EXHIBIT 10.2
FIRST AMENDED AND RESTATED
PARTICIPATION AGREEMENT
among
UNIVERSAL COMPRESSION, INC.
as Lessee
UNIVERSAL COMPRESSION HOLDINGS, INC.
as Guarantor
BRL UNIVERSAL EQUIPMENT 2001 A, L.P.
as Lessor
The financial institutions listed on the signature pages
hereof as Tranche B Lenders
THE BANK OF NEW YORK,
not in its individual capacity but as Indenture Trustee, Paying Agent,
Transfer Agent and Registrar for the Tranche A Noteholders
BRL UNIVERSAL EQUIPMENT MANAGEMENT, INC.
as Lessor General Partner
BANKERS TRUST COMPANY
as Administrative Agent and Collateral Agent for
Tranche B Lenders and Indenture Trustee, on behalf of the
Tranche A Noteholders
DEUTSCHE BANC ALEX. XXXXX INC.
as Arranger
THE BANK OF NOVA SCOTIA
as Syndication Agent for Tranche B Lenders
BANK ONE, NA
as Documentation Agent for Tranche B Lenders
and
FIRST UNION NATIONAL BANK
as Managing Agent
October 15, 2001
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UNIVERSAL COMPRESSION, INC.,
GAS COMPRESSION EQUIPMENT
FINANCING FACILITY
-------------------------------
TABLE OF CONTENTS
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Page
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1 Definitions and Usage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1A Effectiveness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2 Representations and Warranties. . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.1 Lessee Representations and Warranties . . . . . . . . . . . . . . . . . . . 2
2.2 Guarantor Representations and Warranties. . . . . . . . . . . . . . . . . . 11
2.3 Lessor Representations and Warranties For Benefit of All Parties. . . . . . 12
2.4 Lessor Representations and Warranties For Benefit of Indenture Trustee,
Tranche B Lenders, Administrative Agent and Collateral Agent. . . . . . . . 13
2.5 Representations and Warranties of Lessor General Partner. . . . . . . . . . 14
2.6 Tranche B Lenders Representations and Warranties. . . . . . . . . . . . . . 15
2.7 Private Offering Representations; etc . . . . . . . . . . . . . . . . . . . 15
2.8 Warranty Disclaimers. . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
3 Conditions Precedent. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
3.2 Tranche B Lender Conditions . . . . . . . . . . . . . . . . . . . . . . . . 20
4 Commitments and Fundings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
4.1 Tranche B Commitments . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
4.2 Lessor Commitment to Purchase . . . . . . . . . . . . . . . . . . . . . . . 22
4.3 Lease Supplements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
4.4 Rights in Equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
4.5 Funding Dates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
4.6 Limitation on Size of Facility. . . . . . . . . . . . . . . . . . . . . . . 22
5 Selection of Floating Lease Payment Period. . . . . . . . . . . . . . . . . . . . . 23
6 Default Purchase Options and Cure Rights. . . . . . . . . . . . . . . . . . . . . . 23
6.1 Right to Cure Certain Lease Events of Default . . . . . . . . . . . . . . . 23
6.2 Lessee Cure Right . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
7 Security. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
7.1 Security Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
7.2 Further Assurances. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
7.3 Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
7.4 Other Security. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
(i)
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7.5 Power of Attorney . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
7.6 Assignment of Rights. . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
7.7 Transfer of the Collateral by Collateral Agent. . . . . . . . . . . . . . . 28
7.8 No Segregation of Monies; No Interest . . . . . . . . . . . . . . . . . . . 28
7.9 Distribution of Moneys. . . . . . . . . . . . . . . . . . . . . . . . . . . 28
(a) Scheduled and End of Term Purchase Option Payments. . . . . . . . . 28
(b) Prepayments . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
(c) Payments after an End of Term Sale or Redelivery of Equipment . . . 29
7.10 Payments after a Loan Event of Default. . . . . . . . . . . . . . . . . . . 30
7.11 Application of Certain Other Payments . . . . . . . . . . . . . . . . . . . 30
7.12 Other Payments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
7.13 Retention of Amounts by Collateral Agent. . . . . . . . . . . . . . . . . . 31
7.14 Exercise of Remedies. . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
7.14.1 Rights in Collateral . . . . . . . . . . . . . . . . . . . . . . 31
7.14.2 Delivery of Documents; Taking Possession of Collateral . . . . . 31
7.14.4 Possession of Collateral . . . . . . . . . . . . . . . . . . . . 32
7.14.5 Sale of Collateral . . . . . . . . . . . . . . . . . . . . . . . 32
7.14.6 Discharge. . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
7.14.7 Appointment of Receiver. . . . . . . . . . . . . . . . . . . . . 33
7.14.8 Redemption . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
7.14.9 Rights Cumulative; No Waiver . . . . . . . . . . . . . . . . . . 33
7.14.10 Termination of Proceedings . . . . . . . . . . . . . . . . . . . 34
7.15 No Commingling of Funds . . . . . . . . . . . . . . . . . . . . . . . . . . 34
7.16 Lessor Collateral . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
7.17 Accrued Interest Premium. . . . . . . . . . . . . . . . . . . . . . . . . . 34
7.18 Conflicts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
8 Guaranty. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
9 Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
9.1 Lessor and Lessor General Partner Covenants . . . . . . . . . . . . . . . . 37
9.2 Lessee Covenants for the Benefit of Indenture Trustee and Tranche A
Noteholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
9.3 Lessee Covenants for the Benefit of Lessor and Tranche B Lenders. . . . . . 47
9.4 Covenant of Tranche B Lenders, Lessor, Administrative Agent and
Collateral Agent and Limited Partners . . . . . . . . . . . . . . . . . . . 58
9.5 Covenant of Lessee and Lessor . . . . . . . . . . . . . . . . . . . . . . . 59
10 Indemnities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
10.1 Lessee General Indemnification. . . . . . . . . . . . . . . . . . . . . . . 59
10.2 Exceptions to Lessee's General Indemnification. . . . . . . . . . . . . . . 61
10.3 Tax Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
10.3.1 General Indemnity. . . . . . . . . . . . . . . . . . . . . . . . 61
10.3.2 Exceptions to Tax Indemnity. . . . . . . . . . . . . . . . . . . 62
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10.3.3 Payment of Taxes . . . . . . . . . . . . . . . . . . . . . . . . 63
10.3.4 Tax Filings. . . . . . . . . . . . . . . . . . . . . . . . . . . 64
10.3.5 Withholdings . . . . . . . . . . . . . . . . . . . . . . . . . . 64
10.3.6 Tax Contests . . . . . . . . . . . . . . . . . . . . . . . . . . 65
10.3.7 Special Tax Indemnity. . . . . . . . . . . . . . . . . . . . . . 67
10.4 Increased Costs, Illegality, etc. . . . . . . . . . . . . . . . . . . . . . 67
10.5 Lessee Indemnity. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
10.6 Survival. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
11 Administrative Agent and Collateral Agent . . . . . . . . . . . . . . . . . . . . . 68
11.1 Authorization and Action of Administrative Agent. . . . . . . . . . . . . . 68
11.2 Delegation of Duties. . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
11.3 Agent's Reliance, etc . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
11.4 Administrative Agent, Collateral Agent and Affiliates . . . . . . . . . . . 70
11.5 Credit Decisions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
11.6 Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
11.7 Successor Administrative Agent and Collateral Agent; Termination of Agency. 71
11.8 Registration. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
12 Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
12.1 Expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
12.2 Amendments, Consents and Waivers. . . . . . . . . . . . . . . . . . . . . . 73
12.3 GOVERNING LAW; SUBMISSION TO JURISDICTION; VENUE;
WAIVER OF JURY TRIAL. . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
12.4 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
12.5 Interests in the Equipment. . . . . . . . . . . . . . . . . . . . . . . . . 78
12.6 Descriptive Headings, etc . . . . . . . . . . . . . . . . . . . . . . . . . 79
12.7 Benefit of Agreement; Assignment. . . . . . . . . . . . . . . . . . . . . . 79
12.8 Execution and Effectiveness . . . . . . . . . . . . . . . . . . . . . . . . 81
12.9 Survival. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
12.10 Severability. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
12.11 No Broker . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
12.12 Limited Recourse Against Limited Partners and Lessor General Partner. . . . 82
12.13 Consent and Agreement of Lessee and Guarantor . . . . . . . . . . . . . . . 83
12.14 Consent to Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . 83
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APPENDICES, EXHIBITS AND SCHEDULES
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APPENDIX A Definitions
SCHEDULE 1 Reserved
SCHEDULE 2 Notice Addresses and Payment Instructions
SCHEDULE 3 Subsidiaries
SCHEDULE 4 Insurance
SCHEDULE 5 Liabilities
SCHEDULE 6 Taxes
SCHEDULE 7 Titles, Etc.
SCHEDULE 8 Environmental Matters
SCHEDULE 9 Hedging Agreements
SCHEDULE 10 Negative Pledges
SCHEDULE 11 Debt
SCHEDULE 12 Liens
SCHEDULE 13 Investments, Loans and Advances
SCHEDULE 14 Transactions with Affiliates
EXHIBIT A-1 Form of Xxxx of Sale
EXHIBIT A-2 Form of Xxxx of Sale and Title Warranty
EXHIBIT B Form of Certificate of Sale/Leaseback Equipment Relating to Lease
Supplement
EXHIBIT C Form f Funding Notice and Instructions re Funds on Funding Date
SCHEDULE 1 Amounts to be Funded
EXHIBIT D Form of Compliance Certificate
EXHIBIT E Form of Participation Agreement Supplement
EXHIBIT F Form of Security Supplement
EXHIBIT G Form of Funding Escrow Agreement
(iv)
This FIRST AMENDED AND RESTATED PARTICIPATION AGREEMENT, dated as of
October 15, 2001 (together with all amendments and supplements hereto, this
"Agreement") is among UNIVERSAL COMPRESSION, INC., a Texas corporation
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("Lessee"), UNIVERSAL COMPRESSION HOLDINGS, INC., a Delaware corporation
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("Guarantor"), BRL UNIVERSAL EQUIPMENT 2001 A, L.P., a Delaware limited
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partnership ("Lessor"), THE BANK OF NEW YORK, not in its individual capacity but
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solely as Indenture Trustee, Paying Agent, Transfer Agent and Registrar for the
Tranche A Noteholders ("Indenture Trustee"), the financial institutions listed
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on the signature pages hereof or that may hereafter become party hereto by
execution and delivery of a Participation Agreement Supplement as a Tranche B
Lender or as an Eligible Transferee of a Tranche B Lender, (each a "Tranche B
---------
Lender" and collectively "Tranche B Lenders") BRL UNIVERSAL EQUIPMENT
------ -------------------
MANAGEMENT, INC., a Delaware corporation ("Lessor General Partner"), BANKERS
----------------------
TRUST COMPANY, as Administrative Agent for Tranche B Lenders and Indenture
Trustee acting on behalf of the Tranche A Noteholders (in such capacity,
"Administrative Agent") and BANKERS TRUST COMPANY, as Collateral Agent for
---------------------
Tranche B Lenders and Indenture Trustee acting on behalf of the Tranche A
Noteholders (in such capacity, "Collateral Agent").
----------------
W I T N E S S E T H:
- - - - - - - - - --
WHEREAS, Lessor has agreed to lease to Lessee certain natural gas
compressor equipment pursuant to the Equipment Lease Agreement dated as of
February 9, 2001 between Lessee and Lessor (the "Original Lease Agreement") and
------------------------
a Participation Agreement dated as of February 9, 2001 (as amended and modified
by the First Amendment to Participation Agreement dated March 20, 2001, the
"Original Participation Agreement");
----------------------------------
WHEREAS, Lessee is a subsidiary of Guarantor and to induce Lessor to
lease the natural gas compressor equipment to Lessee and to induce Tranche A
Noteholders to purchase Tranche A Notes and Tranche B Lenders to make a loan or
loans to Lessor, Guarantor agreed to guarantee all of Lessee's obligations under
the Operative Documents;
WHEREAS, to induce Tranche A Noteholders to purchase Tranche A Notes
and Tranche B Lenders to make a loan or loans to Lessor, Lessor has agreed to
provide Collateral Agent on behalf of Tranche A Noteholders and Tranche B
Lenders and Indenture Trustee on behalf of Tranche A Noteholders certain
security in accordance with the terms thereof;
WHEREAS, the parties hereto desire to amend the Original Lease
Agreement and amend and restate the Original Participation Agreement to allow
Lessor to issue additional Tranche A Notes and Tranche B Notes to finance the
acquisition of additional natural gas compressor equipment and lease it to
Lessee.
NOW, THEREFORE, in consideration of the premises and mutual agreements
contained herein, the parties hereto amend and restate the Original
Participation Agreement in its entirety and agree as follows:
1. Definitions and Usage.
-----------------------
Unless the context otherwise requires, capitalized terms used herein
and not otherwise defined herein shall have the meanings set forth or referred
to in Appendix A which Appendix A also contains the rules of usage that shall
apply hereto.
1A. Effectiveness.
-------------
This Agreement shall become effective as of the Amendment Date upon
execution and delivery of:
(a) This Agreement by Lessee, Guarantor, Lessor, Majority Tranche
B Lenders holding Tranche B Notes for Tranche B Loans made on February 9, 2001,
Indenture Trustee, Paying Agent, Transfer Agent and Registrar for Tranche A
Notes, Lessor General Partner, Administrative Agent and Collateral Agent;
(b) The First Amendment to Lease Agreement dated the date hereof
by Lessor and Lessee; and
(c) The First Amendment to Tranche B Loan Agreement dated the date
hereof by Lessor, Administrative Agent, Collateral Agent and Majority Tranche B
Lenders holding Tranche B Notes for Tranche B Loans made on February 9, 2001.
2. Representations and Warranties.
--------------------------------
2.1. Lessee Representations and Warranties. Lessee hereby
----------------------------------------
represents and warrants as of the Closing Date, the Amendment Date and on each
Funding Date for the benefit of each other party hereto as follows.
(a) Lessee (i) is a duly organized and validly existing
corporation in good standing under the laws of the jurisdiction of its
incorporation, (ii) has the corporate power and authority to own its property
and assets and to transact the business in which it is engaged and presently
proposes to engage and (iii) is duly qualified and is authorized to do business
and is in good standing in each jurisdiction where the ownership, leasing or
operation of its property or the conduct of its business requires such
qualifications except for failures to be so qualified which, individually or in
the aggregate, could not reasonably be expected to have a Material Adverse
Effect or a material adverse effect on Lessee's ability to perform its
obligations under the Operative Documents.
(b) Lessee has the corporate power and authority to execute,
deliver and perform the terms and provisions of each of the Operative Documents
to which it is party and has taken all necessary corporate action to authorize
the execution, delivery and performance by it of each of such Operative
Documents. Lessee has duly executed and delivered each of the Operative
Documents to which it is party, and each of such Operative Documents constitutes
its legal, valid and binding obligation enforceable in accordance with its
terms, except to the extent that the enforceability thereof may be limited by
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applicable bankruptcy, insolvency, reorganization, moratorium or other similar
laws generally affecting creditors' rights and by equitable principles
(regard-less of whether enforcement is sought in equity or at law).
(c) Neither the leasing of the Equipment, the execution, delivery
or performance by Lessee of the Operative Documents to which it is a party, nor
compliance by it with the terms and provisions thereof, (i) will contravene any
provision of any law, statute, rule or regulation or any order, writ, injunction
or decree of any court or governmental instrumentality, (ii) will, after giving
effect to any waivers obtained by Lessee, conflict with or result in any
material breach of any of the terms, covenants, conditions or provisions of, or
constitute a default under, or result in the creation or imposition of (or the
obligation to create or impose) any Lien (other than Permitted Liens) upon any
of the property or assets of Lessee, pursuant to the terms of any indenture,
mortgage, deed of trust, credit agreement or loan agreement, or any other
material agreement, contract or instrument, to which Lessee is a party or by
which it or any of its property or assets is bound or to which it may be subject
or (iii) will violate any provision of the Certificate of Incorporation or
By-Laws of Lessee.
(d) No order, consent, approval, license, authorization or
validation of, or filing, recording or registration with (other than the filing
of the Lessee Financing Statements and except as have otherwise been obtained or
made on or prior to the date of this representation), or exemption by, any
governmental or public body or authority, or any subdivision thereof, is
required to authorize, or is required in connection with, (i) the execution,
delivery and performance by Lessee of any Operative Document to which it is a
party or (ii) the legality, validity, binding effect or enforceability against
Lessee of any such Operative Document.
(e) There is no action, suit or other proceeding pending or, to
the best knowledge of Lessee, threatened, (i) with respect to the Revolver,
Senior Notes, Asset Backed Securities, Merger or the transactions contemplated
herein or (ii) that could reasonably be expected to result in a Material Adverse
Effect.
(f) There is no tax, levy, impost, deduction, charge or
withholding which may be imposed on or asserted against the Lessee Collateral or
any part thereof or any interest therein, or against Indenture Trustee, any
Tranche A Noteholder, any Tranche B Lender, Administrative Agent or Collateral
Agent either (i) on or by virtue of the execution or delivery of Operative
Documents or any other document contemplated thereby or (ii) on any payment to
be made by Lessee pursuant to the Operative Documents or any other document
contemplated thereby to which Lessee is a party.
(g) No Lease Default has occurred and is continuing.
(h) All representations and warranties of Lessee set forth in the
other Operative Documents are true and correct in all material respects.
(i) Lessee's chief executive office and its principal place of
business are located at 0000 Xxxxxxxxxx Xxxx, Xxxxxxx, Xxxxx, and Lessee is
incorporated in the State of Texas.
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(j) The transaction contemplated hereby (i) is not required to be
registered pursuant to Code Section 6111(d) or any regulation promulgated
thereunder or (ii) was properly and timely registered in accordance with Code
Section 6111(d) and any regulations promulgated thereunder as of the date of
this representation and the correct registration number was (or will be within
ten (10) Business Days of receipt by Lessee) provided to Lessor, Indenture
Trustee and each Tranche A Noteholder, and Tranche B Lender identified in the
Operative Documents on the date of this representation by name and address.
Each party hereto hereby agrees to provide to Lessee promptly after written
request therefor any information requested by Lessee on or prior to the date of
this representation and necessary for Lessee to register the transaction.
(k) [Reserved]
(l) There are no Liens other than Permitted Liens and Lessor Liens
on any Item of Equipment, the proceeds of any Item of Equipment or the insurance
required under the Lease Agreement.
(m) Each Item of Equipment is personal property and not a fixture
attached to realty under Applicable Law.
(n) Each Item of Equipment has permanently affixed thereto the
unit number or other identification number set forth therefor on the related
Lease Supplement.
(o) The provisions of this Agreement and the Lease Supplement are
effective to create in favor of Lessor and Collateral Agent a legal, valid and
enforceable security interest in each Item of Equipment; Lessor and Collateral
Agent shall be entitled to all of the rights and benefits and priorities
provided to a holder of a perfected first priority Lien under Applicable Law
subject to no Liens other than Permitted Liens or Lessor Liens, and all
recordations and filings have been accomplished in each jurisdiction as required
by law to establish and perfect Lessor's and Collateral Agent's respective
rights in and to such Lessee Collateral or Lessor Collateral, as the case may
be, or due provision has been made therefor, and any giving of notice or any
other action to such end required by Applicable Law has been given or taken.
(p) The provisions of this Agreement are effective to create in
favor of Collateral Agent a legal, valid and enforceable security interest in
all right, title and interest of Lessor in Lessor Collateral, and, in reliance
on the accuracy of the representation and warranty of Lessor in Section 2.4(b),
the filing of the financing statements executed by Lessor as debtor with the
Secretary of State for the States of Delaware and in the applicable filing
office(s) in each state where Revised Article 9 of the UCC has not been adopted
or is not yet effective in which Items of Equipment are located perfects such
security interest in the Lessor Collateral, subject to no Liens other than
Permitted Liens and Lessor Liens, and Collateral Agent shall be entitled to all
of the rights, benefits, and priorities provided to a holder of liens of such
type under Applicable Law.
(q) [Reserved]
(r) [Reserved]
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(s) [Reserved]
(t) No Item of Equipment is intended by Lessee to be "equipment
used in farming operations" as such terms are used in Section 9-401 of the New
York Uniform Commercial Code or any correlative provision of any other
applicable state's Uniform Commercial Code and no Item of Equipment shall be
"goods covered by a certificate of title issued under a statute of this state or
of another jurisdiction under the law of which indication of a security interest
on the certificate is required as a condition of perfection" within the meaning
of Section 9-103 of the New York Uniform Commercial Code or any correlative
provision of any other applicable state's Uniform Commercial Code.
(u) The audited consolidated balance sheet of Guarantor and its
consolidated subsidiaries as at March 31, 2001 and the related consolidated
statement of income, stockholders' equity and cash flow of Guarantor and its
consolidated subsidiaries for the fiscal year ended on said date, with the
opinion thereon of Deloitte Touche heretofore furnished to Lessor, each Tranche
B Lender and Administrative Agent are complete and correct and fairly present
the consolidated financial condition of Guarantor and its consolidated
subsidiaries as at said dates and the results of its operations for the fiscal
year on said dates in all material respects, all in accordance with GAAP, as
applied on a consistent basis. Neither Lessee nor any Subsidiary has on the
Amendment Date any material Debt, contingent liabilities, liabilities for taxes,
unusual forward or long-term commitments or unrealized or anticipated losses
from any unfavorable commitments, except as referred to or reflected or provided
for in the Financial Statements or in Schedule 5. Since March 31, 2001, there
has been no change or event having a Material Adverse Effect. Since the date of
the Financial Statements, neither the business nor the Properties of Lessee or
any Subsidiary have been materially and adversely affected as a result of any
fire, explosion, earthquake, flood, drought, windstorm, accident, strike or
other labor disturbance, embargo, requisition or taking of Property or
cancellation of contracts, permits or concessions by any Governmental Equity,
riot, activities of armed forces or acts of God or of any public enemy. With
respect to the Closing Date and the Amendment Date, notwithstanding anything
contained herein to the contrary, the "Financial Statements" referenced in this
Section 2.1(u) and in Sections 9.3(f) and 9.3(h) are the proforma financial
statements contained in the Offering Memorandum which gives effect to the Merger
and for each Funding Date thereafter, notwithstanding anything contained herein
to the contrary, such "Financial Statements" are the Financial Statements
identified as such in the Participation Agreement Supplement for such Funding
Date.
(v) ERISA.
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(i) Lessee, each Subsidiary and each ERISA Affiliate have
complied in all material respects with ERISA and, where applicable, the
Code regarding each Plan.
(ii) Each Plan is, and has been, maintained in substantial
compliance with ERISA and, where applicable, the Code.
(iii) No act, omission or transaction has occurred which
could result in imposition on Lessee, any Subsidiary or any ERISA Affiliate
(whether directly or indirectly) of (i) either a civil penalty assessed
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pursuant to section 502(c), (i) or (l) of ERISA or a tax imposed pursuant
to Chapter 43 of Subtitle D of the Code or (ii) breach of fiduciary duty
liability damages under section 409 of ERISA.
(iv) No Plan (other than a defined contribution plan) or any
trust created under any such Plan has been terminated since September 2,
1974. No liability to the PBGC (other than for the payment of current
premiums which are not past due) by Lessee, any Subsidiary or any ERISA
Affiliate has been or is expected by Lessee, any Subsidiary or any ERISA
Affiliate to be incurred with respect to any Plan. No ERISA Event with
respect to any Plan has occurred.
(v) Full payment when due has been made of all amounts which
Lessee, any Subsidiary or any ERISA Affiliate is required under the terms
of each Plan or applicable law to have paid as contributions to such Plan,
and no accumulated funding deficiency (as defined in section 302 of ERISA
and section 412 of the Code), whether or not waived, exists with respect to
any Plan.
(vi) The actuarial present value of the benefit liabilities
under each Plan which is subject to Title IV of ERISA does not, as of the
end of Lessee's most recently ended fiscal year, exceed the cur-rent value
of the assets (computed on a plan termination basis in accordance with
Title IV of ERISA) of such Plan allocable to such benefit liabilities. The
term "actuarial present value of the benefit liabilities" shall have the
meaning specified in section 4041 of ERISA.
(vii) None of Lessee, any Subsidiary or any ERISA Affiliate
sponsors, maintains, or contributes to an employee welfare benefit plan, as
defined in section 3(1) of ERISA, including, without limitation, any such
plan maintained to provide benefits to former employees of such entities,
that may not be terminated by Lessee, a Subsidiary thereof or any ERISA
Affiliate in its sole discretion at any time without any material
liability.
(viii) None of Lessee, any Subsidiary or any ERISA Affiliate
sponsors, maintains or con-tributes to, or has at any time in the preceding
six (6) calendar years, sponsored, maintained or contributed to, any
Multiemployer Plan.
(ix) None of Lessee, any Subsidiary or any ERISA Affiliate is
required to provide security under section 401(a)(29) of the Code due to a
Plan amendment that results in an increase in current liability for the
Plan.
(x) Assuming the accuracy at all times of the representation
and warranty of each Tranche B Lender in Section 2.6 of this Agreement, the
execution and delivery of this Agreement will be exempt from, or will not
involve any transaction which is subject to, the prohibitions of either
Section 406 of ERISA or Section 4975 of the Code and will not involve any
transaction in connection with which a penalty could be imposed under
Section 502(i) of ERISA or a tax could be imposed pursuant to Section 4975
of the Code.
-6-
(w) Taxes. Except as set out in Schedule 6, each of Lessee and
-----
its Subsidiaries has filed all United States federal income tax returns and all
other tax returns which are required to be filed by them and have paid all
material taxes due pursuant to such returns or pursuant to any assessment
received by Lessee or any Subsidiary. The charges, accruals and reserves on the
books of Lessee and its Subsidiaries in respect of taxes and other governmental
charges are, in the opinion of Lessee, adequate. No tax lien has been filed
and, to the knowledge of Lessee, no claim is being asserted with respect to any
such tax, fee or other charge.
(x) Titles, etc.
-------------
(i) Except as set out in Schedule 7, Lessee and its
Subsidiaries have good and marketable title to its material properties (i)
except in cases where the failure to have said good and marketable title
would not reasonably cause a Material Adverse Effect and (ii) free and
clear of all Liens, except Liens permitted by Section 9.3(g).
(ii) All leases and agreements necessary for the conduct of
the business of Lessee and its Subsidiaries are valid and subsisting, in
full force and effect and there exists no default or event or circumstance
which with the giving of notice or the passage of time or both would give
rise to a default under any such lease or leases, which would affect in any
material respect the conduct of the business of Lessee and its
Subsidiaries.
(iii) Rights, Properties and other assets presently owned,
leased or licensed by Lessee or its Subsidiaries including, without
limitation, all easements and rights of way, include all rights, Properties
and other assets necessary to permit Lessee or its Subsidiaries to conduct
their business in all material respects in the same manner as its business
has been conducted prior to the date of this representation.
(iv) All of the assets and Properties of Lessee or its
Subsidiaries thereof which are reasonably necessary for the operation of
its business are in good working condition and are maintained in accordance
with prudent business standards.
(y) No Material Misstatements. No written information, statement,
-------------------------
exhibit, certificate, document or report furnished to Administrative Agent and
the Tranche B Lenders (or any of them) by Lessee or any Subsidiary in connection
with the negotiation of this Agreement contained any material misstatement of
fact or omitted to state a material fact or any fact necessary to make the
statement contained therein not materially misleading in the light of the
circumstances in which made and with respect to Lessee and its Subsidiaries
taken as a whole. To Lessee's knowledge, there is no fact peculiar to Lessee or
any Subsidiary which has a Material Adverse Effect or in the future is
reasonably likely to have (so far as Lessee can now reasonably foresee) a
Material Adverse Effect and which has not been set forth in this Agreement or
the other documents, certificates and statements furnished to Administrative
Agent by or on behalf of Lessee or any Subsidiary or otherwise prior to, or on,
the date of this representation in connection with the transactions contemplated
hereby.
-7-
(z) Investment Company Act. Neither Lessee nor any Subsidiary is
-----------------------
an "investment company" or a company "controlled" by an "investment company,"
within the meaning of the Investment Company Act of 1940, as amended.
(aa) Public Utility Holding Company Act. Neither Lessee nor any
------------------------------------
Subsidiary is a "holding company," or a "subsidiary company" of a "holding
company," or an "affiliate" of a "holding company" or of a "subsidiary company"
of a "holding company," or a "public utility" within the meaning of the Public
Utility Holding Company Act of 1935, as amended.
(bb) Subsidiaries. Except as set forth on Schedule 3, Lessee has
------------
no Subsidiaries.
(cc) Defaults. Neither Lessee nor any Subsidiary is in material
--------
default nor has any event or circumstance occurred which, but for the expiration
of any applicable grace period or the giving of notice, or both, would
constitute a material default under any material agreement or instrument to
which Lessee or any Subsidiary is a party or by which Lessee or any Subsidiary
is bound which default would have a Material Adverse Effect.
(dd) Environmental Matters. Except (i) as provided in Schedule 8
----------------------
or (ii) as would not have a Material Adverse Effect (or with respect to (c), (d)
and (e) below, where the failure to take such actions would not have a Material
Adverse Effect):
(i) Neither any Property of Lessee or any Subsidiary nor the
operations conducted thereon violate any order or requirement of any court
or Governmental Entity or any Environmental Law;
(ii) Without limitation of clause (a) above, no Property of
Lessee or any Subsidiary nor the operations currently conducted thereon or,
to the best knowledge of Lessee, by any prior owner or operator of such
Property or operation, are in violation of or subject to any existing,
pending or threatened action, suit, investigation, inquiry or proceeding by
or before any court or Governmental Entity or to any remedial obligations
under Environmental Laws;
(iii) All notices, permits, licenses or similar authorizations,
if any, required to be obtained or filed in connection with the operation
or use of any and all Property of Lessee and each Subsidiary, including
without limitation past or present treatment, storage, disposal or release
of a hazardous substance or solid waste into the environment, have been
duly obtained or filed, and Lessee and each Subsidiary are in compliance
with the terms and conditions of all such notices, permits, licenses and
similar authorizations;
(iv) All hazardous substances, solid waste, and oil and gas
exploration and production wastes, if any, generated at any and all
Property of Lessee or any Subsidiary have in the past been transported,
treated and disposed of in accordance with Environmental Laws and so as not
to pose an imminent and substantial endangerment to public health or
welfare or the environment, and, to the best knowledge of Lessee, all such
-8-
transport carriers and treatment and disposal facilities have been and are
operating in compliance with Environmental Laws and so as not to pose an
imminent and substantial endangerment to public health or welfare or the
environment, and are not the subject of any existing, pending or threatened
action, investigation or inquiry by any Governmental Entity in connection
with any Environmental Law;
(v) Lessee has taken all steps reasonably necessary to
determine and has determined that no hazardous substances, solid waste, or
oil and gas exploration and production wastes, have been disposed of or
otherwise released and there has been no threatened release of any
hazardous substances on or to any Property of Lessee or any Subsidiary
except in compliance with Environmental Laws and so as not to pose an
imminent and substantial endangerment to public health or welfare or the
environment;
(vi) To the extent applicable, all Property of Lessee and
each Subsidiary currently satisfies all design, operation, and equipment
requirements imposed by the OPA or scheduled to be imposed by OPA during
the term of the Lease Agreement, and Lessee does not have any reason to
believe that such Property, to the extent subject to OPA, will not be able
to maintain compliance with the OPA requirements during the term of the
Lease Agreement; and
(vii) Neither Lessee nor any Subsidiary has any known
contingent liability in connection with any release or threatened release
of any oil, hazardous substance or solid waste into the environment.
(ee) Compliance with the Law. Neither Lessee nor any Subsidiary
-------------------------
has violated any Governmental Requirement or failed to obtain any license,
permit, franchise or other governmental authorization necessary for the
ownership of any of its Properties or the conduct of its business, which
violation or failure would have (in the event such violation or failure were
asserted by any Person through appropriate action) a Material Adverse Effect.
(ff) Insurance. Schedule 4 attached hereto contains an accurate
---------
and complete description of all material policies of fire, liability, workmen's
compensation and other forms of insurance owned or held by Lessee and each
Subsidiary. All such policies are in full force and effect, all premiums with
respect thereto covering all periods up to and including the date of the closing
have been paid, and no notice of cancellation or termination has been received
with respect to any such policy. Such policies are sufficient for compliance
with all requirements of law and of all agreements to which Lessee or any
Subsidiary is a party; are valid, outstanding and enforceable policies; provide
adequate insurance coverage in at least such amounts and against at least such
risks (but including in any event public liability) as are usually insured
against in the same general area by companies engaged in the same or a similar
business for the assets and operations of Lessee and each Subsidiary; will
remain in full force and effect through the respective dates set forth in the
binders for said insurance without the payment of additional premiums; and will
not in any way be affected by, or terminate or lapse by reason of, the
transactions contemplated by this Agreement. Neither Lessee nor any Subsidiary
has been refused any insurance with respect to its assets or operations, nor has
-9-
its coverage been limited below usual and customary policy limits, by an
insurance carrier to which it has applied for any such insurance or with which
it has carried insurance during the last three (3) years.
(gg) Hedging Agreements. Schedule 9 sets forth a true and
-------------------
complete list of all Hedging Agreements as of the Amendment Date (including
commodity price swap agreements, forward agreements or contracts of sale which
provide for prepayment for deferred shipment or delivery of oil, gas or other
commodities) of Lessee and each Subsidiary, the material terms thereof
(including the type, term, effective date, termination date and notional amounts
or volumes), the net xxxx to market value thereof, all credit support agreements
relating thereto (including any margin required or supplied), and the counter
party to each such agreement.
(hh) Restriction on Liens. Except as set forth on Schedule 10,
----------------------
neither Lessee nor any of Subsidiary is a party to any agreement or arrangement
(other than the Operative Documents, the Revolver and the Security Instruments),
or subject to any order, judgment, writ or decree, which either restricts or
purports to restrict its ability to grant Liens to other Persons on or in
respect of their respective assets or Properties.
(ii) As of each Funding Date, the projections identified on the
Participation Agreement Supplement for such Funding Date (or in the case of the
first Funding Date, the projections made a part of the final Offering Memorandum
of the Lessor dated February 6, 2001 furnished to the Administrative Agent, the
Lessor, the Indenture Trustee and the Tranche B Lenders prior to the Closing
Date) (the "Projections") have been prepared in good faith and are based on
-----------
reasonable assumptions, and there are no statements or conclusions in the
Projections which are based upon or include information known to Lessee to be
misleading in any material respect or which fail to take into account material
information known to Lessee regarding the matters reported therein. Lessee
believes that the Projections are reasonable and attainable, it being recognized
by Lessor and Tranche B Lenders, however, that projections as to future events
are not to be viewed as facts and that the actual results during the period or
periods covered by the Projections may differ from the projected results and
that the differences may be material.
(jj) Lessee has no knowledge of the falsity of, or any reason to
believe, any of the representations of Lessor and Co-Obligor contained in any
Note Purchase Agreement or Underwriting Agreement are untrue or incorrect in any
material respect.
(kk) There has been no change to the written description of Lessee
Maintenance Practices delivered to the Administrative Agent prior to the
Amendment Date, except as otherwise provided on the related Participation
Agreement Supplement for the most recent Funding Date.
2.1A Further Lessee Representations and Warranties. Lessee hereby
---------------------------------------------
represents as of each Funding Date for the benefit of each other party hereto as
follows:
(a) Immediately prior to giving effect to the sale thereof to
Lessor, the Seller thereof has good and marketable title to each Subject Item.
-10-
(b) Each Subject Item is or will be within a reasonable period of
time in compliance with identification xxxx requirements of Section 15 of the
Lease Agreement.
(c) Each Subject Item is in proper working order.
(d) No Event of Loss or event which with the passage of time would
become an Event of Loss has occurred with respect to any Subject Item.
2.2. Guarantor Representations and Warranties. Guarantor
-------------------------------------------
represents and warrants as of the Closing Date, Amendment Date and on each
Funding Date for the benefit of each party hereto as follows.
(a) Guarantor (i) is a duly organized and validly existing
corporation in good standing under the laws of the jurisdiction of its
incorporation, (ii) has the corporate power and authority to own its property
and assets and to transact the business in which it is engaged and presently
proposes to engage and (iii) is duly qualified and authorized to do business and
is in good standing in each jurisdiction where the ownership, leasing or
operation of its property or the conduct of its business requires such
qualifications except for failures to be so qualified which, individually or in
the aggregate, could not reasonably be expected to have a Material Adverse
Effect.
(b) Guarantor has the corporate power and authority to execute,
deliver and perform the terms and provisions of each of the Operative Documents
to which it is party and has taken all necessary corporate action to authorize
the execution, delivery and performance by it of each of such Operative
Documents. Guarantor has duly executed and delivered each of the Operative
Documents to which it is party, and each of such Operative Documents constitutes
its legal, valid and binding obligation enforceable in accordance with its
terms, except to the extent that the enforceability thereof may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other similar
laws generally affecting creditors' rights and by equitable principles
(regardless of whether enforcement is sought in equity or at law).
(c) Neither the execution, delivery or performance by Guarantor of
the Operative Documents to which it is a party, nor compliance by it with the
terms and provisions thereof, (i) will contravene any provision of any law,
statute, rule or regulation or any order, writ, injunction or decree of any
court or governmental instrumentality, (ii) will, after giving effect to any
waivers obtained by Guarantor, conflict with or result in any material breach of
any of the terms, covenants, conditions or provisions of, or constitute a
default under, or result in the creation or imposition of (or the obligation to
create or impose) any Lien (other than Permitted Liens) upon any of the property
or assets of Guarantor or any of its Subsidiaries pursuant to the terms of any
indenture, mortgage, deed of trust, credit agreement or loan agreement, or any
other material agreement, contract or instrument, to which Guarantor or any of
its Subsidiaries is a party or by which it or any of its property or assets is
bound or to which it may be subject or (iii) will violate any provision of the
Certificate of Incorporation or By-Laws of Guarantor or any of its Subsidiaries.
-11-
(d) No order, consent, approval, license, authorization or
validation of, or filing, recording or registration with (except as have
otherwise been obtained or made on or prior to the date of this representation),
or exemption by, any governmental or public body or authority, or any
subdivision thereof, is required to authorize, or is required in connection
with, (i) the execution, delivery and performance by Guarantor of any Operative
Document to which it is a party or (ii) the legality, validity, binding effect
or enforceability against Guarantor of any such Operative Document.
(e) Guarantor has no knowledge of the falsity of, or any reason to
believe, any of the representations and warranties of Lessor and Co-Obligor
contained in any Note Purchase Agreement or Underwriting Agreement are untrue or
incorrect in any material respect.
2.3. Lessor Representations and Warranties For Benefit of All
-------------------------------------------------------------
Parties. Lessor hereby represents and warrants as of the Closing Date,
-------
Amendment Date and on each Funding Date for the benefit of each party hereto as
follows:
(a) Lessor is a limited partnership duly established and validly
existing under the laws of the State of Delaware, has full power, authority and
legal right under such laws to execute, deliver and perform its obligations
under the Operative Documents to which it is a party.
(b) The leasing and financing of the Equipment, the execution and
delivery of the Operative Documents and the other related instruments, documents
and agreements to which Lessor is a party, and the compliance by Lessor with the
terms hereof and thereof and the payments and performance by Lessor of any of
its obligations hereunder and thereunder (i) have been duly and legally
authorized by all necessary action on the part of Lessor, (ii) are not in
contravention of, and will not result in a violation or breach of, any of the
terms of Lessor's Limited Partnership Agreement or Certificate of Limited
Partnership, (iii) will not violate or constitute a breach of any provision of
law, any order of any court or other agency of government, or any indenture,
agreement or other instrument to which Lessor is a party, or by or under which
Lessor or any of Lessor's property is bound, or be in conflict with, result in a
breach of, or constitute (with due notice and/or lapse of time) a default under
any such indenture, agreement or instrument, or result in the creation or
imposition of any Lien, other than Permitted Liens, upon any of Lessor's
property or assets and (iv) will not require, on the part of Lessor, the consent
or approval of, the giving of notice to, the registration with, or the taking of
any other action in respect of, any United States federal, state or local
governmental or public commission, board, authority or agency except for
filings, if any, made pursuant to any notice reporting requirement applicable to
it.
(c) Each Operative Document to which Lessor is a party has been
executed by the duly authorized officer or officers of Lessor General Partner
and delivered to the other parties thereto and constitutes, or when executed by
the duly authorized officer or officers of Lessor General Partner and delivered
to the other parties thereto, will constitute, the legal, valid and binding
obligation of Lessor, enforceable in accordance with its terms except as limited
by any applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting the enforcement of creditors' rights from time to time in
effect and by general principles of equity including those applicable to the
enforce-ability of the remedy of specific performance.
-12-
(d) There is no action, suit or other proceeding now pending or,
to Lessor's knowledge, threatened, against or affecting Lessor, in any court or
before any regulatory commission, board or other administrative governmental
agency (i) which will materially and adversely affect the interest of Lessor in
any Item of Equipment or any Operative Document, or the interest of Collateral
Agent in any such Item or any Operative Document or (ii) that could reasonably
be expected to materially and adversely affect the business, operations,
property, assets, liabilities, condition (financial or otherwise) or prospects
of Lessor.
(e) There is no tax, levy, impost, deduction, charge or
withholding which may be imposed on or asserted against the Lessor Collateral or
any part thereof or any interest therein, or against Indenture Trustee, any
Tranche A Noteholder, any Tranche B Lender, Administrative Agent or Collateral
Agent either (i) on or by virtue of the execution or delivery of Operative
Documents or any other document contemplated thereby or (ii) on any payment to
be made by Lessor pursuant to the Operative Documents or any other document
contemplated thereby to which Lessor is a party.
(f) Lessor has no indebtedness or other liabilities, whether
contingent or otherwise, other than its obligations under and as contemplated by
the Operative Documents.
(g) No Loan Default or Loan Event of Default not caused by a Lease
Default or Lease Event of Default has occurred and is continuing.
(h) Neither Lessor nor any Person authorized to act on its behalf
has directly or indirectly offered to sell any interests in the Lessor
Collateral, Tranche A Notes, Tranche B Notes or Equity Certificates or any
security similar thereto, to, or otherwise approved or negotiated with respect
thereto with anyone. Neither Lessor nor any Person authorized to act on its
behalf will so offer or sell in violation of Section 5 of the Securities Act of
1933, as amended, or any securities or blue sky law of any applicable
jurisdiction.
(i) The representations and warranties of Lessor in each Note
Purchase Agreement and Underwriting Agreement are true and correct in all
material respects and Lessor has complied with all of its covenants in each such
agreement in all material respects.
2.4. Lessor Representations and Warranties For Benefit of
----------------------------------------------------------
Indenture Trustee, Tranche B Lenders, Administrative Agent and Collateral Agent.
--------------------------------------------------------------------------------
Lessor hereby represents and warrants as of the Closing Date, Amendment Date and
on each Funding Date for the benefit of Indenture Trustee, each Tranche B
Lender, Administrative Agent and Collateral Agent as follows:
(a) No Lease Default or Lease Event of Default of which it has
knowledge has occurred and is continuing.
(b) Lessor's chief executive office and principal place of
business is located at 0000 Xxxxxx Xxxxx Xxxxxxxxx, Xxxxx 0000, Xxxxxx, Xxxxx
and Lessor's records with respect to the transactions contemplated by the
Operative Documents are located at such address.
-13-
(c) Lessor is duly qualified and is authorized to do business and
is in good standing in each jurisdiction where ownership, leasing or operation
of its property or the conduct of its business requires such qualifications
except for failures to be so qualified which, individually or in the aggregate,
could not reasonably be expected to have a material adverse effect on Lessor's
ability to perform its obligations or exercise its rights under the Operative
Documents to which it is a party or on the business, property, assets,
liabilities, condition (financial or otherwise) or prospects of Lessor.
(d) After giving effect to each Xxxx of Sale therefor, Lessor has
good and marketable title to each Item of Equipment (including the parts and
components thereof) and the Lessor Collateral is free and clear of all Liens
other than Permitted Liens.
(e) The provisions of this Agreement are effective to create in
favor of Collateral Agent a legal, valid and enforceable security interest in
all right, title and interest of Lessor in the Lessor Collateral, and the filing
of the financing statements executed by Lessor as debtor with the Secretary of
State for the State of Delaware, and in the applicable filing office(s) in each
state where Revised Article 9 of the UCC has not been adopted or is not yet
effective in which Items of Equipment are located perfects such security
interest in the Lessor Collateral, subject to no Liens other than Permitted
Liens and Lessor Liens and Collateral Agent shall be entitled to all of the
rights, benefits, and priorities provided to a holder of liens of such type
under Applicable Law.
(f) Neither Lessor nor any Person authorized to act on its behalf
will permit any transfer of any interest in Lessor, directly or indirectly, that
would result in the Lessor being treated as a Publicly Traded Partnership
pursuant to Code Section 7704.
2.5. Representations and Warranties of Lessor General Partner.
------------------------------------------------------------
Lessor General Partner represents and warrants that as of the Closing Date,
Amendment Date and on each Funding Date for the benefit of each other party
hereto as follows:
(a) It is duly organized under the laws of its jurisdiction of
incorporation, has full corporate power and authority and legal right under such
laws to execute, deliver and perform its obligations under the Operative
Documents to which it is a party and is qualified to do business in and is in
good standing in all material respects in, each jurisdiction in which the nature
of its business makes such qualification necessary, except where failure to be
so qualified and in good standing would not have a material adverse effect on
its ability to perform its obligations under the Operative Documents to which it
is a party.
(b) The execution and delivery of the Operative Documents and the
other related instruments, documents and agreements to which it is a party, and
the compliance by it with the terms hereof and thereof and the payments and
performance by it of any its obligations hereunder and thereunder (i) have been
duly and legally authorized by all necessary corporate action on its part, (ii)
are not in contravention of, and will not result in a violation or breach of,
any of the terms of its certificate of incorporation (or equivalent document),
its by-laws or any provisions relating to its capital stock, (iii) will not
violate or constitute a breach of any provision of law, any order of any court
or other agency of government, or any indenture, agreement or other instrument
-14-
to which it is a party, or by or under which it is bound, or be in conflict
with, result in a breach of, or constitute (with due notice and/or lapse of
time) a default under any such indenture, agreement or instrument, or result in
the creation or imposition of any Lien upon any of its property or assets and
(iv) will not require, on its part or any Affiliate's part thereof, the consent
or approval of, the giving of notice to, the registration with, or the taking of
any other action in respect of, any United State federal, state or local
governmental or public commission, board, authority or agency except for
filings, if any, made pursuant to any notice reporting requirement applicable
to it.
(c) Each Operative Document to which it is a party has been
executed by its duly authorized officer or officers and delivered to the other
parties thereto and constitutes, or when executed by its duly authorized officer
or officers and delivered to the other parties thereto, such Operative Documents
will constitute, legal, valid and binding obligations enforceable in accordance
with their terms except as limited by any applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditors' rights from time to time in effect and by general principles of
equity including those applicable to the enforceability of the remedy of
specific performance.
(d) It is not in breach of any covenants or agreements made by it
in the Limited Partnership Agreement or in this Agreement.
(e) There are no actions, suits or proceedings pending or, to the
best of its knowledge, threatened before any court or by or before any other
Government Entity, or any arbitrator, which either individually or in the
aggregate, would have a material adverse effect on the Lessor Collateral or on
the right, power and authority or its ability to perform its obligations under
any Operative Document to which it is a party.
(f) There are no Lessor Liens attributable to it on the assets of
Lessor or on any part thereof, and the execution, delivery and performance by it
of the Operative Documents to which it is a party will not subject the assets of
Lessor to any Lessor Liens attributable to it.
(g) It does not have, has not used and shall not use the assets of
an "employee benefit plan" as defined in Section 3(3) of ERISA or a "plan" as
defined in Section 4975(e) of the Code to make any capital contribution or other
payment under the Operative Documents.
2.6. Tranche B Lenders Representations and Warranties. Each of
---------------------------------------------------
the Tranche B Lenders solely with respect to itself, severally represents and
warrants as of each Funding Date on which it makes a Tranche B Loan, for the
benefit of each party hereto, that it has not used and shall not use the assets
of an "employee benefit plan" as defined in Section 3(3) of ERISA or a "plan" as
defined in Section 4975(e) of the Code to fund any Loan or make any other
payment under the Operative Documents.
2.7. Private Offering Representations; etc. Each of Lessee,
-----------------------------------------
Guarantor and Lessor General Partner represents to each other party hereto that
(a) neither it, nor any of its Affiliates, nor anyone it has authorized or
employed to act on its behalf as agent, broker, dealer or otherwise in
connection with the offering or sale of (i) the Tranche A Notes or any similar
-15-
security or (ii) any interest in and to Lessor Collateral or any similar
security, as the case may be, has, directly or indirectly, offered any such
security for sale to, or solicited any offer to acquire any of the same from,
anyone, except that Lessee represents that it and its Affiliates have offered
Tranche A Notes and an interest in the Lessor Collateral to the Tranche A
Noteholders, Tranche B Lenders, Limited Partners, respectively, and, with
respect to an interest in the Lessor Collateral, to other "accredited investors"
as defined in Rule 501(a) of Regulation D promulgated pursuant to the Securities
Act of 1933, as amended, and (b) neither it nor anyone it has authorized to act
on its behalf has offered or sold, or will so offer to sell, (i) any Tranche A
Notes or any interest in and to the Lessor Collateral, or (ii) any securities
similar thereto, in violation of the provisions of Section 5 of the Securities
Act of 1933, as amended. The representations and warranties of each of the
parties pursuant to this Section 2.7 are several and not joint.
2.8. Warranty Disclaimers. EACH OF LESSOR, INDENTURE TRUSTEE,
---------------------
TRANCHE B LENDER, ADMINISTRATIVE AGENT AND COLLATERAL AGENT AS APPLICABLE
DEMISE, LEASE AND FINANCE THE ITEMS OF EQUIPMENT HEREUNDER AS-IS AND WHERE-IS
WITH ALL FAULTS IF ANY AND IN WHATEVER CONDITION THEY MAY BE IN AND EXPRESSLY
DISCLAIMS AND MAKES NO REPRESENTATION OR WARRANTY, EITHER EXPRESSED OR IMPLIED,
AS TO THE DESIGN, CONDITION, QUALITY, CAPACITY, MERCHANTABILITY, DURABILITY,
SUITABILITY OR ITS FITNESS FOR ANY PARTICULAR PURPOSE, OR QUALIFICATION FOR ANY
PARTICULAR TRADE OR ANY OTHER MATTER CONCERNING, THE ITEMS OF EQUIPMENT. LESSEE
HEREBY WAIVES ANY CLAIM (INCLUDING ANY CLAIM BASED ON STRICT OR ABSOLUTE
LIABILITY IN TORT OR INFRINGEMENT) IT MIGHT HAVE AGAINST LESSOR, INDENTURE
TRUSTEE, ANY TRANCHE A NOTE-HOLDER, ANY INITIAL PURCHASER, ANY TRANCHE B LENDER,
ARRANGER, ANY LIMITED PARTNER, LESSOR GENERAL PARTNER, ADMINISTRATIVE AGENT OR
COLLATERAL AGENT FOR ANY LOSS, DAMAGE (INCLUDING INCIDENTAL OR CONSEQUENTIAL
DAMAGE) OR EXPENSE CAUSED BY ANY ITEM OF EQUIPMENT EXCEPT TO THE EXTENT CAUSED
BY SUCH PARTY'S GROSS NEGLIGENCE OR WILLFUL MIS-CONDUCT OR BY LESSEE'S LOSS OF
USE THEREOF FOR ANY REASON WHATSOEVER. LESSOR HEREBY WAIVES ANY CLAIM (INCLUDING
ANY CLAIM BASED ON STRICT OR ABSOLUTE LIABILITY IN TORT OR INFRINGEMENT) IT
MIGHT HAVE AGAINST LESSOR, INDENTURE TRUSTEE, ANY TRANCHE A NOTEHOLDER, ANY
INITIAL PURCHASER, ANY TRANCHE B LENDER, ARRANGER, ANY LIMITED PARTNER, LESSOR
GENERAL PARTNER, ADMINISTRATIVE AGENT OR COLLATERAL AGENT FOR ANY LOSS, DAMAGE
(INCLUDING INCIDENTAL OR CONSEQUENTIAL DAMAGE) OR EXPENSE CAUSED BY ANY ITEM OF
EQUIPMENT EXCEPT TO THE EXTENT CAUSED BY SUCH PARTY'S GROSS NEGLIGENCE OR
WILLFUL MISCONDUCT OR LESSOR'S BREACH OF ITS COVENANT OF QUIET ENJOYMENT IN
SECTION 2 OF THE LEASE FOR ANY REASON WHATSOEVER.
3. Conditions Precedent.
---------------------
3.1. Lessor Conditions. Lessor shall have no obligation to
------------------
acquire any Item of Equipment proposed by Lessee to be leased under the Lease
Agreement on any Funding Date (with respect to any Funding Date, each such Item
of Equipment to be so leased, a "Subject Item") and subject it to the Lease
------------
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Agreement unless on or before such Funding Date each of the following conditions
are fulfilled:
(a) There shall exist no Lease Default or Lease Event of Default
and all representations and warranties of Lessee and Guarantor contained herein
and in the other Operative Documents shall be true and correct in all material
respects as of such Funding Date.
(b) Each Subject Item is reasonably acceptable to Lessor and
Administrative Agent.
(c) Each Item of Equipment is free of all Liens other than
Permitted Liens and Lessor Liens.
(d) The aggregate of the Acquisition Costs of each Subject Item is
less than or equal to the Maximum Acquisition Cost for such Funding Date.
(e) Lessor and Administrative Agent shall have received a Lessee
Certificate, dated such Funding Date with respect to such Subject Item duly
executed by a Responsible Officer of Lessee.
(f) Lessor shall have received the related Participation Agreement
Supplement, the related Lease Supplement, a Note Purchase Agreement or
Underwriting Agreement for the Tranche A Notes to be first issued on such
Funding Date in the aggregate equal to aggregate of Tranche A Components of all
Subject Items to be first leased on such Funding Date, a Xxxx of Sale for each
Subject Item, a Funding Escrow Agreement and each other agreement described
under the heading "Additional Conditions Precedent" on the related Participation
Agreement Supplement in each case duly authorized, executed and delivered by
each other party thereto.
(g) All licenses, registrations, permits, consents and approvals
required by Applicable Laws or by any Governmental Entity (i) in connection with
Lessor's rights and interests in such Item of Equipment to the extent such
licenses, registrations, permits, consents or approvals are required because of
the nature of the Equipment and (ii) in connection with the delivery,
acquisition, use and operation of such Subject Item shall have been obtained to
the satisfaction of Lessor.
(h) Lessor shall have received from Lessee, in form and substance
satisfactory to Lessor, resolutions of the board of directors of Lessee or other
written evidence of appropriate corporate action, and the certificate of
incorporation and by-laws, each certified as of such Funding Date by the
secretary of Lessee, duly authorizing the execution, delivery and performance of
this Agreement, the Lease Agreement and each other document to be delivered in
connection therewith to which it is a party, together with an incumbency
certificate as to the person or persons authorized to execute and deliver such
documents on behalf of Lessee.
(i) Lessor shall have received from Guarantor, in form and
substance satisfactory to Lessor, resolutions of the board of directors of
Guarantor or other written evidence of appropriate corporate action, and the
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certificate of incorporation and by-laws, each certified by the secretary of
Guarantor as of such Funding Date, duly authorizing the execution, delivery and
performance of the Participation Agreement and each other document to be
delivered in connection therewith to which it is a party, together with an
incumbency certificate as to the person or persons authorized to execute and
deliver such documents on behalf of Guarantor.
(j) Lessor shall have received from Lessee, in form and substance
satisfactory to Lessor, a certificate dated such Funding Date executed by a duly
authorized officer of Lessee, the truth and accuracy of which shall be a
condition to Lessor to acquire such Item of Equipment, confirming that each of
the representations and warranties set forth in Section 2.1 and 2.1A are true
and correct as if made on and as of such date except to the extent such
representations and warranties expressly provide that they relate solely to an
earlier date.
(k) Lessor shall have received from Guarantor, in form and
substance satisfactory to Lessor, a certificate dated such Funding Date,
executed by a duly authorized officer of Guarantor, the truth and accuracy of
which shall be a condition to Lessor to acquire such Item of Equipment,
confirming that each of the representations and warranties set forth in Section
2.2 are true and correct as if made on and as of such date except to the extent
such representations and warranties expressly provide that they relate solely to
an earlier date.
(l) Lessor shall have received written opinions of Gardere Xxxxx
Xxxxxx LLP, counsel to Lessee and Guarantor, dated such Funding Date and
addressed to Lessor, Indenture Trustee, the Initial Purchasers, each Tranche B
Lender, Administrative Agent and Collateral Agent in form and substance
reasonably satisfactory to Lessor.
(m) Lessor shall have received a written opinion of Xxxx Xxxxxxx,
Esq., in-house counsel to Lessee and Guarantor, dated such Funding Date and
addressed to Lessor, Indenture Trustee, the Initial Purchasers, each Tranche B
Lender, Administrative Agent and Collateral Agent in form and substance
reasonably satisfactory to Lessor.
(n) Lessee shall have delivered a good standing certificate dated
within five (5) days of such Funding Date from the State of Texas and state in
which Lessee is incorporated and Guarantor shall have delivered a good standing
certificate dated within five (5) days of such Funding Date from the State of
Texas and state in which Guarantor is incorporated.
(o) Lessor shall have received for each Subject Item on or before
the Funding Date an Appraisal dated within thirty (30) days of such Funding Date
confirming that the aggregate Acquisition Costs of such Subject Item and all
other Subject Items is less than or equal to both the aggregate Initial Fair
Market Values and the aggregate Residual Values of all Subject Items.
(p) Lessee shall have paid all of the reasonable costs and
expenses incurred by Lessor, Lessor General Partner, Indenture Trustee, Bankers
Trust Company as Tranche B Lender, Administrative Agent and Collateral Agent (in
each case including attorneys' fees), and required to be paid by Lessee under
the Operative Documents, in each case invoiced at least one day prior to such
Funding Date.
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(q) Lessor and Administrative Agent shall have received at least
three (3) LIBOR Banking Days before the Funding Date a Funding Notice executed
and delivered by Lessee with the amounts to be funded by each Tranche B Lender
with a commitment to make a Tranche B Loan on such date identified thereon.
(r) Lessor shall have received the proceeds of the Tranche A Notes
to be issued on such Funding Date as contemplated by the Note Purchase Agreement
or Underwriting Agreement for such Tranche A Notes.
(s) Lessor shall have received the proceeds of the Tranche B Loans
set forth in the Funding Notice for such Funding Date.
(t) Lessor shall have received from Limited Partners any amounts
required of them in the Limited Partnership Agreement.
(u) Lessor shall have received from Lessee payment of any Lease
Premium due on such Funding Date or there shall be due and owing by Lessor to
Lessee on such Funding Date an amount equal to or greater than such Lease
Premium against which Lessor may credit in accordance with Section 7.13 of the
Lease Agreement the full amount of such Lease Premium.
(v) Lessor shall have received an insurance certificate in form
and substance satisfactory to Lessor confirming that the Equipment is insured in
accordance with the provisions of Section 20 of the Lease Agreement.
(w) Administrative Agent shall have received the payment of all
fees due on or before such Funding Date as may be set forth in the letter
agreement between Administrative Agent and Lessee.
(x) Lessee shall have executed and delivered to Administrative
Agent Lessee Financing Statements for the Subject Items.
(y) Lessor shall have received at any time prior to the Funding
Date lien search results in form and substance reasonably acceptable to it
searching the Uniform Commercial Code records of, with respect to Guarantor, the
state of its incorporation and the State of Texas, and with respect to Lessee,
the state of its incorporation, the State of Texas, each state in which a
Subject Item is located, and in states that require filings in local
jurisdictions in order to perfect a security interest in a Subject Item, each
such local jurisdiction, each indicating that, after the filing of those UCC
release or termination statements, if any, executed and delivered by Lessee and
all other relevant Persons to Administrative Agent on or before such Funding
Date, the representations set forth in Section 2.1(l) will be accurate and
complete in all respects to the extent determinable from such searches.
(z) Lessor shall have received such other confirmatory
assignments, conveyances, financing and continuation statements, transfer
endorsements and other assurances or instruments other than estoppel
certificates or other agreements, certificates or other documents to be
delivered by any Sublessee or other Person (other than an Affiliate of Lessee)
which Lessor may reasonably request to perfect, preserve or protect Lessor's
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security interest granted under Section 9 of the Lease Agreement, in form and
substance satisfactory to Lessor, as Lessor may reasonably request in writing at
least five (5) Business Days before such Funding Date.
The leasing of each Item of Equipment by Lessee hereunder shall
constitute a representation and warranty by Lessee as of the date such leasing
commences that the conditions contained in Section 3.1 have been satisfied.
3.2. Tranche B Lender Conditions. No Tranche B Lender shall have
----------------------------
any obligation to make a Tranche B Loan for the acquisition of any Subject Item
hereunder unless on or before the Funding Date therefor each of the following
conditions are fulfilled:
(a) The conditions precedent to Lessor's obligation to lease such
Subject Item in accordance with the terms hereof (except for the condition
precedent set forth in Sections 3.1(s)) shall have been satisfied, without
waiver or modification (except as consented to by Administrative Agent), and
such Tranche B Lender shall have received copies of all documents and opinions
with respect thereto.
(b) There shall exist no Loan Default or Loan Event of Default and
all representations and warranties of Lessor and Lessor General Partner
contained herein and in the other Operative Documents shall be true and correct.
(c) Each other Tranche B Lender with a commitment to make a
Tranche B Loan on such Funding Date shall have funded its pro rata share of the
Tranche B Loans to be funded on such Funding Date based upon its Tranche B
Commitment and the amount of the Tranche B Loan to be made by such Tranche B
Lender does not exceed its Tranche B Commitment.
(d) Such Tranche B Lender shall have received original
counterparts (unless otherwise specified) in each case duly authorized, executed
and delivered by each other party thereto in form and substance satisfactory to
such Tranche B Lender and in full force and effect of this Agreement, the
related Participation Agreement Supplement, such Tranche B Lender's related
Tranche B Note, a copy of the related Security Supplement and a Funding Escrow
Agreement.
(e) Such Tranche B Lender shall have received from Lessor, in form
and substance satisfactory to such Tranche B Lender, a copy of Lessor's
Certificate of Limited Partnership and the Limited Partnership Agreement, each
certified as of such Funding Date by the secretary of Lessor General Partner.
(f) Such Tranche B Lender shall have received from Lessor General
Partner, in form and substance satisfactory to such Tranche B Lender, Lessor
General Partner's Certificate of Incorporation, By-Laws, and resolutions of its
board of directors duly authorizing the execution, delivery and performance of
this Agreement, the Lease Agreement, and each other document to be delivered in
connection therewith to which it is a party, each certified as of such Funding
Date by the secretary of Lessor General Partner, together with an incumbency
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certificate as to the person or persons authorized to execute and deliver such
documents on behalf of Lessor General Partner.
(g) Such Tranche B Lender shall have received a certificate in
form and substance satisfactory to such Tranche B Lender dated such Funding Date
from Lessor General Partner, the truth and accuracy of which shall be a
condition to the obligation of such Tranche B Lender to make its Tranche B Loan,
confirming that each of the representations and warranties of Lessor and Lessor
General Partner set forth in Sections 2.3, 2.4 and 2.5 are true and correct as
if made on and as of such date except to the extent such representations and
warranties expressly provide that they relate solely to an earlier date.
(h) Such Tranche B Lender shall have received written opinions of
counsel to Lessor and Lessor General Partner dated such Funding Date and
addressed to Indenture Trustee, the Initial Purchasers of the Tranche A Notes to
be issued on such date, each Tranche B Lender making a Tranche B Loan on such
date, Administrative Agent, and Collateral Agent, in form and substance
reasonably acceptable to such Tranche B Lender.
(i) Each of Lessor and Lessor General Partner shall have delivered
a good standing certificate dated within ten (10) days of such Funding Date from
the State of Delaware.
(j) Administrative Agent shall have received, in each case duly
authorized, executed and delivered by Lessor in form and substance satisfactory
to Administrative Agent and in full force and effect, the Lessor Financing
Statements for such Subject Item.
(k) Administrative Agent shall have received such other
confirmatory assignments, conveyances, financing and continuation statements,
transfer endorsements and other assurances or instruments other than estoppel
certificates or other agreements, certificates or other documents to be
delivered by any Sublessee or other Person (other than an Affiliate of Lessee)
which Majority Lenders may reasonably request to perfect, preserve or protect
Collateral Agent's security interest granted hereunder, in form and substance
satisfactory to Majority Lenders as Majority Lenders may reasonably request in
writing at least five (5) Business Days before such Funding Date.
4. Commitments and Fundings.
--------------------------
4.1. Tranche B Commitments. Subject to and upon the terms and
-----------------------
conditions set forth in Section 3 for the benefit of Tranche B Lenders, each
Tranche B Lender agrees to make on a Funding Date a single, non-revolving loan
to Lessor in an aggregate principal amount up to the amount of its Tranche B
Commitment set forth on the Participation Agreement Supplement for such Funding
Date (each such loan, a "Tranche B Loan"). Each party hereto agrees that,
---------------
except as provided below, no Tranche B Lender shall be required to make any
Tranche B Loan on any Funding Date hereunder in an amount in excess of its pro
rata share (based upon the aggregate of the Tranche B Commitments) of the
aggregate Tranche B Components to be funded on such Funding Date. Each Tranche
B Lender's obligation hereunder is several, such that the failure of any Tranche
B Lender to make a Tranche B Loan or satisfy any other obligation shall not
relieve any other Tranche B Lender of its obligations hereunder, and if any
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Xxxxxxx X Lender with a commitment to make a Tranche B Loan on any Funding Date
shall fail to make a Tranche B Loan on such date each other Tranche B Lender
shall make an additional Tranche B Loan in an amount equal to its pro rata share
(based upon the aggregate of the Tranche B Commitments for such Funding Date of
the non-defaulting Tranche B Lenders) of the Tranche B Loan that was to have
been made by the defaulting Tranche B Lender, provided that the maximum
aggregate amount of Tranche B Loans that any Tranche B Lender shall be obligated
to make on any Funding Date shall not exceed its Tranche B Commitment set forth
on the Participation Agreement Supplement for such Funding Date. Any Tranche B
Loan made by another Tranche B Lender of a portion of a Tranche B Loan to have
been made by a defaulting Tranche B Lender shall not relieve such defaulting
Tranche B Lender of its obligations hereunder. If the conditions to the
obligations of any Tranche B Lender specified in Section 3.2 have not been
fulfilled or waived by it on or before the Commitment Termination Date at the
time in effect, such Tranche B Lender shall be relieved of all further
obligations to make any Tranche B Loan. Nothing in this Section 4.1 shall
operate to relieve Lessor, Lessee or Guarantor from their respective obligations
under the Operative Documents or to waive any Tranche B Lender's rights against
Lessor, Lessee or Guarantor.
4.2. Lessor Commitment to Purchase. Subject to and upon the terms
-----------------------------
and conditions herein set forth for the benefit of Lessor, Lessee may cause
Sellers to sell to Lessor on any Funding Date and in such event Lessor agrees to
buy for the Acquisition Cost thereof and lease to Lessee on such Funding Date
certain natural gas compressor equipment. If the conditions to the obligations
of Lessor in Section 3.1 have not been fulfilled or waived by it on or before
the Commitment Termination Date at the time in effect, Lessor shall be relieved
of all further obligations to acquire from or lease to Lessee any natural gas
compressor equipment.
4.3. Lease Supplements. Upon the sale and lease of an Item of
------------------
Equipment in accordance with Section 4.2 Lessee shall execute and deliver to
Lessor a Lease Supplement for such Item of Equipment which Lease Supplement upon
satisfaction of the conditions precedent in Section 3.1 shall thereafter be
executed by Lessor and a signed counterpart provided to Lessee. Upon execution
and delivery by Lessee of such Lease Supplement, such Item of Equipment shall
automatically become in accordance with this Section 4.3 subject to the Lease
Agreement and an "Item of Equipment" thereunder.
4.4. Rights in Equipment. Upon the execution and delivery by
---------------------
Lessee of a Lease Supplement relating to an Item of Equipment and satisfaction
of the other applicable conditions precedent set forth in Section 3, Lessor
shall have good and marketable title to such Item of Equipment subject only to
Permitted Liens and Lessor Liens and shall be obligated to pay or reimburse
Lessee in full for the Acquisition Cost of such Item of Equipment in accordance
with the provisions of this Agreement, provided that nothing in this Section
4.4 shall affect in any manner the respective rights and obligations of Lessor
and Lessee under the Lease Agreement or shall reduce or diminish any claim or
remedy for damages which Lessor or Lessee might assert for any breach or
violation of the terms of the Lease Agreement or of this Agreement.
4.5. Funding Dates. Each Funding Date after the Closing Date
--------------
shall occur only during a Commitment Period and, unless otherwise provided on
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the related Participation Agreement Supplement, there shall be no more than one
Funding Date during any Commitment Period.
4.6. Limitation on Size of Facility. Notwithstanding anything to
-------------------------------
the contrary in the Operative Documents, the aggregate of all Tranche A Notes at
any time issued and all Tranche B Loans and Equity Contributions at any time
made shall not exceed $793,000,000.
5. Selection of Floating Lease Payment Period.
-----------------------------------------------
Provided no lease Event of Default shall have occurred and is
continuing Lessee shall at least three (3) LIBOR Banking Days prior to each
Floating Payment Date (other than a Floating Payment Date in the third-month of
a six-month LIBOR Floating Payment Period) deliver to Lessor written irrevocable
notice of its election to have both the Applicable Equity Rate and the
Applicable Tranche B Rate components of Floating Lease Payments for all Items of
Equipment be based on one-month, two-month, three-month, or six-month LIBOR or
on the Alternate Rate and Lessor shall promptly deliver notice of such election
to Administrative Agent. The Floating Lease Period based on one-month,
two-month, three-month or six-month LIBOR shall commence on such Floating
Payment Date and shall end on the calendar date corresponding to the first day
of such Floating Lease Period in the first, second, third or six month after
such Floating Payment Date, respectively; provided however, if such day is not a
LIBOR Banking Day, then the last day of such Floating Lease Period shall be the
next LIBOR Banking Day, provided further, if such next LIBOR Banking Day would
be in the next calendar month, then the last day of such Floating Lease Period
shall be the immediately preceding LIBOR Banking Day. The Floating Lease Period
for Alternate Rate based Floating Lease Payments shall commence on such Floating
Payment Date and shall end on the date specified for such in Lessee's notice of
election, provided such date shall not be more than ninety (90) days from such
Floating Payment Date. Lessee shall not make an election that would cause the
new Floating Payment Date resulting from such election to be later than the
Scheduled Termination Date. If Lessee fails to provide such notice of election
at least three (3) LIBOR Banking Days before any Floating Payment Date, Lessee
shall be deemed to have elected a one-month LIBOR based Applicable Equity Rate
and Applicable Tranche B Rate. At any time while a Lease Event of Default
exists, the Floating Payment Period shall be based on one-month LIBOR.
6. Default Purchase Options and Cure Rights.
---------------------------------------------
6.1. Right to Cure Certain Lease Events of Default.
----------------------------------------------------
(a) If Lessee shall fail to make any Lease Payment when the same
shall have become due, and if such failure of Lessee to make such Lease Payment
shall not constitute the third consecutive such failure, then Lessor, any
Tranche B Lender or Tranche B Lenders (the "Curing Party") may (but is not
------------
obligated to) pay to Collateral Agent for the benefit of Secured Parties, at any
time prior to the earlier of the expiration of ten (10) Business Days after the
Curing Party shall have received notice from Administrative Agent of the failure
of Lessee to make such Lease Payment, an amount equal to the Lease Payment or
Lease Payments then due by reason of the failure of Lessee to pay such Lease
Payment (otherwise than by declaration of acceleration) on such Payment Date,
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and such payment by the Curing Party shall be deemed to have cured any Loan
Event of Default which arose or would have arisen from such failure of Lessee.
(b) If Lessee shall fail to make any Supplemental Payment when the
same shall become due, or otherwise fail to perform any of its obligations
(other than the payment of a Lease Payment under the Lease Agreement) under any
Operative Document to which it is a party, which failure shall continue until
such time as such failure shall constitute a Lease Event of Default upon notice
to Lessee and can be cured by the payment of money, then a Curing Party may (but
is not obligated to) make such payment or perform such obligation through the
payment of money at any time prior to the expiration of ten (10) Business Days
after such Curing Party shall have received notice of the occurrence of any such
failure, and such payment or performance by such Curing Party shall be deemed to
have cured any Loan Event of Default which arose or would have arisen from such
failure of Lessee.
(c) Upon such payment or performance by a Curing Party, such
Curing Party shall (to the extent of such payment made by it and the costs and
expenses incurred in connection with such payments and performance thereof
together with interest thereon) be subrogated to the rights of Lessor and
Secured Parties to receive from Lessee the Lease Payment or Supplemental
Payment, as the case may be, paid by such Curing Party. If Collateral Agent
shall thereafter receive from Lessee such Lease Payment or Supplemental Payment,
Collateral Agent shall forthwith remit such payment to such Curing Party in
reimbursement for the funds so advanced by it.
(d) Until the expiration of the period during which the Curing
Party shall be entitled to exercise rights under Section 6.1(a) or (b) with
respect to any failure by Lessee referred to therein, neither Administrative
Agent, Collateral Agent, Indenture Trustee nor any Secured Party shall take or
commence any action it would otherwise be entitled to take or commence under the
Operative Documents as a result of such failure by Lessee.
6.2. Lessee Cure Right. Notwithstanding anything to the contrary
------------------
contained in this Agreement or any of the other Operative Documents, each of
Lessor, Indenture Trustee, each Tranche B Lender, Administrative Agent and
Collateral Agent hereby agrees with and for the benefit of Lessee as follows:
(a) Lessee shall have the right to satisfy any conditions
precedent set forth in Section 3.2 in the event that Lessor fails to do so on a
timely basis, to the extent such condition precedent may be satisfied by a party
other than Lessor and to the extent it may be satisfied without violating any
law, court order or contractual obligation applicable thereto.
(b) Lessee shall have the right, in place of Lessor, to cure
within the grace periods provided therefor, to the extent capable of cure by a
party other than Lessor, any Loan Default or Loan Event of Default.
(c) Copies of all notices from Indenture Trustee, any Secured
Party, Administrative Agent or Collateral Agent to Lessor hereunder or under the
Indenture or Tranche B Loan Agreement shall be sent to Lessee by the sending
party and no such notice shall be effective for any purpose hereunder or
thereunder unless sent to Lessee.
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(d) Lessor will, promptly upon becoming aware of any Loan Default
or Loan Event of Default, other than a Loan Default or Loan Event of Default
arising from a Lease Default or Lease Event of Default, notify Lessee of the
occurrence of such Loan Default or Loan Event of Default.
(e) Each payment by Lessee or Guarantor to Collateral Agent under
the Operative Documents shall be deemed to constitute a payment to Indenture
Trustee, any Tranche A Noteholder, any Tranche B Lender, Administrative Agent or
Collateral Agent, as the case may be, of the corresponding payment obligation
owing by Lessor to such Indenture Trustee, Tranche A Noteholder, Tranche B
Lender, Administrative Agent or Collateral Agent under any of the Operative
Documents solely for the purpose of determining amounts owed by Lessee under
the Operative Documents.
7. Security.
--------
7.1. Security Interest. For valuable consideration, and to secure
-----------------
the due payment and performance of all principal of, premium, if any, and
interest on the Tranche A Notes and the Tranche B Loans, Premium, Makewhole, and
Breakage Costs, if any, and all indebtedness and other liabilities and
obligations, whether now existing or hereafter arising (including any
obligations to indemnify, reimburse or pay costs and/or expenses) of Lessor to
Indenture Trustee, any Secured Party, Administrative Agent or Collateral Agent
arising out of or in any way connected with the Operative Documents and all
instruments, agreements and documents executed, issued and delivered pursuant
thereto (collectively, the "Secured Obligations"), Lessor hereby assigns,
--------------------
conveys, mortgages, pledges, hypothecates, transfers and sets over to Collateral
Agent, and grants to Collateral Agent, for the benefit of the Secured Parties, a
first Lien on and security interest in the rights, title and interest of Lessor
now held or hereafter acquired in and to the following, except for Excepted
Payments and Excepted Rights with respect thereto (collectively, along with all
other rights, titles and interest pledged by Lessor to Collateral Agent pursuant
to any Security Supplements, the "Lessor Collateral"):
------------------
(a) the Items of Equipment;
(b) all Subleases pertaining to the Items of Equipment;
(c) any Xxxx of Sale and all warranties (including, without
limitation, warranties of title, merchantability, fitness for a particular
purpose, quality and freedom from defects) and rights of recourse against
manufacturers, assemblers, sellers and others in connection with the Items
of Equipment;
(d) the Security Documents, all Accrued Interest Premium, all
Tranche A Premium and all Lease Payments and Supplemental Payments payable
under this Agreement and the Lease Agreement and all other sums payable
thereunder;
(e) all accounts, contract rights, general intangibles and all
other property rights of any nature whatsoever arising out of or in
connection with this Agreement, the Lease Agreement or the Items of
Equipment, including, without limitation, Lease Payments, Supplemental
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Payments and Lessee Collateral and any other payments due and to become due
under this Agreement, the Lease Agreement and the Subleases whether as
repayments, reimbursements, contractual obligations, indemnities, damages
or otherwise;
(f) all moneys now or hereafter paid or required to be paid to
Indenture Trustee or any Secured Party pursuant to any Operative Document;
(g) all proceeds of Lessor Collateral including, without
limitation, all rentals, income and profits in respect of the Items of
Equipment, whether under the Lease Agreement or otherwise, all credits
granted by any manufacturer or vendor with respect to the return of any
Item of Equipment and the proceeds of any insurance payable with respect to
the Items of Equipment;
(h) all claims, rights, powers, or privileges and remedies of
Lessor under this Agreement and the Lease Agreement;
(i) all rights of Lessor under this Agreement and the Lease
Agreement to make determinations to exercise any election (including, but
not limited to, election of remedies) or option or to give or receive any
notice, consent, waiver or approval, together with full power and authority
to demand, receive, enforce, collect or receipt for any of the foregoing or
any property which is the subject of this Agreement or the Lease Agreement,
to enforce or execute any checks, or other instruments or orders, to file
any claims and to take any action which (in the opinion of Collateral
Agent) may be necessary or advisable in connection with any of the
foregoing; and
(j) all moneys and investments held by Lessor as security under
Section 28.4.4 of the Lease Agreement.
provided, however, Collateral Agent agrees for the benefit of Lessor that so
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long as no Loan Event of Default has occurred and is continuing, it will not
exercise any of the rights assigned to it under clauses (h) and (i) of this
Section 7, other than the right to receive amounts due under the Lease Agreement
and Section 9 of this Agreement, without the prior written consent of Lessor and
Administrative Agent.
7.2. Further Assurances. For each Item of Equipment, Lessor will,
------------------
at Lessee's expense, make, execute, endorse, acknowledge, file and/or deliver to
Collateral Agent from time to time such confirmatory assignments, conveyances,
financing and continuation statements, transfer endorsements and other
assurances or instruments other than estoppel certificates or other agreements,
certificates and other documents to be delivered by any Sublessee or other
Person (other than an Affiliate of Lessee) which Administrative Agent may
reasonably request to perfect, preserve or protect Collateral Agent's security
interest granted hereunder. To the extent permitted by Applicable Law, Lessor
authorizes Collateral Agent to file any such financing and continuation
statements without the signature of Lessor and Lessor will pay all applicable
filing fees and related expenses. Lessor will, at Lessee's expense and upon the
request of Administrative Agent, qualify with the Texas Secretary of State to do
business in the State of Texas as a foreign limited partnership.
-26-
7.3. Termination. Upon the full and final discharge and
-----------
satisfaction of Lessor's obligations with respect to (i) all amounts owed under
the Operative Documents, (ii) all amounts owed under Sections 2.5.1 and 2.5.2 of
the Tranche B Loan Agreement and Article 3 or Sections 4.13, 4.14 or 7.01 of the
Indenture in relation to the purchase by Lessee of any Item of Equipment and
(iii) any Item of Equipment replaced in accordance with Section 13 of the Lease
Agreement, unless in the case of clause (ii) or (iii) a Lease Event of Default
shall have occurred and be continuing, the provisions of this Section 7 and each
Security Supplement shall terminate with respect to all Lessor Collateral or
such Items of Equipment (as applicable) and all right, title and interest of
Collateral Agent in and to all Lessor Collateral or such Items of Equipment (as
applicable) and the proceeds thereof shall revert to Lessor. Following payment
or substitution in accordance with the foregoing sentence, Lessor's obligations
to Indenture Trustee, Secured Parties, Administrative Agent and Collateral Agent
in and to all Items of Equipment or such Items of Equipment (as applicable)
shall terminate. Upon the occurrence and during the continuation of a Lease
Event of Default, the fore-going discharge shall be made only following
satisfaction of all of Lessee's obligations to purchase the Items of Equipment
under Section 24(d) of the Lease Agreement. Collateral Agent shall, at Lessor's
expense, execute and deliver any evidence of such release as Lessor may
reasonably require and furnish to Collateral Agent.
7.4. Other Security. To the extent that the obligations of Lessor
--------------
under any Operative Document are now or hereafter secured by property other than
Lessor Collateral or by the guarantee, endorsement or property of any other
Person, then at the written request of Administrative Agent, and in accordance
with its written instructions, Collateral Agent shall have the right to pursue,
relinquish, subordinate, modify or take any other action with respect thereto,
without in any way modifying or affecting any of Collateral Agent's rights and
remedies hereunder.
7.5. Power of Attorney. Lessor irrevocably authorizes Collateral
------------------
Agent and does hereby make, constitute and appoint Collateral Agent and any
officer of Collateral Agent, with full power of substitution, as Lessor's true
and lawful attorney-in-fact, with power, in its own name or in the name of
Lessor, to endorse any notes, checks, drafts, money orders, or other instruments
of payment (including payments payable under or in respect of any policy of
insurance) in respect of Lessor Collateral that may come into possession of
Collateral Agent; to sign and endorse any invoice, freight or express xxxx, xxxx
of lading, storage or warehouse receipts, drafts against debtors, assignments,
verifications and notices in connection with accounts, and other documents
relating to Lessor Collateral; to pay or discharge Taxes, Liens, security
interests or other encumbrances at any time levied or placed on or threatened
against Lessor Collateral; to demand, collect, receipt for, compromise, settle
and xxx for monies due in respect of Lessor Collateral; and generally, to do, at
Collateral Agent's option and at Lessor's expense, at any time, or from time to
time, all acts and things which Collateral Agent deems necessary to protect,
preserve and realize upon Lessor Collateral and Collateral Agent's security
interests therein and in order to effect the intent of the Operative Documents
all as fully and effectually as Lessor might or could do; and Lessor hereby
ratifies all that said attorney shall lawfully do or cause to be done by virtue
hereof. This power of attorney shall be coupled with an interest and
irrevocable for the term of this Agreement and thereafter as long as any of the
obligations of Lessor under any Operative Document shall be outstanding. The
powers conferred on Collateral Agent hereunder are solely to protect the
security interest in Lessor Collateral and shall not impose any duty upon
-27-
Collateral Agent to exercise any such powers. Collateral Agent shall be
accountable only for amounts that it actually receives as a result of the
exercise of such powers and neither it nor any of its officers, directors or
employees shall be responsible to Lessor for any act or failure to act, except
for its own gross negligence or willful misconduct.
7.6. Assignment of Rights. Lessor agrees that the assignments
----------------------
herein are irrevocable and it will not, while said assignments are in effect or
thereafter until Lessor has received from Administrative Agent notice of the
termination thereof, take any action as Lessor under the Lease Agreement or
otherwise which is inconsistent with this Agreement or make any other
assignment, designation or direction inconsistent herewith and that any
assignment, designation or direction inconsistent herewith shall be void.
Lessor and Collateral Agent agree that the following are, without limitation,
rights, powers, privileges, options, and benefits exclusively assigned by Lessor
to Collateral Agent (to the exclusion of Lessor) hereunder: (i) all of Lessor's
right to make claim for, receive, collect and receipt for (and to apply the same
to the payment of the principal of, Premium, Makewhole or Breakage Costs, if
any, and interest on the Tranche A Notes and Tranche B Loans) all rents, income,
revenues, issues, profits, insurance proceeds, condemnation awards, sales
proceeds and other sums payable or receivable under this Agreement and the Lease
Agreement or pursuant hereto or thereto, (ii) all of Lessor's right to make
waivers and agreements, to give and receive all notices and other instruments
in its capacity as Lessor under the Operative Documents, (iii) all of Lessor's
right to take action upon the happening of Lease Event of Default, including
the commencement, conduct and consummation of proceedings at law or in equity as
shall be permitted under any provision of the Lease Agreement or by law, and
(iv) all of Lessor's right to do all other things which Lessor is or may become
entitled to do under the Lease Agreement.
7.7. Transfer of the Collateral by Collateral Agent. Collateral
------------------------------------------------
Agent, Indenture Trustee or any Secured Party may be a transferee of Lessor
Collateral or of any part thereof or of any interest therein at any sale
thereof, whether pursuant to foreclosure or power of sale or otherwise
here-under, and may apply upon the transfer price the indebtedness secured
hereby owing to such transfer, to the extent of such transferee's distributive
share of the transfer price to the extent permitted by Applicable Law. Any such
transferee shall, upon any such transfer, acquire title to the properties so
transferred, free of the Lien of this Agreement.
7.8. No Segregation of Monies; No Interest. Any monies paid to or
-------------------------------------
retained by Collateral Agent pursuant to any provision hereof and not then
required to be distributed to any party as provided in this Section 7 need not
be segregated in any manner except to the extent required by law, and may be
deposited under such general conditions as may be prescribed by law, without
interest.
7.9. Distribution of Moneys. Except as may be otherwise provided
-----------------------
in this Section 7 and for so long as no Loan Event of Default or Loan Default
resulting from any failure to make a payment under the Indenture or Tranche B
Loan has occurred and is continuing, all moneys received by Collateral Agent
shall be applied in accordance with this Section 7.9:
(a) Scheduled and End of Term Purchase Option Payments. Moneys
-----------------------------------------------------
received by Collateral Agent constituting Lease Payments other than any payment
-28-
due under Section 29.1 or 29.2 of the Lease Agreement (including the payment of
interest on any such overdue amount), shall be applied without duplication (as
determined by Administrative Agent) on the date received by Collateral Agent:
First, to Indenture Trustee for the benefit of Tranche A Noteholders
-----
and to each Tranche B Lender for all principal, interest, Premium,
Makewhole and Breakage, if any, due each such Person, in each case on a
pari passu basis;
---- -----
Second, to each Lessor Indemnified Person on a pari passu basis, all
------ ---- -----
other amounts then due such Person under the Operative Documents;
Third, to Lessor all amounts then due Lessor under Section 10;
-----
Fourth, for the benefit of Lessor, to each Limited Partner on a pari
------ ----
passu basis, for all amounts then due Limited Partners, under the Limited
----- ----
Partnership Agreement and the Lessor Indemnity Agreement; and
Fifth, the balance, if any, of such payment remaining thereafter shall
-----
be distributed to Lessor to be distributed in accordance with the Lease
Agreement and Limited Partnership Agreement.
(b) Prepayments. Moneys received by Collateral Agent constituting
-----------
payment of Acquisition Cost with respect to any Early Purchase Option under
Section 28.4.1, 28.4.2 or 28.4.3 of the Lease Agreement shall be applied without
duplication (as determined by Administrative Agent) on the date received by
Collateral Agent:
First, to Indenture Trustee for the benefit of Tranche A Noteholders
-----
and to each Tranche B Lender for all principal, interest, Premium,
Makewhole and Breakage Costs, if any, then due such Person in each case on
a pari passu basis, provided however, if the amount received under Section
---- -----
28.4.3 of the Lease Agreement is less than the Equity Redemption Target or
the Net Proceeds Redemption Target, as the case may be, then the amounts to
be paid to Tranche B Lenders hereunder shall be reduced by the amount of
such shortfall.;
Second, for the benefit of Lessor, to each Limited Partner on a pari
------ ----
passu basis for all amounts then due under the Limited Partnership
-----
Agreement and its pro rata share (based upon the aggregate Equity
Contributions of all Limited Partners) of the Equity Component of each Item
of Equipment so purchased; and
Third, to each other party hereto in accordance with clauses Second,
----- -------
Third and Fifth of Section 7.9(a).
---- -----
(c) Payments after an End of Term Sale or Redelivery of Equipment.
-------------------------------------------------------------
All moneys received by Collateral Agent in accordance with Sections 28.3, 29.1
and 29.2 of the Lease Agreement shall be applied without duplication (as
determined by Administrative Agent) on the date received by Collateral Agent:
-29-
First, to Indenture Trustee for the benefit of Tranche A Noteholders
-----
for principal and interest due on the Tranche A Notes;
Second, to Tranche B Lenders on a pari passu basis for principal and
------
interest due on the Tranche B Loans; and
Third, to each other party hereto in accordance with clauses Second
----- ------
through Fifth of Section 7.9(a).
-----
(d) Excepted Payments. Moneys received by Collateral Agent
------------------
constituting Excepted Payments shall be paid promptly after receipt thereof to
the Persons entitled thereto in accordance with the Operative Documents.
7.10. Payments after a Loan Event of Default. All payments
--------------------------------------------
received and all amounts held or realized by Collateral Agent (including any
amounts realized by Collateral Agent from the exercise of any remedies) after
the occurrence and during the continuance of a Loan Event of Default or Loan
Default resulting from any failure to make a payment under the Indenture or
Tranche B Loan, and all payments or amounts then held or thereafter received by
Collateral Agent hereunder or under the Operative Documents other than Excepted
Payments, shall, so long as such Loan Event of Default continues and shall not
have been waived in writing by (i) Indenture Trustee, acting on behalf of the
Tranche A Noteholders, in the event of a Tranche A Event of Default that is not
also a Tranche B Event of Default, (ii) Majority Tranche B Lenders in the event
of a Tranche B Event of Default that is not also a Tranche A Event of Default or
(iii) Indenture Trustee, acting on behalf of the Tranche A Noteholders, and
Majority Tranche B Lenders for any Loan Event of Default that is both a Tranche
A Event of Default and a Tranche B Event of Default, be applied on the date
received:
First, so much of such payments or amounts held or realized by
-----
Collateral Agent as shall be required to reimburse Collateral Agent,
Administrative Agent and Indenture Trustee for any expenses not reimbursed
by Lessor in connection with the collection or distribution of such amounts
held or realized by Collateral Agent or in connection with the expenses
incurred in enforcing its remedies hereunder and preserving Lessor
Collateral including, without limitation, those expenses contemplated under
Section 12.1 of this Agreement, shall be retained by Collateral Agent or
paid to Administrative Agent or Indenture Trustee, as the case may be; and
Second, to each other party hereto in accordance with clauses First
------ -----
through Third of Section 7.9(a) with any amounts remaining to be held as
-----
security for Lessor's and Lessee's obligations under the Operative
Documents for so long as any Event of Default has occurred and is
continuing and thereafter clauses Fourth and Fifth of Section 7.9(a).
------ -----
7.11. Application of Certain Other Payments. Any payments
-----------------------------------------
received by Indenture Trustee or any Secured Party for which provision as to the
application thereof is made in this Agreement or any other Operative Document
shall be applied forthwith to the purpose for which such payment was made in
accordance with the terms of this Agreement, or such other Operative Document.
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7.12. Other Payments. Except as otherwise provided in Sections
---------------
7.9 and 7.10, (i) any payments received by Collateral Agent for which no
provision as to the application thereof is made in the Operative Documents, or
elsewhere in this Section 7, and (ii) all payments received and amounts realized
by Collateral Agent with respect to Lessor Collateral (including, without
limitation, all amounts realized upon the sale, release or other disposition of
Lessor Collateral upon foreclosure of this Agreement), to the extent received or
realized at any time after payment in full of the amounts then due the parties
hereto shall be paid to Lessor or its designee.
7.13. Retention of Amounts by Collateral Agent. If at the time of
----------------------------------------
receipt by Collateral Agent of any payment or amount which would otherwise be
distributable to Lessor, there shall have occurred and be continuing a Loan
Default or a Loan Event of Default, Collateral Agent shall not distribute any
such amount to Lessor or its designee and shall hold it as security for Lessor's
obligations to Secured Parties under the Operative Documents until such time as
there shall not be continuing such Loan Default or Loan Event of Default.
7.14. Exercise of Remedies.
----------------------
7.14.1. Rights in Collateral. If a Loan Event of Default
----------------------
shall have occurred and be continuing, then and in every such case Collateral
Agent shall, upon written request by Administrative Agent or Indenture Trustee,
acting on behalf of the Tranche A Noteholders after a Tranche A Event of
Default, subject to Lessee's right of quiet enjoyment pursuant to Section 2 of
the Lease Agreement, exercise any or all of the rights and powers and pursue any
and all of the remedies pursuant to this Section 7.14, any and all remedies
under the other Security Documents, and any and all remedies available to a
secured party under the UCC or any other provision or law and, in the event such
Loan Event of Default is related to a Lease Event of Default, subject to
Lessee's rights to purchase the Items of Equipment pursuant to Section 24 of the
Lease Agreement, may take possession of all or any part of Lessor Collateral and
may exclude Lessor, and, subject to the terms of the Lease Agreement, Lessee,
any sublessee and all Persons claiming under any of them wholly or partly
therefrom; provided, however, Collateral Agent shall not sell or re-lease the
-------- -------
Equipment for a period of thirty (30) days after such Event of Default during
which time Lessor, Administrative Agent, Collateral Agent and any Tranche B
Lender may remarket the Equipment.
7.14.2. Delivery of Documents; Taking Possession of
------------------------------------------------
Collateral. Upon the occurrence of a Loan Event of Default, at the request of
----------
Administrative Agent, Lessor shall promptly execute and deliver to Collateral
Agent such instruments of title and other documents as Administrative Agent may
deem necessary or advisable to enable Collateral Agent or a representative
designated by Collateral Agent, at such time or times and place or places as
Collateral Agent may specify, to obtain possession of all or any part of Lessor
Collateral to whose possession Collateral Agent shall at the time be entitled
hereunder. If Lessor shall for any reason fail to execute and deliver such
instruments and documents after the request by Collateral Agent, Collateral
Agent may (i) obtain a judgment conferring on Collateral Agent the right to
immediate possession and requiring Lessor to execute and deliver such
instruments and documents to Collateral Agent, to the entry of which judgment
Lessor hereby specifically consents, and (ii) pursue all or part of such Lessor
Collateral wherever it may be found and may enter any of the premises of Lessee
or Lessor wherever such Lessor Collateral may be or is purported to be and
-31-
search for such Lessor Collateral and take possession of and remove such Lessor
Collateral. All expenses of obtaining such judgment or of pursuing, searching
for and taking such property shall, until paid, be secured by the Lien of this
Agreement.
7.14.4. Possession of Collateral. Subject to the proviso in
-------------------------
Section 7.14.1, upon taking of possession pursuant hereto and at the written
request of Administrative Agent, Collateral Agent or a representative designated
by Collateral Agent may, from time to time, at the expense of Lessee, make all
such expenditures for maintenance, insurance, repairs, replacements and
alterations to any of Lessor Collateral, as it may deem appropriate and
commercially reasonable. In such case, Collateral Agent or a representative of
Collateral Agent shall have the right (but not the obligation) to maintain, use,
operate, store, lease, control or manage Lessor Collateral and to carry on the
business and to exercise all rights and powers of Lessor relating to Lessor
Collateral, as Administrative Agent shall deem best, including the right to
enter into any and all such agreements with respect to the maintenance, use,
operation, storage, leasing, control, management or disposition of Lessor
Collateral or any part thereof as Administrative Agent may determine; and
Collateral Agent shall be entitled to collect and receive directly all tolls,
rents (including Lease Payments and Supplemental Payments), revenues, issues,
income, products and profits of Lessor Collateral and every part thereof,
without prejudice, however, to the right of Secured Parties or Collateral Agent
under any provision of this Agreement to collect and receive all cash held by,
or required to be deposited with, Lessor hereunder. Such tolls, rents (including
Lease Payments and Supplemental Payments), revenues, issues, income, products
and profits shall be applied to pay the expenses of the use, operation, storage,
leasing, control, management or disposition of Lessor Collateral and of
conducting the business thereof, and of all maintenance, repairs, replacements,
alterations, additions and improvements, and to make all payments which
Collateral Agent may be required or may elect to make, if any, for Taxes,
assessments, insurance or other proper charges upon Lessor Collateral or any
part thereof (including the employment of engineers and accountants to examine,
inspect and make reports upon the properties and books and records of Lessor or
Lessee), and all other payments which Collateral Agent may be required or
authorized to make under any provision of this Agreement, as well as just and
reasonable compensation for the services of Collateral Agent, and of all Persons
properly engaged and employed by Collateral Agent.
7.14.5. Sale of Collateral. Subject to the proviso in
--------------------
Section 7.14.1, in addition, Collateral Agent may, in accordance with the
written instructions of Administrative Agent and, if any such transaction or
related series of transactions relates to Equipment with value in excess of
$30,000,000, the Indenture Trustee, sell, assign, transfer and deliver the
whole, or from time to time to the extent permitted by law, any part of Lessor
Collateral or any interest therein, at any private sale or public auction with
or without demand, advertisement or notice (except as herein required or as may
be required by law) of the date, time and place of sale and any adjustment
thereof for cash or credit or other property for immediate or future delivery
and for such price or prices and on such terms as Administrative Agent may
determine, or as may be required by law. It is agreed that ten (10) Business
Days' notice to Lessor of the date, time and place (and terms, in the case of a
private sale) of any proposed sale by Collateral Agent of Lessor Collateral or
any part thereof or interest therein is reasonable. Each of Administrative
Agent, Collateral Agent and any Secured Party may be a purchaser of Lessor
Collateral or any part thereof or any interest therein at any sale thereof,
-32-
whether pursuant to foreclosure or power of sale or otherwise. In accordance
with the written instructions of Administrative Agent, Collateral Agent may
apply against the purchase price therefor all or part of the amount then due
under the Secured Obligations. Collateral Agent shall, upon any such purchase,
acquire good title to the property so purchased, to the extent permitted by
Applicable Law, free of all rights of redemption.
7.14.6. Discharge. Upon any sale of Lessor Collateral or any
---------
part thereof or interest therein, whether pursuant to foreclosure or power of
sale or otherwise, the receipt of the purchase money by the official making the
sale by judicial proceeding or by Collateral Agent shall be sufficient discharge
to the purchaser for the purchase money and neither such official nor such
purchaser shall be obliged to see to the application thereof.
7.14.7. Appointment of Receiver. If a Loan Event of Default
------------------------
shall have occurred and be continuing, Collateral Agent shall, as a matter of
right, be entitled to appoint a receiver or trustee or representative (who may
be Collateral Agent or any successor or nominee thereof, or any Tranche B Lender
appointed by Collateral Agent) for all or any part of Lessor Collateral, whether
such receivership or agency or representation be incidental to a proposed sale
of Lessor Collateral or the taking of possession thereof, the exercise of
remedies under this Agreement or the Lease Agreement or otherwise, and Lessor
hereby consents to the appointment of such a receiver, trustee or
representative. Any receiver, trustee or representative appointed for all or any
part of Lessor Collateral shall be entitled to exercise all rights of Collateral
Agent under this Agreement and the other Operative Documents to the extent
provided in such appointment and shall be entitled to exercise all the powers
and pursue all the remedies of Collateral Agent hereunder with respect to Lessor
Collateral.
7.14.8. Redemption. Any sale of Lessor Collateral or any
----------
part thereof or any interest therein, whether pursuant to foreclosure or power
of sale or otherwise hereunder, shall forever be a perpetual bar against Lessor,
after the expiration of the period, if any, during which Lessor shall have the
benefit of redemption laws which may not be waived pursuant to Section 7.14.5
and this Section 7.14.8. Subject to the provisions of this Agreement, Lessor
covenants (to the extent that it may lawfully do so) that it will not at any
time insist upon, or plead, or in any manner whatsoever claim or take the
benefit or advantage of, any appraisement, valuation, stay or extension law
wherever enacted, nor at any time hereafter in force, in order to prevent or
hinder the enforcement of this Agreement or the execution of any power granted
herein to Secured Parties or Collateral Agent, or the absolute sale of Lessor
Collateral, or any part thereof, or the possession thereof by any transfer at
any sale under this Section 7.14; and Lessor for itself and all who may claim
under it, so far as it or any of them now or thereafter lawfully do so, waives
all right to have Lessor Collateral marshaled upon any foreclosure hereof, and
agrees that any court having jurisdiction to foreclose this Agreement may order
the sale of Lessor Collateral as an entirety.
7.14.9. Rights Cumulative; No Waiver. Each and every right,
-----------------------------
power and remedy herein given to Secured Parties, Administrative Agent and
Collateral Agent specifically or otherwise in this Agreement shall be cumulative
and shall be in addition to every other right, power and remedy herein
specifically given or now or hereafter existing at law, in equity or by statute,
and each and every right, power and remedy whether specifically herein given or
-33-
otherwise existing may be exercised from time to time and as often and in such
order as may be deemed expedient by Administrative Agent or Collateral Agent,
and the exercise or the beginning of the exercise of any power or remedy shall
not be construed to be a waiver of the right to exercise at the same time or
thereafter any other right, power or remedy. No delay or omission by Indenture
Trustee, any Secured Party, Administrative Agent or Collateral Agent in the
exercise of any right, remedy or power or in the pursuance of any remedy shall
impair any such right, power or remedy or be construed to be a waiver of any
default on the part of Lessor, Lessee or Guarantor or to be an acquiescence
therein.
7.14.10. Termination of Proceedings. If Administrative
----------------------------
Agent, Indenture Trustee, Secured Parties or Collateral Agent shall have
instituted any proceeding to enforce any right, power or remedy under this
Agreement by foreclosure, entry or otherwise, and such proceedings shall have
been discontinued or abandoned for any reason or shall have been determined
adversely to Administrative Agent, Indenture Trustee, Secured Parties or
Collateral Agent, then and in every such case Lessor, Administrative Agent,
Indenture Trustee, Secured Parties, Collateral Agent, Lessee and Guarantor
shall, subject to any binding determination in such proceeding, be restored to
their former positions and rights hereunder with respect to Lessor Collateral,
and all rights, remedies and powers of Administrative Agent, Indenture Trustee,
Secured Parties and Collateral Agent shall continue as if no such proceedings
had been instituted.
7.15. No Commingling of Funds. If at any time during a Loan
--------------------------
Default or Loan Event of Default Lessor should receive any amounts payable by
Lessee under the Lease Agreement or by Guarantor under the Participation
Agreement other than Excepted Payments, or any other proceeds for or with
respect to Lessor Collateral, it will hold such amounts in trust for Collateral
Agent and not commingle such amounts with any other amounts belonging to or held
by Borrower, advise Collateral Agent of such receipt and promptly forward such
amounts directly to Collateral Agent.
7.16. Lessor Collateral. Upon the occurrence and continuance of
------------------
any Loan Event of Default, Lessor will immediately upon receipt of all checks,
drafts, cash or other remittances in payment of any of its accounts, contract
rights or general intangible constituting part of Lessor Collateral, or in
payment for any Lessor Collateral sold, transferred, leased or otherwise
disposed of, or in payment or on account of its accounts, contracts, contract
rights, notes, drafts, acceptances, general intangibles, choses in action and
all other forms of obligation relating to any of Lessor Collateral so sold,
transferred or otherwise disposed of, deliver any such items to Collateral Agent
accompanied by a remittance report in form supplied or approved by Collateral
Agent, such items to be delivered to Collateral Agent in the same form received,
endorsed or otherwise assigned by Lessor where necessary to permit collection of
items and, regardless of the form of such endorsement, Lessor hereby waives
presentment, demand, notice of dishonor, protest and notice of protest.
7.17. Conflicts. If any provision of this Section 7 conflicts
---------
with any provision contained in any other Operative Document, such provision
contained in this Section 7 shall prevail.
-34-
8. Guaranty.
--------
For the benefit of each Person to whom the Lessee owes any payment or
other obligation under the Operative Documents (each a "Guaranty Party"),
--------------
Guarantor irrevocably and unconditionally guarantees the full and prompt payment
when due (whether by acceleration or otherwise) of Lease Payments, Supplemental
Payments and any interest due thereon and of all obligations and liabilities
(including, without limitation, indemnities, fees and interest thereon) of
Lessee now existing or hereafter incurred under, arising out of or in connection
with this Agreement or any other Operative Document and the due performance and
compliance by Lessee with the terms of the Lease Agreement and the Operative
Documents binding on Lessee (all such payments, interest, obligations and
liabilities, collectively, the "Guaranteed Obligations"). All payments by
-----------------------
Guarantor under this guaranty shall be made on the same basis as payments by
Lessee under the Operative Documents. Guarantor hereby waives notice of
acceptance of this guaranty and notice of any liability to which it may apply,
and waives presentment, demand of payment, protest, notice of dishonor or
nonpayment of any such liability, suit or taking of other action by an Guaranty
Party against, and any other notice to, any party liable thereon (including such
Guarantor or any other guarantor). Any Guaranty Party may at any time and from
time to time unless otherwise prohibited under the Operative Documents without
the consent of, or notice to Guarantor, without incurring responsibility to
Guarantor and without impairing or releasing the obligations of Guarantor
hereunder, upon or without any terms or conditions and in whole or in part:
(a) change the manner, place or terms of payment of, and/or change
or extend the time of payment of, renew or alter, any of the Guaranteed
Obligations, any security therefor, or any liability incurred directly or
indirectly in respect therof, and the guaranty herein made shall apply to the
Guaranteed Obligations as so changed, extended, renewed or altered;
(b) sell, exchange, release, surrender, realize upon or otherwise
deal with in any manner and in any order any property by whomsoever at any time
pledged or mortgaged to secure, or howsoever securing, the Guaranteed
Obligations or any liability is (including any of those hereunder) incurred
directly or indirectly in respect thereof or hereof, and/or any offset there
against;
(c) exercise or refrain from exercising any rights against Lessee
or others or otherwise act or refrain from acting;
(d) settle or compromise any of the Guaranteed Obligations, any
security therefor or any liability (including any of those hereunder) incurred
directly or indirectly in respect thereof or hereof;
(e) apply any sums by whomsoever paid or howsoever realized to any
liability or liabilities of Lessee to any Guaranty Party regardless of what
liabilities or liabilities of Lessee remain unpaid; and/or
-35-
(f) consent to or waive any breach of, or any act, omission or
default under, any of the Operative Documents or otherwise amend, modify or
supplement any of the Operative Documents or any of such other instruments or
agreements.
The obligations of Guarantor under this Section 8 are absolute and
unconditional and shall remain in full force and effect without regard to, and
shall not be released, suspended, discharged, terminated or otherwise affected
by, any circumstance or ocurrence whatsoever, including,without limitation (i)
any action or inaction by any Guaranty Party; or (ii) any invalidity,
irregularity or unenforceability of all or part of the Guaranteed Obligations or
of any security therefor. The obligations under this Section 8 are primary
obligations of Guarantor. If and to the extent that Guarantor makes any payment
to any Guaranty Party or to any other Person pursuant to or in respect of this
Section 8, any claim which Guarantor may have against Lessee by reason thereof
shall be subject and subordinate to the prior payment in full of the Guaranteed
Obligations.
The obligations under this Section 8 are continuing and all
liabilities to which they apply or may apply under the terms hereof shall be
conclusively presumed to have been created in reliance hereon. No failure or
delay on the part of any Guaranty Party in exercising any right, power or
privilege hereunder and no course of dealing between Guarantor, any Guaranty
Party or the holder of any Tranche A Note or Tranche B Note shall operate as a
waiver thereof; nor shall any single or partial exercise of any right, power or
privilege hereunder preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. The rights, powers and
remedies herein expressly provided are cumulative and not exclusive of any
rights, powers and remedies which any Guaranty Party would otherwise have. No
notice to or demand on Guarantor in any case shall entitle Guarantor to any
other further notice or demand in similar or other circumstances or constitute a
waiver of the rights of any Guaranty Party to any other or further action in any
circumstances without notice or demand.
This guaranty shall continue to be effective, or be reinstated, as the
case may be, if at any time payment, or any part thereof, or of any of the
Guaranteed Obligations is rescinded or must otherwise be restored or returned by
the Guaranty Parties upon the insolvency, bankruptcy, dissolution, liquidation
or reorganization of Lessee or Guarantor, or upon or as a result of the
appointment of a receiver, intervenor, or conservator of, or trustee or similar
officer for, Lessee or Guarantor or any substantial part of its property, all as
though such payment had not been made and any statute of limitations in favor of
Guarantor against any Guaranty Party relating to any such amount to be restored
or returned shall be tolled, or deemed to have been tolled, to the extent
permitted by law, during the period from the date such payment was made to such
Guaranty Party until the date such Guaranty Party so restores or returns such
amount.
9. Covenants.
---------
9.1. Lessor and Lessor General Partner Covenants. Each of Lessor
--------------------------------------------
and Lessor General Partner covenants for the benefit of each other party hereto
(unless each shall have otherwise waived in writing compliance herewith) during
the term of this Agreement as follows:
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(a) It shall take all actions as are required to keep the
representations and warranties made by it in Section 2.4 (with respect to
Lessor) and in Section 2.5 (with respect to Lessor General Partner) (except, in
the case of clause (b) of Section 2.4 (with respect to Lessor), if the location
of such office shall change, it shall provide each other party hereto with not
less than ten (10) days' prior written notice of such change), true and correct
in all material respects (but without regard to the date when such
representations and warranties were made or are expressed to be effective) until
such time as all of the obligations secured hereby have been paid in full.
(b) The proceeds of each Tranche A Note and Tranche B Loan shall
be used solely to finance Lessor's acquisitions of Items of Equipment in
accordance with the terms of this Agreement and for costs related to such
transactions. No part of the proceeds of any Tranche A Note or Tranche B Loan
will be used to purchase or carry any Margin Stock or to extend credit for the
purpose of purchasing or carrying any Margin Stock. Neither the issuing of any
Tranche A Note, the making of any Tranche B Loan nor the use of the proceeds
thereof will violate or be inconsistent with the provisions of Regulation T, U
or X of the Board of Governors of the Federal Reserve System.
(c) It shall comply in all material respects with all Applicable
Laws, rules, regulations and orders of any jurisdiction, such compliance to
include paying when due all Taxes imposed upon it or upon its property by any
Governmental Entity except to the extent contested in good faith and for which
adequate reserves have been segregated.
(d) It shall promptly take, and maintain the effectiveness of, all
action of the type referred to in clause (b) of Section 2.3 or otherwise that
may, from time to time, be necessary or appropriate under Applicable Law in
connection with the performance by Lessor of its obligations under the Operative
Documents, or the taking of any action hereby or thereby contemplated, or
necessary for the legality, validity, binding effect or enforceability of the
Operative Documents, or for the making of any payment or the transfer or
remittance of any funds by Lessor under the Operative Documents.
(e) It shall duly pay and discharge (i) immediately upon the
attachment thereof (A) in the case of Lessor General Partner, all Liens
attributable to Lessor General Partner (other than Permitted Liens) on any
Lessor Collateral, and (B) in the case of Lessor, all Liens other than Permitted
Liens on any Lessor Collateral, (ii) as and when due, all of its indebtedness
and other obligations before the time that any Lien attaches unless and only to
the extent that any such amounts are not yet due and payable or the validity
thereof is being contested in good faith by appropriate proceedings so long as
such proceedings do not involve any material danger of the sale, forfeiture or
loss of the Items of Equipment or any interest therein and Lessor maintains
appropriate reserves with respect thereto or has made adequate provision for the
payment thereof, in accordance with generally accepted accounting principles and
approved by Administrative Agent and (iii) all Taxes imposed upon or against it
or its property or assets, or upon any property leased by it, prior to the date
on which penalties attach thereto.
(f) It shall keep at all times books of record and account in
which full, true and correct entries will be made of all dealings or
transactions in relation to its business and affairs, and provide or cause to be
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provided adequate protection against loss or damage to such books of record and
account.
(g) It shall not operate in a manner that would result in an
actual, constructive or substantive consolidation with Limited Partners or any
other Person other than Lessee or Lessor General Partner in the case of Lessor
or other than Lessee or Lessor in the case of Lessor General Partner, and in
such connection Lessor shall observe all limited partnership formalities,
maintain records separately and independently from those of Limited Partners or
other Person and enter into any transactions with Limited Partners only on an
arm's-length contractual basis.
(h) It shall not, and shall cause Co-Obligor not to, without the
consent of Indenture Trustee acting on behalf of Majority Tranche A Noteholders,
the consent of all Tranche B Lenders and the consent of Administrative Agent (i)
enter into any business other than its acquisition, leasing, financing and sale
of the Equipment, (ii) create, incur, assume or permit to exist any
Indebtedness, except as expressly permitted by this Agreement, (iii) enter into,
or be a party to, any transaction with any Person, except the transactions set
forth in the Operative Documents and as expressly permitted thereby, (iv)
acquire any assets other than the Equipment and the rights of Lessor set forth
under the Operative Documents, or (v) make any investment in, guarantee the
obligations of, or make or advance money to any Person (other than capital
contributions to Co-Obligor for the sole purpose of maintaining Co-Obligor's
corporate existence), through the direct or indirect lending of money, holding
of securities or otherwise except the transactions set forth in the Operative
Documents and as expressly permitted thereby.
(i) It shall not wind up, liquidate or dissolve its affairs or
enter into any transaction of merger or consolidation, or convey, sell, lease
(substantially as a whole), or otherwise dispose of (whether in one or in a
series of transactions) its assets except as expressly permitted by this
Agreement.
(j) It shall notify Lessee of any Loan Event of Default except any
such Loan Event of Default caused by or related to a Lease Event of Default.
(k) It shall not claim ownership of any Item of Equipment on any
federal, state, local or foreign tax return or filing.
9.2. Lessee Covenants for the Benefit of Indenture Trustee and
-------------------------------------------------------------
Tranche A Noteholders. Lessee covenants and agrees solely for the benefit of
-----------------------
Lessor, Co-Obligor, Indenture Trustee and each Tranche A Noteholder (unless
Indenture Trustee or Majority Tranche A Noteholders shall otherwise waive in
writing compliance herewith or the Tranche A Notes shall have been defeased
pursuant to and in accordance with the terms of Article 7 of the Indenture) that
on the Closing Date and thereafter during the remaining term of this Agreement
as follows:
(a) Limitation on Incurrence of Additional Indebtedness. Lessee
----------------------------------------------------
will not, and will not permit any of its Restricted Subsidiaries to, directly or
indirectly, create, incur, assume, guarantee, become liable, contingently or
otherwise, with respect to, or otherwise become responsible for payment of
(collectively, "incur") any Indebtedness (other than Permitted Indebtedness);
provided, however, that if no Tranche A Event of Default shall have occurred and
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be continuing at the time of or as a consequence of the incurrence of any such
Indebtedness, Lessee and its Restricted Subsidiaries may incur Indebtedness
(including, without limitation, Acquired Indebtedness) if on the date of the
incurrence of such Indebtedness, after giving effect to the incurrence thereof,
the Consolidated Fixed Charge Coverage Ratio of Lessee is greater than 2.25 to
1.0.
For purposes of determining compliance with this covenant, (i) in the
event that an item of Indebtedness meets the criteria of more than one of the
types of Indebtedness permitted by this covenant, Lessee in its sole discretion
will classify such item of Indebtedness and will only be required to include the
amount and type of each class of Indebtedness in the test specified in the first
paragraph of this covenant or in one of the clauses of the definition of the
term "Permitted In-debtedness", (ii) the amount of Indebtedness (other than
Indebtedness consisting of an Operating Lease Facility) issued at a price which
is less than the principal amount thereof shall be equal to the amount of
liability in respect thereof determined in accordance with GAAP, (iii)
Indebtedness incurred in connection with, or in contemplation of, any
transaction described in the definition of the term "Acquired Indebtedness"
shall be deemed to have been incurred by Lessee or one of its Restricted
Subsidiaries, as the case may be, at the time an acquired Person becomes such a
Restricted Subsidiary (or is merged into Lessee or such a Restricted Subsidiary)
or at the time of the acquisition of assets, as the case may be, (iv) the
maximum amount of Indebtedness that Lessee and its Restricted Subsidiaries may
incur pursuant to this covenant shall not be deemed to be exceeded, with respect
to any outstanding Indebtedness, due solely to the result of fluctuations in the
exchange rates of currencies, and (v) guarantees or Liens supporting
Indebtedness permitted to be incurred under this covenant may be issued or
granted if otherwise issued or granted in accordance with the terms of this
Section 9.2.
(b) Limitation on Restricted Payments. Lessee will not, and will
---------------------------------
not cause or permit any of its Restricted Subsidiaries to, directly or
indirectly, (i) declare or pay any dividend or make any distribution (other than
dividends or distributions payable in Qualified Capital Stock of Lessee or in
options, warrants, or other rights to purchase such Qualified Capital Stock (but
excluding any debt security or Disqualified Capital Stock convertible into, or
exchangeable for, such Qualified Capital Stock)) on or in respect of shares of
Lessee's Capital Stock to holders of such Capital Stock, (ii) purchase, redeem
or otherwise acquire or retire for value any Capital Stock of Lessee or any
warrants, rights or options to purchase or acquire shares of any class of such
Capital Stock (in each case, other than in exchange for Qualified Capital Stock
of Lessee or options, warrants or other rights to purchase such Qualified
Capital Stock (but excluding any debt security, or Disqualified Capital Stock
convertible into, or exchangeable for, such Qualified Capital Stock)), (iii)
make any principal payment on, purchase, defease, redeem, prepay, decrease or
otherwise acquire or retire for value, prior to any scheduled final maturity,
scheduled repayment or scheduled sinking fund payment, any Indebtedness of
Lessee that is subordinate or junior in right of payment to Lessee's rental
payment obligations under the Lease Agreement or (iv) make any Investment (other
than Permitted Investments) (each of the foregoing actions set forth in clauses
(i), (ii), (iii) and (iv) being referred to as a "Restricted Payment"), if at
the time of such Restricted Payment or immediately after giving effect thereto,
(A) a Tranche A Default or a Tranche A Event of Default shall have occurred and
be continuing or (B) Lessee is not able to incur at least $1.00 of additional
Indebtedness (other than Permitted Indebtedness) in compliance with Section
9.2(a) or (C) the aggregate amount of Restricted Payments (including such
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proposed Restricted Payment) made subsequent to the Issue Date (the amount
expended for such purposes, if other than in cash, being the fair market value
of such property as determined reasonably and in good faith by the Board of
Directors of Lessee) shall exceed the sum of: (1) 50% of the cumulative
Consolidated Net Income (or if cumulative Consolidated Net Income shall be a
loss, minus 100% of such loss) of Lessee earned subsequent to the Issue Date and
on or prior to the date the Restricted Payment occurs (the "Reference Date")
(treating such period as a single accounting period); plus (2) 100% of (x) the
aggregate net cash proceeds and (y) the aggregate fair market value (as
determined in good faith by the Board of Directors of Lessee as evidenced by a
Board Resolution), of property other than cash, received by Lessee from any
Person (other than a Subsidiary of Lessee) from the issuance and sale subsequent
to the Issue Date and on or prior to the Reference Date of Qualified Capital
Stock of Lessee or options, warrants or other rights to purchase such Qualified
Capital Stock (but excluding any debt security or Disqualified Capital Stock
convertible into, or exchangeable for, such Qualified Capital Stock); plus (3)
without duplication of any amounts included in clause (C)(2) above, 100% of the
aggregate net cash proceeds of any equity contribution received by Lessee from a
holder of Lessee's Capital Stock (excluding, in the case of clauses (C)(3) and
(4), any net cash proceeds from an Equity Offering to the extent used to
purchase Equipment in accordance with Section 28.4.1 of the Lease Agreement and
in compliance with Section 3.03(b) of the Indenture; plus (4) 100% of the
aggregate net cash proceeds received by Lessee from any Person (other than a
Subsidiary of Lessee) from the issuance and sale (subsequent to the Issue Date)
of debt securities or shares of Disqualified Capital Stock that have been
converted into or exchanged for Qualified Capital Stock of Lessee, together with
the aggregate cash received by Lessee at the time of such conversion or
exchange; plus (5) without duplication, the sum of (a) the aggregate amount
returned in cash to Lessee or a Restricted Subsidiary of Lessee on or with
respect to Investments (other than Permitted Investments) made subsequent to the
Issue Date whether through interest payments, principal payments, dividends or
other distributions or payments, (b) the net cash proceeds received by Lessee or
any of its Restricted Subsidiaries from the disposition of all or any portion of
such Investments (other than to a Subsidiary of Lessee) and (c) upon
redesignation of an Unrestricted Subsidiary as a Restricted Subsidiary, the fair
market value of such Subsidiary; provided, however, that the sum of clauses (a),
(b) and (c) above shall not exceed the aggregate amount of all such Investments
made subsequent to the Issue Date; plus (6) $15,000,000.
Notwithstanding the foregoing, the provisions set forth in the
immediately preceding paragraph do not prohibit: (i) the payment of any dividend
within sixty (60) days after the date of declaration of such dividend if the
dividend would have been permitted on the date of declaration; (ii) the
acquisition of any shares of Capital Stock of Lessee, either (A) solely in
exchange for shares of Qualified Capital Stock of Lessee or options, warrants,
or other rights to purchase such Qualified Capital Stock (other than any debt
security or Disqualified Capital Stock convertible into, or exchangeable for,
such Qualified Capital Stock) or (B) through the application of net proceeds of
a substantially concurrent sale for cash (other than to a Subsidiary of Lessee)
of shares of Qualified Capital Stock of Lessee or options, warrants, or other
rights to purchase such Qualified Capital Stock (other than any debt security or
Disqualified Capital Stock convertible into, or exchangeable for, such Qualified
Capital Stock); (iii) the acquisition of any Indebtedness of Lessee that is
subordinate or junior in right of payment to Lessee's rental payment obligations
under the Lease Agreement either (A) solely in exchange for shares of Qualified
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Capital Stock of Lessee, or options, warrants, or other rights to purchase such
qualified Capital Stock or (B) through the application of net proceeds of a
substantially concurrent sale for cash (other than to a Subsidiary of Lessee) of
(1) shares of Qualified Capital Stock of Lessee or (2) Refinancing Indebtedness;
(iv) dividends or payments to Guarantor of cash to be immediately applied to
repurchases by Guarantor of Qualified Capital Stock of Guarantor or options to
purchase such Qualified Capital Stock from directors or employees or former
directors or former employees of Guarantor or any of its Subsidiaries or their
authorized representatives upon the death, disability or termination of
employment of such persons or pursuant to the terms of any customary agreement
under which such Qualified Capital Stock or options were issued, in an aggregate
amount not to exceed $1,000,000 plus any life insurance proceeds in any calendar
year; (v) the repurchase of any Indebtedness which is subordinated to Lessee's
rental payment obligations under the Lease Agreement at a purchase price not
greater than 101% of the principal amount of such Indebtedness in the event of a
change of control in accordance with provisions similar to Section 9.2(i)
hereof; provided that, prior to or simultaneously with the purchase, the Lessor
has made the Change of Control Offer as provided in the Indenture with respect
to the Tranche A Notes and has repurchased all Tranche A Notes validly tendered
for payment in connection with such Change of Control Offer; (vi) payments or
distributions to dissenting stockholders pursuant to applicable law, pursuant to
or in connection with a consolidation, merger or transfer of assets that
complies with the provisions of Section 9.2 hereof applicable to mergers,
consolidating and transfers of all or substantially all of the property and
assets of Lessee, (vii) any dividends or payments to Guarantor in respect of
overhead expenses, legal, accounting, commissions reporting and other
professional fees and expenses of Guarantor that are directly attributable to
the operations of Lessee and its restricted subsidiaries; (viii) payments to
holders of Qualified Capital Stock of Lessee or Guarantor (A) in lieu of the
issuance of fractional shares of Qualified Capital Stock of Lessee or Guarantor
or (B) to redeem or repurchase stock purchase of similar rights issued as a
shareholder rights device; provided that the payments made pursuant to this
clause (viii) from the Issue Date through the final stated maturity of the
Tranche A Notes may not exceed $2,000,000; and (ix) repurchases, acquisitions or
retirements of shares of Qualified Capital Stock of Lessee or Guarantor deemed
to occur upon the exercise of stock options or similar rights issued under
employee benefits plans of Lessee or Guarantor if such shares represent all or a
portion of the exercise price or are surrendered in connection with satisfying
any income tax obligation; provided that, except in the case of clauses (i) and
(ii), no Tranche A Default or Tranche A Event of Default shall have occurred and
be continuing or occur as a consequence of the actions or payments set forth
therein. In determining the aggregate amount of Restricted Payments made
subsequent to the Issue Date in accordance with clause (C) of the immediately
preceding paragraph, amounts expended, without duplication, pursuant to clauses
(i), (ii)(B), (iv) through (vi) and (viii) shall be included in such
calculation.
Not later than ten (10) days after the date of making any Restricted
Payment (but not including any transaction described in the preceding
paragraph), Lessee shall deliver to Indenture Trustee an officers' certificate
stating that such Restricted Payment complies with Section 9.2 and setting forth
in reasonable detail the basis upon which the required calculations were
computed, which calculations may be based upon Lessee's latest available
internal quarterly financial statements.
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(c) Limitation on Asset Sales. Lessee will not, and will not
----------------------------
permit any of its Restricted Subsidiaries to, consummate an Asset Sale unless
(i) Lessee or the applicable Restricted Subsidiary, as the case may be, receives
consideration at the time of such Asset Sale at least equal to the fair market
value of the assets sold or otherwise disposed of (as determined in good faith
by Lessee's Board of Directors) and (ii) at least 75% of the consideration
received by Lessee or the Restricted Subsidiary, as the case may be, from such
Asset Sale shall be in the form of cash or Cash Equivalents; provided that (A)
the amount of any liabilities of Lessee or any such Restricted Subsidiary (other
than liabilities that are by their terms subordinated to Lessee's rental payment
obligations under the Lease Agreement) that are assumed by the transferee of any
such assets and (B) the fair market value of any marketable securities received
by Lessee or any such Restricted Subsidiary in exchange for any such assets that
are promptly converted into cash shall be deemed to be cash for purposes of this
provision; and provided, further, that in no event shall the aggregate fair
market value at the time of receipt of consideration received by Lessee in a
form other than cash or Cash Equivalents exceed 15% of Lessee's Consolidated
Total Assets. In the event of an Asset Sale, Lessee shall apply, or cause such
Restricted Subsidiary to apply, the Net Cash Proceeds relating to such Asset
Sale within 720 days of receipt thereof either (A) to repay or prepay any
indebtedness under the Credit Agreement, and effect a permanent reduction
thereof, (B) to make an investment in either (x) properties and assets that
replace the properties and assets that were the subject of such Asset Sale or
(y) properties or assets that will be used in the business of Lessee and its
Restricted Subsidiaries as existing on the Issue Date or in businesses similar
or reasonably related thereto or in the capital stock of any entity a majority
of whose assets consists of the properties or assets described under (x) or (y)
("Replacement Assets"), or (C) to a combination of prepayment and investment
permitted by the immediately foregoing clauses (A) and (B). After the day on
which the aggregate amount of Net Cash Proceeds which have not been applied as
permitted in the immediately foregoing clauses (A), (B) and (C) of the next
preceding sentence (a "Net Proceeds Offer Amount") exceeds $15,000,000 (the "Net
Proceeds Offer Trigger Date"), Lessee shall make an offer to apply such Net Cash
Proceeds to purchase Equipment from Lessor at the Acquisition Cost thereof;
provided, Lessee shall have the option of applying a portion of the Net Proceeds
Offer Amount to the repurchase of any Indebtedness not subordinated to its
rental payment obligations under the Lease Agreement, pro rata based on the
amount of Tranche A Notes, the Tranche B Loans and the Equity Contributions
outstanding on the one hand, and the amount of such other Indebtedness
outstanding on the other hand. The purchase price for such other Indebtedness
will not exceed 100% of the principal amount thereof, plus accrued and unpaid
interest thereon. If Lessee elects to so repay such other Indebtedness, the
amount of Equipment purchased by it will be reduced by the amount of such other
Indebtedness so repurchased.
If at any time any non-cash consideration received by Lessee or any
Restricted Subsidiary of Lessee, as the case may be, in connection with any
Asset Sale is converted into or sold or otherwise disposed of for cash (other
than interest received with respect to any such non-cash consideration), then
such conversion or disposition shall be deemed to constitute an Asset Sale and
the Net Cash Proceeds thereof shall be applied in accordance with this covenant.
To the extent that the aggregate principal amount of the Tranche A Notes, the
Tranche B Loans and the Equity Contributions repurchased is less than the Net
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Proceeds Offer Amount, Lessee and its Restricted Subsidiaries may use such
deficiency for general corporate purposes. Upon completion of such Net Proceeds
Offer, the Net Proceeds Offer Amount will be reset to zero.
Notwithstanding the two (2) immediately preceding paragraphs, Lessee
and its Restricted Subsidiaries will be permitted to consummate an Asset Sale
without complying with the foregoing paragraphs to the extent (i) at least 80%
of the consideration for such Asset Sale constitutes Replacement Assets and (ii)
such Asset Sale is for fair market value; provided that any consideration not
constituting Replacement Assets received by Lessee or any of its Restricted
Subsidiaries in connection with any Asset Sale permitted to be consummated under
this paragraph shall constitute Net Cash Proceeds subject to the provisions of
the preceding paragraph.
If at any time any non-cash consideration received by Lessee or any
Restricted Subsidiary of Lessee, as the case may be, in connection with any
Asset Sale is converted into or sold or otherwise disposed of for cash (other
than interest received with respect to any such non-cash consideration), then
such conversion or disposition shall be deemed to constitute an Asset Sale and
the Net Cash Proceeds thereof shall be applied in accordance with this covenant.
To the extent that the aggregate principal amount of Tranche A Notes, tendered
pursuant to such Net Proceeds Offer is less than the net Proceeds Offer Amount
allocable to the Tranche A Notes, Lessee and its Restricted Subsidiaries may use
such deficiency for general corporate purposes.
(d) Limitation on Dividend and Other Payment Restrictions
-----------------------------------------------------------
Affecting Subsidiaries. Lessee will not, and will not cause or permit any of
-----------------------
its Restricted Subsidiaries to, directly or indirectly, create or otherwise
cause or permit to exist or become effective any encumbrance or restriction on
the ability of any Restricted Subsidiary of Lessee to (i) pay dividends or make
any other distributions on or in respect of its Capital Stock; (ii) make loans
or advances or to pay any Indebtedness or other obligation owed to Lessee or any
other Restricted Subsidiary of Lessee; or (iii) transfer any of its property or
assets to Lessee or any other Restricted Subsidiary of Lessee, except for such
encumbrances or restrictions existing under or by reason of: (A) applicable
law; (B) a Securitized Operating Lease Facility; (C) the Credit Agreement; (D)
any agreement or instrument governing Acquired Indebtedness, which encumbrance
or restriction is not applicable to any Person, or the properties or assets of
any Person, other than the Person or the properties or assets of the Person so
acquired; (E) agreements existing on the Issue Date to the extent and in the
manner such encumbrances and restrictions are contemplated by such agreements;
(F) in the case of clause (iii) above: (1) agreements or instruments arising or
agreed to in the ordinary course of business that restrict in a customary manner
the subletting, assignment or transfer of any property or asset subject to a
lease, license, conveyance or other contract and (2) any transfer of, agreement
to transfer, option or right with respect to, or Lien on, any property or assets
of Lessee or any Restricted Subsidiary entered into in compliance with Section
9.2 hereof; (G) an agreement that has been entered into for the sale or
disposition of all or substantially all of the Capital Stock of, or property and
assets of, any Restricted Subsidiary of Lessee; (H) provisions in agreements or
instruments which prohibit the payment of dividends or the making of other
distributions with respect to any Capital Stock of a Person other than on a pro
rata basis; or (I) an agreement governing Indebtedness incurred to Refinance the
Indebtedness issued, assumed or incurred pursuant to an agreement referred to in
clause (B), (C), (D) or (E) above; provided, however, that the provisions
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relating to such encumbrance or restriction contained in any such Indebtedness
are no less favorable to Lessee or the relevant Restricted Subsidiary of Lessee
in any material respect as determined by the Board of Directors of Lessee in its
reasonable and good faith judgment than the provisions relating to such
encumbrance or restriction contained in agreements referred to in such clause
(B), (C), (D) or (E). Nothing contained in clause (iii) of this Section 9.2(d)
shall prevent Lessee or any of its Restricted Subsidiaries from creating,
incurring, assuming or suffering to exist any Lien created, incurred, assumed or
suffered to exist in accordance with the other terms of this Agreement.
(e) Limitation on Preferred Stock of Restricted Subsidiaries.
-------------------------------------------------------------
Lessee will not and will not permit any of its Restricted Subsidiaries to issue
any Preferred Stock (other than to Lessee or to a Wholly Owned Restricted
Subsidiary of Lessee) or permit any Person (other than Lessee or a Wholly Owned
Restricted Subsidiary of Lessee) to own any Preferred Stock of any Restricted
Subsidiary of Lessee; provided that the foregoing shall not prohibit (i) the
creation of a Lien in any such Preferred Stock under the Credit Agreement and
otherwise created in accordance with this Agreement or (ii) issuances of sales
to directors of directors' qualifying shares or issuances or sales to foreign
nationals of such Preferred Stock, in each case to the extent required by
applicable law.
(f) Limitation on Liens. Lessee will not, and will not cause or
--------------------
permit any of its Restricted Subsidiaries to, directly or indirectly, create,
incur, assume or permit or suffer to exist any Liens of any kind against or upon
any property or assets of Lessee or any of its Restricted Subsidiaries whether
owned on the Issue Date or acquired after the Issue Date, or any proceeds
therefrom, or assign or otherwise convey any right to receive income or profits
therefrom except for (i) Liens existing as of the Issue Date (other than Liens
securing Indebtedness under the Credit Agreement) to the extent and in the
manner such Liens are in effect on the Issue Date and Liens to the extent
contemplated by the Operative Documents; (ii) Liens securing Indebtedness under
the Credit Agreement incurred pursuant to Section 9.2(a); (iii) Liens securing
an Operating Lease Facility, including Liens securing or relating to any
obligations with respect to such Operating Lease Facility or with respect to
guarantees provided to such Operating Lease Facilities; (iv) Liens of Lessee or
a Wholly Owned Restricted Subsidiary of Lessee on assets of any Restricted
Subsidiary of Lessee; (v) Liens securing Refinancing Indebtedness which is
incurred to Refinance any Indebtedness which has been secured by a Lien
permitted under this Agreement and which has been incurred in accordance with
the provisions of this Agreement; provided, however, that such Liens (1) are no
less favorable to the Tranche A Noteholders and are not more favorable to the
lienholders with respect to such Liens than the Liens in respect of the
Indebtedness being Refinanced and (2) do not extend to or cover any property or
assets of Lessee or any of its Restricted Subsidiaries not securing the
Indebtedness so Refinanced; and (vi) Tranche A Permitted Liens.
(g) Merger, Consolidation and Sale of Assets. Lessee will not,
------------------------------------------
in a single transaction or series of related transactions, consolidate or merge
with or into any Person, or sell, assign, transfer, lease, convey or otherwise
dispose of (or cause or permit any Restricted Subsidiary of Lessee to sell,
assign, transfer, lease, convey or otherwise dispose of) all or substantially
all of Lessee's assets (determined on a consolidated basis for Lessee and
Lessee's Restricted Subsidiaries) whether as an entirety or substantially as an
entirety to any Person unless: (i) either (A) Lessee shall be the surviving or
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continuing corporation or (B) the Person (if other than Lessee) formed by such
consolidation or into which Lessee is merged or the Person which acquires by
sale, assignment, transfer, lease, conveyance or other disposition the
properties and assets of Lessee and of Lessee's Restricted Subsidiaries
substantially as an entirety (the "Surviving Entity") (1) shall be a corporation
----------------
organized and validly existing under the laws of the United States or any State
thereof or the District of Columbia and (2) shall expressly assume all
obligations of Lessee under the Lease Agreement on the part of Lessee to be
performed or observed by Lessee; (ii) immediately after giving effect to such
transaction and the assumption contemplated by clause (i)(B)(2) above (including
giving effect to any Indebtedness and Acquired Indebtedness incurred in
connection with or in respect of such transaction), Lessee or such Surviving
Entity, as the case may be, (a) shall have a Consolidated Net Worth equal to or
greater than the Consolidated Net Worth of Lessee immediately prior to such
transaction, and (b) shall be able to incur at least $1.00 of additional
Indebtedness (other than Permitted Indebtedness) pursuant to Section 9.2(a);
(iii) immediately after giving effect to such transaction and the assumption
contemplated by clause (i)(B)(2) above (including, without limitation, giving
effect to any Indebtedness and Acquired Indebtedness incurred or anticipated to
be incurred and any Lien granted in connection with or in respect of the
transaction), no Tranche A Default or Tranche A Event of Default shall have
occurred or be continuing; and (iv) Lessee or the Surviving Entity shall have
delivered to Indenture Trustee an officers' certificate and an opinion of
counsel, each stating that such consolidation, merger, sale, assignment,
transfer, lease, conveyance or other disposition and that all conditions
precedent in this Agreement relating to such transaction have been satisfied.
(h) Limitations on Transactions with Affiliates.
-----------------------------------------------
(i) Lessee will not, and will not permit any of its
Restricted Subsidiaries to, directly or indirectly, enter into or permit to
exist any transaction or series of related transactions (including, without
limitation, the purchase, sale, lease or exchange of any property or the
rendering of any service) with, or for the benefit of, any of its
Affiliates (each an "Affiliate Transaction"), other than (A) Affiliate
----------------------
Transactions permitted under paragraph (ii) below and (B) Affiliate
Transactions on terms that are no less favorable than those that might
reasonably have been obtained in a comparable transaction at such time on
an arm's-length basis from a Person that is not an Affiliate of Lessee or
such Restricted Subsidiary. All Affiliate Transactions (and each series of
related Affiliate Transactions which are similar or part of a common plan)
involving aggregate payments or other property with a fair market value in
excess of $5,000,000 shall be approved by the unaffiliated members of the
Board of Directors of Lessee or such Restricted Subsidiary, as the case may
be, such approval to be evidenced by a Board Resolution stating that such
unaffiliated members of the Board of Directors has determined that such
transaction complies with the foregoing provisions. If Lessee or any
Restricted Subsidiary of Lessee enters into an Affiliate Transaction (or a
series of related Affiliate Transactions related to a common plan) that
involves an aggregate fair market value of more than $10,000,000, Lessee or
such Restricted Subsidiary, as the case may be, shall, prior to the
consummation thereof, obtain a favorable opinion as to the fairness of such
transaction or series of related transactions to Lessee or the relevant
Restricted Subsidiary, as the case may be, from a financial point of view,
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from a nationally recognized firm qualified to do the business for which it
is engaged and file the same with Indenture Trustee.
(ii) The restrictions set forth in clause (i) above shall not
apply to (A) reasonable fees and compensation paid to and indemnity
provided on behalf of, officers, directors, employees or consultants of
Lessee or any Restricted Subsidiary of Lessee as determined in good faith
by Lessee's Board of Directors or senior management; (B) transactions
exclusively between or among Lessee and any of its Wholly Owned Restricted
Subsidiaries or exclusively between or among such Wholly Owned Restricted
Subsidiaries, provided such transactions are not otherwise prohibited by
this Agreement; (C) any agreement as in effect as of the Issue Date
(including, but not limited to, the Xxxxxxxxxxx Transition Services
Agreement) or any amendment thereto or any transaction contemplated thereby
(including, but not limited to, pursuant to any amendment thereto) in any
replacement agreement thereto so long as any such amendment or replacement
agreement is not more disadvantageous to the Tranche A Noteholders in any
material respect than the original agreement as in effect on the Issue
Date; (D) Restricted Payments permitted by Section 9.2(b); (E) the Tax
Sharing Agreement; (F) employment agreements with officers and employees of
Lessee and its Restricted Subsidiaries, in the ordinary course of business;
(G) loans and advances to employees not to exceed $5,000,000 outstanding at
any one time, in the ordinary course of business; (H) arrangements with
directors of Lessee existing on the Issue Date as disclosed in the Offering
Memorandum; (I) the Acquisition of Gas Services International Ltd. and
related entities including International Pumps & Compressions Pty. Ltd. for
consideration of approximately $21 million, if consummated within six (6)
months of the Issue Date, and documents related thereto; and (J) the
provision of compression or related services to Xxxxxxxxxxx or any other
Affiliate in the ordinary course of business on market terms; provided,
however, that if aggregate payments or property involved in any such
transaction or series of related transactions exceeds $5,000,000, such
transaction or transactions shall be approved by the unaffiliated members
of the Board of Directors of Lessee.
(i) Change of Control. Upon a Change of Control, Lessee shall
-------------------
comply with Section 28.4.3 of the Lease Agreement.
(j) Conduct of Business. Lessee and its Restricted Subsidiaries
---------------------
will not engage in any businesses which are not the same, similar or reasonably
related to the businesses in which Lessee and its Restricted Subsidiaries are
engaged on the Issue Date.
(k) Reports to Indenture Trustee. Lessee will deliver to
-------------------------------
Indenture Trustee within fifteen (15) days after the filing of the same with the
Commission, copies of the quarterly and annual reports and of the information,
documents and other reports, if any, which Lessee is required to file with the
Commission pursuant to Section 13 or 15(d) of the Exchange Act. Further,
notwithstanding that Lessee may not be subject to the reporting requirements of
Section 13 or 15(d) of the Exchange Act, Lessee will provide Indenture Trustee
and Tranche A Noteholders with such annual reports and such information,
documents and other reports specified in Sections 13 and 15(d) of the Exchange
Act.
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(l) Lessee and Guarantor deliveries to Indenture Trustee. Lessee
------------------------------------------------------
and Guarantor will promptly deliver to Indenture Trustee the following:
(l) Lessee and Guarantor deliveries to Indenture Trustee.
--------------------------------------------------------
Lessee and Guarantor will promptly deliver to Indenture Trustee the
following:
(i) Any Opinions of Counsel, Board Resolutions or other
documents required to be delivered to Indenture Trustee pursuant to
Sections 9.2(a)-(k).
(ii) Notice to Indenture Trustee if either Lessee or
Guarantor become the beneficial owners of any Tranche A Notes.
(iii) An annual compliance certificate stating that there is
no Lease Default or Lease Event of Default.
(iv) Copies of all appraisals and Opinions of Counsel
required under the TIA, including without limitation those required under
Sections 9.02, 9.03, 9.04 and 9.05 of the Indenture.
(v) Prompt notice by Lessee to Indenture Trustee of a Lease
Default or Lease Event of Default.
(vi) Prompt notice by Lessee to Indenture Trustee of the
resignation or inability to act of Collateral Agent.
9.3. Lessee Covenants for the Benefit of Lessor and Tranche B
-------------------------------------------------------------
Lenders. Lessee covenants and agrees for the benefit of Lessor, Co-Obligor and
-------
each Tranche B Lender that on the Closing Date therefore and thereafter during
the remaining term of this Agreement as follows:
(a) Reporting Requirements. Lessee shall deliver, or shall cause
-----------------------
to be delivered, to Lessor, Administrative Agent with sufficient copies of each
for each Tranche B Lender:
(i) Annual Financial Statements. As soon as available and in
---------------------------
any event within 120 days after the end of each fiscal year of Guarantor,
the audited consolidated and unaudited consolidating statements of income,
stockholders' equity, changes in financial position and cash flow of
Guarantor and its consolidated subsidiaries for such fiscal year, and the
related consolidated and consolidating balance sheets of Guarantor and its
consolidated subsidiaries as at the end of such fiscal year, and setting
forth in each case in comparative form the corresponding figures for the
preceding fiscal year, and accompanied by the related opinion of
independent public accountants of recognized national standing acceptable
to Administrative Agent which opinion shall state that said financial
statements fairly present the consolidated and consolidating financial
condition and results of operations of Guarantor and its consolidated
subsidiaries as at the end of, and for, such fiscal year and that such
financial statements have been prepared in accordance with GAAP, except for
such changes in such principles with which the independent public
accountants shall have concurred and such opinion shall not contain a
"going concern" or like qualification or exception, and a certificate of
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such accountants stating that, in making the examination necessary for
their opinion, they obtained no knowledge, except as specifically stated,
of any Lease Default.
(ii) Quarterly Financial Statements. As soon as available
--------------------------------
and in any event within 60 days after the end of each of the first three
fiscal quarterly periods of each fiscal year of Guarantor, consolidated and
consolidating statements of income, stockholders' equity, changes in
financial position and cash flow of Guarantor and its consolidated
subsidiaries for such period and for the period from the beginning of the
respective fiscal year to the end of such period, and the related
consolidated and consolidating balance sheets as at the end of such period,
and setting forth in each case in comparative form the corresponding
figures for the corresponding period in the preceding fiscal year,
accompanied by the certificate of a Responsible Officer, which certificate
shall state that said financial statements fairly present the consolidated
and consolidating financial condition and results of operations of
Guarantor and its consolidated subsidiaries in accordance with GAAP, as at
the end of, and for, such period (subject to normal yearend audit
adjustments).
(iii) Notice of Default, Etc. Promptly after Lessee knows
--------------------------
that any Lease Default or any Material Adverse Effect (Tranche B) has
occurred, a notice of such Lease Default or Material Adverse Effect
(Tranche B), describing the same in reasonable detail and the action Lessee
proposes to take with respect thereto and at Lessor's or any Tranche B
Lender's option, a copy of notice of such Lease Default.
(iv) Management Letters. Promptly after Lessee's or any
-------------------
Subsidiaries' receipt thereof, a copy of any "management letter" addressed
to the Board of Directors of Lessee or such Subsidiary from its certified
public accountants and any internal control memoranda relating thereto.
(v) SEC Filings, Etc. Promptly upon its becoming available,
------------------
each financial statement, report, notice or proxy statement sent by Lessee
to stockholders generally and each regular or periodic report and any
registration statement, prospectus or written communication (other than
transmittal letters) in respect thereof filed by Lessee with or received by
Lessee in connection therewith from any securities exchange or the SEC or
any successor agency.
(vi) Other Matters. From time to time such other information
-------------
regarding the business, affairs or financial condition of Lessee or any
Subsidiary (including, without limitation, any Plan or Multi-employer Plan
and any reports or other information required to be filed under ERISA) as
any Tranche B Lender or Administrative Agent may reasonably request.
(vii) Hedging Agreements. As soon as available and in any
-------------------
event within ten (10) Business Days after each Quarterly Date, a report, in
form and substance satisfactory to Administrative Agent, setting forth as
of the last Business Day of such Quarterly Date a true and complete list of
all Hedging Agreements (including commodity price swap agreements, forward
agreements or contracts of sale which provide for prepayment for deferred
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shipment or delivery of oil, gas or other commodities) of Lessee and each
Subsidiary, the material terms thereof (including the type, term, effective
date, termination date and notional amounts or volumes), the net xxxx to
market value therefor, any new credit support agreements relating thereto
not listed on Schedule 9, any margin required or supplied under any credit
support document, and the counter party to each such agreement.
(viii) Labor Disputes. Promptly upon becoming aware of any
---------------
labor dispute which could reasonably be expected to have a Material Adverse
Effect (Tranche B), a notice of such dispute describing same in detail and
the action of Lessee proposes to take with respect thereto.
Lessee will furnish to Administrative Agent, at the time it furnishes each set
of financial statements pursuant to paragraph (i) or (ii) above, a certificate
substantially in the form of Exhibit D executed by a Responsible Officer (i)
certifying as to the matters set forth therein and stating that no Lease Default
has occurred and is continuing (or, if any Lease Default has occurred and is
continuing, describing the same in reasonable detail), and (ii) setting forth in
reasonable detail the computations necessary to determine whether Lessee is in
compliance with Section 9.3(o)(i), (ii) and (iii) as of the end of the
respective fiscal quarter or fiscal year.
(b) Litigation. Lessee shall promptly give to Administrative
----------
Agent notice of any litigation or governmental investigation or proceeding
pending against Lessee or any of its Subsidiaries which could reasonably be
expected to materially and adversely affect the business, operations, property,
assets, liabilities, condition (financial or otherwise) or prospects of Lessee
or any its Subsidiaries.
(c) Maintenance, Etc.
------------------
(i) Generally. Lessee shall and shall cause each Subsidiary
---------
to (A) preserve and maintain its legal entity existence and all of its
material rights, privileges, franchises, patents, trademarks, copyrights
and licenses, (B) keep books of record and account in which full, true and
correct entries will be made of all dealings or transactions in relation to
its business and activities, (C) comply with all Governmental Requirements
if failure to comply with such requirements will have a Material Adverse
Effect (Tranche B), (D) pay and discharge all taxes, assessments and
governmental charges or levies imposed on it or on its income or profits or
on any of its Property prior to the date on which penalties attach thereto,
except for any such tax, assessment, charge or levy the payment of which is
being contested in good faith and by proper proceedings and against which
adequate reserves are being maintained, and (E) upon reasonable notice,
permit representatives of Administrative Agent or any Tranche B Lender,
during normal business hours, to examine, copy and make extracts from its
books and records, to inspect its Properties, and to discuss its business
and affairs with its officers, all to the extent reasonably requested by
such Tranche B Lender or Administrative Agent (as the case may be).
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(ii) Proof of Insurance. Contemporaneously with the delivery
------------------
of the financial statements required by Section 9.3(a)(i) to be delivered
for each year, Lessee will furnish or cause to be furnished to
Administrative Agent and the Tranche B Lenders a certificate of insurance
coverage from the insurer in form and substance satisfactory to
Administrative Agent and, if requested, will furnish Administrative Agent
and the Tranche B Lenders copies of the applicable policies.
(iii) Operation of Properties. Lessee will and will cause
-------------------------
each Subsidiary to operate its Properties or cause such Properties to be
operated in a careful and efficient manner in accordance with the practices
of the industry and in compliance with all applicable contracts and
agreements and in compliance in all material respects with all Governmental
Requirements.
(d) Environmental Matters.
----------------------
(i) Establishment of Procedures. Lessee will and will cause
----------------------------
each Subsidiary to establish and implement such procedures as may be
reasonably necessary to continuously determine and assure that any failure
of the following does not have a Material Adverse Effect (Tranche B): (A)
all Property of Lessee and its Subsidiaries and the operations conducted
thereon and other activities of Lessee and its Subsidiaries are in
compliance with and do not violate the requirements of any Environmental
Laws, (B) no oil, hazardous substances or solid wastes are disposed of or
otherwise released on or to any Property owned by any such party except in
compliance with Environmental Laws, (C) no hazardous substance will be
released on or to any such Property in a quantity equal to or exceeding
that quantity which requires reporting pursuant to Section 103 of CERCLA,
and (D) no oil, oil and gas exploration and production wastes or hazardous
substance is released on or to any such Property so as to pose an imminent
and substantial endangerment to public health or welfare or the
environment.
(ii) Notice of Action. Lessee will promptly notify
------------------
Administrative Agent and the Tranche B Lenders in writing of any threatened
action, investigation or inquiry by any Governmental Entity of which Lessee
has knowledge in connection with any Environmental Law, excluding routine
testing and corrective action.
(e) ERISA Information and Compliance. Lessee will promptly
-----------------------------------
furnish and will cause the Subsidiaries and any ERISA Affiliate to promptly
furnish to Administrative Agent with sufficient copies to the Tranche B Lenders
(i) promptly after the filing thereof with the United States Secretary of Labor,
the Internal Revenue Service or the PBGC, copies of each annual and other report
with respect to each Plan or any trust created thereunder, (ii) immediately upon
becoming aware of the occurrence of any ERISA Event or of any "prohibited
transaction," as described in section 406 of ERISA or in section 4975 of the
Code, in connection with any Plan or any trust created thereunder, a written
notice signed by a Responsible Officer specifying the nature thereof, what
action Lessee, the Subsidiary or the ERISA Affiliate is taking or proposes to
take with respect thereto, and, when known, any action taken or proposed by the
Internal Revenue Service, the Department of Labor or the PBGC with respect
thereto, and (iii) immediately upon receipt thereof, copies of any notice of the
PBGC's intention to terminate or to have a trustee appointed to administer any
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Plan. With respect to each Plan (other than a Multiemployer Plan), Lessee will,
and will cause each Subsidiary and ERISA Affiliate to, (A) satisfy in full and
in a timely manner, without incurring any late payment or underpayment charge or
penalty and without giving rise to any lien, all of the contribution and funding
requirements of section 412 of the Code (determined without regard to
subsections (d), (e), (f) and (k) thereof) and of section 302 of ERISA
(determined without regard to sections 303, 304 and 306 of ERISA), and (B) pay,
or cause to be paid, to the PBGC in a timely manner, without incurring any late
payment or underpayment charge or penalty, all premiums required pursuant to
sections 4006 and 4007 of ERISA.
(f) Debt. Without the prior consent of the Majority Tranche B
----
Lenders, neither Lessee, Guarantor nor any Subsidiary will incur, create, assume
or permit to exist any Debt, except:
(i) Debt (including unfunded commitments) of Lessee or
Guarantor existing on the Closing Date which is reflected in the Financial
Statements or is disclosed in Schedule 11, and any renewals, extensions,
refinancings and modifications (but not increases) thereof;
(ii) accounts payable (for the deferred purchase price of
Property or services) from time to time incurred in the ordinary course of
business which, if greater than 90 days past the invoice or billing date,
are being contested in good faith by appropriate proceedings if reserves
adequate under GAAP shall have been established therefor;
(iii) Debt of Lessee under Hedging Agreements which are for
bona fide business purposes and are not speculative; and
(iv) Operating Equipment Lease Obligations;
(v) other Debt of Lessee and its Domestic Subsidiaries,
incurred or assumed, not to exceed $35,000,000 in the aggregate;
(vi) Debt evidenced by Capital Lease Obligations and Purchase
Money Debt, provided that in no event shall the aggregate principal amount
of Capital Lease Obligations and Purchase Money Debt permitted by this
clause (vi) exceed $30,000,000 at any time outstanding;
(vii) Debt with respect to surety bonds, appeal bonds or
custom bonds required in the ordinary course of business or in connection
with the enforcement of rights or claims of the Lessee or any of its
Subsidiaries or in connection with judgments that do not result in a Lease
Default or a Lease Event of Default, provided that the aggregate
outstanding amount of all cash surety bonds, appeal bonds and custom bonds
permitted by this clause (vii) shall not at any time exceed $5,000,000; and
(viii) Debt of any Foreign Subsidiary of Lessee or Guarantor
the proceeds of which Debt are used for such Foreign Subsidiary's and/or
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their Foreign Subsidiaries' working capital and general corporate purposes
("Foreign Subsidiary Indebtedness")
--------------------------------
(ix) Debt for borrowed money assumed by Lessee or one of its
Subsidiaries, or of a Subsidiary of Lessee acquired, pursuant to an
acquisition or merger permitted pursuant to the terms of this Agreement,
provided that such Debt shall not exceed $65,000,000 in the aggregate at
any time and such Debt was not incurred in connection with, or in
anticipation or contemplation of such permitted acquisition or merger; and
provided further that the aggregate amount of Debt permitted pursuant to
this clause (ix) that has a scheduled maturity date that is earlier than
the Revolver shall not exceed $30,000,000.
(g) Liens. Without the prior written consent of the Majority
-----
Tranche B Lenders, neither Lessee nor any Subsidiary will create, incur, assume
or permit to exist any Lien on any of its Properties (now owned or hereafter
acquired), except:
(i) Liens securing the payment of any Revolver Indebtedness;
(ii) Excepted Liens;
(iii) Liens securing Capital Lease Obligations and Purchase
Money Debt allowed under Section 9.3(f)(vi), but only on the Property under
lease or purchased;
(iv) Liens on assets created in connection with the ABS
Operating Lease Facility, Liens on assets of any bankruptcy remote
subsidiaries created for the purpose and as a condition to an Operating
Equipment Lease Facility and its Liens securing Operating Equipment Lease
Obligations with respect to any Operating Equipment Lease Facility and any
guaranties thereof, provided that such Liens do not extend to or cover any
Property or assets of Lessee or any of its Subsidiaries other than the
Property subject to or pledged to such Operating Equipment Leases, any
Property or rights (including rights under subleases) relating to such
leased property and the equity interests of the lessee in any such
Operating Equipment Lease, provided, however, that at the time of entering
into (and immediately after giving effect to) any such lease, no Lease
Default shall have occurred or be continuing under this Agreement;
(v) Liens disclosed on Schedule 12;
(vi) Liens arising out of Hedging Agreements with lenders
under the Revolver or Affiliates (Tranche B) thereof;
(vii) Liens relating to Debt permitted under Section
9.3(f)(v) provided that the aggregate amount of Debt by such Liens shall
not exceed $20,000,000;
(viii) Liens on assets of Foreign Subsidiaries under Foreign
Credit Facilities (Tranche B); and
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(ix) Liens securing acquired Debt permitted under Section
9.3(f)(ix); provided, however, such Liens do not extend to or cover any
property other than the property or assets that secured such Debt prior to
the time it was acquired or assumed.
(h) Investments, Loans and Advances. Without the prior written
----------------------------------
consent of the Majority Tranche B Lenders, neither Lessee nor any Subsidiary
will make or permit to remain outstanding any loans or advances to or
Investments (Tranche B) in any Person, except that, so long as no Lease Event of
Default has occurred and is continuing, the foregoing restriction shall not
apply to:
(i) Investments (Tranche B), loans or advances reflected in
the Financial Statements or which are disclosed to the Lenders in Schedule
13;
(ii) accounts receivable arising in the ordinary course of
business;
(iii) direct obligations of the United States or any agency
thereof, or obligations guaranteed by the United States or any agency
thereof, in each case maturing within one year from the date of creation
thereof;
(iv) commercial paper maturing within one year from the date
of creation thereof rated in the highest grade by S&P or Moody's;
(v) deposits maturing within one year from the date of
creation thereof with, including certificates of deposit issued by, any
Tranche B Lender or any office located in the United States of any other
bank or trust company which is organized under the laws of the United
States or any state thereof, has capital, surplus and undivided profits
aggregating at least $100,000,000.00 (as of the date of such Tranche B
Lender's or bank or trust company's most recent financial reports) and has
a short term deposit rating of no lower than A2 or P2, as such rating is
set forth from time to time, by S&P or Moody's, respectively;
(vi) deposits in money market funds investing exclusively in
Investments (Tranche B) described in clause (iii), (iv) or (v) above;
(vii) other Investments (Tranche B), loans or advances not to
exceed $100,000,000 in any single fiscal year or $250,000,000 in the
aggregate at any time outstanding, provided however, for the purposes of
this clause (vii), Investments (Tranche B), loans or advances of
approximately $98,700,000 with respect to Lessee's acquisition of KCI,
Inc., of approximately $25,000,000 with respect to Lessee's acquisition of
Louisiana Compressor Maintenance Co., and of approximately $30,000,000 with
respect to Lessee's acquisition of Compressor Systems, Inc. shall not be
included in calculating Investments (Tranche B), loans or advances; and
(viii) payroll advances and employee loans up to $5,000,000.
(i) Dividends, Distributions and Redemptions. Without the prior
------------------------------------------
written consent of the Majority Tranche B Lenders, Lessee will not declare or
pay any dividend, purchase, redeem or other-wise acquire for value any of its
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stock now or hereafter outstanding, return any capital to its stock-holders or
make any distribution of its assets to its stockholders; except that so long as
there shall exist no Lease Default or Lease Event of Default (both before and
after giving effect to the payment thereof) (i) Lessee may pay cash dividends to
Guarantor so long as the proceeds thereof are immediately used by Guarantor to
purchase shares of common stock or options to purchase shares of common stock of
Guarantor held by former employees of Lessee following the termination of their
employment by Lessee or any of its Subsidiaries provided that the aggregate
amount of cash dividends paid pursuant to this Section 9.3(i)(i), not during any
fiscal year of Lessee exceed $7,500,000; or (ii) Lessee may make other
distributions provided that the aggregate amount of such distributions shall not
exceed $5,000,000 during any fiscal year.
(j) Nature of Business. Without the prior written consent of the
-------------------
Majority Tranche B Lenders, neither Lessee nor any Subsidiary will allow any
material change to be made in the character of its business.
(k) Mergers, Etc. Without the prior written consent of the
--------------
Majority Tranche B Lenders, neither Lessee nor any Subsidiary will merge into or
with or consolidate with any other Person, or sell, lease or otherwise dispose
of (whether in one transaction or in a series of transactions) all or
substantially all of its Property or assets to any other Person except that (i)
any Subsidiary of Lessee may be merged into or consolidated with or sell, lease
or otherwise dispose of - all or substantially all of its Property or assets to
(A) Lessee, so long as Lessee is the surviving business entity, or (B) another
Subsidiary of Lessee and (ii) Lessee may merge into or consolidate with any
Person provided, in each case (A) immediately thereafter and giving effect
thereto, no event shall occur and be continuing which constitutes a Lease
Default or Lease Event of Default and (B) Lessee is the surviving business
entity.
(l) Sales Proceeds. Without the prior written consent of the
---------------
Majority Tranche B Lenders, neither Lessee nor any Person acting on behalf of
Lessee has taken or will take any action which might cause any of the Operative
Documents to violate Regulation T, U or X or any other regulation of the Board
of Governors of the Federal Reserve System or to violate Section 7 of the
Exchange Act or any rule or regulation thereunder, in each case as now in effect
or as the same may hereinafter be in effect.
(m) ERISA Compliance. Without the prior written consent of the
-----------------
Majority Tranche B Lenders, Lessee will not at any time:
(i) Engage in, or permit any Subsidiary or ERISA Affiliate to
engage in, any transaction in connection with which Lessee, any Subsidiary
or any ERISA Affiliate could be subjected to either a civil penalty
assessed pursuant to section 502(c), (i) or (l) of ERISA or a tax imposed
by Chapter 43 of Subtitle D of the Code;
(ii) Terminate, or permit any Subsidiary or ERISA Affiliate
to terminate, any Plan in a manner, or take any other action with respect
to any Plan, which could result in any liability to Lessee, any Subsidiary
or any ERISA Affiliate to the PBGC;
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(iii) Fail to make, or permit any Subsidiary or ERISA
Affiliate to fail to make, full payment when due of all amounts which,
under the provisions of any Plan, agreement relating thereto or applicable
law, Lessee, a Subsidiary or any ERISA Affiliate is required to pay as
contributions thereto;
(iv) Permit to exist, or allow any Subsidiary or ERISA
Affiliate to permit to exist, any accumulated funding deficiency within
the meaning of Section 302 of ERISA or section 412 of the Code, whether or
not waived, with respect to any Plan;
(v) Permit, or allow any Subsidiary or ERISA Affiliate to
permit, the actuarial present value of the benefit liabilities under any
Plan maintained by Lessee, any Subsidiary or any ERISA Affiliate which is
regulated under Title IV of ERISA to exceed the current value of the assets
(computed on a plan termination basis in accordance with Title IV of ERISA)
of such Plan allocable to such benefit liabilities. The term "actuarial
present value of the benefit liabilities" shall have the meaning specified
in section 4041 of ERISA;
(vi) Contribute to or assume an obligation to contribute to,
or permit any Subsidiary or ERISA Affiliate to con-tribute to or assume an
obligation to contribute to, any Multiemployer Plan;
(vii) Acquire, or permit any Subsidiary or ERISA Affiliate to
acquire, an interest in any Person that causes such Person to become an
ERISA Affiliate with respect to Lessee, any Subsidiary or any ERISA
Affiliate if such Person sponsors, maintains or con-tributes to, or at any
time in the six-year period preceding such acquisition has sponsored,
maintained, or contributed to, (A) any Multiemployer Plan, or (B) any other
Plan that is subject to Title IV of ERISA under which the actuarial present
value of the benefit liabilities under such Plan exceeds the current value
of the assets (computed on a plan termination basis in accordance with
Title IV of ERISA) of such Plan allocable to such benefit liabilities;
(viii) Incur, or permit any Subsidiary or ERISA Affiliate to
incur, a liability to or on account of a Plan under sections 515, 4062,
4063, 4064, 4201 or 4204 of ERISA;
(ix) Contribute to or assume an obligation to contribute to,
or permit any Subsidiary or ERISA Affiliate to contribute to or assume an
obligation to contribute to, any employee welfare benefit plan, as defined
in section 3(1) of ERISA, including, without limitation, any such plan
maintained to provide benefits to former employees of such entities, that
may not be terminated by such entities in their sole discretion at any time
without any material liability; or
(x) Amend or permit any Subsidiary or ERISA Affiliate to
amend, a Plan resulting in an increase in current liability such that
Lessee, any Subsidiary or any ERISA Affiliate is required to provide
security to such Plan under section 401(a)(29) of the Code.
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(n) Sale or Discount of Receivables. Without the prior written
----------------------------------
consent of the Majority Tranche B Lenders, neither Lessee nor any Subsidiary
will discount or sell (with or without recourse) any of its notes receivable or
accounts receivable, except in the ordinary course of business.
(o) Certain Financial Covenants. Without the prior written
-----------------------------
consent of the Majority Tranche B Lenders:
(i) Current Ratio. Lessee will not permit its ratio of (A)
--------------
Consolidated Current Assets to (B) Consolidated Current Liabilities to be
less than 1.0 to 1.0 at any time.
(ii) Total Debt to EBITDAR. Lessee will not permit its Total
---------------------
Leverage Ratio as of the end of any Testing Period to be greater than the
ratios and for the periods indicated below:
Period Ratio
------ -----
Closing Date through 3/31/02 4.75 to 1.00
4/01/02 and at all times thereafter 4.50 to 1.00
(iii) Interest Coverage Ratio. Lessee will not permit its
-------------------------
Interest Coverage Ratio as of the end of any Testing Period to be less than
the ratios and for the periods indicated below:
Period Ratio
------ -----
Closing Date through 3/31/02 2.00 to 1.00
4/01/02 through 3/31/04 2.25 to 1.00
4/01/04 and at all times thereafter 2.50 to 1.00
(iv) Test and Calculations of Financial Ratios. Until the
--------------------------------------------
fiscal quarter beginning April 1, 2002, the financial ratios set forth in
clauses (i), (ii) and (iii) above will be tested on a quarterly basis
beginning March 31, 2001. Said financial ratios will be calculated
utilizing annualized results for the period from and including the Closing
Date through the applicable quarterly determination date. From and
including April 1, 2002 and at all times thereafter, said financial ratios
will be determined on a rolling four-quarter basis.
(p) Sale of Properties. Without the prior written consent of the
-------------------
Majority Tranche B Lenders, Lessee will not, and will not permit any Subsidiary
to, sell, assign, convey or otherwise transfer any Property; except that Lessee
and any Subsidiary:
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(i) may sell or otherwise dispose of any Property which, in
the reasonable judgment of such Person, is obsolete, worn out or otherwise
no longer useful in the conduct of such Person's business;
(ii) may sell or lease inventory or equipment to their
respective customers in the ordinary course of business; and
(iii) may dispose of Property necessary to effectuate
Operating Equipment Lease Facilities otherwise permitted hereby; provided,
--------
however, the net proceeds received in connection with any such disposition
-------
of property shall be used first to prepay the outstanding principal
balance, if any, of the amounts borrowed under the Revolver pursuant to an
Equipment Loan (as defined in the Revolver) on a dollar for dollar basis.
(q) Environmental Matters. Without the prior written consent of
----------------------
the Majority Tranche B Lenders, neither Lessee nor any Subsidiary will cause or
permit any of its Property to be in violation of, or do anything or permit
anything to be done which will subject any such Property to any remedial
obligations under any Environmental Law, assuming disclosure to the applicable
Governmental Entity of all relevant facts, conditions and circumstances, if any,
pertaining to such Property where such violations or remedial obligations would
have a Material Adverse Effect (Tranche B).
(r) Transactions with Affiliates. Without the prior written
------------------------------
consent of the Majority Tranche B Lenders, except for certain transition service
agreements entered into in conjunction with the Merger on or prior to the
Closing Date and disclosed to Administrative Agent and the Tranche B Lenders on
Schedule 14, neither Lessee nor any Subsidiary will enter into any transaction,
including, without limitation, any purchase, sale, lease or exchange of Property
or the rendering of any ser-vice, with any Affiliate (Tranche B) unless such
transactions are otherwise permitted under this Agreement, are in the ordinary
course of its business and are upon fair and reasonable terms no less favorable
to it than it would obtain in a comparable arm's length transaction with a
Person not an Affiliate (Tranche B).
(s) Subsidiaries. Without the prior written consent of the
------------
Majority Tranche B Lenders, Lessee shall not, and shall not permit any
Subsidiary to, create any additional Subsidiaries except for (i) Subsidiaries
formed in connection with Operating Equipment Lease Facilities permitted
hereunder, (ii) Subsidiaries resulting from the Merger or from future mergers or
acquisitions permitted hereunder, and (iii) new Subsidiaries created by Lessee
in compliance with Section 9.3(h). Lessee shall not and shall not permit any
Subsidiary to sell or to issue any stock or ownership interest of a Subsidiary,
except to Lessee and except in compliance with Section 9.3(h).
(t) [Reserved].
(u) Use of ERISA Assets. At no time shall Lessee use or attempt
---------------------
to use any assets which would be deemed to be "plan assets" under the "plan
asset regulations" promulgated pursuant to ERISA to satisfy any or all
obligations under the Operative Documents.
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9.4. Covenant of Tranche B Lenders, Lessor, Administrative Agent
-------------------------------------------------------------
and Collateral Agent and Limited Partners. If Lessor, any Tranche B Lender,
---------------------------------------------
Administrative Agent or Collateral Agent is not a U.S. Person, it shall provide,
to Lessee and to any other party making payments to it under the Operative
Documents, on the Closing Date (or, if later at the time it becomes Lessor, a
Tranche B Lender, Administrative Agent or Collateral Agent, as the case may be)
and at such times as may be necessary thereafter under Applicable Law as in
effect on the Closing Date (including Section 1441 of the Code) and at such
other times as shall be reasonably requested by Lessee or any other party making
payments to it under the Operative Documents, a fully completed Internal Revenue
Service Form W-8 or successor form (including an appropriate Internal Revenue
Service Form W-8 completed as specified in Treasury Regulations section
1.1441-4(a)), along with any other forms or documents required to be attached to
such forms upon which Lessee or such other party can rely establishing that all
payments to each such Person under the Operative Documents can be made free and
clear of any requirement to withhold any United States federal income tax
therefrom; provided, however, that each such Person shall not be required to
-------- -------
provide such forms if, solely as a result of a change after the Closing Date in
Applicable Law as in effect on the Closing Date (or such later date) such Person
is not legally entitled to deliver such form. In the event of a failure to
provide any form as required under this Section 9.4 by any Tranche B Lender,
Lessor, Administrative Agent or Collateral Agent, the relevant party shall be
entitled to withhold from any payment made pursuant to the Operative Documents
to such Person the appropriate amount of federal income tax, notwithstanding the
provisions of the Operative Documents to the contrary and provided further, that
----------------
Lessee shall not have any indemnity obligation to such Person pursuant to
Section 10.3.5 hereof to the extent related to such failure.
9.5. Covenant of Lessee and Lessor. Each of Lessor and Lessee
---------------------------------
agrees for the benefit of each Tranche B Lender that no item of equipment shall
be leased under the Lease Agreement (other than by way of a substitution of
equipment in accordance with Section 13 of the Lease Agreement) on a Funding
Date without satisfaction of the condition precedent set forth in Section 3.1(o)
with respect to such item, notwithstanding any waiver of such condition by any
other Tranche B Lenders.
10. Indemnities.
-----------
10.1. Lessee General Indemnification. Lessee hereby assumes
--------------------------------
liability for, and does hereby agree to indemnify, protect, save, defend, and
hold harmless each Lessee Indemnified Person (and, with respect to clause (ix)
below, Arrangers) on an After-Tax Basis, from and against any and all
obligations, fees, expenses, costs, liabilities, losses, damages, penalties,
claims, demands, actions, suits, judgments and related costs and expenses,
including reasonable legal fees and expenses, of every kind and nature
whatsoever, imposed on, incurred by, or asserted against such Lessee Indemnified
Person (collectively, "Losses"), which relate in any way relate to or arise in
------
any way out of (i) the manufacture, construction, ordering, transfer, acceptance
or rejection, ownership, transfer of ownership, titling or retitling,
registration or re-registration, delivery, leasing, subleasing, possession, use,
operation, maintenance, storage, removal, redelivery, repossession, mortgaging,
granting of any interest in, transfer of title to, acquisition, sale or other
application or disposition, disposition of licensing, documentation, of any Item
of Equipment, or any part thereof, including, without limitation, any of such as
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may arise from (A) loss or damage to any property or death or injury to any
Persons, (B) patent or latent defects in any Items of Equipment (whether or not
discoverable by Lessee or any Lessee Indemnified Person, (C) any claims based on
strict liability in tort or negligence, (D) any claims related to the release of
any substance into the environment and (E) any claims based on patent,
trademark, trade name or copyright infringement, or (ii) the Operative Documents
or the transactions contemplated hereby or thereby, or (iii) any failure on the
part of Lessee or Guarantor to perform or comply with any Applicable Law, any of
the terms of any Operative Document to which it is a party or any instrument
referred to or contemplated hereby or thereby or the non-conformity of any
Equipment with Applicable Law, or (iv) reliance on any representation or
warranty made or deemed made by Lessee or Guarantor or any of their respective
officers under or in connection with any Operative Document which shall have
been false or incorrect in any material respect when made or deemed made or
delivered, or (v) any repayment to Lessee by Lessor of any amount previously
distributed hereunder which amount such Person is required to repay, or (vi) any
investigation, litigation or proceeding related to any Operative Document or the
use of proceeds of Tranche A Notes, Tranche B Loans or Equity Contributions or
the ownership of the Tranche A Notes, Tranche B Notes or Equity Certificates or
in respect of the Lease Agreement, or (vii) the failure to vest or maintain
vested in Lessor and Collateral Agent or to transfer to Lessor or Collateral
Agent an undivided security interest in the Lessee Collateral or the Lessor
Collateral, respectively, including collections free and clear of Liens to the
extent required by the Operative Documents, or (viii) any agreement by Lessor to
pay any amounts under Section 6.5 of the Limited Partnership Agreement or to
indemnify any Person under the Lessor Indemnity Agreement, or (ix) the
engagement of the Appraiser with respect to the delivery of any Appraisal to be
delivered in accordance with the Operative Documents. Lessee shall be subrogated
to a Lessee Indemnified Person's rights in any matter with respect to which
Lessee has actually reimbursed such Lessee Indemnified Person for amounts
expended by it or has actually paid such amounts directly pursuant to this
Section 10.1. In case any claim, action, suit or proceeding is made or brought
against any Lessee Indemnified Person in connection with any claim indemnified
against hereunder, such Lessee Indemnified Person will, promptly after receipt
of notice of such claim or the commencement of such action, suit or proceeding,
notify Lessee thereof, enclosing a copy of all papers served upon such Lessee
Indemnified Person, but failure to give such notice or to enclose such papers
shall not relieve Lessee from any liability hereunder unless such failure
materially and adversely affects Lessee's defense of such claim resulting in a
material increase in liability of Lessee in respect of such claim or preventing
it from reducing liability therefor, in which case Lessee shall not be required
to indemnify such Lessee Indemnified Person for the amount by which such
liability was increased or not reduced for failure to give such notice. Provided
no Lease Event of Default has occurred, Lessee will be entitled to participate
in, and assume the defense of, such claim, action, suit or proceeding, or cause
the same to be resisted or defended by counsel selected by Lessee and reasonably
acceptable to the Lessee Indemnified Person; provided, however, if such claim,
action, suit or proceeding involves any material risk of loss or forfeiture of
title to the Equipment (unless Lessee shall have posted a bond or other security
reasonably satisfactory to Administrative Agent in respect of such risk) or any
material risk of criminal penalty being assessed against any Lessee Indemnified
Person, upon such Lessee Indemnified Person's request, Lessee will at its
expense, cause such claim, action, suit or proceeding to be resisted or defended
by counsel selected by such Lessee Indemnified Person and reasonably acceptable
to Lessee. After notice from Lessee to such Lessee Indemnified Person of
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Lessee's election to so assume the defense of such claim, action, suit or
proceeding, Lessee will not be liable to such Lessee Indemnified Person for any
costs and expenses of any settlement of such claim, action, suit or proceeding
effected by such Lessee Indemnified Person without the prior written consent of
Lessee (which consent will not be unreasonably withheld). Such Lessee
Indemnified Person may participate at its own expense in any such claim, action,
suit or proceeding controlled by Lessee pursuant hereto; provided such
participation does not, in the opinion of independent counsel appointed by
Lessee, interfere with such control) and such participation will not constitute
a waiver of the indemnification provided in this Section 10. In the event of any
failure by Lessee to satisfy its obligations under this Section 10.1, Lessee
shall pay all reasonable costs and expenses (including, without limitation,
attorney's fees and expenses) incurred by such Lessee Indemnified Person in
connection with such action, suit or proceeding. Additionally, if outside
counsel to such Lessee Indemnified Person determines that a conflict of interest
exists between such Person and Lessee regarding any Loss indemnified hereunder,
Lessee agrees to pay the reasonable fees and expenses of separate counsel for
and as selected by such Lessee Indemnified Person. The provisions of this
Section 10.1, and the obligations of Lessee under this Section 10.1, shall apply
from the date of this Agreement notwithstanding that the Term may not have
commenced, and shall survive and continue in full force and effect
notwithstanding the expiration or earlier termination of this Agreement, the
Lease Agreement or any other Operative Document in whole or in part, including
the expiration of termination of the Term with respect to any Item of Equipment,
and are expressly made for the benefit of, and shall be enforceable by Lessor.
10.2. Exceptions to Lessee's General Indemnification.
--------------------------------------------------
Notwithstanding the terms of Section 10.1, Lessee shall not be required to
indemnify any Lessee Indemnified Person under Section 10.1 for any of the
following: (i) any Loss to the extent resulting from the willful misconduct or
gross negligence of such Lessee Indemnified Person (it being understood that
Lessee shall be required to indemnify any Lessee Indemnified Person even if the
ordinary (but not gross) negligence of such Lessee Indemnified Person caused or
contributed to such Loss), (ii) any Loss resulting from Lessor Liens
attributable to such Lessee Indemnified Person, (iii) any Loss to the extent
attributable to acts or events occurring after the end of the Term, if any, so
long as no Lease Event of Default shall have occurred and be continuing and the
Equipment has either been purchased or redelivered in accordance with the terms
of Section 6.1, 28.2, 28.3 or 28.4 of the Lease Agreement, (iv) any Loss (other
than a Loss attributable to a Lease Event of Default) arising from a breach by
such Lessee Indemnified Person of any agreement entered into in connection with
the assignment or participation of any interest of such Lessee Indemnified
Person under the Lease Agreement or the other Operative Documents, (v) any Loss
to the extent arising or resulting from the failure of such Lessee Indemnified
Person to comply with laws applicable to financial institutions or their
affiliates generally or the failure of such Lessee Indemnified Person to file
any material notice, report, filing or other document required by any
Governmental Entity regulating banks or their affiliates in connection with such
Lessee Indemnified Person's execution of, and participation in the transactions
contemplated by, the Operative Documents except to the extent resulting from the
acts or omissions of Lessee or Guarantor, (vi) any other expense or Loss to the
extent expressly provided under any of the Operative Documents to be paid or
borne by such Lessee Indemnified Person at its own expense, (vii) any Loss to
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the extent resulting from the offer, sale, disposition or transfer by such
Lessee Indemnified Person of all or part of its interest in the Operative
Documents, other than a Loss arising as a result of the occurrence of a Lease
Event of Default, (viii) any Loss that is a Tax or based on a Tax, (ix) any Loss
to the extent resulting from any business, transaction or other activity in
which such Lessee Indemnified Person is engaged, which has no relation to the
transactions contemplated hereby or by any of the Operative Documents, (x) any
Loss resulting from a Tranche A Event of Default or Tranche B Event of Default
not attributable to a Lease Event of Default, (xi) any Loss which is an ordinary
and usual operating or overhead expense of such Lessee Indemnified Person except
expenses incurred relating to an Lease Event of Default, (xii) any Loss in
connection with any dispute between or among Lessee Indemnified Persons other
than Losses caused by a Lease Event of Default and (xiii) any Loss arising under
Section 406(a) of ERISA or Section 4975 of the Code (a) as a result of Loans or
funds advanced by Tranche B Lenders or Lessor being deemed to be "plan assets"
under the "plan asset regulations" promulgated pursuant to ERISA or (b) as a
result of a violation of Section 406(b) of ERISA or Section 4975(c)(1) (E) or
(F) of the Code by Tranche B Lenders or Lessor. Section 10.1 shall be
construed as an indemnity only and not a guaranty of residual value of the
Items of Equipment.
10.3. Tax Indemnity.
--------------
10.3.1. General Indemnity. Subject to the other provisions
------------------
of this Section 10.3, Lessee agrees to pay, defend and indemnify and hold
Lessor, Indenture Trustee, Administrative Agent and Collateral Agent and their
respective Affiliates, successors and assigns (including any consolidated or
combined group of which any such Person is a member) (each a "Tax Indemnitee")
--------------
harmless on an After-Tax Basis from any and all federal, state, local and
foreign taxes, excise taxes, fees, withholdings, levies, documentary stamps,
imposts, duties, assessments, penalties and charges of any kind and nature
whatsoever, together with any penalties, fines or interest thereon (herein
called "Taxes") howsoever imposed, whether levied or imposed upon or asserted
-----
against a Tax Indemnitee, Lessee, any Item of Equipment, or any part thereof, by
any federal, state or local government or taxing authority in the United States,
or by any taxing authority of a foreign country or subdivision thereof, upon or
with respect to (i) the Items of Equipment, any Item of Equipment or any part
thereof, (ii) the manufacture, construction, ordering, transfer, ownership,
transfer of ownership, titling or retitling, registration or re-registration,
delivery, leasing, subleasing, possession, use, operation, maintenance, storage,
removal, return, mortgaging, granting of any interest in, transfers of title to,
acquisition, sale or other disposition of licensing, documentation,
repossession, sale or other acquisition or disposition of the Items of
Equipment, any Item of Equipment or any part thereof, (iii) the revenues, rent,
receipts or earnings arising from any Item of Equipment or any part thereof,
(iv) any Operative Document, (v) any Lease Payment or Supplemental Payment or
any payment made to Lessor, Indenture Trustee or any Tranche A Noteholder, any
Tranche B Lender, by Lessor or Lessee pursuant to the Operative Documents, or
(vi) otherwise in respect of the Operative Documents or any thereof or any
transaction or transactions contemplated hereby or thereby. Lessee further
agrees to defend and indemnify and hold Lessor harmless on an After-Tax Basis
from any and all Taxes howsoever imposed, whether levied or imposed upon or
asserted against any Person by any federal, state or local government or taxing
authority in the United States, or by any taxing authority of a foreign country
or subdivision thereof against which Lessor has agreed to indemnify such Person
under the Lessor Indemnity Agreement.
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10.3.2. Exceptions to Tax Indemnity. Notwithstanding
------------------------------
anything to the contrary in Section 10.3.1, the following shall be excluded
from the indemnity provided under Section 10.3.1: (i) Taxes (other than Taxes
that are, or are in the nature of, sales, use, rental, value added, transfer or
property taxes) that are imposed on a Tax Indemnitee by the United States
federal government that are based on or measured by the gross or net income or
gross or net receipts, taxes based on capital gains and minimum taxes and any
and all withholding Taxes (which, for the avoidance of doubt, are dealt with in
Section 10.3.5 hereof) of such Person; provided, that this clause (i) shall not
be interpreted to prevent a payment from being made hereunder on an After-Tax
Basis if such payment is otherwise required to be so made; (ii) Taxes (other
than Taxes that are, or are in the nature of, sales, use, rental, value added,
transfer or property taxes) that are imposed on any Tax Indemnitee (other than
Lessor) by any state, local or foreign jurisdiction or taxing authority within
any state or local or foreign jurisdiction and that are net income taxes, or
are franchise taxes, any gross income or gross receipts taxes imposed in lieu of
a net income tax, taxes based on capital gains and minimum taxes and any and all
withholding Taxes (which, for the avoidance of doubt, are dealt with in Section
10.3.5 hereof) of such Person; provided that such Taxes shall not be excluded
--------
under this clause (ii) to the extent such Taxes would have been imposed had the
location, possession or use of any Equipment in, the location or the operation
of Lessee, Lessor or Guarantor in, or Lessor's, Lessee's or Guarantor's making
payments under the Operative Documents from, the jurisdiction imposing such
Taxes been the sole connection between such Tax Indemnitee and the jurisdiction
imposing such Taxes, unless, however, such Tax Indemnitee would have been
subject to tax in such jurisdiction absent the transactions contemplated by the
Operative Documents; provided further, that Lessor is indemnified for all Taxes
----------------
excluded by this subsection (ii); provided further, that this clause (ii) shall
----------------
not be interpreted to prevent a payment from being made on an After-Tax Basis if
such payment is otherwise required to be so made; (iii) provided that all
amounts due from Lessee under the Operative Documents have been paid, any Tax to
the extent it relates to any act, event or omission that occurs after the
termination of the Lease Agreement and, if required, redelivery or sale of an
Item of Equipment in accordance with the terms of the Lease Agreement (but not
any Tax that is otherwise excluded herein or is imposed with respect to such
termination, redelivery or sale or to any period prior to such termination,
redelivery or sale); (iv) any Taxes which are imposed on a Tax Indemnitee as a
result of the gross negligence or willful misconduct of such Tax Indemnitee
itself, as determined by a court of competent jurisdiction (as opposed to gross
negligence or willful misconduct imputed to such Tax Indemnitee), but not Taxes
imposed as a result of ordinary negligence of such Tax Indemnitee; (v) Taxes
imposed on, or increased (under Applicable Law in effect on the date of the
transfer) as a result of a voluntary transfer by the Tax Indemnitee or any
transfer as a result of the bankruptcy of such Tax Indemnitee not caused by a an
Event of Default under Section 23(a) of the Lease Agreement of any Item of
Equipment or interest therein or any interest in or arising under any Operative
Document or any transactions contemplated thereby other than any such transfer
required by law or by the Operative Document, occurring pursuant to the exercise
of remedies during the continuance of a Lease Event of Default or requested by
Lessee; (vi) with respect to Lessor, any Tax that results from or would not have
been imposed but for the breach or inaccuracy of any representation set forth in
Section 2.3 or 2.4 hereof, as the case may be; (vii) any Tax to the extent
resulting in whole or in part from the failure of any Tax Indemnitee to file a
return that is proper and timely unless such failure results from the failure of
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Lessee to perform its obligations under Section 10.3.4 hereof; and (viii) any
Tax that results from or would not have imposed but for the failure of any Tax
Indemnitee, at Lessee's sole cost, to pro-vide any form, certificate or other
document reasonably requested by, prepared by and timely pro-vided to such Tax
Indemnitee by Lessee, legally able to be provided by such Tax Indemnitee and
necessary to avoid the imposition of such Tax provided that such Tax Indemnitee
reasonably deter-mines that to so provide such form, certificate or other
document would have no adverse effect on it.
10.3.3. Payment of Taxes. Subject to the terms of Section
------------------
10.3.6, Lessee agrees to pay or cause to be paid all Taxes indemnified pursuant
to Section 10.3.1 directly to the taxing authorities where feasible and
otherwise to the Tax Indemnitee, as appropriate, and Lessee shall at its own
expense, upon such Tax Indemnitee's reasonable request, furnish to such Tax
Indemnitee copies of official receipts or other reasonably satisfactory evidence
of such payment. In the case of Taxes for which no contest is conducted
pursuant to Section 10.3.6 and which Lessee pays directly to the taxing
authorities, Lessee shall pay such Taxes prior to the latest time permitted by
the relevant taxing authority for timely payment. In the case of Taxes for
which a Lessee reimburses a Tax Indemnitee, Lessee shall do so within thirty
(30) days after receipt by Lessee of demand by such Tax Indemnitee describing in
reasonable detail the nature of the Tax and the basis for the demand (including
without limitation the computation of the amount pay-able), accompanied by
receipts or other reasonable evidence of payment of the Tax in respect of such
demand. In the case of Taxes for which a contest is conducted pursuant to
Section 10.3.6 Lessee agrees to pay such Taxes or reimburse such Tax Indemnitee
for such Taxes, to the extent not previously paid or reimbursed pursuant to
Section 10.3.1, prior to the latest time permitted by the relevant taxing
authority for timely payment after conclusion of all contests hereunder.
At Lessee's written request, the amount of any indemnification
payment by Lessee pursuant to Section 10.3.1 shall be verified and certified by
the independent public accounting firm regularly engaged by such Tax Indemnitee.
The fees and expenses of such independent public accounting firm shall be paid
by Lessee unless such verification shall result in an adjustment in Lessee's
favor of five percent (5%) or more of the payment as computed by the Tax
Indemnitee, in which case such fee shall be paid by the Tax Indemnitee.
10.3.4. Tax Filings. Lessee shall be responsible for
------------
preparing and filing any real and personal property or ad valorem tax returns in
-- -------
respect of the Equipment. In the case of any other report, statement or tax
return that shall be required to be made with respect to any Taxes which are
indemnified by Lessee pursuant to Section 10.3.1, Lessee, at its sole cost and
expense, shall notify the relevant Tax Indemnitee of such requirement and
(except if such Tax Indemnitee notifies Lessee that such Tax Indemnitee intends
to prepare and file such report or return) (i) to the extent required or
permitted by and consistent with filing requirements in the applicable
jurisdiction, make and file in Lessee's name such return, statement or report
and (ii) in the case of any other such return, statement or report required to
be made in the name of such Tax Indemnitee, advise such Tax Indemnitee of such
fact and prepare such return, statement or report for filing by such Tax
Indemnitee or, where such return, statement or report shall be required to
reflect items in addition to any obligations of Lessee under or arising out of
Section 10.3.1, provide such Tax Indemnitee at Lessee's expense with information
sufficient to permit such return, statement or report to be properly made with
respect to any obligations of Lessee under or arising out of Section 10.3.1.
Such Tax Indemnitee shall, upon Lessee's request and at Lessee's expense,
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provide any data not deemed confidential by such Tax Indemnitee maintained by
such Tax Indemnitee (and not otherwise available to or within the control of
Lessee) with respect to the Equipment which Lessee may reasonably require to
prepare any required Tax returns or reports.
10.3.5. Withholdings. As between Lessee on one hand, and
------------
Lessor, Administrative Agent and Collateral Agent (each a "Withholding Party")
-----------------
on the other hand, Lessee shall be responsible for, and Lessee shall indemnify
and hold harmless each Withholding Party on an After Tax Basis against, any
obligation for United States or foreign withholding taxes or similar levies,
imposts, charges, fees, deductions or withholdings (collectively,
"Withholdings") imposed in respect of any part of the Lease Payments, interest
or other amounts payable by Lessee or Lessor to any Withholding Party, or with
respect to any other payments under the Operative Documents (all such payments
being referred to herein as "Exempt Payments" to be made without deduction,
---------------
withholding or set off) (and, if any With-holding Party receives a demand for
such payment from any taxing authority or a With-holding is otherwise required
with respect to any Exempt Payment, Lessee shall discharge such demand on behalf
of such Withholding Party); provided, however, that the obligation of Lessee
-------- -------
under this Section 10.3.5 shall not apply to any Withholdings that would not
have been imposed but for such Withholding Party's failure to comply with
Section 9.4.
If a Tax Indemnitee or a Withholding Party or any Affiliate with
whom such Tax Indemnitee or a Withholding Party files a consolidated tax return
(or equivalent) subsequently receives the benefit in any country of a tax
credit, deduction or other allowance or reduction resulting from Taxes or Losses
with respect to which it or an Affiliate has received a payment of an indemnity
amount from Lessee under Section 10.1 or 10.3, such Person will pay to Lessee
such part of that benefit as in the sole discretion of such Person will leave it
(after such payment) in a position no more and no less favorable than it would
have been in if no additional payment had been required to be paid, provided
always that (i) such Person will determine in its sole discretion, exercised in
good faith, the amount and allocation of any such benefit and of the date on
which it is received and of any After-Tax Basis calculation required with
respect to payments to or from it, (ii) such Person will have the absolute
discretion as to the order and manner in which it employs or claims tax credits
and allowances available to it and (iii) such Person will not be obliged to
disclose to Lessee any information regarding its tax affairs or tax
computations.
10.3.6. Tax Contests. If a claim is made in writing against
-------------
any Tax Indemnitee for any Taxes which Lessee is required to pay or indemnify
against pursuant to Section 10.3.1, such Tax Indemnitee shall promptly notify
Lessee in writing, provided that, without prejudice to any rights or claims for
damages Lessee may have as a result of such failure, the failure to so notify
Lessee will not reduce Lessee's obligation under Section 10.3 except if such
failure precludes the contest of such claim. Subject to the next sentence, if
requested by Lessee in writing within thirty (30) days after receipt by Lessee
of a notice described in the preceding sentence, such Tax Indemnitee and, if
required or appropriate to prosecute such contest, any other Tax Indemnitee,
shall permit such Lessee, to contest in the name of Lessee, and if such contest
by such Lessee in the name of such Lessee is not permissible or allowed, shall,
at the request of Lessee, permit such Lessee to contest in the name of the Tax
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Indemnitee and, if such contest by Lessee in the name of the Tax Indemnitee is
not permissible or allowed, shall, at the request of Lessee diligently contest
in good faith (including pursuing all administrative and judicial appeals) the
validity, applicability or amount of such Taxes in appropriate administrative or
judicial proceedings; provided that (i) prior to taking such action Lessee shall
--------
have agreed to pay and shall have provided an undertaking reasonably acceptable
to such Tax Indemnitee with respect thereto or shall have paid each Tax
Indemnitee that is engaged in such contest in a satisfactory manner for all
out-of-pocket costs and expenses which such Tax Indemnitee may incur in
connection with contesting such claim, including, without limitation, all
reasonable legal and accountant's fees and disbursements and costs of
administrative and judicial proceedings, and the amount of any interest or
penalties which may be payable as a result of contesting such claim, (ii) if
such contest is to be initiated by the payment of, and the claiming of a refund
for, such Taxes (such election to be within the sole discretion of Lessee),
Lessee shall have advanced such Tax Indemnitee sufficient funds (on an
interest-free basis and on an After-Tax Basis) to make such payment, (iii) any
action to be taken will not result in a material risk of sale, forfeiture or
loss of Lessor's title to, or Lessor's or Collateral Agent's interest in, any
Item of Equipment unless Lessee shall have made provision against such risk in a
manner acceptable to such Tax Indemnitee in its sole discretion, (iv) such Tax
Indemnitee shall not have determined, based on an opinion of such Tax
Indemnitee's counsel, that such action is reasonably likely to result in adverse
consequences to the future tax liability of such Tax Indemnitee not indemnified
to such Tax Indemnitee's satisfaction and (v) Lessee shall have delivered to
such Tax Indemnitee a written acknowledgment of its liability hereunder for such
Taxes, provided that such acknowledgment shall not be binding on such Lessee if
the contest of such Taxes is resolved through a written opinion of an
adjudicator stating a basis for such resolution that demonstrates Lessee has no
liability to such Tax Indemnitee hereunder for such Taxes and provided further,
----------------
that such Lessee shall have no right to contest in the name of a Tax Indemnitee,
and such Tax Indemnitee shall itself contest, if the contest involves issues
with respect to which Lessee would not be required to indemnify such Tax
Indemnitee hereunder and which cannot be severed by reasonable efforts of such
Tax Indemnitee from all issues with respect to which Lessee would be liable
hereunder or the severance of which would adversely affect the position of such
Tax Indemnitee, and in any such contest such Tax Indemnitee may in its sole
discretion select the forum for such contest and determine in good faith the
manner in which such contest shall be conducted, including, without limitation,
the pursuit of appeals, but shall consult with Lessee and its counsel in good
faith with respect to such Lessee's interests with respect to contest. If a
claim for Taxes is made in writing against any Tax Indemnitee and such Tax
Indemnitee complies with its obligations under this Section 10.3.6, Lessee and
such Tax Indemnitee shall, for purposes of determining the amount, if any,
payable to such Tax Indemnitee under Section 10.3, be bound by the results of
any contest under this Section 10.3.6 (or by the final written assessment by the
relevant taxing authority, if Lessee elect not to contest under this Section
10.3.6) as to the amount of Tax due to the relevant taxing jurisdiction, the
validity and applicability of such Tax, and any stated reason as to the basis
for the imposition of such Tax contained in the final determination with respect
to such contest. If any Tax Indemnitee shall determine in its sole discretion
that it has either obtained a refund of or been granted a credit, deduction or
other allowance or reduction against Taxes for which Lessee is not obligated to
indemnify such Tax Indemnitee hereunder for amounts corresponding to all or any
part of any Taxes which Lessee shall have paid to any Tax Indemnitee or for
which Lessee shall have reimbursed any Tax Indemnitee hereunder, such Tax
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Indemnitee shall, provided that no Lease Event of Default shall have occurred
and be continuing, pay to Lessee an amount which is equal to the sum of the
amount of such refund or credit, deduction or other allowance or reduction, plus
any interest received (or credited against Taxes for which Lessee is not
obligated to indemnify such Tax Indemnitee hereunder) on such refund fairly
attributable to any Taxes paid by such Lessee or with funds provided by Lessee
prior to the receipt of such refund, reduced by any Taxes incurred by such Tax
Indemnitee by reason of the receipt or accrual of such refund and interest, and
increased by any tax benefit realized by Tax Indemnitee as a result of any
payment by such Tax Indemnitee made pursuant to this sentence so as to return
such Tax Indemnitee to the same net after-tax position it would have been in if
the Taxes so refunded or credited had not been imposed; provided further, that a
----------------
Tax Indemnitee shall not be obligated to pay any Lessee an amount in excess of
all amounts of Taxes (and additional amounts described in Section 10.3)
previously paid by Lessee pursuant to Section 10.3 to such Tax Indemnitee,
provided further, however, that such Tax Indemnitee shall pay any amounts that
------------ -------
it is not required to pay to Lessee solely by reason of the foregoing proviso at
such time as Lessee shall have made any additional payments to such Indemnitee
pursuant to Section 10.3 hereof equal to such amounts, and if a Lease Event of
Default shall have occurred and be continuing, such Tax Indemnitee shall have
the option of applying the amount otherwise due any Lessee pursuant to this
sentence against Lessee obligations under any Operative Document or of holding
such amount as security for Lessee full performance of such obligations until
the earlier of (x) the date all obligations owed to such Tax Indemnitee under
the Operative Documents have been paid in full and (y) the curing of such Lease
Event of Default, after which such Tax Indemnitee shall pay such amount to
Lessee. Any Tax Indemnitee shall be entitled to settle any claim that is the
subject of a contest hereunder without the consent of Lessee provided that, in
so doing, such Tax Indemnitee shall waive any rights to indemnification by
Lessee with respect to such settled claim and any other claim the contest of
which would be precluded as a result of such settlement hereunder and shall
repay to Lessee any amounts advanced to pay such contested Taxes with interest
actually received in respect thereof and release any undertaking required
hereunder.
10.3.7. Special Tax Indemnity. Lessee shall pay and assume
-----------------------
all liability for, and does hereby agree to indemnify each Tax Indemnitee on an
After Tax Basis for any tax, addition to tax, penalty, or other cost as a result
of the breach, inaccuracy or incorrectness of the representation found in
Section 2.1(j). Notwithstanding anything to the contrary in this Section
10.3.7, Lessee shall not be obligated to indemnify any Tax Indemnitee pursuant
to this Section 10.3.7 in respect of any tax, penalty, or other cost that
results from or would not have occurred but for any failure by such Tax
Indemnitee to provide the information requested by Lessee in accordance with
Section 2.1(j). Any claim under this Section 10.3.7 shall be subject to the
contest provisions of Section 10.3.6 (applied as if such claim were in respect
of a Tax indemnified by Lessee under Section 10.3.1) and the verification
provisions of Section 10.3.3 (applied as if the amount to be paid under this
Section 10.3.7 was a payment required under Section 10.3.1 hereof).
10.4. Increased Costs, Illegality, etc. Lessee hereby assumes
------------------------------------
liability for, and does hereby agree to indemnify, protect, save, defend and
hold harmless Lessor on an After-Tax Basis, from and against any and all amounts
that Lessor is obligated to pay any Tranche B Lender under Section 2.7 of the
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Xxxxxxx X Loan Agreement or any Limited Partner under Section 6.5 of the Limited
Partnership Agreement.
Lessor shall promptly, or Administrative Agent may, give notice (by
telephone promptly confirmed in writing) to Lessee of each claim under this
Section 10.4 which written notice shall show in reasonable detail the basis for
the calculation thereof and shall, absent manifest error, be final and
conclusive and binding on all the parties hereto)Lessee shall pay to Lessor, or
at Administrative Agent's direction, the Person to whom Lessor has obligation to
pay such amount, within fifteen (15) days of the earlier of Lessor's and
Administrative Agent's written request therefor, such amounts owed by Lessor to
such Person.
10.5. Lessee Indemnity. Lessee hereby assumes liability for, and
-----------------
does hereby agree to indemnify, protect, save, defend, and hold harmless Lessor
on an After-Tax Basis from and against any and all Losses and each Tax
Indemnitee against any and all amounts owed by Lessor under the Loan Agreement
to the extent that there is a Lease Payment corresponding to the Loan payment
for which the indemnity is claimed under Section 10.2 hereof.
10.6. Survival. All obligations provided for in this Section 10
--------
shall survive the resignation or removal of Administrative Agent or Collateral
Agent under Section 11.7, the sale of any Item of Equipment, any termination of
the Lease Agreement, the termination of this Agreement, and the payment in full
of the Tranche A Notes, the Tranche B Loans, the Equity Certificates and all
amounts arising under the Lease Agreement, Tranche A Notes, Tranche B Loans and
Limited Partnership Agreement.
11. Administrative Agent and Collateral Agent.
---------------------------------------------
11.1. Authorization and Action of Administrative Agent.
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(a) (i) Indenture Trustee for itself and on behalf of Tranche A
Noteholders and (ii) each Tranche B Lender hereby appoints and authorizes
Administrative Agent to take such action as agent on their behalf and to
exercise such powers under this Agreement and the other Operative Documents as
are delegated to Administrative Agent by the terms hereof and thereof, together
with such powers as are reasonably incidental thereto. Except as otherwise
provided in the Limited Partnership Agreement, Administrative Agent shall act
solely as agents for Indenture Trustee and Tranche B Lenders and does not assume
nor shall be deemed to assume any obligation or relationship of trust or agency
with any of Lessee, Lessor, or Guarantor. As to any matters not expressly
provided for by a Operative Document (including enforcement or collection of the
Tranche A Notes or Tranche B Loans), Administrative Agent shall not be required
nor authorized to exercise any discretion or take any action, but shall be
required to act or to refrain from acting (and shall be fully protected in so
acting or refraining from acting) upon the instructions of (i) Indenture Trustee
acting on behalf of Majority Tranche A Noteholders, and (ii) Majority Tranche B
Lenders, and such instructions shall be binding, in the case of instructions
under clause (i), upon Indenture Trustee and each Tranche A Noteholder and, in
the case of instructions under clause (ii), upon each Tranche B Lender;
provided, however, Administrative Agent shall not be required to take any action
-------- -------
which exposes it to personal liability or which is contrary to any Operative
Document or Applicable Law. Administrative Agent agrees to give to Indenture
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Trustee, and Tranche B Lenders prompt notice of each notice given to it by
Lessor or Lessee pursuant to the terms of this Agreement; provided, however,
-------- -------
Administrative Agent shall not be deemed to have any notice of a Loan Default or
Loan Event of Default unless it has received notice of such from another party
hereto. Administrative Agent may, with the prior consent of Indenture Trustee
acting on behalf of Majority Tranche A Noteholders, or Majority Tranche B
Lenders, as the case may be, agree to any waiver or amendment of the Operative
Documents on behalf of all Tranche A Noteholders, or all Tranche B Lenders, as
the case may be; provided, however, Administrative Agent will not, without the
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prior consent of (i) Indenture Trustee acting on behalf of all Tranche A
Noteholders, and (ii) all Tranche B Lenders, agree to any waiver or amendment
that would (A) postpone the time or times for payment of any amount payable
under this Agreement or the Lease Agreement or (B) reduce any Lease Payment
payable under this Agreement or the Lease Agreement. Administrative Agent will
not, without the prior consent of (i) Indenture Trustee on behalf of all Tranche
A Noteholders and (ii) all Tranche B Lenders, agree to any waiver or amendment
that would, prior to the payment in full of the Secured Obligations, release all
or substantially all of the Lessor Collateral from the Lien created by the
Security Documents, other than in accordance with the terms of the Operative
Documents. Administrative Agent shall pursue the remedies under the Operative
Documents following a Loan Event of Default in good faith and in a commercially
reasonable manner and in accordance with the instructions of Majority Tranche B
Lenders provided, however, Administrative Agent shall be under no obligation to
-------- -------
pursue such remedies unless such Majority Tranche B Lenders have offered to
Administrative Agent security or indemnity satisfactory to it as to the terms,
coverage, duration, amount or otherwise with respect to the costs, expenses and
liabilities that may be incurred by it in compliance with such written
instructions, requests or directions; provided further Administrative Agent
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shall not, without the consent of (i) Indenture Trustee in accordance with the
terms of the Indenture and (ii) Majority Tranche B Lenders (A) approve any plan
of reorganization or liquidation arising out of a Lease Event of Default of the
type described in Section 23(h) of the Lease Agreement, a Tranche A Event of
Default of the type described in Sections 5.01(h) and (i) of the Indenture or a
Tranche B Event of Default of the type described in Section 5.1.4 of the Tranche
B Loan Agreement (B) approve, sell or cause the sale of Equipment in a single
transaction or a series of related transactions of Equipment with value in
excess of $30,000,000 (other than a sale in accordance with the terms of the
Lease Agreement provided no Lease Event of Default has occurred and is
continuing). The appointment and authority of Administrative Agent hereunder
shall terminate upon the indefeasible payment in full of all amounts owed
Indenture Trustee, each Secured Party, Administrative Agent and Collateral Agent
under the Operative Documents.
(b) (i) Indenture Trustee, for itself and on behalf of Tranche A
Noteholders, and (ii) each Tranche B Lender hereby appoints and authorizes
Collateral Agent to take such action as agent on their behalf and to exercise
such powers under this Agreement and the other Operative Documents as are
delegated to Collateral Agent by the terms hereof and thereof, together with
such powers as are reasonably incidental thereto. Collateral Agent shall act
solely as agent for Indenture Trustee and Tranche B Lenders and does not assume
nor shall be deemed to assume any obligation or relationship of trust or agency
with any of Lessee, Lessor, Limited Partners, Lessor General Partner or
Guarantor. As to any matters not expressly provided for by a Operative Document
(including enforcement or collection of the Tranche A Notes or the Tranche B
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Loans), Collateral Agent shall not be required nor authorized to exercise any
discretion or take any action, but shall be required to act or to refrain from
acting (and shall be fully protected in so acting or refraining from acting)
upon the instructions of Administrative Agent acting on behalf of Secured
Parties, and such instructions shall be binding upon Indenture Trustee and all
Secured Parties; provided, however, Collateral Agent shall not be required to
-------- -------
take any action which exposes it to personal liability or which is contrary to
any Operative Document or Applicable Law. Collateral Agent agrees to give to
Indenture Trustee and Tranche B Lenders prompt notice of each notice given to it
by Lessor or Lessee pursuant to the terms of this Agreement; provided, however,
-------- -------
Collateral Agent shall not be deemed to have any notice of a Loan Default or
Loan Event of Default unless it has received notice of such from another party
hereto. Collateral Agent shall pursue the remedies of Secured Parties under the
Operative Documents following a Loan Event of Default in accordance with the
instructions of Administrative Agent; provided, however, Collateral Agent shall
-------- -------
be under no obligation to pursue such remedies unless one or more Tranche B
Lenders have offered to Collateral Agent security or indemnity satisfactory to
it as to the terms, coverage, duration, amount or otherwise with respect to the
costs, expenses and liabilities that may be incurred by it in compliance with
such written instructions, requests or directions. The appointment and authority
of Collateral Agent here-under shall terminate upon the indefeasible payment in
full of all amounts owed Indenture Trustee, each Secured Party, Administrative
Agent and Collateral Agent under the Operative Documents.
(c) Lessor and Tranche B Lenders hereby designate Administrative
Agent, and Administrative Agent hereby agrees, to calculate the interest due on
the Tranche B Loans, the Equity Yield and the Floating Lease Payments on each
Floating Payment Date and give notice of such amounts to Lessee, Lessor, and
each Tranche B Lender at least two (2) Business Days before such Floating
Payment Date.
11.2. Delegation of Duties. Administrative Agent and Collateral
----------------------
Agent may execute any of their duties under these Operative Documents through
agents or attorneys-in-fact and shall be entitled to advice of counsel
concerning all matters pertaining to such duties. Neither Administrative Agent
nor Collateral Agent shall be responsible for the negligence or misconduct of
any agents or attorneys-in-fact selected by it with reasonable care.
11.3. Agent's Reliance, etc. Neither Administrative Agent nor
------------------------
Collateral Agent nor any of their respective directors, officers, agents or
employees shall be liable for any action taken or omitted by it or them under or
in connection with any Operative Document, except for its or their own gross
negligence or willful misconduct. Without limitation of the generality of the
foregoing, each of Administrative Agent and Collateral Agent (i) may consult
with legal counsel (including counsel for Lessee), independent public
accountants and other experts selected by it and shall not be liable for any
action taken or omitted in good faith by it in accordance with the advice of
such counsel, accountants or experts, (ii) makes no warranty or representation
to Indenture Trustee or Secured Parties and shall not be responsible to
Indenture Trustee or Secured Parties for any statements, warranties or
representations made in or in connection with any Operative Document, (iii)
shall not have any duty to ascertain or to inquire as to the performance or
observance of any of the terms, covenants or conditions of any Operative
Document on the part of Lessee or Lessor or to inspect the property (including
the books and records) of Lessee or Lessor, (iv) shall not be responsible to
Indenture Trustee or Secured Parties for the due execution, legality, validity,
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enforceability, genuineness, sufficiency or value of any Operative Document or
any other instrument or document furnished pursuant thereto, and (v) shall incur
no liability under or in respect of any Operative Document by acting upon any
notice, consent, certificate or other instrument or writing (which may be by
fax, telegram, cable or telex) believed by it to be genuine and signed or sent
by the proper party or parties (including, but not limited to any notice,
consent, certification, other instrument or writing from Indenture Trustee
purportedly on behalf of Tranche A Noteholders or from Administrative Agent
purportedly on behalf of any Tranche A Noteholders or from Administrative Agent
purportedly on behalf of any Secured Parties. The permissive right of
Administrative Agent and Collateral Agent to take the actions permitted by this
Agreement shall not be construed as an obligation or duty to do so.
11.4. Administrative Agent, Collateral Agent and Affiliates. With
-----------------------------------------------------
respect to any Tranche B Loans or Equity Contributions made by it, any Tranche A
Note purchased by it or any Equity Certificate held by it, each of
Administrative Agent and Collateral Agent shall have the same rights and powers
under each Operative Document as any other Tranche B Lender or Limited Partner
as the case may be and may exercise the same as though it were not an agent
hereunder. Administrative Agent and Collateral Agent and their respective
Affiliates may accept deposits from, lend money to, act as trustee under
indentures of, and generally engage in any kind of business with, Lessor, Lessee
or Guarantor, any of their Affiliates and any Person who may do business with or
own securities of Lessor, Lessee or Guarantor or any such Affiliate, all as if
Administrative Agent and Collateral Agent were not an agent hereunder and
without any duty to account therefor to any other party hereto.
11.5. Credit Decisions. Each Tranche B Lender acknowledges that
-----------------
it has, independently and without reliance upon Administrative Agent or
Collateral Agent, and based on the financial statements of Lessee and Guarantor
and such other documents and information as it has deemed appropriate, made its
own credit analysis and decision to enter into this Agreement and the other
Operative Documents. Each Tranche B Lender also acknowledges that it will,
independently and without reliance upon Administrative Agent or Collateral
Agent, as the case may be and based on such documents and information as it
shall deem appropriate at the time, continue to make its own credit decisions in
taking or not taking action under the Operative Documents.
11.6. Indemnification. Each Tranche B Lender agrees to indemnify
---------------
Administrative Agent and Collateral Agent, (to the extent not reimbursed by
Lessor or Lessee) ratably according to its pro rata share on the aggregate
outstanding balances of the Tranche B Loans ("Indemnity Pro Rata Share"), from
------------------------
and against any and all liabilities, obligations, losses, dam-ages, penalties,
actions, judgments, suits, costs, expenses or disbursements of any kind or
nature whatsoever which may be imposed on, incurred by or asserted against
Administrative Agent or Collateral Agent in any way relating or arising out of
any Operative Document or any action taken or omitted by Administrative Agent or
Collateral Agent under any Operative Document in their capacities as agents for
such Person; provided that no Tranche B Lender shall be liable to Administrative
Agent or Collateral Agent hereunder for any portion of such liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements resulting from such Administrative Agent's or such
Collateral Agent's gross negligence or willful misconduct. Without limitation of
the foregoing, each Tranche B Lender agrees to reimburse Administrative Agent
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and Collateral Agent ratably according to its Indemnity Pro Rata Share promptly
upon demand for out-of-pocket expenses (including counsel fees) incurred by
Administrative Agent or Collateral Agent in connection with the preparation,
execution, delivery, administration, modification, amendment or enforcement
(whether through negotiations, legal proceedings or otherwise) of, or legal
advice in respect of rights or responsibilities under, Operative Document in
their capacities as agents for such Person, to the extent that Administrative
Agent or Collateral Agent is not reimbursed for such expenses by Lessor or
Lessee. Neither Lessee's nor Lessor's indemnity obligations shall be reduced by
this Section 11.6.
11.7. Successor Administrative Agent and Collateral Agent;
---------------------------------------------------------
Termination of Agency. Administrative Agent and Collateral Agent may resign at
----------------------
any time by giving at least fifteen (15) days written notice thereof to
Indenture Trustee, each Tranche B Lender, Lessor and Lessee, and each of
Administrative Agent and Collateral Agent may be removed at any time with or
without cause by Indenture Trustee acting on behalf of Majority Tranche A
Noteholders together with Majority Tranche B Lenders. Upon any resignation or
removal of Administrative Agent or Collateral Agent, Majority Tranche B Lenders
shall have the right with, provided no Lease Event of Default shall have
occurred and be continuing, the consent of Lessee (such consent not to be
unreasonably withheld or delayed) to appoint a successor Administrative Agent
who shall be reasonably acceptable to Lessee (it being understood and agreed
that any non-defaulting Tranche B Lender is deemed to be acceptable to Lessee)
and not objected to by Indenture Trustee on behalf of Majority Tranche A
Noteholders. If no successor Administrative Agent or Collateral Agent shall
have been so appointed by Majority Tranche B Lenders within thirty (30) days
after any such resignation of removal, the retiring Administrative Agent or
Collateral Agent may, appoint a successor Administrative Agent or Collateral
Agent which shall be a commercial bank organized under the laws of the United
States of America or of any State thereof and having a combined capital and
surplus of at least $100,000,000. Upon the acceptance of any appointment as
Administrative Agent or Collateral Agent hereunder by a successor Administrative
Agent or Collateral Agent, such successor Administrative Agent or Collateral
Agent shall thereupon succeed to and become vested with all the rights, powers,
privileges and duties of the retiring Administrative Agent or Collateral Agent,
and the obligations under each Operative Document. Any Administrative Agent or
Collateral Agent resigning in accordance with this Section 11.7 shall retain the
benefits of Section 11 as to any actions taken or omitted to be taken by it
while it was Administrative Agent or Collateral Agent.
11.8. Registration.
------------
(a) Tranche A Notes. The Tranche A Notes shall be registered in
-----------------
accordance with the terms of the Indenture.
(b) Tranche B Notes. Administrative Agent shall preserve
-----------------
registration books identifying each Tranche B Lender's interest in the Tranche B
Notes and a list of the names and addresses of the holders of the Tranche B
Notes, which register and list shall be available to each Party hereto or their
respective representatives for inspection (the "Register"). Ownership of the
--------
Tranche B Notes shall be proved by the Register. No transfer by any holder of a
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Xxxxxxx X Note or any portion thereof shall be effective unless and until such
transfer is made upon the registration books maintained by Administrative Agent.
Prior to due presentment for registration of transfer of any Tranche B Note,
Administrative Agent, Collateral Agent, Lessee and Lessor shall deem and treat
the Person in whose name any Tranche B Note is registered as the absolute owner
of such Tranche B Note for the purpose of receiving payment of principal of, and
Breakage Costs, if any, and interest on such Tranche B Note and for all other
purposes whatsoever, whether or not such Tranche B Note is overdue, and neither
Administrative Agent, Collateral Agent, Lessor, nor Lessee shall be affected by
any notice to the contrary.
(c) Lease Agreement. Administrative Agent shall preserve
----------------
registration books identifying each Person holding any interest of Lessor in the
Lease Agreement and registering any assignment of such interest effected in
compliance with Section 12.7. Except for the interests of Collateral Agent
pursuant to the Operative Documents, no transfer by Lessor of any holder of
Lessor's interest in the Lease Agreement shall be effective unless and until
such transfer is made upon the registration books maintained by Administrative
Agent.
12. Miscellaneous.
-------------
12.1. Expenses. Lessor agrees to pay, to the extent that it has
--------
Tranche A Premium or Accrued Interest Premium available to it for the payment of
such, within ten (10) Business Days of written notice thereof (or such earlier
time as may be agreed by Lessor or Lessee) (i) the reasonable fees and expenses
(initial and ongoing) of Indenture Trustee for serving as Indenture Trustee to
Tranche A Noteholders, of Lessor General Partner for serving as such and of
Indenture Trustee, Lessor, Lessor General Partner, Bankers Trust Company as a
Tranche B Lender, Deutsche Bank AG, New York Branch as Limited Partner,
Administrative Agent and Collateral Agent (including, without limitation,
reasonable counsel fees and disbursements other than Excluded Expenses) in
connection with the negotiation, preparation, execution and delivery of the
Operative Documents and the issuance of the Tranche A Notes, Tranche B Notes and
Equity Certificates and the consummation of the transactions contemplated
thereby including the expenses of Lessor and Co-Obligor for auditing, legal,
filing fees and related expenses associated with the registration of the Tranche
A Notes, compliance with its obligations under the Indenture and Registration
Rights Agreement and compliance with TIA, the Securities Exchange Act and the
Securities Act and (ii) any fees payable to Arranger or any other Person as
agreed in writing by either Lessor or Lessee in connection with the issuance of
Tranche A Notes or the making of Tranche B Loans. Lessor agrees to pay Lessee
on each Funding Day an inspection and overhaul fee equal to the aggregate amount
of Tranche A Premium and Accrued Interest Premium received by Lessor on such
day, if any, less the amount of any of the expenses and fees paid by Lessor on
such date in accordance with the previous sentence. Lessee agrees to pay all of
the fees and expenses described in clauses (i) and (ii) of the first sentence of
this Section 12.1 (other than the payment of principal or interest on the
Tranche A Notes or Tranche B Loans or other than as a result of a Loan Event of
Default not caused by or arising out of a Lease Event of Default) to the extent
such fees and expenses are not paid by Lessor on the due date therefor. Lessee
agrees to pay the reasonable fees and disbursements of special counsel to each
of Lessor, Lessor General Partner, Indenture Trustee, Administrative Agent and
Collateral Agent (other than Excluded Expenses) in connection with any
amendments, waivers or consents requested by Lessor, Lessee or Guarantor under
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any Operative Document. Upon the occurrence and during the continuance of any
Lease Event of Default, Lessee agrees to pay or reimburse each of Indenture
Trustee, each Tranche A Noteholder, each Tranche B Lender, Lessor, Lessor
General Partner, Administrative Agent and Collateral Agent for reasonable costs
and expenses of counsel and of financial advisors as shall have been selected by
such Person to assist them in connection with such Lease Event of Default.
12.2. Amendments, Consents and Waivers.
-----------------------------------
(a) Except as otherwise expressly provided and subject to the
rights assigned by Lessor to Collateral Agent hereunder, neither this Agreement
nor any other Operative Document (other than the Limited Partnership Agreement)
nor any terms hereof or thereof may be amended, supplemented, waived or modified
without the written agreement and consent of the parties thereto and Lessee,
provided that where the consent of Indenture Trustee, or Tranche B Lenders is
required, such consent (except as provided below) may be given by (x) Indenture
Trustee acting on behalf of Majority Tranche A Noteholders, or (y)
Administrative Agent acting on behalf of Majority Tranche B Lenders, as the case
may be, and any such consent shall be binding in the case of clause (x) on
Indenture Trustee and all Tranche A Noteholders, and in the case of clause (y),
on all Tranche B Lenders, provided further, that no such amendment,
-------- -------
modification, waiver or supplement shall, (i) without the consent of a Tranche A
Noteholder (A), extend the final scheduled maturity of such Tranche A Note, or
reduce the rate or extend the time of payment of interest thereon (except (x) in
connection with the waiver of applicability of any post-default increase in
interest rates and (y) that any amendment or modification that is agreed to by
Indenture Trustee acting on behalf of Majority Tranche A Noteholders directly
affected thereby to the financial definitions in the Operative Documents shall
not constitute a reduction in the rate of interest or fees for purposes of this
clause (A) notwithstanding the fact that such amendment or modification would
otherwise actually result in such a reduction, so long as the primary purpose
(as determined in good faith by Lessee and Administrative Agent) of the
respective amendment or modification was not to decrease the pricing pursuant to
this Agreement and the other Operative Documents), or reduce the principal
amount thereof (except to the extent repaid in cash), (B) release all or
substantially all of Collateral Agent's interest in the Lessor Collateral
(except as expressly provided herein), (C) reduce the percentage specified in
the definition of Majority Tranche A Noteholders or (D) amend this Section 12.2
(other than clauses (ii) through (vi) of this Section 12.2(a)), (ii) without the
consent of a Tranche B Lender (A) extend the final scheduled maturity of its
Tranche B Loan or extend the time of payment of interest thereon (except (x) in
connection with the waiver of applicability of any post-default increase in
interest rates and (y) that any amendment or modification that is agreed to by
Administrative Agent acting on behalf of Majority Tranche B Lenders directly
affected thereby to the financial definitions in the Operative Documents shall
not constitute a reduction in the rate of interest or fees for purposes of this
clause (A), notwithstanding the fact that such amendment or modification would
otherwise actually result in such a reduction, so long as the primary purpose
(as determined in good faith by Lessee and Administrative Agent) of the
respective amendment or modification was not to decrease the pricing pursuant to
this Agreement and the other Operative Documents), or reduce the principal
amount thereof (except to the extent repaid in cash), (B) release all or
substantially all of Collateral Agent's interest in the Lessor Collateral
(except as expressly provided herein), (C) reduce the percentage specified in
the definition of Majority Tranche B Lenders, (D) amend this Section 12.2 (other
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than clauses (i) through (vi) of this Section 12.2(a)) or (E) extend or increase
the amount of its Tranche B Commitment, (iii) without the consent of Indenture
Trustee, amend, modify or waive any provision relating to the rights of
Indenture Trustee, (iv) without the consent of Administrative Agent, amend,
modify or waive any provision relating to the rights or obligations of
Administrative Agent, (v) without the consent of Collateral Agent, amend, modify
or waive any provision relating to the rights or obligations of Collateral Agent
or (vi) without the consent of Lessor General Partner, amend, modify or waive
any provision relating to the rights or obligations of Lessor General Partner or
Lessor.
(b) Notwithstanding anything to the contrary in Section 12(a)
above, (i) subject to clause (i) of Section 12.2(a), Lessee, Lessor and
Indenture Trustee acting on behalf of Majority Tranche A Noteholders may amend,
supplement, modify or waive any of the Lessee covenants set forth in Section 9.2
hereof and with the written consent of Lessor amend, supplement, modify or waive
any of the terms of the Indenture or Tranche A Notes in accordance with the
terms thereof and (ii) subject to clause (ii) of Section 12.2(a), Lessee, Lessor
and Administrative Agent acting on behalf of Majority Tranche B Lenders may
amend, supplement, modify or waive any of the Lessee covenants set forth in
Section 9.3 hereof, any of the terms of the Tranche B Loan Agreement and Tranche
B Notes, any of the terms of Sections 6, 10(b), 11 (except where any such
amendment, supplement, waiver or modification of maintenance obligations would
impair the value of any Item of Equipment in any material respect), 17, 28.3,
29.3 and 29.4 of the Lease Agreement. Administrative Agent agrees to deliver to
Indenture Trustee notice of any amendment of Section 11 of the Lease Agreement
made in accordance with this Section 12.2.(b).
(c) If, in connection with any proposed change, waiver, discharge
or termination to any of the provisions of this Agreement or any other Operative
Document, the consent of all Tranche B Lenders is required and the consent of
Majority Tranche B Lenders (but not all Tranche B Lenders) is obtained, then
Lessee shall have the right to replace each such non-consenting Tranche B Lender
(so long as all non-consenting Tranche B Lenders are so replaced) with one or
more Replacement Tranche B Lenders, pursuant to Section 12.7 so long as at the
time of such replacement, each such Replacement Tranche B Lender consents to the
pro-posed change, waiver, discharge or termination; provided however, no Tranche
B Lender shall be obligated to assign its rights hereunder unless all of its
interest or the interest of any Affiliate thereof in Lessor is assigned in
accordance with the terms of the Limited Partnership Agreement.
12.3. GOVERNING LAW; SUBMISSION TO JURISDICTION; VENUE; WAIVER OF
------------------------------------------------------------
JURY TRIAL.
-----------
(a) THIS AGREEMENT AND THE OTHER OPERATIVE DOCUMENTS AND THE
RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER AND THERE-UNDER SHALL, BE
CONSTRUED IN ACCORDANCE WITH AND BE GOVERNED BY THE LAW OF THE STATE OF NEW
YORK. ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY OTHER
OPERATIVE DOCUMENT MAY BE BROUGHT IN THE COURTS OF THE STATE OF NEW YORK OR OF
THE UNITED STATES FOR THE SOUTHERN DISTRICT OF NEW YORK, AND, BY EXECUTION AND
DELIVERY OF THIS AGREEMENT, EACH OF GUARANTOR AND LESSEE HEREBY IRREVOCABLY
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ACCEPTS FOR ITSELF AND IN RESPECT OF ITS PROPERTY, GENERALLY AND
UNCONDITIONALLY, THE JURISDICTION OF THE AFORESAID COURTS. EACH OF GUARANTOR AND
LESSEE HEREBY IRREVOCABLY DESIGNATES, APPOINTS AND EMPOWERS CT CORPORATION
SYSTEM, WITH OFFICES ON THE DATE HEREOF AT 000 XXXXXX XXXXXX, XXX XXXX, XXX XXXX
000000 AS ITS DESIGNEE, APPOINTEE AND AGENT TO RECEIVE, ACCEPT AND ACKNOWLEDGE
FOR AND ON ITS BEHALF, AND IN RESPECT OF ITS PROPERTY, SERVICE OF ANY AND ALL
LEGAL PROCESS, SUMMONS, NOTICES AND DOCUMENTS WHICH MAY BE SERVED IN ANY SUCH
ACTION OR PROCEEDING. IF FOR ANY REASON SUCH DESIGNEE, APPOINTEE AND AGENT SHALL
CEASE TO BE AVAILABLE TO ACT AS SUCH, EACH OF GUARANTOR AND LESSEE AGREES TO
DESIGNATE A NEW DESIGNEE, APPOINTEE AND AGENT IN NEW YORK CITY ON THE TERMS AND
FOR THE PURPOSES OF THIS PROVISION SATISFACTORY TO THE AGENT UNDER THIS
AGREEMENT. EACH OF THE PARTIES HERETO FURTHER IRREVOCABLY CONSENTS TO THE
SERVICE OF PROCESS OUT OF ANY OF THE AFOREMENTIONED COURTS IN ANY SUCH ACTION OR
PROCEEDING BY THE MAILING OF COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL,
POSTAGE PREPAID, TO SUCH PARTY HERE-UNDER AT ITS ADDRESS SET FORTH OPPOSITE ITS
SIGNATURE BELOW, SUCH SERVICE TO BECOME EFFECTIVE THIRTY (30) DAYS AFTER SUCH
MAILING. NOTHING HEREIN SHALL AFFECT THE RIGHT OF ANY PARTY TO THIS AGREEMENT,
TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL
PROCEEDINGS OR OTHERWISE PROCEED AGAINST ANY OTHER PARTY IN ANY OTHER
JURISDICTION.
(b) EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES ANY
OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY OF
THE AFORESAID ACTIONS OR PROCEEDINGS ARISING OUT OF OR IN CONNECTION WITH THIS
AGREEMENT OR ANY OTHER OPERATIVE DOCUMENT BROUGHT IN THE COURTS REFERRED TO IN
CLAUSE (a) ABOVE AND HEREBY FURTHER IRREVOCABLY WAIVES AND AGREES NOT TO PLEAD
OR CLAIM IN ANY SUCH COURT THAT ANY SUCH ACTION OR PROCEEDING BROUGHT IN ANY
SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.
(c) EACH OF THE PARTIES TO THIS AGREEMENT HEREBY IRREVOCABLY
WAIVES ALL RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM
ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE OTHER OPERATIVE DOCUMENTS OR
THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.
12.4. Notices. All notifications, notices, demands, requests and
-------
other communications herein provided for or made pursuant hereto shall be in
writing (including telegraphic, telex, telecopier or cable communication) and
mailed, telegraphed, telexed, telecopied, cabled or delivered via courier to the
addresses listed below. All such notices and communications shall, when mailed,
telegraphed, telexed, telecopied, or cabled or sent by overnight courier, be
effective when deposited in the mails, delivered to the telegraph company, cable
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company or overnight courier, as the case may be, or sent by telex or
telecopier, except that notices and communications to Administrative Agent,
Lessor and Lessee shall not be effective until received by Administrative Agent,
Lessor or Lessee, as the case may be. A copy of all notices Lessee is required
to deliver under the Operative Documents shall be delivered to Indenture
Trustee, Administrative Agent and Collateral Agent. The initial address of the
parties hereto are as follows:
to Lessee: Universal Compression, Inc.
0000 Xxxxxxxxxx Xxxx
Xxxxxxx, Xxxxx 00000
Attention: Xxxxxxx X. XxxxXxxxxx
Senior Vice President & Chief Financial Officer
Telephone: (000) 000-0000
Telefax: (000) 000-0000
with a copy to
Xxxx X. Xxxxxxx
Senior Vice President & General Counsel
Universal Compression, Inc.
0000 Xxxxxxxxxx Xxxx
Xxxxxxx, Xxxxx 00000
Telephone: (000) 000-0000
Telefax: (000) 000-0000
to Guarantor: Universal Compression Holdings, Inc.
0000 Xxxxxxxxxx Xxxx
Xxxxxxx, Xxxxx 00000
Attention: Xxxxxxx X. XxxxXxxxxx
Senior Vice President & Chief Financial Officer
Telephone: (000) 000-0000
Telefax: (000) 000-0000
with a copy to
Xxxx X. Xxxxxxx
Senior Vice President & General Counsel
Universal Compression, Inc.
0000 Xxxxxxxxxx Xxxx
Xxxxxxx, Xxxxx 00000
Telephone: (000) 000-0000
Telefax: (000) 000-0000
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to Lessor: BRL Universal Equipment Management, Inc.
c/o BRL Universal Equipment Management, Inc.
0000 Xxxxxx Xxxxx Xxxx.
Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attention: Xxxxxxx X. Xxxxxx
President
Telephone: (000) 000-0000
Telefax: (000) 000-0000
with a copy to
Universal Compression, Inc.
0000 Xxxxxxxxxx Xxxx
Xxxxxxx, Xxxxx 00000
Attention: Xxxxxxx X. XxxxXxxxxx
Senior Vice President & Chief Financial Officer
Telephone: (000) 000-0000
Telefax: (000) 000-0000
to Lessor General Partner: BRL Universal Equipment Management, Inc.
0000 Xxxxxx Xxxxx Xxxx., Xxxxxx, Xxxxx 00000
Attention: Xxxxxxx X. Xxxxxx, President
Telephone: (000) 000-0000
Telefax: (000) 000-0000
to Indenture Trustee, on behalf The Bank of New York
of Tranche A Noteholders 000 Xxxxxxx Xxxxxx, Xxxxx 00 Xxxx
Xxx Xxxx, XX 00000
Attention: Corporate Trust Trustee
Administration
Telephone: (000) 000-0000
Telefax: (000) 000-0000
to Tranche B Lenders and See Schedule 2 hereto.
Limited Partners:
Administrative Agent: Bankers Trust Company
000 Xxxxxxx Xxxxxx, M.S. 0000
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx Xxxxxxxxxx
Internal Mail Code: NYC 02-2802
Telephone: (000) 000-0000
Telefax: (000) 000-0000
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With a copy of all notices and documents delivered in accordance with the Lease
Agreement or Sections 3.1 hereof to:
Deutsche Banc Alex. Xxxxx Inc.
00 Xxxx 00xx Xxxxxx, Mail Stop 1411
Xxx Xxxx, XX 00000
Attention: Xxxxxx Xxxxxxxxx, Xx., Director
Global Asset Finance and Leasing
Telephone: (000) 000-0000
Telefax: (000) 000-0000
Collateral Agent: Bankers Trust Company
000 Xxxxxxx Xxxxxx, M.S. 0000
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx Xxxxxxxxxx
Internal Mail Code: NYC 02-2802
Telephone: (000) 000-0000
Telefax: (000) 000-0000
12.5. Interests in the Equipment. The parties hereto intend that
---------------------------
(i) for financial accounting purposes with respect to Lessee, Lessor will be
treated as the owner and the lessor of each Item of Equipment and Lessee will be
treated as the lessee of each Item of Equipment and (ii) for all federal, state
and local income tax purposes, state sales, use and other transaction tax
purposes, (A) the Operative Documents will be treated as a financing
arrangement, (B) Lessor will be deemed a lender making loans to Lessee in an
amount equal to the sum of the aggregate of the outstanding Equity Contributions
and the outstanding principal amount of the Tranche A Notes and Tranche B Loans
and (C) Lessee will be treated as the owner of each Item of Equipment and will
be entitled to all tax benefits ordinarily available to an owner of equipment
like the Equipment for such tax purposes. Lessor shall take no action
inconsistent with the intention of the parties set forth in clause (ii)(C) of
this Section 12.5. Notwithstanding the intentions of the parties expressed
herein, each party hereto acknowledges and agrees that Lessor has not made, and
no other party hereto nor Arranger, any Tranche A Noteholder or Limited Partner
has made, any representations or warranties concerning the tax, accounting or
legal characteristics of the Operative Documents and that such party has
obtained and relied upon and agree that they will obtain and rely upon such tax,
accounting and legal advice from their own accountants and counsel concerning
the Operative Documents as they deems appropriate.
12.6. Descriptive Headings, etc. The descriptive headings used in
--------------------------
this Agreement are for convenience only and shall not be deemed to affect the
meaning or construction of any provision hereof.
12.7. Benefit of Agreement; Assignment. This Agreement shall be
----------------------------------
binding upon and inure to the benefit of the parties hereto and their respective
successors and permitted assigns and in particular any holder from time to time
of any Tranche A Note or Tranche B Note. Subject to the following proviso,
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neither Lessor, Lessee, Indenture Trustee, nor any Tranche B Lender without the
prior written consent of each other party hereto, may assign any or all of its
rights or obligations hereunder or under any other Operative Document to which
it is a party; provided, however,
-------- -------
(i) Lessor General Partner may at any time transfer or assign
any or all of its rights or obligations under the Operative Documents in
accordance with the provisions of Article 9 of the Limited Partnership
Agreement;
(ii) Indenture Trustee may at any time transfer or assign any
or all of its rights or obligations under the Operative Documents in
accordance with the provisions of Section 6.8 or 6.9 of the Indenture;
(iii) Any Tranche B Lender may transfer, assign or grant
participations in its rights in the Operative Documents; provided, however,
-----------------
such Tranche B Lender shall remain a "Tranche B Lender" for all purposes
hereunder and the transferee, assignee or participant, as the case may be,
shall not constitute a "Tranche B Lender" hereunder and, provided further,
-----------------
that no Tranche B Lender shall transfer or grant any participation under
which the participant shall have rights to approve any amendment to or
waiver of this Agreement or any other Operative Document except to the
extent such amendment or waiver would (A) extend the final scheduled
maturity of any Tranche B Loan which such participant is participating, or
reduce the rate or extend the time of payment of interest or fees thereon
(except in connection with a waiver of applicability of any post-default
increase in interest rates) or reduce the principal amount thereof, or
increase the amount of the participant's participation over the amount
thereof then in effect (it being understood that a waiver of any Loan
Default or Loan Event of Default shall not constitute a change in the terms
of such participation, and that an increase in any Tranche B Loan shall be
permitted without the consent of any participant if the participant's
participation is not increased as a result thereof), (B) consent to the
assignment or transfer by Lessor or Lessee of any of its rights and
obligations under the Operative Documents or (C) release all or
substantially all of the Collateral under all of the Security Documents
(except as expressly provided in the Operative Documents) securing the
Tranche B Loans in which such participant is participating. In the case of
any such participation, the participant shall not have any rights under any
Operative Documents (the participant's rights against such Tranche B Lender
in respect of such participation to be those set forth in the agreement
executed by such Tranche B Lender in favor of the participant relating
thereto) and all amounts payable by Lessor and Lessee under the Operative
Documents shall be determined as if such Tranche B Lender had not sold such
participation;
(iv) Notwithstanding the foregoing, any Tranche B Lender (or
any Tranche B Lender together with one or more other Tranche B Lenders) may
(A) assign all or a portion of its rights and obligations under the
Operative Documents to (x) its parent company and/or any affiliate of such
Tranche B Lender which is at least 50% owned by such Tranche B Lender or
its parent company or to one or more Tranche B Lenders or (y) in the case
of any Tranche B Lender that is a fund that invests in loans, any other
fund that invests in loans and is managed or advised by the same investment
advisor of such Tranche B Lender or by an Affiliate of such investment
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advisor or (B) assign all, or if less than all, a portion of outstanding
principal balance equal to at least $5,000,000 in the aggregate for the
assigning Tranche B Lender or assigning Tranche B Lenders of such Tranche B
Loan and related outstanding obligations hereunder or under the Tranche B
Loan Agreement to one or more Eligible Transferees (treating any fund that
invests in loans and any other fund that invests in loans and is managed or
advised by the same investment advisor of such fund or by an Affiliate of
such investment advisor as a single Eligible Transferee), each of which
assignees shall become a party to this Agreement and the Tranche B Loan
Agreement as a Tranche B Lender by execution of an Assignment and
Assumption Agreement, provided that (w) new Tranche B Notes will be issued,
--------
at Lessee's expense, to such new Tranche B Lender and to the assigning
Tranche B Lender upon the request of such Person, such new Tranche B Notes
to be in conformity with the requirements of Section 2.3 of the Tranche B
Loan Agreement, (x) the consent of Administrative Agent, Lessee and Lessor
shall be required in connection with any assignment to an Eligible
Transferee pursuant to clause (B) above (which consents shall not be
unreasonably withheld), provided that the consent of Lessor shall not be
required at any time that a Loan Event of Default has occurred and is
continuing and the consent of Lessee shall not be required at any time that
a Lease Event of Default has occurred and is continuing, (y) Administrative
Agent shall receive for its own account at the time of each such
assignment, from the assigning or assignee Tranche B Lender, the payment
of a non-refundable assignment fee of $3,500 and (z) promptly after such
assignment, Lessor and Lessee shall have received from Administrative Agent
notice of any such assignment, together with the copy of the Assignment and
Assumption Agreement relating thereto. To the extent of any assignment
pursuant to this Section 12.7, the assigning Tranche B Lender shall be
relieved of its obligations hereunder. At the time of each assignment
pursuant to this Section 12.7 to a Person which is not already a Tranche B
Lender hereunder and which is not a U.S. Person (as such term is defined in
Section 7701(a)(30) of the Code) for federal income tax purposes, the
respective assignee Tranche B Lender shall, to the extent legally entitled
to do so, provide to Lessor and Lessee, the forms described in such Section
9.4 of the Participation Agreement. To the extent that an assignment of all
or any portion of a Tranche B Lender's interests would, at the time of such
assignment, result in additional increased costs under Section 2.7 of the
Tranche B Loan Agreement from those that would have been incurred by the
respective assigning Tranche B Lender prior to such assignment, then Lessee
shall not be obligated to pay such incremental additional increased costs
(although Lessee shall be obligated to pay any other increased costs of the
type described above resulting from changes after the date of the
respective assignment);
(v) Each Tranche B Lender shall provide written notice to
Administrative Agent of any assignment or participation by such Tranche B
Lender of any interest it may have under any Operative Document. In the
case of any participations, other than to which Lessee otherwise consents,
the right of any such participant to indemnification or other amounts under
Section 10 shall be limited to amounts which would have been due had no
such participation been granted;
(vi) Notwithstanding any other provision in the Operative
Documents, any Tranche B Lender may at any time create a security interest
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in, or pledge, all or any portion of its rights under and interest in any
of the Operative Documents in favor of any Federal Reserve Bank in
accordance with Regulation A of the Federal Reserve Board or U.S. Treasury
Regulation 31 CFR 203.14, and such Federal Reserve Bank may enforce such
pledge or security interest in any manner permitted under Applicable Law;
and
(vii) Provided no Lease Event of Default has occurred and is
continuing, on any Floating Payment Date after at least thirty (30) days,
but no more than sixty (60) days advance written notice to each party
hereto, Lessee may cause all, but not less than all Tranche B Lenders to
sell with recourse, representation or warranties their rights and interests
in the Tranche B Loans, to any financial institutions selected by Lessee
for an amount equal to (A) the outstanding balance of such Person's Tranche
B Loan plus (B) all interest accrued on such amount plus (C) any Breakage
Costs suffered by such Person, plus (D) any other amount due such person
under the Operative Documents (the "Tranche B Transfer Amount") provided
-------------------------
such financial institution purchases from such Tranche B Lender (or any
Affiliate thereof) any interest it or such Affiliate may have in Lessor for
an amount equal to (A) the outstanding balance of such Person's Equity
Contribution, plus (B) all Equity Yield accrued on such amount plus (C) any
Breakage Costs suffered by such Person (the "Equity Transfer Amount"). Such
---------------------------
sale or sales shall become effective upon delivery of an Assignment and
Assumption Agreement and payment to each Tranche B Lender and, if
applicable, Limited Partner in immediately available funds its respective
Tranche B Transfer Amount or Equity Transfer Amount. Lessor agrees to amend
the Applicable Tranche B Rates as such replacement Tranche B Lenders may
agree.
12.8. Execution and Effectiveness. This Agreement may be executed
---------------------------
(i) in multiple counterparts, each of which shall be regarded as an original and
all of which shall constitute a single instrument and shall become effective on
the Closing Date when each of the parties hereto shall have signed a copy hereof
(whether the same or different copies) and (ii) by facsimile signature and each
such signature shall be treated in all respects as having the same effect as an
original signature.
12.9. Survival. Each of the representations, warranties, terms,
--------
covenants, agreements and conditions contained in this Agreement shall
specifically survive the execution and delivery of this Agreement and the other
Operative Documents, the issuing of the Tranche A Notes and the making of the
Tranche B Loans and Equity Contributions and shall, unless otherwise expressly
provided therein, continue in full force and effect until the Tranche A Notes
and Tranche B Loans, together with interest thereon, the Equity Contributions
together with the Equity Yield and all other sums payable hereunder or
thereunder have been indefeasibly paid in full.
12.10. Severability. The provisions of this Agreement are
------------
severable, and if any section or provision shall be held invalid or
unenforceable in whole or in part in any jurisdiction, then such invalidity or
unenforceability shall affect only such clause or provision, or part thereof, in
such jurisdiction and shall not in any manner affect such clause or provision in
any other jurisdiction, or any other clause or provision of this Agreement in
any jurisdiction.
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12.11. No Broker. Each party hereto hereby represents and
----------
warrants to the other parties that no broker other than Arranger (whose fees
shall be paid solely by Lessee) brought about the transactions contemplated
hereby and each party hereby agrees to indemnify (the "Indemnifying Party") and
------------------
hold each other party harmless from, any and all other liabilities and costs
(including, without limitation, costs of counsel) to any Person claiming
brokerage commissions or finder's fees as a result of any agreement with the
Indemnifying Party.
12.12. Limited Recourse Against Limited Partners and Lessor
----------------------------------------------------------
General Partner. Without impairing any of the other rights, powers, privileges,
---------------
liens or security interests of Indenture Trustee, any Secured Party,
Administrative Agent or Collateral Agent pursuant to Operative Documents, except
for such Limited Partner's or Lessor General Partner's gross negligence, willful
misconduct, misrepresentations or fraud and as expressly provided in this
Agreement or any other Operative Document, and subject to the proviso below,
Indenture Trustee and each Secured Party agrees that as between it and each
Limited Partner or Lessor General Partner, no recourse shall be had with respect
to this Agreement or such other Operative Documents against Limited Partners or
Lessor General Partner, or any officer, director, employee, agent or Affiliate
thereof for amounts owed by Lessor under the Operative Documents; and no Limited
Partner or Lessor General Partner, or any officer, director, employee, agent or
Affiliate thereof shall have any personal liability for any amounts owed by
Lessor under the Operative Documents, notwithstanding any other provision of
this Agreement or the other Operative Documents. The Indenture Trustee Tranche
B Lenders, Administrative Agent and Collateral Agent each agree that the
personal liability of Lessor shall be strictly and absolutely limited to the
Lessor Collateral and no recourse for the payment of any amount due under this
Agreement or any other agreement contemplated hereby, or for any claim based
thereon or otherwise in respect thereof, shall be had against any other assets
of Lessor, of Lessor General Partner or any Limited Partner or any incorporator,
shareholder, partner, officer, director or Affiliate (past, present or future)
or of any successor corporation to Lessor General Partner or any Affiliate of
either, it being understood that the Borrower is a limited partnership formed
for the purpose of the transactions involved in and relating to this Agreement
on the express understanding aforesaid; provided, however, that nothing
-------- -------
contained in this Section 12.12 or elsewhere shall be construed to (i) prevent
recourse to and the enforcement against the Lessor Collateral of all
liabilities, obligations and undertakings contained in the Operative Documents,
(ii) limit, restrict, or impair the right of Indenture Trustee or any Secured
Party to accelerate the maturity of any Trance A Note or Tranche B Loan upon the
occurrence of a Loan Event of Default, (iii) prevent the bringing of an action
or obtaining a judgment against any Limited Partner or Lessor General Partner
for fraud, any breach of any of its representations, warranties or covenants
under any of the Operative Documents, or any negligent mishandling of funds or
any failure to apply any amounts received from any party hereto in accordance
with the terms of the Operative Documents, (iv) prevent the bringing of an
action or obtaining a judgment over Lessor to obtain jurisdiction over the
Lessor Collateral, Lessee or Guarantor; provided that no judgment or any such
action shall seek a deficiency judgment against Lessor or hold Lessor General
Partner, any Limited Partner or any incorporator, shareholder, partner, officer,
director of Lessor General Partner or any Limited Partner personally liable
therefor, or (v) prevent the bringing of an action or obtaining of a judgment to
foreclose the lien of this Agreement or Security Documents or otherwise realize
-82-
upon the Lessor Collateral or the sums due or to become due under the Lease
Agreement or the other Operative Documents to which any such Person is a party.
12.13. Consent and Agreement of Lessee and Guarantor. Lessee and
----------------------------------------------
Guarantor hereby consent to the assignment set forth in Section 7. Lessor and
Collateral Agent hereby instruct, and Lessee and Guarantor agree, that until
further notified by Collateral Agent, Lessee, Guarantor and Lessor shall pay all
amounts payable by Lessee or Guarantor under the Operative Documents other than
Excepted Payments to the account of Collateral Agent or as Collateral Agent may
otherwise designate in a written notice to Lessee, Guarantor and Lessor. If
there is any disagreement between Administrative Agent and Lessor as to whether
any amount is an Excepted Payment, Lessor, Lessee and Guarantor shall abide by
Administrative Agent's determination with respect to such amount.
12.14. Consent to Amendments. By execution and delivery of this
-----------------------
Agreement, each of the parties hereto acknowledges receipt of and consents to
the amendments to the Lease Agreement set forth in the First Amendment to Lease
Agreement of even date herewith between Lessor and Lessee and the amendments to
the Tranche B Loan Agreement set forth in the First Amendment to Tranche B Loan
Agreement of even date herewith among Lessor, Tranche B Lenders, Administrative
Agent and Collateral Agent.
* * *
-83-
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and delivered by their respective duly authorized officers as
of the date first above written.
UNIVERSAL COMPRESSION, INC.,
as Lessee
By /s/ Xxxxxxx X. XxxxXxxxxx
--------------------------------------------
Senior Vice President and
Chief Financial Officer
UNIVERSAL COMPRESSION HOLDINGS, INC.,
as Guarantor
By /s/ Xxxxxxx X. XxxxXxxxxx
--------------------------------------------
Senior Vice President and
Chief Financial Officer
BRL UNIVERSAL EQUIPMENT 2001 A, L.P.,
as Lessor
By BRL Universal Equipment Management, Inc.
Its General Partner
By /s/ Xxxxxxx X. Xxxxxx
--------------------------------------------
President
BRL UNIVERSAL EQUIPMENT MANAGEMENT, INC.
as Lessor General Partner
By /s/ Xxxxxxx X. Xxxxxx
--------------------------------------------
President
THE BANK OF NEW YORK,
not individually but as Indenture Trustee
for Tranche A Noteholders
By /s/ Xxxx X. Xxxxx
--------------------------------------------
Vice President
FIRST UNION NATIONAL BANK,
as Tranche B Lender
[Percentage of Tranche B Notes
immediately prior to Amendment
Date: 7.75887357%]
By /s/ Xxxxx X. Xxxxxxxxx
--------------------------------------------
Vice President
BANK ONE, NA
(Main Office Chicago)
as Tranche B Lender
[Percentage of Tranche B Notes
immediately prior to Amendment
Date: 12.51588931%]
By /s/ Xxxxxx X. Xxxxxxx
--------------------------------------------
Vice President
THE BANK OF NOVA SCOTIA,
as Tranche B Lender
[Percentage of Tranche B Notes
immediately prior to Amendment
Date: 12.51588931%]
By /s/ F.C.H. Xxxxx
--------------------------------------------
Senior Manager, Loan Operations
3
CITADEL HILL 2000 LTD.,
as Tranche B Lender
[Percentage of Tranche B Notes
immediately prior to Amendment
Date: 7.82243082%]
By /s/ Xxxxxxx Xxxxxxxx
--------------------------------------------
Authorized Signatory
NATEXIS BANQUES POPULAIRES,
as Tranche B Lender
[Percentage of Tranche B Notes
immediately prior to Amendment
Date: 12.51588931%]
By
--------------------------------------------
Name
Title
LANDMARK CDO LIMITED,
as Tranche B Lender
[Percentage of Tranche B Notes
immediately prior to Amendment
Date: 12.51588931%]
By: Aladdin Asset Management
LLC, as Manager
By /s/ Xxxxxx Xxxxxxxx
--------------------------------------------
Authorized Signatory
CSAM FUNDING I,
as Tranche B Lender
[Percentage of Tranche B Notes
immediately prior to Amendment
Date: 10.8878459%]
By
--------------------------------------------
Name
Title
4
FIRST DOMINION FUNDING I,
as Tranche B Lender
[Percentage of Tranche B Notes
immediately prior to Amendment
Date: 14.08037548%]
By
--------------------------------------------
Name
Title
FIRST DOMINION FUNDING II,
as Tranche B Lender
[Percentage of Tranche B Notes
immediately prior to Amendment
Date: 9.386916984%]
By
--------------------------------------------
Name
Title
BANKERS TRUST COMPANY,
as Administrative Agent
By /s/ Xxxxx X. Xxxxx
--------------------------------------------
Managing Director
BANKERS TRUST COMPANY,
as Collateral Agent
By /s/ Xxxxx X. Xxxxx
--------------------------------------------
Managing Director
4
APPENDIX A TO
PARTICIPATION
AGREEMENT
UNIVERSAL COMPRESSION, INC.
GAS COMPRESSION EQUIPMENT
FINANCING FACILITY
The definitions stated herein shall equally apply to both the singular
and plural forms of the terms defined. Any agreement defined or referred to
below means such agreement as amended, supplemented or modified from time to
time, and includes all exhibits, supplements and appendices thereto. Unless
otherwise specified, any Person defined or referred to below includes its
successors, permitted transferees and assigns. The word "including," when used
below or in any Operative Document, is deemed to be followed by "without
limitation," whether or not such words appear.
"ABS Operating Lease Facility" means the Operating Lease Facility of
----------------------------
UCC Compression LLC, a wholly owned subsidiary of Lessee, dated the Issue Date,
arranged by First Union Securities, Inc., which provides for funding of up to
$200,000,000.
"Accrued Interest Premium" means with respect to any Tranche A Note,
------------------------
that portion of the proceeds from the issuance of any Tranche A Note received by
Lessor or BRL Universal Equipment Corp. representing interest that would have
accrued on such Tranche A Note had it been issued on the Semi-Annual Payment
Date immediately preceding its date of issuance.
"Acquired Indebtedness" means Indebtedness (including any Operating
---------------------
Lease Facility) of a Person or any of its Subsidiaries existing at the time such
Person becomes a Restricted Subsidiary of Lessee or at the time it merges or
consolidates with Lessee or any of the Lessee's Subsidiaries or assumed in
connection with the acquisition of assets from such Person and in each case not
incurred by such Person in connection with, or in anticipation or contemplation
of, such Person becoming a Restricted Subsidiary of Lessee or such acquisition,
merger or consolidation.
"Acquisition Cost" of each Item of Equipment means the amount set
----------------
forth therefor on the Lease Supplement or Notice of Substitution therefor.
"Administrative Agent" means Bankers Trust Company.
--------------------
"Affiliate" means, as to any Person, any other Person which, directly
---------
or indirectly through one or more intermediaries, is in control of, is
controlled by, or is under common control with, such Person. For purposes of
this definition, "control" of a Person means the possession, directly or
indirectly, of the power, to direct or cause the direction of the management and
policies of such Person, whether through the ownership of voting securities, by
contract or otherwise; and the terms "controlling" and "controlled" have
meanings correlative of the foregoing.
"Affiliate (Tranche B)" of any Person shall mean (i) any Person
---------------------
directly or indirectly controlled by, controlling or under common control with
such first Person, (ii) any director or officer of such first Person or of any
Person referred to in clause (i) above and (iii) if any Person in clause (i)
above is an individual, any member of the immediate family (including parents,
spouse and children) of such individual and any trust whose principal
beneficiary is such individual or one or more members of such immediate family
and any Person who is controlled by any such member or trust. For purposes of
this definition, any Person which owns directly or indirectly 10% or more of the
securities having ordinary voting power for the election of directors or other
governing body of a corporation or 10% or more of the partnership or other
ownership interests of any other Person (other than as a limited partner of such
other Person) will be deemed to control (including, with its correlative
meanings, controlled by and under common control with) such corporation or other
Person.
"After-Tax Basis" means in respect of an amount (the "base amount")
---------------
with respect to a Person, (i) the base amount supplemented by (ii) an additional
payment, if necessary, to such Person such that, after reduction (but not below
zero) for the net amount of all Taxes (taking into account credits, offsets,
deductions or other benefits realized or to be realized by such Person or its
Affiliates in respect of such base amount and such Taxes, calculated assuming
that such credits reduce such taxes, and any deductions or other benefits reduce
income that would otherwise be subject to such tax, at the then-maximum marginal
rate generally applicable to such Person), if any, imposed on such Person
(calculated at the then maximum marginal rates generally applicable to such
Person) in respect of the sum of the base amount and such additional payment
shall be equal to the base amount.
"Alternate Rate" means a variable rate equal to the greater of (i) the
--------------
sum of the Federal Funds Rate from time to time in effect and 0.5% and (ii) the
rate of interest from time to time announced by Deutsche Bank AG, New York
Branch at its principal office in New York, New York from time to time as its
"prime commercial lending rate" (which rate is a reference rate and does not
necessarily represent the lowest or best rate actually charged to any customer,
and Deutsche Bank AG, New York Branch may make commercial loans or other loans
at rates of interest at, above or below such reference rate), with any per diem
determination based on a 365 or 366-day year, as the case may be.
"Amendment Date" means the date of the First Amended and Restated
--------------
Participation Agreement among Lessee, Guarantor, Tranche B Lenders, Indenture
Trustee, Paying Agent, Registrar, Lessor General Partner, Administrative Agent
and Collateral Agent.
"Applicable Equity Rate" for any Floating Payment Period with respect
----------------------
to an Equity Contribution means, subject to Section 6.5 of the Limited
Partnership Agreement, an interest rate per annum equal to (i) the one (1)
month, two (2) month, three (3) month or six (6) month LIBOR Rate or Alternate
Rate at the time in effect in accordance with Section 5.7 of the Limited
Partnership Agreement, plus (ii) the Equity Margin.
"Applicable Law" means, with respect to any Person or Item of
--------------
Equipment, all existing and future laws, rules, guidelines, regulations
(including proposed, temporary and final income tax regulations), statutes,
treaties, codes, ordinances, permits, certificates, orders and
-2-
licenses of and interpretations by any Governmental Entity and judgments,
decrees, injunctions, writs, or orders of any court, arbitrator or other
administrative, judicial, or quasi-judicial tribunal or agency of competent
jurisdiction applicable to such Person of Item of Equipment.
"Applicable Tranche B Rate" for any Floating Payment Period with
-------------------------
respect to a Tranche B Loan, means, subject to Section 2.7 of the Tranche B
Loan Agreement, an interest rate per annum equal to (i) the one (1) month, two
(2) month, three (3) month or six (6) month LIBOR Rate or Alternate Rate at the
time in effect in accordance with Section 2.3.3 of the Tranche B Loan Agreement,
plus (ii) the Tranche B Margin.
"Appraisal" means, with respect to an Item of Equipment, an appraisal
---------
reasonably acceptable to Administrative Agent prepared by the Appraiser at
Lessee's expense conducted by, or in the presence of, the Appraiser and based
upon a physical inspection to the extent reasonably deemed necessary by the
Appraiser, that states the fair market value of such Item as of the date of such
Appraisal and estimates such Item's Residual Value.
"Appraisal Date" has the meaning set forth in Section 14 of the Lease
--------------
Agreement.
"Appraiser" means American Appraisal Associates, Inc., or an
---------
independent expert selected by Lessee and acceptable to the Lessor and
Administrative Agent.
"Arranger" means Deutsche Banc Alex. Xxxxx Inc.
--------
"Asset Acquisition" means (a) an Investment by Lessee or any
-----------------
Restricted Subsidiary of Lessee in any other Person pursuant to which such
Person shall become a Restricted Subsidiary of Lessee or any Restricted
Subsidiary of Lessee, or shall be merged with or into Lessee or any Restricted
Subsidiary of Lessee, or (b) the acquisition by Lessee or any Restricted
Subsidiary of Lessee of the assets of any Person (other than a Restricted
Subsidiary of Lessee) which constitute all or substantially all of the assets of
such Person or comprise any division or line of business of such Person or any
other properties or assets of such Person other than in the ordinary course of
business.
"Asset Backed Securities" means up to $200,000,000 asset backed
-----------------------
securitization facility BRL Universal Compression Funding I, L.P.
"Asset Sale" means any direct or indirect sale, issuance, conveyance,
----------
transfer, lease (other than operating leases entered into with customers in the
ordinary course of business consistent with past practice or sales of equipment
pursuant to purchase options entered into with customers by Lessee or a
Restricted Subsidiary of Lessee in the ordinary course of business consistent
with past practice), assignment or other transfer for value by Lessee or any of
its Restricted Subsidiaries (excluding any Lien granted in accordance with
Section 9.2(f) of the Participation Agreement, but including any Sale and
Leaseback Transaction) to any Person other than Lessee or a Wholly Owned
Restricted Subsidiary of Lessee of (a) any Capital Stock of any Restricted
Subsidiary of Lessee; or (b) any other property or assets of Lessee or any
Restricted Subsidiary of Lessee other than in the ordinary course of business;
provided, however, that Asset Sales shall not include (i) a transaction or
series of related transactions for which Lessee or its
-3-
Restricted Subsidiaries receive aggregate consideration of less than $2,000,000
and (ii) the sale, lease, conveyance, disposition or other transfer of all or
substantially all of the assets of Lessee as permitted under Section 9.2(g) of
the Participation Agreement, (iii) the transfer of assets to the lessor under a
Securitized Operating Lease Facility to cure a default related to an
under-collateralization event thereunder and (iv) any Restricted Payment (other
than, for purpose of calculating the Consolidated Fixed Change Coverage Ratio
only, any non-cash Restricted Payment) permitted under Section 9.2(b) of the
Participation Agreement.
"Assignee" means the Collateral Agent and its successors and permitted
--------
assigns.
"Assignment and Assumption Agreement" for a Tranche B Lender means the
-----------------------------------
Assignment and Assumption Agreement substantially in the form of Exhibit B to
the Tranche B Loan Agreement.
"Bankruptcy Code" means Title 11 of the United States Code entitled
---------------
"Bankruptcy" as now or hereafter in effect or any successor thereto.
"Xxxx of Sale" means, for any Item of Equipment sold by Lessee to
------------
Lessor, in the form of Exhibit A-1 to the Participation Agreement and for any
Item of Equipment sold by a Person other than Lessee to Lessor, a Xxxx of Sale
in the form of Exhibit A-2 to the Participation Agreement, in each case executed
and delivered by the Seller thereof and, where Lessee is not the Seller, by
Lessee.
"Blended Equity Yield Rate" means the weighted average of the
-------------------------
Applicable Equity Rate on all Equity Contributions outstanding at the time of
determination (such weighted average based upon the principal balances of such
Equity Contributions).
"Blended Tranche B Rate" means the weighted average rate of interest
----------------------
on all Tranche B Notes outstanding at the time of determination (such weighted
average based upon the principal balances of such Tranche B Notes).
"Board of Directors" means, as to any Person, the board of directors,
------------------
management committee or other bodies governing the management of such Person or
the general partner of such Person or any duly authorized committee thereof.
"Board Resolution" means, with respect to any Person, a copy of a
----------------
resolution certified by the Secretary or an Assistant Secretary of such Person
to have been duly adopted by the Board of Directors of such Person and to be in
full force and effect on the date of such certification, and delivered to the
Indenture Trustee.
"Borrower" means the Lessor in its capacity as borrower under the
--------
Tranche B Loan Agreement.
"Breakage Costs" means any amount or amounts as shall compensate a
--------------
Tranche B Lender or Limited Partner for any reasonable loss (excluding loss of
profit), expense or liabilities incurred after using good faith and reasonable
efforts to minimize such loss, cost or expense by a Tranche B Lender or Limited
Partner as a result of a prepayment by Lessor of principal, interest,
-4-
Equity Yield or Equity Component pursuant to the terms of the Operative
Documents or as a result of a funding that does not occur on a date specified
therefor in the Funding Notice. The amount of the loss, expense or liabilities
shall be determined by the Person seeking such, and notice thereof shall be
provided to Lessee in the form of a certificate of such Person stating that the
calculations set forth therein are in accordance with the terms of the
Participation Agreement and setting forth in reason-able detail the basis for
such calculations, such certificate being conclusive and binding for all
purposes absent manifest error.
"Business Day" means any day other than a day on which banking
------------
institutions in the State of New York are authorized by law to close.
"Capital Lease" means a lease of (or other arrangement conveying the
-------------
right to use) real and/or personal Property, or a combination thereof, with
respect to which the lessee is required concurrently to recognize the
acquisition of an asset and the incurrence of a Debt in accordance with GAAP.
"Capital Lease Obligations" means as to any Person, all obligations of
-------------------------
such Person as lessee under any Capital Lease, which obligations are required to
be classified and accounted for as capital leases on a balance sheet of such
Person under GAAP, and the amount of such obligations shall be the capitalized
amount thereof determined in accordance with GAAP.
"Capital Stock" means (i) with respect to any Person that is a
-------------
corporation, any and all shares, interests, participations or other equivalents
(however designated and whether or not voting) of corporate stock, including
each class of Common Stock and Preferred Stock of such Person and (ii) with
respect to any Person that is not a corporation, any and all partnership or
other equity interests of such Person.
"Capitalized Lease" means a lease that is required to be classified
-----------------
and accounted for as a capitalized lease under GAAP.
"Capitalized Lease Obligation" means, as to any Person, the
----------------------------
obligations of such Person under a Capitalized Lease and, for purposes of this
definition, the amount of such obligations at any date shall be the capitalized
amount of such obligations at such date, determined in accordance with GAAP.
"Cash Equivalents" means (i) marketable direct obligations issued by,
----------------
or unconditionally guaranteed by, the United States Government or issued by any
agency thereof and backed by the full faith and credit of the United States, in
each case maturing within one year from the date of acquisition thereof; (ii)
marketable direct obligations issued by any state of the United States of
America or any political subdivision of any such state or any public
instrumentality thereof maturing within one year from the date of acquisition
thereof and, at the time of acquisition, having one of the two highest ratings
obtainable from either S&P or Xxxxx'x; (iii) commercial paper maturing no more
than one year from the date of creation thereof and, at the time of acquisition,
having a rating of at least A-1 from S&P or at least P-1 from Xxxxx'x; (iv)
certificates of deposit or bankers' acceptances maturing within one year from
the date of acquisition thereof issued by any bank organized under the laws of
the United States
-5-
of America or any state thereof or the District of Columbia or any U.S. branch
of a foreign bank having at the date of acquisition thereof combined capital and
surplus of not less than $250,000,000; (v) repurchase obligations with a term of
not more than seven days for underlying securities of the types described in
clause (i) above entered into with any bank meeting the qualifications specified
in clause (iv) above; (vi) investments in money market funds which invest
substantially all their assets in securities of the types described in clauses
(i) through (v) above; and (vii) investments made by Foreign Restricted
Subsidiaries in local currencies in instruments issued by or with entities of
such jurisdiction having correlative attributes to the foregoing.
"Change of Control" means the occurrence of one or more of the
-----------------
following events: (i) any sale, lease, exchange or other transfer (in one
transaction or a series of related transactions, but other than by the granting
of a Lien in accordance with the Participation Agreement or by way of
consolidation or merger in accordance with the Participation Agreement) of all
or substantially all of the assets of Lessee and its Subsidiaries, or Guarantor
and its Subsidiaries, in each case taken as a whole, to any Person or group (as
defined in Section 13(d)(3) of the Exchange Act) (whether or not otherwise in
compliance with the provisions of the Participation Agreement) other than to the
Permitted Holders; (ii) the approval by the holders of Capital Stock of
Guarantor or Lessee of any plan or proposal for the liquidation or dissolution
of Guarantor or Lessee (whether or not otherwise in compliance with the
provisions of the Participation Agreement); (iii) any Person or group within the
meaning of Section 13(d) of the Exchange Act (other than the Permitted Holders
and Guarantor) shall become the beneficial owner as defined in Rule 13d-3 under
the Exchange Act, of shares representing more than 50% of the aggregate voting
power represented by the Capital Stock of Guarantor or Lessee; or (iv) the
replacement of the majority of the Board of Directors of Guarantor or Lessee
over a two-year period from the directors who constituted the Board of Directors
of Guarantor or Lessee, as the case may be, at the beginning of such period, and
such replacement shall not have been approved by a vote of at least a majority
of the Board of Directors of Guarantor or Lessee, as the case may be, then still
in office who either were members of such Board of Directors at the beginning of
such period or whose election as a member of such Board of Directors was
previously so approved.
"CHP" means Xxxxxx Xxxxxx Partners III, L.P., a private investment
---
fund managed by Xxxxxx Xxxxxx, Inc., a Delaware corporation.
"Closing Date" means February 9, 2001.
------------
"Code" means the Internal Revenue Code of 1986, as the same may be
----
amended from time to time, and the regulations promulgated and rulings issued
thereunder. Section references to the Code are to the Code, as in effect at the
date the Participation Agreement and any subsequent provisions of the Code,
amendment thereof, supplement thereto or substituted therefor.
"Collateral" means the Lessee Collateral and Lessor Collateral.
----------
"Collateral Agent" means Bankers Trust Company.
----------------
-6-
"Collateral Agent Lien" means any Lien over the Lessor Collateral
---------------------
granted to Collateral Agent under the Operative Documents.
"Commitment Period" means, from time to time, the period commencing on
-----------------
the date of any Participation Agreement Supplement and ending on the Commitment
Termination Date set forth on such Participation Agreement Supplement.
"Commitment Termination Date" means for Lessor and each Tranche B
---------------------------
Lender, from time to time, the later of the Closing Date and the date identified
as such on the most recent Participation Agreement Supplement to which such
Person is a party.
"Common Stock" of any Person means any and all shares, interests or
------------
other participations in, and other equivalents (however designated and whether
voting or non-voting) of such Person's common stock, whether outstanding on the
Issue Date or issued after the Issue Date, and includes, without limitation, all
series and classes of such common stock.
"Consolidated Current Assets" shall mean all assets of Lessee and its
---------------------------
Consolidated Subsidiaries which under GAAP would be classified as current
assets.
"Consolidated Current Liabilities" shall mean all liabilities of
--------------------------------
Lessee and its Consolidated Subsidiaries which under GAAP would be classified as
current liabilities but excluding the current maturities on long-term Debt.
"Consolidated EBITDA" means, with respect to any Person, for any
-------------------
period, the sum (without duplication) of (i) Consolidated Net Income and (ii) to
the extent Consolidated Net Income has been reduced thereby, (A) all income
taxes of such Person and its Restricted Subsidiaries paid or accrued in
accordance with GAAP for such period (other than income taxes attributable to
extraordinary or nonrecurring gains or losses or taxes attributable to sales or
dispositions outside the ordinary course of business), (B) Consolidated Interest
Expense, (C) Consolidated Rental Expense, (D) Consolidated Non-cash Charges less
any non-cash items increasing Consolidated Net Income for such period, all as
determined on a consolidated basis for such Person and its Restricted
Subsidiaries in accordance with GAAP and (E) any expense of Lessee or its
Restricted Subsidiaries incurred in connection with the overhaul of equipment
that can be reclassified as a capital expenditure in accordance with GAAP.
"Consolidated Fixed Charge Coverage Ratio" means, with respect to any
----------------------------------------
Person, the ratio of Consolidated EBITDA of such Person during the four full
fiscal quarters (the "Four Quarter Period") ending on or prior to the date of
the transaction giving rise to the need to calculate the Consolidated Fixed
Charge Coverage Ratio (the "Transaction Date") to Consolidated Fixed Charges of
such Person for the Four Quarter Period. In addition to and without limitation
of the foregoing, for purposes of this definition, "Consolidated EBITDA" and
"Consolidated Fixed Charges" shall be calculated after giving effect on a pro
forma basis for the period of such calculation to (i) the incurrence or
repayment of any Indebtedness of such Person or any of its Restricted
Subsidiaries (and the application of the proceeds thereof) giving rise to the
need to make such calculation and any incurrence or repayment of other
Indebtedness (and the application of the proceeds thereof), other than the
incurrence or repayment of Indebtedness
-7-
in the ordinary course of business for working capital purposes pursuant to
working capital facilities, occurring during the Four Quarter Period or at any
time subsequent to the last day of the Four Quarter Period and on or prior to
the Transaction Date, as if such incurrence or repayment, as the case may be
(and the application of the proceeds thereof), occurred on the first day of the
Four Quarter Period and (ii) any Asset Sales or Asset Acquisitions (including,
without limitation, any Asset Acquisition giving rise to the need to make such
calculation as a result of such Person or one of its Restricted Subsidiaries
(including any Person who becomes a Restricted Subsidiary as a result of the
Asset Acquisition) incurring, assuming or otherwise being liable for Acquired
Indebtedness and also including any Consolidated EBITDA (including any pro forma
expense and cost reductions calculated on a basis consistent with Regulation S-X
under the Securities Act) attributable to the assets which are the subject of
the Asset Acquisition or Asset Sale during the Four Quarter Period) occurring
during the Four Quarter Period or at any time subsequent to the last day of the
Four Quarter Period and on or prior to the Transaction Date, as if such Asset
Sale or Asset Acquisition (including the incurrence, assumption or liability for
any such Acquired Indebtedness) occurred on the first day of the Four Quarter
Period. Furthermore, in calculating "Consolidated Fixed Charges" for purposes
of determining the denominator (but not the numerator) of this "Consolidated
Fixed Charge Coverage Ratio," (1) interest on outstanding Indebtedness
determined on a fluctuating basis as of the Transaction Date and which will
continue to be so determined thereafter shall be deemed to have accrued at a
fixed rate per annum equal to the rate of interest on such Indebtedness in
effect on the Transaction Date; and (2) notwithstanding clause (1) above,
interest on Indebtedness determined on a fluctuating basis, to the extent such
interest is covered by agreements relating to Interest Swap Obligations, shall
be deemed to accrue at the rate per annum resulting after giving effect to the
operation of such agreements.
"Consolidated Fixed Charges" means, with respect to any Person for any
--------------------------
period, the sum, without duplication, of (i) Consolidated Interest Expense and
(ii) Consolidated Rental Expense, plus (iii) the product of (x) the amount of
all dividend payments on any series of Preferred Stock of such Person (other
than dividends paid in Qualified Capital Stock) paid, accrued or scheduled to be
paid or accrued during such period times (y) a fraction, the numerator of which
is one and the denominator of which is one minus the then current effective
consolidated federal, state and local tax rate of such Person, expressed as a
decimal.
"Consolidated Interest Expense" means, with respect to any Person for
-----------------------------
any period, the sum of, without duplication: (i) the aggregate of the interest
expense of such Person and its Restricted Subsidiaries for such period
determined on a consolidated basis in accordance with GAAP, including without
limitation, (a) any amortization of debt discount and amortization of deferred
financing costs, (b) the net costs under Interest Swap Obligations and Currency
Agreements, (c) all capitalized interest and (d) the interest portion of any
deferred payment obligation; (ii) the interest component of Capitalized Lease
Obligations paid, accrued and/or scheduled to be paid or accrued by such Person
and its Restricted Subsidiaries during such period as determined on a
consolidated basis in accordance with GAAP; and (iii) fees and charges related
to letters of credit, bankers acceptances and similar transactions; excluding,
however, (1) any amount of such interest expense of any Restricted Subsidiary if
the net income of such Restricted Subsidiary is excluded in the calculation of
Consolidated Net Income pursuant to clause (d) of the definition thereof (but
only in the same proportion as the net income of such
-8-
Restricted Subsidiary is excluded from the calculation of Consolidated Net
Income pursuant to clause (d) of the definition thereof) and (2) any non-cash
amortization or write-off of fees and expenses incurred in connection with
financing arrangements for the Merger.
"Consolidated Net Income" means, with respect to any Person, for any
-----------------------
period, the aggregate net income (or loss) of such Person and its Restricted
Subsidiaries for such period on a consolidated basis, determined in accordance
with GAAP; provided that there shall be excluded therefrom (without duplication)
(a) after-tax gains or losses from Asset Sales, (b) after-tax items classified
as extraordinary or nonrecurring gains or losses, (c) the net income or loss of
any Person acquired in a "pooling of interests" transaction accrued prior to the
date it becomes a Restricted Subsidiary of the referent Person or is merged or
consolidated with the referent Person or any Restricted Subsidiary of the
referent Person, (d) the net income (but not loss) of any Restricted Subsidiary
of the referent Person to the extent that the declaration of dividends or
similar distributions by that Restricted Subsidiary of that income is restricted
by a contract, operation of law or otherwise, except for any dividends or
distributions actually paid by such Restricted Subsidiary to the referent
Person, (e) the net income but not loss of any Person, other than a Restricted
Subsidiary of the referent Person, except to the extent of cash dividends or
distributions paid to the referent Person or to a Wholly Owned Restricted
Subsidiary of the referent Person by such Person, (f) income or loss
attributable to discontinued operations (including, without limitation,
operations disposed of during such period whether or not such operations were
classified as discontinued) and (g) the cumulative effect of a change in
accounting principles.
"Consolidated Net Income (Tranche B)" means with respect to Lessee and
-----------------------------------
its Consolidated Subsidiaries, for any period, the aggregate of the net income
(or loss) of Lessee and its Consolidated Subsidiaries after allowances for taxes
for such period, determined on a consolidated basis in accordance with GAAP;
provided that there shall be excluded from such net income (to the extent
--------
otherwise included therein) the following: (i) the net income of any Person in
which Lessee or any Consolidated Subsidiary has an interest (which interest does
not cause the net income of such other Person to be consolidated with the net
income of Lessee and its Consolidated Subsidiaries in accordance with GAAP),
except to the extent of the amount of dividends or distributions actually paid
in such period by such other Person to Lessee or to a Consolidated Subsidiary,
as the case may be; (ii) the net income (but not loss) of any Consolidated
Subsidiary to the extent that the declaration or payment of dividends or similar
distributions or transfers or loans by that Consolidated Subsidiary is not at
the time permitted by operation of the terms of its charter or any agreement,
instrument or Governmental Requirement applicable to such Consolidated
Subsidiary, or is otherwise restricted or prohibited in each case determined in
accordance with GAAP; (iii) the net income (or loss) of any Person acquired in a
pooling-of-interests transaction for any period prior to the date of such
transaction; (iv) any extraordinary gains or losses, including gains or losses
attributable to Property sales not in the ordinary course of business; and (v)
the cumulative effect of a change in accounting principles and any gains or
losses attributable to writeups or write downs of assets.
"Consolidated Net Worth" of any Person means the consolidated
----------------------
stockholders' equity of such Person, determined on a consolidated basis in
accordance with GAAP, less (without duplication) amounts attributable to
Disqualified Capital Stock of such Person.
-9-
"Consolidated Non-Cash Charges" means, with respect to any Person, for
-----------------------------
any period, the aggregate depreciation, amortization and other non-cash expenses
of such Person and its Restricted Subsidiaries reducing Consolidated Net Income
of such Person and its Restricted Subsidiaries for such period, determined on a
consolidated basis in accordance with GAAP (excluding any such charges which
require an accrual of or a reserve for cash charges for any future period).
"Consolidated Rental Expense" means, with respect to any Person, for
---------------------------
any period, the aggregate of the rental expense of such Person and its
Restricted Subsidiaries related to operating lease facilities of such Person and
its Restricted Subsidiaries for such period, determined on a consolidated basis.
"Consolidated Subsidiaries" means each Subsidiary of Lessee (whether
-------------------------
now or hereafter created or acquired) the financial statements of which shall be
(or should have been) consolidated with the financial statements of Lessee in
accordance with GAAP.
"Consolidated Total Assets" of any Person means such Person's total
-------------------------
consolidated assets calculated in accordance with GAAP.
"Contingent Obligation" means, as to any Person, any obligation of
---------------------
such Person guaranteeing or intended to guarantee any Indebtedness, leases,
dividends or other obligations ("primary obligations") of any other Person (the
"primary obligor") in any manner, whether directly or indirectly, including,
without limitation, any obligation of such Person, whether or not contingent,
(a) to purchase any such primary obligation or any property constituting direct
or indirect security therefor, (b) to advance or supply funds (i) for the
purchase or payment of any such primary obligation or (ii) to maintain working
capital or equity capital of the primary obligor or otherwise to maintain the
net worth or solvency of the primary obligor, (c) to purchase property,
securities or services primarily for the purpose of assuring the owner of any
such primary obligation of the ability of the primary obligor to make payment of
such primary obligation or (d) otherwise to assure or hold harmless the holder
of such primary obligation against loss in respect thereof; provided, however,
-------- -------
that the term Contingent Obligation shall not include endorsements of
instruments for deposit or collection in the ordinary course of business. The
amount of any Contingent Obligation shall be deemed to be an amount equal to the
stated or determinable amount of the primary obligation in respect of which such
Contingent Obligation is made or, if not stated or determinable, the maximum
reasonably anticipated liability in respect thereof (assuming such Person is
required to perform thereunder) as determined by such Person in good faith.
"Continuing Directors" means the directors of Guarantor on the Closing
--------------------
Date (after giving effect to the Merger) and each other director of Guarantor if
such other director's nomination or election to the Board of Directors of
Guarantor is recommended by a majority of the then Continuing Directors.
"Co-Obligor" means BRL Universal Equipment Corp.
----------
-10-
"Credit Agreement" means one or more credit agreements, including
----------------
without limitation, the Credit Agreement dated as of the Issue Date, among
Lessee, the lenders party thereto in their capacities as lenders thereunder and,
First Union National Bank, as agent, and any Foreign Credit Facility together
with the documents related thereto (including, without limitation, any guarantee
agreements and security documents), in each case as such agreements may be
amended (including any amendment and restatement thereof), supplemented or
otherwise modified from time to time, including any agreement extending the
maturity of, refinancing, replacing or otherwise restructuring (including
increasing the amount of available borrowings thereunder or adding Restricted
Subsidiaries of Lessee as additional borrowers or guarantors thereunder) all or
any portion of the Indebtedness under such agreement or any successor or
replacement agreement and whether by the same or any other agent, lender or
group of lenders.
"Curing Party" has the meaning set forth in Section 6.1(a) of the
------------
Participation Agreement.
"Currency Agreement" means any foreign exchange contract, currency
------------------
swap agreement or other similar agreement or arrangement designed to protect
Lessee or any Restricted Subsidiary of Lessee against fluctuations in currency
values.
"Date of Manufacture" with respect to any Item of Equipment, means the
-------------------
date the manufacturer or vendor thereof sold as new the oldest of the (i)
compressor, (ii) natural gas driver and (iii) air cooler installed on such Item
of Equipment.
"Date of Overhaul" with respect to any Item of Equipment, means the
----------------
date Lessee or its designee completes a complete overhaul of such Item of
Equipment.
"Debt" shall mean, for any Person the sum of the following (without
----
duplication): (i) all obligations of such Person for borrowed money or evidenced
by bonds, debentures, notes or other similar instruments (including principal,
interest, fees and charges); (ii) all obligations of such Person (whether
contingent or otherwise) in respect of bankers' acceptances, letters of credit,
surety or other bonds and similar instruments; (iii) all obligations of such
Person to pay the deferred purchase price of Property or services (other than
for borrowed money); (iv) all Capital Lease Obligations in respect of which such
Person is liable (whether contingent or otherwise); (v) all Operating Equipment
Lease Obligations which require such Person or its Affiliate (Tranche B) to make
payments over the term of such lease; (vi) all Debt (as described in the other
clauses of this definition) and other obligations of others secured by a Lien on
any asset of such Person, whether or not such Debt is assumed by such Person;
(vii) all Debt (as described in the other clauses of this definition) and other
obligations of others guaranteed by such Person or in which such Person
otherwise assures a creditor against loss of the debtor or obligations of
others; (viii) all obligations or undertakings of such Person to maintain or
cause to be maintained the financial position or covenants of others or to
purchase the Debt or Property of others; (ix) obligations to deliver goods or
services in consideration of advance payments; (x) obligations to pay for goods
or services whether or not such goods or services are actually received or
utilized by such Person; (xi) any capital stock of such Person in which such
Person has a mandatory obligation to redeem such stock; (xii) any Debt of a
Special Entity for which such Person is liable
-11-
either by agreement or because of a Governmental Requirement; and (xiv) all net
obligations of such Person under Hedging Agreements.
"Deficiency" has the meaning set forth in Section 29.1 of the Lease
----------
Agreement.
"Disqualified Capital Stock" means that portion of any Person's
--------------------------
Capital Stock which, by its terms (or by the terms of any security into which it
is convertible or for which it is exchangeable), or upon the happening of any
event, matures or is mandatorily redeemable, pursuant to a sinking fund
obligation or otherwise, or is redeemable at the sole option of the holder
thereof on or prior to the final maturity date of the Tranche A Notes, provided
that any Capital Stock that would not constitute Disqualified Capital Stock but
for provisions thereof giving holders thereof the right to require such Person
to repurchase or redeem such Capital Stock upon the occurrence of an "asset
sale" or "change of control" occurring prior to the stated maturity of the
Tranche A Notes shall not constitute Disqualified Capital Stock if the "asset
sale" or "change of control" provisions applicable to such Capital Stock are no
more favorable to the holders of such Capital Stock than the provisions
contained Section 9.2(c) and 9.2(i) of the Participation Agreement and such
Capital Stock specifically provides that such Person will not repurchase or
redeem any such stock pursuant to such provision prior to Lessor's repurchase of
Equipment from Lessee as required to be repurchased pursuant to such covenants.
"Dollar" means freely transferable, lawful money of the United States.
------
"Domestic Subsidiary" means each Subsidiary of Lessee which is not a
--------------------
Foreign Subsidiary.
"Early Purchase Option" means the Lessee's purchase rights under
-----------------------
Section 28.4.1 and 28.4.2 of the Lease Agreement.
"EBITDAR" shall mean, for any period, the sum of Consolidated Net
-------
Income (Tranche B) for such period plus the following expenses or charges to the
extent deducted from Consolidated Net Income (Tranche B) in such period: Total
Interest Expense, taxes, depreciation, amortization and rental expense excluding
non-recurring charges. EBITDAR will be:
(a) adjusted on a pro forma basis (reasonably acceptable to
Administrative Agent) for future acquisitions and divestitures including
projected synergies;
(b) calculated utilizing annualized results for the period from
and including the Closing Date up to but excluding the applicable quarterly
determination date; and
(c) from and after April 1, 2002, and at all times thereafter,
calculated on a rolling four-quarter basis.
"Eligible Transferee" means and includes a commercial bank, financial
-------------------
institution or other "accredited investor" (as defined in Regulation D of the
Securities Act) other than any such Person that is directly involved in a
Permitted Business.
-12-
"Environmental Claims" means any and all administrative, regulatory or
--------------------
judicial actions, suits, demands, demand letters, directives, claims, liens,
notices of noncompliance or violation, investigations or proceedings relating in
any way to any Environmental Law or any permit issued, or any approval given,
under any such Environmental Law (hereafter, "Claims"), including, without
------
limitation, (i) any and all Claims by governmental or regulatory authorities for
enforcement, cleanup, removal, response, remedial or other actions or damages
pursuant to any applicable Environmental Law, and (ii) any and all Claims by any
third party seeking damages, contribution, indemnification, cost recovery,
compensation or injunctive relief in connection with alleged injury or threat of
injury to health, safety or the environment due to the presence of Hazardous
Materials.
"Environmental Law" means any Federal, state, foreign or local
-----------------
statute, law, rule, regulation, ordinance, code, guideline, written policy and
rule of common law now or here-after in effect and in each case as amended, and
any judicial or administrative interpretation thereof, including any judicial or
administrative order, consent decree or judgment, relating to the environment,
employee health and safety or Hazardous Materials, including, without
limitation, CERCLA; RCRA; the Federal Water Pollution Control Act, 33 U.S.C.
Sec. 1251 et seq.; the Toxic Substances Control Act, 15 U.S.C. Sec. 2601 et
-- ---- --
seq.; the Clean Air Act, 42 U.S.C. Sec. 7401 et seq.; the Safe Drinking Water
-- ---
Act, 42 U.S.C. Sec. 3803 et seq.; the Oil Pollution Act of 1990, 33 U.S.C. Sec.
-- ----
2701 et seq.; the Emergency Planning and the Community Right-to-Know Act of
-- ----
1986, 42 U.S.C. Sec. 11001 et seq.; the Hazardous Material Transportation Act,
-- ----
49 U.S.C. Sec. 1801 et seq.; the Occupational Safety and Health Act, 29 U.S.C.
-- ----
Sec. 651 et seq.; and any state and local or foreign counterparts or
-- ----
equivalents, in each case as amended from time to time.
"Equipment" means the equipment described on the Schedules of
---------
Equipment attached to the Lease Supplements and all related appliances, parts,
accessories, appurtenances, accessions, additions, improvements, replacements
and other equipment or components of any nature from time to time incorporated
or installed therein.
"Equity Administrative Agent" means Deutsche Bank AG, New York Branch.
---------------------------
"Equity Certificate" has the meaning set forth in Section 17.1.3 of
------------------
the Limited Partnership Agreement.
"Equity Commitment" means for each Limited Partner the Dollar amount
-----------------
as of the most recent date set forth in Exhibit B to the Limited Partnership
Agreement below the term "Equity Commitment".
"Equity Component" for each Item of Equipment, means the dollar amount
----------------
of the Acquisition Cost financed by Limited Partners on the Funding Date
therefor, which amount shall be equal to 3.06352459% of such Acquisition Cost.
"Equity Contribution" means the equity contribution made by each
-------------------
Equity Participant to Lessor on any Funding Date, the aggregate of such
contributions to be equal to 3.06352459% of such Acquisition Cost of all Items
of Equipment purchased by Lessor on such Funding Date.
-13-
"Equity Margin" means 5.25% (525 basis points).
-------------
"Equity Offering" means an underwritten public offering or private
---------------
placement of Qualified Capital Stock of Lessee or Guarantor, subsequent to the
Closing Date.
"Equity Redemption Target" has the meaning set forth in Section 28.4.3
------------------------
of the Lease Agreement.
"Equity Yield" means the amounts accrued at the Applicable Equity Rate
------------
on the outstanding balance of any Equity Contribution.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
-----
amended, and the regulations promulgated thereunder. Section references to
ERISA are to ERISA, as in effect at the date of the Participation Agreement and
any subsequent provisions of ERISA, amendment thereof, supplemented thereto or
substituted therefor.
"ERISA Affiliate" shall mean each trade or business (whether or not
---------------
incorporated) which together with Lessee or any Subsidiary would be deemed to be
a "single employer" within the meaning of section 4001(b)(1) of ERISA or
subsections (b), (c), (m) or (o) of section 414 of the Code.
"ERISA Event" shall mean (i) a "Reportable Event" described in Section
-----------
4043 of ERISA and the regulations issued thereunder, (ii) the withdrawal of
Lessee, any Subsidiary or any ERISA Affiliate from a Plan during a plan year in
which it was a "substantial employer" as defined in Section 4001(a)(2) of ERISA,
(iii) the filing of a notice of intent to terminate a Plan or the treatment of a
Plan amendment as a termination under Section 4041 of ERISA, (iv) the
institution of proceedings to terminate a Plan by the PBGC or (v) any other
event or condition which might constitute grounds under Section 4042 of ERISA
for the termination of, or the appointment of a trustee to administer, any Plan.
"Eurodollar" means U.S. currency held in banks outside the U.S. and
----------
used for settling international transactions.
"Event of Loss" with respect to any Item of Equipment means (i) the
-------------
loss of such Item of Equipment or any substantial part thereof, or (ii) the loss
of the use of such Item of Equipment due to theft or disappearance for a period
in excess of 45 days during the Term, or existing at the expiration or earlier
termination of the Term, or (iii) the destruction, damage beyond repair, or
rendition of such Item of Equipment or any substantial part thereof permanently
unfit for normal use for any reason whatsoever, or (iv) the condemnation,
confiscation, seizure, or requisition of use or title to such Item of Equipment
or any substantial part thereof by any Governmental Entity under the power of
eminent domain or otherwise beyond the earlier of fifteen (15) days and the end
of the Term.
"Excepted Liens" shall mean: (i) Liens for taxes, assessments or
--------------
other governmental charges or levies not yet due or which are being contested in
good faith by appropriate action and for which adequate reserves have been
maintained; (ii) Liens in connection with workmen's compensation, unemployment
insurance or other social security, old
-14-
age pension or public liability obligations not yet due or which are being
contested in good faith by appropriate action and for which adequate reserves
have been maintained in accordance with GAAP; (iii) operators', vendors',
carriers', warehousemen's, repairmen's, mechanics', workmen's, materialmen's,
construction or other like Liens arising by operation of law in the ordinary
course of business or statutory landlord's liens, each of which is in respect of
obligations that have not been outstanding more than 90 days or which are being
contested in good faith by appropriate proceedings and for which adequate
reserves have been maintained in accordance with GAAP; (iv) any Liens reserved
in leases or farmout agreements for rent or royalties and for compliance with
the terms of the farmout agreements or leases in the case of leasehold estates,
to the extent that any such Lien referred to in this clause does not materially
impair the use of the Property covered by such Lien for the purposes for which
such Property is held by Lessee or any Subsidiary or materially impair the value
of such Property subject thereto; (v) encumbrances (other than to secure the
payment of borrowed money or the deferred purchase price of Property or
services), easements, restrictions, servitudes, permits, conditions, covenants,
exceptions or reservations in any rights of way or other Property of Lessee or
any Subsidiary for the purpose of roads, pipelines, transmission lines,
transportation lines, distribution lines for the removal of gas, oil, coal or
other minerals or timber, and other like purposes, or for the joint or common
use of real estate, rights of way, facilities and equipment, and defects,
irregularities, zoning restrictions and deficiencies in title of any rights of
way or other Property which in the aggregate do not materially impair the use of
such rights of way or other Property for the purposes of which such rights of
way and other Property are held by Lessee or any Subsidiary or materially impair
the value of such Property subject thereto; (vi) deposits of cash or securities
to secure the performance of bids, trade contracts, leases, statutory
obligations and other obligations of a like nature incurred in the ordinary
course of business; and (vii) Liens permitted by the Security Instruments;
(viii) Liens arising out of fully bonded, judgment liens; and (ix) liens for
Lessor's title to property leased under Capital Leases.
"Excepted Payments" means (i) indemnity payments paid or payable in
-----------------
favor of Lessor under the Operative Documents, (ii) proceeds of public liability
insurance (or government indemnities in lieu thereof) payable to Lessor either
pursuant to the Lease Agreement or the Participation Agreement (which shall
include proceeds of any self-insurance by Lessee) or maintained by Lessee or
Lessor and not required to be maintained under the Lease Agreement, (iii) costs
or expenses paid or payable by Lessee to, or for the benefit of Lessor, (iv)
where any amount payable to Lessor is expressed to be payable on an After-Tax
Basis, the increment to the underlying payment obligation arising by virtue of
the operation of the definition of "After-Tax Basis," (v) any payments in
respect of interest to the extent attributable to payments referred to in
clauses (i) through (iv) above and otherwise required to be paid thereon, and
(vi) the proceeds of enforcement of any right to receive the proceeds of any
amount referred to in clauses (i) through (v) above; provided, however, Excepted
Payments shall not include any Lease Payment or part thereof.
"Excepted Rights" means all rights of Lessor to receive, claim or
---------------
compromise Excepted Payments.
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
------------
or any successor statute or statutes thereto.
-15-
"Excluded Expenses" means fees and disbursements of counsel to any
-----------------
party to the Operative Documents other than Lessor, Lessee, Lessor General
Partner, Guarantor or Indenture Trustee in connection with (a) the negotiation,
preparation, execution and delivery of the First Amended and Restated
Participation Agreement dated as of October __, 2001 or the other Operative
Documents dated the date thereof or executed in connection therewith or (b) the
issuance of any Tranche A Notes or the making of any Tranche B Loans; provided
however, "Excluded Expenses" shall not include fees or disbursements of counsel
in connection with the enforcement or collection of any Tranche A Notes or
Tranche B Loans or any amendments to the Operative Documents requested by
Lessor, Lessee, Lessor General Partner or Guarantor other than those amendments
described in clause (a).
"Fair Market Value" means, with respect to a calculation of Fair
-----------------
Market Value under Section 9.2 of the Participation Agreement (and the
definitions related thereto) for any asset or property, the price which could be
negotiated in an arm's-length, free market transaction, for cash, between a
willing seller and a willing and able buyer, neither of whom is under undue
pressure or compulsion to complete the transaction which amount shall be
determined by the Board of Directors of Lessee acting in good faith and shall be
evidenced by a Board Resolution of the Board of Directors of Lessee delivered to
Indenture Trustee.
"Federal Funds Rate" means, for any day, the rate per annum (rounded
------------------
upwards, if necessary, to the nearest 1/100 of one percent) equal to the
weighted average of the rates on overnight Federal funds transactions with
members of the Federal Reserve System arranged by Federal funds brokers on such
day, as published by the Federal Reserve Bank of New York on the Business Day
next succeeding such day, provided that (i) if the day for which such rate is to
--------
be determined is not a Business Day, the Federal Funds Rate for such day shall
be such rate on such transactions on the next preceding Business Day as so
published on the next succeeding Business Day, and (ii) if such rate is not so
published for any day which is a Business Day, the average of the quotations at
approximately 11:00 a.m. (New York time) for such day on such transactions
received by Agent from three federal funds brokers of recognized standing
selected by Agent.
"Financial Statements" shall mean the financial statement or
--------------------
statements of Guarantor and its Consolidated Subsidiaries described or referred
to in Section 2.1(u) of the Participation Agreement.
"Financing Statements" means the Lessee Financing Statements and the
---------------------
Lessor Financing Statements.
"Floating Lease Payment" means the Lease Payment payable during the
----------------------
Term pursuant to Section 7.1.2 of the Lease Agreement.
"Floating Payment Date" means, with respect to any Item of Equipment
---------------------
(i) in the case of any Item of Equipment the last day of each Floating Payment
Period or Tranche B Loan or Equity Contribution to finance such, as elected by
Lessee in accordance with Section 5 of the Participation Agreement, in the case
of any Tranche B Loan, as elected by Lessor in accordance with Section 2.3.3 of
the Tranche B Loan Agreement and in the case of any Equity Contribution,
-16-
as elected by Lessor in accordance with Section 5.7 of the Limited Partnership
Agreement and (ii) the Termination Date therefor; provided, however, if Lessee
-------- -------
and Lessor elect a Floating Payment Period based on six-month LIBOR, the
calendar date in the third calendar month of such Floating Payment Period
corresponding to the first day of such period shall also be a Floating Payment
Date; provided further if such day is not a LIBOR Banking Day, then such
Floating Payment Date therefor shall be the next LIBOR Banking Day, provided
further, if such next LIBOR Banking Day would be in the next calendar month,
then such Floating Payment Date shall be the immediately preceding LIBOR Banking
Day.
"Floating Payment Period" means for each Item of Equipment means the
-----------------------
period commencing on the Funding Date for such Item of Equipment and ending on
the next Floating Payment Date for all other Items of Equipment and thereafter
each period elected by Lessee in accordance with Section 5 of the Participation
Agreement, for each Tranche B Loan, each period selected by Lessor in accordance
with Section 2.3.3 of the Tranche B Loan Agreement and for each Equity
Contribution, each period selected by Lessor in accordance with Section 5.7 of
the Limited Partnership Agreement.
"Foreign Credit Facility" means any credit facility of a Foreign
-----------------------
Restricted Subsidiary.
"Foreign Credit Facility (Tranche B)" means any credit facility of any
-----------------------------------
Subsidiary of Lessee (i) whose jurisdiction of incorporation is other than the
United States of America, any state thereof, the District of Columbia or any
possession thereof and (ii) which derives substantially all of it income from
jurisdictions other than the United States of America.
"Foreign Pension Plan" means any plan, fund (including, without
--------------------
limitation, any superannuation fund) or other similar program established or
maintained outside the United States of America by Guarantor or any one or more
of its Subsidiaries primarily for the benefit of employees of Guarantor or such
Subsidiaries residing outside the United States of America, which plan, fund or
other similar program provides, or results in, retirement income, a deferral of
income in contemplation of retirement or payments to be made upon termination of
employment, and which plan is not subject to ERISA or the Code.
"Foreign Restricted Subsidiary" means any Restricted Subsidiary of
-----------------------------
Lessee (i) whose jurisdiction of incorporation is other than the United States
of America, any state thereof, the District of Columbia or any possession
thereof and (ii) which derives substantially all of its income from
jurisdictions other than the United States of America.
"Foreign Subsidiary" means each Subsidiary of Lessee that is
------------------
incorporated under the laws of any jurisdiction other than the United States of
America, any State thereof, or any territory thereof.
"Funding Date" means each date on which Tranche A Notes are issued and
------------
Tranche B Loans are made in accordance with the Operative Documents, which date
shall be a LIBOR Banking Day.
-17-
"Funding Escrow Agreement" means for each Funding Date the Funding
------------------------
Escrow Agreement substantially in the form attached to the Participation
Agreement as Exhibit G, to be executed by Lessee, Lessor, Indenture Trustee,
purchasers or underwriters of the Tranche A Notes, Tranche B Lenders making
Tranche B Loans on such Funding Date, Administrative Agent and Collateral Agent.
"Funding Notice" means a Funding Notice and Instructions Re Funds On
--------------
Funding Date, substantially in the form of Exhibit C to the Participation
Agreement.
"GAAP" means generally accepted accounting principles set forth in the
----
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as may be approved by a significant segment of the accounting
profession of the United States, which are in effect as of the Closing Date,
provided, however, that all reports and other financial information provided by
Lessee to Tranche A Noteholders or Indenture Trustee shall be prepared in
accordance with GAAP as in effect on the date of such report or other financial
information.
"Governmental Entity" means any Federal, state, municipal or other
-------------------
governmental department, commission, board, bureau, agency, central bank or
instrumentality or any court, in each case whether of the United States or any
foreign country.
"Governmental Requirement" shall mean any law, statute, code,
------------------------
ordinance, order, determination, rule, regulation, judgment, decree,
injunction, franchise, permit, certificate, license, authorization or other
directive or requirement (whether or not having the force of law), including,
without limitation, Environmental Laws, energy regulations and occupational,
safety and health standards or controls, of any Governmental Entity.
"GSI Acquisition" means the acquisition of Gas Services International
---------------
Ltd. and related entities including International Pumps and Compressory Pts.
Ltd. for consideration of approximately $21,000,000.
"Guaranteed Obligations" has the meaning set forth in Section 8 of the
----------------------
Participation Agreement.
"Guarantor" means Universal Compression Holdings, Inc., a Delaware
---------
corporation.
"Guaranty Party" has the meaning set forth in Section 8 of the
--------------
Participation Agreement.
"Hazardous Materials" means (i) any petroleum or petroleum products,
-------------------
radio-active materials, asbestos in any form that is or could become friable,
urea formaldehyde foam insulation, transformers or other equipment that contain
dielectric fluid containing levels of polychlorinated biphenyls, and radon gas;
(ii) any chemicals, materials or substances defined as or included in the
definition of "hazardous substances," "hazardous waste," "hazardous materials,"
"extremely hazardous substances," "restricted hazardous waste," "toxic
substances,"
-18-
"toxic pollutants," "contaminants," or "pollutants," or words of similar import,
under any applicable Environmental Law; and (iii) any other chemical, material
or substance, the Release of which is prohibited, limited or regulated by any
governmental authority.
"Hedging Agreements" shall mean any commodity, interest rate or
------------------
currency swap, cap, floor, collar, forward agreement or other exchange or
protection agreements or any option with respect to any such transaction.
"Indebtedness" means with respect to any Person, without duplication,
------------
(i) all Obligations of such Person for borrowed money, (ii) all Obligations of
such Person evidenced by bonds, debentures, notes or other similar instruments,
(iii) (A) all Capitalized Lease Obligations of such Person and (B) all
Obligations in respect of any Operating Lease Facility, (iv) all Obligations of
such Person issued or assumed as the deferred purchase price of property
(including any purchase price adjustment(s) related to the acquisition of
Tidewater Compression), all conditional sale obligations and all Obligations
under any title retention agreement (but excluding trade accounts payable and
other accrued liabilities arising in the ordinary course of business that are
not overdue by 120 days or more or are being contested in good faith by
appropriate proceedings promptly instituted and diligently conducted), (v) all
Obligations of such Person for the reimbursement of any obligor on any letter of
credit, banker's acceptance or similar credit transaction, (vi) guarantees and
other contingent obligations in respect of Indebtedness of other Persons of the
type referred to in clauses (i) through (v) above and clause (viii) below to the
extent such Indebtedness is so guaranteed, (vii) all Obligations of any other
Person of the type referred to in clauses (i) through (vi) above which are
secured by any lien on any property or asset of such Person, the amount of such
Obligation being deemed to be the lesser of the fair market value of such
property or asset and the amount of the Obligation so secured, (viii) all
Obligations of such Person under Currency Agreements and Interest Swap
Obligations of such Person (other than effective hedging instruments designated
as such by such Person) and (ix) all Disqualified Capital Stock issued by such
Person with the amount of Indebtedness represented by such Disqualified Capital
Stock being equal to the greater of its voluntary or involuntary liquidation
preference and its maximum fixed repurchase price, but excluding accrued
dividends, if any. For purposes hereof, the "maximum fixed repurchase price" of
any Disqualified Capital Stock which does not have a fixed repurchase price
shall be calculated in accordance with the terms of such Disqualified Capital
Stock as if such Disqualified Capital Stock were purchased on any date on which
Indebtedness shall be required to be determined pursuant to the Indenture, and
if such price is based upon, or measured by, the fair market value of such
Disqualified Capital Stock, such fair market value shall be determined in good
faith by the Board of Directors of the issuer of such Disqualified Capital
Stock. The amount of Indebtedness of any Person at any date shall be the
outstanding balance at such date of all unconditional obligations as described
above and, with respect to contingent obligations, the maximum liability upon
the occurrence of the contingency giving rise to the obligation, provided that
(A) the amount outstanding at any time of any Indebtedness issued with original
issue discount is the original issue price of such indebtedness and (B)
"Indebtedness" shall not include any money borrowed and set aside, at the time
of the incurrence of related Indebtedness, to fund cash interest payments on
such related Indebtedness.
-19-
"Indemnifying Party" has the meaning set forth in Section 12.11 of the
------------------
Participation Agreement.
"Indenture" means the Indenture Agreement dated as of February 9, 2001
---------
among Lessor, Co-Obligor and Indenture Trustee.
"Indenture Trustee" means The Bank of New York and any successor
-----------------
thereto appointed in accordance with the terms of the Indenture.
"Interest Coverage Ratio" shall mean the ratio of (i) EBITDAR for the
-----------------------
applicable Testing Period to (ii) Total Interest Expense for the applicable
Testing Period.
"Initial Fair Market Value" with respect to any Item of Equipment,
-------------------------
means the amount identified as the fair market value of such Item on the
Appraisal delivered to Lessor in accordance with Section 3.1(o) of the
Participation Agreement.
"Initial Purchaser" means each Underwriter and each purchaser party to
-----------------
a Note Purchase Agreement.
"Interest Rate Protection Agreement" means any interest rate swap
----------------------------------
agreement, interest rate cap agreement, interest collar agreement, interest rate
hedging agreement or other similar agreement or arrangement.
"Interest Swap Obligations" means the obligations of any Person
-------------------------
pursuant to any arrangement with any other Person, whereby, directly or
indirectly, such Person is entitled to receive from time to time periodic
payments calculated by applying either a floating or a fixed rate of interest on
a stated notional amount in exchange for periodic payments made by such other
Person calculated by applying a fixed or a floating rate of interest on the same
notional amount and shall include, without limitation, interest rate swaps,
caps, floors, collars and similar agreements.
"Investment" means, with respect to any Person, any direct or indirect
----------
loan or other extension of credit (including, without limitation, a guarantee)
or capital contribution to (by means of any transfer of cash or other property
to others or any payment for property or services for the account or use of
others), or any purchase or acquisition by such Person of any Capital Stock,
bonds, notes, debentures or other securities or evidences of Indebtedness issued
by, any Person. "Investment" shall exclude (i) extensions of trade credit by
Lessee and its Restricted Subsidiaries on commercially reasonable terms in
accordance with normal trade practices of Lessee or such Restricted Subsidiary,
as the case may be, and (ii) the acquisition of Capital Stock, securities or
other properties or assets by Lessee or any of its Restricted Subsidiaries for,
and to the extent of consideration consisting of Capital Stock of Lessee. For
the purposes of Section 9.2(b) of the Participation Agreement, (i) "Investment"
shall (A) include and be valued at the fair market value of the net assets of
any Restricted Subsidiary at the time that such Restricted Subsidiary is
designated an Unrestricted Subsidiary and (B) exclude the fair market value of
the net assets of any Unrestricted Subsidiary at the time that such Unrestricted
Subsidiary is designated a Restricted Subsidiary and (ii) the amount of any
Investment shall be
-20-
the original cost of such Investment plus the cost of all additional Investments
by Lessee or any of its Restricted Subsidiaries, without any adjustments for
increases or decreases in value, or write-ups, write-downs or write-offs with
respect to such Investment, reduced by the payment of dividends or distributions
in connection with such Investment or any other amounts received in respect of
such Investment; provided that no such payment of dividends or distributions or
receipt of any such other amounts shall reduce the amount of any Investment if
such payment of dividends or distributions or receipt of any such amounts would
be included in Consolidated Net Income. If Lessee or any Restricted Subsidiary
of Lessee sells or otherwise disposes of any Common Stock of any direct or
indirect Restricted Subsidiary of Lessee such that, after giving effect to any
such sale or disposition, Lessee no longer owns, directly or indirectly, greater
than 50% of the Common Stock of such Restricted Subsidiary, Lessee shall be
deemed to have made an investment on the date of such sale equal to the fair
market value of the Common Stock of such Restricted Subsidiary not sold or
disposed of.
"Investment (Tranche B)" means with respect to any Person, any direct
----------------------
or indirect loan or other extension of credit (including, without limitation, a
guarantee) or capital contribution to (by means of any transfer of cash or other
property to others or any payment for property or services for the account or
use of others), or any purchase or acquisition by such Person of any Capital
Stock, bonds, notes, debentures or other securities or evidences of Revolver
Indebtedness issued by, any Person. Investment shall exclude extensions of
trade credit by Lessee and its Subsidiaries on commercially reasonable terms in
accordance with normal trade practices of Lessee or such Subsidiary, as the case
may be.
"Issue Date" means February 9, 2001.
----------
"Item of Equipment" or "Item" means any of the items of Equipment
----------------- ----
separately identified on any Schedule of Equipment attached to a Lease
Supplement other than those Items purchased pursuant to Section 28 of the Lease
Agreement or substituted pursuant to Section 13 of the Lease Agreement.
"Lease Agreement" means the Equipment Lease Agreement dated as of
---------------
February 9, 2001 between Lessee and Lessor and each Lease Supplement.
"Lease Default" means any event, action or condition which with notice
-------------
or lapse of time or both would constitute a Lease Event of Default.
"Lease Event of Default" has the meaning set forth in Section 23 of
----------------------
the Lease Agreement.
"Lease Payment" means each Semi-Annual Lease Payment, Floating Lease
-------------
Payment, any Lease Premium, any Deficiency, any end of term rent adjustment
payable in accordance with Section 29.2 or 29.4 of the Lease Agreement and any
payments due under Sections 28.2 or 28.4 of the Lease Agreement.
"Lease Period" for each Item of Equipment means each Semi-Annual
------------
Payment Period and each Floating Payment Period therefor.
-21-
"Lease Premium" means the Lease Payment payable on a Funding Date
-------------
pursuant to Section 7.1.3 of the Lease Agreement.
"Lease Supplement" means each Lease Supplement substantially in the
----------------
form attached to the Lease Agreement as Exhibit A, to be executed by Lessor and
Lessee on a Funding Date.
"Leasehold" of any Person means all the right, title and interest of
---------
such Person as lessee or licensee in, to and under leases or licenses of land,
improvements and/or fixtures.
"Lessee" means Universal Compression, Inc., a Texas corporation.
------
"Lessee Certificate" means a certificate by Lessee executed by a
------------------
Responsible Officer in the form of Exhibit B to the Participation Agreement.
"Lessee Collateral" has the meaning set forth in Section 9 of the
-----------------
Lease Agreement.
"Lessee Financing Statement" means the financing statements and any
--------------------------
supplement or amendment thereto in form and substance reasonably acceptable to
Lessor and the Administrative Agent appropriately completed and executed by
Lessee for filing in each jurisdiction necessary or desirable (as reasonably
determined by Agent or Lessor) to perfect Lessor's interest in the Lessee
Collateral to the extent the Lease Agreement is a security agreement.
"Lessee Indemnified Person" means Lessor, Co-Obligor, Indenture
-------------------------
Trustee and each of their respective partners, shareholders, officers,
directors, contractors, employees, agents and servants.
"Lessee Maintenance Practices" means from time to time Lessee's
----------------------------
practices and policies with respect to the maintenance and servicing of natural
gas compressors owned, managed and leased by Lessee.
"Lessor" means BRL Universal Equipment 2001 A, L.P.
------
"Lessor Collateral" has the meaning set forth in Section 7.1 of the
-----------------
Participation Agreement.
"Lessor Financing Statements" means financing statements in form and
---------------------------
substance reasonably acceptable to the Administrative Agent and appropriately
completed and executed by Lessor for filing in each jurisdiction necessary or
desirable (as reasonably determined by the Administrative Agent) to perfect a
security interest in favor of the Collateral Agent in the Lessor Collateral.
"Lessor General Partner" means BRL Universal Equipment Management,
----------------------
Inc.
"Lessor Indemnified Person" means each of Indenture Trustee, each
-------------------------
Tranche A Noteholder, each Tranche B Lender, Administrative Agent and Collateral
Agent, and each of
-22-
their respective Affiliates, officers, directors, employees, beneficiaries,
stock-holders, agents and servants.
"Lessor Indemnity Agreement" means the Indemnity and Security
--------------------------
Agreement dated as of February 9, 2001 among Lessor, each Limited Partner and
Equity Administrative Agent.
"Lessor Lien" means any Lien on or against any Item of Equipment, the
-----------
Lease Agreement, or Lessor's interest therein arising as a result of (i) any
claim against Lessor not resulting from the transactions contemplated by the
Operative Documents, (ii) any act or omission of Lessor which is not required or
expressly permitted by the Operative Documents or is in violation of any of the
terms of the Operative Documents, (iii) any claim against Lessor with respect to
Taxes or obligations of such Person against which Lessee is not required to
indemnify such Person pursuant to the Participation Agreement or the other
Operative Documents or (iv) any claim against Lessor arising out of any transfer
by Lessor of all or any portion of the interest of such Person in any Item or
the Operative Documents other than the transfer of interest in or possession of
such Item by such Person pursuant to and in accordance with the Operative
Documents or pursuant to the exercise of any remedy set forth in the Operative
Documents.
"Lessor Margin Letter" means the letter agreement dated as of February
--------------------
9, 2001 between Lessee, Lessor and Administrative Agent regarding the amount to
be paid by Lessee under clause (iii) of Section 7.1.2 of the Lease Agreement.
"Letters of Credit" shall mean the letters of credit issued pursuant
-----------------
to Section 2.01(b) of the Revolver and all reimbursement obligations pertaining
to any such letters of credit, and "Letter of Credit" shall mean any one of the
Letters of Credit and the reimbursement obligations pertaining thereto and shall
include Offshore Currency Letters of Credit.
"Liability Insurance" has the meaning set forth in Section 20 of the
-------------------
Lease Agreement.
"LIBOR Banking Day" means any day other than a day on which banking
-----------------
institutions in New York, New York or London, England are authorized by law to
close.
"LIBOR Rate" means (i) the offered quotation to first-class banks in
----------
the New York interbank Eurodollar market by Bankers Trust Company for Dollar
deposits of amounts in immediately available funds comparable to the outstanding
principal amount of the Tranche B Loans with maturities comparable to the
applicable Floating Payment Period applicable for such Tranche B Loans
commencing two LIBOR Banking Days thereafter as of 10:00 A.M. (New York time) on
the date which is two LIBOR Banking Days prior to the commencement of such
Floating Payment Period, divided (and rounded off to the nearest 1/16 of 1%) by
(ii) a percentage equal to 100% minus the then stated maximum rate of all
reserve requirements (including, without limitation, any marginal, emergency,
supplemental, special or other reserves required by applicable law) applicable
to any member bank of the Federal Reserve System in respect of Eurocurrency
funding or liabilities as defined in Regulation D (or any
-23-
successor category of liabilities under Regulation D) in the case of both clause
(i) and clause (ii) as determined by Administrative Agent.
"Lien" means any lien, mortgage, deed of trust, pledge, security
----
interest, charge or encumbrance of any kind (including any conditional sale or
other title retention agreement, any lease in the nature thereof and any
agreement to give any security interest).
"Limited Event of Default" has the meaning provided in Section 17.6 of
------------------------
the Lease Agreement.
"Limited Partners" means Deutsche Bank AG, New York Branch, First
----------------
Union National Bank and any Eligible Transferee that is an assignee thereof and
any other Eligible Transferees who from time to time become party to the Limited
Partnership Agreement as Limited Partners in accordance with the terms of the
Limited Partnership Agreement.
"Limited Partnership Agreement" means that certain Amended and
-----------------------------
Restated Limited Partnership Agreement of the Lessor, dated as of February 9,
2001.
"Limited Partnership Agreement Supplement" means the supplement
----------------------------------------
substantially in the form attached to the Limited Partnership Agreement as
Exhibit D to be delivered in accordance with the terms thereof.
"Loan Default" means an event, which with the giving of notice or
------------
lapse of time or both, would become a Loan Event of Default.
"Loan Event of Default" means a Tranche A Event of Default or a
---------------------
Tranche B Event of Default.
"Loss, Damage and Destruction" has the meaning set forth in Section 19
----------------------------
of the Lease Agreement.
"Losses" has the meaning provided in Section 10.1 of the Participation
------
Agreement.
"Majority Tranche A Noteholders" means the Tranche A Noteholders
------------------------------
holding a majority in aggregate principal amount of the Tranche A Notes then
outstanding (as determined in accordance with the terms of the Indenture).
"Majority Tranche B Lenders" means the Tranche B Lenders holding more
--------------------------
than fifty percent (50%) of the outstanding principal amount of the Tranche B
Notes.
"Makewhole" means, with respect to a Tranche A Note, an amount equal
---------
to the greater of (i) 1.0% of the outstanding principal amount of such Tranche A
Note and (ii) the excess of (a) the present value of the remaining interest,
premium and principal payments due on such Tranche A Note as if such Tranche A
Note were redeemed on February 15, 2005, computed using a discount rate equal to
the Treasury Rate on such date plus 0.50%, over (b) the outstanding principal
amount of such Tranche A Note.
-24-
"Material Adverse Effect" means any material and adverse effect on (i)
-----------------------
the assets, liabilities, financial condition, business, operations or affairs of
Lessee, Guarantor and their Subsidiaries taken as a whole as reflected in the
Financial Statements or from the facts represented or warranted in any Operative
Documents and the Offering Memorandum prepared in connection with the issuance
of the Tranche A Notes as the case may be, or (ii) the ability of Lessee,
Guarantor and their Subsidiaries taken as a whole to carry out their business as
at the Closing Date or as proposed as of the Closing Date to be conducted or
meet their obligations under the Operative Documents, as the case may be, on a
timely basis.
"Material Adverse Effect (Tranche B)" means any material and adverse
-----------------------------------
effect on (i) the assets, liabilities, financial condition, business, operations
or affairs of Lessee, Guarantor and their Subsidiaries taken as a whole as
reflected in the Financial Statements or from the facts represented or warranted
in any Operative Documents and the Offering Memorandum prepared in connection
with the issuance of the Tranche A Notes, as the case may be, or (ii) the
ability of Lessee, Guarantor and their Subsidiaries taken as a whole to meet
their obligations under the Operative Documents, as the case may be, on a timely
basis.
"Maturity Date" for each Tranche A Note and each Tranche B Loan means
-------------
the earlier of (i) the last day of the Term for the Items of Equipment financed
with the proceeds of such Tranche A Note or Tranche B Loan and (ii) the date on
which such Tranche A Note or Tranche B Loan becomes due and payable in
accordance with the terms thereof.
"Maximum Acquisition Cost" for all Items of Equipment to be acquired
------------------------
by Lessor and leased to Lessee under the Lease Agreement on any Funding Date,
means the amount identified as such on the Participation Agreement Supplement
for such Funding Date.
"Maximum Lessee Risk Amount" for any Item of Equipment on any date of
--------------------------
determination means an amount obtained by multiplying (i) the percentage set
forth as the "Maximum Lessee Risk Percentage" in the Lease Supplement for such
Item (which percentage will be the maximum amount permitted in order to allow
Lessee to get off balance sheet treatment for the Equipment (approximately 82%))
by (ii) the Acquisition Cost for such Item.
"Maximum Lessor Risk Amount" for any Item of Equipment on any date of
--------------------------
determination means an amount obtained by multiplying (i) the percentage set
forth as "Maximum Lessor Risk Percentage" in the Lease Supplement (which
percentage will be 100% less the Maximum Lessee Risk Amount) by (ii) the
Acquisition Cost for such Item.
"Merger" means the merger pursuant to that certain Agreement and Plan
------
of Merger dated as of October 23, 2000 among Enterra Compression Company, WEUS
Holding, Inc., Xxxxxxxxxxx International, Inc., Guarantor and Lessee, and
related agreements.
"Moody's shall mean Xxxxx'x Investors Services, Inc.
-------
"Multiemployer Plan" shall mean a Plan defined as such in Section
------------------
3(37) or 4001(a)(3) of ERISA.
-25-
"Net Cash Proceeds" means, with respect to any Asset Sale, the
-----------------
proceeds in the form of cash or Cash Equivalents including payments in respect
of deferred payment obligations when received in the form of cash or Cash
Equivalents (other than the portion of any such deferred payment constituting
interest) received by Lessee or any of its Restricted Subsidiaries from such
Asset Sale net of (a) reasonable out-of-pocket expenses and fees relating to
such Asset Sale (including, without limitation, legal, accounting and investment
banking fees and sales or brokerage commissions), (b) net taxes paid or payable
as a result of such Asset Sale, (c) repayment of Indebtedness that is required
to be repaid in connection with such Asset Sale, (d) amounts required to be paid
to any Person (other than Lessee or any of its Restricted Subsidiaries) owning a
beneficial interest in the assets which are subject to such Asset Sale and (e)
appropriate amounts to be provided by Lessee or any Restricted Subsidiary, as
the case may be, as a reserve, in accordance with GAAP, against any liabilities
associated with such Asset Sale and retained by Lessee or any Restricted
Subsidiary, as the case may be, after such Asset Sale, including, without
limitation, pension and other post-employment benefit liabilities, liabilities
related to environmental matters and liabilities under any indemnification
obligations associated with such Asset Sale.
"Net Proceeds of Sale" means with respect to each Item of Equipment
--------------------
sold by Lessor pursuant to Section 24(c) or 28.3 of the Lease Agreement or sold
by Lessor as referenced in Section 29.2 of the Lease Agreement, the net amount
of the proceeds of sale of such Item, after deducting from the gross proceeds of
such sale (i) all sales taxes and other taxes as may be applicable to the sale
or transfer of such Item, (ii) all fees, costs and expenses of such sale
reasonably incurred by Lessor or Lessee in the case of a sale on the Termination
Date or by Lessor in the case of a sale after the Termination Date and (iii)
any other amounts for which, if not paid, Lessor would be liable as a result of
such sale or which, if not paid, would constitute a Lien on such Item.
"Net Proceeds Offer Trigger Date" has the meaning set forth in Section
-------------------------------
9.2(c) of the Participation Agreement.
"Net Proceeds Redemption Target" has the meaning set forth in Section
------------------------------
28.4.3 of the Lease Agreement.
"9 7/8% Senior Discount Notes" means those certain unsecured 9 7/8%
----------------------------
Senior Discount Notes due 2008, issued by Lessee pursuant to that certain
Indenture dated as of February 20, 1998, between TW Acquisition Corporation (now
known as Universal Compression, Inc.) and the United States Trust Company of New
York.
"Non-U.S. Person" means any Person that is not a U.S. Person.
---------------
"Note Purchase Agreement" means any note purchase agreement executed
-----------------------
and delivered by Lessor with respect to the sale of any Tranche A Notes issued
in accordance with the Indenture.
"Notice of Substitution" has the meaning set forth in Section 13(b) of
----------------------
the Lease Agreement.
-26-
"Obligations" means all obligations for principal, premium, interest,
-----------
penalties, fees, indemnifications, reimbursements, damages and other liabilities
payable under the documentation governing any Indebtedness.
"Offshore Currency" shall mean any lawful currency (other than
-----------------
Dollars) that the relevant Issuing Bank with respect to any Offshore Currency
Letter of Credit, in its sole reasonable opinion, at any time determines to be
(a) freely traded in the offshore interbank foreign exchange markets, (b) freely
transferable, and (c) freely convertible into Dollars.
"Offshore Currency Letter of Credit" shall mean any Letter of Credit
----------------------------------
denominated in an Offshore Currency.
"Operating Equipment Lease" means, as to any Person, any asset backed
-------------------------
securitization transaction (other than the ABS Operating Lease Facility) entered
into for the purpose of financing gas compression equipment and any operating
lease transaction relating to gas compression equipment that is treated as an
operating lease for purposes of accounting in accordance with GAAP but not for
tax purposes.
"Operating Equipment Lease Facility" means each operating lease
----------------------------------
transaction or asset backed securitization transaction (other than the ABS
Operating Lease Facility) contemplated by an Operating Equipment Lease,
including without limitation, the Lease Agreement.
"Operating Equipment Lease Obligations" shall mean, as to any Person,
-------------------------------------
all obligations of such Person as lessee under any Operating Equipment Lease.
"Operating Lease Facility" means any operating lease transaction
------------------------
entered into by Lessee or its Restricted Subsidiaries resulting in the
off-balance sheet financing of any Lessee's or such Restricted Subsidiary's gas
compression equipment.
"Operative Documents" means the Participation Agreement, each
-------------------
Participation Agreement Supplement, Security Supplement, the Indenture, each
Note Purchase Agreement, each Underwriting Agreement, any Registration Rights
Agreement, the Tranche B Loan Agreement, the Tranche A Notes, the Tranche B
Notes, the Bills of Sale, the Funding Notices, the Lease Agreement, the Lease
Supplements, the Limited Partnership Agreement, the Quiet Enjoyment and
Indemnity Agreement (Tranche A), the Quiet Enjoyment and Indemnity Agreement
(Tranche B), the Funding Escrow Agreement, the Lessor Indemnity Agreement, the
Lessor Margin Letter, the Security Documents, and each other document identified
as an "Operative Document" in a Participation Agreement Supplement and in each
case, all exhibits and supplements thereto, in each case as amended and modified
from time to time.
"Optional Alteration" has the meaning set forth in Section 12(c) of
-------------------
the Lease Agreement.
"Original Participation Agreement" has the meaning set forth in the
--------------------------------
recitals to the Participation Agreement.
-27-
"Other Hedging Agreement" means any foreign exchange contract,
-----------------------
currency swap agreement or other similar agreement or arrangement designed to
protect against the fluctuations in currency values.
"Overdue Rate" (i) with respect to any amount due any Tranche A
------------
Noteholder means the Tranche A Rate applicable to such Person's Tranche A Note
plus two (2) percent (200 basis points), (ii) with respect to any amount due any
Tranche B Lender means the Applicable Tranche B Rate for such Lender's Tranche B
Loan at the time in effect plus two (2) percent (200 basis points) and (iii)
with respect to any amount due a Limited Partner means the Applicable Equity
Rate for such Limited Partner's Equity Contribution at the time in effect plus
two (2) percent (200 basis points).
"Participation Agreement" means the First Amended and Restated
-----------------------
Participation Agreement dated as of October __, 2001, among Lessee, Guarantor,
Lessor, Lessor General Partner, Indenture Trustee, Tranche B Lenders,
Administrative Agent and Collateral Agent.
"Participation Agreement Supplement" for each Funding Date after the
----------------------------------
Closing Date means the Participation Agreement Supplement substantially in the
form attached to the Participation Agreement as Exhibit E and sequentially
numbered to be executed by the Lessee, Guarantor, Lessor, the Tranche B Lenders
who have committed to make a Tranche B Loan on such Funding Date, the Indenture
Trustee and consented to by the Administrative Agent.
"Payment Date" for the lease of each Item of Equipment each
------------
Semi-Annual Payment Date and Floating Payment Date, for each Tranche A Note,
means each Semi-Annual Payment Date and for each Tranche B Loan and Equity
Contribution, means each Floating Payment Date.
"Payment Date Option Amount" has the meaning set forth in Section 28.4
--------------------------
of the Lease Agreement.
"PBGC" means the Pension Benefit Guaranty Corporation or established
----
pursuant to Section 4002 of ERISA, or any successor thereto.
"Permitted Business" means the business in which Lessee is engaged on
------------------
the Closing Date and reasonable extensions thereof.
"Permitted Holder(s)" means (i) Weatherford and any Affiliate of
-------------------
Weatherford and (ii) each of CHP and Xxxxxx Xxxxxx Inc. and employees,
management, directors and Affiliates of the foregoing.
"Permitted Indebtedness" means, without duplication, each of the
----------------------
following:
(i) Indebtedness under the Lease Agreement as in effect on the
Issue Date (which Lease Agreement will relate to Equipment with an appraised
fair market value of at least $427,000,000);
-28-
(ii) Indebtedness incurred pursuant to the Credit Agreement in an
aggregate principal amount at any time outstanding not to exceed (A)
$125,000,000 in the aggregate with respect to Indebtedness under the Revolving
Credit Loans, reduced by any required permanent repayments (which are
accompanied by a corresponding permanent commitment reduction) thereunder and
(B) under one or more any Foreign Credit Facilities, reduced by any required
permanent repayments thereof as a result of any asset sales, but not to exceed
$25,000,000 outstanding at any one time;
(iii) other Indebtedness of Lessee and its Restricted Subsidiaries
outstanding on the Issue Date reduced by the amount of any scheduled
amortization payments or mandatory prepayments when actually paid or permanent
reductions thereon;
(iv) Interest Swap Obligations of Lessee covering Indebtedness of
Lessee or any of its Restricted Subsidiaries and Interest Swap Obligations of
any Restricted Subsidiary of Lessee covering Indebtedness of such Restricted
Subsidiary and its Restricted Subsidiaries; provided, however, that such
Interest Swap Obligations are entered into to protect Lessee and its Restricted
Subsidiaries from fluctuations in interest rates on Indebtedness incurred in
accordance with Section 9.2(c) of the Participation Agreement to the extent the
notional principal amount of such Interest Swap Obligation does not exceed the
principal amount of the Indebtedness to which such Interest Swap Obligation
relates;
(v) Indebtedness under Currency Agreements; provided that in the
case of Currency Agreements which relate to Indebtedness, such Currency
Agreements do not increase the Indebtedness of Lessee and its Restricted
Subsidiaries outstanding other than as a result of fluctuations in foreign
currency exchange rates or by reason of fees, indemnities and compensation
payable thereunder;
(vi) Indebtedness of a Restricted Subsidiary of Lessee to Lessee
or to a Restricted Subsidiary of Lessee for so long as such Indebtedness is held
by Lessee or a Restricted Subsidiary of Lessee, in each case subject to no Lien
held by a Person other than Lessee or a Restricted Subsidiary of Lessee;
provided that if as of any date any Person other than Lessee or a Restricted
Subsidiary of Lessee owns or holds any such Indebtedness or holds a Lien, other
than a Tranche A Permitted Lien, in respect of such Indebtedness, such date
shall be deemed the incurrence of Indebtedness not constituting Permitted
Indebtedness by the issuer of such Indebtedness;
(vii) Indebtedness of Lessee to a Restricted Subsidiary of Lessee
for so long as such Indebtedness is held by a Restricted Subsidiary of Lessee,
in each case subject to no Lien, other than a Tranche A Permitted Lien; provided
that (a) any Indebtedness of Lessee to any Restricted Subsidiary of Lessee is
unsecured and subordinated, pursuant to a written agreement, to Lessee's
obligations under the Lease Agreement and (b) if as of any date any Person other
than a Restricted Subsidiary of Lessee owns or holds any such Indebtedness or
any Person, other than pursuant to the Credit Agreement, holds a Lien in respect
of such Indebtedness, such date shall be deemed the incurrence of Indebtedness
not constituting Permitted Indebtedness by Lessee;
-29-
(viii) Indebtedness arising from the honoring by a bank or other
financial institution of a check, draft or similar instrument inadvertently
(except in the case of daylight overdrafts) drawn against insufficient funds in
the ordinary course of business; provided, however, that such Indebtedness is
extinguished within three business days of incurrence;
(ix) Indebtedness of Lessee or any of its Restricted Subsidiaries
represented by letters of credit for the account of Lessee or such Restricted
Subsidiary, as the case may be, in order to provide security for workers'
compensation claims, payment obligations in connection with self-insurance or
similar requirements in the ordinary course of business;
(x) Indebtedness represented by Capitalized Lease Obligations and
Purchase Money Indebtedness of Lessee or Guarantor and their Restricted
Subsidiaries incurred in the ordinary course of business not to exceed
$20,000,000 at any one time outstanding;
(xi) Indebtedness (A) in respect of performance, surety or appeal
bonds or letters of credit provided in the ordinary course of business, or (B)
arising from agreements providing for indemnification, adjustment of purchase
price or similar obligations, or from guarantees or letters of credit, surety
bonds or performance bonds securing any such obligations of Lessee or any of its
Restricted Subsidiaries, in any case incurred in connection with the disposition
of any business, assets or Restricted Subsidiary of Lessee (excluding herefrom
any guarantees of Indebtedness incurred by any Person acquiring all or any
portion of such business, assets or Restricted Subsidiary of Lessee for the
purpose of financing such acquisition), in a principal amount not to exceed the
gross proceeds actually received by Lessee or any of its Restricted Subsidiaries
in connection with such disposition;
(xii) Indebtedness of Lessee or any of its Restricted
Subsidiaries, to the extent the net proceeds thereof are substantially
contemporaneously used to purchase Equipment from Lessor to fund (A) the
repurchase of Tranche A Notes tendered in a Change of Control Offer or (B) a
deposit to defease the Tranche A Notes;
(xiii) guarantees of Indebtedness of Lessee or any of its
Restricted Subsidiaries by any Restricted Subsidiary; and guarantees of
Indebtedness of any Restricted Subsidiary of Lessee by Lessee provided that such
Indebtedness is permitted by Section 9.2(a) of the Participation Agreement;
(xiv) Indebtedness of Lessee and its Restricted Subsidiaries under
the ABS Operating Lease Facility to the extent of the initial draw thereunder on
the issue date thereof and, thereafter, additional draws to the extent that
Lessee or its Restricted Subsidiaries apply the proceeds of such draws to
permanently repay Indebtedness of Lessee or its Restricted Subsidiaries;
(xv) Refinancing Indebtedness; and
(xvi) additional Indebtedness of Lessee and its Restricted
Subsidiaries in an aggregate principal amount not to exceed $20,000,000 at any
one time outstanding.
-30-
"Permitted Investments" means (i) Investments by Lessee or any
---------------------
Restricted Subsidiary of Lessee in any Person that is or will become immediately
after such Investment a Restricted Subsidiary of Lessee or that will merge or
consolidate into Lessee or a Restricted Subsidiary of Lessee; (ii) Investments
in Lessee by any Restricted Subsidiary of Lessee; provided that any Indebtedness
evidencing such Investment in Lessee is unsecured and subordinated, pursuant to
a written agreement, to Lessee's obligations under the Lease Agreement; (iii)
in-vestments in cash and Cash Equivalents; (iv) loans and advances to employees
and officers of Lessee and its Restricted Subsidiaries in the ordinary course of
business for bona fide business purposes not in excess of $500,000 at any one
time outstanding; (v) Currency Agreements and Interest Swap Obligations entered
into in the ordinary course of Lessee's or its Restricted Subsidiaries'
businesses and otherwise in compliance with the Participation Agreement; (vi)
In-vestments in Unrestricted Subsidiaries and joint ventures not to exceed
$10,000,000 at any one time outstanding; (vii) Investments in securities of
trade creditors or customers received pursuant to any plan of reorganization or
similar arrangement upon the bankruptcy or insolvency of such trade creditors or
customers; (viii) Investments made by Lessee or its Restricted Subsidiaries as a
result of consideration received in connection with an Asset Sale made in
compliance with the Section 9.2(c) of the Participation Agreement; (ix) other
Investments not to exceed $10,000,000 at any one time outstanding and (x)
Investments existing on the Issue Date.
"Permitted Liens" means, as to any Item of Equipment (i) the
---------------
respective rights and interests of the parties under the Operative Documents as
provided in the Operative Documents (including any Lien created pursuant to or
expressly permitted by the terms of the Operative Documents), (ii) Liens for
Taxes that either are not yet due and payable or are being contested in good
faith, (iii) any Sublease, (iv) Liens arising by operation of law,
materialmen's, mechanics', workers', repairmen's, employees', carriers',
warehousemen's and other like Liens in connection with any alterations,
modifications or replacements to the extent permitted by Sections 12 and 13 of
the Lease Agreement for amounts that are not more than sixty (60) days past due
or are being diligently contested in good faith by appropriate proceedings, so
long as such proceedings satisfy the conditions for contest proceedings set
forth in Section 10 of the Participation Agreement, (v) Liens arising out of
judgments or awards with respect to which appeals or other proceedings for
review are being prosecuted in good faith and for the payment of which adequate
reserves have been provided as required by GAAP or other appropriate provisions
have been made, and (vi) Liens created by Lessee with the written consent of
Lessor and any Assignee.
"Person" means any individual, corporation, partnership, limited
------
liability company, joint venture, association, joint stock company, trust,
trustee(s) of a trust, unincorporated organization, or government or
Governmental Entity, agency or political subdivision thereof.
"Plan" means any pension plan as defined in Section 3(2) of ERISA,
----
which is maintained or contributed to by (or to which there is an obligation to
contribute of) Guarantor or a Subsidiary of Guarantor or an ERISA Affiliate, and
each such plan for the five year period immediately following the latest date on
which Guarantor, or a Subsidiary of Guarantor or an ERISA Affiliate maintained,
contributed to or had an obligation to contribute to such plan.
-31-
"Preferred Stock" of any Person means any Capital Stock of such Person
---------------
that has preferential rights to any other Capital Stock of such Person with
respect to dividends or redemptions or upon liquidation.
"Premium" means, with respect to the Tranche A Notes, any premium
-------
(including any Makewhole), payable upon an optional redemption of the Tranche A
Notes by Lessor (whether following an Equity Offering, a Change of Control or
otherwise), the premium payable pursuant to an offer to repurchase Tranche A
Notes upon the occurrence of a Change of Control, any amounts in excess of the
principal amount thereof payable upon acceleration of the Tranche A Notes and,
if applicable, such amount in excess of the aggregate principal amount of the
Tranche A Notes as may be necessary to be deposited by Lessor in connection with
either a covenant defeasance or a legal defeasance of the Tranche A Notes under
the Indenture.
"Projections" has the meaning set forth in Section 2.1(ii) of the
-----------
Participation Agreement.
"Property" shall mean any interest in any kind of property or asset,
--------
whether real, personal or mixed, or tangible or intangible.
"Property Insurance" has the meaning set forth in Section 20 of the
------------------
Lease Agreement.
"Purchase Date" has the meaning set forth in Section 28.4.4 of the
-------------
Lease Agreement.
"Purchase Money Debt" means Revolver Indebtedness, the proceeds of
-------------------
which are used to finance the acquisition, construction or improvement of
inventory, equipment or other property in the ordinary course of business.
"Purchase Money Indebtedness" means Indebtedness of Lessee and its
---------------------------
Restricted Subsidiaries incurred in the normal course of business for the
purpose of financing all or any part of the purchase price, or the cost of
installation, construction or improvement, of property or equipment.
"Purchase Option Amount" has the meaning set forth in Section 28.2 of
----------------------
the Lease Agreement.
"Qualified Capital Stock" means any Capital Stock that is not
-----------------------
Disqualified Capital Stock.
"Quarterly Date" shall mean the last day of each March, June,
--------------
September and December, in each year, the first of which shall be March 31,
2001; provided, however, that if any such day is not a Business Day, such
-------- -------
Quarterly Date shall be the next succeeding Business Day.
-32-
"Quiet Enjoyment and Indemnity Agreement (Tranche A)" means the Quiet
---------------------------------------------------
Enjoyment and Indemnity Agreement dated February 9, 2001 among Lessee, Indenture
Trustee, Administrative Agent and Collateral Agent.
"Quiet Enjoyment and Indemnity Agreement (Tranche B)" means the Quiet
---------------------------------------------------
Enjoyment and Indemnity Agreement dated February 9, 2001 among Lessee, Tranche B
Lenders, Administrative Agent and Collateral Agent.
"Real Property" of any Person means all the right, title and interest
--------------
of such Person in and to land, improvements and fixtures, including Leaseholds.
"Redelivery Location" means, with respect to any Item of Equipment
-------------------
that is to be returned by Lessee to Lessor, a location or locations within the
United States designated by Administrative Agent; provided that the total number
of Redelivery Locations shall not exceed four (4) locations.
"Redelivery Notice" has the meaning set forth in Section 28.3.1 of the
-----------------
Lease Agreement.
"Refinance" means, in respect of any security or Indebtedness, to
---------
refinance, extend, renew, refund, repay, prepay, redeem, defease or retire, or
to issue a security or Indebtedness in exchange or replacement for, such
security or Indebtedness in whole or in part. "Refinanced" and "Refinancing"
shall have correlative meanings.
"Refinancing Indebtedness" means any Refinancing by Lessee or any
------------------------
Restricted Subsidiary of Lessee of Indebtedness incurred in accordance with
Section 9.2(a) of the Participation Agreement (other than pursuant to clause
(ii), (iv), (v), (vi), (vii), (viii), (ix), (x), (xi), (xii), (xiii) or (xvi) of
the definition of Permitted Indebtedness), in each case (other than Refinancing
Indebtedness incurred to Refinance all of the Tranche A Notes) that does not (1)
result in an increase in the aggregate principal amount of Indebtedness of such
Person as of the date of such proposed Refinancing (plus accrued interest and
plus the amount of any premium required to be paid under the terms of the
instrument governing such Indebtedness and plus the amount of reasonable fees,
expenses and other amounts payable by the Lessee or any of its Restricted
Subsidiaries in connection with such Refinancing) or (2) create Indebtedness
with (A) a Weighted Average Life to Maturity that is less than the Weighted
Average Life to Maturity of the Indebtedness being Refinanced or (B) a final
maturity earlier than the final maturity of the Indebtedness being Refinanced;
provided that if such Indebtedness being Refinanced is subordinate or junior to
Lessee's rental payment obligations under the Lease Agreement, then such
Refinancing Indebtedness shall be subordinate to Lessee's rental payment
obligations under the Lease at least to the same extent and in the same manner
as the Indebtedness being Refinanced.
"Register" has the meaning set forth in Section 11.8 of the
--------
Participation Agreement.
-33-
"Registration Rights Agreement" means the Registration Rights
-----------------------------
Agreement, if any, executed and delivered by Lessor, Co-Obligor, Lessee,
Guarantor and the Initial Purchaser party thereto relating to the issuance and
registration of Tranche A Notes.
"Regulation D" shall mean Regulation D of the Board of Governors of
------------
the Federal Reserve System (or any successor), as the same may be amended or
supplemented from time to time.
"Remarketing Period" has the meaning set forth in Section 28.3.2 of
------------------
the Lease Agreement.
"Replaced Equipment" has the meaning provided in Section 13(a) of the
------------------
Lease Agreement.
"Reportable Event" means an event described in Section 4043(c) of
----------------
ERISA with respect to a Plan that is subject to Title IV of ERISA other than
those events as to which the 30-day notice period is waived under PBGC
Regulation Section 4043.
"Required Alteration" has the meaning set forth in Section 12(b) of
-------------------
the Lease Agreement.
"Residual Value" means, for any Item of Equipment, the estimated fair
--------------
market value of such Item as of the Scheduled Termination Date with
consideration given to the effects of inflation or deflation measured from the
date on which such value is determined, assuming such Item is in good condition
and will continue to be maintained in good operating condition with normal
preventive maintenance, and assuming the market for used equipment of the same
nature on the Scheduled Termination Date will not reflect unusual conditions of
supply and demand.
"Responsible Officer" means, with respect to any Person, the chief
-------------------
executive officer, the president, the chief financial officer, the chief
operating officer, the treasurer or the vice president for financial or legal
affairs of such Person, or in the case of any partnership, of any of such
Person's general partners.
"Restricted Subsidiary" of any Person means any Subsidiary of such
---------------------
Person which at the time of determination is not an Unrestricted Subsidiary.
"Revised Article 9" means Article 9 of the UCC as revised and made
-----------------
effective on or after July 1, 2001, in any applicable jurisdiction in which it
has been enacted.
"Revolver" means the Revolving Credit Facility dated as of February 9,
--------
2001, between the Lessee, First Union Bank N.A. as Administrative Agent (as
defined therein) and the lenders that become a party thereto, and if such
agreement is no longer in effect, any other credit agreement or loan agreement
which provides Lessee directly or indirectly, with a primary source of working
capital borrowings and if no such credit agreement or loan agreement is in
effect, then such last credit agreement or loan agreement as in effect
immediately prior to its termination or expiration.
-34-
"Revolver Indebtedness" means (without duplication) any and all
---------------------
amounts owing or to be owing by Lessee in connection with the Revolver and the
Letter of Credit Application under the Revolver, and any Hedging Agreements now
or hereafter arising between Lessee and any lender under the Revolver or any
Affiliate thereof and permitted by the terms of the Revolver and all renewals,
extensions and/or rearrangements of any of the foregoing.
"Revolving Credit Loans" means one or more revolving credit facilities
----------------------
under the Credit Agreement.
"Sale and Leaseback Transaction" means any direct or indirect
------------------------------
arrangement with any Person or to which any such Person is a party, providing
for the leasing to Lessee or a Restricted Subsidiary of Lessee of any property,
whether owned by Lessee or any Restricted Subsidiary of Lessee at the Issue Date
or later acquired, which has been or is to be sold or transferred by Lessee or
such Restricted Subsidiary to such Person or to any other Person from whom funds
have been or are to be advanced by such Person on the security of such Property.
"Scheduled Termination Date" means February 15, 2008.
--------------------------
"SEC" shall mean the Securities and Exchange Commission or any
---
successor Governmental Entity.
"Secured Obligations" has the meaning set forth in Section 7.1 of the
-------------------
Participation Agreement.
"Secured Parties" means the Tranche A Noteholders and the Tranche B
---------------
Lenders.
"Securities Act" means the Securities Act of 1933, as amended, and the
--------------
rules and regulations promulgated thereunder.
"Securitized Operating Lease Facility" means an Operating Lease
------------------------------------
Facility pursuant to which the lessor thereunder receives, directly or
indirectly, the benefit of Liens on property or assets of Lessee or its
Restricted Subsidiaries other than the property subject to such leases, any
property or rights (including rights under subleases) relating to such leased
property and the equity interest of the lessee in any such lease.
"Security Documents" means the Participation Agreement, Lease
------------------
Agreement, Lease Supplement, Lessee Financing Statements and Lessor Financing
Statements.
"Security Instruments" shall mean the Letters of Credit, the Fee
--------------------
Letter, the agreements or instruments described or referred to in Exhibit D of
the Revolver, and any and all other agreements or instruments now or hereafter
executed and delivered by Lessee or any other Person (other than participation
or similar agreements between any lender under the Revolver and any other lender
or creditor with respect to any Revolver Indebtedness pursuant to the Revolver
in connection with, or as security for the payment or performance of the Lease
Agreement, or the Revolver, or reimbursement obligations under the Letters of
Credit, as such agreements may be amended, supplemented or restated from time to
time.
-35-
"Security Supplement" for each Funding Date means the Security
-------------------
Supplement substantially in the form attached to the Participation Agreement as
Exhibit F and sequentially numbered executed by Lessor and Collateral Agent.
"Seller" means with respect to each Item of Equipment, whichever of
------
Lessee, or other Person identified as a "Seller" of such Item on the related
Participation Agreement Supplement or in the case of the first Funding Date, the
Persons identified in the definition of "Seller" in Appendix A to the Original
Participation Agreement.
"Semi-Annual Lease Payment" means the Lease Payment payable during the
-------------------------
Term pursuant to Section 7.1.1 of the Lease Agreement.
"Semi-Annual Payment Date" means each February 15 and August 15 during
------------------------
the Term commencing with August 15, 2001, the Termination Date and Maturity
Date; provided, however, if any such calendar date is not a Business Day, then
-------- -------
the Semi-Annual Payment Date shall be the next Business Day.
"Semi-Annual Payment Period" means initially the period from and
--------------------------
including the Closing Date to but excluding the next Semi-Annual Payment Date
and thereafter each six month period from and including the last Semi-Annual
Payment Date to but excluding the next Semi-Annual Payment Date.
"Senior Discount Notes" means the 9-7/8% Senior Discount Notes due
---------------------
February 15, 2008 issued by Lessee.
"Significant Subsidiary" with respect to any Person, means any
----------------------
Restricted Subsidiary of such Person that satisfies the criteria for a
"significant subsidiary" set forth in Rule 1.02(w) of Regulation S-X under the
Securities Act.
"Similar Type" means, with respect to any Item of Equipment with (i) a
------------
horsepower rating of less than 100, a natural gas compressor with any horsepower
rating, (ii) a horsepower rating of 100 or more but less than 200, a natural gas
compressor with a horsepower rating of 100 or more, (iii) a horsepower rating of
300 or more but less than 600, a natural gas compressor with a horsepower rating
of 300 or more, (iv) a horsepower rating of 600 or more but less than 1000, a
natural gas compressor with a horsepower rating of 600 or more and (v) a
horsepower rating of 1000 or more, a natural gas compressor with a horsepower
rating of 1000 or more.
"Special Entity" means any joint venture, limited liability company or
--------------
partnership, general or limited partnership or any other type of partnership or
company other than a corporation in which the Lessee or one or more of its other
Subsidiaries is a member, owner, partner or joint venturer and owns, directly or
indirectly, at least a majority of the equity of such entity or controls such
entity, but excluding any tax partnerships that are not classified as
partnerships under state law. For purposes of this definition, any Person which
owns directly or indirectly an equity investment in another Person which allows
the first Person to manage or
-36-
elect managers who manage the normal activities of such second Person will be
deemed to "control" such second Person (e.g. a sole general partner controls a
---
limited partnership).
"Subject Item" has the meaning set forth in Section 3.1 of the
------------
Participation Agreement.
"Sublease" has the meaning set forth in Section 17 of the Lease
--------
Agreement.
"Sublessee" has the meaning set forth in Section 17 of the Lease
---------
Agreement.
"Subsidiary" means, with respect to any Person, (i) any corporation of
----------
which the outstanding Capital Stock having at least a majority of the votes
entitled to be cast in the election of directors under ordinary circumstances
shall at the time be owned, directly or indirectly, by such Person or (ii) any
other Person of which at least a majority of the voting interest under ordinary
circumstances is at the time, directly or indirectly, owned by such Person.
"Substitution Date" has the meaning set forth in Section 13(a) of the
-----------------
Lease Agreement.
"Supplemental Payments" means all amounts, liabilities and obligations
---------------------
which Lessee assumes or agrees to pay under the Operative Documents.
"S&P" shall mean Standard & Poors Ratings Group, a division of The
---
XxXxxx-Xxxx Companies, Inc.
"Tax Sharing Agreement" means the tax sharing agreement between Lessee
---------------------
and Guarantor as in effect on the date hereof, and as thereafter modified in any
way not adverse to Lessee or the Tranche A Noteholders.
"Taxes" has the meaning set forth in Section 10.3.1 of the
-----
Participation Agreement.
"Term" for each Item of Equipment means the period from and including
----
the Funding Date therefor and ending on the Termination Date therefor.
"Termination Date" for each Item of Equipment means the earliest of
----------------
(i) the Scheduled Termination Date, and (ii) if the Lessee exercises its early
transfer option pursuant to Section 28.4 of the Lease Agreement, the applicable
Floating Payment Date so elected by Lessee.
"Testing Period" shall mean (a) for any determination made during the
--------------
period from and including Closing Date through fiscal quarter ending March 31,
2002, a single period consisting of the fiscal quarter of Lessee last ended,
utilizing annualized results for the period from and including the Closing Date
through such fiscal quarter end, and (b) for any determination made from and
including April 1, 2002, and at all times thereafter, a single period consisting
of the four consecutive fiscal quarters of Lessee then last ended (whether or
not such quarters are all within the same fiscal year); provided, however, that
-------- -------
if a particular provision of the Revolver indicates that a Testing Period shall
be a different specified duration, such Testing
-37-
Period shall consist of the particular fiscal quarter or quarters then last
ended which are so indicated in such provision.
"TIA" means the Trust Indenture Act of 1939, as amended.
---
"Tidewater Compression" means Tidewater Compression Service, Inc.
---------------------
"Total Debt" shall mean, at any time (without duplication), the sum
----------
of (i) 100% of Debt reflected on the balance sheet of Lessee in accordance with
GAAP, plus (ii) 82% of any amount funded (Debt and equity) under Operating
----
Equipment Lease Facilities including the Lease Agreement, plus (iii) 85% of any
----
amount funded (Debt and equity) in connection with the ABS Operating Equipment
Lease Facility.
"Total Interest Expense" shall mean, for any period, the total
----------------------
consolidated cash interest expense net of cash interest income of Lessee and its
Consolidated Subsidiaries for such period (including, without limitation, the
cash equivalent of the interest expense associated with Capital Lease
Obligations and all interest paid on the 9 7/8% Senior Discount Notes but
excluding (i) upfront fees paid in connection with the Lease Agreement, the ABS
Facility or Revolver , (ii) Debt or lease issuance costs which have to be
amortized, (iii) lease payments on any office equipment or real property and
(iv) any principal components paid on all lease payments) plus rental payments
made in connection with Operating Equipment Lease Obligations and the ABS
Facility (excluding any principal amortization components).
"Total Leverage Ratio" means the ratio of Total Debt to EBITDAR.
--------------------
"Tranche A Component" for each Item of Equipment means the dollar
-------------------
amount of the Acquisition Cost of such Item financed by Tranche A Noteholders on
the Funding Date therefor, which amount shall be equal to the Maximum Lessee
Risk Amount for such Item.
"Tranche A Noteholders" means the holders of the Tranche A Notes.
---------------------
"Tranche A Notes" means the senior secured notes issued pursuant to
---------------
the terms of the Indenture.
"Tranche A Default" means an event or condition the occurrence of
-----------------
which is, or with the lapse of time or the giving of notice of both would be a
Tranche A Event of Default.
"Tranche A Discount" means with respect to any Funding Date, the
------------------
amount, if any, by which the principal amount of the Tranche A Notes issued on
such Funding Date exceeds the proceeds (other than Accrued Interest Premium)
received by Lessor from the issuance of such Tranche A Notes.
"Tranche A Event of Default" has the meaning set forth in Section 5.01
--------------------------
of the Indenture.
"Tranche A Permitted Liens" means the following types of Liens:
-------------------------
-38-
(i) Liens for taxes, assessments or governmental charges or claims
either (a) not delinquent or (b) being contested in good faith by appropriate
proceedings and as to which Lessee or its Restricted Subsidiaries shall have set
aside on its books such reserves as may be required pursuant to GAAP;
(ii) statutory Liens of landlords and Liens of carriers,
warehousemen, mechanics, suppliers, materialmen, repairmen and other Liens
imposed by law incurred in the ordinary course of business for sums not yet
delinquent or being contested in good faith, if such reserve or other
appropriate provision, if any, as shall be required by GAAP shall have been made
in respect thereof;
(iii) Liens incurred or deposits made in the ordinary course of
business in connection with workers' compensation, unemployment insurance and
other types of social security, including any Lien securing letters of credit
issued in the ordinary course of business consistent with past practice in
connection therewith, or to secure the performance of tenders, statutory
obligations, surety and appeal bonds, bids, leases, government contracts,
performance and return-of-money bonds and other similar obligations (exclusive
of obligations for the payment of borrowed money);
(iv) Liens arising by reason of any judgment, decree or order of
any court but not giving rise to a Lease Event of Default so long as such Lien
is adequately bonded and any appropriate legal proceedings which may have been
duly initiated for the review of such judgment, decree or order shall not have
been finally terminated or the period within which such proceedings may be
initiated shall not have expired;
(v) easements, rights-of-way, zoning restrictions and other
similar charges or encumbrances in respect of real property not interfering in
any material respect with the ordinary conduct of the business of Lessee or any
of its Restricted Subsidiaries;
(vi) Liens representing the interest or title of a lessor under
any Capitalized Lease; provided that such Liens do not extend to any property or
assets which is not leased property subject to such Capitalized Lease;
(vii) Liens upon specific items of inventory or other goods and
proceeds of Lessee or any of its Restricted Subsidiaries securing such Person's
obligations in respect of bankers' acceptances issued or created for the account
of such Person to facilitate the purchase, shipment or storage of such inventory
or other goods;
(viii) Liens securing reimbursement obligations with respect to
letters of credit which encumber documents and other property relating to such
letters of credit and products and proceeds thereof;
(ix) Liens encumbering deposits made to secure obligations arising
from statutory, regulatory, contractual, or warranty requirements of Lessee or
any of their Restricted Subsidiaries, including rights of offset and set-off;
-39-
(x) Liens securing Interest Swap Obligations which Interest Swap
Obligations relate to Indebtedness that is otherwise permitted under the
Participation Agreement;
(xi) Liens securing Capitalized Lease Obligations and Purchase
Money Indebtedness permitted pursuant to Section 9.2(a) of the Participation
Agreement; provided, however, that in the case of Purchase Money Indebtedness
(A) the Indebtedness shall not exceed the cost of such property or assets and
shall not be secured by any property or assets of Lessee or any Restricted
Subsidiary of Lessee other than the property and assets so acquired or
constructed and (B) the Lien securing such Indebtedness shall be created within
180 days of such acquisition or construction or, in the case of a refinancing of
any Purchase Money Indebtedness, within 180 days of such refinancing;
(xii) Liens securing Indebtedness under Currency Agreements; and
(xiii) Liens securing Acquired Indebtedness incurred in accordance
with the Section 9.2(a) of the Participation Agreement; provided that (A) such
Liens secured such Acquired Indebtedness at the time of and prior to the
incurrence of such Acquired Indebtedness by Lessee or a Restricted Subsidiary of
Lessee and were not granted in connection with, or in anticipation of, the
incurrence of such Acquired Indebtedness by Lessee or a Restricted Subsidiary of
Lessee and (B) such Liens do not extend to or cover any property or assets of
Lessee or of any of its Restricted Subsidiaries other than the property or
assets that secured the Acquired Indebtedness prior to the time such
Indebtedness became Acquired Indebtedness of Lessee or a Restricted Subsidiary
of Lessee.
"Tranche A Premium" means with respect to any Funding Date, any
-----------------
proceeds other than Accrued Interest Premium from the issuance of any Tranche A
Notes on such Funding Date received by Lessor or BRL Universal Equipment Corp.
in excess of the principal amount of such Tranche A Notes.
"Tranche A Rate" means for any Tranche A Note the interest rate set
--------------
forth on such Tranche A Note.
"Tranche B Commitment" for the first Funding Date, has the meaning set
--------------------
forth in the definition of "Tranche B Commitment" in Appendix A to the Original
Participation Agreement and for each Tranche B Lender on any Funding Date
thereafter means the Dollar amount set forth for such Lender in the related
Participation Agreement Supplement.
"Tranche B Component" for each Item of Equipment, means the dollar
-------------------
amount of the Acquisition Cost of such Item financed by Tranche B Lenders on the
Funding Date therefor, which amount shall be equal to a pro rata portion (based
on the Initial Fair Market Value of such Item and the aggregate Initial Fair
Market Values of all Equipment first being leased under the Lease Agreement on
such Funding Date) of the aggregate principal balances of the Tranche B Loans
made on such Funding Date.
"Tranche B Default" means an event, which with the giving of notice or
-----------------
lapse of time or both, would become a Tranche B Event of Default.
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"Tranche B Event of Default" has the meaning set forth in Section 5.1
--------------------------
of the Tranche B Loan Agreement.
"Tranche B Lenders" means First Union National Bank, Bank One, NA, The
-----------------
Bank of Nova Scotia, Citadel Hill 2000 Ltd., Natexis Banques Populaires,
Landmark CDO Limited, CSAM Funding I, First Dominion Funding I and First
Dominion Funding II and any Eligible Transferee that is an assignee thereof and
any other Eligible Transferee who from time to time becomes a party to the
Participation Agreement and Tranche B Loan Agreement as a Tranche B Lender in
accordance with the terms thereof.
"Tranche B Loan" has the meaning set forth in Section 4.1 of the
--------------
Participation Agreement.
"Tranche B Loan Agreement" means the Tranche B Loan Agreement, dated
------------------------
as of February 9, 2001, among Lessor, the Administrative Agent, the Collateral
Agent and the Tranche B Lenders as amended by the First Amendment to Tranche B
Loan Agreement dated September __, 2001.
"Tranche B Margin" means 3.25% (325 basis points).
----------------
"Tranche B Note" has the meaning set forth in Section 2.2 of the
--------------
Tranche B Loan Agreement.
"Treasury Rate" for any date, means the yield to maturity at the time
-------------
of computation of United States Treasury securities with a constant maturity (as
compiled and published in the most recent Federal Reserve Statistical Release
H.15 (519) that has become publicly available at least two (2) business days
prior to the date the redemption is effected pursuant to Section 3.03(c) of the
Revolver (the "Change of Control Redemption Date") (or, if such Statistical
---------------------------------
Release is no longer published, any publicly available source or similar market
date) most nearly equal to the period from the Change of Control Redemption Date
to February 15, 2005; provided, however, that if the period from the Change of
-------- -------
Control Redemption Date to February 15, 2005 is not equal to the constant
maturity of a United States Treasury security for which a weekly average yield
is given, the Treasury Rate shall be obtained by linear interpolation
(calculated to the nearest one-twelfth of a year) from the weekly average yields
of United States Treasury securities for which such yields are given except that
if the period from Change of Control Redemption Date to February 15, 2005 is
less than one year, the weekly average yield on actually traded United States
Treasury securities adjusted to a constant maturity of one year shall be used.
"UCC" means the Uniform Commercial Code, as in effect in any
---
applicable jurisdiction.
"UCO Compression LLC" shall mean UCO Compression LLC, a Delaware
-------------------
limited liability company, which is the bankruptcy remote, special purpose,
wholly-owned Subsidiary of Lessee created to own and lease gas compression
equipment in conjunction with the ABS Operating Lease Facility.
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"Underwriter" means each underwriter party to an Underwriting
-----------
Agreement.
"Underwriting Agreement" means any underwriting agreement executed and
----------------------
delivered by Lessor with respect to the issuance of any Tranche A Notes in
accordance with the Indenture.
"Unfunded Current Liability" of any Plan means the amount, if any, by
---------------------------
which the value of the accumulated plan benefits under the Plan determined on a
plan termination basis in accordance with actuarial assumptions at such time
consistent with those prescribed by the PBGC for purposes of Section 4044 of
ERISA, exceeds the fair market value of all plan assets allocable to such
liabilities under Title IV of ERISA (excluding any accrued but unpaid
contributions).
"Unrestricted Subsidiary" of Lessee means (i) any Subsidiary of Lessee
-----------------------
that at the time of determination shall be or continue to be designated an
Unrestricted Subsidiary by the Board of Directors of Lessee in the manner
provided below and (ii) any Subsidiary of an Unrestricted Subsidiary. The Board
of Directors of Lessee may designate any Subsidiary (including any newly
acquired or newly formed Subsidiary) to be an Unrestricted Subsidiary unless
such Subsidiary owns any Capital Stock of, or owns or holds any Lien on any
property of, Lessee or any other Subsidiary of Lessee that is not a Subsidiary
of the Subsidiary to be so designated; provided that (x) Lessee certifies to
Indenture Trustee that such designation complies with Section 9.2(b) of the
Participation Agreement and (y) each Subsidiary to be so designated and each of
its Subsidiaries has not at the time of designation, and does not thereafter,
create, incur, issue, assume, guarantee or otherwise become directly or
indirectly liable with respect to any Indebtedness pursuant to which the lender
has recourse to any of the assets of Lessee or any of its Restricted
Subsidiaries. The Board of Directors may designate any Unrestricted Subsidiary
to be a Restricted Subsidiary only if (x) immediately after giving effect to
such designation, Lessee is able to incur at least $1.00 of additional
Indebtedness (other than Permitted Indebtedness) in compliance with Section
9.2(a) of the Participation Agreement and (y) immediately before and immediately
after giving effect to such designation, no Tranche A Default or Tranche A Event
of Default shall have occurred and be continuing. Any such designation by the
Board of Directors shall be evidenced to Indenture Trustee by promptly filing
with Indenture Trustee a copy of the Board Resolution giving effect to such
designation and an officers' certificate certifying that such designation
complied with the foregoing provisions.
"U.S. Person" has the meaning set forth in Section 7701(a)(30) of the
-----------
Code.
"Xxxxxxxxxxx Transition Services Agreement" means the agreement dated
-----------------------------------------
as of the Closing Date between Xxxxxxxxxxx International Inc. and Xxxxxxxxxxx
Global Compression Services, L.P. related to the provision of transition
services by Xxxxxxxxxxx to Lessee.
"Weighted Average Life to Maturity" means, when applied to any
---------------------------------
Indebtedness at any date, the number of years obtained by dividing (a) the then
outstanding aggregate principal amount of such Indebtedness into (b) the sum of
the total of the products obtained by multiplying (i) the amount of each then
remaining installment, sinking fund, serial maturity or other required payment
of principal, including payment at final maturity, in respect thereof, by (ii)
the number
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of years (calculated to the nearest one-twelfth) which will elapse between such
date and the making of such payment.
"Wholly Owned Restricted Subsidiary" of any Person means any
----------------------------------
Restricted Subsidiary of such Person of which all the outstanding voting
securities (other than directors' qualifying shares or an immaterial amount of
shares required to be owned by other Persons, in each case pursuant to
applicable law) are owned by such Person or any Wholly Owned Restricted
Subsidiary of such Person.
When used in any Operative Document the words "this Agreement",
"herein", "hereunder", "hereof" or other like words mean and include such
Operative Document and each amendment and supplement thereto (including, without
limitation, with respect to the Lease Agreement, each Lease Supplement and with
respect to the Participation Agreement, each Participation Agreement Supplement
and Security Supplement). Each of the Operative Documents is the result of
arm's-length negotiations among, and has been review by, each party thereto and
its counsel. Accordingly, each of the Operative Documents shall be deemed to be
the product of each of the parties thereto, and no ambiguity shall be construed
in favor of or against any party. Headings in the Operative Documents are for
convenience of reference only and are not part of the substance thereof. All
references to sections, schedules and exhibits in any Operative Document are to
sections, schedules and exhibits in or to such Operative Document unless
otherwise specified. Unless otherwise specified herein, all accounting terms
used herein shall be interpreted, all accounting determinations hereunder shall
be made, and all financial statements required to be delivered hereunder shall
be prepared in accordance with United States generally accepted accounting
principles as in effect from time to time, applied on a basis consistent (except
for changes concurred in by Guarantor's independent public accountants) with the
then most recent audited consolidated financial statements of Guarantor and its
Consolidated Subsidiaries provided that, if either (i) Guarantor notifies
Administrative Agent that Guarantor wishes to eliminate the effect of any change
in generally accepted accounting principles on the operation of any covenant
contained in the Participation Agreement or (ii) Administrative Agent notifies
Guarantor that it wishes to effect such an elimination, then Guarantor's
compliance with such covenant shall be determined on the basis of generally
accepted accounting principles in effect immediately before the relevant change
in generally accepted accounting principles becomes effective, until either (A)
such notice is withdrawn by the party giving such notice or (B) such covenant is
amended in a manner satisfactory to Guarantor and Administrative Agent to
reflect such change in generally accepted accounting principles. All
calculations of interest, fees and other amounts for any period shall include
the first day of such period and exclude the last day of such period unless
otherwise specified. All words importing any gender shall be deemed to include
the other gender. All references to statutes are to be construed as including
all statutory provisions consolidating, amending or replacing the statute
referred to. Unless otherwise specified, references to agreements and other
contractual instruments shall be deemed to include all subsequent amendments,
modifications and supplements thereto, and references to any Person shall be
deemed to include all successors and permitted assigns of such Person.
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