EXECUTION COPY
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AMENDED AND RESTATED COMMON SECURITY AGREEMENT
among
PORT ARTHUR FINANCE CORP.,
as Borrower,
PORT ARTHUR COKER COMPANY L.P.,
as Partnership and Guarantor,
SABINE RIVER HOLDING CORP.,
as General Partner of the Partnership,
NECHES RIVER HOLDING CORP.,
as Limited Partner of the Partnership,
THE PREMCOR REFINING GROUP INC.
DEUTSCHE BANK TRUST COMPANY AMERICAS,
as Collateral Trustee for the Secured Parties,
HSBC BANK USA,
as Capital Markets Trustee for the Capital Markets Senior Lenders,
and
DEUTSCHE BANK TRUST COMPANY AMERICAS,
as Depositary Bank
Dated as of June 6, 2002
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Table of Contents
Section Page
ARTICLE I
DEFINITIONS AND INTERPRETATION
1.01 Definitions ........................................................................ 2
1.02 Interpretation ..................................................................... 2
1.03 References to this Document ........................................................ 3
1.04 Conflict ........................................................................... 3
ARTICLE II
SENIOR DEBT
2.01 Senior Debt Obligations Secured Hereby ............................................. 3
2.02 Pari Passu Treatment ............................................................... 3
2.03 Guaranteed Senior Debt Obligations ................................................. 3
2.04 Optional Prepayments ............................................................... 3
2.05 Mandatory Prepayments of Senior Debt with Certain Proceeds ......................... 4
2.06 Pro Rata Payment of Senior Debt Obligations ........................................ 4
2.07 Non-Pro Rata Prepayments ........................................................... 4
2.08 Insufficient Payments .............................................................. 5
2.09 Additional Senior Debt ............................................................. 6
2.10 Replacement Senior Debt ............................................................ 7
ARTICLE III
REPRESENTATIONS AND WARRANTIES
3.01 Representations and Warranties of the Borrower, the Partnership, the
Partners and PRG ................................................................... 9
ARTICLE IV
COVENANTS
4.01 Covenants of the Borrower and the Partnership ...................................... 14
4.02 Covenants of the Partners .......................................................... 23
4.03 Covenant of PRG .................................................................... 25
4.04 Common Covenant .................................................................... 25
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Section Page
ARTICLE V
ACCOUNTS
5.01 Accounts ....................................................................... 25
5.02 Subaccounts .................................................................... 28
5.03 Principal and Interest Accrual Account ......................................... 28
5.04 Debt Service Reserve Account ................................................... 29
5.05 Casualty Insurance Proceeds and Condemnation Compensation ...................... 29
5.06 Mandatory Prepayment Account ................................................... 30
5.07 Investment of Funds in Accounts ................................................ 30
5.08 Withdrawals from Accounts During the Continuance of a Default .................. 31
5.09 Reports and Certifications ..................................................... 31
5.10 Unsecured Accounts ............................................................. 32
ARTICLE VI
SECURITY INTERESTS
6.01 Confirmation of Security Interests ............................................. 32
6.02 Property and Improvements of the Partnership ................................... 32
6.03 General Partner's Interest in the Partnership .................................. 33
6.04 Limited Partnership Interest in the Partnership ................................ 35
6.05 The Partnership's Shares in the Borrower ....................................... 36
6.06 Interests in Accounts and Authorized Investments ............................... 37
6.07 The Project Documents, Sales Agreements and Spot Contracts ..................... 37
6.08 Insurance and Insurance Proceeds; Reinsurance .................................. 39
6.09 All Personal Property Including Machinery and Equipment, Technology
General Intangibles, Accounts and Other Personal Property ...................... 40
6.10 Permitted Hedging Arrangements ................................................. 40
6.11 Intercompany Loans from the Borrower to the Partnership ........................ 40
6.12 Proceeds, Products, Etc ........................................................ 41
6.13 Perfection and Maintenance of Security Interests ............................... 41
6.14 Rights in Collateral Prior to Enforcement Direction ............................ 43
6.15 Liability of Borrower Parties .................................................. 44
6.16 Release of Security Interests .................................................. 45
6.17 PMI Subordinated Lien .......................................................... 45
ARTICLE VII
INSURANCE
7.01 Maintenance of Insurance ....................................................... 45
7.02 Additional Insureds and Loss Payees Provisions ................................. 45
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Section Page
7.03 Other Lender Provisions in Policies ............................................ 46
7.04 Payment, Assignment, Etc. of Reinsurance or Co-Insurance ....................... 46
7.05 Rated Insurers ................................................................. 47
7.06 Payment of Premiums ............................................................ 47
7.07 Application of Insurance Proceeds .............................................. 47
7.08 Information .................................................................... 48
7.09 Insurance Consultant ........................................................... 49
ARTICLE VIII
REPORTING
8.01 Regular Reporting .............................................................. 49
8.02 Notice of Extraordinary Events ................................................. 51
8.03 Books and Records .............................................................. 51
ARTICLE IX
COMMON CONDITIONS PRECEDENT
9.01 Common Conditions Precedent to Disbursements of Senior Loans ................... 51
ARTICLE X
EVENTS OF DEFAULT AND REMEDIES
10.01 Events of Default .............................................................. 52
10.02 Declaration of Default ......................................................... 54
10.03 Cessation of Default ........................................................... 54
10.04 Remedies ....................................................................... 54
10.05 Enforcement Action ............................................................. 56
10.06 Incidents of Sale .............................................................. 56
10.07 Collateral Trustee May File Proofs of Claim .................................... 56
10.08 Collateral Trustee May Enforce Claims .......................................... 57
10.09 Control of Enforcement Action .................................................. 57
10.10 Limitation on Suits ............................................................ 57
10.11 Enforcement Proceeds Account ................................................... 58
10.12 Application of Enforcement Proceeds ............................................ 58
ARTICLE XI
RESTRICTED PAYMENTS
11.01 Restricted Payments ........................................................... 59
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Section Page
ARTICLE XII
GUARANTEE
12.01 Guarantee by the Partnership, the Partners and PRG ........................ 60
ARTICLE XIII
THE COLLATERAL TRUSTEE
13.01 Appointment of Collateral Trustee ......................................... 61
13.02 Delivery of Documentation ................................................. 61
13.03 Attorney-in-Fact .......................................................... 61
13.04 Authority to Act for Secured Parties ...................................... 62
13.05 Reliance .................................................................. 63
13.06 Liability ................................................................. 63
13.07 Consultation with Counsel, Etc ............................................ 63
13.08 Duties .................................................................... 63
13.09 Resignation, Replacement and Successor Collateral Trustee ................. 64
13.10 Indemnities ............................................................... 65
13.11 Compensation .............................................................. 66
13.12 Certificates .............................................................. 66
13.13 Information ............................................................... 66
13.14 Books and Accounts ........................................................ 66
13.15 Limitation on Collateral Trustee's Duties in Respect of Collateral ........ 67
13.16 Right to Initiate Judicial Proceedings, Etc ............................... 67
13.17 Exculpatory Provisions .................................................... 67
13.18 Merger of the Collateral Trustee .......................................... 68
13.19 Treatment of Senior Lenders by Collateral Trustee ......................... 68
13.20 Miscellaneous ............................................................. 68
ARTICLE XIV
MISCELLANEOUS
14.01 Effectiveness; Termination ................................................ 69
14.02 Calculation of Floating Rate Obligations .................................. 70
14.03 GOVERNING LAW ............................................................. 71
14.04 Waiver of Jury Trial ...................................................... 71
14.05 Severability .............................................................. 71
14.06 Entire Agreement .......................................................... 71
14.07 Restrictions on Assignments and Participations ............................ 71
14.08 Notices ................................................................... 71
14.09 Benefits of Agreement ..................................................... 72
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Section Page
14.10 Remedies ............................................... 72
14.11 Execution in Counterparts .............................. 73
14.12 Consent to Jurisdiction ............................... 73
14.13 Amendments, Etc ........................................ 74
14.14 Conflicts .............................................. 74
14.15 Compliance with Applicable Law ......................... 74
14.16 Indemnification ........................................ 75
APPENDICES
A. Definitions
B. Initial Senior Lender Group
C. Reserved
D. Form of Assignment and Acceptance
E. Consents and Approvals for Agreements
F. Reserved
G. Reserved
H. Form of Mortgage
I. Form of Consent and Acknowledgment
J. Schedule of Required Insurance
K. Reserved
L. Reserved
M. Reserved
N. Reserved
O. Reserved
P. Notices
Q. Debt Subordination Terms
R. Lien Subordination Terms
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AMENDED AND RESTATED COMMON SECURITY AGREEMENT
This Agreement, dated as of June 6, 2002, is made among:
PORT ARTHUR FINANCE CORP., a corporation organized under the laws
of the State of Delaware,
PORT ARTHUR COKER COMPANY L.P., a limited partnership organized
under the laws of the State of Delaware,
SABINE RIVER HOLDING CORP., a corporation organized under the
laws of the State of Delaware,
NECHES RIVER HOLDING CORP., a corporation organized under the
laws of the State of Delaware,
THE PREMCOR REFINING GROUP INC., a corporation organized under
the laws of the State of Delaware,
DEUTSCHE BANK TRUST COMPANY AMERICAS (formerly known as "Bankers
Trust Company"), a banking corporation incorporated under the laws of the State
of New York, as Collateral Trustee for the Secured Parties,
HSBC BANK USA, a New York banking corporation and trust company,
as Capital Markets Trustee for the Capital Markets Senior Lenders, and
DEUTSCHE BANK TRUST COMPANY AMERICAS (formerly known as "Bankers
Trust Company"), a banking corporation incorporated under the laws of the State
of New York, as Depositary Bank.
WHEREAS:
A. The Parties hereto entered into a Common Security Agreement,
dated as of August 19, 1999 (the "Original CSA"), to induce the Senior Lenders
thereunder to provide Senior Debt to the Borrower and to induce the Oil Payment
Insurers to provide the Oil Payment Insurance Policy;
B. Clark Refining Holdings Inc., Clark Refining & Marketing,
Inc. and Clark USA, Inc. have changed their names to Premcor Inc., The Premcor
Refining Group Inc. and Premcor USA Inc., respectively, effective May 10, 2000;
C. Prior to the effectiveness hereof, the Borrower will make an
Optional Prepayment in respect of all the outstanding Bank Senior Debt;
D. Concurrently with the effectiveness hereof, the Oil Payment
Insurance Policy and the Debt Service Reserve Guarantee Arrangement will be
terminated;
E. The Borrower, the Partnership, the General Partner and the
Limited Partner have proposed to amend and restate the Original CSA in order to
eliminate or modify certain covenants and agreements contained therein
(including the agreements to maintain the Oil Payment Insurance Policy and the
Debt Service Reserve Guarantee Arrangement), to release certain security
interests created thereby and to make other changes related or incidental to the
foregoing;
F. The Capital Markets Senior Lenders have granted the requisite
consents to, and a Ratings Reaffirmation has been obtained with respect to, the
actions and amendments described in the preceding recitals;
G. Final Completion was achieved on December 27, 2001; and
H. All things have been done that are necessary to constitute
this Agreement the valid and legally binding contract and security agreement of
the Borrower, the Partnership, the General Partner and the Limited Partner.
NOW, THEREFORE, to secure the Senior Debt Obligations and the
performance of all obligations under the Senior Loan Agreements, the Notes, this
Agreement and the other Security Documents, and, in consideration of the
premises and the mutual covenants contained herein, and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Borrower, the Partnership, the General Partner, the Limited
Partner and PRG hereby agree with the Collateral Trustee, the Depository Bank
and the Capital Markets Trustee as follows:
ARTICLE I
DEFINITIONS AND INTERPRETATION
1.01 Definitions. Defined terms in this Agreement and the
Appendices to this Agreement, which may be identified by the capitalization of
the first letter of each principal word thereof, have the meanings assigned to
them in Appendix A.
1.02 Interpretation. In this Agreement and in the Appendices
hereto, except to the extent that the context otherwise requires:
(a) the Table of Contents and headings are for convenience
only and shall not affect the interpretation of this Agreement;
(b) unless otherwise specified, references to Articles,
Sections, clauses and Appendices are references to Articles, Sections,
clauses and Appendices to this Agreement;
(c) references to any document or agreement, including
without limitation this Agreement, shall be deemed to include
references to such document or agreement (together with all
appendices, annexes and schedules thereto) as amended, supplemented,
replaced or restated from time to time in
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accordance with its terms and (where applicable) subject to compliance
with the requirements set forth therein;
(d) references to any party to this Agreement or any other
document or agreement shall include its successors and permitted
assigns; and
(e) accounting terms not otherwise defined shall be
construed in accordance with GAAP.
1.03 References to this Document. Each reference in the other
Financing Documents to "the Common Security Agreement", "thereunder", "therein",
"thereof' or words of like import referring to this Agreement shall be a
reference to this Amended and Restated Common Security Agreement (this
"Agreement").
1.04 Conflict. In the event of any conflict between this
Agreement and any other Financing Document, this Agreement shall govern.
ARTICLE II
SENIOR DEBT
2.01 Senior Debt Obligations Secured Hereby. All Senior Debt
Obligations shall be secured by and entitled to the benefits of this Agreement
and the security interests granted by or pursuant to this Agreement and the
Security Documents. The Initial Senior Lenders, the Initial Senior Debt, the
Initial Senior Debt Commitments and the Indenture are each identified in
Appendix B.
2.02 Pari Passu Treatment. All Senior Debt Obligations shall
rank in right of payment, upon liquidation and in all other respects pari passu
without preference among Senior Debt Obligations by reason of date of incurrence
or otherwise.
2.03 Guaranteed Senior Debt Obligations. All Senior Debt
Obligations of the Borrower shall be unconditionally guaranteed by the
Partnership, the Partners and PRG in accordance with Article XII.
2.04 Optional Prepayments. Subject to Section 2.06 and the
Senior Loan Agreements, the Partnership, or the Borrower at the direction of the
Partnership, shall have the right to make Optional Prepayments in respect of
Senior Loans at any time or from time to time, provided that:
(a) subject to the applicable Senior Loan Agreement or
Senior Loan Agreements, the Borrower Parties shall give not less than three
Business Days' prior notice of any Optional Prepayment to the Collateral
Trustee; and
(b) Optional Prepayments under this Section 2.04 shall be
made in accordance with, and shall be accompanied by any prepayment
compensation required by, the applicable Senior Loan Agreement or Senior
Loan Agreements.
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2.05 Mandatory Prepayments of Senior Debt with Certain Proceeds. The
Partnership, or the Borrower at the direction of the Partnership, shall apply
the following to the prepayment of Senior Loans, in each case in accordance with
the applicable Senior Loan Agreement or Senior Loan Agreements:
(a) any Loss Proceeds in respect of any casualty to Project
Property (other than Released Collateral) to the extent such Loss Proceeds
are not applied toward repairing, replacing or restoring the relevant
Project Property in accordance with Section 7.07;
(b) upon receipt, (i) any Late Payments, to the extent that the
Partnership (A) does not utilize such Late Payments to make payments to PMI
pursuant to Section 4.4 or 16.5 of the Long-Term Oil Supply Agreement and
(B) need not direct such Late Payments to the payment of interest on the
Senior Debt and (ii) Buydown Payments made by the EPC Contractor under
Section 6 of the EPC Contract or any amounts recovered from the EPC
Contractor under the EPC Contract for failure to achieve any of the
Guaranteed Values or the Guaranteed Performance Dates;
(c) any business interruption or contingent business
interruption insurance to the extent that the relevant Project Property is
not repaired, replaced or restored; and
(d) upon receipt, any Condemnation Compensation.
In addition, upon the occurrence of a Constructive Total Loss of
Project Property, the Partnership, or the Borrower at the direction of the
Partnership, shall prepay in full all Senior Loans then outstanding, in
accordance with the applicable Senior Loan Agreement or Senior Loan Agreements.
Mandatory Prepayments required to be made pursuant to this Section
2.05 shall be applied to reduce the remaining principal installments of Senior
Loans pro rata as to each remaining principal installment outstanding.
2.06 Pro Rata Payment of Senior Debt Obligations. Each payment,
Optional Prepayment or Mandatory Prepayment, other than an Optional Prepayment
or Mandatory Prepayment made in accordance with Section 2.07, by the
Partnership, or the Borrower at the direction of the Partnership, to a Senior
Lender in respect of Senior Debt Obligations shall be a Pro Rata Payment.
2.07 Non-Pro Rata Prepayments. Notwithstanding Section 2.06, subject
to the terms of the applicable Senior Loan Agreement or Senior Loan Agreements,
the Borrower Parties may:
(a) make an Optional Prepayment, in whole or in part, of Senior
Loans owed to Senior Lenders in one or more Senior Lender Groups without
making a Pro Rata Payment to any Senior Lenders in any other Senior Lender
Group if such payment or prepayment is made (i) with Equity Funding, (ii)
with
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the proceeds of Replacement Senior Debt incurred by the Borrower in
compliance with the requirements of Section 2.10 or (iii) from funds
otherwise available for Restricted Payments pursuant to Section 11.01. Each
such Optional Prepayment shall be a Pro Rata Payment among the Senior
Lenders in each Senior Lender Group being prepaid;
(b) make an Optional Prepayment of Senior Loans owed to all
Senior Lenders without making a Pro Rata Payment to the Capital Markets
Senior Lenders, provided that such Optional Prepayment is a Pro Rata
Payment among all Senior Lenders (other than the Capital Markets Senior
Lenders); and
(c) make a Mandatory Prepayment in whole or in part of Senior
Debt Obligations owed to any Senior Lender that is entitled to or has
received such Mandatory Prepayment as compensation for costs incurred by it
in connection with making or maintaining its Senior Loans under its Senior
Loan Agreement in excess of costs incurred generally by the other Senior
Lenders, or because it has become unlawful for it to honor its obligation
to make or maintain Senior Loans under its Senior Loan Agreement and it has
not become unlawful generally for the other Senior Lenders to honor their
obligations to make or maintain Senior Loans to the Borrower under their
Senior Loan Agreement or Senior Loan Agreements without making a Pro Rata
Payment to any other Senior Lenders, provided that such payment or
prepayment is made (i) with Equity Funding, (ii) with the proceeds of
Replacement Senior Debt incurred by the Borrower in compliance with the
requirements of Section 2.10 or (iii) from funds otherwise available for
Restricted Payments pursuant to Section 11.01.
2.08 Insufficient Payments. If, at any time at which any Senior Debt
Obligations are payable by the Partnership, or the Borrower at the direction of
the Partnership, to a Senior Lender, such Senior Lender receives insufficient
funds from the Partnership or the Borrower, as the case may be, to pay in full
all Senior Debt Obligations payable to such Senior Lender at such time pursuant
to its Senior Loan Agreement or this Agreement, the funds so received by such
Senior Lender shall be applied to the payment of amounts owing by the Borrower
as such Senior Lender may determine from time to time and in any order of
priority, provided that, so long as no Senior Loan has been accelerated, such
funds shall be applied in a manner that is consistent with the following order
of priority:
first, to pay outstanding fees, costs, expenses, reimbursements and
indemnities then due and payable to the Collateral Trustee, the Depositary
Bank or any Applicable Agent;
second, to pay interest (other than overdue interest), fees, expenses,
indemnities and breakage costs then due and payable to such Senior Lender;
third, to pay overdue interest then due and payable to such Senior
Lender;
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fourth, to pay principal (other than overdue principal) and redemption
or prepayment premiums then due and payable to such Senior Lender; and
fifth, to pay overdue principal then due and payable to such Senior
Lender.
2.09 Additional Senior Debt. (a) At any time, and from time to time,
the Partnership, or the Borrower at the direction of the Partnership, may enter
into agreements providing for commitments to lend, and may incur, in addition to
the Initial Senior Debt and any Replacement Senior Debt, without the prior
consent of Senior Lenders, Indebtedness secured by the Collateral and entitled
to the benefits of this Agreement and the other Security Documents ("Additional
Senior Debt"), provided that in each case such Additional Senior Debt shall be
incurred subject to the following conditions:
(i) if the proceeds of such Additional Senior Debt
incurred or committed will be used solely to finance or refinance
Mandatory Capital Expenditures permitted to be made by the Partnership
under the Financing Documents, a Responsible Officer certifies to the
Collateral Trustee, and the Independent Engineer confirms, that (A) no
Event of Default or Potential Default has occurred and is Continuing,
(B) the amount and scope of such Mandatory Capital Expenditures are
(1) necessary to comply with a change in applicable environmental,
health, safety or other laws or regulations binding on the Partnership
or (2) otherwise necessary to operate the Heavy Oil Processing
Facility in accordance with Section 4.01(o) and (C) after giving
effect to the incurrence of all Additional Senior Debt, and based on
reasonable assumptions verified by the Independent Engineer, (1) the
minimum Debt Service Coverage Ratio for each remaining calendar year
through final maturity of the Senior Debt shall be not less than
1.5:1.0 and (2) the average annual Debt Service Coverage Ratio from
the date of incurrence of such Additional Senior Debt through final
maturity of the Senior Debt shall be not less than 2.0:1.0;
(ii) if the proceeds of such Additional Senior Debt
incurred or committed will be used solely to finance or refinance
Discretionary Capital Expenditures permitted to be made by the
Partnership under the Financing Documents, a Responsible Officer
certifies to the Collateral Trustee, and the Independent Engineer
confirms, that (A) no Event of Default or Potential Default has
occurred and is Continuing, (B) after giving effect to the incurrence
of all Additional Senior Debt, and based on reasonable assumptions
verified by the Independent Engineer, (1) the minimum Debt Service
Coverage Ratio for each remaining calendar year through final maturity
of the Senior Debt shall be not less than 2.0:l.0 and (2) the average
annual Debt Service Coverage Ratio from the date of incurrence of such
Additional Senior Debt through final maturity of the Senior Debt shall
be not less than 2.6:1.0, (C) the Partnership obtains a Ratings
Reaffirmation and (D) the
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aggregate principal amount of all such Additional Senior Debt for
Discretionary Capital Expenditures does not exceed $50 million;
(iii) such Additional Senior Debt ranks in right of
payment, upon liquidation and in all other respects pari passu
with all other Senior Debt, without preference among Senior Debt
Obligations by reason of date of incurrence or otherwise; and
(iv) the lender of the Additional Senior Debt (or an
agent or trustee therefor and on behalf thereof) shall have
executed and delivered to the Collateral Trustee an agreement in
substantially the form of the assumption agreement attached as
Appendix D hereto pursuant to which such lender (or an agent or
trustee therefor and on behalf thereof) agrees (A) to become a
party to this Agreement and the Transfer Restrictions Agreement,
(B) to be bound as a Senior Lender by all the terms and
conditions of this Agreement and the Transfer Restrictions
Agreement and (C) to perform all the obligations of a Senior
Lender under this Agreement and the Transfer Restrictions
Agreement in accordance with the terms hereof and thereof, and
which assumption agreement shall have attached thereto a copy of
the proposed Senior Loan Agreement relating to the Additional
Senior Debt (which shall disclose the tenor and amortization
schedule of such Additional Senior Debt and the rate, or the rate
basis and margin in the case of a floating rate, at which such
Additional Senior Debt shall bear interest).
(b) Commitments for Additional Senior Debt permitted under
this Section 2.09 shall be considered Senior Debt Commitments for all purposes
of this Agreement. Loan agreements pursuant to which such Additional Senior Debt
is incurred or committed to be lent shall be considered Senior Loan Agreements
for all purposes of this Agreement. Appendix B shall be deemed to be amended
from time to time to make reference to any such Senior Loan Agreements.
(c) Any incurrence of Additional Senior Debt other than in
accordance with clause (a) of this Section 2.09 shall require the prior consent
of Requisite Lenders.
2.10 Replacement Senior Debt. (a) At any time, and from time to
time, the Partnership, or the Borrower at the direction of the Partnership, may
enter into commitments to incur, and may incur, to replace the Initial Senior
Debt, without the consent of the Senior Lenders, Indebtedness secured by the
Collateral and entitled to the benefits of this Agreement and the other Security
Documents for the purpose of paying or prepaying all or any part of the Initial
Senior Debt in accordance with Section 2.07 (including any redemption and
prepayment premiums and other refinancing fees or expenses) or replacing all or
part of the unutilized or canceled part of the related outstanding Senior Debt
Commitments ("Replacement Senior Debt"), provided that in each case the
following conditions shall have been satisfied:
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(i) (A) the aggregate principal amount of such
Replacement Senior Debt does not exceed the sum of the amount of
Senior Debt Obligations being paid or prepaid and the unutilized
or canceled part of the Senior Debt Commitments being replaced,
(B) such Replacement Senior Debt has a Weighted Average Life no
shorter, and a final maturity date no earlier, than that of the
Senior Debt being replaced, (C) the projected average Debt
Service Coverage Ratio through January 15, 2009, calculated on a
pro forma basis reflecting the incurrence of such Replacement
Senior Debt, is not less than 2.2:l.0 and (D) the Partnership has
obtained a Ratings Reaffirmation;
(ii) the Partnership shall have delivered to the
Collateral Trustee, no less than 30 Business Days prior to the
date such Replacement Senior Debt is to be incurred or such
agreements providing for such commitments are entered into, a
certificate signed by a Responsible Officer (A) identifying the
lender of the Replacement Senior Debt, (B) certifying that the
Replacement Senior Debt is or will be incurred solely for the
purposes of making a payment or prepayment of Senior Debt
Obligations (including any redemption and prepayment premiums and
other refinancing fees or expenses) or for replacing all or any
part of the unutilized or canceled part of any outstanding Senior
Debt Commitment, and (C) certifying that the conditions set forth
in subclause (i) of this clause (a) have or will have been
satisfied upon the incurrence of the Replacement Senior Debt; and
(iii) the lender of the Replacement Senior Debt (or an
agent or trustee therefor and on behalf thereof) shall have
executed and delivered to the Collateral Trustee an agreement in
substantially the form of the assumption agreement attached as
Appendix D hereto pursuant to which such lender (or an agent or
trustee therefor and on behalf thereof) agrees (A) to become a
party to this Agreement and the Transfer Restrictions Agreement,
(B) to be bound as a Senior Lender by all the terms and
conditions of this Agreement and the Transfer Restrictions
Agreement and (C) to perform all the obligations of a Senior
Lender under this Agreement and the Transfer Restrictions
Agreement in accordance with the terms hereof and thereof, and
which assumption agreement shall have attached a copy of the
proposed Senior Loan Agreement relating to the Replacement Senior
Debt (which shall disclose the tenor and amortization schedule of
such Replacement Senior Debt and the rate, or the rate basis and
margin in the case of a floating rate, at which such Replacement
Senior Debt shall bear interest).
(b) Commitments for Replacement Senior Debt permitted under
this Section 2.10 shall be considered Senior Debt Commitments for all purposes
of this Agreement. Loan agreements pursuant to which such Replacement Senior
Debt is incurred or committed to be lent shall be considered Senior Loan
Agreements for all
8
purposes of this Agreement. Appendix B shall be deemed to be amended from time
to time to make reference to any such Senior Loan Agreements.
(c) Any incurrence of Replacement Senior Debt other than in
accordance with clause (a) of this Section 2.10 shall require the prior consent
of Requisite Lenders.
(d) Notwithstanding anything in this Section 2.10 to the
contrary, any Replacement Senior Debt incurred pursuant to clause (a) of this
Section 2.10 shall be incurred, in the case of Capital Markets Senior Debt,
pursuant to a supplemental indenture in accordance with Article Nine of the
Indenture.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
3.01 Representations and Warranties of the Borrower, the
Partnership, the Partners and PRG. Each of the Borrower, the Partnership, the
Partners and PRG represents and warrants to the Collateral Trustee, the Capital
Markets Trustee, the Depositary Bank and each Senior Lender, in each case with
respect to itself, that:
(a) Organization and Business. It is a corporation, in the
case of the Borrower, each of the Partners and PRG, or a limited
partnership, in the case of the Partnership, duly organized, validly
existing and in good standing under the laws of the State of Delaware,
has all power and authority (corporate and other) necessary under the
laws of the State of Delaware to own its properties and to carry on
its business as presently conducted, has been duly qualified as a
foreign corporation or partnership, as the case may be, for the
transaction of business and is in good standing under the laws of the
States of Texas and Missouri. Its location for purposes of the NY UCC
is the State of Delaware. Except in the case of PRG, it does not own
any properties or assets other than those relating to the Coker
Project and has not engaged in any business or activity other than the
business of the Coker Project.
(b) Ownership. The General Partner is the sole general
partner of the Partnership; the Limited Partner is the sole limited
partner of the Partnership; the Partners together own direct and
beneficial interests in all the partnership capital of the
Partnership, free and clear of all liens, encumbrances, equities or
claims (other than those in favor of the Secured Parties); and no
other person has any other interest in or right to any of the
Partnership's partnership capital. Upon completion of the transactions
contemplated by Section 5.02 of the Master Amendment Agreement, (i)
PRG will own 100% of the outstanding shares of capital stock of the
General Partner, free and clear of all liens, encumbrances, equities
or claims (except for any Liens thereon or security interests therein
granted by PRG from time to time as security for any of its
obligations), (ii) no person other than PRG will be a shareholder of
the General Partner or have any interest in or rights to any shares of
capital stock of the General Partner and (iii)
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all outstanding shares of capital stock of the General Partner will have
been duly and validly authorized and issued and will be fully paid and
non-assessable. The General Partner owns all of the outstanding shares of
capital stock of the Limited Partner, free and clear of all liens,
encumbrances, equities or claims; no other person is a shareholder of the
Limited Partner or has any interest in or rights to any shares of capital
stock of the Limited Partner; and all the outstanding shares of capital
stock of the Limited Partner have been duly and validly authorized and
issued and are fully paid and non-assessable. The Partnership owns all the
outstanding shares of capital stock of the Borrower, free and clear of all
liens, encumbrances, equities or claims; no other person is a shareholder
of the Borrower or has any interest in or rights to any shares of capital
stock of the Borrower; and all the outstanding shares of capital stock of
the Borrower have been duly and validly authorized and issued and are fully
paid and non-assessable. None of the Borrower, the Partnership nor either
of the Partners owns, directly or indirectly, any capital stock or other
ownership interests in any Person other than as set forth herein.
(c) Authority. It has full power and authority to execute and
deliver this Agreement, the other Amendment Documents and the PRG Guarantee
Documents, in each case to which it is a party and to perform and incur its
obligations hereunder and thereunder.
(d) Binding Agreement. This Agreement, the other Amendment
Documents, the PRG Guarantee Documents and the Transaction Documents
entered into prior to the date hereof (if amended by the Amendment
Documents, as so amended), in each case to which it is a party constitute
its valid and legally binding obligations enforceable in accordance with
their respective terms, subject to bankruptcy, insolvency, fraudulent
transfer, reorganization, moratorium and similar laws of general
applicability relating to or affecting creditors' rights and to general
equity principles. Any Transaction Documents that will be executed and
delivered by it after the date hereof (and, in the case of those that have
been executed and delivered on or prior to the date hereof, any future
modifications, supplements or amendments thereto), when executed and
delivered by it, will constitute its valid and legally binding obligation
enforceable in accordance with its terms, subject to bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium and similar
laws of general applicability relating to or affecting creditors' rights
and to general equity principles.
(e) Consents and Approvals for Agreements.
(i) All Third-Party Authorizations that are necessary
for (A) the execution, delivery and performance by it of this Agreement,
the other Amendment Documents, the PRG Guarantee Documents and the
Transaction Documents entered into prior to the date hereof (if amended by
the Amendment Documents, as so amended), in each case to which it is a
party, (B) the incurrence of Senior Debt by the Borrower, (C) the guarantee
of the Senior Debt by the Partnership, the Partners and PRG and (D) the
grant to the Secured Parties of the
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security interests in the Collateral under the Original CSA and the other
Security Documents (and, to the extent applicable, the ratification and
confirmation of such security interests pursuant to Article VI) are listed
in Appendix E, have been obtained and are in full force and effect, are
held in the appropriate party's name, are not subject to appeal, are free
from conditions or requirements that cannot be met or complied with and are
free from conditions or requirements the compliance with which could
reasonably be expected to have a Material Adverse Effect.
(ii) All Third-Party Authorizations that are necessary
for the execution, delivery and performance by each of the Premcor Entities
of the Transaction Documents (if amended by the Amendment Documents, as so
amended) to which it is a party have been obtained and are in full force
and effect, are held in the appropriate party's name, are not subject to
appeal, are free from conditions or requirements that cannot be met or
complied with and are free from conditions or requirements the compliance
with which could reasonably be expected to have a Material Adverse Effect.
(iii) Other than those that are not necessary as of such
time and that are expected to be obtained in the ordinary course as and
when required, at every time after the date of this Agreement on which this
representation is deemed to be made, all Third-Party Authorizations that
are necessary for all of the actions referred to in subclauses (i) and (ii)
of this clause (e) have been obtained, are in full force and effect, are
held in the appropriate party's name, are not subject to appeal, are free
from conditions or requirements that cannot be met or complied with and are
free from conditions or requirements the compliance with which could
reasonably be expected to have a Material Adverse Effect.
(f) No Conflicts. The compliance by it with all of the
provisions of this Agreement, the other Amendment Documents, the PRG
Guarantee Documents and the Transaction Documents (if amended by the
Amendment Documents, as so amended), in each case to which it is a party
and the consummation of the transactions herein and therein contemplated
will not conflict with or result in a breach or violation of any of the
terms or provisions of, or constitute a default under, any indenture,
mortgage, deed of trust, loan agreement, lease or other agreement or
instrument to which it is a party or by which it is bound or to which it or
any of its property or assets may be subject, nor will such action result
in any violation of the provisions of its organizational documents or any
applicable statute or any order, rule, regulation, injunction, decree, writ
or judgment of any court, judicial body, governmental agency or other body
having jurisdiction over it or any of its properties or assets.
(g) No Conflicts with Obligations of the Premcor Entities.
To the best of its knowledge after due inquiry, the compliance by it with
all the provisions of this Agreement, the other Amendment Documents, the
PRG Guarantee Documents and the Transaction Documents (if amended by the
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Amendment Documents, as so amended), in each case to which it is a party
and the consummation of the transactions herein and therein contemplated
will not conflict with or result in a breach or violation of any of the
terms or provisions of, or constitute a default under, any indenture,
mortgage, deed of trust, loan agreement, lease or other agreement or
instrument to which any of the Premcor Entities is a party or by which any
of them is bound or to which any of them or any of their property or assets
may be subject, nor will such action result in any violation of the
provisions of the Premcor Entities' organizational documents or any
applicable statute or any order, rule, regulation, injunction, decree, writ
or judgment of any court, judicial body, governmental agency or other body
having jurisdiction over any of the Premcor Entities or any of their
properties or assets.
(h) Title to Properties; Security Interests. Each of the
Borrower, the Partnership and the Partners has good and valid title to, or
a valid, subsisting and enforceable leasehold interest, easement, right of
way or auxiliary rights in, all properties (including real property) it
purports to own, lease or hold any such interest or rights in, all its
assets and all its revenues (including good, legal and valid title to, or a
valid, subsisting and enforceable leasehold interest in, the Collateral, in
which it has in the Original CSA, as amended and restated by this
Agreement, or the other Security Documents, granted a security interest);
and there are no mortgages, liens, charges, pledges, security interests or
encumbrances of any nature whatsoever, and no adverse or competing claims,
against such properties, assets or revenues except Permitted Liens. The
Liens created by the Original CSA, as amended and restated by this
Agreement, or the other Security Documents in favor of the Secured Parties
or the Collateral Trustee for the benefit of the Secured Parties, have not
been and will not be affected by the execution, delivery and performance of
the Amendment Documents, except to the extent that any such Liens are
released thereby. Each such security interest is valid and binding and
constitutes, under applicable law, a fully perfected first priority
security interest, superior in right to any other Liens, except Permitted
Liens, and enforceable against the grantor of such security interest, any
trustee in bankruptcy and any attaching creditor or third party. No
currently effective financing statement or other instrument or recordation
covering all or any part of the Collateral purported to be covered by this
Agreement or the other Security Documents is on file in any recording
office, except such as may have been filed in favor of the Secured Parties
or the Collateral Trustee on behalf of the Secured Parties for the direct
or indirect benefit of the Secured Parties, or in respect of any Permitted
Lien.
(i) Ranking.
(i) The obligations of the Borrower under each Senior
Loan Agreement, the Senior Loans made thereunder and any Notes evidencing
such Senior Loans, will at all times rank in right of payment, in right of
collateral security, upon liquidation and in all other respects pari passu
with the Borrower's obligations under each other Senior Loan Agreement, the
Senior Loans made
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thereunder and any Notes evidencing such Senior Loans. The Borrower has no
obligations other than in connection with the Indenture and the related
Notes.
(ii) The obligations of the Partnership under the Guarantee
of each Senior Loan Agreement, the Senior Loans made thereunder and any
Notes evidencing such Senior Loans, will at all times rank in right of
payment, in right of collateral security, upon liquidation and in all other
respects (A) pari passu with the obligations of the Partnership under the
Guarantee of each other Senior Loan Agreement, the Senior Loans made
thereunder and any Notes evidencing such Senior Loans and (B) senior to the
Partnership's obligations under the Partnership Notes, any Subordinated
Debt and all its other obligations other than those that have priority
under applicable law.
(iii) The obligations of PRG under the Guarantee of each
Senior Loan Agreement, the Senior Loans made thereunder and any Notes
evidencing such Senior Loans, will at all times rank in right of payment,
in right of collateral security, upon liquidation and in all other respects
pari passu with all of its other senior unsecured Indebtedness.
(j) No Default. It is not in violation of any of its
constitutive partnership or corporate documents (as amended by the
Amendment Documents) or in default in the performance or observance of any
obligation, covenant or condition contained in this Agreement, any other
Transaction Document (if amended by the Amendment Documents, as so amended)
or any other indenture, mortgage, deed of trust, loan agreement, lease or
other agreement or instrument to which it is a party or by which it is
bound or to which any of its properties or assets may be subject.
(k) Investment Company Act. It is not and, after giving effect
to the guarantee by PRG of the Senior Debt it will not be, an "investment
company", or an entity "controlled" by an "investment company" as such
terms are defined in the Investment Company Act of 1940, as amended.
(l) Margin Regulations. None of the transactions contemplated by
this Agreement will violate or result in a violation of Section 7 of the
Exchange Act, or any regulation promulgated thereunder, including
Regulations T, U and X of the Board of Governors of the Federal Reserve
System.
(m) ERISA. None of the Borrower, the Partnership or the Partners
sponsors, maintains or contributes to any employee benefit plan as defined
in Section 3(3) of ERISA, or has at any time sponsored, maintained or
contributed to any such employee benefit plan.
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ARTICLE IV
COVENANTS
4.01 Covenants of the Borrower and the Partnership. Each of the
Borrower and the Partnership covenants and agrees with the Collateral Trustee
and each of the Secured Parties that so long as any Senior Debt or Senior Debt
Commitment shall remain outstanding and until all Senior Debt Obligations due
and to become due shall have been paid in full:
(a) Maintenance of Existence. It shall do all things
necessary to maintain: (i) its due organization, valid existence and good
standing as a corporation, in the case of the Borrower, and a limited
partnership, in the case of the Partnership, under the laws of the State of
Delaware; (ii) the power and authority (corporate and otherwise) necessary
under the laws of the State of Delaware to own its properties and to carry
on the business of the Coker Project; and (iii) its qualification as a
foreign corporation or limited partnership, as the case may be, for the
transaction of business in good standing under the laws of the State of
Texas. In the event that any change in corporate form or status is required
under any applicable law, it shall take such measures as are necessary to
protect the integrity and effectiveness of its obligations, including
without limitation all its covenants and all security interests created,
under this Agreement and the other Transaction Documents to which it is
party. It shall not dissolve, liquidate, enter into any merger or
consolidation, or sell or transfer all or substantially all of its assets.
(b) Business. The Partnership shall conduct no business or
activity other than the business of the Coker Project (and such business
reasonably incidental thereto) and shall not change the purpose, nature or
scope of the Coker Project from that described in the definition of "Coker
Project" in Appendix A, including all additions, improvements or
modifications thereto permitted by this Agreement. The Borrower shall not
have any assets other than the Partnership Notes and its rights under the
Transaction Documents to which it is a party and shall not conduct any
business other than as necessary to perform its respective obligations
under such Transaction Documents to which it is a party.
(c) Principal Place of Business. It shall maintain its
executive office and principal place of business in (i) Port Arthur, Texas,
(ii) St. Louis, Missouri (iii) Greenwich, Connecticut or (iv) any other
location; provided that, in the case of subclause (iv) only, (A) it shall
have provided the Collateral Trustee at least 30 days' prior written notice
identifying such location and (B) all actions required to be taken pursuant
to Section 6.13 to create, preserve, continue, perfect or validate any
security interest granted by or pursuant to the Original CSA, as amended
and restated by this Agreement, or the other Security Documents in the
Collateral or to enable the Collateral Trustee on behalf of the Secured
Parties to exercise or enforce its rights under this Agreement or the other
Security Documents with respect to such security interest shall have been
taken.
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(d) Accounting and Cost Control Systems. It shall maintain,
or cause to be maintained, management information and cost accounting
systems for the Coker Project at all times in accordance with Prudent
Industry Practice, and shall employ, or cause to be employed, independent
auditors of recognized national standing to audit annually its financial
statements.
(e) Access. It shall grant the Collateral Trustee and the
Applicable Agent or Applicable Agents or their designees (which may include
any Independent Consultant) from time to time, including but not limited to
during the pendency of an Event of Default or Potential Default, complete
access to its books and records, quality control and performance test data,
all other data relating to the Coker Project and the physical facilities of
the Coker Project and an opportunity to discuss accounting matters with its
independent auditors, provided that all such inspections are conducted
during normal business hours in a manner that does not unreasonably disrupt
the operation of the Coker Project. Each of the Independent Consultants,
the Collateral Trustee and the Applicable Agent or Applicable Agents shall
also have the right to monitor, witness and appraise the operation of the
Coker Project. It shall offer and cause its officers, employees, agents and
contractors to offer all reasonable assistance to the Persons making any
such visit. So long as any Event of Default or Potential Default has
occurred and is Continuing, the reasonable fees and documented expenses of
such Persons shall be for the account of the Partnership.
(f) Environmental Audits. If the Collateral Trustee or the
Applicable Agent or Applicable Agents or any of their respective designees
reasonably believes that a Release, threat of Release or violation of any
Environmental Law may have occurred, or if an Event of Default or Potential
Default has occurred, it shall, upon receipt of a written communication
setting forth the basis for such belief, grant access to and assist any
environmental consultants for the purpose of conducting any environmental
compliance or contamination audits requested by any of the Collateral
Trustee, the Applicable Agent or Applicable Agents in its sole discretion
and all costs associated with any such audits shall be paid by the
Partnership.
(g) Preservation of Assets.
(i) It shall maintain its assets constituting part of
the Collateral in good repair and shall make such repairs and
replacements as are required in accordance with Prudent Industry
Practice. The Partnership shall not sell, assign, lease, transfer or
otherwise dispose of any Project Property constituting part of the
Collateral without the prior consent of Supermajority Lenders, except
for (A) dispositions of Project Production other than dispositions
prohibited by the terms of clause (q) of this Section 4.01, (B)
dispositions of Project Property that has become obsolete or
redundant, (C) dispositions made in the ordinary course of its
business, (D) dispositions of Project Property the net proceeds of
which are used within 90 days of such disposition to replace such
Project Property with
15
similar productive property or assets of the Partnership pursuant to a
binding agreement for the purchase of such replacement Project Property
entered into by the Partnership on or prior to the date of such
disposition, (E) transfers of Permits to PRG or (F) dispositions of
Project Property approved by the Applicable Agent or Applicable Agents
up to an aggregate value of $50 million in the form of a sale-
and-leaseback transaction or a loan transaction as part of a tax-exempt
bond financing under the laws of the State of Texas within the first
five years following the date hereof, provided that, with respect to
dispositions excepted under (B), (C) (D) or (F), as the case may be, of
this subclause (i), the Partnership shall deliver to the Collateral
Trustee, no later than the date of such disposition, a certificate of a
Responsible Officer that such disposition is being made in accordance
with (B), (C) (D) or (F), as the case may be. Neither the Borrower, the
Partnership nor either of the Partners shall sell, assign, lease,
transfer or otherwise dispose of any Project Property whatsoever other
than in accordance with the Financing Documents. Nothing in this
subclause (i) shall be construed to limit the ability of the Borrower
and the Partnership to create, assume, incur, permit or suffer to exist
any Permitted Lien.
(ii) As soon as practicable after certification by the
Partnership to the Collateral Trustee, in a form acceptable to the
Collateral Trustee, to the effect that it intends to dispose of an
asset in accordance with clause (g)(i) of this Section 4.01, the
Collateral Trustee and the Applicable Agent or Applicable Agents, at
the Partnership's request and expense, shall execute and deliver, file
and record any notice, waiver, termination statement, instruments of
satisfaction, discharge and release of security as may be necessary to
release any security interest in such asset created by or pursuant to
this Agreement or any Security Document and to release or waive any
restriction on the transferability of such asset contained in any
Financing Document, including this Agreement or any Security Document.
(h) Taxes. It shall (i) file or cause to be filed all returns
required to be filed by it and (ii) pay and discharge, before the same
shall become delinquent, after giving effect to any applicable extensions,
all Taxes imposed on it or its property (including interest and penalties)
unless such Taxes are being contested in good faith and by appropriate
proceedings, appropriate reserves are maintained with respect thereto in
accordance with GAAP and such proceedings, if adversely determined, could
not reasonably be expected to have a Material Adverse Effect. It shall
notify the Collateral Trustee promptly following the occurrence thereof, in
reasonable detail, of any disputes pending between it and any Governmental
Authority relating to Taxes.
(i) Compliance with Law. It shall comply, and use its
reasonable best efforts to cause its contractors to comply, with all
applicable (or, in the case of compliance by such contractors only, all
material) laws, rules, regulations and
16
orders of Governmental Authorities (including without limitation securities
laws, Environmental Laws, health and safety laws and laws relating to the
disposal and clean-up of hazardous wastes in effect from time to time)
unless the necessity of compliance therewith is being contested in good
faith by appropriate proceedings, appropriate reserves have been
established and are maintained with respect thereto in accordance with GAAP
and such proceedings, if adversely determined, could not reasonably be
expected to have a Material Adverse Effect. It shall notify the Collateral
Trustee, promptly following the initiation of any such proceedings, in
reasonable detail of any disputes pending between it or any of its
contractors and any Governmental Authority relating to compliance or
noncompliance with any such law, rule, regulation or order.
(j) Maintenance of Approvals for Agreements. It shall maintain
or cause to be maintained all Third-Party Authorizations that are necessary
for (i) the execution, delivery and performance by it of each Transaction
Document to which it is a party, (ii) the incurrence and guarantee of the
Senior Debt Obligations, as the case may be, and (iii) the performance of
its obligations under the Financing Documents, in good standing, in full
force and effect, in its name or in the name of its contractors, not
subject to appeal and free from conditions or requirements, except to the
extent that a failure so to maintain such Third-Party Authorizations could
not reasonably be expected to have a Material Adverse Effect. It shall
promptly upon receipt or publication furnish to each of the Collateral
Trustee and the Applicable Agent or Applicable Agents a copy of all such
Third-Party Authorizations, including any amendment, supplement or
modification thereto.
(k) Maintenance of Approvals for Coker Project. It shall
maintain, and to the extent not obtained on or prior to the date hereof,
obtain on or before the date on which they are required to be obtained, or
cause to be so maintained or obtained, all (i) Third-Party Authorizations,
(ii) easements, leases, rights-of-way, auxiliary rights and other real
property rights and (iii) licenses and other rights to use Technology, in
each case that are necessary in order to operate and maintain the Coker
Project in the manner contemplated by the Transaction Documents, in good
standing, in full force and effect, in its name or in the name of its
contractors, not subject to appeal and free from conditions or
requirements, except to the extent that a failure to do so could not
reasonably be expected to result in a Material Adverse Effect, provided
that nothing herein shall limit the ability of the Borrower and the
Partnership to transfer Permits to PRG in accordance with clause (g)(i) of
this Section 4.01. It shall promptly upon receipt or publication furnish to
each of the Collateral Trustee and the Applicable Agent or Applicable
Agents a copy of all such Third-Party Authorizations, easements, leases,
rights-of-way, auxiliary rights and other real property rights, and
licenses and other rights to use Technology, including any amendment,
supplement or modification thereto.
(l) Maintenance of Supply. The Partnership shall maintain at all
times supplies of, or contracts providing for supplies of, hydrogen,
electricity,
17
steam, natural gas and other feedstock and utilities, telecommunications
services and other inputs necessary to conduct its business in accordance
with Prudent Industry Practice and to comply in all respects with its
obligations under and to derive all benefits from the Transaction Documents
to which it is a party, except where a failure to maintain such supplies or
contracts could not reasonably be expected to have a Material Adverse
Effect.
(m) Maintenance of Crude Oil Supply. The Partnership shall, (i)
subject to force majeure and any other disruptions of supplies outside its
control, at all times maintain supplies of crude oil necessary to conduct
its business in accordance with Section 4.01(o) and to produce the Required
Product Mix under the Product Purchase Agreement and (ii) during the term
of the Long-Term Oil Supply Agreement, comply in all respects with its
obligations, derive all its benefits and enforce all its rights under the
Long-Term Oil Supply Agreement, the Long-Term Oil Supply Agreement
Guarantee and the PMI Consent and Agreement.
(n) Changes to Facilities and Improvements.
(i) The Partnership may change the physical facilities
of the Coker Complex from those set forth in the Turnkey
Specifications, or may approve a change in the upgrade of the
Ancillary Equipment from those set forth in the specifications set
forth in the Premcor EPC Contract, without the consent of the Secured
Parties, by providing notice to the Collateral Trustee, the
Independent Engineer and each Credit Rating Agency then rating the
Capital Markets Senior Debt describing such change, provided that each
of the following conditions has been satisfied: (A) such change does
not have a Material Adverse Effect; (B) such change does not
materially increase the unit cash operating costs on a per barrel of
throughput basis of the Coker Project or decrease its design capacity;
(C) there is no shortfall in the Principal and Interest Accrual
Account or Debt Service Reserve Account; and (D) the Partnership will
have access to sufficient funds to fund as incurred the costs
associated with such change. Any notice delivered by the Partnership
pursuant to the immediately preceding sentence shall be accompanied by
a certificate of a Responsible Officer as to the satisfaction of the
conditions set forth in this subclause (i), provided that any
certifications of the Partnership in respect of the conditions set
forth in subclause (B) through (D) of the immediately preceding
sentence shall be confirmed by the Independent Engineer.
(ii) In the event that the Partnership desires to
undertake a change in the Coker Complex or approve a change in the
upgrade of the Ancillary Equipment that does not comply with the
requirements set forth in subclause (i) of this clause (n), the
Partnership shall notify the Collateral Trustee, each Applicable
Agent, the Independent Engineer and each Credit Rating Agency then
rating the Capital Markets Senior Debt of the proposed change. Each
such notice shall be accompanied by a
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statement of the Partnership describing in reasonable detail such
proposed change and the reasons for, and desirability of, such change,
together with the Partnership's opinion as to each of the matters set
forth in subclause (i) of this clause (n). The Applicable Agent or
Applicable Agents may consult with the Independent Engineer in respect
of such proposed change and request certification from the Independent
Engineer with respect to any of the Partnership's opinions as to the
matters set forth in subclause (i) of this clause (n); and any such
proposed change shall become effective only with the prior consent of
Requisite Secured Parties.
(iii) The Partnership shall deliver to the Independent
Engineer, and make available to the Collateral Trustee upon request, a
copy of the Turnkey Specifications and the specifications for the
Ancillary Equipment as amended from time to time in accordance with
this clause (n).
(o) Operation of the Project. The Partnership shall (i) cause
the Coker Project to be operated, repaired and maintained at all times in
accordance with Prudent Industry Practice and the Transaction Documents,
(ii) maintain or cause to be maintained such spare parts and inventory as
are consistent with the Transaction Documents and Prudent Industry
Practice, (iii) maintain or cause to be maintained at the Coker Project
site a complete set of plans and specifications for the Coker Project and
(iv) at all times maintain or cause to be maintained appropriate security
at the Coker Project site in accordance with Prudent Industry Practice.
(p) Environmental Compliance. The Partnership shall (i) conduct
its operations and maintain its properties and assets in material
compliance with all applicable Environmental Laws, permits, licenses and
other approvals and authorizations, (ii) dispose or cause to be disposed
all Hazardous Substances relating to the Coker Project in material
compliance with all, and so as would not result in a material liability
under any, Environmental Laws, permits, licenses and other approvals and
authorizations and (iii) promptly notify the Collateral Trustee and the
Applicable Agent or Applicable Agents of the commencement of any civil,
criminal, or material administrative actions or suits, and any material
environmental investigations, studies, audits, tests, reviews or other
analyses, environmental demands, claims, hearings, investigations or
proceedings.
(q) Project Production. The Partnership shall (i) enter into
sales agreements for the sale or disposition of all Project Production,
including without limitation the Product Purchase Agreement, on terms and
conditions (including, if appropriate in light of the nature and credit
quality of the counterparty, credit support arrangements) consistent with
Prudent Industry Practice, (ii) undertake any such sales or disposition of
Project Production on fair and commercially reasonable terms on an
arm's-length basis and (iii) in the case of the Product Purchase Agreement
and the Services and Supply Agreement, promptly bill, and
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cause to be collected from, PRG amounts due in respect of Project
Production sold and services rendered.
(r) Project Documents. It shall comply in all respects with, and
enforce against other parties all its rights (including without limitation
any third party beneficiary rights) under, the Project Documents. It shall
not agree to any amendment, waiver, modification, termination or assignment
of any of its rights or obligations under any Project Document to which it
is or becomes a party or the Marine Dock and Terminaling Agreement, or
provide any consent thereunder, unless (i)(A) a copy of such amendment,
waiver, modification, termination, assignment or consent has been delivered
to the Collateral Trustee at least 10 Business Days in advance of the
effective date thereof, having attached a certificate of a Responsible
Officer (with the verification of the Independent Engineer) certifying that
the proposed amendment, waiver, modification, termination, assignment or
consent could not reasonably be expected to have a Material Adverse Effect,
and (B) such proposed amendment, waiver, modification, termination,
assignment or consent could not reasonably be expected to have a Material
Adverse Effect, (ii) the Partnership has obtained the prior written consent
of Supermajority Secured Parties, (iii) any such amendment, modification or
waiver relates solely to Excluded PRG Covenants or such amendment,
modification or waiver relates solely to a Permitted Modification, provided
that nothing in this clause (r) shall (x) obligate the Partnership to take
any action in connection with a termination of the Marine Dock and
Terminaling Agreement by Sun Pipe Line Company in accordance with the terms
of such agreement or (y) limit the ability of the Borrower or the
Partnership to agree to any amendment, waiver or modification in respect of
the Insurance Policies so long as (1) after giving effect to such
amendment, waiver or modification, the Borrower Parties will continue to be
in compliance with Article VII and (2) copies of any such proposed
amendment, waiver or modification have been delivered to the Collateral
Trustee at least 10 Business Days prior to the effectiveness thereof.
(s) Limitation on Indebtedness. The Partnership shall not create,
incur, assume or suffer to exist any Indebtedness other than Permitted
Indebtedness. The Borrower shall not create, incur, assume or suffer to
exist any trade accounts payable or other accrued liability or any
Indebtedness other than Senior Debt.
(t) Preservation of Security Interests; Limitation on Liens and
Encumbrances. It (i) shall preserve, maintain and perfect the first
priority security interests granted by or pursuant to the Original CSA, as
amended and restated by this Agreement, and the other Security Documents
and preserve and protect the Collateral as set forth in Article VI and the
other Security Documents and (ii) shall not, without the consent of
Supermajority Secured Parties, create, assume, incur, permit or suffer to
exist any Lien upon, or any security interest in, any of its property,
assets or contractual rights, whether now owned or hereafter acquired,
except for Permitted Liens.
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(u) Limitation on Investments and Loans. It shall not make any
investments or loans or advances to any Person, except for (i) Authorized
Investments, (ii) down payments or prepayments to suppliers or service
providers (other than to any Premcor Entity) in the ordinary course of
business and on customary commercial terms, (iii) receivables arising in
the ordinary course of business and (iv) loans or advances to other
Borrower Parties or to Premcor Entities so long as such loans and advances
are permitted in accordance with Section 11.01.
(v) Limitation on Guarantees. It shall not assume, guarantee,
endorse, contingently agree to purchase or otherwise become liable upon the
obligation of any other Person except (i) by the endorsement of negotiable
instruments for deposit or collection or similar transactions in the
ordinary course of business, (ii) guarantees provided in connection with
the granting of performance bonds to contractors and suppliers and
Governmental Authorities made in the ordinary course of business, (iii)
guarantees provided in connection with Permitted Indebtedness and (iv)
guarantees expressly permitted or required under the Financing Documents.
(w) Hedging. It shall not enter into any swap agreements, option
contracts, future contracts, options on future contracts, spot or forward
contracts, caps, floors, collars or other agreements to purchase or sell or
any other hedging arrangements, in each case in respect of currencies,
interest rates, commodities or otherwise other than Permitted Hedging
Arrangements.
(x) Use of Proceeds. All proceeds of Additional Senior Debt
incurred to finance or refinance Mandatory Capital Expenditures or
Discretionary Capital Expenditures pursuant to Section 2.09 shall be used
solely to finance or refinance such Mandatory Capital Expenditures or
Discretionary Capital Expenditures, as the case may be. All proceeds of
Replacement Senior Debt shall be used to pay or prepay Senior Debt or to
replace Senior Debt Commitments in accordance with Section 2.10. Proceeds
of the Senior Debt may be invested in Authorized Investments prior to being
used in accordance with this clause (x).
(y) Independent Consultants. The Partnership, on behalf of the
Secured Parties, has appointed, and the Secured Parties have accepted,
Purvin & Gertz as the initial Independent Consultant and Sedgwick of
Tennessee, Inc. as the initial Insurance Consultant. Majority Secured
Parties, upon 15 days' prior written notice to the Collateral Trustee and
each Applicable Agent, shall have the right to remove an Independent
Consultant if, in the opinion of Majority Secured Parties, such Independent
Consultant (i) ceases to be a consulting firm of recognized international
standing, (ii) has become an Affiliate of the Partnership, the Borrower,
any of the Partners, the Premcor Entities, an Applicable Agent or a Secured
Party, (iii) has developed a conflict of interest that calls into question
such firm's capacity to exercise independent judgment in the performance of
its duties in connection with the Coker Project or (iv) has failed to
charge commercially reasonable compensation for its duties. If any
Independent
21
Consultant is removed or resigns and thereby ceases to act as an
Independent Consultant, the Capital Markets Trustee shall promptly
designate a replacement Independent Consultant of recognized international
standing. The Partnership shall pay for the reasonable and documented fees
and expenses of each Independent Consultant incurred in connection with (i)
the preparation of the initial report of such Independent Consultant and
all other work performed by it, prior to the date of this Agreement and
(ii) any other work relating to or reasonably requested by the Collateral
Trustee or the Capital Markets Trustee in connection with the transactions
contemplated by this Agreement.
(z) Subsidiaries. The Partnership shall not at any time own any
capital stock or other ownership interest in any Person other than the
Borrower. Neither the Partnership nor the Borrower shall form any new
Subsidiary. The Partnership and the Borrower shall at all times maintain
the status of the Borrower as a wholly owned subsidiary of the Partnership.
(aa) Credit Rating Agencies. So long as any Capital Markets
Senior Debt is outstanding, the Partnership shall take all actions as may
be necessary or appropriate from time to time to cause such Capital Markets
Senior Debt to be rated by the Credit Rating Agencies. If Moody's or S&P
ceases to be a "nationally recognized statistical rating organization"
registered with the Commission or ceases to be in the business of rating
securities of the type and nature of the Capital Markets Senior Debt, the
Partnership may replace it with any other "nationally recognized
statistical rating organization" in the business of rating securities of
the type and nature of the Capital Markets Senior Debt nominated by the
Partnership and approved by Majority Bondholders, following which such
nominee shall be a "Credit Rating Agency" for all purposes of this
Agreement.
(bb) Accounts. The Partnership shall cause the Accounts to be
established and maintained at all times in accordance with Article V.
(cc) Insurance. The Partnership shall maintain at all times the
insurance required to be maintained pursuant to Article VII on the terms
and conditions set forth therein.
(dd) Further Assurances. It agrees to do all things reasonably
requested by the Collateral Trustee or the Applicable Agent or Applicable
Agents to consummate and make effective, as soon as practicable, the
transactions contemplated by, and to carry out the purposes of, this
Agreement and the other Transaction Documents, including without limitation
the timely obtaining of consents, authorizations, orders and approvals of
any Governmental Authority and the providing of such additional
certificates, legal opinions and other documentation as may be requested
from time to time by the Collateral Trustee or the Applicable Agent or
Applicable Agents in order to provide assurances to the Collateral Trustee
or the Applicable Agent or Applicable Agents, as the case may
22
be, regarding the continued compliance with the terms and conditions
of the Transaction Documents.
(ee) Technology. The Partnership shall maintain in
place all licenses and other rights with respect to Technology to the
extent necessary for the operation or maintenance of the Project at
any time.
4.02 Covenants of the Partners. Each of the Partners covenants
and agrees with the Collateral Trustee and each of the Secured Parties that so
long as any Senior Debt or Senior Debt Commitment remains outstanding and until
all Senior Debt Obligations due and to become due shall have been paid in full:
(a) Maintenance of Existence. It shall do all things
necessary to maintain: (i) its due organization, valid existence and
good standing as a corporation under the laws of the State of
Delaware; (ii) the power and authority (corporate and otherwise)
necessary under the laws of the State of Delaware to own its
properties and to carry on its business; and (iii) its qualification
as a foreign corporation for the transaction of business in good
standing under the laws of the State of Texas. In the event that any
change in corporate form or status is required under any applicable
law, it shall take such measures as are necessary to protect the
integrity and effectiveness of its obligations under this Agreement
and the other Transaction Documents to which it is party. It shall not
dissolve, liquidate, enter into any merger or consolidation, or sell
or transfer all or substantially all of its assets.
(b) Business. It shall not conduct any business or have any
assets other than as necessary to perform its respective obligations
under the Transaction Documents to which it is a party.
(c) Preservation of Assets. It shall not sell, assign,
lease, transfer or otherwise dispose of any of its assets other than
as permitted or required by the Financing Documents.
(d) Taxes. It shall (i) file or cause to be filed all
returns required to be filed by it and (ii) pay and discharge, before
the same shall become delinquent, after giving effect to any
applicable extensions, all Taxes imposed on it or its property
(including interest and penalties) unless such Taxes are being
contested in good faith and by appropriate proceedings, appropriate
reserves are maintained with respect thereto in accordance with GAAP
and such proceedings, if adversely determined could not reasonably be
expected to have a Material Adverse Effect. It shall notify the
Collateral Trustee, promptly following the occurrence thereof, in
reasonable detail, of any disputes pending between it and any
Governmental Authority relating to Taxes.
(e) Compliance with Law. It shall comply with all
applicable laws, rules, regulations and orders of Governmental
Authorities, unless the necessity of compliance therewith is being
contested in good faith by appropriate
23
proceedings, appropriate reserves have been established and are maintained with
respect thereto in accordance with GAAP and such proceedings, if adversely
determined could not reasonably be expected to have a Material Adverse Effect.
It shall notify the Collateral Trustee, promptly following the initiation of any
such proceedings, in reasonable detail, of any disputes pending between it and
any Governmental Authority relating to its compliance or noncompliance with any
such law, rule, regulation or order.
(f) Maintenance of Approvals for Agreements. It shall maintain
all Third-Party Authorizations that are necessary for the execution, delivery
and performance by it of its obligations under each Transaction Document to
which it is a party, in good standing, in full force and effect, in its name,
not subject to appeal and free from conditions or requirements, except to the
extent that a failure so to maintain such Third-Party Authorizations could not
reasonably be expected to have a Material Adverse Effect. It shall promptly upon
receipt or publication furnish to each of the Collateral Trustee and the
Applicable Agent or Applicable Agents a copy of all such Third-Party
Authorizations, including any amendment, supplement or modification thereto.
(g) Limitation on Indebtedness. It shall not create, incur,
assume or suffer to exist any Indebtedness other than (i) as expressly permitted
or required by and subject to the terms of the Financing Documents or (ii) to
guarantee any Permitted Indebtedness of the Borrower or the Partnership.
(h) Limitation on Liens and Encumbrances. It shall not create,
assume, incur, permit or suffer to exist any Lien upon, or any security interest
in, any of its property, assets or contractual rights, whether now owned or
hereafter acquired, other than as required under the Financing Documents.
(i) Limitation on Investments and Loans. It shall not make any
investments or loans or advances to any Person, other than as required under the
Financing Documents; provided, however, that this sentence shall not apply to
transactions with Affiliates involving payments in respect of equity, loans or
advances.
(j) Limitation on Guarantees. It shall not assume, guarantee,
endorse, contingently agree to purchase or otherwise become liable upon the
obligation of any other Person except (i) guarantees specifically required under
the Financing Documents or (ii) to guarantee any Permitted Indebtedness of the
Borrower or the Partnership.
(k) Subsidiaries. It shall not at any time own any capital
stock or other ownership interest in any Person other than the Partnership and
it shall not form any new Subsidiary, provided that the General Partner may form
a wholly-owned direct Subsidiary to hold the l% general partnership interest in
the Partnership currently held by the General Partner, provided such new
subsidiary becomes party to this Agreement on the same terms and subject to the
same
24
conditions as the General Partner (including, without limitation, the
guarantee under Article XII and all covenants set forth in this
Section 4.02).
(1) Accounts. It shall not establish or maintain any bank
account.
(m) Further Assurances. It agrees to do all things reasonably
requested by the Secured Parties to consummate and make effective, as
soon as practicable, the transactions contemplated by, and to carry
out the purposes of, this Agreement and the other Transaction
Documents, including without limitation the timely obtaining of
consents, authorizations, orders and approvals of any Governmental
Authority and the providing of such additional certificates, legal
opinions and other documentation as may be requested from time to time
by the Collateral Trustee or the Applicable Agent or Applicable Agents
in order to provide assurances to the Collateral Trustee or the
Applicable Agent or Applicable Agents, as the case may be, regarding
the continued compliance with the terms and conditions of the
Transaction Documents.
4.03 Covenant of PRG. PRG covenants and agrees with the Collateral
Trustee and each of the Secured Parties that so long as any Senior Debt or
Senior Debt Commitment remains outstanding and until all Senior Debt Obligations
due and to become due shall have been paid in full, PRG shall (i) maintain or
cause to be maintain all Permits that are necessary for the Partnership to
satisfy its obligations under Section 4.01(o) and for the Partnership to perform
the Project Documents in accordance with their respective terms and (ii) not
agree to any amendment, waiver, modification, termination or assignment of any
of its rights or obligations under any such Permits if such amendment, waiver,
modification, termination or assignment could reasonably be expected to have a
Material Adverse Effect.
4.04 Common Covenant. Each of the Borrower, the Partnership, the
Partners and PRG will not agree, without the consent of each Senior Lender
Group, to any amendment or modification of any Senior Loan Agreement that would
have the effect of (i) materially altering, to the advantage of the Senior
Lenders party thereto, the timing (or conditions or event that control the
timing) of payment of any amount payable (or that might become payable) by the
Borrower or the Partnership, (ii) imposing additional or more stringent
conditions precedent to the disbursement of Senior Loans thereunder or (iii)
increasing the rate (or the method of calculation) at which interest is payable
on Senior Loans thereunder.
ARTICLE V
ACCOUNTS
5.01 Accounts. (a) Pursuant to the Original CSA the Partnership
directed the Collateral Trustee to, and the Collateral Trustee did, establish,
and continues to maintain, the following secured accounts in the name of the
Collateral Trustee at the Depositary Bank in The City of New York ("Accounts"),
provided that the actual designation of each Account shall consist of the words
"Deutsche Bank Trust Company
25
Americas, as Collateral Trustee", followed by the respective defined term set
forth below in parentheses:
(i) "Principal and Interest Accrual Account",
into which deposits shall be made, and from which withdrawals
shall be made, in accordance with Section 5.03;
(ii) "Debt Service Reserve Account", into
which deposits shall be made, and from which withdrawals shall
be made, in accordance with Section 5.04;
(iii) "Casualty and Insurance Account", into
which deposits shall be made, and the funds on deposit in which
shall be applied, in accordance with Section 5.05; and
(iv) "Mandatory Prepayment Account", into which
deposits shall be made, and from which withdrawals shall be
made, in accordance with Section 5.06.
Each Account may have one or more Subaccounts as provided in
Section 5.02. All moneys held in the Accounts shall be trust funds held by the
Collateral Trustee for the purpose of making payments therefrom in accordance
with this Agreement. Only the Collateral Trustee shall have the right to make
withdrawals and payments from the Accounts, upon instruction or direction, as
provided in this Agreement.
The Depositary Bank hereby agrees to act as, and the
Partnership acknowledges that the Depositary Bank shall act as, "securities
intermediary" (as defined in the NY UCC) in respect of the Accounts and
Subaccounts under this Agreement. The Partnership, the Collateral Trustee and
the Depositary Bank agree that (A) each Account and Subaccount shall be treated
as a "securities account" (within the meaning of Section 8-501(a) of the NY UCC)
and the Collateral Trustee shall be the named "entitlement holder" (within the
meaning of Section 8-102(a)(7) of the NY UCC) in respect thereof, (B) each item
of property (whether investment property, financial asset, security, instrument
or cash) credited to any Account or Subaccount shall be treated as a "financial
asset" (within the meaning of Section 8-102(a)(9) of the NY UCC), and all
financial assets in registered form or payable to a person or persons or to
order and credited to any Account or any Subaccount shall be registered in the
name of, payable to or to the order of, or specially endorsed to, the Depositary
Bank or in blank, or credited to another securities account maintained by
another securities intermediary in the name of the Depositary Bank, and in no
case will any financial asset credited to any Account or Subaccount be
registered in the name of, payable to or to the order of, or specially endorsed
to, the Partnership, except to the extent the foregoing have been specially
endorsed by the Partnership to the Depositary Bank or in blank, (C) the
Depositary Bank shall comply solely with "entitlement orders" (within the
meaning of Section 8-102(8) of the NY UCC) issued by the Collateral Trustee and
relating to any financial asset held in any Account or Subaccount without
further consent from the Partnership, (D) on any date
26
on which the Collateral Trustee is required by the terms of this Agreement to
transfer any funds on deposit in any Account or Subaccount, the Collateral
Trustee shall cause the Depositary Bank to make such transfer as provided herein
and (E) the Depositary Bank shall not change the name or account number of any
Account or Subaccount without the prior consent of the Collateral Trustee.
In the event that the Depositary Bank has or subsequently obtains by
agreement, operation of law or otherwise a lien or security interest in any
Account or Subaccount or any "security entitlement" (as defined in the NY UCC)
credited thereto, the Depositary Bank agrees that such lien or security interest
shall be subordinate to the lien and security interest of the Collateral
Trustee. The financial assets standing to the credit of the Accounts and
Subaccounts will not be subject to deduction, set-off, banker's lien, or any
other right in favor of any Person other than the rights of the Collateral
Trustee set forth in this Agreement. The Depositary Bank hereby waives any right
of banker's lien, set-off or counterclaim in respect of any assets contained in
any Account or Subaccount or otherwise that are held by the Depositary Bank
hereunder.
The Depositary Bank and the Partnership have not entered into any
agreement with respect to the Accounts or the Subaccounts or any financial
assets credited to any Account or Subaccount other than this Agreement and the
other Security Documents. The Depositary Bank has not entered into any agreement
with the Partnership or any other Person purporting to limit or condition the
obligation of the Depositary Bank to comply with entitlement orders originated
by the Collateral Trustee in accordance with this clause (a).
Except for the claims and interest of the Collateral Trustee and the
Partnership in each of the Accounts and Subaccounts, the Depositary Bank does
not have actual knowledge of any claim to, or interest in, any Account or
Subaccount or in any financial asset credited thereto. If any Person asserts any
lien, encumbrance or adverse claim (including any writ, garnishment, judgment,
warrant of attachment, execution or similar process) against any Account or
Subaccount or in any financial asset credited thereto, the Depositary Bank shall
promptly notify the Collateral Trustee, the Applicable Agent or Applicable
Agents and the Partnership thereof.
The rights and powers granted to the Depositary Bank by the Collateral
Trustee have been granted in order to perfect its lien and the security
interests in the Accounts and the Subaccounts, and are powers coupled with an
interest and will neither be affected by the bankruptcy of the Partnership nor
the lapse of time.
The Partnership shall not have any rights against or to monies held in
the Accounts or Subaccounts, as third party beneficiary or otherwise, except for
the right to receive or make requisitions of monies held in the Accounts or
Subaccounts as permitted by this Agreement, and to direct the investment of
monies held in the Accounts or Subaccounts as permitted by Section 5.07. In no
event shall any amounts or Authorized Investments deposited in or credited to
any Account or Subaccount be registered in the name of the Partnership, payable
to the order of the Partnership or specially endorsed to
27
the Partnership except to the extent that the foregoing have been specially
endorsed to the Collateral Trustee or in blank.
For purposes of the NY UCC, the Depositary Bank confirms and agrees
that the "securities intermediary's jurisdiction" (as defined in the NY UCC)
with respect to the Accounts and the Subaccounts is the State of New York.
(b) The Partnership shall instruct the Collateral Trustee to
disburse funds from the Accounts or Subaccounts only in accordance with Sections
5.06 and 5.07. The Partnership shall not, and shall not permit any Person to,
make any transfer, deposit or withdrawal in respect of any Account or Subaccount
other than pursuant to (i) this Article V or (ii) a valid and binding order of a
court of competent jurisdiction, provided that any withdrawal or transfer from
an Account or Subaccount pursuant to a valid and binding order of a court of
competent jurisdiction that is not otherwise expressly permitted by the terms of
this Article V shall constitute an "Event of Default" under clause (a) of
Section 10.01 after the expiration of the applicable period of grace set forth
therein.
5.02 Subaccounts. (a) Subject to clause (b) of this Section 5.02,
each Account may include one or more secured accounts ("Subaccounts"),
established and maintained in The City of New York by the Collateral Trustee in
the name of the Collateral Trustee, with the Depositary Bank designated as the
"securities intermediary". Each Subaccount shall be identified with the
particular Account to which it relates and shall be segregated from any other
Subaccount.
(b) The Partnership shall give the Collateral Trustee at least 20
days' prior notice of its intention to establish a Subaccount and Majority
Lenders shall have the right within such 20-day period, in their sole
discretion, to reject the establishment of such Subaccount.
(c) Unless otherwise specified in this Agreement, all references
to any Account shall include references to all related Subaccounts thereof and
such Subaccounts shall be subject to the same restrictions and limitations as
the Accounts to which they relate.
(d) No Subaccount may itself include another Subaccount.
5.03 Principal and Interest Accrual Account.
(a) Deposits. On or prior to the date on which this Agreement
becomes effective in accordance with Section 14.01, the Partnership shall
deposit or cause to be deposited, and at all times until the first withdrawal of
funds in accordance with clause (b) below the Partnership shall maintain on
deposit, funds in the Principal and Interest Accrual Account equal to $16.9
million. On the 14th day of each month (or, if the 14th day of any month is not
a Business Day, then on the immediately preceding Business Day in such month),
the Partnership shall deposit or cause to be deposited, and at all times until
the next withdrawal of funds in accordance with clause (b) below the Partnership
shall maintain on deposit, funds in the Principal and Interest Accrual Account
28
equal to one-sixth of the aggregate amount of Senior Debt Obligations becoming
due and payable on the next succeeding Payment Date.
(b) Withdrawals. On any Payment Date, the Partnership shall direct
the Collateral Trustee to, and the Collateral Trustee shall, apply the funds
then on deposit in the Principal and Interest Accrual Account to pay Senior Debt
Obligations that are due and payable on such date (such direction to be in
writing and to specify the amounts that are so due and payable on such date).
5.04 Debt Service Reserve Account.
(a) Deposits. The balance in the Debt Service Reserve Account at
any time of determination shall be deemed to be the aggregate at such time of
(A) the amount of cash on deposit in such account and (B) the market value of
Authorized Investments in respect of funds deposited therein. On or prior to the
date on which this Agreement becomes effective in accordance with Section 14.01,
the Partnership shall deposit or cause to be deposited, and at all times
thereafter (except as provided in clause (b) below) the Partnership shall
maintain on deposit, funds in the Debt Service Reserve Account so that the
balance in such Account shall be in an amount not less than the Debt Service
Reserve Amount at any time.
(b) Withdrawals. Funds from time to time on deposit in the Debt
Service Reserve Account may be withdrawn only as follows:
(i) Transfers to Pay Senior Debt. The Partnership may
direct the Collateral Trustee in writing to, and the Collateral
Trustee shall, apply all or any part of the funds on deposit in the
Debt Service Reserve Account at any time to pay Senior Debt
Obligations that are due and payable on the date of the withdrawal to
the extent that the funds then available to the Partnership are
insufficient to pay such Senior Debt Obligations.
(ii) Post-Default. Upon being notified in writing of the
occurrence of a Default, the Collateral Trustee shall retain the funds
on deposit in the Debt Service Reserve Account in such account and the
Collateral Trustee shall apply such funds to pay Senior Debt
Obligations as and when they become due and payable.
Within 30 days following any withdrawal of funds from the Debt Service Reserve
Account, the Partnership shall deposit or cause to be deposited, and at all
times thereafter the Partnership shall maintain on deposit, funds in such
Account so that the balance in such Account shall be in an amount not less than
the Debt Service Reserve Amount.
5.05 Casualty Insurance Proceeds and Condemnation Compensation. The
Partnership shall cause the proceeds from insurance for any casualty suffered by
Project Property (other than Released Collateral) to be paid directly into the
Casualty and Insurance Account, for application in accordance with Section 7.07.
Proceeds received in
29
respect of any Condemnation Compensation shall be paid directly into the
Mandatory Prepayment Account.
5.06 Mandatory Prepayment Account. (a) Deposits. The Partnership
shall deposit or transfer, or cause to be deposited or transferred, funds into
the Mandatory Prepayment Account in accordance with Section 2.05.
(b) Withdrawals. All funds deposited into the Mandatory
Prepayment Account in accordance with Section 2.05 shall within two Business
Days of such deposit be applied to the prepayment of Senior Debt in accordance
with Article II and the applicable Senior Loan Agreement or Senior Loan
Agreements.
5.07 Investment of Funds in Accounts. (a) Unless a Default has
occurred and is Continuing, the Collateral Trustee shall invest funds (and vary
and redeem such investments) in the Accounts as directed by the Partnership,
provided that such investments shall be made only in Authorized Investments and
shall be at the expense of the Partnership.
(b) If a Default has occurred and is Continuing, the Collateral
Trustee shall, to the extent so notified as contemplated by clause (a) of
Section 5.08, invest funds (and vary and redeem such investments) in the
Accounts as directed by the Person designated in the notice given pursuant to
clause (a) of Section 5.08, provided that such funds may be invested only in
Authorized Investments and shall be at the expense of the Partnership.
(c) If at any time the Collateral Trustee has not received
written instructions as to the investments of funds (or variation or redemption
of such investments) in the Accounts, it shall use its reasonable efforts
(without waiting for further instructions) to, and shall in any event within 10
days following receipt of funds, invest such funds to the extent practicable in
Authorized Investments that mature no later than the next Business Day. All
investments of funds in the Accounts pursuant to this Section 5.07 shall be made
on behalf of the Collateral Trustee and shall be reflected as such on the books
and records of the Collateral Trustee and shall be at the expense of the
Partnership.
(d) Whenever directed to make a withdrawal or transfer of funds,
the Collateral Trustee (unless, so long as no Default is Continuing, otherwise
directed by the Partnership) is authorized to liquidate any investment, to the
extent that, after application of all other available funds, liquidation of such
investment is necessary to make such transfer. The Collateral Trustee shall use
its reasonable efforts to liquidate investments in a manner that minimizes
interest costs and penalties (unless, so long as no Default is Continuing,
otherwise directed by the Partnership). The Collateral Trustee (in its
individual and trust capacities) shall have, however, no liability with respect
to any interest cost or penalty on the liquidation of any investment pursuant to
this clause (d), nor shall the Collateral Trustee (in its individual and trust
capacities) have any liability with respect to investments of moneys held in the
Accounts (or any losses resulting therefrom) made in accordance with this
Section 5.07.
30
(e) All references in this Agreement to Accounts, and to cash,
moneys or funds therein or balances thereof, shall include Authorized
Investments in which such moneys are then invested and the proceeds thereof.
5.08 Withdrawals from Accounts During the Continuance of a
Default. (a) If a Default shall have been declared and is Continuing, the Senior
Lender(s) declaring a Default in accordance with Section 10.02 may notify the
Collateral Trustee in writing (with a copy to the Partnership) that, as
contemplated by this Agreement, the Collateral Trustee shall no longer accept
instructions from the Partnership for the investment, withdrawal or transfer of
funds or investments in the Accounts. The Depositary Bank shall thereafter
accept instructions for the investment, withdrawal or transfer of funds or
investments in such Accounts solely from the Collateral Trustee or other
Person(s) designated by the Collateral Trustee (as designated in the notice
given under this clause (a)). The Collateral Trustee shall invest funds or
investments in the Accounts only in Authorized Investments. The Collateral
Trustee shall give the Depositary Bank prompt notice of the circumstances
expressly contemplated by this clause (a).
(b) Upon receipt by the Collateral Trustee of a Cessation Notice
with respect to a Default, the Collateral Trustee shall immediately notify the
Depositary Bank, with a copy to the Partnership, directing them once again to
accept the directions of the Partnership, and the Collateral Trustee and the
Depositary Bank shall again accept the directions of the Partnership in respect
of investment, withdrawal and transfer of funds in the Accounts on the terms and
conditions of this Agreement.
5.09 Reports and Certifications. (a) The Collateral Trustee shall
deliver to the Partnership and to the Applicable Agent or Applicable Agents, no
later than 20 days after the end of each month following the Original Closing
Date, copies of the account statements for all Accounts for such month prepared
or compiled by the Collateral Trustee. Such account statements shall indicate,
with respect to each such account, deposits and withdrawals, investments made
and closing balances.
(b) Each time the Partnership directs that a transfer or
withdrawal be made from an Account, it will be deemed to represent and warrant
for the benefit of the Collateral Trustee and the Secured Parties that such
transfer or withdrawal is being made in an amount, and will be applied solely
for the purposes, permitted by this Article V.
(c) The Collateral Trustee shall maintain all such accounts,
books and records as may be necessary to record all transactions carried out by
it under this Agreement. The Collateral Trustee shall permit the Applicable
Agent or Applicable Agents, the Partnership and their authorized representatives
to examine such accounts, books and records, provided that any such examination
shall occur upon reasonable notice and during normal business hours.
31
5.10 Unsecured Accounts. The Partnership may from time to time
establish and maintain such unsecured operating and other accounts as it may
deem necessary or appropriate in connection with its business.
ARTICLE VI
SECURITY INTERESTS
6.01 Confirmation of Security Interests. The Liens and security
interests created or granted in or pursuant to the Original CSA are hereby
ratified and confirmed as valid, subsisting and continuing in all respects by
the Borrower, the General Partner and the Limited Partner, except to the extent
modified or released by this Agreement. The grants of the Liens and security
interests contained in or contemplated by Sections 6.02 through 6.11 are
included herein solely for the purpose of restating, ratifying and confirming
the Liens and security interests created or granted in or pursuant to the
Original CSA, and the phrases "hereby grants, transfers and assigns" or "hereby
grants, transfers, delivers, pledges and assigns" are to be construed as
restating, ratifying and confirming the relevant grants, transfers, assignments,
deliveries and pledges made in or pursuant to the Original CSA. Further, the
Borrower, the Partnership, the General Partner and the Limited Partner hereby
agree that this Agreement is not intended, and shall not be construed or
interpreted, to restrict, derogate or impair, and shall not constitute or be
construed or interpreted as a termination, release or waiver of, any of the
liens, security interests, assignments, transfers, deliveries or pledges made or
granted in or pursuant to the Original CSA or the other Security Documents
against the Collateral (or any portion thereof), except to the extent provided
herein with respect to the Released Collateral. Notwithstanding any other
provision of this Agreement, the Released Collateral is hereby released from the
relevant Liens and security interests created or granted in or pursuant to the
Original CSA and the Collateral Trustee is instructed by all parties hereto to
take all actions requested of it or referred to in this Agreement required to
implement such release of the Required Collateral.
6.02 Property and Improvements of the Partnership. (a) The
Partnership shall execute and record in all necessary places a mortgage,
substantially in the form of Appendix H attached hereto (the "Mortgage"), in
favor of the Collateral Trustee for the benefit and on behalf of the Secured
Parties, as security for the full payment of the Senior Debt Obligations and the
performance of the other obligations of the Borrower, the Partnership and the
Partners under the Financing Documents, covering all the Partnership's estate,
right, title and interest that it now has or that shall hereafter arise in and
to (i) the Coker Complex and all related units owned by the Partnership, (ii)
the Ancillary Equipment Site Lease and (iii) the Ground Lease and Blanket
Easement, all as described more fully in the attachments, annexes and appendices
to the Mortgage. All improvements as of the Original Closing Date or thereafter
created on the property described in the Mortgage and all equipment and fixtures
as of the Original Closing Date or thereafter attached to the property described
in the Mortgage, all of which, including without limitation replacements and
additions thereto, shall be deemed to be and remain a part of the property
covered by the Mortgage. As consideration for the disbursement of
32
the Senior Debt, in addition to the Mortgage, the Partnership agrees that, if it
acquires any real property, improvements, real estate leases or other property
of the same or similar type described in this clause (a) and such real property,
improvements, real estate leases or other property are not then subject to the
Mortgage, any other mortgage granted to the Collateral Trustee for the benefit
of the Secured Parties or an existing pledge to the Collateral Trustee for the
benefit of the Secured Parties, the Partnership shall, within 30 days of such
acquisition, execute, record and deliver to the Collateral Trustee for the
benefit of the Secured Parties a mortgage substantially in the form of Appendix
H covering all right, title and interest in such property.
(b) The Partnership hereby grants, transfers and assigns to the
Collateral Trustee for the benefit and on behalf of the Secured Parties, as
security for the full payment of the Senior Debt Obligations and the performance
of the other obligations of the Borrower, the Partnership and the Partners under
the Financing Documents, and hereby grants a Lien on and first priority security
interest in, all the Partnership's estate, right, title and interest that it now
has or that shall hereafter arise in and to the mortgaged property and
improvements described in clause (a) above (including after-acquired property),
all as more fully described in the Mortgage, including without limitation all
attachments, annexes, and appendices thereto. The Partnership shall make or
cause to be made any filings or recordations, give or cause to be given any
notices and take or cause to be taken any other actions as may be reasonably
necessary in the State of New York and in the State of Texas to perfect the
grant of the first priority security interest in the property described in this
Section 6.02.
6.03 General Partner's Interest in the Partnership. (a) The
General Partner hereby grants, transfers, delivers, pledges and assigns to the
Collateral Trustee for the benefit and on behalf of the Secured Parties, as
security for the full payment of the Senior Debt Obligations and the performance
of the other obligations of the Borrower, the Partnership and the Partners under
the Financing Documents, and hereby grants a Lien on and first priority security
interest in, all right, title and interest that it now has or that shall
hereafter arise in and to the following:
(i) all the General Partner's right, title and
ownership interests in and to the Partnership, which interests
presently are designated as the General Partnership Interest and
represent a 1% interest in the Partnership issued and outstanding
as of the date hereof, and all the General Partner's other legal,
equitable or beneficial interests in the Partnership, whether now
owned or hereafter acquired by the General Partner;
(ii) all certificates representing or evidencing the
General Partnership Interest and any options, warrants or other
rights to purchase the General Partnership Interest or
certificates at any time owned by the General Partner, including
without limitation all the General Partnership Interest or
certificates, options, warrants or other rights acquired by the
General Partner in the future (collectively, the "GP
Certificates") and any other certificates or instruments
representing the GP
33
Certificates, accompanied by certificate transfers duly executed
in blank, and all cash, securities, distributions and other
property at any time in the future and from time to time
received, receivable or otherwise distributed, in respect of or
in exchange for any or all of the GP Certificates;
(iii) all securities in substitution for or in addition
to any of the foregoing, any certificates representing or
evidencing such securities, and all cash, securities,
distributions and other property at any time and from time to
time received, receivable or otherwise distributed in respect of
or in exchange for any or all of the foregoing;
(iv) all other claims of any kind or nature, and any
instruments, certificates, chattel paper or other writings
evidencing such claims, whether in contract or tort, and whether
arising by operation of law, consensual agreement or otherwise,
at any time acquired by the General Partner in respect of any or
all of the foregoing against the Partnership; and
(v) to the extent not included in the foregoing, all
cash and non-cash proceeds, products, rents, revenues, issues,
profits, royalties, income, benefits, additions, substitutions,
replacements, and accessions of and to any and all of the
foregoing, including without limitation (A) all rights of the
General Partner to receive monies due and to become due under or
pursuant to the General Partnership Interest; (B) all rights of
the General Partner to receive any indemnity, warranty or
guarantee with respect to the General Partnership Interest; and
(C) to the extent not included in the foregoing, all additions to
and replacements of the General Partnership Interest and all
proceeds receivable or received when any and all of the General
Partnership Interest is sold, collected, exchanged or otherwise
disposed whether voluntarily or involuntarily.
(b) Any additional GP Certificates at any time or from time to
time after the Original Closing Date acquired by the General Partner (by
purchase, distribution or otherwise) shall form part of the General Partnership
Interest and the General Partner will forthwith pledge and deposit such GP
Certificates to and with the Collateral Trustee, promptly take all such other
actions required to perfect the security interest therein of the Collateral
Trustee under any requirement of law (including without limitation under the
uniform commercial code as adopted in any appropriate jurisdiction), deliver to
the Collateral Trustee certificates therefor accompanied by certificate
transfers duly executed in blank by the General Partner or such other
instruments of transfer as are acceptable to the Collateral Trustee and promptly
thereafter deliver, or cause to be delivered, to the Collateral Trustee a
certificate describing such GP Certificates and certifying that the same have
been duly deposited with, and are subject to the security interest in favor of,
the Collateral Trustee for the benefit and on behalf of the Secured Parties
hereunder.
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(c) Notwithstanding anything to the contrary contained in
clauses (a) and (b) of this Section 6.03, if any partnership interest of the
General Partner in the Partnership (owned or hereafter acquired) is not
evidenced by a certificated security, the General Partner shall promptly notify
the Collateral Trustee and shall promptly take all actions required to perfect
the security interest therein of the Collateral Trustee under any requirement of
law (including without limitation under the Uniform Commercial Code as adopted
in any appropriate jurisdiction).
6.04 Limited Partnership Interest in the Partnership. (a) The
Limited Partner hereby grants, transfers, delivers, pledges and assigns to the
Collateral Trustee for the benefit and on behalf of the Secured Parties, as
security for the full payment of the Senior Debt Obligations and the performance
of the other obligations of the Borrower, the Partnership and the Partners under
the Financing Documents, and hereby grants a lien on and first priority security
interest in, all right, title and interest that it now has or that shall
hereafter arise in and to the following:
(i) all the Limited Partner's right, title
and ownership interests in and to the Partnership, which
interests presently are designated as the Limited Partnership
Interest and represent a 99% interest in the Partnership
issued and outstanding as of the date hereof, and all the
Limited Partner's other legal, equitable or beneficial
interests in the Partnership, whether now owned or hereafter
acquired by the Limited Partner;
(ii) all certificates representing or
evidencing the Limited Partnership Interest and any options,
warrants or other rights to purchase the Limited Partnership
Interest or certificates at any time owned by the Limited
Partner, including, without limitation, all the Limited
Partnership Interest or certificates, options, warrants or
other rights acquired by the Limited Partner in the future,
(collectively, the "LP Certificates") and any other
certificates or instruments representing the LP Certificates,
accompanied by certificate transfers duly executed in blank,
and all cash, securities, distributions and other property at
any time in the future and from time to time received,
receivable or otherwise distributed, in respect of or in
exchange for any or all of the LP Certificates;
(iii) all securities in substitution for or in
addition to any of the foregoing, any certificates representing
or evidencing such securities, and all cash, securities,
distributions and other property at any time and from time to
time received, receivable or otherwise distributed in respect
of or in exchange for any or all of the foregoing;
(iv) all other claims of any kind or nature,
and any instruments, certificates, chattel paper or other
writings evidencing such claims, whether in contract or tort,
and whether arising by operation of law, consensual agreement
or otherwise, at any time acquired by the
35
Limited Partner in respect of any or all of the foregoing
against the Partnership; and
(v) to the extent not included in the foregoing,
all cash and non-cash proceeds, products, rents, revenues,
issues, profits, royalties, income, benefits, additions,
substitutions, replacements, and accessions of and to any and
all of the foregoing, including without limitation (A) all
rights of the Limited Partner to receive monies due and to
become due under or pursuant to the Limited Partnership
Interest; (B) all rights of the Limited Partner to receive any
indemnity, warranty or guarantee with respect to the Limited
Partnership Interest; and (C) to the extent not included in the
foregoing, all additions to and replacements of the Limited
Partnership Interest and all proceeds receivable or received
when any and all of the Limited Partnership Interest is sold,
collected, exchanged or otherwise disposed whether voluntarily
or involuntarily.
(b) Any additional LP Certificates at any time or from time to
time after the Original Closing Date acquired by the Limited Partner (by
purchase, distribution or otherwise) shall form part of the Limited Partnership
Interest and the Limited Partner will forthwith pledge and deposit such LP
Certificates to and with the Collateral Trustee, promptly take all such other
actions required to perfect the security interest therein of the Collateral
Trustee under any requirement of law (including without limitation under the
uniform commercial code as adopted in any appropriate jurisdiction), deliver to
the Collateral Trustee certificates therefor accompanied by certificate
transfers duly executed in blank by the Limited Partner or such other
instruments of transfer as are acceptable to the Collateral Trustee and promptly
thereafter deliver, or cause to be delivered, to the Collateral Trustee a
certificate describing such LP Certificates and certifying that the same have
been duly deposited with, and are subject to the security interest in favor of,
the Collateral Trustee for the benefit and on behalf of the Secured Parties
hereunder.
(c) Notwithstanding anything to the contrary contained in
clauses (a) and (b) of this Section 6.04, if any partnership interest of the
Limited Partner in the Partnership (owned or hereafter acquired) is not
evidenced by a certificated security, the Limited Partner shall promptly notify
the Collateral Trustee and shall promptly take all actions required to perfect
the security interest therein of the Collateral Trustee under any requirement of
law (including without limitation under the uniform commercial code as adopted
in any appropriate jurisdiction).
6.05 The Partnership's Shares in the Borrower. The Partnership
hereby grants, transfers, delivers, pledges and assigns to the Collateral
Trustee for the benefit of the Secured Parties, as security for the full payment
of the Senior Debt Obligations and for the performance of the other obligations
of the Borrower, the Partnership and the Partners under the Financing Documents,
and hereby grants a Lien on and first priority security interest in, all right,
title and interest that it now has or that shall hereafter arise in and to the
Shares of the Borrower, together with all shares, coupons or securities issued
as a dividend on such Shares or representing a distribution or return of capital
36
upon or in respect of such Shares or warrants or any subscription or other
purchase rights with respect to such Shares. On or prior to the Original Closing
Date, the Partnership delivered to the Collateral Trustee for the benefit of the
Secured Parties the certificates representing the Shares of the Borrower and,
promptly following receipt, the Partnership shall deliver to the Collateral
Trustee for the benefit of the Secured Parties any of such other shares,
securities, warrants, coupons, rights or other relevant documentation together
in each case with stock powers, duly executed by the Partnership in blank with
appropriate signature guarantees, to be held by the Collateral Trustee for the
benefit of the Secured Parties pursuant to the pledge made hereby. The
Partnership agrees that it shall not permit the certificate of incorporation or
bylaws of the Borrower or any other governing and constituent documents of the
Borrower to be amended or modified in any manner that would cause the
Partnership to hold less than l00% share of the aggregate voting power
represented by the Shares or otherwise deprive the Partnership of control of the
Borrower.
6.06 Interests in Accounts and Authorized Investments. The
Partnership hereby grants, transfers, pledges, hypothecates, assigns and sets
over to the Collateral Trustee for the benefit of the Secured Parties, as
security for the full payment of the Senior Debt Obligations and for the
performance of the other obligations of the Borrower, the Partnership and the
Partners under the Financing Documents, and hereby grants a lien on and first
priority security interest in, all right, title and interest that it now has or
that shall hereafter arise in and to the Accounts and Subaccounts (each as
defined in this Agreement) and, to the fullest extent possible under applicable
law, to the money, certificated and uncertificated securities, security
entitlements, instruments, all investments made with or arising out of such
funds, all claims thereunder or in connection therewith, rights and other
property at any time and from time to time received, receivable or otherwise
distributed in respect of such Accounts, such funds or such investments and, in
each case, proceeds therefrom. Funds and investments in the Accounts and
Subaccounts are trust funds held by the Collateral Trustee for application as
provided in this Agreement. Accordingly, notwithstanding the foregoing grant,
transfer and assignment, the Collateral Trustee shall apply such funds and
investments strictly in accordance with the terms of this Agreement. Whether or
not Senior Lenders shall have taken Enforcement Action, none of the Borrower,
the Partnership, the Partners or the Collateral Trustee (other than to the
extent expressly provided herein), nor any Secured Party, shall have the right
to withdraw, apply, invest or offset the money and investments in the Accounts
and Subaccounts (each as defined in this Agreement), nor shall any such Person
exercise any right it may have to attach or garnish such money, certificated and
uncertificated securities, instruments, other investments, if any, or proceeds
in any such account, in each case otherwise than as provided in this Agreement,
and the Partnership and the Senior Lenders shall have only those rights to
direct the Collateral Trustee as to the application of funds and investments as
are provided in this Agreement.
6.07 The Project Documents, Sales Agreements and Spot
Contracts. (a) Assignment of Rights. (i) Without limiting the generality of any
other provisions of this Agreement, including without limitation Section 6.09,
the Partnership hereby grants, transfers and assigns to the Collateral Trustee
for the benefit of the Secured Parties as
37
security for the full payment of the Senior Debt Obligations and for the
performance of the other obligations of the Borrower, the Partnership and the
Partners under the Financing Documents, and hereby grants to the Collateral
Trustee for the benefit of the Secured Parties a lien on and first priority
security interest in, all right, title and interest (but not obligations or
duties) that it now has or that shall hereafter arise in and to (A) the Project
Documents, Sales Agreements or Spot Contracts to which it is a party, whether
now existing or hereafter arising, (B) all rights to payment, claims, powers,
privileges, proceeds, titles, interests and remedies of the Partnership, whether
arising under any of the Project Documents, Sales Agreements or Spot Contracts,
by statute, at law, in equity or otherwise, resulting from any failure or
performance or compliance with any of the provisions of any such Project
Documents, Sales Agreement or Spot Contract, together with full power and
authority, in its own name or in the name of the Partnership or otherwise (but
subject to subclause (ii) of this clause (a)), to enforce such Project
Documents, Sales Agreements or Spot Contracts against, counterparties thereto or
guarantors thereunder, as the case may be, and to collect, receive and give
receipts and releases for proceeds or other amounts payable under such Project
Documents, Sales Agreements or Spot Contracts and (C) all rights of the
Partnership to terminate, amend, supplement, modify or waive performance under
any Project Document, Sales Agreement or Spot Contract, in each case as such
Project Document, Sales Agreement or Spot Contract may be amended, supplemented,
renewed or otherwise modified, including without limitation any agreement,
contract or document replacing or substituting for such Project Document, Sales
Agreement or Spot Contract from time to time.
(ii) The Partnership shall make all requests for and
in respect of any moneys due under any such Project Document, Sales Agreement or
Spot Contract, and, if for any reason the Partnership fails to do so within two
Business Days of a request by the Collateral Trustee, the Collateral Trustee may
make such requests as assignee with the same force and effect as if made by the
Partnership. The Partnership agrees promptly to provide the Collateral Trustee
at its request with copies of all requests made by it in respect of moneys due
from a party to any such Project Document, Sales Agreement or Spot Contract
under any such Project Document, Sales Agreement or Spot Contract.
(b) Notice. (i) Concurrently with entering into any of the
Project Documents, Sales Agreements or Spot Contracts, the Partnership shall
give or cause to be given written notice to the counterparty thereunder of the
security interest therein granted by clause (a) of this Section 6.07.
(ii) The Partnership shall obtain from the counterparty
under each Project Document, and shall deliver or cause to be delivered to the
Collateral Trustee, promptly after entering into such Project Documents, a
signed consent and acknowledgment addressed to the Collateral Trustee and
substantially in the form set forth in Appendix I hereto, to the effect that
such counterparty has received notice from the Partnership of the security
interest granted by clause (a) of this Section 6.07 in such Project Document and
that such counterparty shall notify the Collateral Trustee of any breach of
material obligations by the Partnership under such Project Document. The
Collateral Trustee may assume that any consent and acknowledgement so delivered
to it
38
is substantially in the form set forth in Appendix I hereto unless notified in
writing to the contrary by any Person.
(iii) The Partnership shall obtain from the
counterparty under each Sales Agreement and shall deliver or cause to be
delivered to the Collateral Trustee promptly after entering into such Sales
Agreement a signed consent and acknowledgment addressed to the Collateral
Trustee and substantially in the form set for in Appendix I hereto to the effect
that such counterparty has received notice from the Partnership of the security
interest granted by clause (a) of this Section 6.07 in such Sales Agreement and
that such counterparty shall notify the Collateral Trustee of any breach of
material obligations by the Partnership under such Project Document. The
Collateral Trustee may assume that any consent and acknowledgement so delivered
to it is substantially in the form set forth in Appendix I hereto unless
notified in writing to the contrary by any Person.
(iv) Promptly after entering into any Project
Document, Sales Agreement or Spot Contract (unless such Spot Contract is not in
writing), the Partnership shall deliver a copy thereof to the Collateral
Trustee, together with the related counterparty's consent and acknowledgment (if
required).
6.08 Insurance and Insurance Proceeds; Reinsurance. (a)
Without limiting the generality of any other provisions of this Agreement,
including without limitation Section 6.09, the Partnership hereby grants,
transfers and assigns to the Collateral Trustee for the benefit of the Secured
Parties, as security for the ful1 payment of the Senior Debt Obligations and for
the performance of the other obligations of the Borrower, the Partnership and
the Partners under the Financing Documents, and hereby grants to the Collateral
Trustee for the benefit of the Secured Parties a Lien on and first priority
security interest in, all right, title and interest that it now has or that
shall hereafter arise in and to any and all insurance policies issued to the
Partnership with respect to any Required Insurance (other than any insurance
policy in respect of third-party liability insurance and workmen's compensation)
and all proceeds thereof. The Partnership hereby authorizes the Collateral
Trustee to collect and receive such proceeds and shall direct the issuer of each
of such insurance policy to make payment for all such losses directly and solely
to the Collateral Trustee in accordance with Article VII.
(b) The Partnership shall, subject to commercial
availability and if requested by the Collateral Trustee: (i) cause each of its
insurers to grant, transfer and assign to the Collateral Trustee for the benefit
of the Secured Parties, as security for the full payment of the Senior Debt
Obligations and for the performance of the other obligations of the Borrower,
the Partnership and the Partners under the Financing Documents, and to grant to
the Collateral Trustee for the benefit of the Secured Parties a first priority
security interest in, all right, title and interest that such insurer may have
or that may thereafter arise in and to any and all reinsurance policies issued
by such insurers' reinsurers in respect of any Required Insurance (other than
any reinsurance policy in respect of third-party liability insurance and
workmen's compensation) and all proceeds thereof; and (ii) cause each of the
reinsurers providing reinsurance coverage in
39
respect of any Required Insurance to include a cut-through endorsement in favor
of the Collateral Trustee for the benefit of the Secured Parties in its
reinsurance policy.
6.09 All Personal Property Including Machinery and Equipment,
Technology General Intangibles, Accounts and Other Personal Property. Without
limiting the generality of any other provisions of this Agreement, including
without limitation this Section 6.09, the Partnership hereby grants, transfers
and assigns to the Collateral Trustee for the benefit and on behalf of the
Secured Parties, as security for the Senior Debt Obligations and the performance
of the other obligations of the Borrower, the Partnership and the Partners under
the Financing Documents and hereby grants a lien on and first priority security
interest in, all right, title and interest that it now has or that shall
hereafter arise in and to all equipment, fixtures, goods, general intangibles,
accounts and intellectual property and all other personal property (tangible or
intangible) that does not constitute Released Collateral, including without
limitation (a) machinery, equipment, fixtures, chattels, and all other personal
property and substitutions and replacements thereof, now or hereafter owned by
the Partnership or in which the Partnership has or shall acquire an interest
that does not constitute Released Collateral and (b) all general intangibles,
licenses, authorizations, trademarks and other intellectual property, including
without limitation, the Technology relating to the design, development,
operation, management and use of the Heavy Oil Processing Facility that does not
constitute Released Collateral, provided that the Collateral Trustee shall have
no obligation to take any action in respect of any such intellectual property
unless and until it has been duly notified of the existence of such intellectual
property.
6.10 Permitted Hedging Arrangements. Without limiting the
generality of any other provisions of this Agreement, including without
limitation Section 6.09, the Partnership hereby grants, transfers and assigns to
the Collateral Trustee for the benefit of the Secured Parties, as security for
the full payment of the Senior Debt Obligations and for the performance of the
other obligations of the Borrower, the Partnership and the Partners under the
Financing Documents, and hereby grants a lien on and first priority security
interest in, all right, title and interest the Partnership that shall hereafter
arise in and to Permitted Hedging Arrangements and all claims resulting from any
failure of performance or compliance with any of the provisions of any of the
Permitted Hedging Arrangements, together with full power and authority, in its
own name or in the name of the Partnership or otherwise, to enforce Permitted
Hedging Arrangements against the counterparties thereto. Concurrently with
entering into a Permitted Hedging Arrangement, the Partnership shall give or
cause to be given written notice to the counterparties thereto of the security
interest hereby granted and shall obtain from each such counterparty an
acknowledgment thereof and furnish it to the Collateral Trustee.
6.11 Intercompany Loans from the Borrower to the Partnership.
The Borrower hereby grants, transfers and assigns to the Collateral Trustee for
the benefit and on behalf of the Secured Parties, as security for the full
payment of the Senior Debt Obligations and for the performance of the other
obligations of the Borrower, the Partnership and the Partners under the
Financing Documents, and hereby grants a Lien on and first priority security
interest in, all right, title and interest that it now has or that shall
hereafter arise in and to any intercompany loans to the Partnership that the
Borrower has
40
made or will make, including without limitation (i) each intercompany loan and
all promissory notes, documents, agreements and other instruments evidencing
such intercompany loan, or executed and delivered in connection with such
intercompany loan, (ii) any and all collateral security for any intercompany
loan, including without limitation all mortgages, deeds of trust, security
agreements, collateral assignments, guaranties, pledges, letters of credit,
chattel paper and similar instruments, and any shares, securities, money or
other property delivered by the Partnership in respect of such intercompany
loan, (iii) all UCC-1 financing statements filed in connection with the
intercompany loans and (iv) any other instruments and documents included in the
mortgage file relating to such intercompany loan, and all rights to payment,
claims, powers, privileges, proceeds, titles, interests and remedies of the
Borrower, whether arising under any of the documents, instruments or other
agreements evidencing such intercompany loan, by statute, at law, in equity or
otherwise, resulting from any failure of performance or compliance with any of
the provisions such intercompany loan, together with full power and authority to
enforce such intercompany loan against counterparties thereto or guarantors
thereunder, as the case may be, and to collect, receive and give receipts and
releases for proceeds or other amounts payable under such intercompany loan.
6.12 Proceeds, Products, Etc. To the extent not otherwise
included in any of the foregoing provisions of this Article VI, each of the
Borrower, the Partnership, the Limited Partner and the General Partner hereby
grants, transfers and assigns to the Collateral Trustee for the benefit of the
Secured Parties, as security for the full payment of the Senior Debt Obligations
and for the performance of all other obligations of the Borrower, the
Partnership and the Partners under the Financing Documents, and hereby grants a
lien on and first priority security interest in, all right, title and interest
that it now has or that shall hereafter arise in and to all proceeds of any and
all of the Collateral covered by the foregoing provisions of this Article VI and
all additions and accessions to, substitutions and replacements for, and rents,
profits, royalties, revenues, issues, income, benefits, product and offspring of
any and all of such Collateral; provided, however, that such grant, transfer and
assignment shall not extend to (a) any cash or cash equivalents of the Borrower
Parties other than those from time to time on deposit in the Accounts or (b) any
Released Collateral.
6.13 Perfection and Maintenance of Security Interests. (a)
Notwithstanding any other provision of this Article VI, at any time and from
time to time, upon demand of the Collateral Trustee and pursuant to Article IX,
in each case on behalf and at the direction of any Secured Party, (i) each of
the Borrower, the Partnership and the Partners shall give, execute, file and
record any notice, financing statement, continuation statement, public deed,
instrument, document or agreement and use its best efforts to obtain such
governmental approvals, consents, licenses or authorizations that such Secured
Party may consider necessary or desirable, and shall take all other necessary
action as required or advisable, to create, preserve, continue, perfect or
validate any security interest granted under the Security Documents, hereunder
or pursuant hereto in the Collateral or to enable the Collateral Trustee on
behalf of such Secured Party to exercise or enforce its rights hereunder or
under the Security Documents with respect to such security interest, (ii) each
of the Borrower, the Partnership and the Partners shall
41
give, execute, file and record any notice, financing statement, continuation
statement, public deed, instrument, document or agreement and use its best
efforts to obtain such governmental approvals, consents, licenses or
authorizations, that such Secured Party may consider necessary or desirable, and
shall take all other necessary action as required or advisable, to create,
preserve, continue, perfect or validate any security interest in any written
agreement to which any of the Borrower, the Partnership and the Partners is a
party and (iii) each of the Borrower, the Partnership and the Partners shall
obtain written consents to assignment from the counterparties to the Project
Documents, where appropriate, acknowledging the rights of Secured Parties.
Without limiting the generality of the foregoing, each of the Borrower, the
Partnership and the Partners shall make or cause to be made any filings or
recordations, give or cause to be given any notices and take or cause to be
taken any other actions as may be necessary in any and all applicable
jurisdictions and filing offices including without limitation in the State of
New York, the State of Texas and the United Mexican States, to perfect the grant
of the first priority security interest in the Collateral, and each constituent
item thereof, as described in this Article VI and the Collateral Trustee, on
behalf of the Secured Parties, is authorized to file, under the Uniform
Commercial Code of any state of the United States of America or other applicable
law, financing statements, continuation statements or other documents relating
to the Collateral necessary to preserve a security interest in the Collateral,
in each case without the signature of any of the Borrower, the Partnership and
the Partners (to the extent permitted by applicable law). The Collateral Trustee
shall execute all public deeds or other documents as required by applicable law
and regulation and as requested by the Secured Parties to duly create and
register security interests provided for by this Article VI, provided, however,
that neither the Collateral Trustee nor the Secured Parties have any
responsibility for the creation, perfection, validity or enforceability of any
security interest created or intended to be created hereby or pursuant to this
Agreement or for the maintenance or perfection of any such security interest.
Any Secured Party taking action under this Section 6.13 shall use reasonable
efforts to notify the Partnership thereof following the taking of such action.
Each of the Borrower, the Partnership and the Partners shall notify the
Collateral Trustee upon or prior to entering into any Project Document in which
any of them are or may be required to grant a security interest pursuant to this
Article VI.
(b) None of the Borrower, the Partnership nor either
of the Partners shall take any actions that would impair or render ineffective
or adversely affect the perfection or the priority of any of the security
interests granted in, or pursuant to, this Agreement or any other Security
Document.
(c) On or prior to the Original Closing Date, each of
the Borrower, the Partnership and the Partners agrees to execute and deliver to
the Depositary Bank and the Collateral Trustee for the benefit of the Secured
Parties, and register in every public registry in any state of the United States
of America in which such registration is necessary, an irrevocable power of
attorney, in a form required by such registry, for a term equal to such time as
the Senior Loans are outstanding or are in effect granting the Collateral
Trustee, as attorney-in-fact of each of the Borrower, the Partnership and the
Partners, the power and right, in the name or on behalf of each of them without
notice to or assent by any of them, to the extent permitted by applicable
42
law, to take any action and execute any instruments which any Secured Party may
deem reasonably necessary or advisable to create, preserve, continue, perfect or
validate any security interest granted under or pursuant to this Agreement or
any Security Document.
(d) The Security Documents to be entered into under
the laws of the State of New York or the State of Texas, and the consents and
acknowledgments to be obtained from third parties referred to in this Article
VI, shall be substantially in the forms most recently agreed with the Applicable
Agent or Applicable Agents and furnished to the Secured Parties prior to the
Original Closing Date.
(e) Each of the Borrower, the Partnership and the
Partners and the Collateral Trustee (on behalf of itself and the Senior
Lenders), as the case may be, prior to or concurrently with the time or times
that Senior Lenders other than the Senior Lenders party to this Agreement on the
date hereof (including without limitation successors, transferees and assigns of
such Senior Lenders) become holders of Senior Loans secured by and entitled to
the benefits of this Agreement, shall amend each of the Security Documents to
which it is a party to identify specifically such additional Senior Lenders and
the Senior Loans held or to be held thereby and to state that the Senior Loans
held by such additional Senior Lenders shall have the benefit of the security
interests referred to therein, and the Borrower, the Partnership and the
Partners shall be required to pay any filing or recording fees payable in the
State of New York or the State of Texas in respect of Collateral in connection
with any such amendments.
6.14 Rights in Collateral Prior to Enforcement Direction.
(a) Notwithstanding the security interests created and to be created pursuant to
this Agreement, unless otherwise provided in this Agreement (including without
limitation under Section 10.02) or the Transfer Restrictions Agreement or unless
the Collateral Trustee shall have received an Enforcement Direction with respect
to any Collateral, the Borrower, the Partnership and the Partners shall retain
and be entitled to exercise all their respective rights relating to such
Collateral, subject to the terms and conditions of this Agreement and of the
security interests created or to be created hereunder or by any of the Security
Documents, including without limitation as follows: (i) possessing and using the
Project Property and altering or disposing of any part thereof; (ii) exercising
all rights relating to the Project Documents; (iii) renewing insurance policies,
making claims and instituting and settling proceedings against insurers
thereunder; (iv) transferring (in accordance with the Transfer Restrictions
Agreement and the terms hereof) any Partnership Interests in the Partnership,
receiving the profits to be derived from any of the Partnership Interests in the
Partnership and exercising rights as shareholder, general partner or limited
partner of any of the Borrower, the Partnership and the Partners, as the case
may be, under their respective organizational documents (and the Collateral
Trustee shall execute and deliver to such parties, where appropriate, all such
proxies, powers of attorney, dividend and other orders, and all such instruments
as they may reasonably request for the purpose of enabling them to exercise the
rights and powers which they are entitled to exercise pursuant to this clause);
(v) amending any agreements in respect of Subordinated Debt and assigning such
agreements (in accordance with the Transfer Restrictions Agreement); and (vi)
amending each of the Project Documents, making waivers and elections thereunder
and instituting and settling proceedings for the
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enforcement of rights thereunder, provided that such amendment, waiver, election
or settlement does not have a Material Adverse Effect.
(b) Except as otherwise provided in this Agreement,
unless the Collateral Trustee shall have received an Enforcement Direction with
respect to such Collateral, the Collateral Trustee and the Depositary Bank
shall, at the request and cost of any of the Borrower, the Partnership and the
Partners, as the case may be, execute such documents and take such action and do
such things as may be necessary or desirable to enable such grantor of the
security interest in such Collateral to exercise the rights retained by them in
such Collateral, provided that such execution or action does not have a Material
Adverse Effect.
(c) Without limiting the generality of this Article
VI, upon the receipt by the Collateral Trustee of an Enforcement Direction, the
Collateral Trustee shall be entitled, without limitation as to any other
Enforcement Action available, to (i) transfer title of the General Partnership
Interest and Limited Partnership Interest in the Partnership and the Shares in
the Borrower to the Collateral Trustee, the Secured Parties or any other Person,
(ii) receive all dividends and other distributions payable to owners of the
General Partnership Interest and Limited Partnership Interest in the Partnership
and the Shares in the Borrower, (iii) exercise all voting and other rights
pertaining to the General Partnership Interest and Limited Partnership Interest
in the Partnership and the Shares in the Borrower as so directed and (iv) freely
sell and dispose of the General Partnership Interest and Limited Partnership
Interest in the Partnership and the Shares in the Borrower, in each case,
subject to the terms and conditions of this Agreement, the other Security
Documents and applicable law.
6.15 Liability of Borrower Parties. Notwithstanding any
other provision of this Agreement or the other Security Documents, subject to
applicable law:
(a) Each of the Borrower, the Partnership and the
Partners shall remain liable under all agreements and contracts
included in the Collateral to the extent provided therein;
(b) The exercise by the Collateral Trustee or any
Secured Party of any of their respective rights under this Agreement or
the Security Documents shall not release any of the Borrower, the
Partnership or either of the Partners from any of its duties or
obligations under any contracts or agreements included in the
Collateral except to the extent provided therein; and
(c) Neither the Collateral Trustee nor any Secured
Party shall have any obligation or liability under any such contracts
or agreements included in the Collateral by reason of this Agreement or
the Security Documents, nor shall the Collateral Trustee or any Secured
Party be obligated to perform any of the obligations or duties of any
of the parties thereunder or to take any action or collect or enforce
any claim for payment assigned hereunder.
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6.16 Release of Security Interests. Except as otherwise provided in
Section 6.01 or elsewhere in this Agreement, the release of any security
interest under this Agreement and the Security Documents requires the consent of
the Capital Markets Senior Lender Group.
6.17 PMI Subordinated Lien. The Partnership may at any time execute
documentation granting the PMI Subordinated Lien, provided that such
documentation shall include subordination provisions substantially in the form
attached hereto as Appendix R.
ARTICLE VII
INSURANCE
7.01 Maintenance of Insurance. The Partnership shall at all times
keep all Project Property of an insurable nature and of a character usually
insured, insured with insurers and reinsurers that are Rated Insurers selected
by it against such risks, with all risk property and general liability coverage
(including deductibles and exclusions) and in such form and amounts as are
customary for project facilities of similar type and scale to the Heavy Oil
Processing Facility (including insurance against sudden and accidental
environmental damage and business interruption and contingent business
interruption insurance). The Partnership shall, at a minimum and without
limiting the generality of the immediately preceding sentence, obtain and
maintain at least the coverage set forth on the schedule of Required Insurance
set forth in Appendix J. The schedule of Required Insurance set forth in
Appendix J may be amended by the Partnership, after consultation with the
Insurance Consultant, from time to time upon the prior consent of Requisite
Lenders. Notwithstanding anything in this Article VII or Appendix J to the
contrary, the Partnership shall not be in Default, and no Event of Default shall
arise hereunder, by reason of the Partnership's failure to obtain insurance in
compliance with the provisions of this Article VII or Appendix J, so long as (a)
the respective ratings of the Capital Markets Senior Debt by the Credit Rating
Agencies are equal to or higher than such ratings on the date hereof and (b) the
Partnership otherwise maintains insurance coverage (including deductibles,
retention and insurance forms) consistent with customary insurance standards in
its industry, as determined by the Partnership in consultation with the
Insurance Consultant, provided, that, if the ratings of the Capital Markets
Senior Debt at any time cease to be equal to or higher that such ratings on the
date hereof, the Partnership's failure to obtain insurance in compliance with
the provisions of this Article VII or Appendix J shall not constitute an Event
of Default for the first 30 days following such cessation, if the Partnership
uses good faith efforts to obtain such coverage during such 30-day period.
7.02 Additional Insureds and Loss Payees Provisions. The Partnership
shall irrevocably cause (a) each of its insurance policies and, subject to
commercial availability and if requested the Collateral Trustee, the related
reinsurance policies (other than policies in respect of workers' compensation or
third-party liability insurance) to name the Collateral Trustee on behalf of the
Secured Parties and the Secured Parties as additional (and not joint) insurers
and sole loss payees as their interests may appear and
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(b) each of its insurance policies (other than any policy in respect of third
party liability insurance and workers' compensation) to require all payment of
proceeds directly to the Casualty and Insurance Account in accordance with
Section 7.07 with words to substantially the following effect: "All recoveries
hereunder shall be paid in full to Deutsche Bank Trust Company Americas, as
Collateral Trustee, or to its order without any deduction or deductions
whatsoever for deposit into [details for Casualty and Insurance Account]." The
Partnership shall cause each insurance policy in respect of third-party
liability insurance (including automobile and directors' and officers' liability
insurance) and workmen's compensation to designate such third parties as the
loss payee in words to substantially the following effect: "All proceeds of
insurance arising hereunder that are payable for the benefit of third parties
shall at all times be paid directly to such third parties provided such person
has executed a discharge of all claims against the insured parties in respect of
the risk or liability in relation to which the claim was made unless the insurer
is satisfied that the relevant insured parties have fully and unconditionally
discharged the claim or liability when such sums shall be paid to the said
insured parties."
7.03 Other Lender Provisions in Policies. The Partnership shall
procure and shall cause its insurers and reinsurers to procure the inclusion in
each insurance policy or reinsurance policy, as the case may be, issued to the
Partnership or for the benefit of the Partnership provisions (a) that require
the insurer or reinsurer to give at least 60 days' notice to the Collateral
Trustee before the cancellation or non-renewal of any insurance policy takes
effect or, if commercially available, 30 days', or if not so available, 15 days'
notice in case of any cancellation or non-renewal due to non-payment of
premiums, to the Collateral Trustee, (b) that require the insurer or reinsurer
to give notice to the Collateral Trustee of a default by the Partnership in the
payment of any premium when due for payment under such insurance or reinsurance
policy, (c) that require the insurer or reinsurer to waive all rights of
subrogation it may have against any insured and the respective directors,
officers and employees of the insured, (d) that require the insurer or reinsurer
to waive all rights of set-off in respect of recoveries due thereunder and (e)
that ensure the severability of interests of the insureds, provided that the
requirements set forth in this sentence in respect of reinsurers shall be
subject to commercial availability and shall apply only if requested by the
Applicable Agent or Applicable Agents or the Collateral Trustee.
7.04 Payment, Assignment, Etc. of Reinsurance or Co-Insurance. The
Partnership shall ensure that all its insurers, reinsurers and co-insurers agree
to arrangements designed to produce the following results: (a) that, after the
Collateral Trustee exercises its security interest in insurance, the claims of
the Collateral Trustee prevail over any competing claims of the Partnership; (b)
that such insurers, reinsurers or co-insurers pay any claims under such
insurance, reinsurance or co-insurance policies directly to the Collateral
Trustee in the manner contemplated by Section 6.08 and clause (b) of Section
7.02; and (c) that the Partnership or, if applicable, the Collateral Trustee, be
permitted to make claims under such reinsurance or co-insurance policies
directly against such reinsurers or co-insurers in the event its insurers fail
to do so or fail to do so to the full satisfaction of the Partnership or, if
applicable, the Collateral Trustee, or are insolvent, in liquidation or
bankrupt, provided that the requirements set forth in this
46
sentence in respect of reinsurers and co-insurers shall be subject to commercial
availability and shall apply only if requested by the Applicable Agent or
Applicable Agents or the Collateral Trustee. Such arrangements shall be in
accordance with the requirements set forth in clause (b) of Section 6.08.
7.05 Rated Insurers. Notwithstanding anything in this Article VII to
the contrary, the Partnership shall at all times ensure that it is party to
insurance policies and, to the extent necessary, its insurers and reinsurers are
party to reinsurance policies such that (a) 100% of the risk in respect of the
Project Property insured pursuant to Section 7.01 is ultimately borne by a Rated
Insurer and (b) the Collateral Trustee has, to the fullest extent permitted by
applicable law, the benefit of effective cut-through endorsement clauses as from
time to time may be necessary to allow the Collateral Trustee to bring a direct
claim against a Rated Insurer in respect of 100% of the insured Coker Project
risk.
7.06 Payment of Premiums. The Partnership shall pay all premiums and
other sums payable in respect of its insurance when due, provided, however, that
the Collateral Trustee shall be entitled (but not obligated) to pay premiums and
other sums due in respect of the Partnership's insurance if such insurance would
expire or otherwise be canceled or suspended within 10 days thereafter as a
result of a failure to pay such premiums or sums. If the Collateral Trustee pays
any premiums or sums pursuant to the immediately preceding sentence, the
Collateral Trustee shall be entitled to reimbursement therefor as a Senior Debt
Obligation.
7.07 Application of Insurance Proceeds. All proceeds of insurance or,
if applicable, reinsurance shall be applied as follows:
(a) Any sum paid in settlement of a liability to a third party
shall be paid to the Person to whom the liability shall have been incurred
or, if such liability shall have been paid by the insured party, to or to
the order of the insured party.
(b) Any other sum paid in respect of any casualty to Project
Property, including without limitation in respect of any Catastrophic
Casualty, or any proceeds of business interruption or contingent business
interruption insurance, if any, shall be paid by the insurer or reinsurer,
if applicable, as contemplated in Section 7.02, deposited in the Casualty
and Insurance Account. Without limiting the obligations of the Partnership
under this Agreement, subject to clause (c) of this Section 7.07, the
Partnership shall promptly restore, repair or replace any Project Property
affected or damaged by a casualty loss, in each case (i) to the extent
necessary in accordance with Prudent Industry Practice to restore the unit
cash operating margin of the Coker Project, the frequency and scope of any
required maintenance and the Coker Project's design capacity and capacity
utilization to the levels that existed immediately prior to such casualty
loss and (ii) to the extent of any casualty insurance proceeds received in
respect thereof.
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(c) Within 60 days following the occurrence of Catastrophic
Casualty, the Partnership shall deliver to the Collateral Trustee a
plan for the application of casualty insurance proceeds in respect
thereof and other funds available to the Partnership to restore, repair
or replace the Project Property. If, within 45 days following the later
of the receipt by the Collateral Trustee of such plan and the deposit
of such proceeds into the Casualty and Insurance Account, Majority
Lenders notify the Partnership that in their reasonable judgment it is
unlikely that, after implementation of the Partnership's plan, the
Partnership would be able to pay the Senior Debt Obligations as and
when they come due or be able to produce Product Production of
substantially the same (or higher) quality and quantity as it had prior
to such loss or series of losses, such casualty insurance proceeds
shall remain in the Casualty and Insurance Account. In the event that
(i) Majority Lenders so notify the Partnership or (ii) the plan shall
not have been delivered, then Majority Lenders shall have the right to
require the Partnership to apply such proceeds to prepay Senior Loans
in accordance with Section 2.05(a). Prepayments under this clause (c)
shall be made within two Business Days following such transfer and
shall be applied to reduce the remaining principal installments of
Senior Loans pro rata as to each remaining principal installment
outstanding. The Senior Lenders shall have the option, at the
Partnership's expense, to consult with the Independent Consultant for
purposes of reviewing any plan for the application of such casualty
insurance proceeds with respect to which Majority Lenders have the
right to object.
7.08 Information. The Partnership shall promptly notify the
Collateral Trustee of (a) any material dispute with an insurer, (b) the failure
by the Partnership to pay any premium under any insurance policy when due, (c)
the failure by the Partnership, for any reason, to maintain in full force and
effect the insurance coverage set forth in Appendix J, as it may be amended from
time to time in accordance with Section 7.01, (d) any proposed amendment to the
schedule of minimum insurance requirements set forth in Appendix J, (e) any
reduction in any insurance coverage maintained by the Partnership and (f) any
insurance claim or casualty loss or series of losses in excess of $5 million.
Not less than 15 days prior to the effective date of any issuance, renewal or
replacement of any insurance policy, the Partnership shall deliver to the
Collateral Trustee and the Insurance Consultant copies of any certificate of
insurance, binder or broker's undertaking letter or policy, as the case may be,
in respect of renewal or replacement of any insurance policy. The Collateral
Trustee, in consultation, at the Collateral Trustee's option, with the Insurance
Consultant, shall be entitled to review (and the Partnership shall promptly
furnish or cause to be furnished) the proposed final wording for any such policy
to ensure compliance with the terms hereof. If, in the judgment of any of the
Applicable Agent or Applicable Agents, the Collateral Trustee, the Insurance
Consultant or Majority Lenders, such proposed final wording does not so comply,
the Partnership shall amend, or cause to be amended, such wording so that it
does so comply in the reasonable judgment of the relevant party. The Partnership
shall also provide the Collateral Trustee and the Insurance Consultant with any
other information relating to the Partnership's insurance or reinsurance or any
claims thereunder that may be requested by the Applicable Agent or Applicable
Agents or the Collateral Trustee or the Insurance Consultant. To ensure
compliance with the terms
48
hereof, the Partnership shall permit the Insurance Consultant, at the expense of
the Partnership, to examine insurance policies issued to the Partnership or the
brokers at the places where they are kept upon reasonable notice and during
normal business hours.
7.09 Insurance Consultant. The Partnership shall reimburse the
Insurance Consultant and the Secured Parties for the reasonable fees and
expenses of the Insurance Consultant retained by the Partnership on behalf of
the Secured Parties in connection with any review of information received from,
or any consultation with, the Partnership.
ARTICLE VIII
REPORTING
8.01 Regular Reporting.
(a) Operating Reports. The Partnership shall furnish to the
Applicable Agent or Applicable Agents, each Credit Rating Agency and the
Independent Engineer, not later than 45 days after the end of each of the
Partnership's fiscal quarters, a summary of operations during such quarter,
including information in reasonable detail concerning (i) the calculation of any
adjustments to the Partnership's payment obligations under the Long-Term Oil
Supply Agreement pursuant to Section 11.1 of such agreement during such quarter,
(ii) any adverse change with respect to environmental permits and approvals and
compliance with permit and approval conditions and applicable environmental
regulations during such quarter, (iii) the nature and duration of any
operational or production disruptions or limitations that affected the Coker
Project during such period, (iv) the progress, schedule and actual to-date and
expected aggregate costs of any Mandatory Capital Expenditures or Discretionary
Capital Expenditures, as the case may be, and the Partnership's then-current
expectations as to the effect of such Mandatory Capital Expenditures or
Discretionary Capital Expenditures, as the case may be, on unit operating costs,
the frequency and scope of required Coker Project maintenance, including design
capacity and capacity utilization, (v) Project Production under the Product
Purchase Agreement during such quarter, (vi) sales during such quarter, and
inventories remaining at quarter end, (vii) the amount of the Premcor Processing
Fee and the volume of product processed for PRG during such quarter, (viii) the
amount of fees paid to PRG for services provided under the Services and Supply
Agreement and the Ancillary Equipment Site Lease for such quarter and (ix) any
material developments during such quarter in Coker Project operations, including
without limitation technical problems, interruptions of operations, disputes
with Governmental Authorities, labor problems or declines in prices for Project
Production or any other matter that could be expected to have a Material Adverse
Effect.
49
(b) Financial Statements. The Partnership shall furnish to
the Collateral Trustee, the Capital Markets Trustee, each Credit Rating Agency
and the Independent Engineer:
(i) Quarterly. Within 45 days after the end of
each of the first three quarters of each fiscal year, unaudited
quarterly PRG Financial Statements prepared in accordance with GAAP.
Such PRG Financial Statements shall be accompanied by a certificate
of a Responsible Officer attesting that (except as may otherwise be
noted in such certificate) such PRG Financial Statements are
presented in conformity with GAAP on a basis consistent with that of
the most recent audited PRG Financial Statements;
(ii) Annual. Within 90 days after the end of each
fiscal year, annual PRG Financial Statements presented in conformity
with GAAP, audited by independent public accountants of recognized
international standing appointed from time to time by PRG together
with the opinion of such accountants; and
(iii) No Default Certificate. On the date of
delivery of quarterly or annual PRG Financial Statements pursuant to
this subclause (ii) above, (A) a certificate of a Responsible Officer
certifying that no Event of Default or Potential Default has occurred
and is Continuing on such date and (B) solely in the case of the
delivery of annual PRG Financial Statements, a certificate of the
independent public accountants of the PRG certifying that, after
their audit of such annual PRG Financial Statements, no facts are
known to them that would cause them to believe that an Event of
Default or Potential Default has occurred and is Continuing on such
date, in each of cases (A) and (B), other than Events of Default or
Potential Defaults disclosed to the Collateral Trustee, each Credit
Rating Agency and the Independent Engineer in accordance with clause
(a) of Section 8.02.
(c) Permitted Hedging Arrangements. The Partnership shall,
if applicable, deliver to the Collateral Trustee, each Credit Rating
Agency and the Independent Engineer on the date of the delivery of its
quarterly and annual financial statements pursuant to clause (b) of this
Section 8.01, a report listing all Permitted Hedging Arrangements entered
into or terminated in the current quarter.
(d) Other Information. The Partnership shall furnish to the
Collateral Trustee, each Credit Rating Agency and each Independent
Consultant such other information related to the Coker Project as it shall
reasonably request from time to time.
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8.02 Notice of Extraordinary Events. The Partnership shall
promptly deliver to the Collateral Trustee, the Applicable Agent or Applicable
Agents, each Credit Rating Agency and the Independent Engineer notice upon its
discovery of:
(a) any Event of Default or Potential Default and any
breach of its obligations under this Agreement or any Senior Loan
Agreement that does not of itself constitute an Event of Default or a
Potential Default;
(b) any material default (including without limitation
any material payment default) under, or any amendment or termination
of, any Project Document or any material disputes in respect thereof
with counterparties thereof;
(c) the occurrence of any Event of Force Majeure that
excuses the performance of any obligation under, or allows the
termination of, any Transaction Document;
(d) any litigation, arbitration, administrative,
governmental or other similar proceeding that is instituted or
threatened against any of the Borrower, the Partnership, the General
Partner or the Limited Partner or any of their respective property or
assets, that, if adversely determined, could be expected to have a
Material Adverse Effect;
(e) other developments in operation of the Coker Project,
if not otherwise reported in any report of the Partnership required to
be provided hereunder, that could reasonably be expected to have a
Material Adverse Effect; and
(f) any facts or circumstances regarding the matters
described in the representations set forth in Section 3.01 that would
render any such representation untrue if being made at the time of
discovery by the Partnership;
in each case describing the nature thereof and any action the Partnership
proposes to take with respect thereto.
8.03 Books and Records. Each of the Partnership and the
Borrower shall (a) keep proper books of record and account in which entries will
be made of transactions of or in relation to its business and (b) keep accounts
and financial and cost records.
ARTICLE IX
COMMON CONDITIONS PRECEDENT
9.01 Common Conditions Precedent to Disbursements of Senior
Loans. The obligation of each Senior Lender to make the initial and any
subsequent disbursement of a Senior Loan under its Senior Loan Agreement shall
be subject to
51
satisfaction or waiver by it of each of the conditions precedent set forth in
such Senior Loan Agreement.
ARTICLE X
EVENTS OF DEFAULT AND REMEDIES
10.01 Events of Default. Each of the following events shall be
an "Event of Default":
(a) Payment Default. Either the Borrower or the
Partnership shall default in the payment when due of principal,
interest, premium or other amounts owing in respect of any Senior Debt
and such default remains uncured or unwaived for more than five
Business Days;
(b) Breach of Representation and Warranty. Any
representation or warranty made by any of the Borrower, the
Partnership, the General Partner, the Limited Partner or the
Shareholders or in any Financing Document shall prove to have been
false or misleading in any material respect when made;
(c) Breach of Covenant. Any of the Borrower, the
Partnership, the General Partner or the Limited Partner shall fail to
observe or perform any obligation to be observed or performed by it
under this Agreement and such failure shall continue unwaived or
unremedied for 30 days;
(d) Default under the Financing Documents. An event of
default shall have occurred and be Continuing under any Financing
Document;
(e) Default Under or Termination of the Project
Documents. Any party to a Project Document shall fail in any material
respect to observe or perform any covenant or other obligation (other
than any Excluded PRG Covenants) to be observed or performed by it or
to pay any amounts owing by it thereunder and such failure shall
continue uncured, unwaived or unremedied, (i) in the case of any
failure under any Project Document to which an Affiliate of the
Partnership is a party or in the case of a failure to pay any amounts
owing under the EPC Contract, the Long-Term Oil Supply Agreement or the
Hydrogen Supply Agreements, for more than 30 days, (ii) in the case of
any other failure under the EPC Contract, the Long-Term Oil Supply
Agreement or the Hydrogen Supply Agreements, for more than 60 days
(which grace period shall be extended to no more than 180 days in the
aggregate if the Partnership is diligently pursuing a remedy for such
failure, including without limitation by replacing the relevant Project
Document) and (iii) in the case of any other failure under any other
Project Document, for more than 30 days;
(f) Insolvency. An Insolvency Event shall have occurred
with respect to any of the Borrower, the Partnership, the General
Partner or the Limited Partner;
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(g) Cross-Acceleration. (i) Any Indebtedness in an aggregate
principal amount in excess of $5 million of any of the Borrower, the
Partnership, the General Partner or the Limited Partner shall have been declared
due and payable or required to be prepaid or redeemed (other than by regularly
scheduled required prepayment or redemption) prior to the stated maturity
thereof, or (ii) any event or condition shall have occurred that would permit a
holder of such Indebtedness to make such a declaration and any applicable grace
period in the financing documents under which such Indebtedness was incurred
shall have expired;
(h) Attachment of Collateral. A Person other than the
Collateral Trustee, any Applicable Agent or Applicable Agents, any of the
Secured Parties or any of their authorized representatives shall have attached
(i) any Account or Subaccount or funds in any Account or Subaccount or (ii) any
portion of the property and assets of any of the Borrower, the Partnership, the
General Partner or the Limited Partner which property and assets, individually
or in the aggregate, have a book value in excess of $5 million, and, in the case
of subclause (ii) only, such attachment shall remain unlifted, unstayed or
undischarged for a period of 30 days;
(i) Security Interests Invalid. Any security interests created
or purported to be created by or pursuant to the Original CSA as amended and
restated by this Agreement, or the other Security Documents shall, in the
reasonable opinion of counsel to the Secured Parties, not be valid, perfected,
first priority security interests in favor of the Collateral Trustee for the
benefit of the Secured Parties (except to the extent specified in the forms of
legal opinions delivered in accordance with the Original CSA;
(j) Unsatisfied Judgments. A final judgment or final judgments
(i) in the aggregate in excess of $5 million with respect to any of the
Borrower, the Partnership, the General Partner or the Limited Partner shall have
been rendered by a court or other competent tribunal against any of the
Borrower, the Partnership, the General Partner or the Limited Partner and shall
have remained unpaid, unstayed, undischarged, unbonded or undismissed after the
right to appeal has expired;
(k) Unenforceability of Agreements. Any Transaction Document
shall have been repudiated or terminated by any party thereto, by operation of
law or otherwise, or any material provision of any Transaction Document shall
have ceased for any other reason to be valid, legally binding or enforceable
against any party thereto other than the Secured Parties if such cessation is
not cured within 30 days after notice to the Partnership;
(1) Abandonment. Abandonment shall have occurred; or
(m) Failure to Deposit Funds in Accounts. The Partnership shall
fail to cause funds to be deposited into the Accounts in accordance with the
terms
53
set forth in Article V and such failure shall continue unwaived or
unremedied for five Business Days, provided that any failure by the
Partnership to deposit or cause to be deposited sufficient funds into the
Principal and Interest Accrual Account and the Debt Service Reserve Account
in accordance with Section 5.03(a) or 5.04(a), as applicable, on the date
on which this Agreement becomes effective in accordance with Section 14.01,
shall be an Event of Default immediately;
10.02 Declaration of Default. Upon receipt by the Collateral
Trustee of one or more of the following:
(a) a certificate from a Senior Lender or Senior Lender
Group stating that an Event of Default described in clause (a) (insofar as
either such Event of Default relates to such Senior Lender or Senior Lender
Group) of Section 10.01 has occurred and is Continuing and instructing the
Collateral Trustee to declare a Default; or
(b) a certificate from Majority Lenders stating that an Event
of Default has occurred and is Continuing and instructing the Collateral
Trustee to declare a Default under this Agreement,
then, by notice to the Partnership, a "Default" shall occur, provided that a
"Default" shall occur without such declaration or other notice (which
declaration or notice shall, for purposes of the Senior Loan Agreements, be
deemed to have been given) upon the occurrence of an Event of Default described
in clause (f) of Section 10.01.
10.03 Cessation of Default. Any Senior Lender or Senior Lender
Group that has given a certificate pursuant to Section 10.02 shall promptly
notify the Collateral Trustee, the Borrower, the Partnership and each other
Secured Party upon learning of the cessation of the Event of Default to which
such certificate related. Any notice given pursuant to this Section 10.03 shall
be a "Cessation Notice". A Cessation Notice shall be effective upon receipt
thereof by the Borrower or the Partnership and the Default to which such notice
relates shall be deemed no longer to be Continuing for all purposes hereunder.
10.04 Remedies. At any time when a Default has occurred and is
Continuing:
(a) in the case of a Default arising in connection with an
Event of Default described in clause (f) of Section 10.01, without any
declaration or other action on the part of the Collateral Trustee, any
Applicable Agent or any Secured Party, all Senior Debt Commitments shall
automatically terminate and 100% of the outstanding principal amount of the
Senior Debt, together with any premium, accrued interest, fees and other
amounts due under the Senior Loan Agreements shall become immediately due
and payable without presentment, demand, protest or any other notice of any
kind, all of which are hereby expressly waived by the
54
Borrower and the Partnership, anything contained herein to the contrary
notwithstanding;
(b) in the case of any Default,
(i) Subject to the rights of the Secured Parties set
forth in subclause (ii) of this clause (b):
(A) the Collateral Trustee, at the direction of
Majority Lenders, shall take the actions in respect of the
Accounts required by Section 5.06;
(B) Majority Lenders shall have the right, at their
sole option, to require the Partnership to continue to operate the
Heavy Oil Processing Facility or to require the Partnership to
appoint a manager or operator on terms and conditions acceptable
to such Majority Lenders for the purpose of performing such duties
for and rendering such assistance on behalf of the Partnership as
is required by a committee or other group of representatives of
Senior Lenders. The manager or operator shall be entitled, on
behalf of the Partnership, to operate and manage the Heavy Oil
Processing Facility, incur expenses, including capital
expenditures necessary or advisable in its reasonable discretion,
enter into contracts with one or more third parties, acquire,
sell, lease or dispose of assets (other than the Heavy Oil
Processing Facility as a whole), protect and preserve the Heavy
Oil Processing Facility and take all other necessary or advisable
actions relating thereto, all at the expense and for the account
of the Partnership; and
(C) Each Senior Lender Group shall have the right to
apply the relevant interest rate provided for in its respective
Senior Loan Agreement.
(ii) (A) Majority Lenders shall have the right to give
the Collateral Trustee a notice identified as an enforcement direction,
together with a certification that such notice is given in accordance
with this Agreement (an "Enforcement Direction"), directing the
Collateral Trustee to take Enforcement Action;
(B) During the period following the declaration of any
Default and preceding the issuance of an Enforcement Direction,
the Partnership shall use its reasonable best efforts to cure the
Event of Default giving rise to such Default and to mitigate any
adverse consequences to the Heavy Oil Processing Facility of such
Event of Default; and
(C) Nothing in this subclause (ii) shall prevent the
Collateral Trustee or the Secured Parties from taking action
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with respect to the Collateral to preserve and protect their
rights in, or to prevent any diminution in the value,
utility or condition of, such Collateral.
10.05 Enforcement Action. Upon receipt of an Enforcement
Direction, the Collateral Trustee shall, as promptly as practicable, if so
instructed by the Secured Party or Secured Parties giving such Enforcement
Direction, subject to applicable law, take Enforcement Action.
10.06 Incidents of Sale. Upon any sale of any of the Collateral
made or caused to be made by the Collateral Trustee, whether made under the
power of sale hereby given or pursuant to judicial proceedings, to the extent
permitted by applicable law:
(a) any Secured Party may bid for and purchase the property
offered for sale, and upon compliance with the terms of sale may hold
and dispose of such property;
(b) the Collateral Trustee may, but shall not be obligated
to, make and deliver to the purchaser or purchasers a good and
sufficient deed, bill of sale and instrument of assignment and transfer
of the property sold; and
(c) the Collateral Trustee, in its own name or pursuant to
the power of attorney granted in or pursuant to clause (c) of Section
6.13 by the Borrower, the Partnership and each of the Partners, may
make all necessary deeds, bills of sale and instruments of assignment
and transfer of the property thus sold and for that purpose the
Collateral Trustee may execute all necessary deeds, bills of sale and
instruments of assignment and transfer, and may substitute one or more
Persons with like power (and the Borrower, the Partnership and each of
the Partners hereby ratifies and confirms all that its said attorney or
such substitute or substitutes shall lawfully do by virtue hereof; but
if so requested by the Collateral Trustee or by any purchaser, the
Borrower, the Partnership and each of the Partners, as the case may be,
shall ratify and confirm any such sale or transfer by executing and
delivering to the Collateral Trustee or to such purchaser or purchasers
all proper deeds, bills of sale, instruments of assignment and transfer
and releases as may be designated in any such request).
Upon a sale of the General Partnership Interest or the Limited
Partnership Interest or substantially all the Project Property, whether made
under the power of sale hereby given or pursuant to judicial proceedings, the
Partnership shall permit, to the extent permitted by applicable law, the
purchaser thereof and its successors and its and their assigns to take and use
the name of the Partnership and to carry on business under such name or any
variant or variants thereof and to use and employ any and all other trade names
and trademarks of the Partnership.
10.07 Collateral Trustee May File Proofs of Claim. In case of
the pendency of any receivership, insolvency, liquidation, bankruptcy,
reorganization,
56
arrangement, adjustment, composition or other similar judicial proceeding
relative to the Borrower, the Partnership, each of the Partners or the
Collateral, the Collateral Trustee (irrespective of whether the principal of the
Senior Debt shall then be due and payable) shall be entitled and empowered, by
intervention in such proceeding or otherwise, (a) to file and prove a claim for
the whole amount of the Senior Debt Obligations owing and unpaid and to file
such other papers or documents as may be necessary or advisable in order to have
the claims of the Collateral Trustee (including any claim for the reasonable
compensation, disbursements and advances of the Collateral Trustee, in its
individual or trust capacity, its agents and counsel) and of the Secured Parties
allowed in such judicial proceeding and (b) to collect and receive any moneys or
other property payable or deliverable on any such claims and to distribute the
same; and any custodian, receiver, assignee, Collateral Trustee, liquidator,
sequestrator or other similar official in any such judicial proceeding is hereby
authorized by each Secured Party to make such payments to the Collateral
Trustee.
10.08 Collateral Trustee May Enforce Claims. All rights of action and
claims under this Agreement may be prosecuted and enforced by the Collateral
Trustee in its own name as Collateral Trustee of an express trust, provided,
however, that the Collateral Trustee is also hereby appointed as agent for the
Secured Parties for this and the other purposes of this Agreement, and the
Collateral Trustee may, if necessary under applicable law, take such action
solely as agent for the Secured Parties. Any recovery of judgment by the
Collateral Trustee shall, after provision for the payment of the reasonable
compensation, expenses, disbursements and advances of the Collateral Trustee,
its agents and counsel, be for the benefit of the Secured Parties and deposited
to the Enforcement Proceeds Account for application as provided in Section
10.12.
10.09 Control of Enforcement Action. Subject to the receipt by the
Collateral Trustee of indemnity satisfactory to it, the Secured Party or Secured
Parties giving an Enforcement Direction shall have the right, after the giving
of an Enforcement Direction:
(a) to require the Collateral Trustee to enforce this Agreement,
either by judicial proceedings for the enforcement of the payment of Senior
Debt and the enforcement of the security interests created under this
Agreement and any of the other Security Documents, the sale of the
Collateral or any part thereof or otherwise or by the exercise of the power
of entry or sale hereby conferred; and
(b) to direct the time, method and place of conducting any
proceeding for any remedy available to the Collateral Trustee, or
exercising any trust or power conferred upon the Collateral Trustee under
this Agreement, provided that (i) such direction shall not be in conflict
with applicable law, this Agreement or any of the Security Documents and
(ii) the Collateral Trustee may take any other action incidental to
carrying out any direction of such Secured Party or Secured Parties.
10.10 Limitation on Suits. (a) No Secured Party (except through the
giving of an Enforcement Direction properly given under Section 10.04) shall
have the
57
right in respect of the Senior Debt Obligations or otherwise under its Senior
Loan Agreement to commence any proceeding, judicial or otherwise, against the
Borrower, the Partnership or either of the Partners under any bankruptcy law or
other reorganization, arrangement, readjustment of debt, relief of debtors,
dissolution, insolvency, liquidation or similar law or for the appointment of a
receiver, trustee or other officer or representative of a court or of creditors.
(b) None of the Secured Parties (except through the giving of
an Enforcement Direction properly given under Section 10.04) shall have the
right to commence any proceeding, judicial or otherwise, to enforce any judgment
obtained by it, in respect of the Senior Debt Obligations or otherwise under its
Senior Loan Agreement against the Borrower, the Partnership or either of the
Partners or their assets or properties, to enforce any provision of this
Agreement, any Security Document or the security interests granted hereby or
pursuant hereto, it being understood and intended that none of the Secured
Parties shall have any rights in any manner whatever to affect, disturb or
prejudice the security interests created hereby or pursuant hereto or the rights
of any of the other Secured Parties, or to obtain or seek to obtain priority or
preference over any other Secured Party or to enforce any rights under this
Agreement, any Security Document or its Senior Loan Agreement or except in the
manner herein or therein provided.
10.11 Enforcement Proceeds Account. Upon receipt of an Enforcement
Direction, the Collateral Trustee shall establish and thereafter maintain in its
name a segregated bank account in New York, New York ("Enforcement Proceeds
Account") for the purpose of depositing therein: (a) any balances then standing
in the Accounts or the Subaccounts or received therein from time to time
thereafter; (b) the proceeds of any sale (net of the costs and expenses of such
sale and any taxes, assessments or prior liens) or Enforcement Action (net of
the costs and expenses of such action) taken pursuant to this Article X; (c) the
proceeds of any insurance referred to in Section 7.07; and (d) all proceeds and
any moneys otherwise received for satisfaction of the Senior Debt Obligations.
All moneys held in the Enforcement Proceeds Account shall be trust funds held by
the Collateral Trustee for the benefit of Secured Parties for the purpose of
making payments therefrom in accordance with Section 10.12.
10.12 Application of Enforcement Proceeds. Proceeds from the
Enforcement Proceeds Account shall be applied promptly by the Collateral
Trustee, at the direction of Majority Lenders, in the following order of
priority:
(a) first, to the payment of all fees, indemnities and any
other amounts owed to the Collateral Trustee, the Applicable Agent or
Applicable Agents and the Depositary Bank in their individual or trust
capacity (but not, where applicable, as Senior Lender) relating to services
rendered in their capacity as Collateral Trustee (including in connection
with the taking of any Enforcement Action), Applicable Agent or Applicable
Agents, or Depositary Bank, as the case may be.
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(b) second, to the payment of all fees, costs,
expenses, indemnities and any other amounts owed to the Secured
Parties and the whole amount then outstanding of Senior Debt
Obligations and in case such moneys shall not be sufficient to
pay in full the whole amount so due and unpaid, then to make Pro
Rata Payments, without any preference or priority, as among the
Secured Parties; and
(c) third, after the payment in full of the Senior Debt
Obligations, to the payment of the remainder, if any, to the
Partnership or its successors, or in the case of proceeds from
the transfer or disposition of all or part of the interests in
the General Partner or Limited Partner to the Shareholders or the
General Partner, as the case may be, or as a court of competent
jurisdiction may otherwise direct.
ARTICLE XI
RESTRICTED PAYMENTS
11.01 Restricted Payments. (a) Subject to clause (b) of this
Section 11.01, no Restricted Payments may be made by the Partnership unless each
of the following conditions has been met:
(i) immediately prior and after giving effect to
such Restricted Payment, no Event of Default or Potential
Default arising under Section 10.01(a) or (f) has occurred
and is Continuing; and
(ii) immediately prior and after giving effect to
such Restricted Payment, the Debt Service Reserve Account
and the Principal and Interest Accrual Account shall be
fully funded in accordance with Sections 5.03 and 5.04,
respectively; provided, however, that upon this Agreement
becoming effective in accordance with Section 14.01, the
Partnership may make a one-time Restricted Payment in the
amount of $141.4 million to the General Partner and the
Limited Partner, allocated in accordance with their
respective partnership interests, irrespective of whether
the Debt Service Reserve Account and the Principal and
Interest Accrual Account are then fully funded.
(b) The Partnership may make distributions to the
General Partner and the Limited Partner in an aggregate amount not to exceed
$100,000 in each calendar year solely for the purpose of permitting the Partners
to pay their respective directors' fees, accounting expenses and other
administrative expenses.
(c) Upon the making of any Restricted Payment, the
Partnership shall be deemed to have represented to the Collateral Trustee that
the conditions to such Restricted Payment set forth in clause (a) have been
satisfied (upon which representation the Collateral Trustee may rely without
further inquiry).
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ARTICLE XII
GUARANTEE
12.01 Guarantee by the Partnership, the Partners and PRG. (a)
Subject to clause (b) of this Section 12.01, each of the Partnership, the
Partners and PRG hereby unconditionally guarantees, jointly and severally, to
each Senior Lender and the Collateral Trustee (a) the due and punctual payment
of the principal of and interest on each Senior Debt Obligations when and as the
same shall become due and payable, whether at the maturity thereof, by
declaration of acceleration or otherwise, in accordance with the terms of the
Senior Debt and this Agreement and (b) the performance by the Borrower of each
of its other obligations under this Agreement and the other Financing Documents.
Each of the Partnership, the Partners and PRG hereby agrees that its obligations
hereunder shall be as if it were a principal debtor and obligor and not merely a
surety, and shall be absolute and unconditional, irrespective of, and shall be
unaffected by, any invalidity, irregularity or unenforceability of any Senior
Loan or any provision of this Agreement or of the other Financing Documents, any
failure to enforce the provisions of any Senior Loan or any provision of this
Agreement or of the other Financing Documents, any waiver, modification or
indulgence granted to the Borrower with respect thereto by any Senior Lender,
the Collateral Trustee or any Applicable Agent, or any other circumstances which
may otherwise constitute a legal or equitable discharge of a surety or
guarantor. Each of the Partnership, the Partners and PRG hereby waives
diligence, presentment, demand of payment, filing of claims with a court in the
event of merger, bankruptcy or insolvency of the Borrower, any right to require
a proceeding first against the Borrower, the benefit of discussion, protest or
notice with respect to any Senior Loan or the Senior Debt evidenced thereby and
all demands whatsoever, and covenants that this Guarantee will not be discharged
with respect to any Senior Loan except by payment in full of the principal
amount due thereunder and any interest thereon. Each of the Partnership, the
Partners and PRG hereby agrees that it will pay, or reimburse any Senior Lender
and the Collateral Trustee on demand for, all reasonable costs and expenses
(including fees and disbursements of counsel) incurred by such Senior Lender or
the Collateral Trustee in connection with any rescission or restoration of this
Guarantee, including any such costs and expenses incurred in defending against
any claim alleging that any payment constituted a preference, fraudulent
transfer or similar payment under any bankruptcy, insolvency or similar law.
(b) Notwithstanding anything in this Section 12.01 to
the contrary, the guarantee under clause (a) of this Section 12.01 shall (i) not
apply to the extent that any obligation is guaranteed pursuant to (A) the
guarantee attached to the securities evidencing Capital Markets Senior Debt in
accordance with Section 205 and Article 12 of the Indenture or (B) any other
guarantee in respect of Senior Loans made under any Senior Loan Agreement or
(ii) not be effective with respect to PRG until completion of the transactions
contemplated by Section 5.02 of the Master Amendment Agreement.
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ARTICLE XIII
THE COLLATERAL TRUSTEE
13.01 Appointment of Collateral Trustee. Deutsche Bank Trust
Company Americas was in the Original CSA, and hereby is, appointed as Collateral
Trustee hereunder (the "Collateral Trustee") and has in the Original CSA, and
does hereby accepts the trust created in this Agreement upon the terms and
conditions hereof.
13.02 Delivery of Documentation. Executed counterparts of the
Financing Documents have been delivered to the Collateral Trustee and the
Collateral Trustee acknowledges receipt thereof. The Borrower, the Partnership
and each of the Partners and each Applicable Agent agree to deliver to the
Collateral Trustee any Senior Loan Agreement relating to Additional Senior Debt
or Replacement Senior Debt and any instrument amending or modifying any
agreement to which it is a party previously delivered to the Collateral Trustee.
Amendments or modifications of the aforementioned agreements shall be in writing
and shall not affect the duties and obligations of the Collateral Trustee
hereunder unless (a) the Collateral Trustee has received a copy of such
amendment or modification and (b) with respect to any amendment or modification
which, in the opinion of the Collateral Trustee, modifies the Collateral
Trustee's duties, obligations, or responsibility, the Collateral Trustee has
consented in writing thereto within 10 Business Days of receiving a copy
thereof.
13.03 Attorney-in-Fact. The Collateral Trustee or any officer
or agent thereof, with full power of substitution, is hereby appointed the
attorney-in-fact of each of the Borrower, the Partnership, the General Partner
and the Limited Partner for the purpose of carrying out the provisions of this
Agreement and any of the Financing Documents and taking any action and executing
any instruments which the Collateral Trustee, at the direction of Majority
Lenders, may deem necessary or advisable to accomplish the purposes hereof and
thereof, which appointment as attorney-in-fact is coupled with an interest and
irrevocable and, without limiting the generality of the foregoing, which
appointment hereby gives the Collateral Trustee the power and right on behalf of
each of the Borrower, the Partnership, the General Partner and the Limited
Partner without notice to or assent by any of the foregoing, to the extent
permitted by applicable law, to do the following when and to the extent it is
authorized or directed to do so pursuant to the terms of this Agreement or any
of the Security Documents:
(i) to ask for, demand, sue for, collect,
receive and give acquittance for any and all moneys due or to
become due with respect to, and to the extent of, the rights
assigned to it by any of the Borrower, the Partnership, the
General Partner and the Limited Partner to the extent of the
interest therein of any Secured Party in the Collateral;
(ii) to receive, take, endorse, assign and
deliver any and all checks, notes, drafts, acceptances,
documents and other negotiable and non-negotiable instruments,
documents and chattel paper taken or received
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by the Collateral Trustee in connection with this Agreement or
any of the Financing Documents;
(iii) to commence, file, prosecute, defend,
settle, compromise, adjust, revoke, cancel, annul, move to
dismiss or otherwise undo any claim, suit, action or proceeding
with respect to the security interests granted for the benefit
of the Secured Parties in the Collateral;
(iv) to sell, transfer, assign or otherwise deal
in or with the Collateral or any part thereof pursuant to the
terms and conditions of this Agreement and the Financing
Documents; and
(v) to do, at its option and at the expense
and for the account of any of the Borrower, the Partnership,
the General Partner and the Limited Partner at any time or from
time to time, all acts and things which the Collateral Trustee
deems necessary to protect or preserve the Collateral and to
realize upon such Collateral.
Each of the Borrower, the Partnership, the General Partner and
the Limited Partner agrees, if required by applicable law or reasonably
requested by the Collateral Trustee, to execute and deliver to the Collateral
Trustee, and register in every public registry in the State of Texas, the State
of New York or the United Mexican States in which such registration is
necessary, a notarized public deed or other instrument constituting such power
of attorney. The Collateral Trustee shall not be responsible for the negligence
or misconduct of any attorney-in-fact selected by it without gross negligence or
willful misconduct.
13.04 Authority to Act for Secured Parties. (a) The Collateral
Trustee or any officer or agent thereof, with full power of substitution, is
hereby appointed the attorney-in-fact of each of the Secured Parties to act for
and on behalf of the Secured Parties with respect to this Agreement, the
Security Documents and the other Financing Documents, including but not limited
to the right to accept and execute this Agreement, the Security Documents and
the other Financing Documents and any and all amendments (subject to Section
14.13) and renewals of such documents and, on behalf of the Secured Parties, to
exercise in accordance with the provisions hereof the Secured Parties' rights
under this Agreement, the Security Documents and the other Financing Documents
as the same may be amended or renewed from time to time.
(b) Each Secured Party agrees, if required by
applicable law or reasonably requested by the Collateral Trustee, to execute and
deliver to the Collateral Trustee, and register in every public registry in
which such registration is necessary, a notarized public deed or other
instrument appointing the Collateral Trustee and any officer or agent thereof,
with full power of substitution, its attorney-in-fact for purposes of exercising
the rights and remedies of such Secured Party under this Agreement and the
Financing Documents and taking all action on behalf of the Secured Parties that
the Collateral Trustee is authorized to take pursuant to this Agreement.
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13.05 Reliance. The Collateral Trustee shall be entitled to act
upon any notice, certificate, instrument, demand, request, direction,
instruction, waiver, receipt, consent, agreement or other document or
communication furnished hereunder or under the Security Documents or the other
Financing Documents, which it in good faith believes and on its face appears to
be genuine, and it shall be entitled to rely upon the due execution, validity
and effectiveness, and the truth and acceptability, of any provisions contained
therein. The Collateral Trustee shall not have any responsibility to make any
investigation into the facts or matters stated in any notice, certificate,
instrument, demand, request, direction, instruction, waiver, receipt, consent,
agreement or other document or communication furnished to it hereunder or under
the Security Documents or the other Financing Documents. Each of the Borrower,
the Partnership, the General Partner and the Limited Partner shall deliver to
the Collateral Trustee a list of authorized signatories of any notice,
certificate, instrument, demand, request, direction, instruction, waiver,
receipt, consent, agreement or other document or communication furnished to the
Collateral Trustee hereunder or under the Security Documents or the other
Financing Documents, and the Collateral Trustee shall be entitled to rely on
such list until a new list is furnished by the Borrower, the Partnership, the
General Partner or the Limited Partner, as the case may be, to the Collateral
Trustee.
13.06 Liability. The Collateral Trustee shall not be liable for
any error of judgment or for any act done or omitted to be done by it in good
faith or for any mistake of fact or law, or for anything that it may do or
refrain from doing except for its own gross negligence or willful misconduct.
The Secured Parties shall in no event be liable for any act done or omitted to
be done by the Collateral Trustee or by any of its officers or employees.
13.07 Consultation with Counsel, Etc. The Collateral Trustee may
consult with, and obtain advice from, legal counsel, accountants and other
experts, in connection with the performance of its duties hereunder or under the
Security Documents or the other Financing Documents, and it shall incur no
liability and shall be fully protected in acting in good faith in accordance
with the opinion and advice of such counsel, accountants and other experts. The
Collateral Trustee shall not be responsible for the negligence or misconduct of
any counsel, accountants and other experts selected by it without gross
negligence or willful misconduct on its part.
13.08 Duties. The Collateral Trustee shall have no duties other
than those specifically set forth or provided for in the Financing Documents and
no implied covenants or obligations of the Collateral Trustee shall be read into
the Financing Documents or any related agreement to which the Collateral Trustee
is a party. The Collateral Trustee shall have no obligation to familiarize
itself with and shall have no responsibility with respect to any other agreement
or document relating to the transactions contemplated by the Financing Documents
(except such sections of such agreements or documents referred to herein) nor
any obligation to inquire whether any notice, certificate, instrument, demand,
request, direction, instruction, waiver, receipt, consent, document,
communication, statement or calculation is in conformity with the terms of any
such other agreement, except those irregularities or errors manifestly apparent
on the face of such document or to the actual knowledge of the Collateral
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Trustee. Except to the extent that the Collateral Trustee is acting on express
instructions, the Collateral Trustee shall at all times take such care in
dealing with the Collateral as it would in dealing with its own property or
similar property under its care. The Collateral Trustee shall, upon receipt of
an Enforcement Direction and acceptable indemnification, exercise the rights and
powers vested in it by this Agreement or by any Security Document which it is
directed by Majority Lenders to exercise and the Collateral Trustee shall not be
liable with respect to any action taken or omitted to be taken by it in
accordance with the direction of such Majority Lenders or any action in
connection therewith undertaken by it in good faith and without gross negligence
or willful misconduct.
13.09 Resignation, Replacement and Successor Collateral Trustee.
The Collateral Trustee at any time may resign as Collateral Trustee under this
Agreement and any other documents to which it is a party upon giving not less
than three months' notice in writing to the Partnership and the Applicable Agent
or Applicable Agents. The Collateral Trustee may be removed as Collateral
Trustee hereunder by an instrument in writing signed by Majority Lenders. Upon
resignation or removal of the Collateral Trustee, the Capital Markets Trustee
shall appoint a replacement Collateral Trustee. No resignation or removal of the
Collateral Trustee and no appointment of a successor trustee shall be effective
until (a) the successor Collateral Trustee has accepted its appointment, (b) all
indemnities, compensation and expenses required by Sections 13.10 and 13.11
shall have been paid or provided for and (c) the Collateral Trustee shall have
executed and delivered to the successor Collateral Trustee a notarized
instrument delegating its rights and responsibilities hereunder and under the
other Financing Documents to the successor Collateral Trustee. If no successor
trustee shall have been so appointed and shall have accepted such appointment
within 30 days after the date fixed for such resignation or such removal, the
Collateral Trustee may, at the expense of the Partnership, petition any court of
competent jurisdiction for the appointment of a successor trustee. Such court
may thereupon, after such notice, if any, as it may prescribe, appoint a
successor trustee. Any successor trustee appointed pursuant to this Section
13.09 shall be a bank or trust company organized under the laws of the United
States or of the State of New York, having its principal corporate trust office
in The City of New York and a combined capital and surplus of at least $500
million. Any successor trustee shall evidence its acceptance of the trust
hereunder by executing and delivering to the Partnership, the Applicable Agent
or Applicable Agents and the Collateral Trustee an instrument accepting this
trust and its appointment as Collateral Trustee hereunder and under the other
Financing Documents, and thereupon such successor Collateral Trustee, without
any further act, deed or conveyance, shall become vested with all the rights,
powers, duties and obligations of its predecessor hereunder and under the other
Financing Documents with like effect as if originally named as Collateral
Trustee herein and therein, and such predecessor shall have no further
obligation or liability thereunder except for liability with respect to its acts
or omissions prior to such succession pursuant to Section 13.06; nevertheless,
on the request of any party hereto or such successor trustee, the Collateral
Trustee ceasing to act shall execute and deliver instruments transferring to
such successor trustee all rights and powers of the Collateral Trustee so
ceasing to act, including any such instruments necessary to assign the rights
under this Agreement and the other Financing Documents and to transfer the
Accounts to such
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successor trustee, and shall deliver to such successor trustee all property held
by it in trust hereunder. The Partnership shall promptly notify the Credit
Rating Agencies of any resignation, removal or replacement of the Collateral
Trustee or any action in connection therewith undertaken by it in good faith and
without gross negligence or wilful misconduct.
13.10 Indemnities. (a) The Partnership agrees to indemnify the
Collateral Trustee in its individual and trust capacity, including without
limitation in its capacity as Depositary Bank, and its Affiliates, officers,
agents and employees for, and to hold each of them harmless against, any loss,
liability, claim, judgment, settlement, compromise, obligation, damage, penalty,
cost, expense or disbursement of any kind or nature whatsoever (including
reasonable attorney's fees and expenses) with respect to the execution,
delivery, enforcement, performance and administration of this Agreement and the
other Financing Documents, unless arising from the gross negligence, bad faith
or willful misconduct of such of the Collateral Trustee or the agents that are
seeking indemnification, including the costs and expenses of defending itself
against any claim of liability in the premises. As security for such payment,
the Collateral Trustee in its individual capacity shall have an interest prior
to the Secured Parties upon all Collateral and other property and funds held or
collected by the Collateral Trustee as part of the trust established hereunder.
(b) In any suit, proceeding or action brought by the
Collateral Trustee in its individual capacity, or by any of its Affiliates,
officers, agents and employees, under or with respect to the Collateral for any
sum owing hereunder or under any other Financing Document, or to enforce any
provisions hereof or of any other Financing Document, the Partnership will save,
indemnify and keep the Collateral Trustee in its individual capacity harmless
from and against all expense, loss or damage (including reasonable attorney's
fees and expenses) suffered by reason of any defense, set-off, counterclaim,
recoupment or reduction of liability whatsoever of the obligee thereunder,
arising out of a breach by any of the Borrower, the Partnership, the General
Partner, the Limited Partner of any of their obligations hereunder or under any
other Financing Document or arising out of any other agreement, indebtedness or
liability at any time owing to or in favor of such obligee or its successors
from the Borrower, the Partnership, the General Partner or the Limited Partner,
and all such obligations of the Borrower, the Partnership, the General Partner
and the Limited Partner shall be and remain enforceable against and only against
each of them and shall not be enforceable against the Collateral Trustee (in its
individual or trust capacity) or any Secured Party.
(c) The agreements in this Section 13.10 shall survive
resignation or removal of the Collateral Trustee and the termination of the
other provisions of this Agreement.
(d) All references in this Section 13.10 to the Collateral
Trustee shall be deemed to apply to the Collateral Trustee in its capacities as
Collateral Trustee and Depositary Bank, as applicable.
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13.11 Compensation. The Collateral Trustee shall be entitled to
reasonable compensation (which shall not be limited by any provision of law in
regard to compensation of a Collateral Trustee of an express trust) as may be
agreed from time to time between the Partnership and the Collateral Trustee for
all services rendered under this Agreement and the other Financing Documents and
such compensation, together with reimbursement of the Collateral Trustee in its
individual capacity for its advances, disbursements and expenses in connection
with the performance of the trust provided for herein (including the reasonable
fees and expenses of its agents and of counsel, accountants and other experts
referred to in Section 13.07), shall be paid by the Partnership promptly upon
demand from the Collateral Trustee from time to time as services are rendered
and expenses are incurred. The Secured Parties shall have no liability for any
fees, expenses or disbursements of the Collateral Trustee. Any reasonable and
documented fees, compensation, indemnity amounts (unless such indemnity amounts
are subject to dispute among the parties hereto) or expenses of the Collateral
Trustee (in its individual or trust capacity) or its counsel not paid as
provided for herein may be taken from any property held by the Collateral
Trustee hereunder notwithstanding any provisions herein to the contrary.
13.12 Certificates. Whenever in the administration of the trusts of
this Agreement the Collateral Trustee shall deem it necessary or desirable that
a matter be proved or established in connection with taking or omitting any
action by the Collateral Trustee hereunder or under any other Financing
Document, such matter (unless other evidence in respect thereof be herein
specifically prescribed) may, in the absence of gross negligence or willful
misconduct on the part of the Collateral Trustee, be deemed to be conclusively
proved or established by a written certificate of the Partnership delivered to
the Collateral Trustee.
13.13 Information. (a) The Partnership agrees that, from time to time
upon request of the Collateral Trustee, the Partnership shall deliver to the
Collateral Trustee a list setting forth, by each Senior Loan Agreement, (i) the
aggregate principal amount outstanding thereunder and (ii) the interest rate
then in effect thereunder.
(b) Each Applicable Agent shall deliver to the Collateral
Trustee an authority and incumbency certificate setting forth the names and
specimen signatures of the persons authorized to provide instructions or
directions to the Collateral Trustee as of the date of its Senior Loan Agreement
and shall promptly provide any changes thereto from time to time thereafter. The
Collateral Trustee shall be entitled to rely conclusively on such certificate
until it receives a certificate specifically stating that it is a superseding
certificate.
13.14 Books and Accounts. (a) The Collateral Trustee shall maintain
all such accounts, books and records as may be necessary properly to record all
transactions carried out by it under this Agreement.
(b) On or before the 10th Business Day in New York of each
calendar month, the Collateral Trustee shall send to each Applicable Agent a
statement indicating the amount of funds on deposit in each Account and the
nature of any
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investments thereof as of the end of the preceding calendar month and
identifying all deposits to and payments from such account during such calendar
month, including the date on which made (but only to the extent that such
information is available to the Collateral Trustee from the Depositary Bank).
Upon the request and at the expense of any Secured Party, the Collateral Trustee
shall at any time inform each Secured Party of deposits, investments, payments,
balances and any other information they may request (and that is reasonably
available to the Collateral Trustee) regarding the Accounts. The Collateral
Trustee shall also promptly forward to the Partnership and each Applicable Agent
a copy of any such statement it receives from the Depositary Bank.
13.15 Limitation on Collateral Trustee's Duties in Respect of
Collateral. Beyond its express duties set forth in this Agreement or in the
other Financing Documents as to the custody thereof and the accounting to the
Partnership and the Secured Parties for moneys received hereunder, the
Collateral Trustee shall not have any duty to the Borrower, the Partnership, the
General Partner, the Limited Partner or the Secured Parties with respect to any
Collateral in its possession or control or in the possession or control of its
agent or nominee, any income thereon, or the priority or preservation of rights
against prior parties or any other rights pertaining thereto. To the extent,
however, that the Collateral Trustee or an agent or nominee of the Collateral
Trustee maintains possession or control of any of the Collateral or the Security
Documents at any office of the Collateral Trustee, the Collateral Trustee shall,
or shall instruct such agent or nominee to, grant the Borrower, the Partnership,
the General Partner, the Limited Partner and the Secured Parties the access to
such Collateral or Security Documents which they require for the conduct of
their businesses, except, in the case of the Borrower, if and to the extent that
the Collateral Trustee shall have received an Enforcement Direction.
13.16 Right to Initiate Judicial Proceedings, Etc. If the Collateral
Trustee shall have received an Enforcement Direction, and during such time as
such Enforcement Direction shall not have been withdrawn, (a) the Collateral
Trustee shall have the right and power to institute and maintain such suits and
proceedings (subject to the instructions of Majority Lenders) as it may deem
appropriate to protect and enforce the rights vested in it by this Agreement and
the other Financing Documents and (b) the Collateral Trustee may, either after
entry or without entry, proceed (subject to the instructions of Majority
Lenders) by suit or suits at law or in equity to enforce such rights and to
foreclose upon the Collateral assigned for the benefit and to the extent of the
interest therein of such Secured Parties and to realize upon all or, from time
to time, any of the property of the trust established hereunder for the benefit
of such Secured Parties under the judgment or decree of a court of competent
jurisdiction.
13.17 Exculpatory Provisions. The Collateral Trustee makes no
representations as to the value or condition of the trust created under this
Agreement or any part thereof, or as to the title of the Borrower, the
Partnership, the General Partner or the Limited Partner thereto or as to the
rights and interests granted or the security afforded by this Agreement or any
of the Security Documents or as to the validity, execution (except by itself),
enforceability, legality or sufficiency of this Agreement, any other Financing
Document or the Senior Debt secured hereby, and the Collateral Trustee
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(in its individual and trust capacities) shall incur no liability or
responsibility in respect of any such matters.
13.18 Merger of the Collateral Trustee. Any corporation into which the
Collateral Trustee in its individual capacity shall be merged, or with which it
shall be consolidated, or any corporation resulting from any merger or
consolidation to which the Collateral Trustee (in its individual capacity) shall
be a party, shall be the Collateral Trustee under this Agreement, without the
execution or filing of any paper or any further act on the part of the parties
hereto, provided that such party shall meet the requirements of Section 13.09.
13.19 Treatment of Senior Lenders by Collateral Trustee. (a) The
Collateral Trustee may treat the Senior Lenders as the holders of the Notes
evidencing Senior Debt Obligations and as the absolute owners thereof for all
purposes under this Agreement and the other Financing Documents unless the
Collateral Trustee shall receive notice to the contrary from the Applicable
Agent.
(b) Any Person that shall be designated as the duly authorized
representative of one or more of the Senior Lenders to act as such in connection
with any matters pertaining to this Agreement, or any other Financing Document
or the Collateral shall present to the Collateral Trustee such documents,
including without limitation opinions of counsel, as the Collateral Trustee may
reasonably request, in order to demonstrate to the Collateral Trustee the
authority of such Person to act as the representative of such Senior Lenders.
The Collateral Trustee may rely upon such documents until it receives documents,
including without limitation opinions of counsel, as the Collateral Trustee may
reasonably request, specifically stating that they are superseding documents.
13.20 Miscellaneous. (a) The Collateral Trustee shall have the right
at any time to seek instructions concerning the administration of this trust
from any court of competent jurisdiction. In the event that any disagreement
between the other parties to this Agreement results in adverse claims being made
in connection with property held by the Collateral Trustee and the terms of this
Agreement do not unambiguously mandate the action the Collateral Trustee is to
take or not to take in connection therewith under the circumstance then
existing, or the Collateral Trustee is in doubt as to what action it is required
to take or not to take, the Collateral Trustee shall be entitled to refrain from
taking any action until directed otherwise in writing by a request signed
jointly by the parties hereto entitled to give such direction or by order of a
court of competent jurisdiction.
(b) None of the provisions of this Agreement or the other
Financing Documents shall be construed to require the Collateral Trustee in its
individual or trust capacity to expend or risk its own funds or otherwise to
incur any personal financial liability in the performance of any of its duties
hereunder or thereunder if it shall have reasonable grounds for belief that
repayment of such funds or indemnity against such risk or liability is not
reasonably assured to it. The Collateral Trustee shall be under no obligation to
exercise any of the rights or powers vested in it by this
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Agreement or the other Financing Documents, at the request or direction of the
Borrower, the Partnership, the General Partner or the Limited Partner or any
Secured Party, unless the Collateral Trustee shall have been offered security or
indemnity reasonably satisfactory to it against the costs, expenses and
liabilities which might be incurred by it in compliance with such request or
direction (including interest thereon from the time incurred until reimbursed).
(c) The Collateral Trustee in its individual capacity (or any
parent, subsidiary or associated person) may accept deposits from, lend money
to, and generally engage in any business with, any of the Borrower, the
Partnership, the General Partner, the Limited Partner, any Shareholder, any
Premcor Entity, any party to a Project Document, any Secured Party, or any of
their Affiliates, without affecting the validity of the trust created hereby or
the right to enforce any Senior Debt Obligations or other right to payment or
security interest created hereunder or pursuant hereto as freely as if it were
not the Collateral Trustee hereunder. The Collateral Trustee shall notify each
Secured Party at any time it believes it has any interest conflicting with its
obligations hereunder. The Collateral Trustee in its individual capacity
(without prejudice to its rights under Section 13.10 and the last sentence of
Section 13.11) hereby waives any right of banker's lien, set-off or counterclaim
in respect of any assets contained in the Accounts or otherwise that are held by
the Collateral Trustee as trustee hereunder.
(d) The Collateral Trustee in its individual capacity shall not
be personally liable for debts contracted or liabilities or damages incurred in
the management or operations of the trust hereunder, except for those contracted
or incurred as a result of its gross negligence or willful misconduct.
(e) Except to the extent this Agreement and any other Financing
Documents expressly contemplates that the Collateral Trustee is allowed to act
through agents or other third parties, the Collateral Trustee shall not
delegate, assign, or otherwise transfer any of its obligations, duties or
responsibilities hereunder to any Person other than any of its Affiliates
without the prior consent of the Partnership and Requisite Lenders, provided,
however, that no such consent shall be required in connection with the
enforcement of remedies hereunder on behalf of the Secured Parties.
ARTICLE XIV
MISCELLANEOUS
14.01 Effectiveness; Termination.
(a) This Agreement shall become effective in accordance with
Section 4.01 of the Master Amendment Agreement, dated as of June 6, 2002, among
the Borrower, the Partnership, PRG, the Collateral Trustee and the Capital
Markets Trustee, provided that the obligations of PRG under Section 12.01 shall
only become effective upon completion of the transactions contemplated by
Section 5.02 of the Master Amendment Agreement. The execution, delivery and
effectiveness of this Agreement shall not, except as expressly provided herein,
operate as a waiver of any right, power or
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remedy of any of the Collateral Trustee, any Applicable Agent or any Secured
Party under any of the Financing Documents.
(b) Subject to clause (b) of Section 14.16, upon satisfaction of
each of the following conditions precedent, this Agreement and the security
interests and rights created by or pursuant to this Agreement or any Security
Document shall terminate, and the Secured Parties and their respective
attorneys-in-fact shall, at the expense of the Partnership, execute and deliver
a termination statement and such instruments of satisfaction, discharge and
release of security in respect of all Collateral as may be requested by the
Partnership, the Collateral Trustee shall pay, assign, transfer and deliver to
or to the order of the Partnership all moneys and investments in the Accounts
and Subaccounts and the Collateral Trustee shall deliver to the Partnership, the
General Partner and the Limited Partner the Shares of the Borrower, the
certificates representing the General Partnership Interest in the Partnership
and the certificates representing the Limited Partnership Interest in the
Partnership, respectively, and any other securities held by it:
(i) all Senior Debt Obligations have been paid in full and
all lending commitments have terminated or expired; and
(ii) the Partnership has delivered to the Collateral Trustee
a certificate stating that the conditions precedent to termination
pursuant to this Section 14.01 have been satisfied.
The obligations of the Senior Lenders to make further disbursements of
Senior Loans under their respective Senior Loan Agreements shall terminate in
accordance with each such Senior Loan Agreement and, in any case, upon the
termination of this Agreement.
14.02 Calculation of Floating Rate Obligations. In calculating the
amount of the Senior Debt Obligations payable for purposes of determining the
Debt Service Coverage Ratio for any future period, and any other amounts to be
calculated under this Agreement where the following estimation would be
necessary, any interest payable on Senior Debt bearing interest at a floating
rate, unless such rate is known for the entire period, shall be included in such
calculation at a single fixed interest rate (the "Equivalent Fixed Rate") equal
to the fixed interest rate that could be obtained by the Partnership in exchange
for such floating interest rate in an interest rate swap transaction with a
notional amount equal to the principal amount of such Senior Debt and a term and
a notional amortization schedule equal to that of such Senior Debt, assuming the
Partnership entered into such swap transaction on any reference date no fewer
than 30 days prior to the date of calculation. In determining the Equivalent
Fixed Rate, the Partnership shall select no fewer than four published quotations
of recognized dealers in The City of New York of the highest credit standing,
and the applicable Equivalent Fixed Rate shall be equal to the highest
applicable fixed interest rate quoted by any such dealer.
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14.03 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
14.04 Waiver of Jury Trial. Each party hereto hereby waives, to the
full extent permitted by applicable law, any and all right to trial by jury in
any legal proceeding directly or indirectly arising out of or relating to this
Agreement or the transactions contemplated hereby.
14.05 Severability. If any provision of this Agreement shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not, to the full extent permitted by applicable
law, in any way be affected or impaired thereby.
14.06 Entire Agreement. This Agreement (including Appendices) and the
other Financing Documents constitute the entire agreement and understanding, and
supersede all prior agreements and understandings (both written and oral),
between the Borrower, the Partnership, the General Partner and the Limited
Partner, on the one hand, and the Collateral Trustee, any Applicable Agent and
the Secured Parties, on the other hand. The Senior Lenders shall have no
benefit, any legal or equitable right or remedy under any Transaction Documents
except as expressly provided herein or therein.
14.07 Restrictions on Assignments and Participations. The Senior
Lenders may assign any rights or any payments due or to become due under the
Senior Loan Agreements providing for their Senior Loans or grant any
participation in their Senior Loans without the prior consent of any of the
Borrower Parties, provided that written notice thereof shall be provided to the
Partnership promptly after such assignment.
14.08 Notices. (a) Any notice, claim, request, demand, consent,
designation, direction, instruction, certificate, report or other communication
to be given hereunder or under any Senior Loan Agreement will be deemed duly
given when given or made in writing and (i) personally delivered, (ii) sent by
facsimile transmission (with written confirmation or acknowledgment of receipt,
whether written or oral) or (iii) five days have elapsed after mailing by
certified or registered mail, postage pre-paid, return receipt requested, in
each case addressed to a party at its address or facsimile transmission number
as indicated in Appendix P or to such other address or facsimile transmission
number of which such party has given notice. Any notice to be given by or on
behalf of any of the Borrower, the Partnership, the General Partner and the
Limited Partner to any Senior Lender Group may be sent to the Applicable Agent.
Notice of any address or facsimile number change shall be effective only upon
receipt. Notices and all written documents to be provided to the Collateral
Trustee under this Agreement shall be deemed received by the Collateral Trustee
only if addressed in accordance with the requirements of Appendix P hereto,
including but not limited to the addressee thereon.
(b) The Collateral Trustee shall promptly forward to each
Applicable Agent copies of any notice, claim, certificate, report instrument,
demand,
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request, direction, instruction, designation, waiver, receipt, consent or other
communication or document, including the reports received pursuant to Article
VIII, that it receives in connection with the Project Documents or the Financing
Documents unless the Collateral Trustee reasonably believes that such material
has already been provided by to such Person.
14.09 Benefits of Agreement. Nothing in this Agreement, any Senior
Loan Agreement or any other Financing Document, express or implied, shall give
to any Person, other than the parties hereto, the Secured Parties and their
respective successors and permitted assigns hereunder, under the Financing
Documents any benefit or any legal or equitable right or remedy under this
Agreement or any other Financing Documents.
14.10 Remedies. (a) No remedy herein conferred upon the Collateral
Trustee, any Applicable Agent or the Secured Parties is intended to be exclusive
of any other remedy and each and every such remedy shall be cumulative and shall
be in addition to every other remedy given hereunder or under or any other
Financing Document or now or hereafter existing at law or in equity or by
statute or otherwise.
(b) The amounts payable by the Borrower at any time under each
Senior Loan Agreement shall be a separate and independent debt and each Senior
Lender, except as otherwise specifically provided in this Agreement or any other
Financing Document, shall be entitled to protect and enforce its rights arising
out of this Agreement or any other Financing Document and its right to cancel or
suspend its commitment to make Senior Loans and to accelerate the maturity of
amounts due under its Senior Loan Agreement. Except as aforesaid, it shall not
be necessary for any other Senior Lender to consent to, or be joined as an
additional party in, any proceedings for such purposes.
(c) No failure on the part of any Secured Party to exercise and
no delay in exercising, and no course of dealing with respect to, any right,
power, or privilege under this Agreement or any other Financing Document, shall
operate as a waiver thereof nor shall any single or partial exercise of any
right, power or privilege under any such document preclude any other or further
exercise thereof or the exercise of any other right, power or privilege. Neither
the Collateral Trustee nor any Applicable Agent nor any Secured Party shall be
responsible for the failure of any other Secured Party to perform its
obligations hereunder or under any Senior Loan Agreement.
(d) In case any Secured Party, or the Collateral Trustee on
behalf of any Secured Party, shall have proceeded to enforce any right, remedy
or power under this Agreement or any other Financing Document and the proceeding
for the enforcement thereof shall have been discontinued or abandoned for any
reason or shall have been determined adversely to such Secured Party, then and
in every such case the Borrower, the Partnership, the General Partner and the
Limited Partner and the Secured Parties shall, subject to any effect of or
determination in such proceeding, severally and respectively be restored to
their former positions and rights hereunder and under such other Financing
Document and thereafter all rights, remedies and powers of the Secured Parties
shall continue as though no such proceeding had been taken.
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14.11 Execution in Counterparts. This Agreement may be executed in any
number of counterparts and by the different parties hereto on separate
counterparts, each of which when so executed and delivered shall be an original,
but all the counterparts shall together constitute one and the same instrument.
14.12 Consent to Jurisdiction. (a) Subject to clause (c) of this
Section 14.12, each party hereto hereby irrevocably consents and agrees, for the
benefit of each other party hereto, that any legal action, suit or proceeding
against it with respect to its obligations, liabilities or any other matter
under or arising out of or in connection with this Agreement, any Senior Loan
Agreement, any Note or the Senior Debt Obligations may be brought in any Federal
or State court located in the Borough of Manhattan, The City of New York, and
hereby irrevocably accepts and submits to the exclusive jurisdiction of each
such court, to the exclusion of all other courts, with respect to any such
action, suit or proceeding. Each party hereto hereby waives, to the fullest
extent permitted by applicable law, any objection which it may now or hereafter
have to the laying of venue of any of the aforesaid actions, suits or
proceedings, brought in any such court and hereby further waives and agrees not
to plead or claim in any such court that any such action, suit or proceeding
brought therein has been brought in an inconvenient forum.
(b) Each of the Borrower Parties hereby irrevocably appoints CT
Corporation System, with offices at the date hereof at 111 Eighth Avenue, New
York, New York 10011, as its authorized agent on which any and all legal process
may be served in any such action, suit or proceeding brought in any Federal or
State court located in the Borough of Manhattan, The City of New York. Each of
the Borrower Parties agrees that service of process in respect of it upon its
respective agent, together with written notice of such service given to it in
the manner provided in Section 14.08, shall be deemed to be effective service of
process upon it in any such action, suit or proceeding. Each of the Borrower
Parties agrees that the failure of its respective agent to give notice to it of
any such service shall not impair or affect the validity of such service or any
judgment rendered in any action, suit or proceeding based thereon. If for any
reason any Borrower Party's respective agent shall cease to be available to act
as such, or if any party hereto that was located in New York ceases to be so
located, such party agrees to designate a new agent in the Borough of Manhattan,
The City of New York, on the terms and for the purposes of this clause (b).
(c) Notwithstanding the provision of clause (a) of this Section
14.12, nothing herein shall be deemed to limit the ability of any of the Secured
Parties, the Collateral Trustee or any Applicable Agent to serve any such legal
process in any other manner permitted by applicable law or to obtain
jurisdiction over any of the Borrower, the Partnership, the General Partner or
the Limited Partner or bring actions, suits or proceedings against any such
party in such other jurisdiction, including without limitation in any Federal or
State court located in the State of Texas, and in such manner, as may be
permitted by applicable law.
(d) Each party hereto agrees that a final judgment against it in
any action, suit or proceeding taken in any Federal or State Court in the
Borough of
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Manhattan, The City of New York in accordance with clause (a) of this Section
14.12 or, in the case of any of the Borrower, the Partnership, the General
Partner or the Limited Partner, in any other court in accordance with clause (c)
of this Section 14.12, shall be conclusive and may be enforced in any
jurisdiction by suit on the judgment, a certified copy of which judgment shall
be conclusive evidence thereof, or by any other means provided by law.
14.13 Amendments, Etc. Except as otherwise expressly provided in this
Agreement, no provision of this Agreement may be amended, modified, supplemented
or waived except by an agreement in writing signed by (a) the Borrower and the
General Partner on behalf of the Partnership and (b) one or more of the
Applicable Agents, as appropriate, on behalf of and pursuant to the prior
written instructions of Requisite Lenders, provided that: (i) no amendment,
modification, supplement or waiver shall, unless by an instrument signed by each
Senior Lender, the Collateral Trustee and each Applicable Agent, modify in any
manner: (A) the rights and obligations of the Borrower or the Partnership to
prepay Senior Loans; (B) the rights and obligations of the Borrower or the
Partnership to make Pro Rata Payments; (C) the conditions precedent set forth in
Article IX; (D) the obligations of any Senior Lender (unless such modification
does not create any additional obligation of such Senior Lender); (E) the amount
or term of any Senior Debt Commitment; (F) Sections 10.02 and 10.04; or (G) the
definitions of "Supermajority Lenders", "Requisite Lenders", "Majority Lenders",
"Supermajority Secured Parties", "Requisite Secured Parties", "Majority Secured
Parties", "Secured Parties", "Supermajority Bondholders", "Requisite
Bondholders", "Majority Bondholders", "Senior Lenders" or any of the defined
terms used in such definitions, or the number or percentage of Secured Parties
required to make any determinations or waive any rights under this Agreement or
to modify any provision hereof; (ii) any amendment, modification, supplement or
waiver in respect of Article XIII or that affects the rights and obligations of
the Collateral Trustee shall require the consent of the Collateral Trustee; and
(iii) any amendment, modification, supplement or waiver that affects the rights
and obligations of any Applicable Agent shall require the consent of such
Applicable Agent. Notwithstanding the preceding sentence, the Borrower, the
Partnership, the Collateral Trustee and each Applicable Agent may, without the
consent of any other Senior Lender, at any time and from time to time, enter
into one or more amendments hereto, in the form satisfactory to each, to cure
any ambiguity, to correct or supplement any provision in this Agreement that may
be misleading, defective or inconsistent with any other provision herein or to
make any other provisions with respect to matters or questions arising under
this Agreement, in each cases, so long as such action shall not adversely affect
the interest of the other Senior Lenders. This Section 14.13 shall not apply to
any automatic amendment to Appendix B upon satisfaction of the conditions for
such automatic amendment set forth herein.
14.14 Conflicts. In case of any conflict or inconsistency between this
Agreement and any Financing Document, this Agreement shall control.
14.15 Compliance with Applicable Law. Notwithstanding any provision of
this Agreement, but without in any way limiting the rights of the Collateral
Trustee or the Secured Parties under Article X in connection with any Event of
Default resulting
74
from the taking or refraining from taking of any action pursuant to any law,
statute, regulation, rule, order, injunction, decree, writ or judgment binding
on it or affecting its properties, none of the Borrower, the Partnership, the
General Partner or the Limited Partner shall be obligated to take or refrain
from taking any action otherwise required under this Agreement if at the time
such party is to take or refrain from taking such action, such action is
contrary to any law, statute, regulation, rule, order, injunction, decree, writ
or judgment binding on it or affecting its properties.
14.16 Indemnification. (a) The Borrower, the Partnership, the General
Partner, the Limited Partner and PRG, jointly and severally, assume full
liability for, and agree to and shall indemnify and hold harmless the Collateral
Trustee, each Applicable Agent, each Secured Party and their respective
affiliates, officers, directors, employees, agents and servants (each, an
"Indemnified Person") against and from any and all liabilities, obligations,
losses, damages (compensatory, punitive or otherwise), penalties, claims,
actions, duties, suits, costs and expenses (including reasonable fees of legal
counsel and expenses and costs of investigation) of whatsoever kind and nature,
including, without prejudice to the generality of the foregoing, those arising
in contract or tort (including negligence) or by strict liability or otherwise,
which are imposed on, incurred by or asserted against any Indemnified Person
(whether or not also indemnified by any other Person under any other document)
and which in any way relate to or arise out of, whether directly or indirectly:
(i) the Senior Loan Agreements, the Notes, the Senior
Debt Obligations or any actual or proposed use of the proceeds of the
Senior Loans;
(ii) any Environmental Law applicable to the past, present
or future operations of the Partnership or any predecessor in interest
to the Partnership or the environmental contamination of any site or
facility owned, operated or leased at any time by the Partnership (or
any such predecessor in interest) in connection with the Coker
Project, any contamination or any Release or threatened Release of any
Hazardous Substance by the Partnership (or any predecessor in interest
or third party) at, onto or from any such site or facility; or
(iii) the exercise by the Collateral Trustee, each
Applicable Agent and each Secured Party of any of their respective
rights and remedies under any of the Financing Documents;
provided that no Indemnified Person shall have any right to be indemnified
hereunder for its own willful misconduct or gross negligence.
(b) The indemnities provided by the Borrower, the Partnership,
the General Partner and the Limited Partner pursuant to this Agreement shall
survive the expiration, cancellation, termination or modification of this
Agreement and the other Financing Documents and the provision of any subsequent
or additional indemnity by any Person.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed.
PORT ARTHUR FINANCE CORP.
By: ________________________________
Name:
Title:
PORT ARTHUR COKER COMPANY L.P.
By: SABINE RIVER HOLDING CORP.,
as General Partner
By: ________________________________
Name:
Title:
SABINE RIVER HOLDING CORP.
By: ________________________________
Name:
Title:
NECHES RIVER HOLDING CORP.
By: ________________________________
Name:
Title:
THE PREMCOR REFINING GROUP INC.
By: ________________________________
Name:
Title:
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DEUTSCHE BANK TRUST COMPANY AMERICAS,
as Collateral Trustee for the Secured Parties
By: ___________________________________
Name:
Title:
By: ___________________________________
Name:
Title:
HSBC BANK USA,
as Capital Markets Trustee for the Capital
Markets Senior Lenders
By: ___________________________________
Name:
Title:
DEUTSCHE BANK TRUST COMPANY AMERICAS,
as Depositary Bank
By: ___________________________________
Name:
Title:
By: ___________________________________
Name:
Title:
77
Appendix A
to Common Security Agreement
DEFINITIONS
In this Appendix A, the Common Security Agreement and the other
Appendices hereto and in any other document that refers to this Appendix A, the
following terms shall have the meanings assigned below (the singular includes
the plural and vice versa) (unless otherwise specified, section references in
this Appendix A are to sections of the Common Security Agreement):
"Abandonment" shall occur if (a)(i) the Partnership publicly announces
the permanent shutdown of all or substantially all engineering, development,
construction or production activities of the Coker Project or (ii) PRG publicly
announces the permanent shutdown of all or substantially all production
activities of the Refinery or (b)(x) the Partnership ceases all or substantially
all production activities of the Coker Project or (y) PRG ceases all or
substantially all production activities of the Refinery and, with regard to
(b)(x) and (y), such cessation continues without interruption for 90 days and
either the Collateral Trustee or any Senior Lender requests the Partnership or
PRG, as the case may be, to confirm in writing that they have not, or do not
currently intend to, shut down permanently all or substantially all production
activities of the Coker Project or the Refinery, as the case may be, and the
Partnership or PRG, as the case may be, fails to provide such confirmation
within 30 days following such request or, in any event, fails to resume such
engineering, development, construction or production activities, as the case may
be, within 60 days following such request. For purposes of this definition, the
Partnership and PRG shall not be deemed to have ceased production activities of
the Coker Project or the Refinery, as the case may be, if such cessation is
caused by an Event of Force Majeure unless and until such Event of Force Majeure
lasts more than 180 days.
"Accounts" has the meaning set forth in Section 5.01.
"Additional Senior Debt" has the meaning set forth in clause (a) of
Section 2.09.
"Agreement" means the Amended and Restated Common Security Agreement,
dated as of the date hereof, among the Borrower, the Partnership, PRG, the
General Partner, the Limited Partner, the Collateral Trustee and the Capital
Markets Trustee.
"Affiliate" means, with respect to any Person, any other Person that
directly controls, is controlled by, or is under common control with such other
Person. For purposes of this definition, "control" when used with respect to any
Person means (a) the power to direct the management and policies of such Person,
directly or indirectly, whether through the ownership of voting securities, by
contract or otherwise, or (b) the direct or indirect beneficial ownership of 25%
equity interest in such Person.
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"Amendment Documents" means this Agreement, the Supplemental Indenture
to the Indenture and Amendment No. 1 to the Transfer Restrictions Agreement.
"Ancillary Equipment" has the meaning set forth in the Ancillary
Equipment Site Lease.
"Ancillary Equipment Site Lease" means the Ancillary Equipment Site
Lease and Easement Agreement, dated August 19, 1999 between the Partnership and
PRG (as successor to Clark R&M), as the same may be amended from time to time in
accordance with its terms and the restrictions on amendments set forth in this
Agreement and the Transfer Restrictions Agreement.
"Annual Budget and Operating Plan" has the meaning set forth in
Section 6 of the Services and Supply Agreement as in effect on the date hereof.
"Applicable Agent" means, (a) in the case of the Capital Markets
Senior Lender Group, the Capital Markets Trustee and (b) in the case of any
other Senior Lender Group, the Person notified to the Collateral Trustee as the
Applicable Agent for such Senior Lender Group.
"Authorized Investments" means (a) investments maturing within one
year after the acquisition thereof in (i) obligations of, or guaranteed as to
principal and interest by, the United States Government or any agency thereof
the obligations of which are backed by the full faith and credit of the United
States, (ii) certificates of deposit of, and time and demand deposits (including
Eurodollar deposits) with, banks or trust companies with a rating of at least
A-l from Moody's and A from S&P and at least $500 million of shareholders'
equity or (iii) commercial paper by an issuer rated at least P-l from Moody's
and A-l from S&P as to principal and interest and which has at least $500
million of shareholders' equity; or (b) investments in any money market fund
having a rating in the highest investment category granted by Moody's or S&P at
the time of acquisition (including without limitation any such fund for which
the Depositary Bank or any Affiliate thereof serves as investment manager,
administrator or custodian).
"Bank Senior Debt" has the meaning set forth in the Original CSA.
"Blackstone" means, collectively, Blackstone Capital Partners III
Merchant Banking Fund L.P., a limited partnership organized under the laws of
the State of Delaware, Blackstone Offshore Capital Partners III L.P., a limited
partnership organized under the laws of the Cayman Islands, and Blackstone
Family Investment Partnership III L.P., a limited partnership organized under
the laws of the State of Delaware.
"Bondholders" means holders of the Notes representing Capital Markets
Senior Debt.
"Borrower" means Port Arthur Finance Corp., a Delaware corporation.
"Borrower Parties" means the Borrower, the Partnership and the
Partners.
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"Business Day" means a day on which commercial banks are generally
open for business in the Borough of Manhattan, The City of New York.
"Capital Markets Senior Debt" means Senior Debt provided under the
Indenture.
"Capital Markets Senior Lender Group" means the Senior Lender Group
which is party to the Indenture.
"Capital Markets Senior Lenders" means the beneficial holders of
Capital Markets Senior Debt.
"Capital Markets Trustee" means HSBC Bank USA in its capacity as
trustee under the Indenture.
"Cash Proceeds" means, with respect to any period, all funds received
or projected to be received by the Partnership during such period including
without limitation (a) cash flow generated by the Project in the ordinary course
of business; (b) earnings on funds held in the Accounts and any other accounts
of the Partnership; and (c) insurance proceeds for business interruption.
"Casualty and Insurance Account" has the meaning set forth in Section
5.01.
"Catastrophic Casualty" means any actual or constructive casualty loss
or series of related losses in respect of Project Property in excess of $50
million.
"Cessation Notice" has the meaning set forth in Section 10.03 of this
Agreement.
"Clark R&M" means Clark Refining & Marketing, Inc., the predecessor of
PRG.
"Coker Complex" has the meaning set forth in the Services and Supply
Agreement.
"Coker Project" means the construction, ownership, development,
operation and maintenance of the Heavy Oil Processing Facility.
"Collateral" means all property, rights and other interests of the
Borrower and the Partnership in which security interests, trusts or mortgages
are created for the benefit of the Secured Parties under or pursuant to the
Security Documents.
"Collateral Trustee" means Deutsche Bank Trust Company Americas
(formerly known as "Bankers Trust Company"), in its capacity as Collateral
Trustee under this Agreement.
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"Commission" means the Securities and Exchange Commission or any
successor entity.
"Condemnation Compensation" means all value (whether in the form of
money, property or otherwise) paid or payable to the Partnership by any
Governmental Authority as compensation for or in respect of any act or series of
acts of condemnation of Project Property.
"Constructive Total Loss" means any single casualty loss or a series
of related casualty losses to any Project Property for which the costs of
replacing such damaged Project Property or repairing it to at least the same
operating standards that existed immediately prior to such loss or series of
losses would exceed, or the Independent Engineer estimates it would exceed, $250
million.
"Continuing" means, with respect to a Default, that such Default has
been declared as provided in Section 10.02 and that neither the Borrower nor the
Partnership has received a Cessation Notice with respect thereto pursuant to
Section 10.03.
"Credit Rating Agency" means each of Moody's and S&P and their
respective successors.
"Debt Service Coverage Ratio" means for any period, the ratio of (a)
the aggregate of Cash Proceeds minus Project Expenses for such period to (b)
Senior Debt Obligations (other than pursuant to Optional Prepayments or
Mandatory Prepayments), paid or expected to be paid during such period, as the
case may be.
"Debt Service Reserve Account" has the meaning set forth in Section
5.01.
"Debt Service Reserve Amount" means $45,000,000.
"Debt Service Reserve Guarantee Arrangement" has the meaning set forth
in the Original CSA.
"Default" has the meaning set forth in Section 10.02.
"Depositary Bank" means the corporate trust office of Deutsche Bank
Trust Company Americas appointed by the Collateral Trustee to maintain the
Accounts.
"Discretionary Capital Expenditures" means capital expenditures
(including any financing costs and related fees and expenses) other than
Mandatory Capital Expenditures in respect of the Coker Project that the
Partnership may make at its discretion in accordance with the terms of this
Agreement.
"Enforcement Action" means, after the issuance of an Enforcement
Direction, any or all of the following: (a) the application of funds in the
Accounts or Subaccounts to the payment of Senior Debt Obligations; (b) the
declaration of the principal of the Senior Debt immediately due and payable; (c)
the exercising of any power of sale or other rights granted by this Agreement or
any of the Security
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Documents; (d) the sale of the Collateral either as an entirety or, if permitted
by applicable law, in parcels to the highest bidder at a public auction at such
place and at such time and upon such terms as the Senior Lender or Senior
Lenders issuing the relevant Enforcement Direction may specify or may be
required by applicable law; (e) the proceeding to protect and enforce the rights
of the Secured Parties under this Agreement, the other Security Documents or any
other Financing Document by sale pursuant to judicial proceedings or by a
proceeding in equity or at law or otherwise, whether for the enforcement of the
security interests created under or pursuant to this Agreement or any other
Security Document or for the enforcement of any other legal, equitable or other
remedy; (f) the exercising in respect of the Collateral, in addition to other
rights and remedies provided for herein or otherwise available to the Secured
Parties, to the extent permitted by applicable law, of all the rights and
remedies of a secured party upon default under the NY UCC or the Texas UCC; (g)
the charge, set-off or other application of all or any part of the Senior Debt
Obligations against the Accounts or Subaccounts or any part thereof; and (h) the
taking of any other legal, equitable or other remedy or action permitted by this
Agreement or applicable law.
"Enforcement Direction" has the meaning set forth in Section 10.04.
"Enforcement Proceeds Account" has the meaning set forth in Section
10.11.
"Environmental Law" means any law, regulation, judgment, consent
decree, agreement, agency requirement or common law duty relating to the
protection of the environment or human health and safety.
"EPC Contract" means the Engineering, Procurement and Construction
Contract, dated July 12, 1999, between the Partnership and the EPC Contractor,
as the same may be amended from time to time in accordance with its terms and
the restrictions on amendments set forth in this Agreement.
"EPC Contract Guarantee" means the EPC Contract Guarantee, dated July
13, 1999, between the Partnership and the EPC Guarantor, as the same may be
amended from time to time in accordance with its terms and the restrictions on
amendments set forth in this Agreement.
"EPC Contractor" means Foster Wheeler USA Corporation.
"EPC Guarantor" means Foster Wheeler Corporation.
"Equity Funding" means direct or indirect cash contributions to the
Partnership from the Shareholders (in the form of contributions of equity
capital or Subordinated Debt, as the Shareholders shall in their sole discretion
decide).
"Equivalent Fixed Rate" has the meaning set forth in Section 14.02.
"ERISA" means the United States Employee Retirement Income Security
Act of 1974, as amended from time to time.
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"Event of Default" has the meaning set forth in Section 10.01.
"Event of Force Majeure" means, with respect to any Project Document,
any event or circumstance defined in such Project Document as an event of force
majeure.
"Exchange Act" means the Securities Exchange Act of 1934, as amended
from time to time.
"Excluded PRG Covenants" means the requirements (i) in Articles 5 and
6 of the Services and Supply Agreement, that PRG provide quarterly reports and
annual budgets and operating plans to the Partnership, and (ii) in Section 5.14
of the Services and Supply Agreement, that PRG obtain Permits in the
Partnership's name.
"Final Completion" has the meaning set forth in the EPC Contract as in
effect on the date hereof.
"Financing Documents" means the Original CSA, as amended and restated
by this Agreement, the Senior Loan Agreements, the Notes, the Transfer
Restrictions Agreement, the Security Documents and any ancillary documents,
including fee letters and all certificates, delivered under or in connection
therewith.
"GAAP" means generally accepted accounting principles in the United
States as in effect from time to time.
"General Partner" means Sabine River Holding Corp., a Delaware
Corporation.
"General Partnership Interest" means the interest in the Partnership
owned by the General Partner.
"Governmental Authority" means any government, any governmental
administration, agency, instrumentality or other instrumentality or other
political subdivision thereof or any court, commission or other governmental
authority of competent jurisdiction.
"GP Certificates" has the meaning set forth in subclause (ii) of
clause (a) of Section 6.03.
"Ground Lease and Blanket Easement" means the Coker Complex Ground
Lease and Blanket Easement Agreement, dated August 19, 1999, between the
Partnership and PRG (as successor to Clark R&M), as amended from time to time in
accordance with its terms and the restrictions on amendments set forth in this
Agreement and the Transfer Restrictions Agreement.
"Guarantee" means the obligations of the Partnership, the Partners and
PRG set forth in Article XII of this Agreement and the corresponding provisions
of the other Financing Documents.
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"Guaranteed Performance Dates" has the meaning set forth in the EPC
Contract as in effect on the date thereof.
"Guarantor" means the Partnership.
"Hazardous Substance" means any substance in any concentration that is
now or hereafter listed, classified or regulated pursuant to any Environmental
Law including any petroleum products or by-products, asbestos-containing
material, polychlorinated biphenyls, refinery wastes, lead and radioactive
materials.
"Heavy Oil Processing Facility" has the meaning set forth in the
Services and Supply Agreement as in effect on the date hereof.
"Historical Twelve-Month Period" means, in relation to any date, the
period commencing on the day falling 364 days prior to either (a) the month-end
immediately preceding such date or (b) such date, if such date is a month-end,
and ending on such month-end.
"Hydrogen Plant" has the meaning set forth in the Hydrogen Supply
Agreement.
"Hydrogen Supplier" means Air Products and Chemicals, Inc.
"Hydrogen Supply Agreements" means (a) the Hydrogen Supply Agreement,
dated August 1, 1999, between the Hydrogen Supplier and the Partnership, as the
same may be amended from time to time in accordance with its terms and the
restrictions on amendments set forth in this Agreement and the Transfer
Restrictions Agreement and (b) the Product Supply Agreement, dated August 1,
1999, between the Hydrogen Supplier and PRG (as successor to Clark R&M), as the
same may be amended from time to time in accordance with its terms and the
restrictions on amendments set forth in this Agreement and the Transfer
Restrictions Agreement.
"Indebtedness" means, whether recourse is to all or a portion of the
assets of such Person and whether or not contingent, (a) every obligation of
such Person for money borrowed, (b) every obligation of such Person evidenced by
bonds, debentures, notes or other similar instruments, (c) every reimbursement
obligation of such Person, contingent or otherwise, with respect to letters of
credit, bankers' acceptances or similar facilities, whether issued for the
account of such Person or otherwise, (d) every obligation of such Person
incurred or assumed as the deferred purchase price of property or services
(excluding trade accounts payable or accrued liabilities arising in the ordinary
course of business), (e) every capital lease obligation of such Person and (f)
every obligation of the type referred to in clauses (a) through (e), inclusive,
of another Person and all dividends of another Person, the payment of which, in
either case, such Person has guaranteed or is responsible or liable for,
directly or indirectly, as obligor, guarantor or otherwise.
"Indemnified Person" has the meaning set forth in clause (a) of
Section 14.16.
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"Indenture" means the trust indenture, dated as of August 19, 1999, as
amended by the First Supplemental Indenture thereto, dated as of the date
hereof, among the Borrower, the Guarantors (as defined therein), the Capital
Markets Trustee and the Collateral Trustee as further amended from time to time.
"Independent Consultant" means each of the Independent Engineer, the
Insurance Consultant and any other Person appointed pursuant to clause (y) of
Section 4.01.
"Independent Engineer" means the consulting engineering firm appointed
pursuant to clause (y) of Section 4.01.
"Initial Senior Debt" means the Senior Debt provided under the
Indenture.
"Initial Senior Debt Commitments" means the commitments to provide the
Initial Senior Debt.
"Initial Senior Lenders" means the Senior Lenders that are party to
the Indenture.
"Insolvency Event", with respect to any Person, means (a) entry by any
competent Governmental Authority of any jurisdiction or a court having
jurisdiction in the premises of (i) a decree or order for relief in respect of
such Person in an involuntary case or proceeding under any applicable
bankruptcy, insolvency, reorganization, dissolution, winding-up or other similar
law or (ii) an involuntary or contested decree or order adjudging such Person a
bankrupt or insolvent, or approving as properly filed a petition seeking
reorganization, arrangement, adjustment, dissolution, winding-up or composition
of or in respect of such Person under any applicable law, or appointing a
custodian, receiver, liquidator, assignee, Collateral Trustee, sequestrator or
other similar official of such Person or of any substantial part of the property
of such Person, or ordering the winding up or liquidation of the affairs of such
Person and the continuance of any such decree or order unstayed and in effect
for a period of 30 consecutive days or (b) commencement of a voluntary case or
proceeding under any applicable bankruptcy, insolvency, reorganization,
dissolution, winding-up or other similar law or of any other case or proceeding
to be adjudicated a bankrupt or insolvent, or the consent by such Person to the
entry of a decree or order for relief in respect of such Person in an
involuntary case or proceeding under any applicable bankruptcy, insolvency,
reorganization, dissolution, winding-up or other similar law or to the
commencement of any bankruptcy or insolvency case or proceeding against such
Person, or the filing by such Person of a petition or answer or consent seeking
reorganization or relief under any applicable law; or consent by such Person to
the filing of such petition or to the appointment of or taking possession by a
custodian, receiver, liquidator, assignee, Collateral Trustee, sequestrator or
other similar official of such Person or of any substantial part of the property
of such Person, or the making by such Person of an assignment for the benefit of
creditors, or the admission by such Person in writing of its inability to pay
its debts generally as they become due, or the taking of corporate action by
such Person in furtherance of any such action.
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"Insurance Policies" means the insurance policies providing for
Required Insurance.
"Late Payments" has the meaning set forth in the EPC Contract.
"Lien" means, with respect to any property or assets, any Sale and
Leaseback Transaction and any mortgage, lien, pledge, charge, security interest
or encumbrance of any kind in respect of such property or assets, or any
preferential arrangement of any kind or nature whatsoever having the practical
effect of constituting a security interest on or with respect to such property
or assets. For the purposes of this definition, a Person shall be deemed to own
subject to a Lien any property or assets that it has acquired or holds subject
to the interest of a vendor or lessor under any conditional sales or other title
retention agreement.
"Limited Partner" means Neches River Holding Corp., a Delaware
corporation, and its successors.
"Limited Partnership Interest" means the interest in the Partnership
owned by the Limited Partner, and its successors.
"Long-Term Oil Supply Agreement" means the Maya Crude Oil Sales
Agreement, dated March 10, 1998, between PRG (as successor to Clark R&M) and
PMI, and assigned to the Partnership as of the date hereof, as amended and
supplemented by the First Amendment and Supplement thereto, dated August 19,
1999, as the same may be further amended from time to time in accordance with
its terms and the restrictions on amendments set forth in this Agreement.
"Long-Term Oil Supply Agreement Guarantee" means the Long-Term Oil
Supply Agreement Guarantee, dated March 10, 1998, between PRG (as successor to
Clark R&M) and Pemex, and assigned to the Partnership on the date hereof, as the
same may be amended from time to time in accordance with its terms and the
restrictions on amendments set forth in this Agreement.
"Loss Proceeds" means all proceeds from insurance or other recovery,
excluding any portion of such proceeds relating to the interruption of business,
loss of profits or similar matters or any sum paid in settlement of a liability
to a third party or any reimbursement to any insured party in respect of any
such payment.
"LP Certificates" has the meaning set forth in subclause (ii) of clause (a)
of Section 6.04.
"Majority Bondholders" means holders of more than 50% of the aggregate
outstanding principal amount of Capital Markets Senior Debt.
"Majority Lenders" means holders of more than 25% of the aggregate
outstanding principal amount of Senior Debt and Senior Debt Commitments.
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"Majority Secured Parties" means holders of more than 25% of the
aggregate outstanding principal amount of Capital Markets Senior Debt.
"Mandatoy Capital Expenditures" means capital expenditures (including
any financing costs and related fees and expenses) in respect of the Coker
Project that (a) the Partnership is required to make in order to comply with a
change in environmental, health, safety or other laws or regulations binding on
the Partnership or (b) are otherwise necessary to continue to operate the Coker
Project in accordance with Section 4.01(o).
"Mandatory Prepayment" means a prepayment made pursuant to Section
2.05 of this Agreement and the Senior Loan Agreements.
"Mandatory Prepayment Account" has the meaning set forth in Section
5.01 of this Agreement.
"Marine Dock and Terminaling Agreement" means the Marine Dock and
Terminaling Agreement, dated August 17, 1999, between Sun Pipe Line Company and
PRG (as successor to Clark R&M), as the same may be amended from time to time in
accordance with the terms and restrictions on amendments set forth in this
Agreement.
"Master Amendment Agreement" means the Master Amendment Agreement,
dated as of the date hereof, among the Borrower Parties, PRG, Premcor USA,
Premcor, the Collateral Trustee and the Capital Markets Trustee.
"Material Adverse Effect" means a material adverse effect on (a) the
business, assets, operations, properties, financial condition or prospects of
any of the Borrower, the Partnership or either of the Partners, (b) the
Partnership's ability to operate, or cause to be operated, the Heavy Oil
Processing Facility substantially in the manner contemplated by this Agreement
and the other Transaction Documents, (c) the rights and remedies of the
Collateral Trustee, any Secured Party or any Applicable Agent under any
Transaction Document, (d) the ability of the Partnership or the Borrower to make
payment of any Senior Debt Obligations when due or (e) the ability of any of the
Partnership, the Borrower or either of the Partners, any Affiliate thereof, any
Shareholder, any Premcor Entity or any other party to perform its material
obligations under any Transaction Document to which it is a party.
"Moody's" means Moody's Investors Service, Inc. and its successors.
"Mortgage" has the meaning set forth in Section 6.02 of this
Agreement.
"Notes" means (a) with respect to the Capital Markets Senior Debt, the
bonds issued in respect thereof and (b) with respect to any other Senior Debt,
any notes or bonds issued in respect thereof.
"NY UCC" means the New York Uniform Commercial Code as in effect from
time to time.
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"Oil Payment Insurance Policy" has the meaning set forth in the
Original CSA.
"Oil Payment Insurers" has the meaning set for the in the Original
CSA.
"Optional Prepayments" means a prepayment of the principal amount of
the Senior Loans made in accordance with this Agreement and the Senior Loan
Agreements, other than a Mandatory Prepayment.
"Original Closing" means the "Closing", as defined in the Original
CSA.
"Original Closing Date" means August 19, 1999.
"Original CSA" has the meaning set forth in the recitals hereto.
"Partners" means the General Partner and the Limited Partner.
"Partnership" means Port Arthur Coker Company L.P., a limited
partnership organized under the laws of Delaware.
"Partnership Notes" means promissory notes issued by the Partnership
to the Borrower representing the obligation of the Partnership to repay the
intercompany loans from the Borrower.
"Payment Date" means each January 15 and July 15 of each year,
commencing on January 15, 2000 in the case of interest and January 15, 2002 in
the case of principal.
"Pemex" means Petroleos Mexicanos, the parent of PMI.
"Permits" means the Permits, as defined in the Services and Supply
Agreement, needed to operate the Project.
"Permitted Hedging Arrangements" means swaps, option contracts,
futures contracts, options on futures contracts, caps, floors, collars, hedging
arrangements entered into by the Borrower of or the Partnership with one or more
lenders to hedge the Partnership's exposure to movements in prices of crude oil
and other relevant natural resources or interest rates, in each case in the
ordinary course of businesses in connection with a risk-management strategy and
not for purposes of speculation.
"Permitted Indebtedness" means (a) Indebtedness in respect of the
Senior Debt Obligations and the other obligations of the Partnership and the
Borrower under the Financing Documents, (b) Permitted Hedging Arrangements, (c)
trade accounts payable in the ordinary course of business to the extent incurred
for the construction or operation of the Coker Project and not for the borrowing
of money, (d) Subordinated Debt, (e) Indebtedness of any Borrower Party
incurred, within the first five years following the Original Closing Date, in
connection with a tax-exempt bond financing under the laws of the State of Texas
in an aggregate principal amount not to exceed $50 million at any time
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outstanding, (f) Indebtedness to any other Borrower Party and (g) Indebtedness
owing to PRG for purposes of the daily administration of cash balances in the
ordinary course of business.
"Permitted Liens" means (a) Liens for taxes not delinquent or being
contested in good faith and by appropriate proceedings, (b) Liens, constituting
deposits or pledges to secure obligations under workmen's compensation, social
security or similar laws, or under unemployment insurance, (c) Liens
constituting deposits or pledges or secure bids, tenders, contracts (other than
contracts for the payment of money), leases, statutory obligations, surety and
appeal bonds and other obligations of like nature arising in the ordinary course
of business, (d) mechanics', workmen's, materialmen's or other like Liens
arising in the ordinary course of business with respect to obligations that are
not due or that are being contested in good faith, (e) Liens constituting
easements and imperfections of title on real estate, provided that such
easements and imperfections do not render title unusable for purposes of the
Coker Project, (f) Liens to secure Senior Debt Obligations, (g) Liens securing
judgments, decrees or orders of any court (i) that are not currently
dischargeable or (ii) that have been discharged or stayed or appealed within 30
days after the date of such judgment, decree or order (in the case of a stay or
appeal, during the period of such stay or appeal), (h) the PMI Subordinated
Lien, (i) liens on crude oil and intermediate and refined products produced by
the Heavy Oil Processing Facility and the proceeds thereof (to the extent such
proceeds constitute cash or cash equivalents) to secure the obligations of PRG
under any bank credit facility under which PRG shall be permitted to incur
Indebtedness for working capital purposes (for itself and for the benefit of the
Partnership) in the form of letters of credit, revolving extensions credit or a
combination thereof and (j) Liens on cash eligible for Restricted Payments in
accordance with Section 11.01. For the avoidance of doubt, it is understood and
agreed that with respect to the Permitted Lien described in the foregoing clause
(i), the proceeds thereof shall not include any interest of the Partnership in
any Project Document or any receivables of the Partnership arising under any
Project Document, but shall include cash revenue from the sale of such Released
Collateral to third parties.
"Permitted Modification" means any change to the physical facilities
of the Coker Complex permitted by the terms of Section 4.01(n).
"Person" means any individual, corporation, partnership, joint
venture, association, joint stock company, trust, unincorporated organization,
government agency, government or political subdivision thereof.
"PMI" means PMI Comercio Internacional, S.A. de C.V.
"PMI Consent and Agreement" means the Consent and Agreement, dated as
of the date hereof, among PMI, the Partnership and the Secured Parties.
"PMI Subordinated Lien" means a subordinated lien over certain Project
Property granted to PMI in accordance with Section 29.5(c) of the Long-Term Oil
Supply Agreement.
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"Potential Default" means an event or condition that after the
expiration of any applicable grace period (whether specified in this Agreement,
any Project Document or otherwise) or the delivery of notice (or both) will or
could be expected to become an Event of Default.
"Premcor" means Premcor Inc.
"Premcor Entities" means Premcor, Premcor USA and PRG.
"Premcor EPC Contract" means the Engineering, Procurement and
Construction Agreement, dated March 24, 1998, between PRG (as successor to Clark
R&M) and the EPC Contractor, as amended by Amendment No. One thereto, dated as
of August 19, 1999, as the same may be further amended or supplemented from time
to time in accordance with its terms and the restrictions on amendments set
forth in this Agreement and the Transfer Restrictions Agreement.
"Premcor Processing Fee" means the fee payable by PRG to the
Partnership for processing services rendered by the Partnership pursuant to the
Services and Supply Agreement.
"Premcor USA" means Premcor USA Inc.
"PRG" means The Premcor Refining Group Inc.
"PRG Financial Statements" means, for any quarter or year, the
consolidated balance sheet of PRG as of the close of such quarter or year and
consolidated statements of income and expense and cash flow and changes in
financial position from the beginning to the close of such quarter or year, as
the case may be, setting forth in comparative form the corresponding
consolidated figures for the corresponding periods in the preceding year or for
the preceding year, as the case may be, provided that all PRG Financial
Statements shall include consolidating financial data for the Borrower Parties
at the General Partner level.
"PRG Guarantee Documents" means the Guarantee provided by PRG and the
Registration Rights Agreement, dated as of the date hereof, among the Borrower,
the Partnership, the Partners, PRG and the Capital Markets Trustee in respect of
such Guarantee.
"Principal and Interest Accrual Account" has the meaning set forth in
Section 5.01.
"Pro Rata Payment" means a payment to a Senior Lender on any date on
which a payment on or in respect of Senior Debt Obligations is made in which:
(a) interest (other than overdue interest), fees, expenses,
indemnities and breakage costs paid to such Senior Lender on such date bear
the same proportion to the total payments of interest (other than overdue
interest), fees, expenses, indemnities and breakage costs made to all
Senior Lenders on such date as (i) the
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total Senior Debt Obligations for interest (other than overdue interest),
fees, expenses, indemnities and breakage costs due to such Senior Lender on
such date bear to (ii) the total Senior Debt Obligations for interest
(other than overdue interest), fees, expenses, indemnities and breakage
costs due to all Senior Lenders on such date;
(b) overdue interest paid to such Senior Lender on such date bears
the same proportion to the total payments of overdue interest made to all
Senior Lenders on such date as (i) the total Senior Debt Obligations for
overdue interest due to such Senior Lender on such date bear to (ii) the
total Senior Debt Obligations for overdue interest due to all Senior
Lenders on such date;
(c) payments of principal (other than overdue principal) and
redemption or prepayment premiums paid to such Senior Lender on such date
bear the same proportion to the total principal (other than overdue
principal), and redemption or prepayment premiums made to all Senior
Lenders on such date as (i) the total Senior Debt Obligations for principal
(other than overdue principal) and redemption or prepayment premiums due to
such Senior Lender on such date bear to (ii) the total Senior Debt
Obligations for principal (other than overdue principal) and redemption or
prepayment premiums due to all Senior Lenders on such date; or
(d) overdue principal payable by way of acceleration paid to such
Senior Lender on such date bears the same proportion to the total overdue
principal payable by way of acceleration on such date as (i) the total
Senior Debt Obligations for overdue principal payable by way of
acceleration to such Senior Lender on such date bear to (ii) the total
Senior Debt Obligations for overdue principal payable by way of
acceleration to all Senior Lenders on such date;
provided that in each of cases (a) through (d), inclusive, if payments cannot be
made exactly in such proportion due to minimum required payment amounts and
required integral multiples of payments under any of the Senior Loan Agreements,
payments made in amounts as near as such exactly proportionate amounts as
possible shall be deemed to be Pro Rata Payments.
"Product Purchase Agreement" means the Product Purchase Agreement,
dated the date hereof, between the Partnership and PRG (as successor to Clark
R&M), dated August 19, 1999, as the same may be amended from time to time in
accordance with its terms and the restrictions on amendments set forth in this
Agreement.
"Project Documents" means the EPC Contract, EPC Contract Guarantee,
Premcor EPC Contract, Long-Term Oil Supply Agreement, Long-Term Oil Supply
Agreement Guarantee, PMI Consent and Agreement, Services and Supply Agreement,
Product Purchase Agreement, Hydrogen Supply Agreements, Ground Lease and Blanket
Easement, Ancillary Equipment Site Lease, Insurance Policies and Marine Dock and
Terminaling Agreement.
A-14
"Project Expenses" means cash items of expenditure (other than
Discretionary Capital Expenditures) for purposes of the Coker Project (whether
incurred in connection with the construction or the operation of the Coker
Project), including without limitation wages, salaries, purchases of crude oil
or diluent, employment, sales and other similar operational taxes, indemnities
(including indemnities payable to the initial purchasers of the Capital Markets
Senior Debt) fees and expenses of lenders and trustees, professional fees and
expenses, legally imposed cash reserve or other similar obligations, premiums or
fees under or in connection with expenditures for utilities, spares and other
capital goods inventory, capital expenses related to the construction and
start-up of the Coker Project, Mandatory Capital Expenditures, expenditures for
ordinary repair and maintenance, scheduled maintenance expenditures and other
amounts payable under Project Documents, but in each case excluding Senior Debt
Obligations, Restricted Payments and Subordinated Debt Obligations.
"Project Production" means all the Partnership's production from the
Coker Project including intermediate and refined products, sulfur and related
products and Petroleum Coke and any other products or by products of the Coker
Project.
"Project Property" means all property, assets and rights, real and
personal, tangible and intangible, whether now owned or hereafter acquired,
wherever located, of the Partnership or the Borrower, including without
limitation the Accounts and the Subaccounts, and the rights of the Partnership
or the Borrower under the Project Documents and any other contract or agreement
to which it is a party or beneficiary.
"Projected Twelve-Month Period" means, in relation to any date, the
period commencing on the first day after either (a) the month-end immediately
preceding such date or (b) such date, if such date is a month-end, and ending on
the day falling 364 days following such month-end.
"Prudent Industry Practice" means, at any time, practices, methods,
acts, techniques and standards in effect that are consistent with (a) the best
practice refinery standards generally followed by the crude oil refinery
industry in the United States or (b) such higher standards as may be applied or
followed by PRG or any of its Affiliates in the performance of similar tasks in
respect of operations at the Refinery.
"Rated Insurer" means an insurance or reinsurance company that has a
rating by Best's Rating Service of not less than A- and a "Financial Size
Category of Class IX".
"Ratings Reaffirmation" means written notice from each Credit Rating
Agency that, after taking into account any event or action causing such Ratings
Reaffirmation to be required, its rating of all Capital Markets Senior Debt will
be equal to or higher than its then-current rating of such Capital Markets
Senior Debt, without negative implication.
"Refinery" has the meaning set forth in the Services and Supply
Agreement as in effect on the date hereof.
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"Release" means any release, spill, emission, leaking, pumping,
injection, deposit, discharge, dispersal, escaping, leaching or migration into
the environment, including the movement of any Hazardous Substance through
ambient air, soil, surface water, ground water, wetlands, land or subsurface
strata and the contamination of structures, surfaces and buildings.
"Released Collateral" means (a) all property and interests in
property described in (i) Section 6.09 of the Original CSA, (ii) Section 6.05 of
the Original CSA as such Section 6.05 relates to Accounts as defined in the
Original CSA that are not Accounts as defined in this Agreement or (iii) Section
6.11 of the Original CSA as such Section 6.11 relates to the Capital
Contribution Agreements (as defined in the Original CSA), (b) the Permits and
(c) all money, securities, security entitlements, instruments, investments,
claims, rights and other property relating to any and all of the foregoing, and
all proceeds of any and all of the foregoing. For the avoidance of doubt, it is
understood and agreed that with respect to the Released Collateral described in
the foregoing clause (a), the proceeds thereof shall not include any interest of
the Partnership in any Project Document or any receivables of the Partnership
arising under any Project Document, but shall include cash revenue from the sale
of such Released Collateral to third parties.
"Replacement Senior Debt" has the meaning set forth in clause
(a) of Section 2.10.
"Required Insurance" means the minimum amount of insurance
coverage set forth in Appendix J required to be maintained by the Partnership.
"Requisite Bondholders" means holders of more than 66% of the
aggregate outstanding principal amount of Capital Markets Senior Debt.
"Requisite Lenders" means either (a) the holders of more than
50% of the aggregate outstanding principal amount of Senior Debt and Senior Debt
Commitments or (b) a Ratings Reaffirmation.
"Requisite Secured Parties" means either (i) Majority
Bondholders (or, in the case of Section 2.09(c) of this Agreement, Requisite
Bondholders) or (ii) a Ratings Reaffirmation.
"Responsible Officer" means (a) in the case of the Partnership
and the General Partner, a senior executive officer of the General Partner and
(b) in the case of the Borrower, means a senior executive officer of the
Borrower.
"Restricted Payment" means any payments, advances, loans or
distributions made by or at the direction of the Partnership to any of its
Affiliates other than payments (i) in accordance with the Services and Supply
Agreement, Product Purchase Agreement, Ground Lease and Blanket Easement or
Ancillary Equipment Site Lease, or (ii) required under the Tax Sharing
Agreement, dated as of August 19, 1999, among the General Partner, the Limited
Partner, Premcor and the other parties thereto.
A-16
"S&P" means Standard & Poor's, a division of the McGraw-Hill
Companies.
"Sale and Leaseback Transaction" means any arrangement with a
lender or investor or to which such lender or investor is a party, having a term
of more than one year, providing for the leasing by a Person of real or personal
property which was sold or transferred by such Person to such lender or investor
or to any Person to whom funds have been or are to be advanced by such lender or
investor on the security of such property.
"Sales Agreement" means a written contract or agreement (other
than the Product Purchase Agreement or a Spot Contract) entered into by the
Partnership for the sale or other disposition of Project Production.
"Secured Parties" means the Senior Lenders, the Applicable
Agents and the Collateral Trustee.
"Security Documents" means the security documents, conditional
assignments and powers of attorney, consents to assignment, the Original CSA, as
amended and restated by this Agreement, the Mortgage and any other agreement or
document signed, recorded, registered or filed by any of the Borrower, the
Partnership or either of the Partners or any other Person in order to create,
preserve, continue, perfect or validate any security interest in the Collateral
in favor of the Secured Parties as security for Senior Debt Obligations.
"Senior Debt" means the aggregate disbursed amount of the
Capital Markets Senior Debt, Additional Senior Debt and Replacement Senior Debt.
"Senior Debt Commitments" means the aggregate principal amount
any Senior Lender is committed to disburse to the Borrowers under any Senior
Loan Agreement as set forth in Appendix B. The Indenture shall not be considered
a Senior Debt Commitment for any purpose.
"Senior Debt Obligations" means the obligations to pay the
principal of and interest on the Senior Debt (including any interest accruing
after the filing of a petition with respect to, or the commencement of, any
proceeding in bankruptcy, liquidation or analogous laws, whether or not a claim
for post-petition interest is allowed in such proceeding), as well as any and
all commissions, fees, indemnities, prepayment premiums and other amounts
payable by the Borrower or the Partnership (including without limitation
pursuant to the Partnership's obligations under the Guarantee) under this
Agreement or any other Financing Document, in each case including all renewals,
extensions or refundings thereof or amendments, modifications or supplements
thereto.
"Senior Lender Group" shall mean each group of Senior Lenders
that is party to the same Senior Loan Agreement.
"Senior Lenders" means the holders from time to time of Senior
Debt under the Senior Loan Agreement or Senior Loan Agreements, provided that,
for
A-17
purposes of the Capital Markets Senior Debt, the Capital Markets Trustee will
constitute the sole Senior Lender for the purposes of representing the Capital
Markets Senior Lenders, except as otherwise provided herein or in the Indenture.
"Senior Loan Agreement" means the Indenture and any loan
agreement set forth in Appendix B entered into by the Borrower, an Applicable
Agent, if any, and any lenders of Additional Senior Debt or Replacement Senior
Debt, in each case as amended or otherwise modified from time to time.
"Senior Loans" means the individual loans or other debt
pursuant to which Senior Debt is incurred by the Borrower under the Senior Loan
Agreement or Senior Loan Agreements.
"Services and Supply Agreement" means the Services and Supply
Agreement, dated August 19, 1999, between the Partnership and PRG (as successor
to Clark R&M), as the same may be amended from time to time in accordance with
its terms and the restrictions on amendments set forth in this Agreement and the
Transfer Restrictions Agreement.
"Shareholder" means each of Blackstone, Occidental Petroleum,
Premcor, Premcor USA and PRG and each other shareholder, directly or indirectly,
holding the outstanding capital stock of the General Partner.
"Shares" means all the shares of capital stock of the
Borrower.
"Spot Contract" means a written contract or agreement for the
sale or other disposition of Project Production with a term of 30 days or less
or any oral contract or arrangement evidenced by a confirmation receipt entered
into by the Partnership for the sale or other disposition of Project Production.
"Subaccounts" has the meaning set forth in Section 5.02 of
this Agreement.
"Subordinated Debt" means unsecured Indebtedness of the
Partnership, whether currently outstanding or hereafter created, held by a
Shareholder or an Affiliate of a Shareholder (other than PRG or Premcor USA),
ranking in right of payment and upon liquidation and in all other respects
junior to the Senior Debt Obligations in accordance with the subordination terms
set forth in Appendix Q.
"Subordinated Debt Obligations" means the obligations to pay
the principal of and interest on the Subordinated Debt, and other amounts
payable to the Subordinated Lenders.
"Subordinated Lender" means any holder of Subordinated Debt.
"Subsidiary" of a Person means (a) any corporation more than
50% of the outstanding voting shares of which is owned, directly or indirectly,
by such Person or by one or more other Subsidiaries of such Person or by such
Person and one or more
A-18
Subsidiaries thereof or (b) any other Person (other than a corporation) in which
such Person, or one or more other Subsidiaries of such Person or such Person and
one or more Subsidiaries thereof, directly or indirectly, has at least a
majority ownership and power to direct the policies, management and affairs
thereof.
"Supermajority Bondholders" means holders of more than 75% of the
aggregate outstanding principal amount of Capital Markets Senior Debt.
"Supermajority Lenders" means, with respect to any consent required
under this Agreement, that either (a) such consent has been given by holders of
more than 75% of the aggregate outstanding principal amount of Senior Debt and
Senior Debt Commitments or (b) a Ratings Reaffirmation has been obtained.
"Supermajority Secured Parties" means either (a) Supermajority
Bondholders or (b) a Ratings Reaffirmation.
"Taxes" means all federal, state, local or foreign income, gross
receipts, windfall profits, severance, property, production, sales, use, excise,
franchise, employment, value added, real estate, withholding or similar taxes,
assessments, fees, liabilities or other charges, together with any interest,
additions or penalties with respect thereto and any interest in respect of such
additions or penalties.
"Technology" means all proprietary technology and know-how (including
without limitation inventions, formulas and formulations, specifications,
manufacturing methods and processes, designs, quality control data, design and
manufacturing tolerances and testing, performance and raw material data),
research materials, drawings and other intellectual property relating to the
development, construction, operation or maintenance of the Project.
"Texas UCC" means the Texas Uniform Commercial Code as in effect from
time to time.
"Third-Party Authorizations" means all authorizations, approvals,
franchises, licenses, permits (excluding the Permits) and consents issued by a
Governmental Authority or other third party.
"Transaction Documents" means the Financing Documents, the Project
Documents and any ancillary documents delivered under or in connection
therewith.
"Transfer Restrictions Agreement" means the Transfer Restrictions
Agreement, dated as of August 19, 1999 among the Borrower, the Partnership, the
General Partner, the Limited Partner, Blackstone, Premcor (as successor to Clark
Refining Holdings Inc.), the Collateral Trustee, the Bank Senior Lenders
Administrative Agent, the Capital Markets Trustee, as amended by Amendment No. 1
dated as of the date hereof and as the same may be further amended from time to
time in accordance with its terms and the restrictions on amendments set forth
in this Agreement.
"Turnkey Specifications" has the meaning set forth in the EPC Contract.
A-19
"Weighted Average Life" means, when applied to any Indebtedness at any
date, the number of years obtained by dividing (a) the total of the products
obtained by multiplying (i) the amount of each then remaining installment,
sinking fund, serial maturity or other required payments of principal, including
payment at final maturity, in respect thereof, by (ii) the numbers of years
(calculated to the nearest one-twelfth) that will elapse between such date and
the making of such payment, by (b) the then outstanding principal amount of such
Indebtedness.
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Appendix B
to Amended and Restated Common Security Agreement
INITIAL SENIOR LENDER GROUP
- --------------------------------------------------------------------------------
Initial Senior Debt
and
Senior Debt Commitment Initial Senior
Initial Senior Lender of Initial Senior Lender Loan Agreements
- --------------------------------------------------------------------------------
1. Capital Markets Senior U.S. $255,000,000 Indenture
Lender Group
- --------------------------------------------------------------------------------
B-1