EXECUTION COPY
Exhibit 10.45
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PARTICIPATION AGREEMENT
among
HANOVER COMPRESSION INC.,
as Lessee,
HANOVER EQUIPMENT TRUST 2000A,
a Delaware business trust,
as Lessor,
FIRST UNION NATIONAL BANK and SCOTIABANC INC.,
as Investors,
THE INDUSTRIAL BANK OF JAPAN, LTD.,
as Syndication Agent,
THE BANK OF NOVA SCOTIA,
as Documentation Agent,
THE CHASE MANHATTAN BANK,
as Agent
and
THE LENDERS PARTIES HERETO
______________________________
Dated as of March 13, 2000
______________________________
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TABLE OF CONTENTS
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SECTION 1. THE LOANS........................................................ 1
1.1 Loans............................................................. 1
1.2 Credit Agreement.................................................. 1
1.3 Collateral For Loans.............................................. 1
1.4 Guarantee......................................................... 1
SECTION 2. INVESTOR CONTRIBUTION............................................ 2
2.1 Investor Contribution............................................. 2
SECTION 3. SUMMARY OF THE TRANSACTIONS...................................... 2
3.1 Operative Agreements.............................................. 2
3.2 Equipment Purchase and Lease...................................... 2
3.3 Aggregate Tranche A Percentage; Tranche A Percentage.............. 2
SECTION 4. THE CLOSINGS..................................................... 3
4.1 Initial Closing Date.............................................. 3
4.2 Subsequent Closing Dates.......................................... 3
4.3 Trust Company Authorization....................................... 3
SECTION 5. FUNDING OF ADVANCES.............................................. 3
5.1 General........................................................... 3
5.2 Procedures for Funding............................................ 3
SECTION 6. CONDITIONS OF THE CLOSING........................................ 4
6.1 General Conditions to the Investors' and the Lenders' Obligations
to Make Loans and Investor Contributions......................... 4
6.2 Conditions to the Investors' and the Lenders' Obligations to Make
Advances to pay Equipment Acquisition Costs...................... 8
SECTION 7. REPRESENTATIONS AND WARRANTIES................................... 9
7.1 Representations and Warranties of the Investors on the Initial
Closing Date..................................................... 9
7.2 Representations and Warranties of Lessor on the Initial Closing
Date............................................................. 11
7.3 Representations and Warranties of the Lessee on the Initial
Closing Date..................................................... 13
7.4 Representations and Warranties of the Trust Company on the
Initial Closing Date............................................. 13
7.5 Representations and Warranties of the Lessee on Equipment
Closing Dates.................................................... 14
7.6 Representations and Warranties of the Lessor on Equipment
Closing Dates.................................................... 17
SECTION 8. PAYMENT OF CERTAIN EXPENSES...................................... 18
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8.1 Transaction Expenses.............................................. 18
8.2 Brokers' Fees and Stamp Taxes..................................... 18
8.3 Certain Fees and Expenses......................................... 19
8.4 Credit Agreement and Related Obligations.......................... 19
8.5 Commitment Fees................................................... 19
8.6 Overdue Rate...................................................... 20
8.7 Continuous Perfection of Security Interests....................... 20
8.8 Oklahoma Equipment Subleases...................................... 20
SECTION 9. OTHER COVENANTS AND AGREEMENTS.................................... 20
9.1 Covenants of the Trust and the Investors and the Trust Company.... 20
9.2 Repayment of Certain Amounts on Maturity Date..................... 22
9.3 Amendment of Certain Documents.................................... 22
9.4 Proceeds of Casualty.............................................. 23
SECTION 10. CREDIT AGREEMENT................................................ 23
10.1 Lessee's Credit Agreement Rights.................................. 23
SECTION 11. TRANSFER OF INTEREST............................................ 25
11.1 Restrictions on Transfer.......................................... 25
11.2 Effect of Transfer................................................ 25
SECTION 12. INDEMNIFICATION................................................. 25
12.1 General Indemnity................................................. 25
12.2 General Tax Indemnity............................................. 26
SECTION 13. MISCELLANEOUS................................................... 30
13.1 Survival of Agreements............................................ 30
13.2 No Broker, etc.................................................... 31
13.3 Notices........................................................... 31
13.4 Counterparts...................................................... 32
13.5 Amendments and Termination........................................ 32
13.6 Headings, etc..................................................... 33
13.7 Parties in Interest............................................... 33
13.8 GOVERNING LAW..................................................... 33
13.9 Severability...................................................... 33
13.10 Liability Limited................................................. 33
13.11 Rights of Lessee.................................................. 33
13.12 Further Assurances................................................ 33
13.13 Successors and Assigns............................................ 34
13.14 No Representation or Warranty..................................... 34
13.15 Highest Lawful Rate............................................... 34
13.16 Waiver............................................................ 35
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Annex A Rules of Usage and Definitions
Annex B Pricing Grid
Exhibits
Exhibit A Form of Assignment of Leases and Consent to Assignment
Exhibit B Form of Security Agreement
Exhibit C Form of Guarantee
Exhibit D Form of Requisition
Exhibit E Equipment Closing Certificate
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EXECUTION COPY
PARTICIPATION AGREEMENT dated as of March 13, 2000 (this "Agreement"),
among HANOVER COMPRESSION INC., a Delaware corporation (the "Lessee"); HANOVER
EQUIPMENT TRUST 2000A, a Delaware business trust (the "Trust" or the "Lessor");
THE CHASE MANHATTAN BANK, a New York banking corporation, as agent (in such
capacity, the "Agent"); THE INDUSTRIAL BANK OF JAPAN, LTD., New York branch, as
syndication agent (the "Syndication Agent"); THE BANK OF NOVA SCOTIA, a Canadian
chartered bank, as documentation agent (the "Document Agent"); FIRST UNION
NATIONAL BANK and SCOTIABANC INC., a Delaware corporation, as Investors (the
"Investors"); WILMINGTON TRUST COMPANY, in its individual capacity, and each of
the financial institutions listed on the signature pages hereof (each, a
"Lender"; collectively, the "Lenders"). Capitalized terms used but not
otherwise defined in this Agreement shall have the meanings set forth in Annex A
hereto.
Preliminary Statement
In consideration of the mutual agreements herein contained and other
good and valuable consideration, receipt of which is hereby acknowledged, the
parties hereto hereby agree as follows:
SECTION 1. THE LOANS
1.1 Loans. The Lenders have agreed to make loans to the Lessor in
an aggregate principal amount of up to $[194,000,000] in order for the Lessor to
acquire the Equipment and to pay other Equipment Acquisition Costs.
1.2 Credit Agreement. The Loans shall be made pursuant to the
Credit Agreement. Pursuant to this Agreement and the Credit Agreement, the
Loans will be made to the Lessor from time to time at the request of the Lessee.
1.3 Collateral For Loans. The Loans and the obligations of the
Lessor under the Credit Agreement shall be secured by, inter alia, (i) a first
priority assignment of the Lease, granted pursuant to the Assignment of Lease
and consented to by the Lessee pursuant to the Consent to Assignment (in each
case in the respective forms set forth on Exhibit A hereto), and (ii) a first
priority security interest in each piece of Equipment pursuant to a Security
Agreement in the form set forth on Exhibit B hereto.
1.4 Guarantee. The obligations of the Lessor under the Credit
Agreement shall be guaranteed by the Guarantors to the extent provided in the
Guarantee (in the form attached hereto as Exhibit C).
SECTION 2. INVESTOR CONTRIBUTION
2.1 Investor Contribution. Subject to the terms and conditions of
this Agreement, and in reliance on the representations and warranties of each of
the parties hereto contained herein or made pursuant hereto, on the first
Equipment Closing Date, the Investors shall make an investment in the Lessor (an
"Investor Contribution") in an amount equal to the Investor Commitment. The
Lessor shall use the Investor Contributions to pay a portion of the Equipment
Acquisition Costs simultaneously and pro rata with the Loans advanced by the
Lenders. The Lessee shall have the right to prepay the Investor Contribution,
in connection with the exercise by the Lessee of its right to direct the Lessor
to prepay the Loans in accordance with Section 10.1(e).
SECTION 3. SUMMARY OF THE TRANSACTIONS
3.1 Operative Agreements. On the Initial Closing Date, each of the
respective parties thereto shall execute and deliver this Agreement, the Lease,
the Security Agreement, the Notes, the Guarantee, the Credit Agreement, the
Assignment of Lease, the Consent to Assignment, and such other documents,
instruments, certificates and opinions of counsel as agreed to by the parties
hereto.
3.2 Equipment Purchase and Lease. (a) On each Equipment Closing
Date and subject to the terms and conditions of this Agreement and the Credit
Agreement (i) the Lenders will make Loans in accordance with Section 5 hereof
and the terms and provisions of the Credit Agreement, which Loans will be
secured by the Security Agreement executed and delivered by the Lessor and
joined in by the Lessee, (iii) the Lessor will purchase all right, title and
interest of Lessee in and to each piece of Equipment to be purchased on such
Equipment Closing Date and (iv) the Lessor will simultaneously lease all of its
right, title and interest in such Equipment to the Lessee by executing and
delivering a Lease Supplement.
(b) On each Equipment Closing Date, the Lessee shall certify to the
Agent on the Equipment Closing Certificate the Tranche A Percentage for each
piece of Equipment being acquired on such Equipment Closing Date. The Tranche A
Percentage so certified shall be the Tranche A Percentage for such piece of
Equipment for the duration of the Term.
3.3 Aggregate Tranche A Percentage; Tranche A Percentage. (a)
Notwithstanding any other provision of this Agreement or the other Operative
Agreements, the Lessee agrees that in no event shall the Lessee specify a piece
of Equipment for the Lessor to acquire and lease pursuant to the execution and
delivery of a Lease Supplement if the Aggregate Tranche
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A Percentage after giving effect to the acquisition and lease pursuant to the
execution and delivery of a Lease Supplement of such Equipment would be less
than 85%.
(b) Notwithstanding any other provision of this Agreement or the other
Operative Agreements, the Lessee agrees that in no event shall the Lessee
specify a piece of Equipment for the Lessor to acquire and lease pursuant to
the execution and delivery of a Lease Supplement if the Tranche A Percentage
with respect to such Equipment would be less than 85%.
SECTION 4. THE CLOSINGS
4.1 Initial Closing Date. All documents and instruments required
to be delivered on the Initial Closing Date shall be delivered at the offices of
Simpson Thacher & Bartlett, 425 Lexington Avenue, New York, New York, or at such
other location as may be determined by the Agent and the Lessee.
4.2 Subsequent Closing Dates. The Lessee shall deliver to the
Lessor, the Investors and the Agent a Requisition appropriately completed, in
connection with each Closing Date.
4.3 Trust Company Authorization. The Investors agree that, with
respect to each Closing Date, the satisfaction or waiver of the conditions
contained in Section 6 hereof shall constitute, without further act,
authorization and direction by both Investors to the Trustee to take on behalf
of the Lessor the actions specified in Section 2.1 of the Trust Agreement.
SECTION 5. FUNDING OF ADVANCES
5.1 General. To the extent funds have been made available to the
Lessor as Loans and Investor Contributions, the Lessor will: (i) acquire the
Equipment in accordance with the terms of this Agreement and the other Operative
Agreements; (ii) on behalf of the Lessee, pay Transaction Expenses; and (iii)
pay all other Equipment Acquisition Costs.
5.2 Procedures for Funding. (a) Not less than three Business Days
prior to each proposed Closing Date (other than the Initial Closing Date), the
Lessee shall deliver to the Investors and the Agent, a requisition (a
"Requisition"), appropriately completed, in the form of Exhibit D hereto.
(b) Each Requisition shall: (i) be irrevocable; and (ii) request funds
in an amount of at least $200,000 (or such lesser amounts as shall be equal to
the total aggregate of the Available
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Commitments plus the Available Investor Commitment at such time) for the payment
of Equipment Acquisition Costs or other Equipment Acquisition Costs which have
previously been incurred and were not the subject of and funded pursuant to a
prior Requisition, in each case as specified in the Requisition.
(c) So long as no Default or Event of Default has occurred and is
continuing and subject to the Lessor and the Agent having each received the
materials required by Section 6.1 and/or 6.2, as applicable, on each Equipment
Closing Date (i) the Lenders shall make Loans to the Lessor in an aggregate
amount not to exceed 97% of the aggregate funds specified in any Requisition, up
to an aggregate principal amount equal to the Available Commitments; (ii) with
respect to the first Equipment Closing Date, the Investors shall have made an
Investor Contribution in an amount equal to the Investor Commitment; and (iii)
the total amount of such Loans made on such date and Investor Contribution made
on the first Equipment Closing Date shall be used to fully cover the aggregate
Equipment Cost (after giving effect to amounts to be paid in connection with the
Equipment Acquisition Cost for such Equipment Closing Date).
(d) Notwithstanding anything to the contrary in this Agreement, (i)
the Lenders shall not be required to make Loans in an aggregate amount with
respect to all the Equipment in excess of 97% of the amount allocated to all
such Equipment (after giving effect to the Equipment purchased in connection
with the Requisition).
SECTION 6. CONDITIONS OF THE CLOSINGS AND ADVANCES
6.1 General Conditions to the Investors' and the Lenders' Obligations
to Make Loans and Investor Contributions. The agreement of each Lender to
make Loans, and the Investors to make Investor Contributions, is subject to the
satisfaction or waiver, immediately prior to or concurrently with the making of
such Loans and Investor Contribution, of the following conditions precedent:
(a) Operative Agreements. Each of the Operative Agreements entered
into on the Initial Closing Date or subsequently on an Equipment Closing
Date shall have been duly authorized, executed, acknowledged and delivered
by the parties thereto and shall be in full force and effect, and no event
of default thereunder or default under Section 17.1(a) or (b) of the Lease
shall exist (both before and after giving effect to the transactions
contemplated by the Operative Agreements), and the Agent and the Investors
shall have received a fully executed copy of each of the Operative
Agreements (other than the Notes of which the Agent shall have received the
originals thereof);
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(b) Taxes. All taxes, fees and other charges in connection with the
execution, delivery, and, where applicable, recording, filing and
registration of the Operative Agreements shall have been paid or provisions
for such payment shall have been made to the reasonable satisfaction of the
Agent and both Investors;
(c) Governmental Approvals. All necessary (or, in the reasonable
opinion of the Agent, the Investors and their respective counsel,
advisable) Governmental Actions, in each case required by any law or
regulation enacted, imposed or adopted on or after the date hereof or by
any change in fact or circumstances since the date hereof, shall have been
obtained or made and be in full force and effect;
(d) Insurance. The Agent and the Investors shall have received
evidence in form and substance reasonably satisfactory to them that all of
the requirements of Section 14 of the Lease shall have been satisfied
(which evidence shall include a report from a reputable insurance broker
certifying that all such requirements have been satisfied and otherwise in
form and substance satisfactory to Agent and both Investors);
(e) Legal Requirements. The transactions contemplated by the
Operative Agreements do not and will not violate in any respect any Legal
Requirements that would reasonably be expected to have a Material Adverse
Effect and do not and will not subject the Agent, any Lender or the
Investors to any adverse regulatory prohibitions or constraints;
(f) Corporate Proceedings of the Lessee and Each Guarantor. On the
Initial Closing Date, the Agent and the Investors shall have received a
copy of the resolutions or minutes, in form and substance satisfactory to
the Agent and both Investors, of the Board of Directors of the Lessee and
each Guarantor authorizing the execution, delivery and performance of this
Agreement, the Guarantee and the other Operative Agreements to which it is
a party, certified by the Secretary or an Assistant Secretary of the Lessee
or of such Guarantor as of the Initial Closing Date, which certificate
shall be in form and substance reasonably satisfactory to the Agent and
both Investors and shall state that the resolutions or minutes thereby
certified have not been amended, modified, revoked or rescinded;
(g) Lessee and Guarantor Incumbency Certificate. On the Initial
Closing Date, the Agent and the Investors shall have received a certificate
of the Lessee and each Guarantor, dated the Initial Closing Date, as to the
incumbency and signature of the officers of the Lessee and each Guarantor
executing any Operative Agreement reasonably satisfactory in form and
substance to the Agent and both Investors, executed by the President or any
Vice President and the Secretary or any Assistant Secretary of the Lessee
or of such Guarantor;
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(h) [Reserved]
(i) Corporate Proceedings of the Trust Company. On the Initial
Closing Date, the Agent, the Investors and the Lessee shall have received a
copy of the resolutions, in form and substance reasonably satisfactory to
the Agent, both Investors and the Lessee, of the Board of Directors of the
Trust Company authorizing the execution, delivery and performance of the
Operative Agreements to which it is a party, certified by the Secretary or
an Assistant Secretary of the Trust Company as of the Initial Closing Date,
which certificate shall be in form and substance satisfactory to the Agent,
both Investors and the Lessee and shall state that the resolutions thereby
certified have not been amended, modified, revoked or rescinded;
(j) Trust Company Incumbency Certificate. On the Initial Closing
Date, the Agent, both Investors and the Lessee shall have received a
certificate of the Trust Company, dated the Initial Closing Date, as to the
incumbency and signature of the officers of the Trust Company executing any
Operative Agreement, satisfactory in form and substance to the Agent, both
Investors and the Lessee, executed by the President or any Vice President,
Assistant Vice President, or a duly authorized Trust Officer and the
Secretary or any Assistant Secretary of the Trust Company;
(k) Corporate Documents. (i) The Agent and both Investors shall have
received true and complete copies of the certificate of incorporation and
by-laws of the Lessee, certified as of the Initial Closing Date as complete
and correct copies thereof by the Secretary or an Assistant Secretary of
the Lessee;
(ii) The Agent and the Lessee shall have received true and complete
copies of the articles of incorporation and by-laws of each of the
Investors, certified as of the Initial Closing Date as complete and correct
copies thereof by the Secretary or an Assistant Secretary of each of the
Investors;
(l) Consents, Licenses and Approvals. All consents, authorizations
and filings required in order to allow Lessee to consummate the transaction
contemplated by this Agreement shall have been obtained and be in full
force and effect, except to the extent the failure to obtain or maintain
any such consent, authorization or filing would not individually or in the
aggregate have a Material Adverse Effect;
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(m) Fees. The Agent and the Arranger shall have received the fees to
be paid on the Initial Closing Date pursuant to the Fee Letter which fees
shall not be paid using the proceeds of the Loans or Investor
Contributions;
(n) Legal Opinions. (i) On the Initial closing Date, the Agent and
the Investors shall have received the executed legal opinion of Latham &
Watkins, in form and substance reasonably acceptable to the Agent;
(ii) On the Initial Closing Date, the Agent, the Lessee and the
Investors shall have received the executed legal opinion of Morris, James,
Hitchens & Williams LLP, counsel to the Lessor and the Trust Company, in
form and substance reasonably acceptable to the Agent; and
(iii) By the First Equipment Closing Date Agent, the Lessee,
and the Investors shall have received the executed legal opinions of (a)
Jackson Walker L.L.P. and (b) Holland & Hart, local counsel to the Lessee
and the Guarantors in (a) Texas and Louisiana and (b) Wyoming,
respectively, in form and substance reasonably acceptable to the Agent;
(o) Actions to Perfect Liens. The Agent shall have received evidence
in form and substance satisfactory to it that all filings, recordings,
registrations and other actions, including the filing of duly executed
Lender Financing Statements and Lessor Financing Statements, necessary or,
in the opinion of the Agent or the Investors, desirable to perfect the
Liens created by the Security Documents shall have been completed;
(p) Lien Searches. By the First Equipment Closing Date the Agent and
the Investors shall have received the results of recent search by a Person
reasonably satisfactory to the Agent, of the Uniform Commercial Code,
judgement and tax lien filings which may have been filed in each State in
which any Equipment is located with respect to personal property of the
Lessee, and the results of such search shall be satisfactory to the Agent
and both Investors;
(q) Representations and Warranties. The representations and
warranties of the Lessor, the Lessee, the Investors and the Guarantor
contained herein and in each of the other Operative Agreements shall be
true and correct in all material respects on and as of each Closing Date as
if made on and as of each Closing Date (unless such representations and
warranties specifically refer to another date);
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(r) Performance of Operative Agreements. The parties hereto (other
than the Investors or the Lenders) shall have performed in all material
respects their respective agreements contained herein and in the other
Operative Agreements on or prior to each such Closing Date; and
(s) Default. There shall not have occurred and be continuing any
Default or Event of Default and no Default or Event of Default will have
occurred after giving effect to the Advance requested by such Requisition.
6.2 Conditions to the Investors' and the Lenders' Obligations to Make
Advances to pay Equipment Acquisition Costs.
The obligations of the Investors to make the Investor Contribution, on
the first Equipment Closing Date, and of the Lenders to make Loans to the
Lessor, on an Equipment Closing Date, for the purpose of providing funds to the
Lessor necessary to acquire a piece of Equipment are subject to the satisfaction
or waiver of the following conditions precedent:
(a) Requisition. The Agent and the Investors shall have received a
fully executed counterpart of the Requisition dated as of the Equipment
Closing Date (but delivered at least three Business Days prior to the
Equipment Closing Date other than on the Initial Closing Date),
appropriately completed;
(b) Bill of Sale. There shall have been delivered to the Lessor, a
bill of sale (the "Bill of Sale"), in form and substance reasonably
acceptable to the Agent, with respect to each piece of Equipment being
purchased on such Equipment Closing Date, conveying title to such piece of
Equipment to the Lessor, subject only to the Permitted Exceptions;
(c) Title. The Lessor shall have good and valid title to the
Equipment being acquired on such Equipment Closing Date subject only to the
Permitted Exceptions, and the Lessor shall have granted the security
interest pursuant to the Security Agreement with respect to the Equipment.
(d) Lease Supplement. The Lessee shall have delivered a Lease
Supplement executed by the Lessee and the Lessor with respect to all
Equipment being acquired on such Equipment Closing Date to the Agent;
(e) Security Agreement Supplement. The Lessee shall have delivered a
supplement to the Security Agreement executed by the Lessor and Lessee with
respect to each piece of Equipment being acquired on such Equipment Closing
Date to the Agent that
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is not already subject to the Security Agreement. The Lien of the
Security Agreement, as supplemented, shall conform to the representations
and warranties set forth in Section 7.5(f);
(f) Supplement to Assignment of Lease. The Lessee shall have executed
and delivered an original Supplement to Assignment of Lease executed by the
Lessor with respect to each piece of Equipment being acquired on such
Equipment Closing Date that is not already subject to the Assignment of
Lease;
(g) Appraisal. The Agent and the Investors shall have received an
Appraisal of the Equipment being acquired on such Equipment Closing Date
and such Appraisal shall be in form and substance acceptable to the Agent,
both Investors and the Lessor;
(h) Default. There shall not have occurred and be continuing any
Default or Event of Default and no Default or Event of Default will have
occurred after giving effect to the Advance requested by such Requisition;
(i) Local Opinions. With respect to each piece of Equipment being
acquired on such Equipment Closing Date:
(i) the Agent and the Investors shall have received the executed
legal opinion of local counsel to the Lessee and the Guarantors in the
state in which such Equipment is located, in form and substance reasonably
acceptable to the Agent;
(ii) the Agent, the Lessee and the Investors shall have received
the executed legal opinion of counsel to Lessor and the Trust Company, in
form and substance reasonably acceptable to the Agent; and
(iii) the Agent and the Investors shall have received the
executed legal opinion of counsel to Lessee and the Guarantors,
substantially in form and substance reasonably acceptable to the Agent.
SECTION 7. REPRESENTATIONS AND WARRANTIES
7.1 Representations and Warranties of the Investors on the Initial
Closing Date . Each of the Investors represents and warrants to each of the
other parties hereto as of the Initial Closing Date as follows:
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(a) Due Organization, etc. It is a duly organized and validly
existing corporation in good standing under the laws of its state of
incorporation and has the power and authority to carry on its business as
now conducted and to enter into and perform its obligations under this
Agreement, each Operative Agreement to which it is a party and each other
agreement, instrument and document executed and delivered by it on the
Closing Date in connection with or as contemplated by each such Operative
Agreement to which it is or will be a party.
(b) Authorization; No Conflict. The execution, delivery and
performance of each Operative Agreement to which it is a party has been
duly authorized by all necessary action on its part and neither the
execution and delivery thereof by the Investor, nor the consummation of the
transactions contemplated thereby by the Investor, nor compliance by it
with any of the terms and provisions thereof (i) requires or will require
any approval of (which approval has not been obtained) the shareholders of,
or approval or consent of any Person, (ii) contravenes or will contravene
any Legal Requirement applicable to or binding on it as of the date hereof,
(iii) does or will contravene or result in any breach of or constitute any
default under, or result in the creation of any Lessor Lien upon the
Equipment, its articles of incorporation or by-laws, any indenture,
mortgage, chattel mortgage, deed of trust, conditional sales contract, bank
loan or credit agreement or other agreement or instrument to which it or
its properties may be bound or (iv) does or will require any Governmental
Action by any Governmental Authority other than any Governmental Action
required solely due to the nature of the Equipment.
(c) Enforceability, etc. Each Operative Agreement to which it is a
party has been duly executed and delivered by it and constitutes, or upon
execution and delivery will constitute, a legal, valid and binding
obligation enforceable against it in accordance with the terms thereof
except as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting the
enforcement of creditors' rights generally and by general equitable
principles (whether enforcement is sought by proceedings in equity or at
law).
(d) ERISA. The Investor is making the Investor Contribution
contemplated to be made by it hereunder for its own account and with its
general corporate assets in the ordinary course of its business, and no
part of such amount constitutes (i) "plan assets" under 29 CFR 2510.3-101
or (ii) assets of a "governmental plan" as defined under Section 3(32) of
ERISA.
(e) Litigation. To its knowledge, no litigation, investigation or
proceeding of or before any arbitrator or Governmental Authority is pending
or threatened by or against the Investor (a) with respect to any of the
Operative Agreements or any of the transactions
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contemplated hereby or thereby, or (b) which would reasonably be expected
to have a material adverse effect on the assets, liabilities, operations,
business or financial condition of the Investor.
(f) Lessor Liens. The Equipment is free and clear of Lessor Liens
attributable to the Investors.
7.2 Representations and Warranties of Lessor on the Initial Closing
Date. Lessor represents and warrants to each of the other parties hereto as
of the Initial Closing Date as follows:
(a) Due Organization, etc. Lessor is a duly organized and validly
existing business trust in good standing under the laws of the State of
Delaware and has the power and authority to carry on its business as now
conducted and to enter into and perform its obligations under this
Agreement, each Operative Agreement to which it is a party and each other
agreement, instrument and document executed and delivered by it on the
Closing Date in connection with or as contemplated by each such Operative
Agreement.
(b) Authorization; No Conflict. The execution, delivery and
performance of each Operative Agreement to which it is a party has been
duly authorized by all necessary action on its part and neither the
execution and delivery thereof by the Lessor, nor the consummation of the
transactions contemplated thereby by the Lessor, nor compliance by it with
any of the terms and provisions thereof (i) requires or will require any
approval of (which approval has not been obtained) any party or approval or
consent of any Person, (ii) contravenes or will contravene any Legal
Requirement applicable to or binding on it as of the date hereof, (iii)
does or will contravene or result in any breach of or constitute any
default under, or result in the creation of any Lessor Lien upon the
Equipment or the Trust Agreement, any indenture, mortgage, chattel
mortgage, deed of trust, conditional sales contract, bank loan or credit
agreement or other agreement or instrument to which it or its properties
may be bound or (iv) does or will require any Governmental Action by any
Governmental Authority.
(c) Enforceability, etc. Each Operative Agreement to which it is a
party has been duly executed and delivered by it and constitutes, or upon
execution and delivery will constitute, a legal, valid and binding
obligation enforceable against it in accordance with the terms thereof
except as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting the
enforcement of creditors' rights generally and by general equitable
principles (whether enforcement is sought by proceedings in equity or at
law).
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(d) Litigation. No litigation, investigation or proceeding of or
before any arbitrator or Governmental Authority is pending or threatened by
or against the Lessor (a) with respect to any of the Operative Agreements
or any of the transactions contemplated hereby or thereby, or (b) which
would reasonably be expected to have a material adverse effect on the
assets, liabilities, operations, business or financial condition of the
Lessor.
(e) Assignment. Lessor has not assigned or transferred any of its
right, title or interest in or under the Lease, any other Operative
Agreement or any Equipment, except in accordance with the other Operative
Agreements.
(f) No Default. The Lessor is not in default under or with respect to
any of its Contractual Obligations in any respect which would reasonably
be expected to have a material adverse effect on the assets, liabilities,
operations, business or financial condition of the Lessor. No Default or
Event of Default attributable to it has occurred and is continuing.
(g) Use of Proceeds. The proceeds of the Loans and the Investor
Contribution shall be applied by the Lessor solely in accordance with the
provisions of the Operative Agreements.
(h) Chief Place of Business. The Lessor's chief place of business,
chief executive office and office where the documents, accounts and records
relating to the transactions contemplated by this Agreement and each other
Operative Agreement are kept are located at 1100 North Market Street,
Wilmington, Delaware 19890-0001.
(i) Federal Reserve Regulations. The Lessor is not engaged
principally in, and does not have as one of its most important activities,
the business of extending credit for the purpose of purchasing or carrying
any margin stock (within the meaning of Regulation U of the Board), and no
part of the proceeds of the Loans will be used by it, directly or
indirectly, to purchase or carry any margin stock or to extend credit to
others for the purpose of purchasing or carrying any such margin stock or
for any purpose that violates, or is inconsistent with, the provisions of
Regulations of the Board, including but not limited to, T, U or X of the
Board.
(j) Investment and Holding Company Status. The Lessor is not (i) an
"investment company" as defined in, or subject to regulation under the
Investment Company Act of 1940 or (ii) a "holding company" as defined in,
or subject to regulation under, the Public Utility Holding Company Act of
1935.
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(k) Securities Act. Neither the Lessor nor any Person authorized by
the Lessor to act on its behalf has offered or sold any interest in the
Equipment or the Notes, or in any similar security or interest relating to
the Equipment, or in any security the offering of which for the purposes of
the Securities Act would be deemed to be part of the same offering as the
offering of the aforementioned securities to, or solicited any offer to
acquire any of the same from, any Person other than, in the case of the
Notes, the Agent, and neither the Lessor nor any Person authorized by the
Lessor to act on its behalf will take any action which would subject the
issuance or sale of any interest in the Equipment or the Notes to the
provisions of Section 5 of the Securities Act or require the qualification
of any Operative Agreement under the Trust Indenture Act of 1939, as
amended.
(l) ERISA. The Lessor is making the Lessor Contribution contemplated
to be made by it hereunder in the ordinary course of its business, and no
part of such amount constitutes (i) "plan assets" under 29 CFR 2510.3-101
or (ii) assets of a "governmental plan" as defined under Section 3(32) of
ERISA.
(m) Lessor Liens. The Equipment is free and clear of all Lessor
Liens.
7.3 Representations and Warranties of the Lessee on the Initial
Closing Date. Each of the representations and warranties of the Lessee set
forth in Section 9 of the Guaranty are hereby incorporated by reference as if
made by Lessee pursuant to the terms of this Agreement and shall for all
purposes be deemed to have been made by Lessee hereunder on the Initial Closing
Date.
7.4 Representations and Warranties of the Trust Company on the
Initial Closing Date. The Trust Company represents and warrants to each of
the other parties hereto that:
(a) Due Organization, etc. It is a banking corporation duly organized
and validly existing and in good standing under the laws of the State of
Delaware and has the power and authority to enter into and perform its
obligations under the Trust Agreement and has the corporate power and
authority to act as the trustee under the Trust Agreement and to enter into
and perform the obligations under each of the other Operative Agreements to
which Trust Company or the Trust, as the case may be, is or will be a party
and each other agreement, instrument and document to be executed and
delivered by it on or before the Initial Closing Date in connection with or
as contemplated by each such Operative Agreement to which the Trust Company
or the Trust, as the case may be, is or will be a party.
(b) Authorization; No Conflict. The execution, delivery and
performance of each Operative Agreement to which it is a party, either in
its individual capacity or (assuming due
14
authorization, execution and delivery of the Trust Agreement by both
Investors) as the Trust, as the case may be, has been duly authorized by
all necessary action on its part and neither the execution and delivery
thereof, nor the consummation of the transactions contemplated thereby, nor
compliance by it with any of the terms and provisions thereof (i) does or
will require any approval or consent of any Person (ii) does or will
contravene any current United States federal law, governmental rule or
regulation relating to its banking or trust powers, (iii) does or will
contravene or result in any breach of or constitute any default under, or
result in the creation of any Lien upon any of its property under, its
charter or by-laws, or any indenture, mortgage, chattel mortgage, deed of
trust, conditional sales contract, bank loan or credit agreement or other
agreement or instrument to which it is a party or by which it or its
properties may be bound or affected or (iv) does or will require any
Governmental Action by any Governmental Authority of the State of Delaware
or the United States governing its banking or trust powers.
(c) Trust Agreement Enforceability, etc. The Trust Agreement and,
assuming the Trust Agreement is the legal, valid and binding obligation of
both Investors, each other Operative Agreement to which Trust Company or
the Trust, as the case may be, is a party have been, or on or before the
Closing Date will be, duly executed and delivered by Trust Company or the
Trust, as the case may be, and the Trust Agreement and each such other
Operative Agreement to the extent entered into by the Trust Company
constitutes, or upon execution and delivery will constitute, a legal, valid
and binding obligation enforceable against Trust Company in accordance with
the terms thereof except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting the enforcement of creditors' rights generally and by general
equitable principles (whether enforcement is sought by proceedings in
equity or at law).
(d) Litigation. No litigation, investigation or proceeding of or
before any arbitrator or Governmental Authority is pending or threatened by
or against the Trust Company with respect to any of the Operative
Agreements or any of the transactions contemplated hereby or thereby.
(e) Liens. The Trust Estate is free and clear of Lessor Liens
attributable to the Trust Company, and there are no Liens affecting the
title of the Trust to the Equipment or resulting from any act or claim
against the Trust Company arising out of any event or condition not related
to the ownership, leasing use or operation of the Equipment or any other
transaction contemplated by this Agreement or any of the other Operative
Agreements, including any Lien resulting from the nonpayment by the Trust
Company of any Taxes imposed or measured by its net income.
15
7.5 Representations and Warranties of the Lessee on Equipment Closing
Dates. The Lessee hereby represents and warrants as of each Equipment Closing
Date as follows:
(a) Representations and Warranties. The representations and
warranties of the Lessee and the Guarantors set forth herein and in each of the
other Operative Agreements are true and correct in all material respects on and
as of such Equipment Closing Date as if made on and as of such Equipment Closing
Date (unless such representations and warranties specifically refer to another
date). The Lessee and each Guarantor are in compliance in all material respects
with their respective obligations under the Operative Agreements and there
exists no Lease Default or Lease Event of Default.
(b) No Default. No Default or Event of Default attributable to Lessee
will occur as a result of, or after giving effect to, the Advance requested by
the Requisition on such Equipment Closing Date.
(c) Authorization by the Lessee. The execution and delivery of each
Lease Supplement and other Operative Agreement delivered by the Lessee on such
Equipment Closing Date and the performance of the obligations of the Lessee
under each such Lease Supplement and other Operative Agreements have been duly
authorized by all requisite corporate action of the Lessee.
(d) Execution and Delivery by the Lessee. Each Lease Supplement and
other Operative Agreement delivered on such Equipment Closing Date by the Lessee
have been duly executed and delivered by the Lessee.
(e) Valid and Binding Obligations. Each Lease Supplement and other
Operative Agreement delivered by the Lessee on such Equipment Closing Date is a
legal, valid and binding obligation of the Lessee, enforceable against the
Lessee in accordance with its respective terms except as enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting the enforcement of creditors' rights generally and by
general equitable principles (whether enforcement is sought by proceedings in
equity or at law).
(f) Filing of UCC Financing Statements and Priority of Liens. The UCC
Financing Statements with respect to the Equipment being acquired on such
Equipment Closing Date have been fully executed and delivered to the Agent on
the Equipment Closing Date or have been filed with the appropriate Governmental
Authorities so that the liens created pursuant to each of the Security Agreement
and the Lease (together with the Assignment of Lease) constitutes a valid and
perfected security interest on each applicable piece of Equipment located
thereon in an amount not less than the Equipment Cost with respect to such
Equipment subject, in all cases, to the Lessee's right to relocate the
Equipment.
16
(g) Insurance Coverage. The Lessee maintains insurance coverage for
each piece of Equipment being acquired by the Lessor on such Equipment Closing
Date which meets the requirements of Section 14.1 of the Lease and all of such
coverage is in full force and effect.
(h) Legal Requirements. Each piece of Equipment being acquired by the
Lessor on such Equipment Closing Date complies in all material respects with all
Legal Requirements (including all zoning and land use laws and Environmental
Laws).
(i) Consents, etc. All material consents, licenses and permits
required by all Legal Requirements for operation of each piece of Equipment
being acquired on such Equipment Closing Date have been obtained and are in full
force and effect.
(j) Environmental Matters.
(1) The Equipment being acquired on such Equipment Closing Date
does not contain any Hazardous Substances in amounts or concentrations
which (i) constitute a material violation of, or (ii) would reasonably
be expected to give rise to material liability under, any
Environmental Law.
(2) The Equipment being acquired on such Equipment Closing Date
is in compliance in all material respects with all applicable
Environmental Laws.
(3) Neither the Lessee nor any of its Subsidiaries has received
any notice of violation, alleged violation, non-compliance, liability
or potential liability regarding any material non-compliance with
Environmental Laws with regard to the Equipment being acquired on such
Equipment Closing Date, nor does the Lessee have knowledge that any
such notice will be received or is being threatened.
(4) Hazardous Substances have not been transported or
discharged from the Equipment being acquired on such Equipment Closing
Date so as to create a material violation of any Environmental Law,
nor have any Hazardous Substances been generated, treated, or used
with respect to the Equipment being acquired on such Equipment Closing
Date so as to create a material violation of any applicable
Environmental Law.
(5) No judicial proceeding or governmental or administrative
action is pending or, to the best knowledge of the Lessee, threatened,
under any Environmental Law to which the Lessee or any Subsidiary is
or, to Lessee's
17
knowledge, will be named as a party with respect to the Equipment
being acquired on such Equipment Closing Date, nor are there any
consent decrees or other decrees, consent orders, administrative
orders or other orders, or other administrative or judicial
requirements outstanding under any Environmental Law with respect to
the Equipment being acquired on such Equipment Closing Date.
(6) There has been no release or threat of release of Hazardous
Substances at or from the Equipment being acquired on such Equipment
Closing Date, or arising from or related to the operations of the
Lessee or any Subsidiary in connection with the Equipment being
acquired on such Equipment Closing Date, in violation of or in amounts
or in a manner that would reasonably be expected to give rise to any
material liability under any Environmental Laws.
(k) Location of the Equipment. Each piece of Equipment being acquired
on such Equipment Closing Date is located within the United States or on lands
covered by leases under the exclusive jurisdiction of the United States of
America pursuant to the Outer Continental Shelf Lands Act, as amended, 43 U.S.C.
' ' 1331, et seq. (1986).
(l) Conditions Precedent in Operative Agreements. All conditions
precedent contained in this Agreement and in the other Operative Agreements
required to be satisfied by Lessee relating to the acquisition of a piece of
Equipment by the Lessor have been satisfied in full or waived by the Agent and
the Lessee.
(m) Hart-Scott-Rodino. The acquisition of the Equipment being acquired
on such Equipment Closing Date does not conflict with, violate or require the
consent of, any Governmental Authority under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended.
7.6 Representations and Warranties of the Lessor on Equipment Closing
Dates. The Lessor hereby represents and warrants as of each Equipment Closing
Date as follows:
(a) Representations and Warranties; No Default. The representations
and warranties of the Lessor set forth herein and in each of the other Operative
Agreements are true and correct in all material respects on and as of such
Equipment Closing Date as if made on and as of such Equipment Closing Date
(unless such representations and warranties specifically refer to another date).
The Lessor is in compliance with its respective obligations under the Operative
Agreements and there exists no Default or Event of Default under any of the
Operative Agreements. No Default or Event of Default attributable to the Lessor
will occur as a result of, or after giving effect to, the Advance requested by
the Requisition on such Equipment Closing Date.
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(b) Authorization by the Lessor. The execution and delivery of each
Lease Supplement, Security Agreement, Supplement to Assignment of Lease and
other Operative Agreement delivered by the Lessor on such Equipment Closing Date
and the performance of the obligations of the Lessor under each such Lease
Supplement, Security Agreement Supplement to the Assignment of Lease and other
Operative Agreement have been duly authorized by all requisite action of the
Lessor.
(c) Execution and Delivery by the Lessor. Each Lease Supplement,
Security Agreement, Supplement to the Assignment of Lease and other Operative
Agreement delivered by the Lessor on such Equipment Closing Date have been duly
executed and delivered by the Lessor.
(d) Valid and Binding Obligations. Each Lease Supplement, Security
Agreement, Supplement to the Assignment of Lease and other Operative Agreement
delivered by the Lessor on such Equipment Closing Date is a legal, valid and
binding obligation of the Lessor, enforceable against the Lessor in accordance
with its terms except as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting the enforcement
of creditors' rights generally and by general equitable principles (whether
enforcement is sought by proceedings in equity or at law).
(e) Conditions Precedent in Operative Agreements. All conditions
precedent contained in this Agreement and in the other Operative Agreements to
be satisfied by the Lessor relating to the acquisition of a piece of Equipment
by the Lessor have been satisfied in full.
SECTION 8. PAYMENT OF CERTAIN EXPENSES
Lessee agrees, for the benefit of the Investors, the Trust Company,
the Lessor, the Agent and each of the Lenders, to:
8.1 Transaction Expenses. (a) On the Initial Closing Date, pay, or
cause to be paid, all reasonable fees, expenses and disbursements of one counsel
to each of the Lessor, the Trust Company, the Agent, and the Investors in
connection with the transactions contemplated by the Operative Agreements and
incurred in connection with such Initial Closing Date, including all Transaction
Expenses, and all other reasonable expenses in connection with such Initial
Closing Date, including all expenses relating to all fees, taxes and expenses
for the recording, registration and filing of documents.
(b) On each Equipment Closing Date, pay, or cause to be paid, all
reasonable fees, expenses and disbursements of each of the Lessor's, the Trust
Company's, the Agent's and the
19
Investors' counsel in connection with the transactions contemplated by the
Operative Agreements and incurred in connection with such Equipment Closing
Date, including all Transaction Expenses arising from such Equipment Closing
Date, and all other reasonable expenses in connection with such Equipment
Closing Date, including all expenses relating to each Appraisal, and all fees,
taxes and expenses for the recording, registration and filing of documents.
8.2 Brokers' Fees and Stamp Taxes. Pay or cause to be paid
brokers' fees with respect to brokers retained by or with the prior written
consent of Lessee and any and all stamp, transfer and other similar taxes, fees
and excises, if any, including any interest and penalties, which are payable in
connection with the transactions contemplated by this Agreement and the other
Operative Agreements.
8.3 Certain Fees and Expenses . Pay or cause to be paid (i) the
initial and annual Trust Company's fee and all expenses of the Trust Company and
any necessary co-trustees (including reasonable counsel fees and expenses) or
any successor owner trustee, for acting as trustee under the Trust Agreement,
(ii) all costs and expenses incurred by the Lessee, the Agent, the Investors,
the Trust Company or the Lessor in entering into any future amendments or
supplements with respect to any of the Operative Agreements, whether or not such
amendments or supplements are ultimately entered into, or giving or withholding
of waivers of consents hereto or thereto, which have been requested by the
Lessee, and (iii) all costs and expenses incurred by the Lessor, the Lessee, the
Investors, the Trust Company or the Agent in connection with any purchase of any
Equipment by the Lessee pursuant to Section 20 of the Lease.
8.4 Credit Agreement and Related Obligations. (a) Pay, on or
prior to the due date thereof, all costs, fees, indemnities, expenses and other
amounts (other than principal and interest on the Loans, but including breakage
costs and interest on overdue amounts pursuant to Section 2.14 of the Credit
Agreement or otherwise) required to be paid by the Lessor under any Operative
Agreement.
(b) Pay to the Agent all fees specified in the Fee Letter at the time
and in the manner required by the Fee Letter, which fees may not be paid by
using the proceeds of the Loans or the Investor Contribution.
(c) Pay to the Lessor promptly after receipt of notice therefor any
additional amounts payable to the Investors in respect of the Investor
Contribution under Sections 2.13, 2.14 and 2.15 of the Credit Agreement (it
being agreed that the Investors are, for purposes of this Agreement,
beneficiaries of the provisions of Sections 2.13, 2.14 and 2.15 of the Credit
Agreement).
20
8.5 Commitment Fees . (a) Pay to the Agent for the account of each
Lender the Commitment Fee on each Commitment Fee Payment Date.
(b) Pay to the Investors the Investor Commitment Fee on each
Commitment Fee Payment Date in accordance with each investor's pro rata portion
of the Available Investor Commitment.
(c) The Commitment Fee and the Investor Commitment Fee shall be
calculated on the basis of a 365- (or 366-, as the case may be) day year for the
actual days elapsed. If all or a portion of the Commitment Fee or the Investor
Commitment Fee shall not be paid when due, such overdue amount shall bear
interest, payable by the Lessee on demand, at a rate per annum equal to the
applicable Overdue Rate, from the date of such non-payment until such amount is
paid in full (as well after as before judgment).
8.6 Overdue Rate. If all or a portion of the Investor Yield, the
Investor Contribution or any other amount owed to the Investors shall not be
paid when due, such overdue amount shall bear interest, payable on demand, at a
rate per annum equal to the applicable Overdue Rate, from the date of such non-
payment until such amount is paid in full (as well after as before judgment).
8.7 Continuous Perfection of Security Interests. If the Officer's
Certificate required to be delivered by Lessee pursuant to Section 10.3(b) of
the Lease shall indicate that any of the Equipment has been relocated, then
Lessee will provide to the Agent, together with the Officer's Certificate,
evidence in form and substance satisfactory to Agent that all filings,
recordings, registrations and other actions, including the filing of duly
executed Lender Financing Statements and Lessor Financing Statements, necessary
or, in the reasonable opinion of the Agent, desirable to perfect the Liens
granted by the Security Documents shall have been completed.
8.8 Oklahoma Equipment Subleases. With respect to any leases or
other agreements entered into by Lessee with respect to Equipment located in the
State of Oklahoma ("Oklahoma Subleases"), Lessee shall, by May 15, 2000 (or
within 90 days of the date any Oklahoma Sublease is subsequently entered into),
undertake to file, in accordance with 60 Okla. Stat. 1991 ' 319, et. seq., the
original Oklahoma Sublease instrument or a true copy thereof in the chattel
mortgage records of the office of the county clerk in the county where the
Equipment is located and provide Agent with reasonably satisfactory evidence of
Lessee's compliance with this Section 8.8.
SECTION 9. OTHER COVENANTS AND AGREEMENTS
21
9.1 Covenants of the Trust and the Investors and the Trust Company.
Each of the parties hereby agrees that so long as this Agreement is in effect:
(a) Discharge of Liens. Each of the Investors, the Trust and the
Trust Company, in its individual capacity, will not create or permit to exist at
any time, and will, at its own cost and expense, promptly take such action as
may be necessary duly to discharge, or to cause to be discharged, all Lessor
Liens on the Equipment attributable to it or any of its Affiliates; provided,
however, that the Investor, the Trust and the Trust Company shall not be
required to so discharge any such Lessor Lien while the same is being contested
in good faith by appropriate proceedings diligently prosecuted so long as such
proceedings shall not cause Lessee or any other party hereto to be in default
under any of the Operative Documents and shall not involve any material danger
of impairment of the Liens of the Security Documents or of the sale, forfeiture
or loss of, and shall not materially interfere with the use or disposition of,
the Equipment or title thereto or any interest therein or the payment of Rent.
(b) Trust Agreement. Without prejudice to any right under the Trust
Agreement of the Trust Company to resign, or the Investors= right under the
Trust Agreement to remove the institution acting as Trustee, each of the
Investors and the Trust Company hereby agrees with the Lessee and the Agent (i)
not to terminate or revoke the trust created by the Trust Agreement except as
permitted by the Trust Agreement, (ii) not to amend, supplement, terminate or
revoke or otherwise modify any provision of the Trust Agreement without the
prior written consent of any party adversely affected by such amendment and in
any event with prior notice to the Lessee and (iii) to comply with all of the
terms of the Trust Agreement, the nonperformance of which would adversely affect
such party. The Trust Company will provide each party hereto with a copy of any
amendment to the Trust Agreement within thirty (30) days after such amendment is
effective.
(c) Successor Trust Company. The Trust Company or any successor may
resign or be removed by both Investors as owner trustee, a successor owner
trustee may be appointed, and a corporation may become the owner trustee under
the Trust Agreement, only in accordance with the provisions of Section 8 of the
Trust Agreement and with the consent of the Lessee, which consent shall not be
unreasonably withheld or delayed.
(d) Indebtedness; Other Business. The Trust shall not contract for,
create, incur or assume any indebtedness, or enter into any business or other
activity, or hold title to any assets other than pursuant to or under the
Operative Agreements.
(e) No Violation. Neither the Investors nor the Trust Company will
instruct the Trust to take any action in violation of the terms of any Operative
Agreement.
22
(f) No Voluntary Bankruptcy. Neither the Investors nor the Trust
shall (i) commence, consent to, approve of or acquiesce to any case, proceeding
or other action under any existing or future law of any jurisdiction, domestic
or foreign, relating to bankruptcy, insolvency, reorganization, arrangement,
winding-up, liquidation, dissolution, composition or other relief with respect
to it or its debts, or (ii) seek appointment of a receiver, trustee, custodian
or other similar official for it or for all or any substantial part of its
assets, or make a general assignment for the benefit of its creditors; and
neither the Investors nor the Trust shall take any action in furtherance of, or
indicating its consent to, approval of, or acquiescence in, any of the acts set
forth in this paragraph.
(g) Change of Chief Place of Business. The Trust shall give prompt
prior notice to the Lessee and the Agent if the Trust's chief place of business
or chief executive office, or the office where the records concerning the
accounts or contract rights relating to the Equipment are kept, shall cease to
be located at the address set forth in Section 7.2(h) or if it shall change its
name.
(h) Loan Documents. Provided that no Lease Event of Default is
continuing, none of the Lenders, the Trust Company, the Lessor, the Agent nor
the Investors shall consent to or permit any material amendment, supplement,
waiver or other modification of the terms and provisions of the Credit
Agreement, the Notes or the Security Documents which would reasonably be
expected to adversely impact the Lessee, in each case without the prior written
consent of the Lessee.
(i) Disposition of Assets. The Trust shall not convey, sell, lease,
assign, transfer or otherwise dispose of any of its property, business or
assets, whether now owned or hereafter acquired, except to the extent expressly
authorized by the Operative Agreements.
(j) Compliance with Operative Agreements. It shall at all times
observe and perform all of the covenants, conditions and obligations required to
be performed by it under each Operative Agreement to which it is a party.
(k) Tax Reporting. No party hereto other than the Lessee will file
(or permit to be filed) any tax return taking the position that such party (or
its affiliates) is the owner of the Equipment for federal, state or local tax
purposes.
9.2 Repayment of Certain Amounts on Maturity Date. The Investors,
the Lessor and the Agent hereby agree that if (i) on the Maturity Date (after
giving effect to all payments made by the Lessee under the Lease and the
application of all sales proceeds pursuant to Section 8 of the Credit Agreement)
there remains any outstanding principal or accrued and unpaid interest under the
Tranche B Notes (the aggregate amount of such outstanding principal, the
"Tranche B Deficit") and
23
(ii) during the Marketing Period the Lessor or the Investors have received any
Marketing Period Equity Return, then on the Maturity Date the Investors shall
ratably pay to the Agent an amount up to the amount of the Tranche B Deficit to
be applied pursuant to Section 8 of the Credit Agreement, but in no event
greater than the Marketing Period Equity Return received by both Investors.
9.3 Amendment of Certain Documents. The Agent, for itself and on
behalf of the Lenders, hereby agrees for the benefit of the Trust and the
Investors that it will not amend, alter or otherwise modify, or consent to any
amendment, alteration or modification of, the Lease (including the definitions
of any terms used in such document) without the prior written consent of the
Trust and both Investors, as the case may be, if such amendment, alteration or
modification would adversely affect the interests of the Trust or the Investors.
Provisions requiring consent, include any amendment, alteration or modification
that would release the Lessee from any of its obligations in respect of the
payment of Basic Rent, Supplemental Rent, Termination Value, Maximum Residual
Guarantee Amount or the Purchase Option Price or any other payments in respect
of the Equipment as set forth in the Lease, or amend the provisions of Section 8
of the Credit Agreement, or reduce the amount of, or change the time or manner
of payment of, obligations of the Lessee as set forth in the Lease, or create or
impose any obligation on the part of the Trust or the Investors under the Lease,
or extend or shorten the duration of the Term, or modify the provisions of this
Section 9.3.
9.4 Proceeds of Casualty. Subject to Section 15 of the Lease, the
Lessor and the Investors agree, for the benefit of the Agent and the Lenders,
that if at any time either the Lessor or the either of the Investors receives
any proceeds as a result, directly or indirectly, of any Casualty or
Condemnation with respect to the Equipment which the Lessor is entitled to
retain and hold in accordance with the terms of the Lease, the Lessor and both
Investors agree that they will promptly deposit such amounts in an account with
the Agent. The Lessor and the Investors also agree that they will execute and
deliver such documents and instruments as the Agent may request in order to
grant the Agent, for the benefit of the Lenders, a valid and perfected, first
priority security interest in such proceeds.
9.5 Intercreditor Agreement. The Lessee, the Agent, the Lenders, the
Investors and the Lessor hereby agree and confirm that the provisions of Section
8 of the Credit Agreement are intended to constitute an intercreditor agreement
and a subordination agreement under Section 510 of the Bankruptcy Code or any
similar provision therein.
9.6 Appraisal. The Lessee agrees that on or prior to any Replacement
Equipment Closing Date, and upon the written request of the Required Lenders or
both Investors, the Lessee shall provide to the Agent and the Investors an
Appraisal of the Replacement Equipment, such Appraisal in form and substance
satisfactory to the Agent and both Investors; provided, the Lessee is not
required to provide more than one such Appraisal in any twelve month period.
24
SECTION 10. CREDIT AGREEMENT
10.1 Lessee's Credit Agreement Rights. Notwithstanding anything to
the contrary contained in the Credit Agreement, the Agent, the Lenders, the
Lessee, the Investors and the Trust hereby agree that:
(a) the Lessee shall have the right to give the notices referred to in
Section 2.3 of the Credit Agreement;
(b) the Lessee shall have the right to convert or continue Loans in
accordance with Section 2.6 of the Credit Agreement;
(c) the Lessee shall receive copies of all notices delivered to the
Lessor under the Credit Agreement and the other Operative Agreements and such
notices shall not be effective until received by Lessee;
(d) the Lessee shall have the right to select Interest Periods in
accordance with the terms of the Credit Agreement;
(e) the Lessee shall have the right to give notice of prepayment of
the Loans in accordance with the Credit Agreement, provided that if the Lessee
shall give notice of prepayment of the Loans, the Lessee shall prepay a pro rata
portion of the Investor Contribution;
(f) the Lessee shall have the right to cure, to the extent susceptible
to a cure, any Credit Agreement Default or Credit Agreement Event of Default of
the Lessor;
(g) the Lessee shall have the right to approve any successor Agent
pursuant to Section 7.9 of the Credit Agreement;
(h) the Lessee shall have the right, on behalf of the Lessor, to
select any Person or Persons (including the Lessee) to whom funds may be paid at
the discretion of the Lessor in accordance with Sections 8.1 and 8.2 of the
Credit Agreement;
(i) the Lessee shall have the right to consent to any assignment by a
Lender, if required pursuant to Section 9.7 of the Credit Agreement;
(j) the Lessee shall have the right to request that another lending
office be designated pursuant to Section 2.15(a) of the Credit Agreement;
25
(k) Lessee shall have the right to cause a Lender to assign its rights
and delegate its obligation under the Credit Agreement pursuant to Section 2.16
of the Credit Agreement;
(l) the Lessee shall have the obligation to notify the Agent of the
amounts or information specified in Section 5.8 of the Credit Agreement; and
(m) without limiting the foregoing clauses (a) through (l), and in
addition thereto, (x) the Trust shall not exercise any right under the Credit
Agreement without giving the Lessee at least fifteen (15) Business Days' prior
written notice (or such shorter period as may be required but in no case less
than five (5) Business Days) and, following such notice, the Trust shall take
such action, or forbear from taking such action, as the Lessee shall direct and
(y) the Lessee shall have the right to exercise any other right of the Trust
under the Credit Agreement upon not less than two (2) Business Days' prior
written notice from the Lessee to the Trust. Notwithstanding the foregoing,
both Investors shall retain the exclusive right to direct the Trust with respect
to the exercise of the Excepted Rights.
SECTION 11. TRANSFER OF INTEREST
11.1 Restrictions on Transfer. Neither of the Investors may,
directly or indirectly, assign, convey or otherwise transfer any of its right,
title or interest in or to the Trust Estate or the Trust Agreement nor shall
there be any change in control of either of the Investors without the consent of
the Agent and the Lessee, which consent shall not be unreasonably withheld or
delayed. Any transfer by either of the Investors as above provided, shall be
effected pursuant to an agreement in form and substance reasonably satisfactory
to the Agent, the Investors, the Trust Company, the Lessee and their respective
counsel.
11.2 Effect of Transfer. From and after any transfer effected in
accordance with this Section 11, the transferor shall be released, to the extent
of such transfer, from its liability hereunder and under the other documents to
which it is a party in respect of obligations to be performed on or after the
date of such transfer; provided, however, that any transferor Investor shall
remain liable under the Trust Agreement to the extent that the transferee
Investor shall not have assumed the obligations of the transferor Investor
thereunder. Upon any transfer by either of the Investors as above provided, any
such transferee shall assume the obligations of the same entity, and the Lessor
or Investor, as the case may be, and shall be deemed the "same entity", as the
case may be, for all purposes of such documents and each reference herein to the
transferor shall thereafter be deemed a reference to such transferee for all
purposes, except as provided in the preceding sentence. Notwithstanding any
transfer of all or a portion of the transferor's interest as provided in this
Section
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11, the transferor shall be entitled to all benefits accrued and all
rights vested prior to such transfer including rights to indemnification under
any such document.
SECTION 12. INDEMNIFICATION
12.1 General Indemnity . The Lessee, hereby assumes liability for
and agrees to defend, indemnify and hold harmless each Indemnified Person on an
After Tax Basis from and against any Claims which may be imposed on, incurred by
or asserted against an Indemnified Person in any way relating to or arising out
of (a) the financing, refinancing, purchase, acceptance, rejection, ownership,
design, delivery, acceptance, nondelivery, leasing, subleasing, possession, use,
operation, repair, modification, transportation, condition, sale, return,
repossession (whether by summary proceedings or otherwise), or any other
disposition of the Equipment or any part thereof; (b) any latent or other
defects in any piece of Equipment whether or not discoverable by an Indemnified
Person or the Lessee; (c) a violation of Environmental Laws, Environmental
Claims or other loss of or damage relating to the Equipment; (d) the Operative
Agreements, or any transaction contemplated thereby; (e) any breach by the
Lessee of any of its representations or warranties under the Operative
Agreements or failure by the Lessee to perform or observe any covenant or
agreement to be performed by it under any of the Operative Agreements; and (f)
personal injury, death or property damage relating to the Equipment, including
Claims based on strict liability in tort; but in any event excluding (v) Claims
to the extent such Claims arise solely out of the gross negligence or willful
misconduct of such Indemnified Person, (w) Claims to the extent such Claims
arise solely out of events occurring after Lessee's discharge of all its
obligations under the Lease or (x) any Taxes including any Claim (or any portion
of a Claim) made upon an Indemnified Person by a third party that at its origin
is based upon a Tax (other than amounts necessary to make any payments hereunder
on an After Tax Basis, where the Lessee is otherwise specifically required to
make such payments on an After Tax Basis), (y) legal proceedings commenced
against an Indemnified Person by any security holder or creditor solely in its
capacity as such, or (z) legal proceedings commenced against an Indemnified
Person by any other Indemnified Person or by any transferee of an Indemnified
Person. The Lessee shall be entitled to control, and shall assume full
responsibility for the defense of any Claim; provided, however, that the Trust,
the Trust Company, the Agent and the Investors named in such Claim, may each
retain separate counsel at the expense of the Lessee in the event of and to the
extent of an actual conflict or a potential conflict. The Lessee and each
Indemnified Person agree to give each other prompt written notice of any Claim
hereby indemnified against but the giving of any such notice by an Indemnified
Person shall not be a condition to the Lessee's obligations under this Section
12.1, except to the extent failure to give such notice materially prejudices
Lessee's rights hereunder or with respect to the defense or settlement of such
Claim. After an Indemnified Person has been fully indemnified for a Claim
pursuant to this Section 12.1, and so long as no Lease Event of Default shall
have occurred and be continuing, the Lessee shall be
27
subrogated to any right of such Indemnified Person with respect to such Claim.
None of the Indemnified Persons shall settle a Claim without the prior written
consent of the Lessee, which consent shall not be unreasonably withheld or
delayed.
12.2 General Tax Indemnity. (a) The Lessee shall pay and assume
liability for, and does hereby agree to indemnify, protect and defend the
Equipment and all Tax Indemnitees, and hold them harmless against, all
Impositions on an After Tax Basis.
(b) Provided that no Default or Event of Default has occurred and is
continuing, if any Tax Indemnitee obtains a refund or a reduction in a liability
(but only if such reduction relates to a Tax not otherwise indemnifiable
hereunder and has not been taken into account in determining the amount of a
payment on an After Tax Basis) as a result of any Imposition paid or reimbursed
by the Lessee (in whole or in part), such Tax Indemnitee shall promptly pay to
the Lessee the lesser of (x) the amount of such refund or reduction in liability
and (y) the amount previously so paid or advanced by the Lessee, in each case
net of reasonable expenses not already paid or reimbursed by the Lessee.
(c)(i) Subject to the terms of Section 12.2(g), the Lessee shall pay
or cause to be paid all Impositions directly to the taxing authorities where
feasible and otherwise to the Tax Indemnitee, as appropriate, and the Lessee
shall at its own expense, upon such Tax Indemnitee's reasonable request, furnish
to such Tax Indemnitee copies of official receipts or other satisfactory proof
evidencing such payment.
(ii) In the case of Impositions for which no contest is conducted
pursuant to Section 12.2(g) and which the Lessee pays directly to the taxing
authorities, the Lessee shall pay such Impositions prior to the latest time
permitted by the relevant taxing authority for timely payment. In the case of
Impositions for which the Lessee reimburses a Tax Indemnitee, the Lessee shall
do so within twenty (20) days after receipt by the Lessee of demand by such Tax
Indemnitee describing in reasonable detail the nature of the Imposition and the
basis for the demand (including the computation of the amount payable), but in
no event shall the Lessee be required to pay such reimbursement prior to 15 days
before the latest time permitted by the relevant taxing authority for timely
payment. In the case of Impositions for which a contest is conducted pursuant
to Section 12.2(g), the Lessee shall pay such Impositions or reimburse such Tax
Indemnitee for such Impositions, to the extent not previously paid or reimbursed
pursuant to subsection (a), prior to the latest time permitted by the relevant
taxing authority for timely payment after conclusion of all contests under
Section 12.2(g).
(iii) Impositions imposed with respect to a piece of Equipment for a
billing period during which the Lease expires or terminates with respect to such
Equipment (unless the Lessee has
28
exercised the Purchase Option with respect to the Equipment) shall be adjusted
and prorated on a daily basis between the Lessee and the Lessor, whether or not
such Imposition is imposed before or after such expiration or termination and
each party shall pay or reimburse the other for each party's pro rata share
thereof.
(iv) At the Lessee's request, the amount of any indemnification
payment by the Lessee pursuant to subsection (a) shall be verified and certified
by an independent public accounting firm mutually acceptable to the Lessee and
the Tax Indemnitee. The fees and expenses of such independent public accounting
firm shall be paid by the Lessee unless such verification shall result in an
adjustment in the Lessee's favor of 10% or more of the payment as computed by
such Tax Indemnitee, in which case such fee shall be paid by such Tax
Indemnitee.
(d)(i) The Lessee shall be responsible for preparing and filing any
real and personal property or ad valorem tax returns in respect of the
Equipment. In case any other report or tax return shall be required to be made
with respect to any obligations of the Lessee under or arising out of subsection
(a) and of which the Lessee has knowledge, the Lessee, at its sole cost and
expense, shall notify the relevant Tax Indemnitee of such requirement and
(except if such Tax Indemnitee notifies the Lessee that such Person intends to
file such report or return) (A) to the extent required or permitted by and
consistent with Legal Requirements, make and file in its own name such return,
statement or report; and (B) in the case of any other such return, statement or
report required to be made in the name of such Tax Indemnitee, advise such Tax
Indemnitee of such fact and prepare such return, statement or report for filing
by such Tax Indemnitee or, where such return, statement or report shall be
required to reflect items in addition to any obligations of the Lessee under or
arising out of subsection (a), provide such Tax Indemnitee at the Lessee's
expense with information sufficient to permit such return, statement or report
to be properly made with respect to any obligations of the Lessee under or
arising out of subsection (a). Such Tax Indemnitee shall, upon the Lessee's
request and at the Lessee's expense, provide any data maintained by such Tax
Indemnitee (and not otherwise within the control of the Lessee) with respect to
the Equipment which the Lessee may reasonably require to prepare any required
tax returns or reports;
(e) If as a result of the payment or reimbursement by the Lessee of
any expenses of a Tax Indemnitee or the payment of any Transaction Expenses
incurred in connection with the transactions contemplated by the Operative
Agreements, any Tax Indemnitee, shall suffer a net increase in any federal,
state or local income tax liability, the Lessee shall indemnify such Tax
Indemnitees (without duplication of any indemnification required by subsection
(a)) on an After Tax Basis for the amount of such increase. The calculation of
any such net increase shall take into account any current or future tax savings
realized or reasonably expected to be realized by such Tax Indemnitees, in
respect thereof, as well as any interest, penalties and additions to tax payable
by such Tax Indemnitees, in respect thereof;
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(f) As between the Lessee and the Lessor, the Lessee shall be
responsible for, and the Lessee shall indemnify and hold harmless the Trust
Company in its individual capacity and as the Lessor (without duplication of any
indemnification required by subsection (a)) on an After Tax Basis against, any
obligation for United States withholding taxes imposed in respect of the
interest payable on the Notes or the Certificates to the extent, but only to the
extent, Lessor has actually paid funds to a taxing authority with respect to
such withholding taxes (and, if the Lessor receives a demand for such payment
from any taxing authority, the Lessee shall discharge such demand on behalf of
the Lessor);
(g)(i) If a written claim is made against any Tax Indemnitee or if any
proceeding shall be commenced against such Tax Indemnitee (including a written
notice of such proceeding), for any Impositions, such Tax Indemnitee shall
promptly notify Lessee in writing and shall not take action with respect to such
claim or proceeding without the consent of Lessee for thirty (30) days after the
receipt of such notice by Lessee; provided, that, in the case of any such claim
or proceeding, if action shall be required by law or regulation to be taken
prior to the end of such 30-day period, such Tax Indemnitee shall, in such
notice to Lessee, inform Lessee, and no action shall be taken with respect to
such claim or proceeding without the consent of Lessee before the end of such
shorter period; provided, further, that the failure of such Tax Indemnitee to
give the notices referred to this sentence shall not diminish Lessee's
obligation hereunder except to the extent such failure materially adversely
affects Lessee in contesting all or part of such claim.
(ii) If, within thirty (30) days of receipt of such notice from the
Tax Indemnitee (or such shorter period as the Tax Indemnitee has noticed Lessee
is required by law or regulation for the Tax Indemnitee to commence such
contest), Lessee shall request in writing that such Tax Indemnitee contest such
Imposition, the Tax Indemnitee shall, at the expense of Lessee, in good faith
conduct and control such contest (including, without limitation, by pursuit of
appeals) relating to the validity, applicability or amount of such Impositions
(provided, however, that (A) if such contest can be pursued independently from
any other proceeding involving a tax liability of such Tax Indemnitee, the Tax
Indemnitee, at Lessee's request, shall allow Lessee to conduct and control such
contest and (B) in the case of any contest that Lessee is not entitled to
control, the Tax Indemnitee may request Lessee to conduct and control such
contest if possible or permissible under applicable law or regulation) by, in
the sole discretion of the Person conducting and controlling such contest, (1)
resisting payment thereof, (2) not paying the same except under protest, if
protest is necessary and proper, (3) if the payment be made, using reasonable
efforts to obtain a refund thereof in appropriate administrative and judicial
proceedings, or (4) taking such other action as is reasonably requested by
Lessee from time to time.
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(iii) The party controlling any contest shall consult in good faith
with the non-controlling party and shall keep the non-controlling party
reasonably informed as to the conduct of such contest; provided that all
decisions ultimately shall be made in the sole discretion of the controlling
party. The parties agree that an Tax Indemnitee may at any time decline to take
further action with respect to the contest of any Imposition and may settle such
contest if such Tax Indemnitee shall waive its rights to any indemnity from
Lessee that otherwise would be payable in respect of such claim (and any future
claim by any taxing authority with respect to other taxable periods that are
based, in whole or in part, upon the resolution of such claim) and shall pay to
Lessee any amount previously paid or advanced by Lessee pursuant to this Section
12.2 by way of indemnification or advance for the payment of an Imposition, and
no other then future liability of the Lessee is likely with respect to such
Imposition.
(iv) Notwithstanding the foregoing provisions of this Section 12.2, a
Tax Indemnitee shall not be required to take any action and Lessee shall not be
permitted to contest any Impositions in its own name or that of the Tax
Indemnitee unless (A) Lessee shall have agreed to pay and shall pay to such Tax
Indemnitee on demand and on an After Tax Basis all reasonable costs, losses and
expenses that such Tax Indemnitee actually incurs in connection with contesting
such Impositions, including, without limitation, all reasonable legal,
accounting and investigatory fees and disbursements, (B) in the case of a claim
that must be pursued in the name of an Tax Indemnitee (or an Affiliate thereof),
the amount of the potential indemnity (taking into account all similar or
logically related claims that have been or could be raised in any audit
involving such Tax Indemnitee for which Lessee may be liable to pay an indemnity
under this Section 12.2) is more than $25,000, unless the pursuit of such
contest is in a manner mutually satisfactory to the Tax Indemnitee and the
Lessee, but in no event shall such right prevent the Lessee from prosecuting or
continuing such contest, (C) the Tax Indemnitee shall have reasonably determined
that the action to be taken will not result in any material danger of sale,
forfeiture or loss of any piece of Equipment, or any part thereof or interest
therein, will not interfere with the payment of Rent, and will not result in
risk of criminal liability, (D) if such contest shall involve the payment of the
Imposition prior to the contest, Lessee shall provide to the Tax Indemnitee an
interest-free advance in an amount equal to the Imposition that the Tax
Indemnitee is required to pay (with no additional net after-tax cost to such Tax
Indemnitee), (E) in the case of a claim that must be pursued in the name of an
Tax Indemnitee (or an Affiliate thereof), Lessee shall have provided to such Tax
Indemnitee an opinion of independent tax counsel selected by the Lessee and
reasonably satisfactory to such Tax Indemnitee stating that a reasonable basis
exists to contest such claim (or, in the case of an appeal of an adverse
determination, an opinion of such counsel to the effect that there is
substantial authority for the position asserted in such appeal) and (F) no Event
of Default shall have occurred and be continuing. In no event shall a Tax
Indemnitee be required to appeal an adverse judicial determination to the United
State Supreme Court. In addition, a Tax Indemnitee shall not be required to
contest any claim in its name (or that of an Affiliate) if the subject matter
thereof shall be of a continuing nature
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and shall have previously been decided adversely by a court of competent
jurisdiction pursuant to the contest provisions of this Section 12.2, unless
there shall have been a change in law (or interpretation thereof) and the shall
Tax Indemnitee have received, at the Lessee's expense, an opinion of independent
tax counsel selected by the Lessee and reasonably acceptable to the Tax
Indemnitee stating that as a result of such change in law (or interpretation
thereof), it is more likely than not that the Tax Indemnitee will prevail in
such contest.
SECTION 13. MISCELLANEOUS
13.1 Survival of Agreements. The representations, warranties,
covenants, indemnities and agreements of the parties provided for in the
Operative Agreements, and the parties' obligations under any and all thereof,
shall survive the execution and delivery of this Agreement, the transfer of the
Equipment to the Trust, any disposition of any interest of the Trust in the
Equipment or any interest of the Investors in the Trust, the payment of the
Notes and any disposition thereof and shall be and continue in effect
notwithstanding any investigation made by any party and the fact that any party
may waive compliance with any of the other terms, provisions or conditions of
any of the Operative Agreements. Except as otherwise expressly set forth herein
or in other Operative Agreements, the indemnities of the parties provided for in
the Operative Agreements shall survive the expiration or termination of any
thereof.
13.2 No Broker, etc. Each of the parties hereto represents to the
others that it has not retained or employed any broker, finder or financial
adviser to act on its behalf in connection with this Agreement, nor has it
authorized any broker, finder or financial adviser retained or employed by any
other Person so to act, except for the Arranger, the fees of which shall be paid
by the Lessee in accordance with the Fee Letter. Any party who is in breach of
this representation shall indemnify and hold the other parties harmless from and
against any liability arising out of such breach of this representation.
13.3 Notices. All notices, requests and demands to or upon the
respective parties hereto to be effective shall be in writing (including by
facsimile transmission), and, unless otherwise expressly provided herein, shall
be deemed to have been duly given or made (a) when delivered by hand, (b) one
Business Day after delivery to a nationally recognized courier service
specifying overnight delivery, (c) three Business Days after being deposited in
the mail, certified or registered, postage prepaid, or (d) in the case of
facsimile notice, when sent and receipt has been confirmed, addressed as follows
in the case of the Lessee, the Trust, the Trust Company and the Agent, and as
set forth in Schedule 1.1 of the Credit Agreement in the case of the Lenders:
If to the Lessee, to it at: Hanover Compression Inc.
32
12001 North Houston Rosslyn
Houston, Texas 77806
Attention: Chief Financial Officer
Telecopy No.: 281-447-8781
With a copy to: Latham & Watkins
Sears Tower, Suite 5800
233 South Wacker Drive
Chicago, Illinois 60606
Attention: Richard S. Meller and
Michael A. Pucker
Telecopy No.: 312-993-9767
If to the Trust, to it at: Hanover Equipment Trust 2000A
c/o Wilmington Trust Company
1100 North Market Street
Wilmington, Delaware 19890
Attention: Corporate Trust Administration
Telecopy No.: 302-651-8882
If to the Investors, to them at:
If to the Trust Company, to it at: Wilmington Trust Company
1100 North Market Street
Wilmington, Delaware 19890
Attention: Corporate Trust
Administration
Telecopy No.: 302-651-8882
If to the Agent, to it at: The Chase Manhattan Bank
Loan and Agency Services Group
One Chase Manhattan Plaza
New York, New York 10081
Attention: Agency Service
Telecopy No.: 212-552-5777
33
and
Credit and Lending
The Chase Manhattan Bank
270 Park Avenue
21st Floor
New York, NY 10017
Attention: Peter Ling
Telecopy No.: 212-270-4676
From time to time any party may designate a new address for purposes of notice
hereunder by notice to each of the other parties hereto.
13.4 Counterparts. This Agreement may be executed by the parties
hereto in separate counterparts, each of which when so executed and delivered
shall be an original, but all such counterparts shall together constitute but
one and the same instrument.
13.5 Amendments and Termination. Neither this Agreement nor any of
the terms hereof may be terminated, amended, supplemented, waived or modified
except by an instrument in writing signed by the party against which the
enforcement of the termination, amendment, supplement, waiver or modification
shall be sought. This Agreement may be terminated by an agreement signed in
writing by the Trust, both Investors, the Lessee, the Agent and the Lenders.
Notwithstanding the foregoing provisions to the contrary, in the case of the
Lenders, the action of the Required Lenders shall control, except as otherwise
provided in Section 9.1 of the Credit Agreement.
13.6 Headings, etc.. The Table of Contents and headings of the
various Sections and Subsections of this Agreement are for convenience of
reference only and shall not modify, define, expand or limit any of the terms or
provisions hereof.
13.7 Parties in Interest. Except as expressly provided herein,
none of the provisions of this Agreement are intended for the benefit of any
Person except the parties hereto.
13.8 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
34
13.9 Severability. Any provision of this Agreement that is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
13.10 Liability Limited. The Lessee, the Agent, the Lenders and
the Investors each acknowledge and agree that the Trust Company is (except as
otherwise expressly provided herein or therein) entering into this Agreement and
the other Operative Agreements to which it is a party (other than the Trust
Agreement), solely in its capacity as trustee under the Trust Agreement and not
in its individual capacity and that Trust Company shall not be liable or
accountable under any circumstances whatsoever in its individual capacity for or
on account of any statements, representations, warranties, covenants or
obligations stated to be those of the Trust, except for its own gross negligence
or willful misconduct and as otherwise expressly provided herein or in the other
Operative Agreements.
13.11 Rights of Lessee. Notwithstanding any provision of the
Operative Agreements, if at any time all obligations (i) of the Trust under the
Credit Agreement and the Security Documents and (ii) of the Lessee under the
Operative Agreements have in each case been satisfied or discharged in full,
then the Lessee shall be entitled to (a) terminate the Lease (to the extent not
previously terminated) and (b) receive all amounts then held under the Operative
Agreements and all proceeds with respect to the Equipment. Upon the fulfillment
of the obligations contained in clauses (i) and (ii) above, the Lessor shall
transfer to the Lessee all of its right, title and interest in and to the
Equipment (to the extent not previously transferred to the Lessee in accordance
with the Lease) and any amounts or proceeds referred to in the foregoing clause
(b) shall be paid over to the Lessee.
13.12 Further Assurances. The parties hereto shall promptly cause
to be taken, executed, acknowledged or delivered, at the sole expense of the
Lessee (other than with respect to the removal of Lessor Liens), all such
further acts, conveyances, documents and assurances as the other parties may
from time to time reasonably request in order to carry out and effectuate the
intent and purposes of this Agreement, the other Operative Agreements and the
transactions contemplated hereby and thereby (including, without limitation, the
preparation, execution and filing of any and all Uniform Commercial Code
financing statements and other filings or registrations which the parties hereto
may from time to time request to be filed or effected). The Lessee, at its own
expense, shall take such action as may be reasonably requested in order to
maintain and protect all security interests provided for hereunder or under any
other Operative Agreement.
35
13.13 Successors and Assigns. This Agreement shall be binding upon
and inure to the benefit of the parties hereto and their respective successors
and assigns.
13.14 No Representation or Warranty. Nothing contained herein, in
any other Operative Agreement or in any other materials delivered to the Lessee
in connection with the transactions contemplated hereby or thereby shall be
deemed a representation or warranty by the Agent or the Arranger or any of their
Affiliates as to the proper accounting treatment or tax treatment that should be
afforded to the Lease and the Lessor's ownership of the Equipment and the Agent
expressly disclaims any representation or warranty with respect to such matters.
13.15 Highest Lawful Rate. It is the intention of the parties
hereto conform strictly to applicable usury laws and, anything herein to the
contrary notwithstanding, the obligations of the Lessee, the Lessor or the
Investors or any other party under any Operative Agreement, shall be subject to
the limitation that payments of interest or of other amounts constituting
interest shall not be required to the extent that receipt thereof would be in
excess of the Highest Lawful Rate, or otherwise contrary to provisions of law
applicable to the recipient limiting rates of interest which may be charged or
collected by the recipient. Accordingly, if the transactions or the amount paid
or otherwise agreed to be paid for the use, forbearance or detention of money
under this Agreement, the Lease and any other Operative Agreement would exceed
the Highest Lawful Rate or otherwise be usurious with respect to the recipient
of any such amount, then, in that event, notwithstanding anything to the
contrary in this Agreement, the Lease or any other Operative Agreement, it is
agreed as follows as to the recipient of any such amount:
(a the provisions of this Section 13.15 shall govern and control
over any other provision in this Agreement, the Lease and any other Operative
Agreement and each provision set forth therein is hereby so limited;
(b the aggregate of all consideration which constitutes interest
that is contracted for, charged or received under this Agreement, the Lease, or
any other Operative Agreement shall under no circumstances exceed the maximum
amount of interest allowed by any Requirement of Law (such maximum lawful
interest rate, if any, with respect to such Lender herein called the "Highest
Lawful Rate"), and all amounts owed under this Agreement, the Lease and any
other Operative Agreement shall be held subject to reduction and (i) the amount
of interest which would otherwise be payable to the recipient hereunder and
under the Lease, the Loan Documents and any other Operative Agreement, shall be
automatically reduced to the amount allowed under any Requirement of Law and
(ii) any unearned interest paid in excess of the Highest Lawful Rate shall be
credited to the payor by the recipient (or, if such consideration shall have
been paid in full, refunded to the payee);
36
(c all sums paid, or agreed to be paid for the use, forbearance and
detention of the money under this Agreement, the Lease, or any other Operative
Agreement shall, to the extent permitted by any Requirement of Law, be
amortized, prorated, allocated and spread throughout the full term of such
indebtedness until payment in full so that the actual rate of interest is
uniform throughout the full term thereof; and
(d if at any time the interest, together with any other fees, late
charges and other sums payable pursuant to or in connection with this Agreement,
the Lease, and any other Operative Agreement executed in connection herewith or
therewith, and deemed interest under any Requirement of Law exceeds that amount
which would have accrued at the Highest Lawful Rate, the amount of interest and
any such fees, charges and sums to accrue to the recipient of such interest,
fees, charges and sums pursuant to the Operative Agreement shall be limited,
notwithstanding anything to the contrary in the Operative Agreement to that
amount which would have accrued at the Highest Lawful Rate for the recipient,
but any subsequent reductions, as applicable, shall not reduce the interest to
accrue pursuant to the Operative Agreement below the recipient's Highest Lawful
Rate until the total amount of interest payable to the recipient (including all
consideration which constitutes interest) equals the amount of interest which
would have been payable to the recipient (including all consideration which
constitutes interest), plus the amount of fees which would have been received
but for the effect of this Section 13.15.
13.16 Waiver. EACH PARTY HERETO FOR THE BENEFIT OF THE PARTIES
HERETO AND THE GUARANTORS HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE
EXTENT NOT PROHIBITED BY LAW, ANY RIGHT IT MAY HAVE TO CLAIM OR RECOVER IN ANY
LEGAL ACTION OR PROCEEDING PURSUANT TO THE OPERATIVE AGREEMENTS ANY SPECIAL,
EXEMPLARY, PUNITIVE, INDIRECT OR CONSEQUENTIAL DAMAGES.
37
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed by their respective officers thereunto duly authorized as of
the day and year first above written.
HANOVER COMPRESSION INC., as Lessee
By: ____________________________________
Name:
Title:
HANOVER EQUIPMENT TRUST 2000A
By: Wilmington Trust Company, not individually
but solely as Trustee
By: ____________________________________
Name:
Title:
THE CHASE MANHATTAN BANK, as Agent and as a Lender
By: ____________________________________
Name:
Title:
WILMINGTON TRUST COMPANY, in its individual
capacity, only to the extent expressly set forth
herein
By: ____________________________________
Name:
Title:
38
FIRST UNION NATIONAL BANK, as an Investor
By: ____________________________________
Name:
Title:
39
SCOTIABANC INC., as an Investor
By: ____________________________________
Name:
Title:
40
THE BANK OF NOVA SCOTIA, as Documentation
Agent and as a Lender
By: ____________________________________
Name:
Title:
41
BANK ONE, N.A., as a Lender
By: ____________________________________
Name:
Title:
42
CREDIT SUISSE FIRST BOSTON, as a Lender
By: ____________________________________
Name:
Title:
43
DG BANK DEUTSCHE
GENOSSENSCHAFTSBANK AG, as a Lender
By: ____________________________________
Name:
Title:
44
FIRST UNION NATIONAL BANK, as a Lender
By: ____________________________________
Name:
Title:
45
THE INDUSTRIAL BANK OF JAPAN, LTD., as
Syndication Agent and as a Lender
By: ____________________________________
Name:
Title:
46
NATEXIS BANQUE BFCE, as a Lender
By: ____________________________________
Name:
Title:
47
NATIONAL CITY BANK, as a Lender
By: ____________________________________
Name:
Title:
48
PARIBAS, as a Lender
By: ____________________________________
Name:
Title:
By: ____________________________________
Name:
Title:
49
SUNTRUST BANK, ATLANTA, as a Lender
By: ____________________________________
Name:
Title:
By: ____________________________________
Name:
Title:
50
ANNEX B
PRICING GRID
Participation Agreement
Consolidated Applicable Margin- Applicable Margin- Applicable
Indebtedness Ratio Eurocurrency Loans Base Rate Loans Commitment
- ------------------ ------------------ ------------------ Fee Rate
--------
*4.0 to 1.0 1.75% .750% .375%
***4.0 to 1.0 and 1.75% .750% .375%
*3.0 to 1.0
***3.0 to 1.0 and 1.50% .500% .300%
*2.0 to 1.0
***2.0 to 1.0 and 1.25% .500% .300%
*1.0 to 1.0
***1.0 to 1.0 1.00% 0% .250%
- ------------------
* greater than
** greater than or equal to
*** less than of equal to
Changes in the Applicable Margin or in the Applicable Commitment Fee Rate
resulting from changes in the Consolidated Indebtedness Ratio shall become
effective on each date which is the start of the succeeding fiscal quarter
(each, an "Adjustment Date") for which an Applicable Margin Certificate of
Holdings is delivered to the Lenders pursuant to Section 10.2(f) of the
Guarantee (but in any event not later than the 45th day after the end of each of
each quarter of each fiscal year) and shall remain in effect until the next
change to be effected pursuant to this paragraph. If any Applicable Margin
Certificate referred to above is not delivered within the time periods specified
above, then the Consolidated Indebtedness Ratio as at the end of the fiscal
period that would have been covered thereby shall for the purposes of this
definition be deemed to be greater than 4.0 to 1.0. In addition, at all times
while an Event of Default shall have occurred and be continuing, the highest
rate set forth in each column of the Pricing Grid shall apply. Each
determination of the Consolidated Indebtedness Ratio pursuant to this Pricing
Grid shall be made for the periods and in the manner contemplated by Section
11.1(d) of the Guarantee.
51
EXHIBIT D TO THE
PARTICIPATION AGREEMENT
FORM
REQUISITION
HANOVER COMPRESSION INC. (the "Lessee"), submits this Requisition and
certifies, represents and warrants to each of the Lessor, Investors, The Chase
Manhattan Bank, as agent (in such capacity, the "Agent"), and each of the
financial institutions from time to time parties to the Credit Agreement (the
"Lenders") dated as of March 13, 2000, as follows (capitalized terms used in
this Requisition and not otherwise defined herein shall have the meaning
assigned to such terms in Annex A to the Participation Agreement dated as of
March 13, 2000 , among the Lessee, the Lessor, the Investor, the Agent and the
Lenders) in each case as of the date hereof:
1. Amount. (a) The total amount of the Advance requested by this
Requisition is $[ ]. The Advance will be comprised of Loans
totalling $[ $[ ] (not to exceed 97% of the aggregate
amount requested).
(b) The total amounts of the Available Commitments and the Available
Investor Commitment (after giving effect to the amount requested by this
Requisition) are $[ ] and $[ ], respectively.
(c) With respect to aggregate Equipment Cost, the aggregate amount of
the Loans outstanding represent [___]% of such Equipment Cost and the
aggregate amount of the Investment Contribution represents [__]% of such
Equipment Cost.
2. Date of Advance. The Lessee requests that the Advance be made on
[ ].
3. Type of Loan and Contribution. The Lessee requests that the
Loans be made as [Eurodollar Rate] [ABR Rate] Loans.
4. Interest Period for Eurodollar Loans. [ ] months.
5. Proceeds. The Lessee represents and warrants that the proceeds
of the Advance shall be used solely to pay the Equipment Acquisition Costs
and Transaction Expenses with respect to the Equipment identified in this
Requisition.
52
6. Representations and Warranties. The Lessee hereby represents and
warrants as follows in each case as of the date hereof:
(a) The representations and warranties of the Lessee and the
Guarantors set forth in the Operative Agreements are true and correct
in all material respects on and as of the date hereof. The Lessee
and the Guarantors are in compliance with their respective
obligations under the Operative Agreements and there exists no
Default or Event of Default (other than a Borrower Default) under any
of the Operative Agreements. No Default or Event of Default (other
than a Borrower Default) will occur under any of the Operative
Agreements as a result of the Advance requested by this Requisition.
(b) Attached to this Requisition is a schedule identifying the
Equipment which is the subject of this Requisition.
(c) All conditions precedent contained in the Participation
Agreement and in the other Operative Agreements relating to the
acquisition of the Equipment by the Lessor have been satisfied in
full.
7. Indemnity. The Lessee agrees to indemnify and hold harmless each
of the Trust, the Trust Company, the Investors, the Agent and the Lenders
and each director, officer, employee, agent, shareholder, partner or holder
of beneficial interest thereof (each, an "indemnified person") against, and
to reimburse each indemnified person, upon its demand, for, any losses,
claims, damages, liabilities or other expenses ("Losses") to which such
indemnified person may become subject insofar as such Losses arise out of
or in any way relate to the breach by the Lessee of any representation or
warranty contained in this Requisition or any untrue statement made in this
Requisition, including, without limitation, Losses consisting of reasonable
legal or other expenses incurred in connection with investigating,
defending or participating in any legal proceeding relating to any of the
foregoing (whether or not such indemnified person is a party thereto);
provided, however, that no such indemnification will be required for any
losses to the extent such losses arise solely out of the gross negligence
or willful misconduct of such indemnified person.
8. Survival. The agreements, statements, representation and
warranties contained in this Requisition shall survive and remain effective
until the Loans and all other obligations under the Credit Agreement and
the other Operative Agreements are paid or otherwise satisfied in full by
the Lessee and the Lessee, as applicable.
Date: ___________ HANOVER COMPRESSION INC.
By:
------------------------------
Name:
Title:
53
EXHIBIT E TO
PARTICIPATION AGREEMENT
FORM OF EQUIPMENT CLOSING CERTIFICATE
Pursuant to that certain Participation Agreement, dated as of March 13, 2000,
among Hanover Compression Inc., as Lessee (the "Lessee"), Hanover Equipment
Trust 2000A, as Lessor, The Chase Manhattan Bank, as Agent, the Investors, the
Trust Company and the Lenders named therein, the undersigned, a [ ] of
Lessee, does hereby certify on behalf of Lessee as follows (capitalized terms
used herein shall have the meanings ascribed thereto in the Participation
Agreement):
(a) The Tranche A Percentage for the Equipment being acquired on the
date hereof is [ ]%.
(b) The Aggregate Tranche A Percentage for all Equipment after giving
effect to the acquisition of the Equipment being acquired on the date hereof is
[ ]%.
IN WITNESS WHEREOF, I have signed my name this ____ day of ________,
2000.
HANOVER COMPRESSION INC.
By: ______________________________
Name:
Title: