Exhibit 10.5
PARTICIPATION AGREEMENT
Dated as of June 27, 1997
among
EL DORADO NITROGEN COMPANY,
as Lessee and Construction Agent,
BOATMEN'S TRUST COMPANY OF TEXAS,
not in its individual capacity,
except as expressly provided herein, but solely
as Owner Trustee,
SECURITY PACIFIC LEASING CORPORATION,
as Owner Participant,
WILMINGTON TRUST COMPANY,
not in its individual capacity,
except as expressly provided herein, but solely
as Indenture Trustee,
BAYERISCHE LANDESBANK, NEW YORK BRANCH,
as a Construction Lender and as Note Purchaser,
SECURITY PACIFIC LEASING CORPORATION,
as a Construction Lender,
and
BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION,
as Construction Loan Agent
NITRIC ACID PRODUCTION FACILITY
TABLE OF CONTENTS
PAGE
SECTION 1 DEFINITIONS; INTERPRETATION OF THIS AGREEMENT . . . . . . . .2
1.1 Definitions . . . . . . . . . . . . . . . . . . . . . . . . .2
1.2 Directly or Indirectly. . . . . . . . . . . . . . . . . . . .3
SECTION 2 PURCHASE OF UNITS; CONSTRUCTION AGENT; CONSTRUCTION
ADVANCES; FUNDINGS; PARTICIPATION IN THE EQUIPMENT
COST; TRANSACTION COSTS . . . . . . . . . . . . . . . . . . .3
2.1 Construction Agent; Sale and Purchase . . . . . . . . . . . .3
2.2 Construction Advances . . . . . . . . . . . . . . . . . . . .5
2.3 Purchase Dates; Advance Dates; Procedure for Funding. . . . .6
2.4 Investments by the Owner Participant. . . . . . . . . . . . .7
2.5 Issue and Sale of Note. . . . . . . . . . . . . . . . . . . .8
2.6 Lease Term Commencement Date; Procedure for Participation . 10
2.7 Owner Participant's Instructions. . . . . . . . . . . . . . 12
2.8 Expenses. . . . . . . . . . . . . . . . . . . . . . . . . . 12
2.9 Calculation of Adjustments to Basic Rent, Stipulated Loss Value,
Termination Value and Note Amortization; Confirmation
and Verification............................................15
2.10 Postponement of Closing; Termination of Transaction; and
Expiration of Commitment. . . . . . . . . . . . . . . . . . 18
2.11 Sufficiency of Note and Cash Payment. . . . . . . . . . . . 19
SECTION 3 REPRESENTATIONS AND WARRANTIES. . . . . . . . . . . . . . . 19
3.1 Representations and Warranties of the Owner Trustee . . . . 19
3.2 Representations and Warranties of the Lessee. . . . . . . . 21
3.3 Representations and Warranties of the Indenture Bank and
the Indenture Trustee . . . . . . . . . . . . . . . . . . . 29
3.4 Representations and Warranties of the Owner Participant . . 30
3.5 Representations, Warranties and Covenants Regarding
Beneficial Interest and Notes . . . . . . . . . . . . . . . 32
SECTION 4 CLOSING CONDITIONS. . . . . . . . . . . . . . . . . . . . . 35
4.1 Conditions Precedent to the Making of First Construction
Advance.....................................................35
4.2 Conditions Precedent to Each Advance Date . . . . . . . . . 37
4.3 Conditions Precedent to Investment by the Participants. . . 39
4.4 Additional Conditions Precedent to Investment by the Owner
Participant. . . . . . . . . . . . . . . . . . . . . . . . .44
4.5 Additional Conditions Precedent to Purchase by the Note
Purchaser . . . . . . . . . . . . . . . . . . . . . . . . . 46
4.6 Conditions Precedent to the Obligation of the Lessee. . . . 47
4.7 Opinion Acknowledgment. . . . . . . . . . . . . . . . . . . 49
4.8 Further Condition To Participants' Commitment . . . . . . . 49
SECTION 5 FINANCIAL AND OTHER REPORTS OF THE LESSEE . . . . . . . . . 49
SECTION 6 CERTAIN COVENANTS OF THE PARTICIPANTS, THE OWNER
TRUSTEE, THE INDENTURE TRUSTEE AND THE LESSEE . . . . . . . 50
6.1 Restrictions on Transfer of Beneficial Interest . . . . . . 50
6.2 Liens Attributable to the Owner Participant . . . . . . . . 52
6.3 Lessor's Liens Attributable to the Owner Trustee. . . . . . 52
6.4 Liens Created by the Indenture Trustee. . . . . . . . . . . 53
6.5 Certain Covenants of the Owner Trustee, the Owner
Participant and Boatmen's . . . . . . . . . . . . . . . . . 53
6.6 Lessee's Merger Covenant. . . . . . . . . . . . . . . . . . 54
6.7 Lessee Not to Own Notes or Beneficial Interest. . . . . . . 55
6.8 Broker's Fees . . . . . . . . . . . . . . . . . . . . . . . 55
6.9 Boatmen's Covenant to Notify of Relocation or Name Change . 55
6.10 Lessee's Covenant to Notify of Relocation or Name Change. . 55
6.11 Corporate Existence . . . . . . . . . . . . . . . . . . . . 56
6.12 Compliance with Laws. . . . . . . . . . . . . . . . . . . . 56
6.13 Restriction on Transfer of Notes. . . . . . . . . . . . . . 56
6.14 Amendments to Indenture . . . . . . . . . . . . . . . . . . 57
6.15 Environmental Matters . . . . . . . . . . . . . . . . . . . 57
SECTION 7 LESSEE'S INDEMNITIES. . . . . . . . . . . . . . . . . . . . 58
7.1 General Tax Indemnity . . . . . . . . . . . . . . . . . . . 58
7.2 General Indemnification and Waiver of Certain Claims. . . . 69
SECTION 8 LESSEE'S RIGHTS UNDER THE LEASE . . . . . . . . . . . . . . 74
SECTION 9 SPECIAL RIGHTS OF NOTE PURCHASER. . . . . . . . . . . . . . 74
SECTION 10 MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . 75
10.1 Survival. . . . . . . . . . . . . . . . . . . . . . . . . . 75
10.2 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . 75
10.3 No Guaranty . . . . . . . . . . . . . . . . . . . . . . . . 76
10.4 Successors and Assigns. . . . . . . . . . . . . . . . . . . 76
10.5 Business Day. . . . . . . . . . . . . . . . . . . . . . . . 76
10.6 GOVERNING LAW . . . . . . . . . . . . . . . . . . . . . . . 76
10.7 Severability. . . . . . . . . . . . . . . . . . . . . . . . 76
10.8 Counterparts. . . . . . . . . . . . . . . . . . . . . . . . 76
10.9 Headings and Table of Contents. . . . . . . . . . . . . . . 77
10.10 Reproduction of Documents . . . . . . . . . . . . . . . . . 77
10.11 Limitations of Liability. . . . . . . . . . . . . . . . . . 77
10.12 Amendments and Waivers. . . . . . . . . . . . . . . . . . . 78
10.13 Disclosure of Information . . . . . . . . . . . . . . . . . 78
10.14 FORUM SELECTION AND CONSENT TO JURISDICTION . . . . . . . . 79
10.15 WAIVER OF JURY TRIAL. . . . . . . . . . . . . . . . . . . . 79
10.16 Confidentiality . . . . . . . . . . . . . . . . . . . . . . 79
Attachments:
Exhibit A Form of Amended and Restated Trust Agreement
Exhibit B Form of Indenture
Exhibit C Form of Construction Loan Agreement
Exhibit D-1 Form of Bayer Support Agreement THIS EXHIBIT HAS BEEN
OMITTED AS IT IS THE SUBJECT OF A REQUEST BY THE
COMPANY FOR CONFIDENTIAL TREATMENT BY THE
SECURITIES AND EXCHANGE COMMISSION UNDER THE
FREEDOM OF INFORMATION ACT. THE OMITTED
INFORMATION HAS BEEN FILED SEPARATELY WITH THE
SECRETARY OF THE SECURITIES AND EXCHANGE
COMMISSION FOR PURPOSES OF SUCH REQUEST.
Exhibit D-2 Form of Bayer LetterTHIS EXHIBIT HAS BEEN OMITTED AS IT IS
THE SUBJECT OF A REQUEST BY THE COMPANY FOR
CONFIDENTIAL TREATMENT BY THE SECURITIES AND
EXCHANGE COMMISSION UNDER THE FREEDOM OF
INFORMATION ACT. THE OMITTED INFORMATION HAS
BEEN FILED SEPARATELY WITH THE SECRETARY OF THE
SECURITIES AND EXCHANGE COMMISSION FOR PURPOSES
OF SUCH REQUEST.
Exhibit D-3 Form of Bayer Environmental Letter
Exhibit E Form of Lease
Exhibit F-1 Form of Ground Lease
Exhibit F-2 Form of Ground Lease Sublease
Exhibit G-1A Form of Opinion of Lessee's In-House Counsel - Effective Date
Exhibit G-1B Form of Opinion of Lessee's Special Counsel - Effective Date
Exhibit G-2A Form of Opinion of Lessee's In-House Counsel -
Lease Term Commencement Date
Exhibit G-2B Form of Opinion of Lessee's Special Counsel -
Lease Term Commencement Date
Exhibit H-1 Form of Opinion of Owner Trustee's Special Counsel -
Effective Date
Exhibit H-2 Form of Opinion of Owner Trustee's Special Counsel -
Lease Term Commencement Date
Exhibit I-1A Form of Opinion of Owner Participant's In-House Counsel -
Effective Date
Exhibit I-1B Form of Opinion of Owner Participant s Special Counsel -
Effective Date
Exhibit I-1C Form of Opinion of Owner Participant s Special Texas Counsel -
Effective Date
Exhibit I-2A Form of Opinion of Owner Participant's In-House Counsel -
Lease Term Commencement Date
Exhibit I-2B Form of Opinion of Owner Participant's Special Counsel -
Lease Term Commencement Date
Exhibit I-2C Form of Opinion of Owner Participant s Special Texas Counsel -
Lease Term Commencement Date
Exhibit J-1 Form of Opinion of Indenture Trustee's Special Counsel -
Effective Date
Exhibit J-2 Form of Opinion of Indenture Trustee s Special Counsel -
Lease Term Commencement Date
Exhibit K-1A Form of Opinion of Bayer's In-House Counsel - Effective Date
Exhibit K-1B Form of Opinion of Bayer s Special Counsel - Effective Date
Exhibit K-2A Form of Opinion of Bayer's In-House Counsel -
Lease Term Commencement Date
Exhibit K-2B Form of Opinion of Bayer s Special Counsel -
Lease Term Commencement Date
Exhibit L Form of Private Placement Certificate
Exhibit M [Intentionally Omitted]
Exhibit N Form of Assignment and Assumption Agreement
Exhibit O Form of Bill of Sale
Exhibit P Form of Purchase Notice
Exhibit Q Form of Advance Date Notice
Exhibit R Form of Amended and Restated Construction Agency Agreement
Exhibit S-1 Form of Project and Supply Agreement CERTAIN INFORMATION WITHIN
THIS EXHIBIT HAS BEEN OMITTED AS IT IS THE SUBJECT OF A REQUEST
BY THE COMPANY FOR CONFIDENTIAL TREATMENT BY THE SECURITIES AND
EXCHANGE COMMISSION UNDER THE FREEDOM OF INFORMATION ACT. THE
OMITTED INFORMATION HAS BEEN FILED SEPARATELY WITH THE SECRETARY
OF THE SECURITIES AND EXCHANGE COMMISSION FOR PURPOSES OF SUCH
REQUEST.
Exhibit S-2 Form of Services Agreement CERTAIN INFORMATION WITHIN THIS EXHIBIT
HAS BEEN OMITTED AS IT IS THE SUBJECT OF A REQUEST BY THE COMPANY
FOR CONFIDENTIAL TREATMENT BY THE SECURITIES AND EXCHANGE
COMMISSION UNDER THE FREEDOM OF INFORMATION ACT. THE OMITTED
INFORMATION HAS BEEN FILED SEPARATELY WITH THE SECRETARY OF THE
SECURITIES AND EXCHANGE COMMISSION FOR PURPOSES OF SUCH REQUEST.
Exhibit S-3 Form of Ground Lease Related Document
Exhibit T-1 Form of Leasehold Deed of Trust (Construction)
Exhibit T-2 Form of Leasehold Deed of Trust (Indenture)
Exhibit U Form of Eligible OP Assignee Guaranty
Exhibit V Form of Security Agreement
SCHEDULE 1 Parties' Addresses and Payment Instructions
SCHEDULE 2 Rental Factors
SCHEDULE 3 Stipulated Loss Value/Termination Value
SCHEDULE 4 [Intentionally Omitted]
SCHEDULE 5 Amortization Schedule
SCHEDULE 6 Fixed Price Purchase Option Amount THIS SCHEDULE HAS BEEN OMITTED
AS IT IS THE SUBJECT OF A REQUEST BY THE COMPANY FOR CONFIDENTIAL
TREATMENT BY THE SECURITIES AND EXCHANGE COMMISSION UNDER THE
FREEDOM OF INFORMATION ACT. THE OMITTED INFORMATION HAS BEEN
FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND
EXCHANGE COMMISSION FOR PURPOSES OF SUCH REQUEST.
SCHEDULE 7 Leased Property
SCHEDULE 8 Pricing Assumptions
SCHEDULE 9 Construction Commitment Amounts
SCHEDULE 10 Note Purchaser s Percentage and Commitment
SCHEDULE 11 Lessee Disclosures
Appendix A Definitions
PARTICIPATION AGREEMENT
This PARTICIPATION AGREEMENT, dated as of June 27, 1997 (as
amended, supplemented or otherwise modified from time to time,
this Agreement or this "Participation Agreement"), is among:
(i) EL DORADO NITROGEN COMPANY, an Oklahoma corporation (together
with its successors and permitted assigns, the Lessee ; and
sometimes also referred to herein as the Construction Agent , as
applicable) (ii) BOATMEN'S TRUST COMPANY OF TEXAS, a Texas state
chartered trust company ("Boatmen's"), not in its individual
capacity, except as expressly provided herein, but solely as
trustee under the Trust Agreement (in such capacity, together
with its successors and permitted assigns, the Owner Trustee or
"Lessor"); (iii) SECURITY PACIFIC LEASING CORPORATION, a Delaware
corporation (together with its successors and assigns, the "Owner
Participant"); (iv) WILMINGTON TRUST COMPANY, a Delaware banking
corporation (in its individual capacity, "Indenture Bank"), not
in its individual capacity, except as expressly provided herein,
but solely as trustee under the Indenture (in such capacity,
together with its successors and assigns, the "Indenture
Trustee"); (v) BAYERISCHE LANDESBANK, NEW YORK BRANCH
("Bayerische"), as a construction lender and as note purchaser;
(vi) SECURITY PACIFIC LEASING CORPORATION, a Delaware corporation
("Security Pacific") , as a construction lender (Bayerische and
Security Pacific, together with their respective successors and
permitted assigns, in their respective capacities as construction
lenders, the Construction Lenders , and Bayerische, in its
capacity as note purchaser, the "Note Purchaser"); and (vii)
BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, a
national banking association, as agent for the Construction
Lenders (in such capacity, together with its successors and
assigns, the "Construction Loan Agent").
W I T N E S S E T H:
WHEREAS, concurrently with the execution and delivery of
this Agreement, the Owner Participant is entering into an Amended
and Restated Trust Agreement (EDNC Trust 1997) (the form of which
is attached as Exhibit A) with Boatmen's, pursuant to which
Boatmen's, acting as the Owner Trustee, agrees, among other
things, to hold the Trust Estate for the benefit of the Owner
Participant thereunder on the terms specified in the Trust
Agreement, subject, however, to the Lien created under the
Indenture and under the Construction Loan Agreement and, subject
to the terms and conditions hereof, to purchase on one or more
Purchase Dates the Units; and
WHEREAS, concurrently with the execution and delivery of
this Agreement, the Owner Trustee is entering into an Amended and
Restated Construction Agency Agreement (the Construction Agency
Agreement ) with the Construction Agent, the form of which
Amended and Restated Construction Agency Agreement is attached as
Exhibit R; and
WHEREAS, concurrently with the execution and delivery of
this Agreement, the Owner Trustee is entering into the
Construction Loan Agreement (the form of which is attached as
Exhibit C) with the Construction Lenders and the Construction
Loan Agent pursuant to which the Owner Trustee may borrow
Construction Advances to finance the Equipment Cost for the
Units, pay Transaction Costs, make progress payments in
connection with the Units, and pay interest on outstanding
Construction Advances; and
WHEREAS, concurrently with the execution and delivery of
this Agreement, the Lessee is leasing from Bayer Corporation, an
Indiana corporation ("Bayer"), the Premises pursuant to a Ground
Lease substantially in the form of Exhibit F-1 and, in connection
therewith, the Lessee is subleasing the Premises to the Owner
Trustee pursuant to a Ground Lease Sublease substantially in the
form of Exhibit F-2, and the Owner Trustee is further subleasing
to the Lessee the Premises pursuant to a Lease substantially in
the form of Exhibit E; and
WHEREAS, the Lessee agrees to lease from the Owner Trustee,
and the Owner Trustee agrees to lease to the Lessee, on the Lease
Term Commencement Date, all of the Units pursuant to the Lease;
and
WHEREAS, concurrently with the execution and delivery of
this Agreement, the Lessee and the Owner Participant will enter
into a Tax Indemnity Agreement relating to the Units; and
WHEREAS, on or prior to the Lease Term Commencement Date,
the Owner Trustee will enter into the Indenture (the form of
which is attached as Exhibit B) with the Indenture Trustee
pursuant to which the Owner Trustee will agree, among other
things, to issue on the Lease Term Commencement Date the Note to
the Note Purchaser as evidence of the loans made by the Note
Purchaser in the financing of the Equipment Cost for the Units;
NOW, THEREFORE, in consideration of the mutual agreements
herein contained and other good and valuable consideration,
receipt of which is acknowledged, the parties hereto agree as
follows:
SECTION 1 DEFINITIONS; INTERPRETATION OF THIS AGREEMENT
1.1 Definitions. For all purposes of this Agreement,
except as otherwise defined herein or unless the context
otherwise requires:
(a) capitalized terms used herein (including the
foregoing recitals) shall have the meanings assigned to them
in Appendix A hereto;
(b) the words herein, hereof and hereunder and
other words of similar import refer to this Agreement as a
whole and not to any particular Article, Section or other
subdivision; and
(c) all references in this Agreement to Articles,
Section, Exhibits and Schedules refer to Articles, Sections,
Exhibits and Schedules of this Agreement unless otherwise
indicated.
1.2 Directly or Indirectly. Where any provision in this
Agreement refers to action to be taken by any Person, or which
such Person is prohibited from taking, such provision shall be
applicable whether such action is taken directly or indirectly by
such Person.
SECTION 2 PURCHASE OF UNITS; CONSTRUCTION AGENT; CONSTRUCTION
ADVANCES; FUNDINGS; PARTICIPATION IN THE EQUIPMENT
COST; TRANSACTION COSTS
2.1 Construction Agent; Sale and Purchase.
(a) Pursuant to the Construction Agency Agreement, the
Owner Trustee is appointing the Construction Agent as its
construction agent with respect to the Units, and the
Construction Agent accepts such appointment pursuant to the
Construction Agency Agreement and hereto. In its capacity as
such, the Construction Agent shall select, order, install (or
arrange for the installment of) and test the Units to be leased
by the Lessee, and shall take all necessary action to provide
that the Units will be In Service and subject to the Lease on or
prior to the Construction Termination Date. If all of the Units
are not subject to the Lease for any reason (including, without
limitation, the failure of the Lessee to execute and deliver a
Lease Supplement with respect thereto, or if the conditions
precedent to the investment by the Participants pursuant to
Sections 4.3, 4.4, 4.5 and 4.8 have not been met) on or before
such Construction Termination Date, then the Construction Agent
shall pay, as damages, to the Owner Trustee on the day following
the Construction Termination Date, an amount equal to the sum of
(i) the outstanding principal amount of all Construction
Advances, plus (ii) the accrued and unpaid (and not previously
capitalized) interest on such Construction Advances as of the day
following the Construction Termination Date, plus (iii) the
accrued and unpaid Commitment Fee as of the day following the
Construction Termination Date, plus (iv) all other amounts due to
the Owner Trustee, the Owner Participant, the Construction
Lenders, the Indenture Trustee or any Indemnified Person pursuant
to this Agreement or any other Operative Agreement. Upon receipt
of such payment, the Owner Trustee shall transfer all of the
Units to the Lessee (or as the Lessee may direct) and terminate
the Lease, without any representation or warranty, except as to
the absence of Lessor Liens.
(b) Subject to the terms and conditions hereof and on the
basis of the representations and warranties set forth herein, the
Owner Trustee agrees, on each Purchase Date, to purchase from the
vendor or manufacturer, or to make, or reimburse the Construction
Agent for, progress payments to the vendor or manufacturer of,
the Units described in the Purchase Notice given pursuant to
Section 2.3(a) with respect to such Purchase Date, and in
connection therewith, the Owner Trustee agrees to pay to the
vendor or manufacturer, or, in the case of a reimbursement, the
Construction Agent, the Purchase Cost or a progress payment for
each such Unit, or portion thereof, as specified in the Purchase
Notice relating to such Unit; provided, however, that the Owner
Trustee shall not be obligated to purchase on any Purchase Date
any Unit that is destroyed, damaged, defective, in unsuitable
condition or otherwise unacceptable to the Lessee for lease
pursuant to the Lease; and provided further, however, that the
principal amount of all advances made under the Interim Financing
Documents, and all accrued and unpaid interest and fees
thereunder, outstanding as of the Effective Date shall be rolled
over and deemed to have been advanced to the Owner Trustee as
Construction Advances (made pro rata by the Construction Lenders
in proportion to the respective Construction Commitment Amounts
of such Construction Lenders) on the Effective Date, such
Effective Date to be deemed to be a Purchase Date for all
purposes hereunder.
(c) During the period from the first Purchase Date to the
Lease Term Commencement Date (the "Construction Term"), the
Construction Agent shall (i) at its expense, carry and maintain
insurance with respect to such Units as set forth in Section 12
of the Lease and (ii) keep such Unit at the site identified in
the Purchase Notice. In the event that an Event of Loss shall
occur during the Construction Term, the Construction Agent shall,
on or before the earlier of the date that is 180 days after the
date of such Event of Loss and the Construction Termination Date,
either (i) replace such Unit with a replacement Unit meeting the
standards of Section 11.2(i) of the Lease or (ii) pay to the
Owner Trustee an amount equal to the outstanding Construction
Advances, together with all accrued and unpaid (and not
previously capitalized) interest thereon and all other amounts
due with respect thereto (including but not limited to the
accrued and unpaid Commitment Fee); provided that the
Construction Agent shall, not later than 60 days after the date
of such Event of Loss, notify the Owner Trustee and the
Construction Loan Agent of the action which it proposes to take
with respect to such Event of Loss. The Construction Agent
agrees that the Owner Trustee and the Construction Lenders shall
have all of the rights of inspection with respect to the Units
during the Construction Term therefor as set forth in Section 13
of the Lease.
(d) It is the intent of the Construction Agent, the Owner
Trustee and the Owner Participant that during the Construction
Term, each Unit purchased on a Purchase Date from a vendor or
manufacturer shall be owned by the Owner Trustee. If any court
shall determine that any Unit is owned by the Construction Agent
during the Construction Term, the Construction Agent shall be
deemed to have granted and assigned, and hereby grants and
assigns, to the Owner Trustee during the Construction Term a
continuing, first priority security interest in and to such Unit
and the proceeds thereof, whether now owned or hereafter
acquired, and wherever located, as security for the Construction
Agent's obligations with respect to such Unit under the Operative
Agreements, including, without limitation, the Construction
Agent's obligations pursuant to Section 2.1(a). The Construction
Agent hereby acknowledges that the Owner Trustee has pledged
during the Construction Term all of its right, title and interest
in the Units to the Construction Loan Agent, for the benefit of
the Construction Lenders, pursuant to the Construction Loan
Agreement. The Construction Agent hereby agrees to take all such
action, at its expense, as the Owner Trustee, the Owner
Participant or the Construction Loan Agent may reasonably
request, including, without limitation, the execution, delivery
and filing of financing statements, in order to perfect the Owner
Trustee's or the Construction Loan Agent's interest in the Units
during the Construction Term or to otherwise carry out the intent
of this Agreement.
2.2 Construction Advances.
(a) In order to finance the cost (including progress
payments) of the Units related to a Purchase Date, to pay
Transaction Costs described in Section 2.8(a)(i) through and
including (xiii) incurred prior to the Closing and to make
required interest payments, Section 2.1 of the Trust Agreement
authorizes the Owner Trustee, subject to the terms and conditions
hereof, to borrow funds from the Construction Lenders pursuant to
the Construction Loan Agreement and hereto (each such borrowing,
a "Construction Advance"). In no event shall the aggregate
principal amount of all Construction Advances outstanding exceed
the Construction Commitment Amount. The Construction Advances
are to be made under, and secured by, the Construction Loan
Agreement. The Construction Advances shall be LIBOR Advances;
interest shall be payable on the Construction Advances at the
rates and times set forth in the Construction Loan Agreement.
The Construction Advances shall be repaid in full on the earlier
to occur of the Lease Term Commencement Date and the day
immediately following the Construction Termination Date.
(b) Subject to the terms and conditions hereof (including,
without limitation, the second proviso to Section 2.1(b)) and on
the basis of the representations and warranties set forth herein,
on each Purchase Date, on each date that Transaction Costs are
payable and on each date that interest on a Construction Advance
is due (each of the foregoing, an "Advance Date"), in each case
that occurs on or prior to the Construction Termination Date, the
Construction Lenders will make a Construction Advance to the
Owner Trustee in an amount equal to (v) the Purchase Cost, or a
portion thereof, of the Units to be purchased by the Owner
Trustee on such Purchase Date, (w) progress payments upon any
Unit then due and owing, (x) the Transaction Costs described in
Section 2.8(a)(i) through and including (xiii) then due and
owing, (y) the accrued interest on the Construction Advances due
on such date, or (z) the sum of any combination of the foregoing
clauses (v), (w), (x) or (y); provided, however, that the
commitment of the Construction Lenders to make Construction
Advances shall not exceed the excess of the Construction
Commitment Amount over the aggregate principal amount of all
Construction Advances then outstanding.
(c) If on any Advance Date the conditions to the
obligations of the Construction Lenders specified in Sections 4.1
and 4.2 have not been fulfilled or waived in writing by the
Construction Lenders, the Construction Lenders may thereupon
elect to be relieved of all further obligations under this
Agreement with respect to the transactions contemplated to occur
on such Advance Date. Nothing in this paragraph shall operate to
relieve the Owner Trustee, the Owner Participant, the
Construction Agent or the Lessee from any of their respective
obligations hereunder or to waive the Construction Loan Agent's
or the Construction Lenders' rights against the Owner Trustee,
the Owner Participant or the Lessee.
2.3 Purchase Dates; Advance Dates; Procedure for Funding.
(a) Notice of Purchase Date. The purchase of Units
pursuant to Section 2.3 (b), the making of progress payments and
the making of the related Construction Advance shall take place
on any Business Day occurring on or before the Construction
Termination Date (each a "Purchase Date"), provided that (i)
there shall be no more than two Purchase Dates in any calendar
month, (ii) the aggregate Purchase Cost of the Units to be
purchased on each Purchase Date and progress payments to be made
on each Purchase Date shall not be less than $100,000 and (iii)
the Construction Agent shall have delivered written notice of
such Purchase Date (each such notice, a "Purchase Notice") to the
Owner Trustee, the Owner Participant and the Construction Loan
Agent at least two Business Days prior to such proposed Purchase
Date. Each Purchase Notice shall be in the form attached hereto
as Exhibit P, appropriately completed. Prior to 12:00 noon, New
York City time, on such Purchase Date, subject to the fulfillment
of the applicable conditions precedent set forth herein, each
Construction Lender shall make its Construction Percentage of the
amount of the Construction Advance required to be paid on such
Purchase Date available to the Owner Trustee, by transferring or
delivering such amount, in funds immediately available on such
Purchase Date, to the Owner Trustee, either directly to, or for
deposit in, the Owner Trustee's account number 55-05-300-4673100
at Boatmen's First National Bank of Amarillo (ABA No. 111-300-
945), account name: Credit Trust Account, with a reference to
EDNC Trust-1997. The making available by the Construction
Lenders of the Construction Advance to be paid on such Purchase
Date shall be deemed a waiver by the Construction Lenders of the
timely delivery of the Purchase Notice (if not theretofore
delivered on a timely basis).
(b) Purchase. With respect to each Purchase Date, upon
receipt by the Owner Trustee on such Purchase Date of the
Construction Advance required to be paid on such Purchase Date,
the Owner Trustee shall, subject to the conditions set forth in
Sections 4.1 and 4.2 having been fulfilled to the satisfaction of
the Owner Participant and the Construction Loan Agent or waived
by the Owner Participant and the Construction Loan Agent, pay to
the applicable sellers of the Units or make progress payments in
respect of Units (or reimburse the Construction Agent for
payments made to the applicable sellers) from the proceeds of
Construction Advances, in immediately available funds, an amount
equal to the Purchase Cost, or a portion thereof, for the Units
to be settled for on such Purchase Date or with respect to which
progress payments are being made, as set forth in the related
Purchase Notice.
(c) Advance Date Notice. Two Business Days prior to each
Advance Date, the Construction Agent shall deliver to the Owner
Trustee, the Owner Participant and the Construction Loan Agent a
notice substantially in the form of Exhibit Q (each, an "Advance
Date Notice"), appropriately completed.
(d) Construction Advances. Prior to 12:00 noon, New York
City time, on such Purchase Date, subject to the fulfillment of
the applicable conditions precedent set forth herein, each
Construction Lender shall make its Construction Percentage of the
amount of the Construction Advance required to be paid on such
Purchase Date available to the Owner Trustee, by transferring or
delivering such amount, in funds immediately available on such
Purchase Date, to the Owner Trustee, either directly to, or for
deposit in, the Owner Trustee's account number 55-05-300-4673100
at Boatmen's First National Bank of Amarillo (ABA No. 111-300-
945), account name: Credit Trust Account, with a reference to
EDNC Trust-1997. The making available by the Construction
Lenders of the Construction Advance to be paid on such Purchase
Date shall be deemed a waiver by the Construction Lenders of the
timely delivery of the Purchase Notice (if not theretofore
delivered on a timely basis).
(e) Interest Periods. On each Advance Date, the Lessee
shall specify the Interest Period applicable to the related
Construction Advance as set forth in the Advance Date Notice
related thereto. On the last day of each Interest Period for a
LIBOR Advance, the Lessee shall continue such Construction
Advance, in whole, as a LIBOR Advance for a subsequent Interest
Period with a duration as set forth in the applicable Advance
Date Notice. Any such Construction Advances pursuant to Section
2.3(d) shall be subject to the following:
(i) each LIBOR Advance shall be in a principal amount
equal to at least $100,000;
(ii) there shall not be more than three (3) different
Interest Periods outstanding at any one time; and
(iii) no Interest Period shall extend beyond the
Scheduled Lease Commencement Date.
Each Purchase Notice and Advance Date Notice shall be
irrevocable. If no notice is given with respect to the
continuation of a LIBOR Advance on or prior to the second
Business Day before the last day of the Interest Period with
respect thereto, such Construction Advance shall have an Interest
Period of one month.
2.4 Investments by the Owner Participant.
(a) Subject to the terms and conditions hereof and on the
basis of the representations and warranties set forth herein, on
the Lease Term Commencement Date, the Owner Participant agrees to
participate in the payment of the Total Equipment Cost for all of
the Units, taken together as a whole, by making an equity
investment in the beneficial ownership of such Units in the
amount (the Owner Participant's "Commitment") equal to the Owner
Participant's Percentage of the Total Equipment Cost for all of
the Units. The Owner Participant's Commitment shall be paid to
the Owner Trustee to be held and applied by the Owner Trustee
toward the repayment of the Construction Advances then
outstanding made by Security Pacific and as provided in Section
2.6. In no event shall the aggregate amount of (x) the Owner
Participant's Percentage of the Total Equipment Cost and (y) the
Transaction Costs (which the Owner Participant shall pay pursuant
to Section 2.8(a)) exceed $15,000,000.
(b) If on the Lease Term Commencement Date the conditions
to the obligations of the Owner Participant specified in Sections
4.3, 4.4 and 4.8 have not been fulfilled or waived by it, the
Owner Participant may thereupon elect to be relieved of all
further obligations under this Agreement with respect to the
transactions contemplated to occur on the Lease Term Commencement
Date. In case any Note Purchaser shall default in its obligation
to make the amount of its commitment available pursuant to
Section 2.5 on the Lease Term Commencement Date, the Owner
Participant shall use its reasonable efforts to promptly find a
replacement Note Purchaser (but shall not be required to find,
nor to fund itself as, a replacement Note Purchaser). Nothing in
this paragraph shall operate to relieve the Lessee, the Owner
Trustee, the Indenture Trustee or the Note Purchaser from any of
their respective obligations hereunder or to waive any of the
Owner Participant's rights against the Lessee, the Owner Trustee,
the Indenture Trustee or the Note Purchaser.
2.5 Issue and Sale of Note.
(a) In order to finance a portion of the Total Equipment
Cost of all of the Units, Section 2.1 of the Trust Agreement
authorizes the Owner Trustee, subject to the terms and conditions
hereof, to issue and sell secured notes of one series. In no
event shall the aggregate principal amount of the Note exceed the
lesser of (i) 85% of the Total Equipment Cost and (ii)
$65,000,000. The Note is to be issued under, and secured by, the
Indenture. The Note is to be dated the date of original issue,
to bear interest prior to maturity at the rate designated in such
Note, payable monthly on each Rent Payment Date for the related
Lease Supplement thereafter until and including maturity, and to
be otherwise in the form of Note attached to the Indenture as
Exhibit A. The term Note or Notes , as used herein and in the
other Operative Agreements, shall mean and include the Note
issued under the Indenture and any Notes issued in exchange
therefor or replacement thereof pursuant to the Indenture.
(b) Subject to the terms and conditions hereof and on the
basis of the representations and warranties set forth herein, on
the Lease Term Commencement Date, the Note Purchaser will
participate in the payment of the Total Equipment Cost for all of
the Units by purchasing the Note at a price in United States
dollars equal to 100% of the principal amount thereof and in an
aggregate principal amount equal to the product of (i) the Total
Equipment Cost for all of the Units and (ii) the percentage set
forth therefor in the Owner Participant's Certificate described
in Section 2.6(a); provided that the commitment of the Note
Purchaser to purchase its Note pursuant to this Section 2.5(b)
shall not exceed the amount set forth on Schedule 10 hereto; and
provided, further, that the aggregate principal amount of the
Note to be issued on the Lease Term Commencement Date to the Note
Purchaser shall be equal to the product of (x) the percentage set
forth for such Note Purchaser on Schedule 10 hereto and (y) the
aggregate principal amount of the Note to be issued on the Lease
Term Commencement Date. Notwithstanding the foregoing, the Note
Purchaser shall be deemed to have purchased its Note and to have
repaid the Construction Advances (except any portion thereof
attributable to Transaction Costs, but excluding (i) accrued and
unpaid interest on such Transaction Costs and (ii) previously
capitalized interest on such Transaction Costs (such portion
attributable to Transaction Costs, after giving effect to the
exclusions in the immediately preceding clauses (i) and (ii),
being Excluded Transaction Costs )) then outstanding made by
such Note Purchaser in its capacity as a Construction Lender,
together with all accrued but unpaid interest on such
Construction Advances, on the Lease Term Commencement Date
without any further action required by such Note Purchaser;
provided, however, that if the amount set forth in clause (A) of
the fourth sentence of Section 2.6(a) (the Clause (A) Amount )
is other than the outstanding principal amount of, and accrued
and unpaid (and not previously capitalized) interest payable to
Security Pacific upon, Construction Advances of Security Pacific,
other than that portion of Excluded Transaction Costs which are a
part thereof (the "Security Pacific Amount"), then (x) if such
Clause A Amount is greater than the Security Pacific Amount, the
Owner Trustee, following receipt of the Clause A Amount from the
Owner Participant upon the consummation of the Closing, shall
apply the sum which shall be equal to the difference between the
Clause A Amount and the Security Pacific Amount to the
outstanding principal amount of, and accrued and unpaid (and not
previously capitalized) interest payable to the Construction
Lenders other than Security Pacific upon, Construction Advances
of Construction Lenders other than Security Pacific, other than
that portion of Excluded Transaction Costs which are a part
thereof, and (y) if the Clause A Amount is less than the Security
Pacific Amount, the participation of the Note Purchaser
determined pursuant to the provisions of this Section 2.5(b),
except for this sentence, shall be paid to Security Pacific as a
Construction Lender upon the consummation of the Closing, so that
in the case of each of the foregoing clauses (x) and (y) Security
Pacific and each other Construction Lender shall be paid its
outstanding principal amount of, and accrued and unpaid (and not
previously capitalized) interest upon, its Construction Advances,
other than that portion of Excluded Transaction Costs which are a
part thereof, in full. The Note delivered to the Note Purchaser
will be typewritten and will be in the form of a single Note
registered in the name of such Note Purchaser. Contemporaneously
therewith, Excluded Transaction Costs will be paid by the Owner
Participant to the Owner Trustee pursuant to Section 2.8(a) and
will be applied by the Owner Trustee to the Construction Advances
so that upon the payment thereof and consummation of the Closing
the aggregate outstanding principal amount of, and accrued and
unpaid (and not previously capitalized), interest payable to the
Construction Lenders upon, the Construction Advances shall be
paid in full.
(c) If on the Lease Term Commencement Date the conditions
to the obligations of the Note Purchaser specified in Sections
4.3, 4.5 and 4.8 have not been fulfilled or waived by the Note
Purchaser, the Note Purchaser may thereupon elect to be relieved
of all further obligations under this Agreement with respect to
the transactions contemplated to occur on the Lease Term
Commencement Date. In such an event, the Owner Trustee shall
immediately pay to the Construction Lenders an amount equal to
the sum of (i) the outstanding principal amount of all
Construction Advances, plus (ii) the accrued and unpaid interest
on such Construction Advances as of the Construction Termination
Date, plus (iii) the accrued and unpaid Commitment Fee, plus (iv)
all other amounts due to the Construction Lenders pursuant to
this Agreement or any other Operative Agreement. In case the
Owner Participant shall default in its obligation to make the
amount of its Commitment available pursuant to Section 2.4, or to
make the amount of the Excluded Transaction Costs available
pursuant to Section 2.8(a), the Note Purchaser shall have no
obligation to make any amounts available under any Operative
Agreement. Nothing in this paragraph shall operate to relieve
the Owner Trustee, the Owner Participant, the Lessee or the
Indenture Trustee from any of their respective obligations
hereunder or to waive any Note Purchaser's rights against the
Owner Trustee, the Owner Participant, the Lessee or the Indenture
Trustee.
2.6 Lease Term Commencement Date; Procedure for
Participation
(a) Notice of Closing. The refinancing and lease of all of
the Units, taken together as a whole, and purchase by the Note
Purchaser of the Note shall take place, and all documentation
relating thereto shall be delivered, at the offices of Mayer,
Brown & Platt, 1675 Broadway, New York, New York 10019-5820
commencing at 10:00 a.m., New York City time, on the Lease Term
Commencement Date designated by not less than five Business Days'
(or such lesser notice agreed upon by the Lessee, the Owner
Participant and the Note Purchaser) prior written notice by the
Lessee to the Owner Participant, the Owner Trustee, the Indenture
Trustee and the Note Purchaser (such notice being referred to as
a "Notice of Lease Commencement"); provided, however that (i)
there shall not be more than one Lease Term Commencement Date,
(ii) the Lessee shall use its reasonable efforts to effect the
Lease Term Commencement Date on the first day of a calendar month
and (iii) the Lease Term Commencement Date shall occur on or
before June 30, 1999. The aforesaid closing is referred to as
the Closing. The Notice of Lease Commencement shall be by
facsimile transmission promptly confirmed by telephone and shall
specify in reasonable detail (i) the number, type and description
of all of the Units, (ii) the Total Equipment Cost of such Units,
(iii) the Equipment Cost of each Unit, (iv) the proposed Lease
Term Commencement Date and (v) the location of such Units (if
other than at the Premises). Not less than two Business Days
prior to the Lease Term Commencement Date, the Owner Participant
shall deliver to the Lessee, the Owner Trustee, the Indenture
Trustee and the Note Purchaser a certificate (the Owner
Participant's Certificate ) setting forth (A) the amount of the
Owner Participant's Commitment (to be paid on the Lease Term
Commencement Date), (B) the Owner Participant's Percentage of the
Total Equipment Cost (to be funded on the Lease Term Commencement
Date), (C) the aggregate principal amount of the Note to be sold
on such Lease Term Commencement Date and purchased by the Note
Purchaser, and (D) the percentage of the Total Equipment Cost for
all of the Units to be funded by the Note Purchaser on the Lease
Term Commencement Date through the purchase of the Note, and
having attached thereto revised Schedules 2, 3, 4 and 5 to this
Participation Agreement (as the same relate to the Lease Term
Commencement Date) reflecting any adjustments to Basic Rent,
Stipulated Loss Value, Termination Value and debt amortization
pursuant to Section 2.9(a)(i). Nothing in this Section 2.6(a)
shall limit or affect the Owner Participant's right to make post-
closing adjustments pursuant to Section 2.9(a). Prior to 12:00
noon, New York City time, on the Lease Term Commencement Date,
the Owner Participant shall make the amount of the Owner
Participant's Commitment, and, subject to the second sentence of
Section 2.5(b), the Note Purchaser shall make the principal
amount of the Note to be purchased on the Lease Term Commencement
Date, available to the Owner Trustee, by transferring or
delivering such amounts, in funds immediately available on the
Lease Term Commencement Date, to the Owner Trustee, either
directly to, or for deposit in, the Owner Trustee's account
number 55-05-300-4673100 at Boatmen's First National Bank of
Amarillo (ABA No. 111-300-945), account name: Credit Trust
Account, with a reference to EDNC Trust-1997. The making
available by the Owner Participant of its Commitment on the Lease
Term Commencement Date (which may include the tendering by the
Owner Participant of its interest in the Construction Note) shall
be deemed a waiver by the Owner Participant and the Owner
Trustee, and the making available by the Note Purchaser of the
funds to be paid by such Note Purchaser on the Lease Term
Commencement Date (which may include the tendering by the Note
Purchaser of its interest in the Construction Note) shall be
deemed a waiver by such Note Purchaser and the Indenture Trustee,
of the timely delivery of the Notice of Lease Commencement (if
not theretofore delivered on a timely basis).
(b) Closing. With respect to the Lease Term Commencement
Date, upon receipt (or deemed receipt) by the Owner Trustee on
the Lease Term Commencement Date of the Owner Participant's
Commitment (required to be paid on the Lease Term Commencement
Date), the proceeds (or deemed proceeds) of the Note to be sold
on the Lease Term Commencement Date, and the Excluded Transaction
Costs, the Owner Trustee shall, subject to the conditions set
forth in Sections 4.3, 4.4 and 4.8 having been fulfilled to the
satisfaction of the Owner Participant or waived by the Owner
Participant and subject to the conditions set forth in Sections
4.3, 4.5 and 4.8 having been fulfilled to the satisfaction of the
Note Purchaser or waived by the Note Purchaser, pay (and to the
extent of deemed proceeds be deemed to have paid) to the
Construction Loan Agent, for the benefit of the Construction
Lenders, from the funds then held by it, in immediately available
funds, an amount equal to the outstanding Construction Advances,
plus all accrued and unpaid (and not previously capitalized)
interest thereon.
(c) Failure to Close. If on the Lease Term Commencement
Date the Owner Participant fails to make any payment required of
it under this Section 2.6, a Note Purchaser fails to purchase its
Note or the Owner Participant, a Note Purchaser or the
Construction Agent otherwise is in breach of any of its material
obligations under any Operative Agreement, then any party hereto
(other than the party so failing to make the payment (other than
by reason of a failure of the closing conditions contained herein
to be satisfied) or otherwise in breach) may cancel its
obligations under this Agreement with respect to the Closing and
the transactions contemplated hereby with respect to the Closing
by notice to the other parties; provided that this Section 2.6(c)
shall neither limit the obligations, if any, of the Construction
Agent under Section 2.8(c), and such obligations shall survive
any exercise of rights by the Construction Agent, nor affect any
rights any non-breaching party hereto may have against either the
Owner Participant or a Note Purchaser for any failure described
in this Section 2.6(c); and provided further, with respect to any
funds actually deposited by a Participant with the Owner Trustee
as payment under Sections 2.4 and 2.5 and this Section 2.6,
interest shall be paid in the same manner, and to the same
extent, as provided for in Section 2.10(b) mutatis mutandis if
such Participant is not the party in breach.
(d) Transfer of Rights. For and in consideration of the
payment of the Construction Advances and other amounts payable
hereunder, and other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the
Construction Agent shall convey, assign, bargain, grant, transfer
and sell to the Owner Trustee, and its successors and assigns, if
not theretofore conveyed, assigned, bargained, granted,
transferred and sold to the Owner Trustee, all of the
Construction Agent's right, title and interest, if any, in each
Unit on and as of the Lease Term Commencement Date, free and
clear of all Liens, other than Permitted Liens. The Construction
Agent covenants and agrees that it will defend the Owner
Trustee's title to each Unit against the claims and demands of
all persons whomsoever.
2.7 Owner Participant's Instructions.
(a) Authorization and Direction on the Lease Term
Commencement Date. The Owner Participant agrees that its making
available to the Owner Trustee the amount of its Commitment for
the Units and an amount equal to the Excluded Transaction Costs
in accordance with the terms of this Section 2 shall constitute,
without further act, authorization or direction by the Owner
Participant to the Owner Trustee, subject, on the Lease Term
Commencement Date, to the conditions set forth in Sections 4.3,
4.4 and 4.8 having been fulfilled to the satisfaction of the
Owner Participant or waived by the Owner Participant, to take the
actions specified in Section 2.1 of the Trust Agreement with
respect to all of the Units, taken together as a whole, on the
Lease Term Commencement Date. The Owner Participant further
agrees that the authorization by the Owner Participant to the
Owner Trustee to release to the Construction Loan Agent, for the
benefit of the Construction Lenders, the Owner Participant's
Commitment and Excluded Transaction Costs shall constitute,
without further act, notice and confirmation that all conditions
to such closing set forth in Sections 4.3, 4.4 and 4.8 were
either met to the satisfaction of the Owner Participant or, if
not so met, were waived as a condition precedent to such closing
by it.
(b) Authorization and Direction Regarding Replacement
Units. The Owner Participant agrees, in the case of any
Replacement Unit substituted pursuant to Section 11.4 of the
Lease, that the Owner Trustee is authorized and directed to take
the actions specified in such Section 11.4 of the Lease with
respect to such Replacement Unit upon due compliance by the
Lessee with the terms and conditions set forth in such Section of
the Lease with respect to such Replacement Unit.
2.8 Expenses.
(a) Transaction Costs. If the Owner Participant shall have
made its equity investment provided for in Section 2.4 and the
transactions contemplated by this Agreement are consummated, the
Owner Participant will pay from time to time (including, with
respect to Excluded Transaction Costs (which, for the avoidance
of doubt, shall include the accrued and unpaid Commitment Fee),
on the Lease Term Commencement Date) the following (the
Transaction Costs ), if evidenced by an invoice or invoices
(which the Lessee shall have the right to review and approve, but
which approval shall not be unreasonably withheld), such payment
to be made (with respect to Transaction Costs other than Excluded
Transaction Costs) within 30 days of the delivery of such invoice
or invoices:
(i) (A) the cost of reproducing and printing the
Operative Agreements, and (B) all costs and fees in
connection with the filing and recording of each document
required to be filed or recorded pursuant to the provisions
hereof or of any other Operative Agreement;
(ii) (A) the fees and expenses of Mayer, Brown &
Platt, special counsel for the Owner Participant and (B) the
allocated internal costs of internal counsel to the Owner
Participant and BA Leasing & Capital Corporation, for their
services rendered in connection with the negotiation,
preparation, execution and delivery of the Operative
Agreements and other documentation prepared in connection
with the contemplated transactions;
(iii) (A) the fees and expenses of White & Case,
special counsel for the Note Purchaser and Bayerische, in
its capacity as a Construction Lender, and (B) the fees and
expenses of two Texas counsel for the Construction Loan
Agent, the Construction Lenders and the Note Purchaser, for
their services rendered in connection with the negotiation,
execution and delivery of the Operative Agreements and other
documentation prepared in connection with the contemplated
transactions;
(iv) the fees and expenses of Baker & Botts, L.L.P.,
special counsel for the Owner Trustee, for their services
rendered in connection with the negotiation, execution and
delivery of the Operative Agreements and other documentation
prepared in connection with the contemplated transactions;
(v) the fees and expenses of Richards, Layton &
Finger, special counsel for the Indenture Trustee, for their
services rendered in connection with the negotiation,
execution and delivery of the Operative Agreements and other
documentation prepared in connection with the contemplated
transactions;
(vi) with respect to the Lease Term Commencement
Date, the initial fees and expenses of each of the Owner
Trustee and the Indenture Trustee;
(vii) the fees and expenses of Accuval Associates,
Incorporated, for their services rendered in connection with
delivering the Appraisals required by Sections 4.4(a) and
4.5(f);
(viii) the fees and expenses of any environmental
consultants retained by the Owner Participant with respect
to the Units or the Premises or matters related thereto;
(ix) the fees and expenses of an independent
engineering consulting firm retained by the Owner
Participant in connection with the written Engineering
Report to be provided to the Owner Participant pursuant to
Section 4.4(e);
(x) the expenses of Bank of America in connection
with arranging the debt in the transactions contemplated by
the Operative Agreements; and the reasonable out-of-pocket
expenses of the Owner Participant, the Construction Loan
Agent, the Construction Lenders and Bank of America;
(xi) the Commitment Fee;
(xii) the debt placement fees of Bank of America; and
(xiii) any and all fees and costs associated with the
arrangement of the Swap Agreement.
The foregoing agreement to pay Transaction Costs is in addition
to the Owner Participant's Commitment, but subject to the last
sentence of Section 2.4(a). Notwithstanding the foregoing, the
Owner Participant shall not be obligated to pay any Transaction
Cost if the invoice therefor is not delivered within 120 days
after the Lease Term Commencement Date.
(b) Other Expenses After the consummation of the
transactions contemplated by this Agreement on the Lease Term
Commencement Date, the Lessee agrees to pay when due: (i) the
fees and expenses of the Owner Trustee, the Indenture Trustee,
the Note Purchaser, the Construction Loan Agent, the Construction
Lenders and the Owner Participant (including reasonable legal
fees and expenses) incurred in connection with any supplements,
amendments, modifications or alterations of any of the Operative
Agreements, and all recording and filing fees, stamp taxes and
other recording or filing taxes incurred in connection therewith;
(ii) the ongoing fees and expenses (including reasonable legal
fees and expenses) of the Owner Trustee under the Operative
Agreements (including, without limitation, Section 6.2 of the
Trust Agreement); (iii) the ongoing fees and expenses of the
Indenture Trustee under the Operative Agreements (including,
without limitation, Section 9.5 of the Indenture); (iv) all
recording and filing fees, stamp taxes and other recording or
filing taxes in connection with any continuation statements or
other documents filed to maintain and protect the rights of the
parties under the Operative Agreements; (v) all other fees and
expenses (including reasonable legal fees and expenses) incurred
by the Owner Trustee, the Indenture Trustee, the Owner
Participant and the Note Purchaser in connection with endeavoring
to administer or enforce the Operative Agreements; and (vi) all
Transaction Costs not required to be paid by the Owner
Participant.
(c) Failure to Consummate Transaction.
Except as set forth in the following sentence, if the
transactions contemplated hereby on the Effective Date, any
Purchase Date or the Lease Term Commencement Date are not
consummated for any reason, the Construction Agent shall pay all
Transaction Costs. Notwithstanding anything contained herein to
the contrary, if the transactions contemplated hereby are not
consummated as a result of (i) the Owner Participant's failure to
make its equity investment as required by Section 2.4(a) after
the conditions specified in Sections 4.3, 4.4 and 4.8 have been
satisfied or waived by it in writing, the Owner Participant shall
pay (or reimburse the Owner Trustee to the extent such
Transaction Costs were paid as part of any Construction Advances)
its own fees and expenses and the fees and expenses of its
special counsel, Mayer, Brown & Platt; or (ii) the Note
Purchaser's failure to purchase the Note as required by Section
2.5 after the conditions specified in Sections 4.3, 4.5 and 4.8
have been satisfied or waived by it in writing, no debt placement
fee with respect to the Note Purchaser shall be payable, and the
Note Purchaser shall pay its own fees and expenses and the fees
and expenses of its special counsel.
(d) Invoices. All invoices in respect of Transaction Costs
shall be directed to the Owner Participant and the Lessee at
their respective addresses set forth in Section 10.2.
2.9 Calculation of Adjustments to Basic Rent, Stipulated
Loss Value, Termination Value and Note Amortization;
Confirmation and Verification.
(a) Calculation of Adjustments.
(i) In the event that, with respect to the Units:
(A) there is any variation from the Pricing Assumptions set
forth on Schedule 8 (other than the application of Section
168(d)(3) of the Code), (B) a Change in Tax Law occurs, or
(C) a Proposed Change in Tax Law is finalized or enacted, as
applicable; then, subject to Section 2.9(c), in each such
case, the Owner Participant shall recalculate (and adjust
upward or downward, as appropriate) the payments or amounts,
as the case may be, of Basic Rent, Stipulated Loss Values
and Termination Values and, solely upon written direction
from the Lessee, and subject to the satisfaction of the
conditions contained in Section 2.9(d) and in accordance
with the procedures set forth in Section 2.14 of the
Indenture, the amortization of the Notes, in each case for
or with respect to such Units (x) first to preserve the Net
Economic Return that the Owner Participant would have
realized had the events described in the foregoing clauses
(A) through (C) not occurred, and (y) then to minimize to
the greatest extent possible, consistent with the
requirements set forth in this Section 2.9(a)(i), the
present value (discounted quarterly at an interest rate per
annum equal to the applicable Debt Rate) of the payments of
Basic Rent for such Units, taken together as a whole. In
the case of the events described in clause (A) of the
immediately preceding sentence actually known to the Lessor
at least five (5) Business Days prior to the Lease Term
Commencement Date, Lessor shall prepare adjustments (upward
or downward) no later than three (3) Business Days prior to
the Lease Term Commencement Date. In the case of the events
described in clauses (A) or (B) of the immediately preceding
sentence, such adjustments shall be made on or prior to, and
shall be effective as of the Lease Term Commencement Date;
in the case of the events described in clause (C) of such
sentence, such adjustments shall be effective as of the next
Rent Payment Date which is at least 30 days after the event
giving rise to such adjustment. In performing any such
recalculation and in determining the preservation of the
Owner Participant's Net Economic Return, the Owner
Participant shall utilize the same methods and assumptions
as are set forth in the definition of Net Economic Return
(other than those assumptions which changed as a result of
any of the events described in clauses (A) through (C) of
the first sentence of this paragraph (i) necessitating such
recalculation). Such adjustments shall comply with: (1)
Section 467 of the Code (including regulations, rulings and
decisions if any, issued under, or with respect to, Section
467 of the Code prior to such adjustment and applicable
thereto) such that no such adjustment shall cause the Lease
to be a disqualified leaseback within the meaning of such
Code section, (2) Revenue Procedures 75-21 and 75-28
Sections 4.02(5), 4.07(1) and 4.08(1) (except as applicable
to uneven payments of rent), and (3) to the extent possible,
while still preserving the Owner Participant's Net Economic
Return and meeting the other requirements of this Section
2.9(a), the requirements of FASB Statement No. 13 in order
that the Lease will qualify as an operating lease
thereunder. Each adjustment shall be reflected in an
appropriate adjustment of the appropriate portions of
Schedules 2, 3, 4 and/or 5 and/or 7 to this Agreement (and
the related adjustments to the assumptions contained in
clauses (A) through (C) above).
(ii) The adjustments to the Schedules referred to in
paragraph (i) above shall be made, subject always to
Sections 2.9(b) and 2.9(c), by the Owner Participant without
the consent of the other parties hereto.
(b) Confirmation and Verification. Upon completion of any
recalculation with respect to the Units described above in
Section 2.9(a), a duly authorized officer of the Owner
Participant shall provide a certificate to the Lessee, the
Indenture Trustee and each holder of a Note either (x) stating
that for such Units the payments of Basic Rent, Stipulated Loss
Values, Termination Values and amortization of the Notes with
respect to the Lease Term as are then set forth in the
appropriate portions of Schedules 2, 3, 4 and 5 of this Agreement
do not require change, or (y) setting forth such adjustments to
such payments of Basic Rent, Stipulated Loss Values, Termination
Values or amortization of the Notes with respect to the Lease
Term as have been calculated by the Owner Participant in
accordance with Section 2.9(a) above. Such certificate shall
describe in reasonable detail the basis for any such adjustments.
If the Lessee shall so request within 30 days of receiving the
certificate described in the first sentence of this Section
2.9(b), the recalculation of any such adjustments described in
this Section 2.9 shall be verified by a nationally recognized
firm of certified public accountants (other than the firm which
then prepares the Lessee's audited statements unless the Owner
Participant otherwise consents, which consent may be withheld in
the Owner Participant's sole and absolute discretion) selected by
the Lessee and reasonably acceptable to the Owner Participant,
and any such recalculation of such adjustment as so verified
shall be binding on the Lessee and the Owner Participant. Such
accountants shall be requested to make their determination within
30 days of its appointment by the Lessee. The Owner Participant
shall provide to a representative of such accountants, on a
confidential basis (and such accountants shall be obligated to
execute a confidentiality agreement in form and substance
reasonably acceptable to the Owner Participant), the original
assumptions used by the Owner Participant and the methods used by
the Owner Participant in the original calculation of, and any
recalculation of, Basic Rent, Stipulated Loss Values, Termination
Values and amortization of the Notes and such other information
as is necessary to determine whether the computation is accurate
and in conformity with the provisions of this Agreement. In no
event shall the Owner Participant be required to provide any tax
return in connection with any verification. All materials
provided by the Owner Participant shall remain the property of
the Owner Participant and shall be returned to the Owner
Participant contemporaneously with the completion of the
verification process. The costs of such verification shall be
borne by the Lessee, except that if such accounting firm s
verification shall result in a decrease in the net present value
of Basic Rent, as compared to the net present value of Basic Rent
proposed by the Owner Participant, each discounted at the
applicable Debt Rate, by more than 15 basis points, then the
Owner Participant shall pay the costs of such verification.
(c) Sufficiency of Rent, etc.; Compliance of Adjustments.
Anything contained in this Section 2.9 to the contrary
notwithstanding, any adjustment made to the payments of Basic
Rent, Stipulated Loss Values or Termination Values with respect
to the Lease Term, pursuant to the foregoing, shall comply with
the following requirements: (i) each installment of Basic Rent,
on the Lease Term Commencement Date and as adjusted pursuant to
this Section 2.9, under any circumstances and in any event, will
be in a scheduled amount at least sufficient for the Owner
Trustee to pay in full as of the due date of such installment any
scheduled payment of principal of and interest on the Notes
required to be paid on such due date of such installment of Basic
Rent, and (ii) Stipulated Loss Values and Termination Values, on
the Lease Term Commencement Date and as adjusted pursuant to this
Section 2.9, under any circumstances and in any event (assuming
there has been performance in full of the Lease), will be in a
scheduled amount at least sufficient to pay in full as of the
date of scheduled payment thereof, together with any installment
of Basic Rent, payable in arrears, scheduled to be payable as of
the date of scheduled payment thereof, the aggregate unpaid
principal of and all unpaid interest on the Notes accrued to the
date on which Stipulated Loss Value or Termination Value, as the
case may be, is to be paid in accordance with the terms of the
Lease.
(d) Adjustment Due to Change in Transaction Costs or Change
in Tax Rate. If the Transaction Costs are other than 4.0% of
Total Equipment Cost, the principal amortization schedule for the
Notes may be modified by the Owner Participant, in accordance
with the procedure set forth in Section 2.14 of the Indenture;
provided, however, that (A) no such modification shall (1) change
the unpaid principal amount of any Outstanding Note or (2) extend
the Maturity Date of any Note, (B) after taking such modification
into account, the average life to maturity of such Notes shall
not be different by more than 180 days from the average life to
maturity of the Notes set out in Schedule 5 at the date hereof
and (C) any such adjustment resulting from a change in the
assumed Transaction Costs shall occur no later than six months
from the Lease Term Commencement Date. In addition, Basic Rent,
Stipulated Loss Values and Termination Values with respect to the
Units may be adjusted due to such Change in Tax Rate so long as
Owner Participant holds Lessee harmless, on a net after-tax
basis, from any out-of-pocket expenses attributable to such
adjustment and any adverse tax effect of such adjustment, or
Owner Participant s payment of such expenses and such adjustment
(i) shall comply with Section 2.9(c), (ii) shall not (x) increase
the present value (discounted monthly at an interest rate per
annum equal to the applicable Debt Rate) of the payments of Basic
Rent and (y) as of any date, increase the sum of the present
value (discounted monthly at an interest rate per annum equal to
the applicable Debt Rate) of the payments of Basic Rent through
such date plus the present value (discounted monthly at an
interest rate per equal to the applicable Debt Rate) of the
Stipulated Loss Value or Termination Value as of such date, and
(iii) if the Lease qualified as an operating lease under FASB
Statement No. 13 prior to such adjustment, shall be made in such
a way so as to continue to comply with the requirements of FASB
Statement No. 13.
2.10 Postponement of Closing; Termination of Transaction;
and Expiration of Commitment.
(a) Postponement. The scheduled Closing may be postponed
from time to time for any reason (but to no later than the
Scheduled Lease Commencement Date subject to Section 2.6(a)) if
the Lessee gives the Participants and the Trustees facsimile
notice (promptly confirmed by telephone) of the postponement and
notice of the date to which such Closing has been postponed, the
notice of postponement to be received by each party no later than
11:00 a.m., New York City time, on the Scheduled Lease
Commencement Date, and the term Scheduled Lease Commencement
Date as used in this Agreement thereupon shall mean such
postponed Scheduled Lease Commencement Date .
(b) Interest on Participant Funds. In the event of any
postponement of the Scheduled Original Lease Commencement Date
pursuant to Section 2.10(a) or if the Lease Term Commencement
Date fails to occur: (i) the Lessee will reimburse each
Participant for the loss of the use of its funds (other than
funds which are Construction Advances plus accrued and unpaid
(and not previously capitalized) interest thereon) occasioned by
such postponement by paying to such Participant on demand
interest at a rate per annum equal to the Debt Rate, for the
period from and including the Scheduled Original Lease
Commencement Date, if such Participant has made its funds
available, to but excluding the earlier of the date upon which
such funds are returned (unless such funds are returned after
1:00 p.m. (New York City time) in which case such date of return
shall be included) or the Lease Term Commencement Date; provided
that the Lessee shall in any event pay to each Participant at
least one day's interest on the amount of such funds, unless such
Participant shall have received, prior to 1:00 p.m. (New York
City time) on the Business Day preceding the Scheduled Original
Lease Commencement Date, a notice of postponement of the
Scheduled Original Lease Commencement Date pursuant to Section
2.10(a); and (ii) the Owner Trustee will return not later than
1:00 p.m. (New York City time), on the first Business Day
following the Scheduled Original Lease Commencement Date, any
such funds which it shall have received from such Participant and
originally expected to have been used in the Closing on the
Scheduled Original Lease Commencement Date. Any Excluded
Transaction Costs which the Owner Participant has made available
shall be treated as a part of the funds subject to this Section
2.10(b).
(c) Expiration of Commitment. Notwithstanding the
provisions of Section 2.10(a) or any other provision hereof,
neither the Owner Participant nor any Note Purchaser shall be
under any obligation to make its funds available beyond 1:00
p.m., New York City time, on June 30, 1999.
(d) Several Commitments. The obligations hereunder of the
Participants shall be several and not joint and no Participant
shall be liable or responsible for the acts or defaults of any
other Participant.
2.11 Sufficiency of Note and Cash Payment. Notwithstanding
anything to the contrary contained in this Agreement, the
aggregate of (i) the principal amount of the Note which
Bayerische shall receive on the Lease Term Commencement Date and
(ii) any cash payment which Bayerische shall receive from the
Owner Trustee on the Lease Term Commencement Date (such aggregate
of (i) and (ii), the Aggregate Lease Term Commencement Date
Payment ) shall be not less than the aggregate of (x) the portion
of the accrued and unpaid Commitment Fee payable to Bayerische in
its capacity as a Construction Lender, and (y) the aggregate
outstanding principal amount of, and accrued and unpaid (and not
previously capitalized) interest payable upon, the Construction
Advances made by Bayerische in its capacity as a Construction
Lender. The Construction Loan Agent s calculation with respect to
whether the Aggregate Lease Term Commencement Date Payment is
sufficient in terms of the foregoing sentence shall control
absent demonstrable error.
SECTION 3 REPRESENTATIONS AND WARRANTIES
3.1 Representations and Warranties of the Owner Trustee.
Boatmen's, both in its individual capacity and as Owner Trustee
(except that (x) the representations and warranties in Sections
3.1(a), 3.1(b), 3.1(d)(i), 3.1(d)(ii), 3.1(e)(i), 3.1(e)(ii),
3.1(f), 3.1(h)(i) and 3.1(j)(i) are made by Boatmen's solely in
its individual capacity and (y) the representations and
warranties in Sections 3.1(c), 3.1(d)(iii), 3.1(e)(iii),
3.1(h)(ii) and 3.1(j)(ii) are made by the Owner Trustee solely in
its capacity as such), represents and warrants to the other
parties hereto, notwithstanding the provisions of Section 10.12
or any similar provision in any other Operative Agreement, that:
(a) Organization and Power. Boatmen's (i) is a
national banking association, duly organized, validly
existing and in good standing under the laws of the United
States of America, (ii) has full corporate power, authority
and legal right to carry on its business as now conducted
and to enter into and perform its obligations hereunder and
under the Trust Agreement, and (iii) (assuming due
authorization, execution and delivery of the Trust Agreement
by the Owner Participant) has full power and authority, as
Owner Trustee, and, to the extent expressly provided herein
or therein, in its individual capacity, to enter into and
perform its obligations under each of the Owner Trustee
Agreements.
(b) Authorization, Execution and Validity. (i)
Boatmen's has duly authorized, executed and delivered the
Trust Agreement; (ii) assuming the due authorization,
execution and delivery of the Trust Agreement by the Owner
Participant, the Owner Trustee, in its trust capacity, and,
to the extent expressly provided herein or therein, in its
individual capacity, has duly authorized, executed and
delivered each of the other Owner Trustee Agreements; and
(iii) the Trust Agreement and this Agreement constitute
legal, valid and binding obligations of Boatmen's,
enforceable against it in its individual capacity (but, with
respect to this Participation Agreement, only to the extent
of representations, warranties, covenants and agreements
expressly made by Boatmen's in its individual capacity) in
accordance with their respective terms, except as enforce-
ability may be limited by bankruptcy, insolvency,
reorganization, moratorium or other laws affecting the
enforcement of creditors', mortgagees' or lessors' rights in
general and by general principles of equity (regardless of
whether such enforceability is considered in a proceeding in
equity or at law).
(c) Further Validity Warranty. Assuming the due
authorization, execution and delivery of the Trust Agreement
by the Owner Participant, each of the Owner Trustee
Agreements (other than the Trust Agreement) constitutes, or
when entered into will constitute, a legal, valid and
binding obligation of the Owner Trustee enforceable against
the Owner Trustee in accordance with its terms, except as
enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or other laws affecting the
enforcement of creditors', mortgagees' or lessors' rights in
general and by general principles of equity (regardless of
whether such enforceability is considered in a proceeding in
equity or at law).
(d) No Conflict. (i) The execution, delivery and
performance by Boatmen's, in its individual capacity and as
Owner Trustee, of each Owner Trustee Agreement and
compliance by Boatmen's, in its individual capacity and as
Owner Trustee, with all of the provisions hereof and thereof
do not and will not contravene any law or regulation of the
United States of America or the State of Texas governing the
banking or trust powers of Boatmen's, in its individual
capacity and as Owner Trustee; (ii) the execution, delivery
and performance by Boatmen's of each Owner Trustee Agreement
and compliance by Boatmen's with all of the provisions
hereof and thereof do not and will not contravene any order
of any court or Governmental Authority applicable to or
binding on Boatmen's or contravene the provisions of, or
constitute a default by Boatmen's under, or result in the
creation of any Lien upon the Trust Estate under Boatmen's
charter documents or by-laws or any indenture, mortgage,
contract or other agreement or instrument to which Boatmen's
is a party or by which Boatmen's or any of its property is
bound or affected; and (iii) the execution, delivery and
performance by the Owner Trustee of each Owner Trustee
Agreement and compliance by the Owner Trustee with all the
provisions hereof and thereof do not and will not contravene
any order of any Governmental Authority or contravene the
provisions of, or constitute a default by the Owner Trustee
under, or result in the creation of any Lien upon the Trust
Estate under any indenture, mortgage, contract or other
agreement or instrument to which the Owner Trustee is a
party or by which the Owner Trustee or any of its property
is bound or affected.
(e) Litigation. (i) There are no proceedings
pending or, to the knowledge of Boatmen's, threatened
against Boatmen's, in its individual capacity or as Owner
Trustee, before any Governmental Authority which
individually or in the aggregate would impair the ability of
Boatmen's, in its individual capacity or as Owner Trustee,
to perform its obligations under the Owner Trustee
Agreements or which question the validity of any Owner
Trustee Agreement or any action taken or to be taken
pursuant thereto; (ii) Boatmen's is not in default with
respect to any order of any Governmental Authority, the
default under which would materially adversely affect the
ability of Boatmen's, in its individual capacity or as Owner
Trustee, to perform its obligations under the Owner Trustee
Agreements; and (iii) the Owner Trustee is not in default
with respect to any order of any Governmental Authority, the
default under which would materially adversely affect the
ability of the Owner Trustee to perform its obligations
under the Owner Trustee Agreements.
(f) Consents. No consent, approval or authorization
of, or filing, registration or qualification with, or giving
of notice or taking of any other action with respect to, any
state or local Governmental Authority or any United States
federal Governmental Authority regulating the banking or
trust powers of Boatmen's, in its individual capacity or as
Owner Trustee, is required in connection with the execution,
delivery and performance by Boatmen's, in its individual
capacity and as Owner Trustee, of any of the transactions
contemplated hereby or of the Trust Agreement or of any of
the transactions contemplated by any of the other Owner
Trustee Agreements, other than any such consent, approval,
authorization, filing, registration, qualification, notice
or action as has been duly obtained, given or taken and is
in full force and effect.
(g) Title. On each Purchase Date (other than a
Purchase Date on which only progress payments are being
made), the Owner Trustee shall receive from each seller of a
Unit such title to such Unit as was conveyed to it by such
seller.
(h) Default. (i) Boatmen's is not in default under
any of the Owner Trustee Agreements; and (ii) the Owner
Trustee is not in default under any of the Owner Trustee
Agreements.
(i) Chief Executive Office. Both the principal
place of business and the chief executive office (as such
term is used in the Uniform Commercial Code) of the Owner
Trustee are located at 701 South Taylor Street, Amarillo,
Texas 79101, Attention: Corporate Trust Department. The
place where its records concerning the Units and all its
interest in, to and under all documents relating to the
Trust Estate is located at Boatmen's Trust Company of Texas,
701 South Taylor Street, Amarillo, Texas 79101, Attention:
Corporate Trust Department.
(j) No Liens. (i) The Owner Trustee's right, title
and interest in and to the Units and the Lease are free of
any Lessor's Liens attributable to Boatmen's, in its
individual capacity; and (ii) the Owner Trustee has not
conveyed an interest in the Trust Estate to any Person, or
subjected the Trust Estate to any Lien except pursuant to
the Lease, the Indenture and the Construction Loan Agreement
(which conveyance under the Construction Loan Agreement with
respect to a Unit subject to the Indenture will be
terminated as of the Lease Term Commencement Date).
3.2 Representations and Warranties of the Lessee. The
Lessee represents and warrants to the other parties hereto that:
(a) Due Organization. The Lessee is a corporation
duly organized, validly existing and in good standing under
the laws of the State of its incorporation, and has the
corporate power and authority to conduct its business as now
conducted, to own or hold under lease its properties and to
execute, deliver and perform its obligations under the
Operative Agreements to which it is or is to become a party.
The Lessee is duly qualified to do business and is in good
standing in: (i) each jurisdiction in which Units to be
leased by the Lessee are located; and (ii) each other
jurisdiction in which its business is conducted, except
where failure so to qualify or to be in good standing could
not reasonably be expected to have a Material Adverse
Effect.
(b) Due Authorization; No Conflict. Each of the
Operative Agreements to which the Lessee is or is to become
a party has been duly authorized by all necessary corporate
action on the part of the Lessee and has been or on each
Purchase Date or Lease Term Commencement Date, as the case
may be, will have been, duly executed and delivered by the
Lessee, and the execution, delivery and performance thereof
and compliance by the Lessee with all of the provisions
hereof and thereof do not, and on each Purchase Date and the
Lease Term Commencement Date will not (i) require any
approval of the shareholders of the Lessee or any approval
or consent of any trustee or holder of any indebtedness or
obligation of the Lessee, other than such consents and
approvals as have been, or, on or prior to such Purchase
Date and the Lease Term Commencement Date, as the case may
be, will have been, obtained (and are in full force and
effect), (ii) contravene any law or regulation, or any order
of any Governmental Authority binding on the Lessee or any
of its properties, the Units or the Operative Agreements,
(iii) breach or contravene the Lessee's certificate of
incorporation or by-laws; or (iv) contravene or result in
any breach of or creation of any Lien (other than pursuant
to the Operative Agreements) upon any property of the Lessee
under any indenture, mortgage, loan agreement, lease or
other agreement or instrument to which the Lessee is a party
or by which the Lessee or any of its properties is bound.
The Lessee is in compliance with all applicable laws,
including Environmental Laws and Governmental Actions, the
failure to comply with which could reasonably be expected to
have a Material Adverse Effect.
(c) Governmental Action. All Governmental Action,
required in connection with the execution, delivery and
performance by the Lessee of the Operative Agreements to
which it is or is to become a party, has been or will have
been on each Advance Date and the Lease Term Commencement
Date obtained, given or made (and are or will be in full
force and effect), but for those Governmental Actions, all
of which are either (x) not required on the date hereof or
on the related Advance Date or the Lease Term Commencement
Date, as the case may be, and cannot be obtained prior to
such date(s), as the case may be, or (y) for which the
failure to obtain, give or make could not reasonably be
expected to have a Material Adverse Effect.
(d) Enforceability. Each of the Operative
Agreements to which the Lessee is or is to become a party
constitutes, or, when executed and delivered by the Lessee,
will constitute, the legal, valid and binding obligation of
the Lessee, enforceable against the Lessee in accordance
with the terms thereof, except as enforceability may be
limited by bankruptcy, insolvency, reorganization,
moratorium or other laws affecting the enforcement of
creditors', mortgagees' or lessors' rights in general and by
general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at
law).
(e) Litigation. Except as disclosed on Schedule 11
hereto, there is no action, suit or proceeding pending or,
to the Lessee's knowledge, threatened and, to the Lessee's
knowledge, there are no facts, circumstances, conditions or
occurrences that would reasonably be expected to form the
basis of a Claim against the Lessee or any Unit before or by
any Governmental Authority that (i) questions the validity
or enforceability of the Operative Agreements to which the
Lessee is or is to become a party or (ii) if adversely
determined, could (whether individually or when aggregated
with other actions, suits or proceedings) be reasonably
expected to have a Material Adverse Effect. The Lessee is
not in default with respect to any order of any Governmental
Authority except as disclosed on Schedule 11, which default
could reasonably be expected to have a Material Adverse
Effect.
(f) No Defaults; Etc. No Lease Default or Lease
Event of Default has occurred or is continuing. The Lessee
is not a party to any agreement or instrument or subject to
any charter or other corporate restriction affecting its
business, properties, financial condition, prospects or
results of operations that could have a Material Adverse
Effect. The Lessee is not in default in, nor has any non-
permanent waiver been granted to the Lessee with respect to
the performance, observance or fulfillment of any of the
obligations, covenants or conditions contained in (i) any
agreement to which it is a party, which default could be
reasonably expected to have a Material Adverse Effect or
(ii) any other agreement or instrument evidencing or
governing an outstanding principal amount of indebtedness
equal to or in excess of Ten Million Dollars ($10,000,000).
(g) Financial Advisors; Broker's Fee. The Lessee
has not retained any broker, finder, agent (excluding Bank
of America in its capacity as debt placement agent) or
financial advisor in connection with the transactions
contemplated hereby. Neither the Lessee nor any Person
authorized or employed by the Lessee as agent or otherwise
has taken any action the effect of which would be to cause
the Owner Participant, the Trust Estate, the Owner Trustee,
the Note Purchaser, the Construction Lenders, the
Construction Loan Agent or the Indenture Trustee to be
liable for any brokers', finders', agents' or advisors' fees
or commissions or costs of any nature or kind claimed by or
on behalf of brokers, finders, agents or advisors in respect
of the transactions contemplated by the Operative
Agreements, except for the fees of Bank of America as debt
placement agent.
(h) Status of the Lessee. The Lessee is not an
investment company or an affiliated person of an
investment company within the meaning of the Investment
Company Act of 1940, as amended. The Lessee is not subject
to regulation as a Holding Company, an affiliate of a
Holding Company, or a Subsidiary Company of a Holding
Company , within the meaning of the Public Utility Holding
Company Act of 1935, as amended.
(i) Title to the Units; Security Interest. On each
Purchase Date (other than a Purchase Date on which only
progress payments are being made), (A) good, marketable and
insurable title to the Units to be settled for on such
Purchase Date will be validly and effectively conveyed to,
and vested in, the Owner Trustee, free and clear of all
Liens, except the Lien of the Construction Loan Agreement
and other Permitted Liens and (B) no filings or recordings
are necessary to validly and effectively convey to the Owner
Trustee good, marketable and insurable title to interest in
such Units, in all cases free and clear of all Liens, except
the Lien of the Construction Loan Agreement and other
Permitted Liens, or to grant to the Construction Loan Agent,
for the benefit of the Construction Lenders, and to perfect,
the Lien provided for in the Construction Loan Agreement,
except for the filings and recordings required by Section
4.2(c). On or prior to each Purchase Date, the Lessee shall
have delivered to special counsel to the Construction Loan
Agent for filing in the appropriate filing offices all
filings and recordings required by Section 4.2(c).
Notwithstanding the foregoing terms of this Section 3.2(i),
or any other term of this Agreement to the contrary, the
parties hereto acknowledge and agree that title to the Units
may pass to the Owner Trustee only on the Lease Term
Commencement Date or on a limited number of dates prior
thereto, the timing of such transfer or transfers of title
to be subject to the terms of (x) the Turnkey Engineering,
Procurement and Construction Agreement, dated as of July 1,
1997, to be entered into between the Construction Agent and
ICF Kaiser Engineers, Inc. (the "Turnkey Construction
Contract"), and (y) prior to the execution and delivery of
the Turnkey Construction Contract, that certain letter of
intent, dated as of February 14, 1997, between the
Construction Agent and ICF Kaiser Engineers, Inc. (the
"Construction Letter of Intent"). On the Lease Term
Commencement Date, (a) good, marketable and insurable title
to all Units will be vested in the Owner Trustee, free and
clear of all Liens, except the Lien of the Lease and the
Indenture and other Permitted Liens, (B) no filings or
recordings are necessary to validly and effectively vest in
the Owner Trustee good, marketable and insurable title to
such Units, in all cases free and clear of all Liens except
the Lien of the Lease and the Indenture and other Permitted
Liens, and (C) upon the filing and recording of all filings
and recordings required by Sections 4.3(c) and 4.5(b), the
Indenture will create a valid and perfected first priority
Lien and security interest in the Indenture Estate,
effective as against creditors of, and purchasers from, the
Owner Trustee and the Lessee, subject only to Permitted
Liens and to the accuracy of the representations and
warranties in Sections 3.1(j) and 3.4(f). On or prior to
the Lease Term Commencement Date, the Lessee has caused to
be filed in the appropriate filing offices all filings and
recordings required by Sections 4.3(c) and 4.5(b).
(j) Applicable Law. The use of the Units (whether
taken individually, as a whole, or otherwise) in a manner
consistent with the Operative Agreements does not violate
any applicable law, including Environmental Laws, or
Governmental Action, the violation of which could reasonably
be expected to have a Material Adverse Effect.
(k) Event of Loss; Eminent Domain. No Event of Loss
has occurred; no event or condition has occurred which
would, with the passage of time or the giving of notice, or
both, constitute an Event of Loss; and no damage, loss,
condemnation, confiscation, theft or seizure has occurred
with respect to any Unit which would result in the potential
for any other party to the Operative Agreements to fail to
consummate the transactions contemplated hereby. There is
no action pending or, to the knowledge of the Lessee,
threatened by any Governmental Authority or other Person to
initiate a taking or use of the Units (whether taken
individually, as a whole, or otherwise) or any part or
portion thereof through condemnation, seizure, requisition
of title, power of eminent domain or otherwise.
(l) Certificates, Permits. The Lessee has obtained
and is in compliance with all Governmental Actions and all
certificates, licenses, and permits, required from all
Governmental Authorities or from private parties, for the
normal use and operation of the Units (whether taken
individually, as a whole, or otherwise) that the failure to
obtain or comply with could reasonably be expected to have a
Material Adverse Effect and all such certificates, licenses,
permits and the like will be final, in full force and effect
and all applicable appeal periods shall have expired on the
Lease Term Commencement Date.
(m) Chief Executive Office. The principal place of
business and chief executive office (as such term is used in
Article 9 of the Uniform Commercial Code) of the Lessee and
the office where it keeps its records concerning its
accounts relating to the transactions contemplated hereby is
accurately set forth opposite the Lessee's name on
Schedule 1.
(n) Use of Proceeds. None of the transactions
contemplated by the Operative Agreements (including, without
limitation, the use of the proceeds indirectly received by
the Lessee from the Construction Advances or sale of the
Note) will result in a violation of Section 7 of the
Securities Exchange Act or any regulations issued pursuant
thereto, including, without limitation, Regulations G, T, U
and X of the Board of Governors of the Federal Reserve
System, 12 C.F.R., Chapter II.
(o) Taxes. All Federal and state income tax returns
and all other material Federal and state tax returns, or
allowable extensions thereof, required to be filed by the
Lessee or any of its Subsidiaries have, in fact, been filed,
and all taxes which are shown to be due and payable in such
returns or extensions have been paid. Except as described
on Schedule 11 hereto, no controversy in respect of
additional income or other material taxes due is pending or,
to the knowledge of the Lessee threatened, other than any
such controversy which, if prosecuted, would result solely
in a Permitted Lien.
(p) Disclosure. The information disclosed in
writing by or on behalf of the Lessee to the Owner
Participant, the Note Purchaser or the Construction Lenders
(including, without limitation, in any memorandum prepared
in connection with the placement of the Note and financial
statements) in connection with the negotiation of the
Operative Agreements and the transactions contemplated
hereby and thereby, when taken as a whole with all other
written disclosures to such parties by the Lessee, do not
contain an untrue statement of a material fact or omit to
state a material fact necessary to make the statements
herein or therein, in light of the circumstances under which
they were made, not misleading. There is no fact known to
the Lessee that has not been disclosed to the Owner
Participant and the Note Purchaser in writing that could
reasonably be expected to have a Material Adverse Effect.
(q) Subjection to Government Regulation. Except as
disclosed on Schedule 11 hereto, none of the Owner
Participant, any Construction Lender, the Construction Loan
Agent, the Indenture Trustee or any Note Purchaser will
become (i) solely by reason of entering into the Operative
Agreements or the consummation of the transactions
contemplated thereby, subject to ongoing regulation of its
operations by any Governmental Authority; or (ii) upon the
exercise of remedies under the Indenture or the Lease or
upon the expiration thereof, other than with respect to
environmental permits needed for the operation of the Units
(taken together as a whole) and which Lessee has obtained
and which remain in full force and effect, subject to
ongoing regulation of its operations by any Governmental
Authority.
(r) Unsatisfied Judgments. There are no material
outstanding unsatisfied judgments, tax liens or bankruptcy
proceedings against the Lessee.
(s) Foreign Person. The Lessee is not a foreign
person as defined in Section 1445 of the Code.
(t) ERISA.
(i) Prohibited Transactions. Neither the
execution of the Operative Agreements nor the
consummation of any transaction contemplated thereby,
including the making by the Owner Participant of its
investment or the holding by it of the Beneficial
Interest, the making or holding by the Construction
Lenders of the Construction Advances or the purchase or
holding by the Note Purchaser of the Note, will
constitute a "prohibited transaction" (as defined in
section 406 of ERISA or section 4975 of the Code). It
is understood that, in making the representation set
out in this Section 3.2(t)(i), the Lessee is relying,
to the extent applicable, upon the representation of
the Owner Participant set forth at Section 3.4(i), upon
the representation of the Construction Lenders set
forth at Section 3.5(f) and upon the representation of
the Note Purchaser set forth at Section 3.5(e).
(ii) Pension Plans.
(A) Compliance with ERISA. The Lessee and
the ERISA Affiliates are in compliance with
ERISA and the Code, except for such failures to
comply that, in the aggregate for all such
failures, could not reasonably be expected to
have a Material Adverse Effect. To the best of
the Lessee's knowledge, there have been no
"reportable events" (as defined in section 4043
of ERISA) with respect to any Pension Plan that
could result in the termination of such Pension
Plan and give rise to a liability of the Lessee
or any ERISA Affiliate in respect thereof that
could reasonably be expected to have a Material
Adverse Effect.
(B) Funding Status. No "accumulated funding
deficiency" (as defined in section 302 of ERISA
and section 412 of the Code) exists with respect
to Pension Plans of the Lessee, and no ERISA
Affiliate has an accumulated funding deficiency.
Neither the Lessee nor any ERISA Affiliate has
failed to make any contribution or payment to
any Pension Plan which has resulted, or could
reasonably be expected to result, in the
imposition of a Lien under section 302(f) of
ERISA or section 412(n) of the Code.
(C) PBGC. No liability to the Pension
Benefit Guaranty Corporation (the "PBGC") has
been or is expected to be incurred by the Lessee
or any ERISA Affiliate with respect to any
Pension Plan that, individually or in the
aggregate, could reasonably be expected to have
a Material Adverse Effect. No circumstance
exists that constitutes or reasonably could be
expected to constitute grounds under section
4042 of ERISA entitling the PBGC to institute
proceedings to terminate, or appoint a trustee
to administer, any Pension Plan or trust created
thereunder, nor has the PBGC instituted any such
proceeding.
(D) Multiemployer Plans. Neither the Lessee
nor any ERISA Affiliate has incurred or
presently expects to incur any withdrawal
liability under Title IV of ERISA with respect
to any Multiemployer Plan that could reasonably
be expected to have a Material Adverse Effect.
(u) Sales Tax. On each Purchase Date (other than
one on which only progress payments are being made) and on
the Lease Term Commencement Date, all sales or use taxes
relating to the sale to the Owner Trustee of the Units to be
settled for on such Purchase Date or on the Lease Term
Commencement Date (if any), as the case may be, which are
then due will have been paid in full or adequate provision
for the payment of which will have been made.
(v) Description of Units. The description of the
Units with respect to a Purchase Date set forth in the
Purchase Notice delivered in connection with such Purchase
Date is, or will be, a true and correct description of the
Units being sold on such date in all material respects.
(w) Condition of Units. No event or condition
currently exists that (i) presently adversely affects the
operation or maintenance of any of the Units (whether taken
together as a functional whole or individually) or (ii)
causes the Lessee to believe that the functional ability of
the Units (whether taken together as a functional whole or
individually) is less than the functional ability for which
the Units were designed.
(x) Lease of Real Property. Except as set forth on
Schedule 7, the Lessee holds a valid leasehold interest
under the Ground Lease to each parcel of real property upon
which any Unit leased or to be leased by the Lessee will be
located; and no Unit leased or to be leased by the Lessee
will be or become subject to any Liens, rights of distraint,
charges, encumbrances or Claims created by or through Lessee
as a result of such Unit being located upon such owned or
leased real property, except for Permitted Liens.
(y) Intellectual Property. All third party
licenses, patents, trademarks, tradenames and similar
rights, if any, necessary for the operation of the Units
(whether taken together as a functional whole or
individually) by the Lessee or a third party are in full
force and effect and have been, or on the Lease Term
Commencement will be, duly assigned or licensed to the Owner
Trustee; it being understood that such licenses, patents,
trademarks, tradenames and similar rights do not include
licenses, patents, trademarks, tradenames and similar rights
related to the products produced by the Lessee with the
Units.
(z) Environmental Matters.
(i) Lessee is in compliance, in all material
respects, with all Environmental Laws and the
requirements of any permits issued under such Laws.
(ii) Lessee has not generated, used, treated,
recycled, stored, released or disposed of, or permitted
the generation, use, treatment, recycling, storage,
release or disposal of Hazardous Substances at, on or
under all or a portion of the Premises or transported
or permitted the transportation of Hazardous Substances
to or from the Premises, the Units and Easements,
except as necessary for the construction and operation
of Lessee's business and in compliance in all material
respects with all applicable Environmental Laws.
(iii) There are no pending or, to the best
knowledge of Lessee, threatened Environmental Claims
against Lessee or the Premises, the Units and
Easements.
The parties acknowledge that the Easements are used in
connection with many operations (in addition to the
operations of Lessee) and that the representations and
covenants made in this Agreement with respect to Easements
apply only to activities involving the Premises or the
Units.
3.3 Representations and Warranties of the Indenture Bank
and the Indenture Trustee. Indenture Bank, in its individual
capacity and in its capacity as Indenture Trustee as set forth
below, represents and warrants to the other parties hereto that:
(a) Organization and Power. Indenture Bank is a
banking corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware and
has full corporate power, authority and legal right to carry
on its business as now conducted and to enter into and
perform its obligations hereunder and under each of the
other Indenture Trustee Agreements.
(b) Authorization, Execution and Validity.
Indenture Bank has duly authorized, executed and delivered
each of the Indenture Trustee Agreements other than those to
be executed and delivered on the Lease Term Commitment Date,
and, as of the Lease Term Commitment Date, the Indenture
Trustee Agreements to be delivered on the Lease Term
Commencement Date also will have been duly authorized,
executed and delivered (and in the case of the Note, duly
authenticated) by it. Assuming that each of the Indenture
Trustee Agreements constitutes, or when entered into will
constitute, a legal, valid and binding obligation of all
other parties thereto, enforceable against such parties in
accordance with their respective terms, this Agreement
constitutes, and each of the other Indenture Trustee
Agreements when entered into by the Indenture Bank will
constitute, the legal, valid and binding obligation of
Indenture Bank, enforceable against it in its individual
capacity (to the extent expressly provided therein) in
accordance with its respective terms, except as
enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or other laws affecting the
enforcement of creditors', mortgagees' or lessors' rights in
general and by general principles of equity (regardless of
whether such enforceability is considered in a proceeding in
equity or at law).
(c) Further Validity Warranty. Assuming that each
of the Indenture Trustee Agreements constitutes, or when
entered into will constitute, a legal, valid and binding
obligation of all other parties thereto, enforceable against
such parties in accordance with their respective terms, each
of the Indenture Trustee Agreements constitutes, or when
entered into by the Indenture Trustee will constitute, a
legal, valid and binding obligation of Indenture Trustee
enforceable against it in accordance with its respective
terms, except as enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium or other
laws affecting the enforcement of creditors', mortgagees' or
lessors' rights in general and by general principles of
equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law).
(d) No Conflict. The execution, delivery and
performance by Indenture Bank and Indenture Trustee of each
Indenture Trustee Agreement and compliance by Indenture Bank
and Indenture Trustee with all of the provisions thereof
binding upon it do not and will not contravene any order of
any Governmental Authority or any law or regulation of the
United States of America or the State of Delaware, in each
case governing the banking or trust powers of Indenture
Bank, or contravene the provisions of, or constitute a
default by Indenture Bank under, or result in the creation
of any Lien (except for Permitted Liens upon the Units) upon
the Indenture Estate under its corporate charter or by-laws
or any indenture, mortgage, contract or other agreement or
instrument to which Indenture Bank is a party or by which
Indenture Bank or any of its property is bound or affected.
(e) Litigation. There are no proceedings pending
or, to the knowledge of Indenture Bank, threatened against
Indenture Bank, in its individual capacity or as Indenture
Trustee, before any Governmental Authority governing the
banking or trust powers of the Indenture Bank or the
Indenture Trustee which individually or in the aggregate
would impair the ability of the Indenture Bank or the
Indenture Trustee to perform its respective obligations
under this Agreement or any other Indenture Trustee
Agreement or which question the validity of this Agreement
or any other Indenture Trustee Agreement or any action taken
or to be taken pursuant hereto or thereto. Indenture Bank
is not in default with respect to any order of any
Governmental Authority governing the banking or trust powers
of the Indenture Bank, the default under which would affect
adversely the ability of the Indenture Bank or the Indenture
Trustee to perform its obligations under this Agreement or
any other Indenture Trustee Agreement.
(f) Consents. No consent, approval or authorization
of, or filing, registration or qualification with, or giving
of notice or taking of any other action with respect to, any
state or local Governmental Authority or any United States
federal Governmental Authority regulating the banking or
trust powers of Indenture Bank is required in connection
with the execution, delivery and performance by Indenture
Bank, in its individual capacity or as Indenture Trustee, of
any of the transactions contemplated hereby or of any of the
transactions contemplated by any of the other Indenture
Trustee Agreements, other than any such consent, approval,
authorization, filing, registration, qualification, notice
or action as has been duly obtained, given or taken and is
in full force and effect.
(g) Default. The Indenture Trustee is not in
default under any of the Indenture Trustee Agreements.
3.4 Representations and Warranties of the Owner
Participant. The Owner Participant represents and warrants to
the other parties hereto that:
(a) Organization and Power. The Owner Participant
is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware, has
the power, authority and legal right to carry on its
business as now conducted, and has the power, authority and
legal right to execute, deliver and perform its obligations
under the Owner Participant Agreements.
(b) Authorization, Execution and Validity. The
Owner Participant Agreements have been duly authorized by
all necessary action, executed and delivered (or, in the
case of each other Owner Participant Agreement executed and
delivered in relation to a Purchase Date or the Lease Term
Commencement Date, on such Purchase Date or the Lease Term
Comment Date, as the case may be, will have been duly
executed and delivered) by the Owner Participant; and
(assuming the due authorization, execution and delivery by
each other party thereto) constitute (or, in the case of
each other Owner Participant Agreement executed and
delivered in relation to a Purchase Date or the Lease Term
Commencement Date, on such Purchase Date or the Lease Term
Commencement Date, as the case may be, will constitute)
legal, valid and binding obligations of the Owner
Participant, enforceable against it in accordance with their
respective terms, except as enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium or other
laws affecting the enforcement of creditors', mortgagees' or
lessors' rights in general and by general principles of
equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law).
(c) No Conflict. The execution, delivery and
performance by the Owner Participant of each Owner
Participant Agreement and compliance by the Owner
Participant with all of the provisions thereof do not and
will not contravene any law or regulation, or any order of
any Governmental Authority applicable to or binding on the
Owner Participant (it being understood that the Owner
Participant makes no representation or warranty relating to
the nature of the Units or the Premises or the laws,
regulations or orders pertaining thereto or pertaining to
the use thereof), or contravene the provisions of, or
constitute a default by the Owner Participant under, or
result in the creation of any Lien (except for Permitted
Liens upon the Units) upon the Units under its certificate
of incorporation or any indenture, mortgage, contract or
other agreement or instrument to which the Owner Participant
is a party or by which the Owner Participant or any of its
property is bound or affected. The representation and
warranty contained in this Section 3.4(c) does not
constitute any representation or warranty as to ERISA or
regulations thereunder.
(d) Litigation. There is no action, suit or
proceeding pending or, to the knowledge of the Owner
Participant, threatened against the Owner Participant before
or by any Governmental Authority that (i) questions the
validity or enforceability of any Owner Participant
Agreement or (ii) if adversely determined (whether
individually or when aggregated with other actions, suits or
proceedings) would materially and adversely affect its
ability to perform its obligations under the Owner
Participant Agreements. The Owner Participant is not in
default with respect to any order of any Governmental
Authority, the default under which would materially affect
adversely the ability of the Owner Participant to perform
its obligations under the Owner Participant Agreements.
(e) Governmental Actions. No Governmental Action on
the part of the Owner Participant is required in connection
with the execution, delivery and performance by the Owner
Participant of the Owner Participant Agreements (it being
understood that the Owner Participant makes no
representation or warranty relating to the nature of the
Units or the Premises or the laws, regulations or orders
pertaining thereto).
(f) No Liens. The Trust Estate is free of any
Lessor's Liens attributable to the Owner Participant.
(g) Default. The Owner Participant is not in
default under any of the Owner Participant Agreements. No
Indenture Default or Indenture Event of Default with respect
to the Owner Participant has occurred and is continuing.
(h) Investment Company. The Owner Participant is
not an investment company or an affiliated person of an
investment company within the meaning of the Investment
Company Act of 1940, as amended.
(i) ERISA. The Owner Participant is not an
employee benefit plan within the meaning of Section 3(3)
of ERISA which is subject to Title I of ERISA, or a plan
within the meaning of Section 4975 of the Code or an entity
that is deemed to hold plan assets within the meaning of
29 C.F.R. Section 2510.3-101 of any such employee benefit plan or
plan (collectively, an "ERISA Plan"), and no part of the
funds to be advanced by the Owner Participant pursuant to
Section 2.4 will constitute assets of an ERISA Plan.
(j) Broker's Fees. Neither the Owner Participant
nor any Person authorized or employed by the Owner
Participant as agent or otherwise has taken any action the
effect of which would be to cause the Trust Estate, the
Owner Trustee, the Lessee, the Note Purchaser, the
Construction Lenders, the Construction Loan Agent or the
Indenture Trustee to be liable for any brokers', finders',
agents' or advisors' fees or commissions or costs of any
nature or kind claimed by or on behalf of brokers, finders,
agents or advisors in respect of the transactions
contemplated by the Operative Agreements.
3.5 Representations, Warranties and Covenants Regarding
Beneficial Interest and Notes.
(a) Offers by the Owner Trustee. Boatmen's
represents and warrants to the other parties hereto that, as
of the date hereof, as of each Advance Date and as of the
Lease Term Commencement Date, neither the Owner Trustee
(whether acting in its individual capacity or as Owner
Trustee) nor any Person authorized or employed by the Owner
Trustee as agent or otherwise in connection with the
placement of any interest in the Construction Notes, the
Note, the Beneficial Interest, the Trust Estate, the
Indenture Trust Estate, the Lease, the Bayer Letter or the
Bayer Support Agreement or any similar interest has directly
or indirectly offered any interest in any of the
Construction Notes, the Note, the Beneficial Interest, the
Trust Estate, the Indenture Trust Estate, the Lease, the
Bayer Letter or the Bayer Support Agreement, or any similar
interest for sale to, or directly or indirectly solicited
any offers to buy any thereof from, or otherwise approached
or negotiated with respect thereto with, any Person.
(b) Offers by the Lessee. The Lessee represents and
warrants to the other parties hereto that, as of the date
hereof, as of each Advance Date and as of the Lease Term
Commencement Date, it has not, nor has any Person authorized
or employed by it as agent or otherwise in connection with
the placement of the Construction Notes, the Note, the
Beneficial Interest, the Trust Estate, the Indenture Estate,
the Lease, the Bayer Letter or the Bayer Support Agreement,
directly or indirectly offered any interest in the Units
(whether individually or taken together as a whole), the
Construction Notes, the Note, the Beneficial Interest, the
Trust Estate, the Indenture Estate, the Lease, the Bayer
Letter or the Bayer Support Agreement, or any similar
securities of the Lessee or the Owner Trustee, for sale to,
or directly or indirectly solicited any offers to buy any
thereof from, or otherwise approached or negotiated with
respect thereto with, any Person in violation of the
Securities Act or any state securities laws, and neither it
nor any Person authorized or employed by it as agent or
otherwise in connection with the placement of the
Construction Notes or the Note, the Beneficial Interest, the
Trust Estate, the Indenture Estate, the Lease, the Bayer
Letter or the Bayer Support Agreement has taken any action
which would subject any interest in the Construction Notes,
the Units, the Note, the Beneficial Interest, the Trust
Estate, the Indenture Estate, the Lease, the Bayer Letter or
the Bayer Support Agreement to the registration requirements
of Section 5 of the Securities Act or any state securities
laws.
(c) Securities Covenant. Each of the Owner Trustee
and the Lessee covenants and agrees as to itself that
neither it nor anyone acting on the behalf of it will:
(i) offer the Beneficial Interest, the Trust
Estate or any part thereof or any similar security for
issue or sale to, or solicit any offer to acquire any
thereof from, or otherwise approach or negotiate with,
anyone so as to violate the provisions of Section 5 of
the Securities Act, or any state securities laws, or
(ii) offer the Construction Notes, the Notes
or any part thereof or any similar security for issue
or sale to, or solicit any offer to acquire any thereof
from, or otherwise approach or negotiate with, anyone
so as to violate the provisions of Section 5 of the
Securities Act or any state securities laws.
(d) Purchase for Investment. Each Participant
represents and warrants to each other Participant, the
Lessee, and the Trustees that, as of the Lease Term
Commencement Date, such Participant is purchasing the
Interest (as hereinafter defined) to be acquired by it for
its account with no present intention of distributing such
Interest or any part thereof in any manner which would
violate the Securities Act or state securities laws, but
without prejudice, however, to the right of such Participant
at all times to sell or otherwise dispose of all or any part
of such Interest in compliance with the Securities Act and
any state securities laws and, in the case of the Owner
Participant, Section 6.1 hereof or, in the case of the Note
Purchaser, Section 6.13 hereof. The Beneficial Interest and
the Notes are sometimes referred to in the Operative
Agreements collectively as the Interests and individually
as an "Interest".
(e) ERISA Representation, Warranty and Covenant of
Note Purchaser. The Note Purchaser represents, warrants and
covenants that either (i) no part of the funds used by it to
acquire and hold any Note constitutes assets of an ERISA
Plan; or (ii) the source of funds used to acquire and hold
any Note is an "insurance company general account" within
the meaning of Department of Labor Prohibited Transaction
Exemption ( PTE ) 95-60 (issued July 12, 1995), and there is
no employee benefit plan (treating as a single plan all
plans maintained by the same employer or employee
organization) with respect to which the aggregate amount of
the general account reserves and liabilities for all
contracts held by or on behalf of such plan exceed 10% of
the total reserves and liabilities of such general account
(exclusive of separate account liabilities) plus surplus, as
set forth in such Note Purchaser's most recent annual
statement in the form required by the National Association
of Insurance Commissioners as filed with such Note
Purchaser's state of domicile. Any transferee of a Note
shall by its acceptance of such Note be deemed to make one
of the above representations and covenants to Lessee, Owner
Participant, Owner Trustee and Indenture Trustee regarding
the source of funds used to purchase and hold such Note.
(f) ERISA Representation, Warranty and Covenant of
each Construction Lender. Each Construction Lender
represents, warrants and covenants to each of the other
parties that (i) it is not an ERISA Plan, and (ii) no part
of the funds used by it to fund and hold any Construction
Advance constitutes assets of an ERISA Plan.
(g) Reaffirmation on the Lease Term Commencement
Date. The purchase of the Note by the Note Purchaser on the
Lease Term Commencement Date shall constitute a
reaffirmation by such Note Purchaser of its representations
and warranties set forth in this Section 3.5 as of the Lease
Term Commencement Date.
(h) Tax Status of Bayerische. Bayerische is
acquiring its interest in the Note and any Construction
Advance through its New York branch and all principal,
interest and Premium, if any, generated by the Note and any
Construction Advance is expected to be effectively
connected (within the meaning of Section 1441(c) of the
Code and the regulations thereunder) with the conduct of
Bayerische's trade or business in the United States. The
Internal Revenue Service Forms 4224 delivered by Bayerische
to the Owner Participant, the Indenture Trustee, the Lessor
and the Lessee on the date hereof are true and correct and
Bayerische has obtained all approvals needed to execute and
deliver such Forms.
SECTION 4 CLOSING CONDITIONS
4.1 Conditions Precedent to the Making of First
Construction Advance. The obligation of the Owner Trustee to
proceed with the transactions contemplated for it by the
Operative Agreements on the date of the first Construction
Advance, and the obligation of the Construction Lenders to make a
Construction Advance on such date, shall be subject to the
fulfillment to the satisfaction of (including, with respect to
writings, such writings being in form and substance reasonably
satisfactory to the addressee or beneficiary thereof), or the
waiver in writing by, the Owner Participant, the Owner Trustee,
the Construction Agent or the Construction Lenders, as
appropriate, of the following conditions hereunder on such date:
(a) Execution of Certain Operative Agreements. This
Agreement, the Trust Agreement, the Construction Notes, the
Construction Agency Agreement, the Facility Documents, the
Support Documents, the Ground Lease Sublease, the Lease, the
Tax Indemnity Agreement, the Security Agreement, the
Construction Loan Agreement, the Leasehold Deed of Trust
(Construction), the Leasehold Deed of Trust (Indenture) and
the Construction Agency Agreement Assignment shall have been
duly executed and delivered by the parties thereto (except
that the execution and delivery of this Agreement and the
other documents referred to above by a party hereto or
thereto shall not be a condition precedent to such party's
obligations hereunder), shall each be in full force and
effect and executed counterparts of each shall have been
delivered to the Owner Participant, the Owner Trustee and
the Construction Lenders or their respective counsel on or
before such first date (except that (A) there shall only be
one executed counterpart of each Construction Note payable
to a Construction Lender, and each Construction Note shall
be delivered to the payee thereof and (B) the Tax Indemnity
Agreement shall only be delivered to the Owner Participant).
(b) Opinions of Counsel. The Owner Trustee, the
Construction Lenders and the Owner Participant shall have
received the favorable written opinion of each of:
(i) David M. Shear, General Counsel of the
Lessee, substantially in the form of Exhibit G-1A;
(ii) Sidley & Austin, special counsel to the
Lessee, substantially in the form of Exhibit G-1B;
(iii) Baker & Botts, L.L.P., special counsel
to the Owner Trustee, substantially in the form of
Exhibit H-1;
(iv) Joseph B. Schubert, Senior Counsel of
the Owner Participant, substantially in the form of
Exhibit I-1A;
(v) Mayer, Brown & Platt, special counsel to
the Owner Participant, substantially in the form of
Exhibit I-1B;
(vi) Fulbright & Jaworski LLP, special Texas
counsel to the Owner Participant, substantially in the
form of Exhibit I-1C;
(vii) Richards, Layton & Finger, special
counsel to the Indenture Trustee, substantially in the
form of Exhibit J-1;
(viii) Paul Berry, Assistant General Counsel of
Bayer, substantially in the form of Exhibit K-1A;
(ix) Jones, Day, Reavis & Pogue, special
counsel to Bayer, substantially in the form of Exhibit
K-1B; and
(x) special local counsel as to real
property and other matters, in form and substance
reasonably satisfactory to the Construction Loan Agent
and the Owner Participant;
provided that receipt by a party hereto of a favorable
written opinion from counsel to such party shall not be a
condition precedent to such party's obligations hereunder.
(c) Corporate Documents. The Owner Trustee, the
Construction Lenders and the Owner Participant shall have
received such documents and evidence with respect to the
Lessee, the Owner Trustee, Bayer and the Owner Participant
as the recipient may reasonably request in order to
establish the consummation of the transactions contemplated
by this Agreement and the other Operative Agreements,
including corporate charters and by-laws, certificates of
incumbency and evidence of the taking of all corporate and
other proceedings in connection herewith and therewith and
compliance with the conditions herein or therein set forth;
provided that receipt by a party hereto of such documents
and evidence with respect to such party shall not be a
condition precedent to such party's obligations hereunder.
(d) Recordation and Filing of Lease, Etc. (i) the
Ground Lease, the Ground Lease Sublease and the Lease
(including any Lease Supplement) (and/or a financing
statement or similar notice thereof if and to the extent
permitted or required by applicable law) shall have been
recorded or filed for record in such public offices as may
be deemed necessary or appropriate by special counsel for
such Participant in order to (A) protect the rights of the
Owner Trustee in the Units and in the balance of the Trust
Estate and (B) perfect the right, title and interest of the
Construction Loan Agent under the Construction Loan
Agreement, and (ii) the Lessee shall provide evidence
satisfactory to the Participants and their respective
counsel that no Liens or other claims exist in respect of
any portion of the Trust Estate in favor of any Person
(other than Permitted Liens). By such recording or filing
of a memorandum of the Ground Lease, the Ground Lease
Sublease or the Lease (including any Lease Supplement)
(and/or a financing statement or similar notice thereof),
neither the Owner Trustee, the Owner Participant nor the
Lessee are acknowledging or implying that the Ground Lease,
the Ground Lease Sublease or Lease (including any Lease
Supplement) constitutes a security agreement or creates a
security interest within the meaning of the Uniform
Commercial Code.
(e) Consents. All approvals and consents of any
trustees or holders of any indebtedness or obligations of
the Lessee which are required in connection with the
transactions contemplated by this Agreement shall have been
duly obtained and shall be in full force and effect.
(f) Governmental Actions. All actions, if any,
required to have been taken on or prior to such first date
in connection with the transactions contemplated by this
Agreement shall have been taken by any Governmental
Authority and all orders, permits, waivers, exemptions,
authorizations and approvals of such entities required to be
in effect on such first date in connection with the
transactions contemplated by this Agreement shall have been
issued, and all such orders, permits, waivers, exemptions,
authorizations and approvals shall be in full force and
effect.
(g) Satisfactory Proceedings. All proceedings taken
in connection with the transactions contemplated by this
Agreement, and all documents necessary to the consummation
thereof or which are addressed to the Owner Participant, the
Owner Trustee, the Construction Agent or the Construction
Lenders, shall be satisfactory in form and substance to such
Person and its respective counsel, and each such Person
shall have received a copy (executed or certified as may be
appropriate) of all legal documents or proceedings taken in
connection with the consummation of such transactions; and
all legal matters in connection with the transactions
contemplated hereby shall be satisfactory to each such
Person and its respective counsel.
(h) Construction Documents. The Construction Letter
of Intent shall be in full force and effect and executed
counterparts thereof shall have been delivered to the Owner
Participant, the Owner Trustee and the Construction Lenders,
or their respective counsel, on or before such date.
4.2 Conditions Precedent to Each Advance Date. The
obligation of the Owner Trustee to proceed with the transactions
contemplated for it on each Advance Date and of the Construction
Lenders to make any Construction Advance on such date (including
the first such date) shall be subject to the fulfillment to the
satisfaction of, or the waiver in writing by, the Owner
Participant, the Owner Trustee and the Construction Lenders, as
appropriate, of the following conditions hereunder on such date:
(a) No Default. No event shall have occurred and be
continuing that constitutes a Construction Agreement Default
or a Construction Agreement Event of Default.
(b) Representations and Warranties. The
representations and warranties of each of the Lessee, the
Owner Trustee and the Owner Participant shall be true and
correct in all material respects on such Advance Date with
the same effect as though made on and as of such date,
except to the extent that such representations and
warranties relate solely to an earlier date (in which case
such representations and warranties were true and correct in
all material respects on and as of such earlier date); and
the Lessee shall have performed and complied with all
agreements and conditions herein contained or contained in
any other Operative Agreement which are required to be
performed or complied with by the Lessee on or before such
date; and the acceptance of the proceeds of the Construction
Advance on such date shall constitute a representation and
warranty of the Lessee to the foregoing effect.
(c) Bill of Sale; UCC Filings. The Owner Trustee
shall have received a bill of sale in substantially the form
attached hereto as Exhibit O from the sellers of the Units,
if any, to be settled for on such date, dated such date
(which bill of sale, if not available from the vendor or
manufacturer of the Units being settled for on such date,
may be prepared by the Construction Agent) transferring to
the Owner Trustee all right, title and interest to such
Units, including, without limitation, legal and beneficial
title to such Units, free and clear of all Liens; and a
Uniform Commercial Code financing statement (or similar
notice thereof if and to the extent permitted or required by
applicable law) shall have been recorded or filed for record
in such public offices as may be deemed necessary or
appropriate by special counsel for the Owner Participant and
the Construction Lenders (or, if not filed, shall have been
delivered to special counsel for the Construction Lenders
for filing in the appropriate filing offices), in order to
(A) perfect the rights, titles and interests of the Owner
Trustee and (B) perfect the right, title and interest of the
Construction Loan Agent under the Construction Loan
Agreement.
(d) No Threatened Proceedings. No action or
proceeding shall have been instituted, nor shall
Governmental Action be threatened before any Governmental
Authority, nor shall any order, judgment or decree have been
issued or proposed to be issued by any Governmental
Authority at the time of such Advance Date to set aside,
restrain, enjoin or prevent the completion and consummation
of this Agreement or the transactions contemplated hereby.
(e) Notice. The Owner Trustee, the Construction
Loan Agent and the Owner Participant shall have received the
Purchase Notice or the Advance Date Notice, as the case may
be, required pursuant to Section 2.3.
(f) No Illegality. No change shall have occurred
after the date of the execution and delivery of this
Agreement in applicable law or regulations thereunder or
interpretations thereof by regulatory authorities that would
make it illegal for the Owner Participant, the Owner
Trustee, the Construction Agent or any Construction Lender
to enter into any transaction contemplated by the Operative
Agreements.
(g) Tax Law Change. No adverse change or proposed
change of tax law (including any Change in Tax Law or Change
in Tax Rate) shall have occurred that would not result under
the Operative Agreements in a fully compensating rental
adjustment.
4.3 Conditions Precedent to Investment by the Participants.
The obligation of each Participant to make the investment
specified with respect to such Participant in Sections 2.4, 2.5
and 2.6 (which investment may be made in whole or in part by the
tendering of the Construction Note), and for the Indenture
Trustee and the Owner Trustee to proceed with the transactions
contemplated for it by the Operative Agreements, on the Lease
Term Commencement Date shall be subject to the fulfillment to the
satisfaction of (including, with respect to writings, such
writings being in form and substance reasonably satisfactory to
the addressee or beneficiary thereof), or the waiver in writing
by, such Participant, the Owner Trustee or the Indenture Trustee,
as appropriate, of the following conditions hereunder on the
Lease Term Commencement Date:
(a) Execution of Certain Operative Agreements. This
Agreement, the Trust Agreement, the Facility Documents, the
Support Documents, the Ground Lease Sublease, the Lease, the
Lease Supplements in respect of all of the Units, the
Security Agreement, the Leasehold Deed of Trust
(Construction), the Leasehold Deed of Trust (Indenture), the
Indenture, the Construction Agency Agreement Assignment and
the Note (which, in addition to the provisions of this
Section 4.3, shall comply with the provisions of Section
2.11) shall have been duly executed and delivered by the
parties thereto (except that the execution and delivery of
this Agreement and the other documents referred to above by
a party hereto or thereto shall not be a condition precedent
to such party's obligations hereunder), shall each be in
full force and effect and executed counterparts of each
shall have been delivered to each Participant, the Owner
Trustee and the Indenture Trustee or their respective
counsel on or before the Lease Term Commencement Date
(except that there shall only be one executed counterpart of
each Note, and each such Note shall be delivered to the
payee thereof).
(b) No Default. No event shall have occurred and be
continuing that constitutes a Lease Default, a Lease Event
of Default, an Indenture Default or an Indenture Event of
Default.
(c) Recordation and Filing of Lease, Etc. (i) the
Ground Lease, the Ground Lease Sublease, the Lease, the
Lease Supplement (and/or a financing statement or similar
notice thereof if and to the extent permitted or required by
applicable law) shall have been recorded or filed for record
in such public offices as may be deemed necessary or
appropriate by special counsel for such Participant in order
to (A) protect the rights of the Owner Trustee in the Units
and in the balance of the Trust Estate and (B) perfect the
right, title and interest of the Indenture Trustee under the
Indenture, and (ii) the Lessee shall provide evidence
satisfactory to the Participants and their respective
counsel that no Liens or other claims exist in respect of
any Unit or any other portion of the Trust Estate or on the
Indenture Estate, in each case, in favor of any Person
(other than Permitted Liens) or exist as a result of any
right, claim or interest in favor of any Person owning or
holding any interest in the Premises or that appropriate
waivers and/or terminations of such Liens or other claims
have been obtained and recorded or filed for record in all
necessary public offices; provided, however, that, in the
case of Permitted Liens described in clause (iv) of the
definition of Permitted Liens, on the Lease Term
Commencement Date there shall be no Liens in favor of ICF
Kaiser Engineers, Inc. or any of its subcontractors which
shall not have been waived or duly paid or otherwise
provided for. By such recording or filing of a memorandum
of the Ground Lease, the Ground Lease Sublease, the Lease or
Lease Supplement (and/or a financing statement or similar
notice thereof), neither the Owner Trustee, the Owner
Participant nor the Lessee are acknowledging or implying
that the Ground Lease, Ground Lease Sublease or Lease
constitutes a "security agreement" or creates a "security
interest" within the meaning of the Uniform Commercial Code.
(d) Closing Certificate of the Lessee. The Owner
Trustee, the Indenture Trustee and each Participant shall
have received an Officer's Certificate of the Lessee dated
such date, to the effect that the representations and
warranties of the Lessee contained in Sections 3.2 and
3.5(b) are true and correct in all material respects on the
Lease Term Commencement Date with the same effect as though
made on and as of said date, except to the extent that the
representations and warranties relate solely to an earlier
date (in which case such representations and warranties were
true and correct in all material respects on and as of such
earlier date), and that the Lessee has performed and
complied with all agreements and conditions contained in any
Operative Agreement which are required to be performed or
complied with by the Lessee on or before said date.
(e) Closing Certificate of the Owner Trustee. The
Indenture Trustee and each Participant shall have received
an Officer's Certificate of the Owner Trustee, in its
individual capacity and as Owner Trustee, dated such date,
to the effect that the representations and warranties of the
Owner Trustee, in its individual capacity and as Owner
Trustee, contained in Sections 3.1 and 3.5(a) are true and
correct in all material respects on the Lease Term
Commencement Date with the same effect as though made on and
as of said date, except to the extent that such
representations and warranties relate solely to an earlier
date (in which case such representations and warranties were
true and correct in all material respects on and as of such
earlier date), and that the Owner Trustee, in its individual
capacity and as Owner Trustee, has performed and complied
with all agreements and conditions contained in any
Operative Agreement which are required to be performed or
complied with by the Owner Trustee, in its individual
capacity and as Owner Trustee, on or before said date. The
delivery of the foregoing certificate shall not be a
condition precedent to the Owner Trustee's obligations
hereunder.
(f) Closing Certificate of the Owner Participant.
The Owner Trustee, the Indenture Trustee and the Note
Purchaser shall have received an Officer's Certificate of
the Owner Participant dated such date, to the effect that
the representations and warranties of the Owner Participant
contained in Sections 3.4 and 3.5(d) are true and correct in
all material respects on the Lease Term Commencement Date
with the same effect as though made on and as of said date,
except to the extent that such representations and
warranties relate solely to an earlier date (in which case
such representations and warranties were true and correct in
all material respects on and as of such earlier date), and
that the Owner Participant has performed and complied with
all agreements and conditions contained in any Operative
Agreement which are required to be performed or complied
with by the Owner Participant on or before said date. The
delivery of the foregoing certificate shall not be a
condition precedent to the Owner Participant's obligations
hereunder.
(g) Closing Certificate of the Indenture Trustee.
The Owner Trustee and each Participant shall have received
an Officer's Certificate of the Indenture Bank, in its
individual capacity and as Indenture Trustee, dated such
date, to the effect that the representations and warranties
of the Indenture Bank, in its individual capacity and as
Indenture Trustee, contained in Section 3.3 are true and
correct in all material respects on the Lease Term
Commencement Date with the same effect as though made on and
as of said date, except to the extent that such representa-
tions and warranties relate solely to an earlier date (in
which case such representations and warranties were true and
correct in all material respects on and as of such earlier
date), and that the Indenture Bank, in its individual
capacity and as Indenture Trustee, has performed and
complied with all agreements and conditions contained in any
Operative Agreement which are required to be performed or
complied with by the Indenture Bank, in its individual
capacity and as Indenture Trustee on or before said date.
The delivery of the foregoing certificate shall not be a
condition precedent to the Indenture Trustee's obligations
hereunder.
(h) Opinions of Counsel. The Owner Trustee, the
Indenture Trustee and each Participant shall have received
the favorable written opinion of each of:
(i) David M. Shear, General Counsel of the
Lessee, substantially in the form of Exhibit G-2A;
(ii) Sidley & Austin, special counsel to the
Lessee, substantially in the form of Exhibit G-2B;
(iii) Baker & Botts, L.L.P., special counsel
to the Owner Trustee, substantially in the form of
Exhibit H-2;
(iv) Joseph B. Schubert, Senior Counsel of
the Owner Participant, substantially in the form of
Exhibit I-2A;
(v) Mayer, Brown & Platt, special counsel to
the Owner Participant, substantially in the form of
Exhibit I-2B;
(vi) Fulbright & Jaworski LLP, special Texas
counsel to the Owner Participant, substantially in the
form of Exhibit I-2C;
(vii) Richards, Layton & Finger, special
counsel to the Indentured Trustee, substantially in the
form of Exhibit J-2;
(viii) Paul Berry, Assistant General Counsel of
Bayer, substantially in the form of Exhibit K-2A;
(ix) Jones, Day, Reavis & Pogue, special
counsel to Bayer, substantially in the form of Exhibit
K-2B; and
(x) special local counsel as to real
property and other matters, in form and substance
reasonably satisfactory to the Participants;
provided that receipt by a party hereto of a favorable
written opinion from counsel to such party shall not be a
condition precedent to such party's obligations hereunder.
(i) Title. After giving effect to the transactions
contemplated hereby on the Lease Term Commencement Date, the
Owner Trustee shall have legal title to and the ownership of
each and every Unit, free and clear of all Liens, except for
Permitted Liens.
(j) Insurance. (i) the insurance coverages required
pursuant to Section 12 of the Lease (including the self-
insurance provisions thereof) shall be in full force and
effect and (ii) the Owner Trustee, the Indenture Trustee and
each Participant shall have received the report of the
Lessee's independent insurance broker required pursuant to
Section 12 of the Lease together with certificates of
insurance evidencing the insurance then carried and
maintained on the Units.
(k) Corporate Documents. The Owner Trustee, the
Indenture Trustee and each Participant shall have received
such documents and evidence with respect to the Lessee,
Bayer, the Owner Trustee, the Indenture Trustee and the
Owner Participant as the recipient may reasonably request in
order to establish the consummation of the transactions
contemplated by this Agreement and the other Operative
Agreements, including corporate charters and by-laws, good
standing certificates, certificates of incumbency and
evidence of the taking of all corporate and other
proceedings in connection herewith and therewith and
compliance with the conditions herein and therein set forth;
provided that receipt by a party hereto of such documents
and evidence with respect to such party shall not be a
condition precedent to such party's obligations hereunder.
(l) No Threatened Proceedings. No action or
proceeding shall have been instituted, nor shall
Governmental Action be threatened before any Governmental
Authority, nor shall any order, judgment or decree have been
issued or proposed to be issued by any Governmental
Authority at the time of the Lease Term Commencement Date to
set aside, restrain, enjoin or prevent the completion and
consummation of this Agreement or the transactions
contemplated hereby.
(m) Lease Term Commencement Notice. The Owner
Trustee, the Indenture Trustee and each Participant shall
have received the Notice of Lease Commencement required
pursuant to Section 2.6(a).
(n) No Illegality. No change shall have occurred
after the date of the execution and delivery of this
Agreement in applicable law or regulations thereunder or
interpretations thereof by regulatory authorities that would
make it illegal for any Participant or any Trustee to enter
into any transaction contemplated by the Operative
Agreements.
(o) Related Transactions. The Note Purchaser shall
have purchased its Note in the amount specified in, and
otherwise in accordance with, Sections 2.5 and 2.6, the
Owner Participant shall have advanced funds in the amount
specified in, and otherwise in accordance with Sections 2.4,
2.6, and, with respect to Excluded Transaction Costs,
2.8(a); and the Owner Trustee shall have received the
proceeds thereof; provided that the purchase or advance by a
Participant shall not be a condition precedent to such
Participant's obligations hereunder.
(p) Consents. All approvals and consents of any
trustees or holders of any indebtedness or obligations of
the Lessee which are required in connection with the
transactions contemplated by this Agreement shall have been
duly obtained and shall be in full force and effect.
(q) Governmental Actions. All actions, if any,
required to have been taken on or prior to the Lease Term
Commencement Date in connection with the transactions
contemplated by this Agreement on the Lease Term
Commencement Date shall have been taken by any Governmental
Authority and all orders, permits, waivers, exemptions,
authorizations and approvals of such entities required to be
in effect on the Lease Term Commencement Date in connection
with the transactions contemplated by this Agreement on the
Lease Term Commencement Date shall have been issued, and all
such orders, permits, waivers, exemptions, authorizations
and approvals shall be in full force and effect.
(r) Equipment Cost Certificate. The Owner Trustee,
the Indenture Trustee and each Participant shall have
received an Officer's Certificate of the Lessee certifying
that the Equipment Cost of each Unit is the amount shown on
the appropriate Lease Supplement.
(s) Private Placement Certificate. Each
Participant, the Owner Trustee and the Indenture Trustee
shall have received a certificate (the Private Placement
Certificate ), substantially in the form of Exhibit L
hereto, from Bank of America, dated the Lease Term
Commencement Date, with respect to offerees of the
Beneficial Interest and the Note.
(t) Satisfactory Proceedings. All proceedings taken
in connection with the transactions contemplated by this
Agreement and the other Operative Agreements, and all
documents necessary to the consummation thereof or which are
addressed to the Participants or the Trustees shall be
satisfactory in form and substance to the Participants and
the Trustees and their respective counsel, and each such
Person shall have received a copy (executed or certified as
may be appropriate) of all legal documents or proceedings
taken in connection with the consummation of such
transactions; and all legal matters in connection with the
transactions contemplated hereby and thereby shall be
satisfactory to each such Person and its respective counsel.
(u) Environmental Report. On or before the Lease
Term Commencement Date, the Owner Participant and the Note
Purchaser shall have received a written environmental
assessment of the soil conditions at the Premises from an
independent environmental consultant selected by the Lessee
and approved by the Owner Participant, in form and substance
satisfactory to the Owner Participant and the Note
Purchaser, which assessment is expected to be provided on or
about August 31, 1997.
(v) Completion. Completion shall have occurred.
(w) Lien Waivers. On the Lease Term Commencement
Date, the Owner Participant and the Note Purchaser shall
have received copies of each subcontractor s lien waiver
(required pursuant to the Turnkey Construction Contract)
delivered to the Construction Agent on or prior to the Lease
Term Commencement Date.
4.4 Additional Conditions Precedent to Investment by the
Owner Participant. The obligation of the Owner Participant to
make its investment specified in Section 2.4 and to pay Excluded
Transaction Costs on the Lease Term Commencement Date shall be
subject to the fulfillment to the satisfaction of (including,
with respect to writings, such writings being in form and
substance reasonably satisfactory to the Owner Participant), or
the waiver in writing by, the Owner Participant of the following
additional conditions:
(a) Appraisal. On or before the Lease Term
Commencement Date, the Owner Participant shall have received
an opinion (the "Appraisal") of Accuval concluding that:
(i) the fair market value in place and in use of each Unit
on the Lease Term Commencement Date is equal to the
Equipment Cost of such Unit; (ii) the anticipated remaining
economic useful life of the Units does not exceed 125% of
the base Lease Term (excluding any period prior to the Lease
Term Commencement Date) and does not exceed the term of the
Ground Lease or the Ground Lease Sublease; (iii) without
taking into account inflation or deflation from and after
the Lease Term Commencement Date, it is reasonable to expect
that at the end of the Lease Term, (A) each Unit will have a
fair market value of at least 20% of Equipment Cost therefor
and (B) all of the Units will have a fair market value of at
least 20% of Total Equipment Cost; (iv) the estimated fair
market value of the Units at the end of the base Lease Term,
taking into account a prudent and supportable rate of
inflation or deflation, is no greater than the Fixed Price
Purchase Option Amount for the Units; (v) the use of the
Units at the end of the base Lease Term by Lessor or by a
Person, other than Lessee or any person related to Lessee
within the meaning of Section 318 of the Code (a Lessee
Related Person ), who could lease or purchase the Units from
Lessor, will be commercially feasible to Lessor or such
other Person; (vi) (A) not less than 95% of the Units
constitute tangible personal property for U.S. federal
income tax purposes and as described in Asset Class 28.0
Manufacture of Chemicals and Allied Products under U.S.
Rev. Proc. 87-56 or otherwise constitute 5-year recovery
property, and (B) not more than 5% of the Units constitute
nonresidential real property; (vii) assuming the
enforceability thereof, the Operative Agreements grant
Lessor all rights necessary to operate the Units in
commercial operation at design capacity and do not restrict
the Lessor's right to sell the output thereof to parties
other than a Lessee Related Person for the remaining
economic life of the Units at their installed location; and
(viii) on the Lease Term Commencement Date, the Units will
be in service and ready and available to perform their
assigned function at design capacity and none of the Units
requires any improvement or modification to perform its
specifically assigned function.
(b) Opinion with Respect to Certain Tax Aspects. On
the Lease Term Commencement Date, the Owner Participant
shall have received the opinion of Mayer, Brown & Platt, its
special tax counsel, addressed, and in form and substance
satisfactory, to the Owner Participant containing such
counsel's favorable opinion with respect to such federal tax
matters as the Owner Participant may request.
(c) Tax Indemnity Agreement. On or before the first
Advance Date, the Tax Indemnity Agreement shall have been
duly executed and delivered by the Lessee and, assuming due
authorization, execution and delivery by the Owner
Participant, the Tax Indemnity Agreement shall be in full
force and effect.
(d) Tax Law Change. On or before the Lease Term
Commencement Date, no Change in Tax Law shall have occurred
or shall have been proposed which in the Owner Participant's
reasonable judgment would adversely affect the Owner
Participant's investment in the Units or the Lease and for
which an adjustment is not permitted pursuant to Section
2.9(a).
(e) Engineering Report. On or before the Lease Term
Commencement Date, the Owner Participant shall have received
a written Engineering Report (the "Engineering Report")
regarding all of the Units as installed on the Premises from
an independent engineering consulting firm selected by the
Owner Participant and the Construction Agent, which
Engineering Report shall be in form and substance
satisfactory to the Owner Participant.
4.5 Additional Conditions Precedent to Purchase by the Note
Purchaser. The obligation of the Note Purchaser to purchase and
pay for its Note to be delivered pursuant hereto on the Lease
Term Commencement Date shall be subject to the fulfillment to the
satisfaction of (including, with respect to writings, such
writings being in form and substance reasonably satisfactory to
such Note Purchaser), or the waiver in writing by, such Note
Purchaser of the following additional conditions:
(a) Note. The Note Purchaser shall have received
its Note.
(b) Recording of Indenture. On or before the Lease
Term Commencement Date, the Indenture (and/or a financing
statement or similar notice thereof, if and to the extent
permitted or required by applicable law) shall have been
recorded or filed in such public offices as may be deemed
necessary or appropriate by special counsel to the Note
Purchaser in order to perfect the first priority Lien and
security interest provided by the Indenture as against
creditors of and purchasers from the Owner Trustee and the
Lessee.
(c) Legal Investment. The Note to be issued on the
Lease Term Commencement Date shall on the Lease Term
Commencement Date qualify as a legal investment for the Note
Purchaser under any laws regulating investments to which it
may be subject (without recourse to provisions in any such
law permitting limited investments without restriction as to
the character of the particular investment), and such Note
Purchaser shall have received such evidence as it may
reasonably request to establish compliance with this
condition.
(d) Opinion of Counsel. On the Lease Term
Commencement Date, the Note Purchaser shall have received
the favorable written opinion, dated the Lease Term
Commencement Date, of (i) White & Case, its special counsel,
and (ii) Fulbright & Jaworski LLP, its special Texas
counsel, in each case with respect to such matters as the
Note Purchaser shall reasonably request.
(e) Revised Schedules. The Owner Participant shall
have delivered to the Note Purchaser revised Schedules 2, 3,
4, 5 and 6 hereto pursuant to Section 2.6(a) and the Note
Purchaser shall be satisfied that such Schedules comply with
Sections 2.9(c) and (d).
(f) Appraisal. On or before the Lease Term
Commencement Date, the Note Purchaser shall have received a
letter from Accuval describing: (i) the fair market value
of all of the Units taken together as a whole as of the
Lease Term Commencement Date, (ii) the economic useful life
of all of the Units and (iii) the estimated fair market
value of all of the Units, as of the expiration of the Lease
Term, taking into account inflation and deflation.
(g) Completion. Completion shall have occurred.
(h) Swap Agreement. Without cost to it, the Note
Purchaser shall have the benefit of an interest rate swap
agreement with counterparties reasonably acceptable to the
Note Purchaser containing the following terms: (i) the term
of the swap agreement shall be ten years; (ii) the notional
principal amount of the swap agreement shall be
approximately $60,000,000; and (iii) the monthly payments to
be made available to the Note Purchaser under the swap
agreement shall be calculated by reference to a floating
rate equal to the sum of the LIBO Rate, plus 29 basis points
(such swap agreement, the "Swap Agreement"). Bank of
America agrees to arrange for such Swap Agreement on such
terms on or before the Lease Term Commencement Date.
4.6 Conditions Precedent to the Obligation of the Lessee.
The obligation of the Lessee with respect to the consummation of
the transactions to occur on and after the Lease Term
Commencement Date shall be subject to the fulfillment to the
satisfaction of (including, with respect to writings, such
writings being in form and substance reasonably satisfactory to
the Lessee), or the waiver in writing by, the Lessee of the
following conditions; provided, however, that the following shall
not limit the obligations of Bayer under the Bayer Letter or the
Bayer Support Agreement:
(a) Operative Agreements. On or before the Lease
Term Commencement Date, the Operative Agreements shall have
been duly authorized, executed and delivered by the parties
thereto (other than the Lessee), shall each be in full force
and effect and executed counterparts of each (except for the
Note) shall have been delivered to the Lessee or its special
counsel on or before the Lease Term Commencement Date.
(b) Representations and Warranties True. On the
Lease Term Commencement Date, the representations and
warranties of the Owner Trustee, the Owner Participant, the
Indenture Trustee and the Note Purchaser contained in
Section 3 hereof shall be true and correct in all material
respects as of the Lease Term Commencement Date as though
made on and as of such date, except to the extent that such
representations and warranties relate solely to an earlier
date (in which case such representations and warranties were
true and correct in all material respects on and as of such
earlier date), and the Lessee shall have received an
Officer's Certificate dated such date from each of the Owner
Trustee as described in Section 4.3(e), the Owner
Participant as described in Section 4.3(f) and the Indenture
Trustee as described in Section 4.3(g), addressed to the
Lessee and certifying as to the foregoing matters insofar as
they relate to the Owner Trustee, the Owner Participant and
the Indenture Trustee, as the case may be.
(c) Opinions of Counsel. On the Lease Term
Commencement Date, the Lessee shall have received the
opinions of counsel referred to in Section 4.3(h) (other
than those set forth in clauses (i), (vi), (vii) and (viii)
therein), addressed to the Lessee.
(d) Corporate Documents. On the Lease Term
Commencement Date, the Lessee shall have received such
documents and evidence with respect to the Owner Trustee,
the Indenture Trustee and the Owner Participant as the
Lessee may reasonably request in order to establish the
consummation of the transactions contemplated by this
Agreement and the other Operative Agreements, including
corporate charters and by-laws, certificates of incumbency
and evidence of the taking of all corporate and other
proceedings in connection herewith and therewith and
compliance with the conditions herein and therein set forth.
(e) No Threatened Proceedings. No action or
proceeding shall have been instituted, nor shall any
Governmental Action be threatened before any Governmental
Authority, nor shall any order, judgment or decree have been
issued or proposed to be issued by any Governmental
Authority at the time of the Lease Term Commencement Date to
set aside, restrain, enjoin or prevent the completion and
consummation of this Agreement or the transactions
contemplated hereby; provided that any such action or
proceeding instituted or threatened by the Lessee or any of
its Affiliates shall not be a condition precedent to the
Lessee's obligations hereunder.
(f) Owner Participant's Investment; Issuance of
Note. (i) The Owner Participant shall have made available
on the Lease Term Commencement Date the portion of its
Commitment and Excluded Transaction Costs in the amounts
specified in, and otherwise in accordance with, Sections
2.4, 2.6 and 2.8(a), and (ii) the Note Purchaser shall have
purchased its Note in the amount specified in, and otherwise
in accordance with, Sections 2.5 and 2.6.
(g) Revised Schedules. The Owner Participant shall
have delivered to the Lessee, the Owner Trustee and the
Indenture Trustee revised Schedules 2, 3, 4, 5 and 6 hereto
pursuant to Section 2.6(a).
(h) Private Placement Certificate. The Lessee shall
have received an executed counterpart of the Private
Placement Certificate.
(i) No Change in Law or Material Rent Adjustment.
No change of law shall have occurred that, in the opinion of
Lessee, renders the transactions contemplated herein
illegal; and no rent adjustment shall be proposed which, in
the opinion of Lessee, renders the transactions uneconomic
to Lessee, provided that if all adjustments to Base Rent
result in an increase of the present value of Base Rent
(other than adjustments relating to the interest rate upon
the Debt) by less than 200 basis points, such adjustments
shall not be deemed to be uneconomic.
(j) Completion. Completion shall have occurred,
provided, however, that any failure of completion to occur
which is a result of the actions or inactions of the Lessee
shall not be deemed a failure of Completion for purposes of
this Section 4.6.
4.7 Opinion Acknowledgment. Each of the parties hereto,
with respect to such party, expressly consents to the rendering
by its counsel of the opinion referred to in Sections 4.1(b),
4.3(h), 4.5(d) and 4.6(c) and acknowledges that such opinion
shall be deemed to be rendered at the request and upon the
instructions of such party, each of whom has consulted with and
has been advised by its counsel as to the consequences of such
request, instructions and consent.
4.8 Further Condition To Participants' Commitment. The
obligation of each Construction Lender to make any Construction
Advance, and the obligation of each Participant to make its
investment specified in Section 2 on the Lease Term Commencement
Date, shall be further subject to the condition that no material
adverse change shall have occurred in (x) the condition,
financial or otherwise, of the Lessee or Bayer from its condition
as of December 31, 1996, and (y) Bayer's ability to perform its
obligations under the Support Documents.
SECTION 5 FINANCIAL AND OTHER REPORTS OF THE LESSEE
(a) Financial Statements. The Lessee covenants and
agrees that it will furnish directly to the Owner
Participant, the Owner Trustee, each Construction Lender,
the Construction Loan Agent, each holder of a Note and the
Indenture Trustee the following:
(i) Interim Financials. As soon as
available and in any event within 60 days after the end
of each quarterly period, except the last, of each
fiscal year of LSB, an unaudited consolidated balance
sheet of LSB and its Subsidiaries (including the
Lessee) as at the end of such period, together with the
related unaudited consolidated statements of income and
expense of LSB and its Subsidiaries (including the
Lessee) for the period beginning on the first day of
such fiscal year and ending on the last day of such
quarterly period, all in reasonable detail and
prepared in accordance with GAAP, and certified as
true, correct and complete, subject to changes
resulting from year-end adjustments, by a Senior
Financial Officer; and
(ii) Audited Report. As soon as available
and in any event within 120 days after the last day of
each fiscal year of LSB, audited consolidated balance
sheet, statement of income and expense, retained
earnings, and statements of cash flows and
stockholders' equity for LSB and its Subsidiaries
(including the Lessee) for such fiscal year, and the
accompanying notes thereto, setting forth in each case
in comparative form the figures for the previous fiscal
year, all in reasonable detail and prepared in
accordance with GAAP; such financial statements shall
be certified by a firm of independent certified public
accountants of recognized international standing
selected by LSB, without qualification relating to
scope of audit.
(b) Reports to the Securities and Exchange
Commission. As soon as available, the Lessee shall furnish
to the Owner Participant, the Owner Trustee, each
Construction Lender, the Note Purchaser and the Indenture
Trustee one copy of each publicly filed proxy statement,
financial statement or report (including, without
limitation, each Annual Report on Form 10-K (or any
successor form), each Quarterly Report on Form 10-Q (or any
successor form) and each Report on Form 8-K), or proxy
statement filed under the Securities Exchange Act of 1934,
as amended, sent by LSB or the Lessee, as the case may be,
or any Subsidiary of either to stockholders generally, in
respect thereof filed by LSB or the Lessee or any such
Subsidiary with, the National Association of Securities
Dealers, any securities exchange or the Securities and
Exchange Commission or any successor agency.
(c) Compliance Certificate. Within the time periods
prescribed in Sections 5(a)(i) and 5(a)(ii), the Lessee
shall send to the Owner Participant, the Owner Trustee, each
Construction Lender, the Note Purchaser and the Indenture
Trustee a certificate, signed by a Responsible Officer of
the Lessee, to the effect that the signer is familiar with
the relevant terms of the Operative Agreements and has
reviewed, or caused to be made under signer's supervision a
review of, the activities of the Lessee and that, to the
best of his or her knowledge, no Lease Default or Lease
Event of Default exists, or if a Lease Default or Lease
Event of Default exists or did exist, specifying such Lease
Default or Lease Event of Default and the nature, period of
existence and status thereof and what action the Lessee has
taken or proposes to take with respect thereto.
(d) Defaults. The Lessee shall promptly notify the
Owner Participant, the Owner Trustee, each Construction
Lender, the Note Purchaser and the Indenture Trustee in
writing of the occurrence of any Lease Default or Lease
Event of Default, and what action the Lessee has taken or
proposes to take with respect thereto.
(e) Other Information. The Lessee shall send to the
Owner Participant, the Owner Trustee, each Construction
Lender, the Construction Loan Agent, the Note Purchaser and
the Indenture Trustee from time to time, such additional
information as the Owner Participant, the Owner Trustee, any
Construction Lender, the Construction Loan Agent, any holder
of a Note or the Indenture Trustee may reasonably request.
SECTION 6 CERTAIN COVENANTS OF THE PARTICIPANTS, THE OWNER
TRUSTEE, THE INDENTURE TRUSTEE AND THE LESSEE
6.1 Restrictions on Transfer of Beneficial Interest. The
Owner Participant covenants and agrees with and for the benefit
of the other parties to this Agreement that without the consent
of the Lessee and a Majority In Interest, the Owner Participant
will not sell, convey, assign or otherwise transfer all or a
portion of its Beneficial Interest or its right and interest in
and to this Agreement, the Tax Indemnity Agreement, the Trust
Agreement and the other Operative Agreements prior to the
expiration or earlier termination of the Lease Term (except by
merger or consolidation) unless:
(a) Transferee Qualifications. The Person to whom
such transfer is to be made (a "Transferee") is an Eligible
OP Assignee.
(b) Notice. The Owner Trustee, Indenture Trustee
and the Lessee shall have received 15 days' prior written
notice of such transfer specifying the name and address of
any proposed Transferee and such additional information as
shall be necessary to determine whether the proposed
transfer satisfies the requirements of this Section 6.1.
(c) Transfer Agreement and Opinion of Counsel. Such
Transferee enters into an agreement substantially in the
form of Exhibit N hereto and provides the Indenture Trustee,
the Note Purchaser, the Owner Trustee and the Lessee with an
opinion of counsel (whose fees and expenses shall not be the
obligation of the Lessee) covering the matter referred to in
clause (d) below and stating that such agreement has been
duly authorized, executed and delivered by such Transferee
and constitutes the legal, valid and binding contract of
such Transferee, enforceable against such Transferee in
accordance with its terms (subject to customary
qualifications).
(d) No Violation of Law. Such transfer complies in
all respects with and does not violate any applicable law.
(e) Expenses. All fees, expenses and charges of the
parties hereto (including, without limitation, reasonable
legal fees and expenses of special counsel) incurred in
connection with each transfer of such Beneficial Interest is
paid by an Owner Participant, as specified in the agreement
entered into pursuant to Section 6.1(c).
(f) ERISA. Such Transferee makes the representation
set forth in Section 3.4(i) to the parties hereto.
(g) Default. As a result of such transfer, no
Indenture Default attributable to the Owner Participant or
the Owner Trustee shall have occurred and be continuing.
(h) Non-Competitor. Such Transferee is not a
Competitor, unless the Lessee and Bayer shall have otherwise
consented in writing.
(i) Number of Owner Participants. After giving
effect to such transfer, there are no more than three (3)
Owner Participants.
In connection with any such transfer, the Lessee shall represent
to the Transferee that no Lease Default, Lease Event of Default
or, except as disclosed pursuant to the Lease, Event of Loss then
exists. Upon any such transfer (x) except as the context
otherwise requires, such Transferee shall be deemed an Owner
Participant for all purposes, and shall enjoy the rights and
privileges and perform the obligations of the transferor Owner
Participant to the extent of the interest transferred hereunder
and under each other Operative Agreement to which the transferor
Owner Participant is a party, and, except as the context
otherwise requires, each reference in this Agreement and each
other Operative Agreement to the Owner Participant shall
thereafter be deemed to include such Transferee for all purposes
to the extent of the interest transferred, and (y) the transferor
shall be released from all obligations hereunder and under each
other Operative Agreement to which such transferor is a party or
by which such transferor is bound to the extent such obligations
are expressly assumed by a Transferee. In no event shall any
such transfer or assignment waive or release the transferor from
any liability on account of any breach existing immediately prior
to such transfer of any of its representations, warranties,
covenants or obligations set forth in the Operative Agreements or
for any fraudulent or wilful misconduct. Any transfer,
conveyance or assignment of the Owner Participant's Beneficial
Interest hereunder in violation of this Section 6.1 shall be void
and of no effect, unless such transfer, conveyance or assignment,
on its face, at the time of occurrence appears to comply with the
requirements of this Section 6.1; and the effectiveness of a
transfer, conveyance or assignment which appears on its face to
comply with the requirements of this Section 6.1, however, shall
not impair any other right or remedy which any party may have as
a result of such transfer, conveyance or assignment actually
violating this Section 6.1. In the event that there is more than
one Owner Participant, any consent, waiver or amendment with
respect to the Operative Agreements may be given by those Owner
Participants that hold more than 50% of the aggregate amount
invested by the Owner Participants, except that without the
consent of each Owner Participant affected thereby, no consent,
amendment or waiver may (i) reduce any amount payable as Basic
Rent or Supplemental Rent, or change the date on which any such
amount is payable, (ii) create or allow any Liens on the Units
other than Permitted Liens, (iii) affect any Excepted Property or
(iv) reduce the percentage required to approve consents, waivers
and amendments set forth in this sentence.
6.2 Liens Attributable to the Owner Participant. The Owner
Participant covenants and agrees with and for the benefit of the
other parties to this Agreement that the Owner Participant will
not directly or indirectly create, incur, assume or suffer to
exist: (a) any Lessor's Liens created by it (whether or not
through its act or failure to act), or (b) any Lessor's Liens
arising as a result of taxes described in clause (iii) of the
definition of Lessor's Liens which are imposed against the Owner
Trustee (not in its individual capacity but solely as Owner
Trustee); and the Owner Participant agrees that it will, at its
own cost and expense, take such action as may be necessary to
duly discharge and satisfy in full any such Lessor's Lien (by
bonding or otherwise); provided that the Owner Participant may
contest any such Lessor's Lien in good faith by appropriate
proceedings so long as such proceedings do not involve any
material danger of the sale, forfeiture or loss of the Trust
Estate or any interest therein and do not interfere with the use,
operation or possession of the Units by the Lessee under the
Lease or the rights, titles and interests of the Construction
Loan Agent under the Construction Loan Agreement or the Indenture
Trustee under the Indenture. The Owner Participant agrees to
hold harmless the other parties to this Agreement from and
against any loss, cost or expense (including reasonable legal
fees and disbursements) as the result of the existence of any
such Lessor's Lien or the failure of the Owner Participant to
discharge and satisfy any such Lessor's Lien.
6.3 Lessor's Liens Attributable to the Owner Trustee.
Boatmen's covenants and agrees with and for the benefit of the
other parties to this Agreement that Boatmen's will not directly
or indirectly create, incur, assume or suffer to exist any
Lessor's Liens attributable to it (whether or not through its act
or failure to act), and Boatmen's agrees that it will, at its own
cost and expense, take such action as may be necessary to duly
discharge and satisfy in full any such Lessor's Lien (by bonding
or otherwise). Boatmen's agrees to hold harmless the other
parties to this Agreement from and against any loss, cost or
expense (including reasonable legal fees and disbursements) as
the result of the existence of any such Lessor's Lien or the
failure of Boatmen's to discharge and satisfy any such Lessor's
Lien.
6.4 Liens Created by the Indenture Trustee. The Indenture
Trustee, in its individual capacity, covenants and agrees with
and for the benefit of the other parties to this Agreement that:
(a) it shall not cause or permit to exist any Lien on the Units
or all or any other portion of the Trust Estate or the Indenture
Estate arising as a result of (i) claims against the Indenture
Trustee, in its individual capacity, not related to its interest
in the Units or any other portion of the Trust Estate, or the
administration of the Indenture Estate pursuant to the Indenture,
(ii) acts, or failures to act, of the Indenture Trustee, in its
individual capacity, not contemplated, or failure of the
Indenture Trustee to take any action it is expressly required to
perform, by the Operative Agreements, (iii) claims against the
Indenture Trustee in its individual capacity relating to taxes or
expenses that are not indemnified against by the Lessee pursuant
to Section 7 attributable to the Indenture Trustee, in its
individual capacity, or (iv) claims against the Indenture Trustee
arising out of the transfer by the Indenture Trustee (without the
consent of the Lessee and the Owner Trustee and not pursuant to
the direction of the holders of Notes pursuant to the terms of
the Indenture) of all or any portion of its interest in the
Units, the Indenture Estate or the Operative Agreements, other
than a transfer expressly contemplated by the Operative
Agreements; and (b) the Indenture Trustee will, at its own cost
and expense (and without any right of reimbursement from any
other party hereto), promptly take such action as may be
necessary to duly discharge and satisfy in full any such Lien (by
bonding or otherwise). The Indenture Trustee agrees to hold
harmless the other parties to this Agreement from and against any
loss, cost or expense (including reasonable legal fees and
disbursements) as the result of the existence of any such Lien or
the failure of the Indenture Trustee to discharge and satisfy any
such Lien.
6.5 Certain Covenants of the Owner Trustee, the Owner
Participant and Boatmen's. The Owner Participant and Boatmen's
hereby covenant and agree, severally and not jointly, with and
for the benefit of the Lessee, the Indenture Trustee, the
Construction Loan Agent, the Construction Lenders and the Note
Purchaser: (a) not to amend, supplement or otherwise modify any
provision of the Trust Agreement in such a manner as to adversely
affect the rights of the Lessee, the Indenture Trustee, the
Construction Loan Agent, the Construction Lenders or the Note
Purchaser, without the prior written consent of the affected
party and (b) not to terminate or revoke the Trust Agreement, or
the trust created by the Trust Agreement, and such trust shall
not be subject to revocation or termination by the Owner
Participant, prior to the latest of (i) payment in full and
discharge of the Construction Advances and all other indebtedness
secured by the Construction Loan Agreement, (ii) payment in full
and discharge of the Notes and all other indebtedness secured by
the Indenture and the final discharge thereof pursuant to Section
10.1 thereof and (iii) the expiration or early termination of the
Lease and (c) so long as the Lien of the Indenture has not been
discharged in accordance with the terms thereof, not to declare a
Lease Event of Default under the Lease except as expressly
permitted by the terms of the Indenture.
6.6 Lessee's Merger Covenant. (a) The Lessee shall not
consolidate with or merge into any other Person, or permit any
other Person to merge or consolidate with or into it, or convey,
transfer or lease substantially all of its assets as an entirety
to any Person without the consent of the Owner Participant, the
Required Construction Lenders and the Construction Loan Agent
(for so long as any Construction Advance is outstanding) and a
Majority In Interest unless (i) the Person formed by such
consolidation or surviving such merger (if other than the Lessee)
or the Person which acquires by conveyance, transfer or lease
substantially all of the assets of the Lessee as an entirety (A)
is a domestic corporation organized and existing under the laws
of the United States of America or a political subdivision
thereof, and (B) shall execute and deliver to the Owner Trustee,
the Owner Participant, the Indenture Trustee, the Construction
Lenders, the Construction Loan Agent and the Note Purchaser an
agreement, in form and substance satisfactory to the Owner
Trustee, the Owner Participant, the Indenture Trustee, the
Required Construction Lenders and the Construction Loan Agent
(for so long as any Construction Advance is outstanding) and a
Majority In Interest, containing the express assumption by such
successor Person of the due and punctual performance and
observance of each covenant and condition of this Agreement and
each of the other Operative Agreements to be performed or
observed by the Lessee, (ii) immediately prior to and immediately
after giving effect to such transaction, no Lease Default or
Lease Event of Default shall have occurred, whether as a result
of such consolidation or merger or such conveyance, transfer or
lease or otherwise, (iii) immediately after giving effect to such
transaction, such successor Person shall be in compliance with
all of the terms and conditions of the Operative Agreements and
(iv) such successor Person shall deliver to the Owner Trustee,
Owner Participant, the Indenture Trustee, the Construction
Lenders and the Construction Loan Agent (for so long as any
Construction Advance is outstanding) and the Note Purchaser (x)
an opinion of counsel, which counsel shall be reasonably
satisfactory to the Owner Trustee, the Owner Participant, the
Indenture Trustee, the Required Construction Lenders and the
Construction Loan Agent (for so long as any Construction Advance
is outstanding) and a Majority In Interest and (y) an Officer's
Certificate of a Responsible Officer of the Lessee to the effect
that such merger, consolidation, conveyance, transfer or lease
and such agreement described in clause (i)(B) above comply with
this Section 6.6, that such agreement is a legal, valid and
binding obligation of, and is enforceable against, such successor
Person, and that all conditions precedent relating to such
transaction provided in this Section 6.6 have been complied with.
Upon such consolidation or merger, or any conveyance, transfer or
lease of substantially all of the assets of the Lessee as an
entirety in accordance with this Section 6.6, the successor
Person formed by such consolidation or into which the Lessee is
merged or to which such conveyance, transfer or lease is made
shall succeed to, and be substituted for, and may exercise every
right and power of, the Lessee, as the case may be, under this
Agreement and the other Operative Agreements with the same effect
as if such successor Person had been named as the Lessee herein
and therein. No such consolidation, merger, conveyance, transfer
or lease of all or substantially all of the assets of the Lessee
as an entirety shall have the effect of releasing the Lessee or
any successor Person from its liability under the Operative
Agreements. Nothing contained in this Section 6.6 shall permit
any lease, sublease, assignment or other arrangement for the use,
operation or possession of the Units except in compliance with
the applicable provisions of the Lease.
6.7 Lessee Not to Own Notes or Beneficial Interest.
(a) Neither the Lessee nor any of its Affiliates nor any
ERISA Plan sponsored by the Lessee or any of its Affiliates, will
at any time own any of the Notes.
(b) Neither the Lessee nor any of its Affiliates will at
any time own any of the Beneficial Interest unless the Owner
Trustee, the Owner Participant, the Indenture Trustee, the
Construction Loan Agent (for so long as any Construction Advance
is outstanding), the Required Construction Lenders (for so long
as any Construction Advance is outstanding) and a Majority In
Interest consent thereto; provided that neither the Lessee nor
any of its Affiliates shall acquire any of the Beneficial
Interest if such acquisition would result in a prohibited
transaction (as defined in Section 406 of ERISA or section 4975
of the Code).
6.8 Broker's Fees.
(a) Lessee. The Lessee covenants and agrees that it will
hold the Owner Participant, the Owner Trustee, the Indenture
Trustee, the Construction Lenders, the Construction Loan Agent
and each holder of a Note harmless from and against any claim,
demand or liability for any broker's, finder's or placement fees
or commission alleged to have been incurred as a result of any
action by the Lessee in connection with the transactions
contemplated by the Operative Agreements, except for any such fee
or commission included in Transaction Costs.
(b) The Owner Participant. The Owner Participant covenants
and agrees that it will hold the Lessee, the Owner Trustee, the
Indenture Trustee, the Construction Lenders, the Construction
Loan Agent and each holder of a Note harmless from and against
any claim, demand or liability for any broker's, finder's or
placement fees or commission alleged to have been incurred as a
result of any action by the Owner Participant in connection with
the transactions contemplated by the Operative Agreements.
6.9 Boatmen's Covenant to Notify of Relocation or Name
Change. Boatmen's covenants and agrees to give the Owner
Participant, the Indenture Trustee, the Construction Loan Agent
and the Lessee prompt written notice of any relocation of its
chief executive office, principal place of business or the place
where its records concerning the Units and all its interest in,
to and under all documents relating to the Trust Estate is
located or of any change in its corporate name.
6.10 Lessee's Covenant to Notify of Relocation or Name
Change. The Lessee covenants and agrees to give the Owner
Trustee, the Owner Participant, the Construction Loan Agent and
the Indenture Trustee prompt written notice (which notice shall
be given at least 15 days prior to the effectiveness of any
relocation) of any relocation of its chief executive office,
principal place of business or the place where its records
concerning the Units is located or of any change in its corporate
name.
6.11 Corporate Existence. Except as otherwise provided in
Section 6.6, the Lessee covenants and agrees at all times to
maintain its corporate existence and all of its rights,
privileges and franchises necessary in the normal conduct of its
business, except for any corporate right, privilege or franchise
(x) that it determines, in its reasonable, good faith business
judgment, is no longer necessary or desirable in the conduct of
its business, and (y) the loss of which could not have a Material
Adverse Effect.
6.12 Compliance with Laws. The Lessee covenants and agrees
to comply with all laws, rules, regulations (including ERISA),
orders, writs, judgments, injunctions, decrees or awards to which
it may be subject, except where the failure so to comply could
not reasonably be expected to have a Material Adverse Effect.
The Lessee shall promptly file any reports, or furnish to the
Owner Trustee and the Owner Participant such information as may
be required to enable the Owner Trustee and the Owner Participant
timely to file any reports, required to be filed by the Owner
Trustee as the Lessor and the Owner Participant under the Lease
with any Governmental Authority.
6.13 Restriction on Transfer of Notes. The Note Purchaser
agrees, and each holder of a Note upon acceptance or purchase of
such Note shall be deemed to have agreed, that it will not
transfer or grant a participation in a Note unless:
(a) in the case of a transfer, the transferee is an
Eligible Lender Assignee and such transfer complies with
Section 2.4 of the Indenture;
(b) in the case of a transfer or participation, the
transferee or Note Purchaser is not a Competitor, unless the
Lessee shall have otherwise consented;
(c) in the case of a transfer, immediately after
such transfer, the transferee shall hold a Note or Notes in
an aggregate principal amount equal to the lesser of (i)
$5,000,000 and (ii) the aggregate outstanding principal
amount of all of the transferors' Notes immediately prior to
such transfer;
(d) in the case of a transfer, such transfer does
not, at the time of transfer, and after giving effect to the
transfer, increase the Lessee's costs or obligations (other
than non-material administrative costs and obligations),
unless the Lessee shall have otherwise consented; and
(e) in the case of a transfer to an Eligible Lender
Assignee which is organized under the laws of any
jurisdiction other than the United States or any state
thereof, the transferor Note Purchaser or Note holder shall
have furnished to each of the Owner Participant, the
Indenture Trustee, the Lessor and the Lessee (A) two
completed and executed copies of Internal Revenue Service
Form 4224 or, if the transferee is organized under the laws
of France, Germany, The Netherlands or the United Kingdom,
Internal Revenue Service Form 1001 (wherein such Eligible
Lender Assignee claims entitlement to complete exemption
from United States federal withholding tax), (B) either a
duly completed and executed Internal Revenue Service Form W-
8 or W-9 (to establish an exemption from United States
backup withholding tax), and (C) any other governmental
forms which are necessary or required under applicable tax
law, treaty or otherwise by law to reduce or eliminate any
withholding tax.
6.14 Amendments to Indenture. So long as no Lease Default
or Lease Event of Default shall have occurred and be continuing,
the Owner Participant, the Indenture Trustee and Boatmen's, each
severally and not jointly, agree that they will not amend the
Indenture in such a manner as to adversely affect the rights of
the Lessee without the prior written consent of the Lessee.
6.15 Environmental Matters. Lessee covenants to the Owner
Participant, the Owner Trustee, the Indenture Trustee and the
holders of the Notes:
(a) During the Lease Term, Lessee shall comply in
all material respects with all Environmental Laws and the
requirements of any permits issued under such Environmental
Laws and shall keep or cause to be kept the Premises, the
Units and Easements free and clear of any Liens imposed
pursuant to such Environmental Laws.
(b) During the Lease Term, Lessee shall not
generate, use, treat, recycle, store, release or dispose of,
or permit the generation, use, treatment, recycling,
storage, release or disposal of Hazardous Substances at, on
or under all or a portion of the Premises, the Units or
Easements, or transport or permit the transportation of
Hazardous Substances to or from the Premises, the Units or
Easements, except as reasonably necessary for the
construction and operation of Lessee's business and in
compliance with all applicable Environmental Laws.
(c) During the Lease Term, Lessee shall conduct and
complete any investigation and undertake any Cleanup,
removal, remedial or other action required by a Governmental
Authority or Environmental Laws to remove and remediate all
Hazardous Substances released during the Lease Term, at, on,
in, under or emanating from the Premises, the Units and
Easements, including such investigation, Cleanup, removal,
remedial or other action on properties adjacent to the
Premises to the extent permitted by the Facility Documents
or Environmental Laws.
(d) During the Lease Term, Lessee shall provide
written notice to the Owner Participant, Owner Trustee,
Indenture Trustee and the holders of the Notes of (i) any
fact, circumstance, condition, occurrence at, on, or arising
from the Premises, the Units and Easements that results or
would be reasonably likely to result in a material
noncompliance with any Environmental Laws or any release of
Hazardous Substances during the Lease Term on or from the
Premises that has resulted or would be reasonably likely to
result in personal injury or material property damage, such
notice to be given promptly after the condition is
discovered or release or occurrence takes place; (ii) any
fact, circumstance, condition or occurrence at the Premises
and the Units that would cause, or would be reasonably
likely to cause, the Premises, the Units and Easements to be
subject to any restrictions on ownership, occupancy, use or
transferability under any Environmental Law; and (iii) any
pending or threatened Environmental Claim against Lessee or
any other person or entity arising in connection with their
occupying or conducting operations on or at the Premises,
the Units and Easements, such notice to be given promptly
after such Environmental Claim is commenced or threatened.
To the extent possible, all such notices shall describe in
reasonable detail the nature of the Environmental Claim,
investigation, condition, incident or occurrence and the
Lessee's response thereto. In addition, the Lessee shall
provide the Owner Participant, the Owner Trustee, the
Indenture Trustee and the holders of the Notes with copies
of all written communications with any Governmental
Authorities relating to any material non-compliance with
Environmental Laws or any material Environmental Claim
simultaneously with the giving or promptly upon receiving
any such written communications. The Lessee shall also
provide such detailed reports of any Environmental Claim as
may be reasonably requested by the Owner Participant, the
Owner Trustee, the Indenture Trustee and the holders of the
Notes.
SECTION 7 LESSEE'S INDEMNITIES
7.1 General Tax Indemnity.
(a) Tax Indemnitee Defined. For purposes of this
Section 7.1, Tax Indemnitee means the Owner Participant
and its Affiliates, the Owner Trustee, both in its
individual capacity and as trustee, each Construction Lender
and its Affiliates, the Indenture Trustee, both in its
individual capacity and as trustee, the Construction Loan
Agent, the Note Purchaser and each holder of a Note and each
of their respective successors, assigns, servants, agents,
officers, directors and employees and the Trust Estate and
the Indenture Estate.
(b) Taxes Indemnified. The Lessee agrees to pay
promptly when due, and will indemnify and hold harmless each
Tax Indemnitee on an After-Tax Basis against, all taxes,
fees, withholdings, and governmental charges attributable to
the transactions contemplated herein including all license,
recording, documentary, registration and other fees and all
taxes (including, without limitation, income, adjusted gross
income, gross receipts, franchise, net worth, capital,
sales, rental, use, value added, property (tangible and
intangible), ad valorem, excise and stamp taxes), fees,
levies, imposts, recording duties, charges, assessments or
withholdings of any nature whatsoever, together with any
assessments, penalties, fines, addition to tax or interest
thereon (individually, a "Tax" and collectively called
"Taxes"), however imposed (whether imposed upon any Tax
Indemnitee, the Lessee, or all or any part of the Units or
any payment made in connection with the transactions
contemplated hereunder), by any federal, state or local
government or taxing authority in the United States of
America, or by any government or taxing authority of a
foreign country, of any political subdivision or taxing
authority thereof or by a territory or possession of the
United States of America or an international taxing
authority, upon or with respect to, based upon or measured
by:
(i) the Units or any part thereof;
(ii) the location, replacement, conditioning,
refinancing, control, purchase, repossession,
improvement, maintenance, redelivery, manufacture,
acquisition, purchase, financing, mortgaging,
ownership, acceptance, rejection, delivery, non-
delivery, leasing, subleasing, transportation,
insuring, inspection, registration, assembly,
abandonment, preparation, installation, possession,
use, operation, return, presence, storage, repair,
transfer of title, modification, rebuilding, import,
export, alteration, addition, replacement, assignment,
overhaul, transfer or registration, imposition of any
Lien, sale or other disposition of the Units or any
part thereof or interest therein;
(iii) the rentals, receipts or earnings arising
from the Operative Agreements or from the purchase,
financing, ownership, delivery, leasing, possession,
use, operation, return, storage, transfer of title,
sale or other disposition of the Units or any part
thereof;
(iv) any or all of the Operative Agreements;
(v) the Units, or the income or other proceeds
received with respect to the Units, held by the Owner
Trustee under the Trust Agreement or after a Lease
Event of Default, by the Construction Loan Agent under
the Construction Loan Agreement or by the Indenture
Trustee under the Indenture, as the case may be;
(vi) otherwise with respect to or by reason of
the transactions described in or contemplated by the
Operative Agreements;
(vii) the payment of the principal or interest
or other amounts payable with respect to the
Construction Advances or the Notes;
(viii) the Notes, the Construction Advances or
the issuance, acquisition, transfer, or refinancing
thereof or the Beneficial Interest or the creation
thereof under the Trust Agreement; or
(ix) any assumptions by the Lessee of the
Notes.
(c) Taxes Excluded. The indemnity provided for in
paragraph (b) above shall not apply to any of the following:
(i) in the case of any Tax Indemnitee other
than a Lender Indemnitee, (A) Taxes imposed by the
United States federal government, the State of Texas
(or any Governmental Authority within the State of
Texas) or the Tax Indemnitee s Home Jurisdiction (as
hereinafter defined) imposed on or measured by the net
or gross income or excess profits, capital gains,
receipts, minimum tax from tax preferences, accumulated
earnings, personal holding company income, alternative
minimum taxable income, capital, franchise, excess
profits, net worth or conduct of business of, or
succession and estate taxes of, such Tax Indemnitee
(other than any Taxes which are, or are in the nature
of, sales (unless included in Equipment Cost), use,
value added (other than value added Taxes in the nature
of net or gross income Taxes rather than sales or use
Taxes), rental, license, ad valorem or property
Taxes)(collectively "Income Taxes") and (B) Income
Taxes imposed by any taxing authority other than the
United States federal government, or the State of Texas
(or any Governmental Authority within the State of
Texas) or the Tax Indemnitee s Home Jurisdiction;
provided, that Income Taxes imposed by a jurisdiction
described in clause (B) of this Section 7.1(c)(i) shall
be subject to indemnification if (w) the Units or any
part thereof are operated, registered, located, present
or used within such jurisdiction, (x) a Lessee Person
is present or conducts activities within such
jurisdiction, (y) a Lessee Person makes, or is deemed
to make, payments from or through such jurisdiction, or
(z) any security interest, filing or collateral
contemplated by the Operative Agreements is present,
perfected, exists or occurs within such jurisdiction
and, in any case described in clauses (w) through (z),
such event or occurrence causes the transactions
contemplated by the Operative Agreements to be subject
to Income Tax in such jurisdiction (and if so subject
to such Income Taxes, the portion of the Tax
Indemnitee s Income Taxes payable to such jurisdiction
which shall be subject to indemnification pursuant to
this Section 7.1 shall be determined as if the sole
connection of the Tax Indemnitee with such jurisdiction
had been the transactions contemplated by the Operative
Agreements). Notwithstanding the foregoing, the
provisions of this Section 7.1(c)(i) and each other
exclusion contained in Section 7.1(c) relating to
income Taxes shall not be interpreted to exclude any
amount necessary to make any payment under the
Operative Agreements, otherwise required to be made on
an After-Tax Basis, to be made on an After-Tax Basis.
For purposes of this Section 7.1(c)(i), the term Tax
Indemnitee s Home Jurisdiction shall mean the State of
California (or any Governmental Authority within the
State of California), provided, that if Security
Pacific Leasing Corporation (or any Affiliate) or any
transferee or subsequent transferee of Security Pacific
Leasing Corporation (or an Affiliate) transfers some or
all of its interest in the Units, the Lease, the Trust
Estate, or any other interest or obligations arising
under the Operative Agreements to another Owner
Participant pursuant to the terms of this Agreement,
the term "Tax Indemnitee's Home Jurisdiction" shall
mean the state in which such transferee (or the
applicable subsequent transferee) is treated as
maintaining its principal place of business or
headquarters (and any Governmental Authority within
such state);
(ii) in the case of a Lender Indemnitee, (A)
Taxes imposed by the United States federal governmental
or the Lender Indemnitee s Home Jurisdiction (as
hereinafter defined) on or measured by the net or gross
income or excess profits, capital gains, receipts,
minimum tax from tax preferences, accumulated earnings,
personal holding company income, alternative minimum
taxable income, capital, franchise, excess profits, net
worth or conduct of business of, or succession and
estate taxes of, such Lender Indemnitee, other than any
such Taxes which are, or are in the nature of, sales,
use, value added, rental, license, ad valorem or
property Taxes, (collectively, "Income Taxes") and (B)
Income Taxes imposed by any taxing authority other than
the United States federal government or the Lender
Indemnitee s Home Jurisdiction; provided that Income
Taxes imposed by a jurisdiction described in clause (B)
of this Section 7.1(c) (ii) shall be subject to
indemnification if (w) the Units or any part thereof,
are operated, registered, located, present, or used
within such jurisdiction, (x) a Lessee Person, or any
other Tax Indemnitee, is present or conducts activities
within such jurisdiction, (y) a Lessee Person, or the
Owner Trustee or Owner Participant, makes, or is deemed
to make, payments from or through such jurisdiction, or
(z) any security interest, filing or collateral
contemplated by the Operative Agreements is present,
perfected, exists or occurs within such jurisdiction,
and in any case described in clauses (w) through (z),
such event or occurrence causes the transactions
contemplated by the Operative Agreements to be subject
to Income Tax in such jurisdiction (determined without
taking into account any other contacts that the Lender
Indemnitee may have with such jurisdiction) and if so
subject to such Income Taxes, the portion of the Lender
Indemnitee s Income Taxes payable to such jurisdiction
which shall be subject to indemnification pursuant to
this Section 7.1 shall be determined as if the sole
connection of the Lender Indemnitee with such
jurisdiction had been the transactions contemplated by
the Operative Agreements. Notwithstanding the
foregoing, the provisions of this clause (ii) relating
to Income Taxes shall not exclude from the indemnity
described in this Section 7.1 any Taxes for which the
Lessee would be required to indemnify a Lender
Indemnitee so that any payment under the Operative
Agreements, otherwise required to be made on an After-
Tax Basis, is made on an After-Tax Basis. (For
purposes of this Section 7.1(c)(ii), the term Lender
Indemnitee s Home Jurisdiction shall mean the State of
New York, New York City or Germany (or any governmental
authority within the State of New York, New York City
or Germany), provided that if the Lender Indemnitee
transfers all or a portion of its interest in the Note
or the Construction Advances in accordance with the
terms of this Agreement, the term Lender Indemnitee s
Home Jurisdiction shall be modified to reflect the
location within the United States in which the Note or
Construction Advance is maintained as an asset and the
jurisdiction under the laws of which the transferee
Lender Indemnitee has been formed.)
(iii) in the case of a Tax Indemnitee other than
a Lender Indemnitee, Taxes arising out of or measured
by acts, omissions, events or periods of time (or any
combination of the foregoing) which occur after (and
are not attributable to acts, omissions or events
occurring contemporaneously with or prior to) (1) the
payment in full of all amounts payable by the Lessee
pursuant to and in accordance with the Operative
Agreements and (2) the earlier of (x) the expiration of
the Lease Term and return of the Units in accordance
with the return provisions of the Lease and (y) the
termination of the Lease in accordance with the
applicable provisions of the Lease and return or
disposition of the Units in accordance with the Lease,
except that, notwithstanding anything to the contrary,
Taxes incurred in connection with the exercise of any
remedies following the occurrence and continuance of a
Lease Event of Default shall not be included in this
Section 7.1(c)(iii);
(iv) in the case of a Lender Indemnitee, Taxes
imposed on such Lender Indemnitee with respect to any
period commencing after the date of the payment in full
of the Construction Advances and the Notes and all
amounts due to the Construction Lender, the Note
Purchaser and each holder of a Note pursuant to the
Operative Agreements, except that Taxes related to
events occurring or matters arising prior to or
simultaneously with such date shall not be excluded
from the indemnity provided for in this Section 7.1 by
reason of this Section 7.1(c)(iv);
(v) in the case of a Tax Indemnitee other than a
Lender Indemnitee, Taxes imposed that would not have
been imposed but for any act or omission of such Tax
Indemnitee not contemplated by the Operative
Agreements, including, without limitation, the willful
misconduct or gross negligence of such Tax Indemnitee
(other than any act, omission, gross negligence or
willful misconduct not actually committed by but
instead imputed to such Indemnitee by reason of such
Tax Indemnitee's participation in the transactions
contemplated by the Operative Agreements and entering
into the Operative Agreements);
(vi) in the case of a Lender Indemnitee, Taxes
imposed on such Lender Indemnitee that would not have
been imposed but for the gross negligence or willful
misconduct of such Lender Indemnitee (other than any
gross negligence or willful misconduct not actually
committed by such Lender Indemnitee, but imputed to
such Lender Indemnitee by reason of (y) the acts or
omissions of a Lessee Person or any other Tax
Indemnitee, or (z) such Lender Indemnitee s
participation in the transactions contemplated by the
Operative Agreements and entering into the Operative
Agreements);
(vii) in the case of a Tax Indemnitee other than
a Lender Indemnitee, Taxes imposed on any Tax
Indemnitee or any successor, assign or Affiliate
thereof which became payable by reason of (A) any
voluntary transfer, assignment, sale or other
disposition ("Transfer") by such Tax Indemnitee
subsequent to the applicable Purchase Date, of any
interest in some or all of the Units, the Lease, its
interest in the Trust Estate, or any other interest or
obligations arising under the Operative Agreements,
other than (y) Taxes that result from Transfers which
occur as a result of the exercise of remedies after a
Lease Event of Default has occurred and is continuing
or (z) Taxes (other than Taxes on net income, Taxes of
a similar nature or Taxes imposed in lieu of the
foregoing) that result from any Transfer pursuant to
the terms of the Lease at the request or option of the
Lessee (including the Lessee's exercise of the option
granted pursuant to Section 22 of the Lease); or (B)
any involuntary Transfer by such Tax Indemnitee of any
interest in the Units, the Lease, or any interests or
obligations arising under the Operative Agreements
resulting from any bankruptcy or other proceeding for
relief of debtors in which such Tax Indemnitee is the
debtor or any foreclosure by a creditor of such Tax
Indemnitee other than any such Transfer following the
occurrence and continuance of a Lease Event of Default;
(viii) in the case of a Lender Indemnitee, Taxes
imposed on such Lender Indemnitee which become payable
by reason of any voluntary or involuntary transfer or
disposition by such Lender Indemnitee of its interest
in the Construction Loan Advances or the Notes other
than (y) Taxes imposed under Section 4975 of the Code
that would not have been imposed if the representation
made by the Owner Participant in Section 3.4(i) had
been true and correct at the time made, and (z) any
such Taxes that result from transfers or dispositions
which occur after a Lease Event of Default has occurred
and is continuing; provided, however, the provisions of
this clause (viii) shall not exclude from the indemnity
described in this Section 7.1 any Taxes for which the
Lessee would be required to indemnify a Lender
Indemnitee so that any payment under the Operative
Agreements, otherwise required to be made on an After-
Tax Basis, is made on an After-Tax Basis;
(ix) Taxes imposed on or with respect to or
payable by the Owner Trustee or the Indenture Trustee
based on, measured by or imposed with respect to any
fees paid to or accruable by the Owner Trustee or the
Indenture Trustee, as the case may be, in its capacity
as Owner Trustee or the Indenture Trustee, as the case
may be;
(x) in the case of a Tax Indemnitee other than a
Lender Indemnitee, Taxes which have been included in
Lessor's Cost to the extent actually paid on or before
the Lease Commencement Date;
(xi) Taxes imposed upon the Owner Participant
for which the Lessee is obligated to indemnify the
Owner Participant pursuant to the Tax Indemnity
Agreement;
(xii) Taxes imposed against a transferee (or
subsequent transferee) of an original Tax Indemnitee to
the extent of the excess of such Taxes over the amount
of such Taxes which would have been imposed against the
original Tax Indemnitee had there not been a transfer
by such original Tax Indemnitee of its interest in the
Units, the Lease, its interest in the Trust Estate, the
Notes, the Construction Advances or any other interest
or obligation arising under the Operative Agreements;
provided, however, that this subparagraph (xii) shall
not apply (A) to any transfer following the occurrence
and continuance of a Lease Event of Default (or, in the
case of a transferee or subsequent transferee of a
Lender Indemnitee, a Transfer which occurs while a
payment then due under the Indenture has not been
paid), (B) in determining amounts necessary to make
payments on an After-Tax Basis or (C) Taxes imposed
under Section 4975 of the Code that would not have been
imposed if the representation made by the Owner
Participant in Section 3.4(i) had been true and correct
at the time made;
(xiii) in the case of a Tax Indemnitee other
than a Lender Indemnitee, Taxes resulting from any
Transfer by a Tax Indemnitee of all or any portion of
its interest in the Lease or any Unit to the extent of
the excess of such Taxes over the amount of such Taxes
that would have been imposed had there been no such
disposition; and
(xiv) any interest, penalties or additions to
tax of a Tax Indemnitee attributable to a failure by
such Tax Indemnitee to file when due any report or
return required by any taxing authority or to a failure
by the Lessor to pay or remit any Tax when due in
either case unless caused by the Lessee's failure to
prepare returns, provide information or otherwise meet
its obligations under the Operative Agreements.
(d) Withholding Taxes. Notwithstanding any of the
exclusions set forth in paragraph (c) to the contrary, in
the case of any withholding Taxes imposed or other
deductions on the Lessee's payment of Rent or on the payment
by or on behalf of the Lessor of principal, interest or
Premium, if any, on the Note or on any amounts paid pursuant
to the Indenture or the Construction Loan Agreement, the
Lessee shall make such additional payments as will be
sufficient such that after the payment of such withholdings
and deductions there will be available sufficient amounts to
pay all Rent amounts otherwise payable hereunder or under
the Lease, and all principal, interest and Premium, if any,
on the Note or on any amounts paid pursuant to the Indenture
or the Construction Loan Agreement, subject to the Lessee's
right to recover from the Owner Participant any of such
amounts withheld from Lessee s payment of Rent as a result
of the Owner Participant or any Affiliate thereof, being
other than a U.S. Person, for which the Owner Participant
agrees to pay the Lessee promptly upon demand.
(e) Payments to the Lessee.
(i) If any Tax Indemnitee actually shall
realize a net Tax benefit with respect to a Tax not
indemnifiable hereunder as a result of any Taxes paid
or indemnified against by the Lessee under this Section
7.1 (whether by way of deduction, credit, allocation or
apportionment or otherwise), which benefit was not
previously taken into account in determining the amount
of the Lessee's payment to such Tax Indemnitee, such
Tax Indemnitee shall pay to the Lessee an amount, on an
After-Tax Basis, equal to the amount of such net Tax
benefit attributable to the payment being made to the
Lessee hereunder; provided, however, that if, and so
long as, a Lease Event of Default shall have occurred
and be continuing, and, in the case of a Lender
Indemnitee, any payment then due to such Lender
Indemnitee under the Operative Agreements has not been
paid, the Tax Indemnitee may hold such amount for the
benefit of the Lessee and shall pay such amount to the
Lessee promptly following the date on which the Lease
Event of Default is no longer continuing and, in the
case of a Lender Indemnitee, such payment to such
Lender Indemnitee has been made; provided further,
however, that no Tax Indemnitee shall be required to
pay to the Lessee any Tax benefit to the extent such
benefit (determined without regard to the reverse
gross-up amount) exceeds the indemnity received by such
Tax Indemnitee (determined without regard to the gross-
up amount), with such excess to be carried over and
applied against any future obligation of the Lessee to
indemnify such Tax Indemnitee under the Operative
Agreements. In the case of a Lender Indemnitee, such
Lender Indemnitee may determine in its sole discretion
whether to claim a Tax credit as distinguished from a
Tax deduction for any Tax and such treatment shall be
applied for purposes of determining the amount of such
Tax benefit. If such Tax benefit is thereafter lost,
the additional Tax payable shall be treated as a Tax
indemnifiable hereunder without regard to the
exclusions set forth in Section 7.1(c) except if, and
to the extent, such loss results solely from such Tax
Indemnitee's gross negligence or willful misconduct.
(ii) Upon receipt by a Tax Indemnitee of a
refund or credit of all or part of any Taxes paid or
indemnified against by the Lessee, which refund or
credit was not previously taken into account in
determining the amount of the Lessee's payment to Tax
Indemnitee, such Tax Indemnitee shall pay to the
Lessee, on an After-Tax Basis, an amount equal to the
amount of such refund plus any interest received by or
credited to such Tax Indemnitee with respect to such
refund; provided that if, and so long as, a Lease Event
of default shall have occurred and be continuing, and,
in the case of a Lender Indemnitee, any payment to such
Lender Indemnitee under the Operative Agreements then
due has not been paid, the Tax Indemnitee may hold such
amount for the benefit of the Lessee and shall pay such
amount to the Lessee promptly following the date on
which the Lease Event of Default is no longer
continuing and, in the case of a Lender Indemnitee,
such payment has been made. If it is later determined
that the Tax Indemnitee was not entitled to such refund
or credit, the portion of such refund that is repaid,
recaptured or disallowed will be treated as a Tax
indemnifiable hereunder without regard to the
exclusions set forth in Section 7.1(c) except if, and
to the extent, such loss, recapture or disallowance
results solely from such Tax Indemnitee s gross
negligence or willful misconduct.
(iii) The Tax Indemnitee will, at the Lessee's
expense, pursue refunds and Tax benefits that would
result in any such payments to the Lessee, but only if
(x) the Tax Indemnitee has been notified in writing by
the Lessee that such refunds or Tax benefits are
available, and (y) in the case of a Lender Indemnitee,
the pursuit of such refund or Tax benefit shall not, in
the sole discretion of such Lender Indemnitee,
exercised in good faith, result in any adverse
consequence to such Lender Indemnitee.
(f) Procedures. Any amount payable to a Tax
Indemnitee pursuant to paragraph (b) shall be paid within 30
days after receipt of a written demand therefor from such
Tax Indemnitee accompanied by a written statement describing
in reasonable detail the basis for such indemnity and the
computation of the amount so payable, provided that such
amount need not be paid prior to the later of (i) the date
on which such Taxes are due or (ii) in the case of amounts
which are being contested pursuant to paragraph (g) hereof
and which are not required to be paid under applicable law,
the time such contest (including all appeals permitted
hereunder) is finally resolved, provided, further, that with
respect to Taxes of a recurring nature, the Tax Indemnitee
shall only be required to provide one such written notice.
Any amount payable to the Lessee pursuant to paragraph (e)
shall be paid within 30 days of the day on which a return is
filed reflecting such Tax benefit or, in the case of a
refund, promptly after the Tax Indemnitee actually receives
a refund giving rise to a payment under paragraph (e), and
shall be accompanied by a written statement by the Tax
Indemnitee setting forth in reasonable detail the basis for
computing the amount of such payment. Within 30 days
following the Lessee's receipt of any computation from the
Tax Indemnitee, the Lessee may request that a nationally
recognized accounting firm selected by the Tax Indemnitee,
and reasonably acceptable to the Lessee, determine whether
such computations (but not any matters of interpretation of
law or the Operative Agreements) are correct. Such
accounting firm shall be requested to make the determination
contemplated by this paragraph (f) within 30 days of its
selection. In the event such accounting firm shall
determine that such computations are incorrect, then such
firm shall determine what it believes to be the correct
computations. The Tax Indemnitee shall cooperate with such
accounting firm and supply it with all information necessary
to permit it to accomplish such determination. The
computations of such accounting firm shall be final, binding
and conclusive upon the parties and the Lessee shall not
have any right to inspect the books, records or tax returns
of the Tax Indemnitee to verify such computation or for any
other purpose. All fees and expenses of the accounting firm
payable under this Section 7.1(f) shall be borne by the
Lessee, except that if such accounting firm's computation
shall result in a decrease in the amount due from the Lessee
or an increase in the amount owing to the Lessee by more
than the greater of 5% of the Tax Indemnitee's computation
or $10,000, then the Tax Indemnitee shall bear the cost of
such accounting firm.
(g) Contest. If any claim shall be made against any
Tax Indemnitee or if any proceeding shall be commenced
against any Tax Indemnitee (including a written notice of
such proceeding) for any Tax as to which the Lessee may have
an indemnity obligation, or if any Tax Indemnitee shall
determine that any Tax as to which the Lessee may have an
indemnity obligation may be payable, such Tax Indemnitee
shall promptly notify the Lessee in writing and shall not
take any action with respect to such claim, proceeding or
Tax without the consent of the Lessee for 30 days after
receipt of such notice by the Lessee unless the failure to
take action could result in the imposition of penalties or
fines or material danger of sale, forfeiture or loss of, or
the creation of any Lien on, the Units or any portion
thereof or interest therein; provided, however, that any
failure to provide such notice shall not relieve the Lessee
of any obligation to indemnify any Tax Indemnitee hereunder
except to the extent such failure materially impairs the
defense of such claim and such failure did not result from
the Lessee's failure to provide information, file reports or
otherwise fulfill the requirements of the Operative
Agreements; provided, further, however, that if such Tax
Indemnitee shall be required by law or regulation to take
action with respect to any such claim, proceeding or Tax
prior to the end of such 30 day period such Tax Indemnitee
shall, in such notice to the Lessee, so inform the Lessee
and such Tax Indemnitee shall not take any action with
respect to such claim, proceeding or Tax without the consent
of the Lessee before the date on which such Tax Indemnitee
shall be required to take action. If, within 30 days after
its receipt of such notice (or the shorter period referred
to in the preceding sentence), the Lessee shall request in
writing that such Tax Indemnitee contest the imposition of
such Tax, the Tax Indemnitee shall, at the expense of the
Lessee, in good faith contest (including by pursuit of
appeals other than appeals to the United States Supreme
Court), and shall not settle without the Lessee's written
consent (such consent not to be unreasonably withheld, in
good faith, based solely on the merits of the claim at
issue), or if such contest does not involve a claim for
Income Taxes or Taxes imposed by way of withholding, the Tax
Indemnitee shall allow the Lessee to contest the validity,
applicability or amount of such Tax in the Lessee's own
name, or if required by law, in the Tax Indemnitee's name,
by, in the sole discretion of the Person conducting such
contest:
(i) resisting payment thereof;
(ii) not paying the same except under protest,
if protest shall be necessary and proper; or
(iii) if payment shall be made, using
reasonable efforts to obtain a refund thereof in
appropriate administrative and judicial proceedings;
provided, however, that in no event shall such Tax
Indemnitee be required to contest (or permit the Lessee to
contest) the imposition of any Tax for which the Lessee may
be obligated unless: (t) no Lease Default or Lease Event of
Default shall have occurred and be continuing, (u) in the
case of Income Taxes or withholding Taxes indemnifiable
hereunder, (1) the amount of the claim and all future
related claims exceeds $100,000 and (2) the Lessee shall
have delivered to the Tax Indemnitee an opinion of tax
counsel chosen by the Lessee and reasonably acceptable to
the Tax Indemnitee to the effect that there is a Reasonable
Basis to contest such claim and, in the case of an appeal of
an adverse judicial decision, a reasonable basis to appeal
such decision, (v) in the case of any contest conducted by
the Lessee, the Lessee shall have acknowledged in writing
its liability hereunder if the contest is unsuccessful, (w)
the Lessee shall have agreed to pay such Tax Indemnitee all
costs and expenses that such Tax Indemnitee shall incur in
connection with the contest of such claim (including all
reasonable legal and accounting fees and disbursements), (x)
the action to be taken will not result in any material
danger of sale, forfeiture or loss of, or the creation of
any Lien on, the Units or any portion thereof or interest
therein, (y) if such contest shall involve payment of the
claim, the Lessee shall advance the amount thereof, plus
interest, penalties and additions to Tax with respect
thereto, to such Tax Indemnitee on an interest-free basis
and on an after-tax basis, and (z) the subject matter of
the claim shall not be of a continuing nature which has been
previously decided by a court of competent jurisdiction
pursuant to the contest provisions of this Section 7.1(g)
unless there shall have been a change in facts or law after
the date with respect to which such previous contest shall
have been decided, and the Tax Indemnitee shall have
received, at Lessee s expense, an opinion of independent tax
counsel chosen by the Lessee and reasonably acceptable to
the Tax Indemnitee that as a result of such change in facts
or law it is more likely than not that such contest will
prevail. For purposes of the preceding sentence, a
Reasonable Basis for a position shall exist if tax counsel
may properly advise reporting such position on a tax return
in accordance with ABA Formal Opinion 85-352 issued by the
Standing Committee on Ethics and Professional Responsibility
of the American Bar Association. The Tax Indemnitee shall
consult in good faith with the Lessee regarding the conduct
of any contest controlled by such Tax Indemnitee and the
Lessee shall consult in good faith with the Tax Indemnitee
regarding the conduct of any contest controlled by the
Lessee. Notwithstanding the above, a Tax Indemnitee may
settle and will not be required to contest the imposition of
any Taxes if such Tax Indemnitee shall waive its right to
indemnity with respect to such Taxes and any future and
logically related Taxes unless, with respect to such future
Taxes, the facts or law with respect thereto change in a
manner which would render a new contest of such Taxes
reasonable.
(h) Reports. In the event any reports with respect
to Taxes are required to be made, the Lessee will either
prepare and file such reports (and in the case of reports
which are required to be filed on the basis of individual
Units, such reports shall be prepared and filed in such
manner as to show as required the interests of each Tax
Indemnitee in such Unit) or, (x) if it shall not be
permitted to file the same, it will notify each Tax
Indemnitee of such reporting requirements, prepare such
reports in such manner as shall be reasonably satisfactory
to each Tax Indemnitee and deliver the same to each Tax
Indemnitee within a reasonable period prior to the date the
same is to be filed or (y) if it shall not possess the
information required to so prepare and file (and such
information is of the type which the Tax Indemnitee could
reasonably be expected to possess and which is of the type
which the Lessee and its Affiliates would not reasonably be
expected to possess) it shall request such information from
the Tax Indemnitee, which Tax Indemnitee will cooperate with
the Lessee in good faith to provide such information, if
within the possession of such Tax Indemnitee, or if not
within its possession, to obtain (at the Lessee's expense)
such information; it being understood that the ultimate
responsibility for obtaining such information not in the
possession of the Tax Indemnitee shall be that of the
Lessee.
7.2 General Indemnification and Waiver of Certain Claims.
(a) Claims Defined. For the purposes of this
Section 7.2, Claims shall mean any and all costs, expenses
(including reasonable attorneys' and consultants' fees and
disbursements), liabilities, obligations, losses, damages,
penalties, proceedings, actions or suits or claims of
whatsoever kind or nature (whether or not on the basis of
negligence, strict or absolute liability or liability in
tort) which may be imposed on, incurred by, suffered by, or
asserted against an Indemnified Person or any Unit or any
other portion of the Trust Estate and, except as otherwise
expressly provided in this Section 7.2, shall include, but
not be limited to, all reasonable out-of-pocket costs,
disbursements and expenses paid or incurred by an
Indemnified Person in connection therewith or thereto.
(b) Indemnified Person Defined. For the purposes of
this Section 7.2, "Indemnified Person" means the Owner
Participant, the Owner Trustee (both in its individual
capacity and as Owner Trustee), the Trust Estate, the
Indenture Trustee (both in its individual capacity and as
Indenture Trustee), the Indenture Estate, the Construction
Lenders, the Construction Loan Agent, the holders of Notes
(and if such holder is the nominee of another Person, such
other Person) and the respective shareholders, directors,
officers, employees, Affiliates, successors and permitted
assigns, agents and servants of the Owner Participant, the
Owner Trustee (both in its individual capacity and as Owner
Trustee), the Indenture Trustee (both in its individual
capacity and as Indenture Trustee), the Construction Loan
Agent, the Construction Lenders, and the holders of Notes.
(c) Claims Indemnified. Subject to the exclusions
stated in paragraph (d) below, the Lessee agrees to
indemnify, protect, defend and hold harmless each
Indemnified Person on an After-Tax Basis against Claims
relating to, resulting from or arising out of the Units, any
of the property constituting a part of the Trust Estate, the
Operative Agreements or the transactions contemplated
thereby (whether or not such Indemnified Person shall be
indemnified as to such Claim by any other Person),
including, without limitation:
(i) this Agreement or any other Operative
Agreement or any of the transactions contemplated
hereby and thereby, or the location, replacement,
condition, ownership, acquisition, lease, operation,
possession, repossession, redelivery, modification,
improvement, abandonment, use, non-use, maintenance,
assembly, installation, presence, rebuilding, import,
export, addition, assignment, transfer of title,
preparation, sublease, rental, substitution, control,
repair, storage, alteration, transfer, sale or other
application or disposition (including the imposition of
a Lien other than a Lessor's Lien), return, overhaul,
transportation, insuring, inspection, testing or
registration of any Unit (including, without
limitation, injury, death or property damage of
passengers, shippers or others), and strict liability
in tort;
(ii) the actual or alleged presence, release
or threatened release of Hazardous Substances on, in,
under or from the Premises, Easements or Units during
the Lease Term, whether discovered during or after the
Lease Term; any Environmental Claim based on Lessee s
operations on or at the Premises, Easements or Units,
but excluding any matters based solely on the gross
negligence or willful misconduct of the Owner
Participant, the Owner Trustee, the Indenture Trustee
and the holders of the Notes; and any violation by
Lessee of any Environmental Law;
(iii) the construction, manufacture, financing,
mortgaging, refinancing, design, purchase, acceptance,
rejection, delivery, non-delivery or condition of any
Unit (including, without limitation, latent and other
defects, whether or not discoverable, and any claim for
patent, trademark or copyright infringement);
(iv) any act or omission (whether negligent or
otherwise) or any breach of or failure to perform or
observe, or any other noncompliance with, any covenant,
condition or agreement to be performed by, or other
obligation of, the Lessee or Bayer under any of the
Operative Agreements, or the falsity of any
representation or warranty of the Lessee or Bayer in
any of the Operative Agreements or in any document or
certificate delivered in connection therewith, other
than representations and warranties in the Tax
Indemnity Agreement;
(v) without limiting Section 10.3, the offer,
issue, sale or delivery of any Notes or the
Construction Advances or the Construction Notes or any
interest in the Trust Estate and any refinancing of the
Notes or the Construction Advances or the Construction
Notes, other than violations of applicable securities
laws attributable to such Indemnified Person's own
actions or omissions (and not imputed to such
Indemnified Person solely by reason of its entering
into the Operative Agreements, its participation in the
transactions contemplated by the Operative Agreements
and its interest in the Units or the acts or omissions
of the Lessee or Bayer);
(vi) the imposition of any Lien on any Unit
other than Lessor's Liens;
(vii) endeavoring to enforce the Operative
Agreements or exercising remedies thereunder;
(viii) violations of ERISA, including, without
limitation, by reason of this Agreement or any other
Operative Agreement or any transactions contemplated
hereby or thereby constituting a prohibited transaction
within the meaning of Section 406 of ERISA;
(ix) any violation of any law, rule, regulation
or order by the Lessee or its directors, officers,
employees, agents or servants; and
(x) any costs incurred directly or indirectly by
the Construction Lenders in connection with the
purchase by Bayerische of a participation in Security
Pacific s Construction Advances as contemplated by
Section 2.5 of the Construction Loan Agreement which
result from any breakage of an Interest Period for
outstanding Construction Advances or the establishment
of any short-period match-funding by Bayerische related
to the purchase of such participation.
(d) Claims Excluded. The following are excluded
from the agreement to indemnify under this Section 7.2:
(i) Claims with respect to any Unit to the
extent attributable to acts or events occurring in
connection with and after (and not attributable to
events having occurred or conditions existing prior to)
(A) in the case of the consummation by the Lessee of a
purchase option with respect to all of the Units under
Section 22 of the Lease, or the payment of Termination
Value by the Lessee in respect of Proposed Terminated
Units under Section 10.2 of the Lease, or the
occurrence of an Event of Loss with respect to all of
the Units for which Stipulated Loss Value is paid under
Section 11 of the Lease, the payment of all amounts due
from the Lessee in connection with any such event, and
(B) in all other cases, with respect to such Unit, the
last to occur of (x) the earlier to occur of the
termination of the Lease or the expiration of the Lease
Term thereof, (y) the return of such Unit to the Owner
Trustee in accordance with the terms of the Lease (it
being understood that, so long as any Unit is in
storage as provided in Section 6.3 of the Lease, the
date of return thereof for the purpose of this Clause
(i)(B)(y) shall be the end of the last day of such
storage period), and (z) the payment in full of the
principal of, Premium, if any, and interest on the
Notes and all other amounts due and payable to or for
the account of the Indenture Trustee and the Note
holders under the Indenture and the other Operative
Agreements;
(ii) Claims which are Taxes (other than amounts
necessary to indemnify Claims on an After-Tax Basis),
or any cost or expense of contesting any such Taxes
whether or not the Lessee is required to indemnify
therefor under Section 7.1 hereof or the Tax Indemnity
Agreement, the Lessee's entire obligation with respect
to Claims which are Taxes under Section 4975 of the
Code and to Taxes and losses of tax benefits being
fully set out in such Section 7.1 or the Tax Indemnity
Agreement;
(iii) with respect to any particular
Indemnified Person and only as to such Indemnified
Person, Claims to the extent attributable to the gross
negligence or wilful misconduct (other than any gross
negligence or wilful misconduct imputed as a matter of
law to such Indemnified Person solely by reason of its
participation in the transactions and entering into the
Operative Agreements, its interest in the Units or the
acts or omissions of the Lessee or Bayer) of, or the
falsity or inaccuracy of any representation or warranty
of, or any breach of any covenant of, such Indemnified
Person; and
(iv) Claims attributable to (A) any voluntary
transfer, assignment or other disposition ( Transfer )
by such Indemnified Person subsequent to the applicable
Purchase Date, of any interest in some or all of the
Units, any of the property constituting the Trust
Estate, the Lease, its interest in the Trust Estate,
the Notes, the Construction Advances or any other
interests or obligations arising under the Operative
Agreements other than (x) Transfers which occur as a
result of the exercise of remedies after a Lease Event
of Default has occurred and is continuing, (y) any
Transfer pursuant to the terms of the Lease at the
request or option of the Lessee (including the Lessee's
exercise of the option granted pursuant to Section 22
of the Lease), or (z) any Claim under ERISA that would
not have been made if the representation made by the
Owner Participant in Section 3.4(i) had been true and
correct when made or (B) any involuntary Transfer by
such Indemnified Person of any interest in the Units,
any of the property constituting the Trust Estate, the
Lease, the Notes, the Construction Advances or any
interests or obligations arising under the Operative
Agreements resulting from any bankruptcy or other
proceeding for relief of debtors in which such
Indemnified Person is the debtor or any foreclosure by
a creditor of the Indemnified Person other than (y) any
such Transfer following the occurrence and continuance
of a Lease Event of Default, or (z) any Claim under
ERISA that would not have been made if the
representation made by the Owner Participant in Section
3.4(i) had been true and correct when made.
(e) Insured Claims. In the case of any Claim
indemnified by the Lessee hereunder which is covered by a
policy of insurance maintained by the Lessee pursuant to
Section 12 of the Lease or otherwise, each Indemnified
Person agrees, at Lessee's cost and expense, to provide
reasonable cooperation to the insurers in the exercise of
their rights to investigate, defend or compromise such Claim
as may be required to retain the benefits of such insurance
with respect to such Claim.
(f) Claims Procedure. An Indemnified Person shall,
after obtaining actual knowledge thereof, promptly notify
the Lessee of any Claim as to which indemnification is
sought (unless the Lessee theretofore has notified such
Indemnified Person of such Claim); provided, however, that
the failure to give such notice shall not release the Lessee
from any of its obligations under this Section 7, except to
the extent that failure to give notice of any action, suit
or proceeding against such Indemnified Person shall
materially and substantially prejudice the Lessee's ability
to defend such Claim and such failure arises out of or is
caused by the misconduct or negligence of such Indemnified
Person, provided that, for purposes of this sentence,
whenever (but only prior to the Lease Term Commencement
Date) Bayerische, in its capacity as a Construction Lender,
is an Indemnified Person, such Indemnified Person shall be
deemed to have actual knowledge of a Claim only to the
extent that both such Indemnified Person and the
Construction Loan Agent have actual knowledge of such claim.
Subject to the provisions of the following paragraph, the
Lessee shall at its sole cost and expense be entitled to
control, and shall assume full responsibility for, the
defense of such Claim; provided that the Lessee shall keep
the Indemnified Person which is the subject of such
proceeding fully apprised of the status of such proceeding
and shall provide such Indemnified Person with all
information with respect to such proceeding as such
Indemnified Person shall reasonably request.
Notwithstanding any of the foregoing to the contrary,
no Lessee shall be entitled to control and assume
responsibility for the defense of such Claim if (1) a Lease
Event of Default shall have occurred and be continuing and
the Indemnified Person notifies the Lessee that it is no
longer permitted to control the defense of such Claim, (2)
there exists an imminent risk of sale, forfeiture or loss of
any Unit or any other portion of the Trust Estate or such
proceeding will involve any material danger of the sale,
forfeiture or loss of, or the creation of any Lien (other
than any Permitted Lien) on, any Unit or any other portion
of the Trust Estate, (3) the amounts involved, in the
reasonable opinion of such Indemnified Person, are likely to
have a materially adverse effect on the business, taken as a
whole, of such Indemnified Person (other than the ownership,
leasing and financing of the Units), (4) in the reasonable
opinion of such Indemnified Person, there exists an actual
or potential material conflict of interest such that it is
advisable for such Indemnified Person to retain control of
such proceeding, (5) the Lessee has not acknowledged its
liability to the Indemnified Person with respect to such
Claim (except to the extent that thereafter any judicial
determination or settlement establishes that the act,
omission or event giving rise to such Claim was not
indemnifiable under this Section 7.2) or (6) in the
reasonable opinion of such Indemnified Person such Claim
involves the risk of criminal sanctions or liability to such
Indemnified Person. In the circumstances described in
clauses (1) through (6), the Indemnified Person shall be
entitled to control and assume responsibility for the
defense of such claim or liability at the cost and expense
of the Lessee. Unless a Lease Event of Default has occurred
and is continuing, the Indemnified Person shall not settle
or compromise any Claim without the prior consent of the
Lessee, which consent shall not be unreasonably withheld.
In addition, any Indemnified Person, at its own cost and
expense, may participate in any proceeding controlled by the
Lessee pursuant to this Section 7.2(f). The Lessee may in
any event participate in all such proceedings at its own
cost and expense. Nothing contained in this Section 7.2(f)
shall be deemed to require an Indemnified Person to contest
any Claim or to assume responsibility for or control of any
judicial proceeding with respect thereto.
(g) Subrogation. If a Claim indemnified under this
Section 7.2 is paid in full by the Lessee and/or an insurer
under a policy of insurance maintained by the Lessee, or if
payment of the Claim has otherwise been provided for in full
in a manner reasonably satisfactory to the Indemnified
Person, the Lessee and/or such insurer, as the case may be,
shall be subrogated to the extent of such payment (or
provision) to the rights and remedies of the Indemnified
Person (other than under insurance policies maintained by
such Indemnified Person) on whose behalf such Claim was paid
(or provided for) with respect to the act or event giving
rise to such Claim. So long as no Lease Default or Lease
Event of Default shall have occurred and be continuing,
should an Indemnified Person receive any refund, in whole or
in part, with respect to any Claim paid by the Lessee
hereunder, it shall promptly pay over the amount refunded
(but not in excess of the amount the Lessee or any of its
insurers has paid in respect of such Claim paid or payable
by such Indemnified Person on account of such refund) to the
Lessee.
(h) Waiver of Certain Claims. The Lessee hereby
waives and releases any Claim now or hereafter existing
against any Indemnified Person arising out of death or
personal injury to personnel of the Lessee or any of its
Affiliates or Bayer (including directors, officers,
employees, agents and servants), loss or damage to property
of the Lessee or its Affiliates or Bayer, or the loss of use
of any property of Lessee or its Affiliates or Bayer, which
may result from or arise out of the condition, use or
operation of the Units during the Lease Term, including,
without limitation, any latent or patent defect whether or
not discoverable.
(i) No Guaranty. The general indemnification
provisions of this Section 7.2 do not constitute a guaranty
by the Lessee that the principal of, interest on or any
other amounts payable with respect to the Notes will be
paid.
SECTION 8 LESSEE'S RIGHTS UNDER THE LEASE
Each party to this Agreement acknowledges notice of, and
consents in all respects to, the terms of the Lease, and
expressly, severally and as to its own actions only, agrees that
unless a Lease Event of Default has occurred and is continuing,
it shall not take, or cause to be taken, any action contrary to
the Lessee's rights under the Lease, including, without
limitation, the right to possession, use and operation by the
Lessee (or any permitted sublessee) of the Units.
SECTION 9 SPECIAL RIGHTS OF NOTE PURCHASER
Notwithstanding any provision to the contrary in this
Agreement, the Indenture or the Notes relating to the manner and
place of payment, all amounts payable to the Note Purchaser with
respect to any Notes held by the Note Purchaser or a nominee for
the Note Purchaser shall be paid by the Indenture Trustee to the
Note Purchaser (without any presentment thereof and without any
notation of the payment being made thereon) by check, duly
mailed, by first-class mail, postage prepaid, or delivered to
such Note Purchaser at the address for payments for such Note
Purchaser or, if a wire transfer to a bank account is designated
opposite such Note Purchaser's name on Schedule 1 or in a written
notice from such Note Purchaser to the Owner Trustee and the
Indenture Trustee, by wire transfer of immediately available
funds to the bank so designated for credit to the account and
marked for attention as so designated, provided that such bank
has facilities for the receipt of a wire transfer, or in any
other manner or to any other address in the United States as may
be designated by such Note Purchaser in a written notice from
such Note Purchaser to the Owner Trustee and the Indenture
Trustee. In the case of any wire transfer, the Indenture Trustee
will transfer funds from the office of the Indenture Trustee not
later than 2:00 p.m., Wilmington, Delaware time the date any
payment or prepayment of principal, Premium, if any, or interest
on the Notes is due, provided that funds therefor have been
received by the Indenture Trustee in cash or in solvent credits
acceptable to it by 12:00 noon, Wilmington, Delaware time, or if
not so received, the Indenture Trustee shall transfer such funds
promptly upon its receipt of such cash or solvent credits, but no
later than 12:00 noon Wilmington, Delaware time the next Business
Day. In the event the Indenture Trustee shall fail to make any
such payment as provided in the immediately foregoing sentence
after its receipt of funds by the time specified above, the
Indenture Trustee agrees to compensate the Note holders for loss
of use of funds. The Note Purchaser agrees that, if the Note
Purchaser shall sell or transfer any Notes, the Note Purchaser
will notify the Indenture Trustee of the name and address of the
transferee and such Note Purchaser will, prior to the delivery of
such Notes, make a notation on such Notes of the date to which
interest has been paid thereon and of the amount of any payments
or prepayments made on account of the principal thereof.
SECTION 10 MISCELLANEOUS
10.1 Survival. All warranties, representations,
indemnities and covenants made by any party hereto, whether
herein or in any certificate or other instrument delivered by any
such party or on behalf of any such party under this Agreement,
shall be considered to have been relied upon by each other party
hereto and shall survive the execution and delivery hereof, the
consummation of the transactions contemplated hereby at the
Closing or on each Purchase Date, each Advance Date and the Lease
Term Commencement Date, regardless of any investigation made by
any such party or on behalf of any such party. All indemnities
made by any party hereto, whether herein or in any certificate or
other instrument delivered by any such party or on behalf of any
such party under this Agreement, shall survive the termination of
this Agreement or any other Operative Agreement.
10.2 Notices. Unless otherwise expressly specified or
permitted by the terms hereof, all communications and notices
provided for herein shall be in writing, and any such notice
shall become effective when received. Any written notice shall
be by (a) personal delivery thereof, including, without
limitation, by overnight mail and courier service, (b) United
States mail, certified, postage prepaid, return receipt requested
or (c) facsimile transmission, confirmed by the method set forth
in clause (a) or (b) above, in each case addressed to addressee
at its respective address set forth on Schedule 1 or at such
other address as such Person may from time to time designate by
written notice to the other Persons party hereto.
10.3 No Guaranty. Nothing contained herein (including,
without limitation, Section 7.2 hereof) or in the Lease, the
Indenture, the Trust Agreement, the Bayer Letter, the Bayer
Support Agreement or the Tax Indemnity Agreement or in any
certificate or other statement delivered by the Lessee or Bayer
in connection with the transactions contemplated hereby or
thereby shall be deemed to be (a) a guaranty by the Lessee or
Bayer to the Owner Trustee, the Owner Participant, the Indenture
Trustee or any holder of Notes that the Units will have any
residual value or useful life, or (b) a guaranty by the Lessee or
Bayer of payment of the principal of, Premium, if any, or
interest on the Notes. Nevertheless, this Participation
Agreement and each other document named in the foregoing sentence
shall be enforceable in accordance with its terms.
10.4 Successors and Assigns. This Agreement shall be
binding upon the parties hereto and their respective successors
and assigns and shall inure to the benefit of, and shall be
enforceable by, the parties hereto and their respective
successors and assigns as permitted by and in accordance with the
terms hereof, including each successive holder of the Beneficial
Interest permitted under Section 6.1 hereof and each successive
holder of a Note permitted under Section 6.13 hereof. Except as
expressly provided herein or in the other Operative Agreements,
no party hereto may assign their interests herein without the
consent of the other parties hereto.
10.5 Business Day. If the date on which any payment is to
be made pursuant to this Agreement or any other Operative
Agreement is not a Business Day, the payment otherwise payable on
such date shall be payable on the next succeeding Business Day,
with the same force and effect as if made on the date when such
payment is due.
10.6 GOVERNING LAW. THIS AGREEMENT SHALL BE IN ALL
RESPECTS GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF
THE STATE OF NEW YORK INCLUDING ALL MATTERS OF CONSTRUCTION,
VALIDITY AND PERFORMANCE.
10.7 Severability. Whenever possible, each provision of
this Agreement shall be interpreted in such manner as to be
effective and valid under applicable law, but if any provision of
this Agreement shall be prohibited by or invalid under the laws
of any jurisdiction, such provision, as to such jurisdiction,
shall be ineffective to the extent of such prohibition or
invalidity, without invalidating the remainder of such provision
or the remaining provisions of this Agreement as to such
jurisdiction or any other jurisdiction.
10.8 Counterparts. This Agreement may be executed in any
number of counterparts, each executed counterpart constituting an
original but all together only one agreement.
10.9 Headings and Table of Contents. The headings of the
Sections of this Agreement and the Table of Contents are inserted
for purposes of convenience only and shall not be construed to
affect the meaning or construction of any of the provisions
hereof.
10.10 Reproduction of Documents. This Agreement, all
documents constituting exhibits hereto, and all documents
relating hereto received by a party hereto, including, without
limitation, (a) consents, waivers and modifications that may
hereafter be executed, (b) documents received in connection with
the purchase of the Notes, (c) documents received by the Owner
Participant in connection with the Owner Trustee's purchase of
the Units, and (d) financial statements, certificates, and other
information previously or hereafter furnished to the Owner
Participant, the Owner Trustee, the Construction Loan Agent and
the Indenture Trustee, may be reproduced by the party receiving
the same by any photographic, photostatic, microfilm, micro-card,
miniature photographic or other similar process. Each party
hereto agrees and stipulates that, to the extent permitted by
law, any such reproduction shall be admissible in evidence as the
original itself in any judicial or administrative proceeding
(whether or not the original is in existence and whether or not
such reproduction was made by such party in the regular course of
business) and that, to the extent permitted by law, any
enlargement, facsimile, or further reproduction of such
reproduction shall likewise be admissible in evidence.
10.11 Limitations of Liability.
(a) Liabilities of the Indenture Trustee, the Owner
Trustee, the Construction Lenders, the Construction Loan Agent
and the Participants. Neither the Indenture Trustee, the Owner
Trustee, any Construction Lender, the Construction Loan Agent nor
any Participant shall have any obligation or duty to the Lessee
or to others with respect to the transactions contemplated
hereby, except those obligations or duties expressly set forth
with respect to it in this Agreement and the other Operative
Agreements; and neither the Indenture Trustee, the Owner Trustee,
any Construction Lender, the Construction Loan Agent nor any
Participant shall be liable for performance by any other party
hereto of such other party's obligations or duties hereunder.
Without limiting the generality of the foregoing, under no
circumstances whatsoever shall the Indenture Trustee, any
Construction Lender, the Construction Loan Agent or any
Participant be liable to the Lessee for any action or inaction on
the part of the Owner Trustee in connection with the transactions
contemplated herein, whether or not such action or inaction is
caused by misconduct or negligence of the Owner Trustee unless
such action or inaction is at the direction of the Indenture
Trustee, such Construction Lender, the Construction Loan Agent or
such Participant, as the case may be.
(b) No Recourse to the Owner Trustee. It is expressly
understood and agreed by and among the Owner Trustee, the Lessee,
each Participant, each Construction Lender, the Construction Loan
Agent and the Indenture Trustee, and their respective successors
and permitted assigns, that, subject to the proviso contained in
this Section 10.11(b), all representations, warranties, covenants
and undertakings of the Owner Trustee hereunder shall be binding
upon the Owner Trustee only in its capacity as Owner Trustee
under the Trust Agreement, and (except as otherwise expressly
provided herein) the Owner Trustee shall not be liable in its
individual capacity for any breach thereof, except in the case of
handling funds for failure to act with the same care Boatmen's
uses in handling its own funds, and in all other cases for its
gross negligence or wilful misconduct; provided, however, that
nothing in this Section 10.11(b) shall be construed to limit in
scope or substance those representations, warranties, covenants
and undertakings of the Owner Trustee made expressly in its
individual capacity set forth herein or in any other Operative
Agreement. The term "Owner Trustee" as used in this Agreement
shall include any successor trustee under the Trust Agreement, or
the Owner Participant if the trust created thereby is terminated
or revoked.
(c) No Recourse to the Indenture Trustee. It is
expressly understood and agreed by and among the Owner Trustee,
the Lessee, each Participant, the Indenture Trustee and each
holder of a Note, and their respective successors and permitted
assigns, that, subject to the proviso contained in this Section
10.11(c), all representations, warranties, covenants and
undertakings of the Indenture Trustee hereunder shall be binding
upon the Indenture Trustee only in its capacity as Indenture
Trustee under the Indenture, and (except as otherwise expressly
provided herein) the Indenture Trustee shall not be liable in its
individual capacity for any breach thereof, except in the case of
handling funds for failure to act with the same care the
Indenture Bank uses in handling its own funds and in all other
cases for its gross negligence or wilful misconduct; provided,
however, that nothing in this Section 10.11(c) shall be construed
to limit in scope or substance those representations, warranties,
covenants and undertakings of the Indenture Trustee made
expressly in its individual capacity set forth herein or in any
other Operative Agreement. The term Indenture Trustee as used
in this Agreement shall include any successor trustee under the
Indenture.
10.12 Amendments and Waivers. Subject to Section 2.9
hereof, no term, covenant, agreement or condition of this
Agreement may be terminated, amended or compliance therewith
waived (either generally or in a particular instance,
retroactively or prospectively) except by an instrument or
instruments in writing executed by each party against which
enforcement of the termination, amendment or waiver is sought.
10.13 Disclosure of Information. (a) The Lessee authorizes
each holder of a Note to disclose to any Note Purchaser or
potential Note Purchaser, or to any assignee or potential
assignee of a Note, any and all financial and other information
in such holder's possession concerning the Lessee or LSB that has
been delivered to such holder of a Note by or on behalf of the
Lessee or LSB pursuant to this Agreement or any other Operative
Agreement or that has been delivered to such holder of a Note by
or on behalf of the Lessee or LSB in connection with such
holder's investigation of the Lessee and LSB prior to purchasing
a Note.
(b) Subject to the provisions of Section 10.16, the
Lessee authorizes the Owner Participant to disclose to any
Transferee or potential Transferee of the Beneficial Interest any
and all financial and other information in the Owner
Participant's possession concerning the Lessee or LSB that has
been delivered to the Owner Participant by or on behalf of the
Lessee or LSB pursuant to this Agreement or any other Operative
Agreement or that has been delivered to the Owner Participant by
or on behalf of the Lessee or LSB in connection with the Owner
Participant's investigation of the Lessee and LSB prior to
purchasing the Beneficial Interest.
10.14 FORUM SELECTION AND CONSENT TO JURISDICTION. ANY
LITIGATION BASED HEREON OR ON ANY OTHER OPERATIVE AGREEMENT, OR
ARISING OUT OF, UNDER OR IN CONNECTION WITH, THIS AGREEMENT OR
ANY OTHER OPERATIVE AGREEMENT, OR ANY COURSE OF CONDUCT, COURSE
OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF
ANY PARTY HERETO SHALL BE BROUGHT AND MAINTAINED EXCLUSIVELY IN
THE COURTS OF THE STATE OF NEW YORK OR IN THE UNITED STATES
DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK, EXCEPT FOR
LITIGATION BROUGHT IN THE COURTS OF OTHER JURISDICTIONS TO
ENFORCE JUDGMENTS RENDERED BY SUCH COURTS OF THE STATE OF NEW
YORK OR FEDERAL COURTS LOCATED IN NEW YORK. EACH PARTY HERETO
HEREBY EXPRESSLY AND IRREVOCABLY SUBMITS TO THE JURISDICTION OF
THE COURTS OF THE STATE OF NEW YORK AND OF THE UNITED STATES
DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK AND OF THE
APPELLATE COURTS THEREFROM FOR THE PURPOSE OF ANY SUCH LITIGATION
AS SET FORTH ABOVE AND IRREVOCABLY AGREES TO BE BOUND BY ANY
FINAL JUDGMENT RENDERED THEREIN FOR WHICH APPEALS OR THE TIME FOR
APPEAL HAVE EXPIRED IN CONNECTION WITH SUCH LITIGATION. EACH
PARTY HERETO FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF
PROCESS BY REGISTERED MAIL, POSTAGE PREPAID, OR BY PERSONAL
SERVICE WITHIN OR WITHOUT THE STATE OF NEW YORK. EACH PARTY
HERETO HEREBY EXPRESSLY AND IRREVOCABLY WAIVES, TO THE FULLEST
EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY HAVE OR
HEREAFTER MAY HAVE TO THE LAYING OR VENUE OF ANY SUCH LITIGATION
BROUGHT IN ANY SUCH COURT REFERRED TO ABOVE AND ANY CLAIM THAT
ANY SUCH LITIGATION HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.
TO THE EXTENT THAT ANY PARTY HERETO HAS OR HEREAFTER MAY ACQUIRE
ANY IMMUNITY FROM JURISDICTION OF ANY COURT OR FROM ANY LEGAL
PROCESS (WHETHER THROUGH SERVICE OR NOTICE, ATTACHMENT PRIOR TO
JUDGMENT, ATTACHMENT IN AID OF EXECUTION OR OTHERWISE) WITH
RESPECT TO ITSELF OR ITS PROPERTY, SUCH PARTY HEREBY IRREVOCABLY
WAIVES SUCH IMMUNITY IN RESPECT OF ITS OBLIGATIONS UNDER THIS
AGREEMENT AND THE OTHER OPERATIVE AGREEMENTS.
10.15 WAIVER OF JURY TRIAL. THE PARTIES HERETO WAIVE ANY
RIGHT TO TRIAL BY JURY WITH RESPECT TO ANY MATTER ARISING
HEREUNDER OR UNDER ANY OTHER OPERATIVE AGREEMENT.
10.16 Confidentiality. The parties hereto (other than
Lessee) agree to take normal and reasonable precautions in
accordance with their normal procedures and exercise due care to
maintain the confidentiality of all information relating to the
Lessee, Bayer and their respective Affiliates, which has been
identified as confidential by the Lessee or Bayer, and neither
such parties nor any of their Affiliates shall use any such
information for any purpose or in any manner other than pursuant
to the terms contemplated by the Operative Agreements; except to
the extent such information (a) was or becomes generally
available to the public other than as a result of a disclosure by
such parties, or (b) was or becomes available on a non-
confidential basis from a source other than the Lessee or Bayer;
provided, that such source is not bound by a confidentiality
agreement with either the Lessee or Bayer known to such parties;
and provided, further, that any such party may disclose such
information (i) at the request or pursuant to any requirement of
any Governmental Authority to which such party is subject or in
connection with an examination of such party by any such
Governmental Authority including, without limitation, the
National Association of Insurance Commissioners and any other
industry regulators, (ii) pursuant to subpoena or other court
process, (iii) when required to do so in accordance with the
provisions of any applicable law, (iv) to each such party's
independent auditors and other professional advisors, and (v) to
any Person and in any proceeding necessary in any such party's
judgment to protect such party's interests in connection with any
claim or dispute involving such party. Notwithstanding the
foregoing, the Lessee authorizes such parties to disclose to any
participant or assignee or purchaser of the Construction Notes,
the Notes, the Trust Estate, the Indenture Estate, the Beneficial
Interest or the Units (each, a "Transferee"), to any prospective
Transferee and to any Affiliate, such financial and other
information in such parties' possession concerning the Lessee,
Bayer or their respective Affiliates which has been delivered to
such parties pursuant to this Lease or the Participation
Agreement; provided, that unless otherwise agreed by the Lessee
or Bayer, as applicable, the Transferee agrees in writing with
such parties to keep such information confidential to the same
extent required of such parties hereunder.
* * * * *
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed and delivered in New York, New York, all
as of the date first above written.
Lessee: EL DORADO NITROGEN COMPANY
By:__________________________________
Name:_____________________________
Title:____________________________
Owner Trustee: BOATMEN'S TRUST COMPANY OF TEXAS,
not in its individual capacity, except as
expressly provided herein, but solely as
Owner Trustee
By:__________________________________
Name:_____________________________
Title:____________________________
Owner Participant: SECURITY PACIFIC LEASING CORPORATION
By:__________________________________
Name:_____________________________
Title:____________________________
Indenture Trustee: WILMINGTON TRUST COMPANY,
not in its individual capacity, except as
expressly provided herein, but solely as
Indenture Trustee
By:___________________________________
Name:____________________________
Title:___________________________
Construction Loan
Agent: BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION
By:___________________________________
Name:______________________________
Title:_____________________________
Construction Lender: SECURITY PACIFIC LEASING CORPORATION
By:___________________________________
Name:______________________________
Title:_____________________________
Construction Lender
and Note Purchaser: BAYERISCHE LANDESBANK, NEW YORK BRANCH
By:___________________________________
Name:______________________________
Title:_____________________________
By:___________________________________
Name:______________________________
Title:_____________________________
EXHIBIT A
Participation Agreement
FORM OF AMENDED AND RESTATED TRUST AGREEMENT
EXHIBIT B
Participation Agreement
FORM OF INDENTURE
EXHIBIT C
Participation Agreement
FORM OF CONSTRUCTION LOAN AGREEMENT
EXHIBIT D-1
Participation Agreement
FORM OF BAYER SUPPORT AGREEMENT
EXHIBIT D-2
Participation Agreement
FORM OF BAYER LETTER
EXHIBIT E
Participation Agreement
FORM OF LEASE
EXHIBIT F-1
Participation Agreement
FORM OF GROUND LEASE
EXHIBIT F-2
Participation Agreement
FORM OF GROUND LEASE SUBLEASE
EXHIBIT G-1
Participation Agreement
FORM OF OPINION OF LESSEE'S COUNSEL - EFFECTIVE DATE
EXHIBIT G-2
Participation Agreement
FORM OF OPINION OF LESSEE'S COUNSEL - LEASE
TERM COMMENCEMENT DATE
EXHIBIT H-1
Participation Agreement
FORM OF OPINION OF OWNER TRUSTEE'S SPECIAL COUNSEL -
EFFECTIVE DATE
EXHIBIT H-2
Participation Agreement
FORM OF OPINION OF OWNER TRUSTEE'S SPECIAL COUNSEL -
LEASE TERM COMMENCEMENT DATE
EXHIBIT I-1A
Participation Agreement
FORM OF OPINION OF OWNER PARTICIPANT'S SPECIAL COUNSEL -
EFFECTIVE DATE
EXHIBIT I-2A
Participation Agreement
FORM OF OPINION OF OWNER PARTICIPANT'S SPECIAL COUNSEL -
EFFECTIVE DATE
EXHIBIT I-2B
Participation Agreement
FORM OF OPINION OF OWNER PARTICIPANT S SPECIAL
COUNSEL-LEASE TERM COMMENCEMENT DATE
EXHIBIT J
Participation Agreement
FORM OF OPINION OF INDENTURE TRUSTEE'S SPECIAL COUNSEL
EXHIBIT K-1A
Participation Agreement
FORM OF OPINION OF BAYER'S COUNSEL -
EFFECTIVE DATE
EXHIBIT K-1B
Participation Agreement
FORM OF OPINION OF PAUL BERRY
EXHIBIT K-2A
Participation Agreement
FORM OF OPINION OF BAYER'S COUNSEL -
LEASE TERM COMMENCEMENT DATE
EXHIBIT K-2B
Participation Agreement
FORM OF OPINION OF PAUL BERRY -
LEASE TERM COMMENCEMENT DATE
EXHIBIT L
Participation Agreement
FORM OF PRIVATE PLACEMENT CERTIFICATE
EXHIBIT M
Participation Agreement
[INTENTIONALLY OMITTED]
EXHIBIT N
Participation Agreement
FORM OF ASSIGNMENT AND ASSUMPTION AGREEMENT
EXHIBIT O
Participation Agreement
FORM OF BILL OF SALE
EXHIBIT P
Participation Agreement
FORM OF PURCHASE NOTICE
EXHIBIT Q
Participation Agreement
FORM OF ADVANCE DATE NOTICE
EXHIBIT R
Participation Agreement
FORM OF AMENDED AND RESTATED
CONSTRUCTION AGENCY AGREEMENT
EXHIBIT S
Participation Agreement
FORM OF FACILITY DOCUMENTS
EXHIBIT T
Participation Agreement
FORM OF SUPPORT DOCUMENTS
EXHIBIT U
Participation Agreement
FORM OF ELIGIBLE OP ASSIGNEE GUARANTY
SCHEDULE 1
Participation Agreement
PARTIES' ADDRESSES AND PAYMENT INSTRUCTIONS
Party Address Payment Instructions
SCHEDULE 2
Participation Agreement
RENTAL FACTORS
Basic Rent Percentage
Rent Payment Date In Arrears/In Advance
SCHEDULE 3
Participation Agreement
STIPULATED LOSS VALUE/TERMINATION VALUE
Stipulated Loss
Value as Percent Termination
Determination Date of Total Eqipment Cost Value
- ------------------- ---------------------- -----------
SCHEDULE 4
Participation Agreement
[INTENTIONALLY OMITTED]
SCHEDULE 5
Participation Agreement
AMORTIZATION SCHEDULE
SCHEDULE 6
Participation Agreement
FIXED PRICE PURCHASE OPTION AMOUNT
Fixed Price Purchase
Lease Term Expiration Date Option Amount
- -------------------------- ---------------------
SCHEDULE 7
Participation Agreement
LEASED PROPERTY
SCHEDULE 8
Participation Agreement
PRICING ASSUMPTIONS
SCHEDULE 9
Participation Agreement
CONSTRUCTION COMMITMENT AMOUNTS
SCHEDULE 10
Participation Agreement
NOTE PURCHASER'S PERCENTAGE AND COMMITMENT
SCHEDULE 11
Participation Agreement
LESSEE DISCLOSURES
APPENDIX A
Participation Agreement
DEFINITIONS