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EXHIBIT 10.14
EXECUTION COPY
ATLANTIC WATER TRUST
AMENDED AND RESTATED TRUST AGREEMENT
BY
WILMINGTON TRUST COMPANY,
as Trustee
XXXXXX TRUST,
as Beneficial Owner
and
ENRON CORP.,
as Depositor and Beneficial Owner
Dated as of December 17, 1998
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TABLE OF CONTENTS
Page
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ARTICLE I GENERAL................................................................................................1
Section 1.01. Appointment of Wilmington Trust Company...................................................1
Section 1.02. Formation of the Trust....................................................................1
Section 1.03. Name, Principal Office, and Name and Address of Trustee as Agent for Service of Process...2
Section 1.04. Purpose and Powers........................................................................2
Section 1.05. Claims Against the Trust..................................................................3
Section 1.06. Holding of the Trust Estate...............................................................3
Section 1.07. Certain Covenants Relating to the Separateness of the Trust...............................3
ARTICLE II DEFINITIONS...........................................................................................4
ARTICLE III BENEFICIAL INTERESTS AND CONTRIBUTIONS...............................................................7
Section 3.01. Initial Contributions.....................................................................7
Section 3.02. Contributions on the Closing Date.........................................................7
Section 3.03. Further Undertakings On the Closing Date..................................................8
Section 3.04. Classification of Beneficial Interests....................................................8
Section 3.05. Additional Classes of Beneficial Interests................................................8
Section 3.06. Additional Contribution by the Beneficial Owner of the Class B Interest...................9
ARTICLE IV DISTRIBUTIONS.........................................................................................9
Section 4.01. Payments From Trust Estate................................................................9
Section 4.02. Establishment of the Distribution Account.................................................9
Section 4.03. Distributions............................................................................10
Section 4.04. Distribution Date Statements.............................................................14
Section 4.05. Trust Accounts...........................................................................14
Section 4.06. Deferred Class A Distribution; Bristol Water Dividends; Azurix Europe Residual Proceeds
and Azurix Europe Residual Proceeds Account..............................................15
Section 4.07. Class A Priority Distribution............................................................16
Section 4.08. Certain Limitations on the Rights of Class A Interest....................................16
ARTICLE V LIMITATION ON THE LIABILITY OF THE BENEFICIAL OWNERS..................................................16
Section 5.01. Liability of Beneficial Owners...........................................................16
ARTICLE VI RIGHTS, OBLIGATIONS, POWERS AND STATUS OF THE BENEFICIAL OWNERS; BOARD OF DIRECTORS..................17
Section 6.01. Management of the Trust..................................................................17
Section 6.02. Management of Subsidiaries...............................................................18
Section 6.03. Bankruptcy, Dissolution or Termination of a Beneficial Owner.............................19
Section 6.04. Transfer of Beneficial Ownership.........................................................19
Section 6.05. Creditors of the Beneficial Owners.......................................................19
(i)
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ARTICLE VII CONCERNING THE TRUSTEE AND WILMINGTON TRUST
COMPANY..............................................................................................20
Section 7.01. General..................................................................................20
Section 7.02. Acceptance of the Trust..................................................................22
Section 7.03. Authority and Duties of the Trustee......................................................22
Section 7.04. Representations and Warranties of Wilmington Trust Company...............................23
Section 7.05. Resignation of the Trustee...............................................................24
Section 7.06. Liability................................................................................25
Section 7.07. Indemnification..........................................................................25
Section 7.08. Fees and Expenses........................................................................25
Section 7.09. Litigation, Action Outside Delaware......................................................25
ARTICLE VIII REPRESENTATIONS AND WARRANTIES.....................................................................26
Section 8.01. Representations and Warranties of Beneficial Owners......................................26
ARTICLE IX DISSOLUTION, BANKRUPTCY AND LIQUIDATION OF THE TRUST.................................................27
Section 9.01. Dissolution of the Trust.................................................................27
Section 9.02. Termination..............................................................................27
Section 9.03. Sale of Assets following a Xxxxxx Note Trigger Event or Upon a Failure to
Pay the Xxxxxx Certificate Price.........................................................27
ARTICLE X NOTICES...............................................................................................28
Section 10.01. Notices.................................................................................28
ARTICLE XI MISCELLANEOUS PROVISIONS.............................................................................28
Section 11.01. Entire Agreement.........................................................................28
Section 11.02. Governing Law...........................................................................28
Section 11.03. Effect..................................................................................28
Section 11.04. Pronouns and Number.....................................................................28
Section 11.05. Effect of Headings......................................................................28
Section 11.06. Severability of Provisions..............................................................28
Section 11.07. Pledge of the Class A Interest to the Indenture Trustee.................................29
Section 11.08. Tax Matters.............................................................................29
Section 11.09. Financial Statements....................................................................30
Section 11.10. Amendments, Waivers, Etc................................................................31
Section 11.11. Limitation of Liability..................................................................31
Section 11.12. Counterparts.............................................................................31
Exhibit A - Form of Certificate
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ATLANTIC WATER TRUST
AMENDED AND RESTATED TRUST AGREEMENT
This AMENDED AND RESTATED TRUST AGREEMENT (this "Agreement")
of Atlantic Water Trust, a Delaware statutory business trust, is made and
entered into as of December 17, 1998 by WILMINGTON TRUST COMPANY, a Delaware
banking corporation, as trustee hereunder, XXXXXX WATER TRUST, a Delaware
statutory business trust ("Xxxxxx"), and ENRON CORP., a corporation organized
under the laws of Oregon ("Enron"). Capitalized terms used without definitions
have the meanings assigned to such terms in Article II. Capitalized terms used
herein that are not otherwise defined in Article II have the meanings assigned
to such terms in Appendix A to the Participation Agreement dated as of December
8, 1998 (the "Participation Agreement") among the Trust, Xxxxxx, Enron, Enron
Water (Holding) L.L.C., Bristol Water Trust, Preferred Voting Trust, Azurix
Europe Ltd. and Bankers Trust Company as Indenture Trustee;
WHEREAS, as of November 30, 1998, Wilmington Trust Company and
Enron as depositor (the "Depositor") entered into a Trust Agreement (the "Trust
Agreement") pursuant to which the Trust was formed under the terms and
conditions set forth therein;
WHEREAS, Wilmington Trust Company, Xxxxxx and Enron desire to
amend and restate the Trust Agreement in its entirety;
NOW THEREFORE, in consideration of the premises and the mutual
covenants herein contained, the parties hereto agree as follows:
ARTICLE I
GENERAL
Section 1.01. Appointment of Wilmington Trust Company. The
Depositor has appointed Wilmington Trust Company as Trustee of the Trust
effective as of November 30, 1998, to have all the rights, powers and duties set
forth herein and in the Act and has authorized the Trustee to file the
Certificate of Trust with the Secretary of State pursuant to Section 3810 of the
Act.
Section 1.02. Formation of the Trust. The Trust was formed as
a statutory business trust under and pursuant to the Trust Agreement, the Act
and such other provisions of applicable law as shall pertain to statutory
business trusts organized pursuant to and in accordance with the Act. It is the
intention of the parties hereto that from and after the date hereof, this
Agreement constitute the sole governing instrument of the Trust. All Persons
owning or otherwise holding interests of beneficial ownership in the Trust shall
own or otherwise hold such interests of beneficial ownership pursuant to the
provisions of this Agreement.
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Section 1.03. Name, Principal Office, and Name and Address of
Trustee as Agent for Service of Process. The Trust shall be conducted under the
name "Atlantic Water Trust," in which name the Trust or the Trustee on behalf of
the Trust shall enter into contracts and agreements with respect to the
transactions contemplated hereby. The principal place of business and office of
the Trust shall be c/o Wilmington Trust Company, Xxxxxx Square North, 0000 Xxxxx
Xxxxxx Xxxxxx, Xxxxxxxxxx, Xxxxxxxx 00000-0000, Attention: Corporate Trust
Administration. The Trustee, who is hereby designated to accept service of
process, is Wilmington Trust Company and its current office is located at the
address provided in the preceding sentence.
Section 1.04. Purpose and Powers. (a) The purpose of the Trust
shall be limited to engaging in the following activities:
(i) to enter into the Participation Agreement with Bristol
Water Trust, Enron Water L.L.C., Enron, Xxxxxx, Voting Trust, Azurix Europe and
the Indenture Trustee, which agreement sets forth certain rights and obligations
of the parties thereto in respect of each other party thereto in connection with
the transactions contemplated by the Transaction Documents;
(ii) subject to dilution of its ownership interests upon,
among other things, any offering, either primary or secondary, of any
instruments representing an equity interest in Azurix Corp. ("Azurix"), to own
any instrument representing an equity interest in Azurix;
(iii) to establish a Delaware statutory trust ("Bristol Water
Trust") by making a capital contribution which shall consist of (x) a cash
contribution in an amount equal to the Overfund Amount and (y) a contribution of
its rights under the Azurix Europe Original Deed;
(iv) to cause Bristol Water Trust to enter into (x) the Azurix
Europe Deed with Azurix Europe, (y) the Swap Agreement pursuant to which certain
amounts paid by Azurix Europe under the Azurix Europe Deed for the benefit of
Bristol Water Trust shall be converted from pounds sterling into U.S. dollars in
accordance with the terms thereof, and (z) (1) the Bristol Water Security
Agreement with Xxxxxx pursuant to which Bristol Water Trust shall pledge its
trust estate and (2) the Azurix Europe Deed of Assignment (I) with Azurix Europe
and Xxxxxx pursuant to which Bristol Water Trust shall pledge its interests in
the Azurix Europe Deed, in each case, in order to secure its obligations under
Section 5.4(b) of the Participation Agreement;
(v) to establish and issue one or more additional classes of
Beneficial Interest in accordance with Section 3.05;
(vi) to enter into and perform its obligations under the
Transaction Documents to which it is a party;
(vii) to engage in those activities that are necessary to
accomplish the foregoing or are incidental thereto;
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(viii) subject to compliance with the Transaction Documents,
to engage in such other activities as may be required in connection with
conservation of the Trust Estate and making distributions to the Beneficial
Owners; and
(ix) to execute such undertakings as may be required by UK
regulatory authorities in connection with its indirect ownership of Wessex Water
Services.
(b) The Trust is hereby authorized to engage in the foregoing
activities. The Trust shall not engage in any activity other than as required or
expressly authorized by the terms of this Agreement or the other Transaction
Documents or, subject to the terms of this Agreement, as the Beneficial Owners
may time to time direct. Without limiting the generality of the foregoing, the
Trust shall not issue any debt or incur any other liability except as expressly
provided herein or in the other Transaction Documents.
Section 1.05. Claims Against the Trust. All Persons extending
credit to, contracting with or having any claim against the Trust shall look
only to the assets of the Trust for payment under such credit, contract or
claim. None of the Trustee (including in its individual capacity), and the
Beneficial Owners, or any of the Trust's officers, employees or agents, whether
past, present or future shall be personally liable therefor.
Section 1.06. Holding of the Trust Estate. The Trustee hereby
agrees to have and to hold the Trust Estate on behalf of the Trust, together
with all and singular revenues, issues, profits and proceeds thereof and
therefrom and appurtenances thereto until this Agreement terminates pursuant to
the terms of this Agreement, in trust under and subject to the conditions and
agreements hereinafter set forth, for the benefit of the Beneficial Owners.
Section 1.07. Certain Covenants Relating to the Separateness
of the Trust.
(a) The Trust shall not commingle or pool its funds or other
assets with those of any other Person.
(b) The Trust shall maintain its assets in such a manner that
it is not costly or difficult to segregate, ascertain or otherwise identify its
individual assets from those of any other Person.
(c) The Trust shall maintain its own records and books of
account.
(d) The Trust shall not incur any Indebtedness, except
pursuant to the Transaction Documents.
(e) The Trust shall not lend money to any Person, except
pursuant to the Transaction Documents, and will not become obligated to provide
funds for the purpose of supporting the obligations of any Person.
(f) The Trust shall not (i) hold itself out or permit itself
to be held out as having agreed to pay, or as being liable for, debts of another
Person; (ii) fail to correct any
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misrepresentation, of which the Trustee has actual knowledge, with respect to
the foregoing; or (iii) operate or purport to operate collectively as a single
or consolidated business entity with respect to any other Person, but the Trust
shall prepare consolidated financial statements consolidating the financial
results of Bristol Water Trust, Azurix, and the consolidated subsidiaries of
Azurix.
(g) The Trust shall abide by all statutory Delaware business
trust formalities, and shall cause its financial statements to be prepared in
accordance with U.S. GAAP and in a manner that indicates the separate existence
of the Trust and the Trust's assets and liabilities.
(h) Except for United States federal, state and local income
tax purposes, the issuance of the beneficial ownership interest in the Trust to
the Beneficial Owners was and is intended to be, and shall be accounted for on
the books, records, and financial statements of the Trust and the Beneficial
Owners as the issuance of equity capital and not as a loan by the Beneficial
Owners to the Trust.
(i) Any bank account of the Trust shall be separate from the
accounts of any other Person.
(j) The Trust shall make no transfer of its assets except in
accordance with or as contemplated by the Transaction Documents.
ARTICLE II
DEFINITIONS
"Additional Class B Director" has the meaning set forth in
Section 6.01(b).
"Atlantic Water Assets Proceeds Subaccount" means the
subaccount of the Distribution Account described under that name in Section
4.02(a)(iv).
"Atlantic Water Asset Sales Proceeds" has the meaning set
forth in Section 4.02(a)(iv).
"Atlantic Water Equity Proceeds Subaccount" means the
subaccount of the Distribution Account described under that name in Section
4.02(a)(iii).
"Atlantic Water Equity Sales Proceeds" has the meaning set
forth in Section 4.02(a)(iii).
"Atlantic Water Transaction Documents" shall mean this
Agreement and the Participation Agreement.
"Azurix Europe Residual Payments" has the meaning set forth in
Section 4.06(b).
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"Bankruptcy Action" has the meaning set forth in Section 9.01.
"Beneficial Interests" has the meaning set forth in Section
3.04(a).
"Beneficial Owners" means Xxxxxx and Enron as owners of the
Class A Interest and Class B Interest, respectively, of the Trust, and their
respective successors and assigns.
"Board of Directors" shall mean the board of directors of the
Trust described in Section 6.01.
"Bristol Water Dividends" has the meaning set forth in Section
4.06(a).
"Certificate of Trust" means the Certificate of Trust of
Atlantic Water Trust filed under the Act with the Secretary of State on November
30, 1998, as such Certificate of Trust may be amended or restated from time to
time.
"Class A Allocated Gains" shall have the meaning set forth in
Section 4.05(a).
"Class A Allocated Losses" shall have the meaning set forth in
Section 4.05(a).
"Class A Designated Director" shall have the meaning set forth
in Section 6.01(b)(i).
"Class A Final Distribution Date" shall mean December 15,
2002.
"Class A Interest" shall have the meaning set forth in Section
3.04(a)(i).
"Class A Priority Distribution" has the meaning set forth in
Section 4.07.
"Class A Trust Account" means the account established on the
books of the Trustee in accordance with Section 4.05(a).
"Class B Designated Director" shall have the meaning set forth
in Section 6.01(b)(i).
"Class B Interest" shall have the meaning set forth in Section
3.04(a)(ii).
"Class B Trust Account" means the account established on the
books of the Trustee in accordance with Section 4.05(b).
"Collections" means all distributions, payments or proceeds on
or of any asset constituting the Trust Estate.
"Contributions" means the payments and contributions made and
to be made by the Beneficial Owners pursuant to Article III, any additional cash
contribution made after the Closing Date, and in the case of the Beneficial
Owner of the Class B Interest, any Enron Equity Sales Proceeds deposited in the
Enron Equity Proceeds Subaccount in accordance with Section 3.06.
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"Deferred Class A Distribution" has the meaning set forth in
Section 4.03(c).
"Distribution Account" has the meaning set forth in Section
4.02(a).
"Distribution Date" means, with respect to any distributions
made from the (i) Ordinary Distribution Subaccount, the second Business Day
immediately preceding each Payment Date as defined under the Indenture, (ii)
Enron Equity Proceeds Subaccount, the Business Day immediately following the
receipt of any Enron Equity Sales Proceeds, (iii) Atlantic Water Equity Proceeds
Subaccount or the Atlantic Water Asset Proceeds Subaccount, the Business Day
immediately following the receipt of any Atlantic Water Equity Sales Proceeds or
Atlantic Water Asset Sales Proceeds, as the case may be, and thereafter, the
second Business Day immediately preceding each Payment Date as defined under the
Indenture for so long as any amounts remain in such subaccounts, and (iv) Trust
Liquidation Proceeds Subaccount, each and every Business Day after the
liquidation of the Trust until all of the assets of the Trust are liquidated.
"Distribution Date Statement" has the meaning set forth in
Section 4.04.
"Enron Equity Proceeds Subaccount" means the subaccount of the
Distribution Account described under that name in Section 4.02(a)(ii).
"Enron Equity Sales Proceeds" has the meaning set forth in
Section 4.02(a)(ii).
"Indemnified Person" has the meaning set forth in Section 7.07
hereof.
"Initial Class A Contribution" means $1,149,000,000.
"Initial Class B Contribution" means the Contribution made by
Enron under Sections 3.01 and 3.02(b), which for purposes of Section 4.05 shall
be deemed to equal $846,000,000.
"Xxxxxx Certificate Distribution Account" has the meaning set
forth in the Xxxxxx Trust Agreement.
"Ordinary Distribution Subaccount" means the subaccount of the
Distribution Account described under that name in Section 4.02(a)(i).
"Partner" has the meaning set forth in Section 11.08.
"Partnership" has the meaning set forth in Section 11.08.
"Periodic Filings" means any tax filings or submissions that
the Trust is required to make with any federal, state or local taxing authority
or regulatory agency.
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"Secretary of State" means the office of the Secretary of
State of the State of Delaware.
"Subject Subsidiary" has the meaning set forth in Section
6.02.
"Tax Capital Account" has the meaning set forth in Section
11.08.
"Trust" means the Delaware statutory business trust known as
"Atlantic Water Trust" which was formed as of November 30, 1998, under the Act
pursuant to the Trust Agreement and the filing of the Certificate of Trust.
"Trust Account" shall have the meaning set forth in Section
4.05.
"Trust Estate" means all right, title and interest of the
Trust in and to the Contributions and any other property contributed to the
Trust by the Beneficial Owners or otherwise acquired by the Trust, including,
without limitation, all of the rights of the Trust under the Transaction
Documents to which it is a party, together with distributions, payments,
revenues, issues, profits or proceeds received by the Trust in respect thereof
and therefrom, and all appurtenances thereto.
"Trust Liquidation Proceeds" has the meaning set forth in
Section 4.02(a)(v).
"Trust Liquidation Proceeds Subaccount" means the subaccount
of the Distribution Account described under that name in Section 4.02(a)(v).
"Trustee" means Wilmington Trust Company, not in its
individual capacity but solely as a trustee hereunder, and any successor trustee
appointed in accordance with Section 3807 of the Act and Section 7.05.
ARTICLE III
BENEFICIAL INTERESTS AND CONTRIBUTIONS
Section 3.01. Initial Contributions. On November 30, 1998, the
Depositor assigned, transferred, conveyed and set over to the Trustee the sum of
one dollar as partial consideration for issuance to it of the Class B Beneficial
Interest set forth in Section 3.04, which initial payment constituted the
initial Trust Estate.
Section 3.02. Contributions on the Closing Date. Each of
Xxxxxx and Enron hereby agrees to make, on the Closing Date, the following
payments and capital contributions:
(a) Xxxxxx agrees to make a cash payment in an amount equal to
$1,149,000,000; and
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(b) Enron agrees to make a contribution of (i) all of its
ownership interests in Enron Water L.L.C., (ii) $200,000,000 in the
form of a release of indebtedness in such amount owed by Enron Water
L.L.C. to Enron under the Enron Loan Note and (iii) its rights under
the Azurix Europe Original Deed.
Section 3.03. Further Undertakings On the Closing Date. On the
Closing Date, the Trust shall:
(a) make a contribution in an amount equal to $249,000,000 to
Bristol Water Trust constituting the Overfund Amount;
(b) contribute $900,000,000 to Enron Water L.L.C. and cause
Enron Water L.L.C. to apply such amount as repayment under Enron Water
L.L.C.'s indebtedness owed to Enron under the Enron Loan Note; and
(c) merge Enron Water L.L.C. with and into Azurix with Azurix
being the surviving entity.
Section 3.04. Classification of Beneficial Interests. (a) The
beneficial ownership interests in the assets of the Trust (the "Beneficial
Interests") shall consist of the following:
(i) Class A Beneficial Interest (the "Class A
Interest") representing Marlin's Contributions; and
(ii) Class B Beneficial Interest (the "Class B
Interest") representing Enron's Contributions.
(b) Any Class A Interest purchased by the Beneficial Owner of
the Class B Interest pursuant to Section 8(h) of the Remarketing
Agreement shall be immediately converted into Class B Interest and the
balance of the Class B Trust Account shall be increased by the amount
applied to the payment of the principal of the Xxxxxx Senior Notes in
accordance with Section 4.05(b).
(c) The Beneficial Interests shall be evidenced by trust
certificates substantially in the form of Exhibit A hereto.
Section 3.05. Additional Classes of Beneficial Interests. In
addition to the Class A Interest and the Class B Interest established on the
Closing Date, the Trust may establish one or more additional classes of
Beneficial Interest if directed by the majority of the Board of Directors upon
receipt of contributions in respect thereof; provided, that any such additional
class of beneficial interest and the rights of such additional class of
beneficial owners to the Trust's assets shall be subordinate and junior to the
Class A Interest in all respects; provided, further, that the right of the
Beneficial Owner of the Class A Interest to appoint members of the Board of
Directors of the Trust in accordance with Section 6.01 shall in no way be
diluted as a result of the establishment of such additional class of beneficial
interest. In the case of any distributions of amounts on deposit in the
Distribution Account in accordance with Section 4.03
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and any distribution of the Trust's assets following a termination of the Trust
in accordance with Section 9.02, any amounts owing to the Beneficial Owners of
the Class A Interest shall be paid in full in cash before any further payment or
distribution is made to such additional class of beneficial owners. In the event
that notwithstanding the provision of this Agreement any beneficial owner of
such additional class shall have received any payment or distribution in respect
of such Beneficial Interest contrary to the provisions of this Agreement, then,
unless and until the Class A Interest and all other amounts payable hereunder to
the Beneficial Owners thereof shall have been paid in full in cash, such payment
or distribution shall be received and held in trust for the benefit of, and
shall forthwith be paid over and delivered to, the Beneficial Owners of the
Class A Interest. Any holder of such additional class of Beneficial Interest
shall not be entitled to demand, accept or receive any payment or distribution
in respect of such Beneficial Interest in violation of the provisions of this
Agreement.
Section 3.06. Additional Contribution by the Beneficial Owner
of the Class B Interest. The Beneficial Owner of the Class B Interest shall have
the right, but not the obligation, to contribute Enron Equity Sales Proceeds to
the Trust upon the occurrence of a Xxxxxx Note Trigger Event or on any date not
more than 150 days prior to the Maturity Date if (A) the Holders of the Xxxxxx
Senior Notes, Xxxxxx and the Co-Issuer have not unanimously agreed, with each
having the right not to agree in its sole, unfettered discretion, to reset the
interest rate and maturity on the Xxxxxx Senior Notes, or (B) despite such
unanimous agreement by the Holders of the Xxxxxx Senior Notes, Xxxxxx and the
Co-Issuer, Enron and Xxxxxx have not agreed, with each having the right not to
agree in its sole, unfettered discretion, to corresponding changes to the
distribution provisions set forth in Section 4.03 of this Agreement all within
two Business Days of Enron's request to reset such terms. The Beneficial Owner
of the Class B Interest agrees that any additional contribution made by such
Beneficial Owner after the Closing Date shall be in cash only.
ARTICLE IV
DISTRIBUTIONS
Section 4.01. Payments From Trust Estate. All payments to be
made by the Trust or the Trustee on behalf of the Trust under this Agreement or
any of the documents to which the Trust is a party shall be made only from the
Trust Estate and the income and proceeds thereon.
Section 4.02. Establishment of the Distribution Account. (a)
The Trustee, in the name, and on behalf, of the Trust, is hereby authorized and
shall establish and maintain in the name of the Trust an account with the
Trustee (the "Distribution Account"), bearing a designation clearly indicating
that the funds deposited therein are held for the benefit of the Trust. The
Trustee shall establish under the Distribution Account the following five
subaccounts:
(i) the "Ordinary Distribution Subaccount," into which shall be
deposited any payments received by the Trust other than any
Contribution, Enron Equity Sales Proceeds, Atlantic Water
Equity Sales Proceeds, Atlantic Water Asset
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Sales Proceeds, Trust Liquidation Proceeds, Bristol Water
Dividends or Azurix Europe Residual Payments;
(ii) the "Enron Equity Proceeds Subaccount," into which shall be
deposited any payments made to the Trust by Enron, at Enron's
option and in accordance with Section 3.06, an amount not
greater than the proceeds of offerings of Enron Common Stock
or Enron Mandatorily Convertible Preferred Securities after
the Closing Date (such proceeds, the "Enron Equity Sales
Proceeds");
(iii) the "Atlantic Water Equity Proceeds Subaccount," into which
shall be deposited an amount equal to the proceeds received by
Enron or its Affiliates or the Trust or, at the option of
Azurix, amounts received by any subsidiary directly or
indirectly held by the Trust, in connection with any offering
after the Closing Date, either primary or secondary, of any
instruments representing an equity interest in the Trust or
any subsidiary directly or indirectly held by the Trust (such
proceeds, the "Atlantic Water Equity Sales Proceeds");
(iv) the "Atlantic Water Asset Proceeds Subaccount," into which
shall be deposited any proceeds received by the Trust from the
sale of any assets of any subsidiary directly or indirectly
held by the Trust, including, without limitation, from the
liquidation of any such subsidiary, but excluding any proceeds
from the sale of assets in connection with the liquidation of
the Trust (such proceeds, the "Atlantic Water Asset Sales
Proceeds"); and
(v) the "Trust Liquidation Proceeds Subaccount," into which shall
be deposited any proceeds received upon sale of the assets of
the Trust pursuant to Sections 9.01 or 9.03 (such proceeds,
the "Trust Liquidation Proceeds").
(b) Only the Trustee, on behalf of and for the benefit of the
Trust, shall be entitled to withdraw funds from the Distribution
Account and only the Trustee shall be an authorized signatory on the
Distribution Account. The Trustee shall withdraw funds from the
Distribution Account only pursuant to and in accordance with this
Agreement and the Transaction Documents.
(c) The Trust shall possess all right, title and interest in
all amounts credited from time to time in the Distribution Account and
in all proceeds thereof (including all income thereon), and such funds
shall constitute part of the Trust Estate.
Section 4.03. Distributions. (a) On each Distribution Date on
or before 1:00 p.m., New York City time, the Trustee, on behalf of and for the
benefit of the Trust, shall distribute all amounts credited to the Distribution
Account pursuant to and in accordance with this Section 4.03(a).
(i) Ordinary Distribution Subaccount. The Trustee, to the
extent funds are received by 11:00 a.m., on behalf of and for the
benefit of the Trust, shall distribute all
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amounts credited to the Ordinary Distribution Subaccount in the
following order of priority:
first, to the extent that the sum of the amounts
credited to the Interest Account and the Certificate Yield
Account on such day (after giving effect to all deposits made
on such day) is less than the Class A Priority Distribution
then accrued and unpaid, as set forth in a Distribution
Shortfall Notice for deposit in (x) the Collection Account
established under the Indenture, if on or prior to the Senior
Note Final Payment Date, or (y) the Xxxxxx Certificate
Distribution Account maintained with the Xxxxxx Trustee, if
after the Senior Note Final Payment Date, in each case, for
the benefit of the Beneficial Owner of the Class A Interest,
in an amount equal to such shortfall;
second, to the extent, and only to the extent, that
the Beneficial Owner of the Class A Interest shall have
consented in writing, pro rata to (A) the Beneficial Owner of
the Class A Interest for deposit in (x) the Collection Account
established under the Indenture, if on or prior to the Senior
Note Final Payment Date, and (y) the Xxxxxx Certificate
Distribution Account maintained with the Xxxxxx Trustee, if
after the Senior Note Final Payment Date and (B) the
Beneficial Owner of the Class B Interest, in each case based
on the balances of their respective Trust Accounts, all
amounts, if any, remaining in the Ordinary Distribution
Subaccount; and
third, in the event the Beneficial Owner of the Class
A Interest shall not have consented to the distribution in
accordance with priority second of this clause (a)(i), such
amount to be retained in the Ordinary Distribution Subaccount
for reinvestment in Permitted Investments.
(ii) Enron Equity Proceeds Subaccount. The Trustee, on behalf
of and for the benefit of the Trust, shall distribute amounts credited
to the Enron Equity Proceeds Subaccount for deposit in the Remarketing
Account established under the Indenture, for the benefit of the
Beneficial Owner of the Class A Interest.
(iii) Atlantic Water Equity Proceeds Subaccount. The Trustee,
on behalf of and for the benefit of the Trust, shall distribute amounts
credited to the Atlantic Water Equity Proceeds Subaccount, pursuant to
and in accordance with the following order:
first, to the extent that the sum of the amounts
credited to the Interest Account and the Certificate Yield
Account on such day (after giving effect to all deposits made
on such day) is less than the Class A Priority Distribution
then accrued and unpaid, as set forth in a Distribution
Shortfall Notice, for deposit in (x) the Equity Proceeds
Account established under the Indenture, if on or prior to the
Senior Note Final Payment Date, or (y) the Xxxxxx Certificate
Distribution Account maintained with the Xxxxxx Trustee, if
after the Senior Note Final Payment Date, in each case, for
the benefit of the Beneficial Owner of the Class A Interest,
in an amount equal to such shortfall;
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second, in the event the Beneficial Owner of the
Class B Interest shall have consented in writing, in the
following order:
(A) to the Beneficial Owner of the Class B
Interest up to an amount equal to $180,000,000 (less
any amounts previously distributed to the Beneficial
Owner of the Class B Interest pursuant to this
Section 4.03(a)(iii) or Section 4.03(a)(iv));
provided, that, in the case of Atlantic Water Equity
Sales Proceeds resulting from one or more sales of a
portion of Enron's Class B Interest, the first
$180,000,000 (less any amounts previously distributed
or credited to the Beneficial Owner of the Class B
Interest pursuant to this Section 4.03(a)(iii) or
Section 4.03(a)(iv)) of such Atlantic Water Equity
Sales Proceeds to be distributed pursuant to this
clause second are not required to be deposited in,
but shall be credited to, the Atlantic Water Equity
Proceeds Subaccount;
(B) for deposit in (x) the Equity Proceeds
Account established under the Indenture, if on or
prior to the Senior Note Final Payment Date, or (y)
the Xxxxxx Certificate Distribution Account
maintained with the Xxxxxx Trustee, if after the
Senior Note Final Payment Date, in each case for the
benefit of the Beneficial Owner of the Class A
Interest, up to an amount equal to the greater of (1)
the balance of the Class A Trust Account as of such
date (after giving effect to any other distribution
or payment made with respect to any Xxxxxx Security
on such day) and (2) the sum of (a) the Optional
Redemption Price or the Mandatory Redemption Price,
as applicable, (b) the Xxxxxx Certificate Price and
(c) any Default Yield (after giving effect to any
Class A Priority Distribution made on such day);
(C) all amounts, if any, remaining on
deposit in the Atlantic Water Equity Proceeds
Subaccount to the Beneficial Owner of the Class B
Interest; and
third, in the event the Beneficial Owner of the Class
B Interest shall not have consented to the distributions in
accordance with priority second of this clause (a)(iii), such
amounts to be retained in the Atlantic Water Equity Proceeds
Subaccount for reinvestment in Permitted Investments.
(iv) Atlantic Water Asset Proceeds Subaccount. The Trustee, on
behalf of and for the benefit of the Trust, shall distribute amounts
credited to the Atlantic Water Asset Proceeds Subaccount, pursuant to
and in accordance with the following order:
first, to the extent that the sum of the amounts
credited to the Interest Account and the Certificate Yield
Account on such day (after giving effect to all deposits made
on such day) is less than the Class A Priority Distribution
then accrued and unpaid, as set forth in a Distribution
Shortfall Notice, for deposit in
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(x) the Collection Account established under the Indenture, if
on or prior to the Senior Note Final Payment Date, or (y) the
Xxxxxx Certificate Distribution Account maintained with the
Xxxxxx Trustee, if after the Senior Note Final Payment Date,
in each case, for the benefit of the Beneficial Owner of the
Class A Interest, in an amount equal to such shortfall;
second, in the event the Beneficial Owner of the
Class B Interest shall have consented in writing, in the
following order:
(A) to the Beneficial Owner of the Class B
Interest up to an amount equal to $180,000,000 (less
any amounts previously distributed or deemed
distributed to the Beneficial Owner of the Class B
Interest pursuant to Section 4.03(a)(iii) and this
Section 4.03(a)(iv));
(B) for deposit in (x) the Collection
Account established under the Indenture, if on or
prior to the Senior Note Final Payment Date, or (y)
the Xxxxxx Certificate Distribution Account
maintained with the Xxxxxx Trustee, if after the
Senior Note Final Payment Date, in each case for the
benefit of the Beneficial Owner of the Class A
Interest, up to an amount equal to the greater of (1)
the balance of the Class A Trust Account as of such
date (after giving effect to any other distribution
or payment made with respect to any Xxxxxx Security
on such day) and (2) the sum of (a) the Optional
Redemption Price or the Mandatory Redemption Price,
as applicable, (b) the Xxxxxx Certificate Price and
(c) any Default Yield (after giving effect to any
Class A Priority Distribution made on such day);
(C) all amounts, if any, remaining on
deposit in the Atlantic Water Asset Proceeds
Subaccount to the Beneficial Owner of the Class B
Interest; and
third, in the event the Beneficial Owner of the
Class B Interest shall not have consented to the distributions
in accordance with priority second of this clause (a)(iv),
such amounts to be retained in the Atlantic Water Asset
Proceeds Subaccount for reinvestment in Permitted Investments.
(v) Trust Liquidation Proceeds Subaccount. The Trustee, on
behalf of and for the benefit of the Trust, shall distribute amounts
credited to the Liquidation Proceeds Subaccount pursuant to and in
accordance with the following order:
first, to pay the costs and expenses of the winding
up, liquidation and termination of the Trust;
second, to the creditors of the Trust (other than
Enron or any Enron Affiliates), in the order of priority
provided by law;
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third, to establish reserves reasonably adequate to
meet any and all contingent liabilities or obligations of the
Trust (other than any liabilities or obligations owed to Enron
or any Enron Affiliates);
fourth, to the Beneficial Owner of the Class A
Interest, for deposit in (x) the Collection Account
established under the Indenture, if on or prior to the Senior
Note Final Payment Date or (y) the Xxxxxx Certificate
Distribution Account maintained with the Xxxxxx Trustee, if
after the Senior Note Final Payment Date, the sum of (A) any
Class A Priority Distribution due but not paid and (B) the
amount, if any, by which (I) the sum of the Mandatory
Redemption Price, the Xxxxxx Certificate Price and any Default
Yield exceeds (II) the balance of the Class A Trust Account as
of such date; and
fifth, the remaining amounts, to (A) the Beneficial
Owner of the Class A Interest, for deposit in (x) the
Collection Account established under the Indenture, if on or
prior to the Senior Note Final Payment Date or (y) the Xxxxxx
Certificate Distribution Account maintained with the Xxxxxx
Trustee, if after the Senior Note Final Payment Date, and (B)
the Beneficial Owner of the Class B Interest, pro rata in
accordance with the balances of their respective Trust
Accounts.
(b) Any amount on deposit in any subaccount of the
Distribution Account on a date other than the applicable Distribution Date shall
be invested in Permitted Investments.
(c) Notwithstanding anything in clause (a) of this Section
4.03, (A) the Beneficial Owner of the Class A Interest acting at the direction
of the holders of the Xxxxxx Certificates (exercising their rights under Section
5.04 or Section 6.02 of the Xxxxxx Trust Agreement) shall have the right to
direct the Trustee to apply an amount equal to the Base Amount (the "Deferred
Class A Distribution") in accordance with Section 4.06 and (B) the Beneficial
Owner of the Class B Interest shall have the right to elect not to receive all
or any portion of the distributions it is otherwise entitled to receive in
accordance with Section 4.03 and to direct the Trust as to the application of
such amounts.
Section 4.04. Distribution Date Statements. On each
Distribution Date on which funds are being distributed pursuant to Section 4.03
hereof, the Trustee shall prepare and deliver to the Beneficial Owners and the
Indenture Trustee a statement (a "Distribution Date Statement") setting forth
for the period since the preceding Distribution Date (i) the amount, nature and
origin of all income, proceeds, payments and collections received in each
subaccount of the Distribution Account, (ii) the amounts to be paid or
distributed pursuant to Section 4.03 hereof and (iii) the balances of the Trust
Accounts after giving effect to the distributions made on such day.
Section 4.05. Trust Accounts. A separate account (a "Trust
Account") shall be established and maintained on the books of the Trustee for
each class of Beneficial Interest:
(a) Class A Trust Account. The Trust Account for the Class A
Interest shall be credited with the Initial Class A Contribution on the Closing
Date and throughout the
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existence of the Trust shall be (x) increased (i) by the amount of any
additional Contributions made by the Beneficial Owners of the Class A Interest
after the Closing Date and (ii) at any time the Class A Allocated Losses are
greater than zero, by the cash gains, if any, realized by the Trust on any of
the assets in the Trust Estate up to an amount equal to the Class A Allocated
Losses as of the date such gains are realized (such gains, the "Class A
Allocated Gains"), and (y) decreased (i) upon any reduction in the aggregate
outstanding principal amount of the Xxxxxx Senior Notes, by an amount equal to
such reduction, regardless of whether as a result of distributions from the
Trust, (ii) upon any repayment of the Base Amount, by an amount equal to such
payment (it being understood, for the avoidance of doubt, that the Class A Trust
Account shall be unaffected by any Class A Priority Distribution made to the
Beneficial Owner of the Class A Interest, by any payment of Default Interest
Amount or Default Yield, by any payment in respect of the Optional Redemption
Price or any Mandatory Redemption Price in excess of the principal balance of
the Xxxxxx Senior Notes and by any payment in respect of the Xxxxxx Certificate
Price in excess of the Base Amount, and (iii) by the cash losses, if any,
realized by the Trust on any of the assets in the Trust Estate in excess of the
balance of the Class B Trust Account as of the date such losses are realized
(such losses, the "Class A Allocated Losses").
(b) Class B Trust Account. The Trust Account for the Class B
Interest shall be credited with the Initial Class B Contribution on the Closing
Date, and throughout the existence of the Trust shall be (a) increased by (i)
the amount of any additional Contributions made by the Beneficial Owners of the
Class B Interest after the Closing Date, (ii) the amount applied to the payment
of the principal of the Xxxxxx Senior Notes in the case payment is made by Enron
to Xxxxxx in accordance with Section 8(h) of the Remarketing Agreement, and
(iii) the cash gains, if any, realized by the Trust on any of the assets in the
Trust Estate in excess of the Class A Allocated Gains and (b) decreased by (i)
the cash losses, if any, realized by the Trust on any of the assets in the Trust
Estate (to the extent of the balance of the Class B Trust Account), and (ii) all
amounts distributed to the Beneficial Owner of the Class B Interest (it being
understood, for avoidance of doubt, that the Class B Trust Account shall be
unaffected by any distribution or deemed distribution to the Beneficial Owner of
the Class B Interest made from Atlantic Water Equity Sales Proceeds resulting
from one or more sales of a portion of Enron's Class B Interest).
Section 4.06. Deferred Class A Distribution; Bristol Water
Dividends; Azurix Europe Residual Proceeds and Azurix Europe Residual Proceeds
Account. (a) If the Beneficial Owner of the Class A Interest exercises its right
under Section 4.03(c), the Trust shall contribute, or at the direction of the
Board of Directors (if and to the extent such direction is delivered to the
Trustee within two (2) Business Days of the Base Amount Deferral Date), lend to
Azurix an amount equal to the Deferred Class A Distribution.
(b) Any amounts received by the Trust as the owner of the
beneficial interests of Bristol Water Trust (such amounts, "Bristol Water
Dividends"), if and when such amounts are received by the Trust shall be applied
by the Trust as an additional capital contribution to Azurix, or at the
direction of the Board of Directors (if and to the extent such direction is
delivered to the Trustee within two (2) Business Days after such amounts are
received by the Trust), loaned to Azurix.
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(c) The Trustee, in the name, and on behalf, of the Trust,
shall establish and maintain in the name of the Trust an account with Bankers
Trust International (the "Azurix Europe Residual Proceeds Account"), into which
shall be deposited any payments received by the Trust from the Azurix Europe
Interest Account (Sterling) and the Azurix Europe Note Proceeds Account
(Sterling), each established under the Indenture (such payments, the "Azurix
Europe Residual Payments"). Such account shall bear a designation clearly
indicating that the funds deposited therein are held for the benefit of the
Trust. Any amounts on deposit in the Azurix Europe Residual Proceeds Account
shall be applied by the Trust as an additional capital contribution to Azurix,
or at the direction of the Beneficial Owner of the Class B Interest (if and to
the extent such direction is delivered to the Trustee within two (2) Business
Days after such amounts are deposited into the Azurix Europe Residual Proceeds
Account), loaned to Azurix.
Section 4.07. Class A Priority Distribution. The Beneficial
Owner of the Class A Interest shall be entitled to receive, on each Payment
Date, so long as the balance of the Class A Trust Account is greater than zero,
a distribution in an amount equal to the sum of (x) any Xxxxxx Interest Amount
then due and payable and (y) Xxxxxx Certificate Yield then due and payable or in
the case of a Base Amount Deferral by the Xxxxxx Certificateholders pursuant to
Sections 5.04 or 6.02 of the Xxxxxx Trust Agreement, the Treasury Yield due and
payable as described in Section 5.06 of the Xxxxxx Trust Agreement (the "Class A
Priority Distribution"). The obligation of the Trust to make such distribution
shall be deemed satisfied to the extent payments are deposited by, or at the
direction of, Bristol Water Trust to the accounts established under the
Indenture in accordance with Section 5.4 of the Participation Agreement.
Section 4.08. Certain Limitations on the Rights of Class A
Interest. Notwithstanding anything else herein to the contrary, the Beneficial
Owner of Class A Interest shall be entitled to receive distributions in
accordance with this Article IV, only so long as the then current balance of the
Class A Trust Account is greater than zero. In the event the balance of the
Class A Trust Account is reduced to zero, the rights of the Beneficial Owner of
the Class A Interest hereunder, including, without limitation, its rights under
Article VI, shall be terminated.
ARTICLE V
LIMITATION ON THE LIABILITY OF THE BENEFICIAL OWNERS
Section 5.01. Liability of Beneficial Owners. None of the
Beneficial Owners shall be liable to any third party for any debt, claim,
demand, judgment or obligation of any kind of, against or with respect to the
Trust by reason of its status as a beneficial owner of the Trust, nor shall
either Beneficial Owner, solely by reason of its status as such, be subject to
any personal liability whatsoever, in tort, contract or otherwise, to any third
party in connection with the property, liabilities or affairs of the Trust. For
the avoidance of doubt, the foregoing sentence shall in no way limit the
obligations of the Depositor under Sections 7.07, 7.08 and 7.09.
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ARTICLE VI
RIGHTS, OBLIGATIONS, POWERS AND STATUS OF THE
BENEFICIAL OWNERS; BOARD OF DIRECTORS
Section 6.01. Management of the Trust. (a) General. It is the
intention of the parties hereto that, the Trustee's duties are to be ministerial
in nature only, except as otherwise expressly provided herein. Subject to
Section 9.01 hereof, the Beneficial Owners, directly or acting through the Board
of Directors, shall have the right and obligation to determine the matters
herein referenced to be determined by the Beneficial Owners and to direct the
Trustee to conduct such matters. Subject to the provisions of the Act, the
Beneficial Owners, directly or acting through the Board of Directors, shall
direct the management of the business and affairs of the Trust in order best to
carry out its purposes. In the event the direction or instruction given to the
Trustee by a Beneficial Owner in accordance with, and as provided by, the terms
hereof conflicts or is inconsistent with the direction or instruction given by
the Board of Directors, the direction or instruction given by such Beneficial
Owner(s) shall govern.
(b) Board of Directors. Unless otherwise set forth in this
Agreement, and subject to the provisions of the Transaction Documents, the Board
of Directors shall have the right to vote on all customary trust governance
matters, as would a board of directors for a corporation organized under the
laws of Delaware ; provided that (i) the expenditure by Azurix or Azurix Ltd. or
any of their subsidiaries (other than Azurix Europe's subsidiaries, as to which
no limit shall apply) of up to an aggregate of $2,400,000,000 on acquisitions
and other development activities, (ii) any contributions or loans made to Azurix
pursuant to Section 4.06(c) and (iii) equity offerings by Azurix or Azurix Ltd.
or any of their subsidiaries shall not require any vote or approval by the Board
of Directors, and in each case shall be at the direction of the Beneficial Owner
of the Class B Interest.
(i) Number of Board Members: The Board of Directors
shall initially consist of an even number of members not
greater than ten. The Beneficial Owners of each of the Class A
Interest and the Class B Interest shall have the power at all
times to appoint up to 50% of the Board of Directors (each
director so appointed by the Beneficial Owner of the Class A
Interest hereinafter referred to as the "Class A Designated
Director" and each director so appointed by the Beneficial
Owner of the Class B Interest hereinafter referred to as the
"Class B Designated Director"). The Beneficial Owners of each
of the Class A Interest and the Class B Interest shall have
the right, at any time without cause, to remove any of the
directors appointed by them upon prior written notice to the
Trustee and the Beneficial Owner of the other Class. If the
Beneficial Owner of the Class A Interest has not appointed all
the directors that it is entitled to appoint, the Beneficial
Owner of the Class B Interest shall have the right to appoint
such directors (each, an "Additional Class B Director");
provided, however, the Beneficial Owner of the Class A
Interest shall have the right, at any time without cause (upon
prior written notice), to remove any Additional Class B
Director, provided, further, that in no event shall the
Beneficial Owner of the Class A Interest have the right to
remove, at any time, more directors than such Beneficial
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Owner is entitled to appoint at such time. The Beneficial
Owner of the Class A Interest shall have the right to appoint
other members to the Board of Directors in place of any
directors removed by such Beneficial Owner.
(ii) Quorum. A majority of the members of the Board
of Directors at the time of any decision making, one of whom
shall be a Class B Designated Director (as to which fact there
shall be delivered to the Trustee a duly executed certificate
of a member of the Board of Directors), shall be present in
making any decision of the Board of Directors, and the
affirmative vote of a majority of the directors constituting
such quorum shall be necessary for any action or decision made
by the Board of Directors.
(iii) Delivery of Information to the Beneficial Owner
of the Class A Interest. During any period that the Beneficial
Owner of the Class A Interest has not appointed any Class A
Designated Director, the Beneficial Owner of the Class B
Interest shall deliver or cause to be delivered to the
Beneficial Owner of the Class A Interest, no later than 10
Business Days prior to any proposed meeting of the Board of
Directors, an agenda setting forth the matters to be addressed
at such meeting, and shall deliver or cause to be delivered to
the Beneficial Owner of the Class A Interest, concurrently
with the distribution thereof to any director, all reports and
any other information that is provided to such director.
(c) Standard of Care of the Members. No director shall be
personally liable to the Trust or the Trustee, the Depositor or any Beneficial
Owner for monetary damages for breach of fiduciary duty as a director, except
for liability (i) for any breach of the director's duty of loyalty to the Trust
or the Beneficial Owners, (ii) for acts or omissions not in good faith or which
involve intentional misconduct or a knowing violation of law or (iii) for any
transaction from which the director derived an improper personal benefit. No
amendment or repeal of this Section 6.01(c) shall adversely affect any right or
protection of a director existing hereunder in respect of any act or omission
occurring prior to such amendment or repeal.
Section 6.02. Management of Subsidiaries. (a) Appointment
Rights. Subject to Section 6.02(b), if, but only if, the Beneficial Owner of the
Class A Interest has appointed all of the directors that such Beneficial Owner
is entitled to appoint, such Beneficial Owner shall have the right to instruct
the Class A Designated Directors to cause the immediate appointment of one half
of the directors, or equivalent positions, of each subsidiary of the Trust other
than subsidiaries of Azurix Europe. In any subsidiary (the "Subject Subsidiary")
of the Trust where the Beneficial Owner of the Class A Interest has failed to
cause the appointment of all the directors (or equivalent positions) that such
Beneficial Owner has the right to appoint, the right of the directors of the
Subject Subsidiary who represent such Beneficial Owner to appoint directors in
any lower-tier subsidiary shall be suspended until the Beneficial Owner of the
Class A Interest causes the appointment of all of the directors of the Subject
Subsidiary that such Beneficial Owner is entitled to appoint.
(b) Dilution. If as a result of an offering of equity
interests by any subsidiary of the Trust, third parties have the right to
appoint and remove directors (or equivalent positions)
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of such subsidiary, such right shall correspondingly reduce the ability of the
representatives of the Beneficial Owner of the Class A Interest to cause the
appointment and removal of directors of such subsidiary, but not the ability of
the Beneficial Owner of the Class B Interest to cause the appointment of
directors. The foregoing dilution will be applied cumulatively if third party
equity investors in more than one subsidiary of the Trust have the right to
appoint and remove directors (or equivalent positions). By way of example, and
not by way of limitation, if (i) third party equity investors in Azurix are
given the right to appoint and remove ten percent (10%) of the board of
directors of Azurix and (ii) third party equity investors in Azurix Ltd. are
given the right to appoint and remove fifteen percent (15%) of the directors of
Azurix Ltd., then the Beneficial Owner of the Class A Interest would have the
right to appoint and remove forty percent (40%) of the board of directors of
Azurix and twenty-five percent (25%) of the directors of Azurix Ltd. The
Beneficial Owner of the Class A Interest, together with Persons who are not
Affiliates of the Beneficial Owner of the Class B Interest, shall at all times
have the right, by contract or statute, or both, to appoint and remove at least
one-half of the directors, or equivalent positions, of each subsidiary of the
Trust other than the subsidiaries of Azurix Europe.
(c) Delivery of Information. For each subsidiary of the Trust,
other than subsidiaries of Azurix Europe, that does not have a director (or
equivalent position) appointed by a representative of the Beneficial Owner of
the Class A Interest, such subsidiary shall deliver information to the
Beneficial Owner of the Class A Interest concurrently with delivery of such
information to the directors (or equivalent positions) of such subsidiary.
Section 6.03. Bankruptcy, Dissolution or Termination of a
Beneficial Owner. The incapacity, dissolution, termination or bankruptcy of a
Beneficial Owner shall not result in the termination or dissolution of the
Trust.
Section 6.04. Transfer of Beneficial Ownership. (a) To the
extent permitted by applicable law, and except as otherwise permitted in the
Transaction Documents, the Beneficial Owner of the Class A Interest shall not
have the right to transfer its Beneficial Interest in the Trust without the
prior written consent of the Beneficial Owner of the Class B Interest; provided,
however, the Beneficial Owner of the Class A Interest may transfer its
Beneficial Interest without such consent (i) following a Xxxxxx Note Trigger
Event or (ii) to the extent contemplated by Section 11.07.
(b) Any transfers by the Beneficial Owner of the Class B
Interest shall be permitted only to the extent that such proposed transferor of
Class B Interest shall have delivered an opinion of Xxxxx Xxxxxxxxxx L.L.P.,
Xxxxxx & Xxxxxx L.L.P., Milbank, Tweed, Xxxxxx & XxXxxx or any other nationally
recognized securities counsel to the effect that such transfer would not cause
the Trust or Xxxxxx to be required to register as an investment company under
the Investment Company Act of 1940, as amended.
Section 6.05. Creditors of the Beneficial Owners. As is
provided in paragraph (b) of Section 3805 of the Act, no creditor of a
Beneficial Owner shall have any right to obtain possession of, or otherwise
exercise legal or equitable remedies with respect to, the Trust Estate.
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ARTICLE VII
CONCERNING THE TRUSTEE AND WILMINGTON TRUST COMPANY
Section 7.01. General. (a) In the exercise or administration
of the Trust hereunder (and, without limitation, with respect to taking any
action pursuant to the terms of paragraph (a) of Section 9.01 hereof), the
Trustee at the expense of the Trust (to be paid by the Depositor in accordance
with Section 7.08) (i) may act directly or through agents or attorneys pursuant
to agreements entered into with any of them, and the Trustee shall not be liable
for the default or misconduct of such agents or attorneys if such agents or
attorneys shall have been selected by the Trustee with reasonable care; and (ii)
may consult with counsel, accountants and other skilled Persons to be selected
with reasonable care and employed by the Trustee, and it shall not be liable for
anything done, suffered or omitted in good faith by it in accordance with the
advice or opinion of any such counsel, accountants or other skilled Persons.
(b) Except as expressly provided herein, (i) in accepting the
Trust hereby created, Wilmington Trust Company acts solely as Trustee hereunder
and not in its individual capacity, and (ii) all Persons having any claim
against the Trust or the Trustee by reason of the transactions contemplated by
this Agreement shall look only to the Trust's property for payment or
satisfaction thereof.
(c) Except in accordance with the written instructions
furnished by the Beneficial Owners or the Board of Directors and except as
expressly provided herein, the Trustee shall have no duty to (i) see to any
recording or filing of any document, or (ii) see to the payment or discharge of
any tax, assessment or other governmental charge or any lien or encumbrance of
any kind owing with respect to, assessed or levied against any part of the
Trust.
(d) The Trustee shall manage the business and affairs of the
Trust in accordance with the terms of the Act and the Atlantic Water Transaction
Documents; provided, however, that the Trustee undertakes to perform only such
duties as are specifically set forth in this Agreement and as the Trustee may be
duly directed from time to time in writing by both Beneficial Owners or the
Board of Directors (acting within the scope of their authority as provided in
Section 6.01) and as the Trustee is required to in order to comply with the
other Atlantic Transaction Document. The Trustee shall not have any duty or
obligation to manage, control, use, sell, dispose of or otherwise deal with the
Trust or to otherwise take or refrain from taking any action under this
Agreement except as expressly required by the terms hereof (or of the other
Atlantic Water Transaction Document) or as expressly provided in written
instructions from the Beneficial Owners or the Board of Directors, and no
implied duties or obligations shall be read into this Agreement or the other
Atlantic Water Transaction Document against the Trustee. Wilmington Trust
Company nevertheless agrees that it will, at its own cost and expense (and not
at the expense of the Trust), promptly take all action as may be necessary to
discharge any Liens on any part of the Trust Estate which are attributable to
actions by or claims against Wilmington Trust Company that are not related to
the ownership of any part of the Trust Estate or the administration of the Trust
Estate or the transactions contemplated by this Agreement.
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(e) The Trustee shall not be required to take any action under
this Agreement if the Trustee shall reasonably determine or shall have been
advised by counsel that such action is contrary to the terms of this Agreement
or is otherwise contrary to law.
(f) Subject to paragraph (a) of Section 9.01, whenever the
Trustee is unable to decide between alternative courses of action permitted or
required by the terms of this Agreement, or is unsure as to the application,
intent, interpretation or meaning of any provision hereof, the Trustee may give
notice (in such form as shall be appropriate under the circumstances) to the
Beneficial Owners or the Board of Directors (acting within the scope of their
authority as provided in Section 6.01) requesting written instructions as to the
course of action to be adopted, and, to the extent the Trustee acts in good
faith in accordance with any such appropriate instruction received, the Trustee
shall not be liable on account of such action or inaction to any Person. If the
Trustee shall not have received appropriate instructions within ten days of such
notice (or within such shorter period of time as reasonably may be specified in
such notice or may be necessary under the circumstances), it may, but shall be
under no duty to, take or refrain from taking such action which is consistent,
in its view, with this Agreement and as it shall deem to be in the best
interests of the Beneficial Owners, and the Trustee shall have no liability to
any Person for any such action or inaction.
(g) In no event whatsoever shall the Trustee be liable for any
representation, warranty, covenant, agreement, indebtedness or other obligation
of the Trust; provided, however, the foregoing shall, in no event whatsoever,
relieve the Trustee from any liability resulting from the Trustee's bad faith,
willful misconduct or gross negligence.
(h) The Trustee may rely upon and shall incur no liability to
anyone in acting upon any signature, instrument, notice, resolution, request,
consent, order, certificate, report, opinion, bond or other document or paper
reasonably believed by it to be genuine and reasonably believed by it to be
signed by the proper Persons. The Trustee may accept a certified copy of a
resolution of the board of directors or other governing body of any Person as
conclusive evidence that such resolution has been duly adopted by such body and
that the same is in full force and effect. As to any fact or matter the manner
of ascertainment of which is not specifically prescribed herein, the Trustee may
for all purposes hereof rely on a certificate, signed by the president or any
vice president or by the treasurer or any assistant treasurer or the secretary
or any assistant secretary (or equivalent position) of the relevant party, as to
such fact or matter, and such certificate shall constitute full protection to
the Trustee for any action taken or omitted to be taken by it in good faith
reliance thereon.
(i) The Trustee shall not be personally liable for any error
of judgment made in good faith.
(j) The Trustee shall not be required to take any action that
is inconsistent with the purposes of the Trust set forth in Section 1.04.
(k) No provision of this Agreement shall require the Trustee
to expend or risk its personal funds, or otherwise incur any financial liability
in the performance of its rights or powers hereunder, if the Trustee shall have
reasonable grounds for believing that repayment of
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such funds or adequate indemnity against such risk or liability is not
reasonably assured or provided to it.
(l) The Trustee may fully rely upon and shall have no
liability in connection with calculations or instructions forwarded to the
Trustee by both Beneficial Owners or the Board of Directors (acting within the
scope of their authority as provided in Section 6.01), unless the Trustee
determines that such calculations or instructions are in error; provided,
however, the Trustee shall have no obligation to make any such determination.
(m) The Trustee shall not have any responsibility or liability
for or with respect to the genuineness, value, sufficiency or validity of the
Trust Estate. The Trustee shall in no event assume or incur any liability, duty
or obligation to the Beneficial Owners or any other Person other than as
expressly provided for herein, and in no event shall the Trustee have any
implied duties or obligations hereunder.
(n) The Trustee shall incur no liability if, by reason of any
provision of any future law or regulation thereunder, the Trustee shall be
prevented or forbidden from doing or performing any act or thing which the terms
of this Agreement provide shall or may be done or performed.
Section 7.02. Acceptance of the Trust. Wilmington Trust
Company declares that it accepts the Trust hereby created and agrees to perform
its duties under this Agreement and the Act but only upon the terms of this
Agreement and as contemplated by the other Atlantic Water Transaction Document.
Section 7.03. Authority and Duties of the Trustee. (a) The
Trustee shall have the authority to act on behalf of the Trust to carry out the
purposes of the Trust and duties of the Trust under the Transaction Documents to
which the Trust or the Trustee is a party. The Trustee is authorized and
directed to execute and deliver this Agreement and the Participation Agreement
and each certificate or other document attached as an exhibit to or contemplated
by any such agreement, in such form as both Beneficial Owners shall approve
subject to the terms of the Transaction Documents, as evidenced conclusively by
the Trustee's execution thereof. The execution and delivery of, and performance
of the terms of, the Participation Agreement, and each certificate or other
document attached as an exhibit to or otherwise expressly contemplated by any
such agreement shall be deemed not to conflict with or constitute a breach or
default under this Agreement. The Trustee shall have only such authority and
duties as are expressly set forth in this Agreement. Upon the written
instruction of both Beneficial Owners, the Trustee shall amend the Certificate
of Trust or this Agreement, and shall execute, acknowledge, deliver, file or
record any document or instrument necessary or appropriate to carry out the
provisions of this Agreement, and the Participation Agreement in such form as is
provided to it; provided that such action does not alter the rights, powers and
duties of the Trustee as set forth in this Article VII.
(b) The Trustee shall have the power and authority to execute,
deliver, acknowledge and file all necessary documents and to maintain all
necessary records of the Trust as required by the Act.
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(c) The Trustee need not investigate any fact or matter stated
in any such document, but the Trustee, in its discretion, may make further
inquiry or investigation.
(d) The Trustee shall cause to be prepared and filed, such tax
returns and Periodic Filings relating to the Trust, and make such elections as
may from time to time be required or appropriate under any applicable Federal,
state or local statute or rule or regulation thereunder so as to maintain to the
extent possible the Trust's characterization for United States federal income
and any state or local tax purposes as provided in Section 11.08.
(e) The Trustee shall furnish to the Beneficial Owners,
promptly upon receipt thereof, duplicates or copies of all reports, notices,
requests, demands, certificates, financial statements and any other instruments
furnished to the Trustee hereunder, under the Participation Agreement, provided
that the Trustee shall not be required to furnish the Beneficial Owners with a
copy of any such materials if the Trustee determines that such party has
otherwise received such copies, unless such Beneficial Owner so requests.
(f) The Trustee shall cause to be kept, at its Corporate Trust
Office at Xxxxxx Square North, 0000 Xxxxx Xxxxxx Xxxxxx, Xxxxxxxxxx, Xxxxxxxx
00000-0000, Attention: Corporate Trust Administration, a register or registers
for the purpose of registering the Beneficial Interest. The Trustee shall be the
registrar and shall, subject to the limitations set forth in Section 6.04,
provide for the registration of transfer of the Beneficial Interest of a
Beneficial Owner at the written request of such Beneficial Owner.
Section 7.04. Representations and Warranties of Wilmington
Trust Company. Wilmington Trust Company, in its individual capacity, hereby
represents and warrants to the Beneficial Owners, that:
(a) it is duly incorporated, validly existing and in good
standing under the laws of its jurisdiction of incorporation;
(b) is has the corporate power and authority to execute,
deliver and perform its obligations under this Agreement, and this Agreement has
been duly authorized by it by all necessary corporate action;
(c) no authorization, consent or approval of any governmental
authority, regulatory body or other Person is required for the due
authorization, execution, delivery or performance by it of this Agreement (other
than the filing of the Certificate of Trust);
(d) this Agreement has been duly executed and delivered by it
and (subject to the due execution and delivery by the other parties hereto)
constitutes a legal and binding obligation of it, enforceable against it in
accordance with its terms, except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other similar laws now or
hereinafter in effect, relating to the enforcement of creditors' rights in
general and except as such enforceability may be limited by general principles
of equity (whether considered in a proceeding at law or in equity); and
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(e) it complies with all the requirements of the Act relating
to the qualification of a trustee of a Delaware business trust.
Section 7.05. Resignation of the Trustee. (a) The Trustee may
resign by giving 60 days' prior written notice to the Beneficial Owners. In the
case of the resignation of the Trustee, the Beneficial Owners shall appoint a
Person to serve as successor Trustee, provided, that such Person shall in all
respects satisfy the requirements of Section 3807 of the Act, or any successor
provision and shall be a bank or trust company incorporated and doing business
within the United States of America, whose business shall consist at least in
part as serving as trustee in asset securitization transactions and having a
combined capital and surplus of at least $250,000,000, if there be such an
institution willing, able and legally qualified to perform the duties of the
Trustee hereunder upon reasonable or customary terms. The appointment of the
successor Trustee shall take effect concurrently with (i) the resignation of the
former Trustee and (ii) the ratification of the Transaction Documents by the
successor trustee, and no resignation of a Trustee shall be effective absent the
concurrent appointment of a successor Trustee.
(b) If a successor Trustee shall not have been appointed
within 60 days after such notice of resignation, the Trustee or either
Beneficial Owner may apply to any court of competent jurisdiction to appoint a
successor Trustee to act until such time as a successor shall have been
appointed as above provided.
(c) Any corporation into which the Trustee may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which the Trustee shall be a
party, or any corporation to which substantially all the corporate trust
business of the Trustee may be transferred, shall, subject to such corporation
satisfying in all respects the requirements set forth in Section 7.05(a), be the
Trustee hereunder without further action.
(d) Upon the substitution of the Person serving as Trustee,
the Beneficial Owners and the successor Trustee shall file an amendment to the
Certificate of Trust with the Secretary of State of the State of Delaware in
accordance with the provisions of Section 3810 of the Act, indicating the change
in the Trustee.
Section 7.06. Liability. Wilmington Trust Company shall not be
personally liable under any circumstances, except (a) for its own bad faith,
willful misconduct or gross negligence, (b) in the case of the inaccuracy of any
representation or warranty contained in Section 7.04, (c) for liabilities
arising from the failure by Wilmington Trust Company to perform obligations
expressly undertaken by it in the last sentence of Section 7.01(d) or (d) for
taxes, fees or other charges on, based on or measured by any fees, commissions
or compensation received by the Trustee in connection with any of the
transactions contemplated by this Agreement.
In particular, but not by way of limitation:
(i) the provisions of this Agreement, to the extent that they
restrict the duties and liabilities of Wilmington Trust Company
otherwise existing at law or in equity,
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replace such other duties or liabilities of Wilmington Trust Company to
the extent permissible under law or in equity; and
(ii) Wilmington Trust Company shall not be personally liable
for the default or misconduct of the Beneficial Owners.
Section 7.07. Indemnification. The Depositor shall indemnify,
pay, protect, and hold harmless each of Wilmington Trust Company, its officers,
directors, employees, shareholders and agents (collectively the "Indemnified
Persons" or individually an "Indemnified Person") from and against any and all
liabilities, obligations, losses, damages, actions, judgments, suits,
proceedings, taxes, costs, expenses and disbursements of any kind or nature
whatsoever including, without limitation, all reasonable legal fees, third party
costs and expenses of defense, appeal and settlement of any and all suits,
actions, or proceedings instituted against such Indemnified Person or the Trust
and all reasonable third party costs of investigation in connection therewith
that may be imposed on, incurred by, or asserted against an Indemnified Person
relating to or arising out of any action or inaction on the part of the Trust or
an Indemnified Person in respect of the Trust. Notwithstanding the foregoing,
the Depositor shall not be liable to any such Indemnified Person for any of the
matters set forth in clauses (a) through (d) of the first sentence of Section
7.06. If any action, suit, or proceeding shall be pending against the Trust
and/or one or more Indemnified Person relating to or arising out of any action
or inaction of the Indemnified Person or Indemnified Persons, the Depositor
shall have the right to assume the defense of the Indemnified Person or
Indemnified Persons in which case such defense shall be conducted by counsel
chosen by the Depositor and reasonably satisfactory to the Indemnified Person or
Indemnified Persons; provided, however, that if an Indemnified Person is advised
by its counsel that due to actual or potential conflicting interests
representation by the same counsel would be inappropriate under applicable
standards of professional conduct, such Indemnified Person may, at the expense
of the Trust, employ separate counsel of its choice with respect to all matters
as to which such conflicting interest arise in any such action.
Section 7.08. Fees and Expenses. All reasonable out-of pocket
expenses, disbursements and advances incurred or made by Wilmington Trust
Company, in its capacity as Trustee hereunder, including without limitation,
costs and expenses of winding up, liquidation and termination of the Trust shall
be paid, first, from the Administrative Expenses (as defined in the Indenture)
distributed to the Trustee by the Indenture Trustee under Section 5.09 of the
Indenture (provided, that the Trustee shall give notice to the Indenture Trustee
and the Depositor of the amount of such expenses, disbursements and advances due
and owing to the Trustee no later than three Business Days prior to each
semi-annual Payment Date) and, to the extent such amounts are not sufficient
therefor, second, by the Depositor. Wilmington Trust Company shall receive as
compensation for its services as Trustee hereunder such ordinary fees as are
separately agreed upon between Wilmington Trust Company and the Depositor in a
separate fee agreement. Wilmington Trust Company, in its capacity as Trustee
hereunder, shall be compensated reasonably for any extraordinary services
rendered by it hereunder as agreed to separately by the Depositor and the
Trustee.
Section 7.09. Litigation, Action Outside Delaware. (a) The
Trustee shall not be under any obligation to appear in, prosecute or defend any
action which in its opinion may
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require it to incur any out-of-pocket expense or any liability, unless it shall
be furnished with such reasonable security and indemnity against such expense or
liability as it may require, and any reasonable out-of-pocket costs of the
Trustee as a result of such actions shall be paid, first, from the
Administrative Expenses (as defined in the Indenture) distributed to the Trustee
by the Indenture Trustee under Section 5.09 of the Indenture, and, to the extent
such amounts are not sufficient therefor, second, by the Depositor.
(b) Notwithstanding anything contained herein to the contrary,
Wilmington Trust Company shall not be required to take any action in any
jurisdiction other than in the State of Delaware if the taking of such action
will (i) require the consent or approval or authorization or order of or the
giving of notice to, or the registration with or the taking of any other action
in respect of, any state or other governmental authority or agency of any
jurisdiction other than the State of Delaware; (ii) result in any fee, tax or
other governmental charge under the laws of any jurisdiction or any political
subdivisions thereof in existence on the date hereof other than the State of
Delaware becoming payable by Wilmington Trust Company; or (iii) subject
Wilmington Trust Company to personal jurisdiction in any jurisdiction other than
the State of Delaware for causes of action arising from acts unrelated to the
consummation of the transactions by Wilmington Trust Company contemplated
hereby.
ARTICLE VIII
REPRESENTATIONS AND WARRANTIES
Section 8.01. Representations and Warranties of Beneficial
Owners. Each Beneficial Owner hereby represents and warrants to the Trustee
that:
(a) in the case of Enron, it is duly incorporated and in good
standing under the laws of Oregon; in the case of Xxxxxx, it is a validly
existing Delaware statutory business trust;
(b) it has full power and authority to execute, deliver and
perform its obligations under this Agreement, and this Agreement has been duly
authorized by it by all necessary corporate or other action;
(c) no authorization, consent or approval of any governmental
authority, regulatory body or other Person is required for the due
authorization, execution, delivery or performance by it of this Agreement, other
than the authorizations, consents or approvals expressly contemplated by the
Participation Agreement; and
(d) this Agreement has been duly executed and delivered by it
and constitutes a legal and binding obligation of it, enforceable against it in
accordance with its terms, except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other similar laws now or
hereafter in effect, relating to the enforcement of creditors' rights in general
and except as such enforceability may be limited by general principles of equity
(whether considered in a proceeding at law or in equity).
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ARTICLE IX
DISSOLUTION, BANKRUPTCY AND LIQUIDATION OF THE TRUST
Section 9.01. Dissolution of the Trust. (a) Subject to Section
9.03, the Trust shall be dissolved, wound up and terminated as provided herein
upon the Trustee's determination, in its sole discretion after consultation with
such counsel and other experts as it deems necessary, that the Trust is
insolvent. Upon any such determination, the Trustee shall have the right, in its
sole discretion, to (i) apply for or consent to the appointment of, or the
taking of possession by, a receiver, custodian, trustee, examiner or liquidator
of the Trust or of all or a substantial part of the Trust Estate, (ii) make a
general assignment for the benefit of the Trust's creditors, (iii) file a
petition seeking to take advantage of any other law relating to bankruptcy,
insolvency, reorganization, liquidation, dissolution, arrangement or winding up,
or composition or readjustment of debts, (iv) take any action for the purpose of
effecting any of the foregoing or (v) do the equivalent of any of the foregoing
under the laws of the United States (each action described in (i) through (v), a
"Bankruptcy Action"), each with respect to the Trust upon 90 days' prior written
notice to the Beneficial Owners. The Beneficial Owners shall have no right to
direct the taking of a Bankruptcy Action with respect to the Trust. With respect
to any determination or exercise of discretion by the Trustee under this Section
9.01, the Trustee shall incur no personal liability to any Person for any
determination (action or inaction in connection therewith) made in good faith,
and in acting (or not acting as the case may be) under this Section, the Trustee
shall owe no fiduciary duties to any Person other than the Trust and the
Beneficial Owners. In connection with the Trustee's determination that the Trust
is insolvent, the Trustee shall not be obligated to follow the instructions of
the Beneficial Owners and shall have no liability to the Trust or any other
Person for its failure to do so.
(b) Upon liquidation of the Trust, the proceeds from the
liquidation of the Trust's assets shall be applied in accordance with Section
4.03(a)(v).
Section 9.02. Termination. The Trust shall terminate when all
of the Trust's assets shall have been disposed of and distributed as provided
herein. Upon the winding up of the Trust and its termination, the Trustee shall
cause the Certificate of Trust to be canceled by filing a certificate of
cancellation with the Secretary of State in accordance with the provisions of
Section 3810 of the Act.
Section 9.03. Sale of Assets following a Xxxxxx Note Trigger
Event or Upon a Failure to Pay the Xxxxxx Certificate Price. The Trustee shall,
at the direction of Xxxxxx, cause the liquidation and sale of all or a portion
of the Trust's assets (a) following the occurrence of a Xxxxxx Note Trigger
Event, as soon as practicable following the later of (i) the date of occurrence
of such Xxxxxx Note Trigger Event and (ii) any applicable Standstill Expiration
Date, subject to the terms of Section 9.04 of the Indenture, (b) in the event
the amounts on deposit in the Xxxxxx Certificate Distribution Account maintained
with the Xxxxxx Trustee are insufficient to pay the Xxxxxx Certificate Price to
the holders of the Xxxxxx Certificates as and when required by Section 5.03 of
the Xxxxxx Trust Agreement, as soon as practicable following such insufficiency,
or (c) in the event the Beneficial Owner of the Class B Interest fails to pay
the Beneficial Owner of the
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Class A Interest an amount equal to the Repayment Amount in accordance with
Section 8(h) of the Remarketing Agreement, as soon as practicable following such
failure. The proceeds of such liquidation and sale shall be applied in
accordance with Section 4.03(a)(v), but in no event later than the Class A Final
Distribution Date.
ARTICLE X
NOTICES
Section 10.01. Notices. All notices, demands, consents or
requests required or permitted under this Agreement must be in writing, and
shall be made at the addresses and in the manner set forth in Section 7.2 of the
Participation Agreement.
ARTICLE XI
MISCELLANEOUS PROVISIONS
Section 11.01. Entire Agreement. This Agreement and the Other
Transaction Documents constitute the entire agreement among the parties hereto
relating to the transactions contemplated hereby and thereby.
Section 11.02. Governing Law. THIS AGREEMENT SHALL BE GOVERNED
BY AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
DELAWARE.
Section 11.03. Effect. Except as otherwise specified herein,
this Agreement shall be binding upon and inure to the benefit of the parties and
their respective legal representatives, successors and permitted assigns.
Section 11.04. Pronouns and Number. Wherever from the context
it appears appropriate, each term stated in either the singular or the plural
shall include the singular and the plural, and pronouns stated in either the
masculine, feminine or neuter shall include the masculine, feminine and neuter.
Section 11.05. Effect of Headings. The Table of Contents and
the headings of the Articles, Sections, subsections, clauses and paragraphs
hereof, and of Exhibits hereto, are for convenience of reference only, and shall
not affect the construction or interpretation of this Agreement.
Section 11.06. Severability of Provisions. If any provision
hereof shall be held invalid or unenforceable by any court of competent
jurisdiction, such holding shall not invalidate or render unenforceable any
other provision hereof. To the extent permitted by Applicable Law, the parties
hereto hereby agree that any provision hereof that renders any other term or
provision hereof invalid or unenforceable in any respect shall be modified, but
only to the extent necessary
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to avoid rendering such other term or provision invalid or unenforceable, and
such modification shall be accomplished in the manner that most nearly preserves
the benefit of all the parties' bargain hereunder.
Section 11.07. Pledge of the Class A Interest to the Indenture
Trustee. The Beneficial Owner of the Class B Interest hereby expressly
acknowledges and consents to the pledge by the Beneficial Owner of the Class A
Interest of all such Beneficial Interest to the Indenture Trustee for the
benefit of the holders of the Xxxxxx Senior Notes pursuant to the terms of the
Indenture and any subsequent transfers following foreclosure on such pledge in
accordance with the terms thereof. The Beneficial Owner of the Class B Interest
also expressly acknowledges and consents to any transfer by the Beneficial Owner
of the Class A Interest upon a failure by the Beneficial Owner of the Class B
Interest to make payment in accordance with Section 8(h) of the Remarketing
Agreement.
Section 11.08. Tax Matters. Each of the parties hereto
recognizes and intends that, for United States federal, state and local income
tax purposes,
(a) unless and until the Trust establishes additional classes
of Beneficial Interest or Enron transfers a portion or all of its Class B
Interest, the Trust will be disregarded as an entity separate from the Class B
Beneficial Owner pursuant to the United States Treasury Regulations
ss.ss.301.7701-1 through 301.7701-4 and comparable provisions of state and local
law, and all of the Trust's assets and income will be treated as owned by the
Class B Beneficial Owner whether or not pledged;
(b) if the Trust establishes additional classes of Beneficial
Interest or Enron transfers any of its Class B Interest, the Trust will
thereafter be treated as a partnership pursuant to the United States Treasury
Regulations ss.ss.301.7701-1 through 301.7701-3 and comparable provisions of
state and local law and all of the Trust's assets and income will be treated as
owned by such partnership whether or not pledged;
(c) the Class A Beneficial Interest will be treated as
indebtedness; and
(d) for such periods as the Trust is treated as a partnership
(and while so treated, in this Section 11.08, the Trust is referred to as the
"Partnership" and the Beneficial Owners of the Class B Interest are referred to
as ("Partners")), the following provisions shall apply:
(i) a tax capital account (the "Tax Capital Account")
shall be established and maintained for each Partner in
accordance with the provisions of Treasury Regulation
ss.1.704-1(b);
(ii) except as otherwise required by section 704 of
the Code and the Treasury Regulations thereunder, all items of
income, gain, loss, deduction and other tax items (as
determined for United States federal income tax purposes) for
each taxable year of the Partnership shall be allocated, to
the maximum extent possible, among the Partners in such shares
and proportions as will cause the
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positive balance in each Partner's Tax Capital Account as of
the end of such taxable year to be equal to the sum of the
amount of money and the fair market value of other property
that would be distributed to that Partner as of the end of
such taxable year if the Partnership were to dissolve and
liquidate as of the end of such taxable year;
(iii) Enron (or, if Enron is not then a Partner, such
Partner as the Partners may designate) shall serve as the tax
matters partner (as defined in section 6231 of the Code) of
the Partnership; and
(iv) the Partnership shall make an election to adjust
the basis of Partnership property pursuant to section 754 of
the Code and such other elections for United States federal
tax purposes as Enron may from time to time determine.
To the extent that any of the parties hereto is required to
report any item of income, gain, loss, deduction or credit relating to the Trust
for United States federal, state or local income tax purposes, such party shall
report such item in a manner consistent with the characterization intended by
this Section 11.08 and shall not take any contrary position on any tax return or
report relating to the United States federal, state or local income taxes or
take any other action which is inconsistent with such characterization.
Notwithstanding anything to the contrary herein, no party shall be obligated to
take a position subsequent to (A) a Final Determination to the contrary or (B) a
written opinion of independent, nationally-recognized tax counsel selected by
such party (such counsel and form of opinion to be reasonably satisfactory to
Enron) that no Reasonable Basis exists to take such position, which opinion
shall, solely in the case of a United States federal income Tax return, be based
on a Change in Law, provided, however, that a court decision described in clause
(IV) of the definition of "Change in Law" shall not constitute a Change in Law
if Enron provides to the relevant party a written opinion of independent,
nationally-recognized tax counsel selected by Enron (such counsel and form of
opinion to be reasonably satisfactory to such party) that, notwithstanding such
decision, such party's position is more likely than not to prevail if
challenged.
Section 11.09. Financial Statements. The Trust shall maintain
financial statements in accordance with GAAP and the Trustee shall deliver
copies thereof to each Beneficial Owner as follows:
(a) as soon as available and in any event within 45 days after
the end of the first, second and third fiscal quarters of Atlantic Water Trust,
an unaudited consolidated balance sheet of Atlantic Water Trust as of the end of
such quarter and the related consolidated statements of income and cash flows
for such quarter and for the portion of the fiscal year ending with the last day
of such quarter setting forth in comparative form corresponding unaudited
figures for the corresponding fiscal period of the preceding year, if any and
(b) as soon as available and in any event within 120 days
after the end of each fiscal year of Atlantic Water Trust, audited consolidated
financial statements of Atlantic Water Trust, prepared in accordance with U.S.
GAAP, together with an unqualified audit opinion of
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Xxxxxx Xxxxxxxx LLP or another firm of independent certified public accountants
of recognized national standing.
Section 11.10. Amendments, Waivers, Etc. This Agreement may
not be amended, discharged or terminated nor may any provision hereof be waived
unless such amendment, discharge, termination or waiver is in writing and signed
by Enron, Xxxxxx and the Trustee.
Section 11.11. Limitation of Liability. It is expressly
understood and agreed by the parties hereto with respect to Xxxxxx that (a) this
Agreement is executed and delivered by Wilmington Trust Company, not
individually or personally, but solely as trustee for Xxxxxx, in the exercise of
the powers and authority conferred and vested in it under the Xxxxxx Trust
Agreement, (b) each of the representations, undertakings and agreements herein
made on the part of Xxxxxx is made and intended not as personal representations,
undertakings and agreements by Wilmington Trust but is made and intended for the
purpose of binding only Xxxxxx, and (c) under no circumstances shall Wilmington
Trust Company be personally liable for the payment of any indebtedness or
expenses of Xxxxxx or be liable for the breach or failure of any obligation,
representation, warranty or covenant made or undertaken by Xxxxxx under this
Agreement or other related documents; provided, however, this Section 11.11
shall not limit the liability expressly assumed by Wilmington Trust Company
under this Agreement or the Xxxxxx Trust Agreement.
Section 11.12. Counterparts. This Agreement may be executed in
any number of counterparts, each of which shall be deemed to be an original, but
all such counterparts shall together constitute but one and the same instrument
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IN WITNESS WHEREOF, the undersigned have executed this
Agreement as of the date above first written.
WILMINGTON TRUST COMPANY
By: /s/ XXXXX X. XXXXXX
-------------------------------------------
Name: Xxxxx X. Xxxxxx
Title: Vice President
XXXXXX TRUST,
as a Beneficial Owner
By: WILMINGTON TRUST COMPANY
Not in its individual capacity but solely
in its capacity as trustee
By: /s/ XXXXX X. XXXXXX
-------------------------------------------
Name: Xxxxx X. Xxxxxx
Title: Vice President
ENRON CORP.,
as Depositor and a Beneficial Owner
By: /s/ XXXXX X. XXXXXXXXX
-------------------------------------------
Name: Xxxxx X. Xxxxxxxxx
Title: Agent and Attorney-in-Fact
36
EXHIBIT A-1
[Form of Trust Certificate - Class A Beneficial Interest]
ATLANTIC WATER TRUST
Trust Certificate
evidencing a beneficial ownership interest in the Trust Estate (as defined in
the Atlantic Water Trust Agreement).
THIS TRUST CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE UNITED STATES
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE OR OTHER
SECURITIES LAWS. NEITHER THIS TRUST CERTIFICATE NOR ANY INTEREST OR
PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED,
ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR
UNLESS THE TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT.
THIS TRUST CERTIFICATE DOES NOT REPRESENT AN INTEREST IN OR OBLIGATION OF ENRON
CORP. OR THE TRUSTEE REFERRED TO BELOW, OR OF ANY OF THEIR AFFILIATES EXCEPT AS
SET FORTH HEREIN AND IN THE ATLANTIC WATER TRUST AGREEMENT. THIS TRUST
CERTIFICATE IS NOT GUARANTEED OR INSURED BY ANY GOVERNMENT AGENCY OR
INSTRUMENTALITY.
TO THE EXTENT PERMITTED BY APPLICABLE LAW, AND EXCEPT AS OTHERWISE PERMITTED IN
THE TRANSACTION DOCUMENTS, THIS TRUST CERTIFICATE SHALL NOT BE TRANSFERRED
WITHOUT THE PRIOR WRITTEN CONSENT OF THE BENEFICIAL OWNER OF THE CLASS B
INTEREST; PROVIDED, HOWEVER, THIS TRUST CERTIFICATE MAY BE TRANSFERRED WITHOUT
SUCH CONSENT (I) FOLLOWING A XXXXXX CERTIFICATE TRIGGER EVENT OR (II) TO THE
EXTENT CONTEMPLATED BY SECTION 11.07 OF THE ATLANTIC WATER TRUST AGREEMENT.
THIS TRUST CERTIFICATE WILL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF DELAWARE.
Certificate No.: 1
Initial Class A Trust Account Balance: $1,149,000,000
THIS CERTIFIES THAT Xxxxxx Water Trust is the registered owner
of the Class A beneficial ownership interest (the "Class A Interest") in
Atlantic Water Trust, a Delaware business trust formed pursuant to a Trust
Agreement dated as of November 30, 1998, as amended and restated pursuant to an
Amended and Restated Trust Agreement dated as of December 17, 1998 (the
"Atlantic Water Trust Agreement") among Enron Corp., as Depositor and Beneficial
Owner, Xxxxxx Water Trust, as Beneficial Owner and Wilmington Trust Company, as
Trustee (the "Trustee").
Atlantic Water Trust has also issued a trust certificate
evidencing the Class B beneficial ownership interests of Atlantic Water Trust
(such interest, the "Class B Interest" and the holder of such trust certificate
and the holders of this Trust Certificate, each, a "Beneficial Owner").
Reference is hereby
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37
made to the Atlantic Water Trust Agreement for the respective rights thereunder
of the Depositor, the Beneficial Owner of the Class A Interest and Class B
Interest and the Trustee. The Trust Certificates are subject to all such terms,
and the holder of this Trust Certificate is referred to the Atlantic Water Trust
Agreement for a statement of such terms. To the extent any provision of this
Trust Certificate conflicts with the express provisions of the Atlantic Water
Trust Agreement, the provisions of the Atlantic Water Trust Agreement shall
govern and be controlling. The holder of this Trust Certificate, by virtue of
the acceptance hereof, assents to the terms of the Atlantic Water Trust
Agreement and is bound by such terms. A summary of certain of the pertinent
provisions of the Atlantic Water Trust Agreement is set forth herein.
Capitalized terms used herein shall have the meanings assigned to them in the
Atlantic Water Trust Agreement unless otherwise indicated.
1. Distributions. Any holder of this Trust Certificate will
receive distributions in respect of this Trust Certificate on each Distribution
Date in accordance with Article IV of the Atlantic Water Trust Agreement,
including, without limitation, the Class A Priority Distribution described in
Paragraph 2.
2. Class A Priority Distribution. The Beneficial Owner of the
Class A Interest will be entitled to receive, on each Payment Date, so long as
the balance of the Class A Trust is greater than zero, a distribution in an
amount equal to the sum of (i) any Xxxxxx Interest Amount then due and payable
and (ii) Xxxxxx Certificate Yield then due and payable or in the case of a Base
Amount Deferral by the Xxxxxx Certificateholders pursuant to Section 5.04 and
6.02 of the Xxxxxx Trust Agreement, the Treasury Yield due and payable as
described in Section 5.06 of the Xxxxxx Trust Agreement.
3. Certain Limitations on the Rights of the Class A Interest.
Notwithstanding anything else to the contrary in the Atlantic Water Trust
Agreement, the Beneficial Owner of the Class A Interest will be entitled to
receive distributions in accordance with Article IV thereof, only so long as the
then current balance of the Class A Trust Account is greater than zero. In the
event the balance of the Class A Trust Account is reduced to zero, the rights of
the Beneficial Owner of the Class A Interest under the Atlantic Water Trust
Agreement, including, without limitation, its rights under Article VI, will be
terminated.
4. Amendment, Supplement and Waiver. No provision of the
Atlantic Water Trust Agreement may be amended, discharged or terminated nor may
any provision thereof be waived unless such amendment, discharge, termination or
waiver is in writing and signed by Enron, Xxxxxx and the Trustee.
5. Limitation on Liability. The Trustee will incur no
liability to any Person in acting upon any signature, instrument, notice,
resolution, request, consent, order, certificate, report, opinion, bond or other
documents or paper reasonably believed by it to be genuine and reasonably
believed by it to be signed by the proper party or parties. The Trustee will not
be personally liable for any error of judgment made in good faith.
6. Termination. The obligations and responsibilities of the
Trustee created hereby with respect to the Trust Estate will terminate upon the
distribution to the holders of Trust Certificates of all amounts required to be
distributed to them pursuant to the Atlantic Water Trust Agreement.
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38
Atlantic Water Trust will furnish to any holder of a Trust
Certificate upon written request and without charge a copy of the Atlantic Water
Trust Agreement. Requests may be made to:
Atlantic Water Trust
c/o Wilmington Trust Company
Xxxxxx Square North
0000 Xxxxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxxx 00000-0000
Attention: Corporate Trust Administration
Telecopier No.: 000-000-0000
Telephone No.: 000-000-0000
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39
IN WITNESS WHEREOF, the Trustee has caused this Trust
Certificate to be duly executed.
Dated: December 17, 1998
ATLANTIC WATER TRUST
By: WILMINGTON TRUST COMPANY,
not in its individual capacity but
solely in its capacity as trustee
By:
--------------------------------------
Name:
Title:
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40
ASSIGNMENT FORM
To assign this Trust Certificate, fill in the form below: (I) or (we) assign and
transfer this Trust Certificate to
--------------------------------------------------------------------------------
(Insert assignee's soc. sec. or tax I.D. no.)
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
(Print or type assignee's name, address and zip code)
and irrevocably appoint
---------------------------------------------------------
to transfer this Trust Certificate on the books of Atlantic Water Trust. The
agent may substitute another to act for him.
--------------------------------------------------------------------------------
Date:
----------------------
Your Signature:
-------------------------
(Sign exactly as your name appears on the
face of this Trust Certificate)
Signature Guarantee.
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41
EXHIBIT A-2
[Form of Trust Certificate - Class B Beneficial Interest]
ATLANTIC WATER TRUST
Trust Certificate
evidencing a beneficial ownership interest in the Trust Estate (as defined in
the Atlantic Water Trust Agreement).
THIS TRUST CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE UNITED STATES
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE OR OTHER
SECURITIES LAWS. NEITHER THIS TRUST CERTIFICATE NOR ANY INTEREST OR
PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED,
ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR
UNLESS THE TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT.
THIS TRUST CERTIFICATE DOES NOT REPRESENT AN INTEREST IN OR OBLIGATION OF ENRON
CORP. OR THE TRUSTEE REFERRED TO BELOW, OR OF ANY OF THEIR AFFILIATES EXCEPT AS
SET FORTH HEREIN AND IN THE ATLANTIC WATER TRUST AGREEMENT. THIS TRUST
CERTIFICATE IS NOT GUARANTEED OR INSURED BY ANY GOVERNMENT AGENCY OR
INSTRUMENTALITY.
NO TRANSFER OF THIS TRUST CERTIFICATE SHALL BE PERMITTED UNLESS THE PROPOSED
TRANSFEROR OF THIS TRUST CERTIFICATE HAS DELIVERED AN OPINION OF ANY
NATIONALLY-RECOGNIZED SECURITIES COUNSEL TO THE EFFECT THAT SUCH TRANSFER WOULD
NOT CAUSE THE TRUST OR XXXXXX WATER TRUST TO BE REQUIRED TO REGISTER AS AN
INVESTMENT COMPANY UNDER THE UNITED STATES INVESTMENT COMPANY ACT OF 1940, AS
AMENDED.
THIS TRUST CERTIFICATE WILL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF DELAWARE.
Certificate No.: 2
Initial Class B Trust Account Balance: $846,000,000
THIS CERTIFIES THAT Enron Corp. is the registered owner of the
Class B beneficial ownership interest (the "Class B Interest") in Atlantic Water
Trust, a Delaware business trust formed pursuant to a Trust Agreement dated as
of November 30, 1998, as amended and restated pursuant to an Amended and
Restated Trust Agreement dated as of December 17, 1998 (the "Atlantic Water
Trust Agreement") among Enron Corp., as Depositor and Beneficial Owner, Xxxxxx
Water Trust, as Beneficial Owner and Wilmington Trust Company, as Trustee (the
"Trustee").
Atlantic Water Trust has also issued a trust certificate
evidencing the Class A beneficial ownership interests of Atlantic Water Trust
(such interest, the "Class A Interest" and the holder of such trust certificate
and the holders of this Trust Certificate, each, a "Beneficial Owner").
Reference is hereby made to the Atlantic Water Trust Agreement for the
respective rights thereunder of the Depositor, the
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42
Beneficial Owner of the Class A Interest and Class B Interest and the Trustee.
The Trust Certificates are subject to all such terms, and the holder of this
Trust Certificate is referred to the Atlantic Water Trust Agreement for a
statement of such terms. To the extent any provision of this Trust Certificate
conflicts with the express provisions of the Atlantic Water Trust Agreement, the
provisions of the Atlantic Water Trust Agreement shall govern and be
controlling. The holder of this Trust Certificate, by virtue of the acceptance
hereof, assents to the terms of the Atlantic Water Trust Agreement and is bound
by such terms. A summary of certain of the pertinent provisions of the Atlantic
Water Trust Agreement is set forth herein. Capitalized terms used herein shall
have the meanings assigned to them in the Atlantic Water Trust Agreement unless
otherwise indicated.
1. Distributions. Any holder of this Trust Certificate will
receive distributions in respect of this Trust Certificate on each Distribution
Date in accordance with Article IV of the Atlantic Water Trust Agreement.
2. Amendment, Supplement and Waiver. No provision of the
Atlantic Water Trust Agreement may be amended, discharged or terminated nor may
any provision thereof be waived unless such amendment, discharge, termination or
waiver is in writing and signed by Enron, Xxxxxx and the Trustee.
3. Limitation on Liability. The Trustee will incur no
liability to any Person in acting upon any signature, instrument, notice,
resolution, request, consent, order, certificate, report, opinion, bond or other
documents or paper reasonably believed by it to be genuine and reasonably
believed by it to be signed by the proper party or parties. The Trustee will not
be personally liable for any error of judgment made in good faith.
4. Termination. The obligations and responsibilities of the
Trustee created hereby with respect to the Trust Estate will terminate upon the
distribution to the holders of Trust Certificates of all amounts required to be
distributed to them pursuant to the Atlantic Water Trust Agreement.
Atlantic Water Trust will furnish to any holder of a Trust
Certificate upon written request and without charge a copy of the Atlantic Water
Trust Agreement. Requests may be made to:
Atlantic Water Trust
c/o Wilmington Trust Company
Xxxxxx Square North
0000 Xxxxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxxx 00000-0000
Attention: Corporate Trust Administration
Telecopier No.: 000-000-0000
Telephone No.: 000-000-0000
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43
IN WITNESS WHEREOF, the Trustee has caused this Trust
Certificate to be duly executed.
Dated: December 17, 1998
ATLANTIC WATER TRUST
By: WILMINGTON TRUST COMPANY,
not in its individual capacity but
solely in its capacity as trustee
By:
------------------------------------
Name:
Title:
A-2-3
44
ASSIGNMENT FORM
To assign this Trust Certificate, fill in the form below: (I) or (we) assign and
transfer this Trust Certificate to
--------------------------------------------------------------------------------
(Insert assignee's soc. sec. or tax I.D. no.)
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
(Print or type assignee's name, address and zip code)
and irrevocably appoint
---------------------------------------------------------
to transfer this Trust Certificate on the books of Atlantic Water Trust. The
agent may substitute another to act for him.
--------------------------------------------------------------------------------
Date:
----------------------
Your Signature:
-------------------------
(Sign exactly as your name appears on the
face of this Trust Certificate)
Signature Guarantee.
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