Exhibit 4.04
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COMMON SECURITY AGREEMENT
among
PORT ▇▇▇▇▇▇ FINANCE CORP.,
as Borrower,
PORT ▇▇▇▇▇▇ ▇▇▇▇▇ COMPANY L.P.,
as Partnership and Guarantor,
SABINE RIVER HOLDING CORP.,
as General Partner of the Partnership,
NECHES RIVER HOLDING CORP.,
as Limited Partner of the Partnership,
BANKERS TRUST COMPANY,
as Collateral Trustee for the Secured Parties,
DEUTSCHE BANK AG, NEW YORK BRANCH,
as Administrative Agent for and on behalf of the Bank Senior Lenders,
WINTERTHUR INTERNATIONAL INSURANCE COMPANY LIMITED,
for itself and as Administrative Agent for and on behalf
of the Oil Payment Insurers,
HSBC BANK USA,
as Capital Markets Trustee for the Capital Markets Senior Lenders,
BANKERS TRUST COMPANY,
as Depositary Bank
and
WINTERTHUR INTERNATIONAL INSURANCE COMPANY LIMITED,
as Insurer under the Debt Service Reserve Insurance Guarantee
Dated as of August 19, 1999
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Table of Contents
Section Page
ARTICLE I
DEFINITIONS AND INTERPRETATION
1.01 Definitions........................................................... 2
1.02 Interpretation........................................................ 2
1.03 Conflict.............................................................. 3
ARTICLE II
SENIOR DEBT
2.01 Senior Debt Obligations and Oil Payment Reimbursement Obligations
Secured Hereby........................................................ 3
2.02 Pari Passu Treatment.................................................. 3
2.03 Guaranteed Senior Debt Obligations.................................... 3
2.04 Optional Prepayments.................................................. 4
2.05 Mandatory Prepayments................................................. 4
2.06 Pro Rata Payment of Senior Debt Obligations and Oil Payment
Reimbursement Obligations............................................. 6
2.07 Non-Pro Rata Prepayments.............................................. 6
2.08 Insufficient Payments................................................. 7
2.09 Additional Senior Debt................................................ 8
2.10 Replacement Senior Debt............................................... 9
2.11 Replacement for Oil Payment Insurance Policy.......................... 11
2.12 Extraordinary Prepayments; Substitution of "Compensating Letter
of Credit"............................................................ 12
ARTICLE III
REPRESENTATIONS AND WARRANTIES
3.01 Representations and Warranties of the Borrower, the Partnership
and the Partners....................................................... 13
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Section Page
ARTICLE IV
COVENANTS
4.01 Covenants of the Borrower and the Partnership......................... 24
4.02 Covenants of the Partners............................................. 37
4.03 Common Covenant....................................................... 40
ARTICLE V
ACCOUNTS
5.01 Accounts.............................................................. 40
5.02 Subaccounts........................................................... 44
5.03 Deposits of Project Funds............................................. 44
5.04 Investment of Funds in Accounts....................................... 46
5.05 Withdrawals from Accounts Pre-Default................................. 47
5.06 Withdrawals from Accounts During the Continuance of a Default......... 50
5.07 Principal & Interest Accrual Account.................................. 51
5.08 Tranche B Amortization Account........................................ 51
5.09 Debt Service Reserve Account.......................................... 52
5.10 PMI Surplus Reserve Account........................................... 53
5.11 Tax Reserve Account................................................... 53
5.12 Major Maintenance Account............................................. 54
5.13 Contingency Reserve Account........................................... 55
5.14 Mandatory Prepayment Account.......................................... 55
5.15 Estimated Payment Certificate......................................... 56
5.16 Reports and Certifications............................................ 56
ARTICLE VI
SECURITY INTERESTS
6.01 Property and Improvements of the Partnership.......................... 57
6.02 General Partner's Interest in the Partnership......................... 58
6.03 Limited Partnership Interest in the Partnership....................... 59
6.04 The Partnership's Shares in the Borrower.............................. 61
6.05 Interests in Accounts and Authorized Investments...................... 62
6.06 The Project Documents, Sales Agreements and Spot Contracts............ 62
6.07 Insurance and Insurance Proceeds; Reinsurance......................... 64
6.08 All Personal Property Including Machinery and Equipment,
Technology General Intangibles, Accounts and Other
Personal Property..................................................... 65
6.09 The Partnership's Interest in Crude Oil,
Intermediate Products and Refined Products............................ 65
6.10 Permitted Hedging Arrangements........................................ 66
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Section Page
6.11 Rights under Capital Contribution Agreements; Intercompany Loans
from the Borrower to the Partnership from............................. 66
6.12 Proceeds, Products, etc............................................... 67
6.13 Perfection and Maintenance of Security Interests...................... 67
6.14 Rights in Collateral Prior to Enforcement Direction................... 69
6.15 Liability of Borrower Parties......................................... 70
6.16 Release of Security Interests......................................... 71
6.17 PMI Subordinated Lien................................................. 71
ARTICLE VII
INSURANCE
7.01 Maintenance of Insurance.............................................. 71
7.02 Additional Insureds and Loss Payees Provisions........................ 71
7.03 Other Lender Provisions in Policies................................... 72
7.04 Payment, Assignment, Etc. of Reinsurance or Co-Insurance.............. 72
7.05 Rated Insurers........................................................ 73
7.06 Payment of Premiums................................................... 73
7.07 Application of Insurance Proceeds..................................... 73
7.08 Information........................................................... 74
7.09 Insurance Consultant.................................................. 75
7.10 Delivery of Cover Notes and Policies.................................. 75
ARTICLE VIII
REPORTING
8.01 Regular Reporting..................................................... 76
8.02 Notice of Extraordinary Events........................................ 79
8.03 Books and Records..................................................... 80
ARTICLE IX
COMMON CONDITIONS PRECEDENT
9.01 Common Conditions Precedent to Initial
Disbursements of Senior Loans......................................... 80
9.02 Common Conditions Precedent to Initial and
Subsequent Disbursements of Senior Loans.............................. 85
9.03 Pro Rata Drawdowns; Pro Rata Reductions in
Initial Senior Debt Commitments....................................... 86
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Section Page
ARTICLE X
EVENTS OF DEFAULT AND REMEDIES
10.01 Events of Default.................................................... 87
10.02 Declaration of Default............................................... 90
10.03 Cessation of Default................................................. 90
10.04 Remedies............................................................. 90
10.05 Enforcement Action................................................... 92
10.06 Incidents of Sale.................................................... 92
10.07 Collateral Trustee May File Proofs of Claim.......................... 93
10.08 Collateral Trustee May Enforce Claims................................ 93
10.09 Control of Enforcement Action........................................ 94
10.10 Limitation on Suits.................................................. 94
10.11 Enforcement Proceeds Account......................................... 95
10.12 Application of Enforcement Proceeds.................................. 95
10.13 Action under Oil Payment Insurance Policy............................ 96
ARTICLE XI
RESTRICTED PAYMENTS
11.01 Restricted Payments.................................................. 96
ARTICLE XII
GUARANTEE
12.01 Guarantee by the Partnership and the Partners........................ 97
ARTICLE XIII
THE COLLATERAL TRUSTEE
13.01 Appointment of Collateral Trustee.................................... 98
13.02 Delivery of Documentation............................................ 98
13.03 Attorney-in-Fact..................................................... 99
13.04 Authority to Act for Secured Parties................................. 100
13.05 Reliance............................................................. 100
13.06 Liability............................................................ 101
13.07 Consultation with Counsel, Etc....................................... 101
13.08 Duties............................................................... 101
13.09 Resignation, Replacement and Successor Collateral Trustee............ 102
13.10 Indemnities.......................................................... 103
13.11 Compensation......................................................... 104
13.12 Certificates......................................................... 104
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Section Page
13.13 Information.......................................................... 105
13.14 Books and Accounts................................................... 105
13.15 Limitation on Collateral Trustee's Duties in Respect of Collateral... 105
13.16 Right to Initiate Judicial Proceedings, Etc.......................... 106
13.17 Exculpatory Provisions............................................... 106
13.18 Merger of the Collateral Trustee..................................... 106
13.19 Treatment of Senior Lenders by Collateral Trustee.................... 106
13.20 Miscellaneous........................................................ 107
ARTICLE XIV
MISCELLANEOUS
14.01 Termination.......................................................... 108
14.02 Calculation of Floating Rate Obligations............................. 108
14.03 GOVERNING LAW........................................................ 109
14.04 Waiver of Jury Trial................................................. 109
14.05 Severability......................................................... 109
14.06 Entire Agreement..................................................... 109
14.07 Restrictions on Assignments and Participations....................... 109
14.08 Notices.............................................................. 110
14.09 Benefits of Agreement................................................ 110
14.10 Remedies............................................................. 110
14.11 Execution in Counterparts............................................ 111
14.12 Consent to Jurisdiction.............................................. 111
14.13 Amendments, Etc...................................................... 112
14.14 Conflicts............................................................ 113
14.15 Effectiveness........................................................ 113
14.16 Compliance with Applicable Law....................................... 113
14.17 Indemnification...................................................... 114
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APPENDICES
A. Definitions
B. Initial Senior Lender Group
C. Base Case Model
D. Form of Assignment and Acceptance
E-1. Consents and Approvals for Agreements
E-2. Consents and Approvals for Project
F. Tax Payment Undertaking
G. Major Maintenance Reserve Payment Certificate
H. Form of Mortgage
I-1. Form of Consent and Acknowledgment
J. Schedule of Required Insurance
K. Initial Construction Budget
L-1. Form of Opinion of Mexican Counsel to PMI
L-2. Form of Opinion of Mexican Counsel to Pemex
L-3. Form of Opinion of U.S. Counsel to PMI and Pemex
L-4. Form of Opinion of Counsel to EPC Contractor and EPC Guarantor
L-5 Form of Opinion of Counsel to Hydrogen Supplier
L-6. Form of Opinion of the General Counsel to the ▇▇▇▇▇ Entities
L-7. Form of Opinion of New York Counsel to the Borrower, the
Partnership, the Partners, the ▇▇▇▇▇ Entities and Blackstone
L-8. Form of Opinion of Texas Real Estate Counsel to the Borrower,
the Partnership and the Partners
L-9. Form of Opinion of Texas Environmental Counsel to the Borrower,
the Partnership and the Partners
L-10 Form of Opinion of Texas Counsel to the Borrower, the Partnership
and the Partners
L-11. Form of Opinion of Counsel to Occidental Petroleum
L-12. Form of Opinion of Cayman Islands counsel to Blackstone
L-13. Form of Opinion of English Counsel to the Oil Payment Insurers
M. Insurance Consultant's Report
N. Independent Engineer's Reports
O. Notice of Borrowing
P. Notices
Q. Subordination Terms
SCHEDULES
3.01(x). Environmental Disclosure
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COMMON SECURITY AGREEMENT
This Agreement, dated as of August 19, 1999, is made among:
PORT ▇▇▇▇▇▇ FINANCE CORP., corporation organized under the laws of the
State of Delaware,
PORT ▇▇▇▇▇▇ ▇▇▇▇▇ COMPANY L.P., a limited partnership organized under
the laws of the State of Delaware,
SABINE RIVER HOLDING CORP., a corporation organized under the laws of
the State of Delaware,
NECHES RIVER HOLDING CORP., a corporation organized under the laws of
the State of Delaware,
BANKERS TRUST COMPANY, a banking corporation incorporated under the
laws of the State of New York, as Collateral Trustee for the Secured Parties,
DEUTSCHE BANK AG, NEW YORK BRANCH, a New York State licensed branch of
a German bank, as Administrative Agent for and on behalf of the Bank Senior
Lenders,
WINTERTHUR INTERNATIONAL INSURANCE COMPANY LIMITED, a company
incorporated under the laws of England, for itself and as Administrative Agent
for and on behalf of the Oil Payment Insurers,
HSBC BANK USA, a New York banking corporation and trust company, as
Capital Markets Trustee for the Capital Markets Senior Lenders,
BANKERS TRUST COMPANY, a banking corporation incorporated under the
laws of the State of New York, as Depositary Bank, and
WINTERTHUR INTERNATIONAL INSURANCE COMPANY LIMITED, a company
incorporated under the laws of England, as Insurer under the Debt Service
Reserve Insurance Guarantee.
WHEREAS:
A. The Borrower proposes to incur Senior Debt and loan all the
proceeds of the Senior Loans to the Partnership and has authorized the execution
and delivery of this Agreement;
B. The Partnership, the General Partner and the Limited Partner
propose to guarantee and secure the Senior Debt Obligations and have authorized
the execution and
delivery of this Agreement to induce the Senior Lenders to provide Senior Debt
to the Borrower, and the Oil Payment Insurers to provide the Oil Payment
Insurance Policy;
C. The Borrower, the Partnership, the General Partner, the Limited
Partner, the Shareholders, the ▇▇▇▇▇ Entities, the Senior Lenders and the Oil
Payment Insurers have entered into the Transfer Restrictions Agreement to
induce the Senior Lenders to provide Senior Debt to the Borrower and the Oil
Payment Insurers to provide the Oil Payment Insurance Policy;
D. The Borrower, the Partnership and the General Partner, have
entered into the Capital Contribution Agreements with Blackstone and Occidental
Petroleum, respectively, to induce the Senior Lenders to provide Senior Debt to
the Borrower and the Oil Payment Insurers to provide the Oil Payment Insurance
Policy; and
E. All things have been done that are necessary to constitute this
Agreement the valid and legally binding contract and security agreement of the
Borrower, the Partnership, the General Partner and the Limited Partner.
NOW, THEREFORE, to secure the Senior Debt Obligations and the Oil
Payment Reimbursement Obligations and the performance of all obligations under
the Senior Loan Agreements, the Notes, the Reimbursement Agreement, this
Agreement and the other Security Documents, and in consideration of the premises
and of the execution of the Senior Loan Agreements by the Senior Lenders and of
the making of the Senior Loans thereunder and execution and delivery of the Oil
Payment Insurance Policy by the Oil Payment Insurers, the Borrower, the
Partnership, the General Partner and the Limited Partner hereby agree with the
Collateral Trustee, the Bank Senior Lenders Administrative Agent, the Oil
Payment Insurers Administrative Agent, the Capital Markets Trustee, the
Depositary Bank, the Senior Lenders and the Oil Payment Insurers as follows:
ARTICLE I
DEFINITIONS AND INTERPRETATION
1.01 Definitions. Defined terms in this Agreement and the Appendices
to this Agreement, which may be identified by the capitalization of the first
letter of each principal word thereof, have the meanings assigned to them in
Appendix A.
1.02 Interpretation. In this Agreement and in the Appendices hereto,
except to the extent that the context otherwise requires:
(a) the Table of Contents and headings are for convenience only and
shall not affect the interpretation of this Agreement;
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(b) unless otherwise specified, references to Articles, Sections,
clauses and Appendices are references to Articles, Sections, clauses, and
Appendices to this Agreement;
(c) references to any document or agreement, including without
limitation this Agreement, shall be deemed to include references to such
document or agreement (together with all appendices, annexes and schedules
thereto) as amended, supplemented, replaced or restated from time to time
in accordance with its terms and (where applicable) subject to compliance
with the requirements set forth therein;
(d) references to any party to this Agreement or any other document or
agreement shall include its successors and permitted assigns; and
(e) accounting terms not otherwise defined shall be construed in
accordance with GAAP.
1.03 Conflict. In the event of any conflict between this Agreement
and any other Financing Document, this Agreement shall govern.
ARTICLE II
SENIOR DEBT
2.01 Senior Debt Obligations and Oil Payment Reimbursement
Obligations Secured Hereby. All Senior Debt Obligations and Oil Payment
Reimbursement Obligations shall be secured by and entitled to the benefits of
this Agreement and the security interests granted by or pursuant to this
Agreement and the Security Documents. The Initial Senior Lenders, the Initial
Senior Debt, the Initial Senior Debt Commitments, the Initial Senior Loan
Agreements, the initial Oil Payment Insurers and the Oil Payment Commitment are
each identified in Appendix B.
2.02 Pari Passu Treatment. All Senior Debt Obligations shall rank in
right of payment, upon liquidation and in all other respects pari passu without
preference among Senior Debt Obligations by reason of date of incurrence or
otherwise. All Oil Payment Reimbursement Obligations shall rank in right of
payment and upon liquidation pari passu with all Senior Debt Obligations without
any preference by reason of the date of incurrence or otherwise, except as set
forth in Sections 5.05 and 10.12.
2.03 Guaranteed Senior Debt Obligations. All Senior Debt Obligations
of the Borrower shall be unconditionally guaranteed by the Partnership in
accordance with Article XII.
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2.04 Optional Prepayments. Subject to Sections 2.06 and 2.12 and the
Senior Loan Agreements, the Partnership, or the Borrower at the direction of the
Partnership, shall have the right to make Optional Prepayments in respect of
Senior Loans at any time or from time to time, provided that:
(a) subject to the respective Senior Loan Agreements, the Borrower
Parties shall give not less than 30 days' prior notice of any Optional
Prepayment to the Collateral Trustee, the Bank Senior Lenders
Administrative Agent and, in the case of a prepayment of Capital Markets
Senior Debt, the Capital Markets Trustee;
(b) Optional Prepayments under this Section 2.04 shall be made in
accordance with, and shall be accompanied by any prepayment compensation
required by, the applicable Senior Loan Agreement or Senior Loan
Agreements; and
(c) Optional Prepayments (including Optional Prepayments made pursuant
to Section 2.10) of Bank Senior Debt shall be applied to the remaining
principal installments of Senior Loans in the order such remaining
principal installments come due.
2.05 Mandatory Prepayments.
(a) Prepayments of Senior Debt with Certain Proceeds. The
Partnership, or the Borrower at the direction of the Partnership, shall apply
any of the following to the prepayment of Senior Loans (and, at any time on or
after a Priority Termination Date, Oil Payment Reimbursement Obligations):
(i) any Loss Proceeds in respect of any casualty, other than any
Catastrophic Casualty, to Project Property (other than any shipment of
crude oil for which (A) the Oil Payment Insurers have made, or are
obligated to make, payment to PMI under the Oil Payment Insurance Policy or
(B) the Bank Senior Lenders have provided cash advances or letters of
credit under the Secured Working Capital Facility), to the extent such Loss
Proceeds are not applied toward repairing, replacing or restoring the
relevant Project Property in accordance with Section 7.07; and
(ii) upon receipt, (A) any Late Payments, to the extent that the
Partnership (1) does not utilize such Late Payments to make payments to PMI
pursuant to Section 4.4 or 16.5 of the Long-Term Oil Supply Agreement, (2)
need not direct such Late Payments to the payment of interest on the Senior
Debt or (3) to the extent such Late Payments represent lost profits, does
not cause such Late Payments to be deposited into the Project Revenue
Account, or (B) Buydown Payments made by the EPC Contractor under Section
6 of the EPC Contract or any amounts recovered from the EPC Contractor
under the EPC Contract for failure to achieve any of the Guaranteed Values
or the Guaranteed Performance Dates,
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in each case in accordance with Article V and the Senior Loan Agreements (and
the Reimbursement Agreement, if applicable).
(b) Prepayments of Bank Senior Debt with Excess Cash Flow. After
Start-up, on each Payment Date on which any Bank Senior Debt or Oil Payment
Reimbursement Obligation remains outstanding, the Partnership, or the Borrower
at the direction of the Partnership, shall prepay the Senior Loans (and, at any
time on or after a Priority Termination Date, Oil Payment Reimbursement
Obligations) in an amount, if any, equal to the amount credited to the Mandatory
Prepayment Account in accordance with clause (b) of Section 5.05.
(c) Prepayments of Senior Debt and Oil Payment Reimbursement
Obligations. The Partnership, or the Borrower at the direction of the
Partnership, shall apply any of the following to the prepayment of Senior Bank
Loans and Oil Payment Reimbursement Obligations:
(i) any Loss Proceeds in respect of any Catastrophic Casualty to
Project Property (other than any shipment of crude oil for which (A) the
Oil Payment Insurers have made, or are obligated to make, payment to PMI
under the Oil Payment Insurance Policy or (B) the Bank Senior Lenders have
provided cash advances or letters of credit under the Secured Working
Capital Facility), in each case to the extent that such Loss Proceeds are
not applied toward repairing, replacing or restoring the relevant Project
Property in accordance with Section 7.07;
(ii) any delay in start-up, business interruption or contingent
business interruption insurance proceeds that are not transferred to the
Project Revenue Account in accordance with clause (c) of Section 7.07; and
(ii) upon receipt, any Condemnation Compensation,
in each case in accordance with Article V, the Senior Loan Agreements and the
Reimbursement Agreement. In addition, upon the occurrence of a Constructive
Total Loss of Project Property, the Partnership, or the Borrower at the
direction of the Partnership, shall prepay in full all Senior Loans and Oil
Payment Reimbursement Obligations then outstanding.
(d) Application of Prepayments. If any Mandatory Prepayments required
to be made pursuant to clauses (a), (b) or (c) of this Section 2.05 are applied
to Oil Payment Reimbursement Obligations outstanding at the time of prepayment,
the amount or amounts prepaid shall be applied pro rata between (i) Senior Debt
(or, in the case of clause (b) of this Section 2.05, Bank Senior Debt) and (ii)
such Oil Payment Reimbursement Obligations. Mandatory Prepayments required to be
made pursuant to clause (a) or (c) of this Section 2.05 shall be applied to
reduce the remaining principal installments of Senior Loans pro rata as to each
remaining principal installment outstanding. Mandatory Prepayments required to
be made pursuant to clause (b) of this Section 2.05 shall be applied in direct
order of maturity
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until the principal due on the immediately succeeding Payment Date has been paid
in full and then shall be applied to reduce the remaining principal installments
of Senior Bank Loans in the inverse order of their maturity.
2.06 Pro Rata Payment of Senior Debt Obligations and Oil Payment
Reimbursement Obligations. (a) Each payment, Optional Prepayment or
Mandatory Prepayment, other than an Optional Prepayment or Mandatory Prepayment
made in accordance with Section 2.07, by the Partnership, or the Borrower at the
direction of the Partnership, to a Senior Lender (or an Oil Payment Insurer, if
applicable) in respect of Senior Debt Obligations (which term shall include, for
purposes of this clause (a) only, at any time on or after a Priority Termination
Date, any Oil Payment Reimbursement Obligations then outstanding) shall be a Pro
Rata Payment.
(b) Each payment, Optional Prepayment or Mandatory Prepayment, at any
time prior to a Priority Termination Date, by the Partnership, or the Borrower
at the direction of the Partnership, to an Oil Payment Insurer or a Senior
Lender in respect of Oil Payment Reimbursement Obligations shall be a Pro Rata
Payment.
2.07 Non-Pro Rata Prepayments. Notwithstanding Sections 2.06 and
2.12, subject to the terms of the Senior Loan Agreements, the Borrower Parties
may:
(a) make an Optional Prepayment, in whole or in part, of Senior Loans
owed to Senior Lenders in one or more Senior Lender Groups without making a
Pro Rata Payment to any Senior Lenders in any other Senior Lender Group if
(i) such payment or prepayment is made with Equity Funding, (ii) such
payment or prepayment is made with the proceeds of Replacement Senior Debt
incurred by the Borrower in compliance with the requirements of Section
2.10 or (iii) such payment or prepayment is made from funds otherwise
available for Restricted Payments pursuant to Section 11.01. Each such
Optional Prepayment shall be a Pro Rata Payment among the Senior Lenders in
each Senior Lender Group being prepaid;
(b) make an Optional Prepayment of Senior Loans owed to all Senior
Lenders without making a Pro Rata Payment to the Capital Markets Senior
Lenders, provided that such Optional Prepayment is a Pro Rata Payment among
all Senior Lenders (other than the Capital Markets Senior Lenders);
(c) make a Mandatory Prepayment in whole or in part of Senior Debt
Obligations owed to (i) any Bank Senior Lender if such Mandatory Prepayment
is made in accordance with Section 5.01 or 5.03 of the Bank Senior Loan
Agreement, or (ii) any other Senior Lender that is entitled to or has
received such Mandatory Prepayment as compensation for costs incurred by it
in connection with making or maintaining its Senior Loans under its Senior
Loan Agreement in excess of costs incurred generally by the other Senior
Lenders, or because it has become unlawful for it to honor its obligation
to make or maintain Senior Loans under its Senior Loan Agreement and it has
not become unlawful generally for the other Senior Lenders to
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honor their obligations to make or maintain Senior Loans to the Borrower
under their Senior Loan Agreements, in each of cases (i) and (ii) without
making a Pro Rata Payment to any other Senior Lenders, provided that (x)
such payment or prepayment is made with Equity Funding, (y) such payment or
prepayment is made with the proceeds of Replacement Senior Debt incurred by
the Borrower in compliance with the requirements of Section 2.10 or (z)
such payment or prepayment is made from funds otherwise available for
Restricted Payments pursuant to Section 11.01;
(d) make the prepayments of Bank Senior Debt under the Tranche A Bank
Facility permitted by Section 7.01 of the Bank Senior Loan Agreement in
accordance with Section 2.12 without making a Pro Rata Payment to any
Senior Lenders not referred to in such Section 7.01; and
(e) make an Optional Prepayment of Senior Loans owed to Bank Senior
Lenders under the Tranche A Bank Facility or the Tranche B Bank Facility in
connection with the issuance of additional Capital Markets Senior Debt.
2.08 Insufficient Payments. (a) If at any time at which any Senior
Debt Obligations are payable by the Partnership, or the Borrower at the
direction of the Partnership, to a Senior Lender and such Senior Lender receives
insufficient funds from the Partnership or the Borrower, as the case may be, to
pay in full all Senior Debt Obligations payable to such Senior Lender at such
time pursuant to its Senior Loan Agreement or this Agreement, the funds so
received by such Senior Lender shall be applied to the payment of amounts owing
by the Borrower as such Senior Lender may determine from time to time and in any
order of priority, provided that, so long as no Senior Loan has been
accelerated, such funds shall be applied in a manner that is consistent with the
following order of priority:
first, to pay outstanding fees, costs, expenses, reimbursements and
indemnities then due and payable to the Collateral Trustee, the Depositary
Bank or any Applicable Agent;
second, to pay interest (other than overdue interest), fees, expenses,
indemnities and breakage costs then due and payable to such Senior Lender;
third, to pay overdue interest then due and payable to such Senior
Lender;
fourth, to pay principal (other than overdue principal) and redemption
or prepayment premiums then due and payable to such Senior Lender; and
fifth, to pay overdue principal then due and payable to such Senior
Lender.
2.09 Additional Senior Debt. (a) At any time, and from time to
time the Partnership, or the Borrower at the direction of the Partnership, may
enter into agreements providing for commitments to lend, and may incur, in
addition to the Initial Senior Debt, the Oil Payment Reimbursement Obligations
and any Replacement Senior Debt, without the
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prior consent of Senior Lenders or Oil Payment Insurers, Indebtedness secured by
the Collateral and entitled to the benefits of this Agreement and the Security
Documents ("Additional Senior Debt"), provided that in each case such Additional
Senior Debt shall be incurred subject to the following conditions:
(i) if the proceeds of such Additional Senior Debt incurred or
committed will be used solely to finance or refinance Mandatory Capital
Expenditures permitted to be made by the Partnership under the Financing
Documents, a Responsible Officer certifies to the Collateral Trustee and
the Independent Engineer confirms that (A) no Event of Default or Potential
Default has occurred and is continuing, (B) the amount and scope of such
Mandatory Capital Expenditures are (1) necessary to comply with a change in
applicable environmental, health, safety or other laws or regulations
binding on the Partnership or (2) otherwise necessary to operate the Heavy
Oil Processing Facility in accordance with the Base Case Model and (C)
after giving effect to the incurrence of all Additional Senior Debt, and
based on reasonable assumptions verified by the Independent Engineer, (1)
the minimum Debt Service Coverage Ratio for each remaining calendar year
through final maturity of the Senior Debt (as such final maturity is set
forth in the Base Case Model) shall be not less than 1.5:1.0 and (2) the
average annual Debt Service Coverage Ratio from the date of incurrence of
such Additional Senior Debt through final maturity of the Senior Debt (as
such final maturity is set forth in the Base Case Model) shall be not less
than 2.0:1.0;
(ii) at any time after Substantial Reliability, if the proceeds of
such Additional Senior Debt incurred or committed will be used solely to
finance or refinance Discretionary Capital Expenditures permitted to be
made by the Partnership under the Financing Documents, a Responsible
Officer certifies to the Collateral Trustee and the Independent Engineer
confirms that (A) no Event of Default or Potential Default has occurred and
is continuing, (B) Substantial Reliability has occurred, (C) after giving
effect to the incurrence of all Additional Senior Debt, and based on
reasonable assumptions verified by the Independent Engineer, (1) the
minimum Debt Service Coverage Ratio for each remaining calendar year
through final maturity of the Senior Debt (as such final maturity is set
forth in the Base Case Model) shall be not less than 2.0:1.0 and (2) the
average annual Debt Service Coverage Ratio from the date of incurrence of
such Additional Senior Debt through final maturity of the Senior Debt (as
such final maturity is set forth in the Base Case Model) shall be not less
than 2.6:1.0, (D) the Partnership obtains a Ratings Reaffirmation and (E)
the aggregate principal amount of all such Additional Senior Debt for
Discretionary Capital Expenditures does not exceed (x) at any time that any
Bank Senior Debt remains outstanding, $20 million or (y) at any time that
no Bank Senior Debt remains outstanding, $50 million;
(iii) such Additional Senior Debt (A) ranks in right of payment,
upon liquidation and in all other respects pari passu with all other
Senior Debt without
8
preference among Senior Debt Obligations by reason of date of incurrence
or otherwise and (B) has none of the preferences set forth in Sections
5.05(a)(ii) and 10.12(b) with respect to Oil Payment Reimbursement
Obligations; and
(iv) the lender of the Additional Senior Debt (or an agent or trustee
therefor and on behalf thereof) shall have executed and delivered to the
Collateral Trustee an agreement in substantially the form of the assumption
agreement attached as Appendix D hereto pursuant to which such lender (or
an agent or trustee therefor and on behalf thereof) agrees (A) to become a
party to this Agreement and the Transfer Restrictions Agreement, (B) to be
bound as a Senior Lender by all the terms and conditions of this Agreement
and the Transfer Restrictions Agreement and (C) to perform all the
obligations of a Senior Lender under this Agreement and the Transfer
Restrictions Agreement in accordance with the terms hereof and thereof, and
which assumption agreement shall have attached thereto a copy of the
proposed Senior Loan Agreement relating to the Additional Senior Debt
(which shall disclose the tenor and amortization schedule of such
Additional Senior Debt and the rate, or the rate basis and margin in the
case of a floating rate, at which such Additional Senior Debt shall bear
interest).
(b) Commitments for Additional Senior Debt permitted under this
Section 2.09 shall be considered Senior Debt Commitments for all purposes of
this Agreement. Loan agreements pursuant to which such Additional Senior Debt
is incurred or committed to be lent shall be considered Senior Loan Agreements
for all purposes of this Agreement. Appendix B shall be deemed to be amended
from time to time to make reference to any such Senior Loan Agreements.
(c) Any incurrence of Additional Senior Debt other than in accordance
with clause (a) of this Section 2.09 shall require the prior consent of
Requisite Lenders (or, at any time on or after a Priority Termination Date,
Requisite Secured Parties).
2.10 Replacement Senior Debt. (a) At any time, and from time to
time, the Partnership, or the Borrower at the direction of the Partnership, may
enter into commitments to incur, and may incur, to replace the Initial Senior
Debt, without the consent of the Senior Lenders or the Oil Payment Insurers,
Indebtedness secured by the Collateral and entitled to the benefits of this
Agreement and the Security Documents for the purpose of paying or prepaying all
or any part of the Initial Senior Debt in accordance with Section 2.07
(including any redemption and prepayment premiums and other refinancing fees or
expenses) or replacing all or part of the unutilized or canceled part of the
related outstanding Senior Debt Commitments ("Replacement Senior Debt"),
provided that in each case the following conditions shall have been satisfied:
(i) (A) the aggregate principal amount of such Replacement Senior
Debt does not exceed the sum of the amount of Senior Debt Obligations being
paid or prepaid and the unutilized or canceled part of the Senior Debt
Commitments being
9
replaced, (B) such Replacement Senior Debt has a Weighted Average Life no
shorter, and a final maturity date no earlier, than that of the Senior Debt
being replaced, (C) the projected average Debt Service Coverage Ratio
through January 15, 2009, calculated on a pro forma basis reflecting the
incurrence of such Replacement Senior Debt (but not modifying any of the
other assumptions made in the Base Case Model), is not less than 2.2:1.0
and (D) the Partnership has obtained a Ratings Reaffirmation, provided that
no Ratings Reaffirmation shall be required if such Replacement Senior Debt
(1) is Bank Senior Debt, (2) bears interest at a rate (or in the case of a
floating rate facility, a margin) that is equal to or lower than that
applicable to the Bank Senior Debt being replaced and (3) differs from the
Bank Senior Debt being replaced in no other respect, except for
administrative, procedural, mechanical or other de minimis changes;
(ii) the Partnership shall have delivered to the Collateral Trustee
no less than 30 Business Days prior to the date such Replacement Senior
Debt is to be incurred or such agreements providing for such commitments
are entered into a certificate signed by a Responsible Officer (A)
identifying the lender of the Replacement Senior Debt, (B) certifying that
the Replacement Senior Debt is or will be incurred solely for the purposes
of making a payment or prepayment of Senior Debt Obligations (including any
redemption and prepayment premiums and other refinancing fees or expenses)
or for replacing all or any part of the unutilized or canceled part of any
outstanding Senior Debt Commitment, and (C) certifying that the conditions
set forth in subclause (i) of this clause (a) have or will have been
satisfied upon incurrence of the Replacement Senior Debt; and
(iii) the lender of the Replacement Senior Debt (or an agent or
trustee therefor and on behalf thereof) shall have executed and delivered
to the Collateral Trustee an agreement in substantially the form of the
assumption agreement attached as Appendix D hereto pursuant to which such
lender (or an agent or trustee therefor and on behalf thereof) agrees (A)
to become a party to this Agreement and the Transfer Restrictions
Agreement, (B) to be bound as a Senior Lender by all the terms and
conditions of this Agreement and the Transfer Restrictions Agreement and
(C) to perform all the obligations of a Senior Lender under this Agreement
and the Transfer Restrictions Agreement in accordance with the terms hereof
and thereof, and which assumption agreement shall have attached a copy of
the proposed Senior Loan Agreement relating to the Replacement Senior Debt
(which shall disclose the tenor and amortization schedule of such
Replacement Senior Debt and the rate, or the rate basis and margin in the
case of a floating rate, at which such Replacement Senior Debt shall bear
interest).
(b) Commitments for Replacement Senior Debt permitted under this
Section 2.10 shall be considered Senior Debt Commitments for all purposes of
this Agreement. Loan agreements pursuant to which such Replacement Senior Debt
is incurred or committed to be lent shall be considered Senior Loan Agreements
for all purposes of this
10
Agreement. Appendix B shall be deemed to be amended from time to time to make
reference to any such Senior Loan Agreements.
(c) Any incurrence of Replacement Senior Debt other than in accordance
with clause (a) of this Section 2.10 shall require the prior consent of
Requisite Lenders.
(d) Notwithstanding anything in this Section 2.10 to the contrary, any
Replacement Senior Debt incurred pursuant to clause (a) of this Section 2.10
shall be incurred, (i) in the case of Capital Markets Senior Debt, pursuant to a
supplemental indenture in accordance with Article Nine of the Indenture and (ii)
in the case of Bank Senior Debt, pursuant to a Senior Loan Agreement on terms no
less favorable to the Partnership or the Borrower (as applicable) than those set
forth in the applicable Initial Bank Senior Loan Agreement.
2.11 Replacement for Oil Payment Insurance Policy. (a) At any time,
and from time to time, the Partnership, or the Borrower at the direction of the
Partnership, may enter into one or more letters of credit or similar instruments
satisfying the requirements of Section 11.4 of the Long-Term Oil Supply
Agreement to replace the Oil Payment Insurance Policy in its entirety (but not
in part), without the consent of the Senior Lenders or the Oil Payment Insurers,
provided that in each case the following conditions shall have been satisfied:
(i) (A) the maximum amount of coverage under such letter or letters
of credit or similar instrument or instruments is equal to the coverage
under the Oil Payment Insurance Policy and (B) any suspension, termination
or similar rights of the provider or providers of such letter or letters of
credit or similar instrument or instruments, as the case may be, are
substantially similar to those available to the Oil Payment Insurers under
the Reimbursement Agreement;
(ii) the Partnership shall have delivered to the Collateral Trustee
no less than 30 days prior to the date such letter or letters of credit or
similar instrument or instruments, as the case may be, are entered into a
certificate signed by a Responsible Officer (A) identifying the provider or
providers of such letter or letters of credit or similar instrument or
instruments, as the case may be, (B) certifying that such letter or letters
of credit or similar instrument or instruments, as the case may be, will be
entered into solely for the purpose of replacing the Oil Payment Insurance
Policy in its entirety and (C) certifying that the conditions set forth in
subclause (i) of this clause (a) have or will have been satisfied upon the
entering into of such letter or letters of credit or similar instruments or
instruments, as the case may be; and
(iii) each provider of such letter of credit or similar instrument
(or an agent or trustee therefor and on behalf thereof) shall have executed
and delivered to the Collateral Trustee an agreement in substantially the
form of the assumption agreement attached as Appendix D hereto pursuant to
which such provider (or an agent or trustee therefor and on behalf thereof)
agrees (A) to become a party to this
11
Agreement and the Transfer Restrictions Agreement, (B) to be bound as an
Oil Payment Insurer and Oil Payment Insurers Administrative Agent by all
the terms and conditions of this Agreement and the Transfer Restrictions
Agreement and (C) to perform all the obligations of an Oil Payment Insurer
and Oil Payment Insurers Administrative Agent under this Agreement and the
Transfer Restrictions Agreement in accordance with the terms hereof and
thereof, and which assumption agreement shall have attached a copy of the
proposed letter of credit or similar instrument (which shall disclose the
maximum amount of coverage thereunder and any suspension, termination or
similar rights).
(b) Any letter of credit or similar instrument replacing the Oil
Payment Insurance Policy other than in accordance with clause (a) of this
Section 2.11 shall require the prior written consent of Requisite Lenders.
2.12 Extraordinary Prepayments; Substitution of "Compensating Letter
of Credit". (a) Notwithstanding anything in this Agreement to the contrary,
the Partnership, or the Borrower at the direction of the Partnership, may make
prepayments of (i) Bank Senior Debt under the Tranche A Bank Facility pursuant
to, and in accordance with, Section 2.01 of the Bank Senior Loan Agreement and
(ii) of any "Unpaid Drawing" under the Secured Working Capital Facility with the
proceeds of any Loans borrowed in accordance with Article II thereof.
(b) Notwithstanding anything in this Agreement to the contrary, the
Partnership or the Borrower may enter into arrangements in form and substance,
and with such counterparty or counterparties, satisfactory to the Bank Senior
Lenders Administrative Agent providing for a substitution of the "Compensating
Letter of Credit" and "Compensating L/C Commitments" under the Secured Working
Capital Facility.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
3.01 Representations and Warranties of the Borrower, the Partnership
and the Partners. Each of the Borrower, the Partnership and the Partners
represents and warrants to the Collateral Trustee, the Bank Senior Lenders
Administrative Agent, the Oil Payment Insurers Administrative Agent, the Capital
Markets Trustee, the Depositary Bank, the Oil Payment Insurers and each Senior
Lender that:
(a) Organization and Business. It is a corporation, in the case of
the Borrower and each of the Partners, or a limited partnership, in the
case of the Partnership, duly organized, validly existing and in good
standing under the laws of the State of Delaware, has all power and
authority (corporate and other) necessary under the laws of the State of
Delaware to own its properties and to carry on the business of the ▇▇▇▇▇
Project, has been duly qualified as a foreign corporation or
12
partnership, as the case may be, for the transaction of business and is in
good standing under the laws of the State of Texas. Its executive office
and principal place of business are maintained at ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇▇ ▇▇. ▇▇, ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇. It does not own any properties or
assets other than those relating to the ▇▇▇▇▇ Project and has not engaged
in any business or activity other than the business of the ▇▇▇▇▇ Project.
None of the Borrower, the Partnership nor either of the Partners is a party
to any agreement relating to or affecting the Borrower, the Partnership or
the ▇▇▇▇▇ Project, other than the Transaction Documents in the form
provided to the Collateral Trustee and the Applicable Agents in accordance
with clauses (c), (d) and (e) of Section 9.01 and the Purchase Agreement.
(b) Ownership. The General Partner is the sole general partner of the
Partnership; the Limited Partner is the sole limited partner of the
Partnership; the Partners together own direct and beneficial interests in
all the partnership capital of the Partnership, free and clear of all
liens, encumbrances, equities or claims (other than those in favor of the
Secured Parties); and no other person has any other interest in or right to
any of the Partnership's partnership capital. ▇▇▇▇▇ Holdings owns 90% and
Occidental Petroleum owns 10% of the outstanding shares of capital stock of
the General Partner, free and clear of all liens, encumbrances, equities or
claims; no other person is a shareholder of the General Partner or has any
interest in or rights to any shares of capital stock of the General
Partner; and all outstanding shares of capital stock of the General Partner
have been duly and validly authorized and issued and are fully paid and
non-assessable. The General Partner owns all of the outstanding shares of
capital stock of the Limited Partner, free and clear of all liens,
encumbrances, equities or claims; no other person is a shareholder of the
Limited Partner or has any interest in or rights to any shares of capital
stock of the Limited Partner; and all the outstanding shares of capital
stock of the Limited Partner have been duly and validly authorized and
issued and are fully paid and non-assessable. The Partnership owns all the
outstanding shares of capital stock of the Borrower, free and clear of all
liens, encumbrances, equities or claims; no other person is a shareholder
of the Borrower or has any interest in or rights to any shares of capital
stock of the Borrower; and all the outstanding shares of capital stock of
the Borrower have been duly and validly authorized and issued and are fully
paid and non-assessable. None of the Borrower, the Partnership nor either
of the Partners owns, directly or indirectly, any capital stock or other
ownership interests in any Person other than as set forth herein.
(c) Authority. It (i) has full power and authority to execute and
deliver this Agreement and each of the other Transaction Documents to which
it is a party and to grant to the Collateral Trustee for the benefit of the
Secured Parties the security interests in the Collateral provided for in
this Agreement and the Security Documents and to perform and incur its
obligations under each such Transaction Document and (ii) will have full
power and authority to execute and deliver any
13
Notes, Security Documents, Financing Documents and Project Documents to
which it will be a party and that it will execute and deliver after the
date hereof.
(d) Binding Agreement. It has duly authorized and, in the case of
Transaction Documents entered into on or prior to the date hereof, has
duly executed and delivered, each Transaction Document to which it is a
party and each such Trans action Document entered into on or prior to the
date hereof constitutes its valid and legally binding obligation,
enforceable in accordance with its terms, subject to bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium and similar
laws of general applicability relating to or affecting creditors' rights
and to general equity principles. Any Transaction Documents referred to in
the preceding sentence that will be executed and delivered by it after the
date hereof (and, in the case of those that have been executed and
delivered on or prior to the date hereof, any future modifications,
supplements or amendments thereto), when executed and delivered by it, will
constitute its valid and legally binding obligation enforceable in
accordance with its terms, subject to bankruptcy, insolvency, fraudulent
transfer, reorganization, moratorium and similar laws of general
applicability relating to or affecting creditors' rights and to general
equity principles.
(e) Consents and Approvals for Agreements.
(i) All Third-Party Authorizations that are necessary for (A) the
execution, delivery and performance by it of each Transaction Document
to which it is a party, (B) the incurrence of Senior Debt by the
Borrower, (C) the guarantee of the Senior Debt by the Partnership, and
(D) the grant to the Secured Parties of the security interests in the
Collateral under this Agreement and the Security Documents are listed
in Appendix E-1, have been obtained and are in full force and effect,
are held in the appropriate party's name, are not subject to appeal,
are free from conditions or requirements that cannot be met or
complied with and are free from conditions or requirements the
compliance with which could reasonably be expected to have a Material
Adverse Effect.
(ii) All Third-Party Authorizations that are necessary for the
execution, delivery and performance by each of the ▇▇▇▇▇ Entities of
the Transaction Documents to which it is a party have been obtained
and are in full force and effect, are held in the appropriate party's
name, are not subject to appeal, are free from conditions or
requirements that cannot be met or complied with and are free from
conditions or requirements the compliance with which could reasonably
be expected to have a Material Adverse Effect.
(iii) Other than those that are not necessary as of such time
and that are expected to be obtained in the ordinary course as and
when required, at every time after the date of this Agreement on which
this representation is
14
deemed to be made, all Third-Party Authorizations that are necessary
for all of the actions referred to in subclauses (i) and (ii) of this
clause (e) have been obtained, are in full force and effect, are held
in the appropriate party's name, are not subject to appeal, are free
from conditions or requirements that cannot be met or complied with
and are free from conditions or requirements the compliance with which
could reasonably be expected to have a Material Adverse Effect.
(f) Consents and Approvals for ▇▇▇▇▇ Project.
(i) All (A) Third-Party Authorizations, (B) easements, leases,
rights-of-way, auxiliary rights and other real property rights and (C)
licenses and other rights to use Technology, in each case that are
necessary in order to develop, construct, operate, maintain and
finance the ▇▇▇▇▇ Project in the manner contemplated by the
Transaction Documents are listed in Appendix E-2, have been obtained
and are in full force and effect (unless otherwise noted in such
Appendix E-2), are held in the appropriate party's name, are not
subject to appeal, are free from conditions or requirements that
cannot be met or complied with and are free from conditions or
requirements the compliance with which could reasonably be expected to
have a Material Adverse Effect.
(ii) All (A) Third-Party Authorizations, (B) easements, leases,
rights-of-way, auxiliary rights and other real property rights, and
(C) licenses and other rights to use Technology, in each case that are
necessary in order for ▇▇▇▇▇ R&M to develop, construct, operate and
maintain the ▇▇▇▇▇ Project pursuant to its obligations under the
Project Documents to which it is a party have been obtained and are in
full force and effect, are held in the appropriate party's name, are
not subject to appeal, are free from conditions or requirements that
cannot be met or complied with and are free from conditions or
requirements the compliance with which could reasonably be expected to
have a Material Adverse Effect.
(iii) It has no reason to believe that any of the Third-Party
Authorizations that have not been obtained as of the date hereof, but
that will be required in the future, will not be obtained in the
ordinary course as and when required, will be subject to conditions or
requirements that cannot be met or complied with or will be subject to
conditions or requirements the compliance with which could reasonably
be expected to have a Material Adverse Effect.
(iv) Other than those that are not necessary as of such time and
that are expected to be obtained in the ordinary course as and when
required, at every time after the date of this Agreement on which this
representation is
15
deemed to be made, all Third-Party Authorizations that are necessary
for all of the actions referred to in subclauses (i) and (ii) of this
clause (f) have been obtained, are in full force and effect, are held
in the appropriate party's name, are not subject to appeal, are free
from conditions or requirements that cannot be met or complied with
and are free from conditions or requirements the compliance with which
could reasonably be expected to have a Material Adverse Effect.
(g) ▇▇▇▇▇ Project Information.
(i) There are no facts or circumstances known to it (A) that,
individually or in the aggregate, could have a Material Adverse Effect
and that have not been disclosed in writing to the Senior Lenders (or
any Independent Consultant acting on their behalf) or (B) that could
cause any information provided to the Senior Lenders (or any
Independent Consultant acting on their behalf) in connection with the
▇▇▇▇▇ Project to be materially incorrect or materially misleading as
of the date of this Agreement. Without limiting the generality of the
foregoing, the financial statements most recently furnished to the
Senior Lenders and the Collateral Trustee are true and correct in all
material respects as of the date of this Agreement.
(ii) The information contained in each of the Offering Circular
and the Information Memorandum (other than Parts I. and J. of the
"Executive Summary", the "Summary Terms of Debt Facilities", the
"Financial Projections" and Appendices A through D thereto) is true
and correct in all material respects as of the date of this Agreement
and does not include any untrue statement of a material fact or omit
to state any material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made,
not misleading.
(iii) All information supplied by or on behalf of the
Partnership to the Independent Engineer in connection with the ▇▇▇▇▇
Project, as such information may have been superseded or corrected in
writing prior to the date hereof, is true and correct in all material
respects as of the date of this Agreement. All financial projections
and other forward-looking statements and forecasts supplied by or on
behalf of the Partnership to the Independent Engineer in connection
with the preparation of the Base Case Model have been prepared in good
faith with due care on the basis of the assumptions stated therein
(which assumptions, to the best of the Partnership's knowledge, are
appropriate and reasonable). The Base Case Model, including the
forecasted balance sheets, income statements and cash flow statements
as well as other financial projections and other forward-looking
statements and forecasts with respect to the Partnership and the ▇▇▇▇▇
Project (including without limitation those contained in the Offering
Circular, the Rating
16
Agencies Presentation and the Information Memorandum) delivered to the
Senior Lenders and the Collateral Trustee were prepared in good faith
with due care on the basis of the assumptions stated therein (which
assumptions, to the best of the Partnership's knowledge, are
appropriate and reasonable), are consistent in all material respects
with the Partnership's own assumptions, projections and forecasts for
the applicable periods, with the Partnership's own expectations as to
future conditions and its course of action given the occurrence of any
applicable hypothetical events and with the provisions of the Project
Documents as in effect on the date of this Agreement and represent, as
of the date of this Agreement, a reasonable estimate of the
Partnership's future financial performance.
(h) No Conflicts. The compliance by it with all of the provisions of
the Transaction Documents to which it is a party and the consummation of
the transactions herein and therein contemplated will not conflict with or
result in a breach or violation of any of the terms or provisions of, or
constitute a default under, any indenture, mortgage, deed of trust, loan
agreement, lease or other agreement or instrument to which it is a party or
by which it is bound or to which it or any of its property or assets may be
subject, nor will such action result in any violation of the provisions of
its organizational documents or any applicable statute or any order, rule,
regulation, injunction, decree, writ or judgment of any court, judicial
body, governmental agency or other body having jurisdiction over it or any
of its properties or assets.
(i) No Conflicts with Obligations of the ▇▇▇▇▇ Entities. To the best
of its knowledge after due inquiry, the compliance by it with all the
provisions of the Transaction Documents to which it is a party and the
consummation of the transactions herein and therein contemplated will not
conflict with or result in a breach or violation of any of the terms or
provisions of, or constitute a default under, any indenture, mortgage, deed
of trust, loan agreement, lease or other agreement or instrument to which
any of the ▇▇▇▇▇ Entities is a party or by which any of them is bound or to
which any of them or any of their property or assets may be subject, nor
will such action result in any violation of the provisions of the ▇▇▇▇▇
Entities' organizational documents or any applicable statute or any order,
rule, regulation, injunction, decree, writ or judgment of any court,
judicial body, governmental agency or other body having jurisdiction over
any of the ▇▇▇▇▇ Entities or any of their properties or assets.
17
(j) Reporting Requirements of ▇▇▇▇▇ Entities. To the best of its
knowledge after due inquiry, the annual reports, financial statements and
such other information, documents and other reports required to be filed by
any of the ▇▇▇▇▇ Entities with the Commission under the Exchange Act are
true and correct in all material respects as of the date of this Agreement
and do not include any untrue statement of a material fact or omit to state
any material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading.
(k) Compliance with Laws; No Litigation. It is in compliance with all
applicable laws, rules, regulations and orders of Governmental Authorities
and there are no actions, suits or legal, governmental or arbitration
proceedings pending to which it is a party, affecting it or to which any of
its property or assets is subject, and to the best of its knowledge, no
such proceedings are threatened or contemplated by any Person.
(l) ▇▇▇▇▇ Entities' Compliance with Laws; No Litigation. To the best
of its knowledge after due inquiry, each of the ▇▇▇▇▇ Entities is in
compliance in all material respects with all applicable laws, rules,
regulations and orders of Governmental Authorities and there are no
actions, suits or legal, governmental or arbitration proceedings pending to
which any of the ▇▇▇▇▇ Entities is a party, affecting any of them or to
which any of their property or assets is subject, in each case that could
be materially adverse to such ▇▇▇▇▇ Entity or to the ▇▇▇▇▇ Project, other
than as disclosed in the annual and quarterly reports of any of the ▇▇▇▇▇
Entities as filed with the Commission, and to the best of its knowledge, no
such proceedings are threatened or contemplated by any Person.
(m) Title to Properties; Security Interests.
(i) It has good and valid title to, or a valid, subsisting and
enforceable leasehold interest, easement, right of way or auxiliary
rights in, all properties (including real property) it purports to
own, lease or hold any such interest or rights in, all its assets and
all its revenues (including good, legal and valid title to, or a
valid, subsisting and enforceable leasehold interest in, the
Collateral, in which it agrees, or purports in this Agreement or the
Security Documents, to grant a security interest); and there are no
mortgages, liens, charges, pledges, security interests or encumbrances
of any nature whatsoever, and no adverse or competing claims, against
such properties, assets or revenues except Permitted Liens. To the
extent indicated in the forms of legal opinions set forth in Appendix
L, this Agreement creates in favor of the Secured Parties or the
Collateral Trustee for the benefit of the Secured Parties each
security interest purported to be created hereunder and each Security
Document, when executed and delivered as contemplated hereby, will
create in favor of the Secured Parties or the Collateral Trustee for
18
the benefit of the Secured Parties each security interest purported to
be created thereby. To the extent indicated in the forms of legal
opinions set forth in Appendix L, each such security interest is and,
in the case of those required to be created as a condition to the
initial disbursement of Senior Loans hereunder and the provision of
the Oil Payment Insurance Policy, will be, as of the Closing Date,
valid and binding, and upon the filing and recording or publication
required by this Agreement, will constitute, under applicable law,
fully perfected first priority security interests, superior in right
to any other Liens, except Permitted Liens, and enforceable against
the grantor of such security interests, any trustee in bankruptcy and
any attaching creditor or third party. No currently effective
financing statement or other instrument or recordation covering all or
any part of the Collateral purported to be covered by this Agreement
or the other Security Documents is on file in any recording office,
except such as may have been filed in favor of the Secured Parties or
the Collateral Trustee on behalf of the Secured Parties for the direct
or indirect benefit of the Secured Parties or the Collateral Trustee
on behalf of the Secured Parties or in respect of any Permitted Lien.
(ii) The property interests, easements, rights of way, auxiliary
rights and other rights and interests obtained or to be obtained, and
the material to be supplied, pursuant to the Project Documents (A)
comprise all of the rights and interests necessary to secure any right
or privilege which is material to the development, construction,
operation and maintenance of the ▇▇▇▇▇ Project in accordance with the
Project Documents, all requirements of law and the Base Case Model,
(B) collectively are sufficient to enable the ▇▇▇▇▇ Project to be
located, constructed and operated at the Refinery and (C) provide
adequate ingress and egress from the ▇▇▇▇▇ Project as may be required
in connection with the construction and operation of the ▇▇▇▇▇
Project.
(n) Mechanical Completion, Substantial Reliability and Final
Completion of the ▇▇▇▇▇ Project; Available Financing. It has no reason to
believe that (i) Mechanical Completion and Final Completion will not occur
on or prior to the Guaranteed Mechanical Completion Date and the Guaranteed
Final Completion Date, respectively, (ii) Substantial Reliability will not
occur on or prior to October 1, 2001, (iii) all project costs required to
be paid in order to complete the ▇▇▇▇▇ Project and achieve Mechanical
Completion, Substantial Reliability and Final Completion will exceed
amounts in the aggregate budgeted therefor, (iv) there are material project
costs that have not been budgeted and (v) the ▇▇▇▇▇ Project will not comply
fully with all applicable requirements of law and all Third-Party
Authorizations.
(o) Taxes. It has filed or caused to be filed all tax returns
required to be filed by it, and has paid and discharged all Taxes shown to
be due and payable on such returns or lawfully imposed on it or its
property (including interest and
19
penalties) unless such Taxes are being contested in good faith and by
appropriate proceedings and appropriate reserves are being maintained with
respect thereto in accordance with GAAP. No disputes are pending between it
and any Governmental Authority relating to Taxes as of the date of this
Agreement and, to the extent this representation is made or deemed made
after the date of this Agreement, it has notified the Collateral Trustee in
reasonable detail of any disputes pending between it and any Governmental
Authority relating to Taxes after the date of this Agreement which
disputes, if resolved adversely to it, could reasonably be expected to have
a Material Adverse Effect. Its Partners have not incurred and to the best
of its knowledge will not incur any tax liability in connection with the
▇▇▇▇▇ Project or the other transactions contemplated by the Transaction
Documents that (i) has not been disclosed in writing to the Collateral
Trustee and the Senior Lenders or (ii) is not specifically reflected in the
Base Case Model.
(p) Ranking.
(i) The obligations of the Borrower under each Senior Loan
Agreement, the Senior Loans made thereunder and any Notes evidencing
such Senior Loans, will at all times rank in right of payment, in
right of collateral security, upon liquidation and in all other
respects pari passu with the Borrower's obligations under each other
Senior Loan Agreement, the Senior Loans made thereunder and any Notes
evidencing such Senior Loans. The Borrower has no obligations other
than in connection with (A) the Senior Loan Agreements, the Senior
Loans made thereunder, any Notes evidencing such Senior Loans and (B)
the Debt Service Reserve Guarantee Arrangement.
(ii) The obligations of the Partnership under the Guarantee of
each Senior Loan Agreement, the Senior Loans made thereunder and any
Notes evidencing such Senior Loans, will at all times rank in right of
payment, in right of collateral security, upon liquidation and in all
other respects (A) pari passu with the Partnership's obligations
under the Guarantee of each other Senior Loan Agreement, the Senior
Loans made thereunder and any Notes evidencing such Senior Loans, (B)
pari passu with its Oil Payment Reimbursement Obligations, except as
set forth in Sections 5.05 and 10.12, and (C) senior to the
Partnership's obligations under the Partnership Notes, any
Subordinated Debt and all its other obligations other than those that
have priority under applicable law.
(q) No Default. It is not in violation of any of its constitutive
partnership or corporate documents or in default in the performance or
observance of any obligation, covenant or condition contained in this
Agreement, any other Transaction Document or any other indenture, mortgage,
deed of trust, loan agreement, lease or other agreement or instrument to
which it is a party or by which it is bound or to which any of its
properties or assets may be subject.
20
(r) Arm's-Length Transactions. It has not entered into any
transaction or agreement (including any Authorized Investments) with any
Affiliate other than transactions or agreements that (i) are bona fide
business transactions or agreements reasonably related to the conduct of
its business in accordance with clause (c) of Section 4.01, (ii) are on
terms that are no less favorable to it than those that could have been
obtained at such time by it in a comparable arm's-length transaction and
(iii) have been disclosed in writing to the Collateral Trustee, the Senior
Lenders and the Oil Payment Insurers. All dealings by it with Persons other
than Affiliates also will be conducted on an arm's-length basis.
(s) Copies of Documents. The copies of the Transaction Documents,
other documents, its charter and other constitutive and governing
documents, consents, approvals, budgets, maintenance and Major Maintenance
Plans, insurance binders, certificates and policies, and any amendments to
any of the foregoing provided by it to the Collateral Trustee and the
Applicable Agents are true and complete copies thereof. Such Transaction
Documents and such charters, documents, consents, approvals, budgets,
maintenance and Major Maintenance Plans and insurance binders, certificates
and policies are in full force and effect and there have been no amendments
other than those that have been provided to the Collateral Trustee and the
Applicable Agents.
(t) Year 2000 Compliance. Its computer hardware, software, systems
and its machinery and equipment are Year 2000 Compliant and there are no
existing circumstances or contemplated changes in its computer hardware,
software, systems and other operations that are not Year 2000 Compliant
and, to its best knowledge, the computer hardware, software, systems and
operations of its material suppliers, customers, and others with which it
conducts business (including, but not limited to, the ▇▇▇▇▇ Entities) are
Year 2000 Compliant.
(u) Investment Company Act. It is not and, after giving effect to the
issuance or incurrence by the Borrower and the Guarantee by the Partnership
of the Senior Debt it will not be, an "investment company", or an entity
"controlled" by an "investment company" as such terms are defined in the
Investment Company Act of 1940, as amended.
(v) Margin Regulations. None of the transactions contemplated by this
Agreement (including the use of the proceeds of any Senior Debt) will
violate or result in a violation of Section 7 of the Exchange Act, or any
regulation promulgated thereunder, including Regulations T, U and X of the
Board of Governors of the Federal Reserve System.
(w) No Immunity. Neither it nor any of its properties or assets has
any immunity from jurisdiction of any court otherwise having valid subject
matter and personal jurisdiction or from any other legal process in the
United States (whether
21
through service, notice, attachment prior to judgment, attachment in aid of
execution, execution or otherwise).
(x) Environmental Laws. (i) Its operations and properties have
complied and are complying in all material respects with all applicable
Environmental Laws, and it has obtained all permits, licenses and other
approvals and authorizations necessary for the business of the ▇▇▇▇▇
Project, (ii) other than as disclosed in the Information Memorandum and
the Offering Circular or as set forth on Schedule 3.01(x), neither the
▇▇▇▇▇ Project site nor the Refinery is contaminated with any Hazardous
Substance that could be expected to require investigation or remediation
under any applicable Environmental Law, (iii) it has not received any
notice indicating that it may be in material violation of, or liable under,
any Environmental Law in connection with the ownership or operation of its
businesses, (iv) to the best of its knowledge after due inquiry, except as
disclosed in the Offering Circular or in public filings of the ▇▇▇▇▇
Entities or as set forth on Schedule 3.01(x) none of the ▇▇▇▇▇ Entities has
received any unresolved notice indicating that it may be in material
violation of, or liable under, any Environmental Law in connection with the
ownership or operation of the Refinery, (v) there are no civil, criminal or
administrative actions, suits, demands, claims, hearings, investigations or
proceedings pending or, to the best of its knowledge after due inquiry,
threatened against it alleging any violation of or obligation under any
Environmental Law, (vi) other than as disclosed in the Information
Memorandum and the Offering Circular, the construction of the ▇▇▇▇▇ Project
will not trigger any additional material compliance expenditures or
material obligations relating to any Environmental Law, (vii) no Hazardous
Substance has been disposed of, transferred, released or transported on or
from the ▇▇▇▇▇ Project, other than as could not be expected to result in
claims or liability under applicable Environmental Law, and (viii) it is
not subject to any liabilities (fixed or contingent) relating to any suit,
settlement, court order, administrative order, judgment or claim asserted
or arising under or relating to any Environmental Law. There have been no
environmental investigations, studies, audits, reviews or other analyses
conducted by it or that are in its possession that contain information that
would be material to an assessment of the environmental impact or cost of
the ▇▇▇▇▇ Project as presently constituted that have not been made
available or otherwise disclosed in writing to the Independent Engineer.
(y) ERISA. It does not sponsor, maintain or contribute to any
employee benefit plan as defined in Section 3(3) of ERISA, and has not at
any time sponsored, maintained or contributed to any such employee benefit
plan.
(z) Independence of Independent Consultants. None of the Independent
Consultants or their Affiliates or their respective partners, shareholders,
principals or professional employees providing or overseeing the provision
of services contemplated by this Agreement, (i) had, or was committed to
acquire, any direct
22
material financial interest or material indirect financial interest in the
Partnership or any of its Affiliates or (ii) was, or will be connected as,
a promoter, underwriter, voting trustee, director, officer or employee of
the Partnership or any of its Affiliates.
(aa) Accounting and Cost Control Systems. It will maintain
management information and cost accounting systems for the ▇▇▇▇▇ Project
at all times in accordance with recognized industry procedures.
(bb) Labor Relations. It, and to the best of its knowledge after due
inquiry, each of the ▇▇▇▇▇ Entities is in compliance with any collective
bargaining agreement in any way relating to, or affecting, the Refinery to
which such party is a party and there are no strikes, slowdowns or work
stoppages currently threatened by its employees or suppliers or
contractors, including without limitation the ▇▇▇▇▇ Entities, involved in
the ▇▇▇▇▇ Project that, in each case, could reasonably be expected to have
a Material Adverse Effect.
(cc) No Force Majeure Event. No Event of Force Majeure has occurred
that would excuse it, or, to the best of its knowledge after due inquiry,
any other party to any Project Document from the duty to perform any
obligation under a Project Document.
(dd) Separate Identity. It has (i) maintained all aspects of its
business and operations, including but not limited to its construction,
operations, accounts, assets, liabilities, financial statements and books
and records, separate and apart from the ▇▇▇▇▇ Entities and has held itself
out generally as an entity independent from the ▇▇▇▇▇ Entities; (ii) not
(A) commingled any of its funds, properties or assets with those of any
▇▇▇▇▇ Entity (except for any commingling of crude oil or other feedstocks
within the ▇▇▇▇▇ Complex or in any related storage or piping facilities),
(B) guaranteed or become obligated for debts of any ▇▇▇▇▇ Entity or held
out its credit as being available to satisfy the obligations of any ▇▇▇▇▇
Entity, (C) acquired obligations or securities of any ▇▇▇▇▇ Entity, (D)
pledged its assets for the benefit of, or made any loans or advances to,
any ▇▇▇▇▇ Entity or (E) incurred, created or assumed any indebtedness on
behalf of, or transferred or leased its properties or assets or any
interest therein to, any ▇▇▇▇▇ Entity, except in each case (A) through (E)
as may be permitted by the terms of any of the Finance Documents; (iii)
made all decisions with respect to its business and operations
independently from the ▇▇▇▇▇ Entities (it being understood that most of the
Borrower's directors and officers are individuals employed by a ▇▇▇▇▇
Entity); and (iv) has entered into all business transactions previously
entered into with any ▇▇▇▇▇ Entity on terms and conditions that at such
time were no less favorable to it than those that could have reasonably
been obtained by it at such time in a comparable arm's-length transaction.
23
(ee) Insurance. All contracts and other documents relating to
Required Insurance are in full force and effect and collectively satisfy
all requirements of the Financing Documents and the Project Documents.
(ff) Adequacy of Services. Each of the services, utilities,
materials, licenses and other rights made available or to be made available
to the Partnership under the Project Documents are adequate and sufficient
for the Partnership to develop, construct, operate and maintain the ▇▇▇▇▇
Project in accordance with the Base Case Model.
(gg) Sole Purpose of Borrower. The Borrower's sole business purpose
is to incur Senior Debt and directly to loan 100% of the proceeds of such
Senior Debt to the Partnership.
ARTICLE IV
COVENANTS
4.01 Covenants of the Borrower and the Partnership. Each of the
Borrower and the Partnership covenants and agrees with the Collateral Trustee
and each of the Secured Parties that so long as any Senior Debt or Senior Debt
Commitment shall remain outstanding and until all Senior Debt Obligations and
Oil Payment Obligations due and to become due shall have been paid in full:
(a) Maintenance of Existence. It shall do all things necessary to
maintain: (i) its due organization, valid existence and good standing as a
corporation, in the case of the Borrower, and a limited partnership, in the
case of the Partnership, under the laws of the State of Delaware; (ii) the
power and authority (corporate and otherwise) necessary under the laws of
the State of Delaware to own its properties and to carry on the business of
the ▇▇▇▇▇ Project; and (iii) its qualification as a foreign corporation or
limited partnership, as the case may be, for the transaction of business in
good standing under the laws of the State of Texas. In the event that any
change in corporate form or status is required under any applicable law, it
shall take such measures as are necessary to protect the integrity and
effectiveness of its obligations, including without limitation all its
covenants and all security interests created, under this Agreement and the
other Transaction Documents to which it is party. It shall not dissolve,
liquidate, enter into any merger or consolidation, or sell or transfer all
or substantially all of its assets.
(b) No Modification. It shall not take any action to amend or
modify, in the case of the Borrower, its Certificate of Incorporation or
Bylaws and, in the case of the Partnership, its Certificate of Limited
Partnership or Partnership Agreement, and, in both cases, any other
constitutive or governing documents in any respect unless (i) a copy of
such amendment or modification has been delivered to the
24
Collateral Trustee reasonably in advance of the effective date thereof,
having attached a certificate of a Responsible Officer certifying that such
amendment or waiver could not reasonably be expected to have a Material
Adverse Effect, and such amendment or waiver could not reasonably be
expected to have a Material Adverse Effect or (ii) it has obtained the
prior consent of Supermajority Lenders (or, at any time on or after a
Priority Termination Date, Supermajority Secured Parties).
(c) Business. The Partnership shall conduct no business or activity
other than the business of the ▇▇▇▇▇ Project (and such business reasonably
incidental thereto) and shall not change the purpose, nature or scope of
the ▇▇▇▇▇ Project from that described in (i) the definition of "▇▇▇▇▇
Project" in Appendix A and (ii) to the extent consistent therewith, the
Partnership Agreement and any other constitutive or governing documents of
the Partnership. The Borrower shall not have any assets other than the
Partnership Notes and its rights under the Transaction Documents to which
it is a party and shall not conduct any business other than as necessary to
perform its respective obligations under such Transaction Documents to
which it is a party.
(d) Principal Place of Business. It shall maintain its executive
office and principal place of business in Port ▇▇▇▇▇▇, Texas and shall
maintain in such place originals or copies of the principal books and
records relating to its business.
(e) Accounting and Cost Control Systems. It shall maintain, or cause
to be maintained, its own management information and cost accounting
systems for the ▇▇▇▇▇ Project at all times in accordance with Prudent
Industry Practice and separate and apart from all management information
and cost accounting systems of any of the ▇▇▇▇▇ Entities, and shall employ
independent auditors of recognized national standing to audit annually its
financial statements.
(f) Access. It shall grant the Collateral Trustee, each Bank Senior
Lender, Oil Payment Insurers Administrative Agent and the Capital Markets
Trustee or their designees (which may include any Independent Consultant)
from time to time, including but not limited to during the pendency of an
Event of Default or Potential Default, complete access to its books and
records, quality control and performance test data, all other data relating
to the ▇▇▇▇▇ Project and construction progress and the physical facilities
of the ▇▇▇▇▇ Project and an opportunity to discuss accounting matters with
its independent auditors, provided that all such inspections are conducted
during normal business hours in a manner that does not unreasonably disrupt
the construction or operation of the ▇▇▇▇▇ Project. Each of the
Independent Consultants, Bank Senior Lenders, the Collateral Trustee, the
Oil Payment Insurers Administrative Agent and the Capital Markets Trustee
shall also have the right to monitor, witness and appraise the
construction, testing and operation of the ▇▇▇▇▇ Project. It shall offer
and cause its officers, employees, agents and contractors to offer all
reasonable assistance to the Persons making any such visit. So long as any
25
Event of Default or Potential Default has occurred and is Continuing, the
reasonable fees and documented expenses of such Persons shall be for the
account of the Partnership.
(g) Environmental Audits. If the Collateral Trustee, any Bank Senior
Lender, the Oil Payment Insurers Administrative Agent or the Capital
Markets Trustee or any of its designees reasonably believes that a Release,
threat of Release or violation of any Environmental Law may have occurred,
or if an Event of Default or Potential Default has occurred, it shall, upon
receipt of a written communication setting forth the basis for such belief,
grant access to and assist any environmental consultants for the purpose of
conducting any environmental compliance or contamination audits requested
by any of the Collateral Trustee, any Bank Senior Lender, the Oil Payment
Insurers Administrative Agent or the Capital Markets Trustee in its sole
discretion and all costs associated with any such audits shall be paid by
the Partnership.
(h) Preservation of Assets.
(i) It shall maintain its assets in good repair and shall make
such repairs and replacements as are required in accordance with
Prudent Industry Practice. The Partnership shall not sell, assign,
lease, transfer or otherwise dispose of any Project Property without
the prior consent of Supermajority Lenders (or, at any time on or
after a Priority Termination Date, Supermajority Secured Parties),
except for (A) dispositions of Project Production other than
dispositions prohibited by the terms of clause (t) of this Section
4.01, (B) dispositions of Project Property that has become obsolete or
redundant, (C) dispositions made in the ordinary course of its
business, (D) dispositions of Project Property the net proceeds of
which are used within 90 days of such disposition to replace such
Project Property with similar productive property or assets of the
Partnership pursuant to a binding agreement for the purchase of such
replacement Project Property entered into by the Partnership on or
prior to the date of such disposition or (E) dispositions of Project
Property approved by the Bank Senior Lenders Administrative Agent up
to an aggregate value of $50 million in the form of a sale-and-
leaseback transaction as part of a tax-exempt bond financing under the
laws of the State of Texas to replace Senior Debt in accordance with
the terms and conditions of Section 2.10 within the first five years
following the date hereof, provided that, with respect to dispositions
excepted under (B), (C), (D) or (E), as the case may be, of this
subclause (i), the Partnership shall deliver to the Collateral Trustee
no later than the date of such disposition a certificate of a
Responsible Officer, in a form approved by the Independent Engineer,
that such disposition is being made in accordance with (B), (C), (D)
or (E), as the case may be. Neither the Borrower, the Partnership nor
either of the Partners shall sell, assign, lease, transfer or
otherwise dispose of any
26
Project Property whatsoever other than in accordance with the
Financing Documents.
(ii) As soon as practicable after certification by the
Partnership to the Collateral Trustee, in a form acceptable to the
Collateral Trustee, to the effect that it intends to dispose of an
asset in accordance with clause (h)(i) of this Section 4.01, the
Collateral Trustee, each Bank Senior Lender, the Oil Payment Insurers
Administrative Agent and the Capital Markets Trustee, at the
Partnership's request and expense, shall execute and deliver, file and
record any notice, waiver, termination statement, instruments of
satisfaction, discharge and release of security as may be necessary to
release any security interest in such asset created by or pursuant to
this Agreement or any Security Document and to release or waive any
restriction on the transferability of such asset contained in any
Financing Document, including this Agreement or any Security Document.
(i) Taxes. It shall (i) file or cause to be filed all returns
required to be filed by it, and (ii) pay and discharge, before the same
shall become delinquent, after giving effect to any applicable extensions,
all Taxes imposed on it or its property (including interest and penalties)
unless such Taxes are being contested in good faith and by appropriate
proceedings, appropriate reserves are maintained with respect thereto in
accordance with GAAP and such proceedings, if adversely determined, could
not reasonably be expected to have a Material Adverse Effect. It shall
notify the Collateral Trustee promptly following the occurrence thereof, in
reasonable detail, of any disputes pending between it and any Governmental
Authority relating to Taxes.
(j) Compliance with Law. It shall comply, and use its reasonable best
efforts to cause its contractors to comply, with all applicable (or, in the
case of compliance by such contractors only, all material) laws, rules,
regulations and orders of Governmental Authorities (including without
limitation securities laws, Environmental Laws, health and safety laws and
laws relating to the disposal and clean-up of hazardous wastes in effect
from time to time) unless the necessity of compliance therewith is being
contested in good faith by appropriate proceedings, appropriate reserves
have been established and are maintained with respect thereto in accordance
with GAAP and such proceedings, if adversely determined, could not
reasonably be expected to have a Material Adverse Effect. It shall notify
the Collateral Trustee, promptly following the initiation of any such
proceedings, in reasonable detail of any disputes pending between it or any
of its contractors and any Governmental Authority relating to compliance or
noncompliance with any such law, rule, regulation or order.
(k) Maintenance of Approvals for Agreements. It shall maintain or
cause to be maintained all Third-Party Authorizations that are necessary
for (i) the
27
execution, delivery and performance by it of each Transaction Document to
which it is a party, (ii) the incurrence and guarantee of the Senior Debt
Obligations, as the case may be, and (iii) the performance of its
obligations under the Financing Documents, in good standing, in full force
and effect, in its name or in the name of its contractors, not subject to
appeal and free from conditions or requirements, except to the extent that
a failure so to maintain such Third-Party Authorizations could not
reasonably be expected to have a Material Adverse Effect. It shall promptly
upon receipt or publication furnish to each of the Collateral Trustee and
the Applicable Agents a copy of all such Third-Party Authorizations,
including any amendment, supplement or modification thereto.
(l) Maintenance of Approvals for ▇▇▇▇▇ Project. It shall maintain,
and to the extent not obtained on or prior to the date hereof, obtain on or
before the date on which they are required to be obtained, or cause to be
so maintained or obtained, all (i) Third-Party Authorizations, (ii)
easements, leases, rights-of-way, auxiliary rights and other real property
rights and (iii) licenses and other rights to use Technology, in each case
that are necessary in order to develop, construct, operate, maintain and
finance the ▇▇▇▇▇ Project in the manner contemplated by the Transaction
Documents, in good standing, in full force and effect, in its name or in
the name of its contractors, not subject to appeal and free from conditions
or requirements, except to the extent that a failure to do so could not
reasonably be expected to result in a Material Adverse Effect. It shall
promptly upon receipt or publication furnish to each of the Collateral
Trustee and the Applicable Agents a copy of all such Third-Party
Authorizations; easements, leases, rights-of-way, auxiliary rights and
other real property rights, and licenses and other rights to use
Technology, including any amendment, supplement or modification thereto.
(m) Maintenance of Supply. The Partnership shall maintain at all
times supplies of, or contracts providing for supplies of, hydrogen,
electricity, steam, natural gas and other feedstock and utilities,
telecommunications services and other inputs necessary to conduct its
business in accordance with Prudent Industry Practice and to comply in all
respects with its obligations under and to derive all benefits from the
Transaction Documents to which it is a party, except where a failure to
maintain such supplies or contracts could not reasonably be expected to
have a Material Adverse Effect.
(n) Maintenance of Crude Oil Supply. The Partnership shall, (i)
subject to force majeure and any other disruptions of supplies outside its
control, at all times maintain supplies of crude oil necessary to conduct
its business in accordance with the Base Case Model and to produce the
Required Product Mix under the Product Purchase Agreement, (ii) during the
term of the Long-Term Oil Supply Agreement (A) comply in all respects with
its obligations, derive all its benefits and enforce all its rights under
the Long-Term Oil Supply Agreement, the Long-Term Oil Supply Agreement
Guarantee and the PMI Consent and Agreement and (B) to the extent
28
required by the Long-Term Oil Supply Agreement, maintain in full force and
effect the Oil Payment Insurance Policy.
(o) Arm's-Length Transactions. It shall not enter into any
transaction or agreement (including any Authorized Investment) with any
Affiliate unless such transaction or agreement (i) is a bona fide business
transaction or agreement reasonably related to the conduct of its business
in accordance with clause (c) of Section 4.01, (ii) is on terms that at
such time are no less favorable to it than those that could be obtained by
it at such time in a comparable arm's length transaction, and (iii) has
been disclosed to the Collateral Trustee, the Senior Lenders and the Oil
Payment Insurers Administrative Agent. All dealings by it with Persons
other than Affiliates also shall be conducted on an arm's-length basis.
(p) Year 2000 Compliance. It shall ensure that its computer hardware,
software, systems and other operations are Year 2000 Compliant and shall
use its reasonable best efforts to ensure that the computer hardware,
software, systems and operations of its material suppliers, customers, and
others with which it conducts business (including without limitation the
▇▇▇▇▇ Entities) to be Year 2000 Compliant.
(q) Construction and Completion of the ▇▇▇▇▇ Project; Changes to
Facilities and Improvements.
(i) The Partnership shall (A) cause the ▇▇▇▇▇ Complex to be
constructed in all respects in accordance with the Turnkey
Specifications, cause Mechanical Completion to occur on or before
March 1, 2001 (or October 1, 2001 if the conditions set forth in
clause (n) of Section 10.01 are satisfied), cause Substantial
Reliability to occur on or before October 1, 2001 and cause Final
Completion to occur on or before the Guaranteed Final Completion Date,
all as set forth in the EPC Contract as in effect on the date hereof,
(B) require ▇▇▇▇▇ R&M to cause the Ancillary Equipment to be upgraded
and completed in all respects, on or before October 1, 2000 in
accordance with the specifications set forth in the ▇▇▇▇▇ ▇▇▇ Contract
in effect on the date hereof (or February 1, 2001 if the conditions
set forth in clause (o) of Section 10.01 are satisfied) and (C) cause
the Hydrogen Plant to be constructed in all respects in accordance
with the specifications set forth in the Hydrogen Supply Agreement as
in effect on the date hereof on or before December 6, 2000 (or March
1, 2001 if the conditions set forth in clause (p) of Section 10.01
have been satisfied). The Partnership may change the physical
facilities of the ▇▇▇▇▇ Complex from those set forth in the Turnkey
Specifications, or may approve a change in the upgrade of the
Ancillary Equipment from those set forth in the specifications set
forth in the ▇▇▇▇▇ ▇▇▇ Contract, without the consent of the Secured
Parties by providing notice to the Collateral Trustee, the Independent
Engineer and each Credit Rating Agency then rating the Capital Markets
Senior Debt describing such
29
change, provided that each of the following conditions has been
satisfied: (1) such change does not have a Material Adverse Effect,
(2) regardless of whether such change is made prior to or after
Substantial Reliability, such change would not materially increase the
unit cash operating costs of the ▇▇▇▇▇ Project or the frequency or
scope of any required maintenance, materially change its design
capacity or materially decrease capacity utilization, (3) if such
change is made after Substantial Reliability, (a) there is no
shortfall in the Principal & Interest Accrual Account or Debt Service
Reserve Account and (b) the Partnership will have access to sufficient
funds to fund as incurred the costs associated with such change
(including without limitation any Principal & Interest Accrual Account
expected to be due and payable during any related construction period
shutdown) and (4) after giving effect to the projected costs and
revenues associated with such change, (x) the minimum Debt Service
Coverage Ratio for each remaining year through final maturity of the
Senior Debt in the Base Case Model shall be not less than 2.1:1.0 and
(y) the average annual Debt Service Coverage Ratio through final
maturity of the Senior Debt in the Base Case Model shall be not less
than 2.4:1.0. Any notice delivered by the Partnership pursuant to the
immediately preceding sentence shall be accompanied by a certificate
of a Responsible Officer as to the satisfaction of the conditions set
forth in this subclause (i), provided that any certifications of the
Partnership in respect of the conditions set forth in subclause (A),
(B)(2), (B)(3) and (B)(4) of the proviso to the immediately preceding
sentence shall be confirmed by the Independent Engineer.
(ii) In the event that the Partnership desires to undertake a
change in the ▇▇▇▇▇ Complex or approve a change in the upgrade of the
Ancillary Equipment that does not comply with the requirements set
forth in subclause (i) of this clause (q), the Partnership shall
notify the Collateral Trustee, each Applicable Agent, the Independent
Engineer and each Credit Rating Agency then rating the Capital Markets
Senior Debt of the proposed change. Each such notice shall be
accompanied by a statement of the Partnership describing in reasonable
detail such proposed change and the reasons for, and desirability of,
such change, together with the Partnership's opinion as to each of the
matters set forth in subclause (i) of this clause (q). The Bank Senior
Lenders, the Oil Payment Insurers Administrative Agent and the Capital
Markets Trustee may consult with the Independent Engineer in respect
of such proposed change and request certification from the Independent
Engineer with respect to any of the Partnership's opinions as to the
matters set forth in subclause (i) of this clause (q); and any such
proposed change shall become effective only with the prior consent of
Requisite Secured Parties).
30
(iii) The Partnership shall deliver to the Independent Engineer,
and make available to the Collateral Trustee upon request, a copy of
the Turnkey Specifications and the specifications for the Ancillary
Equipment as amended from time to time in accordance with this clause
(q).
(r) Operation of the Project. The Partnership shall (i) cause the
▇▇▇▇▇ Project to be constructed, developed, operated, repaired and
maintained at all times in accordance with Prudent Industry Practice, the
Transaction Documents, the Major Maintenance Plan and the Base Case Model
(as updated from time to time by an Annual Budget and Operating Plan), (ii)
maintain or caused to be maintained such spare parts and inventory as are
consistent with the Transaction Documents and Prudent Industry Practice,
(iii) maintain or caused to be maintained at the ▇▇▇▇▇ Project site a
complete set of plans and specifications for the ▇▇▇▇▇ Project and (iv) at
all times maintain or cause to be maintained appropriate security at the
▇▇▇▇▇ Project site in accordance with Prudent Industry Practice.
(s) Environmental Compliance. The Partnership shall (i) conduct its
operations and maintain its properties and assets in material compliance
with all applicable Environmental Laws, permits, licenses and other
approvals and authorizations, (ii) dispose or cause to be disposed all
Hazardous Substances relating to the ▇▇▇▇▇ Project in material compliance
with all, and so as would not result in a material liability under any,
Environmental Laws, permits, licenses and other approvals and
authorizations and (iii) promptly notify the Collateral Trustee, the Senior
Lenders and the Oil Payment Insurers Administrative Agent of the
commencement of any civil, criminal, or administrative actions or suits,
and any material environmental investigations, studies, audits, tests,
reviews or other analyses, environmental demands, claims, hearings,
investigations or proceedings.
(t) Project Production. The Partnership shall (i) enter into sales
agreements for the sale or disposition of all Project Production, including
without limitation the Product Purchase Agreement, on terms and conditions
(including, if appropriate in light of the nature and credit quality of the
counterparty, credit support arrangements) consistent with Prudent Industry
Practice, (ii) undertake any such sales or disposition of Project
Production on fair and commercially reasonable terms on an arm's-length
basis and (iii) in the case of the Product Purchase Agreement and the
Services and Supply Agreement, promptly ▇▇▇▇, and cause to be collected
from, ▇▇▇▇▇ R&M amounts due in respect of Project Production sold and
services rendered and instruct ▇▇▇▇▇ R&M to send all payments directly to
the Project Revenue Account.
(u) Project Documents. It shall comply in all respects with, and
enforce against other parties all its rights (including without limitation
any third-party beneficiary rights) under, the Project Documents. It shall
not agree to any amendment, waiver, modification, termination or assignment
of any of its rights or obligations under any Project Document to which it
is or becomes a party (other than
31
the Bylaws, the Charters, the Partnership Agreement and the Insurance
Policies, which are subject to the provisions of clause (b) of this Section
4.01 and Article VII, respectively) or the Marine Dock and Terminaling
Agreement, or provide any consent thereunder, unless (i) (A) a copy of such
amendment, waiver, modification, termination, assignment or consent has
been delivered to the Collateral Trustee at least 10 Business Days in
advance of the effective date thereof, having attached a certificate of a
Responsible Officer (with the verification of the Independent Engineer)
certifying that the proposed amendment, waiver, modification, termination,
assignment or consent could not reasonably be expected to have a Material
Adverse Effect, and (B) such proposed amendment, waiver, modification,
termination, assignment or consent could not reasonably be expected to have
a Material Adverse Effect, or (ii) the Partnership has obtained the prior
written consent of Supermajority Secured Parties, provided that nothing in
this clause (u) shall obligate the Partnership to take any action in
connection with a termination of the Marine Dock and Terminaling Agreement
by Sun Pipe Line Company in accordance with the terms of such agreement.
(v) Maintenance of Separate Identity. It shall (i) maintain all
aspects of its business and operations, including but not limited to its
construction operations, Heavy Oil Processing Facility operations,
accounts, assets, liabilities, financial statements and books and records,
separate and apart from the ▇▇▇▇▇ Entities and shall hold itself out to the
public as an entity independent from the ▇▇▇▇▇ Entities; (ii) not (A)
commingle any of its funds, properties or assets with those of any ▇▇▇▇▇
Entity (except for any commingling of crude oil or other feedstocks within
the ▇▇▇▇▇ Complex or in any related storage or pipeline facilities), (B)
guarantee or become obligated for debts of any ▇▇▇▇▇ Entity or hold out its
credit as being available to satisfy any obligations of any ▇▇▇▇▇ Entity,
(C) acquire obligations or securities of any ▇▇▇▇▇ Entity, (D) pledge its
assets for the benefit of, or make any loans or advances to, any ▇▇▇▇▇
Entity, or (E) incur, create or assume any indebtedness on behalf of, or
transfer or lease its assets or any interest therein to, any ▇▇▇▇▇ Entity,
except in each case (A) through (E) as may be permitted or required by the
terms of any of the Financing Documents; (iii) make all decisions with
respect to its business and operations independently from the ▇▇▇▇▇
Entities; (iv) enter into all business transactions with any ▇▇▇▇▇ Entity
on terms and conditions that at such time are no less favorable to it than
those that could been obtained by it at such time in a comparable arm's-
length transaction and (v) take all steps necessary to correct any
misunderstanding regarding its separate identity. For purposes of this
clause (v), common tankage of oil and other fungible products shall not
constitute commingling so long as the volumes of such products owned by the
Partnership are adequately reflected in the relevant ▇▇▇▇▇ Entity's
records.
(w) Limitation on Indebtedness. The Partnership shall not create,
incur, assume or suffer to exist any Indebtedness other than Permitted
Indebtedness. The
32
Borrower shall not create, incur, assume or suffer to exist any trade
accounts payable or other accrued liability or any Indebtedness other than
Senior Debt.
(x) Preservation of Security Interests; Limitation on Liens and
Encumbrances. It (i) shall preserve, maintain and perfect the first
priority security interests granted under this Agreement and the Security
Documents and preserve and protect the Collateral as set forth in Article
VI and the Security Documents and (ii) shall not, without the consent of
Supermajority Secured Parties, create, assume, incur, permit or suffer to
exist any Lien upon, or any security interest in, any of its property,
assets or contractual rights, whether now owned or hereafter acquired,
except for Permitted Liens.
(y) Limitation on Investments and Loans. It shall not make any
investments or loans or advances to any Person, except for (i) Authorized
Investments, (ii) down payments or prepayments to suppliers or service
providers (other than to any ▇▇▇▇▇ Entity) in the ordinary course of
business and on customary commercial terms and (iii) receivables arising in
the ordinary course of business.
(z) Limitation on Guarantees. It shall not assume, guarantee,
endorse, contingently agree to purchase or otherwise become liable upon the
obligation of any other Person except (i) by the endorsement of negotiable
instruments for deposit or collection or similar transactions in the
ordinary course of business, (ii) guarantees provided in connection with
the granting of performance bonds to contractors and suppliers and
Governmental Authorities made in the ordinary course of business, and (iii)
guarantees expressly permitted or required under the Financing Documents.
(aa) Hedging. It shall not enter into any swap agreements, option
contracts, future contracts, options on future contracts, spot or forward
contracts, caps, floors, collars or other agreements to purchase or sell or
any other hedging arrangements, in each case in respect of currencies,
interest rates, commodities or otherwise other than Permitted Hedging
Arrangements. If at any time 6-month LIBOR shall have been in excess of
6.25% per annum for at least one month, the Borrower shall promptly, but in
any event within 30 days following the expiration of such 30-day period,
enter into and maintain in effect, with respect to not less than 50% of the
aggregate principal amount of Bank Senior Term Debt from time to time
outstanding, Permitted Hedging Arrangements reasonably satisfactory to the
Bank Senior Lenders Administrative Agent that effectively provide a cap of
7.50% on the LIBOR component of the interest rate of the Bank Senior Term
Debt from time to time. If subsequently LIBOR ceases to be in excess of
6.25% per annum and remains at or below such level for at least 90
consecutive days, the Borrower may terminate such Permitted Hedging
Arrangements.
(bb) Use of Proceeds. All proceeds of the Initial Senior Debt (other
than the Secured Working Capital Facility) shall be used solely to
reimburse ▇▇▇▇▇ R&M
33
for Project Expenses incurred prior to the date hereof and to pay Project
Expenses. All proceeds of Additional Senior Debt incurred to finance or
refinance Mandatory Capital Expenditures or Discretionary Capital
Expenditures pursuant to Section 2.09 shall be used solely to finance or
refinance such Mandatory Capital Expenditures or Discretionary Capital
Expenditures, as the case may be. All proceeds of Replacement Senior Debt
shall be used to pay or prepay Senior Debt or to replace Senior Debt
Commitments in accordance with Section 2.10. Proceeds of the Senior Debt
may be invested in Authorized Investments prior to being used in accordance
with this clause (bb).
(cc) Independent Consultants. The Partnership, on behalf of the
Secured Parties, has appointed, and the Secured Parties have accepted,
▇▇▇▇▇▇ & ▇▇▇▇▇ as the initial Independent Engineer and as the initial
Marketing Consultant and Sedgwick of Tennessee, Inc. as the initial
Insurance Consultant. Majority Secured Parties, upon 15 days prior written
notice to the Collateral Trustee and each Applicable Agent, shall have the
right to remove an Independent Consultant if, in the opinion of Majority
Secured Parties, such Independent Consultant (i) ceases to be a consulting
firm of recognized international standing, (ii) has become an Affiliate of
the Partnership, the Borrower, any of the Partners, the ▇▇▇▇▇ Entities, the
Oil Payment Insurers, an Applicable Agent, or a Secured Party, (iii) has
developed a conflict of interest that calls into question such firm's
capacity to exercise independent judgment in the performance of its duties
in connection with the ▇▇▇▇▇ Project, or (iv) has failed to charge
commercially reasonable compensation for its duties. If any Independent
Consultant is removed or resigns and thereby ceases to act as an
Independent Consultant and any Bank Senior Debt or Bank Senior Debt
Commitments remain outstanding, the Bank Senior Lenders Administrative
Agent shall promptly designate a replacement Independent Consultant of
recognized international standing and notify the Capital Markets Trustee
and the Oil Payment Insurers Administrative Agent thereof. Such selection
shall become final unless, within 10 days following such notification, the
Capital Markets Trustee reasonably objects to the designated replacement
Independent Consultant, in which case the Bank Senior Lenders
Administrative Agent shall select another replacement Independent
Consultant of recognized international standing and notify the Capital
Markets Trustee and the Oil Payment Insurers Administrative Agent thereof.
If the Capital Markets Trustee does not object to such selection within 10
days following the date of notification thereof, the replacement
Independent Consultant shall be deemed to have been accepted. If the
Capital Markets Trustee does so object, the Bank Senior Lenders
Administrative Agent shall repeat the selection process in accordance with
the two foregoing sentences until a replacement Independent Consultant is
found that is reasonably acceptable to the Capital Markets Trustee. If no
Bank Senior Debt or Bank Senior Debt Commitments remain outstanding, the
Capital Markets Trustee shall promptly designate a replacement Independent
Consultant of recognized international standing. The Partnership shall pay
for the reasonable and documented fees and expenses of each Independent
Consultant
34
incurred in connection with (i) the preparation of the initial report of
such Independent Consultant and all other work performed by it, prior to
the date of this Agreement and (ii) verification of Mechanical Completion,
Substantial Reliability, Final Completion, all annual reviews of the ▇▇▇▇▇
Project performed by such Independent Consultant on behalf of the Secured
Parties and any other work relating to or reasonably requested by the
Collateral Trustee, the Bank Senior Lenders, the Oil Payment Insurers
Administrative Agent or the Capital Markets Trustee in connection with the
transactions contemplated by this Agreement.
(dd) Subsidiaries. The Partnership shall not at any time own any
capital stock or other ownership interest in any Person other than the
Borrower. Neither the Partnership nor the Borrower shall form any new
Subsidiary. The Partnership and the Borrower shall at all times maintain
the status of the Borrower as a wholly owned subsidiary of the Partnership.
(ee) Credit Rating Agencies. So long as any Capital Markets Senior
Debt is outstanding, the Partnership shall take all actions as may be
necessary or appropriate from time to time to cause such Capital Markets
Senior Debt to be rated by ▇▇▇▇▇'▇ Investors Service, Inc. and Standard &
Poor's Inc. (the "Credit Rating Agencies"). If ▇▇▇▇▇'▇ Investors Service,
Inc. or Standard & Poor's Inc. ceases to be a "nationally recognized
statistical rating organization" registered with the Commission or ceases
to be in the business of rating securities of the type and nature of the
Capital Markets Senior Debt, the Partnership may replace it with any other
"nationally recognized statistical rating organization" in the business of
rating securities of the type and nature of the Capital Markets Senior Debt
nominated by the Partnership and approved by Majority Bank Lenders and
Majority Bondholders, following which such nominee shall be a "Credit
Rating Agency" for all purposes of this Agreement.
(ff) Accounts. The Partnership shall cause the Accounts to be
established and maintained at all times in accordance with Article V, shall
maintain no bank accounts other than the Accounts and the Operating Account
and shall make no transfer, deposit or withdrawal from any Account, except
in either case as specifically permitted in Article V. The Borrower shall
not establish or maintain any bank account.
(gg) Insurance. The Partnership shall maintain at all times the
insurance required to be maintained in Article VII on the terms and
conditions set forth therein.
(hh) ERISA. It shall not adopt, sponsor, maintain, administer,
contribute to, or become required to contribute to any employee benefit
plan as defined in Section 3(3) of ERISA.
(ii) Further Assurances. It agrees to do all things reasonably
requested by the Collateral Trustee, the Bank Senior Lenders, the Oil
Payment Insurers
35
Administrative Agent or the Capital Markets Trustee to consummate and make
effective, as soon as practicable, the transactions contemplated by, and to
carry out the purposes of, this Agreement and the other Transaction
Documents, including without limitation the timely obtaining of consents,
authorizations, orders and approvals of any Governmental Authority and the
providing of such additional certificates, legal opinions and other
documentation as may be requested from time to time by the Collateral
Trustee, the Bank Senior Lenders, the Oil Payment Insurers Administrative
Agent or the Capital Markets Trustee in order to provide assurances to the
Collateral Trustee, the Bank Senior Lenders, the Oil Payment Insurers
Administrative Agent or the Capital Markets Trustee, as the case may be,
regarding the continued compliance with the terms and conditions of the
Transaction Documents.
(jj) Oil Payment Insurance Policy. The Partnership shall maintain in
place, and make all payments required to be made in respect of, the Oil
Payment Insurance Policy unless and until the rating of the Partnership's
long-term senior unsecured debt obligations has been at least Baa2 by
▇▇▇▇▇'▇ and BBB by S&P for at least 12 consecutive months.
(kk) Independent Director. The Borrower shall give each Applicable
Agent not less than 45 days' prior notice of any appointment of an
independent director to its board of directors in accordance with Section 6
of the Borrower's Certificate of Incorporation, and the Borrower shall not
make such appointment if any Applicable Agent objects within such 45-day
period to such proposed appointment.
(ll) Technology. The Partnership shall (i) take all such actions as
may be necessary to ensure that it possesses, or has the right to use, all
licenses and other rights with respect to Technology prior to Final
Completion (or at such earlier time as may be required under the
circumstances) and (ii) maintain in place all licenses and other rights
with respect to Technology to the extent necessary for the development,
construction, operation or maintenance of the Project at any time.
(mm) Pipeline and Terminal Easement. The Partnership shall cause
▇▇▇▇▇ R&M to obtain, within six months following the date hereof, a
mortgagee policy of title insurance for the Mortgage to the extent it
relates to the ▇▇▇▇▇ Terminal Property, naming the Secured Parties as the
insured, insuring that the insured Mortgage is a valid, first priority lien
on the ▇▇▇▇▇ Terminal Property encumbered thereby, subject to such
exceptions as may be reasonable under the circumstances, as determined in
the reasonable judgment of the Bank Senior Lenders Administrative Agent.
(nn) Amounts Received from PMI. The Partnership shall cause any and
all amounts repaid to the Partnership by PMI, whether as the result of
defenses exercised
36
by the Partnership or for any other reason, to the extent such amounts
relate to any shipment of Maya crude oil for which the Oil Payment Insurers
have made payment to PMI under the Oil Payment Insurance Policy, promptly
to be paid directly to the Oil Payment Insurers Administrative Agent.
(oo) Tax Sharing Arrangements. Notwithstanding anything to the
contrary in the Partnership Agreement or any other agreement, but subject to
Section 11.01, the Partnership shall not distribute to the Partners in any
taxable year an amount that would exceed the Partners' share of the actual tax
liability of the group of companies that includes the Partners in respect of the
Partnership's income.
4.02 Covenants of the Partners. Each of the Partners covenants and
agrees with the Collateral Trustee and each of the Secured Parties that so long
as any Senior Debt or Senior Debt Commitment remains outstanding and until all
Senior Debt Obligations due and to become due shall have been paid in full:
(a) Maintenance of Existence. It shall do all things necessary to
maintain (i) its due organization, valid existence and good standing as a
corporation under the laws of the State of Delaware, (ii) the power and
authority (corporate and otherwise) necessary under the laws of the State
of Delaware to own its properties and to carry on its business, and (iii)
its qualification as a foreign corporation for the transaction of business
in good standing under the laws of the State of Texas. In the event that
any change in corporate form or status is required under any applicable
law, it shall take such measures as are necessary to protect the integrity
and effectiveness of its obligations under this Agreement and the other
Transaction Documents to which it is party. It shall not dissolve,
liquidate, enter into any merger or consolidation, or sell or transfer all
or substantially all of its assets.
(b) No Modification. It shall not take any action to amend or modify
its Certificate of Incorporation or Bylaws or any other constitutive or
governing documents in any respect unless (i) a copy of such amendment or
modification has been delivered to the Collateral Trustee reasonably in
advance of the effective date thereof, having attached a certificate of a
Responsible Officer certifying that such amendment or waiver could not
reasonably be expected to have a Material Adverse Effect, and such
amendment or waiver could not reasonably be expected to have a Material
Adverse Effect or (ii) it has obtained the prior consent of Supermajority
Lenders (or, at any time on or after a Priority Termination Date,
Supermajority Secured Parties).
(c) Business. It shall not conduct any business or have any assets
other than as necessary to perform its respective obligations under the
Transaction Documents to which it is a party.
37
(d) Preservation of Assets. It shall not sell, assign, lease,
transfer or otherwise dispose of any of its assets other than as permitted
or required by the Financing Documents.
(e) Taxes. It shall (i) file or cause to be filed all returns
required to be filed by it, and (x) pay and discharge, before the same
shall become delinquent, after giving effect to any applicable extensions,
all Taxes imposed on it or its property (including interest and penalties)
unless such Taxes are being contested in good faith and by appropriate
proceedings, appropriate reserves are maintained with respect thereto in
accordance with GAAP and such proceedings, if adversely determined could
not reasonably be expected to have a Material Adverse Effect. It shall
notify the Collateral Trustee, promptly following the occurrence thereof,
in reasonable detail, of any disputes pending between it and any
Governmental Authority relating to Taxes.
(f) Compliance with Law. It shall comply with all applicable laws,
rules, regulations and orders of Governmental Authorities, unless the
necessity of compliance therewith is being contested in good faith by
appropriate proceedings, appropriate reserves have been established and are
maintained with respect thereto in accordance with GAAP and such
proceedings, if adversely determined could not reasonably be expected to
have a Material Adverse Effect. It shall notify the Collateral Trustee,
promptly following the initiation of any such proceedings, in reasonable
detail, of any disputes pending between it and any Governmental Authority
relating to its compliance or noncompliance with any such law, rule,
regulation or order.
(g) Maintenance of Approvals for Agreements. It shall maintain all
Third-Party Authorizations that are necessary for the execution, delivery
and performance by it of its obligations under each Transaction Document to
which it is a party, in good standing, in full force and effect, in its
name, not subject to appeal and free from conditions or requirements,
except to the extent that a failure so to maintain such Third-Party
Authorizations could not reasonably be expected to have a Material Adverse
Effect. It shall promptly upon receipt or publication furnish to each of
the Collateral Trustee and the Applicable Agents a copy of all such Third-
Party Authorizations, including any amendment, supplement or modification
thereto.
(h) Arm's-Length Transactions. It shall not enter into any
transaction or agreement with any Affiliate other than pursuant to the
Transaction Documents.
(i) Maintenance of Separate Identity. It shall (i) maintain all
aspects of its business and operations, including but not limited to its
accounts, assets, liabilities, financial statements and books and records,
separate and apart from the ▇▇▇▇▇ Entities and shall hold itself out to the
public as an entity independent from the ▇▇▇▇▇ Entities; (ii) not (A)
commingle any of its funds, properties or assets with those
38
of any ▇▇▇▇▇ Entity (except for any commingling of crude oil in the crude
unit of the ▇▇▇▇▇ Complex), (B) guarantee or become obligated for debts of
any ▇▇▇▇▇ Entity or hold out its credit as being available to satisfy any
obligations of any ▇▇▇▇▇ Entity, (C) acquire obligations or securities of
any ▇▇▇▇▇ Entity, (D) pledge its assets for the benefit of, or make any
loans or advances to, any ▇▇▇▇▇ Entity, or (E) incur, create or assume any
indebtedness on behalf of, or transfer or lease its assets or any interest
therein to, any ▇▇▇▇▇ Entity, except in each case (A) through (E) as may be
permitted or required by the terms of any of the Financing Documents; (iii)
make all decisions with respect to its business and operations
independently from the ▇▇▇▇▇ Entities; (iv) enter into all business
transactions with any ▇▇▇▇▇ Entity on terms and conditions that at such
time are no less favorable to it than those that could been obtained by it
at such time in a comparable arm's-length transaction and (v) take all
steps necessary to correct any misunderstanding regarding its separate
identity.
(j) Limitation on Indebtedness. It shall not create, incur, assume or
suffer to exist any Indebtedness other than as expressly permitted or
required by and subject to the terms of the Financing Documents.
(k) Limitation on Liens and Encumbrances. It shall not create,
assume, incur, permit or suffer to exist any Lien upon, or any security
interest in, any of its property, assets or contractual rights, whether now
owned or hereafter acquired, other than as required under the Financing
Documents.
(l) Limitation on Investments and Loans. It shall not make any
investments or loans or advances to any Person, other than as required
under the Financing Documents.
(m) Limitation on Guarantees. It shall not assume, guarantee,
endorse, contingently agree to purchase or otherwise become liable upon the
obligation of any other Person except guarantees specifically required
under the Financing Documents.
(n) Subsidiaries. It shall not at any time own any capital stock or
other ownership interest in any Person other than the Partnership and it
shall not form any new Subsidiary.
(o) Accounts. It shall not establish or maintain any bank account.
(p) Further Assurances. It agrees to do all things reasonably
requested by the Secured Parties to consummate and make effective, as soon
as practicable, the transactions contemplated by, and to carry out the
purposes of, this Agreement and the other Transaction Documents, including
without limitation the timely obtaining of consents, authorizations, orders
and approvals of any Governmental Authority and the providing of such
additional certificates, legal opinions and other documentation as may be
requested from time to time by the Collateral Trustee, the Bank Senior
Lenders, the Oil Payment Insurers Administrative Agent or the Capital
Markets
39
Trustee in order to provide assurances to the Collateral Trustee, the Bank
Senior Lenders, the Oil Payment Insurers Administrative Agent or the
Capital Markets Trustee, as the case may be, regarding the continued
compliance with the terms and conditions of the Transaction Documents.
(q) Independent Director. It shall give each Applicable Agent not
less than 45 days' prior notice of any appointment of an independent
director to its board of directors in accordance with Section 5 of its
Certificate of Incorporation, and it shall not make such appointment if any
Applicable Agent objects within such 45-day period to such proposed
appointment.
4.03 Common Covenant. Each of the Borrower, Partnership and the
Partners will not agree, without the consent of each Senior Lender Group and the
Oil Payment Insurers, to any amendment or modification of any Senior Loan
Agreement, the Oil Payment Insurance Policy or the Reimbursement Agreement, as
the case may be, that would have the effect of (i) materially altering, to the
advantage of the Senior Lenders party thereto or the Oil Payment Insurers, as
the case may be, the timing (or conditions or event that control the timing) of
payment of any amount payable (or that might become payable) by the Borrower or
the Partnership, (ii) imposing additional or more stringent conditions precedent
to the disbursement of Senior Loans thereunder or (iii) increasing the rate (or
the method of calculation) at which interest is payable on Senior Loans
thereunder.
ARTICLE V
ACCOUNTS
5.01 Accounts. (a) The Partnership shall direct the Collateral
Trustee to, and the Collateral Trustee shall, on or prior to Closing, establish
and maintain the following secured accounts in the name of the Collateral
Trustee at the Depositary Bank in The City of New York ("Accounts"), provided
that the actual designation of each Account shall consist of the words "Bankers
Trust Company, as Collateral Trustee", followed by the respective defined term
set forth below in parentheses:
(i) "Bank Loan Drawdown and Equity Funding Account", into which
deposits shall be made in accordance with clause (a) of Section 5.03;
(ii) "Bond Proceeds Account", into which deposits shall be made in
accordance with clause (a) of Section 5.03;
(iii) "Project Revenue Account", into which deposits shall be made in
accordance with clauses (a), (b), (c), (d) and (j) of Section 5.03;
(iv) "PMI Premium Reserve Account", into which deposits shall be made
in accordance with clause (a)(i)(C) of Section 5.05;
40
(v) "Principal & Interest Accrual Account", into which deposits
shall be made in accordance with clause (h) of Section 5.03, clause (a)(iv)
of Section 5.05, clause (b) of Section 5.06 and Section 5.07;
(vi) "Tranche B Amortization Account", into which deposits shall be
made in accordance with clause (a) of Section 5.08;
(vii) "Tax Reserve Account", into which deposits shall be made in
accordance with clause (i) of Section 5.03, clause (a)(v) of Section 5.05,
clause (b) of Section 5.06 and Section 5.11;
(viii) "Major Maintenance Account", into which deposits shall be
made in accordance with clause (i) of Section 5.03, clause (a)(vi) of
Section 5.05, clause (b) of Section 5.06 and Section 5.12;
(ix) "PMI Surplus Reserve Account", into which deposits shall be
made in accordance with clause (i) of Section 5.03, clause (a)(viii) of
Section 5.05 and Section 5.10;
(x) "Debt Service Reserve Account", into which deposits shall be
made in accordance with clause (i) of Section 5.03, clauses (a)(vii) and
(c) of Section 5.05, clause (b) of Section 5.06 and Section 5.09;
(xi) "Casualty and Insurance Account", into which deposits shall be
made in accordance with clause (e) of Section 5.03;
(xii) "Catastrophic Casualty Account", into which deposits shall be
made in accordance with clause (f) of Section 5.03;
(xiii) "Mandatory Prepayment Account", into which deposits shall be
made in accordance with clause (g) of Section 5.03, clause (b) of Section
5.05, clause (b) of Section 5.06 and Section 5.14;
(xiv) "Contingency Reserve Account", into which deposits may be
made in accordance with clause (i) of Section 5.03 and Section 5.13; and
(xv) "Distribution Account", into which deposits may be made in
accordance with clause (d) of Section 5.05.
Each Account may have one or more Subaccounts as provided in Section
5.02. All moneys held in the Accounts shall be trust funds held by the
Collateral Trustee for the purpose of making payments therefrom in accordance
with this Agreement. Only the Collateral Trustee shall have the right to make
withdrawals and payments from the Accounts, upon instruction or direction, as
provided in this Agreement.
41
The Depositary Bank hereby agrees to act as, and the Partnership
acknowledges that the Depositary Bank shall act as, "securities intermediary"
(as defined in the NY UCC) in respect of the Accounts and Subaccounts under this
Agreement. The Partnership, the Collateral Trustee and the Depositary Bank
agree that (A) each Account and Subaccount shall be treated as a "securities
account" (within the meaning of Section 8-501(a) of the NY UCC and the
Collateral Trustee shall be the named "entitlement holder" (within the meaning
of Section 8-102(a)(7) of the NY UCC) in respect thereof, (B) each item of
property (whether investment property, financial asset, security, instrument or
cash) credited to any Account or Subaccount shall be treated as a "financial
asset" (within the meaning of Section 8-102(a)(9) of the NY UCC), and all
financial assets in registered form or payable to a person or persons or to
order and credited to any Account or any Subaccount shall be registered in the
name of, payable to or to the order of, or specially endorsed to, the Depositary
Bank or in blank, or credited to another securities account maintained by
another securities intermediary in the name of the Depositary Bank, and in no
case will any financial asset credited to any Account or Subaccount be
registered in the name of, payable to or to the order of, or specially endorsed
to the Partnership except to the extent the foregoing have been specially
endorsed by the Partnership to the Depositary Bank or in blank, (C) the
Depositary Bank shall comply solely with "entitlement orders" (within the
meaning of Section 8-102(8) of the NY UCC) issued by the Collateral Trustee and
relating to any financial asset held in any Account or Subaccount without
further consent from the Partnership, (D) on any date on which the Collateral
Trustee is required by the terms of this Agreement to transfer any funds on
deposit in any Account or Subaccount, the Collateral Trustee shall cause the
Depositary Bank to make such transfer as provided herein and (E) the Depositary
Bank shall not change the name or account number of any Account or Subaccount
without the prior consent of the Collateral Trustee.
In the event that the Depositary Bank has or subsequently obtains by
agreement, operation of law or otherwise a lien or security interest in any
Account or Subaccount or any "security entitlement" (as defined in the NY UCC)
credited thereto, the Depositary Bank agrees that such lien or security interest
shall be subordinate to the lien and security interest of the Collateral
Trustee. The financial assets standing to the credit of the Accounts and
Subaccounts will not be subject to deduction, set-off, banker's lien, or any
other right in favor of any Person other than the rights of the Collateral
Trustee set forth in this Agreement. The Depositary Bank hereby waives any
right of banker's lien, set-off or counterclaim in respect of any assets
contained in any Account or Subaccount or otherwise that are held by the
Depositary Bank hereunder.
The Depositary Bank and the Partnership have not entered into any
agreement with respect to the Accounts or the Subaccounts or any financial
assets credited to any Account or Subaccount other than this Agreement, the Debt
Service Reserve Guarantee Arrangement and the Security Documents. The
Depositary Bank has not entered into any agreement with the Partnership or any
other Person purporting to limit or condition the obligation of the Depositary
Bank to comply with entitlement orders originated by the Collateral Trustee in
accordance with this clause (a).
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Except for the claims and interest of the Collateral Trustee and the
Partnership in each of the Accounts and Subaccounts, the Depositary Bank does
not have actual knowledge of any claim to, or interest in, any Account or
Subaccount or in any financial asset credited thereto. If any Person asserts
any lien, encumbrance or adverse claim (including any writ, garnishment,
judgment, warrant of attachment, execution or similar process) against any
Account or Subaccount or in any financial asset credited thereto, the Depositary
Bank shall promptly notify the Collateral Trustee, the Bank Senior Lenders, the
Capital Markets Trustee, the Oil Payment Insurers Administrative Agent and the
Partnership thereof.
The rights and powers granted to the Depositary Bank by the Collateral
Trustee have been granted in order to perfect its lien and the security
interests in the Accounts and the Subaccounts, and are powers coupled with an
interest and will neither be affected by the bankruptcy of the Partnership nor
the lapse of time.
The Partnership shall not have any rights against or to monies held in
the Accounts or Subaccounts, as third party beneficiary or otherwise, except the
right to receive or make requisitions of monies held in the Accounts or
Subaccounts as permitted by this Agreement, and to direct the investment of
monies held in the Accounts or Subaccounts as permitted by Section 5.04. In no
event shall any amounts or Authorized Investments deposited in or credited to
any Account or Subaccount be registered in the name of the Partnership, payable
to the order of the Partnership or specially endorsed to the Partnership except
to the extent that the foregoing have been specially endorsed to the Collateral
Trustee or in blank.
For purposes of the NY UCC, the Depositary Bank confirms and agrees
that the "securities intermediary's jurisdiction" (as defined in the NY UCC)
with respect to the Accounts and the Subaccounts is the State of New York.
(b) The Partnership shall instruct the Collateral Trustee to
disburse funds from the Accounts or Subaccounts only in accordance with Section
5.05 and Section 5.06. The Partnership shall not, and shall not permit any
Person to, make any transfer, deposit or withdrawal in respect of any Account or
Subaccount other than pursuant to (i) this Article V or (ii) a valid and binding
order of a court of competent jurisdiction, provided that any withdrawal or
transfer from an Account or Subaccount pursuant to a valid and binding order of
a court of competent jurisdiction that is not otherwise expressly permitted by
the terms of this Article V shall constitute an "Event of Default" under clause
(a) of Section 10.01 after the expiration of the applicable period of grace set
forth therein.
(c) The Partnership shall establish an unsecured operating account
(the "Operating Account") with the Depositary Bank, into which deposits shall be
made in accordance with clause (a)(i)(B) of Section 5.05.
5.02 Subaccounts. (a) Subject to clause (b) of this Section 5.02,
each Account may include one or more secured accounts ("Subaccounts"),
established and maintained in The City of New York by the Collateral Trustee in
the name of the Collateral
43
Trustee, with the Depositary Bank designated as the "securities intermediary".
Each Subaccount shall be identified with the particular Account to which it
relates and shall be segregated from any other Subaccount.
(b) The Partnership shall give the Collateral Trustee at least 20
days' prior notice of its intention to establish a Subaccount and Majority
Lenders shall have the right within such 20 day period, in their sole
discretion, to reject the establishment of such Subaccount.
(c) Unless otherwise specified in this Agreement, all references to
any Account shall include references to all related Subaccounts thereof and such
Subaccounts shall be subject to the same restrictions and limitations as the
Accounts to which they relate.
(d) No Subaccount may itself include another Subaccount.
5.03 Deposits of Project Funds. (a) Senior Loan Drawdowns.
Borrowings under Senior Loans (other than Capital Markets Senior Debt) shall be
paid directly into the Bank Loan Drawdown and Equity Funding Account.
Simultaneously with any deposit of proceeds of Senior Bank Loans, a pro rata
portion of the Capital Commitments shall be paid directly into the Bank Loan
Drawdown and Equity Funding Account. The net proceeds from the issuance of
Capital Markets Senior Debt shall be paid directly to the Bond Proceeds Account.
After Substantial Reliability, the Partnership shall instruct the Collateral
Trustee to transfer all funds remaining in the Bank Loan and Equity Funding
Account and the Bond Proceeds Account to the Project Revenue Account and, at the
discretion of the Partnership, an amount no greater than the Contingency Reserve
Amount to the Contingency Reserve Account, and, thereafter, the Collateral
Trustee shall instruct the Depositary Bank to close the Bank Loan and Equity
Funding Account and the Bond Proceeds Account.
(b) Proceeds from Project Production. In accordance with Section
6.06, the Partnership shall cause each purchaser of Product Production from the
Partnership (including without limitation ▇▇▇▇▇ R&M) or any Person making
payment on behalf of any such purchaser (including financial institutions making
payments on its behalf under letters of credit or otherwise), to make all such
payments directly into the Project Revenue Account.
(c) Proceeds from Project Documents. The Partnership shall cause
the parties to the Project Documents and any Persons making any payments on
behalf of each of them (including financial institutions making payments on any
such Person's behalf under letters of credit or otherwise) to make any and all
payments required to be made to the Partnership under such Project Documents
(other than payments giving rise to Mandatory Prepayments under Section 2.05)
directly into the Project Revenue Account.
(d) Proceeds from Sale of Project Property and Condemnation
Compensation. The Partnership shall cause the purchaser of any Project Property
and any Persons making any payments on behalf of such purchaser (including
financial institutions making payments on its behalf under letters of credit or
otherwise) to make any and all such
44
payments directly into the Project Revenue Account. Proceeds received in respect
of any Condemnation Compensation shall be paid directly into the Mandatory
Prepayment Account.
(e) Proceeds from Casualty Insurance. The Partnership shall cause the
proceeds from insurance for any casualty (other than any Catastrophic Casualty)
suffered by Project Property to be paid directly into the Casualty and Insurance
Account for application in accordance with Section 7.07.
(f) Proceeds from Catastrophic Casualty Insurance. The Partnership
shall cause the proceeds from insurance for any Catastrophic Casualty suffered
by Project Property to be paid directly into the Catastrophic Casualty Account
for application in accordance with Section 7.07.
(g) Mandatory Prepayments. Notwithstanding clauses (a) through (f) of
this Section 5.03, the Partnership shall direct the Collateral Trustee to
deposit any amounts subject to mandatory prepayment pursuant to Section 2.05
directly into the Mandatory Prepayment Account.
(h) Permitted Hedging Arrangements. The Partnership shall direct that
the proceeds of all Permitted Hedging Arrangements be paid directly into the
Principal & Interest Accrual Account.
(i) Debt Service Reserve, PMI Surplus Reserve, Tax Reserve, Major
Maintenance Reserve and Contingency Reserve Payments. Payments into the Debt
Service Reserve Account, the PMI Surplus Reserve Account, the Tax Reserve
Account, the Major Maintenance Account and the Contingency Reserve Account shall
be made in accordance with Sections 5.09, 5.10, 5.11, 5.12 and 5.13,
respectively.
(j) Other Project Funds. Other than as specified in clauses (a)
through (i) of this Section 5.03, all Project Funds (except for any amounts
repaid to the Partnership by PMI, whether as the result of defenses exercised by
the Partnership or for any other reason, to the extent such amounts relate to
any shipment of Maya crude oil for which the Oil Payment Insurers have made
payment to PMI under the Oil Payment Insurance Policy) shall be deposited
directly into the Project Revenue Account.
(k) If, notwithstanding the instructions required to be given in
accordance with this Section 5.03, any payments are remitted to the Partnership
or another Person other than by deposit into the Accounts in accordance with
this Agreement (it being the intent and understanding of the parties hereto that
such payments are not to be made directly to the Partnership or any other Person
but directly into the Accounts for application in accordance with this Article
V), then, to the fullest extent permitted by applicable law, the Partnership or
such other Person shall receive such payments in a constructive trust for the
Secured Parties and subject to the Secured Parties' security interest, and shall
(or shall cause the Person receiving such payments to) promptly remit them to
the Collateral Trustee for deposit in the Account or Accounts designated by this
Section 5.03.
45
5.04 Investment of Funds in Accounts. (a) Unless a Default has
occurred and is Continuing, the Collateral Trustee shall invest funds (and vary
and redeem such investments) in the Accounts as directed by the Partnership,
provided that such investments shall be made only in Authorized Investments and
shall be at the expense of the Partnership.
(b) If a Default has occurred and is Continuing, the Collateral
Trustee shall, to the extent so notified as contemplated by clause (a) of
Section 5.06, invest funds (and vary and redeem such investments) in the
Accounts as directed by the Person designated in the notice given pursuant to
clause (a) of Section 5.06, provided that such funds may be invested only in
Authorized Investments and shall be at the expense of the Partnership.
(c) If at any time the Collateral Trustee has not received
instructions as to the investments of funds (or variation or redemption of such
investments) in the Accounts, it shall use its reasonable efforts (without
waiting for further instructions) to, and shall in any event within 10 days
following receipt of funds, invest such funds to the extent practicable in
Authorized Investments that mature no later than the next Business Day. All
investments of funds in the Accounts pursuant to this Section 5.04 shall be made
on behalf of the Collateral Trustee and shall be reflected as such on the books
and records of the Collateral Trustee and shall be at the expense of the
Partnership.
(d) Whenever directed to make a withdrawal or transfer of funds, the
Collateral Trustee (unless, so long as no Default is Continuing, otherwise
directed by the Partnership) is authorized to liquidate any investment, to the
extent that, after application of all other available funds, liquidation of such
investment is necessary to make such transfer. The Collateral Trustee shall use
its reasonable efforts to liquidate investments in a manner that minimizes
interest costs and penalties (unless, so long as no Default is Continuing,
otherwise directed by the Partnership). The Collateral Trustee (in its
individual and trust capacities) shall have, however, no liability with respect
to any interest cost or penalty on the liquidation of any investment pursuant to
this clause (d), nor shall the Collateral Trustee (in its individual and trust
capacities) have any liability with respect to investments of moneys held in the
Accounts (or any losses resulting therefrom) made in accordance with this
Section 5.04.
(e) All references in this Agreement to Accounts, and to cash,
moneys or funds therein or balances thereof, shall include Authorized
Investments in which such moneys are then invested and the proceeds thereof.
5.05 Withdrawals from Accounts Pre-Default. (a) Subject to clause
(e) of this Section 5.05, at any time and from time to time, unless a Default
shall have occurred and be Continuing, the Partnership shall on the first
Business Day of each calendar month, and shall have the right at any other time
to, direct the Collateral Trustee to withdraw funds from the Bank Loan Drawdown
and Equity Funding Account, the Bond Proceeds Account or Project Revenue
Account, and apply such funds in the following order of priority, provided that
withdrawals from the Project Revenue Account for any purpose other than those
described in subclause (i) below shall be permitted only if and to the extent
that the funds on
46
deposit in the Project Revenue Account at any time exceed the aggregate amount
of all invoices then outstanding in respect of the Partnership's payment
obligations (including without limitation in respect of any premium payable to
PMI pursuant to Article 18 of the Long-Term Oil Supply Agreement) under the
Long-Term Oil Supply Agreement, as certified in a certificate delivered to the
Collateral Trustee by a Responsible Officer of the Partnership:
(i) first, (A) to pay Project Expenses then due and payable, as
evidenced by invoices provided to the Collateral Trustee, (B) thereafter,
to transfer funds into the Operating Account in an amount equal to 30 days
of Estimated Project Expenses (other than Project Expenses relating to the
purchase of crude oil), as certified by the Partnership in an Estimated
Payment Certificate and (C) thereafter, to transfer funds into the PMI
Premium Reserve Account in an amount equal to the Quarterly Surplus
received by the Partnership in the relevant quarter to the extent such
funds are required, based upon calculations delivered by PMI and reasonably
acceptable to the Partnership, for payments of premiums to PMI pursuant in
the subsequent quarter or quarters;
(ii) second, to pay Oil Payment Reimbursement Obligations then due
and payable;
(iii) third, to pay Senior Debt Obligations then due and payable
(other than those to be withdrawn in accordance with subclause (x) below);
(iv) fourth, to transfer funds to the Principal & Interest Accrual
Account in an amount equal to (A) all Senior Debt Obligations to become due
prior to and including the immediately succeeding Payment Date, less any
balance in the Principal & Interest Accrual Account and (B) on each of the
last three Payment Dates or, if necessary to preserve the Debt Service
Coverage Ratios for each remaining year set forth in the Base Case Model in
the case of a reallocation of Loans pursuant to Section 7.01 of the Bank
Senior Loan Agreement, four Payment Dates, Payment Dates, one-third or one-
fourth, as the case may be, of the aggregate principal amount of all Senior
Loans then outstanding under the Tranche B Bank Facility;
(v) fifth, to transfer funds to the Tax Reserve Account in an amount
equal to the Projected Tax Reserve Amount less the balance in the Tax
Reserve Account;
(vi) sixth, to transfer funds to the Major Maintenance Account in an
amount not less than the Minimum Major Maintenance Reserve Payment due on
the immediately succeeding Payment Date and not exceeding the Maximum Major
Maintenance Reserve Payment with respect to such Payment Date;
(vii) seventh, to transfer to the Debt Service Reserve Account an
amount equal to the Debt Service Reserve Shortfall (except to the extent
such Debt Service Reserve Shortfall results from a drawing under the Debt
Service Reserve Guarantee Arrangement that has not yet been repaid);
47
(viii) eighth, without duplication of its obligation to transfer
funds into the PMI Premium Reserve Account, to transfer funds to the PMI
Surplus Reserve Account in an amount equal to the amount, if any, by which
the PMI Surplus under the Long-Term Oil Supply Agreement exceeds the
balance in the PMI Surplus Reserve Account, up to an amount not exceeding
the PMI Surplus Reserve Amount;
(ix) ninth, (A) to pay interest in respect of any outstanding
amounts drawn under the Debt Service Reserve Guarantee Arrangement and (B)
thereafter, on the sixth Payment Date and each subsequent Payment Date
until the aggregate principal amount available under the Debt Service
Reserve Guarantee Arrangement has been reduced to zero in accordance with
clause (b)(i) of Section 5.09, to transfer the Debt Service Reserve Accrual
Amount to the Debt Service Reserve Account, provided that, if the Debt
Service Reserve Accrual Amount is not so transferred on any such Payment
Date, the Debt Service Reserve Accrual Amount due on the next succeeding
Payment Date, if any, shall be increased by such unpaid amount or amounts;
and
(x) tenth, to apply any Excess Cash Flow in accordance with clauses
(b) and (c) of this Section 5.05; and
(xi) eleventh, after Final Completion, to make Restricted Payments
in accordance with Section 11.01.
(b) Prepayments of Bank Senior Debt with Excess Cash Flow. After
Start-up, at any time at which any Bank Senior Term Debt remains outstanding, on
(but not prior to) each Payment Date, the Partnership shall instruct the
Collateral Trustee to transfer funds to the Mandatory Prepayment Account in an
amount equal to 75% of excess cash flow ("Excess Cash Flow"), consisting of:
(i) the balance in the Project Revenue Account (after application in accordance
with subclauses first through ninth of clause (a) of this Section 5.05), plus
(ii) the balance in the Principal & Interest Accrual Account, if any, in excess
of the Senior Debt Obligations to be paid with such funds on or before such
Payment Date, plus (iii) the balance in the Tax Reserve Account, if any, in
excess of the Projected Tax Reserve Amount, plus (iv) the balance in the Major
Maintenance Account, if any, in excess of the Maximum Accrued Major Maintenance
Reserve Amount after taking into account the Major Maintenance Reserve Payment
to be paid on such Payment Date, plus (v) the balance in the PMI Surplus Reserve
Account in excess of the PMI Surplus Reserve Amount, plus (vi) the balance in
the Debt Service Reserve Account, if any, in excess of (A) the Debt Service
Reserve Amount, less (B) the aggregate principal amount then available under the
Debt Service Reserve Guarantee Arrangement. On each such Payment Date, the
balance in the Mandatory Prepayment Account on account of this clause (b) shall
be applied to the prepayment of Bank Senior Term Debt in accordance with the
Bank Senior Loan Agreements.
(c) Debt Service Reserve Principal Repayments and Funding with
Residual Excess Cash Flow. On each Payment Date after Start-up on which any
Bank Senior Term Debt remains outstanding, the Partnership shall instruct the
Collateral Trustee to apply
48
funds in an amount equal to the 25% of Excess Cash Flow not covered by clause
(b) of this Section 5.05 (or in an amount equal to 100% Excess Cash Flow if and
when all Bank Senior Term Debt has been repaid) (i) to repay any principal
amounts drawn down under the Debt Service Reserve Guarantee Arrangement and (ii)
thereafter, to fund the Debt Service Reserve Account.
(d) Payments to the Distribution Account. Within 30 days following
each Payment Date after Final Completion, the Partnership may instruct the
Collateral Trustee to transfer funds in an amount equal to any remaining Excess
Cash Flow after the application of clauses (b) and (c) of this Section 5.05 to
the Distribution Account. At the Partnership's discretion, funds on deposit in
the Distribution Account may be used (i) after Substantial Reliability, to make
Restricted Payments pursuant to and in accordance with the terms of Section
11.01 of this Agreement or (ii) to pay Senior Debt Obligations when due. Funds
on deposit in the Distribution Account may be transferred upon the instruction
of the Partnership (or, if a Default has occurred and is Continuing, by the
Collateral Trustee pursuant to clause (a) of Section 5.06).
(e) Withdrawals from Bond Proceeds Account. The Collateral Trustee,
acting at the instruction of the Partnership, shall not withdraw any funds on
deposit in the Bond Proceeds Account for any reason unless and until the
Independent Engineer has confirmed that the funds disbursed to the Partnership
to date in accordance with this Section 5.05 have been spent (i) in accordance
with the Initial Construction Budget, as amended from time to time by each
Annual Budget and Operating Plan and as modified by any Change Orders expressly
permitted under this Agreement and authorized by the Independent Engineer, and
(ii) as described under the headings "Use of Proceeds" and "Financing Plan" in
the Offering Circular.
(f) Withdrawals from PMI Premium Reserve Account. The Collateral
Trustee, acting at the instruction of the Partnership, shall transfer any funds
on deposit in the PMI Premium Reserve Account to the Project Revenue Account
when and to the extent required to pay any premium on the purchase price of Maya
to PMI pursuant to Article 18 of the Long-Term Oil Supply Agreement.
5.06 Withdrawals from Accounts During the Continuance of a Default.
(a) If a Default shall have been declared and is Continuing, the Senior
Lender(s) declaring a Default in accordance with Section 10.02 may notify the
Collateral Trustee (with a copy to the Partnership) that, as contemplated by
this Agreement, the Collateral Trustee shall no longer accept instructions from
the Partnership for the investment, withdrawal or transfer of funds or
investments in the Accounts. The Depositary Bank shall thereafter accept
instructions for the investment, withdrawal or transfer of funds or investments
in such Accounts solely from the Collateral Trustee or other Person(s)
designated by the Collateral Trustee (as designated in the notice given under
this clause (a)). The Collateral Trustee shall invest Project Funds only in
Authorized Investments. The Collateral Trustee shall give the Depositary Bank
prompt notice of the circumstances expressly contemplated by this clause (a).
49
(b) Following the receipt by the Collateral Trustee of a notice
pursuant to clause (a) of this Section 5.06, and until such time as a Cessation
Notice has been given under clause (c) of this Section 5.06, or Enforcement
Action is taken by the Senior Lenders so entitled in accordance with Section
10.04, the Collateral Trustee shall exercise its rights to instruct the
Depositary Bank in a manner that causes available funds in the Accounts to be
applied in the order of priority set forth in clause (a) of Section 5.05, except
that (i) no funds shall be credited to the Distribution Account and (ii) any Oil
Payment Reimbursement Obligations that remain unpaid on a Priority Termination
Date shall rank pari passu in right of payment with the Senior Debt Obligations
then due and payable, in each of cases (i) and (ii) until such time as a
Cessation Notice has been delivered under clause (c) of this Section 5.06 and
the provisions of clauses (b) and (c) of Section 5.05 shall continue to apply.
Funds not distributed pursuant to the foregoing provisions or Sections 5.05
shall remain in the Project Revenue Account.
(c) Upon receipt by the Collateral Trustee of a Cessation Notice
with respect to a Default that is Continuing, the Collateral Trustee shall
immediately notify the Depositary Bank, with a copy to the Partnership,
directing them once again to accept the directions of the Partnership, and the
Collateral Trustee and the Depositary Bank shall again accept the directions of
the Partnership in respect of investment, withdrawal and transfer of funds in
the Accounts on the terms and conditions of this Agreement.
(d) Immediately before unpaid Oil Payment Reimbursement Obligations
become pari passu in right of payment with Senior Debt Obligations, as provided
in clause (b)(ii) of this Section 5.06, the Collateral Trustee shall, without
further instruction by the Senior Lenders or the Partnership, apply any and all
funds then on deposit in the Project Revenue Account, less any amounts that the
Collateral Trustee determines (based on a certificate delivered to it by a
Responsible Officer of the Partnership) are necessary to pay outstanding
invoices for (i) purchases of crude oil (including without limitation in respect
of any premium payable to PMI pursuant to Article 18 of the Long-Term Oil Supply
Agreement) or (ii) other Project Expenses, in each of cases (i) and (ii) in the
ordinary course of business, to the repayment of any and all Oil Payment
Reimbursement Obligations then outstanding.
5.07 Principal & Interest Accrual Account.
(a) Deposits. To the extent available from funds in the Project
Revenue Account, funds shall be deposited into the Principal & Interest Accrual
Account at any time and from time to time when there exists a Principal &
Interest Accrual Account Shortfall until the balance in the Principal & Interest
Accrual Account is in an amount not less than all Senior Debt Obligations that
are or will become due and payable prior to or on the immediately succeeding
Payment Date.
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(b) Withdrawals.
(i) Funds deposited into the Principal & Interest Accrual Account in
accordance with clause (a)(iv)(A) of Section 5.05 shall be applied to pay
Senior Debt Obligations as and when due, upon the instruction of the
Partnership in accordance with Section 5.05 or the Collateral Trustee in
accordance with Section 5.06, as the case may be. Notwithstanding anything
in the foregoing sentence to the contrary, at any time on or after a
Priority Termination Date, any funds that have been so deposited into the
Principal & Interest Accrual Account after the giving of the relevant
Priority Termination Notice shall be applied to pay Senior Debt Obligations
and Oil Payment Reimbursement Obligations as and when due, upon the
instruction of the Collateral Trustee in accordance with Section 5.06.
(ii) Funds deposited into the Principal & Interest Accrual Account in
accordance with clause (a)(iv)(B) of Section 5.05 on each of the last three
Payment Dates or, if necessary to preserve the Debt Service Coverage Ratios
for each remaining year set forth in the Base Case Model in the case of a
reallocation of Loans pursuant to Section 7.01 of the Bank Senior Loan
Agreement, four Payment Dates, Payment Dates shall be transferred to the
Tranche B Amortization Account on such Payment Date.
5.08 Tranche B Amortization Account.
(a) Deposits. Funds shall be deposited into the Tranche B
Amortization Account pursuant to clause (b)(ii) of Section 5.07.
(b) Withdrawals. Funds on deposit in the Tranche B Amortization
Account shall be applied to repay the principal of all Senior Loans outstanding
under the Tranche B Bank Facility upon maturity.
5.09 Debt Service Reserve Account.
(a) Deposits.
(i) To the extent available, funds shall be deposited into the Debt
Service Reserve Account pursuant to clauses (a)(vii), (a)(ix)(B) and (c) of
Section 5.05 and clause (b) of Section 5.06. In addition, any funds drawn
down under the Debt Service Reserve Guarantee Arrangement shall be
deposited in the Debt Service Reserve Account.
(ii) The balance in the Debt Service Reserve Account at any time of
determination shall be deemed to be the aggregate at such time of (A) the
amount of cash on deposit in such account, (B) the market value of
Authorized Investments in respect of funds deposited therein and (C) the
amount available for drawings under the Debt Service Reserve Guarantee
Arrangement. At or prior to Substantial
51
Reliability, the Partnership shall deposit or cause to be deposited funds
in the Debt Service Reserve Account so that the balance in such Account
shall be in an amount not less than the Debt Service Reserve Amount.
The Partnership shall have made a "Debt Service Reserve Payment" to
the extent that it deposits funds, including Authorized Investments, by way of
transfer from other Accounts or otherwise, to the Debt Service Reserve Account
or procures the Debt Service Reserve Guarantee Arrangement. A withdrawal or
transfer from the Debt Service Reserve Account shall have been made to the
extent that funds, including Authorized Investments, are transferred out of the
Debt Service Reserve Account or the Debt Service Reserve Guarantee Arrangement
is reduced or terminated.
(b) Withdrawals from the Debt Service Reserve Account. Funds in the
Debt Service Reserve Account may be withdrawn only as follows:
(i) Debt Service Reserve Guarantee Arrangement. The aggregate
principal amount of the Debt Service Reserve Guarantee Arrangement shall be
automatically reduced to the extent that the Partnership pays Debt Service
Reserve Accrual Amounts pursuant to clause (a)(ix)(B) of Section 5.05 or
makes Debt Service Reserve Payments pursuant to clause (c) of Section 5.05,
provided that, in each case, after giving effect thereto, there shall be no
Debt Service Reserve Shortfall.
(ii) Transfers to Pay Senior Debt. The Partnership may direct the
Collateral Trustee to, and the Collateral Trustee shall, apply all or a
part of the funds in the Debt Service Reserve Account at any time to pay
Senior Debt Obligations (and, at any time on or after a Priority
Termination Date, Oil Payment Reimbursement Obligations) due and payable on
the date of the withdrawal or within five Business Days thereafter to the
extent that there are insufficient funds in the Principal & Interest
Accrual Account available to make such payments, provided that no Default
shall have occurred and be Continuing on the date of payment.
(iii) Post-Default. Upon the occurrence of a Default, the Collateral
Trustee shall retain the funds on deposit in the Debt Service Reserve
Account in such account and the Collateral Trustee shall apply such funds
in accordance with clause (b) of Section 5.06.
5.10 PMI Surplus Reserve Account. (a) Deposits. To the extent
available from funds in the Project Revenue Account, funds shall be deposited
into the PMI Surplus Reserve Account pursuant to clause (a)(viii) of Section
5.05 and clause (b) of Section 5.06 at any time and from time to time when the
then existing PMI Surplus exceeds the balance in the PMI Surplus Reserve Account
(each such amount, a "PMI Surplus Reserve Payment") until the balance in the PMI
Surplus Reserve Account is an amount not less than the PMI Surplus Reserve
Amount.
52
(b) Withdrawals. Funds in the PMI Surplus Reserve Account may be
withdrawn only as follows:
(i) Shortfalls in Principal & Interest Accrual Account. The
Partnership shall direct the Collateral Trustee to transfer to the
Principal & Interest Accrual Account an amount equal to the difference
between the balance of the Principal & Interest Accrual Account and the
Senior Debt Obligations (and, at any time on or after a Priority
Termination Date, Oil Payment Reimbursement Obligations) that are or will
become due and payable prior to or on the immediately succeeding Payment
Date.
(ii) Payment of Senior Debt. Funds on deposit in the PMI Surplus
Reserve Account shall be transferred in accordance with clause (b)(i) of
this Section 5.10, provided, however, that if funds are otherwise
unavailable in any Account, funds on deposit in the PMI Surplus Reserve
Account shall be used for the payment of Senior Debt Obligations (and, at
any time on or after a Priority Termination Date, Oil Payment Reimbursement
Obligations) that are then due and payable.
5.11 Tax Reserve Account. (a) Deposits. To the extent available
from funds in the Project Revenue Account, funds shall be deposited in the Tax
Reserve Account pursuant to clause (a)(v) of Section 5.05 and clause (b) of
Section 5.06 at any time when the then existing Projected Tax Reserve Amount
exceeds the balance in the Tax Reserve Account.
(b) Withdrawals.
(i) At any time when funds are on deposit in the Tax Reserve
Account, the Partnership may direct the Collateral Trustee to instruct the
Depositary Bank to pay an amount equal to the General Partner's or the
Limited Partner's income or franchise taxes then due and payable (including
without limitation any amounts required to be paid to ▇▇▇▇▇ Holdings, the
General Partner or the Limited Partner under the Tax Sharing Agreement) to
an account designated by the Partnership upon receipt by the Collateral
Trustee from ▇▇▇▇▇ Holdings of a Tax Payment Undertaking in the form
attached hereto as Appendix F.
(ii) At any time when funds are on deposit in the Tax Reserve
Account, the Partnership may direct the Collateral Trustee to instruct the
Depositary Bank to transfer funds to the Operating Account in an amount
equal to any Taxes imposed on the Partnership, itself, that are then due
and payable (other than with respect to any income or franchise taxes of,
or that are required to be paid by, the General Partner or the Limited
Partner under the Tax Sharing Agreement, or operational taxes that are
considered to be Project Expenses) upon receipt by the Collateral Trustee
from the Partnership of a Tax Payment Undertaking in the form attached
hereto as Appendix F.
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(iii) Notwithstanding subclauses (i) and (ii) of this clause (b), if
funds are otherwise unavailable in any Account, funds on deposit in the Tax
Reserve Account shall be used for the payment of Senior Debt Obligations
(and, at any time on or after a Priority Termination Date, Oil Payment
Reimbursement Obligations) that are then due and payable.
5.12 Major Maintenance Account. (a) On each Payment Date, to the
extent available from funds in the Project Revenue Account, funds shall be
deposited in the Major Maintenance Account pursuant to clause (a)(vi) of Section
5.05 and clause (b) of Section 5.06 in an amount not less than the Minimum Major
Maintenance Reserve Payment and not in excess of the Maximum Major Maintenance
Reserve Payment in respect of such Payment Date until the balance in the Major
Maintenance Reserve Account is not less than the amount budgeted to complete the
Major Maintenance Plan on the next scheduled Major Maintenance. The Minimum
Major Maintenance Reserve Payment shall be an amount equal to (i) (A) the amount
budgeted to complete the Major Maintenance Plan on the next scheduled Major
Maintenance, less (B) the balance in the Major Maintenance Account, divided by
(ii) the number of Payment Dates from and including the current Payment Date
until the date of the commencement of the next scheduled Major Maintenance. The
Maximum Major Maintenance Reserve Payment shall be an amount equal to (i) the
amount budgeted to complete the Major Maintenance Plan on the next scheduled
Major Maintenance, divided by (ii) the number of Payment Dates equal to the
number of Payment Dates from and including the Payment Date immediately
following the last scheduled Major Maintenance, or if no Major Maintenance had
previously been scheduled following Substantial Reliability, less two Payment
Dates. The Partnership shall deliver to the Collateral Trustee and the
Independent Engineer, at least two Business Days prior to each Payment Date on
which a Major Maintenance Reserve Payment is required to be made, an officer's
certificate, in the form attached hereto as Appendix G, setting forth the basis
and calculations for the payments required to be made in this Section 5.12.
Such Major Maintenance Reserve Payment Certificate shall be reviewed and
confirmed by the Independent Engineer.
(b) Funds on deposit in the Major Maintenance Account shall be
transferred to the Operating Account in the amount set forth for Major
Maintenance expenses in the applicable Estimated Payment Certificate and shall
be used solely for the payment of Major Maintenance expenses or, if funds are
otherwise unavailable in any Account, withdrawn for the payment of Senior Debt
Obligations that are then due and payable, provided that, if the Major
Maintenance Reserve Payments allocated for a particular scheduled Major
Maintenance exceed the actual Major Maintenance expenses for such scheduled
Major Maintenance and if the Independent Engineer confirms or has confirmed that
such scheduled Major Maintenance has been completed and the Major Maintenance
expenses relating thereto have been paid, the Partnership shall instruct the
Collateral Trustee to transfer such unused Major Maintenance Reserve Payments to
the Project Revenue Account to be applied in accordance with Section 5.05 or
Section 5.06, as the case may be.
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5.13 Contingency Reserve Account. (a) Deposits. On the Final
Completion Date, the Partnership may direct the Collateral Trustee to transfer
an amount not exceeding in the aggregate the Contingency Reserve Amount, if any,
from the Bank Loan and Equity Funding Account and the Bond Proceeds Account to
the Contingency Reserve Account.
(b) Withdrawals. At any time and from time to time, the Partnership
may direct the Collateral Trustee to transfer funds on deposit in the
Contingency Reserve Account (i) to the Operating Account to be applied either
(A) to fund the cost (including operating expenses) of necessary repairs and
maintenance of the Heavy Oil Processing Facility to be incurred within the 30
days immediately succeeding such transfer, (B) to fund Mandatory Capital
Expenditures to be incurred within the 30 days immediately succeeding such
transfer or (C) to fund the cost of converting the ▇▇▇▇▇ Project to stand-alone
operation, or (ii) to the Debt Service Reserve Account, provided, however, that
if funds are otherwise unavailable in any Account, funds on deposit in the
Contingency Reserve Account shall be used for the payment of Senior Debt
Obligations that are then due and payable. If the Partnership shall elect to
apply funds on deposit in the Contingency Reserve Account for the purposes set
forth in subclause (i) of this clause (b), at least two Business Days prior to
such transfer, the Partnership shall deliver to the Collateral Trustee a
certificate setting forth in reasonable detail the necessary repairs and
maintenance or the Mandatory Capital Expenditures, as the case may be, which
certificate shall be reviewed and confirmed by the Independent Engineer.
5.14 Mandatory Prepayment Account. (a) Deposits. The Partnership
shall deposit funds, or shall cause the Collateral Trustee to transfer funds,
into the Mandatory Prepayment Account in accordance with the terms set forth in
clause (a) of Section 2.05 or clause (b) of Section 5.05, as the case may be.
(b) Withdrawals. All funds deposited into the Mandatory Prepayment
Account in accordance with the terms set forth in clause (a) of Section 2.05
shall within two Business Days of such deposit be applied to the prepayment of
Senior Debt in accordance with clause (a) of Section 2.05 and the Senior Loan
Agreements (and, at any time on or after a Priority Termination Date, to the
prepayment of Oil Payment Reimbursement Obligations). All funds deposited into
the Mandatory Prepayment Account in accordance with the terms set forth in
clause (b) of Section 2.05 shall be applied to the prepayment of Bank Senior
Debt in accordance with clause (b) of Section 2.05 and the Bank Senior Loan
Agreements (and, at any time on or after a Priority Termination Date, to the
prepayment of Oil Payment Reimbursement Obligations). All funds deposited into
the Mandatory Prepayment Account in accordance with the terms set forth in
clause (c) of Section 2.05 shall within two Business Days of such deposit be
applied to the prepayment of Senior Debt and Oil Payment Reimbursement
Obligations in accordance with clause (c) of Section 2.05 and the Senior Loan
Agreements.
5.15 Estimated Payment Certificate. Before directing the Collateral
Trustee to make transfers to the Operating Account in accordance with clause
(a)(i) of Section 5.05, the Partnership shall deliver to the Collateral Trustee
at least two Business
55
Days prior to the date of the applicable transfer, an Officer's Certificate (an
"Estimated Payment Certificate") setting forth in reasonable detail (i) the
amount of Project Expenses, including without limitation Major Maintenance
expenses separately identified, then due and payable but unpaid, (ii) the
Partnership's estimate of the amount of Project Expenses, including Major
Maintenance expenses separately identified, that will become due and payable
within the 30 days immediately succeeding such transfer, and (iii) the aggregate
amount of cash in the Operating Account as of the date of the Estimated Payment
Certificate (the sum of (i) and (ii) less (iii) being the "Estimated Project
Expenses"). Each such Estimated Payment Certificate shall contain (i) a warranty
that the funds disbursed by the Collateral Trustee from the Project Revenue
Account and the Major Maintenance Account, as the case may be, to the Operating
Account shall be used solely to pay Estimated Project Expenses as described in
such Estimated Payment Certificate and (ii) a certification as to the aggregate
amount of funds in the Operating Account. The Collateral Trustee may
conclusively rely upon the contents of such Estimated Payment Certificate. Such
Estimated Payment Certificate shall also be reviewed and confirmed by the
Independent Engineer if any of the Collateral Trustee, the Administrative
Agents, the Capital Markets Trustee or Majority Lenders (or, at any time on or
after a Priority Termination Date, Majority Secured Parties) shall request such
review and acceptance.
5.16 Reports and Certifications. (a) The Collateral Trustee shall
deliver to the Partnership and to the Oil Payment Insurers Administrative Agent,
the Capital Markets Trustee and each Bank Senior Lender, no later than 20 days
after the end of each month following the Closing Date, copies of the account
statements for all Accounts for such month prepared or compiled by the
Collateral Trustee. Such account statements shall indicate, with respect to each
such account, deposits and withdrawals, investments made and closing balances.
(b) Each time the Partnership directs that a transfer or
withdrawal be made from an Account, it will be deemed to represent and warrant
for the benefit of the Collateral Trustee and the Secured Parties that such
transfer or withdrawal is being made in an amount, and will be applied solely
for the purposes, permitted by this Article V. Any direction for transfer or
withdrawal of funds from any Account for purposes of making a Restricted Payment
pursuant to Section 11.01 shall contain express identification of such purpose.
(c) The Collateral Trustee shall maintain all such accounts, books
and records as may be necessary to record all transactions carried out by it
under this Agreement. The Collateral Trustee shall permit the Bank Senior
Lenders, the Oil Payment Insurers Administrative Agent, the Capital Markets
Trustee, the Partnership and their authorized representatives to examine such
accounts, books and records, provided that any such examination shall occur upon
reasonable notice and during normal business hours.
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ARTICLE VI
SECURITY INTERESTS
6.01 Property and Improvements of the Partnership. (a) On or prior
to the Closing Date, the Partnership shall execute and record in all necessary
places a mortgage, substantially in the form of Appendix H attached hereto (the
"Mortgage"), in favor of the Collateral Trustee for the benefit and on behalf of
the Secured Parties, as security for the full payment of the Senior Debt
Obligations and the Oil Payment Reimbursement Obligations and the performance of
the other obligations of the Borrower, the Partnership and the Partners under
the Financing Documents, covering all the Partnership's estate, right, title and
interest that it now has or that shall hereafter arise in and to (i) the ▇▇▇▇▇
Complex and all related units owned by the Partnership, (ii) the Ancillary
Equipment Site Lease, (iii) the Ground Lease and Blanket Easement and (iv) any
and all Permits, all as described more fully in the attachments, annexes and
appendices to the Mortgage. All improvements as of the Closing Date or
thereafter created on the property described in the Mortgage and all equipment
and fixtures as of the Closing Date or thereafter attached to the property
described in the Mortgage, all of which, including without limitation
replacements and additions thereto, shall be deemed to be and remain a part of
the property covered by the Mortgage. As consideration for the disbursement of
the Senior Debt, in addition to the Mortgage, the Partnership agrees that, if it
acquires any real property, improvements, real estate leases or other property
of the same or similar type described in this clause (a) and such real property,
improvements, real estate leases or other property are not then subject to the
Mortgage, any other mortgage granted to the Collateral Trustee for the benefit
of the Secured Parties or an existing pledge to the Collateral Trustee for the
benefit of the Secured Parties, the Partnership shall, within 30 days of such
acquisition, execute, record and deliver to the Collateral Trustee for the
benefit of the Secured Parties a mortgage substantially in the form of Appendix
H covering all right, title and interest in such property.
(b) The Partnership hereby grants, transfers and assigns to the
Collateral Trustee for the benefit and on behalf of the Secured Parties, as
security for the full payment of the Senior Debt Obligations and the Oil Payment
Reimbursement Obligations and the performance of the other obligations of the
Borrower, the Partnership and the Partners under the Financing Documents, and
hereby grants a lien on and first priority security interest in, all the
Partnership's estate, right, title and interest that it now has or that shall
hereafter arise in and to the mortgaged property and improvements described in
clause (a) of Section 6.01 (including after-acquired property), all as more
fully described in the Mortgage, including without limitation all attachments,
annexes, and appendices thereto. The Partnership shall make or cause to be made
any filings or recordations, give or cause to be given any notices and take or
cause to be taken any other actions as may be reasonably necessary in the State
of New York and in the State of Texas to perfect the grant of the first priority
security interest in the property described in this Section 6.01.
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6.02 General Partner's Interest in the Partnership. (a) The General
Partner hereby grants, transfers, delivers, pledges and assigns to the
Collateral Trustee for the benefit and on behalf of the Secured Parties, as
security for the full payment of the Senior Debt Obligations and the Oil Payment
Reimbursement Obligations and the performance of the other obligations of the
Borrower, the Partnership and the Partners under the Financing Documents, and
hereby grants a lien on and first priority security interest in, all right,
title and interest that it now has or that shall hereafter arise in and to the
following:
(i) all the General Partner's right, title and ownership interests
in and to the Partnership, which interests presently are designated as the
General Partnership Interest and represent a 1% interest in the Partnership
issued and outstanding as of the date hereof, and all the General Partner's
other legal, equitable or beneficial interests in the Partnership, whether
now owned or hereafter acquired by the General Partner;
(ii) all certificates representing or evidencing the General
Partnership Interest and any options, warrants or other rights to purchase
the General Partnership Interest or certificates at any time owned by the
General Partner, including, without limitation, all the General Partnership
Interest or certificates, options, warrants or other rights acquired by the
General Partner in the future, (collectively, the "GP Certificates") and
any other certificates or instruments representing the GP Certificates,
accompanied by certificate transfers duly executed in blank, and all cash,
securities, distributions and other property at any time in the future and
from time to time received, receivable or otherwise distributed, in respect
of or in exchange for any or all of the GP Certificates;
(iii) all securities in substitution for or in addition to any of the
foregoing, any certificates representing or evidencing such securities, and
all cash, securities, distributions and other property at any time and from
time to time received, receivable or otherwise distributed in respect of or
in exchange for any or all of the foregoing;
(iv) all other claims of any kind or nature, and any instruments,
certificates, chattel paper or other writings evidencing such claims,
whether in contract or tort, and whether arising by operation of law,
consensual agreement or otherwise, at any time acquired by the General
Partner in respect of any or all of the foregoing against the Partnership;
and
(v) to the extent not included in the foregoing, all cash and
non-cash proceeds, products, rents, revenues, issues, profits, royalties,
income, benefits, additions, substitutions, replacements, and accessions of
and to any and all of the foregoing, including without limitation (A) all
rights of the General Partner to receive monies due and to become due under
or pursuant to the General Partnership Interest; (B) all rights of the
General Partner to receive any indemnity, warranty or guarantee with
respect to the General Partnership Interest; and (C) to the extent not
included in
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the foregoing, all additions to and replacements of the General Partnership
Interest and all proceeds receivable or received when any and all of the
General Partnership Interest is sold, collected, exchanged or otherwise
disposed whether voluntarily or involuntarily.
(b) Any additional GP Certificates at any time or from time to time
after the Closing Date acquired by the General Partner (by purchase,
distribution or otherwise) shall form part of the General Partnership Interest
and the General Partner will forthwith pledge and deposit such GP Certificates
to and with the Collateral Trustee, promptly take all such other actions
required to perfect the security interest therein of the Collateral Trustee
under any requirement of law (including without limitation under the uniform
commercial code as adopted in any appropriate jurisdiction), deliver to the
Collateral Trustee certificates therefor accompanied by certificate transfers
duly executed in blank by the General Partner or such other instruments of
transfer as are acceptable to the Collateral Trustee and promptly thereafter
deliver, or cause to be delivered, to the Collateral Trustee a certificate
describing such GP Certificates and certifying that the same have been duly
deposited with, and are subject to the security interest in favor of, the
Collateral Trustee for the benefit and on behalf of the Secured Parties
hereunder.
(c) Notwithstanding anything to the contrary contained in clauses
(a) and (b) of this Section 6.02, if any partnership interest of the General
Partner in the Partnership (owned or hereafter acquired) is not evidenced by a
certificated security, the General Partner shall promptly notify the Collateral
Trustee and shall promptly take all actions required to perfect the security
interest therein of the Collateral Trustee under any requirement of law
(including without limitation under the uniform commercial code as adopted in
any appropriate jurisdiction).
6.03 Limited Partnership Interest in the Partnership. (a) The
Limited Partner hereby grants, transfers, delivers, pledges and assigns to the
Collateral Trustee for the benefit and on behalf of the Secured Parties, as
security for the full payment of the Senior Debt Obligations and the Oil Payment
Reimbursement Obligations and the performance of the other obligations of the
Borrower, the Partnership and the Partners under the Financing Documents, and
hereby grants a lien on and first priority security interest in, all right,
title and interest that it now has or that shall hereafter arise in and to the
following:
(i) all the Limited Partner's right, title and ownership interests
in and to the Partnership, which interests presently are designated as the
Limited Partnership Interest and represent a 99% interest in the
Partnership issued and outstanding as of the date hereof, and all the
Limited Partner's other legal, equitable or beneficial interests in the
Partnership, whether now owned or hereafter acquired by the Limited
Partner;
(ii) all certificates representing or evidencing the Limited
Partnership Interest and any options, warrants or other rights to purchase
the Limited Partnership Interest or certificates at any time owned by the
Limited Partner, including, without
59
limitation, all the Limited Partnership Interest or certificates, options,
warrants or other rights acquired by the Limited Partner in the future,
(collectively, the "LP Certificates") and any other certificates or
instruments representing the LP Certificates, accompanied by certificate
transfers duly executed in blank, and all cash, securities, distributions
and other property at any time in the future and from time to time
received, receivable or otherwise distributed, in respect of or in exchange
for any or all of the LP Certificates;
(iii) all securities in substitution for or in addition to any of
the foregoing, any certificates representing or evidencing such securities,
and all cash, securities, distributions and other property at any time and
from time to time received, receivable or otherwise distributed in respect
of or in exchange for any or all of the foregoing;
(iv) all other claims of any kind or nature, and any instruments,
certificates, chattel paper or other writings evidencing such claims,
whether in contract or tort, and whether arising by operation of law,
consensual agreement or otherwise, at any time acquired by the Limited
Partner in respect of any or all of the foregoing against the Partnership;
and
(v) to the extent not included in the foregoing, all cash and
non-cash proceeds, products, rents, revenues, issues, profits, royalties,
income, benefits, additions, substitutions, replacements, and accessions of
and to any and all of the foregoing, including without limitation (A) all
rights of the Limited Partner to receive monies due and to become due under
or pursuant to the Limited Partnership Interest; (B) all rights of the
Limited Partner to receive any indemnity, warranty or guarantee with
respect to the Limited Partnership Interest; and (C) to the extent not
included in the foregoing, all additions to and replacements of the Limited
Partnership Interest and all proceeds receivable or received when any and
all of the Limited Partnership Interest is sold, collected, exchanged or
otherwise disposed whether voluntarily or involuntarily.
(b) Any additional LP Certificates at any time or from time to time
after the Closing Date acquired by the Limited Partner (by purchase,
distribution or otherwise) shall form part of the Limited Partnership Interest
and the Limited Partner will forthwith pledge and deposit such LP Certificates
to and with the Collateral Trustee, promptly take all such other actions
required to perfect the security interest therein of the Collateral Trustee
under any requirement of law (including without limitation under the uniform
commercial code as adopted in any appropriate jurisdiction), deliver to the
Collateral Trustee certificates therefor accompanied by certificate transfers
duly executed in blank by the Limited Partner or such other instruments of
transfer as are acceptable to the Collateral Trustee and promptly thereafter
deliver, or cause to be delivered, to the Collateral Trustee a certificate
describing such LP Certificates and certifying that the same have been duly
deposited with, and are subject to the security interest in favor of, the
Collateral Trustee for the benefit and on behalf of the Secured Parties
hereunder.
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(c) Notwithstanding anything to the contrary contained in clauses
(a) and (b) of this Section 6.03, if any partnership interest of the Limited
Partner in the Partnership (owned or hereafter acquired) is not evidenced by a
certificated security, the Limited Partner shall promptly notify the Collateral
Trustee and shall promptly take all actions required to perfect the security
interest therein of the Collateral Trustee under any requirement of law
(including without limitation under the uniform commercial code as adopted in
any appropriate jurisdiction).
6.04 The Partnership's Shares in the Borrower. The Partnership
hereby grants, transfers, delivers, pledges and assigns to the Collateral
Trustee for the benefit of the Secured Parties, as security for the full payment
of the Senior Debt Obligations and the Oil Payment Reimbursement Obligations and
for the performance of the other obligations of the Borrower, the Partnership
and the Partners under the Financing Documents, and hereby grants a lien on and
first priority security interest in, all right, title and interest that it now
has or that shall hereafter arise in and to the Shares of the Borrower, together
with all shares, coupons or securities issued as a dividend on such Shares or
representing a distribution or return of capital upon or in respect of such
Shares or warrants or any subscription or other purchase rights with respect to
such Shares. On or prior to the Closing Date, the Partnership shall deliver to
the Collateral Trustee for the benefit of the Secured Parties the certificates
representing the Shares of the Borrower and, promptly following receipt, any of
such other shares, securities, warrants, coupons, rights or other relevant
documentation together in each case with stock powers, duly executed by the
Partnership in blank with appropriate signature guarantees, to be held by the
Collateral Trustee for the benefit of the Secured Parties pursuant to the pledge
made hereby. The Partnership agrees that it shall not permit the Certificate of
Incorporation or Bylaws of the Borrower or any other governing and constituent
documents of the Borrower to be amended or modified in any manner that would
cause the Partnership to hold less than 100% share of the aggregate voting power
represented by the Shares or otherwise deprive the Partnership of control of the
Borrower.
6.05 Interests in Accounts and Authorized Investments. The
Partnership hereby grants, transfers, pledges, hypothecates, assigns and sets
over to the Collateral Trustee for the benefit of the Secured Parties, as
security for the full payment of the Senior Debt Obligations and the Oil Payment
Reimbursement Obligations and for the performance of the other obligations of
the Borrower, the Partnership and the Partners under the Financing Documents,
and hereby grants a lien on and first priority security interest in, all right,
title and interest that it now has or that shall hereafter arise in and to the
Accounts and Subaccounts and, to the fullest extent possible under applicable
law, to the money, certificated and uncertificated securities, security
entitlements, instruments, all investments made with or arising out of such
funds, all claims thereunder or in connection therewith, rights and other
property at any time and from time to time received, receivable or otherwise
distributed in respect of such accounts, such funds or such investments and, in
each case, proceeds therefrom. Funds and investments in the Accounts and
Subaccounts are trust funds held by the Collateral Trustee for application as
provided in this Agreement. Accordingly, notwithstanding the foregoing grant,
transfer and assignment, the Collateral Trustee shall
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apply such funds and investments strictly in accordance with the terms of this
Agreement. Whether or not Senior Lenders shall have taken Enforcement Action,
none of the Borrower, the Partnership, the Partners, the Collateral Trustee
(other than to the extent expressly provided herein), nor any Secured Party
shall have the right to withdraw, apply, invest or offset the money and
investments in the Accounts and Subaccounts, nor shall any such Person exercise
any right it may have to attach or garnish such money, certificated and
uncertificated securities, instruments, other investments, if any, or proceeds
in any such account, in each case otherwise than as provided in this Agreement,
and the Partnership and the Senior Lenders shall have only those rights to
direct the Collateral Trustee as to the application of funds and investments as
are provided in this Agreement.
6.06 The Project Documents, Sales Agreements and Spot Contracts.
(a) Assignment of Rights.
(i) Without limiting the generality of any other provisions of this
Agreement, including without limitation Section 6.08, the Partnership
hereby grants, transfers and assigns to the Collateral Trustee for the
benefit of the Secured Parties, as security for the full payment of the
Senior Debt Obligations and the Oil Payment Reimbursement Obligations and
for the performance of the other obligations of the Borrower, the
Partnership and the Partners under the Financing Documents, and hereby
grants to the Collateral Trustee for the benefit of the Secured Parties a
lien on and first priority security interest in, all right, title and
interest (but not obligations or duties) that it now has or that shall
hereafter arise in and to (A) the Project Documents, Sales Agreements or
Spot Contracts to which it is a party, whether now existing or hereafter
arising, (B) all rights to payment, claims, powers, privileges, proceeds,
titles, interests and remedies of the Partnership, whether arising under
any of the Project Documents, Sales Agreements or Spot Contracts, by
statute, at law, in equity or otherwise, resulting from any failure of
performance or compliance with any of the provisions of any such Project
Document, Sales Agreement or Spot Contract, together with full power and
authority, in its own name or in the name of the Partnership or otherwise
(but subject to subclause (ii) of this clause (a)), to enforce such Project
Documents, Sales Agreements or Spot Contracts against counterparties
thereto or guarantors thereunder, as the case may be, and to collect,
receive and give receipts and releases for proceeds or other amounts
payable under such Projects Documents, Sales Agreements or Spot Contracts
and (C) all rights of the Partnership to terminate, amend, supplement,
modify or waive performance under any Project Document, Sales Agreement or
Spot Contract, in each case as such Project Document, Sales Agreement of
Spot Contract may be amended, supplemented, renewed or otherwise modified,
including without limitation any agreement, contract or document replacing
or substituting for such Project Document, Sales Agreement or Spot Contract
from time to time;
(ii) The Partnership shall make all requests for and in respect of
any moneys due under any such Project Document, Sales Agreement or Spot
Contract,
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and, if for any reason the Partnership fails to do so within two Business
Days of a request by the Collateral Trustee, the Collateral Trustee may
make such requests as assignee with the same force and effect as if made by
the Partnership. The Partnership agrees promptly to provide the Collateral
Trustee at its request with copies of all requests made by it in respect of
moneys due from a party to any such Project Document, Sales Agreement or
Spot Contract under any such Project Document, Sales Agreement or Spot
Contract. The Partnership and the Collateral Trustee agree that all funds
received by them in respect of the rights assigned under subclause (i) of
this clause (a) shall be deposited or caused to be deposited by them into
the Project Revenue Account.
(b) Notice.
(i) Concurrently with entering into any of the Project Documents,
Sales Agreements or Spot Contracts, the Partnership shall give or cause to
be given written notice to the counterparty thereunder of the security
interest therein granted by clause (a) of this Section 6.06. Such notice
shall irrevocably instruct such counterparty to make or cause to be made
all payments due under such Project Document, Sales Agreement or Spot
Contract directly to the Project Revenue Account.
(ii) The Partnership shall obtain from the counterparty under each
Project Document and shall deliver or cause to be delivered to the
Collateral Trustee, on or prior to the Closing Date (but, with respect to
any Project Documents entered into after the Closing Date, promptly after
entering into such Project Documents) a signed consent and acknowledgment
addressed to the Collateral Trustee and substantially in the form set forth
in Appendix I-1 hereto, to the effect that such counterparty has received
notice from the Partnership of the security interest granted by clause (a)
of this Section 6.06 in such Project Document, that such counterparty shall
notify the Collateral Trustee of any breach of material obligations by the
Partnership under such Project Document and that such counterparty will
make any and all payments due thereunder directly to the Project Revenue
Account.
(iii) The Partnership shall obtain from the counterparty under each
Sales Agreement and shall deliver or cause to be delivered to the
Collateral Trustee promptly after entering into such Sales Agreement a
signed consent and acknowledgment addressed to the Collateral Trustee and
substantially in the form set forth in Appendix I-1 hereto (with such
changes as reasonably acceptable to the Bank Senior Lenders Administrative
Agent), to the effect that such counterparty has received notice from the
Partnership of the security interest granted by clause (a) of this Section
6.06 in such Sales Agreement, that such counterparty shall notify the
Collateral Trustee of any breach of material obligations by the Partnership
under such Project Documents and that such counterparty will make any and
all payments due thereunder directly to the Project Revenue Account.
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(iv) Promptly after entering into any Project Document, Sales
Agreement or Spot Contract after the Closing Date (unless such Spot
Contract is not in writing), the Partnership shall deliver a copy thereof
to the Collateral Trustee, together with the related counterparty's consent
and acknowledgment (if required).
6.07 Insurance and Insurance Proceeds; Reinsurance. (a) Without
limiting the generality of any other provisions of this Agreement, including
without limitation Section 6.08, the Partnership hereby grants, transfers and
assigns to the Collateral Trustee for the benefit of the Secured Parties, as
security for the full payment of the Senior Debt Obligations and the Oil Payment
Reimbursement Obligations and for the performance of the other obligations of
the Borrower, the Partnership and the Partners under the Financing Documents,
and hereby grants to the Collateral Trustee for the benefit of the Secured
Parties a lien on and first priority security interest in, all right, title and
interest that it now has or that shall hereafter arise in and to any and all
insurance policies issued to the Partnership with respect to any Required
Insurance (other than any insurance policy in respect of third-party liability
insurance and workmen's compensation) and all proceeds thereof. The Partnership
hereby authorizes the Collateral Trustee to collect and receive such proceeds
and shall direct the issuer of each of such insurance policy to make payment for
all such losses directly and solely to the Collateral Trustee in accordance with
Article VII.
(b) The Partnership shall, subject to commercial availability and if
requested by the Bank Senior Lenders Administrative Agent or the Collateral
Trustee: (i) cause each of its insurers to grant, transfer and assign to the
Collateral Trustee for the benefit of the Secured Parties, as security for the
full payment of the Senior Debt Obligations and the Oil Payment Reimbursement
Obligations and for the performance of the other obligations of the Borrower,
the Partnership and the Partners under the Financing Documents, and to grant to
the Collateral Trustee for the benefit of the Secured Parties a first priority
security interest in, all right, title and interest that such insurer may have
or that may thereafter arise in and to any and all reinsurance policies issued
by such insurers' reinsurers in respect of any Required Insurance (other than
any reinsurance policy in respect of third-party liability insurance and
workmen's compensation) and all proceeds thereof; and (ii) cause each of the
reinsurers providing reinsurance coverage in respect of any Required Insurance
to include a cut-through endorsement in favor of the Collateral Trustee for the
benefit of the Secured Parties in its reinsurance policy.
6.08 All Personal Property Including Machinery and Equipment,
Technology General Intangibles, Accounts and Other Personal Property. Without
limiting the generality of any other provisions of this Agreement, including
without limitation this Section 6.08, the Partnership hereby grants, transfers
and assigns to the Collateral Trustee for the benefit and on behalf of the
Secured Parties, as security for the Senior Debt Obligations and the Oil Payment
Reimbursement Obligations and the performance of the other obligations of the
Borrower, the Partnership and the Partners under the Financing Documents and
hereby grants a lien on and first priority security interest in, all right,
title and interest that it now has or that shall hereafter arise in and to all
equipment, fixtures, goods,
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general intangibles, accounts and intellectual property and all other personal
property (tangible or intangible), including without limitation: (a) machinery,
equipment, fixtures, chattels, and all other personal property and substitutions
and replacements thereof, now or hereafter owned by the Partnership or in which
the Partnership has or shall acquire an interest and (b) all general
intangibles, licenses, authorizations, trademarks and other intellectual
property, including without limitation, the Technology relating to the design,
development, operation, management and use of the Heavy Oil Processing Facility,
provided that the Collateral Trustee shall have no obligation to take any action
in respect of any such intellectual property unless and until it has been duly
notified of the existence of such intellectual property.
6.09 The Partnership's Interest in Crude Oil, Intermediate Products
and Refined Products. (a) Without limiting the generality of any other
provisions of this Agreement, including without limitation Section 6.08, the
Partnership hereby grants, transfers and assigns to the Collateral Trustee for
the benefit of the Secured Parties, as security for the full payment of the
Senior Debt Obligations and the Oil Payment Reimbursement Obligations and for
the performance of the other obligations of the Borrower, the Partnership and
the Partners under the Financing Documents, and hereby grants a lien on and
first priority security interest in, all right, title and interest that the
Partnership now has or that shall hereafter arise in and to all inventory
including without limitation (i) any and all crude oil purchased or otherwise
acquired from and any other products supplied by PMI pursuant to the Long-Term
Oil Supply Agreement or otherwise supplied to the Partnership pursuant to the
Long-Term Oil Supply Agreement Guarantee, (ii) any and all crude oil and other
feedstocks purchased or otherwise acquired from and any other products supplied
by any Person, including without limitation ▇▇▇▇▇ R&M, and (iii) any and all
Partnership Intermediate and Refined Products, with such security interest in
the Partnership Intermediate and Refined Products to be retained by the
Collateral Trustee until the Partnership has been paid in full in respect of
such Partnership Intermediate and Refined Products, including without limitation
pursuant to the Product Purchase Agreement, and with respect to the foregoing,
all proceeds thereof, together with full power and authority, in its own name or
in the name of the Partnership or otherwise, to collect, receive and give
receipts and releases for proceeds, (iv) all goods in which the Partnership has
an interest in mass or a joint or other interest or right of any kind and (v)
all goods which are returned to or repossessed by the Partnership, and all
negotiable and non-negotiable documents of title (including without limitation
warehouse receipts, common carrier and pipeline receipts, dock receipts and
bills of lading) issued by any Person covering any inventory. The Partnership
hereby agrees to promptly deliver to the Collateral Trustee (x) any and all
bills of lading or any other document of title received by it under Article 11.6
of the Long-Term Oil Supply Agreement and (y) any and all negotiable and non-
negotiable documents of title (including without limitation warehouse receipts,
common carrier and pipeline receipts, dock receipts and bills of lading issued
by any Person covering any inventory.
6.10 Permitted Hedging Arrangements. Without limiting the generality
of any other provisions of this Agreement, including without limitation Section
6.08, the
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Partnership hereby grants, transfers and assigns to the Collateral Trustee for
the benefit of the Secured Parties, as security for the full payment of the
Senior Debt Obligations and the Oil Payment Reimbursement Obligations and for
the performance of the other obligations of the Borrower, the Partnership and
the Partners under the Financing Documents, and hereby grants a lien on and
first priority security interest in, all right, title and interest the
Partnership that shall hereafter arise in and to Permitted Hedging Arrangements
and all claims resulting from any failure of performance or compliance with any
of the provisions of any of the Permitted Hedging Arrangements, together with
full power and authority, in its own name or in the name of the Partnership or
otherwise, to enforce Permitted Hedging Arrangements against the counterparties
thereto. Concurrently with entering into a Permitted Hedging Arrangement, the
Partnership shall give or cause to be given written notice to the counterparties
thereto of the security interest hereby granted and shall obtain from each such
counterparty an acknowledgment thereof and furnish it to the Collateral Trustee.
6.11 Rights under Capital Contribution Agreements; Intercompany Loans
from the Borrower to the Partnership. (a) On or prior to the Closing Date,
each of the Partnership and the Partners shall grant, transfer and assign to the
Collateral Trustee for the benefit and on behalf of the Secured Parties, as
security for the full payment of the Senior Debt Obligations and the Oil Payment
Reimbursement Obligations and the performance of the other obligations of the
Borrower, the Partnership and the Partners under the Financing Documents, and
grant to the Collateral Trustee for the benefit of the Secured Parties a first
priority security interest in, all right, title and interest that the
Partnership or such Partner, as the case may be, now has or that shall hereafter
arise in and to each of the Capital Contribution Agreements, which grant,
transfer and assignment may be contained in the Capital Contribution Agreements.
(b) The Borrower hereby grants, transfers, and assigns to the
Collateral Trustee for the benefit and on behalf of the Secured Parties, as
security for the full payment of the Senior Debt Obligations and the Oil Payment
Reimbursement Obligations and for the performance of the other obligations of
the Borrower, the Partnership and the Partners under the Financing Documents,
and hereby grants a lien on and first priority security interest in, all right,
title and interest that it now has or that shall hereafter arise in and to any
intercompany loans to the Partnership that the Borrower has made or will make,
including without limitation (i) each intercompany loan and all promissory
notes, documents, agreements and other instruments evidencing such intercompany
loan, or executed and delivered in connection with such intercompany loan, (ii)
any and all collateral security for any intercompany loan, including without
limitation all mortgages, deeds of trust, security agreements, collateral
assignments, guaranties, pledges, letters of credit, chattel paper and similar
instruments, and any shares, securities, money or other property delivered by
the Partnership in respect of such intercompany loan, (iii) all UCC-1 financing
statements filed in connection with the intercompany loans and (iv) any other
instruments and documents included in the mortgage file relating to such
intercompany loan, and all rights to payment, claims, powers, privileges,
proceeds, titles, interests and remedies of the Borrower, whether arising under
any of the documents, instruments or other agreements evidencing such
66
intercompany loan, by statute, at law, in equity or otherwise, resulting from
any failure of performance or compliance with any of the provisions such
intercompany loan, together with full power and authority to enforce such
intercompany loan against counterparties thereto or guarantors thereunder, as
the case may be, and to collect, receive and give receipts and releases for
proceeds or other amounts payable under such intercompany loan.
6.12 Proceeds, Products, etc. To the extent not otherwise included
in any of the foregoing provisions of this Article VI, each of the Borrower,
the Partnership, the Limited Partner and the General Partner hereby grants,
transfers and assigns to the Collateral Trustee for the benefit of the Secured
Parties, as security for the full payment of the Senior Debt Obligations and the
Oil Payment Reimbursement Obligations and for the performance of all other
obligations of the Borrower, the Partnership and the Partners under the
Financing Documents, and hereby grants a lien on and first priority security
interest in, all right, title and interest that it now has or that shall
hereafter arise in and to all proceeds of any and all of the Collateral covered
by the foregoing provisions of this Article VI and all additions and accessions
to, substitutions and replacements for, and rents, profits, royalties, revenues,
issues, income, benefits, product and offspring of any and all of such
Collateral.
6.13 Perfection and Maintenance of Security Interests. (a)
Notwithstanding any other provision of this Article VI, at any time and from
time to time, upon demand of the Collateral Trustee and pursuant to Article IX,
in each case on behalf and at the direction of any Secured Party, (i) each of
the Borrower, the Partnership and the Partners shall give, execute, file and
record any notice, financing statement, continuation statement, public deed,
instrument, document or agreement and use its best efforts to obtain such
governmental approvals, consents, licenses or authorizations that such Secured
Party may consider necessary or desirable, and shall take all other necessary
action as required or advisable, to create, preserve, continue, perfect or
validate any security interest granted under the Security Documents, hereunder
or pursuant hereto in the Collateral or to enable the Collateral Trustee on
behalf of such Secured Party to exercise or enforce its rights hereunder or
under the Security Documents with respect to such security interest, (ii) each
of the Borrower, the Partnership and the Partners shall give, execute, file and
record any notice, financing statement, continuation statement, public deed,
instrument, document or agreement and use its best efforts to obtain such
governmental approvals, consents, licenses or authorizations, that such Secured
Party may consider necessary or desirable, and shall take all other necessary
action as required or advisable, to create, preserve, continue, perfect or
validate any security interest in any written agreement to which any of the
Borrower, the Partnership and the Partners is a party and (iii) each of the
Borrower, the Partnership and the Partners shall obtain written consents to
assignment from the counterparties to the Project Documents, where appropriate,
acknowledging the rights of Secured Parties. Without limiting the generality of
the foregoing, each of the Borrower, the Partnership and the Partners shall make
or cause to be made any filings or recordations, give or cause to be given any
notices and take or cause to be taken any other actions as may be necessary in
any and all applicable jurisdictions and filing offices including without
limitation in the State of New York, the State of Texas and the United Mexican
States, to perfect the grant of the first priority security
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interest in the Collateral, and each constituent item thereof, as described in
this Article VI and the Collateral Trustee, on behalf of the Secured Parties, is
authorized to file, under the Uniform Commercial Code of any state of the United
States of America or other applicable law, financing statements, continuation
statements or other documents relating to the Collateral necessary to preserve a
security interest in the Collateral, in each case without the signature of any
of the Borrower, the Partnership and the Partners (to the extent permitted by
applicable law). The Collateral Trustee shall execute all public deeds or other
documents as required by applicable law and regulation and as requested by the
Secured Parties to duly create and register security interests provided for by
this Article VI, provided, however, that neither the Collateral Trustee nor the
Secured Parties have any responsibility for the creation, perfection, validity
or enforceability of any security interest created or intended to be created
hereby or pursuant to this Agreement or for the maintenance or perfection of any
such security interest. Any Secured Party taking action under this Section 6.12
shall use reasonable efforts to notify the Partnership thereof following the
taking of such action. Each of the Borrower, the Partnership and the Partners
shall notify the Collateral Trustee upon or prior to entering into any Project
Document in which any of them are or may be required to grant a security
interest pursuant to this Article VI.
(b) None of the Borrower, the Partnership nor either of the Partners
shall take any actions that would impair or render ineffective or adversely
affect the perfection or the priority of any of the security interests granted
in, or pursuant to, this Agreement or any Security Document.
(c) On or prior to the Closing Date, each of the Borrower, the
Partnership and the Partners agrees to execute and deliver to the Depositary
Bank and the Collateral Trustee for the benefit of the Secured Parties, and
register in every public registry in any state of the United States of America
in which such registration is necessary, an irrevocable power of attorney, in a
form required by such registry, for a term equal to such time as the Senior
Loans are outstanding or the Oil Payment Insurance Policy and the Reimbursement
Agreement are in effect granting the Collateral Trustee, as attorney-in-fact of
each of the Borrower, the Partnership and the Partners, the power and right, in
the name or on behalf of each of them without notice to or assent by any of
them, to the extent permitted by applicable law, to take any action and execute
any instruments which any Secured Party may deem reasonably necessary or
advisable to create, preserve, continue, perfect or validate any security
interest granted under or pursuant to this Agreement or any Security Document.
(d) The Security Documents to be entered into under the laws of the
State of New York or the State of Texas, and the consents and acknowledgments to
be obtained from third parties referred to in this Article VI, shall be
substantially in the forms most recently agreed with the Applicable Agents and
furnished to the Secured Parties prior to the Closing Date.
(e) Each of the Borrower, the Partnership and the Partners and the
Collateral Trustee (on behalf of itself and the Senior Lenders), as the case may
be, prior to or concurrently with the time or times that Senior Lenders other
than the Senior Lenders
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party to this Agreement on the date hereof (including without limitation
successors, transferees and assigns of such Senior Lenders) become holders of
Senior Loans secured by and entitled to the benefits of this Agreement, shall
amend each of the Security Documents to which it is a party to identify
specifically such additional Senior Lenders and the Senior Loans held or to be
held thereby and to state that the Senior Loans held by such additional Senior
Lenders shall have the benefit of the security interests referred to therein,
and the Borrower, the Partnership and the Partners shall be required to pay any
filing or recording fees payable in the State of New York or the State of Texas
in respect of Collateral in connection with any such amendments.
6.14 Rights in Collateral Prior to Enforcement Direction. (a)
Notwithstanding the security interests created and to be created pursuant to
this Agreement, unless otherwise provided in this Agreement (including without
limitation under Section 10.02) or the Transfer Restrictions Agreement or unless
the Collateral Trustee shall have received an Enforcement Direction with respect
to any Collateral, the Borrower, the Partnership and the Partners shall retain
and be entitled to exercise all their respective rights relating to such
Collateral, subject to the terms and conditions of this Agreement and of the
security interests created or to be created hereunder or by any of the Security
Documents, including without limitation as follows: (i) possessing and using the
Project Property and altering or disposing of any part thereof; (ii) exercising
all rights relating to the Project Documents; (iii) renewing insurance policies,
making claims and instituting and settling proceedings against insurers
thereunder; (iv) transferring (in accordance with the Transfer Restrictions
Agreement and the terms hereof) any Partnership Interests in the Partnership,
receiving the profits to be derived from any of the Partnership Interests in the
Partnership and exercising rights as shareholder, general partner or limited
partner of any of the Borrower, the Partnership and the Partners, as the case
may be, under their respective organizational documents (and the Collateral
Trustee shall execute and deliver to such parties, where appropriate, all such
proxies, powers of attorney, dividend and other orders, and all such instruments
as they may reasonably request for the purpose of enabling them to exercise the
rights and powers which they are entitled to exercise pursuant to this clause);
(v) amending the Subordinated Loan Agreements and assigning the Subordinated
Loan Agreements (in accordance with the Transfer Restrictions Agreement); and
(vi) subject to clause (u) of Section 4.01 of this Agreement, amending each of
the Project Documents, making waivers and elections thereunder and instituting
and settling proceedings for the enforcement of rights thereunder, provided that
such amendment, waiver, election or settlement does not have a Material Adverse
Effect.
(b) Except as otherwise provided in this Agreement, unless the
Collateral Trustee shall have received an Enforcement Direction with respect to
such Collateral, the Collateral Trustee and the Depositary Bank shall, at the
request and cost of any of the Borrower, the Partnership and the Partners, as
the case may be, execute such documents and take such action and do such things
as may be necessary or desirable to enable such grantor of the security interest
in such Collateral to exercise the rights retained by them in such Collateral,
provided that such execution or action does not have a Material Adverse Effect.
69
(c) Without limiting the generality of this Article VI, upon the
receipt by the Collateral Trustee of an Enforcement Direction, the Collateral
Trustee shall be entitled, without limitation as to any other Enforcement Action
available, to (i) transfer title of the General Partnership Interest and Limited
Partnership Interest in the Partnership and the Shares in the Borrower to the
Collateral Trustee, the Secured Parties or any other Person, (ii) receive all
dividends and other distributions payable to owners of the General Partnership
Interest and Limited Partnership Interest in the Partnership and the Shares in
the Borrower, (iii) exercise all voting and other rights pertaining to the
General Partnership Interest and Limited Partnership Interest in the Partnership
and the Shares in the Borrower as so directed and (iv) freely sell and dispose
of the General Partnership Interest and Limited Partnership Interest in the
Partnership and the Shares in the Borrower, in each case, subject to the terms
and conditions of this Agreement, the Security Documents and applicable law.
6.15 Liability of Borrower Parties. Notwithstanding any other
provision of this Agreement or the Security Documents, subject to applicable
law:
(a) Each of the Borrower, the Partnership and the Partners shall
remain liable under all agreements and contracts included in the Collateral
to the extent provided therein;
(b) The exercise by the Collateral Trustee or any Secured Party of
any of their respective rights under this Agreement or the Security
Documents shall not release any of the Borrower, the Partnership or either
of the Partners from any of its duties or obligations under any contracts
or agreements included in the Collateral except to the extent provided
therein; and
(c) Neither the Collateral Trustee nor any Secured Party shall have
any obligation or liability under any such contracts or agreements included
in the Collateral by reason of this Agreement or the Security Documents,
nor shall the Collateral Trustee or any Secured Party be obligated to
perform any of the obligations or duties of any of the parties thereunder
or to take any action or collect or enforce any claim for payment assigned
hereunder.
6.16 Release of Security Interests. Except as otherwise provided in
this Agreement, the release of any security interest under this Agreement and
the Security Documents requires the consent of the Capital Markets Senior Lender
Group, each of the Bank Senior Lenders and each of the Oil Payment Insurers.
6.17 PMI Subordinated Lien. The Partnership may at any time execute
documentation granting the PMI Subordinated Lien, provided that such
documentation shall include subordination provisions in form and substance
satisfactory to the Bank Senior Lenders Administrative Agent.
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ARTICLE VII
INSURANCE
7.01 Maintenance of Insurance. The Partnership shall at all times
keep all Project Property of an insurable nature and of a character usually
insured, insured with insurers and reinsurers that are Rated Insurers selected
by it against such risks, with all risk property and general liability coverage
(including deductibles and exclusions) and in such form and amounts as are
customary for project facilities of similar type and scale to the Heavy Oil
Processing Facility (including insurance against sudden and accidental
environmental damage and, prior to Final Completion, delay in start-up coverage
and, after Final Completion, business interruption and contingent business
interruption insurance). The Partnership shall, at a minimum and without
limiting the generality of the immediately preceding sentence, obtain and
maintain at least the coverage set forth on the schedule of Required Insurance
set forth in Appendix J. The schedule of Required Insurance set forth in
Appendix J may be amended by the Partnership, after consultation with the
Insurance Consultant, from time to time upon the prior consent of Requisite
Lenders (or, at any time on or after a Priority Termination Date, Requisite
Secured Parties).
7.02 Additional Insureds and Loss Payees Provisions. The Partnership
shall irrevocably cause (a) each of its insurance policies and, subject to
commercial availability and if requested by the Bank Senior Lenders
Administrative Agent or the Collateral Trustee, the related reinsurance policies
(other than policies in respect of workers' compensation or third-party
liability insurance) to name the Collateral Trustee on behalf of the Secured
Parties and the Secured Parties as additional (and not joint) insureds and sole
loss payees as their interests may appear and (b) each of its insurance policies
(other than any policy in respect of third-party liability insurance and
workers' compensation) to require all payment of proceeds directly to the
Casualty and Insurance Account or the Catastrophic Casualty Account, as the case
may be, in accordance with Section 7.07 with words to substantially the
following effect: "All recoveries hereunder shall be paid in full to Bankers
Trust Company or to its order without any deduction or deductions whatsoever for
deposit into [details for Casualty and Insurance Account] or, if such recoveries
in the aggregate exceed $50 million, into [details for Catastrophic Casualty
Account]." The Partnership shall cause each insurance policy in respect of
third-party liability insurance (including automobile and directors' and
officers' liability insurance) and workmen's compensation to designate such
third parties as the loss payee in words to substantially the following effect:
"All proceeds of insurance arising hereunder that are payable for the benefit of
third parties shall at all times be paid directly to such third parties provided
such person has executed a discharge of all claims against the insured parties
in respect of the risk or liability in relation to which the claim was made
unless the insurer is satisfied that the relevant insured parties have fully and
unconditionally discharged the claim or liability when such sums shall be paid
to the said insured parties."
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7.03 Other Lender Provisions in Policies. The Partnership shall
procure and shall cause its insurers and reinsurers to procure the inclusion in
each insurance policy or reinsurance policy, as the case may be, issued to the
Partnership or for the benefit of the Partnership provisions (a) that require
the insurer or reinsurer to give at least 60 days' notice to the Collateral
Trustee before the cancellation or non-renewal of any insurance policy takes
effect or, if commercially available, 30 days', or if not so available, 15 days'
notice in case of any cancellation or non-renewal due to non-payment of
premiums, to the Collateral Trustee, (b) that require the insurer or reinsurer
to give notice to the Collateral Trustee of a default by the Partnership in the
payment of any premium when due for payment under such insurance or reinsurance
policy, (c) that require the insurer or reinsurer to waive all rights of
subrogation it may have against any insured and the respective directors,
officers and employees of the insured, (d) that require the insurer or reinsurer
to waive all rights of set-off in respect of recoveries due thereunder, (e) that
require the insurer or reinsurer to waive any right to invalidate any policy
based on any act or failure to act by any other insured (including without
limitation the right to void coverage on the grounds of a breach of warranty by,
or misrepresentation or omission of, the Partnership), except that such waiver
shall apply only in respect of the Secured Parties' interest during the
construction period, and (f) that ensure the severability of interests of the
insureds, provided that the requirements set forth in this sentence in respect
of reinsurers shall be subject to commercial availability and shall apply only
if requested by the Bank Senior Lenders Administrative Agent or the Collateral
Trustee.
7.04 Payment, Assignment, Etc. of Reinsurance or Co-Insurance. The
Partnership shall ensure that all its insurers, reinsurers and co-insurers agree
to arrangements designed to produce the following results: (a) that, after the
Collateral Trustee exercises its security interest in insurance, the claims of
the Collateral Trustee prevail over any competing claims of the Partnership; (b)
that such insurers, reinsurers or co-insurers pay any claims under such
insurance, reinsurance or co-insurance policies directly to the Collateral
Trustee in the manner contemplated by Section 6.07 and clause (b) of Section
7.02; and (c) that the Partnership or, if applicable, the Collateral Trustee, be
permitted to make claims under such reinsurance or co-insurance policies
directly against such reinsurers or co-insurers in the event its insurers fail
to do so or fail to do so to the full satisfaction of the Partnership or, if
applicable, the Collateral Trustee, or are insolvent, in liquidation or
bankrupt, provided that the requirements set forth in this sentence in respect
of reinsurers and co-insurers shall be subject to commercial availability and
shall apply only if requested by the Bank Senior Lenders Administrative Agent or
the Collateral Trustee. Such arrangements shall be in accordance with the
requirements set forth in clause (b) of Section 6.07.
7.05 Rated Insurers. Notwithstanding anything in this Article VII to
the contrary, the Partnership shall at all times ensure that it is party to
insurance policies and, to the extent necessary, its insurers and reinsurers are
party to reinsurance policies such that (a) 100% of the risk in respect of the
Project Property insured pursuant to Section 7.01 is ultimately borne by a Rated
Insurer and (b) the Collateral Trustee has, to the fullest extent permitted by
applicable law, the benefit of effective cut through endorsement clauses as from
72
time to time may be necessary to allow the Collateral Trustee to bring a direct
claim against a Rated Insurer in respect of 100% of the insured ▇▇▇▇▇ Project
risk.
7.06 Payment of Premiums. The Partnership shall pay all premiums and
other sums payable in respect of its insurance when due, provided, however, that
the Collateral Trustee shall be entitled (but not obligated) to pay premiums and
other sums due in respect of the Partnership's insurance if such insurance would
expire or otherwise be canceled or suspended within 10 days thereafter as a
result of a failure to pay such premiums or sums. If the Collateral Trustee
pays any premiums or sums pursuant to the immediately preceding sentence, the
Collateral Trustee shall be entitled to reimbursement therefor as a Senior Debt
Obligation.
7.07 Application of Insurance Proceeds. All proceeds of insurance
or, if applicable, reinsurance shall be applied as follows:
(a) Any sum paid in settlement of a liability to a third party shall
be paid to the Person to whom the liability shall have been incurred or, if
such liability shall have been paid by the insured party, to or to the
order of the insured party;
(b) Any other sum paid in respect of any casualty to Project
Property, including without limitation in respect of any Catastrophic
Casualty, or any proceeds of business interruption or contingent business
interruption insurance, if any, shall be paid by the insurer or reinsurer,
if applicable, as contemplated in Section 7.02, deposited in the Casualty
and Insurance Account or the Catastrophic Casualty Account, as the case may
be. Without limiting the obligations of the Partnership under this
Agreement, subject to clause (c) of this Section 7.07, the Partnership
shall promptly restore, repair or replace any Project Property affected or
damaged by a casualty loss, in each case (i) to the extent necessary in
accordance with Prudent Industry Practice to restore the unit cash
operating margin of the ▇▇▇▇▇ Project, the frequency and scope of any
required maintenance and the ▇▇▇▇▇ Project's design capacity and capacity
utilization to the levels that existed immediately prior to such casualty
loss and (ii) to the extent of any casualty insurance proceeds received in
respect thereof;
(c) Within 60 days following the occurrence of a Catastrophic
Casualty, the Partnership shall deliver to the Collateral Trustee a plan
for the application of casualty insurance proceeds in respect thereof and
other funds available to the Partnership to restore, repair or replace the
Project Property. If, within 45 days following the later of the receipt by
the Collateral Trustee of such plan and the deposit of such proceeds into
the Catastrophic Casualty Account, Majority Lenders (or, at any time on or
after a Priority Termination Date, Majority Secured Parties) notify the
Partnership that in their reasonable judgment it is unlikely that, after
implementation of the Partnership's plan, the Partnership would be able to
pay the Senior Debt Obligations as and when they come due or be able to
produce Product Production of substantially the same (or higher) quality
and quantity as it had prior
73
to such loss or series of losses, such casualty insurance proceeds shall
remain in the Catastrophic Casualty Account. In the event that (x) Majority
Lenders (or Majority Secured Parties, as the case may be) so notify the
Partnership or (y) if the plan shall not have been delivered, then Majority
Lenders (or Majority Secured Parties, as the case may be) shall have the
right to require the Partnership to apply such proceeds to prepay Senior
Debt and to direct the Collateral Trustee to transfer such casualty
insurance proceeds from the Catastrophic Casualty Account to the Mandatory
Prepayments Account. Prepayments under this clause (c) shall be made within
two Business Days following such transfer and shall be applied to reduce
the remaining principal installments of Senior Loans pro rata as to each
remaining principal installment outstanding. The Senior Lenders (or Secured
Parties, as the case may be) shall have the option, at the Partnership's
expense, to consult with the Independent Engineer for purposes of reviewing
any plan for the application of such casualty insurance proceeds with
respect to which Majority Lenders (or Majority Secured Parties, as the case
may be) have the right to object.
(d) Notwithstanding anything else in this Section 7.07 to the
contrary, promptly upon the receipt of any Loss Proceeds relating to any
shipment of Maya crude oil, the Partnership shall instruct the Collateral
Trustee to transfer such Loss Proceeds, to the extent the Oil Payment
Insurers have made, or are obligated to make, payment to PMI under the Oil
Payment Insurance Policy in respect of such shipment, from the Casualty and
Insurance Account or the Catastrophic Casualty Account, as the case may be,
to an account specified for such purpose by the Oil Payment Insurers
Administrative Agent.
7.08 Information. The Partnership shall promptly notify the
Collateral Trustee of (a) any material dispute with an insurer, (b) the failure
by the Partnership to pay any premium under any insurance policy when due, (c)
the failure by the Partnership, for any reason, to maintain in full force and
effect the insurance coverage set forth in Appendix J, as it may be amended from
time to time in accordance with Section 7.01, (d) any proposed amendment to the
schedule of minimum insurance requirements set forth in Appendix J, (e) any
reduction in any insurance coverage maintained by the Partnership and (f) any
insurance claim or casualty loss or series of losses in excess of $5 million.
Not less than 15 days prior to the effective date of any issuance, renewal or
replacement of any insurance policy, the Partnership shall deliver to the
Collateral Trustee and the Insurance Consultant copies of any certificate of
insurance, binder or broker's undertaking letter or policy, as the case may be,
in respect of renewal or replacement of any insurance policy. The Collateral
Trustee, in consultation, at the Collateral Trustee's option, with the Insurance
Consultant, shall be entitled to review (and the Partnership shall promptly
furnish or cause to be furnished) the proposed final wording for any such policy
to ensure compliance with the terms hereof. If in the judgment of any of the
Administrative Agent, the Capital Markets Trustee, the Collateral Trustee, the
Insurance Consultant or Majority Lenders such proposed final wording does not so
comply, the Partnership shall amend, or shall cause to be amended, such wording
so that it does so comply in the reasonable judgment of the relevant party. The
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Partnership shall also provide the Collateral Trustee and Insurance Consultant
with any other information relating to the Partnership's insurance or
reinsurance or any claims thereunder that may be requested by any of the
Administrative Agent, the Capital Markets Trustee, the Collateral Trustee or the
Insurance Consultant. To ensure compliance with the terms hereof, the
Partnership shall permit the Insurance Consultant, at the expense of the
Partnership, to examine insurance policies issued to the Partnership or the
brokers at the places where they are kept upon reasonable notice and during
normal business hours.
7.09 Insurance Consultant. The Partnership shall reimburse the
Insurance Consultant and the Secured Parties for the reasonable fees and
expenses of the Insurance Consultant retained by the Partnership on behalf of
the Secured Parties in connection with (a) its initial review of the
information, insurance plan (including the minimum insurance schedule) and
schedules in connection with the documentation, closing and initial funding of
the Senior Debt, (b) any request by the Partnership for a waiver of, or
amendment to, the minimum insurance requirements set forth in Appendix J or (c)
any review of information received from the Partnership under Section 7.07.
7.10 Delivery of Cover Notes and Policies. The Partnership shall
deliver to the Collateral Trustee certified copies of (i) cover notes on or
prior to the date of this Agreement and (ii) policies within 120 days following
the date of this Agreement, in each case from insurers for each policy required
to be procured and maintained hereunder during the construction period as
described in Appendix J. Such cover notes shall, to the satisfaction of the
Insurance Consultant, confirm the scope of coverage (including without
limitation amounts insured, deductible levels and endorsements) required hereby.
Not less than 30 days prior to the expiration of the policies referred to in
Appendix J in effect during the construction period, the Partnership shall
deliver policies or, if not yet available, other evidence of coverage, including
without limitation drafts of approved policy wording from insurers and, to the
extent reinsurance policies are required pursuant to this Article VII,
reinsurers for each policy required to be procured and maintained during the
▇▇▇▇▇ Project's commercial operation.
ARTICLE VIII
REPORTING
8.01 Regular Reporting.
(a) Construction and Operating Reports. The Partnership shall
furnish to the Collateral Trustee (for delivery to each of the Bank Senior
Lenders, the Oil Payment Insurers Administrative Agent and the Capital Markets
Trustee), each Credit Rating Agency and the Independent Engineer:
(i) Prior to Final Completion. Prior to the Final Completion Date,
the Partnership shall furnish to the Collateral Trustee, for the benefit of
the Secured
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Parties, a copy of all progress reports and each monthly Construction
Report prepared by the EPC Contractor, and all Change Orders requested by
the EPC Contractor, promptly upon receipt thereof by the Partnership. Not
later than 30 days after the end of each calendar month ending prior to the
Final Completion Date, the Partnership shall also furnish the Collateral
Trustee, for the benefit of the Secured Parties, a summary of the progress
of the ▇▇▇▇▇ Project during such month describing: (A) physical progress
and expenditure and any material deviations from the Initial Construction
Budget during such month, (B) cumulative expenditures for the current
quarter through the end of such month, (C) the Partnership's then-current
estimates of expenditures by month for the next two following quarters, (D)
the Partnership's then-current estimates of total Project Expenses to be
incurred prior to the Final Completion Date, and the expected dates for
Mechanical Completion, Substantial Reliability and Final Completion, (E) if
such month is the end of the calendar quarter, an environmental progress
report describing any adverse change with respect to environmental permits
and approvals and compliance with permit and approval conditions and
applicable environmental regulations during such quarter (provided that no
such report shall be required if no such adverse change has occurred during
such quarter), (F) any occurrence of which the Partnership is aware that
could be expected to increase materially the total capital costs of the
▇▇▇▇▇ Project above those in the Initial Construction Budget, to delay the
dates for Mechanical Completion, Substantial Reliability or Final
Completion beyond the then-current estimates, increase unit operating costs
or the frequency and scope of any required maintenance, materially change
design capacity or materially decrease expected capacity utilization or
materially change design capacity or have any other Material Adverse Effect
before or after the Final Completion Date, (G) physical progress and
status, then-current cost estimates and expected timing of completion of
the work to be performed by the EPC Contractor under the ▇▇▇▇▇ ▇▇▇ Contract
and (H) physical progress and status, then-current cost estimates and
expected timing of completion of the construction of the Hydrogen Plant by
the Hydrogen Supplier. In addition, following the initial production of
Project Production, such report shall describe the volume of Project
Production during such month and the amount of revenues received from the
sale of Project Production or the provision of processing services to ▇▇▇▇▇
R&M and the operating costs incurred by the Partnership during such month.
(ii) After Substantial Reliability. Not later than 45 days after the
end of each of the Partnership's fiscal quarters ending after Substantial
Reliability, a summary of operations during such quarter, including
information in reasonable detail concerning (A) the Debt Service Coverage
Ratio for such quarter, the Historical Twelve-Month Period ended on the end
of such quarter and the Projected Twelve-Month Period beginning on the end
of such quarter, and the total Senior Debt Obligations, Project Expenses,
Mandatory Capital Expenditures, Discretionary Capital Expenditures, if any,
for each month during such quarter as compared with the Annual Budget and
Operating Plan and the Major Maintenance Plan last
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delivered to the Collateral Trustee, (B) the calculation of any adjustments
to the Partnership's payment obligations under the Long-Term Oil Supply
Agreement pursuant to Section 11.1 of such agreement during such quarter,
(C) the Partnership's most recent cash planning forecast by month covering
at least the next quarter, (D) any adverse change with respect to
environmental permits and approvals and compliance with permit and approval
conditions and applicable environmental regulations during such quarter,
(E) the nature and duration of any operational or production disruptions or
limitations that affected the ▇▇▇▇▇ Project during such period, (F) the
progress, schedule and actual to-date and expected aggregate costs of any
Mandatory Capital Expenditures or Discretionary Capital Expenditures, as
the case may be, and the Partnership's then-current expectations as to the
effect of such Mandatory Capital Expenditures or Discretionary Capital
Expenditures, as the case may be, on unit operating costs, the frequency
and scope of required ▇▇▇▇▇ Project maintenance, including Major
Maintenance, design capacity and capacity utilization, (G) Project
Production under the Product Purchase Agreement during such quarter, (H)
sales during such quarter, and inventories remaining at quarter end, (I)
the amount of the ▇▇▇▇▇ Processing Fee and the volume of product processed
for ▇▇▇▇▇ R&M during such quarter, (J) the amount of fees paid to ▇▇▇▇▇ R&M
for services provided under the Services and Supply Agreement and the
Ancillary Equipment Site Lease for such quarter and (K) any material
developments during such quarter in ▇▇▇▇▇ Project operations, including
without limitation technical problems, interruptions of operations,
disputes with Governmental Authorities, labor problems or declines in
prices for Project Production or any other matter that could be expected to
have a Material Adverse Effect.
(b) Annual Budget and Operating Plan. The Partnership shall furnish
to the Collateral Trustee each Credit Rating Agency and the Independent
Engineer, (i) promptly after they become available, copies of the proposed
Annual Budget and Operating Plan and the proposed Major Maintenance Plan for
each fiscal year, (ii) not less than 30 days prior to the commencement of the
fiscal year to which it relates, a copy of the final Annual Budget and Operating
Plan and the final Major Maintenance Plan for each fiscal year, together with a
detailed discussion and analysis thereof, (iii) not less than 30 days prior to
the effective date of any amendment proposed to be made to the Annual Budget and
Operating Plan or the Major Maintenance Plan, copies of such proposed
amendments, and (iv) promptly following receipt, quarterly reports delivered to
the Partnership from ▇▇▇▇▇ R&M pursuant to Section 6.3 of the Services and
Supply Agreement. Each proposed Annual Budget and Operating Plan, final Annual
Budget and Operating Plan and any proposed amendment to the Annual Budget and
Operating Plan shall be accompanied by the Independent Engineer's certification
as to the reasonableness of such Annual Budget and Operating Plan or amendment.
The Partnership shall reasonably consider in good faith the views expressed by
any Senior Lender in response to a delivery made to the Senior Lenders pursuant
to this clause (b), and shall reasonably consult with such Senior Lender as to
the appropriateness of any particular forecast, assumption or expenditure that
may be identified by such Senior Lender as being of concern to it.
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(c) Financial Statements. The Partnership shall furnish to the
Collateral Trustee, each Credit Rating Agency and the Independent Engineer:
(i) Quarterly. Within 45 days after the end of each of the first
three quarters of each fiscal year, unaudited quarterly Partnership
Financial Statements and Borrower Financial Statements prepared in
accordance with GAAP. Such Partnership Financial Statements and Borrower
Financial Statements shall be accompanied by a certificate of a Responsible
Officer attesting that (except as may otherwise be noted in such
certificate) such Partnership Financial Statements or Borrower Financial
Statements, as the case may be, are presented in conformity with GAAP on a
basis consistent with that of the most recent audited Partnership Financial
Statements or Borrower Financial Statements, as the case may be;
(ii) Annual. Within 90 days after the end of each fiscal year,
annual Partnership Financial Statements and Borrower Financial Statements
presented in conformity with GAAP, audited by independent public
accountants of recognized international standing appointed from time to
time by the Partnership together with the opinion of such accountants; and
(iii) No Default Certificate. On the date of delivery of quarterly
or annual Partnership Financial Statements pursuant to this clause (c), (A)
a certificate of a Responsible Officer certifying that no Event of Default
or Potential Default has occurred and is Continuing on such date and (B)
solely in the case of the delivery of annual Partnership Financial
Statements, a certificate of the independent public accountants of the
Partnership certifying that, after their audit of such annual Partnership
Financial Statements, no facts are known to them that would cause them to
believe that an Event of Default or Potential Default has occurred and is
Continuing on such date, in each of cases (A) and (B), other than Events of
Default or Potential Defaults disclosed to the Collateral Trustee, each
Credit Rating Agency and each Independent Consultant in accordance with
clause (a) of Section 8.02.
(d) Permitted Hedging Arrangements. The Partnership shall, if
applicable, deliver to the Collateral Trustee, each Credit Rating Agency and the
Independent Engineer on the date of the delivery of its quarterly and annual
financial statements pursuant to clause (c) of this Section 8.01, a report
listing all Permitted Hedging Arrangements entered into or terminated in the
current quarter.
(e) Major Maintenance. The Partnership shall furnish to the
Collateral Trustee, each Credit Rating Agency and the Independent Engineer not
less than 90 days in advance of any Major Maintenance, a notice describing the
expected date of commencement of such Major Maintenance and its duration, the
facilities to be affected, the purpose for the maintenance or other activities
to be conducted during such Major Maintenance and the Partnership's current
estimate of the funds that will be available to pay the expenses of any Major
Maintenance and any Senior Debt Obligations that become due during such Major
Maintenance.
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(f) Other Information. The Partnership shall furnish to the
Collateral Trustee, each Credit Rating Agency and each Independent Consultant
such other information related to the ▇▇▇▇▇ Project as it shall reasonably
request from time to time, including in connection with any Independent
Consultant's annual review of the Project.
8.02 Notice of Extraordinary Events. The Partnership shall promptly
deliver to the Collateral Trustee, the Applicable Agents, each Credit Rating
Agency and the Independent Engineer notice upon its discovery of:
(a) any Event of Default or Potential Default and any breach of its
obligations under this Agreement, any Senior Loan Agreement, the Oil
Payment Insurance Policy or the Reimbursement Agreement that does not of
itself constitute an Event of Default or a Potential Default;
(b) any material default (including without limitation any material
payment default) under, or any amendment or termination of, any Project
Document or any material disputes in respect thereof with counterparties
thereof;
(c) the occurrence of any Event of Force Majeure that excuses the
performance of any obligation under, or allows the termination of, any
Transaction Document;
(d) any litigation, arbitration, administrative, governmental or
other similar proceeding that is instituted or threatened against any of
the Borrower, the Partnership, the General Partner or the Limited Partner
or any of their respective property or assets, that, if adversely
determined, could be expected to have a Material Adverse Effect;
(e) any transaction with an Affiliate of the Partnership; and
(f) other developments in construction or operation of the ▇▇▇▇▇
Project, if not otherwise reported in any report of the Partnership
required to be provided hereunder, that could reasonably be expected to
have a Material Adverse Effect; and
(g) any facts or circumstances regarding the matters described
in the representations set forth in Section 3.01 that would render any such
representation untrue if being made at the time of discovery by the
Partnership;
in each case describing the nature thereof and any action the Partnership
proposes to take with respect thereto.
8.03 Books and Records. Each of the Partnership and the Borrower
shall (a) keep proper books of record and account in which entries will be made
of transactions of or in relation to its business and (b) keep accounts and
financial and cost records, and
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prepare the Partnership Financial Statements or Borrower Financial Statements,
as the case may be, referred to in clause (c) of Section 8.01 in accordance with
GAAP.
ARTICLE IX
COMMON CONDITIONS PRECEDENT
9.01 Common Conditions Precedent to Initial Disbursements of Senior
Loans. The obligation of each Senior Lender to make the initial disbursement of
a Senior Loan under its Senior Loan Agreement shall be subject to (i) the
satisfaction or waiver by it of each of the conditions precedent set forth in
such Senior Lender's Senior Loan Agreement and (ii) each of the following common
conditions precedent, provided that the obligation of each Bank Senior Lender to
make the initial disbursement of a Senior Loan under its Bank Senior Loan
Agreement shall be subject to the further condition that the Borrower has
previously or simultaneously incurred not less than $255 million of Capital
Markets Senior Debt and such Capital Markets Senior Debt remains outstanding
after the application of proceeds from the initial disbursement of such Senior
Loans:
(a) Authorizations, Etc. The Collateral Trustee and each Applicable
Agent shall have received certified copies of the Certificates of
Incorporation and the Bylaws, or the Certificate of Limited Partnership and
the Partnership Agreement, as the case may be, and all other constitutive
and governing documents of each of Borrower, the Partnership, the General
Partner and the Limited Partner, the Shareholders and the ▇▇▇▇▇ Entities
and of the necessary actions of its respective managing committees or
boards of directors taken to authorize the execution and delivery of each
Transaction Document to which it is a party, and the performance by it of
its obligations thereunder.
(b) Incumbency and Signatures. The Collateral Trustee and each
Applicable Agent shall have received a certificate of each of the Borrower,
the Partnership, the General Partner, the Limited Partner, the Shareholders
and ▇▇▇▇▇ R&M in respect of the authority and incumbency of each Person who
has signed or will sign the Transaction Documents, in each case to which it
is a party, on its behalf, or who will, until replaced by another Person or
Persons duly authorized for that purpose, otherwise act as representative
for the purposes of signing documents in connection with the Transaction
Documents and the transactions contemplated hereby and thereby.
(c) Financing Documents. Each of this Agreement and the other
Financing Documents shall have been executed and delivered by each of the
parties named as proposed signatories hereto and thereto to the Collateral
Trustee, each Applicable Agent and the Secured Parties. The Partnership
and the Borrower shall have paid in full the premium required to be paid
for the first annual policy period
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under the Oil Payment Insurance Policy and the Debt Service Reserve
Guarantee Arrangement, respectively.
(d) Security Documents. Each of the Security Documents referred
to in Article VI to be delivered on or prior to the Closing Date shall have
been executed by the party required hereby to execute such Security
Documents and each of the Borrower, the Partnership, the General Partner
and the Limited Partner, as applicable, shall have taken any other steps,
or made arrangements acceptable to the Collateral Trustee to take such
other steps, required, under the laws of the United Mexican States, the
State of New York or the State of Texas or any other applicable law, to
perfect the security interests granted by such Security Documents (or to
make effective such amendment, assignment or powers of attorney), including
without limitation the filing of financing statements, recordation of
mortgages, giving of receipts and receipt of consents, and notarized copies
thereof, together with evidence of filing or any other steps required to
perfect such security interests, if applicable, shall have been delivered
to the Collateral Trustee, the Applicable Agents, each of the Bank Senior
Lenders and the Capital Markets Trustee.
(e) Project Documents. True and complete certified copies of each
of the Project Documents, in form and substance reasonably satisfactory to
the Senior Lenders, shall have been executed and delivered to the
Collateral Trustee, each Bank Senior Lender, the Oil Payment Insurer
Administrative Agent and the Capital Markets Trustee, and each such Project
Document shall be in full force and effect.
(f) Consents and Approvals. Each of the Borrower, the Partnership,
the General Partner and the Limited Partner shall have delivered to the
Collateral Trustee, each Applicable Agent and the Independent Engineer true
and complete certified copies of all Third-Party Authorizations in clause
(e) of Section 3.01 and clause (f) of Section 3.01.
(g) Insurance. (i) The Required Insurance then to be in effect
pursuant to Article VII shall be in full force and effect, (ii) the
Partnership shall have delivered to the Collateral Trustee (for delivery to
each Bank Senior Lender and the Capital Markets Trustee) letters from the
Partnership's insurance brokers (commonly referred to as "undertaking
letters"), dated not earlier than 15 days prior to the Closing Date,
stating with respect to each insurance policy required to be in effect on
the Closing Date pursuant to Article VII that (x) such insurance is in full
force and effect, (y) all premiums theretofore due for payment thereon have
been paid and (z) the underwriters of such insurance have agreed that the
policies, when issued, will contain the provisions required under Sections
7.02, 7.03, 7.04 and, as necessary, Section 7.05 and (iii) the Collateral
Trustee and each Applicable Agent shall have received a certificate of the
Insurance Consultant to the effect that the coverage under the
Partnership's insurance policies and the undertaking letters conforms to
the requirements of Article VII and Appendix J.
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(h) Acceptance of Appointment of Agent for Service. The Collateral
Trustee and each Applicable Agent shall have received acknowledgment of the
irrevocable appointment of agents for service in New York and Texas in
accordance with clause (b) of Section 14.12, clause (b) of Section 4.08 of
the Transfer Restrictions Agreements and any applicable Sections of the
Senior Loan Agreements.
(i) Accounts. The Collateral Trustee and each Applicable Agent shall
have received written notification from the Depositary Bank that each of
the Accounts has been established in accordance with Section 5.01.
(j) Representations and Warranties. The representations and
warranties made in this Agreement and the Transfer Restrictions Agreement
shall be true and correct in all material respects as of the Closing Date
as if made on the Closing Date, as certified in a certificate delivered by
two Responsible Officers of the relevant party.
(k) Legal Opinions. The Collateral Trustee and each Applicable Agent
shall have received the following legal opinions dated the Closing Date and
addressed to the Collateral Trustee, the Applicable Agents and the Secured
Parties:
(i) the opinion of Mexican counsel to PMI, in the form set
forth in Appendix L-1;
(ii) the opinion of Mexican counsel to Pemex, in the form set
forth in Appendix L-2;
(iii) the opinion of U.S. counsel to PMI and Pemex, in the form
set forth in Appendix L-3;
(iv) the opinion of the counsel to the EPC Contractor and the
EPC Guarantor, in the form set forth in Appendix L-4;
(v) the opinion of the counsel to the Hydrogen Supplier, in
the form set forth in Appendix L-5;
(vi) the opinion of the General Counsel to the ▇▇▇▇▇ Entities,
in the form set forth in Appendix L-6;
(vii) the opinions of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, New York
counsel to the Borrower, the Partnership, the Partners, the ▇▇▇▇▇ Entities
and Blackstone, in the form set forth in Appendix L-7;
(viii) the opinions of ▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇▇, Texas real estate
counsel to the Borrower, the Partnership and the Partners, in the form set
forth in Appendix L-8;
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(ix) the opinion of ▇▇▇▇▇▇ & ▇▇▇▇▇▇ L.L.P., Texas environmental
counsel to the Borrower, the Partnership and the Partners, in the form set
forth in Appendix L-9;
(x) the opinion of Benckenstein & Oxford, L.L.P., Texas
counsel to the Borrower, the Partnership and the Partners, in the form set
forth in ▇▇▇▇▇▇▇▇ ▇-▇▇.
(xi) the opinion of the counsel to Occidental Petroleum, in the
form set forth in ▇▇▇▇▇▇▇▇ ▇-▇▇;
(xii) the opinion of ▇.▇. ▇▇▇▇▇▇ & Company, Cayman Islands
counsel to Blackstone, in the form set forth in ▇▇▇▇▇▇▇▇ ▇-▇▇.
(xiii) the opinion of ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, New York counsel
to the Secured Parties, in form and substance reasonably satisfactory to
the Secured Parties; and
(xiv) the opinion of ▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇, English counsel to
the Oil Payment Insurers, in the form set forth in Appendix L-13.
(l) Initial Construction Budget. On or prior to the execution of this
Agreement, the Partnership shall have delivered to the Collateral Trustee
and each Applicable Agent a copy of the Initial Construction Budget
substantially in the form previously approved by the Bank Senior Lenders
Administrative Agent.
(m) Payment of Fees. The Partnership shall have paid, or shall have
given an irrevocable instruction for the payment out of the proceeds of
such Senior Loans, all fees and expenses in respect of the transactions
contemplated by this Agreement then due and payable to each of the
Collateral Trustee, the Senior Lenders, the Oil Payment Insurers
Administrative Agent, the Capital Markets Trustee, the Independent Engineer
and the Insurance Consultant.
(n) Insurance Consultant's Report. The Insurance Consultant's Report
set forth in Appendix M shall have been delivered to the Collateral Trustee
and each Applicable Agent, in form and substance reasonably satisfactory to
the Bank Senior Lenders, the Oil Payment Insurers Administrative Agent and
the Capital Markets Trustee.
(o) Independent Engineer's Reports. All the Independent Engineer's
Reports set forth in Appendix N shall have been delivered to the Collateral
Trustee and each Applicable Agent in form and substance reasonably
satisfactory to the Bank Senior Lenders, the Oil Payment Insurer
Administrative Agent and the Capital Markets Trustee.
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(p) Independent Accountants. The Partnership shall have provided
evidence reasonably satisfactory to the Collateral Trustee and each
Applicable Agent of the appointment of independent public accountants of
recognized national standing.
(q) Licenses and Other Rights. The Partnership shall have delivered
to the Collateral Trustee and each Applicable Agent (i) a letter or
certificate to the effect that the Partnership has obtained all licenses
and other rights to use Technology that are necessary in order to develop,
construct, operate and maintain the ▇▇▇▇▇ Project as contemplated by this
Agreement and the report of the Independent Engineer delivered to the
Collateral Trustee and each Applicable Agent pursuant to clause (o) of this
Section 9.01.
(r) Credit Rating. The Project shall have received and maintained
ratings of not less than BB and Ba3 from Standard & Poor's, Inc. and
▇▇▇▇▇'▇ Investors Service, Inc., respectively.
(s) Financial Statements. Each of the Borrower Parties shall have
delivered to the Collateral Trustee and each Applicable Agent copies of its
most recent audited financial statements (or, if it has no audited
financial statements, its most recent unaudited annual financial
statements), in each case certified by a Responsible Officer.
(t) Title to Properties; Security Interests. Each of the Borrower,
the Partnership and the Partners shall have provided satisfactory evidence
with respect to the matters set forth in its representation contained in
clause (m) of Section 3.01 to the Collateral Trustee and each Applicable
Agent.
(u) Capital Contributions. (i) The Partnership shall have provided
satisfactory evidence of its receipt of each of the Initial Capital
Contributions from the Shareholders to the Collateral Trustee and each
Applicable Agent and (ii) each of the conditions specified in Section 12 of
each of the Capital Contribution Agreements with Blackstone and Occidental
Petroleum, respectively, shall have been satisfied.
(v) Ancillary Equipment Upgrade Account. ▇▇▇▇▇ R&M shall have
provided the EPC Contractor with a standby letter of credit in an initial
amount equal to $97 million in accordance with the ▇▇▇▇▇ ▇▇▇ Contract.
(w) Officers' Certificate. Each of the Borrower Parties shall have
certified, in a certificate delivered to the Secured Parties executed by
two Responsible Officers of the respective party, that all conditions to
disbursement set forth in this Section 9.01 and Section 9.02 have been
satisfied at or prior to the date hereof.
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9.02 Common Conditions Precedent to Initial and Subsequent
Disbursements of Senior Loans. The obligation of each Senior Lender to make the
initial and any subsequent disbursement of a Senior Loan under its Senior Loan
Agreement shall be subject to satisfaction or waiver by it of each of the
conditions precedent set forth in such Senior Loan Agreement and each of the
following common conditions precedent:
(a) Absence of Certain Defaults. (i) No Event of Default or
Potential Default and (ii) no event or condition that with the giving of
notice or lapse of time, or both, would be or is reasonably likely to
result in a material default under any Transaction Document, in each of
cases (i) and (ii) shall have occurred and be continuing.
(b) Notice of Borrowing. Each Bank Senior Lender shall have
received a notice of borrowing from the Borrower and the Partnership
substantially in the form set forth in Appendix O, or in any other form as
the Borrower, the Partnership and such Bank Senior Lender may agree (a
"Notice of Borrowing").
(c) Accuracy of Representations and Warranties. Each representation
and warranty either (i) made in Article III of this Agreement or (ii) set
forth in the Notice of Borrowing provided by the Borrower and the
Partnership in accordance with clause (b) of this Section 9.02 shall be
true and correct in all material respects as of the date of such borrowing
as if made on and as of that date.
(d) No Abandonment. The Partnership shall not have received at
least five Business Days prior to the proposed disbursement date, a notice
from the Collateral Trustee, delivered at the instruction of Majority
Lenders, that they have determined that there has been an Abandonment.
(e) No Material Adverse Change. The Partnership shall not have
received, at least five Business Days prior to the proposed disbursement
date, a notice from the Collateral Trustee, delivered at the instruction of
Majority Lenders, that Majority Lenders have determined in their reasonable
judgment that a material adverse change has occurred in (i) the financial
condition of the Partnership or the engineering, construction, development,
operation or performance of the ▇▇▇▇▇ Project or (ii) the financial
condition of the Borrower, ▇▇▇▇▇ R&M, the Hydrogen Supplier, PMI, Pemex,
the EPC Contractor or the EPC Guarantor that could reasonably be expected
to have a material adverse effect on the financial condition of the
Partnership or the engineering, construction, development, operation or
performance of the ▇▇▇▇▇ Project, provided that (x) the occurrence of any
change in general economic conditions or market prices for crude oil or
refined products or (y) any downgrade in the senior unsecured long-term
debt rating of ▇▇▇▇▇ R&M by one or more Credit Rating Agencies of not more
than one rating category ("notch") shall not be deemed to constitute such a
material adverse change (it being understood that such a downgrade by more
than one rating category shall constitute such a material adverse change
only if it could reasonably be expected to have a material adverse
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effect on the financial condition of the Partnership or the engineering,
construction, development, operation or performance of the ▇▇▇▇▇ Project),
provided, further, that such notice may be delivered within such five-
Business Day period if such material adverse change first occurs during
such five-Business Day period. Any notice delivered by the Collateral
Trustee in accordance with the foregoing shall set forth a reasonably
detailed explanation of the material adverse change that has occurred.
(f) Pro Rata Equity Funding. Prior to or concurrently with any
disbursement of Bank Senior Loans, the Partnership shall have received at
least a pro rata Capital Contribution of its total Capital Commitments
based on the ratio of the sum of such Bank Senior Loans to the total of
all outstanding Bank Senior Debt Commitments and Bank Senior Loans. The
Partnership shall have provided satisfactory evidence of its receipt of
such pro rata Capital Contribution to the Collateral Trustee and each
Applicable Agent.
(g) Other Documents. The Collateral Trustee, each Applicable Agent,
the Independent Engineer and the Insurance Consultant shall have received
such other approvals, documents, certificates and opinions as they may
reasonably request.
9.03 Pro Rata Drawdowns; Pro Rata Reductions in Initial Senior Debt
Commitments.
(a) The Borrower shall borrow concurrently under the Senior Loan
Agreements of all Senior Lender Groups (other than the Capital Markets Senior
Lenders) whose Senior Debt Commitments have not then been fully borrowed, in the
case of each Senior Lender Group, in the proportion that the aggregate
unborrowed portion of its Senior Debt Commitment bears to the total of the
unborrowed portion of all Senior Debt Commitments. If drawdowns from the Senior
Lender Groups cannot be made exactly in such proportion due to minimum drawdown
amounts and required integral multiples of drawdowns under the Senior Loan
Agreements, drawdowns shall be made in amounts as near to such exactly
proportionate amounts as possible and shall be deemed to be drawdowns in
compliance with this Section 9.03. The Borrower shall promptly notify the
Collateral Trustee if funds are not received from any Senior Lender by the close
of business in The City of New York on the day after the date any such drawdown
is due to be received.
(b) Other than in connection with the obtaining of Senior Debt
Commitments in respect of Replacement Senior Debt in accordance with Section
2.10 or a payment or prepayment under Section 2.07, the Borrower shall not
reduce or terminate the unused portion of Senior Debt Commitments under any
Senior Loan Agreement without concurrently reducing or terminating, pro rata
based on the undrawn Senior Debt Commitments, the unused Senior Debt Commitments
under the other Senior Loan Agreements. Any reduction or termination of Senior
Debt Commitments under a Senior Loan Agreement shall automatically amend
Appendix B for all purposes hereunder.
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ARTICLE X
EVENTS OF DEFAULT AND REMEDIES
10.01 Events of Default. Each of the following events shall be an
"Event of Default":
(a) Payment Default. Either the Borrower or the Partnership shall
default in the payment when due of (i) principal, interest, premium or
other amounts owing in respect of any Senior Debt or (ii) any Oil Payment
Reimbursement Obligation, and, in each of cases (i) and (ii), such default
remains uncured or unwaived for more than five Business Days;
(b) Breach of Representation and Warranty. Any representation or
warranty made by any of the Borrower, the Partnership, the General Partner,
the Limited Partner or the Shareholders or in any Financing Document shall
prove to have been false or misleading in any material respect when made;
(c) Breach of Covenant. Any of the Borrower, the Partnership, the
General Partner or the Limited Partner shall fail to observe or perform any
obligation to be observed or performed by it under this Agreement and such
failure shall continue unwaived or unremedied for 30 days;
(d) Default under the Financing Documents. An event of default
shall have occurred and be Continuing under any Financing Document;
(e) Default Under or Termination of the Project Documents. Any
party to a Project Document shall fail in any material respect to observe
or perform any covenant or other obligation to be observed or performed by
it or to pay any amounts owing by it thereunder and such failure shall
continue uncured, unwaived or unremedied, (i) in the case of any failure
under any Project Document to which an Affiliate of the Partnership is a
party or in the case of a failure to pay any amounts owing under the EPC
Contract, the Long-Term Oil Supply Agreement or the Hydrogen Supply
Agreement, for more than 30 days, (ii) in the case of any other failure
under the EPC Contract, the Long-Term Oil Supply Agreement or the Hydrogen
Supply Agreement, for more than 60 days (which grace period shall be
extended to no more than 180 days in the aggregate if the Partnership is
diligently pursuing a remedy for such failure, including without limitation
by replacing the relevant Project Document) and (iii) in the case of any
other failure under any other Project Document, for more than 30 days;
(f) Insolvency. An Insolvency Event shall have occurred with
respect to, (i) at any time, any of the Borrower, the Partnership, the
General Partner or the Limited Partner and (ii) prior to Substantial
Reliability, Blackstone;
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(g) Cross-Acceleration. (i) Any Indebtedness in an aggregate
principal amount in excess of $5 million of any of the Borrower, the
Partnership, the General Partner or the Limited Partner shall have been
declared due and payable or required to be prepaid or redeemed (other than
by regularly scheduled required prepayment or redemption) prior to the
stated maturity thereof, or (ii) any event or condition shall have occurred
that would permit a holder of such Indebtedness to make such a declaration
and any applicable grace period in the financing documents under which such
Indebtedness was incurred shall have expired;
(h) Attachment of Collateral. A Person other than the Collateral
Trustee, any Applicable Agents, any of the Secured Parties or any of their
authorized representatives shall have attached (i) any Account or
Subaccount or funds in any Account or Subaccount or (ii) any portion of the
property and assets of any of the Borrower, the Partnership, the General
Partner or the Limited Partner which property and assets, individually or
in the aggregate, have a book value in excess of $5 million, and, in the
case of subclause (ii) only, such attachment shall remain unlifted,
unstayed or undischarged for a period of 30 days;
(i) Security Interests Invalid. Any security interests created or
purported to be created by or pursuant to this Agreement or any Security
Document shall, in the reasonable opinion of counsel to the Secured
Parties, not be valid, perfected, first priority security interests in
favor of the Collateral Trustee for the benefit of the Secured Parties
(except to the extent specified in the forms of legal opinions set forth in
Appendix L);
(j) Unsatisfied Judgments. A final judgment or final judgments (i) in
the aggregate in excess of $5 million with respect to any of the Borrower,
the Partnership, the General Partner or the Limited Partner shall have been
rendered by a court or other competent tribunal against any of the
Borrower, the Partnership, the General Partner or the Limited Partner and
shall have remained unpaid, unstayed, undischarged, unbonded or undismissed
after the right to appeal has expired;
(k) Unenforceability of Agreements. Any Transaction Document shall
have been repudiated or terminated by any party thereto, by operation of
law or otherwise, or any material provision of any Transaction Document
shall have ceased for any other reason to be valid, legally binding or
enforceable against any party thereto other than the Secured Parties if
such cessation is not cured within 30 days after notice to the Partnership;
(l) Abandonment. Abandonment shall have occurred;
(m) Failure to Achieve Substantial Reliability. The Partnership shall
have failed to achieve Substantial Reliability by October 1, 2001;
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(n) Failure to Achieve Mechanical Completion. The Partnership
shall have failed to achieve Mechanical Completion by March 1, 2001 (or
October 1, 2001 if, commencing on March 1, 2001 (i) the Borrower Parties
continue to pay the Senior Debt Obligations as and when they become due,
(ii) the Borrower Parties accrue monthly all Senior Debt Obligations due
and payable on the immediately succeeding Payment Date and deposit such
funds at the end of each calender month into an escrow account pledged to
the Collateral Trustee for the benefit of the Secured Parties, (iii) the
Partnership continues to pursue diligently the achievement of Mechanical
Completion at the earliest practicable date and (iv) the Partnership has
delivered to the Collateral Trustee a certificate setting forth in
reasonable detail (A) the actions being taken by the Partnership to achieve
Mechanical Completion and (B) the proposed timetable for taking such
actions, which certificate shall be reviewed and confirmed by the
Independent Engineer);
(o) ▇▇▇▇▇ ▇▇▇ Contract. The work to be performed under the ▇▇▇▇▇
▇▇▇ Contract shall have failed to have been substantially completed by
October 1, 2000, subject to an extension to February 1, 2001 if the
Independent Engineer confirms to the Collateral Trustee that such extension
will not have a Material Adverse Effect;
(p) Hydrogen Supply Plant. The Hydrogen Plant shall have failed to
have been completed by December 6, 2000 (or March 1, 2001 if, commencing on
December 6, 2000 (i) the Borrower Parties continue to pay the Senior Debt
Obligations as and when due and (ii) the Partnership continues to pursue
diligently the achievement of completion of the Hydrogen Plant, by the
Hydrogen Supplier or by itself, at the earliest practicable date);
(q) Failure to Deposit Funds in Accounts. The Partnership shall
fail to cause funds to be deposited into the Accounts in accordance with
the terms set forth in Article V and such failure shall continue unwaived
or unremedied for five Business Days.
10.02 Declaration of Default. Upon receipt by the Collateral Trustee
of one or more of the following:
(a) a certificate from a Senior Lender or Senior Lender Group
(or, at any time on or after a Priority Termination Date, the Oil Payment
Insurers Administrative Agent) stating that an Event of Default described
in clause (a) (insofar as either such Event of Default relates to such
Senior Lender or Senior Lender Group) of Section 10.01 has occurred and is
Continuing and instructing the Collateral Trustee to declare a Default; or
(b) a certificate from Majority Lenders (or, at any time on or
after a Priority Termination Date, Majority Secured Parties) stating that
an Event of Default has occurred and is Continuing and instructing the
Collateral Trustee to declare a Default under this Agreement,
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then, by notice to the Partnership, a "Default" shall occur, provided that a
"Default" shall occur without such declaration or other notice (which
declaration or notice shall, for purposes of the Senior Loan Agreements, be
deemed to have been given) upon the occurrence of an Event of Default described
in clause (f) of Section 10.01.
10.03 Cessation of Default. Any Senior Lender or Senior Lender Group
that has given a certificate pursuant to Section 10.02 shall promptly notify the
Collateral Trustee, the Borrower, the Partnership and each other Secured Party
upon learning of the cessation of the Event of Default to which such certificate
related. Any notice given pursuant to this Section 10.03 shall be a "Cessation
Notice." A Cessation Notice shall be effective upon receipt thereof by the
Borrower or the Partnership and the Default to which such notice relates shall
be deemed no longer to be Continuing for all purposes hereunder.
10.04 Remedies. At any time when a Default has occurred and is
Continuing,
(a) in the case of a Default arising in connection with an Event of
Default described in clause (f)(i) of Section 10.01, without any
declaration or other action on the part of the Collateral Trustee, any
Applicable Agent or any Secured Party, all Senior Debt Commitments shall
automatically terminate and 100% of the outstanding principal amount of the
Senior Debt, together with any premium, accrued interest, fees and other
amounts due under the Senior Loan Agreements shall become immediately due
and payable without presentment, demand, protest or any other notice of any
kind, all of which are hereby expressly waived by the Borrower and the
Partnership, anything contained herein to the contrary notwithstanding;
(b) in the case of any Default,
(i) Subject to the rights of the Secured Parties set forth in
subclause (ii) of this clause (b):
(A) the Collateral Trustee, at the direction of Majority Lenders
(or, at any time on or after a Priority Termination Date, Majority Secured
Parties), shall take the actions in respect of the Accounts required by
Section 5.06;
(B) Majority Lenders (or, at any time on or after a Priority
Termination Date, Majority Secured Parties) shall have the right, at
their sole option, to require the Partnership to continue to operate
the Heavy Oil Processing Facility or to require the Partnership to
appoint a manager or operator on terms and conditions acceptable to
such Majority Lenders (or Majority Secured Parties, as the case may
be) for the purpose of performing such duties for and rendering such
assistance on behalf of the Partnership as is required by a committee
or other group of representatives of Senior Lenders. The manager or
operator shall be entitled, on behalf of the Partnership, to operate
and manage the Heavy Oil Processing Facility, incur
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expenses, including capital expenditures necessary or advisable in its
reasonable discretion, enter into contracts with one or more third
parties, acquire, sell, lease or dispose of assets (other than the
Heavy Oil Processing Facility as a whole), protect and preserve the
Heavy Oil Processing Facility and take all other necessary or
advisable actions relating thereto, all at the expense and for the
account of the Partnership; and
(C) Each Senior Lender Group shall have the right to apply the
relevant interest rate provided for in its respective Senior Loan
Agreement.
(ii) (A) Majority Lenders (or, at any time on or after a
Priority Termination Date, Majority Secured Parties) shall have the
right to give the Collateral Trustee a notice identified as an
enforcement direction, together with a certification that such notice
is given in accordance with this Agreement (an "Enforcement
Direction"), directing the Collateral Trustee to take Enforcement
Action;
(B) During the period following the declaration of any Default
and preceding the issuance of an Enforcement Direction, the
Partnership shall use its reasonable best efforts to cure the Event of
Default giving rise to such Default and to mitigate any adverse
consequences to the Heavy Oil Processing Facility of such Event of
Default.
(C) Nothing in this subclause (ii) shall prevent the Collateral
Trustee or the Secured Parties from taking action with respect to the
Collateral to preserve and protect their rights in, or to prevent any
diminution in the value, utility or condition of, such Collateral; and
(c) in the case of any Default, and in addition to any of the rights
specified in clauses (a) and (b) of this Section 10.02, Majority Lenders
shall have the right, at their sole option, to notify the Oil Payment
Insurers Administrative Agent that the second payment priority with respect
to Oil Payment Reimbursement Obligations pursuant to clause (a)(ii) of
Section 5.05 shall terminate (such notice, the "Priority Termination
Notice"). Concurrently with the Priority Termination Notice to the Oil
Payment Insurers Administrative Agent in accordance with the foregoing
sentence, the Bank Senior Lenders Administrative Agent may notify PMI that
the coverage provided by the Oil Payment Insurance Policy shall be
suspended on the earliest date permitted under the terms of the Oil Payment
Insurance Policy. If Majority Lenders do not so notify PMI, the Oil
Payment Insurers Administrative Agent, promptly upon receipt of the
Priority Termination Notice, shall notify PMI that the coverage provided by
the Oil Payment Insurance Policy shall be suspended on the earliest date
permitted under the terms of the Oil Payment Insurance Policy. Upon the
expiration of 30 days following the effectiveness (determined in accordance
with the terms of the Oil Payment Insurance Policy) of such notice by the
Bank Senior Lenders Administrative Agent or the Oil Payment Insurers
Administrative
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Agent, as the case may be, to PMI (such date, the "Priority Termination
Date"), the second payment priority with respect to Oil Payment Insurance
Obligations shall terminate in accordance with clause (b)(ii) of Section
5.06, provided that if the Oil Payment Insurers Administrative Agent
receives a Priority Termination Notice after it has notified PMI that the
coverage provided by the Oil Payment Insurance Policy shall be suspended or
terminated for any reason, the Priority Termination Date shall be the date
that is 30 days after the later of (i) the date on which the Oil Payment
Insurers Administrative Agent receives such Priority Termination Notice and
(ii) the date on which such suspension or termination of the coverage
provided by the Oil Payment Insurance Policy becomes effective in
accordance with the terms thereof.
10.05 Enforcement Action. Upon receipt of an Enforcement Direction,
the Collateral Trustee shall, as promptly as practicable, if so instructed by
the Secured Party or Secured Parties giving such Enforcement Direction, subject
to applicable law, take Enforcement Action.
10.06 Incidents of Sale. Upon any sale of any of the Collateral made
or caused to be made by the Collateral Trustee, whether made under the power of
sale hereby given or pursuant to judicial proceedings, to the extent permitted
by applicable law:
(a) any Secured Party may bid for and purchase the property offered
for sale, and upon compliance with the terms of sale may hold and dispose
of such property;
(b) the Collateral Trustee may, but shall not be obligated to, make
and deliver to the purchaser or purchasers a good and sufficient deed, ▇▇▇▇
of sale and instrument of assignment and transfer of the property sold; and
(c) the Collateral Trustee, in its own name or pursuant to the
power of attorney granted in or pursuant to clause (c) of Section 6.12 by
the Borrower, the Partnership and each of the Partners, may make all
necessary deeds, bills of sale and instruments of assignment and transfer
of the property thus sold and for that purpose the Collateral Trustee may
execute all necessary deeds, bills of sale and instruments of assignment
and transfer, and may substitute one or more Persons with like power (and
the Borrower, the Partnership and each of the Partners hereby ratifies and
confirms all that its said attorney or such substitute or substitutes shall
lawfully do by virtue hereof; but if so requested by the Collateral Trustee
or by any purchaser, the Borrower, the Partnership and each of the
Partners, as the case may be, shall ratify and confirm any such sale or
transfer by executing and delivering to the Collateral Trustee or to such
purchaser or purchasers all proper deeds, bills of sale, instruments of
assignment and transfer and releases as may be designated in any such
request).
Upon a sale of the General Partnership Interest or the Limited
Partnership Interest or substantially all the Project Property, whether made
under the power of sale hereby given or pursuant to judicial proceedings, the
Partnership shall permit, to the extent
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permitted by applicable law, the purchaser thereof and its successors and its
and their assigns to take and use the name of the Partnership and to carry on
business under such name or any variant or variants thereof and to use and
employ any and all other trade names and trademarks of the Partnership.
10.07 Collateral Trustee May File Proofs of Claim. In case of the
pendency of any receivership, insolvency, liquidation, bankruptcy,
reorganization, arrangement, adjustment, composition or other similar judicial
proceeding relative to the Borrower, the Partnership, each of the Partners or
the Collateral, the Collateral Trustee (irrespective of whether the principal of
the Senior Debt shall then be due and payable) shall be entitled and empowered,
by intervention in such proceeding or otherwise, (a) to file and prove a claim
for the whole amount of the Senior Debt Obligations or the Oil Payment
Reimbursement Obligations owing and unpaid and to file such other papers or
documents as may be necessary or advisable in order to have the claims of the
Collateral Trustee (including any claim for the reasonable compensation,
disbursements and advances of the Collateral Trustee, in its individual or trust
capacity, its agents and counsel) and of the Secured Parties allowed in such
judicial proceeding and (b) to collect and receive any moneys or other property
payable or deliverable on any such claims and to distribute the same; and any
custodian, receiver, assignee, Collateral Trustee, liquidator, sequestrator or
other similar official in any such judicial proceeding is hereby authorized by
each Secured Party to make such payments to the Collateral Trustee.
10.08 Collateral Trustee May Enforce Claims. All rights of action and
claims under this Agreement may be prosecuted and enforced by the Collateral
Trustee in its own name as Collateral Trustee of an express trust, provided,
however, that the Collateral Trustee is also hereby appointed as agent for the
Secured Parties for this and the other purposes of this Agreement, and the
Collateral Trustee may, if necessary under applicable law, take such action
solely as agent for the Secured Parties. Any recovery of judgment by the
Collateral Trustee shall, after provision for the payment of the reasonable
compensation, expenses, disbursements and advances of the Collateral Trustee,
its agents and counsel, be for the benefit of the Secured Parties and deposited
to the Enforcement Proceeds Account for application as provided in Section
10.12.
10.09 Control of Enforcement Action. Subject to the receipt by the
Collateral Trustee of indemnity satisfactory to it, the Secured Party or Secured
Parties giving an Enforcement Direction shall have the right, after the giving
of an Enforcement Direction:
(a) to require the Collateral Trustee to enforce this Agreement,
either by judicial proceedings for the enforcement of the payment of Senior
Debt and the Oil Payment Reimbursement Obligations and the enforcement of
the security interests created under this Agreement and any of the Security
Documents, the sale of the Collateral or any part thereof or otherwise or
by the exercise of the power of entry and/or sale hereby conferred; and
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(b) to direct the time, method and place of conducting any
proceeding for any remedy available to the Collateral Trustee, or
exercising any trust or power conferred upon the Collateral Trustee under
this Agreement, provided that (i) such direction shall not be in conflict
with applicable law, this Agreement or any of the Security Documents and
(ii) the Collateral Trustee may take any other action incidental to
carrying out any direction of such Secured Party or Secured Parties.
10.10 Limitation on Suits. (a) No Secured Party (except through the
giving of an Enforcement Direction properly given under Section 10.04) shall
have the right in respect of the Senior Debt Obligations or otherwise under its
Senior Loan Agreement or in respect of the Oil Payment Reimbursement Obligations
or otherwise under the Reimbursement Agreement to commence any proceeding,
judicial or otherwise, against the Borrower, the Partnership or either of the
Partners under any bankruptcy law or other reorganization, arrangement,
readjustment of debt, relief of debtors, dissolution, insolvency, liquidation or
similar law or for the appointment of a receiver, Collateral Trustee or other
officer or representative of a court or of creditors.
(b) None of the Secured Parties (except through the giving of an
Enforcement Direction properly given under Section 10.04) shall have the right
to commence any proceeding, judicial or otherwise, to enforce any judgment
obtained by it, in respect of the Senior Debt Obligations or otherwise under its
Senior Loan Agreement or in respect of the Oil Payment Reimbursement Obligations
or otherwise under the Reimbursement Agreement, against the Borrower, the
Partnership or either of the Partners or their assets or properties, to enforce
any provision of this Agreement, any Security Document or the security interests
granted hereby or pursuant hereto, it being understood and intended that none of
the Secured Parties shall have any rights in any manner whatever to affect,
disturb or prejudice the security interests created hereby or pursuant hereto or
the rights of any of the other Secured Parties, or to obtain or seek to obtain
priority or preference over any other Secured Party or to enforce any rights
under this Agreement, any Security Document or its Senior Loan Agreement or, in
the case of the Oil Payment Insurers, the Reimbursement Agreement, except in the
manner herein or therein provided.
10.11 Enforcement Proceeds Account. Upon receipt of an Enforcement
Direction, the Collateral Trustee shall establish and thereafter maintain in its
name a segregated bank account in New York, New York ("Enforcement Proceeds
Account") for the purpose of depositing therein: (a) any balances then standing
in the Accounts or the Subaccounts or received therein from time to time
thereafter; (b) the proceeds of any sale (net of the costs and expenses of such
sale and any taxes, assessments or prior liens) or Enforcement Action (net of
the costs and expenses of such action) taken pursuant to this Article X; (c) the
proceeds of any insurance referred to in Section 7.07; and (d) all proceeds and
any moneys otherwise received for satisfaction of the Senior Debt Obligations or
the Oil Payment Reimbursement Obligations. All moneys held in the Enforcement
Proceeds Account shall be trust funds held by the Collateral Trustee for the
benefit of Secured Parties for the purpose of making payments therefrom in
accordance with Section 10.12.
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10.12 Application of Enforcement Proceeds. Proceeds from the
Enforcement Proceeds Account shall be applied promptly by the Collateral
Trustee, at the direction of Majority Lenders (or, at any time on or after a
Priority Termination Date, Majority Secured Parties), in the following order of
priority:
(a) first, to the payment of all fees, indemnities and any other
amounts owed to the Collateral Trustee, the Bank Senior Lenders
Administrative Agent, the Oil Payment Insurers Administrative Agent, the
Capital Markets Trustee and the Depositary Bank in their individual or
trust capacity (but not, where applicable, as Senior Lender) relating to
services rendered in their capacity as Collateral Trustee (including in
connection with the taking of any Enforcement Action), Bank Senior Lenders
Administrative Agent, Oil Payment Insurers Administrative Agent, Capital
Markets Trustee or Depositary Bank, as the case may be.
(b) second, to the payment of all fees, costs, expenses,
indemnities and any other amounts owed to the Secured Parties and the whole
amount then outstanding of Senior Debt Obligations or Oil Payment
Reimbursement Obligations and in case such moneys shall not be sufficient
to pay in full the whole amount so due and unpaid, then to make Pro Rata
Payments, without any preference or priority, as among the Secured Parties,
provided that any amounts owed to the Oil Payment Insurers in respect of
Oil Payment Reimbursement Obligations relating to shipments of Maya crude
oil pursuant to the Long-Term Oil Supply Agreement for which title passed
to the Partnership after notice of the Event of Default underlying the
Enforcement Action was given by the Partnership to the Collateral Trustee
and the Administrative Agents in accordance with clause (a) of Section 8.02
(or, if no such notice was given, after the date on which such notice
should have been given in accordance with clause (a) of Section 8.02) shall
have priority over any amounts owed to the Senior Lenders in respect of
Senior Debt Obligations, except to the extent that such Oil Payment
Reimbursement Obligations have been satisfied prior to the relevant
Priority Termination Date, provided, further, that no such priority shall
apply in respect of any Oil Payment Reimbursement Obligations relating to
shipments of Maya crude oil pursuant to the Long-Term Oil Supply Agreement
for which title passed to the Partnership after the relevant Priority
Termination Date; and
(c) third, after the payment in full of the Senior Debt Obligations
and the Oil Payment Reimbursement Obligations, to the payment of the
remainder, if any, to the Partnership or its successors, or in the case of
proceeds from the transfer or disposition of all or part of the interests
in the General Partner or Limited Partner to the Shareholders or the
General Partner, as the case may be, or as a court of competent
jurisdiction may otherwise direct.
10.13 Action under Oil Payment Insurance Policy. Nothing in this
Article X shall limit the right of the Oil Payment Insurers Administrative Agent
to suspend or terminate the coverage under the Oil Payment Insurance Policy in
accordance with the terms of the Reimbursement Agreement, and any such
suspension or termination shall not
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constitute Enforcement Action or another remedy based upon the occurrence or
declaration of an Event of Default for purposes of this Article X.
ARTICLE XI
RESTRICTED PAYMENTS
11.01 Restricted Payments. (a) Subject to clause (b) of this
Section 11.01, no Restricted Payments may be made by the Partnership unless
each of the following conditions has been met:
(i) Final Completion has occurred;
(ii) immediately prior and after giving effect to such
Restricted Payment, no Event of Default or Potential Default or full
or partial Downtime has occurred and is Continuing;
(iii) immediately prior and after giving effect to such
Restricted Payment, the PMI Premium Reserve Account, Debt Service
Reserve Account, the Principal & Interest Accrual Account, the Tax
Reserve Account, the PMI Surplus Reserve Account and the Major
Maintenance Account shall be fully funded and all Project Expenses and
Mandatory Capital Expenditures that have become due and payable have
been paid;
(iv) (A) the projected Debt Service Coverage Ratio for the
Projected Twelve-Month Period beginning on the first day after such
Restricted Payment is made and (B) the historical Debt Service
Coverage Ratio for the Historical Twelve-Month Period ended on the
date such Restricted Payment is made, in each case (A) and (B) is not
less than 1.6:1.0 (or, if the Capital Markets Senior Debt then has an
Investment Grade Rating, 1.35:1.0);
(v) no Insolvency Event with respect to ▇▇▇▇▇ R&M shall have
occurred and be continuing; and
(vi) such Restricted Payment is made within 30 days immediately
following a Payment Date.
(b) The Partnership may direct the Collateral Trustee to make
distributions to the General Partner and the Limited Partner in an
aggregate amount not to exceed $100,000 in each calendar year solely for
the purpose of permitting the Partners to pay their respective directors'
fees, accounting expenses and other administrative expenses.
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(c) The Partnership shall give the Collateral Trustee not less than
five Business Days prior notice of the proposed date of any Restricted
Payment to be made pursuant to this Section 11.01, which notice shall have
attached thereto a certificate of the Partnership signed by a Responsible
Officer certifying that the conditions to such Restricted Payment set forth
in clause (a) have been satisfied, together with information and
computations demonstrating compliance with such conditions.
ARTICLE XII
GUARANTEE
12.01 Guarantee by the Partnership and the Partners. (a) Subject
to clause (b) of this Section 12.01, each of the Partnership and the Partners
hereby unconditionally guarantees, jointly and severally, to each Senior Lender
and the Collateral Trustee (a) the due and punctual payment of the principal of
and interest on each Senior Debt Obligations when and as the same shall become
due and payable, whether at the maturity thereof, by declaration of acceleration
or otherwise, in accordance with the terms of the Senior Debt and this Agreement
and (b) the performance by the Borrower of each of its other obligations under
this Agreement and the other Financing Documents. Each of the Partnership and
the Partners hereby agrees that its obligations hereunder shall be as if it were
a principal debtor and obligor and not merely a surety, and shall be absolute
and unconditional, irrespective of, and shall be unaffected by, any invalidity,
irregularity or unenforceability of any Senior Loan or any provision of this
Agreement or of the other Financing Documents, any failure to enforce the
provisions of any Senior Loan or any provision of this Agreement or of the other
Financing Documents, any waiver, modification or indulgence granted to the
Borrower with respect thereto by any Senior Lender, the Collateral Trustee or
any Applicable Agent, or any other circumstances which may otherwise constitute
a legal or equitable discharge of a surety or guarantor. Each of the
Partnership and the Partners hereby waives diligence, presentment, demand of
payment, filing of claims with a court in the event of merger, bankruptcy or
insolvency of the Borrower, any right to require a proceeding first against the
Borrower, the benefit of discussion, protest or notice with respect to any
Senior Loan or the Senior Debt evidenced thereby and all demands whatsoever, and
covenants that this Guarantee will not be discharged with respect to any Senior
Loan except by payment in full of the principal amount due thereunder and any
interest thereon. Each of the Partnership and the Partners hereby agrees that
it will pay, or reimburse any Senior Lender and the Collateral Trustee on demand
for, all reasonable costs and expenses (including fees and disbursements of
counsel) incurred by such Senior Lender or the Collateral Trustee in connection
with any rescission or restoration of this Guarantee, including any such costs
and expenses incurred in defending against any claim alleging that any payment
constituted a preference, fraudulent transfer or similar payment under any
bankruptcy, insolvency or similar law.
(b) Notwithstanding anything in this Section 12.01 to the contrary,
the guarantee under clause (a) of this Section 12.01 shall not apply to the
extent any obligation
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is guaranteed pursuant to (i) the guarantee attached to the securities
evidencing Capital Markets Senior Debt in accordance with Section 205 and
Article 12 of the Indenture, (ii) the guarantee of Bank Senior Debt pursuant to
Article XI of the Bank Senior Loan Agreement or Article X of the Secured Working
Capital Facility or (iii) the guarantee of the Borrower's obligations under the
Secured Working Capital Facility.
ARTICLE XII
THE COLLATERAL TRUSTEE
13.01 Appointment of Collateral Trustee. Bankers Trust Company is
hereby appointed as Collateral Trustee hereunder (the "Collateral Trustee") and
hereby accepts the trust created in this Agreement upon the terms and conditions
hereof.
13.02 Delivery of Documentation. Executed counterparts of the
Financing Documents have been delivered to the Collateral Trustee and the
Collateral Trustee acknowledges receipt thereof. The Borrower, the Partnership
and each of the Partners and each Applicable Agent agree to deliver to the
Collateral Trustee any Senior Loan Agreement relating to Additional Senior Debt
or Replacement Senior Debt and any instrument amending or modifying any
agreement to which it is a party previously delivered to the Collateral Trustee.
Amendments or modifications of the aforementioned agreements shall be in writing
and shall not affect the duties and obligations of the Collateral Trustee
hereunder unless (a) the Collateral Trustee has received a copy of such
amendment or modification and (b) with respect to any amendment or modification
which, in the opinion of the Collateral Trustee, modifies the Collateral
Trustee's duties, obligations, or responsibility, the Collateral Trustee has
consented in writing thereto within 10 Business Days of receiving a copy
thereof.
13.03 Attorney-in-Fact. The Collateral Trustee or any officer or
agent thereof, with full power of substitution, is hereby appointed the
attorney-in-fact of each of the Borrower, the Partnership, the General Partner
and the Limited Partner for the purpose of carrying out the provisions of this
Agreement and any of the Financing Documents and taking any action and executing
any instruments which the Collateral Trustee, at the direction of Majority
Lenders; may deem necessary or advisable to accomplish the purposes hereof and
thereof, which appointment as attorney-in-fact is coupled with an interest and
irrevocable and, without limiting the generality of the foregoing, which
appointment hereby gives the Collateral Trustee the power and right on behalf of
each of the Borrower, the Partnership, the General Partner and the Limited
Partner without notice to or assent by any of the foregoing, to the extent
permitted by applicable law, to do the following when and to the extent it is
authorized or directed to do so pursuant to the terms of this Agreement or any
of the Security Documents:
(i) to ask for, demand, ▇▇▇ for, collect, receive and give
acquittance for any and all moneys due or to become due with respect to,
and to the extent of, the rights assigned to it by any of the Borrower, the
Partnership, the General Partner and
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the Limited Partner to the extent of the interest therein of any Secured
Party in the Collateral;
(ii) to receive, take, endorse, assign and deliver any and all
checks, notes, drafts, acceptances, documents and other negotiable and non-
negotiable instruments, documents and chattel paper taken or received by
the Collateral Trustee in connection with this Agreement or any of the
Financing Documents;
(iii) to commence, file, prosecute, defend, settle, compromise,
adjust, revoke, cancel, annul, move to dismiss or otherwise undo any claim,
suit, action or proceeding with respect to the security interests granted
for the benefit of the Secured Parties in the Collateral;
(iv) to sell, transfer, assign or otherwise deal in or with the
Collateral or any part thereof pursuant to the terms and conditions of this
Agreement and the Financing Documents; and
(v) to do, at its option and at the expense and for the account
of any of the Borrower, the Partnership, the General Partner and the
Limited Partner at any time or from time to time, all acts and things which
the Collateral Trustee deems necessary to protect or preserve the
Collateral and to realize upon such Collateral.
Each of the Borrower, the Partnership, the General Partner and the
Limited Partner agrees, if required by applicable law or reasonably requested by
the Collateral Trustee, to execute and deliver to the Collateral Trustee, and
register in every public registry in the State of Texas, the State of New York
or the United Mexican States in which such registration is necessary, a
notarized public deed or other instrument constituting such power of attorney.
The Collateral Trustee shall not be responsible for the negligence or misconduct
of any attorney-in-fact selected by it without gross negligence or willful
misconduct.
13.04 Authority to Act for Secured Parties. (a) The Collateral
Trustee or any officer or agent thereof, with full power of substitution, is
hereby appointed the attorney-in-fact of each of the Secured Parties to act for
and on behalf of the Secured Parties with respect to this Agreement, the
Security Documents and the other Financing Documents, including but not limited
to the right to accept and execute this Agreement, the Security Documents and
the other Financing Documents and any and all amendments (subject to Section
14.13) and renewals of such documents and, on behalf of the Secured Parties, to
exercise in accordance with the provisions hereof the Secured Parties' rights
under this Agreement, the Security Documents and the other Financing Documents
as the same may be amended or renewed from time to time.
(b) Each Secured Party agrees, if required by applicable law or
reasonably requested by the Collateral Trustee, to execute and deliver to the
Collateral Trustee, and register in every public registry in which such
registration is necessary, a notarized public deed or other instrument
appointing the Collateral Trustee and any officer or agent thereof,
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with full power of substitution, its attorney-in-fact for purposes of exercising
the rights and remedies of such Secured Party under this Agreement and the
Financing Documents and taking all action on behalf of the Secured Parties that
the Collateral Trustee is authorized to take pursuant to this Agreement.
13.05 Reliance. The Collateral Trustee shall be entitled to act upon
any notice, certificate, instrument, demand, request, direction, instruction,
waiver, receipt, consent, agreement or other document or communication furnished
hereunder or under the Security Documents or the other Financing Documents,
which it in good faith believes and on its face appears to be genuine, and it
shall be entitled to rely upon the due execution, validity and effectiveness,
and the truth and acceptability, of any provisions contained therein. The
Collateral Trustee shall not have any responsibility to make any investigation
into the facts or matters stated in any notice, certificate, instrument, demand,
request, direction, instruction, waiver, receipt, consent, agreement or other
document or communication furnished to it hereunder or under the Security
Documents or the other Financing Documents. Each of the Borrower, the
Partnership, the General Partner and the Limited Partner shall deliver to the
Collateral Trustee a list of authorized signatories of any notice, certificate,
instrument, demand, request, direction, instruction, waiver, receipt, consent,
agreement or other document or communication furnished to the Collateral Trustee
hereunder or under the Security Documents or the other Financing Documents, and
the Collateral Trustee shall be entitled to rely on such list until a new list
is furnished by the Borrower, the Partnership, the General Partner or the
Limited Partner, as the case may be, to the Collateral Trustee.
13.06 Liability. The Collateral Trustee shall not be liable for any
error of judgment or for any act done or omitted to be done by it in good faith
or for any mistake of fact or law, or for anything that it may do or refrain
from doing except for its own gross negligence or willful misconduct. The
Secured Parties shall in no event be liable for any act done or omitted to be
done by the Collateral Trustee or by any of its officers or employees.
13.07 Consultation with Counsel, Etc. The Collateral Trustee may
consult with, and obtain advice from, legal counsel, accountants and other
experts, in connection with the performance of its duties hereunder or under the
Security Documents or the other Financing Documents, and it shall incur no
liability and shall be fully protected in acting in good faith in accordance
with the opinion and advice of such counsel, accountants and other experts. The
Collateral Trustee shall not be responsible for the negligence or misconduct of
any counsel, accountants and other experts selected by it without gross
negligence or willful misconduct on its part.
13.08 Duties. The Collateral Trustee shall have no duties other than
those specifically set forth or provided for in the Financing Documents and no
implied covenants or obligations of the Collateral Trustee shall be read into
the Financing Documents or any related agreement to which the Collateral Trustee
is a party. The Collateral Trustee shall have no obligation to familiarize
itself with and shall have no responsibility with respect to any other agreement
or document relating to the transactions contemplated by the Financing
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Documents (except such sections of such agreements or documents referred to
herein) nor any obligation to inquire whether any notice, certificate,
instrument, demand, request, direction, instruction, waiver, receipt, consent,
document, communication, statement or calculation is in conformity with the
terms of any such other agreement, except those irregularities or errors
manifestly apparent on the face of such document or to the actual knowledge of
the Collateral Trustee. Except to the extent that the Collateral Trustee is
acting on express instructions, the Collateral Trustee shall at all times take
such care in dealing with the Collateral as it would in dealing with its own
property or similar property under its care. The Collateral Trustee shall, upon
receipt of an Enforcement Direction and acceptable indemnification, exercise the
rights and powers vested in it by this Agreement or by any Security Document
which it is directed by Majority Lenders (or Majority Secured Parties, as the
case may be) to exercise and the Collateral Trustee shall not be liable with
respect to any action taken or omitted to be taken by it in accordance with the
direction of such Majority Lenders (or Majority Secured Parties, as the case may
be) or any action in connection therewith undertaken by it in good faith and
without gross negligence or wilful misconduct.
13.09 Resignation, Replacement and Successor Collateral Trustee.
The Collateral Trustee at any time may resign as Collateral Trustee under this
Agreement and any other documents to which it is a party upon giving not less
than three months' notice in writing to the Partnership, the Applicable Agents,
the Bank Senior Lenders and the Capital Markets Trustee. The Collateral Trustee
may be removed as Collateral Trustee hereunder by an instrument in writing
signed by Majority Secured Parties. Upon resignation or removal of the
Collateral Trustee, so long as any Bank Senior Debt or Bank Senior Debt
Commitments remain outstanding, the Bank Senior Lenders Administrative Agent
shall appoint a successor Collateral Trustee and shall notify the Capital
Markets Trustee and the Oil Payment Insurers Administrative Agent thereof. Such
selection shall become final unless within 10 days of such notification, the
Capital Markets Trustee reasonably objects to the designated replacement
Collateral Trustee, in which case the Bank Senior Lenders Administrative Agent
shall select another replacement Collateral Trustee and notify the Capital
Markets Trustee and the Oil Payment Insurers Administrative Agent thereof. If
the Capital Markets Trustee does not reasonably object to such selection within
10 days from the date of notification thereof, the replacement Collateral
Trustee shall be deemed to have been accepted. If the Capital Markets Trustee
does so object, the Bank Senior Lenders Administrative Agent shall repeat the
selection process in accordance with the two foregoing sentences until a
replacement Collateral Trustee is found that is reasonably acceptable to the
Capital Markets Trustee. If no Bank Senior Debt or Bank Senior Debt Commitments
remain outstanding, the Capital Markets Trustee shall appoint a replacement
Collateral Trustee. No resignation or removal of the Collateral Trustee and no
appointment of a successor trustee shall be effective until (i) the successor
Collateral Trustee has accepted its appointment, (ii) all indemnities,
compensation and expenses required by Sections 13.10 and 13.11 shall have been
paid or provided for and (iii) the Collateral Trustee shall have executed and
delivered to the successor Collateral Trustee a notarized instrument delegating
its rights and responsibilities hereunder and under the other Financing
Documents to the successor
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Collateral Trustee. If no successor trustee shall have been so appointed and
shall have accepted such appointment within 30 days after the date fixed for
such resignation or such removal, the Collateral Trustee may, at the expense of
the Partnership, petition any court of competent jurisdiction for the
appointment of a successor trustee. Such court may thereupon, after such notice,
if any, as it may prescribe, appoint a successor trustee. Any successor trustee
appointed pursuant to this Section 13.09 shall be a bank or trust company
organized under the laws of the United States or of the State of New York,
having its principal corporate trust office in The City of New York and a
combined capital and surplus of at least $500 million. Any successor trustee
shall evidence its acceptance of the trust hereunder by executing and delivering
to the Partnership, each Bank Senior Lender, the Capital Markets Trustee and the
Collateral Trustee an instrument accepting this trust and its appointment as
Collateral Trustee hereunder and under the other Financing Documents, and
thereupon such successor Collateral Trustee, without any further act, deed or
conveyance, shall become vested with all the rights, powers, duties and
obligations of its predecessor hereunder and under the other Financing Documents
with like effect as if originally named as Collateral Trustee herein and
therein, and such predecessor shall have no further obligation or liability
thereunder except for liability with respect to its acts or omissions prior to
such succession pursuant to Section 13.06; nevertheless, on the request of any
party hereto or such successor trustee, the Collateral Trustee ceasing to act
shall execute and deliver instruments transferring to such successor trustee all
rights and powers of the Collateral Trustee so ceasing to act, including any
such instruments necessary to assign the rights under this Agreement and the
other Financing Documents and to transfer the Accounts to such successor
trustee, and shall deliver to such successor trustee all property held by it in
trust hereunder. The Partnership shall promptly notify the Credit Rating
Agencies of any resignation, removal or replacement of the Collateral Trustee or
any action in connection therewith undertaken by it in good faith and without
gross negligence or wilful misconduct.
13.10 Indemnities. (a) The Partnership agrees to indemnify the
Collateral Trustee in its individual and trust capacity, including without
limitation in its capacity as Depositary Bank, and its Affiliates, officers,
agents and employees for, and to hold each of them harmless against, any loss,
liability, claim, judgment, settlement, compromise, obligation, damage, penalty,
cost, expense or disbursement of any kind or nature whatsoever (including
reasonable attorney's fees and expenses) with respect to the execution,
delivery, enforcement, performance and administration of this Agreement and the
other Financing Documents, unless arising from the gross negligence, bad faith
or willful misconduct of such of the Collateral Trustee or the agents that are
seeking indemnification, including the costs and expenses of defending itself
against any claim of liability in the premises. As security for such payment,
the Collateral Trustee in its individual capacity shall have an interest prior
to the Secured Parties upon all Collateral and other property and funds held or
collected by the Collateral Trustee as part of the trust established hereunder.
(b) In any suit, proceeding or action brought by the Collateral
Trustee in its individual capacity, or by any of its Affiliates, officers,
agents and employees, under or with respect to the Collateral for any sum owing
hereunder or under any other Financing
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Document, or to enforce any provisions hereof or of any other Financing
Document, the Partnership will save, indemnify and keep the Collateral Trustee
in its individual capacity harmless from and against all expense, loss or damage
(including reasonable attorney's fees and expenses) suffered by reason of any
defense, set-off, counterclaim, recoupment or reduction of liability whatsoever
of the obligee thereunder, arising out of a breach by any of the Borrower, the
Partnership, the General Partner, the Limited Partner of any of their
obligations hereunder or under any other Financing Document or arising out of
any other agreement, indebtedness or liability at any time owing to or in favor
of such obligee or its successors from the Borrower, the Partnership, the
General Partner or the Limited Partner, and all such obligations of the
Borrower, the Partnership, the General Partner and the Limited Partner shall be
and remain enforceable against and only against each of them and shall not be
enforceable against the Collateral Trustee (in its individual or trust capacity)
or any Secured Party.
(c) Each of the Bank Senior Lenders, the Capital Markets Senior
Lenders and the Oil Payment Insurers, ratably in accordance with its pro rata
share of the sum of (i) the aggregate amount of Senior Debt Obligations and (ii)
the Oil Payment Reimbursement Obligations, agrees to indemnify the Collateral
Trustee and its Affiliates and its, and its Affiliates', officers, agents and
employees for, and to hold each of them harmless against, any loss, liability,
claim, judgment, settlement, compromise, obligation, damage, penalty, cost,
expense or disbursement of any kind or nature whatsoever arising prior to the
Guaranteed Final Completion Date with respect to the execution, delivery,
enforcement, performance and administration of this Agreement and the other
Financing Documents (to the extent not reimbursed under clause (a) of this
Section 13.10, but without limiting the obligations of the Partnership
thereunder), unless arising from the gross negligence, bad faith or willful
misconduct of such of the Collateral Trustee or the agents that are seeking
indemnification, including the costs and expenses of defending itself against
any claim of liability in the premises.
(d) The agreements in this Section 13.10 shall survive
resignation or removal of the Collateral Trustee and the termination of the
other provisions of this Agreement.
(e) All references in this Section 13.10 to the Collateral Trustee
shall be deemed to apply to the Collateral Trustee in its capacities as
Collateral Trustee and Depositary Bank, as applicable.
13.11 Compensation. The Collateral Trustee shall be entitled to
reasonable compensation (which shall not be limited by any provision of law in
regard to compensation of a Collateral Trustee of an express trust) as may be
agreed from time to time between the Partnership and the Collateral Trustee for
all services rendered under this Agreement and the other Financing Documents and
such compensation, together with reimbursement of the Collateral Trustee in its
individual capacity for its advances, disbursements and expenses in connection
with the performance of the trust provided for herein (including the reasonable
fees and expenses of its agents and of counsel, accountants and other experts
referred to in
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Section 13.07), shall be paid by the Partnership promptly upon demand from the
Collateral Trustee from time to time as services are rendered and expenses are
incurred. Except to the extent otherwise contemplated by clause (c) of Section
13.10, the Secured Parties shall have no liability for any fees, expenses or
disbursements of the Collateral Trustee. Any reasonable and documented fees,
compensation, indemnity amounts (unless such indemnity amounts are subject to
dispute among the parties hereto) or expenses of the Collateral Trustee (in its
individual or trust capacity) or its counsel not paid as provided for herein may
be taken from any property held by the Collateral Trustee hereunder
notwithstanding any provisions herein to the contrary.
13.12 Certificates. Whenever in the administration of the trusts of
this Agreement the Collateral Trustee shall deem it necessary or desirable that
a matter be proved or established in connection with taking or omitting any
action by the Collateral Trustee hereunder or under any other Financing
Document, such matter (unless other evidence in respect thereof be herein
specifically prescribed) may, in the absence of gross negligence or willful
misconduct on the part of the Collateral Trustee, be deemed to be conclusively
proved or established by a written certificate of the Partnership delivered to
the Collateral Trustee.
13.13 Information. (a) The Partnership agrees that, from time to
time upon request of the Collateral Trustee, the Partnership shall deliver to
the Collateral Trustee a list setting forth, by each Senior Loan Agreement (i)
the aggregate principal amount outstanding thereunder and (ii) the interest rate
then in effect thereunder.
(b) Each Applicable Agent shall deliver to the Collateral Trustee
an authority and incumbency certificate setting forth the names and specimen
signatures of the persons authorized to provide instructions or directions to
the Collateral Trustee as of the date of its Senior Loan Agreement or the
Reimbursement Agreement, as the case may be, and shall promptly provide any
changes thereto from time to time thereafter. The Collateral Trustee shall be
entitled to rely conclusively on such certificate until it receives a
certificate specifically stating that it is a superseding certificate.
13.14 Books and Accounts. (a) The Collateral Trustee shall maintain
all such accounts, books and records as may be necessary properly to record all
transactions carried out by it under this Agreement.
(b) On or before the tenth Business Day in New York of each
calendar month, the Collateral Trustee shall send to each Applicable Agent a
statement indicating the amount of funds on deposit in each Account and the
nature of any investments thereof as of the end of the preceding calendar month
and identifying all deposits to and payments from such account during such
calendar month, including the date on which made (but only to the extent such
information is available to the Collateral Trustee from the Depositary Bank.
Upon the request and at the expense of any Secured Party, the Collateral Trustee
shall at any time inform each Secured Party of deposits, investments, payments,
balances and any other information they may request (and that is reasonably
available to the Collateral Trustee) regarding the Accounts. The Collateral
Trustee shall also promptly forward to the Partnership
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and each Applicable Agent a copy of any such statement it receives from the
Depositary Bank.
13.15 Limitation on Collateral Trustee's Duties in Respect of
Collateral. Beyond its express duties set forth in this Agreement or in the
other Financing Documents as to the custody thereof and the accounting to the
Partnership and the Secured Parties for moneys received hereunder, the
Collateral Trustee shall not have any duty to the Borrower, the Partnership, the
General Partner, the Limited Partner or the Secured Parties with respect to any
Collateral in its possession or control or in the possession or control of its
agent or nominee, any income thereon, or the priority or preservation of rights
against prior parties or any other rights pertaining thereto. To the extent,
however, that the Collateral Trustee or an agent or nominee of the Collateral
Trustee maintains possession or control of any of the Collateral or the Security
Documents at any office of the Collateral Trustee, the Collateral Trustee shall,
or shall instruct such agent or nominee to, grant the Borrower, the Partnership,
the General Partner, the Limited Partner and the Secured Parties the access to
such Collateral or Security Documents which they require for the conduct of
their businesses, except, in the case of the Borrower, if and to the extent that
the Collateral Trustee shall have received an Enforcement Direction.
13.16 Right to Initiate Judicial Proceedings, Etc. If the Collateral
Trustee shall have received an Enforcement Direction and during such time as
such Enforcement Direction shall not have been withdrawn (a) the Collateral
Trustee shall have the right and power to institute and maintain such suits and
proceedings (subject to the instructions of Majority Lenders or Majority Secured
Parties, as the case may be) as it may deem appropriate to protect and enforce
the rights vested in it by this Agreement and the other Financing Documents and
(b) the Collateral Trustee may, either after entry or without entry, proceed
(subject to the instructions of Majority Lenders or Majority Secured Parties, as
the case may be) by suit or suits at law or in equity to enforce such rights and
to foreclose upon the Collateral assigned for the benefit and to the extent of
the interest therein of such Secured Parties and to realize upon all or, from
time to time, any of the property of the trust established hereunder for the
benefit of such Secured Parties under the judgment or decree of a court of
competent jurisdiction.
13.17 Exculpatory Provisions. The Collateral Trustee makes no
representations as to the value or condition of the trust created under this
Agreement or any part thereof, or as to the title of the Borrower, the
Partnership, the General Partner or the Limited Partner thereto or as to the
rights and interests granted or the security afforded by this Agreement or any
of the Security Documents or as to the validity, execution (except by itself),
enforceability, legality or sufficiency of this Agreement, any other Financing
Document or the Senior Debt secured hereby, and the Collateral Trustee (in its
individual and trust capacities) shall incur no liability or responsibility in
respect of any such matters.
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13.18 Merger of the Collateral Trustee. Any corporation into which
the Collateral Trustee in its individual capacity shall be merged, or with which
it shall be consolidated, or any corporation resulting from any merger or
consolidation to which the Collateral Trustee (in its individual capacity) shall
be a party, shall be the Collateral Trustee under this Agreement, without the
execution or filing of any paper or any further act on the part of the parties
hereto, provided that such party shall meet the requirements of Section 13.09.
13.19 Treatment of Senior Lenders by Collateral Trustee. (a) The
Collateral Trustee may treat the Senior Lenders as the holders of the Notes
evidencing Senior Debt Obligations and as the absolute owners thereof for all
purposes under this Agreement and the other Financing Documents unless the
Collateral Trustee shall receive notice to the contrary from the Applicable
Agent.
(b) Any Person that shall be designated as the duly authorized
representative of one or more of the Senior Lenders to act as such in connection
with any matters pertaining to this Agreement, or any other Financing Document
or the Collateral shall present to the Collateral Trustee such documents,
including without limitation opinions of counsel, as the Collateral Trustee may
reasonably request, in order to demonstrate to the Collateral Trustee the
authority of such Person to act as the representative of such Senior Lenders.
The Collateral Trustee may rely upon such documents until it receives documents,
including without limitation opinions of counsel, as the Collateral Trustee may
reasonably request, specifically stating that they are superseding documents.
13.20 Miscellaneous. (a) The Collateral Trustee shall have the
right at any time to seek instructions concerning the administration of this
trust from any court of competent jurisdiction. In the event that any
disagreement between the other parties to this Agreement results in adverse
claims being made in connection with property held by the Collateral Trustee and
the terms of this Agreement do not unambiguously mandate the action the
Collateral Trustee is to take or not to take in connection therewith under the
circumstance then existing, or the Collateral Trustee is in doubt as to what
action it is required to take or not to take, the Collateral Trustee shall be
entitled to refrain from taking any action until directed otherwise in writing
by a request signed jointly by the parties hereto entitled to give such
direction or by order of a court of competent jurisdiction.
(b) None of the provisions of this Agreement or the other Financing
Documents shall be construed to require the Collateral Trustee in its individual
or trust capacity to expend or risk its own funds or otherwise to incur any
personal financial liability in the performance of any of its duties hereunder
or thereunder if it shall have reasonable grounds for belief that repayment of
such funds or indemnity against such risk or liability is not reasonably assured
to it. The Collateral Trustee shall be under no obligation to exercise any of
the rights or powers vested in it by this Agreement or the other Financing
Documents, at the request or direction of the Borrower, the Partnership, the
General Partner or the Limited Partner or any Secured Party, unless the
Collateral Trustee shall have been offered security or indemnity reasonably
satisfactory to it against the costs, expenses and liabilities
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which might be incurred by it in compliance with such request or direction
(including interest thereon from the time incurred until reimbursed).
(c) The Collateral Trustee in its individual capacity (or any
parent, subsidiary or associated person) may accept deposits from, lend money
to, and generally engage in any business with, any of the Borrower, the
Partnership, the General Partner, the Limited Partner, any Shareholder, any
▇▇▇▇▇ Entity, any party to a Project Document, any Secured Party, or any of
their Affiliates, without affecting the validity of the trust created hereby or
the right to enforce any Senior Debt Obligations or Oil Payment Reimbursement
Obligations or other right to payment or security interest created hereunder or
pursuant hereto as freely as if it were not the Collateral Trustee hereunder.
The Collateral Trustee shall notify each Secured Party at any time it believes
it has any interest conflicting with its obligations hereunder. The Collateral
Trustee in its individual capacity (without prejudice to its rights under
Section 13.10 and the last sentence of Section 13.11) hereby waives any right of
banker's lien, set-off or counterclaim in respect of any assets contained in the
Accounts or otherwise that are held by the Collateral Trustee as trustee
hereunder.
(d) The Collateral Trustee in its individual capacity shall not be
personally liable for debts contracted or liabilities or damages incurred in the
management or operations of the trust hereunder, except for those contracted or
incurred as a result of its gross negligence or willful misconduct.
(e) Except to the extent this Agreement and any other Financing
Documents expressly contemplates that the Collateral Trustee is allowed to act
through agents or other third parties, the Collateral Trustee shall not
delegate, assign, or otherwise transfer any of its obligations, duties or
responsibilities hereunder to any Person other than any of its Affiliates
without the prior consent of the Partnership and Requisite Lenders (or, at any
time on or after a Priority Termination Date, Requisite Secured Parties),
provided, however, that no such consent shall be required in connection with the
enforcement of remedies hereunder on behalf of the Secured Parties.
ARTICLE XIV
MISCELLANEOUS
14.01 Termination. Subject to clause (b) of Section 14.17, upon
satisfaction of each of the following conditions precedent, this Agreement and
the security interests and rights created by or pursuant to this Agreement or
any Security Document shall terminate, and the Secured Parties and their
respective attorneys-in-fact shall, at the expense of the Partnership, execute
and deliver a termination statement and such instruments of satisfaction,
discharge and release of security in respect of all Collateral as may be
requested by the Partnership, the Collateral Trustee shall pay, assign, transfer
and deliver to or to the order of the Partnership all moneys and investments in
the Accounts and Subaccounts, and the Collateral Trustee shall deliver to the
Partnership, the General Partner and the Limited
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Partner the Shares of the Borrower, the certificates representing the General
Partnership Interest in the Partnership and the certificates representing the
Limited Partnership Interest in the Partnership, respectively, and any other
securities held by it:
(a) all Senior Debt Obligations and all Oil Payment Reimbursement
Obligations have been paid in full and all lending commitments have
terminated or expired; and
(b) the Partnership shall have delivered to the Collateral
Trustee a certificate stating that the conditions precedent to termination
pursuant to this Section 14.01 have been satisfied.
The obligations of Senior Lenders to make further disbursements of
Senior Loans under their respective Senior Loan Agreements shall terminate in
accordance with each such Senior Loan Agreement and, in any case, upon the
termination of this Agreement. The obligation of the Oil Payment Insurers to
provide coverage with respect to shipments of Maya crude oil in accordance with
the Oil Payment Insurance Policy shall terminate in accordance with the Oil
Payment Insurance Policy and the Reimbursement Agreement and, in any case, upon
the termination of this Agreement.
14.02 Calculation of Floating Rate Obligations. In calculating the
amount of the Senior Debt Obligations payable for purposes of determining the
Debt Service Coverage Ratio for any future period, and any other amounts to be
calculated under this Agreement where the following estimation would be
necessary, any interest payable on Senior Debt bearing interest at a floating
rate, unless such rate is known for the entire period, shall be included in such
calculation at a single fixed interest rate (the "Equivalent Fixed Rate") equal
to the fixed interest rate that could be obtained by the Partnership in exchange
for such floating interest rate in an interest rate swap transaction with a
notional amount equal to the principal amount of such Senior Debt and a term and
a notional amortization schedule equal to that of such Senior Debt, assuming the
Partnership entered into such swap transaction on any reference date no fewer
than 30 days prior to the date of calculation. In determining the Equivalent
Fixed Rate, the Partnership shall select no fewer than four published quotations
of recognized dealers in The City of New York of the highest credit standing,
and the applicable Equivalent Fixed Rate shall be equal to the highest
applicable fixed interest rate quoted by any such dealer.
14.03 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
14.04 Waiver of Jury Trial. Each party hereto hereby waives, to the
fullest extent permitted by applicable law, any and all right to trial by jury
in any legal proceeding directly or indirectly arising out of or relating to
this Agreement or the transactions contemplated hereby.
108
14.05 Severability. If any provision of this Agreement shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
14.06 Entire Agreement. This Agreement (including Appendices) and
the other Financing Documents constitute the entire agreement and
understanding, and supersede all prior agreements and understandings (both
written and oral), between the Borrower, the Partnership, the General Partner
and the Limited Partner, on the one hand, and the Collateral Trustee, any
Applicable Agent and the Secured Parties, on the other hand. The Senior Lenders
shall have no benefit, any legal or equitable right or remedy under any
Transaction Documents except as expressly provided herein or therein.
14.07 Restrictions on Assignments and Participations. (a) The Senior
Lenders may assign any rights or any payments due or to become due under the
Senior Loan Agreements providing for their Senior Loans or grant any
participation in their Senior Loans and (b) the Oil Payment Insurers may assign
any rights or any payments due or to become due under the Reimbursement
Agreement or grant any participation in their Oil Payment Reimbursement
Obligations, in each of cases (a) and (b) without the prior consent of any of
the Borrower Parties, provided that written notice thereof shall be provided to
the Partnership promptly after such assignment.
14.08 Notices. (a) Any notice, claim, request, demand, consent,
designation, direction, instruction, certificate, report or other communication
to be given hereunder or under any Senior Loan Agreement will be deemed duly
given when given or made in writing and (i) personally delivered, (ii) sent by
facsimile transmission (with written confirmation or acknowledgment of receipt,
whether written or oral) or (iii) five days have elapsed after mailing by
certified or registered mail, postage pre-paid, return receipt requested, in
each case addressed to a party at its address or facsimile transmission number
as indicated in Appendix P or to such other address or facsimile transmission
number of which such party has given notice. Any notice to be given by or on
behalf of any of the Borrower, the Partnership, the General Partner and the
Limited Partner to any Senior Lender Group may be sent to the Applicable Agent
on behalf of the Bank Senior Lenders, Capital Markets Senior Lenders or Oil
Payment Insurers, as the case may be. Notice of any address or facsimile number
change shall be effective only upon receipt. Notices and all written documents
to be provided to the Collateral Trustee under this Agreement shall be deemed
received by the Collateral Trustee only if addressed in accordance with the
requirements of Appendix P hereto, including but not limited to the addressee
thereon.
(b) The Collateral Trustee shall promptly forward to the Applicable
Agent copies of any notice, claim, certificate, report instrument, demand,
request, direction, instruction, designation, waiver, receipt, consent or other
communication or document, including the reports received pursuant to Article
VIII, that it receives in connection with the Project Documents or the Financing
Documents unless the Collateral Trustee reasonably believes that such material
has already been provided by to such Person.
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14.09 Benefits of Agreement. Nothing in this Agreement, in any
Senior Loan Agreement or any other Financing Document, express or implied, shall
give to any Person, other than the parties hereto, the Secured Parties and their
respective successors and permitted assigns hereunder, under the Financing
Documents any benefit or any legal or equitable right or remedy under this
Agreement or any other Financing Documents.
14.10 Remedies. (a) No remedy herein conferred upon the Collateral
Trustee, any Applicable Agent or the Secured Parties is intended to be exclusive
of any other remedy and each and every such remedy shall be cumulative and shall
be in addition to every other remedy given hereunder or under or any other
Financing Document or now or hereafter existing at law or in equity or by
statute or otherwise.
(b) The amounts payable by the Borrower at any time under each
Senior Loan Agreement or the Reimbursement Agreement shall be a separate and
independent debt and each Senior Lender or the Oil Payment Insurer, as the case
may be, except as otherwise specifically provided in this Agreement or any other
Financing Document, shall be entitled to protect and enforce its rights arising
out of this Agreement or any other Financing Document and its right, (i) in the
case of a Senior Lender, to cancel or suspend its commitment to make Senior
Loans and to accelerate the maturity of amounts due under its Senior Loan
Agreement, and (ii) in the case of an Oil Payment Insurer, to suspend or
terminate the coverage provided by the Oil Payment Insurance Policy under such
Policy. Except as aforesaid, it shall not be necessary for any other Senior
Lender or Oil Payment Insurer to consent to, or be joined as an additional party
in, any proceedings for such purposes.
(c) No failure on the part of any Secured Party to exercise and no
delay in exercising, and no course of dealing with respect to, any right, power,
or privilege under this Agreement or any other Financing Document, shall operate
as a waiver thereof nor shall any single or partial exercise of any right, power
or privilege under any such document preclude any other or further exercise
thereof or the exercise of any other right, power or privilege. Neither the
Collateral Trustee nor any Applicable Agent nor any Secured Party shall be
responsible for the failure of any other Secured Party to perform its
obligations hereunder, under any Senior Loan Agreement or the Reimbursement
Agreement.
(d) In case any Secured Party, or the Collateral Trustee on
behalf of any Secured Party, shall have proceeded to enforce any right, remedy
or power under this Agreement or any other Financing Document and the proceeding
for the enforcement thereof shall have been discontinued or abandoned for any
reason or shall have been determined adversely to such Secured Party, then and
in every such case the Borrower, the Partnership, the General Partner and the
Limited Partner and the Secured Parties shall, subject to any effect of or
determination in such proceeding, severally and respectively be restored to
their former positions and rights hereunder and under such other Financing
Document and thereafter all rights, remedies and powers of the Secured Parties
shall continue as though no such proceeding had been taken.
110
14.11 Execution in Counterparts. This Agreement may be executed
in any number of counterparts and by the different parties hereto on separate
counterparts, each of which when so executed and delivered shall be an original,
but all the counterparts shall together constitute one and the same instrument.
14.12 Consent to Jurisdiction. (a) Subject to clause (c) of this
Section 14.12, each party hereto hereby irrevocably consents and agrees, for the
benefit of each other party hereto, that any legal action, suit or proceeding
against it with respect to its obligations, liabilities or any other matter
under or arising out of or in connection with this Agreement, any Senior Loan
Agreement, the Reimbursement Agreement, any Note or the Senior Debt Obligations
or the Oil Payment Reimbursement Obligations may be brought in any Federal or
State court located in the Borough of Manhattan, The City of New York, and
hereby irrevocably accepts and submits to the exclusive jurisdiction of each
such court, to the exclusion of all other courts, with respect to any such
action, suit or proceeding. Each party hereto hereby waives to the fullest
extent permitted by applicable laws any objection which it may now or hereafter
have to the laying of venue of any of the aforesaid actions, suits or
proceedings, brought in any such court and hereby further waives and agrees not
to plead or claim in any such court that any such action, suit or proceeding
brought therein has been brought in an inconvenient forum.
(b) Each of the Borrower Parties hereby irrevocably appoints CT
Corporation System, with offices at the date hereof at ▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇,
▇▇▇ ▇▇▇▇ ▇▇▇▇▇, as its authorized agent on which any and all legal process may
be served in any such action, suit or proceeding brought in any Federal or State
court located in the Borough of Manhattan, The City of New York. Each of the
Borrower Parties agrees that service of process in respect of it upon its
respective agent, together with written notice of such service given to it in
the manner provided in Section 14.08, shall be deemed to be effective service of
process upon it in any such action, suit or proceeding. Each of the Borrower
Parties agrees that the failure of its respective agent to give notice to it of
any such service shall not impair or affect the validity of such service or any
judgment rendered in any action, suit or proceeding based thereon. If for any
reason any Borrower Party's respective agent shall cease to be available to act
as such, or if any party hereto that was located in New York ceases to be so
located, such party agrees to designate a new agent in the Borough of Manhattan,
The City of New York, on the terms and for the purposes of this clause (b).
(c) Notwithstanding the provision of clause (a) of this
Section 14.12, nothing herein shall be deemed to limit the ability of any of the
Secured Parties, the Collateral Trustee or any Applicable Agent to serve any
such legal process in any other manner permitted by applicable law or to obtain
jurisdiction over any of the Borrower, the Partnership, the General Partner or
the Limited Partner or bring actions, suits or proceedings against any such
party in such other jurisdiction, including without limitation in any Federal or
State court located in the State of Texas, and in such manner, as may be
permitted by applicable law.
111
(d) Each party hereto agrees that a final judgment against it in
any action, suit or proceeding taken in any Federal or State Court in the
Borough of Manhattan, The City of New York in accordance with clause (a) of this
Section 14.12 or, in the case of any of the Borrower, the Partnership, the
General Partner or the Limited Partner, in any other court in accordance with
clause (c) of this Section 14.12, shall be conclusive and may be enforced in any
jurisdiction by suit on the judgment, a certified copy of which judgment shall
be conclusive evidence thereof, or by any other means provided by law.
14.13 Amendments, Etc. Except as otherwise expressly provided in
this Agreement, no provision of this Agreement may be amended, modified,
supplemented or waived except by an agreement in writing signed by (a) the
Borrower and the General Partner on behalf of the Partnership and (b) one or
more of the Applicable Agents, as appropriate, on behalf of and pursuant to the
prior written instructions of Requisite Lenders (or, at any time on or after a
Priority Termination Date, Requisite Secured Parties), provided that: (A) no
amendment, modification, supplement or waiver shall, unless by an instrument
signed by each Senior Lender, the Collateral Trustee, the Bank Senior Lenders
Administrative Agent, the Oil Payment Insurers Administrative Agent and the
Capital Markets Trustee modify in any manner (1) the rights and obligations of
the Borrower or the Partnership to prepay Senior Loans; (2) the rights and
obligations of the Borrower or the Partnership to make Pro Rata Payments; (3)
the conditions precedent set forth in Article IX; (4) the obligations of any
Senior Lender (unless such modification does not create any additional
obligation of such Senior Lender); (5) the amount or term of any Senior Debt
Commitment; (6) Sections 10.02 and 10.04; or (7) the definitions of
"Supermajority Lenders", "Requisite Lenders", "Majority Lenders" or any of the
defined terms used in such definitions, or the number or percentage of Senior
Lenders required to make any determinations or waive any rights under this
Agreement or to modify any provision hereof; (B) no amendment, modification,
supplement or waiver shall, unless by an instrument signed by each Senior
Lender, the Collateral Trustee and each Applicable Agent, modify in any manner
(1) the obligations of the Borrower and the Partnership described in clause (r)
of Section 4.01 or (2) the definitions of "Supermajority Secured Parties",
"Requisite Secured Parties", "Majority Secured Parties" or any of the defined
terms used in such definitions, or the number or percentage of Secured Parties
required to make any determinations or waive any rights under this Agreement or
to modify any provision hereof; (C) any amendment, modification, supplement or
waiver in respect of Article XIII or that affects the rights and obligations of
the Collateral Trustee shall require the consent of the Collateral Trustee; and
(D) any amendment, modification, supplement or waiver that affects the rights
and obligations of any Applicable Agent shall require the consent of such
Applicable Agent. Notwithstanding the preceding sentence, the Borrower, the
Partnership, the Collateral Trustee, each Applicable Agent and Supermajority
Bank Lenders may, without the consent of any other Senior Lender, at any time
and from time to time, enter into one or more amendments hereto, in the form
satisfactory to each, to cure any ambiguity, to correct or supplement any
provision in this Agreement that may be misleading, defective or inconsistent
with any other provision herein or to make any other provisions with respect to
matters or questions arising under this Agreement, in each cases, so long as
such action shall not adversely affect the interest of the other Senior Lenders.
This Section
112
14.13 shall not apply to any automatic amendment to Appendix B upon
satisfaction of the conditions for such automatic amendment set forth herein.
14.14 Conflicts. In case of any conflict or inconsistency between
this Agreement and any Financing Document, this Agreement shall control.
14.15 Effectiveness. This Agreement shall come into full force and
effect upon its execution and delivery by each of the parties named on the
signature pages hereof.
14.16 Compliance with Applicable Law. Notwithstanding any provision
of this Agreement, but without in any way limiting the rights of the Collateral
Trustee or the Secured Parties under Article X in connection with any Event of
Default resulting from the taking or refraining from taking of any action
pursuant to any law, statute, regulation, rule, order, injunction, decree, writ
or judgment binding on it or affecting its properties, none of the Borrower, the
Partnership, the General Partner or the Limited Partner shall be obligated to
take or refrain from taking any action otherwise required under this Agreement
if at the time such party is to take or refrain from taking such action, such
action is contrary to any law, statute, regulation, rule, order, injunction,
decree, writ or judgment binding on it or affecting its properties.
14.17 Indemnification. (a) The Borrower, the Partnership, the
General Partner and the Limited Partner, jointly and severally, assume full
liability for, and agree to and shall indemnify and hold harmless the Collateral
Trustee, each Applicable Agent, each Secured Party and their respective
affiliates, officers, directors, employees, agents and servants (each, an
"Indemnified Person") against and from any and all liabilities, obligations,
losses, damages (compensatory, punitive or otherwise), penalties, claims,
actions, duties, suits, costs and expenses (including reasonable fees of legal
counsel and expenses and costs of investigation) of whatsoever kind and nature,
including, without prejudice to the generality of the foregoing, those arising
in contract or tort (including negligence) or by strict liability or otherwise,
which are imposed on, incurred by or asserted against any Indemnified Person
(whether or not also indemnified by any other Person under any other document)
and which in any way relate to or arise out of, whether directly or indirectly:
(i) the Senior Loan Agreements, the Senior Debt Obligations, the
Reimbursement Agreement, the Oil Payment Reimbursement Obligations or any
actual or proposed use of the proceeds of the Senior Loans;
(ii) any Environmental Law applicable to the past, present or future
operations of the Partnership or any predecessor in interest to the
Partnership or the environmental contamination of any site or facility
owned, operated or leased at any time by the Partnership (or any such
predecessor in interest) in connection with the ▇▇▇▇▇ Project, any
contamination or any Release or threatened Release of any Hazardous
Substance by the Partnership (or any predecessor in interest or third
party) at, onto or from any such site or facility; or
113
(iii) the exercise by the Collateral Trustee, each Applicable Agent
and each Secured Party of any of their respective rights and remedies
under any of the Financing Documents;
provided that no Indemnified Person shall have any right to be indemnified
hereunder for its own willful misconduct or gross negligence.
(b) The indemnities provided by the Borrower, the Partnership, the
General Partner and the Limited Partner pursuant to this Agreement shall survive
the expiration, cancellation, termination or modification of this Agreement and
the other Financing Documents and the provision of any subsequent or additional
indemnity by any Person.
114
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed.
PORT ▇▇▇▇▇▇ FINANCE CORP.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
-------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Executive Vice President and
Chief Financial Officer
PORT ▇▇▇▇▇▇ ▇▇▇▇▇ COMPANY L.P.
By: SABINE RIVER HOLDING CORP.,
as General Partner
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
-------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Executive Vice President and
Chief Financial Officer
SABINE RIVER HOLDING CORP.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
-------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Executive Vice President and
Chief Financial Officer
NECHES RIVER HOLDING CORP.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
-------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Executive Vice President and
Chief Financial Officer
115
BANKERS TRUST COMPANY,
as Collateral Trustee for the Secured Parties
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
-----------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: Vice President
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-----------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Assistant Vice President
DEUTSCHE BANK AG, NEW YORK BRANCH,
as Administrative Agent for and on behalf of
the Bank Senior Lenders
By: /s/ ▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇
----------------------
Name: ▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇
Title: Associate
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
--------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: Vice President
WINTERTHUR INTERNATIONAL INSURANCE
COMPANY LIMITED,
for itself and as Administrative Agent for
and on behalf of the Oil Payment Insurers
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
--------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Property Underwriting Manager
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
-------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Chief Financial Officer
116
HSBC BANK USA,
as Capital Markets Trustee for the Capital
Markets Senior Lenders
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
-------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Assistant Vice President
BANKERS TRUST COMPANY,
as Depositary Bank
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
-----------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: Vice President
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-----------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Assistant Vice President
WINTERTHUR INTERNATIONAL INSURANCE
COMPANY LIMITED, as Insurer under the Debt
Service Reserve Insurance Guarantee
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
--------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Property Underwriting Manager
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
-------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Chief Financial Officer
117
Appendix A
to Common Security Agreement
DEFINITIONS
In this Appendix A, the Common Security Agreement and the other
Appendices hereto and in any other document that refers to this Appendix A, the
following terms shall have the meanings assigned below (the singular includes
the plural and vice versa) (unless otherwise specified, section references in
this Appendix A are to sections of the Common Security Agreement):
"Abandonment" shall occur if (a)(i) the Partnership publicly announces
the permanent shutdown of all or substantially all engineering, development,
construction or production activities of the ▇▇▇▇▇ Project or (ii) ▇▇▇▇▇ R&M
publicly announces the permanent shutdown of all or substantially all production
activities of the Refinery or (b)(x) the Partnership ceases all or substantially
all engineering, development, construction or production activities of the ▇▇▇▇▇
Project or (y) ▇▇▇▇▇ R&M ceases all or substantially all production activities
of the Refinery and, with regard to (b)(x) and (y), such cessation continues
without interruption for 90 days and either the Collateral Trustee or any Senior
Lender requests the Partnership or ▇▇▇▇▇ R&M, as the case may be, to confirm in
writing that they have not, or do not currently intend to, shut down permanently
all or substantially all engineering, development, construction or production
activities of the ▇▇▇▇▇ Project or the Refinery, as the case may be, and the
Partnership or ▇▇▇▇▇ R&M, as the case may be, fails to provide such confirmation
within 30 days following such request or, in any event, fails to resume such
engineering, development, construction or production activities, as the case may
be, within 60 days following such request. For purposes of this definition, the
Partnership and ▇▇▇▇▇ R&M shall not be deemed to have ceased engineering,
development or construction or production activities of the ▇▇▇▇▇ Project or the
Refinery, as the case may be, if such cessation is caused by an Event of Force
Majeure unless and until such Event of Force Majeure lasts more than 180 days.
"Accounts" has the meaning set forth in Section 5.01.
"Additional Senior Debt" has the meaning set forth in clause (a) of
Section 2.09.
"Affiliate" means, with respect to any Person, any other Person that
directly controls, is controlled by, or is under common control with such other
Person. For purposes of this definition, "control" when used with respect to
any Person means (a) the power to direct the management and policies of such
Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise, or (b) the direct or indirect beneficial
ownership of 25% equity interest in such Person.
A-1
"Ancillary Equipment" has the meaning set forth in the Ancillary
Equipment Site Lease.
"Ancillary Equipment Site Lease" means the Ancillary Equipment Site
Lease and Easement Agreement, dated August 19, between the Partnership and ▇▇▇▇▇
R&M, as the same may be amended from time to time in accordance with its terms
and the restrictions on amendments set forth in this Agreement and the Transfer
Restrictions Agreement.
"Annual Budget and Operating Plan" has the meaning set forth in
Section 6 of the Services and Supply Agreement as in effect on the date hereof.
"Applicable Agent" means, (a) in the case of the Capital Markets
Senior Lender Group, the Capital Markets Trustee, (b) in the case of the Initial
Bank Senior Lender Group, the Bank Senior Lenders Administrative Agent, (c) in
the case of any other Senior Lender Group, the Person notified to the Collateral
Trustee as the Applicable Agent for such Senior Lender Group, and (d) in the
case of the Oil Payment Insurers, the Oil Payment Insurers Administrative Agent.
"Authorized Investments" means (a) investments maturing within one
year after the acquisition thereof in (i) obligations of, or guaranteed as to
principal and interest by, the United States Government or any agency thereof
the obligations of which are backed by the full faith and credit of the United
States, (ii) certificates of deposit of, and time and demand deposits (including
Eurodollar deposits) with, banks or trust companies with a rating of at least A-
1 from ▇▇▇▇▇'▇ and A from S&P and at least $500 million of shareholders' equity
or (iii) commercial paper by an issuer rated at least P-1 from ▇▇▇▇▇'▇ and A-1
from S&P as to principal and interest and which has at least $500 million of
shareholders' equity; or (b) investments in any money market fund having a
rating in the highest investment category granted by ▇▇▇▇▇'▇ or S&P at the time
of acquisition (including without limitation any such fund for which the
Depositary Bank or any Affiliate thereof serves as investment manager,
administrator or custodian).
"Bank Loan Drawdown and Equity Funding Account" has the meaning set
forth in Section 5.01.
"Bank Senior Debt" means Senior Debt held by Bank Senior Lenders.
"Bank Senior Debt Commitments" means the commitments to provide Bank
Senior Debt.
"Bank Senior Lender Group" means any Senior Lender Group which is a
party to the same Bank Senior Loan Agreement.
"Bank Senior Lenders" means the Initial Bank Senior Lenders and any
other commercial financial institutions (other than a Shareholder or any
Affiliate of a Shareholder)
A-2
that have provided Additional Senior Debt or Replacement Senior Debt or have
entered into commitments to provide Additional Senior Debt or Replacement Senior
Debt.
"Bank Senior Lenders Administrative Agent" means Deutsche Bank AG, New
York Branch, in its capacity as Administrative Agent under the Bank Senior Loan
Agreement.
"Bank Senior Loan Agreements" means (a) the Bank Senior Loan
Agreement, dated as of the date hereof, by and among the Borrower, the
Guarantors, the Bank Senior Lenders party thereto and the Bank Senior Lenders
Administrative Agent, (b) the Secured Working Capital Facility and (c) any other
loan agreements relating to Bank Senior Debt.
"Bank Senior Term Debt" means Bank Senior Debt other than that
outstanding under the Secured Working Capital Facility.
"Base Case Model" means the Base Case Model attached as Appendix C.
"Blackstone" means, collectively, Blackstone Capital Partners III
Merchant Banking Fund L.P., a limited partnership organized under the laws of
the State of Delaware, Blackstone Offshore Capital Partners III L.P., a limited
partnership organized under the laws of the Cayman Islands, and Blackstone
Family Investment Partnership III L.P., a limited partnership organized under
the laws of the State of Delaware.
"Bondholders" means holders of the Notes.
"Bond Proceeds Account" has the meaning set forth in Section 5.01.
"Borrower" means Port ▇▇▇▇▇▇ Finance Corp., a Delaware corporation.
"Borrower Financial Statements" means, for any quarter or year, the
balance sheet of the Borrower as of the close of such quarter or year, as the
case may be, and statements of income and expense and cash flow and changes in
financial position from the beginning to the close of such quarter or year, as
the case may be, setting forth in comparative form the corresponding figures for
the corresponding periods in the preceding year or for the preceding year, as
the case may be.
"Borrower Parties" means the Borrower, the Partnership and the
Partners.
"Business Day" means a day on which commercial banks are generally
open for business in the Borough of Manhattan, The City of New York.
"Buydown Payment" has the meaning set forth in Section 6 of the EPC
Contract.
A-3
"Bylaws" means the Bylaws of each of the General Partner, the Limited
Partner and the Borrower, dated July 30, 1999, July 30, 1999 and August 3, 1999,
respectively, all as may be amended from time to time in accordance with their
terms and the restrictions on amendments set forth in this Agreement.
"Capital Commitments" means the commitments of the Shareholders
pursuant to the Capital Contribution Agreements to contribute not less than $135
million in the form of equity or Subordinated Debt, directly or indirectly, to
the Partnership.
"Capital Contribution" means any contribution made to capital of the
Partnership or any Subordinated Debt provided to the Partnership by or on behalf
of a Partner pursuant to the Capital Contribution Agreements or the Partnership
Agreement.
"Capital Contribution Agreements" means the separate Capital
Contribution Agreements, each dated as of the Closing Date, entered into by the
Borrower, the Partnership and the General Partner with Blackstone and Occidental
Petroleum, respectively.
"Capital Markets Senior Debt" means Senior Debt provided under the
Indenture.
"Capital Markets Senior Lender Group" means the Senior Lender Group
which is party to the Indenture.
"Capital Markets Senior Lenders" means the beneficial holders of
Capital Markets Senior Debt.
"Capital Markets Trustee" means HSBC Bank USA in its capacity as
trustee under the Indenture.
"Cash Proceeds" means, with respect to any period, all funds received
or projected to be received by the Partnership during such period including
without limitation (a) cash flow generated by the Project in the ordinary course
of business; (b) earnings on funds held in the Accounts and any other accounts
of the Partnership; and (c) insurance proceeds for business interruption.
"Casualty and Insurance Account" has the meaning set forth in Section
5.01.
"Catastrophic Casualty" means any actual or constructive casualty loss
or series of related losses in respect of Project Property in excess of $50
million.
"Catastrophic Casualty Account" has the meaning set forth in Section
5.01.
"Certificate of Incorporation" means (a) with respect to the General
Partner, the Amended and Restated Certificate of Incorporation, dated September
2, 1999 and
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amended on September 13, 1999, (b) with respect to the Limited Partner, the
Amended and Restated Certificate of Incorporation, dated September 2, 1999 and
amended on September 13, 1999 and (c) with respect to the Borrower, the
Certificate of Incorporation, dated August 2, 1999, all as may be amended from
time to time in accordance with their terms and the restrictions on amendments
set forth in this Agreement and the Transfer Restrictions Agreement.
"Certificate of Limited Partnership" means the Certificate of Limited
Partnership of the Partnership, dated May 4, 1999, as the same may be amended
from time to time in accordance with their terms and the restrictions on
amendments set forth in this Agreement and the Transfer Restrictions Agreement.
"Cessation Notice" has the meaning set forth in Section 10.03 of this
Agreement.
"Change Order" has the meaning set forth in Section 12.4 of the EPC
Contract.
"Charter" means the Certificate of Incorporation of each of the
General Partner, the Limited Partner and the Borrower, all as may be amended
from time to time in accordance with its terms and the restrictions on
amendments set forth in this Agreement.
"▇▇▇▇▇ Entities" means ▇▇▇▇▇ Holdings, ▇▇▇▇▇ USA and ▇▇▇▇▇ R&M.
"▇▇▇▇▇ ▇▇▇ Contract" means the Engineering, Procurement and
Construction Agreement, dated March 24, 1998, between ▇▇▇▇▇ R&M and the EPC
Contractor, as amended by Amendment No. One thereto, dated as of August 19,
1999, as the same may be further amended or supplemented from time to time in
accordance with its terms and the restrictions on amendments set forth in this
Agreement and the Transfer Restrictions Agreement.
"▇▇▇▇▇ Holdings" means ▇▇▇▇▇ Refining Holdings Inc.
"▇▇▇▇▇ Processing Fee" means the fee payable by ▇▇▇▇▇ R&M to the
Partnership for processing services rendered by the Partnership pursuant to the
Services and Supply Agreement.
"▇▇▇▇▇ R&M" means ▇▇▇▇▇ Refining & Marketing, Inc.
"▇▇▇▇▇ USA" means ▇▇▇▇▇ USA, Inc.
"Closing" means the satisfaction or waiver of all conditions precedent
to the making of Senior Loans.
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"Closing Date" means the date on which the Closing occurs.
"▇▇▇▇▇ Complex" has the meaning set forth in the Services and Supply
Agreement.
"▇▇▇▇▇ Project" means the construction, ownership, development,
operation and maintenance of the Heavy Oil Processing Facility.
"Collateral" means all property, rights and other interests of the
Borrower, the Partnership, the General Partner and the Limited Partner in which
security interests, trusts or mortgages are created for the benefit of the
Secured Parties under or pursuant to the Security Documents.
"Collateral Trustee" means Bankers Trust Company, in its capacity as
Collateral Trustee under this Agreement.
"Commission" means the Securities and Exchange Commission or any
successor entity.
"Compensating Collateral" has the meaning set forth in the Long-Term
Oil Supply Agreement.
"Condemnation Compensation" means all value (whether in the form of
money, property or otherwise) paid or payable to the Partnership by any
Governmental Authority as compensation for or in respect of any act or series of
acts of condemnation of Project Property.
"Construction Report" has the meaning set forth in Section 2.14 of the
EPC Contract.
"Constructive Total Loss" means any single casualty loss or a series
of related casualty losses to any Project Property for which the costs of
replacing such damaged Project Property or repairing it to at least the same
operating standards that existed immediately prior to such loss or series of
losses would exceed, or the Independent Engineer estimates it would exceed, $250
million.
"Contingency Reserve Account" has the meaning set forth in Section
5.01 of this Agreement.
"Contingency Reserve Amount" means, at the Final Completion Date, the
unused amount remaining from the amount budgeted for contingencies during the
construction of the ▇▇▇▇▇ Project as set forth in the Base Case Model.
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"Continuing" means, with respect to a Default, that such Default has
been declared as provided in Section 10.02 and that neither the Borrower nor the
Partnership has received a Cessation Notice with respect thereto pursuant to
Section 10.03.
"Credit Interest" has the meaning set forth in the Long-Term Oil
Supply Agreement.
"Credit Rating Agency" means each of ▇▇▇▇▇'▇ and S&P and their
respective successors.
"Debt Service Coverage Ratio" means for any period, the ratio of (a)
the aggregate of Cash Proceeds minus Project Expenses for such period to (b)
Senior Debt Obligations (other than pursuant to Optional Prepayments or
Mandatory Prepayments), paid or expected to be paid during such period, as the
case may be.
"Debt Service Reserve Account" has the meaning set forth in Section
5.01.
"Debt Service Reserve Accrual Amount" means, with respect to each of
the Payment Dates specified in clause (a)(ix) of Section 5.05, one-fifth of the
aggregate principal amount then available under the Debt Service Reserve
Guarantee Arrangement.
"Debt Service Reserve Amount" means, on any date, the sum of (a) the
aggregate amount of principal payments scheduled to be due on the immediately
succeeding Payment Date when a principal payment is scheduled to be made and (b)
the aggregate amount of Senior Debt Obligations (other than principal payments)
scheduled to be due on or prior to the immediately succeeding Payment Date.
"Debt Service Reserve Guarantee Arrangement" means the Debt Service
Reserve Account Insurance Guarantee, dated as of the date hereof, pursuant to
which Winterthur International Insurance Company Limited has undertaken to
guarantee an aggregate principal amount of up to $60 million (subject to
reduction in accordance with clause (b)(i) of Section 5.09) for payments of
Senior Debt Obligations in accordance with clause (b)(ii) of Section 5.09.
"Debt Service Reserve Shortfall" means, on any date, the excess, if
any, of (a) the Debt Service Reserve Amount over (b) the balance in the Debt
Service Reserve Account on such date, as determined in clause (a)(ii) of Section
5.09.
"Default" has the meaning set forth in Section 10.02.
"Depositary Bank" means the corporate trust office of Bankers Trust
Company appointed by the Collateral Trustee to maintain the Accounts.
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"Discretionary Capital Expenditures" means capital expenditures
(including any financing costs and related fees and expenses) other than
Mandatory Capital Expenditures in respect of the ▇▇▇▇▇ Project that the
Partnership may make at its discretion in accordance with the terms of this
Agreement.
"Distribution Account" has the meaning set forth in Section 5.01 of
this Agreement.
"Downtime" means the temporary cessation of all or any substantial
part of the operation of the Heavy Oil Processing Facility or the Refinery.
"DSRIG Provider" means Winterthur International Insurance Company
Limited, as Insurer under the Debt Service Reserve Guarantee Arrangement.
"Enforcement Action" means, after the issuance of an Enforcement
Direction, any or all of the following: (a) the application of funds in the
Accounts or Subaccounts to the payment of Senior Debt Obligations and the Oil
Payment Reimbursement Obligations; (b) the declaration of the principal of the
Senior Debt immediately due and payable; (c) the exercising of any power of sale
or other rights granted by this Agreement or any of the Security Documents; (d)
the sale of the Collateral either as an entirety or, if permitted by applicable
law, in parcels to the highest bidder at a public auction at such place and at
such time and upon such terms as the Senior Lender(s) or Oil Payment Insurer(s)
issuing the relevant Enforcement Direction may specify or may be required by
applicable law; (e) the proceeding to protect and enforce the rights of the
Secured Parties under this Agreement, the Security Documents or any other
Financing Document by sale pursuant to judicial proceedings or by a proceeding
in equity or at law or otherwise, whether for the enforcement of the security
interests created under or pursuant to this Agreement or any other Security
Document or for the enforcement of any other legal, equitable or other remedy;
(f) the exercising in respect of the Collateral, in addition to other rights and
remedies provided for herein or otherwise available to the Secured Parties, to
the extent permitted by applicable law, of all the rights and remedies of a
secured party upon default under the NY UCC or the Texas UCC; (g) the charge,
set-off or other application of all or any part of the Senior Debt Obligations
against the Accounts or Subaccounts or any part thereof; and (h) the taking of
any other legal, equitable or other remedy or action permitted by this
Agreement or applicable law.
"Enforcement Direction" has the meaning set forth in Section 10.04.
"Enforcement Proceeds Account" has the meaning set forth in Section
10.11.
"Environmental Law" means any law, regulation, judgment, consent
decree, agreement, agency requirement or common law duty relating to the
protection of the environment or human health and safety.
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"EPC Contract" means the Engineering, Procurement and Construction
Contract, dated July 12, 1999, between the Partnership and the EPC Contractor,
as the same may be amended from time to time in accordance with its terms and
the restrictions on amendments set forth in this Agreement.
"EPC Contract Guarantee" means the EPC Contract Guarantee, dated July
13, 1999, between the Partnership and the EPC Guarantor, as the same may be
amended from time to time in accordance with its terms and the restrictions on
amendments set forth in this Agreement.
"EPC Contractor" means ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ USA Corporation.
"EPC Guarantor" means ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Corporation.
"Equity Funding" means direct or indirect cash contributions to the
Partnership from the Shareholders (in the form of contributions of equity
capital or Subordinated Debt, as the Shareholders shall in their sole discretion
decide).
"Equivalent Fixed Rate" has the meaning set forth in Section 14.02.
"ERISA" means the United States Employee Retirement Income Security
Act of 1974, as amended from time to time.
"Estimated Payment Certificate" has the meaning set forth in Section
5.15.
"Estimated Project Expense" has the meaning set forth in Section 5.15.
"Eurodollar Business Day" shall mean any day on which banks are
generally open for business in London, England.
"Event of Default" has the meaning set forth in Section 10.01.
"Event of Force Majeure" means, with respect to any Project Document,
any event or circumstance defined in such Project Document as an event of force
majeure.
"Excess Cash Flow" has the meaning set forth in clause (b) of Section
5.05 of this Agreement.
"Exchange Act" means the Securities Exchange Act of 1934, as amended
from time to time.
"Final Completion" has the meaning set forth in the EPC Contract as in
effect on the date hereof.
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"Final Maturity" means (a) with respect to the Tranche A Bank
Facility, January 15, 2007, (b) with respect to the Tranche B Bank Facility,
July 15, 2007, and (c) with respect to the Capital Markets Senior Debt, January
15, 2009.
"Financing Documents" means this Agreement, the Senior Loan
Agreements, the Notes, the Transfer Restrictions Agreement, the Security
Documents, the Intercreditor Agreement, the Oil Payment Insurance Policy, the
Reimbursement Agreement, the Debt Service Reserve Guarantee Arrangement, the
Capital Contribution Agreements and any ancillary documents, including fee
letters and all certificates, delivered under or in connection therewith.
"GAAP" means generally accepted accounting principles in the United
States as in effect from time to time.
"General Partner" means Sabine River Holding Corp., a Delaware
Corporation.
"General Partnership Interest" means the interest in the Partnership
owned by the General Partner.
"Governmental Authority" means any government, any governmental
administration, agency, instrumentality or other instrumentality or other
political subdivision thereof or any court, commission or other governmental
authority of competent jurisdiction.
"GP Certificates" has the meaning set forth in subclause (ii) of
clause (a) of Section 6.02.
"Ground Lease and Blanket Easement" means the ▇▇▇▇▇ Complex Ground
Lease and Blanket Easement Agreement, dated August 19, 1999, between the
Partnership and ▇▇▇▇▇ R&M, as amended from time to time in accordance with its
terms and the restrictions on amendments set forth in this Agreement and the
Transfer Restrictions Agreement.
"Guarantee" means the obligations of the Partnership set forth in
Article XII of this Agreement.
"Guaranteed Final Completion Date" has the meaning set forth in the
EPC Contract as in effect on the date thereof.
"Guaranteed Mechanical Completion Date" has the meaning set forth in
the EPC Contract as in effect on the date thereof.
"Guaranteed Performance Dates" has the meaning set forth in the EPC
Contract as in effect on the date thereof.
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"Guaranteed Values" has the meaning set forth in the EPC Contract as
in effect on the date thereof.
"Guarantor" means the Partnership.
"Hazardous Substance" means any substance in any concentration that is
now or hereafter listed, classified or regulated pursuant to any Environmental
Law including any petroleum products or by-products, asbestos-containing
material, polychlorinated biphenyls, refinery wastes, lead and radioactive
materials.
"Heavy Oil Processing Facility" has the meaning set forth in the
Services and Supply Agreement as in effect on the date hereof.
"Historical Twelve-Month Period " means, in relation to any date, the
period commencing on the day falling 364 days prior to either (a) the month-end
immediately preceding such date or (b) such date, if such date is a month-end,
and ending on such month-end.
"Hydrogen Supplier" means Air Products and Chemicals, Inc.
"Hydrogen Plant" has the meaning set forth in the Hydrogen Supply
Agreement.
"Hydrogen Supply Agreements" means (a) the Hydrogen Supply Agreement,
dated August 1, 1999, between the Hydrogen Supplier and the Partnership, as the
same may be amended from time to time in accordance with its terms and the
restrictions on amendments set forth in this Agreement and the Transfer
Restrictions Agreement and (b) the Product Supply Agreement, dated August 1,
1999, between the Hydrogen Supplier and ▇▇▇▇▇ R&M, as the same may be amended
from time to time in accordance with its terms and the restrictions on
amendments set forth in this Agreement and the Transfer Restrictions Agreement.
"Hydrogen Supply Agreement Guarantee" has the meaning set forth in the
Hydrogen Supply Agreements.
"Indebtedness" means, whether recourse is to all or a portion of the
assets of such Person and whether or not contingent, (a) every obligation of
such Person for money borrowed, (b) every obligation of such Person evidenced by
bonds, debentures, notes or other similar instruments, (c) every reimbursement
obligation of such Person, contingent or otherwise, with respect to letters of
credit, bankers' acceptances or similar facilities, whether issued for the
account of such Person or otherwise, (d) every obligation of such Person
incurred or assumed as the deferred purchase price of property or services
(excluding trade accounts payable or accrued liabilities arising in the ordinary
course of business), (e) every capital lease obligation of such Person and (f)
every obligation of the type referred to in
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clauses (a) through (e), inclusive, of another Person and all dividends of
another Person, the payment of which, in either case, such Person has guaranteed
or is responsible or liable for, directly or indirectly, as obligor, guarantor
or otherwise.
"Indemnified Person" has the meaning set forth in clause (a) of
Section 14.17.
"Indenture" means the trust indenture, dated as of the date hereof,
among the Borrower, the Guarantors and the Capital Markets Trustee pursuant to
which the Capital Markets Senior Debt will be issued, as amended from time to
time.
"Independent Consultant" means each of the Independent Engineer, the
Marketing Consultant, the Insurance Consultant and any other Person appointed
pursuant to clause (cc) of Section 4.01.
"Independent Engineer" means the consulting engineering firm appointed
pursuant to clause (cc) of Section 4.01.
"Independent Engineer's Reports" means the reports set forth in
Appendix N to this Agreement.
"Information Memorandum" means the final confidential Information
Memorandum, dated July, 1999, delivered by the Partnership to the Bank Senior
Lenders.
"Initial Bank Senior Debt" means the indebtedness of the Borrower to
the Initial Bank Senior Lenders under the Initial Bank Senior Loan Agreements.
"Initial Bank Senior Lenders" means the Senior Lenders that are party
to the Initial Bank Senior Loan Agreements.
"Initial Bank Senior Loan Agreements" means the Bank Senior Loan
Agreements, dated as of the date hereof, listed under the heading "Initial Bank
Senior Debt" in Appendix B, as the same may be amended or otherwise modified
from time to time. The Indenture shall not be considered an Initial Bank Senior
Loan Agreement for any purpose under this Agreement.
"Initial Capital Contributions" means the Capital Contributions of not
less than $20 million required to be made by the Shareholders under the Capital
Contribution Agreements on the Closing Date.
"Initial Construction Budget" means the Construction Budget most
recently prepared and delivered to the Collateral Trustee on behalf of the
Secured Parties on or prior to the date hereof and set forth as Appendix K.
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"Initial Senior Debt" means the Senior Debt provided under the Initial
Senior Loan Agreements.
"Initial Senior Debt Commitments" means the commitments to provide the
Initial Senior Debt.
"Initial Senior Lenders" means the Senior Lenders that are party to
the Initial Senior Loan Agreements.
"Initial Senior Loan Agreements" means the Initial Bank Senior Loan
Agreement, the Secured Working Capital Facility and the Indenture.
"Insolvency Event", with respect to any Person, means (a) entry by any
competent Governmental Authority of any jurisdiction or a court having
jurisdiction in the premises of (i) a decree or order for relief in respect of
such Person in an involuntary case or proceeding under any applicable
bankruptcy, insolvency, reorganization, dissolution, winding-up or other similar
law or (ii) an involuntary or contested decree or order adjudging such Person a
bankrupt or insolvent, or approving as properly filed a petition seeking
reorganization, arrangement, adjustment, dissolution, winding-up or composition
of or in respect of such Person under any applicable law, or appointing a
custodian, receiver, liquidator, assignee, Collateral Trustee, sequestrator or
other similar official of such Person or of any substantial part of the property
of such Person, or ordering the winding up or liquidation of the affairs of such
Person and the continuance of any such decree or order unstayed and in effect
for a period of 30 consecutive days or (b) commencement of a voluntary case or
proceeding under any applicable bankruptcy, insolvency, reorganization,
dissolution, winding-up or other similar law or of any other case or proceeding
to be adjudicated a bankrupt or insolvent, or the consent by such Person to the
entry of a decree or order for relief in respect of such Person in an
involuntary case or proceeding under any applicable bankruptcy, insolvency,
reorganization, dissolution, winding-up or other similar law or to the
commencement of any bankruptcy or insolvency case or proceeding against such
Person, or the filing by such Person of a petition or answer or consent seeking
reorganization or relief under any applicable law; or consent by such Person to
the filing of such petition or to the appointment of or taking possession by a
custodian, receiver, liquidator, assignee, Collateral Trustee, sequestrator or
other similar official of such Person or of any substantial part of the property
of such Person, or the making by such Person of an assignment for the benefit of
creditors, or the admission by such Person in writing of its inability to pay
its debts generally as they become due, or the taking of corporate action by
such Person in furtherance of any such action.
"Insurance Consultant" means the insurance consulting firm appointed
pursuant to clause (cc) of Section 4.01.
"Insurance Consultant's Report" means the report set forth in Appendix
M to this Agreement.
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"Insurance Policies" means the insurance policies providing for
Required Insurance.
"Intercreditor Agreement" means the Intercreditor Agreement, dated as
of the date hereof, among the Senior Lenders, the Oil Payment Insurers, the
Collateral Trustee, the Bank Senior Lenders Administrative Agent, the Oil
Payment Insurers Administrative Agent and the Capital Markets Trustee.
"Investment Grade Rating" means a rating of at least "investment
grade" from each of S&P and ▇▇▇▇▇'▇.
"Late Payments" has the meaning set forth in the EPC Contract.
"LIBOR" has the meaning set forth in the Bank Senior Loan Agreement.
"Lien" means, with respect to any property or assets, any Sale and
Leaseback Transaction and any mortgage, lien, pledge, charge, security interest
or encumbrance of any kind in respect of such property or assets, or any
preferential arrangement of any kind or nature whatsoever having the practical
effect of constituting a security interest on or with respect to such property
or assets. For the purposes of this definition, a Person shall be deemed to own
subject to a Lien any property or assets that it has acquired or holds subject
to the interest of a vendor or lessor under any conditional sales or other title
retention agreement.
"Limited Partner" means Neches River Holding Corp., a Delaware
corporation, and its successors.
"Limited Partnership Interest" means the interest in the Partnership
owned by the Limited Partner, and its successors.
"Long-Term Oil Supply Agreement" means the Maya Crude Oil Sales
Agreement, dated March 10, 1998, between ▇▇▇▇▇ R&M and PMI, and assigned to the
Partnership as of the date hereof, as amended and supplemented by the First
Amendment and Supplement thereto, dated August 19, 1999, as the same may be
further amended from time to time in accordance with its terms and the
restrictions on amendments set forth in this Agreement.
"Long-Term Oil Supply Agreement Guarantee" means the Long-Term Oil
Supply Agreement Guarantee, dated March 10, 1998, between ▇▇▇▇▇ R&M and Pemex,
and assigned to the Partnership on the date hereof, as the same may be amended
from time to time in accordance with its terms and the restrictions on
amendments set forth in this Agreement.
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"Loss Proceeds" means all proceeds from insurance or other recovery,
excluding any portion of such proceeds relating to the interruption of business,
loss of profits or similar matters or any sum paid in settlement of a liability
to a third party or any reimbursement to any insured party in respect of any
such payment.
"LP Certificates" has the meaning set forth in subclause (ii) of
clause (a) of Section 6.03.
"▇▇▇▇▇ Terminal Property" means all pipelines, oil handling facilities
and terminaling facilities (including in each case any and all easements
relating thereto) referred to in Section 2.2(c) of the Ground Lease and Blanket
Easement.
"Major Maintenance" means a major maintenance of the Heavy Oil
Processing Facility scheduled in the most recent Major Maintenance Plan, as
amended from time to time in accordance with clause (b) of Section 8.01 of this
Agreement.
"Major Maintenance Account" has the meaning set forth in Section 5.01
of this Agreement.
"Major Maintenance Plan" means the plan prepared by the Partnership in
accordance with clause (b) of Section 8.01 of this Agreement describing the next
scheduled Major Maintenance.
"Major Maintenance Reserve Payment" means the payment made by the
Partnership to the Major Maintenance Account on a Payment Date in accordance
with the terms set forth in Section 5.12 of this Agreement.
"Majority Bank Lenders" means holders of more than 50% of the
aggregate outstanding principal amount of Bank Senior Debt and Bank Senior Debt
Commitments.
"Majority Bondholders" means holders of more than 50% of the aggregate
outstanding principal amount of Capital Markets Senior Debt.
"Majority Lenders" means, (a) at any time when the aggregate
outstanding principal amount of Bank Senior Debt and Bank Senior Debt
Commitments is equal to or exceeds 15% of the aggregate outstanding principal
amount of Senior Debt and Senior Debt Commitments, either (i) Majority Bank
Lenders or (ii) holders of more than 25% of the aggregate outstanding principal
amount of Capital Markets Senior Debt, and (b) at any time when the aggregate
outstanding principal amount of Bank Senior Debt and Bank Senior Debt
Commitments is less than 15% of the aggregate outstanding principal amount of
Senior Debt and Senior Debt Commitments, the holders of more than 25% of the
aggregate outstanding principal amount of Senior Debt and Senior Debt
Commitments.
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"Majority Secured Parties" means either (a) holders of more than 50%
of the aggregate principal amount of Bank Senior Debt outstanding, Bank Senior
Debt Commitments and the Oil Payment Commitment (or, at any time on or after a
Priority Termination Date, the aggregate principal amount of Oil Payment
Reimbursement Obligations then outstanding), taken together, or (b) holders of
more than 25% of the aggregate outstanding principal amount of Capital Markets
Senior Debt.
"Mandatory Capital Expenditures" means capital expenditures (including
any financing costs and related fees and expenses) in respect of the ▇▇▇▇▇
Project that (a) the Partnership is required to make in order to comply with a
change in environmental, health, safety or other laws or regulations binding on
the Partnership or (b) are otherwise necessary to continue to operate the ▇▇▇▇▇
Project in accordance with the Base Case Model.
"Mandatory Prepayment" means a prepayment made pursuant to Section
2.05 of this Agreement and the Senior Loan Agreements.
"Mandatory Prepayment Account" has the meaning set forth in Section
5.01 of this Agreement.
"Marine Dock and Terminaling Agreement" means the Marine Dock and
Terminaling Agreement, dated August 17, 1999, between Sun Pipe Line Company and
▇▇▇▇▇ R&M, as the same may be amended from time to time in accordance with the
terms and restrictions on amendments set forth in this Agreement.
"Marketing Consultant" means ▇▇▇▇▇▇ & ▇▇▇▇▇, the marketing consultant
firm hired by the Partnership on behalf of the Senior Lenders.
"Material Adverse Effect" means a material adverse effect on (a) the
business, assets, operations, properties, financial condition or prospects of
any of the Borrower, the Partnership or either of the Partners, (b) the
Partnership's ability to construct, or cause to be constructed, the ▇▇▇▇▇
Project and operate, or cause to be operated, the Heavy Oil Processing Facility
substantially in the manner contemplated by this Agreement, the other
Transaction Documents and the Base Case Model, including without limitation the
ability to achieve Mechanical Completion by March 1, 2001 and Substantial
Reliability by October 1, 2001, (c) the rights and remedies of the Collateral
Trustee, any Secured Party or any Applicable Agent under any Transaction
Document, (d) the ability of the Partnership or the Borrower to make payment of
any Senior Debt Obligations when due or (e) the ability of any of the
Partnership, the Borrower or either of the Partners, any Affiliate thereof, any
Shareholder, any ▇▇▇▇▇ Entity or any other party to perform its material
obligations under any Transaction Document to which it is a party.
"Maximum Accrued Major Maintenance Reserve Amount" means an amount
equal to the aggregate of the Maximum Major Maintenance Reserve Payments that
the
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Partnership had been permitted to make in accordance with the terms set
forth in Section 5.12.
"Maximum Major Maintenance Reserve Amount" means the maximum payment
permitted to be made by the Partnership to the Major Maintenance Account on a
Payment Date in accordance with the terms set forth in Section 5.12 of this
Agreement.
"Mechanical Completion" has the meaning set forth in the EPC Contract
as in effect on the date hereof.
"Minimum Major Maintenance Reserve Payment" means the minimum payment
required to be made by the Partnership to the Major Maintenance Account on a
Payment Date in accordance with the terms set forth in Section 5.12 of this
Agreement.
"Moody's" means ▇▇▇▇▇'▇ Investors Services, Inc. and its successors.
"Mortgage" has the meaning set forth in clause (a) of Section 6.01 of
this Agreement.
"Notes" means (a) with respect to the Bank Senior Debt, any notes
issued in respect of the Senior Bank Loans, (b) with respect to the Oil Payment
Reimbursement Obligations, the notes issued in respect thereof and (c) with
respect to the Capital Markets Senior Debt, the bonds issued in respect thereof.
"Notice of Borrowing" has the meaning set forth in clause (b) of
Section 9.02 of this Agreement.
"NY UCC" means the New York Uniform Commercial Code as in effect from
time to time.
"Occidental Petroleum" means Occidental Petroleum Corporation.
"Offering Circular" means the final confidential Offering Circular
dated as of August 10, 1999.
"Oil Payment Commitment" means $150 million, the aggregate limit of
liability under the Oil Payment Insurance Policy.
"Oil Payment Insurance Policy" means the Guaranty Insurance Policy,
dated as of the date hereof, and each renewal thereof, issued by Winterthur
International Insurance Company Limited for the benefit of PMI, to provide
insurance coverage for the Partnership's payment obligations for crude oil
purchased under the Long-Term Oil Supply Agreement, as amended from time to
time.
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"Oil Payment Insurers" means Winterthur International Insurance
Company Limited and any and all other insurers or reinsurers that may from time
to time underwrite, reinsure, or participate in, all or part of the insurance
coverage provided by the Oil Payment Insurance Policy.
"Oil Payment Insurers Administrative Agent" means Winterthur
International Insurance Company Limited, in its capacity as Administrative Agent
under the Reimbursement Agreement.
"Oil Payment Reimbursement Obligations" means the obligations to pay
the principal of and interest on (including any interest accruing after the
filing of a petition with respect to, or the commencement of, any proceeding in
bankruptcy, liquidation or analogous laws, whether or not a claim for post-
petition interest is allowed in such proceeding) all amounts at any time
outstanding, as well as any and all commissions, fees, indemnities, prepayment
premiums and other amounts payable by the Borrower or the Partnership (including
without limitation pursuant to the Partnership's obligations under the
Guarantee), under (a) the Reimbursement Agreement with respect to any payments
made by the Oil Payment Insurers to PMI under the Oil Payment Insurance Policy
or (b) the Secured Working Capital Facility with respect to any cash advances or
letters of credit provided for purchases, or refinancing purchases, of crude oil
(excluding the Compensating Collateral), including, in each of cases (a) and (b)
all renewals, extensions or refundings thereof or amendments, modifications or
supplements thereto.
"Operating Account" has the meaning set forth in clause (c) of Section
5.01.
"Optional Prepayments" means a prepayment of the principal amount of
the Senior Loans made in accordance with this Agreement and the Senior Loan
Agreements, other than a Mandatory Prepayment.
"Partners" means the General Partner and the Limited Partner.
"Partnership" means Port ▇▇▇▇▇▇ ▇▇▇▇▇ Company L.P., a limited
partnership organized under the laws of Delaware.
"Partnership Agreement" means the Amended and Restated Limited
Partnership Agreement of Port ▇▇▇▇▇▇ ▇▇▇▇▇ Company, L.P., dated August 2, 1999,
among the General Partner and the Limited Partner, as the same may be amended
from time to time in accordance with its terms and the restrictions on
amendments set forth in this Agreement.
"Partnership Financial Statements" means, for any quarter or year, the
consolidated balance sheet of the Partnership as of the close of such quarter or
year, as the case may be, and consolidated statements of income and expense and
cash flow and changes in financial position from the beginning to the close of
such quarter or year, as the case may
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be, setting forth in comparative form the corresponding consolidated figures for
the corresponding periods in the preceding year or for the preceding year, as
the case may be.
"Partnership Interest" has the meaning set forth in the Partnership
Agreement, as in the effect on the date hereof.
"Partnership Intermediate and Refined Products" means the
Partnership's ownership interest in its share of the intermediate and refined
products produced by the Heavy Oil Processing Facility as determined in
accordance with Section 9-315 of the Texas UCC.
"Partnership Notes" means promissory notes issued by the Partnership
to the Borrower representing the obligation of the Partnership to repay the
intercompany loans from the Borrower.
"Payment Date" means each January 15 and July 15 of each year,
commencing on January 15, 2000 in the case of interest and January 15, 2002 in
the case of principal.
"Pemex" means Petroleos Mexicanos, the parent of PMI.
"Permits" means the Permits, as defined in the Services and Supply
Agreement, needed to operate the Project.
"Permitted Hedging Arrangements" means interest rate swaps, option
contracts, futures contracts, options on futures contracts, caps, floors,
collars or any other hedging arrangements entered into by the Borrower with one
or more Bank Senior Lenders to hedge the Borrower's exposure to movements in
interest rates on the Bank Senior Term Debt, and not for purposes of
speculation.
"Permitted Indebtedness" means (a) Indebtedness in respect of the
Senior Debt Obligations, the Oil Payment Reimbursement Obligations, the
Partnership's obligations under the Debt Service Reserve Guarantee Arrangement
and the other obligations of the Partnership and the Borrower under the
Financing Documents, (b) Permitted Hedging Arrangements, (c) trade accounts
payable in the ordinary course of business to the extent incurred for the
construction or operation of the ▇▇▇▇▇ Project and not for the borrowing of
money and (d) Subordinated Debt.
"Permitted Liens" means (a) Liens for taxes not delinquent or being
contested in good faith and by appropriate proceedings, (b) Liens, constituting
deposits or pledges to secure obligations under workmen's compensation, social
security or similar laws, or under unemployment insurance, (c) Liens
constituting deposits or pledges or secure bids, tenders, contracts (other than
contracts for the payment of money), leases, statutory obligations, surety and
appeal bonds and other obligations of like nature arising in the ordinary course
of
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business, (d) mechanics', workmen's, materialmen's or other like Liens arising
in the ordinary course of business with respect to obligations that are not due
or that are being contested in good faith, (e) Liens constituting easements and
imperfections of title on real estate, provided that such easements and
imperfections do not render title unusable for purposes of the ▇▇▇▇▇ Project,
(f) Liens to secure Senior Debt Obligations, (g) Liens securing judgments,
decrees or orders of any court (i) that are not currently dischargeable or (ii)
that have been discharged or stayed or appealed within 30 days after the date of
such judgment, decree or order (in the case of a stay or appeal, during the
period of such stay or appeal), (h) the PMI Subordinated Lien and (i) liens on
cash eligible for Restricted Payments in accordance with Section 11.01.
"Person" means any individual, corporation, partnership, joint
venture, association, joint stock company, trust, unincorporated organization,
government agency, government or political subdivision thereof.
"PMI" means PMI Comercio Internacional, S.A. de C.V.
"PMI Consent and Agreement" means the Consent and Agreement, dated as
of the date hereof, among PMI, the Partnership and the Secured Parties.
"PMI Premium Reserve Account" has the meaning set forth in Section
5.01.
"PMI Subordinated Lien" means a subordinated lien over certain Project
Property granted to PMI in accordance with Section 29.5(c) of the Long-Term Oil
Supply Agreement
"PMI Surplus" means the amount of Quarterly Surpluses accrued under
the Long-Term Oil Supply Agreement (a) with respect to which the Partnership has
not paid a premium on the purchase price of crude oil purchased under the
Long-Term Oil Supply Agreement and (b) that have not been offset by Quarterly
Shortfalls and Credit Interest under the Long-Term Oil Supply Agreement.
"PMI Surplus Reserve Account" has the meaning set forth in Section
5.01.
"PMI Surplus Reserve Amount" means, at any one time, the amount of the
PMI Surplus subject to a maximum amount equal to $75 million, which maximum
amount shall be automatically reduced to $50 million upon the repayment in full
of all Bank Senior Term Debt.
"PMI Surplus Reserve Payment" has the meaning set forth in clause (a)
of Section 5.10.
"Potential Default" means an event or condition that after the
expiration of any applicable grace period (whether specified in this Agreement,
any Project Document or
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otherwise) or the delivery of notice (or both) will or could be expected to
become an Event of Default.
"Principal & Interest Accrual Account" has the meaning set forth in
Section 5.01.
"Principal & Interest Accrual Account Shortfall" means, on any date,
the excess of (a) the amount of the Senior Debt Obligations due and payable or
to become due and payable on or prior to the immediately succeeding Payment Date
over (b) the balance in the Principal & Interest Accrual Account.
"Priority Termination Date" has the meaning specified in clause (c) of
Section 10.04.
"Priority Termination Notice" has the meaning specified in clause (c)
of Section 10.04.
"Pro Rata Payment" means a payment to a Senior Lender or holder of Oil
Payment Reimbursement Obligations, as the case may be, on any date on which a
payment on or in respect of Senior Debt Obligations or Oil Payment Reimbursement
Obligations, as the case may be, is made in which:
(a) interest (other than overdue interest), fees, expenses,
indemnities and breakage costs paid to such Senior Lender or holder of Oil
Payment Reimbursement Obligations, as the case may be, on such date bear
the same proportion to the total payments of interest (other than overdue
interest), fees, expenses, indemnities and breakage costs made to all
Senior Lenders or holders of Oil Payment Reimbursement Obligations, as the
case may be, on such date as (i) the total Senior Debt Obligations or Oil
Payment Reimbursement Obligations, as the case may be, for interest (other
than overdue interest), fees, expenses, indemnities and breakage costs due
to such Senior Lender or holders of Oil Payment Reimbursement Obligations,
as the case may be, on such date bear to (ii) the total Senior Debt
Obligations or Oil Payment Reimbursement Obligations, as the case may be,
for interest (other than overdue interest), fees, expenses, indemnities and
breakage costs due to all Senior Lenders or holders of Oil Payment
Reimbursement Obligations, as the case may be, on such date;
(b) overdue interest paid to such Senior Lender or holders of Oil
Payment Reimbursement Obligations, as the case may be, on such date bears
the same proportion to the total payments of overdue interest made to all
Senior Lenders or holders of Oil Payment Reimbursement Obligations, as the
case may be, on such date as (i) the total Senior Debt Obligations or Oil
Payment Reimbursement Obligations, as the case may be, for overdue interest
due to such Senior Lender or holders of Oil Payment Reimbursement
Obligations, as the case may be, on such date bear to (ii)
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the total Senior Debt Obligations or Oil Payment Reimbursement
Obligations, as the case may be, for overdue interest due to all Senior
Lenders or holders of Oil Payment Reimbursement Obligations, as the case
may be, on such date;
(c) payments of principal (other than overdue principal) and
redemption or prepayment premiums paid to such Senior Lender or holders of
Oil Payment Reimbursement Obligations, as the case may be, on such date
bear the same proportion to the total principal (other than overdue
principal), and redemption or prepayment premiums made to all Senior
Lenders on or holders of Oil Payment Reimbursement Obligations, as the case
may be, such date as (i) the total Senior Debt Obligations or Oil Payment
Reimbursement Obligations, as the case may be, for principal (other than
overdue principal) and redemption or prepayment premiums due to such Senior
Lender or holders of Oil Payment Reimbursement Obligations, as the case may
be, on such date bear to (ii) the total Senior Debt Obligations or Oil
Payment Reimbursement Obligations, as the case may be, for principal (other
than overdue principal) and redemption or prepayment premiums due to all
Senior Lenders or holders of Oil Payment Reimbursement Obligations, as the
case may be, on such date; or
(d) overdue principal payable by way of acceleration paid to such
Senior Lender or holders of Oil Payment Reimbursement Obligations, as the
case may be, on such date bears the same proportion to the total overdue
principal payable by way of acceleration on such date as (i) the total
Senior Debt Obligations or Oil Payment Reimbursement Obligations, as the
case may be, for overdue principal payable by way of acceleration to such
Senior Lender or holders of Oil Payment Reimbursement Obligations, as the
case may be, on such date bear to (ii) the total Senior Debt Obligations or
Oil Reimbursement Obligations, as the case may be, for overdue principal
payable by way of acceleration to all Senior Lenders or holders of Oil
Payment Reimbursement Obligations, as the case may be, on such date;
provided that in each of cases (a) through (d), inclusive, if payments cannot be
made exactly in such proportion due to minimum required payment amounts and
required integral multiples of payments under any of the Senior Loan Agreements
or the Reimbursement Agreement, as the case may be, payments made in amounts as
near as such exactly proportionate amounts as possible shall be deemed to be Pro
Rata Payments.
"Product Purchase Agreement" means the Product Purchase Agreement,
dated the date hereof, between the Partnership and ▇▇▇▇▇ R&M, dated August 19,
1999, as the same may be amended from time to time in accordance with its terms
and the restrictions on amendments set forth in this Agreement.
"Project Documents" means the EPC Contract, EPC Contract Guarantee,
▇▇▇▇▇ ▇▇▇ Contract, Long-Term Oil Supply Agreement, Long-Term Oil Supply
Agreement Guarantee, PMI Consent and Agreement, Services and Supply Agreement,
Product Purchase
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Agreement, Hydrogen Supply Agreements, Ground Lease and Blanket Easement,
Ancillary Equipment Site Lease, Permits, Charter and Bylaws of each of the
Borrower, General Partner and Limited Partner, the Partnership Agreement,
Insurance Policies, Debt Service Reserve Guarantee Arrangement and Marine Dock
and Terminaling Agreement.
"Project Entities" means each of the ▇▇▇▇▇ Entities, the Partners, the
Partnership and the Borrower.
"Project Expenses" means cash items of expenditure (other than
Discretionary Capital Expenditures) for purposes of the ▇▇▇▇▇ Project (whether
incurred in connection with the construction or the operation of the ▇▇▇▇▇
Project), including without limitation wages, salaries, purchases of crude oil
or diluent, employment, sales and other similar operational taxes, indemnities
(including indemnities payable to the initial purchasers of the Capital Markets
Senior Debt) fees and expenses of lenders and trustees, professional fees and
expenses, legally imposed cash reserve or other similar obligations, premiums or
fees under or in connection with the Oil Payment Insurance Policy or the Debt
Service Reserve Guarantee Arrangement, expenditures for utilities, spares and
other capital goods inventory, capital expenses related to the construction and
start-up of the ▇▇▇▇▇ Project, Mandatory Capital Expenditures, expenditures for
ordinary repair and maintenance, scheduled maintenance expenditures (including
Major Maintenance) and other amounts payable under Project Documents, but in
each case excluding Senior Debt Obligations, Oil Payment Reimbursement
Obligations, Restricted Payments and Subordinated Debt Obligations.
"Project Funds" means (a) all proceeds of sale of or other disposition
of Project Production, (b) all Senior Debt proceeds, (c) all Equity Funding,
including without limitation proceeds from Subordinated Debt, (d) all insurance
proceeds in respect of the ▇▇▇▇▇ Project, and (e) all damages and awards paid to
the Borrower, the Partnership or the Partners.
"Project Production" means all the Partnership's production from the
▇▇▇▇▇ Project including intermediate and refined products, sulfur and related
products and Petroleum Coke and any other products or by products of the ▇▇▇▇▇
Project.
"Project Property" means all property, assets and rights, real and
personal, tangible and intangible, whether now owned or hereafter acquired,
wherever located, of the Partnership or the Borrower, including without
limitation the Accounts and the Subaccounts, and the rights of the Partnership
or the Borrower under the Project Documents and any other contract or agreement
to which it is a party or beneficiary.
"Project Revenue Account" has the meaning set forth in Section 5.01.
"Projected Tax Reserve Amount" means the total of (a) the amount of
Taxes (other than income or franchise taxes or operational taxes that are
considered Project Expenses) projected to become due and payable on or before
the next two succeeding
A-23
Payment Dates and (b) the amount of income or franchise taxes projected to be
incurred or that will become due and payable on or before the next two
succeeding Payment Dates by the General Partner or the Limited Partner either
directly to a taxing authority or pursuant to the Tax Sharing Agreement, in each
case in respect of its allocable share of the taxable income of the Partnership.
"Projected Twelve-Month Period" means, in relation to any date, the
period commencing on the first day after either (a) the month-end immediately
preceding such date or (b) such date, if such date is a month-end, and ending on
the day falling 364 days following such month-end.
"Prudent Industry Practice" means, at any time, practices, methods,
acts, techniques and standards in effect that are consistent with (a) the best
practice refinery standards generally followed by the crude oil refinery
industry in the United States or (b) such higher standards as may be applied or
followed by ▇▇▇▇▇ R&M or any of its Affiliates in the performance of similar
tasks in respect of operations at the Refinery.
"Purchase Agreement" means the Purchase Agreement, dated as of August
10, 1999, among the Borrower, the Partnership, each of the Partners, ▇▇▇▇▇
Holdings and the Underwriters.
"Quarterly Shortfalls" has the meaning set forth in the Long-Term Oil
Supply Agreement.
"Quarterly Surplus" means has the meaning set forth in the Long-Term
Oil Supply Agreement.
"Rated Insurer" means an insurance or reinsurance company that has a
rating by Best's Rating Service of not less than A- and a "Financial Size
Category of Class IX".
"Ratings Reaffirmation" means written notice from each Credit Rating
Agency that, after taking into account any event or action causing such Ratings
Reaffirmation to be required, its rating of all Capital Markets Senior Debt will
be equal to or higher than its then-current rating of such Capital Markets
Senior Debt, without negative implication.
"Refinery" has the meaning set forth in the Services and Supply
Agreement as in effect on the date hereof.
"Registration Rights Agreement" means the Registration Rights
Agreement, dated as of the date hereof, among the Borrower, the Partnership,
each of the Partners, ▇▇▇▇▇ Holdings and the Underwriters.
"Reimbursement Agreement" means the Oil Payment Reimbursement
Agreement, dated as of the date hereof, by and among the Borrower, the
Partnership, the
A-24
Partners, Winterthur International Company Limited, as Primary Insurer, and the
Oil Payment Insurers Administrative Agent, as amended from time to time.
"Release" means any release, spill, emission, leaking, pumping,
injection, deposit, discharge, dispersal, escaping, leaching or migration into
the environment, including the movement of any Hazardous Substance through
ambient air, soil, surface water, ground water, wetlands, land or subsurface
strata and the contamination of structures, surfaces and buildings.
"Reliability Test Buy Down Date" has the meaning set forth in the EPC
Contract.
"Replacement Senior Debt" has the meaning set forth in clause (a) of
Section 2.10.
"Required Insurance" means the minimum amount of insurance coverage
set forth in Appendix J required to be maintained by the Partnership.
"Requisite Bank Lenders" means holders of more than 66 2/3% of the
aggregate principal amount of Bank Senior Debt and Bank Senior Debt Commitments.
"Requisite Bondholders" means holders of more than 66 2/3% of the
aggregate outstanding principal amount of Capital Markets Senior Debt.
"Requisite Lenders" means (a) at any time when the aggregate
outstanding principal amount of Bank Senior Debt and Bank Senior Debt
Commitments is equal to or exceeds 15% of the aggregate outstanding principal
amount of Senior Debt and Senior Debt Commitments, (i) Requisite Bank Lenders
and (ii) either (A) Majority Bondholders (or, in the case of clause (c) of
Section 2.09 of this Agreement, Requisite Bondholders) or (B) a Ratings
Reaffirmation and (b) at any time when the aggregate outstanding principal
amount of Bank Senior Debt and Bank Senior Debt Commitments is less than 15% of
the aggregate outstanding principal amount of Senior Debt and Senior Debt
Commitments, either (i) the holders of more than 50% of the aggregate
outstanding principal amount of Senior Debt and Senior Debt Commitments or (ii)
a Ratings Reaffirmation.
"Requisite Secured Parties" means (a) holders of more than 66 2/3%
of the aggregate principal amount of Bank Senior Debt outstanding, Bank Senior
Debt Commitments and the Oil Payment Commitment (or, at any time on or after a
Priority Termination Date, the aggregate principal amount of Oil Payment
Reimbursement Obligations then outstanding), taken together, and (b) either (i)
Majority Bondholders (or, in the case of Section 2.09(c) of this Agreement,
Requisite Bondholders) or (ii) a Ratings Reaffirmation.
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"Responsible Officer" means (a) in the case of the Partnership and the
General Partner, a senior executive officer of the General Partner and (b) in
the case of the Borrower, means a senior executive officer of the Borrower.
"Restricted Payment" means any payments or distributions from the
Accounts of amounts for uses other than those described in the first, second,
third, fourth, fifth, sixth, seventh, eighth, ninth or tenth priority category
set forth in clause (a) or in clause (b), (c) or (d) of Section 5.05 of this
Agreement, including without limitation any principal, interest or other
payments due on or in respect of any Subordinated Debt.
"S&P" means Standard & Poor's Ratings Services and its successors.
"Sale and Leaseback Transaction" means any arrangement with a lender
or investor or to which such lender or investor is a party, having a term of
more than one year, providing for the leasing by a Person of real or personal
property which was sold or transferred by such Person to such lender or investor
or to any Person to whom funds have been or are to be advanced by such lender or
investor on the security of such property.
"Sales Agreement" means a written contract or agreement (other than
the Product Purchase Agreement or a Spot Contract) entered into by the
Partnership for the sale or other disposition of Project Production.
"Secured Parties" means the Senior Lenders, the Oil Payment Insurers,
the Applicable Agents, the Collateral Trustee and the DSRIG Provider.
"Secured Working Capital Facility" means the Secured Working Capital
Facility, dated as of the date hereof, by and among the Bank Senior Lenders and
the Partnership, pursuant to which the Partnership is permitted to draw (a) one
or more letters of credit up to an aggregate principal amount of $40 million for
the purpose of providing Compensating Collateral to PMI in accordance with
Section 29.5 of the Long-Term Oil Supply Agreement and (b) cash advances or one
or more letters of credit, for the purpose of providing credit support for
purchases, or refinancing purchases, of crude oil, up to an aggregate principal
amount of $35 million.
"Security Documents" means the security documents, conditional
assignments and powers of attorney, consents to assignment, this Agreement, the
Mortgage and any other agreement or document signed, recorded, registered or
filed by any of the Borrower, the Partnership or either of the Partners or any
other Person in order to create, preserve, continue, perfect or validate any
security interest in the Collateral in favor of the Secured Parties as security
for Senior Debt Obligations and the Oil Payment Reimbursement Obligations.
"Senior Bank Loans" means the individual loans pursuant to which the
Bank Senior Debt is incurred by the Borrower under the Bank Senior Loan
Agreements.
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"Senior Debt" means the aggregate disbursed amount of the Bank Senior
Debt, Capital Markets Senior Debt, Additional Senior Debt and Replacement Senior
Debt.
"Senior Debt Commitments" means the aggregate principal amount any
Senior Lender is committed to disburse to the Borrowers under any Senior Loan
Agreement as set forth in Appendix B. The Indenture shall not be considered a
Senior Debt Commitment for any purpose.
"Senior Debt Obligations" means the obligations to pay the principal
of and interest on the Senior Debt (including any interest accruing after the
filing of a petition with respect to, or the commencement of, any proceeding in
bankruptcy, liquidation or analogous laws, whether or not a claim for post-
petition interest is allowed in such proceeding), as well as any and all
commissions, fees, indemnities, prepayment premiums and other amounts payable by
the Borrower or the Partnership (including without limitation pursuant to the
Partnership's obligations under the Guarantee) under this Agreement or any other
Financing Document, in each case including all renewals, extensions or
refundings thereof or amendments, modifications or supplements thereto, but
excluding any obligations that are Oil Payment Reimbursement Obligations.
"Senior Lenders" means the holders from time to time of Senior Debt
under the Senior Loan Agreements, provided that, for purposes of the Capital
Markets Senior Debt, the Capital Markets Trustee will constitute the sole Senior
Lender for the purposes of representing the Capital Markets Senior Lenders,
except as otherwise provided herein or in the Indenture.
"Senior Lender Group" shall mean each group of Senior Lenders that is
party to the same Senior Loan Agreement.
"Senior Loan Agreements" means the Initial Bank Senior Loan Agreement,
the Secured Working Capital Facility, the Indenture and any loan agreement set
forth in Appendix B entered into by the Borrower, an Applicable Agent, if any,
and any lenders of Additional Senior Debt or Replacement Senior Debt, in each
case as amended or otherwise modified from time to time.
"Senior Loans" means the individual loans or other debt pursuant to
which Senior Debt is incurred by the Borrower under the Senior Loan Agreements.
"Services and Supply Agreement" means the Services and Supply
Agreement, dated August 19, 1999, between the Partnership and ▇▇▇▇▇ R&M, as the
same may be amended from time to time in accordance with its terms and the
restrictions on amendments set forth in this Agreement and the Transfer
Restrictions Agreement.
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"Shareholder" means each of Blackstone, Occidental Petroleum and ▇▇▇▇▇
Holdings and each other shareholder, directly or indirectly, holding the
outstanding capital stock of the General Partner.
"Shares" means all the shares of capital stock of the Borrower.
"Spot Contract" means a written contract or agreement for the sale or
other disposition of Project Production with a term of 30 days or less or any
oral contract or arrangement evidenced by a confirmation receipt entered into by
the Partnership for the sale or other disposition of Project Production.
"Start-up" has the meaning set forth in the EPC Contract.
"Subaccounts" has the meaning set forth in Section 5.02 of this
Agreement.
"Subordinated Debt" means unsecured Indebtedness of the Partnership,
whether currently outstanding or hereafter created, held by a Shareholder or an
Affiliate of a Shareholder (other than ▇▇▇▇▇ R&M or ▇▇▇▇▇ USA), ranking in right
of payment and upon liquidation and in all other respects junior to the Senior
Debt Obligations in accordance with the subordination terms set forth in
Appendix Q.
"Subordinated Debt Obligations" means the obligations to pay the
principal of and interest on the Subordinated Debt, and other amounts payable to
the Subordinated Lenders.
"Subordinated Lender" means any holder of Subordinated Debt.
"Subsidiary" of a Person means (a) any corporation more than 50% of
the outstanding voting shares of which is owned, directly or indirectly, by such
Person or by one or more other Subsidiaries of such Person or by such Person and
one or more Subsidiaries thereof or (b) any other Person (other than a
corporation) in which such Person, or one or more other Subsidiaries of such
Person or such Person and one or more Subsidiaries thereof, directly or
indirectly, has at least a majority ownership and power to direct the policies,
management and affairs thereof.
"Substantial Reliability" has the meaning set forth in the EPC
Contract.
"Supermajority Bank Lenders" means holders of more than 75% of the
aggregate outstanding principal amount of Bank Senior Debt and Bank Senior Debt
Commitments.
"Supermajority Bondholders" means holders of more than 75% of the
aggregate outstanding principal amount of Capital Markets Senior Debt.
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"Supermajority Lenders" means (a) at any time when the aggregate
outstanding principal amount of Bank Senior Debt and Bank Senior Debt
Commitments is equal to or exceeds 15% of the aggregate outstanding principal
amount of Senior Debt and Senior Debt Commitments, (i) Supermajority Bank
Lenders and (ii) either (A) Supermajority Bondholders or (B) a Ratings
Reaffirmation, and (b) at any time when the aggregate outstanding principal
amount of Bank Senior Debt and Bank Senior Debt Commitments is less than 15% of
the aggregate outstanding principal amount of Senior Debt and Senior Debt
Commitments, (i) holders of more than 75% of the aggregate outstanding principal
amount of Senior Debt and Senior Debt Commitments or (B) a Ratings
Reaffirmation.
"Supermajority Secured Parties" means (a) holders of more than 75% of
the aggregate outstanding principal amount of Bank Senior Debt outstanding, Bank
Senior Debt Commitments and the Oil Payment Commitment (or, at any time on or
after a Priority Termination Date, the aggregate principal amount of Oil Payment
Reimbursement Obligations then outstanding), taken together, and (b) either (i)
Supermajority Bondholders or (ii) a Ratings Reaffirmation.
"Tax Payment Undertaking" means the Tax Payment Undertaking in the
form of Appendix F to this Agreement.
"Tax Reserve Account" has the meaning set forth in Section 5.01.
"Tax Sharing Agreement" means the Tax Sharing Agreement, dated as of
the date hereof, among the General Partner, the Limited Partner, ▇▇▇▇▇ Holdings
and the other parties thereto.
"Taxes" means all federal, state, local or foreign income, gross
receipts, windfall profits, severance, property, production, sales, use, excise,
franchise, employment, value added, real estate, withholding or similar taxes,
assessments, fees, liabilities or other charges, together with any interest,
additions or penalties with respect thereto and any interest in respect of such
additions or penalties.
"Technology" means all proprietary technology and know-how (including
without limitation inventions, formulas and formulations, specifications,
manufacturing methods and processes, designs, quality control data, design and
manufacturing tolerances and testing, performance and raw material data),
research materials, drawings and other intellectual property relating to the
development, construction, operation or maintenance of the Project.
"Texas UCC" means the Texas Uniform Commercial Code as in effect from
time to time.
A-29
"Third-Party Authorizations" means all authorizations, approvals,
franchises, licenses, permits (including the Permits) and consents issued by a
Governmental Authority or other third party.
"Tranche A Bank Facility" has the meaning set forth in the Bank Senior
Loan Agreement, dated as of the date hereof, by and among the Borrower, the
Guarantors, the Bank Senior Lenders party thereto and the Bank Senior Lenders
Administrative Agent.
"Tranche B Amortization Account" has the meaning set forth in Section
5.01.
"Tranche B Bank Facility" has the meaning set forth in the Bank Senior
Loan Agreement, dated as of the date hereof, by and among the Borrower, the
Guarantors, the Bank Senior Lenders party thereto and the Bank Senior Lenders
Administrative Agent.
"Transaction Documents" means the Financing Documents, the Project
Documents, the Purchase Agreement, the Registration Rights Agreement and any
ancillary documents delivered under or in connection therewith.
"Transfer Restrictions Agreement" means the Transfer Restrictions
Agreement, dated as of the date hereof, among the Borrower, the Partnership, the
General Partner, the Limited Partner, Blackstone, Clark Holdings, the Collateral
Trustee, the Bank Senior Lenders Administrative Agent, the Capital Markets
Trustee and the Oil Payment Insurers Administrative Agent as the same may be
amended from time to time in accordance with its terms and the restrictions on
amendments set forth in this Agreement.
"Turnkey Specifications" has the meaning set forth in the EPC
Contract.
"Underwriters" means Credit Suisse First Boston Corporation, ▇▇▇▇▇▇▇,
▇▇▇▇▇ & Co. and Deutsche Bank Securities Inc.
"Weighted Average Life" means, when applied to any Indebtedness at any
date, the number of years obtained by dividing (a) the total of the products
obtained by multiplying (i) the amount of each then remaining installment,
sinking fund, serial maturity or other required payments of principal, including
payment at final maturity, in respect thereof, by (ii) the numbers of years
(calculated to the nearest one-twelfth) that will elapse between such date and
the making of such payment, by (b) the then outstanding principal amount of such
Indebtedness.
"Year 2000 Compliant" with respect to any Person means the ability of
the software and other processing capabilities of such Person to interpret and
manipulate correctly all data, in whatever form including printed form, screen
displays, financial records, calculations and loan-related data so as to avoid
errors in processing that may otherwise occur because of the inability of the
software or other processing capabilities to recognize accurately the year 2000
or subsequent dates.
▇-▇▇
▇▇▇▇▇▇▇▇ ▇
to Common Security Agreement
INITIAL SENIOR LENDERS
--------------------------------------------------------------------------------
Initial Senior Debt
and
Senior Debt Commitment Initial Senior
Initial Senior Lender of each Senior Lender Loan Agreements
--------------------------------------------------------------------------------
1. Bank Senior Lender Group U.S. $325,000,000 Bank Senior Loan
o Credit Suisse First Agreement, dated as of
Boston August 19, 1999, among
o Deutsche Bank AG, the Borrower, each of the
New York Branch Guarantors, the Bank
o Goldman Sachs Senior Lenders
Credit Partners L.P. Administrative Agent and
o Citibank, N.A. the Bank Senior Lenders
o General Electric party thereto.
Capital Corporation
o Fuji Bank Ltd.
▇ ▇▇▇▇▇▇ Financial, Inc.
------------------------------------------------------------------------------
2. Bank Senior Lender Group U.S. $75,000,000 Secured Working Capital
o Credit Suisse First Facility, dated as of
Boston August 19, 1999, among
o Deutsche Bank AG, the Borrower, each of the
New York Branch Guarantors, the Bank
o Goldman Sachs Senior Lenders
Credit Partners L.P. Administrative Agent and
the Bank Senior Lenders
party thereto.
------------------------------------------------------------------------------
3. Capital Markets Senior U.S. $255,000,000 Indenture, dated as of
Lender Group August 19, among the
Borrower, each of the
Guarantors, the Capital
Market Trustee and the
Collateral Trustee.
------------------------------------------------------------------------------
B-1
Appendix C
to Common Security Agreement
BASE CASE MODEL*
_____________
* Not filed with this registration statement.
Appendix D
to Common Security Agreement
FORM OF ASSIGNMENT AND ACCEPTANCE
Reference is made to the Bank Senior Loan Agreement, dated as of
August 19, 1999 (as amended, supplemented or otherwise modified from time to
time, the "Bank Senior Loan Agreement"), among PORT ▇▇▇▇▇▇ FINANCE CORP., a
corporation organized under the laws of the State of Delaware (the "Borrower"),
PORT ▇▇▇▇▇▇ ▇▇▇▇▇ COMPANY L.P., a limited partnership organized under the laws
of Delaware (the "Partnership"), SABINE RIVER HOLDING CORP., a corporation
organized under the laws of the State of Delaware (the "General Partner"), and
NECHES RIVER HOLDING CORP., a corporation organized under the laws of the State
of Delaware (the "Limited Partner" and, together with the Partnership and the
General Partner, the "Guarantors") (together, the "Borrowers"), the Bank Senior
Lenders from time to time party thereto (the "Bank Senior Lenders") and Deutsche
Bank AG, New York Bank, as Administrative Agent for the Bank Senior Lenders.
Unless otherwise defined herein, capitalized terms used herein shall have the
meanings ascribed thereto in the Bank Senior Loan Agreement.
The Assignor identified on Schedule I hereto (the "Assignor") and
the Assignee identified on Schedule I hereto (the "Assignee") hereby agree as
follows:
1. The Assignor hereby irrevocably sells and assigns to the Assignee
without recourse to the Assignor, and the Assignee hereby irrevocably purchases
and assumes from the Assignor without recourse to the Assignor, as of the
Effective Date (as defined below), the interest described in Schedule I hereto
(the "Assigned Interest") in and to the Assignor's rights and obligations under
the Bank Senior Loan Agreement with respect to those Bank Senior Loans contained
in the Bank Senior Loan Agreement as are set forth on Schedule I hereto
(individually, an "Assigned Loan"; collectively, the "Assigned Loans"), in a
principal amount for each Assigned Loan as set forth on Schedule I hereto.
2. The Assignor (a) makes no representation or warranty and assumes no
responsibility with respect to any statement, warranties or representations made
in or in connection with any Financing Document, or with respect to the
execution, legality, validity, enforceability, genuineness, sufficiency or value
of any Financing Document or any other instrument or document furnished pursuant
thereto, other than that the Assignor has not created any adverse claim upon the
interest being assigned by it hereunder and that such interest is free and clear
of any such adverse claim; (b) makes no representation or warranty and assumes
no responsibility with respect to the financial condition of the Borrowers or
any other obligor or the performance or observance by the Borrowers or any other
obligor of any of their respective obligations under any Financing Document or
D-1
any other instrument or document furnished pursuant hereto or thereto; and (c)
attaches any Senior Notes held by it evidencing the Assigned Loans and (i)
requests that the Administrative Agent exchange the attached Senior Notes for
new Senior Notes payable to the Assignee and (ii) if the Assignor has retained
any interest in the Assigned Loan, requests that the Administrative Agent
exchange the attached Senior Notes for new Senior Notes payable to the Assignor
and the Assignee, in each case in amounts which reflect the assignment being
made hereby (and after giving effect to any other assignments which have become
effective on the Effective Date).
3. The Assignee (a) represents and warrants that it is legally authorized
to enter into this Assignment and Acceptance; (b) confirms that it has received
a copy of the Financing Documents together with copies of the financial
statements or other information delivered pursuant to clause (d) of Section
12.06 of the Bank Senior Loan Agreement referred to therein and such other
documents and information as it has deemed appropriate to make its own credit
analysis and decision to enter into this Assignment and Acceptance; (c) agrees
that it will, independently and without reliance upon the Assignor, the
Administrative Agent or any other Bank Senior Lender and based on such documents
and information as it shall deem appropriate at the time, continue to make its
own credit decisions in taking or not taking action under the Financing
Documents or any other instrument or document furnished pursuant hereto or
thereto; (d) appoints and authorizes the Administrative Agent to take such
action as agent (in its capacity as Administrative Agent under the Bank Senior
Loan Agreement) on its behalf and to exercise such powers and discretion under
the Financing Documents or any other instrument or document furnished pursuant
hereto or thereto as are delegated to the Administrative Agent by the terms
thereof, together with such powers as are incidental thereto; and (e) agrees
that it will be bound by the provisions of the Financing Documents and will
perform in accordance with its terms all the obligations which by the terms of
the Financing Documents are required to be performed by it as a Bank Senior
Lender.
4. The effective date of this Assignment and Acceptance shall be the
Effective Date of Assignment described in Schedule I hereto (the "Effective
Date"). Following the execution of this Assignment and Acceptance, it will be
delivered to the Administrative Agent for acceptance by it and recording by the
Administrative Agent, effective as of the Effective Date (which shall not,
unless otherwise agreed to by the Administrative Agent, be earlier than five
Business Days after the date of such acceptance and recording by the
Administrative Agent).
5. Upon such acceptance and recording, from and after the Effective Date,
the Administrative Agent shall make all payments in respect of the Assigned
Interest (including payments of principal, interest, fees and other amounts) to
the Assignor for amounts that have accrued prior to the Effective Date and to
the Assignee for amounts which have accrued on and subsequent to the Effective
Date. The Assignor and the
D-2
Assignee shall make all appropriate adjustments in payments by the
Administrative Agent for periods prior to the Effective Date or with respect to
the making of this assignment directly between themselves.
6. From and after the Effective Date, (a) the Assignee shall be a party to
the Bank Senior Loan Agreement and, to the extent provided in this Assignment
and Acceptance, have the rights and obligations of a Bank Senior Lender
thereunder and under such other agreements and shall be bound by the provisions
thereof and (b) the Assignor shall, to the extent provided in this Agreement and
Acceptance, relinquish its rights and be released from its obligations under the
Bank Senior Loan Agreement and such other agreements.
7. THIS ASSIGNMENT AND ACCEPTANCE SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
IN WITNESS WHEREOF, the parties hereto have caused this Assignment
and Acceptance to be executed as of the date first above written by their
respective duly authorized officers on Schedule I hereto.
D-3
Schedule I
to Assignment and Acceptance
Name of Assignor: __________________________________________
Name of Assignee: __________________________________________
Effective Date of Assignment: ______________________________
Commitment Commitment
Principal Amount Principal Amount Percentage Percentage
Assigned of Assigned of Assigned of Assigned of
Tranche A Facility Tranche B Facility Tranche A Facility Tranche B Facility
================== ================== ================== ==================
$________________ $_________________ _________________% _________________%
$________________ $_________________ _________________% _________________%
[Name of Assignee] [Name of Assignor]
By:______________________________ By:______________________________
Name: Name:
Title: Title:
Consented to:
DEUTSCHE BANK AG, NEW YORK BRANCH,
as Administrative Agent for and on behalf of
the Bank Senior Lenders
By:___________________________________
Name:
Title:
By:___________________________________
Name:
Title:
D-4
Received:
BANKERS TRUST COMPANY,
as Collateral Trustee for the Secured Parties
By:___________________________________
Name:
Title:
By:___________________________________
Name:
Title:
CREDIT SUISSE FIRST BOSTON
By:___________________________________
Name:
Title:
PORT ▇▇▇▇▇▇ FINANCE CORP.
By:___________________________________
Name:
Title:
D-5
Appendix E-1
to Common Security Agreement
CONSENTS AND APPROVALS FOR AGREEMENTS
▇-▇-▇
▇▇▇▇▇▇▇▇ ▇-▇
to Common Security Agreement
CONSENTS AND APPROVALS FOR PROJECT
E-2-1
Appendix F
to Common Security Agreement
TAX PAYMENT UNDERTAKING
Bankers Trust Company,
as Collateral Trustee for the Secured Partner
Corporate Trust & Agency Servicer
Four ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
We hereby certify that the proposed disbursement of funds from the
Tax Reserve Account, in the amount of $_________, is being made in compliance
with clause (b)(i) or (b)(ii), as the case may be, of Section 5.11 of the Common
Security Agreement, dated as of August 19, 1999, among Port ▇▇▇▇▇▇ Finance
Corp., Port ▇▇▇▇▇▇ ▇▇▇▇▇ Company L.P., Sabine River Holding Corp., Neches River
Holding Corp., Winterthur International Insurance Company Limited, as Oil
Payment Insurers Administrative Agent, Bankers Trust Company, as Collateral
Trustee for the Secured Parties, Deutsche Bank AG, New York Branch, as Bank
Senior Lenders Administrative Agent, HSBC Bank USA as Capital Markets Trustee
for the Capital Markets Senior Lenders, and Bankers Trust Company, as Depositary
Bank, as the same may be amended or supplemented in accordance with its terms
and in effect from time to time.
Capitalized terms used and not otherwise defined herein shall have
the meanings set forth in the Common Security Agreement, as the case may be.
Very truly yours.
PORT ▇▇▇▇▇▇ ▇▇▇▇▇ COMPANY L.P.
By: ______________________________
Name:
Title:
▇-▇
▇▇▇▇▇▇▇▇ ▇
to Common Security Agreement
MAJOR MAINTENANCE RESERVE PAYMENT CERTIFICATE
Bankers Trust Company,
as Collateral Trustee for the Secured Partner
Corporate Trust & Agency Servicer
Four ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
We, ___________ and ___________, [title of most senior officer] and
[title of second most senior officer], respectively, of Port ▇▇▇▇▇▇ ▇▇▇▇▇
Company L.P., after due inquiry, hereby certify that the proposed disbursement
of funds from the Major Maintenance Account, in the amount of $________, is
being made in compliance with clause (a) of Section 5.12 of the Common Security
Agreement, dated as of August 19, 1999, among Port ▇▇▇▇▇▇ Finance Corp., Port
▇▇▇▇▇▇ ▇▇▇▇▇ Company L.P., Sabine River Holding Corp., Neches River Holding
Corp., Winterthur International Insurance Company Limited, as Oil Payment
Insurers Administrative Agent, Bankers Trust Company, as Collateral Trustee for
the Secured Parties, Deutsche Bank AG, New York Branch, as Bank Senior Lenders
Administrative Agent, HSBC Bank USA as Capital Markets Trustee for the Capital
Markets Senior Lenders, and Bankers Trust Company, as Depositary Bank, as the
same may be amended or supplemented in accordance with its terms and in effect
from time to time.
We also certify that the basis and calculation for such payment, as
set forth below, are true and correct in all material respects.
[set forth basis and calculation]
Capitalized terms used and not otherwise defined herein shall have
the meanings set forth in the Common Security Agreement.
G-1
IN WITNESS WHEREOF, we have hereunto signed our names and affixed
the seal of the Company.
Dated: August ___, 1999
_____________________________________
Name:
Title: [most senior officer]
_____________________________________
Name:
Title: [second most senior officer]
G-2
Appendix H
to Common Security Agreement
FORM OF MORTGAGE
H-1
DEED OF TRUST, ABSOLUTE ASSIGNMENT
OF RENTS, SECURITY
AGREEMENT AND FINANCING STATEMENT
Dated as of August 19, 1999
Made by
Port ▇▇▇▇▇▇ ▇▇▇▇▇ Company L.P.
as Mortgagor,
to
▇. ▇▇▇▇ Peacock II
as Trustee,
for the benefit of
Bankers Trust Company
as Mortgagee.
After recording please return to:
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇, Esq.
DEED OF TRUST, ABSOLUTE ASSIGNMENT OF RENTS,
SECURITY AGREEMENT AND FINANCING STATEMENT
THE STATE OF TEXAS ss.
ss.
COUNTY OF ▇▇▇▇▇▇▇▇▇ ▇▇.
THIS DEED OF TRUST, ABSOLUTE ASSIGNMENT OF RENTS, SECURITY AGREEMENT
AND FINANCING STATEMENT (this "Deed of Trust") is made by PORT ▇▇▇▇▇▇ ▇▇▇▇▇
COMPANY L.P., a limited partnership organized under the laws of the State of
Delaware ("Mortgagor"), to ▇. ▇▇▇▇ ▇▇▇▇▇▇▇ II of ▇▇▇▇▇▇▇▇▇ County, Texas, as
Trustee ("Trustee"), for the benefit of BANKERS TRUST COMPANY, as Collateral
Trustee under that certain Common Security Agreement referred to below
("Mortgagee").
For $10 and other consideration, Mortgagor grants to Trustee the
Mortgaged property (defined below) in trust, to secure the payment of the Debt
(defined below), and grants Mortgagee a security interest in and to all
currently owned or hereafter acquired Collateral (defined below), to secure
payment of the Debt. As additional consideration, Mortgagor presently and
absolutely assigns to Mortgagee the Rents (defined below). The conveyance of the
Mortgaged Property is subject to the Permitted Encumbrances (defined below).
Mortgagor agrees as follows:
1. Definitions:
(a) "Mortgaged Property" means:
(i) (A) All of Mortgagor's estate, right, title and interest owned
as of now or hereafter acquired in and to the tracts or parcels of land,
situated in Jefferson County, Texas described in Exhibit A, (B)
Mortgagor's leasehold estate created under that certain ▇▇▇▇▇ Complex
Ground Lease and Blanket Easement Agreement between ▇▇▇▇▇ Refining &
Marketing, Inc. ("Ground Lessor") and Mortgagor, dated as of August 19,
1999 (as amended from time to time, the "Ground Lease and Blanket
Easement"), together with all of the easements and other rights
appurtenant granted to Mortgagor in the Ground Lease and Blanket Easement,
(C) Mortgagor's leasehold estate created under that certain Ancillary
Equipment Site Lease and Easement Agreement between Ground Lessor and
Mortgagor, dated as of August 19,
1999 (as amended from time to time, the "Ancillary Equipment Site Lease"),
and (D) all rights of way or use, sidewalks, alleys, strips, gores, rights
including rights in streets (including those vacated or to be vacated),
privileges, air rights and development rights, sewer rights, waters, water
courses, water rights and powers, interest in the bed of any stream, creek
or waterway, servitudes, estates, licenses, easements, tenements,
hereditaments and appurtenances incident, belonging or pertaining to such
land, including any mineral, mining, oil and gas rights and rights to
produce or share in the production of anything related thereto similar or
comparable rights of any nature whatsoever now or hereafter appurtenant)
(collectively, the "Land"), and all rights of ingress and egress, and all
other present or future easements and rights appurtenant to, serving or
benefitting the Land;
(ii) All of Mortgagor's estate, right title and interest in the
buildings, structures, fixtures and improvements of every type now or
hereafter located or placed on the Land (which buildings and improvements,
together with any additions thereto or alterations or replacements
thereof, are referred to as the "Improvements"); and
(iii) All of Mortgagor's rights under the following:
(A) All equipment (including without limitation all machinery,
apparatus, materials and fittings) and all fixtures, chattels,
articles of personal property and all other property (real, personal
or mixed), and all appurtenances and additions thereto and
betterments, renewals, substitutions and replacements thereof, now
or hereafter owned by Mortgagor or in which Mortgagor has or shall
acquire an interest (to the extent of such interest), including
without limitation all reactors, tanks, vessels, pumps, valves,
piping, controls, heat exchangers, tools, furniture and furnishings,
heating, lighting, plumbing, water heating, monitoring, ventilating,
air conditioning, refrigerating, sanitation, waste removal,
incinerating or compacting plants, systems, fixtures and equipment,
elevators, escalators, vacuum systems, call systems, sprinkler
systems and other fire prevention and extinguishing apparatus and
materials, alarms, telecommunications, security systems and
equipment, motors, machinery, ducts, (collectively, "Equipment"; the
Land, Improvements and Equipment are collectively referred to herein
as the "Premises").
(B) All present and future general intangibles (including all
contracts between Mortgagor and any original contractor (as defined
in Texas Property Code Chapter 53) or any other person) relating to
construction or improvement (including furnishing materials or
supplies for construction or improvement) of any Mortgaged Property.
-2-
(C) All present and future plans, specifications and drawings
prepared by any architect or engineer relating to the Mortgaged
Property, and all present and future agreements between Mortgagor
and any person relating to the provision of architectural,
engineering or other design services relating to the Mortgaged
Property.
(D) Any commitment of any lender or investor other than
Mortgagee to finance or invest in any of the Mortgaged Property.
(E) Any completion, performance, payment or other bond
relating to any of the Mortgaged Property or any contract for
construction on the Mortgaged Property.
(F) All existing and future leases (whether written or oral)
of any of the Mortgaged Property (the "Leases"), maintenance and
other contracts relating to the Land or the Improvements, all tenant
deposits under any Leases, all licenses, permits and certificates.
(G) All present and after acquired accounts, instruments,
documents and general intangibles (including trade names and symbols
used in connection with the Land and Improvements).
(H) All wastewater, fresh water and other utility capacity and
facilities available to or allocated to the Land or the
Improvements, and all other present or future rights and privileges
relating to the Land or the Improvements.
(I) All real estate tax refunds and credits and all awards or
payments, including interest on any of them, and the right to
receive the same which Mortgagor may have, which may be made with
respect to any of the Premises whether from a Condemnation thereof
or for any other injury to, decrease in the value of, or other
occurrence affecting an of the Premises.
(J) All other personal property, tangible or intangible, now
or hereafter owned by Mortgagor.
(K) All proceeds of any and all of the foregoing and all
additions and accessions to, substitutions and replacements for, and
profits, royalties, revenues, issues, income, benefits, products and
offspring of any and all of the foregoing.
-3-
(b) "Collateral" means all property described in paragraph (iii) of the
definition of Mortgaged Property, to the extent it is personal property under
applicable law, and all proceeds thereof and all proceeds of the property
described in (i), (ii) and (iii) of the definition of Mortgaged Property.
(c) "Condemnation" shall mean a taking or voluntary conveyance during the
term hereof of all or any part of the Mortgaged Property or any interest therein
or right accruing thereto or use thereof, as the result of, or in settlement of,
any condemnation or other eminent domain proceeding by any Governmental
Authority, whether or not the same shall have actually been commenced.
(d) "Rents" means all rent and other income from the Mortgaged Property.
(e) "Debt" means: (i) all Senior Debt Obligations and the Oil Payment
Reimbursement Obligations; (ii) all payment obligations of Mortgagor and Port
▇▇▇▇▇▇ Finance Corp., a Delaware corporation, which is a wholly owned subsidiary
of Mortgagor under the Debt Service Reserve Account Insurance Guarantee dated
August 19, 1999 (as amended from time to time, the "Debt Service Reserve
Guarantee Arrangement") between Mortgagor and Winterthur International Insurance
Company Limited, a company incorporated under the laws of England
("Winterthur"); (iii) all amounts for which Mortgagor may become obligated to
Mortgagee pursuant to this Deed of Trust; (iv) all other obligations of
Mortgagor under any other documents from time to time evidencing, securing or
relating to the Senior Loan Agreements, the Reimbursement Agreement or the Debt
Service Reserve Guarantee Arrangement (collectively, the "Loan Documents"); and
(v) all other obligations of the Borrower, the Mortgagor or the Partners under
the Financing Documents. The total amount of the Debt is $865 million with a
final maturity date of January 15, 2009.
(f) "Governmental Authority" means national or federal government, any
state, regional, local or other political subdivision thereof with jurisdiction
and any person with jurisdiction exercising executive, legislative, judicial,
regulatory or administrative functions of or pertaining to government or
quasi-governmental issues (including, without limitation, any court).
(g) "Permitted Encumbrances" means the liens, easements and encumbrances
to title described on Exhibit B, to the extent each is valid, subsisting and
affects title to the Mortgaged Property.
(h) All terms defined in the Uniform Commercial Code as in effect in the
State of Texas as of the date hereof (the "UCC") have the same meanings in this
Deed of Trust as in the UCC.
-4-
(i) Initially capitalized terms not defined in this Deed of Trust shall
have the meanings specified in the Common Security Agreement, dated as of August
19, 1999, among Port ▇▇▇▇▇▇ Finance Corp., as Borrower, Port ▇▇▇▇▇▇ ▇▇▇▇▇
Company L.P., as Partnership and Guarantor, Sabine River Holding Corp., as
General Partner of the Partnership, Neches River Holding Corp., as Limited
Partner of the Partnership, Bankers Trust Company, as Collateral Trustee for the
Secured Parties, Deutsche Bank AG, New York Branch, as Administrative Agent for
and on behalf of the Bank Senior Lenders, Winterthur, for itself and as
Administrative Agent for and on behalf of the Oil Payment Insurers, HSBC Bank
USA, as Capital Markets Trustee for the Capital Markets Senior Lenders, Bankers
Trust Company, as Depositary Bank, and Winterthur, as Insurer under the Debt
Service Reserve Insurance Guarantee.
2. Mortgagor's Representations and Agreements.
(a) Title to Property. Mortgagor will warrant and defend Trustee's title
to and Mortgagee's security interest in the Mortgaged Property against any
person who claims any of it. No person owns any lien or other interest in the
Mortgaged Property except the lien and security interest created by this Deed of
Trust, other liens and security interests for the benefit of Mortgagee,
Permitted Encumbrances and the statutory lien for taxes not yet due. No person
other than Mortgagee owns any interest in the Rents. No lien document or
financing statement affecting any Mortgaged Property or the Rents, other than
lien documents and financing statements in favor of Mortgagee, is on file in any
public office. If any person claims any interest or encumbrance, except for
Permitted Encumbrances, Mortgagor will promptly remove any such adverse claim,
lien or encumbrance from the Mortgaged Property, or the Rents. Mortgagor will
give Mortgagee prompt notice of an assertion by any person of any interest or
encumbrance affecting, or any legal proceeding affecting, any part of the
Mortgaged Property or the Rents. Mortgagor will take any action Mortgagee
requires to protect, assure or enforce the lien and security interest of this
Deed of Trust and the assignment of the Rents. This paragraph will survive
termination or foreclosure of this Deed of Trust.
(b) Homestead. Mortgagor represents that at the time of execution and
delivery of this Deed of Trust, no part of the Mortgaged Property is any part of
Mortgagor's residential or business homestead.
3. Collection and Application of Insurance and Condemnation
Proceeds. Mortgagor assigns to Mortgagee all amounts received by Mortgagor or
Mortgagee as proceeds of insurance and proceeds of Condemnation proceedings as
additional security for the Debt. Mortgagor will promptly give Mortgagee notice
of any material damage to or condemnation proceeding affecting the Mortgaged
Property. Mortgagee may file or prosecute (or both) any insurance or
Condemnation claim. Mortgagee may collect and give receipts for any money
payable under any insurance policy by reason of loss of or damage
-5-
to the Improvements. Mortgagee may settle or compromise, on any terms and for
any amount it selects, the liability of any insurance company or companies on
any policy, and execute and deliver releases and discharges of liability binding
Mortgagor and Mortgagee. Mortgagee may, collect and give receipts for any money
payable to Mortgagor because of Condemnation proceedings affecting any Mortgaged
Property. Mortgagor RELEASES Mortgagee from any liability in connection with any
settlement or compromise of any insurance or Condemnation claim. Mortgagee shall
apply all insurance or condemnation proceeds in accordance with the terms of the
Common Security Agreement.
4. Events of Default; Acceleration; Appointment of Receiver. (a) The
occurrence of any Default or Event of Default set forth in Article X of the
Common Security Agreement shall constitute an "Event of Default" for all
purposes of this Deed of Trust.
(b) If any Event of Default shall occur and be continuing, then the
Mortgagee shall have (in addition to any and all other available remedies at law
and equity including, without limitation, the remedy provided in clause (c)of
this Section 4 and in Section 5 hereof) each of the remedies set forth in
Article X of the Common Security Agreement.
(c) If any Event of Default shall occur and be continuing, Mortgagee may,
without demand presentment or notice of any kind (including notice of default,
notice of intent to accelerate the maturity of the Debt, or notice of actual
acceleration), all of which Mortgagor waives, declare all of the Debt
immediately due and payable, and may request that Trustee exercise any of
trustee's remedies under this Deed of Trust. In addition, if an Event of Default
occurs, Trustee will be entitled as a matter of right to the appointment of a
receiver or receivers of the Mortgaged Property, and of all its rent and other
income. Notwithstanding the appointment of any receiver, Trustee will be
entitled to the possession and control of any cash or other instruments that
this Deed of Trust requires Mortgagor to deliver or pay to Trustee. If an Event
of Default occurs, Mortgagee may demand that Mortgagor surrender possession of
the Mortgaged Property to Mortgagee. If Mortgagee takes possession of the
Mortgaged Property, Mortgagee will not be liable to Mortgagor for any rental of
the Mortgaged property, nor for any failure to rent or inadequacy of rental of
the Mortgaged Property, nor for any damage to or waste of the Mortgaged
Property, WHETHER OR NOT DUE TO MORTGAGEE'S NEGLIGENCE, except as a result of
the gross negligence or willful misconduct of Mortgagee.
5. Trustee's Sale.
(a) If an Event of Default shall occur and be continuing, Trustee will, at
the request of Mortgagee, sell all or any part of the Mortgaged Property as an
entirety or in parcels, by one sale or by several sales held at one time or at
different times, all as Trustee in Trustee's discretion elects. The sale will be
made in accordance with Texas Property Code Section 51.002 or any successor
statute. If the Land is situated in more than one
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county, then required notices will be given in both or all of such counties, the
Mortgaged Property may be sold in either or any such county, and such notices
shall designate the county where the Mortgaged Property will be sold. The
affidavit of any person having knowledge of the facts to the effect that require
notices were posted, filed or mailed will be prima facie evidence of the facts
recited in the affidavit. The Trustee's deed at any such sale will be with
general warranty, and Mortgagor will warrant and forever defend the title of the
purchaser or purchasers. Mortgagee may be the purchaser at any sale made
hereunder, and credit the sale price against the Debt. Any deed so executed by
Trustee will be prima facie proof of all factual matters stated in it. The
purchaser or purchasers named in any such deed, and all persons subsequently
dealing with the property purported to be thereby conveyed, will be fully
protected in relying upon the truthfulness of factual matters stated in the
deed. After any Trustee's sale, Mortgagor will surrender immediate possession
and control of the property purchased to the purchaser. If Mortgagor falls to
surrender possession, Mortgagor will be a tenant at will.
(b) Mortgagee may at any time before the sale direct Trustee to abandon
the sale, and may at any time thereafter direct Trustee to again commence
foreclosure. Whether or not foreclosure is commenced by Trustee, Mortgagee may
at any time after an Event of Default occurs institute suit for collection of
all or any part of the Debt or foreclosure of the lien of this Deed of Trust or
both. If Mortgagee institutes suit for collection of the Debt and foreclosure of
the lien of this Deed of Trust, Mortgagee may at any time before the entry of
final judgment dismiss the same, and require Trustee to sell the Mortgaged
Property in accordance with the provisions of this Deed of Trust. No single sale
or series of sales under this Deed of Trust or by judicial foreclosure will
extinguish the lien or exhaust the power of sale under this Deed of Trust except
with respect to the items of property sold.
(c) Trustee will apply the proceeds of sale, first to the payment of all
expenses of the sale, second to the payment of the Debt in any order Mortgagee
chooses and third the balance, if any, to any person who is entitled to it. This
paragraph does not give any right, remedy or claim to any holder of any
obligation or lien, other than Mortgagee.
6. Alternative Procedures under UCC. In addition to all other rights
and remedies granted in this Deed of Trust, Mortgagee has the rights of a senior
secured party under the UCC as to any of the Collateral. After an Event of
Default occurs, Mortgagee may require Mortgagor to assemble the Collateral and
make it available to Mortgagee at a reasonably convenient place Mortgagee
designates. Mortgagor authorizes each obligor on any Collateral to make payment
and performance to Mortgagee upon Mortgagee's demand, and payment or performance
to Mortgagee will discharge the obligor's duty as if it had been rendered to
Mortgagor, even if Mortgagor notifies the obligor that payment or performance
should not be made to Mortgagee. Mortgagor irrevocably appoints Mortgagee as its
attorney-in-fact to do all things Mortgagor is required to do under this Deed of
Trust. This appointment is coupled with an interest. Except for the safe custody
of any Collateral in its
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possession and accounting for money actually received by it, Mortgagee has no
duty as to any Collateral, including the duty to preserve rights against prior
parties. Written notice to Mortgagor mailed 10 days prior to public or private
sale is reasonable notice.
7. Change of Trustee. Trustee may be removed at any time with or
without cause, at the option of Mortgagee, by written declaration of removal
executed by Mortgagee, without any notice to or demand upon Trustee, Mortgagor
or any other person. If at any time Trustee is removed, dies or refuses, fails
or is unable to act as Trustee, Mortgagee may appoint any person as successor
Trustee hereunder, without any formality other than a written declaration of
appointment executed by Mortgagee. Immediately upon appointment, the successor
Trustee so appointed automatically will be vested with all the estate and title
in the Mortgaged Property, and with all of the rights, powers, privileges,
authority, options and discretions, and charged with all of the duties and
liabilities, vested in or imposed upon Trustee by this instrument, and any
conveyance executed by any successor Trustee will have the same effect and
validity as if executed by the Trustee named in this Deed of Trust.
8. Fair Market Value for Calculating Deficiencies. If Mortgagee sues
Mortgagor, Borrower or any other party obligated on the Debt or any guarantor of
any Debt to collect any deficiency owing after foreclosure of the Mortgaged
Property, "fair market value" of the Mortgaged Property under Sections 51.003,
51.004, and 51.005 of the Texas Property Code (as amended from time to time)
(the "Deficiency Statutes") will be determined as follows:
(a) Any valuation of the Mortgaged Property will be based on "as is"
condition on the foreclosure date, without any assumption or expectation that
the Mortgaged Property will be repaired or improved in any manner before a
resale of the Mortgaged Property after foreclosure.
(b) Any valuation will assume that the foreclosure purchaser desires
resale of the Mortgaged Property for cash promptly (but no later than twelve
months) following the foreclosure sale.
(c) All reasonable closing costs customarily borne by the seller in a
commercial real estate transaction, including brokerage commissions, title
insurance, a survey of the Mortgaged Property, tax prorations, attorney's fees,
and marketing costs, will be deducted from the gross fair market value of the
Mortgaged Property.
(d) Any valuation will further discount the gross fair market value of the
Mortgaged Property to account for any estimated holding costs associated with
maintaining the Mortgaged Property pending sale, including utilities expenses,
property management fees, taxes and assessments, and other maintenance expenses.
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(e) Any expert opinion testimony given or considered in connection with a
determination of the fair market value of the Mortgaged Property must be given
by persons who have at least five years experience in appraising property
similar to the Mortgaged Property and who have conducted and prepared a complete
written appraisal of the Mortgaged Property taking into consideration the
factors set forth above.
9. All Security Cumulative; Subrogation; Waiver of Marshalling. The
execution of this instrument does not impair any other security for the payment
of any Debt. Mortgagee may take additional security for any Debt in the future
without altering or impairing the lien of this Deed of Trust. Mortgagee may
release any Mortgaged Property or any other security for the Debt without
altering or impairing the lien of this Deed of Trust as to the Mortgaged
Property not released. All present and future security will be cumulative.
Mortgagee is subrogated to all rights, liens or interests in any of the
Mortgaged Property securing the payment of any obligation satisfied or paid off
out of the proceeds of the loans evidenced by the Loan Documents. Mortgagor
waives any right of marshalling of assets or sale in inverse order of
alienation, and all present or future appraisal rights and equity of redemption
rights.
10. Limitations on Amount of Interest. Mortgagor and Mortgagee
intend to conform strictly to applicable usury laws. Therefore, the total amount
of interest (as defined under applicable law) contracted for, charged or
collected under the Debt or this Deed of Trust will never exceed the highest
amount permitted by applicable law. If Mortgagee contracts for, charges or
receives any excess interest, it will be deemed a mistake. Any unlawful contract
or charge will be automatically reformed to conform to applicable law, and if
Mortgagee has received excess interest, Mortgagee will either refund the excess
to Mortgagor or credit the excess on the unpaid amounts owing under the Debt or
this Deed of Trust. All amounts constituting interest will be spread throughout
the full term of the Debt in determining whether interest exceeds lawful
amounts.
11. Financing Statement; Mortgagor's Covenant. This Deed of Trust
may be filed in the real property records as a fixture filing, and may be filed
as a financing statement in any other place which is necessary or desirable to
perfect the security interests granted in this Deed of Trust. A carbon,
photographic or other reproduction of this Deed of Trust or a financing
statement relating to this Deed of Trust is sufficient as a financing statement.
The secured party is Mortgagee and the address of the secured party is set forth
in Section 12. The debtor is Mortgagor and the mailing address of the debtor is
set forth in Section 12. Mortgagor will promptly notify Mortgagee of any change
in Mortgagor's location, name, identity or organizational structure.
12. Notices. Except as otherwise provided, any notice, request or
demand under this Deed of Trust must be in writing and will be sufficient if
either delivered personally or deposited in the United States mail in a postpaid
envelope addressed to the
-9-
mailing address set forth below. A party may designate a different address by
notice given in compliance with this Section. Any notice to Mortgagee must be
sent or delivered to the officer named below or to another officer designated
for receipt of such notices by Mortgagee. The names and mailing addresses of
Mortgagor and Mortgagee are as follows:
Mortgagor: Mortgagee:
Port ▇▇▇▇▇▇ ▇▇▇▇▇ Company L.P. Bankers Trust Company
Port ▇▇▇▇▇▇ Refinery Corporate Trust & Agency Services
▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ Four Albany Street, 4th Floor
▇▇. ▇▇ ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ Attn: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
(or if sent by U.S. Mail:
Port ▇▇▇▇▇▇ ▇▇▇▇▇ Company L.P.
▇.▇. ▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇)
with a copy to:
Port ▇▇▇▇▇▇ ▇▇▇▇▇ Company L.P.
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇. ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Legal Department
13. Additional Agreements. This Deed of Trust benefits the
successors, assigns and legal representatives of Trustee and Mortgagee and binds
any successors or transferees of Mortgagor (however, this provision does not
permit Mortgagor to transfer the Mortgaged Property). Each reference to
Mortgagor, Trustee or Mortgagee includes their respective successors, assigns
and legal representatives. No modification or waiver of this Deed of Trust will
be effective unless in writing and signed by Mortgagee. Mortgagee may waive any
default without waiving any other prior or subsequent default. Mortgagee's
failure to exercise or delay in exercising any rights under this Deed of Trust
will not operate as a waiver of those rights. If any provision of this Deed of
Trust is unenforceable or invalid, that provision will not affect the
enforceability or validity of any other provision. If the application of any
provision of this Deed of Trust to any person or circumstance is illegal or
unenforceable, that application will not affect the legality or enforceability
of the provision as to any other person or circumstance. If more than one person
executes this Deed of Trust as Mortgagor, their obligations under this Deed of
Trust are joint and several.
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14. Rules of Construction. The section headings or captions in this
instrument are for convenience and are not a part of this instrument for any
purpose. Any action permitted to Mortgagee may be taken by any authorized
officer, employee or agent of Mortgagee, or any attorney, accountant,
environmental consultant or other advisor or professional retained by Mortgagee.
Use of the term "including" does not imply any limitation on (but may expand)
the antecedent reference. Unless the context clearly requires otherwise, the
term "may" does not imply any obligation to act. Any reference to exhibits or
schedules means the exhibits or schedules to this Deed of Trust, which are fully
incorporated by reference into this Deed of Trust. Any reference to a particular
document includes all modifications, supplements, replacements, renewals or
extensions of that document, but this rule of construction does not authorize
amendment of any document without Mortgagee's consent.
15. Security Interest Absolute. All rights of Mortgagee and the
liens and security interests granted by this Deed of Trust, and all obligations
of Mortgagor hereunder, are and will be absolute and unconditional, irrespective
of: (i) any lack of validity or enforceability of the Common Security Agreement
or any other Loan Documents; (ii) any change in the time, manner, or place of
payment of, or in any other term of, all or any of the Debt or any other
amendment or waiver of or any consent to any departure from the Common Security
Agreement or any other Loan Documents; (iii) any exchange, release or
non-perfection of any other collateral, or any release or amendment or waiver of
or consent to departure from any guaranty, for all or any of the Debt; or (iv)
any other circumstance which might otherwise constitute a defense available to,
or a discharge of, the Borrower or a third party grantor of a security interest.
16. Mortgagor Further Assurances. Mortgagor agrees to execute,
acknowledge, deliver, file and record such further certificates, amendments,
instruments and documents, and to do all such other acts and things, as may be
required by law or as, in the reasonable judgment of the Mortgagee, may be
necessary or advisable to carry out the intent and purpose of this Deed of Trust
17. Mutual Agreements.
(a) THIS DEED OF TRUST MAY BE EXECUTED IN SEPARATE COUNTERPARTS, EACH OF WHICH
WHEN SO EXECUTED AND DELIVERED SHALL BE DEEMED TO BE AN ORIGINAL AND ALL
OF WHICH COUNTERPARTS TAKEN TOGETHER SHALL CONSTITUTE BUT ONE AND THE SAME
INSTRUMENT.
(b) THIS DEED OF TRUST SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH,
THE LAWS OF THE STATE OF TEXAS.
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(c) EACH OF THE MORTGAGOR AND THE MORTGAGEE HEREBY WAIVES, TO THE EXTENT
PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY
LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS DEED OF TRUST OR THE
TRANSACTIONS CONTEMPLATED HEREBY.
(d) NOTWITHSTANDING ANYTHING HEREIN TO THE CONTRARY, THE MORTGAGEE, IN
EXERCISING ANY RIGHTS OR ENFORCING ANY REMEDIES UNDER THIS DEED OF TRUST
FOR THE BENEFIT AND ON BEHALF OF WINTERTHUR, AS INSURER UNDER THE DEBT
SERVICE RESERVE GUARANTEE ARRANGEMENT, SHALL BE AND AT ALL TIMES REMAIN
SUBJECT TO THE SUBORDINATION PROVISIONS SET FORTH IN ARTICLE IV OF THE
INTERCREDITOR AGREEMENT.
(e) THIS DEED OF TRUST, THE COMMON SECURITY AGREEMENT AND THE LOAN DOCUMENTS
REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE
CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENTORAL
AGREEMENTS BETWEEN THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS
BETWEEN THE PARTIES.
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Mortgagor has executed this instrument to be effective as of
August 19, 1999.
PORT ▇▇▇▇▇▇ ▇▇▇▇▇ COMPANY L.P.
By: SABINE RIVER HOLDING CORP.,
its General Partner
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇
-----------------------------
▇▇▇▇▇ ▇▇▇▇▇
Executive Vice President and
Chief Financial Officer
STATE OF NEW YORK ss.
ss.
COUNTY OF NEW YORK ss.
This instrument was acknowledged before me on the 19th day of
August, 1999, by ▇▇▇▇▇ ▇▇▇▇▇, Executive Vice President and Chief Financial
Officer of Sabine River Holding Corp., a corporation incorporated under the laws
of the State of Delaware, on behalf of said corporation acting as General
Partner of Port ▇▇▇▇▇▇ ▇▇▇▇▇ Company L.P., a partnership formed under the laws
of the State of Delaware.
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
--------------------------------
Notary Public, State of New York
Name:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Notary Public, State of New York
No. 01GO6012061
Qualified in Queens County
Certificate Files in New York County
Commission Expires Aug. 17, 2000
My commission expires:
_____________________________
Mortgagee is executing this Deed of Trust solely to acknowledge its agreement to
the last numbered section above.
BANKERS TRUST COMPANY
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
-----------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: Vice President
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-----------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: ASSISTANT VICE PRESIDENT
STATE OF NEW YORK ss.
ss.
COUNTY OF NEW YORK ss.
This instrument was acknowledged before me on the 19th day of
August, 1999, by ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Vice President of ____________ and ▇▇▇▇▇▇▇
▇. ▇▇▇▇▇▇▇, Asst. Vice President of Bankers Trust Corporation, a banking
corporation incorporated under the laws of the State of New York, on behalf of
said banking corporation.
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
--------------------------------
Notary Public, State of New York
Name:
My commission expires:
_____________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Notary Public, State of New York
No. 01GO6012061
Qualified in Queens County
Certificate Files in New York County
Commission Expires Aug. 17, 2000
Exhibit A
Description of Land
[Description of the Land on which the ▇▇▇▇▇, the Hydrocracker, the Sulfur Plant,
the Sour Water Stripper and the Amine Treating Unit are situated. The
description should be exactly the same, word for word, as the description in the
Title Insurance Policy.]
-1-
Exhibit B
Permitted Encumbrances
(1) Liens for taxes not delinquent or being contested in good faith and by
appropriate proceedings.
(2) Liens, constituting deposits or pledges to secure obligations under
workmen's compensation, social security or similar laws, or under
unemployment insurance.
(3) Liens constituting deposits or pledges or secure bids, tenders, contracts
(other than contracts for the payment of money), leases, statutory
obligations, surety and appeal bonds and other obligations of like nature
arising in the ordinary course of business.
(4) Mechanics', workmen's, materialmen's or other like liens arising in the
ordinary course of business with respect to obligations that are not due
or that are being contested in good faith.
(5) Liens constituting easements and imperfections of title on real estate,
provided that such easements and imperfections do not render title
unusable for purposes of the ▇▇▇▇▇ Project.
(6) Liens securing judgments, decrees or orders of any court (A) that are not
currently dischargeable or (B) that have been discharged or stayed or
appealed within 30 days after the date of such judgment, decree or order
(in the case of a stay or appeal, during the period of such stay or
appeal).
(7) Any other lien or encumbrance permitted under, or consented to as provided
in, the Common Security Agreement.
-1-
Appendix I
to Common Security Agreement
FORM OF CONSENT AND ACKNOWLEDGMENT
CONSENT AND AGREEMENT, dated as of _______, among
_______________________________, _______________________ (the "Contractor"),
BANKERS TRUST COMPANY, a New York banking corporation, as Collateral Trustee for
the benefit of the Secured Parties (as hereinafter defined) (in such capacity,
together with its successors and assigns, the "Collateral Trustee"), and PORT
▇▇▇▇▇▇ ▇▇▇▇▇ COMPANY L.P., a Delaware limited partnership (the "Partnership").
WHEREAS, the Partnership is constructing and will own and operate a
new delayed ▇▇▇▇▇ facility and certain related refinery equipment, located at
Contractor's refinery in Port ▇▇▇▇▇▇, Texas (the "▇▇▇▇▇ Complex")
WHEREAS, Contractor and the Partnership have entered into the
_______________ and dated as of___________ (the "Agreement"), in connection with
the [construction and ]operation of the ▇▇▇▇▇ Complex;
WHEREAS, in order to finance the construction and operation of the
▇▇▇▇▇ Complex, the Partnership has entered into financing arrangements (as the
same may be amended, supplemented or otherwise modified, or extended or
refinanced, from time to time, the Financing Arrangements") with the banks and
other financial institutions from time to time parties thereto (together with
their respective successors and assigns, the "Financing Parties")
WHEREAS, the Financing Arrangements provide, among other things, for
the making of the loans and other extensions of credit to the Partnership, the
proceeds of which are to be applied to finance the construction of the ▇▇▇▇▇
Complex;
WHEREAS, the loans, bonds and other obligations of the Partnership
incurred in connection with the Financing Arrangements will be secured by
substantially all of the assets of the Partnership pursuant to a Common Security
Agreement, dated as of August 19, 1999, entered into by the Partnership in favor
of the Collateral Trustee, pursuant to which the Partnership has assigned to the
Collateral Trustee for the benefit of the Secured Parties, as collateral
security for the Senior Debt Obligations, all of the Partnership's right, title
and interest in, to and under among other things the Agreements;
WHEREAS, it is an obligation of Contractor under the Financing
Arrangements that Contractor execute and deliver this Consent;
I-1
NOW, THEREFORE, in consideration of the foregoing premises and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto hereby agree as follows:
SECTION 1. DEFINITIONS.
(a) Defined Terms. The following terms shall have the meanings indicated:
"Agreements" has the meaning specified in the recitals to this Consent.
"▇▇▇▇▇ Complex" has the meaning specified in the recitals.
"Collateral Trustee" has the meaning specified in the caption of this
Consent.
"Common Security Agreement" means the Common Security Agreement, dated as
of August 19, 1999, among the Partnership, the Collateral Trustee and the other
parties named therein, as the same may be amended, supplemented or otherwise
modified from time to time.
"Consent" means this Consent and Agreement, as the same may be amended,
supplemented or otherwise modified from time to time.
"Contractor" has the meaning specified in the caption of this Consent.
"Default Notice" has the meaning specified in Section 5(a).
"Event of Default" means any of the events listed in Section 10.1 of the
Common Security Agreement.
"Financing Arrangements" has the meaning specified in the recitals to this
Consent.
"Financing Documents" means the Common Security Agreement and any other
agreement or instrument entered into by the Partnership or any other Person
pursuant to the Financing Arrangements which secures, evidences or governs
payment or performance of any of the Senior Debt Obligations.
"Financing Parties" has the meaning specified in the recitals to this
Consent.
"Nominee" has the meaning specified in Section 5(b).
"Notice" has the meaning specified in Section 5(a).
"Partnership" has the meaning specified in the caption of this Consent.
I-2
"Person" means an individual, partnership, corporation, business trust,
joint stock company, trust, unincorporated association, joint venture,
governmental authority or other legal entity of whatever nature.
"Project Revenue Account" has the meaning specified in the Common Security
Agreement.
"Refinancing" means any financing transaction or debt offering
transaction, or series of such transactions, all or part of the proceeds of
which are used to repay the Senior Debt Obligations or otherwise are used to
provide financing for the ▇▇▇▇▇ Complex.
"Replacement Party" has the meaning specified in Section 5(c).
"Secured Parties" has the meaning specified in the Common Security
Agreement.
"Senior Debt Obligations" has the meaning specified in the Common Security
Agreement.
"Transferee" has the meaning specified in Section 5(b)(i).
(b) Other Definitional Provisions.
(i) The words "hereof", "herein" and "hereunder" and words of
similar import when used in this Consent shall refer to this Consent as a whole
and not to any particular provision of this Consent, and section and subsection
references are to this Consent unless otherwise specified.
(ii) Each reference in this Consent to an agreement, instrument or
document shall be deemed to refer to such agreement, instrument or document as
the same may be amended, supplemented or otherwise modified from time to time.
(iii) Any term defined by reference to an agreement, instrument or
other document shall have the meaning so assigned to it whether or not such
agreement, instrument or document is in effect.
(iv) Each reference in this Consent to a Person shall be deemed to
include such Person's successors and assigns.
I-3
SECTION 2. CONSENTS TO ASSIGNMENTS, ETC.
Contractor hereby:
(a) acknowledges that the Secured Parties have entered into the Financing
Arrangements in reliance upon the performance by Contractor of its obligations
under the Agreement and this Consent, and irrevocably consents to the assignment
of the Agreement, pursuant to Section ____ of the Agreement, to the Collateral
Trustee for the benefit of the Secured Parties as collateral security for the
Senior Debt Obligations of all of Partnership's right, title and interest,
(whether now existing or hereafter arising) in, to and arising under the
Agreement;
(b) irrevocably consents, pursuant to Section ____ of the Agreement, to
any subsequent assignment of the Agreement by the Collateral Trustee pursuant to
Section 5(b), upon and after receipt by Contractor of written notice from the
Collateral Trustee that it desires to exercise its rights and remedies as a
secured party, or as trustee for the benefit of the Secured Parties, in respect
of the Senior Debt Obligations (but without any right or obligation of
Contractor to know or confirm whether any such subsequent assignment is
permitted under the Financing Documents), including the acquisition of all of
the Partnership's existing and future rights under the Agreement by sale,
foreclosure or otherwise, or the construction and/or operation of the ▇▇▇▇▇
Complex pending sale or foreclosure through a receiver or otherwise, or the
assignment of the Agreement to any Person who is a Transferee; and Contractor
will, at the request of any such Transferee, enter into a consent and agreement
in connection therewith having terms the same as the terms of this Consent,
except such terms as may be inapplicable;
(c) confirms that the assignment of the Partnership's right, title and
interest in, to and arising under the Agreement pursuant to Section 6.06 of the
Common Security Agreement is in accordance with all applicable provisions of the
Agreement;
(d) irrevocably agrees that the Collateral Trustee and the other Secured
Parties shall not be subject to any liability or obligation under the Agreement
nor shall the Collateral Trustee or any Secured Party be obligated or required
(A) to perform any of the Partnership's obligations under the Agreement or (B)
to take any action to collect or enforce any claim for payment assigned to it
under the Common Security Agreement or otherwise;
(e) acknowledges the right of the Collateral Trustee and the other Secured
Parties to cure defaults by the Partnership under the Agreement pursuant to the
terms of this Consent (notwithstanding anything to the contrary contained in
such Agreement), without assuming or being responsible for any of the
obligations of the Partnership thereunder;
(f) acknowledges the right of the Collateral Trustee, following the
occurrence of an Event of Default under the Common Security Agreement, to
exercise its rights thereunder as a secured creditor and collateral assignee of
the Agreement to make all demands, give all notices, take all actions and
exercise all rights of the Partnership under the Agreement and to enforce the
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Agreement against Contractor, notwithstanding anything to the contrary contained
in the Agreement (but without any right or obligation of Contractor to know or
confirm whether any such subsequent assignment is permitted under the Financing
Documents);
(g) acknowledges and irrevocably agrees, notwithstanding anything to the
contrary contained in the Agreement, but subject to the provisions of this
Consent, that none of the following shall constitute in and of itself, as
between Contractor and the Collateral Trustee or any other Secured Party, a
default or breach by Partnership under the Agreement:
(i) the collateral assignment of the Agreement to the Collateral
Trustee for the benefit of the Secured Parties;
(ii) the sale, foreclosure or other enforcement by the Collateral
Trustee or any other Secured Party of secured creditor remedies;
(iii) the acquisition of the rights of the Partnership under the
Agreement by the Collateral Trustee or any other Person as a result of sale or
foreclosure (or acceptance of an absolute assignment of the Agreement in lieu of
sale or foreclosure) or the exercise of other secured creditor remedies; or
(iv) the assignment of the Agreement by the Collateral Trustee or
any other Secured Party or a Nominee to any other Person, following the
acquisition of the Agreement by the Collateral Trustee or any other Secured
Party or Nominee in the exercise of rights and remedies as a secured creditor
(or in lieu of the exercise of such rights and remedies); and
(h) irrevocably agrees at the request of the Partnership, to enter into a
consent and agreement in connection with a Refinancing having terms the same as
this Consent, except such terms as may be inapplicable or other non-substantive
change.
SECTION 3. PAYMENT OF ASSIGNED SUMS.
Until notified in writing by the Collateral Trustee that the Senior Debt
Obligations have been paid in full, Contractor shall pay by wire transfer in
U.S. dollars of same day funds directly to the Project Revenue Account or as
otherwise instructed in writing by the Collateral Trustee any and all amounts,
if any, payable by Contractor to the Partnership under the Agreement or as a
result of a breach thereof. The making of such payment into the Project Revenue
Account, and the currency of such payment are of the essence of this Consent.
All amounts paid to the Collateral Trustee shall be accompanied by a notice
specifying the amount of such payment and the purpose for which such payment is
being made. After Contractor has been notified in writing by the Collateral
Trustee that the Senior Debt Obligations have been paid in full, Contractor
shall pay such amounts directly to Partnership.
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SECTION 4. REPRESENTATIONS AND WARRANTIES OF CONTRACTOR.
Contractor hereby represents and warrants that:
(a) Organization. It is a corporation duly organized and existing under
the laws of ________ and has the legal capacity to enter into and perform this
Consent.
(b) Government Authorizations. It has obtained all necessary
authorizations from the competent governmental authorities for the execution of
this Consent and the performance of its obligations hereunder.
(c) Corporate Authority. The execution and performance by Contractor of
this Consent has been duly authorized by all necessary corporate action. This
Consent has been duly executed by Contractor and, assuming the due authorization
and execution of this Consent by the Partnership and the Collateral Trustee,
constitutes the legal, valid and binding obligation of Contractor, enforceable
against Contractor in accordance with its terms.
(d) No Conflict. Neither the execution of this Consent by Contractor nor
the performance by Contractor of its obligations hereunder will conflict with or
result in any breach of, or constitute a violation of or default under, any
applicable law or regulation, Contractor's charter or by-laws, or any indenture,
mortgage, deed of trust, or other instrument or agreement (including, without
limitation, any negative pledge or similar clause), to which Contractor or any
of its affiliates is a party, or by which any of them may be bound, or to which
any of their respective property or assets may be subject.
(e) No Litigation. No lawsuit or other proceeding is pending or, to the
knowledge of Contractor, threatened against Contractor which, if determined
adversely to Contractor, may materially and adversely affect its business or
financial condition or the consummation of the transactions contemplated by, or
the performance of its obligations under, this Consent or the Agreement. No
action or proceeding has been instituted and no order, decree, injunction or
judgment of any kind from any court or other governmental authority has been
issued to avoid, restrain or in any other manner prevent the consummation of the
transactions contemplated by this Consent or the Agreement.
(f) Enforcement. The Agreement and this Consent are in proper legal form
to be enforced against Contractor, and it is not necessary to ensure the
legality, validity, enforceability or admissibility into evidence of the
Agreement or this Consent that they be filed, recorded or enrolled with any
governmental authority, or that any such document be stamped with any stamp,
registration or similar transaction tax.
(g) Execution. Delivery: Binding Agreement. The Agreement is in full force
and effect and the Agreement has not been assigned by Contractor. Except for the
assignments referred to
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in Section 2(a) hereof, Contractor has not received any notice of transfer or
assignment of the Agreement by the Partnership.
(h) No Default or Amendment. Neither Contractor nor, to its knowledge, the
Partnership is in default under the Agreement. Contractor has no existing
claims, counterclaims, offsets or defenses against the Partnership in respect of
the Agreement. The Agreement has not been amended, modified or supplemented in
any manner.
SECTION 5. RIGHTS OF COLLATERAL TRUSTEE.
Contractor agrees that the Collateral Trustee, for the benefit of the
Secured Parties, so long as any Senior Debt Obligations remain outstanding,
shall have the following rights with respect to the Agreement:
(a) Notwithstanding anything to the contrary contained in the Agreement,
the Agreement shall not be terminated or canceled by action of Contractor as the
result of any breach or default of the Partnership without prior notice in
writing to the Collateral Trustee, specifying the basis therefor (hereinafter
called a "Notice"). In the event of a default by Partnership under the
Agreement, Contractor (i) will give prompt written notice to the Collateral
Trustee (a "Default Notice") of such default and any cure period pursuant to the
Agreement (the "Partnership's Cure Period"), (ii) will allow the Collateral
Trustee and the other Secured Parties to cure the default during the
Partnership's Cure Period (whether or not the Partnership or any equity investor
in the Partnership also has the right to cure such default during such period)
and (iii) prior to the exercise by Contractor of any right to terminate the
Agreement, will afford the Collateral Trustee and the other Secured Parties the
longer of (A) 120 days after the receipt by the Collateral Trustee of the
Default Notice and (B) 60 days after the expiration of the Partnership's Cure
Period (the "Secured Parties' Cure Period") to cure such default, provided that
the Secured Parties' Cure Period shall be extended for such longer period of
time as is necessary as long as the Collateral Trustee or any other Secured
Party shall be diligently acting in good faith to cure such default or to obtain
title to the ▇▇▇▇▇ Complex; and provided, further, that notwithstanding the
foregoing, in no event shall the Secured Parties' Cure Period with respect to a
payment default by the Partnership exceed 90 days after the Default Notice from
Contractor. No curing of any defaults under the Agreement shall be construed as
an assumption by the Collateral Trustee or the Secured Party of any of the
obligations, covenants or Agreement of the Partnership under the Agreement.
(b) If the Collateral Trustee or any other Secured Party, or a Nominee (as
defined below), shall become the legal or beneficial owner of the ▇▇▇▇▇ Complex,
or shall become entitled to cause the disposition of the ▇▇▇▇▇ Complex pursuant
to the exercise of its rights and remedies as a secured creditor, then:
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(i) Such Person, at its election, may continue the Agreement by
delivering to Contractor a written notice of continuation. Such Person may
thereafter cause the Partnership's interest in the Agreement to be transferred
to itself or to a third party by delivering to Contractor a written notice of
such transfer and an agreement from such Person or such third party satisfying
the conditions of Section 5(b)(ii) hereof (such Person or such third party, as
the case may be, being herein called a "Transferee"), and in the event of any
transfer and any successive transfers thereafter, (A) Contractor will continue
to perform, for the benefit of such Transferee, its obligations under the
Agreement pursuant to its terms as modified hereby, without regard to any
default by the Partnership thereunder, (B) the Partnership shall remain liable
to Contractor for all its obligations and duties under the Agreement, and (C)
any Transferee shall become liable, not personally but solely to the extent of
its direct or indirect right, title and interest in and to the ▇▇▇▇▇ Complex and
the operating contracts relating thereto, to perform the duties and obligations
of the Partnership under the Agreement only as arise in respect of the period
commencing on the date of such Transferee's succession. Only the Transferee, and
not the Person delivering a notice of continuation, shall have liabilities and
obligations under the Agreement.
(ii) Any agreement delivered pursuant to the second sentence of
subparagraph (i) of this Section 5(b) shall provide that the Transferee shall
(A) assume and agree to perform all future obligations of the Partnership under
the Agreement and agree to be bound by the terms of the Agreement in connection
therewith and (B) be bound by all actions taken and notices given by the parties
under the Agreement prior to any such transfer.
(iii) As used in this Section 5, "Nominee" shall mean (A) any Person
or entity that is directly or indirectly owned and controlled by the Collateral
Trustee, the Collateral Trustee or any other Secured Party and (B) which has
acquired the Partnership's right, title and interest in the ▇▇▇▇▇ Complex.
(c) If (i) the Partnership or a trustee or receiver or any Person
exercising the powers of a trustee or receiver in any bankruptcy, insolvency,
receivership, arrangement, liquidation or similar proceeding applicable to the
Partnership rejects the Agreement, or (ii) the Agreement is terminated (x) by
reason of any bankruptcy, insolvency, receivership, arrangement, liquidation or
similar proceeding applicable to the Partnership or (y) by reason of any default
by the Partnership under the Agreement, and if, in any such case, within 90 days
after such termination, the Collateral Trustee shall so request, Contractor will
execute and deliver to the Collateral Trustee, one or more of the Secured
Parties, a Nominee or a Transferee, as shall be designated by the Collateral
Trustee (herein called the "Replacement Party"), a new contract with the
Replacement Party. The new contract shall contain substantially the same terms
and provisions as the Agreement for the balance of the unexpired term thereof.
(d) If the Collateral Trustee, for the benefit of the Secured Parties, or
any Replacement Party is prohibited from curing any default by the Partnership
under the Agreement by any process, stay or injunctions issued by any
governmental authority or pursuant to any bankruptcy
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or insolvency proceeding involving the Partnership, then the Secured Parties=
Cure Period shall be extended for the period of such prohibition.
SECTION 6. AGREEMENTS OF CONTRACTOR
(a) Continuation of Performance. Contractor agrees to continue the
performance of its obligations under the Agreement notwithstanding any default
by the Partnership under any Financing Document, or the exercise by any Person
of its rights under any Financing Document.
(b) No Set-Offs. Deductions or Counterclaim. Contractor agrees that no
amounts due to the Partnership under the Agreement shall be subject to any
reduction for any set-off, deduction, counterclaim or otherwise based upon any
claim against the Partnership. Contractor shall not assert any claim it may have
by reason of the Partnership's default under the Agreement as a defense to
performance of its obligations under any other agreement with the Partnership or
any affiliate of the Partnership or under this Consent. Nothing contained in
this paragraph (c) shall waive Contractor's rights to enforce any such claim as
a cause of action against the Partnership.
(c) Compliance with Instructions from Collateral Trustee. Contractor
hereby agrees that it shall (i) comply with any and all written instructions
received from the Collateral Trustee pursuant to the Financing Documents, (ii)
treat such instructions as coming directly from the Partnership, (iii) disregard
any contradictory instructions received from the Partnership and (iv) with
effect as of the date of receipt of such instructions, direct to the Collateral
Trustee (with a copy to the Partnership) all communications and correspondence
arising out of or in connection with the Agreement.
(d) Notices. All notices or other communications to be delivered to the
Collateral Trustee or the other Secured Parties pursuant to this Consent or the
Agreement shall be delivered to the Collateral Trustee at the address specified
in Section 8 below and, in the case of Contractor or the Partnership, to each of
these respective entities at the addresses specified in Section 8 below.
(e) Amendments of Agreement. Etc. Contractor will not agree to any
amendment, cancellation or early termination of the Agreement, and will not
assign its rights or obligations under the Agreement to a third party, without
the prior written consent of the Collateral Trustee.
(f) Reservation of Rights. Contractor expressly reserves all rights and
remedies available at law or in equity under the Agreement, except to the extent
expressly modified in this Consent.
(g) Copies of Notices to Partnership. Contractor will deliver to the
Collateral Trustee a copy of each notice given by it to the Partnership
concurrently with delivery of such notice to the Partnership.
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SECTION 7. FURTHER ASSURANCES
The parties hereto hereby agree to provide to each other such
documents and to take such other action as may be reasonably necessary to
effectuate fully the purposes of this Consent.
SECTION 8. NOTICES
All notices and other communication under or in connection with this
Consent shall be in writing, shall refer on their face to the Agreement
(although failure to so refer shall not render any such notice or communication
ineffective), shall be sent by first class registered or certified mail, by
facsimile, by hand or by overnight courier service and shall be addressed:
(i) if to Contractor, in accordance with the Agreement;
(ii) if to the Collateral Trustee, to
Bankers Trust Company
Corporate Trust & Agency Services
Four ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ 10006
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
(iii) if to the Partnership, in accordance with the Agreement; or
(iv) to such other address as Contractor, the Partnership or the
Collateral Trustee, as the case may be, may designated by prior written notice
to the other parties given pursuant hereto.
SECTION 9. MISCELLANEOUS
(a) Separate Counterparts; Amendments, Waiver. This Consent may be
executed in separate counterparts, each of which when so executed and delivered
shall be an original but all of such counterparts together shall constitute one
and the same instrument. Neither this Consent nor any of the terms hereof may be
terminated, amended, supplemented, waived or modified except by an instrument in
writing signed by Contractor, the Collateral Trustee and the Partnership.
(b) Severability. Any provision of this Consent 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 the
remaining provisions hereof, and any such prohibition
I-10
or unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
(c) Successors and Assigns. This Consent shall be binding upon and inure
to the benefit of Contractor, the Collateral Trustee, the other Secured Parties,
the Partnership and their respective successors and permitted assigns.
(d) GOVERNING LAW. THIS CONSENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
(e) Submission to Jurisdiction. Contractor hereby irrevocably and
unconditionally: (i) submits for itself and its property in any legal action or
proceeding relating to this Consent, or for recognition and enforcement of any
judgment in respect thereof or the enforcement of an award rendered pursuant to
Section ___ of the Agreement, to the non-exclusive general jurisdiction of the
courts of the State of New York located in the Borough of Manhattan, City of New
York and the Federal courts of the U.S. for the Southern District of New York
located in the Borough of Manhattan, City of New York; and, (ii) notwithstanding
anything to the contrary contained in the Agreement, consents that any action or
proceeding in connection with the Agreement may be brought by the Collateral
Trustee and the Financing Parties in such courts and waives any objection that
it may now or hereafter have to the venue of any such action or proceeding in
any such court or that such action or proceeding was brought in an inconvenient
court and agrees not to plead or claim the same.
(f) Enforcement of Judgments. Contractor agrees that a final judgment
against it in any action, suit or proceeding brought in any New York State or
Federal court in accordance with paragraph (e) above shall be conclusive and may
be enforced in any jurisdiction by suit on the judgment, a certified copy of
which judgment shall be conclusive evidence thereof, or by any other means
provided by law.
(g) No Implied Waiver. Failure or delay on the part of any party hereto to
exercise a right under this Consent shall not operate as a waiver thereof; nor
shall any single or partial exercise of a right preclude any other future
exercise thereof.
(h) Agent for Service of Process. Contractor hereby irrevocably and
unconditionally appoints CT Corporation, with an office on the date hereof at
▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, as its agent, which shall
be a commercial process agent (the "Process Administrative Agent") to receive on
behalf of Contractor and its property service of copies of the summons and
complaint and any other process which may be served in any such action or
proceeding in such New York State or Federal court. In any such action or
proceeding, such service may be made on Contractor by delivering a copy of such
process to Contractor in care of the Process Administrative Agent at the Process
Administrative Agent's above address and by depositing a copy of such process in
the mails by certified or registered air mail, addressed to Contractor at its
address set forth beneath its signature hereto (such service to be effective
upon
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such receipt by the Process Administrative Agent and the depositing of such
process in the mails as aforesaid). Contractor hereby further irrevocably and
unconditionally authorizes and directs such Process Administrative Agent to
accept such service on its behalf. If for any reason the Process Administrative
Agent shall cease to be available to act as such, Contractor agrees to designate
a new agent in New York City on the terms and for the purposes of this provision
satisfactory to the Collateral Trustee. As an alternate method of service,
Contractor irrevocably and unconditionally consents to the service of any and
all process in any such action or proceeding in such New York State or Federal
court by mailing of copies of such process to Contractor by certified or
registered air mail at its address set forth in the Agreement, such service to
become effective 30 days after such mailing. Nothing herein shall affect the
right to effect service of process in any other manner permitted by law or shall
limit the right to ▇▇▇ in any other jurisdiction. Contractor hereby agrees that,
to the fullest extent permitted by applicable law, a final judgment in any such
action or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by law'.
-------------------------
By:_____________________________________
Name:
Title:
Acknowledged and agreed:
BANKERS TRUST COMPANY, as Collateral
Trustee for the benefit of the Secured
Parties
By:_____________________________________
Name:
Title:
PORT ▇▇▇▇▇▇ ▇▇▇▇▇ COMPANY L.P.
By: SABINE RIVER HOLDING CORP., as
General Partner
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By:_____________________________________
Name:
Title:
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Appendix J
to Common Security Agreement
SCHEDULE OF REQUIRED INSURANCE
The Partnership shall maintain or cause to be maintained the following
minimum insurance requirements ("Required Insurance") during the term of this
Agreement, in such form and with a Rated Carrier or such carriers as acceptable
to the Collateral Trustee.
1.0 Construction Period - Partnership
Prior to or upon the Closing Date and until the placement of Operational
Insurance as set forth in 3.0 below, the Partnership shall at all times keep in
force:
1.1 Workers Compensation/Employer's Liability: Workers Compensation
as required by applicable law or authorized governmental authority covering all
persons employed by the Partnership in accordance with the laws of the state in
which the Partnership may be required to pay compensation. Limits for Employers
Liability shall be a minimum of $1,000,000 per accident or disease, aggregate as
to disease and Workers Compensation benefits to full statutory obligations. To
the extent that applicable exposure exists, coverage shall include ▇▇▇▇▇ Act,
USL & H and FELA.
1.2 Automobile Liability: Automobile liability insurance on licensed
motor vehicles owned, non-owned, rented or leased by the Partnership covering
Bodily Injury and Property Damage Liability to a combined inclusive limit of
$1,000,000.
1.3 Commercial General Liability: Commercial General Liability with
Limits of $2,000,000 inclusive per occurrence, and $4,000,000 in the aggregate
annually and such aggregate to apply on a per site or per location basis, for
bodily injury, death and damage to property including loss of use thereof.
Coverage shall be written on occurrence policy forms and specifically be subject
to the following inclusions of coverage:
(i) Contractual Liability
(ii) Products & Completed Operations including cover for a period
not less than 12 months post the issuance of the Certificate of Final
Completion
(iii) Warranty Work extending one year after Final Completion
(iv) Blasting, pile driving, caisson work, underground work
(v) Damage to property including loss of use thereof
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(vi) Broad-form property damage
(vii) Severability of interests clause
(viii) Cross Liability cover
(ix) Contractor Protective
1.4 Umbrella/Excess Liability: Umbrella/Excess Liability Insurance
in excess of the coverages under 1.1 (excess over Employers Liability only), 1.2
and 1.3 in an amount not less than $48,000,000 per occurrence and in the
aggregate annually, with such aggregate to apply on a per site or per project
basis. Such insurance shall be written on occurrence policy forms.
1.5 Aircraft Insurance: Aircraft Liability Insurance with respect to
owned or non-owned aircraft to the extent used directly or indirectly in the
performance of the construction of the Project Property for limits not less than
$25 million each occurrence without aggregate, for bodily injury, death
(including the passenger hazard) and damage to property including loss of use
thereof
1.6 Marine Liability/Physical Damage Insurance: Hull and Machinery
insurance covering the full replacement value of any barges, scows or watercraft
used in connection with the construction of the Project Property. Marine
Liability or Protection Indemnity insurance on any barges, scows or other
watercraft used in connection with the construction of the Project Property
including coverage for special operations, pollution liability and voluntary
removal of wreck for limits which are the greater of those afforded under a
Protection and Indemnity Club or $25 million per occurrence, without aggregate.
In the event such vessels are not entered in a Protection and Indemnity Club,
and American policy form including special operations and pollution liability
shall be acceptable.
1.7 Marine Cargo Insurance and Consequential Loss: The Partnership
shall insure equipment and materials for incorporation into the Project
Property, while in the course of marine, air and inland transit. Coverage shall
be in force from the time that such insured property leaves the last factory or
warehouse of the Contractor, Sub-Contractors or suppliers, for shipment, and
terminates after discharge at Site. Coverage shall be on a full replacement cost
basis with a limit equivalent to the value of the greatest shipment. Coverage
shall include both loading and unloading and shall remain in effect until
property in transit is delivered to the Project site, unloaded and comes under
the cover of the Builders All Risk Policy (1.8). Deductible shall not exceed
$25,000. Marine cargo insurance shall apply with respect to all equipment valued
in excess of $50,000.
Marine Consequential Insurance covering only the Partnership as
Insured for loss of net income and fixed and semi variable expenses insured
resulting from a loss insured under the Marine Cargo policy described above
which necessarily delays the project beyond the
J-2
substantial completion or turnover date. Such insurance shall provide a limit of
$90 million and be subject to a 6-month indemnity period. Deductible or waiting
period shall not exceed 30 days or other collectively agreed period between
Lender and Owner and Contractor.
1.8 All Risks Builders Risk/Delay in Startup: All Risk Builders Risk
insurance including the Partnership, Contractor as named insured and
Contractor's Sub-Contractors as additional insureds, to a limit of the value of
the full replacement cost of the Project, any one occurrence covering physical
loss or damage to the Project Property, the materials, operating equipment, and
supplies for incorporation therein, including temporary or off-site storage and
Project lay-down areas, expendable construction tools, and all temporary
structures used in the erection of the Work while in transit to and from the
site or in storage, while at the site, before and during erection and until
completed and while waiting tests and during tests and until the latter of the
date the Project has achieved Substantial Reliability, or the date the
Operational All Risk insurance has been put into effect.
This insurance shall be subject to London Design/Error DE5 coverage
or equivalent and be subject to a 12 month guaranteed maintenance period. Such
policy shall not contain exclusions with respect to manufacturer, supplier or
Contractor warranty. Deductible shall not exceed $100,000 for material damage
and $250,000 for commissioning and start-up or other collectively agreed
provisions between the Collateral Trustee and the Financing Parties.
Delay in Start Up insurance covering only the Partnership as Insured
for the loss of profit and fixed and semi variable expenses (including but not
limit to interest during construction, debt repayment, mobilization costs,
demobilization costs, fixed takes on supply agreements, etc.) resulting from a
loss insured under the All Risk Builders Risk policy described above. Such
insurance shall provide a limit of $334 million and subject to a 12-month
indemnity period. Deductible or waiting period shall not exceed 30 days.
1.9 General Conditions -- Policies shall be subject to the following
conditions:
(a) All deductibles shall be to the account of the Partnership and
the Collateral Trustee and the Financing Parties shall have no
responsibility for deductibles established herein.
(b) The Partnership shall provide the Collateral Agent and the
Financing Parties with complete wordings prior to the Closing Date;
otherwise, agreed upon wording or expanded cover notes, acceptable to the
Collateral Agent and Financing Parties, until such time as actual policy
wording can be delivered to the Financing Parties. The Collateral Trustee
and the Financing Parties shall review and approve wording with respect to
1.3, 1.4, 1.6, 1.7 and 1.8 prior to each policy being put into effect, and
provided any disclosure of such policy wording shall be made under binder
of secrecy.
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(c) Prior to the Closing Date, the Partnership shall supply to the
Collateral Trustee and the Financing Parties a certification from the
Partnership's insurance representative or a senior officer of the
Partnership to the effect that insurance coverages for which they have
responsibility to put into effect meet the terms and conditions of Article
VII and Appendix J, and that all premiums, then due and payable, have been
paid.
(d) With the exception of 1.7 and 1.8, insurances shall not be
cancellable without 60 days advance written notice of such cancellation to
the Owner and the Financing Parties. Cover under 1.7 and 1.8 shall be
written on policies which are non-cancellable, with the exception of
non-payment of premiums and industry provisions as respects certain perils
on the marine covers. Any notice of cancellation will require no less than
fifteen days prior written notice to the Collateral Trustee and the
Financing Parties.
(e) A waiver of subrogation shall be provided by the insurers to the
Partnership, the Collateral Trustee and the Financing Parties for
coverages under all policies except 1.1 and 1.2.
(f) The Collateral Trustee and the approved Financing Parties as
designated by Partnership, shall be included as Additional Insured under
all policies except 1.1.
(g) With respect to 1.7 and 1.8, the Collateral Trustee or its
assigns shall be named as sole loss payee, on a loss payable/mortgagee
clause equivalent to 438 BFU or as otherwise approved by the Collateral
Trustee.
(h) Coverage provided for the benefit of the Partnership, the
Collateral Trustee and the Financing Parties shall not be invalidated or
vitiated by actions or inactions of others.
2.0 Construction Period -- Contractor
The Partnership will require the Contractor to provide and maintain in
full force and effect with financially responsible insurance carriers meeting
the definition of a Rated Carrier unless otherwise approved by the Partnership
and the Collateral Trustee, from the effective date of the Engineering,
Procurement and Construction Services Agreement ("EPC") until the date of Final
Completion, the following insurance:
2.1 Workers Compensation/Employer's Liability: Workers Compensation
insurance as required by applicable law or authorized governmental authority
covering all persons employed by Contractor for work performed under the EPC in
accordance with the laws of the state in which the Contractor may be required to
pay compensation. Limits for Employers Liability shall be a minimum of
$1,000,000 per accident or disease, aggregate as to disease and
J-4
Workers Compensation benefits to hill statutory obligations. To the extent that
applicable exposure exists, coverage shall include ▇▇▇▇▇ Act, USL & H and FELA.
2.2 Automobile Liability: Automobile Liability insurance on licensed
motor vehicles owned, non-owned rented or leased by contractor and used in
connection with the work to be performed under the EPC covering Bodily Injury
and Property Damage Liability to a combined inclusive limit of $25,000,000.
2.3 Contractors Equipment: Contractors Equipment Insurance covering
equipment and tools, owned, rented or leased for the full replacement cost of
such equipment on an All Risks basis including marine based risk subject to
normal exclusions.
2.4 Commercial General Liability: Commercial General Liability with
limits of $2,000,000 inclusive per occurrence, and $4,000,000 in the aggregate
annually, for bodily injury, death and damage to property including loss of use
thereof. This insurance shall be maintained continuously from commencement of
the Work until the date of Final Completion of the work performed under the EPC,
as set out in the Certificate of Final Completion of the Work, or until the
certificate of Final Completion of the Work is issued, whichever is the later.
Deductibles shall not exceed $50,000 per occurrence with an aggregate limit of
$250,000. The Partnership shall pay up to $250,000 of the deductibles, and any
amount less than $250,000 shall be refunded to the Partnership. Contractor shall
pay all deductibles in excess of $250,000, except for Pollution Liability
Coverage.
Coverage shall specifically be subject to the following inclusions
of coverage:
(i) Contractual Liability
(ii) Products & Completed Operations including cover for a period
not less than 12 months post the issuance of the Certificate
of Final Completion
(iii) Warranty Work extending one year after Final Completion
(iv) Blasting, pile driving, caisson work, underground work
(v) Damage to property including loss of use thereof
(vi) Broad-form property damage
(vii) Railway Liability
(viii) Pollution Liability coverage on at least a Sudden &
Accidental basis
(ix) Severability of interests clause
J-5
(x) Cross Liability cover
(xi) Contractor Protective
2.5 Umbrella/Excess Liability: Umbrella/Excess Liability Insurance
in excess of the coverages under Articles 2.1 (excess over Employer's
Liability), 2.2, and 2.4 in an amount not less than $48,000,000 per occurrence
and in the aggregate annually. Such insurance shall be written on occurrence
policy forms unless otherwise approved by the Partnership.
2.6 Pollution Liability: Contractor shall provide a wrap-up
insurance program to provide Pollution Liability coverage on at least a sudden
and accidental basis, with primary coverage of $1,000,000 occurrence/aggregate
and $5,000,000 occurrence/aggregate coverage in excess of the primary coverage.
2.7 Aircraft Liability: Aircraft Liability Insurance with respect to
owned or non-owned aircraft to the extent used directly or indirectly in the
performance of the work under the EPC for limits not less than $25 million each
occurrence without aggregate, for bodily injury, death (including the passenger
hazard) and damage to property including loss of use thereof.
2.8 Watercraft Liability: Watercraft Liability Insurance with
respect to owned or non-owned watercraft to the extent used directly or
indirectly in the performance of the work under the EPC for limits not less than
$25 million each occurrence without aggregate, for bodily injury, death and
damage to property including loss of use thereof.
2.9 General Conditions -- Policies shall be subject to the following
conditions:
(a) All deductibles shall be the responsibility of the
Contractor and/or its Sub-Contractors
(b) Contractor shall provide the Partnership and Financing
Parties, with complete wordings prior to the Notice to Proceed;
otherwise, agreed upon wording or expanded cover notes, acceptable
to the Partnership and the Collateral Agent, until such time as
actual policy wording can be delivered to the Partnership and the
Collateral Trustee. The Partnership and the Financing Parties shall
review and approve wording with respect to 2.4, 2.5 and 2.6 prior to
each policy being put into effect, and provided that to the extent
that policy wording is supplied, any disclosure of such policy
wording shall be made under binder of secrecy.
(c) Insurances shall not be cancellable without 90 days
advance written notice of such cancellation to the Partnership, the
Collateral Trustee and the Financing Parties.
J-6
(d) A waiver of subrogation shall be provided by the insurers
to the Contractor, the Partnership, the Collateral Trustee and the
Financing Parties for coverages under 2.1 (to the extent permitted
by law), 2.3 and 2.4 and 2.5.
(e) Unless covered as a Named Insured, The Partnership, the
Collateral Trustee and the approved Financing Parties as designated
by the Partnership, shall be included as Additional Insured under
coverages 2.4, 2.5, 2.6 and 2.7.
(f) The Contractor will supply and cause all subcontractors
awarded subcontracts by Contractor after the EPC is signed by the
Partnership and the Contractor, procure coverage as set forth above
under 2.1, 2.1. and 2.4 above and to supply certificates of
insurance to the Partnership, the Collateral Trustee and the
Financing Parties.
3.0 Operational Phase -- Partnership
Prior to the expiration of insurance coverages set forth in 1.0 above, the
Partnership shall at all times keep in force:
3.1 Workers Compensation/Employer's Liability: Workers Compensation
as required by applicable law or authorized governmental authority covering all
persons employed by the Partnership in accordance with the laws of the state in
which the Partnership may be required to pay compensation. Limits for Employers
Liability shall be a minimum of $1,000,000 per accident or disease, aggregate as
to disease and Workers Compensation benefits to full statutory obligations. To
the extent that applicable exposure exists, coverage shall include ▇▇▇▇▇ Act,
USL & H and FELA.
3.2 Automobile Liability: Automobile liability insurance on licensed
motor vehicles owned, non-owned, rented or leased by the Partnership covering
Bodily Injury and Property Damage Liability to a combined inclusive limit of
$1,000,000.
3.3 Commercial General Liability: Commercial General Liability with
Limits of $1,000,000 inclusive per occurrence, and $2,000,000 in the aggregate
annually and such aggregate to apply on a per site or per location basis, for
bodily injury, death and damage to property including loss of use thereof
Coverage shall be written on occurrence policy forms and specifically be subject
to the following inclusions of coverage:
(i) Contractual Liability
(ii) Products & Completed Operations
(iii) Personal injury
J-7
(iv) Blasting, pile driving, caisson work, underground work
(v) Damage to property including loss of use thereof
(vi) Broad-form property damage
(vii) Severability of interests clause
(viii) Cross Liability cover
(ix) Contractor Protective
3.4 Umbrella/Excess Liability: Umbrella/Excess Liability Insurance
in excess of the coverages under 3.1 (excess over Employers Liability only), 1.2
and 1.3 in an amount not less than $49,000,000 per occurrence and in the
aggregate annually, with such aggregate to apply on a per site or per project
basis. Such insurance shall be written on occurrence policy forms.
3.5 Aircraft Insurance: Aircraft Liability Insurance with respect to
owned or non-owned aircraft to the extent used directly or indirectly in the
performance of the operation of the Project Property for limits not less than
$25 million each occurrence without aggregate, for bodily injury, death
(including the passenger hazard) and damage to property including loss of use
thereof
3.6 Marine Liability/Physical Damage Insurance: Hull and Machinery
insurance, to the extent that exposure exist, covering the full replacement
value of any barges, scows or watercraft used in connection with the operation
of the Project Property. Marine Liability or Protection Indemnity insurance on
any barges, scows or other watercraft used in connection with the operation of
the Project Property including coverage for special operations, pollution
liability and voluntary removal of wreck for limits which are the greater of
those afforded under a Protection and Indemnity Club or $25 million per
occurrence, without aggregate. In the event such vessels are not entered in a
Protection and Indemnity Club, and American policy form including special
operations and pollution liability shall be acceptable.
3.7 All Risks Property/Machinery Breakdown/Business Interruption:
All Risk Property insurance, with a limit equal to the full replacement cost of
the Project, any one occurrence and shall cover physical loss or damage to the
Project Property on an all risk basis, including but not limited to earthquake,
flood, collapse, hurricane, storm, etc. Such policy shall include off-site and
transit insurance (inland and ocean) to the extent exposure exists, in a limit
adequate to protect against loss or damage to the values at risk at any one
time. Additional coverages to be provided, subject to sublimits consistent with
industry practice, include but are limited to debris removal, demolition and
increased cost of construction, off-premises power interruption, pollution
cleanup following loss from a covered peril and building ordinance cover.
J-8
The Partnership shall also provide machinery breakdown insurance on
a repair and replacement basis in an amount sufficient to cover the full
insurable value of objects and equipment qualifying for machinery breakdown
cover. In the event the all risk property cover and the machinery breakdown
cover are written by separate insurers, each policy shall contain a joint loss
agreement.
Policies shall be written on a "no coinsurance" basis. Deductibles
shall not exceed $100,000 for physical damage perils and $250,000 for machinery
breakdown cover.
Business interruption insurance covering only the Partnership as
Insured for the loss of profit and fixed and semi variable expenses (including
but not limited to interest during construction, debt repayment, mobilization
costs, demobilization costs, fixed takes on supply agreements, etc.) resulting
from a loss insured under the All Risk Builders Risk policy described above.
Such insurance shall provide a limit of $334 million and subject to a 12-month
indemnity period. The Partnership will submit business interruption worksheets
to the Collateral Trustee annually for review and approval. The Partnership will
also maintain contingent business interruption insurance with respect to the
▇▇▇▇▇ R&M Refinery and the Air Products facilities in an amount not less than
the equivalent of twelve months debt service and fixed expenses. Unless included
in the business interruption cover, the Partnership shall also provide no less
than $5,000,000 extra expense and $5,000,000 expediting insurance. Deductible or
waiting period shall not exceed 30 days.
3.8 Additional Insurance -- The Partnership shall procure such
additional insurance as the Collateral Trustee and the Financing Parties may
from time to time reasonably request, subject to commercial availability and
economic feasibility. In the event the Partnership fails to procure any of the
coverages set forth above, the Collateral Trustee and the Financing Parties have
the right, but not the obligation, to procure such insurance and charge the
costs back to the Partnership.
3.9 General Conditions -- Policies shall be subject to the following
conditions:
(a) All deductibles shall be to the account of the Partnership and
the Collateral Trustee and the Financing Parties shall have no
responsibility for deductibles established herein.
(b) The Partnership shall provide the Collateral Agent and the
Financing Parties with complete wordings prior to the Closing Date;
otherwise, agreed upon wording or expanded cover notes, acceptable to the
Collateral Agent and Financing Parties, until such time as actual policy
wording can be delivered to the Financing Parties. The Collateral Trustee
and the Financing Parties shall review and approve wording with respect to
3.3, 3.4 and 3.7 prior to each policy being put into effect, and provided
that to the extent that policy forms are supplied, any disclosure of such
policy wording shall be made under binder of secrecy.
J-9
(c) Prior to the transition from Construction insurance to
Operational insurance, and annually thereafter, the Partnership shall
supply to the Collateral Trustee and the Financing Parties a certification
from the Partnership's insurance representative or a senior officer of the
Partnership to the effect that insurance coverages for which they have
responsibility to put into effect meet the terms and conditions of Article
VII and Appendix 1, and that all premiums, then due and payable, have been
paid.
(d) Insurances shall not be cancellable without 60 days advance
written notice of such cancellation to the Partnership, the Collateral
Trustee and the Financing Parties. Any notice of cancellation with respect
to nonpayment of premiums will require no less than fifteen days prior
written notice to the Collateral Trustee and the Financing Parties.
(e) A waiver of subrogation shall be provided by the insurers to the
Partnership, the Collateral Trustee and the Financing Parties for
coverages under all policies except 3.1 and 3.2.
(f) The Collateral Trustee and the approved Financing Parties as
designated by Partnership, shall be included as Additional Insured under
all policies except 3.1.
(g) With respect to 3.7, the Collateral Trustee or its assigns shall
be named as sole loss payee, on a loss payable/mortgagee clause equivalent
to 438 BFU or as otherwise approved by the Collateral Trustee.
(h) Coverage provided for the benefit of the Partnership, the
Collateral Trustee and the Financing Parties shall not be invalidated or
vitiated by actions or inactions of others.
4.0 Operational Phase -- Operator
The Partnership will require the Operator to provide and maintain in full
force and effect with financially responsible insurance carriers meeting the
definition of a Rated Carrier unless otherwise approved by the Partnership and
the Collateral Trustee, from the effective date of the operating agreement, or
equivalent, until the expiration of said contract, the following insurance:
4.1 Workers Compensation/Employer's Liability: Workers Compensation
insurance as required by applicable law or authorized governmental authority
covering all persons employed by Operator in accordance with the laws of the
state in which the Operator may be required to pay compensation. Limits for
Employers Liability shall be a minimum of $1,000,000 per accident or disease,
aggregate as to disease and Workers Compensation benefits to full statutory
obligations. To the extent that applicable exposure exists, coverage shall
include ▇▇▇▇▇ Act, USL & H and FELA.
J-10
4.2 Automobile Liability: Automobile Liability insurance on licensed
motor vehicles owned, non-owned rented or leased by Operator and used in
connection with the work to be performed covering Bodily Injury and Property
Damage Liability to a combined inclusive limit of $25,000,000.
4.3 Commercial General Liability: Commercial General Liability with
limits of $2,000,000 inclusive per occurrence, and $4,000,000 in the aggregate
annually, for bodily injury, death and damage to property including loss of use
thereof Coverage shall be written on "occurrence" policy forms. Deductibles
shall not exceed $50,000 per occurrence with an aggregate limit of $250,000.
Coverage shall specifically be subject to the following inclusions
of coverage:
(i) Contractual Liability
(ii) Products & Completed Operations
(iii) Warranty Work extending one year after Final Completion
(iv) Blasting, pile driving, caisson work, underground work
(v) Damage to property including loss of use thereof
(vi) Broad-form property damage
(vii) Pollution Liability coverage on at least a Sudden & Accidental
basis
(viii) Severability of interests clause
(ix) Cross Liability cover
(x) Contractor Protective
4.4 Umbrella/Excess Liability: Umbrella/Excess Liability Insurance
in excess of the coverages under Articles 4.1 (excess over Employer's
Liability), 4.2, and 4.3 in an amount not less than $10,000,000 per occurrence
and in the aggregate annually. Such insurance shall be written on occurrence
policy forms unless otherwise approved by the Partnership.
4.5 Other Insurance -- Operator shall provide other insurance as the
Partnership deems appropriate based upon changes in exposure or operations that,
in the opinion of the Partnership, merit additional coverage or higher limits.
J-11
4.6 General Conditions -- Policies shall be subject to the following
conditions:
(a) All deductibles shall be the responsibility of the Operator
(b) Contractor shall provide the Partnership and Financing Parties,
with certificates of insurance prior to the expiration of any coverage required
above
(c) Insurances shall not be cancellable without 45 days advance
written notice (10 days for nonpayment of premiums) of such cancellation to the
Partnership, the Collateral Trustee and the Financing Parties.
(d) A waiver of subrogation shall be provided by the insurers to the
Partnership, the Collateral Trustee and the Financing Parties for coverages
under 4.1 (to the extent permitted by law), 4.3 and 4.4.
(e) The Partnership, the Collateral Trustee and the approved
Financing Parties as designated by the Partnership, shall be included as
Additional Insured under coverages 4.3 and 4.4.
J-12
Appendix K
to Common Security Agreement
INITIAL CONSTRUCTION BUDGET
K-1
▇▇▇▇▇ PAYMENT SCHEDULE
$ MM
Rev 2
--------------------------------------------------------------------------------------------------------------------
MONTH ENGINEERING (1) MATERIALS CONSTRUCTION (1) OH & P/CONTINGENCY (2) $ TOTALS
Progress Progress Progress Progress Progress Progress
Pmt % Payment $ Payment $ Pmt % Payment $ Payment $
--------------------------------------------------------------------------------------------------------------------
Apr98-Jul99 F'cast 77.0% $61.600 $70.200 $12.4% $19.460 $0.00 $151.260
Aug-99 (3) 7.0% $5.629 $40.500 3.3% $5.186 $28.17 $79.485
Sep-99 6.0% $4.829 $34.600 4.0% $6.286 $4.14 $49.855
Oct-99 4.0% $3.229 $31.000 5.0% $7.856 $4.18 $46.265
Nov-99 3.0% $2.429 $17.500 5.5% $8.646 $3.78 $32.355
Dec-99 1.0% $0.829 $9.800 6.6% $10.366 $2.77 $23.765
Jan-00 1.0% $0.829 $8.600 7.3% $11.466 $2.77 $23.665
Feb-00 1.0% $0.829 $8.600 8.1% $12.726 $2.92 $25.075
Mar-00 $7.500 9.1% $14.296 $2.88 $24.676
Apr-00 $5.900 6.6% $10.366 $2.15 $18.416
May-00 $2.100 7.0% $10.996 $1.73 $14.826
Jun-00 $1.400 6.1% $9.586 $1.45 $12.436
Jul-00 $0.970 6.4% $10.056 $1.43 $12.456
Aug-00 $3.000 5.9% $9.266 $1.23 $13.496
Sep-00 $2.638 4.0% $6.286 $0.83 $9.754
Oct-00 $0.000 2.0% $3.146 $0.42 $3.566
Nov-00 $1.600 0.7% $1.106 $0.15 $2.856
TOTALS 100.0% $80.200 $245,908 100.0% $157.100 $61.00 $544.208
Notes:
(1) Engineering & Construction progress payments based on earned value (%
complete)
(2) OH&P/Contingency progress payment based on overall composite % of total
EPC
(3) Aug99 payments will include a reconciliation to account for any unbilled
charges due ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ at the time of financial closure.
Appendix L
to Common Security Agreement
FORMS OF LEGAL OPINIONS*
_____________
* Not filed with this registration statement.
Appendix L-1
to Common Security Agreement
FORM OF OPINION OF MEXICAN COUNSEL TO PMI
▇-▇
▇▇▇▇▇▇▇▇ ▇-▇
to Common Security Agreement
FORM OF OPINION OF MEXICAN COUNSEL TO ▇▇▇▇▇
▇-▇
▇▇▇▇▇▇▇▇ ▇-▇
to Common Security Agreement
FORM OF OPINION OF U.S. COUNSEL TO PMI AND ▇▇▇▇▇
▇-▇
▇▇▇▇▇▇▇▇ ▇-▇
to Common Security Agreement
FORM OF OPINION OF COUNSEL TO EPC ▇▇▇▇▇▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇
▇-▇
▇▇▇▇▇▇▇▇ ▇-▇
to Common Security Agreement
FORM OF OPINION OF COUNSEL TO HYDROGEN SUPPLIER
▇-▇
▇▇▇▇▇▇▇▇ ▇-▇
to Common Security Agreement
FORM OF OPINION OF THE GENERAL COUNSEL TO THE ▇▇▇▇▇ ENTITIES
▇-▇
▇▇▇▇▇▇▇▇ ▇-▇
to Common Security Agreement
FORM OF OPINION OF NEW YORK COUNSEL TO THE BORROWER, THE PARTNERSHIP, THE
PARTNERS, THE ▇▇▇▇▇ ENTITIES AND ▇▇▇▇▇▇▇▇▇▇
▇-▇
▇▇▇▇▇▇▇▇ ▇-▇
to Common Security Agreement
FORM OF OPINION OF TEXAS REAL ESTATE COUNSEL TO THE BORROWER,
THE PARTNERSHIP AND THE PARTNERS
▇-▇
▇▇▇▇▇▇▇▇ ▇-▇
to Common Security Agreement
FORM OF OPINION OF TEXAS ENVIRONMENTAL COUNSEL TO THE BORROWER,
THE PARTNERSHIP AND THE PARTNERS
▇-▇
▇▇▇▇▇▇▇▇ ▇-▇▇
to Common Security Agreement
FORM OF OPINION OF COUNSEL TO OCCIDENTAL PETROLEUM
▇-▇▇
▇▇▇▇▇▇▇▇ ▇-▇▇
to Common Security Agreement
FORM OF OPINION OF CAYMAN ISLANDS COUNSEL TO BLACKSTONE
▇-▇▇
▇▇▇▇▇▇▇▇ ▇-▇▇
to Common Security Agreement
FORM OF OPINION OF NEW YORK COUNSEL TO THE SECURED PARTIES
▇-▇▇
▇▇▇▇▇▇▇▇ ▇-▇▇
to Common Security Agreement
FORM OF OPINION OF ENGLISH COUNSEL TO THE OIL PAYMENT INSURERS
ADMINISTRATIVE AGENT
L-13
Appendix M
to Common Security Agreement
INSURANCE CONSULTANT'S REPORT
M-1
Appendix N
to Common Security Agreement
INDEPENDENT ENGINEER'S REPORTS
N-1
Appendix O
to Common Security Agreement
NOTICE OF BORROWING
Deutsche Bank, AG, New York Branch,
as Administrative Agent for the Bank Senior Lenders party
to the Bank Senior Loan Agreement
referred to below,
▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ [date]
Attention: o
Ladies and Gentlemen:
Reference is made to the Bank Senior Loan Agreement, dated as of
August 19, 1999 (as amended or modified from time to time, the "Bank Senior Loan
Agreement", the terms defined therein being used herein as therein defined),
among the undersigned, the Bank Senior Lenders party thereto and Deutsche Bank
AG, New York Branch, as Administrative Agent for the Bank Senior Lenders (the
"Administrative Agent"). We hereby give you notice, irrevocably, pursuant to
Section 4.04 of the Bank Senior Loan Agreement that we request a borrowing under
the Bank Senior Loan Agreement and set forth below the information relating to
such borrowing (the "Proposed Borrowing") as required by Section 4.04 of the
Bank Senior Loan Agreement and clause (b) of Section 9.02 of the Common Security
Agreement, dated as of August 19, 1999 (said Agreement, as it may hereafter be
amended, supplemented or otherwise modified from time to time, being the "Common
Security Agreement"), among Port ▇▇▇▇▇▇ ▇▇▇▇▇ Company L.P., Port ▇▇▇▇▇▇ Finance
Corp., Sabine River Holding Corp., Neches River Holding Corp., Bankers Trust
Company, as Collateral Trustee for the Secured Parties, Deutsche Bank AG, New
York Branch, as Administrative Agent for and on behalf of the Bank Senior
Lenders., Winterthur International Insurance Company Limited, as Administrative
Agent for and on behalf of the Oil Payment Insurers, HSBC Bank USA, as Capital
Markets Trustee for the Capital Markets Senior Lenders, and Bankers Trust
Company, as Depositary Bank:
(i) The Business Day of the Proposed Borrowing is [_______].
(ii) The aggregate amount of the Proposed Borrowing is
$[__________] [, $__________ of which shall be made under the
Tranche A Facility and $___ of which shall be made under the
Tranche B Facility].
The undersigned hereby certifies that the following statements are
true on the date hereof, and will be true on the date of the Proposed Borrowing:
O-1
(A) Each of the representations and warranties contained in Section
3.01 of the Common Security Agreement is correct immediately before and will be
correct immediately after giving effect to, the Proposed Borrowing and to the
application of the proceeds therefrom, as though made on and as of such date;
(B) The proceeds from the Proposed Borrowing are scheduled to be,
and the proceeds of any and all borrowings under the Bank Senior Loan Agreement
to date have been or are being, utilized in accordance with the provisions of
Section 4.01 (bb) of the Common Security Agreement as confirmed in the
certificate of the Independent Engineer attached hereto.
(C) All of the disbursements of Senior Loans to date (if any) have
been utililized in accordance with the Initial Construction Budget, as amended
from time to time by each Annual Budget and Operating Plan, as certified by the
Independent Engineer in the certificate attached hereto.
(D) Each of the conditions precedent applicable to the Proposed
Borrowing pursuant to Sections 9.01 and 9.02 of the Common Security Agreement
has been satisfied.
[If the Disbursement Date is the Closing Date, (D) above should read:
The undersigned hereby certifies that each of the conditions
precedent to the Proposed Borrowing pursuant to Sections 9.01 and 9.02 of the
Common Security Agreement will be satisfied on the date of the Proposed
Borrowing.]
The undersigned hereby agree that, if prior to its receipt of the
disbursement requested hereby it determines that any matter certified by it
herein will not be true and correct as of the time of such receipt, it will
promptly so notify the Administrative Agent.
O-2
Capitalized terms used and not otherwise defined herein shall have
the meanings set forth in the Bank Senior Loan Agreement or the Common Security
Agreement, as the case may be.
Very truly yours.
PORT ▇▇▇▇▇▇ FINANCE CORP.
By:_____________________________________
Name:
Title:
With copies to: The Collateral Trustee,
Each of the Bank Senior Lenders party to
the Bank Senior Loan Agreement and
The Bank Senior Lenders Administrative Agent,
at their respective addresses set forth in
Appendix P to the Common Security Agreement
O-3
Appendix P
to Common Security Agreement
NOTICES
If to the Borrower, the Partnership, the General Partner or the Limited Partner:
Port ▇▇▇▇▇▇ Finance Corp. / Port ▇▇▇▇▇▇ ▇▇▇▇▇ Company L.P. / Sabine River
Holding Corp. / Neches River Holding Corp.
1801 5. ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇. ▇▇
▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Phone:▇▇▇-▇▇▇-▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
Attention: Legal Department
If to the Collateral Trustee or the Depositary Bank:
Bankers Trust Company
Corporate Trust & Agency Services
Four ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Phone:▇▇▇-▇▇▇-▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
If to the Bank Senior Lenders Administrative Agent:
Deutsche Bank AG, New York Branch
▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇,
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇
Deutsche Bank AG, New York Branch
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Phone:▇▇▇-▇▇▇-▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
P-1
If to the Capital Markets Trustee:
HSBC Bank USA
Issuer Services
▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Phone:▇▇▇-▇▇▇-▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇
If to the Oil Payment Insurers Administrative Agent:
Winterthur International Insurance Company Limited
▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇, ▇ ▇▇
▇▇▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Telephone: (44) (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (44) (171) 929-3537
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to Common Security Agreement
SUBORDINATION TERMS
1. General: Payment of the principal of and interest on Subordinated Debt
(and all premiums and other amounts payable on or in respect thereof)
shall be subordinate and subject in right of payment to the prior payment
in full of all Senior Debt Obligations and in respect of Oil Payment
Reimbursement Obligations (which terms, as used herein, shall include
without limitation the obligations to pay principal and interest on the
Senior Debt and in respect of Oil Payment Reimbursement Obligations, and
all commissions, fees, indemnities, prepayment premiums and other amounts
payable to the Bank Senior Lenders, the Capital Markets Senior Lenders,
the Oil Payment Insurers, the Oil Payment Insurers Administrative Agent,
the Collateral Trustee, the Bank Senior Lenders Administrative Agent, the
Capital Markets Trustee or any other Applicable Agent under the Financing
Documents, and postpetition interest and postpetition attorneys' fees and
costs, whether or not allowable in bankruptcy, in each case to the extent
such items constitute Senior Debt Obligations or Oil Payment Reimbursement
Obligations or both, as the case may be, due and payable at the time of
any such payment in respect of Subordinated Debt). Each Subordinated
Lender agrees that it will not ask, demand, ▇▇▇ for, take or receive from
the Partnership, by set-off or in any other manner, or retain, payment (in
whole or in part) of the Subordinated Debt, or any security therefor,
other than Restricted Payments permitted under the Common Security
Agreement, unless and until all of the Senior Debt Obligations and Oil
Payment Reimbursement Obligations have been paid in full. Each
Subordinated Lender directs the Borrower to make, and the Borrower agrees
to make, such prior payment of the Senior Debt Obligations and Oil Payment
Reimbursement Obligations.
2. Payment Upon Dissolution, Etc.: In the event of (a) any insolvency or
bankruptcy case or proceeding in connection therewith, relative to the
Partnership or to its creditors as such, or to its assets, or (b) any
liquidation, receivership, dissolution or other winding up of the
Partnership, whether partial or complete and whether voluntary or
involuntary and whether or not involving insolvency or bankruptcy or (c)
any assignment for the benefit of creditors or any other marshaling of
assets and liabilities of the Partnership, then and in any such event the
Bank Senior Lenders, the Capital Markets Senior Lenders, the Oil Payment
Insurers, the Oil Payment Insurers Administrative Agent, the Collateral
Trustee, the Bank Senior Lenders Administrative Agent, the Capital Markets
Trustee or any other Applicable Agent shall be entitled to receive payment
in full of all amounts due or to become due on or in respect of all Senior
Debt Obligations or Oil Payment Reimbursement Obligations or both, as the
case may be, under the Financing Documents before any of the Subordinated
Lenders shall be entitled to receive any payment on account of the
Subordinated Debt (whether in respect of principal, interest premium,
fees, indemnities, commissions or otherwise) and to that end, any payment
or distribution of
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any kind or character, whether in cash, property or securities which may
be payable or deliverable in respect of the Subordinated Debt in any such
case, proceeding, dissolution, liquidation or other winding up or event
shall instead be paid or delivered to the Secured Parties for application
to Senior Debt Obligations and Oil Payment Reimbursement Obligations,
whether or not due, until Senior Debt Obligations and Oil Payment
Reimbursement Obligations shall have first been fully paid and satisfied
in cash.
3. No Payment When Senior Debt in Default: In the event and during the
continuation of any Event of Default or Default, unless and until such
Event of Default or Default shall have been remedied or waived then no
payment (including no Restricted Payment) shall be made by the Borrower on
or in respect of the Subordinated Debt.
4. Proceeding Against the Borrower; No Collateral: Whether or not any default
in payment shall exist under any Senior Loan Agreement, Subordinated
Lenders shall not, without the prior consent of Majority Secured Parties,
(a) commence any proceeding against the Partnership with respect to the
Subordinated Debt or (b) take any collateral security for the Subordinated
Debt.
5. Payment to Senior Lenders of Certain Amounts Received by Subordinated
Lenders: In the event that any Subordinated Lender receives on account or
in respect of the Subordinated Debt any distribution of assets by the
Partnership or payment by or on behalf of the Partnership of any kind or
character, whether in cash, securities or other property, other than
Restricted Payments permitted under the Common Security Agreement, the
Subordinated Lender shall hold or shall cause to be held in trust (as
property of the Senior Lenders) for the benefit of, and immediately upon
receipt thereof, shall pay over or deliver to the Secured Parties such
distribution or payment in precisely the form received (except for the
endorsement or assignment by the Subordinated Lender where necessary) for
application in accordance with the Common Security Agreement. In the event
of failure of the Subordinated Lender to make any such endorsement or
assignment, the Secured Parties irrevocably are authorized and empowered
by and on behalf of each Subordinated Lender to make the same.
6. Authorizations to Senior Lenders and the Collateral Trustee: Each
Subordinated Lender (a) irrevocably authorizes and empowers (without
imposing any obligation on) the Secured Parties and the Collateral Trustee
to demand, ▇▇▇ for, collect, receive and receipt for all payments and
distributions on or in respect of its Subordinated Debt which are required
to be paid or delivered to the Secured Parties, as provided herein, and to
file and prove all claims therefor and take all such other action, in the
name of the Subordinated Lender or otherwise, as the Secured Parties may
determine to be necessary or appropriate for the enforcement of these
subordination provisions, all in such manner as Majority Secured Parties
shall instruct or otherwise in accordance with the Common Security
Agreement, (b) irrevocably authorizes and empowers (without imposing any
obligation) the Secured Parties and the Collateral Trustee to vote the
Subordinated Debt
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(including, without limitation, voting the Subordinated Debt in favor of
or in opposition to any matter which may come before any meeting of
creditors of the Partnership generally or in connection with, or in
anticipation of, any insolvency or bankruptcy case or proceeding, or any
proceeding under any laws relating to the relief of debtors, readjustment
of indebtedness, arrangements, reorganizations, compositions or extensions
relative to the Borrower) in such manner as Majority Secured Parties shall
instruct or otherwise in accordance with the Common Security Agreement and
(c) agrees to execute and deliver to the Secured Parties and the
Collateral Trustee all such further instruments confirming the above
authorization, and all such powers of attorney, proofs of claim,
assignments of claim and other instruments, and to take all such other
action, as may be requested by the Secured Parties or the Collateral
Trustee in order to enable the Secured Parties to enforce all claims upon
or in respect of the Subordinated Debt.
7. Notice: The Subordinated Lenders agree, for the benefit of each Secured
Party, that they will give the Collateral Trustee prompt notice of any
default by the Partnership in respect of the Subordinated Debt.
8. No Waiver; Modification to Senior Debt: No failure on the part of the
Secured Parties or the Collateral Trustee, and no delay in exercising, any
right, remedy or power hereunder shall operate as a waiver thereof by the
Secured Parties or the Collateral Trustee, nor shall any single or partial
exercise of any right, remedy or power hereunder preclude any other or
future exercise by the Secured Parties or the Collateral Trustee of any
other right, remedy or power. Each and every right, remedy and power
granted to the Secured Parties or the Collateral Trustee, or allowed the
Secured Parties or the Collateral Trustee by law or other agreement shall
be cumulative and not exclusive, and may be exercised by the Secured
Parties or the Collateral Trustee, from time to time.
Without in any way limiting the generality of the foregoing, at any time,
without the consent of or notice to the Subordinated Lenders, without
incurring responsibility or liability to the Subordinated Lenders and
without impairing or releasing the subordination provided herein or the
obligations hereunder of the Subordinated Lenders, the Secured Parties may
do any one or more of the following: (a) change the manner, place or terms
of payment of or extend the time of payment of, or renew or alter, Senior
Debt Obligations or Oil Payment Reimbursement Obligations or any
collateral security or guaranty therefor, or otherwise amend or supplement
in any manner Senior Debt Obligations or Oil Payment Reimbursement
Obligations or any instruments evidencing the same or any agreement under
which Senior Debt Obligations are outstanding or any Financing Document;
(b) sell, exchange, release or otherwise deal with any property pledged,
mortgaged or otherwise securing Senior Debt Obligations or Oil Payment
Reimbursement Obligations; (c) release any Person liable in any manner for
the Senior Debt Obligations or Oil Payment Reimbursement Obligations; and
(d) exercise or refrain from exercising any rights against the Borrower
and any other Person. Each Subordinated
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Lender unconditionally waives notice of the incurring of Senior Debt
Obligations or Oil Payment Reimbursement Obligations or any part thereof.
9. Subrogation: Subject to the payment in full of all Senior Debt Obligations
and Oil Payment Reimbursement Obligations, the Subordinated Lenders shall
be subrogated to the rights of each of the Bank Senior Lenders, the
Capital Markets Senior Lenders, the Collateral Trustee, the Oil Payment
Insurers, the Oil Payment Insurers Administrative Agent, the Bank Senior
Lenders Administrative Agent, the Capital Markets Trustee and any other
Applicable Agent to receive distribution of assets of the Partnership, or
payments by or on behalf of the Partnership, made on the Senior Debt
Obligations or Oil Payment Reimbursement Obligations, as the case may be,
until Subordinated Debt shall be paid in full. For purposes of such
subrogation, no payments over, including no payments or distributions to
any of the Bank Senior Lenders, the Capital Markets Senior Lenders, the
Oil Payment Insurers, the Oil Payment Insurers Administrative Agent, the
Collateral Trustee, the Bank Senior Lenders Administrative Agent, the
Capital Markets Trustee or any other Applicable Agent of any cash,
property or securities to which the Subordinated Lenders would be entitled
except for the provisions hereof, pursuant to the provisions hereof, to
any of the Bank Senior Lenders, the Capital Markets Senior Lenders, the
Oil Payment Insurers, the Oil Payment Insurers Administrative Agent, the
Collateral Trustee, the Bank Senior Lenders Administrative Agent, the
Capital Markets Trustee or any other Applicable Agent by the Subordinated
Lenders shall, as among the Partnership, its creditors other than the Bank
Senior Lenders, the Capital Markets Senior Lenders, the Oil Payment
Insurers, the Oil Payment Insurers Administrative Agent, the Collateral
Trustee, the Bank Senior Lenders Administrative Agent, the Capital Markets
Trustee or any other Applicable Agent and the Subordinated Lenders, be
deemed to be a payment or distribution by the Partnership on account of
the Senior Debt Obligations or Oil Payment Reimbursement Obligations, as
the case may be.
10. Benefit of Subordination Provisions: Nothing contained herein shall (a)
impair, as among the Partnership, its creditors other than the Secured
Parties and the Subordinated Lenders, the obligations of the Partnership,
which is absolute and unconditional (and which, subject to the rights
hereunder of the Secured Parties, is intended to rank equally with all
other unsecured obligations of the Partnership), to pay the principal of
and interest on the Subordinated Debt as and when the same shall become
due and payable in accordance with the terms thereof or (b) affect the
relative rights against the Partnership of the Subordinated Lender and
creditors of the Partnership other than Bank Senior Lenders, the Capital
Markets Senior Lenders, the Oil Payment Insurers, the Oil Payment Insurers
Administrative Agent, the Collateral Trustee, the Bank Senior Lenders
Administrative Agent, the Capital Markets Trustee or any other Applicable
Agent.
11. Further Assurances: The Subordinated Lender, at its own cost, shall take
any further action as the Secured Parties may reasonably request in order
to carry out more fully the intent and purpose of these subordination
provisions.
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12. Governing Law: These subordination provisions shall be governed by and
construed in accordance with the laws of the State of New York.
13. Amendment: These subordination provisions may not be amended or modified
without the prior consent of each of the Bank Senior Lenders, the Capital
Markets Senior Lenders, the Oil Payment Insurers, the Oil Payment Insurers
Administrative Agent, the Collateral Trustee, the Bank Senior Lenders
Administrative Agent, the Capital Markets Trustee or any other Applicable
Agent.
14. Transfers: The Subordinated Debt may not be transferred, assigned or
encumbered in any manner other than in accordance with the Common Security
Agreement and Transfer Restrictions Agreement.
15. Successors and Assigns: The Agreement shall be binding and insure to the
benefit of the Subordinated Lenders, the Secured Parties and their
respective successors and permitted assigns.
16. Ranking: All Subordinated Debt shall be unsecured, shall rank junior to
the Senior Debt Obligations and the Oil Payment Reimbursement Obligations,
and shall be pledged as security for the Senior Debt Obligations and the
Oil Payment Reimbursement Obligations.
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Schedule 3.01(x)
to Common Security Agreement
ENVIRONMENTAL DISCLOSURE
Hartford Administrative Complaint
On July 6, 1999, ▇▇▇▇▇ Refining & Marketing, Inc. was served with a
civil administrative complaint by the United States Environmental Agency Region
5, alleging certain violations of the Emergency Planning and Community
Right-to-Know Act, and regulations promulgated thereunder, with respect to
certain record-keeping and reporting requirements relating to the Hartford
refinery. The administrative complaint seeks a civil penalty of $498,000. No
estimate can be made at this time of the company's potential liability, if any,
as a result of this matter.
Port ▇▇▇▇▇▇ NRDA
▇▇▇▇▇ Refining & Marketing, Inc. has received correspondence dated
June 7, 1999 from federal and Texas state natural resource trustees requesting a
meeting to discuss potential natural resource damage at the ▇▇▇▇▇ Port ▇▇▇▇▇▇
refinery site, as well as issues regarding a potential Natural Resource Damage
Assessment. No estimate can be made at this time of the company's potential
liability, if any, with respect to this matter.