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EXHIBIT 10.2
Draft
8/7/98
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ENRON INTERNATIONAL CPO, L.P.,
AS ISSUER
ENRON INTERNATIONAL CPO, INC.,
AS CO-ISSUER
ENRON CPO MANAGEMENT, L.P.,
AS PROGRAM MANAGER
AND
CHASE BANK OF TEXAS, NATIONAL ASSOCIATION,
-----------------------------
AS BACKUP PROGRAM MANAGERS
MANAGEMENT AGREEMENT
DATED AS OF _____, 1998
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TABLE OF CONTENTS
Section 1. Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 2. Management Services. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.01 Services to be Provided . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.02 Standard of Care; Indemnity; Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.03 Support for Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11
2.04 Additional Activities of the Program Manager and its Affiliates . . . . . . . . . . . . . . . . . . .11
2.05 Authorization to Act; Power of Attorney . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .12
2.06 Information; Further Assurances; Agreement under Financing Documents . . . . . . . . . . . . . . . . .12
2.07 Indemnity of Program Manager . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .13
2.08 Compensation to the Issuer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .13
Section 3. Representations and Warranties of the Program Manager. . . . . . . . . . . . . . . . . . . . . . . . .13
3.01 Status . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .13
3.02 Powers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .14
3.03 No Violation or Conflict . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .14
3.04 Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .15
3.05 Absence of Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .15
3.06 Registration as Investment Adviser . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .15
3.07 Ownership of Program Manager . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .15
3.08 Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .15
Section 4. Representations and Warranties of the Issuer. . . . . . . . . . . . . . . . . . . . . . . . . . . . .15
4.01 Status . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .15
4.02 Powers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .15
4.03 No Violation or Conflict . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .16
4.04 Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .16
4.05 Absence of Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .16
4.06 No Required Registration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .16
Section 5. Representations and Warranties of the Co-Issuer. . . . . . . . . . . . . . . . . . . . . . . . . . . .16
5.01 Status . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .17
5.02 Powers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .17
5.03 No Violation or Conflict . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .17
5.04 Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .17
5.05 Absence of Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .18
5.06 No Required Registration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .18
Section 6. Covenants. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .18
6.01 No Petition for Bankruptcy or Insolvency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .18
6.02 Books and Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .18
6.03 Governmental Authorizations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .19
6.04 Compliance with Laws and the Financing Documents . . . . . . . . . . . . . . . . . . . . . . . . . . .19
6.05 Interested Party Transactions; Conflicts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .19
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Section 7. Management Fee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .19
7.01 Payment of Management Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .19
7.02 Status upon Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .20
Section 8. Expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .20
Section 9. No Joint Venture. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .21
Section 10. Termination of this Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .21
10.01 Automatic Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .21
10.02 Optional Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .21
10.03 Effectiveness of Termination under Certain Circumstances . . . . . . . . . . . . . . . . . . . . . .22
10.04 Certain Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .23
10.05 Replacement Management Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .23
10.06 Survival . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .23
Section 11. Miscellaneous. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .23
11.01 Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .23
11.02 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .24
11.03 Amendment, Modification or Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .24
11.04 Successors and Assigns .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .24
11.05 Assignments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .24
11.06 Survival of Representations, Warranties and Indemnities . . . . . . . . . . . . . . . . . . . . . . .24
11.07 Benefit of the Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .24
11.08 Priority of Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .24
11.09 Captions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .25
11.10 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .25
11.11 Arbitration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .25
11.12 Realty Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .26
11.13 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .27
11.14 Complete Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .28
11.15 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .28
11.16 Conflict with the Financing Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .28
11.17 Limitation on Recourse . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .28
11.18 Limitation on Recovery of Certain Types of Damages . . . . . . . . . . . . . . . . . . . . . . . . .28
11.19 Limitation on Amendment of Financing Documents . . . . . . . . . . . . . . . . . . . . . . . . . . .29
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MANAGEMENT AGREEMENT dated as of [_______ __], 1998 among ENRON
INTERNATIONAL CPO, L.P., a limited partnership formed under the laws of the
State of Delaware (the "Issuer"), ENRON INTERNATIONAL CPO, INC., a corporation
organized under the laws of the State of Delaware (the "Co-Issuer" and
collectively with the Issuer, the "Issuers"), ENRON CPO MANAGEMENT, L.P., a
limited partnership formed under the laws of the State of Delaware (the "Program
Manager"), CHASE BANK OF TEXAS, NATIONAL ASSOCIATION, a national banking
association, and THE CHASE MANHATTAN BANK (each a "Backup Program Manager").
The Issuers desire to have the Program Manager provide certain
services to the Issuers, and the Program Manager is willing, and has the
capacity, to provide such services to the Issuers, all on the terms and
conditions of this Agreement.
The Issuers desire to have the Backup Program Managers provide
certain services to the Issuers, and each Backup Program Manager is willing,
and has the capacity, to provide such services to the Issuers, all on the terms
and conditions to this agreement.
In consideration of the foregoing and the mutual agreements
hereinafter contained and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
Section 1. Definitions. Terms used but not defined
herein have the respective meanings given to such terms in Appendix A to the
Common Agreement ("Appendix A") dated as of ________, 1998 among the Issuer, the
Co-Issuer, __________________ as Trustee, ____________________ as Liquidity
Facility Agent, _____________________ as Backup Facility Agent and
__________________ as Collateral Agent (as amended, modified and supplemented
from time to time, the "Common Agreement"), or if not defined therein, in the
Partnership Agreement referred to in Appendix A. Except as otherwise expressly
provided herein, the rules or interpretations set forth in Appendix A shall
apply to this Agreement. As used herein, the following terms have the following
respective meanings:
"Accrual Period" means (a) prior to the Final Termination
Date, each Interest Accrual Period and (b) after the Final Termination Date,
each period beginning on the day (the "First Date") following the last day of
the immediately preceding Accrual Period and ending on the ___ day of the month
of _______, ________, _______ or ________ that occurs closest to the date 90
days after the First Date; provided that no Accrual Period shall extend beyond,
and the final Accrual Period shall end on, the earlier of (i) the date on which
this Agreement is terminated and (ii) the date on which the Issuer is
terminated.
"Administrative Fee" has the meaning specified in Section
7.01.
"Agreement" means this Management Agreement as modified and
supplemented and in effect from time to time (subject to, prior to the Final
Termination Date, the applicable provisions of the Common Agreement).
"Aggregate Book Value of the Issuer's Assets" for any Accrual
Period means (i) at any time prior to the Final Termination Date, the book
value (determined in accordance with GAAP) of all Project Loans, all amounts
credited to the Accounts and (without duplication) all
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Permitted Investments (collectively, the "Relevant Assets") and (ii) at any
time after the Final Termination Date, the book value (determined as aforesaid)
of all Relevant Assets on the last day of such Accrual Period, as such book
value is determined in good faith by the Program Manager.
"Bankruptcy or Insolvency" of any Person means such Person (a)
is dissolved (other than pursuant to a consolidation, amalgamation or merger),
(b) becomes insolvent or is generally unable to pay its debts or fails or
admits in writing its inability generally to pay its debts as they become due,
(c) makes a general assignment, arrangement or composition with or for the
benefit of its creditors, (d) institutes or has instituted against it a
proceeding seeking a judgment of insolvency or bankruptcy or any other relief
under any bankruptcy or insolvency law or other similar law affecting
creditors' rights, or a petition is presented for its winding-up or
liquidation, and, in the case of any such proceeding or petition instituted or
presented against it, such proceeding or petition (i) results in a judgment of
insolvency or bankruptcy or the entry of an order for relief or the making of
an order for its winding-up or liquidation or (ii) is not dismissed,
discharged, stayed or restrained in each case within 90 days of the institution
or presentation thereof, (e) has a resolution passed for its winding-up or
liquidation (other than pursuant to a consolidation, amalgamation or merger),
(f) seeks or becomes subject to the appointment of an administrator,
provisional liquidator, conservator, receiver, trustee, custodian or other
similar official for it or for all or substantially all its assets, (g) has a
secured party take possession of all or substantially all its assets or has a
distress, execution, attachment, sequestration or other legal process levied,
enforced or sued on or against all or substantially all its assets and such
secured party maintains possession, or any such process is not dismissed,
discharged, stayed or restrained, in each case within 30 days thereafter, (h)
causes or is subject to any event with respect to it which, under the
applicable laws of any jurisdiction, has an analogous effect on any of the
events specified in clauses (a) to (g) (inclusive) or (i) takes any material
action in furtherance of, or indicating its consent to, approval of, or
acquiescence in, any of the foregoing acts.
"Comparable Countries" means countries with credit ratings
and/or characteristics similar to that of the country in which the potential
Project Borrower is located.
"Comparable Debt" means debt having similar maturities and
similar payment terms (i.e. fixed or floating rate) which is available to either
(x) the potential Project Borrower from financing sources other than the Issuer
or (y) projects similar to that owned by the potential Project Borrower and
which are located in Comparable Countries. For purposes of this definition,
"Comparable Debt" shall include but not be limited to U.S. Dollar denominated
senior debt provided through commercial banks, private placements, public or
private capital markets offerings and debt provided by export credit agencies,
multilateral lending agencies, bilateral lending agencies, regional development
banks, local development banks and other local financing sources.
"Covered Party" has the meaning specified in Section 8.
"Damages" has the meaning specified in Section 2.02(b).
"Enron Offered Opportunities" means the investment
opportunities offered to the Issuer by Enron pursuant to Section 7.1 of the
Enron Support Agreement and other opportunities offered to the Issuer by Enron
or an Enron Affiliate.
"Indemnified Party" has the meaning specified in Section
2.02(b).
"Inflation Factor" means with respect to any calendar year the
quotient (expressed as a decimal) obtained by dividing (i) the CPI published in
respect of the most recently ended calendar year (the "New Year"), by (ii) the
CPI published in respect of the calendar year immediately preceding the New
Year. "CPI", for purposes hereof, means with respect to any calendar year or
any period during any calendar year the "Consumer Price Index for All Urban
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Consumers (CPI-U) U.S. City Average for All Items" published by the Bureau of
Labor Statistics for the United States Department of Labor (1982-1984=100). If
the CPI shall be converted to a different standard reference base or otherwise
revised after the date hereof, CPI shall thereafter be calculated with use of
such new or revised statistical measure published by the Bureau of Labor
Statistics or, if not so published, as may be published by any other reputable
publisher of such price index selected by the Program Manager.
"Limited Partner" means any Person which owns a Class I
Interest or a Class II Interest.
"Management Fee" has the meaning specified in Section 7.01.
"Material Adverse Effect" means, with respect to any Person, a
material adverse effect on the Property (taken as a whole), business,
operations, financial condition or capitalization of such Person or the ability
of such Person to perform its obligations under this Agreement or any Related
Agreement with respect to such Person or the validity or enforceability hereof
or thereof or the rights and remedies of any other Person party hereto or
thereto.
"Misfeasance" has the meaning specified in Section 2.02(b).
"Pricing Terms" means, with respect to any debt, the "all-in"
cost of such debt, including but not limited to base rates, credit spreads, fees
and withholding tax gross-ups, all to the extent applicable.
"Proceeding" has the meaning specified in Section 2.02(b).
"Property" means any right or interest in or to property of
any kind whatsoever, whether real, personal or mixed and whether tangible or
intangible.
"Related Agreement" means, in respect of any party hereto, any
document relating to this Agreement to which such Person is a party.
"Replacement Management Agreement" means any agreement
substantially in the form hereof entered into after the termination of this
Agreement between the Issuers and a Replacement Manager that obligates the
Replacement Manager to perform all or a substantial portion of the Services.
"Replacement Manager" means any Person that, simultaneously
with, or at any time after, the termination of this Agreement, enters into a
Replacement Management Agreement with the Issuers.
"Services" has the meaning specified in Section 2.01.
"Standard of Care" has the meaning specified in Section
2.02(a).
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Section 2. Management Services.
2.01 Services to be Provided. (a) Subject to the terms
and conditions set forth in this Agreement and the Financing Documents, the
Program Manager hereby agrees to provide the Issuer and the Co-Issuer with the
following services (the "Services"), consistent with the covenants and
agreements of the Issuer and/or the Co-Issuer in the Financing Documents:
(i) (A) evaluating Enron Offered Opportunities, (B) if
appropriate, bidding to make a Project Loan (it being understood and
agreed that the Program Manager is under no obligation to cause the
Issuer to make such a bid if it concludes that such Project Loan is
not in the best interest of the Issuer taking into consideration the
interests of the Holders of Notes, Support Notes and the Holders of
Interests, solely in their capacities as such), and (C) if such bid to
make a Project Loan is accepted by the relevant Project Borrower,
implementing the making of such Project Loan;
(ii) monitoring the Project Loans and other Portfolio Assets
and taking actions such that (A) reasonable inquiries are made and
appropriate actions are taken with respect to (1) construction and
operating performance of the Eligible Projects to which a Project Loan
has been made, (2) scheduled payments, if any, not made when due
pursuant to any Underlying Instruments, (3) the occurrence of any
default or event of default (when it has reason to know of the same)
under, any Underlying Instrument or (4) any periodic reports or other
information provided to the Issuer pursuant to the Underlying
Instruments, (B) Commitments to fund Project Loans are made by the
Program Manager, on behalf of the Issuer, only if the Issuer would be
able to fund such Project Loans in accordance with the terms of the
Common Agreement and (C) administration and collection efforts are
attended to in respect of the Project Loans and other Portfolio Assets
in a timely manner;
(iii) determining and making Permitted Investments and
selecting the dates for acquisitions or sales of Permitted
Investments, and implementing the acquisition and sale of such
Permitted Investments on such dates;
(iv) negotiating Hedging Agreements and identifying and
selecting Hedge Counterparties;
(v) negotiating commitment letters and Underlying Instruments
and any confidentiality agreements in respect of Project Loans and
documentation providing for the purchase and sale of other Portfolio
Assets, including, without limitation, Permitted Investments and the
Hedging Agreements;
(vi) negotiating Backup Facility Loan Agreements and TIP
Investment Management Agreements, as necessary;
(vii) determining the structure of Project Loans and forming,
establishing and managing Intermediate Funding Entities through which
the Issuer may make Project Loans;
(viii) negotiating amendments, modifications, waivers and
supplements to the Underlying Instruments in respect of Project Loans
and of documentation relating to the other Portfolio Assets;
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(ix) exercising rights and remedies associated with Portfolio
Assets, including, without limitation, the Project Loans and the
Hedging Agreements;
(x) providing information (including without limitation
information regarding (A) the Project Loans and other Portfolio Assets
and (B) the satisfaction of any Portfolio Financial Test, the Reserve
Test, the Senior Coverage Test or the Average Life Test) to, and
entering into discussions with, the Rating Agencies;
(xi) after payment in full of the Notes, (A) determining
when, in the opinion of the Program Manager, it would be in the best
interests of (1) the Limited Partners to dissolve the Issuer and (2)
the shareholder of the Co-Issuer to dissolve the Co-Issuer and (B)
liquidating assets of the Issuer in accordance with the Partnership
Agreement and the Co-Issuer in accordance with its organizational
documents;
(xii) selling or otherwise disposing of Project Loans;
(xiii) liquidating all or a portion of any other Collateral;
(xiv) at anytime prior to the Investment Termination Date,
determining whether, in light of the composition of the Issuer's
portfolio of Project Loans, general market conditions and other
pertinent factors, investments in additional Project Loans would
either be impracticable or not beneficial to the Issuer;
(xv) determining whether a borrowing or prepayment should be
made with respect to the Backup Facility or the Liquidity Facility and
whether additional Class A Notes should be issued after the Closing
Date, and taking such action as may be necessary to effect such a
borrowing, prepayment or issuance, as the case may be;
(xvi) determining whether the term of the Issuer should be
extended after _______, 2018;
(xvii) implementing any redemption or refinancing pursuant to
the terms of Article 10 of the Common Agreement and any applicable
Financing Document;
(xviii) determining the existence and amount of an Issuer
Determined Loss;
(xix) enforcing the obligations of Enron under the Enron
Support Agreement;
(xx) furnishing such information (including, but not limited
to, the Valuation Report pursuant to Section 6.1 of the Common
Agreement), certificates, opinions and other documents to the Issuers,
the Representatives, the Collateral Agent, the Hedge Counterparties
and either Rating Agency as may be required from time to time to
determine compliance by the Issuers and/or the Program Manager with
the terms of this Agreement, any of the Financing Documents and/or the
Partnership Agreement, as well as such other information,
certificates, opinions and other documents as may be reasonably
requested from time to time;
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(xxi) selecting and retaining counsel, engineers and other
consultants as may be necessary or appropriate to perform its duties
hereunder;
(xxii) executing and delivering all documents and instruments
and taking such other actions as the Program Manager determines are
necessary or appropriate to perform its duties hereunder or in taking
any other actions or exercising any other discretions of the Issuer or
the Co-Issuer under any Financing Document or otherwise associated
with the management of either;
(xxiii) ensuring that the Underlying Instruments in respect of
a particular Project Loan permit transactions entered into after the
Financial Closing Date therefor between the relevant Project Borrower
and Affiliates of the equity sponsors only on an "arms-length" basis
or better;
(xxiv) filing all reports, proxy or information statements and
other information with the Commission required pursuant to the
informational requirements of the Exchange Act;
(xxv) making determinations as to the transfer of funds from
the Collection Account on a date other than a Quarterly Payment Date
under Section 3.2(c) of the Security Agreement; and
(xxvi) maintaining the books and records of the Issuers
including preparation and filing of any financial statements as may be
required under the Financing Documents.
(b) In providing the Services hereunder, the Program Manager
may employ third parties, including its Affiliates, to render advice and
assistance; provided, however, that (subject to Section 2.02) the Program
Manager shall not be released from any of its duties hereunder regardless of
the performance of any services by third parties.
(c) The Program Manager shall take steps to prevent the
Issuer from becoming subject to taxation on net income in any jurisdiction in
which a Project Borrower is located other than on income arising from a Project
Loan to the Project Borrower in such jurisdiction.
2.02 Standard of Care; Indemnity; Etc.
(a) Standard of Care. In rendering the Services and in taking
the actions to be taken by the Program Manager pursuant to Section 2.05 hereof,
the Program Manager shall (except when acting pursuant to Section 2.01(a)(xi),
Section 2.01(a)(xiv) and Section 2.01(a)(xvii) or otherwise taking any
particular action as directed by the General Partner or the Required Lenders
pursuant to the express terms of this Agreement or any Financing Document) act
as would a reasonable and prudent lender acting for its own account (subject to
the terms hereof and of the Financing Documents). The standard of care set
forth in this paragraph (a) shall hereinafter be referred to as the "Standard
of Care."
In making determinations with respect to the Pricing Terms for
any Project Loan, the Program Manager shall be deemed to have complied with the
Standard of Care
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so long as such Pricing Terms equal or exceed 90% the lowest available Pricing
Terms of Comparable Debt; provided that in the event that the Program Manager is
unable to identify Comparable Debt, the Program Manager may determine Pricing
Terms for a Project Loan by any reasonable means, including the consideration of
Pricing Terms available for any of the following categories of Debt, to the
extent applicable:
(1) Senior debt provided to, or available for, projects
regardless of their type and located in Comparable
Countries and having a credit risk similar to that of
the Eligible Project; and/or
(2) Senior debt provided to, or available for, sovereign
or corporate borrowers in Comparable Countries;
in any case having similar maturities (or, if not
available, shorter and/or longer, maturities).
Notwithstanding anything to the contrary in the preceding
paragraph, in determining the Pricing Terms for any Project Loan the Program
Manager may ignore the impact of current market aberrations and volatility.
In considering any of the aforesaid factors, the Program
Manager may extrapolate or interpolate Pricing Terms for differing maturities
and average lives in any reasonable manner.
Notwithstanding the foregoing, in an instance where a governmental authority
having jurisdiction imposes a ceiling on the Pricing Terms (or any other
economic terms) associated with any Eligible Project, the Program Manager may,
in satisfaction of its Standard of Care, determine Pricing Terms for such
Project Loan at or beneath such ceiling, so long as the Credit Support Tests
are satisfied.
In taking action and making determinations in respect of
maturity dates and amortization of any Project Loans, the Program Manager shall
be deemed to have complied with the Standard of Care so long as the Average
Life Test is satisfied.
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With respect to the acquisition or initial funding,
maintenance and enforcement of any Project Loan, the Program Manager will apply
the Standard of Care in evaluating any transactions between a Project Borrower
and any of its Affiliates, including (where relevant) development fees,
construction contracts, operations and maintenance agreements, fuel agreements
and power purchase agreements.
In rendering the Services and in taking the actions to be
taken by the Program Manager pursuant to Section 2.05 hereof, the Program
Manager shall not take any action, which would cause: (i) the Issuer or the
Co-Issuer to violate any applicable laws, rules and regulations, including any
applicable United States federal and state securities laws, (ii) the Issuer to
breach the Partnership Agreement or the Co-Issuer to breach its Certificate of
Incorporation and Bylaws, (iii) the Issuer or the Co-Issuer to breach any
Transaction Document or Additional Transaction Documents, (iv) the Issuer or
the Co-Issuer to be required to register as an investment company under the
Investment Company Act or (v) in the Program Manager's reasonable belief, a
reduction or withdrawal of the then current ratings of the Class A Notes or the
Class B Notes unless such failure to act would cause the Issuer or the
Co-Issuer to fail to satisfy clause (i) of this paragraph.
Notwithstanding the foregoing or any other provision of this
Agreement, neither the Program Manager, any Affiliate of the Program Manager,
nor any officer, agent, stockholder, partner, member, director or employee of
the Program Manager or any Affiliate of the Program Manager shall, except to
the extent otherwise expressly provided by applicable law, have any liability,
whether direct or indirect and whether in contract, tort or otherwise, (i) for
any action taken or omitted to be taken by it or any of such Persons hereunder
or in connection herewith, unless there has been a determination in accordance
with Section 11.11 hereof that such act or omission was performed or omitted in
bad faith or constituted gross negligence or willful misconduct, or (ii) for
any action taken or omitted to be taken by the Program Manager as required or
prohibited by the Issuer and/or the Co-Issuer under the Partnership Agreement
or the Financing Documents or at the express direction of any of the Collateral
Agent or the Required Lenders (it being understood that the Program Manager
need follow such directions only when expressly required pursuant to the
Financing Documents). The Program Manager may consult with counsel,
accountants, appraisers, technical or other advisers (which may also be
counsel, accountants or technical or other advisers (including but not limited
to the TIP Advisor) for the Issuer, Enron or any of their respective
Affiliates) and shall be fully protected to the extent permitted by applicable
law, in acting or failing to act hereunder if such counsel, accountants,
technical or other advisers are consulted in good faith by the Program Manager
and such action or inaction is taken or not taken in good faith by the Program
Manager in accordance with the advice or opinion of such counsel, accountants,
technical or other advisers. In soliciting the advice or opinion of any
counsel, accountant, technical or other adviser that is an employee of Enron or
any Affiliate of Enron, the Program Manager shall ensure that such employee is
aware that such advice is being solicited by the Program Manager in its
capacity as Program Manager for the Issuer and the Co-Issuer.
(b) Indemnity. The Issuer hereby indemnifies and holds
harmless the Program Manager, Affiliates of the Program Manager, and officers,
agents, stockholders, partners, members, directors and employees of the Program
Manager and Affiliates of the Program
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Manager (each, an "Indemnified Party") from and against any loss, claim,
expense, damage, liability or injury suffered or sustained by any of them,
including, without limitation, judgments, interest thereon, fines, charges,
costs, amounts paid in settlement, expenses and attorneys' fees incurred in
investigating, preparing or defending any action, claim, suit, inquiry,
proceeding, investigation or any appeal taken from the foregoing by or before
any court or governmental, administrative or other regulatory agency, body or
commission (each, a "Proceeding"), whether pending or threatened and whether or
not any Indemnified Party is or may be a party thereto (collectively
"Damages"), by reason of (i) any action taken or omitted to be taken by any
Indemnified Party hereunder or in connection herewith, except for Damages that
have been determined in accordance with Section 11.11 hereof to result from
such Indemnified Party's gross negligence, bad faith or willful misconduct
(collectively, "Misfeasance"), (ii) any action taken or omitted to be taken by
the Program Manager at the express direction of any of the Issuer, the
Co-Issuer, the Collateral Agent or the Required Lenders and (iii) any action
taken or omitted to be taken in good faith by the Program Manager in accordance
with the advice or opinion of counsel or accountants as provided in the last
two sentences of Section 2.02(a).
If a Proceeding is brought against any Indemnified Party with
respect to which indemnity may be sought from the Issuer pursuant hereto, or if
any Indemnified Party receives notice from any potential litigant of a claim
that such Indemnified Party reasonably believes will result in the commencement
against such Indemnified Party of any such Proceeding, such Indemnified Party
shall, (i) as promptly as practicable and, in any event, within 30 days, after
receiving notice thereof, give written notice to the Issuer of the commencement
of such Proceeding or of the existence of any such claim, which notice shall
specify in reasonable detail the nature of the claim and the amount (or an
estimate of the amount) of the claim; provided, however, that any failure to
give or any delay in giving any such notice to the Issuer of any such action,
proceeding or claim shall not relieve the Issuer from its obligations under
this Section 2.02(b) except to the extent that the amount payable by the Issuer
pursuant to its indemnity in this Section 2.02(b) is increased as a result of
such failure or delay, (ii) provide the Issuer such information and cooperation
with respect to such claim as the Issuer may reasonably request, including, but
not limited to, making appropriate personnel available to the Issuer at such
reasonable times as the Issuer may request and (iii) cooperate and take all
steps as the Issuer may reasonably request to preserve and protect any defense
to such claim. In case any such Proceeding shall be brought against any
Indemnified Party, the Issuer will be entitled to participate in the defense of
such Proceeding, and, after written notice from the Issuer to such Indemnified
Party, to assume the defense of such Proceeding with counsel of its choice, or,
as provided in the second to last sentence of this paragraph, compromise or
settle such Proceeding, at its expense (in which case the Issuer will not
thereafter be responsible for the fees and expenses of any separate counsel
retained by such Indemnified Party); provided that such counsel shall be
satisfactory to the Indemnified Party in the exercise of its reasonable
judgment. Notwithstanding the preceding sentence, an Indemnified Party will be
entitled to employ counsel separate from counsel for the Issuer and from any
other party in such action if such Indemnified Party reasonably determines that
a conflict of interest exists or may arise which makes representation by
counsel chosen by the Issuer not advisable. In the event an Indemnified Party
is entitled to employ separate counsel pursuant to the preceding sentence, the
reasonable fees and disbursements of such separate counsel will be paid by the
Issuer; provided that the Issuer will not be obligated to pay in advance of a
final judicial determination of a Proceeding or settlement
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of such Proceeding any fees and disbursements of such separate counsel
otherwise payable in accordance with the terms of this Agreement except to the
extent (i) such Indemnified Party undertakes to repay to the Issuer any amounts
paid pursuant to this sentence in the event of a determination in accordance
with Section 11.11 hereof that such Indemnified Party is liable in such action
due to its Misfeasance and (ii) in the case of any Indemnified Party which is
not a natural person, if such Indemnified Party has either a net worth or
unencumbered liquid assets equal to or less than the aggregate amount which the
Indemnified Party could be obligated to repay pursuant to this paragraph, the
obligation of the Indemnified Party to repay fees and disbursements of separate
counsel is guaranteed by a Person that has, at the time it enters into such
guarantee, both a net worth and unencumbered liquid assets equal to or greater
than the aggregate amount which the Indemnified Party could be obligated to
repay pursuant to this paragraph. Notwithstanding the election by the Issuer
to assume the defense of such Proceeding, (x) the Issuer may not enter into any
compromise or settlement of such Proceeding, without such Indemnified Party's
prior written consent, if such compromise or settlement (A) does not discharge
and release such Indemnified Party from any and all Damages related to or
arising from all matters forming the basis for the claim in respect of which
such Proceeding was brought or (B) imposes any other material liability or
obligation on such Indemnified Party and (y) such Indemnified Party shall have
the right, at its own expense, to employ separate counsel and to participate in
the defense of such Proceeding. No Indemnified Party shall enter into a
settlement of any action, claim or proceeding as to which an Indemnified Party
would be entitled to indemnification hereunder without the Issuer's prior
written consent (which consent may not be unreasonably withheld).
(c) Advance of Expenses. Upon written request from any
Indemnified Party, the Issuer shall advance promptly to such Indemnified Party
any reasonable legal expenses and other costs for which the Indemnified Party
is indemnified hereunder incurred by such Indemnified Party as a result of any
claim made or Proceeding commenced against such Indemnified Party which arises
out of, relates to or is connected with the Services; provided that the Issuer
shall not be obligated to make any payments to an Indemnified Party pursuant to
this Section 2.02(c) unless (i) such Indemnified Party undertakes to repay the
advanced funds to the Issuer in the event that it is not entitled to
indemnification pursuant to this Section 2.02 and (ii) in the case of any
Indemnified Party which is not a natural person, if such Indemnified Party has
either a net worth or unencumbered liquid assets equal to less than the
aggregate amount which the Indemnified Party could be obligated to repay
pursuant to this Section 2.02(c), the obligation of such Indemnified Party to
repay advanced funds is guaranteed by a Person that has, at the time it enters
into such guarantee, both a net worth and unencumbered liquid assets equal to
or greater than the aggregate amount which the Indemnified Party could be
obligated to repay pursuant to this Section 2.02(c).
(d) Payments Permitted by the Financing Documents.
Notwithstanding any provision of this Section 2.02, prior to the Final
Termination Date, amounts payable or to be advanced by the Issuer pursuant to
this Section 2.02 shall be paid only if and to the extent that such payment or
advance is permitted by the Financing Documents (including, without limitation,
Article 4 of the Security Agreement). In the event that an Indemnified Party
is entitled to receive a payment or advance from the Issuer pursuant to this
Section 2.02 but the Issuer is prohibited from making such payment or advance
pursuant to the Financing Documents,
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such Indemnified Person may offset against any amount it owes to the Issuer the
amounts that such Indemnified Party is entitled to receive pursuant to this
Section 2.02.
(e) Policies and Procedures. The Program Manager will devise
and implement policies and procedures (which may be revised from time to time)
that it believes are appropriate in connection with its rendering of the
Services, it being understood that the Program Manager is not a financial
institution and need not maintain policies and procedures similar to those
followed by such an institution.
2.03 Support for Services. The Program Manager shall, at
its own expense (subject to Section 8), maintain such equipment, materials and
expertise, and employ such professional and other personnel, as shall be
necessary to perform the Services.
2.04 Additional Activities of the Program Manager and its
Affiliates.
(a) The Program Manager shall not engage in businesses or
render services of any kind to the Issuers or any other Person, except as
contemplated hereby and except that the Program Manager may be engaged in other
businesses that provide only services for any funding program(s) similar to
that contemplated hereby in which Enron or an Affiliate of Enron is a sponsor.
None of the directors, officers or employees of the Program Manager may serve
as directors, officers or employees of any Project Borrower (except for the
General Counsel of Enron serving as director of the Program Manager), receive
fees for services rendered to any Project Borrower or be a secured or unsecured
creditor of, or hold an equity interest in, any Project Borrower or in any
other issuer of Collateral, except if such equity is publicly-traded.
(b) Nothing herein shall prevent the Program Manager's
Affiliates or the directors, officers, employees and agents thereof from
engaging in other businesses, or from rendering services of any kind to the
Issuers and their Affiliates, the Collateral Agent, the Representatives, the
Noteholders or any other Person to the extent permitted by applicable law.
Without prejudice to the generality of the foregoing, Affiliates of the Program
Manager and directors, officers, employees and agents of such Affiliates may,
among other things:
(i) serve as directors (whether supervisory or managing),
officers, partners, members, employees, agents, nominees or
signatories for the Issuers, Affiliates of the Issuers, Project
Borrowers or any issuer of any other Portfolio Asset or their
respective Affiliates; provided, that such activity will not have a
material adverse effect on the enforceability of Collateral; provided,
further, that nothing in this paragraph shall be deemed to limit the
duties of the Program Manager set forth in Section 2 hereof;
(ii) receive fees for services of any nature rendered to
any Project Borrower or issuer of any Portfolio Asset or their
respective Affiliates; provided, that such activity will not have a
material adverse effect on the enforceability of Collateral; and
(iii) be a secured or unsecured creditor of, or hold an
equity interest in, any Project Borrower, the Issuers, Affiliates of
the Issuers, any Project Borrower or any issuer of any Collateral.
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(c) It is understood that the Program Manager, any of its
Affiliates and any of their respective directors, officers, employees and
agents may (subject, as to the Program Manager, to Section 2.04(a)) engage in
any other business and furnish investment management and advisory services to
others, including Persons which may have investment objectives similar to those
followed by the Program Manager with respect to the Collateral and which may
own securities of the same class, or which are the same type, as the Project
Loans included in the Collateral. The Program Manager will be free, in its
sole discretion, to make recommendations to others, or effect transactions on
behalf of itself or for others, which may be the same as or different from
those effected with respect to the Collateral.
2.05 Authorization to Act; Power of Attorney. Each of the
Issuer and the Co-Issuer hereby appoints and authorizes and, pursuant to
Section 17-403 of the Delaware Uniform Limited Partnership Act, the General
Partner of the Issuer hereby delegates authority to, the Program Manager, and
the Program Manager hereby agrees, to perform, on behalf of the Issuer and the
Co-Issuer, each of the Services and any other action expressly contemplated by
the Financing Documents or the Partnership Agreement to be performed by the
Issuer, the Co-Issuer or the Program Manager, together with such other powers
as are reasonably incidental to such appointment and authorization. In
furtherance thereof, each of the Issuer and the Co-Issuer hereby makes,
constitutes and appoints the Program Manager, with full power of substitution,
as its true and lawful agent and attorney-in-fact, with full power and
authority in its name, place and stead, to sign, execute, certify, swear to,
acknowledge, deliver, file, receive and record any and all documents which the
Program Manager reasonably deems appropriate or necessary in connection with
its duties under this Agreement. The foregoing power of attorney is hereby
declared to be irrevocable and a power coupled with an interest, and it shall
survive and not be affected by the subsequent dissolution or termination of the
Co-Issuer; provided, that the foregoing power of attorney will expire, and the
Program Manager will cease to have any power to act as the Issuer's or the
Co-Issuer's attorney-in-fact, upon termination of this Agreement in accordance
with its terms. The Issuer and the Co-Issuer shall execute and deliver to the
Program Manager or cause to be executed and delivered to the Program Manager
all such other powers of attorney, proxies, dividend and other orders, and all
such instruments, without recourse to the Issuer or the Co-Issuer, as the
Program Manager may reasonably request for the purpose of enabling the Program
Manager to exercise the rights and powers which it is entitled to exercise
pursuant to this Section 2.05. Notwithstanding the foregoing or any other
provision of this Agreement, the Program Manager shall not have any power or
authority to act on behalf of the Issuer or the Co-Issuer in respect of a
voluntary filing of bankruptcy of, or the conduct of any bankruptcy proceeding
of, the Issuer or the Co-Issuer and shall not be authorized to sign, execute,
certify, swear to, acknowledge, deliver, file, receive or record any document
relating thereto.
2.06 Information; Further Assurances; Agreement under
Financing Documents. The Program Manager shall give notice of any
determination made by the Program Manager pursuant to any of clause (xiii),
clause (xv) (only insofar as a determination is made to issue additional Class
A Notes) and clause (xvi) of Section 2.01(a) hereof to the Collateral Agent,
each Representative, each Hedge Counterparty and each Rating Agency. Each of
the Program Manager, the Issuer and the Co-Issuer shall take such actions, and
furnish such certificates, opinions and other documents, as may be reasonably
requested by any other party hereto in order
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to effectuate the purposes of this Agreement and to ensure compliance with
applicable laws and regulations and the terms of the Partnership Agreement and
the Financing Documents. The Program Manager hereby consents and agrees to the
assignment and pledge by the Issuers of this Agreement as set forth in Sections
2.1 and 6.1 of the Security Agreement.
2.07 Indemnity of Program Manager. The Program Manager
hereby indemnifies and holds harmless each of the Issuers and each Holder of
Notes from and against (a) any loss, expense, damage or injury (subject to the
limitations set forth in Section 11.18 hereof) and any costs, expenses and
attorneys' fees incurred in investigating, preparing or prosecuting any claim
against the Program Manager, and, further subject to the limitation that the
indemnification granted to the Holders of the Notes hereunder shall not exceed,
in the aggregate, unpaid principal and interest on the Notes and the reasonable
costs, expenses and attorneys' fees of one firm of counsel to represent the
interest of the Holders of the Notes and the Issuers and, in each case, without
duplication of the amount of any indemnification claim made by the Issuer or
the Co-Issuer) and (b) any Damages in connection with any claim by any third
party (other than a Holder of Notes or any other party to any Financing
Document) against the Issuer or the Co-Issuer, in any such case suffered,
sustained or incurred by the Issuer or the Co-Issuer by reason of any action
taken or omitted to be taken hereunder or in connection herewith by the Program
Manager or any of its officers, agents, stockholders, partners, members,
directors or employees, in each case if there is a determination made in an
arbitration conducted under and in accordance with the terms of Section 11.11
hereof (but not otherwise) that such act or omission was performed or omitted
in bad faith or constituted gross negligence or willful misconduct, except for
any indemnification that is expressly prohibited by applicable law. The
indemnities by the Program Manager set forth in this Section 2.07 apply solely
to it, and none of the Affiliates, officers, agents, stockholders, partners,
members, directors or employees of the Program Manager shall be liable (either
directly, indirectly as a controlling person, vicariously or otherwise) either
hereunder or otherwise arising out of or related to any action taken or omitted
to be taken hereunder or in connection herewith by the Program Manager or any
of its Affiliates or any of their respective officers, agents, stockholders,
partners, members, directors or employees. Subject to the limitations set
forth herein, each Holder of Notes shall be an express third party beneficiary
of the indemnity granted by the Program Manager under this Section 2.07.
2.08 Compensation to the Issuer. The Program Manager
hereby agrees that any payment directly related to the making or maintaining of
any Project Loan shall be paid or payable only to the Issuer; provided that
nothing herein or in any Financing Document shall in any way limit the right of
any Person (including Enron and any of its Affiliates) to receive compensation
for services rendered to a Project Borrower in conformity with the Standard of
Care and consistent with the Services to be provided hereunder, nor shall
anything herein or in any Financing Document restrict the right of the
shareholders of any Project Borrower to agree to any differential equity
distributions.
Section 3. Representations and Warranties of the Program
Manager. The Program Manager hereby represents and warrants to the Issuers as
follows as of the date hereof:
3.01 Status. The Program Manager is a limited partnership
duly formed, validly existing and in good standing under the laws of the State
of Delaware, has all requisite
17
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power and authority, and has all material governmental licenses,
authorizations, consents and approvals, necessary to own its assets and carry
on its business as now being or as proposed to be conducted and is qualified to
do business in all jurisdictions in which the nature of the business conducted
by it makes such qualification necessary and where failure so to qualify would
have a Material Adverse Effect with respect to the Program Manager.
3.02 Powers. The Program Manager has all necessary power
and authority to execute and deliver this Agreement and each Related Agreement
and to perform its obligations under this Agreement and each Related Agreement
and has taken all necessary action to authorize such execution, delivery and
performance. This Agreement has been duly executed and delivered by the
Program Manager. Each Related Agreement, when delivered by the Program
Manager, will have been duly executed and delivered by the Program Manager.
This Agreement constitutes, and each Related Agreement when executed and
delivered by the Program Manager shall constitute, the legal, valid and binding
obligation of the Program Manager, enforceable against the Program Manager in
accordance with its respective terms (subject to applicable bankruptcy,
reorganization, insolvency, moratorium or similar laws affecting creditors'
rights generally and subject, as to enforceability, to equitable principles of
general application (regardless of whether enforcement is sought in a
proceeding in equity or at law)).
3.03 No Violation or Conflict.
(a) None of the execution and delivery of this Agreement by
the Program Manager, the consummation by it of the transactions contemplated
herein and in the Related Agreements and compliance by it with the terms and
provisions hereof and thereof will conflict with or result in a breach of, or
require any consent under, the partnership agreement or the certificate of
limited partnership of the Program Manager, or any applicable law or
regulation, or any order, writ, injunction or decree of any court or
governmental authority or agency, or any agreement or instrument to which the
Program Manager is a party or by which the Program Manager is bound or to which
the Program Manager is subject, or constitute a default under any such
agreement or instrument or result in the creation or imposition of any Lien
upon any Property of the Program Manager pursuant to the terms of any such
agreement or instrument; except in any such case where the conflict, breach or
requirement of consent would not have a Material Adverse Effect.
(b) The Program Manager is not in violation of any of its
constitutional documents. The Program Manager is not in breach or violation of
or in default under (i) the terms of any indenture, contract, lease, mortgage,
deed of trust, note agreement or other evidence of indebtedness or other
agreement, obligation, condition, covenant or instrument to which the Program
Manager is a party or is bound, (ii) any statute applicable to the Program
Manager or (iii) any law, decree, order, rule or regulation applicable to the
Program Manager of any court or regulatory, administrative or governmental
agency, body or authority, or arbitrator having or asserting jurisdiction over
the Program Manager, or its properties; except in any such case where the
default, breach or violation would not have a Material Adverse Effect on the
Program Manager.
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3.04 Consents. All governmental and other consents that
are required to have been obtained by the Program Manager with respect to its
execution, delivery and performance of this Agreement and each Related
Agreement have been obtained and are in full force and effect and all
conditions of any such consents have been complied with.
3.05 Absence of Litigation. There is not pending against
the Program Manager, or against any entity controlled, directly or indirectly,
by the Program Manager, any entity that controls, directly or indirectly, the
Program Manager or any entity directly or indirectly under common control with
the Program Manager, any action, suit or proceeding at law or in equity or
before any court, tribunal, governmental body, agency or official or any
arbitrator that could reasonably be expected to have a Material Adverse Effect
with respect to the Program Manager.
3.06 Registration as Investment Adviser. The Program
Manager is not required to be registered as an investment adviser under the
Investment Adviser's Act of 1940, as amended.
3.07 Ownership of Program Manager. All of the issued and
outstanding general partnership interests of the Program Manager are owned by
Enron CPO Management Holdings II, Inc. and all of the issued and outstanding
limited partnership interests of the Program Manager are owned by Enron CPO
Management Holdings I, Inc.
3.08 Disclosure. The information heretofore furnished in
writing by or on behalf of the Program Manager to the Issuers in connection
with the negotiation, preparation or delivery of this Agreement, when taken as
a whole, does not contain any untrue statement of material fact or omit to
state any material fact necessary to make the statements herein or therein, in
light of the circumstances under which they were made, not misleading.
Section 4. Representations and Warranties of the Issuer.
The Issuer hereby represents and warrants to the Program Manager as follows as
of the date hereof:
4.01 Status. The Issuer is a limited partnership duly
formed, validly existing and in good standing under the laws of the State of
Delaware, has all requisite power and authority, and has all material
governmental licenses, authorizations, consents and approvals, necessary to own
its assets and carry on its business as now being or as proposed to be
conducted and is qualified to do business in all jurisdictions in which the
nature of the business conducted by it makes such qualification necessary and
where failure so to qualify would have a Material Adverse Effect with respect
to the Issuer.
4.02 Powers. The Issuer has all necessary power and
authority to execute and deliver this Agreement and each Related Agreement and
to perform its obligations under this Agreement and each Related Agreement and
has taken all necessary action to authorize such execution, delivery and
performance. This Agreement has been duly executed and delivered by the
Issuer. Each Related Agreement, when delivered by the Issuer, will have been
duly executed and delivered by the Issuer. This Agreement constitutes, and
each Related Agreement when executed and delivered by the Issuer shall
constitute, the legal, valid and binding obligation of
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the Issuer, enforceable against the Issuer in accordance with its respective
terms (subject to applicable bankruptcy, reorganization, insolvency, moratorium
or similar laws affecting creditors' rights generally and subject, as to
enforceability, to equitable principles of general application (regardless of
whether enforcement is sought in a proceeding in equity or at law)).
4.03 No Violation or Conflict.
(a) None of the execution and delivery of this Agreement by
the Issuer, the consummation by it of the transactions contemplated herein and
in the Related Agreements and compliance by it with the terms and provisions
hereof and thereof will conflict with or result in a breach of, or require any
consent under, the Partnership Agreement or the Certificate of Limited
Partnership of the Issuer, or any applicable law or regulation, or any order,
writ, injunction or decree of any court or governmental authority or agency, or
any agreement or instrument to which the Issuer is a party or by which the
Issuer is bound or to which the Issuer is subject, or constitute a default
under any such agreement or instrument or (except for the Lien of Security
Agreement and any Permitted Liens) result in the creation or imposition of any
Lien upon any Property of the Issuer pursuant to the terms of any such
agreement or instrument.
(b) The Issuer is not in violation of any of its
constitutional documents. The Issuer is not in breach or violation of or in
default under (i) the terms of any indenture, contract, lease, mortgage, deed
of trust, note agreement or other evidence of indebtedness or other agreement,
obligation, condition, covenant or instrument to which the Issuer is a party or
is bound, (ii) any statute applicable to the Issuer or (iii) any law, decree,
order, rule or regulation applicable to the Issuer of any court or regulatory,
administrative or governmental agency, body or authority, or arbitrator having
or asserting jurisdiction over the Issuer, or its properties; except in any
such case where the default, breach or violation would not have a Material
Adverse Effect on the Issuer.
4.04 Consents. All governmental and other consents that
are required to have been obtained by the Issuer with respect to its execution,
delivery and performance of this Agreement and each Related Agreement have been
obtained and are in full force and effect and all conditions of any such
consents have been complied with.
4.05 Absence of Litigation. There is not pending or, to
its knowledge, threatened against the Issuer, or against any entity controlled,
directly or indirectly, by the Issuer, any entity that controls, directly or
indirectly, the Issuer or any entity directly or indirectly under common
control with the Issuer, any action, suit or proceeding at law or in equity or
before any court, tribunal, governmental body, agency or official or any
arbitrator that could reasonably be expected to have a Material Adverse Effect
with respect to the Issuer.
4.06 No Required Registration. The Issuer has not engaged
in any transaction that would result in the violation of, or require
registration as an investment company under, the Investment Company Act of
1940, as amended.
Section 5. Representations and Warranties of the
Co-Issuer. The Co-Issuer hereby represents and warrants to the Program Manager
as follows as of the date hereof:
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5.01 Status. The Co-Issuer is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware, has all requisite power and authority, and has all material
governmental licenses, authorizations, consents and approvals, necessary to own
its assets and carry on its business as now being or as proposed to be
conducted and is qualified to do business in all jurisdictions in which the
nature of the business conducted by it makes such qualification necessary and
where failure so to qualify would have a Material Adverse Effect with respect
to the Co-Issuer.
5.02 Powers. The Co-Issuer has all necessary power and
authority to execute and deliver this Agreement and any Related Agreement and
to perform its obligations under this Agreement and each Related Agreement and
has taken all necessary action to authorize such execution, delivery and
performance. This Agreement has been duly executed and delivered by the
Co-Issuer. Each Related Agreement, when delivered by the Co-Issuer, will have
been duly executed and delivered by the Co-Issuer. This Agreement constitutes,
and each Related Agreement when executed and delivered by the Co-Issuer shall
constitute, the legal, valid and binding obligation of the Co-Issuer,
enforceable against the Co-Issuer in accordance with its respective terms
(subject to applicable bankruptcy, reorganization, insolvency, moratorium or
similar laws affecting creditors' rights generally and subject, as to
enforceability, to equitable principles of general application (regardless of
whether enforcement is sought in a proceeding in equity or at law)).
5.03 No Violation or Conflict.
(a) None of the execution and delivery of this Agreement, the
consummation of the transactions contemplated herein and in the Related
Agreements and compliance with the terms and provisions hereof and thereof will
conflict with or result in a breach of, or require any consent under, the
Certificate of Incorporation or bylaws of the Co-Issuer, or any applicable law
or regulation, or any order, writ, injunction or decree of any court or
governmental authority or agency, or any agreement or instrument to which the
Co-Issuer is a party or by which the Co-Issuer is bound or to which the
Co-Issuer is subject, or constitute a default under any such agreement or
instrument or result in the creation or imposition of any Lien upon any
Property of the Co-Issuer pursuant to the terms of any such agreement or
instrument.
(b) The Co-Issuer is not in violation of any of its
constitutional documents. The Co-Issuer is not in breach or violation of or in
default under (i) the terms of any indenture, contract, lease, mortgage, deed
of trust, note agreement or other evidence of indebtedness or other agreement,
obligation, condition, covenant or instrument to which the Co-Issuer is a party
or is bound, (ii) any statute applicable to the Co-Issuer or (iii) any law,
decree, order, rule or regulation applicable to the Co-Issuer of any court or
regulatory, administrative or governmental agency, body or authority, or
arbitrator having or asserting jurisdiction over the Co-Issuer, or its
properties; except in any such case where the default, breach or violation
would not have a Material Adverse Effect on the Co-Issuer.
5.04 Consents. All governmental and other consents that
are required to have been obtained by the Co-Issuer with respect to its
execution, delivery and performance of this
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Agreement and each Related Agreement have been obtained and are in full force
and effect and all conditions of any such consents have been complied with.
5.05 Absence of Litigation. There is not pending or, to
its knowledge, threatened against the Co-Issuer, or against any entity
controlled, directly or indirectly, by the Co-Issuer, any entity that controls,
directly or indirectly, the Co-Issuer or any entity directly or indirectly
under common control with the Co-Issuer, any action, suit or proceeding at law
or in equity or before any court, tribunal, governmental body, agency or
official or any arbitrator that could reasonably be expected to have a Material
Adverse Effect with respect to the Co-Issuer.
5.06 No Required Registration. The Co-Issuer has not
engaged in any transaction that would result in the violation of, or require
registration as an investment company under, the Investment Company Act of
1940, as amended.
Section 6. Covenants. The Program Manager hereby agrees
with the Issuer and the Co-Issuer as follows:
6.01 No Petition for Bankruptcy or Insolvency. The
Program Manager will not petition for the Bankruptcy or Insolvency of the
Issuer or the Co-Issuer so long as this Agreement shall remain in effect and in
no event any earlier than one year and one day, or if longer the applicable
preference period then in effect, after the payment in full of all Secured
Obligations.
6.02 Books and Records.
(a) The Program Manager shall keep books and records relating
to the Services, including such books and records in which the Program Manager
shall record entries of each transaction effected by the Issuer and/or the
Co-Issuer in accordance with instructions given by the Program Manager by reason
of, or by the Program Manager acting on behalf of the Issuer and/or the
Co-Issuer in accordance with, the provision of the Services. The Program
Manager shall permit the Issuers access at all reasonable times to its books
and records as they pertain to the Services.
(b) If the Program Manager is required to use or retain any
documents or other records of the Issuer or the Co-Issuer, it shall keep such
documents and other records clearly marked as pertaining to the assets and
operations of the Issuer or the Co-Issuer and separate and apart from the
documents and records pertaining to the assets of the Program Manager or Enron;
and to the extent that such documents or other records are maintained solely in
computer-generated form, such computer records shall be clearly marked to
reflect that they pertain to the assets and operations of the Issuer or the
Co-Issuer and are in the possession of Program Manager only in its capacity as
manager under this Agreement.
(c) The Program Manager shall not make copies of the books
and records of the Issuer or the Co-Issuer available to any of the creditors of
the Program Manager or Enron or available for any purpose other than to verify
the services rendered or to be rendered by the Program Manager in its capacity
as manager under this Agreement and, in each such instance,
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the Program Manager shall inform any such third party that such documents and
records pertain to the assets and operations of the Issuer or the Co-Issuer and
that the Program Manager has possession of such documents and records for the
sole purpose of permitting it to perform its duties under this Agreement.
6.03 Governmental Authorizations. The Program Manager
will, both on its own behalf and on behalf of the Issuers, obtain all material
permits, licenses, certificates or other administrative or regulatory
authorizations as may be necessary for the performance of the Services and the
actions taken or to be taken by the Program Manager pursuant to Section 2.05
hereof.
6.04 Compliance with Laws and the Financing Documents.
The Program Manager will comply in all material respects with all of the terms
of the Financing Documents applicable to it and to the Issuers and all laws,
rules and regulations applicable to the performance of the Services (including,
without limitation, all applicable provisions of U.S. and other applicable
securities laws) and the actions taken or to be taken by the Program Manager
pursuant to Section 2.05 hereof and will cause, insofar as within the Program
Manager's control pursuant to terms of this Agreement, the Issuers and the
assets of the Issuers to comply in all material respects with (a) all laws,
rules and regulations applicable to the Issuers, (b) all undertakings
applicable to the Issuers set forth in the Financing Documents and (c) all of
the terms of the Partnership Agreement and the organizational documents of the
Co-Issuer; provided, however, that the Program Manager shall not be bound by
any amendment to any of the Financing Documents that materially increases the
duties or liabilities of the Program Manager unless the Program Manager shall
have consented thereto.
6.05 Interested Party Transactions; Conflicts. The
Program Manager will not enter into any transaction with the Issuers that would
be prohibited by the organizational documents of the Issuers. The Program
Manager will not engage in any transaction after the date hereof which
conflicts with the interests of the Issuers if any such transaction would have
a Material Adverse Effect on the Issuers, it being understood and agreed, for
the avoidance of doubt, that any Transaction Documents in effect as of the
Closing Date will be deemed not to conflict with the interests of the Issuers.
Section 7. Management Fee.
7.01 Payment of Management Fee. In consideration for the
performance by the Program Manager of its obligations hereunder, the Issuer
shall pay, or cause the Account Bank to pay to the Program Manager (a) a
quarterly administrative fee (the "Administrative Fee") of $1,500,000, as
automatically adjusted as of each [ ] during the term of this Agreement,
commencing [ ] 1998, for inflation by multiplying the Administrative Fee
in effect on such date by the sum of 1.00 plus the Inflation Factor with
respect to the immediately preceding calendar year, which shall accrue on each
Quarterly Payment Date thereafter, (b) a quarterly management fee (the
"Management Fee") which shall accrue on the Aggregate Book Value of the Issuer's
Assets, for each Accrual Period, at a rate per annum equal to 0.25% and (c) a
quarterly incentive fee (the "Incentive Fee", and collectively with the
Administrative Fee and the Management Fee, the
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"Fees") in an amount (greater than zero) equal to the product of (x) the
Aggregate Project Loan Balance with respect to all non-Defaulted Project Loans,
(y) the excess of (I) the Actual Net Interest Margin over (II) the Base Net
Interest Margin and (z) 5%. Any accrued and unpaid Fees shall be paid to the
Program Manager on each Quarterly Payment Date; provided that, prior to the
Final Termination Date, any accrued and unpaid Fees shall be paid to the
Program Manager only if and to the extent such payment is permitted by the
Financing Documents (including, without limitation, Article 4 of the Security
Agreement), it being understood and agreed that any accrued and unpaid
Administrative Fee and Management Fee not paid on any Quarterly Payment Date as
a result of the application of this proviso shall, subject to the provisions of
the Financing Documents, be payable on the next Quarterly Payment Date and
thereafter as available on subsequent Quarterly Payment Dates; and provided,
further, that the first payment of the Administrative Fee shall be made on the
Closing Date out of the proceeds of issuance of the Notes. After the Final
Termination Date, each reference herein to a "Quarterly Payment Date" shall
instead refer to the 10th day of each January, April, July and October in each
calendar year; provided that if any such day is not a Business Day, then the
relevant date shall be the next succeeding date that is a Business Day.
7.02 Status upon Termination.
(a) If this Agreement shall be terminated pursuant to Section
10.01 or 10.02 hereof, any Fees hereunder accrued to the date of such
termination shall thereafter be paid to the Program Manager as provided in
Section 7.01 hereof (but only after the prior payment in full of any accrued
and unpaid Fees payable to any Replacement Manager under any Replacement
Management Agreement).
(b) If this Agreement shall be terminated pursuant to Section
10 hereof or otherwise, the Fees shall be prorated for any partial periods
between Quarterly Payment Dates during which this Agreement was in effect and
shall be due and payable on the first Quarterly Payment Date following the date
of such termination.
Section 8. Expenses.
(a) Expenses Paid by Program Manager. The Program Manager
shall pay only the following expenses incurred by the Program Manager, the
Issuer or the Co-Issuer (each, a "Covered Party") in connection with the
rendering of the Services and the actions taken or to be taken by the Program
Manager pursuant to Section 2.05: (i) salaries, compensation and expenses of
the directors, officers and employees of the Covered Parties, (ii) general and
administrative expenses of the Covered Parties including shared service
allocations from Enron International Services, Inc., (iii) computer software
and hardware and information management systems expenses of the Covered
Parties, (iv) audit fees and out-of-pocket expenses incurred by the Covered
Parties for the annual audit of the Issuer pursuant to Section 6.3 of the
Common Agreement, (v) expenses related to the annual and quarterly financial
statements of the Issuer, (vi) legal fees and out-of-pocket expenses relating
to general partnership and corporate matters of the Issuer and the Co-Issuer,
respectively and (vii) fees and expenses of tax and other
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consultants relating to general partnership and corporate matters of the Issuer
and the Co-Issuer, respectively.
(b) Expenses Paid by the Issuer. The Issuer shall pay all
other expenses of the Covered Parties, including without limitation, (i)
Transaction Expenses, (ii) expenses related to the Backup Facility and the
Liquidity Facility, (iii) fees of the Rating Agencies, (iv) Administrative
Expenses, (v) all expenses to be paid by the Project Borrowers to the extent
not recovered from the Project Borrowers, (vi) expenses related to a default of
Portfolio Assets or restructuring of Project Loans, (vii) any and all Premiums
related to the Notes, (viii) expenses related to tax audits not covered by
Section 8(a), (ix) any fees and expenses payable to the Program Manager
pursuant to this Agreement, (x) any non-routine legal costs and (xi)
Extraordinary Expenses not covered by Section 8(a).
Section 9. No Joint Venture. The Issuer, the Co-Issuer
and the Program Manager are not partners or joint venturers with each other and
nothing herein shall be construed to make them such partners or joint venturers
or impose any liability as such on any of them. The Program Manager's relation
to the Issuer, the Co-Issuer and to the holders of Secured Obligations and the
Interests shall be deemed to be that of an independent contractor and no
fiduciary relationship shall exist between the Program Manager and the Issuer
or between the Program Manager and the Co- Issuer or between the Program
Manager and the holder of any Secured Obligation or Interest.
Section 10. Program Manger Termination.
10.01 Automatic Termination. The rights and obligations of
the Program Manager under this Agreement will automatically terminate upon the
earliest to occur of the following events:
(a) the dissolution of the Issuer; and
(b) the Bankruptcy or Insolvency of the Program Manager.
10.02 Optional Termination.
(a) The rights and obligations when required of the Program
Manager under this Agreement shall be terminated by the Issuers pursuant to
Section 4.5 of the Common Agreement if any of the following events shall have
occurred (and, in the case of any such event which can be remedied or cured, be
continuing):
(i) an Event of Default or a Subordinate Event of Default
shall have occurred;
(ii) the Program Manager shall fail to comply with or perform
in any material respect any agreement or obligation under this Agreement and
such failure shall not be remedied within 30 days after notice of such failure
is given to the Program Manager;
(iii) any representation, warranty or certification made or
deemed made herein by the Program Manager shall prove to have been false or
misleading as of the time made or
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furnished in any respect that would have a Material Adverse Effect with respect
to the Program Manager, the Issuer or the Co-Issuer;
(iv) any action shall be taken by the Program Manager that
constitutes fraud against the Issuer or the Co-Issuer;
(v) the Program Manager shall be convicted of a felony; or
(vi) the general partner of the Program Manager no longer is,
directly or indirectly, controlled by Enron, or any successor to or assignee of
Enron's rights and obligations under the Support Agreement (as such succession
or assignment is contemplated by Section 14.8 of the Support Agreement).
(b) The rights and obligations of the Program Manager under
this Agreement may be terminated by the Issuers at any time upon a Class I
Trigger Event.
10.03 Effectiveness of Termination under Certain
Circumstances.
(a) No termination pursuant to Section 10.02 hereof shall
be effective unless and until:
(i) notice of such termination (specifying the event that
is the basis for such termination) is given to the Program Manager by
the Issuers (which notice must be delivered not later than 90 days
after notice of any of the events specified in Section 10.02 is given
to the Issuers pursuant to Section 10.04 hereof);
(ii) the date as of which a Replacement Manager shall have
entered into a Replacement Management Agreement;
(iii) so long as no Event of Default has occurred, the
Issuers shall have received one or more written instruments to the
effect that such Replacement Manager is acceptable to the holders of
the Interests (in accordance with the Partnership Agreement); and
(iv) in the case of a termination pursuant to Section
10.02(b), the Required Lenders shall have approved the appointment of
the Replacement Program Manager proposed by the Class I Interest
holders.
(b) In the case of a termination pursuant to Section 10.01:
(i) all duties, authority and power of the Program Manager
under this Agreement shall pass to and be vested in
________________________, except that all duties, authority and power
of the Program Manager under Sections 2.01(x)(B), (xxiv) and (xxvi)
shall pass to and be vested in Chase Bank of Texas, in each case, as
Backup Program Manager; and, without limiting the generality of the
foregoing, each Backup
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Program Manager is hereby authorized and empowered to execute and
deliver, on behalf of the terminated Program Manager, as
attorney-in-fact or otherwise, all documents and other instruments
upon the failure of the terminated Program Manager to execute or
deliver such documents or instruments, and to do and accomplish all
other acts or things necessary or appropriate to effect the purposes
of such termination; and
(ii) the Program Manager agrees to cooperate with the Backup
Program Managers in effecting the termination of the responsibilities
and rights of the Program Manager hereunder, including the transfer to
such Backup Program Managers of all authority of the Program Manager
to service the Project Loans and the other Portfolio Assets; and
without limiting the generality of the foregoing, the Program Manager
shall assist and cooperate with the Backup Program Managers in
transferring all material and data (other than software) used by the
Program Manager and necessary to service the Project Loans and the
other Portfolio Assets effectively in accordance with the terms of
this Agreement.
10.04 Certain Notices. The Program Manager shall give
prompt written notice to the Issuer, each Representative, the Collateral Agent,
each Hedge Counterparty and each Rating Agency:
(a) of the occurrence of any event described in any of
paragraphs (a) through (f) of Section 10.02 hereof, which notice shall describe
such event in reasonable detail; and
(b) of any termination of the Program Manager, whether
pursuant to Section 10.01 or 10.02 hereof or otherwise.
10.05 Replacement Management Agreement. Upon any
termination of this Agreement, the Program Manager or the Backup Program
Managers, as the case may be, shall cooperate with the Issuers, the Collateral
Agent, each Representative and any Replacement Manager in connection with the
assumption by the Replacement Manager of its duties under a Replacement
Management Agreement and shall forthwith deliver to the Issuer any and all
property and documents of the Issuer and the Co-Issuer then in custody of the
Program Manager or the Backup Program Managers, as the case may be.
10.06 Survival. The provisions of Sections 7.02, 8, 10.05,
11.17 and 11.18 shall survive the termination of this Agreement. In addition,
the exculpation and indemnification provisions of Section 2.02 shall survive
the termination of this Agreement with respect to any action or failure to act
referred to in said Section arising prior to such termination.
Section 11. Miscellaneous.
11.01 Waiver. No failure on the part of either party
hereto to exercise and no delay in exercising, and no course of dealing with
respect to, any right, remedy, power or privilege under this Agreement shall
operate as a waiver thereof, nor shall any single or partial waiver of any
right, power or privilege under this Agreement preclude any further exercise
thereof or the exercise of any other right, power or privilege.
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11.02 Notices. All notices and other communications
provided for herein (including, without limitation, any modifications of, or
waivers or consents under, or instructions, directions or requests given under,
this Agreement) shall be given or made in writing (including, without
limitation, by telecopy) to the intended recipient at the "Address for Notices"
specified below its name on the signature page hereof; or, as to any party, at
such other address as shall be designated by such party in a notice to the
other parties. Except as otherwise provided in this Agreement, all such
communications shall be deemed to have been duly given when transmitted by
telecopier or personally delivered or, in the case of a mailed notice, upon
receipt, in each case given or addressed as aforesaid. The Program Manager
shall deliver to the Collateral Agent and each Representative duplicate
original copies of all notices, statements, communications and instruments
delivered or required to be delivered to the Issuer or the Co-Issuer pursuant
to this Agreement.
11.03 Amendment, Modification or Waiver. No provision of
this Agreement may be amended, modified or waived except (a) by an instrument
in writing signed by the Program Manager and the Issuer and the Co-Issuer and
(b) so long as any of the Senior Secured Obligations are outstanding, as
permitted pursuant to Section 6.1(a)(iv) of the Security Agreement.
11.04 Successors and Assigns. This Agreement shall be
binding upon and inure to the benefit of the parties hereto and their
respective successors and permitted assigns.
11.05 Assignments. No party hereto may assign or delegate
any of its rights or obligations under this Agreement (whether by way of
security or otherwise); provided, however (i) the Issuers may xxxxx x Xxxx on
their rights hereunder as provided in the Security Agreement (and the
Collateral Agent may, upon exercise of its rights in respect of such Lien,
exercise all rights and remedies of the Issuers hereunder), and the Program
Manager hereby acknowledges and consents to the creation of such Lien and
consents to any such exercise, and (ii) the Program Manager (x) may assign its
rights and obligations under this Agreement to any successor to or assignee of
Enron's rights and obligations under the Support Agreement (as such succession
or assignment is contemplated by Section 14.8 of the Support Agreement) or (y)
may assign its rights and obligations under this Agreement to any other Person
that is controlled, directly or indirectly, by Enron.
11.06 Survival of Representations, Warranties and
Indemnities. Each representation and warranty made or deemed to be made herein
or pursuant hereto, and each indemnity provided for hereby, shall survive
indefinitely.
11.07 Benefit of the Agreement. The Program Manager agrees
that its obligations hereunder shall be enforceable at the instance of the
Issuers or the Collateral Agent, on behalf of the Secured Parties, as provided
in the Financing Documents.
11.08 Priority of Payments. The Program Manager agrees
that all amounts to which it is entitled pursuant to this Agreement shall be
due only in accordance with Sections 4.1(a) and 4.3(a) of the Security
Agreement and only to the extent funds are available for such
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payments in accordance thereunder. The Program Manager hereby consents to the
collateral assignment of this Agreement as provided in the Security Agreement.
11.09 Captions. The captions and section headings
appearing herein are included solely for convenience of reference and are not
intended to affect the interpretation of any provision of this Agreement.
11.10 Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be identical and all of which,
taken together, shall constitute one and the same instrument, and each of the
parties hereto may execute this Agreement by signing any such counterpart.
11.11 Arbitration.
(a) Disputes. Any and all disputes, claims or controversies
arising out of or in connection with this Agreement, including (without
limitation) its breach, termination or validity shall be solely and finally
settled by arbitration by a panel of three (3) arbitrators under the auspices
of the New York Regional Office of the American Arbitration Association in
accordance with the Commercial Arbitration Rules of the American Arbitration
Association existing at the time the arbitration is notified pursuant to
Section 11.11(b) as modified herein (the "AAA Rules") (without limiting the
foregoing, the Issuer and the Co-Issuer each agree not to raise any claims,
counterclaims, issues or accounting in any proceeding other than in accordance
with this Section 11.11). The parties agree that the award of the arbitrators
shall be the sole and exclusive remedy among them regarding any claims,
counterclaims, issues or accounting presented to the arbitrators.
(b) Selection of Arbitrators. The party electing arbitration
shall so notify the other party in writing in accordance with the AAA Rules,
and such notice shall be accompanied by the name of the arbitrator selected by
the party serving the notice. The second arbitrator, to be chosen by the
respondent, shall be named in the respondent's answering statement and the
third arbitrator, who shall serve as chairperson, shall be chosen by the two
arbitrators so selected within 30 days of service of the respondent's answering
statement. If any arbitrator has not been appointed within the time limits
specified herein or in the AAA Rules, such appointment shall be made by the
American Arbitration Association in the New York Regional Office. For purposes
of this Section 11.11(b), the Issuers shall be deemed to be one and the same
party.
(c) Arbitration Proceedings. All arbitration proceedings
shall be conducted in New York in the English language and shall be governed by
the Federal Arbitration Act (9 U.S.C. Sections 1 et seq.). The parties hereto
agree to facilitate the arbitration by (i) making available to each other and
to the arbitrators for inspection all documents, books, records and personnel
under their control as the arbitrators shall determine to be relevant to the
dispute; (ii) conducting arbitration hearings to the greatest extent possible
on successive, contiguous days; and (iii) observing strictly the time periods
established by the AAA Rules or by the arbitrators for the submission of
evidence and briefs. The arbitrators shall render all decisions, including the
final award, by majority vote and shall state in writing the reasons for such
decisions.
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(d) Arbitral Award. Any monetary award of the arbitrators
shall be made and payable freely available U.S. Dollars free of any tax and
reductions. Any such monetary award shall include interest from the date of
any breach or any violation of this Agreement. The arbitrators shall fix an
appropriate rate of interest from the date of the breach or other violation to
the date when the award is paid in full. In no event shall the interest rate
during such period be lower than the lowest prime, base or equivalent
commercial lending rate announced by any member banks of the New York
Clearinghouse Association of New York, New York for ninety-day loans for
responsible and substantial commercial borrowers.
(e) Costs. Notwithstanding anything to the contrary herein,
the party prevailing on substantially all of its claims shall be entitled to
recover its costs, including reasonable attorneys' fees, for the arbitration
proceedings as well as for any ancillary proceedings, including any proceeding
to compel or enjoin arbitration, to request interim measures, or to confirm or
set aside an award.
(f) Estoppel and Res Judicata. No document filed,
assertion made or issue adjudicated in any court or arbitral proceeding other
than pursuant to this Section 11.11 shall have any collateral, judicial or
other estoppel or res judicata effect on any arbitral proceeding that is
subject to this Section 11.11.
(g) Enforcement of Award. The parties agree that judgment on
an arbitration award may be entered in any court of competent jurisdiction.
11.12 Realty Procedures. The Program Manager will
implement the following procedures:
(i) conduct its business so that no more than 50% of the debt
obligations held by the Issuer are principally secured by interests in
real property within the meaning of [Code section 7701(i)];
(ii) designate an employee or contractor (the "Designee")
whose duties will include monitoring compliance with the limitation in
clause (i) and corporate status issues;
(iii) require each Project Borrower to provide the following
information to the Issuer: (A) an initial representation letter
describing the anticipated use of the total amount of funds to be
borrowed under the Project Loan to such Project Borrower (this letter
must be obtained before the first draw on, or initial funding of, such
Project Loan is made), (B) a revised representation letter if there is
a material change in the actual or intended use of such Project Loan
funds (this letter must be obtained on a timely basis), (C) an
itemized listing by major asset categories (as determined by the
Program Manager) of the estimated fair market value of all assets or
other property that are or will be collateral for such Project Loan
(this listing must be obtained before the first draw on, or initial
funding of, a Project Loan is made), (D) a revised itemized listing of
all such property if there is a material change in the actual or
intended collateral for such Project Loan (this listing must be
obtained on a timely basis), (E) a summary by major asset
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categories (as determined by the Program Manager) of the actual or
estimated future use of the Project Borrower's cumulative construction
payments and other expenditures for assets pledged as collateral for
such Project Loan (this information must be obtained before each draw
on such Project Loan beginning with the month of the first draw on
such Project Loan and ending with the month in which the construction
of the underlying Eligible Project is completed), (F) the balance of
any loans from other lenders that are in parity with such Project Loan
and secured by the same assets that secure the Project Loan from the
Issuer (this information must be obtained on a month-end basis
beginning with the month of the first draw on such Project Loan and
ending with the month in which the construction of the underlying
Eligible Project is completed), and (G) other information that the
Designee believes relevant to monitoring as required by clause (ii);
(iv) to the extent practical, cause the Issuer to incur its
debt obligations and advance funds to Project Borrowers at month-end;
(v) to determine, in consultation with outside counsel, the
legal classification of assets or other property securing a Project
Loan as real or personal property [for purposes of Code section
7701(i)];
(vi) cause Designee to calculate whether the Issuer is a
corporation for purposes of the Code in accordance with guidelines
developed in consultation with outside counsel and to discuss these
calculations with the Chief Executive Officer of the Program Manager
on at least a monthly basis;
(vii) ensure that the initial draw on, or initial funding of,
any Project Loan is at least equal to 130% of the fair market value of
any real estate assets securing such Project Loan on the date of the
first draw or funding;
(viii) ensure that the collateral for the initial draw on, or
initial funding of, any Project Loan includes assets other than real
estate;
(ix) annually prepare a pro-forma corporate reporting as if
the Issuer were a corporation; and
(x) implement an appropriate record retention policy. The
Program Manager will modify the policies and procedures listed above
as it determines to be reasonably necessary in consultation with
external counsel and the Collateral Agent. Prior to the issuance of
Class A Notes or Class B Notes, and no less frequently than
semi-annually, the Program Manager will certify to the Collateral
Agent that the procedures in this section, as modified pursuant to
this section, have been followed and that no more than 50% of the debt
obligations held by the Issuer are principally secured by real
property within the meaning of Code section 7701(i).
11.13 Governing Law. THIS AGREEMENT AND THE RIGHTS AND
DUTIES OF THE PARTIES HERETO SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAW OF THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO THE PRINCIPLES
THEREOF RELATING TO CONFLICTS OF LAW.
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11.14 Complete Agreement. This Agreement (together with
the Financing Documents) sets forth the entire understanding of the parties
relating to the subject matter hereof and supersedes and cancels any prior
communications, understandings and agreements between the parties hereto.
11.15 Severability. If any provision in this Agreement is
invalid, illegal or unenforceable in any jurisdiction, then, to the fullest
extent permitted by applicable law, (i) the other provisions hereof shall
remain in full force and effect in such jurisdiction, (ii) the invalidity,
illegality or unenforceability of any provision hereof in any jurisdiction
shall not affect the validity, legality or enforceability of such provision in
any other jurisdiction and (iii) the parties hereto shall enter into good faith
negotiations to replace the invalid, illegal or unenforceable provision.
11.16 Conflict with the Financing Documents. Subject to
proviso contained in Section 6.04 hereof, in the event that this Agreement
requires any action to be taken with respect to any matter and the Financing
Documents requires that a different action be taken with respect to such
matter, and such actions are mutually exclusive, as long as any Senior Secured
Obligations remain outstanding, the provisions of the Financing Documents in
respect thereof shall control.
11.17 Limitation on Recourse.
(a) Only the Issuers shall be liable for the duties,
obligations and liabilities of the Issuers hereunder. Without prejudice to the
foregoing, (a) none of the assets of any Limited Partner shall be considered to
be assets of the Issuer except to the extent they have been contributed to, and
are retained by, the Issuer and (b) none of the duties, obligations or
liabilities of the Issuer hereunder shall be duties, obligations or liabilities
of any Partner, subject to Section 17-607 of the Delaware Revised Uniform
Limited Partnership Act.
(b) Only the Program Manager shall be liable for the duties,
obligations and liabilities of the Program Manager hereunder. Without
prejudice to the foregoing, none of the assets of any limited partner of the
Program Manager shall be considered to be assets of the Program Manager and no
such limited partner shall be liable for the obligations of the Program Manager
hereunder.
11.18 Limitation on Recovery of Certain Types of Damages.
In connection with any claim made by a party against another party hereunder,
the claiming party shall be entitled to recover, and any arbitrators appointed
hereunder shall have the power to award, only actual damages or direct damages,
together with the costs and expenses incurred by the claiming party in
investigating, preparing and prosecuting the claim for damages, and without
limiting the generality of the foregoing, no such party shall be entitled to
recover, and any such arbitrators are hereby divested of the power to award,
any other damages, whether expressed as punitive, consequential, special,
incidental, indirect, exemplary or treble damages, as damages for loss of
profits, opportunity or income or as penalties, whether based on statute or in
tort, contract or otherwise, regardless of whether such damages may be
available under applicable law or otherwise, and whether or not arising from a
party's sole, joint or concurrent negligence, strict
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liability, or other fault, the parties hereto waiving their right, if any, to
recover any damages in connection with claims hereunder other than actual
damages or direct damages, as so defined. The provisions of this Section 11.18
shall in no manner limit the meaning of "Damages" as used in Section 2.07 with
respect to claims of third parties (excluding Holders of Notes and any other
party to any Financing Document) against the Issuer or the Co-Issuer for which
the Issuer or the Co-Issuer is entitled to be indemnified under Section 2.07
(it being understood that actual and direct damages suffered by the Issuer or
the Co-Issuer may include amounts paid by the Issuer or the Co-Issuer in
respect of a third party claim, regardless of the nature of the damages claimed
by such third party).
11.19 Limitation on Amendment of Financing Documents.
The Issuers shall not permit any amendment to any of the Financing Documents
that (i) materially increases the duties or liabilities of the Program Manager
or (ii) affects the amount or priority of any fees payable to the Program
Manager without the prior written consent of the Program Manager.
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IN WITNESS WHEREOF, the parties hereto have caused this Management Agreement to
be duly executed and delivered as of the day and year first above written.
ENRON INTERNATIONAL CPO, L.P.
By: Enron CPO Holdings, Inc.,
its general partner
By:
---------------------------------------
Name:
Title:
Address for Notices:
ENRON INTERNATIONAL CPO, INC.
By:
---------------------------------------
Name:
Title:
Address for Notices:
ENRON CPO MANAGEMENT, L.P.
By: Enron CPO Management Holdings II, Inc.,
its general partner
By:
---------------------------------------
Name:
Title:
Address for Notices:
00
- 00 -
XXXXX XXXX XX XXXXX, NATIONAL ASSOCIATION
By
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Name
Title:
Address for Notices:
THE CHASE MANHATTAN BANK
By:
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Name:
Title:
Address for Notices:
