in the immediately prior calendar week, substituted Replacement Equipment for
Replaced Equipment, Lessee shall provide Lessor with written notice thereof
("Notice of Substitution") in the form of Exhibit B hereto which Notice of
Substitution shall have attached thereto one or more Bills of Sale representing
the transfer from Lessee to, and for the benefit of, Lessor, for a purchase
price equal to the Casualty Loss Value of the Replaced Equipment, of all right,
title and interest of Lessee in such Replacement Equipment. Upon substitution of
an Item of Equipment under this Section 13 all rights and interests of Lessor in
such Replaced Equipment shall automatically cease and vest in Lessee. Lessor
will at the request and cost of Lessee furnish to or at the direction of Lessee,
a ▇▇▇▇ of sale without recourse or warranty (except as to the absence of Lessor
Liens) and otherwise in form and substance reasonably satisfactory to Lessee and
Lessor, evidencing the transfer to or at the direction of Lessee, all of
Lessor's right, title and interest in and to such Replaced Item(s), "as-is",
"where-is". The purchase price for such Replacement Equipment shall be deemed
paid by Lessor by virtue of its reconveyance to Lessee of the Replaced Equipment
and no further action shall be required between Lessee and Lessor to convey the
Replacement Equipment to Lessor and convey the Replaced Equipment to Lessee,
provided that Lessor shall execute any documents reasonably requested by Lessee
(at Lessee's sole cost and expense) to evidence the release of any Liens created
pursuant to the Operative Documents with respect to such replaced Equipment.
Upon the occurrence of such events, Replacement Equipment shall be deemed to be
Equipment as of the date of the related Notice of Substitution for all purposes
set forth in this Lease Agreement and the other Operative Documents and that the
Acquisition Cost and Casualty Loss Value for such Replacement Equipment shall be
equal to the Acquisition Cost and Casualty Loss Value for such Replaced
Equipment.
(c) In the event that, upon its receipt of a Notice of
Substitution and the related Bills of Sale for any Replacement Equipment, Lessor
shall reasonably challenge whether the fair market value or Residual Value of
said Replacement Equipment is equal to, or in excess of, the Casualty Loss Value
or Residual Value, respectively, of the Replaced Equipment, Lessee shall either
within thirty (30) days of Lessor's demand (i) revise the previously delivered
Notice of Substitution and related Bills of Sale so as to replace or supplement
said Replacement Equipment with other or additional Replacement Equipment that
Lessor reasonably believes has a fair market value and Residual Value equal to,
or in excess of, the Casualty Loss Value and Residual Value, respectively, of
the Replaced Equipment, or (ii) within thirty (30) days of Lessor's demand,
provide Lessor with an Appraisal confirming that the fair market value and
Residual Value of the Replacement Equipment is equal to or greater than the
Casualty Loss Value and Residual Value, respectively, of the Replaced Equipment.
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14. Appraisals.
(a) During the Interim Term, Lessee shall at its expense cause
to be delivered to Lessor an Appraisal of each Item of Equipment for which no
Appraisal has been previously delivered upon the earliest of: (i) on the date
six (6) months after the last previous Appraisal Date (or, if no Appraisal Date
has occurred, after the Closing Date), (ii) if after the last previous Appraisal
Date (or, if no Appraisal Date has occurred, six (6) months after the Closing
Date), Items of Equipment with an aggregate Acquisition Cost in excess of
twenty-five million dollars ($25,000,000) have been made subject to this Lease
Agreement for which no Appraisal has been previously delivered, on the date of
the Lease Agreement Supplement for the Item of Equipment that caused such
twenty-five million dollars ($25,000,000) threshold to be exceeded, (iii) on the
day six (6) Business Days prior to the Basic Term Commencement Date, and (iv) if
after the last previous Appraisal Date (or, if no Appraisal Date has occurred,
after the Closing Date), Replacement Equipment for which no Appraisal has been
previously delivered and which has aggregate Acquisition Costs in excess of 10%
of the aggregate Casualty Loss Value for all Equipment then subject to this
Lease Agreement shall have been substituted for Items of Equipment, on the date
of the Substitution Notice for the Item of Replacement Equipment that caused
such 10% threshold to be exceeded.
(b) During the Basic Term, Lessee shall at its own expense
cause an Appraisal of each item of Replacement Equipment for which no Appraisal
has been previously delivered each time the aggregate Acquisition Costs of all
Replacement Equipment for which no Appraisal has been delivered hereunder
exceeds ten (10) per cent of the aggregate Acquisition Costs for all Equipment
then subject to this Lease Agreement. Such Appraisal shall be delivered to
Lessor within ten (10) days of the date of the Substitution Notice for the
Replacement Equipment that caused such ten (10) percent threshold to be
exceeded.
(c) If any Appraisal states that the estimated fair market
value or Residual Value of an Item of Equipment is less than the Casualty Loss
Value or the Residual Value, respectively, for such Item of Equipment, Lessee
shall within thirty (30) days of the date of such Appraisal at its expense cause
such Item of Equipment to be replaced or supplemented in accordance with Section
13 with one or more Items of Replacement Equipment that meets the requirements
of Section 13(a).
15. Identification Marks. Lessee shall keep and maintain, plainly,
distinctly and conspicuously affixed to each Item, a plaque with the words
"OWNED BY UNIVERSAL COMPRESSION TRUST (2000-1) AND SUBJECT TO A SECURITY
INTEREST IN FAVOR OF BANKERS TRUST COMPANY AS COLLATERAL AGENT FOR LENDERS TO
UNIVERSAL COMPRESSION TRUST (2000-1)" or other appropriate words designated by
Lessor, with appropriate changes thereof and additions thereto as from time to
time may be required by law in order to protect Lessor's and any Assignee's
interests in such Item. Lessee shall not allow the name of any Person, to be
placed upon any Item of Equipment as a designation that might be interpreted as
indicating a claim of ownership thereto or a security interest therein by any
Person other than Lessor or any Assignee.
16. Inspection. Lessee shall permit Lessor (and any designee or
authorized representatives thereof) to make inquiries of Lessee (and Lessee
shall respond to such inquiries) with
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respect to matters relevant to the Equipment and to inspect any Item of
Equipment, at such Person's expense (unless there is a Lease Event of Default
continuing, in which event such inspection shall be at the expense of Lessee),
including the cost and expense for such Person's transportation to and from any
site on which an Item is located, and under conditions reasonably acceptable to
Lessee, and Lessee will make available the books and records of Lessee related
thereto and make copies and extracts therefrom, and will make available officers
and the independent public accountants of Lessee with respect to such matters,
all upon reasonable notice and at such reasonable times during normal business
hours and as may be reasonably requested.
17. Assignment and Leasing.
17.1 By Lessee. EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN THIS
SECTION 17.1, LESSEE SHALL NOT, WITHOUT THE PRIOR WRITTEN CONSENT OF LESSOR,
LEASE ANY ITEM OF EQUIPMENT OR ASSIGN, TRANSFER OR ENCUMBER ITS RIGHTS,
INTERESTS OR OBLIGATIONS HEREUNDER. ANY ATTEMPTED LEASE IN VIOLATION HEREOF AND
ANY ASSIGNMENT, TRANSFER OR ENCUMBERING BY LESSEE OF ITS RIGHTS, INTERESTS OR
OBLIGATIONS HEREUNDER SHALL BE NULL AND VOID. So long as no Lease Event of
Default shall have occurred and be continuing, Lessee may, without the consent
of Lessor, sublease one or more Items of Equipment to any other Person (a
"Sublessee"); provided that such Items of Equipment (whether one or more) are
maintained in the contiguous United States (other than Louisiana); and provided
further, that any sublease entered into pursuant to this Section 17.1 shall
satisfy each of the following conditions (a "Sublease"):
(a) such Sublease shall automatically expire on or before the
expiration of the Term;
(b) such Sublease shall be in writing; shall identify the Item
of Equipment by manufacturer, model and serial number; shall expressly prohibit
any further assignment, sublease or transfer of any rights or interests in the
Equipment; and any Sublease that is extended or made after the first Funding
Date for the Equipment subject thereto shall state that it is subject and
subordinated to this Lease Agreement as follows: "THIS LEASE AGREEMENT AND
LESSEE'S RIGHTS AND INTERESTS HEREUNDER ARE SUBJECT AND SUBORDINATE TO UNIVERSAL
COMPRESSION TRUST (2000-1)'S INTERESTS IN THE [EQUIPMENT] UNDER THE MASTER
EQUIPMENT LEASE AGREEMENT BETWEEN UNIVERSAL COMPRESSION TRUST (2000-1) AND
UNIVERSAL COMPRESSION, INC.";
(c) such Sublease shall not contain a purchase option in favor
of the Sublessee or any other provision pursuant to which the Sublessee may
obtain record or beneficial title to the Equipment leased thereunder from
Lessee, unless, upon the exercise of such purchase option, Lessee substitutes
new Equipment hereunder in accordance with Section 13;
(d) such Sublease shall prohibit the Sublessee from making any
alterations or modifications to the Equipment that would violate this Lease
Agreement;
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(e) such Sublease shall require the Sublessee to maintain the
Equipment in accordance with Sections 10 and 11 and to engage in activities with
the Equipment in a manner consistent with the Equipment's intended purpose and
in accordance with the Equipment's specifications; and
(f) Lessee shall not, without Lessor's prior written consent,
permit or consent to any renewal or extension of a Sublease at any time when a
Lease Event of Default has occurred and is continuing.
Upon request by Lessor or the Administrative Agent, Lessee shall promptly
deliver to Lessor and the Administrative Agent copies of any sublease of an Item
of Equipment (including any Sublease), or (y) a schedule of all subleases of the
Equipment, including Subleases certified by a Responsible Officer of Lessee. No
such leasing by Lessee will reduce any of the obligations of Lessee hereunder or
the rights of Lessor (and any Assignee) hereunder, and all of the obligations of
Lessee hereunder shall be and remain primary and shall continue in full force
and effect as the obligations of a principal and not of a guarantor or surety.
17.2 Registration. This Lease Agreement is a registered
instrument. The Administrative Agent shall establish and maintain registration
books in which it will register, and register any assignment effected in
compliance with Section 12.7 of the Participation Agreement of Lessor's interest
in this Lease Agreement or any portion thereof and which identifies each
registered holder of any interest of Lessor in this Lease Agreement or any
portion thereof. Except for the interests of the Collateral Agent pursuant to
the Operative Documents, no transfer by Lessor of any interest in this Lease
Agreement shall be effective unless and until such transfer is made upon the
registration books maintained by the Administrative Agent.
18. Liens. Lessee shall not directly or indirectly create, incur,
assume or suffer to exist any Lien on or with respect to (a) any Item of
Equipment or any part thereof or Lessor's interest therein or proceeds thereof,
(b) any insurances required hereunder or (c) this Lease Agreement or any of
Lessor's interests hereunder, except Permitted Liens and Lessor Liens. Lessee,
at its own expense, will promptly pay, satisfy and otherwise take such actions
as may be necessary to keep this Lease Agreement and each Item of Equipment free
and clear of, and to duly discharge or eliminate or bond in a manner
satisfactory to Lessor and each Assignee, any Lien other than Permitted Liens
and Lessor Liens if the same shall arise at any time. Lessee will notify Lessor
and each Assignee in writing promptly upon a Responsible Officer of Lessee
obtaining knowledge of any Tax or other Lien other than Permitted Liens and
Lessor Liens that shall attach to the Equipment or any Item of Equipment, and of
the full particulars thereof.
19. Loss, Damage or Destruction.
19.1 Risk of Loss, Damage or Destruction. Lessee hereby
assumes all risk of loss, damage, theft, taking, destruction, confiscation,
requisition or commandeering, partial or complete, of or to each Item of
Equipment ("Loss, Damage or Destruction"), however caused or occasioned except
for Loss, Damage or Destruction caused by the gross negligence or willful
misconduct of Lessor, such risk to be borne by Lessee with respect to each Item
of Equipment from the date of this Lease Agreement, and continuing until such
Item of Equipment has been
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returned to Lessor in accordance with the provisions of Section 6, the rights
and interests in which have been transferred to Lessee in accordance with the
provisions of Section 28.2, 28.4, or 28.5 or has been sold in accordance with
Section 28.3.
19.2 Payment of Casualty Loss Value Upon an Event of Loss. If
an Event of Loss occurs with respect to an Item of Equipment during the Term
thereof, Lessee (a) shall give Lessor and each Assignee prompt written notice of
such loss and of Lessee's election pursuant to clause (b) below and (b) shall
(i) replace such Item within sixty (60) days of such notice subject to and in
accordance with Section 13 or (ii) pay to Lessor on the corresponding Casualty
Loss Value Payment Date the sum of (A) all unpaid Lease Payments due and payable
for such Item of Equipment (which Lease Payments shall accrue until the Casualty
Loss Value Payment Date therefor notwithstanding the date of the Event of Loss),
plus (B) the Casualty Loss Value, plus (C) Breakage Costs, plus (D) all other
Supplemental Payments due for such Item of Equipment as of the date of payment
of the amounts specified in the foregoing clauses (A) and (B). Any payments
received at any time by Lessor or by Lessee from any insurer or other party as a
result of the occurrence of such Event of Loss of an Item of Equipment will be
applied in reduction of Lessee's obligation to pay the foregoing amounts, if not
already paid by Lessee, or, if already paid by Lessee, will be applied to
reimburse Lessee for its payment of such amount, unless a Lease Event of Default
shall have occurred and be continuing in which event any such payments received
by Lessor or by Lessee shall be paid to and applied by the Collateral Agent in
accordance with the priority of payments established under Section 7 of the
Participation Agreement. In the event that any payments received by Lessor,
Assignee, Administrative Agent or Collateral Agent referred to in the
immediately preceding sentence with respect to any Item of Equipment exceed any
amounts due and owing by Lessee to Lessor under the Operative Documents, then,
provided there are no amounts due and owing by Lessee under the Operative
Documents and no Lease Event of Default shall have occurred and be continuing,
such excess shall forthwith be paid by Lessor or its Assignee, as the case may
be, to Lessee. Upon payment in full of such Casualty Loss Value, Lease Payments
and Supplemental Payments, (a) the Lessee's obligations hereunder with respect
to such Item of Equipment (other than those expressly stated to survive the
termination of this Lease Agreement) shall terminate, and (b) all rights and
interests of Lessor in such Item of Equipment shall automatically cease and vest
in Lessee. Lessor will at the request and cost of Lessee furnish to or at the
direction of Lessee, a ▇▇▇▇ of sale without recourse or warranty (except as to
the absence of Lessor Liens) and otherwise in form and substance reasonably
satisfactory to Lessee and Lessor, evidencing the transfer to or at the
direction of Lessee, all of Lessor's right, title and interest in and to such
Item(s), "as-is, where-is". Following any such transfer, Lessee will be
subrogated to all claims of Lessor, if any, against third parties to the extent
the same relate to physical damage to or loss of the transferred Item which was
the subject of such Event of Loss.
19.3 Application of Payments Not Relating to an Event of Loss.
Any payments (including, without limitation, insurance proceeds) received at any
time by Lessor or Lessee from any Governmental Entity or other party with
respect to any loss or damage to any Item or Items of Equipment not constituting
an Event of Loss, will, subject to the last sentence of Section 20, be applied
directly in payment of repairs or for replacement of property in accordance with
the provisions of Sections 11 and 12, if not already paid by Lessee, or if
already paid by Lessee and no Lease Event of Default shall have occurred and be
continuing, shall be applied to reimburse
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Lessee for such payment, and any balance remaining after compliance with the
provisions of said Sections with respect to such loss or damage shall be
retained by Lessee. If any Lease Event of Default shall have occurred and be
continuing, all payments hereunder shall be paid to Lessor or its Assignee in
accordance with Section 19.2.
20. Insurance. Lessee will cause to be carried and maintained, at its
sole expense, with respect to each Item of Equipment at all times during the
Term thereof and for the geographic area in which such Item is at any time
located and until such Item of Equipment has been returned to Lessor pursuant to
Section 6, the rights and interests therein have been transferred to Lessee
pursuant to Section 28.2, 28.4 or 28.5 or sold to a third party pursuant to
Section 28.3 [physical damage insurance (including theft and collision
insurance) insuring against risks of physical loss or damage to the Equipment
("Property Insurance") in an amount no less than [110]% of the aggregate
Casualty Loss Value for all Items of Equipment per occurrence except for
Lessee's customary sublimits for certain perils, and] insurance against
liability for bodily injury, death and property damage resulting from the use
and operation of the Equipment (including sudden and accidental environmental
pollution coverage) ("Liability Insurance") of the types and amounts of coverage
equal to or greater than the insurance coverage Lessee carries on any other
similar equipment owned or leased by Lessee, but in no event providing less than
$50,000,000 of coverage per occurrence. The insurance coverage described in the
preceding sentence shall have deductibles no greater than those applicable to
insurance on similar equipment owned or leased by Lessee or with respect to
general liability or third party coverage shall have deductibles no greater than
$250,000. [Such Property Insurance policy or policies will name Lessee, Lessor
and Assignee as the loss payees.] Such Liability Insurance policy or policies
will name Lessee Indemnified Person as an additional insured. All such policies
will provide that the insurers waive any claim for premiums and any right of
subrogation or setoff against Lessee Indemnified Parties and that the same may
not be invalidated against any Lessee Indemnified Person by reason of any
violation of a condition or breach of warranty of the policies or the
application therefor by Lessee, that the policies may be canceled or materially
altered or reduced in coverage by the insurer only after no less than ten (10)
days' prior written notice from Lessee's insurance broker to Lessor and
Administrative Agent, and that the insurer will give written notice to Lessor
and Administrative Agent in the event of nonpayment of premium by Lessee when
due. The policies of insurance required under this Section 20 for Lessee shall
be valid and enforceable policies issued by insurers having an A.M. Best Company
rating of "A-" or better or otherwise acceptable to the Administrative Agent and
shall provide coverage with respect to incidents occurring anywhere in the
United States. In the event that any of such Liability Insurance policies for an
Item of Equipment shall now or hereafter provide coverage on a "claims-made"
basis, Lessee shall continue to maintain such policies in effect for a period of
not less than three (3) years after the expiration of the Term of the last Item
of Equipment financed hereunder. Upon the execution of each Lease Agreement
Supplement and thereafter not less than three (3) days prior to the expiration
dates of any expiring policies required under this Section 20, Lessee shall
furnish Lessor and the Administrative Agent with certificates of the replacement
insurance coverage required by this Section 20. During the Term, unless a Lease
Event of Default has occurred and be continuing, all proceeds of Property
Insurance on account of any damage to or destruction to the Equipment in an
amount less than $1,000,000 shall be paid over to Lessee or as it may direct and
any such proceeds equal to or greater than $1,000,000
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shall be paid over to Lessor and Lessor shall, upon the written instructions of
Lessee, (a) apply such proceeds against Lessee's payment obligations under
clause (b)(ii) of Section 19.2 or (b) if Lessee elects to replace all or part of
such Equipment pursuant to clause (b)(i) of Section 19.2 reimburse in whole or
in part Lessee or direct payment directly to the vendor for the replacement cost
of such Equipment with any excess remaining to be paid to Lessee, provided,
however, that in the event that a Lease Event of Default shall have occurred and
be continuing such proceeds shall be paid to the Administrative Agent for
application to Lessee's obligations under Section 24.
21. NO LESSOR WARRANTIES. LESSOR HEREBY LEASES THE EQUIPMENT FOR LESSEE
AS-IS WHERE-IS, WITH ALL FAULTS, IF ANY, AND IN WHATEVER CONDITION IT MAY BE IN,
AND EXPRESSLY DISCLAIMS AND MAKES NO REPRESENTATION OR WARRANTY, EITHER
EXPRESSED OR IMPLIED, AS TO THE DESIGN, CONDITION, QUALITY, CAPACITY,
MERCHANTABILITY, DURABILITY, SUITABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE
OF, OR ANY OTHER MATTER CONCERNING, THE EQUIPMENT. LESSEE HEREBY WAIVES ANY
CLAIM (INCLUDING ANY CLAIM BASED ON STRICT OR ABSOLUTE LIABILITY IN TORT OR
INFRINGEMENT) IT MIGHT HAVE AGAINST LESSOR OR ANY CERTIFICATE HOLDER FOR ANY
LOSS, DAMAGE (INCLUDING INCIDENTAL OR CONSEQUENTIAL DAMAGE) OR EXPENSE CAUSED BY
THE EQUIPMENT OR BY LESSEE'S LOSS OF USE THEREOF FOR ANY REASON WHATSOEVER,
INCLUDING COMPLIANCE WITH ENVIRONMENTAL LAWS (WHICH ITEMS OF EQUIPMENT, LESSEE
ACKNOWLEDGES, WERE SELECTED BY LESSEE ON THE BASIS OF ITS OWN JUDGMENT WITHOUT
RELIANCE ON ANY STATEMENTS, REPRESENTATIONS, GUARANTIES OR WARRANTIES MADE BY
LESSOR).
22. Assignment of Manufacturer Warranties. So long and only so long as
a Lease Event of Default shall not have occurred and be continuing, and so long
and only so long as an Item of Equipment shall be subject to this Lease
Agreement and Lessee shall be entitled to possession of such Item hereunder,
Lessor authorizes Lessee, at Lessee's expense, to assert for Lessee's account,
and assigns to Lessee all rights and powers of Lessor under any manufacturer's,
vendor's or dealer's warranty on the Equipment or any part thereof and Lessor
agrees to use reasonable efforts at Lessee's expense to assist Lessee in
obtaining the benefits of such warranties; provided, however, that Lessee shall
indemnify, protect, save, defend and hold harmless Lessor from and against any
and all claims, and all costs, expenses, damages, losses and liabilities
incurred or suffered by Lessor in connection therewith, as a result of, or
incident to, any action by Lessee pursuant to the foregoing authorization.
23. Events of Default. The occurrence of any of the following specified
events (whatever the reason for such Lease Event of Default and whether such
event shall be voluntary or involuntary or come about or be effected by
operation of law or pursuant to or in compliance with any judgment, decree or
order of any court or any order, rule or regulation of any administrative or
governmental body) shall constitute a "Lease Event of Default":
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(a) Lessee shall fail to make any Lease Payment, pay any
Availability Fee or pay any amounts under Sections 28.2, 28.4, 28.5 and 29 on
the date the same is due and payable and such failure shall continue unremedied
for three (3) or more Business Days; or
(b) Lessee shall fail to observe or perform any of the
covenants, agreements or obligations of Lessee set forth in Sections 6, 10, 17.1
or 20 of this Lease Agreement or Section 12.1 of the Participation Agreement
other than those identified in clause (a) above, and such failure shall continue
unremedied for ten (10) or more Business Days after receipt by Lessee of written
notice thereof from Lessor or Assignee; or
(c) Lessee or Guarantor shall fail to perform or observe any
other covenant, condition, or agreement to be performed or observed by it under
any Operative Document (other than those identified in clauses (a) and (b)
above), and such failure shall continue unremedied for a period of thirty (30)
days after receipt by Lessee of written notice thereof from Lessor or Assignee;
or
(d) any representation or warranty made by Lessee or Guarantor
in any of the Operative Documents, or in any certificate delivered pursuant
thereto, shall prove to be untrue in any material respect on the date of which
made; or
(e) Lessee or any of its Significant Subsidiaries shall (i)
default in any payment of any Indebtedness beyond the period of grace, if any,
provided in the instrument or agreement under which such Indebtedness was
created or (ii) default in the observance or performance of any agreement or
condition relating to any Indebtedness or contained in any instrument or
agreement evidencing, securing or relating thereto, or any other event shall
occur or condition exist, the effect of which default or other event or
condition is to have caused, such Indebtedness to become due prior to its stated
maturity, or (iii) any Indebtedness of Lessee shall be declared to be due and
payable, or required to be prepaid other than by a regularly scheduled required
prepayment, prior to the stated maturity thereof, provided that it shall not be
a Lease Default or Lease Event of Default under this Section 23 unless the
aggregate principal amount of all Indebtedness as described in preceding clauses
(i) through (iii), inclusive, is at least $3,000,000 or
(f) At any time after the execution and delivery thereof, the
Participation Agreement ceases to be in full force and effect or Guarantor
denies or disaffirms it obligations thereunder; or
(g) Lessee or any of its Significant Subsidiaries shall
commence a voluntary case concerning itself under the Bankruptcy Code; or an
involuntary case is commenced against Lessee or any of its Significant
Subsidiaries, and the petition is not controverted within 10 days, or is not
dismissed within 60 days, after commencement of the case; or a custodian (as
defined in the Bankruptcy Code) is appointed for, or takes charge of, all or
substantially all of the property of Lessee or any of its Significant
Subsidiaries, or Lessee or any of its Significant Subsidiaries commences any
other proceeding under any reorganization, arrangement, adjustment of debt,
relief of debtors, dissolution, insolvency or liquidation or similar law of any
jurisdiction whether now or hereafter in effect relating to Lessee or any of its
Significant Subsidiaries, or there is
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22
commenced against Lessee or any of its Significant Subsidiaries any such
proceeding which remains undismissed for a period of 60 days, or Lessee or any
of its Significant Subsidiaries is adjudicated insolvent or bankrupt; or any
order of relief or other order approving any such case or proceeding is entered;
or Lessee or any of its Significant Subsidiaries suffers any appointment of any
custodian or the like for it or any substantial part of its property to continue
undischarged or unstayed for a period of 60 days; or Lessee or any of its
Significant Subsidiaries makes a general assignment for the benefit of
creditors; or any corporate action is taken by Lessee or any of its Significant
Subsidiaries for the purpose of effecting any of the foregoing; or
(h) One or more judgments or decrees shall have been entered
against Lessee involving in the aggregate for Lessee and its Significant
Subsidiaries a liability (not paid or fully covered by a reputable and solvent
insurance company) and such judgments and decrees either shall be final and
non-appealable or shall not be vacated, discharged or stayed or bonded pending
appeal for any period of 30 consecutive days, and the aggregate amount of all
such judgments exceeds $3,000,000 or
(i) At any time after the execution and delivery thereof, any
of the Operative Documents shall cease to be in full force and effect, or shall
cease to give the Lessor the Liens, rights, powers and privileges purported to
be created thereby (including, without limitation, a perfected security interest
in, and Lien on, all of the Lessee Collateral (other than Lessee Collateral with
a value not to exceed $1,000,000)), or the Collateral Agent and the Lenders the
Liens, rights, powers and privileges purported to be created thereby (including,
without limitation, a perfected security interest in, and Lien on, all of Lessor
Collateral (other than Lessor Collateral with a value not to exceed $1,000,000))
in each case superior to and prior to the rights of all third Persons (except as
permitted herein), and subject to no other Liens other than Permitted Liens; or
(j) A Change of Control shall occur.
24. Remedies Upon Default. Upon the occurrence of any Lease Event of
Default and at any time thereafter so long as the same shall be continuing,
Lessor may (except in the case of a Lease Event of Default of the type described
in Section 23(g), in which case Lessor shall be deemed automatically without
further act to have elected the remedy set forth in clause (d) below) exercise
one or more of the following remedies, to the extent permitted by Applicable
Law, as Lessor in its sole discretion shall elect:
(a) Lessor may terminate or cancel this Lease Agreement,
without prejudice to any other remedies of Lessor hereunder, with respect to all
or any Item of Equipment, and whether or not this Lease Agreement has been so
terminated, may enter the premises of Lessee, subject to Lessee's normal safety
and security concerns, including standard confidentiality requirements, or any
other party to take immediate possession of the Equipment and remove all or any
Item of Equipment by summary proceedings or otherwise, or may cause Lessee, at
Lessee's expense, to store, maintain, surrender and deliver possession of the
Equipment or such Item in the same manner as provided in Section 6;
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23
(b) Lessor may hold, keep idle or lease to others any Item of
Equipment, as Lessor in its sole discretion may determine, free and clear of any
rights of Lessee, except that Lessee's obligation to pay Lease Payments for any
Lease Payment Periods commencing after Lessee shall have been deprived of
possession pursuant to this Section 24 shall be reduced by the net proceeds, if
any, received by Lessor from leasing the Equipment or such Item to any Person
other than Lessee for the same Lease Payment Periods or any portion thereof;
(c) Lessor may sell the Equipment or any Item of Equipment at
public or private sale as Lessor may determine, free and clear of any rights of
Lessee, and Lessee shall pay to Lessor, as liquidated damages for loss of a
bargain and not as a penalty (in lieu of the Lease Payments due for the
Equipment or Item(s) so sold for any Lease Payment Period commencing after the
date on which such sale occurs), the sum of (i) all unpaid Lease Payments
payable for each Item of Equipment for all Lease Payment Periods through the
date on which such sale occurs, plus (ii) an amount equal to the excess, if any,
of (x) the Casualty Loss Value of the Item(s) of Equipment so sold over (y) the
net proceeds of such sale, plus interest at the rate specified in Section 25 on
the amount of such excess from the Payment Date until the date of actual
payment, plus (iii) all unpaid Supplemental Payments due with respect to each
Item of Equipment so sold, plus (iv) any unpaid Availability Fee;
(d) whether or not Lessor shall have exercised, or shall
thereafter at any time exercise, any of its rights under subsection (a) or (b)
above with respect to any Item(s) of Equipment, Lessor, by written notice to
Lessee specifying a payment date, may demand that Lessee pay to Lessor, and
Lessee shall pay to Lessor, on the payment date specified in such notice, as
liquidated damages for loss of a bargain and not as a penalty (in lieu of the
Lease Payment due for any Item(s) of Equipment for any Lease Payment Period
commencing after the payment date specified in such notice and in lieu of the
exercise by Lessor of its remedies under subsection (b) above in the case of a
re-lease of such Item(s) or under subsection (c) above with respect to a sale of
such Item(s)), the sum of (i) all unpaid Lease Payments payable for such Item(s)
for all Lease Payment Periods through the payment date specified in such notice,
plus (ii) all unpaid Supplemental Payments due with respect to such Item(s) as
of the payment date specified in such notice, plus (iii) an amount equal to any
Breakage Costs owed or paid by Lessor to Lenders in respect of the Notes or
incurred by any Certificate Holder, plus (iv) an amount, with respect to each
such Item, equal to the Casualty Loss Value of such Item(s), plus any accrued
and unpaid Availability Fee; provided, however, upon payment in full by Lessee
within ten (10) days of demand of all amounts due under this Section 24(c),
Lessor will at the request and cost of Lessee furnish to or at the direction of
Lessee a ▇▇▇▇ of sale, without recourse or warranty (except as to the absence of
Lessor Liens), and otherwise in form and substance reasonably satisfactory to
Lessee and Lessor evidencing the transfer to or at the direction of Lessee, all
of Lessor's right, title and interest in and to such Item(s), "as-is, where-is";
and
(e) Lessor may exercise any other right or remedy which may be
available to it under applicable law or proceed by appropriate court action to
enforce the terms hereof or to recover damages for the breach hereof and
terminate this Lease Agreement. In addition, Lessee shall be liable for all
costs and expenses, including reasonable attorney's fees and expenses, incurred
by Lessor, Collateral Agent, Administrative Agent or any Assignee by reason of
the occurrence of any Lease Event of Default or the exercise of Lessor's
remedies with respect
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thereto, including all reasonable costs and expenses incurred in connection with
the return of the Equipment in accordance with Section 6 or in placing the
Equipment in the condition required by said Section.
Except as otherwise expressly provided above, no remedy referred to in this
Section 24 is intended to be exclusive, but each shall be cumulative and in
addition to any other remedy referred to above or otherwise available to Lessor
at law or in equity; and the exercise or beginning of exercise by Lessor of any
one or more of such remedies shall not constitute the exclusive election of such
remedies and shall not preclude the simultaneous or later exercise by Lessor of
any or all of such other remedies. No express or implied waiver by Lessor of any
Lease Event of Default shall in any way be, or be construed to be, a waiver of
any future or subsequent Lease Event of Default. To the extent permitted by
applicable law, Lessee hereby waives any rights now or hereafter conferred by
statute or otherwise which may require Lessor to sell, lease or otherwise use
the Equipment in mitigation of Lessor's damages as set forth in this Section 24
or which may otherwise limit or modify any of Lessor's rights and remedies in
this Section 24.
25. Lessor's Right to Perform for Lessee. If Lessee fails to make any
Supplemental Payment required to be made by it hereunder or fails to perform or
comply with any of its agreements contained herein, Lessor may (but shall not be
obligated) itself, after notice to Lessee, make such payment or perform or
comply with such agreement, and the amount of such payment and the amount of the
reasonable expenses of Lessor incurred in connection with such payment or the
performance of or compliance with such agreement, as the case may be, together
with interest thereon at the rate specified in Section 26, shall, if not paid by
Lessee to Lessor on demand, be deemed a Supplemental Payment hereunder;
provided, however, that no such payment, performance or compliance by Lessor
shall be deemed to cure any Lease Event of Default hereunder.
26. Late Charges. Lessee shall pay to Lessor, upon demand, to the
extent permitted by applicable law, interest on any installment of a Lease
Payment or Availability Fee not paid when due, and on any Supplemental Payment
or other amount payable under this Lease Agreement which is not paid when due,
for any period for which any of the same is overdue (without regard to any grace
period) at a rate equal to the lesser of (a) the Overdue Rate and (b) the
maximum rate of interest permitted by law.
27. Notices. Lessee shall deliver to the Assignee and the
Administrative Agent a copy of each notice to be delivered by Lessee hereunder.
All notices provided for or required under the terms and provisions hereof shall
be given in accordance with Section 12.4 of the Participation Agreement.
28. Lessee's Renewal, Transfer and Early Termination Options; Purchase
Obligation.
28.1 Renewal Option. If no Lease Event of Default shall have
occurred and be continuing, Lessee has not elected to purchase (or deemed to
purchase) the Equipment under Section 28.2 and this Lease Agreement shall not
have been earlier terminated, Lessee may request to renew the Lease Agreement
with respect to all but not less than all Items of Equipment then subject to
this Lease Agreement by providing to the Administrative Agent and Lessor a
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25
written notice of request to renew within six (6) months prior to the end of the
Basic Term. In its sole discretion, Lessor shall determine on or before the date
three (3) months prior to the end of the Basic Term whether to renew and extend
the leasing of the Equipment on terms and conditions acceptable to Lessee and
Lessor.
28.2 Lessee's End of Term Purchase Option. On the Termination
Date, if this Lease Agreement shall not have been earlier terminated, Lessee or
its designee shall be entitled, at its option, to acquire all, but not less than
all, of Lessor's rights and interests in all, but not less than all, of the
Items of Equipment for an amount (the "Purchase Option Amount"), with respect to
all Items of Equipment, payable in immediately available funds, equal to the sum
without duplication of (i) the aggregate of the Casualty Loss Value of all Items
of Equipment, plus (ii) the Lease Payments due and payable for such Items of
Equipment on the Termination Date, plus (iii) any Supplemental Payments then due
and owing to any Person. Upon payment in full of all amounts due upon the
exercise of Lessee's option under this Section 28.2, Lessor will, at the request
and cost of Lessee, transfer to or at the direction of Lessee, without recourse
or warranty (except as to the absence of Lessor Liens), all of Lessor's right,
title and interest in and to such Item(s), "as-is, where-is" and at the cost and
request of Lessee, furnish to or at the direction of Lessee, a ▇▇▇▇ of sale
without recourse or warranty (except as to Lessor Liens) in form and substance
reasonably satisfactory to Lessee and Lessor, evidencing such transfer. If
Lessee does not intend to exercise such purchase option, Lessee shall give
written notice to Lessor to such effect in accordance with Section 28.3.2. If
Lessee fails to give such written notice to Lessor, such failure shall
constitute an election and a binding obligation of Lessee to exercise the
purchase option hereunder and to pay Lessor the Purchase Option Amount with
respect thereto on the Termination Date.
28.3 Third Party Sale of Equipment.
28.3.1 Remarketing Obligations. In the event that Lessee does
not exercise its option to acquire Lessor's rights and interests in all the
Equipment pursuant to Section 28.2, then Lessee shall have the obligation during
the last 180 days of the Basic Term, if applicable (the "Remarketing Period"),
to solicit bona fide bids for not less than all Items of Equipment from
prospective purchasers who are financially capable of purchasing such Items of
Equipment for cash on an "as-is", "where-is" basis, without recourse or
warranty. Any bid received by Lessee prior to the end of the Remarketing Period
shall be promptly communicated to Lessor and Administrative Agent in writing,
setting forth the amount of such bid and the name and address of the person or
entity submitting such bid. Notwithstanding the foregoing, Lessor shall have the
right, but not the obligation, to seek bids for the Equipment during the
Remarketing Period and Lessee shall ▇▇▇▇▇ ▇▇▇▇▇▇ and Administrative Agent or
their respective designees access to the Equipment upon reasonable notice and
during normal business hours to facilitate the exercising of such right.
28.3.2 Notice to Return Possession of Equipment. So long as no
Lease Default or Lease Event of Default shall have occurred, Lessee shall have
the option, exercisable by giving Lessor irrevocable written notice not less
than 180 days and not more than 270 days prior to the Termination Date, to
return possession of all Items of Equipment then subject to this Lease Agreement
to Lessor on the Termination Date. In the event Lessee fails to deliver the
notice
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described in (and within the time period prescribed in) the preceding
sentence, Lessee shall be deemed to have elected the Purchase Option and shall
proceed to purchase the Equipment in accordance with Section 28.2. If at any
time after Lessee gives written notice of its intention to return possession of
the Equipment to Lessor and on or prior to the Termination Date a Lease Default
or a Lease Event of Default shall occur, then Lessee's notice to return
possession of the Equipment shall be deemed automatically revoked and Lessee
shall be deemed to have elected the purchase option in Section 28.2.
28.3.3 Sale of Equipment to Third Party Buyer. On the
Termination Date, provided that all the conditions set forth in Sections 28.3.1,
28.3.2 and in clauses (a) and (b) below have been met, Lessor shall sell (or
cause to be sold) all Items of Equipment, for cash to the bidder, if any, who
shall have submitted the highest bid during the Remarketing Period on an
"as-is", "where-is" basis and without recourse or warranty, and upon receipt by
Lessor of the sales price, Lessor shall instruct Lessee to deliver and Lessee
shall deliver the Equipment to such bidder; provided, that (a) any such sale to
a third party shall be consummated, and the sales price for the Equipment shall
have been paid to Lessor in immediately available funds, on or before the
Termination Date; and (b) Lessor shall not be obligated to sell such Equipment
if the Net Proceeds of Sale of all, but not less than all, the Equipment are
less than the aggregate Maximum Lessor Risk Amount applicable to all, but not
less than all, the Equipment as of the Termination Date. Upon payment in full of
all amounts due upon a sale under this Section 28, Lessor will, so long as no
Lease Event of Default shall have occurred and be continuing, at the request and
cost of the bidder, transfer to or at the direction of the bidder, without
recourse or warranty (except as to the absence of Lessor Liens), all of Lessor's
right, title and interest in and to such Item(s), "as-is", "where-is" and at the
cost and request of the bidder, furnish to or at the direction of Lessee, a ▇▇▇▇
of sale without recourse or warranty (except as to Lessor Liens) and otherwise
in form and substance reasonably satisfactory to the bidder and Lessor,
evidencing such transfer.
28.4 Lessee's Early Purchase Option. Provided this Lease
Agreement shall not have been earlier terminated, Lessee shall be entitled, at
its option, on any Payment Date to acquire all but not less than all of Lessor's
rights and interests, in all, but not less than all, Item(s) of Equipment leased
hereunder, and, upon written notice to Lessor, as hereinafter provided, for an
amount (the "Payment Date Option Amount"), with respect to each Item of
Equipment acquired payable in immediately available funds, equal to the sum of
(i) the Casualty Loss Value of such Item of Equipment, plus (ii) the Lease
Payments due and payable for such Item of Equipment on such Payment Date, plus
(iii) the amount of Breakage Costs, plus (iv) any Supplemental Payments then due
and owing to any Person. Upon payment in full of all amounts due upon the
exercise of Lessee's option under this Section 28.4, Lessor will, at the request
and cost of Lessee, transfer to or at the direction of Lessee, without recourse
or warranty (except as to the absence of Lessor Liens), all of Lessor's right,
title and interest in and to such Item(s), "as-is", "where-is" and, at the
request and cost of Lessee, furnish to or at the direction of Lessee, a ▇▇▇▇ of
sale without recourse or warranty (except as to the absence of Lessor Liens) and
otherwise in form and substance reasonably satisfactory to Lessee and Lessor,
evidencing such transfer. If Lessee intends to exercise said early transfer
option, Lessee shall give written notice to Lessor to such effect not less than
thirty (30) days prior to the Payment Date on which such option will be
exercised. If Lessee gives such written notice to Lessor, such notice shall
constitute a binding obliga-
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tion of Lessee to pay Lessor the Payment Date Option Amount with respect to each
Item of Equipment subject to such notice on the applicable Payment Date.
28.5 Non Completion Purchase Obligation. Notwithstanding any
other provision of this Lease Agreement or any other Operative Document, in the
event that a Completion Certificate has not been delivered to Lessor with
respect to an Item of Equipment on or before the date (the "Non-Completion
Date"), that is the earlier of (i) 6 months after the commencement of the
Assembly Period for such Item of Equipment, and (ii) the Basic Term Commencement
Date, Lessee shall be obligated to purchase Lessor's rights in and to such Item
of Equipment on the first Business Day after the Non-Completion Date for an
amount equal to the Casualty Loss Value for such Item of Equipment plus all
accrued and unpaid interest as of the date of payment and Breakage Costs. Lessee
shall pay all such amounts in immediately available funds on the first Business
Day after the Non-Completion Date. Nothing contained in this Section 28.5 shall
be deemed to extend the Assembly Period. Upon payment in full of all such
amounts, and so long as no Event of Default has occurred and is continuing
hereunder, Lessor shall terminate the Lease Agreement with respect to such Item
of Equipment and shall convey all of its right, title and interest in and to
such Item of Equipment, "as is," "where is", without recourse or warranty
(except as to the absence of Lessor Liens), to Lessee, and Lessee shall have no
further obligation under this Lease Agreement or the other Operative Documents
with respect to such Item of Equipment except those obligations expressly stated
to survive the termination of this Lease Agreement or any other Operative
Document.
29. End of Term Lease Payment Adjustment.
29.1 Third Party Sale of Equipment. This Section 29.1 shall
apply only if a sale of the Items of Equipment to a third party pursuant to
Section 28.3 has been consummated on the Termination Date. If the Net Proceeds
of Sale of such Items of Equipment are less than the aggregate Casualty Loss
Value as of the Termination Date, Lessee shall, on the Termination Date, pay to
Lessor as an end of term Lease Payment adjustment, in immediately available
funds, an amount equal to such deficiency (a "Deficiency") as an adjustment to
the Lease Payment payable under this Lease Agreement for such Items of Equipment
plus the Lease Payment due and payable for such Item(s) of Equipment on the
Termination Date, plus any Supplemental Payments then due and owing to Lessor
hereunder; provided, however, that if no Lease Event of Default or Lease
Default, shall have occurred and be continuing hereunder, the amount of the
Deficiency payable by Lessee with respect to such Items of Equipment shall not
exceed the aggregate Maximum Lessee Risk Amount. If the Net Proceeds of Sale of
such Items of Equipment exceed the aggregate Casualty Loss Value of such Items
of Equipment and if Lessee shall have paid Lessor on or before the Termination
Date the Lease Payment due and payable for such Items of Equipment on the
Termination Date, plus all Supplemental Payments then due and owing with respect
to such Items of Equipment, Lessor shall pay to such Lessee an amount equal to
such excess as an adjustment to the Lease Payment payable under this Lease
Agreement for such Items of Equipment.
29.2 Lessee Payment. If a sale of any Item of Equipment either
to Lessee pursuant to Section 28.2 or 28.4 or to a third party pursuant to
Section 28.3 has not been consummated on the Termination Date with respect
thereto for any reason, then Lessee shall, on the
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28
Termination Date pay to Lessor as an end of term Lease Payment adjustment, in
immediately available funds, as an adjustment to the Lease Payment payable under
this Lease Agreement for each Item that has not been sold pursuant to Section
28.2, 28.3, or 28.4, an amount equal, without duplication to the Lease Payment
due and payable for such Item of Equipment on the Termination Date, plus all
Supplemental Payments then due and owing with respect to such Item(s) plus (a)
the Maximum Lessee Risk Amount of all of such Items, if (i) on the Termination
Date no Lease Event of Default or Lease Default shall have occurred and be
continuing hereunder, and (ii) all Items of Equipment then subject to this Lease
Agreement have been returned to Lessor on the Termination Date in the condition
and at the locations required by Section 6, and (iii) this Lease Agreement shall
not have been terminated prior to the Termination Date or (b) the aggregate
Casualty Loss Value as of the Termination Date of all of such Items, if (1) on
the Termination Date a Lease Event of Default or Lease Default shall have
occurred and be continuing hereunder, or (2) any Item of Equipment then subject
to this Lease Agreement shall not have been returned to Lessor on the
Termination Date in the condition and at the locations required by Section 6, or
(3) this Lease Agreement shall have been terminated prior to the Termination
Date; provided, however, if Lessee pays all amounts due in accordance with this
clause (b) on or prior to the Termination Date, Lessor will at the cost of
Lessee transfer to or at the direction of Lessee, without recourse or warranty
(except as to the absence of Lessor Liens), all of Lessor's right, title and
interest in and to such Item(s), "as-is", "where-is" and at the cost of Lessee
furnish to or at the direction of Lessee, if Lessee shall so request, a ▇▇▇▇ of
sale without recourse or warranty (except as to the absence of Lessor Liens) and
otherwise in form and substance reasonably satisfactory to Lessee and Lessor,
evidencing such transfer. Lessee shall remain liable for the payment of, and
upon the consummation by Lessor of the sale of any Item(s) of Equipment on or
after the Termination Date thereof, Lessee shall pay, or reimburse Lessor for
the payment of, all applicable sales, excise or other Taxes imposed as a result
of such sale, other than gross or net income taxes attributable to such sale,
and such obligation shall survive the termination of this Lease Agreement.
30. GOVERNING LAW; SUBMISSION TO JURISDICTION; VENUE; WAIVER OF JURY
TRIAL. (a) THIS LEASE AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES
HEREUNDER AND THEREUNDER SHALL BE CONSTRUED IN ACCORDANCE WITH AND BE GOVERNED
BY THE LAW OF THE STATE OF NEW YORK. ANY LEGAL ACTION OR PROCEEDING WITH RESPECT
TO THIS LEASE AGREEMENT MAY BE BROUGHT IN THE COURTS OF THE STATE OF NEW YORK OR
OF THE UNITED STATES FOR THE SOUTHERN DISTRICT OF NEW YORK, AND, BY EXECUTION
AND DELIVERY OF THIS LEASE AGREEMENT, LESSEE HEREBY IRREVOCABLY ACCEPTS FOR
ITSELF AND IN RESPECT OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, THE
JURISDICTION OF THE AFORESAID COURTS. LESSEE HEREBY IRREVOCABLY DESIGNATES,
APPOINTS AND EMPOWERS CT CORPORATION SYSTEM, WITH OFFICES ON THE DATE HEREOF AT
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ AS ITS DESIGNEE, APPOINTEE AND AGENT TO
RECEIVE, ACCEPT AND ACKNOWLEDGE FOR AND ON ITS BEHALF, AND IN RESPECT OF ITS
PROPERTY, SERVICE OF ANY AND ALL LEGAL PROCESS, SUMMONS, NOTICES AND DOCUMENTS
WHICH MAY BE SERVED IN ANY SUCH ACTION OR PROCEEDING. IF FOR ANY REASON SUCH
DESIGNEE, APPOINTEE AND
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AGENT SHALL CEASE TO BE AVAILABLE TO ACT AS SUCH, LESSEE AGREES TO DESIGNATE A
NEW DESIGNEE, APPOINTEE AND AGENT IN NEW YORK CITY ON THE TERMS AND FOR THE
PURPOSES OF THIS PROVISION SATISFACTORY TO THE AGENT UNDER THIS LEASE AGREEMENT.
LESSEE FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OUT OF ANY OF THE
AFOREMENTIONED COURTS IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF COPIES
THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO LESSEE AT ITS
ADDRESS SET FORTH IN SECTION 12.4 OF THIS PARTICIPATION AGREEMENT, SUCH SERVICE
TO BECOME EFFECTIVE 30 DAYS AFTER SUCH MAILING. NOTHING HEREIN SHALL AFFECT THE
RIGHT OF LESSOR UNDER THIS LEASE AGREEMENT, TO SERVE PROCESS IN ANY OTHER MANNER
PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST
ANY CREDIT PARTY IN ANY OTHER JURISDICTION.
(b) LESSEE HEREBY IRREVOCABLY WAIVES ANY OBJECTION WHICH IT
MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY OF THE AFORESAID ACTIONS
OR PROCEEDINGS ARISING OUT OF OR IN CONNECTION WITH THIS LEASE AGREEMENT OR ANY
OTHER CREDIT DOCUMENT BROUGHT IN THE COURTS REFERRED TO IN CLAUSE (a) ABOVE AND
HEREBY FURTHER IRREVOCABLY WAIVES AND AGREES NOT TO PLEAD OR CLAIM IN ANY SUCH
COURT THAT ANY SUCH ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN
BROUGHT IN AN INCONVENIENT FORUM.
(c) EACH OF THE PARTIES TO THIS LEASE AGREEMENT HEREBY
IRREVOCABLY WAIVES ALL RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR
COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS LEASE AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY.
31. Miscellaneous. Any provision of this Lease Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating or diminishing Lessor's rights under the remaining provisions
hereof, and any such prohibition or unenforceability in any jurisdiction shall
not invalidate or render unenforceable such provision in any other jurisdiction.
To the extent permitted by applicable law, Lessee hereby waives any provision of
law which renders any provision of this Lease Agreement prohibited or
unenforceable in any respect. No term or provision of this Lease Agreement may
be amended, altered, waived, discharged or terminated except in accordance with
Section 12.2 of the Participation Agreement. A waiver on any one occasion shall
not be construed as a waiver on a future occasion. Except as provided in Section
12.7 of the Participation Agreement, neither Lessee nor Lessor shall assign or
transfer its interests in this Lease Agreement. All of the covenants, conditions
and obligations contained in this Lease Agreement shall be binding upon and
shall inure to the benefit of the respective successors and assigns of Lessor
and (subject to the restrictions of Sections 17.1 and 17.2) Lessee. This Lease
Agreement and the other Operative Documents, and each related instrument,
document, agreement and certificate, collectively constitute the complete and
exclusive statement of the terms of the agreement between Lessor and Lessee with
respect to the acquisition and leas-
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30
ing of the Equipment, and cancel and supersede any and all prior oral or written
understandings with respect thereto.
32. Concerning Lessor. Trust Company is entering into this Lease
Agreement solely in its capacity as Trustee under the Trust Agreement and not in
its individual capacity and in no case shall Trust Company (or any entity acting
as successor Trustee under the Trust Agreement) be personally liable for or on
account of any of the statements, representations, warranties, covenants or
obligations stated to be those of Lessor hereunder.
33. Execution and Effectiveness. This Lease Agreement may be executed
in any number of identical counterparts, any set of which signed by all parties
hereto shall be deemed to constitute a complete, executed original for all
purposes and shall become effective when each of the parties hereto and each of
the parties to the Participation Agreement and Loan Agreement have executed and
delivered this Lease Agreement, the Participation Agreement and the Loan
Agreement.
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IN WITNESS WHEREOF, the parties hereto have caused this Lease Agreement
to be duly executed by their duly authorized representatives as of the date
first above written.
WILMINGTON TRUST COMPANY, not in its
individual capacity, but solely as
Trustee of Universal Compression Trust
(2000-1) under the Trust Agreement dated
as of May __, 2000, as Lessor
By:
---------------------------------------
Name:
Title:
UNIVERSAL COMPRESSION, INC.,
as Lessee
By:
---------------------------------------
Name:
Title:
COUNTERPART NO. _______ OF _______ SERIALLY NUMBERED MANUALLY EXECUTED
COUNTERPARTS. TO THE EXTENT, IF ANY, THAT THIS DOCUMENT CONSTITUTES CHATTEL
PAPER UNDER THE UNIFORM COMMERCIAL CODE, NO SECURITY INTEREST IN THIS DOCUMENT
MAY BE CREATED THROUGH THE TRANSFER AND POSSESSION OF ANY COUNTERPART OTHER THAN
COUNTERPART NO. 1.
32
EXHIBIT A TO
LEASE AGREEMENT
[FORM OF]
LEASE AGREEMENT SUPPLEMENT AND SECURITY GRANT NO.
This Lease Agreement Supplement (this "Supplement") is
executed pursuant to, and incorporates by reference all of the terms, conditions
and provisions of, the Master Equipment Lease Agreement dated as of May __,
2000, between the undersigned Wilmington Trust Company, not in its individual
capacity but solely as Trustee of the Universal Compression Trust (2000-1) under
the Trust Agreement dated as of May __, 2000 ("Lessor") and Universal
Compression, Inc. ("Lessee") (herein, as amended and supplemented from time to
time, called the "Lease Agreement"). All capitalized terms used herein which are
not defined herein shall have the meaning given to such terms in the Lease
Agreement.
A. SUPPLEMENT
Lessee hereby (a) acknowledges and certifies that each Item of
Equipment described below or on any Schedule attached hereto (each, an "Item"
and collectively, the "Equipment") has been selected by, delivered to Lessee,
and is located at the location set forth below, and as between Lessor and
Lessee, each Item identified as assembled is of a size, design, capacity and
manufacture acceptable to and suitable for Lessee's purposes, has been installed
to Lessee's satisfaction, and is in good working order, repair and condition and
(b) unconditionally and irrevocably accepts each Item under the Lease Agreement
on the date hereof. Lessor and Lessee hereby agree that each Item described
below or on any Schedule attached hereto is hereby leased by Lessor under and
subject to all of the terms, conditions and provisions of the Lease Agreement
that the lease term of each such Item commences on the date hereof and that such
date is the first Funding Date thereof and that the Acquisition Cost, Interim
Term, Maximum Lessee Risk, Maximum Lessor Risk, and Casualty Loss Values for all
Items of Equipment covered by this Lease Agreement Supplement are as set forth
below. Lessee hereby agrees to pay the Lease Payment for all Items covered by
this Lease Agreement Supplement in the amounts and at the times specified in
Section 7 of the Lease Agreement and as specified below, reaffirms its
acknowledgments and agreements in the Lease Agreement and certifies that its
representations and warranties set forth in Section 2 of the Participation
Agreement and in any related certificate delivered to Lessor are true and
correct on the date hereof.
1. Description of Item(s) of Equipment (include make,
model and serial number and whether such Item is
completely assembled and the estimated date assembly
will be completed): See Schedule 1 attached hereto.
2. Location: See Schedule 1 attached hereto.
3. Acquisition Cost: See Schedule 1 attached hereto
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4. Casualty Loss Value: See Schedule 1 attached hereto
5. Interim Term: commencing on date hereof ("Funding Date")
and ending on October __, 2001.
6. Certain Values:
a. Maximum Lessee Risk Percentage: ____%
b. Maximum Lessor Risk Percentage: ____%
▇. ▇▇▇▇▇ OF SECURITY INTEREST
The Lease Agreement and this Supplement constitute a financing
agreement intended as security. In consideration of the agreements contained
therein and in the Operative Documents, Lessee hereby grants, bargains, assigns,
transfers, conveys and pledges to Lessor a security interest in and Lien upon
its interest in the Equipment, and its interests in the Subleases related to
such Items of Equipment, each manufacturer's, vendor's or dealer's warranty on
the Equipment or any component thereof and all proceeds thereof as collateral
security for the payment and performance by Lessee of Lessee's obligations as
Lessee under the Operative Documents.
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Dated: ____________, ____.
WILMINGTON TRUST COMPANY, not in its
individual capacity, but solely as
Trustee of Universal Compression Trust
(2000-1) under the Trust Agreement dated
as of May __, 2000,
Lessor
By:
---------------------------------------
Name:
Title:
UNIVERSAL COMPRESSION, INC.
Lessee
By:
--------------------------------------
Name:
Title:
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Schedule 1 to
Lease Agreement Supplement
FORM OF
SCHEDULE OF EQUIPMENT
TO LEASE AGREEMENT SUPPLEMENT NO. ___
TYPE OF LOCATION MODEL SERIAL ASSEMBLED ESTIMATED DATE HP ACQUISITION COST AND CASUALTY
EQUIPMENT (ADDRESS & MANUFACTURER NUMBER NUMBER Y/N OF COMPLETION LOSS VALUE
COUNTY) $
36
EXHIBIT B
to Lease Agreement
[FORM OF] NOTICE OF SUBSTITUTION
[Date]
Universal Compression, Inc. ("Lessee") hereby gives Wilmington
Trust Company as Trustee of the Universal Compression Trust (2000-1) ("Lessor")
notice that as of the date hereof Lessee has substituted the following Equipment
in accordance with Section 13 of the Master Equipment Lease Agreement ("Lease
Agreement") dated as of May __, 2000 between Lessor and Lessee:
Replaced Equipment:
Lease Estimated
Supplement Type of Model Serial Casualty Residual
No. Equipment Manufacturer Number Number Loss Value Value
Replacement Equipment:
Fair Estimated
Type of Model Serial Value Residual
Location Equipment Manufacturer Number Number Market Value
(address & county
Universal Compression, Inc.
Lessee
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By:
Title: