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EXHIBIT 10.5
MASTER EQUIPMENT LEASE AGREEMENT
between
BRL UNIVERSAL COMPRESSION FUNDING I, L.P.
as Head Lessor
and
UCO COMPRESSION LLC
as Head Lessee
Dated as of February 9, 2001
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TABLE OF CONTENTS
Page
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1. Definitions...............................................................1
2. General Provisions.......................................................12
2.1 Agreement for Leasing of Compressors............................12
2.2 Monthly Lease Payment and Additional Payment....................12
2.3 Supplemental Rent...............................................12
2.4 Payments of Rent................................................12
2.5 Minimum Rent....................................................12
2.6 Nature of Payment, Taxes........................................13
2.7 Quiet Enjoyment Intention of the Parties........................13
2.8 Characterization of Head Lease..................................13
2.9 Overpayments....................................................14
3. Delivery, Acceptance and Leasing of Compressors..........................14
4. Term.....................................................................14
5. Return of Compressors....................................................14
5.1 Redelivery......................................................14
5.2 Items to Accompany Redelivery...................................14
5.3 Redelivery Condition............................................15
5.4 Storage.........................................................15
5.5 Timely Redelivery, Deemed Purchase Option.......................16
5.6 Specific Performance............................................16
6. Net Lease Agreement......................................................16
7. Compressors are Personal Property........................................17
8. Use of Compressors, Compliance with Laws.................................17
9. Maintenance and Repair of Compressors....................................18
10. Alterations..............................................................18
11. Assignment and Subleasing by Head Lessee.................................19
12. Liens....................................................................20
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13. Loss, Damage or Destruction..............................................20
13.1 Risk of Loss, Damage or Destruction.............................20
13.2 Payment Upon an Event of Loss...................................21
13.3 Application of Payments Not Relating to an Event of Loss........21
14. Insurance................................................................22
15. NO HEAD LESSOR WARRANTIES................................................23
16. Assignment of Manufacturer Warranties....................................23
17. Head Lease Event of Default..............................................23
18. Remedies Upon Default....................................................25
19. Head Lessor's Right to Perform for Head Lessee...........................26
20. End of Term Options......................................................27
20.1 Head Lessee Purchase Option.....................................27
20.2 Return Option...................................................27
20.3 Renewal Option..................................................29
21. General Indemnity........................................................29
22. Tax Indemnity............................................................33
23. Security for Head Lessor's Obligations...................................34
24. Notices..................................................................34
25. GOVERNING LAW, SUBMISSION TO JURISDICTION:
VENUE, WAIVER OF JURY TRIAL..............................................34
26. Miscellaneous............................................................35
27. Execution and Effectiveness..............................................36
28. Statutory References.....................................................36
29. Severability.............................................................36
30. Counterparts.............................................................36
31. Amendments and Waivers...................................................36
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32. Purchase Option..........................................................36
EXHIBIT A Form of Lease Supplement
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This MASTER EQUIPMENT LEASE AGREEMENT dated as of February 9, 2001
(herein, as amended, supplemented and otherwise modified from time to time, this
"Head Lease"), is between BRL UNIVERSAL COMPRESSION FUNDING I, L.P., a Delaware
limited partnership (together with its successors and assigns, "Head Lessor")
and UCO COMPRESSION LLC, a Delaware limited liability company (together with its
successors and assigns, "Head Lessee").
In consideration of the mutual covenants and agreements set forth
herein, the parties hereto agree as follows:
1. Definitions. Whenever used in this Head Lease, the following words
and phrases shall have the following meanings, and the definitions of such terms
are applicable to the singular as well as the plural forms of such terms and to
the masculine as well as to the feminine and neuter genders of such terms. Other
capitalized items not defined below shall have the meanings given to such terms
in the Indenture (as defined below).
Additional Payment: For any Rent Payment Date on which a Trigger
Event is continuing, an amount equal to the sum of (x) excess of (A) the
Available Head Lessee Collections for the immediately preceding Collection
Period, over (B) the sum of all amounts actually paid pursuant to clauses (1)
through (6) inclusive of Section 7.2(b) of the Head Lessee Security Agreement on
such Rent Payment Date, and (y) any amount on deposit in the Back-up Manager
Account in excess of the amount, determined by the Deal Agent in its sole
discretion, that is or would be needed to compensate a replacement manager).
Advance Rate: With respect to each Lease Supplement and each Lease
Pool set forth in such Lease Supplement, the Advance Rate for such Lease Pool is
set forth in the following table; provided, however, that the Advance Rate for a
particular Lease Pool will reduce to zero on and after the date on which a Head
Lease Event of Default shall have occurred and then be continuing:
Supplement Lease Advance
Number Pool Rate
---------- ----- -------
1 1 80%
2 2 75%
3 3 70%
4 4 70%
5 5 65%
6 6 60%
Affiliate: This term shall have the meaning set forth in Section 101
of the Indenture.
After-Tax or After-Tax Basis: After deduction of the net amount of
all Taxes actually required to be paid by any Person (taking into account any
Tax savings actually realized and not already taken into account by such Person
or any Affiliate thereof by reason of the event or circumstance giving rise to
the payment that is being paid on an After-Tax Basis) with respect to the
receipt or accrual by it of an amount (including additional amounts received by
reason of such amounts being paid on an After-Tax Basis).
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Aggregate Appraised Value: The sum of the most recently available
Appraised Values of the Compressors; provided, however, that if the Return
Option has been selected on the most recent Termination Date in accordance with
the provisions of Section 20.2 hereof, then, notwithstanding the results of any
Appraisal, the Aggregate Appraised Value for the remaining Compressors will not
exceed the product of (a) total horsepower of all Compressors and (b) the
quotient of (i) the Net Sales Proceeds obtained in the most recent sale of
Compressors made in connection with the exercise of the Return Option divided by
(ii) the total number of horsepower in the Lease Pool sold pursuant to the
Return Option.
Aggregate Required OC Amount: As of any date of determination, an
amount equal to the difference between (1) an amount equal to the quotient of
(x) the then unpaid principal balance of all Notes and Capital then outstanding
divided by (y) the mathematical average of the Advance Rates for each Lease Pool
for which the related Term has not expired or terminated and (2) the then unpaid
principal balance of all Notes and Capital then outstanding.
Allocable Portion: With respect to each Lease Pool, a fraction
(expressed as a percentage) the numerator of which is equal to the sum of the
most recently available Appraised Values for all Eligible Compressors in such
Lease Pool and the denominator of which is equal to the sum of the most recently
available Aggregate Appraised Values for all Lease Pools for which the Term
thereof has not yet expired or been terminated.
Annual Appraisal Date: The Payment Date occurring in February of
each calendar year commencing February 2002.
Applicable Law: This term shall have the meaning set forth in
Section 101 of the Indenture.
Appraisal: This term shall have the meaning set forth in Section 101
of the Indenture.
Appraised Value: This term shall have the meaning set forth in
Section 101 of the Indenture.
Available Head Lessee Collections: This term shall have the meaning
set forth in Section 1 of the Head Lessee Security Agreement.
Back-up Manager Fee: This term shall have the meaning set forth in
Section 1 of the Management Agreement.
Breakage Costs: This term shall have the meaning set forth in
Section 205(c) of the Series 2001-1 Supplement.
Business Day: This term shall have the meaning set forth in the
Indenture.
Capital: This term shall have the meaning set forth in the
Partnership Agreement.
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Certificates: This term shall have the meaning set forth in Section
101 of the Indenture.
Claim: This term shall have the meaning set forth in Section 21
hereof.
Class A Note Interest Payment: This term shall have the meaning set
forth in Section 101 of the Series 2001-1 Supplement.
Closing Date: This term shall have the meaning set forth in Section
101 of the Indenture.
Collection Period: This term shall have the meaning set forth in
Section 101 of the Indenture.
Commitment Fee: For each Rent Payment Date, the commitment fees
payable on the next succeeding Payment Date, as such amounts and dates are set
forth in the Series 2000-1 Supplement issued pursuant to the Indenture.
Compressor: This term shall have the meaning set forth in Section
101 of the Indenture.
Concentration Limits: This term has the meaning set forth in Section
1.01 of the Contribution Agreement.
Determination Date: This term shall have the meaning set forth in
Section 101 of the Series 2001-1 Supplement.
Dollars: This term shall have the meaning set forth in Section 101
of the Indenture.
Eligible Compressor: This term shall have the meaning set forth in
Section 101 of the Indenture.
Entitled Party: This term shall have the meaning set forth in the
Head Lessee Security Agreement.
Equipment Filing Locations: This term shall have the meaning set
forth in Section 101 of the Indenture.
Event of Default: This term shall have the meaning set forth in
Section 101 of the Indenture.
Event of Loss: With respect to any Compressor means (a) the loss of
such Compressor or any substantial part thereof, or (b) the loss of the use of
such Compressor 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 (c) the destruction, damage beyond repair, or rendition of such
Compressor or any substantial part thereof permanently unfit for normal use for
any reason
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whatsoever, or (d) the condemnation, confiscation, seizure, or requisition of
use or title to such Compressor or any substantial part thereof by a or any
Governmental Authority under the power of eminent domain or otherwise beyond the
earlier of fifteen (15) days and the end of the Term.
Excluded Payment: This term shall have the meaning set forth in
Section 101 of the Indenture.
Fair Market Sales Value: With respect to the Compressor, an amount
equal in amount to, the value which would be obtained in an arm's length
transaction between an informed and willing purchaser under no compulsion to buy
and an informed and willing seller under no compulsion to sell the compressor.
Governmental Authority: This term shall have the meaning set forth
in Section 101 of the Indenture.
Gross Compressor Lease Revenues: For any Collection Period, an
amount equal to the sum of all rental payments (but excluding (i) indemnity
payments received from Universal, (ii) Net Sales Proceeds and (iii) any rental
payment for which the Manager has previously made an unreimbursed Manager
Advance) received by, or on behalf of, the Head Lessee during such Collection
from the leasing or subleasing, as the case may be, of both the Head Lessee
Compressors and the Head Lessor Compressors.
Head Lease: This term shall have the meaning set forth in Section
2.1 hereof.
Head Lease Collateral: This term shall have the meaning set forth in
Section 2 of the Head Lessee Security Agreement.
Head Lease Event of Default: This term shall have the meaning set
forth in Section 17.
Head Lessee Collection Account: This term shall have the meaning set
forth in the Head Lessee Security Agreement.
Head Lessee Collections: For any Collection Period, an amount equal
to the sum of (i) the Gross Compressor Lease Revenues actually received by, or
on behalf of, the Head Lessee during such Collection Period, (ii) the Net Sales
Proceeds actually received by, or on behalf of, the Head Lessee during such
Collection Period from the sale of any Head Lessee Compressor in accordance with
the terms of the Related Documents, and (iii) any Manager Advances.
Head Lessee Compressors: This term shall have the meaning set forth
in Section 101 of the Indenture.
Head Lessee Indemnified Person: The Head Lessor (including its
partners and the officers, directors, shareholders and Affiliates of each such
Partner), the Indenture Trustee and the Noteholders.
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Head Lessee Purchase Option: This term shall have the meaning set
forth in Section 20.1 hereof.
Head Lessee Security Agreement: The head lessee security agreement,
dated as of February 9, 2001, between the Head Lessee and the Head Lessor, as
such agreement may be amended, modified or supplemented from time to time in
accordance with its terms.
Head Lessor Compressors: This term shall have the meaning set forth
in Section 101 of the Indenture.
Head Lessor Liens: Any Lien on or against any Compressor, this Head
Lease, or Head Lessor's interest therein arising as a result of (a) any claim
against Head Lessor not resulting from the transactions contemplated by the
Related Documents, (b) any act or omission of Head Lessor which is not required
or expressly permitted by the Related Documents or is in violation of any of the
terms of the Related Documents, (c) any claim against Head Lessor with respect
to taxes or obligations of such Person against which Head Lessee is not required
to indemnify such Person pursuant to the Related Documents or (d) any claim
against Head Lessor arising out of any transfer by Head Lessor of all or any
portion of the interest of such Person in any Compressor or the Related
Documents other than the transfer of interest in or possession of such
Compressor by such Person pursuant to and in accordance with the Related
Documents or pursuant to the exercise of any remedy set forth in the Related
Documents.
Indemnitee: Each of the Head Lessor, the Indenture Trustee, each
Noteholder, each Entitled Party, their Affiliates, and each of the successors
and permitted assigns and each of the partners, directors, officers, employees,
servants and agents of each of the foregoing and of each such Affiliate and of
such successors and permitted assigns.
Indenture: The indenture, dated as of February 9, 2001, between the
Issuer and the Indenture Trustee, as such may be amended, supplemented and
otherwise modified from time to time in accordance with its terms.
Indenture Trustee: This term shall have the meaning set forth in
Section 905 of the Indenture.
Indenture Trustee Fees: This term shall have the meaning set forth
in Section 101 of the Indenture.
Insolvency Law: This term shall have the meaning set forth in
Section 101 of the Indenture.
Interest Expense: For each Rent Payment Date, an amount equal to the
sum of (i) Class A Note Interest Payment payable on the next succeeding Payment
Date and (ii) the amounts payable by the Issuer under any Interest Rate Swap
Agreement on such Payment Date (as each such term is defined in the Series
2000-1 Supplement issued pursuant to the Indenture).
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Interest Rate Swap Agreement: This term shall have the meaning set
forth in Section 101 of the Indenture.
Issuer: This term shall have the meaning set forth in Section 101 of
the Indenture.
Lease Payment Adjustment: For any Lease Pool, the difference between
(x) the product of (i) the Purchase Option Percentage and (ii) the sum of (A)
the aggregate unpaid principal balance of the Notes and the Capital as of the
Termination Date, (B) all accrued but unpaid interest on and Commitment Fees
payable with respect to the Notes on the Termination Date, and (C) any unpaid
Partnership Priority Payments on such Termination Date and (y) the Net Sales
Proceeds of such Compressors conducted at the time and subject to the conditions
set forth in Section 20.2.4 hereof; provided, however, that the Lease Payment
Adjustment for any Lease Pool shall not exceed an amount equal to the Maximum
Head Lessee Risk Amount.
Lease Pool: Collectively all of the Head Lessor Compressors set
forth in a specific Lease Supplement.
Lease Supplement: Each supplement to this Head Lease executed from
time to time by the Head Lessor and the Head Lessee, which supplement shall be
substantially in the form of Exhibit A hereto.
Liability Insurance: This term shall have the meaning set forth in
Section 14 hereof.
Lien: This term shall have the meaning set forth in Section 101 of
the Indenture.
Manager: This term shall have the meaning set forth in Section 101
of the Indenture.
Manager Advance: This term shall have the meaning set forth in
Section 8.1 of the Management Agreement.
Manager Default: This term shall have the meaning set forth in
Section 12.1 of the Management Agreement.
Manager Report: This term shall have the meaning set forth in
Section 101 of the Indenture.
Maximum Head Lessee Risk Amount: For any Lease Pool on any date of
determination, an amount equal to the maximum amount permissible such that after
giving effect to such payment this Head Lease is classified as an operating
lease under GAAP.
Maximum Head Lessor Risk Amount: For any Lease Pool on any date of
determination, an amount equal to the maximum amount permissible such that after
giving effect to such payment this Head Lease is classified as an operating
lease under GAAP.
Monthly Lease Payment: For any Rent Payment Date, one of the
following amounts:
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(A) if no Trigger Event is then continuing, the excess of (i) the
sum of the amounts (if any) payable on the immediately succeeding (or related)
Payment Date pursuant to clauses (1), (2), (3), (4), (5), (6), (7) and (8) of
Section 302(c) of the Indenture over (ii) the amount to be received by the
Issuer on such Payment Date from all Interest Rate Swap Agreements; or
(B) if a Trigger Event is then continuing, the sum of (i) the amount
set forth in clause (A) above and (ii) the Additional Payment.
Net Revenue: For any Collection Period, the excess of (x) the Gross
Compressor Lease Revenues actually billed by, or on behalf of, the Head Lessee
during such Collection Period over (y) the amounts payable pursuant to clauses
(1) and (2) of Section 7.2(b) of the Head Lessee Security Agreement for such
Collection Period.
Net Revenue Event: The condition that will exist if the Manager
Report delivered on any Determination Date indicates that the Net Revenue for
the related Collection Period is less than an amount equal to the product of (i)
two and (ii) the amounts payable pursuant to clauses (3), (4) and (5) (excluding
the portion thereof representing commitment fees or availability fees) of
Section 302(c) of the Indenture for such Collection Period, provided, however,
that solely for purposes of this clause (ii), the Back-up Manager Fee payable
pursuant to clause (1) of Section 302(c) of the Indenture shall be excluded from
the Monthly Lease Payment so long as no Trigger Event is continuing. Once a Net
Revenue Event occurs, such Net Revenue Event will continue until the date on
which a subsequent Manager Report indicates that such condition is no longer
continuing.
Net Sales Proceeds: With respect to each Compressor sold by, or on
behalf of, Head Lessor or the Head Lessee, as the case may be, to a third party,
the net amount of the proceeds of sale of such Compressor, 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 Compressor, (ii) all fees, costs and
expenses of such sale reasonably incurred by Head Lessor or Head Lessee in the
case of a sale on the Termination Date or by Head Lessor in the case of a sale
after the Termination Date and (iii) any other amounts for which, if not paid
Head Lessor would be liable as a result of such sale or which, if not paid,
would constitute a Lien on such Compressor.
Noteholders: This term shall have the meaning set forth in Section
101 of the Indenture.
Notes: As of any date of determination all of the Notes issued
pursuant to the Indenture that are then Outstanding.
Optional Alteration: This term shall have the meaning set forth in
Section 10 hereof.
Outstanding: This term shall have the meaning set forth in Section
101 of the Indenture.
Overcollateralization Event: The condition that will exist if the
Manager Report delivered on any Determination Date indicates the existence of
any of the following conditions:
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(1) the sum of the then unpaid principal balance of all Notes and
the then unpaid Capital, exceeds an amount equal to the excess
of (A) the then Aggregate Appraised Value over (B) the then
Aggregate Required OC Amount;
(2) with respect to any Lease Pool, an amount equal to the product
of (x) the Allocable Portion for such Lease Pool and (y) the
then unpaid principal balances of the Notes and Capital,
exceeds an amount equal to 115% of the sum of the most recent
Appraised Values of all Eligible Compressors in such Lease
Pool; or
(3) the sum of the then unpaid principal balance of the Notes and
the then unpaid Capital is greater than an amount equal to the
product of (x) four and one-half (4.5) and (y) annualized Net
Revenue for the Collection Period immediately preceding each
Annual Appraisal Date, provided, however, that in calculating
Net Revenue for purposes of this clause (3), such amount will
be calculated utilizing the Monthly S&A Fee Rate (as defined
in the Management Agreement) and Operations Fee Rates that
will be in effect for the next succeeding year as determined
in accordance with the provisions of the Management Agreement.
Once an Overcollateralization Event occurs, such Overcollateralization Event
shall continue until the date on which a subsequent Manager Report indicates
that none of the conditions set forth in paragraphs (1) and (3) above is no
longer continuing.
Overdue Rate: This term shall have the meaning set forth in Section
101 of the Indenture.
Partnership Agreement: This term shall have the meaning set forth in
Section 101 of the Indenture.
Partnership Priority Payment: This term shall have the meaning set
forth in Section 101 of the Indenture.
Payment Date: This term shall have the meaning set forth in Section
101 of the Indenture.
Permitted Encumbrances: Any of the following: (i) any Lien created
by any Related Documents; (ii) the rights of others under subleases to the
extent expressly permitted by the terms of Section 11 of this Head Lease; (iii)
Head Lessor Liens; (iv) Liens for Taxes either not yet due or being contested in
good faith by appropriate proceedings so long as such proceedings do not involve
a material danger of the sale, forfeiture, loss or restriction on use of the
Compressors; (v) suppliers', vendors', mechanics', workmen's, repairmen's,
employees' or other like Liens arising in the ordinary course of business for
amounts the payment of which is either not yet delinquent or is being contested
in good faith by appropriate proceedings so long as such proceedings do not
involve a material danger of the sale, forfeiture, loss or restriction on use of
the Compressors, and the Head Lessee shall maintain reserves for the discharge
of such Lien in accordance with its general practice,
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if any; and (vi) pre-judgment Liens for claims against the Head Lessee or any
sublessee permitted under the Head Lease which are contested in good faith and
Liens arising out of judgments or awards against the Head Lessee or any
permitted sublessee with respect to which an appeal or proceeding for review is
being prosecuted in good faith and to which a stay of execution has been
obtained pending such appeal or review.
Person: An individual, a partnership, a limited liability company, a
corporation, a joint venture, an unincorporated association, a joint-stock
company, a trust, or other entity or a Governmental Authority.
Property Insurance: This term shall have the meaning set forth in
Section 14 hereof.
Prospective Trigger Event: Any event or condition which with the
giving of notice or the passage of time or both would constitute a Trigger
Event.
Purchase Option Amount: With respect to each Lease Pool for which
the Head Lessee has elected to exercise the Head Lessee Purchase Option, an
amount equal to the sum of:
(1) all Monthly Lease Payments and Supplemental Rent then due
and owing;
(2) the product of (i) the Purchase Option Percentage and (ii)
the sum of (A) the aggregate unpaid principal balance of the Notes
and the Capital as of the Termination Date, (B) all accrued but
unpaid interest on and Commitment Fees payable with respect to the
Notes on the Termination Date, and (C) any unpaid Partnership
Priority Payments on such Termination Date; plus
(3) any breakage fees assessed under any Interest Rate Swap
Agreement in connection with the exercise of any such purchase
option.
Purchase Option Percentage: As of any Termination Date, a fraction
(expressed as a percentage), the numerator of which is the Advance Rate for the
Lease Pool associated with such Termination Date, and the denominator of which
is the sum of the Advance Rates for all Lease Pools in effect on the Termination
Date.
Redelivery Location: A location or locations within the United
States designated by Head Lessor.
Related Documents: This term shall have the meaning set forth in
Section 101 of the Indenture.
Remarketing Period: This term shall have the meaning set forth in
Section 20.2 hereof.
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Renewal Option: The renewal option of the Head Lessee set forth in
Section 20.3 hereof.
Rent Payment Date: The second (2nd) Business Day prior to each
Payment Date.
Report: This term shall have the meaning set forth in Section 22(b)
hereof.
Required Alteration: This term shall have the meaning set forth in
Section 10 hereof.
Responsible Officer: With respect to any Person other than the
Indenture Trustee, 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, and with respect to the
Indenture Trustee, an officer in the Corporate Trust Department of Xxxxx Fargo
Bank Minnesota, National Association with responsibility for this transaction.
Return Option: The end of term option set forth in Section 20.2
hereof.
Senior Class Priority Payments: This term shall have the meaning set
forth in Section 201 of the Series 2001-1 Supplement.
Supplemental Rent: Any and all amounts, liabilities and obligations
(other than Monthly Lease Payments) which the Head Lessee assumes or agrees to
pay under the Head Lease or any other Related Document (whether or not styled as
Supplemental Rent) to any Person, including, without limitation and without
duplication, (i) payments of Purchase Option Amount and amounts calculated with
reference thereto, (ii) if the Return Option is exercised in accordance with the
provisions of Section 20.2 hereof, the Lease Payment Adjustment, (iii) indemnity
and other payments payable pursuant to (A) Sections 21 and 22 of this Head Lease
and (B) clauses (12), (13), (14) and (15) of Section 302(c) of the Indenture,
(iv) all costs and expenses incurred by the Head Lessor (including its partners)
in connection with the transactions contemplated by the Related Documents and
(v) all amounts, other than principal and interest on the Notes, which the Head
Lessor is obligated to pay under the Indenture (including Breakage Costs,
increased costs, make-whole payments and tax indemnification).
Tax and Taxes: Any and all fees (including license, documentation
and registration fees), taxes (including income, gross receipt, sales, rental,
use, turnover, value added, property (tangible and intangible), excise and stamp
taxes), licenses, levies, imposts, duties, recording charges or fees, charges,
assessments and withholdings of any nature whatsoever, together with any and all
assessments, penalties, fines, additions thereto and interest thereon, in each
case imposed by any taxing authority.
Taxing Authority: This term shall have the meaning set forth in
Section 22 hereof.
Term: This term shall have the meaning set forth in Section 4
hereof.
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Termination Date: With respect to each Lease Supplement and each
Lease Pool set forth in such Lease Supplement, the date set forth below under
the column "Termination Date" in the schedule set forth below:
Lease Pool/Lease Termination Number of
Supplement Number Date Years in Term
------------------ --------------------- ---------------
1 February 15, 2004 3
2 February 15, 2005 4
3 February 15, 2006 5
4 February 15, 2007 6
5 February 15, 2008 7
6 February 15, 2009 8
When used in the Related Documents, the Termination Date of a Lease Pool will be
calculated without regard to the extension set forth in Section 20.3 hereof.
Trigger Event: The occurrence and continuation of any of the
following events or conditions: (i) a Manager Default, (ii) a Head Lease Event
of Default, (iii) an Event of Default under this Indenture, (iv) an
Overcollateralization Event that continues unremedied on the immediately
succeeding Determination Date and/or (v) a Net Revenue Event that continues
unremedied on the immediately succeeding Determination Date. Either or both of
an Overcollateralization Event and a Net Revenue Event can be cured in
accordance with the provisions of Section 702(b) of the Indenture and shall
continue until the date on which a subsequent Manager Report indicates that such
conditions no longer exist.
Trust Account: This term shall have the meaning set forth in Section
101 of the Indenture.
Universal: This term shall have the meaning set forth in Section 101
of the Indenture.
User: This term shall have the meaning set forth in the Head Lessee
Security Agreement.
User Lease: This term shall have the meaning set forth in the Head
Lessee Security Agreement.
Weighted Average Age: This term shall have the meaning set forth in
Section 101 of the Indenture.
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2. General Provisions.
2.1 Agreement for Leasing of Compressors. Subject to, and upon all
of the terms and conditions of this Head Lease, Head Lessor hereby agrees to
lease to Head Lessee, and Head Lessee hereby agrees to lease from Head Lessor,
the Compressors identified in each Lease Supplement from time to time executed
by the Head Lessor and the Head Lessee. Each Lease Supplement entered into by
the parties shall constitute a separate non-cancellable lease agreement and
shall incorporate therein all of the terms and conditions of this Head Lease and
contain such additional terms and conditions as agreed upon and the term "Head
Lease" shall refer to all Lease Supplements outstanding from time to time as
such Lease Supplements incorporate the terms of this Head Lease.
2.2 Monthly Lease Payment and Additional Payment. The Head Lessee
agrees to pay to the Head Lessor in advance, on each Rent Payment Date during
the Term of any of the Lease Pools, the Monthly Lease Payment and any Additional
Payment then due. The portion of Monthly Lease Payment and Additional Payment
allocable to each Lease Supplement for which the Term has not then expired shall
be equal to the product of (x) the Monthly Lease Payment and (y) the Allocable
Portion.
2.3 Supplemental Rent. The Head Lessee agrees to pay to such Person
as shall be entitled thereto as expressly provided herein or in any other
Related Document, as appropriate, any and all Supplemental Rent when and as the
same shall become due and owing. Without limiting the Head Lessee's obligation
to pay amounts of Supplemental Rent in accordance with the Related Documents,
the Head Lessee shall pay, on demand, as Supplemental Rent, interest at the
lesser of (x) the Overdue Rate and (y) the maximum rate permissible by law, on
any part of any installment of Monthly Lease Payment, Additional Payment and/or
Supplemental Rent not paid when due, in each case for the period from the due
date thereof until the same shall be paid in full.
2.4 Payments of Rent. All Monthly Lease Payments and Supplemental
Rent shall be paid in Dollars by wire transfer in immediately available funds by
not later than 11:00 a.m., New York City time, on the due date therefor. All
Monthly Lease Payment and Supplemental Rent payable to the Head Lessor hereunder
shall be paid by the Head Lessee to the Head Lessor to the Trust Account, or to
such other account in the United States as the Head Lessor shall have specified
in a notice to the Head Lessee at least ten Business Days prior to the date on
which such Monthly Lease Payment or Supplemental Rent, as the case may be, shall
be due. If any payment hereunder is due on a date which is not a Business Day,
then payment is to be made on the next following Business Day, and the amount
thereof to be paid on such next Business Day shall be the amount which would
have been payable on the date which is not a Business Day (unless calculation of
such amount is based on actual days elapsed).
2.5 Minimum Rent. Anything contained in this Head Lease or any other
Related Document to the contrary notwithstanding, on each Rental Payment Date
there will be due and payable hereunder an amount of Monthly Lease Payment and
Supplemental Rent, which shall be in an amount at least sufficient to pay in
full any payments required to be made on the immediately following Payment Date
of the principal balance of the Notes and any related Interest Expense,
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Commitment Fees, Indenture Trustee Fees, and Partnership Priority Payments,
other than any such payment due as a result of an acceleration of the Notes by
reason of an Event of Default.
2.6 Nature of Payment, Taxes. All payments of the Monthly Lease
Payment and Supplemental Rent shall be made free and clear of, and without
deduction or withholding for, any and all Taxes of any nature whatsoever except
if, when and to the extent required by Applicable Law. If any such withholding
Taxes are imposed on or against or with respect to any amounts payable by the
Head Lessee under this Head Lease, then the Head Lessee shall pay, as
Supplemental Rent, an additional amount such that the net amount actually
received by the Head Lessor will, after deduction of such Taxes and payment
thereof by the Head Lessee to the applicable taxing authority, be equal on an
After-Tax Basis to the amount that would have been received by the Head Lessor
in the absence of such withholding Taxes.
(a) If the Head Lessee is liable for the payment of such withholding
Taxes, it shall pay the full amount of withholding Tax (including any additional
withholding Tax as may be payable as a result of the payment of additional
amounts pursuant to Section 2.6(a)) to the competent tax authorities within the
applicable statutory deadlines, and upon such payment, deliver to the Head
Lessor a duly executed certificate, confirming such payment, together with such
other documents as the Head Lessor may require under Applicable Law in order to
obtain a refund or tax credit, if available, in respect of such withholding
Taxes.
2.7 Quiet Enjoyment Intention of the Parties. Head Lessor agrees
that so long as no Head Lease Event of Default has occurred and is continuing,
Head Lessor shall not take, or cause to be taken, any action (except for the
creation of the Liens created by operation of the Related Documents), contrary
to or interfering with Head Lessee's or any User's right to peaceful possession,
use and quiet enjoyment of each Compressor without any interference, hindrance,
ejection or molestation whatsoever; provided, however nothing in this Section
2.7 shall prevent Head Lessor or the Indenture Trustee from exercising their
inspection rights as set forth in the Head Lessee Security Agreement.
2.8 Characterization of Head Lease. Head Lessor and Head Lessee
intend that for federal and all state and local income tax, bankruptcy,
regulatory, commercial law and all other purposes (other than for accounting
purposes) (A) this Head Lease and each Lease Supplement will be treated as a
financing arrangement and (B) Head Lessee will be treated as the owner of the
Head Lessor Compressors and will be entitled to all tax benefits ordinarily
available to owners of property similar to the Head Lessor Compressors for such
tax purposes. Head Lessor and Head Lessee further do intend this Head Lease and
each Lease Supplement to constitute a "lease intended as security" within the
meaning of UCC Section 1-201(37). Head Lessee shall claim the cost recovery
deductions associated with each Head Lessor Compressor and Head Lessor shall
not, unless required by law, take on its tax return a position inconsistent with
Head Lessee's claim of such deductions. Notwithstanding the foregoing, neither
party hereto has made, nor shall be deemed to have made, any representation or
warranty as to the availability of any of the foregoing treatments under
applicable accounting rules, tax, bankruptcy, regulatory or commercial law or
under any other set of rules.
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2.9 Overpayments. To the extent that the Head Lessor shall at any
time receive from the Head Lessee funds in excess of the Monthly Lease Payment
and Supplemental Rent then due and payable, then, so long as no Head Lease Event
of Default is then continuing, the Head Lessor shall promptly return to the Head
Lessee the amount of such excess payment.
3. Delivery, Acceptance and Leasing of Compressors. The execution by
Head Lessor and Head Lessee of a Lease Supplement shall (a) evidence that each
Compressor leased under such Lease Supplement is leased under, and is subject to
all of the terms, provisions and conditions of, this Head Lease, and (b)
constitute Head Lessee's unconditional and irrevocable acceptance of each such
Compressor for all purposes of this Head Lease and the related Lease Supplement
without further action by any Person. Head Lessor shall not be liable to Head
Lessee for any failure or delay in the delivery of any Compressor to Head
Lessee.
4. Term. The Term for each Lease Supplement shall commence on
the Closing Date and, unless this Head Lease is terminated earlier with respect
to any Compressor, the Term of such Lease Supplement shall end on the
Termination Date specified in such Lease Supplement unless extended under the
circumstances and for the duration specified in Section 20.3 hereof (each such
period between the Closing Date and the Termination Date, a "Term").
5. Return of Compressors.
5.1 Redelivery. Unless Head Lessee has (i) exercised the Head
Lessee Purchase Option, (ii) sold the Compressors to a third party on the
Termination Date pursuant to the Return Option or (iii) repurchased a Compressor
pursuant to the terms of the Related Documents, then on or prior to the
expiration or earlier termination of the Term of the related Lease Pool, Head
Lessee shall dismantle (to the extent necessary to ship such Compressor),
surrender and deliver possession to Head Lessor at the Redelivery Location of
each Compressor included in the related Lease Pool. All such costs of
dismantling, surrender and delivery shall be payable by the Head Lessee.
5.2 Items to Accompany Redelivery. Each redelivery under Section 5.1
shall be accompanied by (i) a certificate executed by a Responsible Officer of
Head Lessee certifying that (A) Head Lessee has used best efforts to maintain
for each Compressor being redelivered all plans, specifications and operating,
maintenance and repair manuals prepared or reviewed by Head Lessee or any of its
Affiliates and (B) such Compressor is in the condition required hereunder, (ii)
a copy of an inventory list for each Compressor, (iii) all then current plans,
specifications and operating, maintenance, and repair manuals and logs relating
to such Compressor that have been retained by Head Lessee or any of its
Affiliates, (iv) with respect to any Compressor which qualifies for or is
subject to any manufacturer's maintenance, repair or warranty policy: (A) if
such manufacturer is the Head Lessee or an Affiliate thereof, Head Lessee shall
cause such manufacturer to deliver to Head Lessor a statement or certificate
that has been signed by an authorized representative of the manufacturer to the
availability of such maintenance, repair or warranty policy or (B) if the
manufacturer is not the Head Lessee or an Affiliate thereof and generally
provides its customers upon request a statement or certificate attesting to the
availability of such maintenance, repair or warranty policy, then Head Lessee
shall utilize reasonable efforts to obtain from such manufacturer such a
statement or certificate, and (v) any additional documentation reasonably
requested by Head
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Lessor, at Head Lessee's cost, relating to the redelivery of or Head Lessor's
interest in each Compressor.
5.3 Redelivery Condition. At the time of such return to Head Lessor,
each Compressor (and each part or component thereof) shall (i) meet the original
design specifications and operating standards of such Compressor, (ii) be in as
good operating condition, state of repair and appearance as when delivered to
Head Lessee hereunder, and shall not have been subjected to excess wear and
tear; provided, that ordinary wear and tear as a result of normal and customary
usage is excepted; and provided, further that "ordinary wear and tear" as used
herein shall not be construed as permitting any material broken, damaged or
missing items or components of any Compressor such that its value, utility or
remaining useful life will be reduced, (iii) be in the condition required by
Section 9 and with respect to any Compressor that qualifies for or is subject to
any manufacturer's maintenance, repair or warranty policy, such Compressor shall
have been maintained and repaired in a manner consistent with such policy, (iv)
have no missing or damaged components such that its value, utility or remaining
useful life will be reduced, (v) comply with all laws and rules referred to in
Section 8, (vi) have attached or affixed thereto any addition, modification or
improvement considered an accession thereto as provided in Section 10 and (vii)
have had removed therefrom in a workmanlike manner, (x) at Head Lessor's option,
any addition, modification or improvement which, as provided in Section 10, is
owned by Head Lessee, and (y) any insignia or marking, and each Compressor (and
each part or component thereof), shall be free and clear of all Liens, other
than Head Lessor Liens.
All operating licenses and agreements pertinent to the operation of
each Compressor, (other than non-transferable licenses to use software), that
are capable of being transferred, shall be fully transferable upon the
expiration of the Term to Head Lessor or its designee. Head Lessee shall
transfer any such transferable license or agreement upon return of the
Compressor at Head Lessee's cost and expense.
Each Compressor that qualifies for or is subject to any
manufacturer's maintenance, repair or warranty policy must be properly
deinstalled in a manner consistent with such policy and in such a way that the
Compressor remains eligible for or subject to such policy, as appropriate, and
Head Lessee shall provide a certificate from a Responsible Officer certifying
that each Compressor was deinstalled in a manner consistent with such policy and
remains eligible for or subject to such policy, as appropriate. Upon
deinstallation, each Compressor shall be secured properly for air or overland or
other suitable transport. Each Compressor shall be delivered to the Redelivery
Location in the manner in which is customary for such Compressor.
Head Lessee shall, at its own expense, make repairs necessary to
restore each Compressor to the condition required by this Section 5.3 prior to
redelivery hereunder.
Upon redelivery, Head Lessee shall provide any additional
documentation reasonably requested by Head Lessor and reasonably available to
Head Lessee, at Head Lessee's cost, relating to the redelivery of such
Compressor.
5.4 Storage. For the purpose of delivering possession of any
Compressor to Head Lessor as above required, Head Lessee shall at its own cost,
expense and risk cause each such
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Compressor to be insured in accordance with Section 14 and stored at the
Redelivery Location identified by Head Lessor at the risk of Head Lessee without
charge to Head Lessor for insurance, rent or storage until all such Compressors
have been sold, leased or otherwise disposed of by Head Lessor; provided,
however, Head Lessee's obligations under this Section 5.4 shall terminate with
respect to each Compressor one (1) year after the required date of delivery of
such Compressor to the Redelivery Location in the condition required by Section
5.3.
5.5 Timely Redelivery, Deemed Purchase Option. If Head Lessee has
not timely satisfied the obligations and conditions set forth in Section 5.1
with respect to the redelivery of each and every Compressor, then Head Lessee
shall be deemed to have exercised the Head Lessee Purchase Option set forth in
Section 21.1 hereof and Head Lessee shall pay to Head Lessor the Purchase Option
Amount with respect to all such Compressors in such Lease Pool.
5.6 Specific Performance. The provisions of this Section 5 are of
the essence of this Head Lease, and the parties hereto agree that, Head Lessor
shall be entitled to specific performance of the covenants of Head Lessee set
forth in this Section 5.
6. Net Lease Agreement. This Head Lease is a net lease agreement. Head
Lessee acknowledges and agrees that its obligations hereunder, including,
without limitation, its obligations to pay Monthly Lease Payments and
Supplemental Rent payable hereunder, shall be absolute and unconditional and
irrevocable under any and all circumstances, shall not be subject to
cancellation, termination, modification or repudiation by Head Lessee, and shall
be paid and performed by Head Lessee without notice or demand (except whenever
this Head Lease expressly provides for notice or demand or both) and without any
abatement, reduction, diminution, setoff, defense (other than prior payment),
counterclaim or recoupment whatsoever, including, without limitation, any
abatement, reduction, diminution, setoff, defense (other than prior payment),
counterclaim, withholding or recoupment due or alleged to be due to, or by
reason of, any past, present or future claims which Head Lessee may have against
Head Lessor, the Indenture Trustee, any Entitled Party, any sublessee or
assignee of Head Lessee, any manufacturer or supplier of any Compressor or any
part thereof, or any other Person for any reason whatsoever, or any defect in
any Compressor or any part thereof, or the condition, design, operation or
fitness for use thereof, any damage to, or any loss or destruction of, any
Compressor or any part thereof, or any Liens or rights of others with respect to
any Compressor or any part thereof, or any default or failure to pay by any
sublessee or assignee of Head Lessee, or any prohibition or interruption of or
other restriction against Head Lessee's use, operation, possession, maintenance,
insurance, improvement or return of any Compressor thereof, for any reason
whatsoever, or any interference with such use, operation or possession by any
Person, or any default by Head Lessor in the performance of any of its
obligations herein contained, or any other indebtedness or liability, howsoever
and whenever arising, of Head Lessor, the Indenture Trustee, any Entitled Party,
any sublessee or assignee of Head Lessee, any other Person, or by reason of
insolvency, bankruptcy or similar proceedings by or against Head Lessor, the
Indenture Trustee, any Entitled Party, any sublessee or assignee of Head Lessee,
or any other Person, or for any other reason whatsoever, whether similar or
dissimilar to any of the foregoing, any present or future law to the contrary
notwithstanding; it being the intention of the parties hereto that all Monthly
Lease Payments, and Supplemental Rent payable by Head Lessee hereunder shall
continue to be payable in all events and in the manner and at the times herein
provided, unless the obligation to pay the same shall be terminated pursuant to
the express provisions of this Head Lease. Nothing contained
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in this Section 6 shall (a) affect any claim, action or right that Head Lessee
may have against Head Lessor or any other Person nor (b) be considered as (i) a
guaranty of the fair market value or useful life of any Compressor upon the
commencement, expiration or termination of the Term with respect to any
Compressor, (ii) a prohibition of assertion of any claim against any
manufacturer, supplier, dealer, vendor, contractor, subcontractor or installer
with respect to any Compressor or any part thereof or (iii) a waiver by Head
Lessee of any of its express rights under any of the Related Documents or of its
right to assert and xxx upon any claims it may have against any Person in one or
more separate actions.
7. Compressors are Personal Property.
It is the intention and understanding of both Head Lessor and Head
Lessee that the Compressors shall be and at all times remain personal property,
notwithstanding the manner in which the Compressors may be attached or affixed
to realty. The Head Lessee agrees to take all actions that are necessary or
desirable to ensure the continued characterization of the Compressor as personal
property under Applicable Law.
8. Use of Compressors, Compliance with Laws. Head Lessee agrees
that each Compressor will be used and operated in compliance with any and all
insurance policy terms, conditions and provisions referenced in the Related
Documents and in all material respects with all statutes, laws, ordinances,
rules and regulations of any federal, national, state or local governmental
body, agency or authority applicable to the use and operation of such
Compressor, including, without limitation, environmental, noise and pollution
laws (including notifications and reports), and that each Compressor will be
used and operated solely in the manner for which it was intended and in
accordance with the license or certificate, if any, provided by the manufacturer
thereof. Head Lessee agrees that no Compressor shall be used by Head Lessee
other than in the subleasing of such Compressor to Head Lessee's customers and
no Compressor shall be used or located at a location outside of the United
States or in a jurisdiction other than the Equipment Filing Locations. Head
Lessee shall use reasonable precautions to prevent loss or damage to each
Compressor from fire and other hazards. Head Lessee shall not permit any
Compressor to be moved from the location in which it is located on the Closing
Date unless the Head Lessee has, at its own expense, made, executed, endorsed,
acknowledged, filed and/or delivered to Head Lessor such confirmatory
assignments, conveyances, financing and continuation statements, transfer
endorsements, or other assurances or instruments (other than estoppel
certificates or other agreements, certificates or other documents to be
delivered by any Lessee or other Person (other than an Affiliate of Head
Lessee)) necessary to perfect, preserve and protect Head Lessor's security
interest in such Compressor. Head Lessee shall not permit any Compressor to be
used in any unlawful trade or in any manner that would violate any law that
would expose such Compressor to penalty, forfeiture or capture. Head Lessee
shall not attach or incorporate any Compressor to or in any other Compressor or
other personal property or to or in any real property in a manner that could
give rise to the assertion of any Lien on such Compressor by reason of such
attachment or the assertion of a claim that such Compressor has become a fixture
and is subject to a Lien in favor of a third party. Head Lessee shall comply in
all material respects with environmental laws and maintain liability insurance
as required pursuant to the Related Documents for all Compressors.
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9. Maintenance and Repair of Compressors. Head Lessee, at its
sole cost and expense shall maintain (or cause to be maintained) each Compressor
(i) in a manner consistent with Head Lessee's maintenance practices applicable
to its other equipment of the same or similar type as such Compressor, so as to
keep each Compressor in good condition (ordinary wear and tear excepted), (ii)
in all material respects in compliance with Applicable Law, (iii) in compliance
with the manufacturer's maintenance standards and procedures and (iv) in all
respects in compliance with the insurance applicable to such Compressors. Head
Lessee shall comply in all material respects with environmental laws and
maintain liability insurance as required pursuant to the Related Documents for
all Compressors. Head Lessee agrees to prepare and deliver to Head Lessor and
each Entitled Party within a reasonable time prior to the required date of
filing (or, to the extent permissible, file on behalf of Head Lessor and the
Indenture Trustee) any and all reports (other than income tax returns) to be
filed by Head Lessor or the Indenture Trustee with any federal, national, state
or other regulatory authority by reason of the ownership by Head Lessor or the
Indenture Trustee of any Compressor or the leasing thereof to Head Lessee to the
extent any such reports are required because of the nature of the Compressors.
Head Lessee agrees to maintain all records, logs and other materials required by
any Governmental Authority having jurisdiction over any Compressor or Head
Lessee, to be maintained in respect of such Compressor. Head Lessee hereby
waives any right now or hereafter conferred by law to make repairs on the
Compressors at the expense of Head Lessor.
10. Alterations.
(a) Except as required or permitted by the provisions of this
Section 10, Head Lessee shall not modify or alter a Compressor without the prior
written approval of the Head Lessor and each Entitled Party.
(b) In case any Compressor (or any part or component thereof) is
required to be altered, added to, replaced or modified in order to comply with
any insurance policies required pursuant to this Head Lease or Applicable Law
(any such alteration, additional replacement or modification, "Required
Alteration"), Head Lessee agrees to make (or cause to be made) such Required
Alteration at its own expense. Thereupon, title to such Required Alteration
shall, without further act, immediately become the property of Head Lessor, free
and clear of all Liens, other than Head Lessor Liens and Permitted Encumbrances
and such Required Alteration shall immediately become subject to the terms and
conditions of this Head Lease.
(c) Head Lessee may make any optional renovation, improvement,
addition, or alteration to any Compressor ("Optional Alteration") provided that
such Optional Alteration does not impair the value, use or remaining useful life
of such Compressor. In the event an Optional Alteration is readily removable
without impairing the value, use or remaining useful life of the Compressor, and
is not a part or appliance which replaces any part or appliance originally
incorporated or installed in or attached to such Compressor on the Closing Date
thereof the Head Lessee may (or, if requested by the Head Lessor shall) remove
such Optional Alteration whereupon such Optional Alteration will remain the
property of Head Lessee. To the extent such Optional Alteration is not readily
removable without impairing the value, use or remaining useful life of the
Compressor to which such Optional Alteration has been made, or is a part or
appliance which replaces any part or appliance originally incorporated or
installed in or attached to such Compressor on the Closing Date thereof the
same, such Optional Alteration shall, without further act,
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immediately be and become the property of, and title shall vest in, Head Lessor,
free and clear of all Liens, other than Head Lessor Liens and Permitted
Encumbrances, and shall be subject to the terms of this Head Lease. Any parts
installed or replacements made by any Head Lessee upon any Compressor pursuant
to its obligation to maintain and keep the Compressors in the condition required
pursuant to the terms of this Head Lease shall be considered accessions to such
Compressor and ownership thereof shall be immediately vested in Head Lessor.
11. Assignment and Subleasing by Head Lessee.
EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN THIS SECTION 11, HEAD
LESSEE SHALL NOT, WITHOUT THE PRIOR WRITTEN CONSENT OF THE HEAD LESSOR AND EACH
ENTITLED PARTY, ASSIGN, TRANSFER OR ENCUMBER ITS RIGHTS, INTERESTS OR
OBLIGATIONS HEREUNDER. ANY ATTEMPTED ASSIGNMENT, TRANSFER OR ENCUMBRANCE BY HEAD
LESSEE OF ITS RIGHTS, INTERESTS OR OBLIGATIONS HEREUNDER SHALL BE NULL AND VOID.
So long as no Head Lease Event of Default shall have occurred and be continuing,
Head Lessee may, without the consent of Head Lessor, sublease one or more
Compressors to any User; provided, that all of the following requirements shall
be satisfied with respect to each such User Lease entered into pursuant to this
Section 11:
(a) the entering into of such User Lease shall not result in (i) a
violation of the provisions of Section 5.2 of the Management Agreement, (ii) a
violation of a Concentration Limit or (iii) the occurrence of a Trigger Event or
a Prospective Trigger Event;
(b) the Compressors are physically located within the United States;
(c) such User Lease shall expire before, or automatically expire on
or before, the expiration of the Term; unless at the time such User Lease is
made, Head Lessee is permitted to and has elected to exercise the Head Lessee
Purchase Option under Section 20.1 hereof and no Trigger Event or Prospective
Trigger Event shall have occurred and is continuing;
(d) such User Lease shall be in writing; shall identify the
Compressor by manufacturer, model and unit number; and shall expressly prohibit
any further assignment, sublease or transfer by User of any rights or interests
in the Compressor;
(e) such User Lease may contain a purchase option in favor of the
User or any other provision pursuant to which the User may obtain record or
beneficial title to the Compressor leased thereunder from Head Lessee, provided
upon the exercise of such purchase option, Head Lessee substitute new
Compressor(s) in accordance with the provisions of Section 13.4 hereof;
(f) such User Lease shall prohibit the User from making any
alterations or modifications to the Compressors that would violate the
provisions of Section 10 of this Head Lease; and
(g) such User Lease shall require the User (i) to maintain the
Compressor in accordance with Sections 8 and 9 hereof or shall require Head
Lessee to maintain the Compressor
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in accordance with those provisions and (ii) to engage in activities with the
Compressor in a manner consistent with the Compressor's intended purpose and in
accordance with the Compressor's specifications.
For so long as a Head Lease Event of Default has occurred and is continuing,
Head Lessee shall not agree to sublease or agree to extend any sublease of any
Compressor without the consent of Head Lessor and each Entitled Party; provided,
however, if such Head Lease Event of Default is solely the result of a breach of
a covenant or of covenants to deliver financial or other information to Head
Lessor or any Entitled Party or to use, maintain or repair the Compressors in
accordance with Sections 8 and 9 (a "Limited Event of Default"), Head Lessee may
agree to sublease any Compressor in accordance with the requirements set forth
in clauses (a) through (g) of this Section 11; provided such User Lease is
expressly subject and subordinate to Head Lessor's and each Entitled Party's
interests in such Compressor. If a Limited Event of Default is subsequently
cured in accordance with the terms of this Head Lease, Head Lessee may cure any
Head Lease Event of Default arising from any failure to make any User Lease to
be expressly subject to and subordinate to Head Lessor's and each Entitled
Party`s interest by delivering to Head Lessor and each Entitled Party a copy of
such User Lease and certifying that such User Lease complies with the provisions
of Section 5.2 of the Management Agreement.
Upon request by Head Lessor, Head Lessee shall promptly deliver to
Head Lessor and Deal Agent (x) a schedule of all User Leases of the Compressor
including Users certified by a Responsible Officer of Head Lessee and (y) for so
long as a Head Lease Event of Default has occurred and is continuing, copies of
each User Lease at the time in effect. No such subleasing by Head Lessee will
reduce or affect any of the obligations of Head Lessee hereunder or the rights
of Head Lessor and each Entitled Party hereunder, and all of the obligations of
Head Lessee hereunder shall be and remain primary and shall continue in full
force and effect as the obligations of a principal and not of a guarantor or
surety.
12. Liens. Head Lessee shall not directly or indirectly create,
incur, assume or suffer to exist any Lien on or with respect to (a) any
Compressor or any part thereof or Head Lessor's interest therein or proceeds
thereof, (b) any insurances required hereunder or (c) this Head Lease or any of
Head Lessor's interests hereunder, except (i) Head Lessor Liens and (ii) in the
case of clause (a), Permitted Encumbrances. Head Lessee, at its own expense,
will promptly pay, satisfy and otherwise take such actions as may be necessary
to keep this Head Lease and each Compressor free and clear of, and to duly
discharge or eliminate (or bond in a manner satisfactory to Head Lessor and each
Entitled Party), any Lien that may arise in violation of the foregoing. Head
Lessee will notify Head Lessor and Indenture Trustee in writing promptly upon a
Responsible Officer of Head Lessee obtaining knowledge of any Lien, other than
Permitted Encumbrances, that shall attach to the Compressors and of the full
particulars of such Lien.
13. Loss, Damage or Destruction.
13.1 Risk of Loss, Damage or Destruction. Head Lessee hereby
assumes all risk of loss, damage, theft, taking, destruction, confiscation,
requisition or commandeering, partial or complete, of or to each Compressor
("Loss, Damage or Destruction"), however caused or occasioned except for Loss,
Damage or Destruction caused by the gross negligence or willful misconduct of
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Head Lessor. Any such of Loss, Damage or Destruction to be borne by Head Lessee
with respect to each Compressor commencing on the Closing Date, and continuing
until the earliest to occur of (x) the return of such Compressor in accordance
with the provision of Section 5 hereof, (y) the transfer of such Compressor to
Head Lessee in accordance with the provisions of Section 20 or (z) the sale of
such Compressor in accordance with Section 20.
13.2 Payment Upon an Event of Loss. If an Event of Loss occurs with
respect to a Compressor during the Term thereof, Head Lessee shall give Head
Lessor, the Deal Agent and Indenture Trustee prompt written notice of such loss
and shall within thirty (30) days after the occurrence of such Event of Loss (i)
replace such Compressor in accordance with the provisions of Section 13.4 hereof
or (ii) pay to Head Lessor an amount equal to the sum of (A) all unpaid Monthly
Lease Payments (determined on a pro rata basis based on the number of horsepower
of such Compressor) due and payable for such Compressor, plus (B) the most
recent Appraised Value of such Compressor, plus (C) all other Supplemental Rent
(determined on a pro rata basis based on the number of horsepower of such
Compressor) due for such Compressor as of the date of payment of the amounts
specified in the foregoing clauses (A) and (B). Any payments received at any
time by Head Lessor or by Head Lessee from any insurer or other party as a
result of the occurrence of such Event of Loss of a Compressor will be applied
in reduction of Head Lessee's obligation to pay the foregoing amounts, if not
already paid by Head Lessee, or, if already paid by Head Lessee, will be applied
to reimburse Head Lessee for its payment of such amount, unless a Head Lease
Event of Default shall have occurred and be continuing in which event any such
payments received by Head Lessor and applied in accordance with the priority of
payments established under the Indenture. In the event that any payments
received by Head Lessor or Indenture Trustee referred to in the immediately
preceding sentence with respect to any Compressor exceed any amounts due and
owing by Head Lessee to Head Lessor under the Related Documents, then, provided
there are no amounts due and owing by Head Lessee under the Related Documents
and no Head Lease Event of Default shall have occurred and be continuing, such
excess shall forthwith be paid to Head Lessee. Upon payment in full of such
amounts, (a) the Head Lessee's obligations hereunder with respect to such
Compressor (other than those expressly stated to survive the termination of this
Head Lease) shall terminate, and (b) all rights and interests of Head Lessor in
such Compressor shall automatically cease and vest in Head Lessee. Head Lessor
will at the request and cost of Head Lessee furnish to or at the direction of
Head Lessee, a xxxx of sale without recourse or warranty (except as to the
absence of Head Lessor Liens) and otherwise in form and substance reasonably
satisfactory to Head Lessee and Head Lessor, evidencing the transfer to or at
the direction of Head Lessee, all of Head Lessor's right, title and interest in
and to such Compressor(s), "as-is, where-is". Following any such transfer, Head
Lessee will be subrogated to all claims of Head Lessor, if any, against third
parties to the extent the same relate to physical damage to or loss of the
transferred Compressor which was the subject of such Event of Loss.
13.3 Application of Payments Not Relating to an Event of Loss. Any
payments (including, without limitation, insurance proceeds) received at any
time by Head Lessor or Head Lessee from any Governmental Authority or other
party with respect to any loss or damage to any Compressor not constituting an
Event of Loss, will be applied directly in payment of repairs or for replacement
of property in accordance with the provisions of Section 13 hereof, if not
already paid by Head Lessee, or if already paid by Head Lessee and no Head Lease
Event of Default shall have occurred and be continuing, shall be applied to
reimburse Head Lessee for such payment. Any
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balance remaining after making such payment with the provisions of said Sections
with respect to such loss or damage shall be retained by Head Lessee. If any
Head Lease Event of Default shall have occurred and be continuing, all payments
hereunder shall be paid to Head Lessor in accordance with Section 13.3.
13.4 Substitution of Compressors. So long as no Trigger Event or
Prospective Trigger Event is continuing or would result therefrom, the Head
Lessee may substitute one or more Eligible Compressors for any Compressor(s) for
which an Event of Loss has occurred. Any such substitution shall be implemented
in accordance with and subject to the restrictions set forth in Section 3.04 of
the Sale Agreement.
14. Insurance.
(a) Head Lessee will cause to be carried and maintained, at its sole
expense, with respect to each Compressor at all times during the Term thereof
and for the geographic area in which such Compressor is at any time located
physical damage insurance (including theft and collision insurance) insuring
against risks of physical loss or damage to the Compressors ("Property
Insurance") in an amount no less than the Appraised Value for each Compressor
per occurrence except for Head Lessee's customary sub-limits for certain perils,
and insurance, and liability insurance in the amount of $50,000,000 per
occurrence against liability for bodily injury, death and property damage
resulting from the use and operation of the Compressors (including sudden and
accidental environmental pollution coverage) ("Liability Insurance") of the
types and amounts of coverage equal to or greater than the insurance coverage
Head Lessee carries on the UCI Compressors. Property Insurance shall not have
deductibles, in the aggregate, in excess of an amount equal to the product of
(x) one half of one percent (.50%) and (y) the then Aggregate Appraised Value,
and the Liability Insurance shall have no deductibles. The policies of insurance
required under this Section shall be valid and enforceable policies issued by
insurers having an A.M. Best Company rating of "A-" or better or otherwise
acceptable to Deal Agent and shall provide coverage with respect to incidents
occurring anywhere in the United States. In the event that any of such Liability
Insurance policies for a Compressor shall now or hereafter provide coverage on a
"claims-made" basis, Head Lessee shall continue to maintain such policies in
effect for a period of not less than three (3) years after the expiration of the
Term of the last Compressor subject to the term of this Head Lease.
(b) Such Property Insurance policy or policies will name the Head
Lessor and each Entitled Party as the loss payees. Such Liability Insurance
policy or policies will name the Head Lessor and each of their shareholders,
partners, directors, officers, employees, agents and servants (each an
"Additional Insured") as an additional insured. Each such policy shall provide
that (i) the insurers waive any claim for premiums and any right of subrogation
or setoff against Additional Insureds, (ii) it may not be invalidated against
any Additional Insured by reason of any violation of a condition or breach of
warranty of the policies or the application therefor by Lessee, (iii) it may be
canceled or materially altered or reduced in coverage by the insurer only after
no less than ten (10) days' prior written notice from Head Lessee's insurance
broker to Head Lessor and each Entitled Party, and (iv) the insurer will give
written notice to Lessor and each Entitled Party in the event of nonpayment of
premium by Head Lessee when due.
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(c) On the Closing Date, and thereafter not less than three (3) days
prior to the expiration dates of any expiring policies required under this
Section 5.7, the Head Lessee shall furnish Head Lessor, the Deal Agent and each
Entitled Party with certificates of the insurance or replacement insurance
coverage required by this Section 5.7.
15. NO HEAD LESSOR WARRANTIES. HEAD LESSOR HEREBY LEASES THE
COMPRESSORS TO HEAD LESSEE AS-IS WHERE-IS, WITH ALL FAULTS, IF ANY, AND IN
WHATEVER CONDITION IT 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
FITNESS FOR ANY PARTICULAR PURPOSE OF, OR ANY OTHER MATTER CONCERNING, THE
COMPRESSORS. HEAD LESSEE HEREBY WAIVES ANY CLAIM (INCLUDING ANY CLAIM BASED ON
STRICT OR ABSOLUTE LIABILITY IN TORT OR INFRINGEMENT) IT MIGHT HAVE AGAINST HEAD
LESSOR, ANY CERTIFICATE HOLDER OR ANY OTHER PERSON FOR ANY LOSS, DAMAGE
(INCLUDING INCIDENTAL OR CONSEQUENTIAL DAMAGE) OR EXPENSE CAUSED BY THE
COMPRESSORS OR BY HEAD LESSEE'S LOSS OF USE THEREOF FOR ANY REASON WHATSOEVER,
INCLUDING COMPLIANCE WITH ENVIRONMENTAL LAWS (WHICH ITEMS OF COMPRESSORS, HEAD
LESSEE ACKNOWLEDGES, WERE SELECTED BY HEAD LESSEE ON THE BASIS OF ITS OWN
JUDGMENT WITHOUT RELIANCE ON ANY STATEMENTS, REPRESENTATIONS, GUARANTIES OR
WARRANTIES MADE BY HEAD LESSOR).
16. Assignment of Manufacturer Warranties. So long and only so long as
a Head Lease Event of Default shall not have occurred and be continuing, and so
long (and only so long) as a Compressor shall be subject to this Head Lease and
Head Lessee shall be entitled to possession of such Compressor hereunder, Head
Lessor authorizes Head Lessee, at Head Lessee's expense, to assert for Head
Lessee's account, and assigns to Head Lessee all rights and powers of Head
Lessor under any manufacturer's, vendor's or dealer's warranty on the
Compressors or any part thereof and Head Lessor agrees to use reasonable efforts
at Head Lessee's expense to assist Head Lessee in obtaining the benefits of such
warranties; provided, however, that Head Lessee shall indemnify, protect, save,
defend and hold harmless Head Lessor from and against any and all claims, and
all costs, expenses, damages, losses and liabilities incurred or suffered by
Head Lessor in connection therewith, as a result of, or incident to, any action
by Head Lessee pursuant to the foregoing authorization.
17. Head Lease Event of Default. The occurrence of any of the following
specified events or conditions (whatever the reason for such event or condition
and whether such event or condition shall be voluntary or involuntary or come
about or be effected by operation of law or pursuant to or in compliance with
any judgment, decree or order of any court or any order, rule or regulation of
any administrative or governmental body) shall constitute a "Head Lease Event of
Default":
(a) Head Lessee shall fail to pay any payment of Monthly Lease
Payment or Supplemental Rent on the date such payment becomes due and such
failure shall continue unremedied for two (2) Business Days; provided, however,
that to the extent that the Deal Agent has failed to deliver when due the
calculation of Senior Class Priority Payments payable on such Payment Date, then
the failure to make such portion of the Monthly Lease Payment shall not
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constitute a Head Lease Event of Default until one Business Day after such
information is so delivered; or
(b) Head Lessee shall fail to observe or perform any of the
covenants, agreements or obligations of the Head Lessee set forth in any of
paragraphs (dd) and (ff) of Section 5 of the Head Lessee Security Agreement; or
(c) Head Lessee shall fail to perform or observe any other covenant,
condition, or agreement to be performed or observed by it under any Related
Document (other than those identified in clauses (a) and (b) above), and such
failure shall continue unremedied for a period of thirty (30) days after the
earlier to occur of (1) receipt by Head Lessee of written notice thereof from
Head Lessor or the Indenture Trustee or (2) the date on which any of the
president, any senior vice president or any executive vice president of Head
Lessee shall have actual knowledge of such failure; or
(d) any representation or warranty made by Head Lessee in any of the
Related Documents, or in any certificate delivered pursuant thereto, shall prove
to be untrue in any material respect on the date of which made; or
(e) the entry of a decree or order for relief by a court having
jurisdiction in respect of the Head Lessee in any involuntary case under any
applicable Insolvency Law, or other similar law now or hereafter in effect, or
appointing a receiver, liquidator, assignee, custodian, trustee, or sequestrator
(or other similar official) for the Head Lessee or for any substantial part of
its properties, or ordering the winding up or liquidation of its affairs, and
the continuance of any such decree or order unstayed and in effect for a period
of 60 consecutive days;
(f) the commencement by the Head Lessee of a voluntary case under
any applicable Insolvency Law, or other similar law now or hereafter in effect,
or the consent by the Head Lessee to the appointment of or taking possession by
a receiver, liquidator, assignee, custodian, trustee or sequestrator (or other
similar official) of the Head Lessee or any substantial part of its properties,
or the making by the Head Lessee of any general assignment for the benefit of
creditors, or the failure by the Head Lessee generally to pay its debts as they
become due, or the taking of any action by the Head Lessee in furtherance of any
such action;
(g) the Head Lessor shall fail to have a first priority perfected
security interest in the Head Lessee Collateral;
(h) the Head Lessee is required to register as an investment company
under the Investment Company Act of 1940, as amended;
(i) the rendering against the Head Lessee of a final judgment,
decree or order for the payment of money in excess of $10,000 and the
continuance of such judgment, decree or order unsatisfied, unbonded or uninsured
for a period of 60 consecutive days;
(j) an Event of Default shall have occurred under the Indenture;
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(k) one or more of the Concentration Limits are violated and such
condition continues unremedied for a period of forty-five (45) days;
(l) the Weighted Average Age of all Head Lessor Compressors and Head
Lessee Compressors exceeds fifteen (15) years and such condition continues
unremedied for forty-five (45) days; or
(m) a Manager Default shall have occurred and a replacement Manager
has not assumed the duties of the terminated Manager by the second Payment Date
following the occurrence of such Manager Default.
18. Remedies Upon Default. Upon the occurrence of any Head Lease Event
of Default and at any time thereafter so long as the same shall be continuing,
Head Lessor may exercise one or more of the following remedies, to the extent
permitted by applicable law, as Head Lessor in its sole discretion shall elect:
(a) Head Lessor may terminate or cancel this Head Lease, without
prejudice to any other remedies of Head Lessor hereunder, with respect to all or
any Compressor, and whether or not this Head Lease has been so terminated, may
enter the premises of Head Lessee, subject to Head Lessee's normal safety and
security concerns, including standard confidentiality requirements, or any other
party to take immediate possession of the Compressors and remove all or any
Compressor by summary proceedings or otherwise, or may cause Head Lessee, at
Head Lessee's expense, to store, maintain, surrender and deliver possession of
the Compressors or such Compressor in the same manner as provided in
Section 5.4;
(b) Head Lessor may hold, keep idle or lease to others any
Compressor, as Head Lessor in its sole discretion may determine, free and clear
of any rights of Head Lessee, except that Head Lessee's obligation to pay
Monthly Lease Payments on any Rent Payment Date after Head Lessee shall have
been deprived of possession pursuant to this Section 18 shall be reduced by the
net proceeds, if any, received by Head Lessor from leasing the Compressors to
any Person other than Head Lessee for the same periods or any portion thereof;
(c) Head Lessor may sell the Compressors or any Compressor at public
or private sale as Head Lessor may determine, free and clear of any rights of
Head Lessee, and Head Lessee shall pay to Head Lessor, as liquidated damages for
loss of a bargain and not as a penalty (in lieu of the Monthly Lease Payments
due for the Compressor so sold for any period commencing after the date on which
such sale occurs), the sum, without duplication, of (i) all unpaid Monthly Lease
Payments payable for such Compressor for all periods through the date on which
such sale occurs, plus (ii) an amount equal to the excess, if any, of (x) the
Appraised Value of the Compressor so sold over (y) the net proceeds of such
sale, plus interest at the rate specified in Section 2.3 on the amount of such
excess from the due date thereof until the date of actual payment, plus (iii)
all unpaid Supplemental Rent due with respect to such Compressor so sold;
(d) the Head Lessor, by written notice to the Head Lessee specifying
a payment date which shall be not earlier than ten, nor more than 60, days from
the date of such notice, may demand that the Head Lessee pay to the Head Lessor,
and the Head Lessee shall pay the Head Lessor, on the payment date specified in
such notice, as liquidated damages for loss of a bargain and
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not as a penalty (in lieu of the Monthly Lease Payment payable after such
payment date), or amount equal to the sum of (i) any unpaid Monthly Lease
Payment due and payable on or before such payment date, plus (ii) all unpaid
Supplemental Rent as of such payment date, plus (iii) an amount equal to the
excess, if any, of Aggregate Appraised Value over the Fair Market Sales Value of
all of the Compressors leased hereunder as of such payment date, plus, in the
case of either clause (A) or (B) above, to the extent permitted by Applicable
Law, interest at the Overdue Rate on the amounts payable pursuant to this
Section 18(d) from the payment date specified pursuant to this Section 18(d) to
the date of actual payment of all such amounts;
(e) Head Lessor may exercise any other right or remedy which may be
available to it under the Head Lessee Security Agreement or Applicable Law or
proceed by appropriate court action to enforce the terms hereof or to recover
damages for the breach hereof and terminate this Head Lease. In addition, Head
Lessee shall be liable for all costs and expenses, including reasonable
attorney's fees and expenses, incurred by Head Lessor and any Entitled Party by
reason of the occurrence of any Head Lease Event of Default or the exercise of
Head Lessor's remedies with respect thereto, including all reasonable costs and
expenses incurred in connection with the return of the Compressors in accordance
with Section 8 or in placing the Compressors in the condition required by said
Section.
Except as otherwise expressly provided above, no remedy referred to in this
Section 18 is intended to be exclusive, but each shall be cumulative and in
addition to any other remedy referred to above or otherwise available to Head
Lessor at law or in equity; and the exercise or beginning of exercise by Head
Lessor of any one or more of such remedies shall not constitute the exclusive
election of such remedies and shall not preclude the simultaneous or later
exercise by Head Lessor of any or all of such other remedies. No express or
implied waiver by Head Lessor of any Head Lease Event of Default shall in any
way be, or be construed to be, a waiver of any future or subsequent Head Lease
Event of Default. To the extent permitted by applicable law, Head Lessee hereby
waives any rights now or hereafter conferred by statute or otherwise which may
require Head Lessor to sell, lease or otherwise use the Compressors in
mitigation of Head Lessor's damages as set forth in this Section 18 or which may
otherwise limit or modify any of Head Lessor's rights and remedies in this
Section 18.
19. Head Lessor's Right to Perform for Head Lessee. During the
existence and continuance of a Head Lease Event of Default, the Head Lessor or
its designee may, but shall not be obligated to, (i) subject to the terms of any
Related Document, perform any and all acts required by the Head Lessee's
covenants herein contained and take all such action thereon as in the Head
Lessor's opinion may be reasonably necessary or appropriate therefor and (ii)
make advances to perform the same. The Head Lessee shall reimburse the Head
Lessor for the amount of any such payment or advance and the amount of the Head
Lessor's reasonable and documented costs and expenses incurred in connection
with such acts or cure, together with interest thereon, to the extent permitted
by Applicable Law, at the Overdue Rate, all of which shall be deemed
Supplemental Rent due and payable by the Head Lessee upon demand. The Head
Lessor shall be under no obligation to the Head Lessee or any other Person to
perform any such act or make any such payment, and no such payment or
performance shall be deemed to waive Head Lease Event of Default or relieve the
Head Lessee of its obligations hereunder or be deemed an eviction or termination
of this Head Lease or a repossession of the Compressors or any interest therein.
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20. End of Term Options.
20.1 Head Lessee Purchase Option. The Head Lessee shall have the
option to purchase all (but not less than all) of the Compressors in such
terminating Lease Pool on the Termination Date for such Lease Pool for the Head
Lessee Purchase Option Amount in accordance with the terms of this Section 20.1
(the "Head Lessee Purchase Option"). If no Trigger Event or Prospective Trigger
Event is then continuing, the Head Lessee may exercise the Head Lessee Purchase
Option by giving written notice to the Head Lessor (with a copy to each Entitled
Party) not more than 210 days prior to the Termination Date and not later than
180 days prior to the Termination Date (which election shall be irrevocable as
of the 180th day prior to the Termination Date). If Head Lessee shall have
elected to exercise the Head Lessee Purchase Option, Head Lessee must
demonstrate to Head Lessor and the Deal Agent (to the Deal Agent's satisfaction)
that it has sufficient liquidity to exercise the Head Lessee Purchase Option and
if the Head Lessee is unable to demonstrate such requisite level of liquidity
the Head Lessee shall be deemed to have elected the Renewal Option. If a Trigger
Event or a Prospective Trigger Event has occurred subsequent to the date on
which the Head Lessee elected to exercise the Head Lease Purchase Option and is
continuing on the scheduled Termination Date of the respective Lease Pool, then
the Head Lessee will be deemed to have elected the Renewal Option with respect
to such Lease Pool. If the Head Lessee shall have elected to not exercise the
Head Lease Purchase Option, the Head Lessee shall provide written notice to such
effect by not later than the 180th day prior to the Termination Date. If the
Head Lessee shall have elected to exercise the Head Lessee Purchase Option and
no Trigger Event or Prospective Trigger Event is continuing on the scheduled
Termination Date for such Lease Pool, the Head Lessee shall pay the Purchase
Option Amount by immediate available cash to the Head Lessor on the Termination
Date. Upon payment in full of all amounts due upon the exercise of the Head
Lessee Purchase Option, Head Lessor will, at the request and cost of Head
Lessee, transfer to or at the direction of Head Lessee, without recourse or
warranty (except as to the absence of Head Lessor Liens), all of Head Lessor's
right, title and interest in and to the Compressor(s) in the related Lease Pool,
"as-is, where-is" and at the cost and request of Head Lessee, furnish to or at
the direction of Head Lessee, a xxxx of sale without recourse or warranty
evidencing such transfer (except as to the absence of Head Lessor Liens), such
xxxx of sale to be in form and substance reasonably satisfactory to Head Lessee
and Head Lessor. If Head Lessee does not intend to exercise the Head Lessee
Purchase Option, Head Lessee shall give written notice to Head Lessor to such
effect in accordance with Section 20.2.1. Prior to the Head Lessor's incurring
costs to remarket or otherwise utilize the Compressors in the maturing Lease
Pool, the Head Lessor shall have the right to request from the Lessee not more
than one year prior to the Termination Date a notice from the Lessee as to its
intention with respect to its exercise of the Head Lessee Purchase Option;
provided, however, that failure to make any such request shall not alter the
rights or obligations of the parties or give rise to any liability on the part
of the Head Lessor nor shall it limit to Head Lessee's right to change its
intentions in that regard.
20.2 Return Option.
20.2.1 Remarketing Obligations. If the Head Lessee is then
permitted to exercise the Return Option and so elects to exercise the Return
Option, the Head Lessee shall give written notice to the Head Lessor (with a
copy to each Entitled Party) not more than 210 days prior
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to the Termination Date and not later than 180 days prior to the Termination
Date (which election shall be irrevocable as of the 180th day prior to the
Termination Date). In the event that Head Lessee does not exercise the Head
Lessee Purchase Option in accordance with the provisions of Section 20.1 hereof
and is not otherwise prohibited from exercising the Return Option in accordance
with the terms of such provision, then Head Lessee shall be deemed to have
elected the Return Option and have the obligation during the last 180 days of
the related Term (the "Remarketing Period") to solicit bona fide bids for not
less than all Compressors in the related Lease Pool from prospective purchasers
who are financially capable of purchasing such Compressors in the related Lease
Pool for cash on an "as-is", "where-is" basis, without recourse, representation
or warranty. Any bid received by Head Lessee prior to the end of the Remarketing
Period shall be promptly communicated to Head Lessor and each Entitled Party in
writing, setting forth the amount of such bid and the name and address of the
person or entity submitting such bid. Notwithstanding the foregoing, Head Lessor
and each Entitled Party shall have the right, but not the obligation, to seek
bids for the Compressors during the Remarketing Period and Head Lessee shall
grant Head Lessor and each Entitled Party or their respective designees access
to the Compressors in the related Lease Pool upon reasonable notice and during
normal business hours to facilitate the exercising of such right.
20.2.2 Deemed Exercise of Head Lessee Purchase Option or
Renewal Option. In the event Head Lessee fails to deliver the notice described
in (and within the time period prescribed in) Section 20.1, then Head Lessee
shall be deemed to have elected (A) so long as no Trigger Event or Prospective
Trigger Event shall have occurred and is continuing at such time, the Head
Lessee Purchase Option and (B) if a Trigger Event or Prospective Trigger Event
is then continuing on the due date of such notice, the Renewal Option.
If a Trigger Event or a Prospective Trigger Event shall occur
at any time after Head Lessee gives written notice of its intention to exercise
the Return Option and return possession of the Compressors to Head Lessor and on
or prior to the related Termination Date, then Head Lessee's notice to return
possession of the Compressors in the related Lease Pool shall be deemed
automatically revoked and Head Lessee shall be deemed to have elected the
Renewal Option.
20.2.3 Sale of Compressors to Third Party Buyer. On the
Termination Date, provided that all the conditions set forth in Sections 20.2.1,
20.2.2 and in clauses (a) and (b) in this Section 20.2.3 have been met, then on
the Termination Date for such Lease Pool the Head Lessor shall sell (or cause to
be sold) all Compressors in the related Lease Pool, for cash to the bidder, if
any, who shall have submitted the highest bid during the Remarketing Period on
an "as is", "where-is" basis and without recourse or warranty. Upon receipt by
Head Lessor of the sales price, Head Lessor shall instruct Head Lessee to
deliver, and Head Lessee shall deliver, the Compressors in the related Lease
Pool to such bidder; provided, that (a) any such sale to a third party shall be
consummated, and the sales price for the Compressors in the related Lease Pool
shall have been paid directly to the Indenture Trustee in immediately available
funds, on or before the Termination Date; and (b) Head Lessor shall not be
obligated to sell such Compressors in the related Lease Pool if the Net Sales
Proceeds of all of the Compressors in the related Lease Pool are less than the
aggregate Maximum Head Lessor Risk Amount applicable to the related Lease Pool.
Upon payment in full of all amounts due upon a sale under this Section 21.2.3,
Head Lessor will, so long as no Head Lease Event of Default shall have occurred
and be continuing and subject to compliance with the provisions of Section 404
of the Indenture, at the request and cost of the bidder, transfer to or at the
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direction of the bidder, without recourse or warranty (except as to the absence
of Head Lessor Liens), all of Head Lessor's right, title and interest in and to
such Compressor(s), "as is", "where-is" and at the cost and request of the
bidder, furnish to or at the direction of Head Lessee, a xxxx of sale without
recourse or warranty (except as to Head Lessor Liens) and otherwise in form and
substance reasonably satisfactory to the bidder and Head Lessor, evidencing such
transfer.
20.2.4 End of Term Lease Payment Adjustment. If either (x)
the Net Sales Proceeds of such Compressors is less than the Purchase Option
Amount for such Lease Pool Date or (y) the Head Lessor does not consummate any
proposed sale due to the failure of the condition set forth in clause (b) of
Section 21.2.3, Head Lessee shall pay to Head Lessor in immediately available
funds on the Termination Date, an amount equal to the Lease Payment Adjustment.
20.3 Renewal Option. If the Head Lessee shall be deemed to have
elected the Renewal Option pursuant to the provisions of Section 20.1 or 20.2
hereof, then the Term of the related Lease Pool shall continue on the terms set
forth herein until the earlier to occur of (x) the date on which an Indenture
Event of Default occurs and (y) the date on which the Trigger Event is cured and
the Head Lessee exercise the Head Lessee Purchase Option in accordance with the
provision of Section 20.1 hereof.
21. General Indemnity.
(a) The Head Lessee hereby agrees to, and hereby does, indemnify
each Indemnitee on an After-Tax Basis against, and agrees to protect, defend and
keep harmless on an After-Tax Basis each Indemnitee from, any and all
liabilities (including, without limitation, negligence, warranty, statutory,
product, strict or absolute liability, liability in tort or otherwise),
obligations, losses, settlements, damages, penalties, claims, actions, suits,
judgments or proceedings of any kind and nature, costs, expenses and
disbursements (including reasonable legal fees and expenses of external counsel
and reasonable allocable fees and expenses of internal legal counsel) of
whatsoever kind and nature (whether or not any of the transactions contemplated
by the Related Documents are consummated), imposed on, incurred or suffered by,
or asserted against, such Indemnitee (herein collectively called "Claims"), in
any way relating to or arising out of:
(i) the Compressors, the Head Lessee Security Agreement or any
portion of or interest in either of the foregoing or any
other property in which the Head Lessor has an interest under
any Related Document;
(ii) the Head Lease, the Head Lessee Security Agreement and any
other Related Document or any of the transactions
contemplated thereby, or resulting therefrom, or execution or
delivery thereof, or the performance, enforcement or
amendment of any of the terms thereof;
(iii) the conduct of the business or affairs of the Head Lessee or
the purchase, acceptance, rejection, financing, refinancing,
mortgaging, delivery, non-delivery, manufacture,
construction, acquisition, design, condition, operation, use,
ownership, lease, sublease, sub-sublease, maintenance,
repair, substitution, possession, rental, conversion, return,
registration, re-
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registration, alteration, overhaul, modification,
improvement, testing, removal, replacement, installation,
storage, severance, transfer of title, abandonment, sale,
resale, or other application or disposition or use of the
Compressors, and the Head Lease Collateral or any portion of
or interest in any one or more of the foregoing or any other
property in which the Head Lessor has an interest under any
Related Document, including, without limitation, any Claim in
any way relating to or arising out of (a) any violation of
environmental law, (b) loss of or damage to any property or
the environment or death or injury to any Person, (c) any
patent, trademark or copyright infringement, and (d) latent
or other defects, regardless of whether discoverable; and
including, without limitation, injury, death, and property
damage to others;
(iv) non-performance or breach by any Head Lessee of any covenant
or obligation, or the falsity of any representation or
warranty by Head Lessee, contained in this Head Lease, the
Head Lessee Security Agreement or any other Related Document
or any act, or omission to act in breach of a legal duty to
act, with respect to or in connection with the Head Lease or
the Compressors or any portion of or interest in any one or
more of the foregoing or any other property in which the Head
Lessor has an interest under any Related Document;
(v) any increased costs, Breakage Costs or other indemnities
payable with respect to the Notes and the Certificates;
(vi) the imposition of any Lien on or with respect to the
Compressor or any Head Lease Collateral or any portion of or
interest in any one or more of the foregoing or any other
property in which the Indenture Trustee has an interest under
any Related Document;
(vii) any violation of any Applicable Law with respect to the
Compressors, the Head Lease Collateral or any portion of or
interest in any one or more of the foregoing, or any other
property in which any Indemnitee has an interest under any
Related Document or the transactions contemplated by or
resulting from the Related Documents;
(viii) the environmental condition and impact of, to or from the
Compressors, the Head Lease Collateral or any other property
in which any Indemnitee has an interest under any Related
Document;
(ix) any regulatory action under Applicable Law pertaining
directly or indirectly to the Compressors, the Head Lease
Collateral or any other property in which any Indemnitee has
an interest under any Related Document;
(x) a failure to provide and maintain the Head Lease Collateral
required hereunder in accordance with the terms of the
Related Documents; or
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(xi) any change in Applicable Law occurring after the Closing
Date.
(b) The following Claims are excluded from the Head Lessee's
agreement to indemnify any Indemnitee under Section 22(a):
(i) any Claim attributable to events or circumstances occurring
after (A) the return of the Compressor (except for any Claim
arising from a return under conditions not in accordance with
the Head Lease or a return in connection with a Head Lease
Event of Default) or (B) the purchase of the Compressor by
the Head Lessee and payment in full of the applicable
Purchase Option Amount or other purchase price therefor
provided for under the Related Documents by the Head Lessee
(except to the extent that such Claim arises in respect of or
relating to any period prior to or simultaneously with the
occurrence of the events described in (A) or (B)), unless
such Claim relates to, or is a remedy with respect to, any
Head Lease Event of Default arising therefrom;
(ii) any Claim that is a Tax (other than any Tax included for
purposes of making a payment on an After-Tax Basis) or a cost
related to the payment, non-payment or contesting of a Tax
whether or not such Tax or cost is indemnified for under any
other provision of this Agreement or any other Related
Document;
(iii) with respect to a particular Indemnitee, any Claim to the
extent, but only to the extent, resulting from the gross
negligence or willful misconduct of such Indemnitee (except
to the extent, in each case, if any, that such gross
negligence or willful misconduct is imputed to such
Indemnitee by reason of such Indemnitee's interest in the
Compressors);
(iv) with respect to a particular Indemnitee, any Claim to the
extent, but only to the extent, caused by the breach by such
Indemnitee of any material agreement, covenant or
indemnification in any Related Document, except, in each
case, to the extent that such breach shall have been caused
by any act, or failure to act in breach of a duty to do so,
by Head Lessee or any of its Affiliates;
(v) with respect to a particular Indemnitee, any Claim to the
extent, but only to the extent, caused by any
misrepresentation or false or misleading representation or
warranty of a material nature by such Indemnitee contained in
any Related Document;
(vi) with respect to a particular Indemnitee, any Claim that is a
cost, fee or expense payable by such Indemnitee pursuant to
any provision of this Head Lease or any other Related
Document where it is expressly stated in such
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provision that such cost, fee or expense is not subject to
indemnification by the Head Lessee under this Head Lease;
(vii) with respect to any particular Indemnitee, any Claim to the
extent caused by amendments, supplements, waivers or consents
with respect to the Related Documents requested by such
Indemnitee unless (i) a Head Lease Event of Default shall
have occurred and be continuing, (ii) such amendment,
supplement, waiver or consent shall have been required by any
Related Document or by Applicable Law or (iii) the Head
Lessee shall have expressly agreed to pay for the same in any
Related Document;
(viii) with respect to any particular Indemnitee, any Claim for
losses of future profits or losses attributable to any
Indemnitee's overhead (other than allocation of such
Indemnitee's internal counsel expenses relating to a Head
Lease Event of Default.
(c) Insured Claims. In the case of any Claim indemnified by the Head
Lessee hereunder which is covered by a policy of insurance maintained by the
Head Lessee pursuant to Section 14 of this Head Lease, each Indemnitee agrees to
cooperate, at the Head Lessee's expense, with the insurers in the exercise of
their rights to investigate, defend or compromise such Claim as may be required
to retain the benefits of such insurance with respect to such Claim.
(d) Subrogation. To the extent that a Claim indemnified by the Head
Lessee under this Section 21 is in effect paid in full by the Head Lessee or an
insurer under a policy of insurance maintained by the Head Lessee pursuant to
Section 21 of the Head Lease such insurer, as the case may be, shall be
subrogated to the rights and remedies of the Indemnitee on whose behalf such
Claim was paid (other than rights of such Indemnitee under insurance policies
maintained at its own expense) with respect to the transaction or event giving
rise to such Claim; provided, however, that the Head Lessee shall not be
entitled to exercise any such right of subrogation at any time while a Head
Lease Event of Default has occurred and is continuing. Should an Indemnitee
receive any refund, in whole or in part, with respect to any Claim paid by the
Head Lessee hereunder, it shall promptly pay the amount refunded (but not an
amount in excess of the amount the Head Lessee or any of its insurers, has paid
in respect of such Claim) over to the Head Lessee after deducting from such
amount any withholding Tax in respect thereof (and the Company shall indemnify
the relevant Indemnitees against any such withholding Taxes).
(e) No Guaranty. The general indemnification provisions of this
Section 21 are not intended to constitute a guaranty by the Head Lessee that the
principal or interest on the Note will be paid.
(f) Certain Amounts Payable. The Head Lessee shall promptly pay on
request to the party entitled thereto as Supplemental Rent (on an After-Tax
Basis as to such party and the beneficiaries) amounts equal to all amounts,
other than principal and interest, payable by the Issuer including, without
limitation, increased costs, make-whole amount and tax indemnification.
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22. Tax Indemnity. Head Lessee agrees to pay timely, and promptly
upon notice to indemnify and hold each Indemnitee harmless on an After-Tax Basis
from, any and all Taxes imposed on or with respect to or asserted against such
Indemnitee, the Head Lessee, this Head Lease (or any document contemplated
hereby), the Compressors or part or component thereof, or such Indemnitee's
interest therein, by any federal, state, local or foreign government or taxing
authority (each, a " Taxing Authority") with respect to the Compressors, or the
manufacture, purchase, acceptance, rejection, ownership, delivery, leasing,
subleasing, possession, use, condition, operation, maintenance, repair,
modification, replacement, return, sale or other disposition thereof, or upon or
with respect to rental payments, receipts, earnings or other proceeds received
or accrued with respect to the Compressors while the same is subject to any
Lease Supplement, and (x) until possession thereof has been delivered to Head
Lessor in accordance with this Head Lease or any Lease Supplement or (y) the
Compressors have been purchased by the Head Lessee as provided in Section 20.1
hereof, and provided in the case of clauses (x) and (y) that Head Lessee has
theretofore paid all amounts payable to the Head Lessor and each other
Indemnitee as provided herein, including all such Taxes payable under this
Section 22 (excluding, however, (i) federal income taxes and Taxes to the extent
based on, or to the extent measured by, the net income and, to the extent
imposed as a result of such Indemnitee engaging in business in the jurisdiction
imposing such Tax, gross income, capital, franchise and comparable doing
business Taxes of such Indemnitee imposed by Taxing Authorities of those
jurisdictions in which such Indemnitee is subject to such Taxes by reason of
transactions unrelated to the transactions contemplated by this Head Lease ,
(ii) Taxes imposed on such Indemnitee arising from any voluntary sale or
transfer by such Indemnitee of any interest in the Compressors or any related
documents, other than (x) any assignment for security in connection with a
financing contemplated by this Head Lease and the transactions related thereto
and (y) any such sale or transfer while a Head Lease Event of Default is
continuing, (iii) Taxes imposed with respect to a period, acts or events after
the last to occur of (w) the end of the Term, (x) delivery of possession of the
Compressors to the Head Lessor as provided herein, (y) except in the case of
Taxes attributable to the Compressors, the payment by the Head Lessee of all
amounts due under this Head Lease and the Related Documents and (z) the
completion of the exercise of remedies by the Head Lessor in connection with a
Head Lease Event of Default, provided, however that this clause (iii) shall not
apply to the extent that such Taxes are imposed on payments made by the Head
Lessee pursuant to this Head Lease and the Related Documents regardless of when
such payments are made, or relate to the exercise of remedies in connection with
a Head Lease Event of Default, or arise from the failure of the Head Lessee to
take (or fail to take) actions required by this Head Lease and the Related
Documents, or a breach of a representation, warranty, covenant or other
obligation under the Lease or relate to events occurring or matters arising
prior to or simultaneously with the end of the Term, (iv) Taxes imposed on an
assignee of the Head Lessor which are in excess of Taxes of which would be due
under this Head Lease under applicable law as of the date of such assignment had
the Head Lessor not assigned its interest in this Head Lease and the Compressors
to an assignee, (v) Taxes arising from the gross negligence or wilful misconduct
of such Indemnitee or a material breach by such Indemnitee of its obligations
under this Head Lease or any Related Document, and (vi) Taxes imposed as a
result of an unreasonable failure by such Indemnitee to cooperate (at the Head
Lessee's expense) with the Head Lessee in connection with filing of tax forms or
taking of other actions in connection with the payment of Taxes. In the event an
Indemnitee receives a refund of any Tax which has been paid by Head Lessee, such
refund, plus all interest paid in connection therewith and fairly attributable
thereto, shall be refunded to Head Lessee.
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(a) If any return, report or statement (" Report") relating to Taxes
or otherwise is required to be made by Head Lessee or an Indemnitee relating to
the Compressor or the transactions contemplated by this Head Lease, Head Lessee
shall so notify such Indemnitee and shall prepare and timely file such Report at
its own expense and provide a copy thereof to such Indemnitee, provided, that if
such report or return is required by Applicable Law to be filed by such
Indemnitee the Head Lessee shall timely provide to such Indemnitee such report
or return (in form and substance reasonably satisfactory to such Indemnitee) for
filing. Head Lessee shall cause all xxxxxxxx of such Taxes to be made to the
Head Lessee (to the extent permitted by law), make timely payment thereof and
furnish written evidence of such payment to such Indemnitee promptly after
payment thereof.
23. Security for Head Lessor's Obligations. In order to secure
all amounts payable by and all obligations to be performed by the Head Lessor
under the Indenture and the other Related Documents, the Head Lessor has agreed
in the Indenture, among other things, to assign to the Indenture Trustee for its
benefit and the benefit of the various Entitled Parties certain rights under
this Head Lease and to pledge to the Indenture Trustee, and to grant a first
priority security interest in favor of the Indenture Trustee, in this Head
Lease, subject to the reservations and conditions therein set forth. The Head
Lessee hereby consents to such assignments and to the creation of such pledge
and security interest and the pledges and security interests in the other
Collateral created thereunder and acknowledges receipt of a copy of the
Indenture, it being understood that such consent shall not affect any
requirement or the absence of any requirement for any consent under any other
circumstances. To the extent, if any, that a Lease Supplement constitutes
chattel paper (as such term is defined in the Uniform Commercial Code as in
effect in any applicable jurisdiction), no security interest in such Lease
Supplement may be created through the transfer or possession of any counterpart
hereof other than the original counterpart, which shall be identified as the
counterpart containing the receipt therefor executed by the Indenture Trustee on
the signature page hereof.
24. Notices. All demands, notices, and communications under this
Agreement shall be in writing personally delivered, or sent by facsimile (with
subsequent telephone confirmation of receipt thereof) or sent by overnight
courier service, at the following address: (a) the Head Lessor and/or the Head
Lessee, each at its address at 0000 Xxxxxxxxxx Xxxx, Xxxxxxx, Xxxxx 00000; and
(b) the Indenture Trustee, the Noteholders, the Rating Agencies and any Series
Enhancer and Administrative Agent at their respective addresses set forth in the
related Supplement. Notice shall be effective and deemed received (a) two days
after being delivered to the courier service, if sent by courier, (b) upon
receipt of confirmation of transmission, if sent by telecopy, or (c) when
delivered, if delivered by hand. Either party may alter the address to which
communications are to be sent by giving notice of such change of address in
conformity with the provisions of this Section 24 for giving notice and by
otherwise complying with any applicable terms of this Agreement.
25. GOVERNING LAW, SUBMISSION TO JURISDICTION: VENUE, WAIVER OF JURY
TRIAL.
25.1 THIS AGREEMENT SHALL BE CONSTRUED BY AND INTERPRETED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO THE
PRINCIPLES OF CONFLICTS OF LAW, AND THE RIGHTS, OBLIGATIONS AND REMEDIES OF THE
PARTIES HERETO SHALL BE DETERMINED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
NEW YORK.
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25.2 ANY LEGAL SUIT, ACTION OR PROCEEDING AGAINST THE CONTRIBUTOR OR
THE TRANSFEREE ARISING OUT OF OR RELATING TO THIS AGREEMENT, OR ANY TRANSACTION
CONTEMPLATED HEREBY, MAY BE INSTITUTED IN ANY FEDERAL OR STATE COURT IN THE
STATE OF NEW YORK AND THE CONTRIBUTOR AND THE TRANSFEREE EACH HEREBY WAIVE ANY
OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUCH
SUIT, ACTION OR PROCEEDING, AND, SOLELY FOR THE PURPOSES OF ENFORCING THIS
AGREEMENT, THE CONTRIBUTOR AND THE TRANSFEREE EACH HEREBY IRREVOCABLY SUBMITS TO
THE JURISDICTION OF ANY SUCH COURT IN ANY SUCH SUIT, ACTION OR PROCEEDING.
LESSEE HEREBY IRREVOCABLY DESIGNATES, APPOINTS AND EMPOWERS CT CORPORATION
SYSTEM, WITH OFFICES ON THE DATE HEREOF AT 000 XXXXXX XXXXXX, XXX XXXX 00000 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, HEAD 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 HEAD LEASE AGREEMENT. EACH OF
HEAD LESSEE AND HEAD LESSOR 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 IT AT 0000 XXXXXXXXXX XXXX, XXXXXXX, XXXXX 00000 ATTENTION: GENERAL
COUNSEL, SUCH SERVICE TO BECOME EFFECTIVE 30 DAYS AFTER SUCH MAILING. NOTHING
HEREIN SHALL AFFECT THE RIGHT OF HEAD LESSEE OR HEAD LESSOR UNDER THIS HEAD
LEASE AGREEMENT, TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO
COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST ANY PERSON IN ANY OTHER
JURISDICTION.
25.3 EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES, AS
AGAINST THE OTHER PARTIES HERETO, ANY RIGHTS IT MAY HAVE TO A JURY TRIAL IN
RESPECT OF ANY CIVIL ACTION OR PROCEEDING (WHETHER ARISING IN CONTRACT OR TORT
OR OTHERWISE), INCLUDING ANY COUNTERCLAIM, ARISING UNDER OR RELATING TO THIS
AGREEMENT OR ANY OTHER RELATED DOCUMENT, INCLUDING IN RESPECT OF THE
NEGOTIATION, ADMINISTRATION OR ENFORCEMENT HEREOF OR THEREOF.
26. Miscellaneous. Any provision of this Head Lease which is prohibited
or un-enforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating or diminishing Head Lessor's rights under the remaining provisions
hereof, and any such prohibition or unenforceability in any jurisdiction shall
not invalidate or render unenforceable such provision in any other jurisdiction.
To the extent permitted by applicable law, Head Lessee hereby waives any
provision of law which renders any provision of this Head Lease prohibited or
unenforceable in any respect. No term or provision of this
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Head Lease may be amended, altered, waived, discharged or terminated except in a
writing signed by the parties to this Head Lease and the Indenture Trustee. A
waiver on any one occasion shall not be construed as a waiver on a future
occasion. Neither Head Lessee nor Head Lessor shall assign or transfer its
interests in this Head Lease. All of the covenant conditions and obligations
contained in this Head Lease shall be binding upon and shall inure to the
benefit of the respective successors and assigns of Head Lessor and (subject to
the restrictions of Sections 19.1 and 19.2) Head Lessee. This Head Lease and the
other Related Documents, and each related instrument, document, agreement and
certificate, collectively constitute the complete and exclusive statement of the
terms of the agreement between Head Lessor and Head Lessee with respect to the
acquisition and leasing of the Compressors, and cancel and supersede any and all
prior oral or written understandings with respect thereto.
27. Execution and Effectiveness. This Head Lease may be executed in
any number of identical counterparts, any set of which signed by all parties
hereto shall be deemed to constitute a complete, executed original for all
purposes and shall become effective when each of the parties hereto and each of
the parties hereto have executed and delivered this Head Lease.
28. Statutory References. References in this Head Lease to any section
of the Uniform Commercial Code shall mean, on or after the effective date of
adoption of any revision to the uniform commercial code in the applicable
jurisdiction, such revised or successor section thereto.
29. Severability. Any provision of this Head Lease which is prohibited
or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction, provided that in no
event shall the provisions of Sections 20, 21 and 22 be deemed to be severable
from the other provisions of this Head Lease. To the extent permitted by
Applicable Law, the Head Lessee and the Head Lessor hereby waive any provision
of law that renders any provision hereof invalid, prohibited or unenforceable in
any respect.
30. Counterparts. This Head Lease may be executed by the parties
hereto in separate counterparts, each of which, subject to Section 25 hereof,
when so executed and delivered shall be an original, but all such counterparts
shall together constitute but one and the same instrument.
31. Amendments and Waivers. No term or provision of this Head Lease
may be changed, waived, discharged or terminated orally, but may be changed,
waived, discharged or terminated only by an instrument in writing signed by the
party against which the enforcement of the change, waiver, discharge or
termination is sought.
32. Purchase Option.
(a) So long as no Head Lease Event of Default is then outstanding,
the Head Lessee may, upon three (3) Business Days' prior written notice to the
Head Lessor, the Indenture Trustee and Deal Agent, purchase one or more
Compressors identified in such notification for an amount equal to the greater
of (i) 4.5 times the Net Revenue associated with such Compressors and
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(ii) the Appraised Value of such Compressors; provided, however, that such
identified Compressors must be selected in accordance with one of the following
methodologies:
(1) all such Compressors must be selected from the then outstanding
Lease Pool with the latest Termination Date;
(2) ratably from all Lease Pools then outstanding in accordance with
the methodology set forth in paragraph (b) of this Section 32.
(b) If the Head Lessee has, pursuant to clause (2) of Section 32(a),
elected to select such purchased Compressors from all Lease Pools then
outstanding, then the amount of Compressors to be drawn from each Lease Pool
shall be equal to the product of (x) the sum of the Appraised Values of all
Compressors to be purchased on such date and (y) the Purchase Option Percentage
for each such Lease Pool. Once the aggregate amount of Compressors to be
selected from each Lease Pool has been determined, then the specific Compressors
from each Lease Pool will be selected on a non-discriminatory basis.
(c) Upon payment in full of all amounts due upon the exercise of the
purchase option, Head Lessor will, at the request and cost of Head Lessee and
subject to compliance with the provisions of Section 404 of the Indenture,
transfer to or at the direction of Head Lessee, without recourse or warranty
(except as to the absence of Head Lessor Liens), all of Head Lessor's right,
title and interest in and to the Compressor(s) in the related Lease Pool,
"as-is, where-is" and at the cost and request of Head Lessee, furnish to or at
the direction of Head Lessee, a xxxx of sale without recourse or warranty
evidencing such transfer (except as to the absence of Head Lessor Liens), such
xxxx of sale to be in form and substance reasonably satisfactory to Head Lessee
and Head Lessor.
[Signatures to follow]
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IN WITNESS WHEREOF, the parties hereto have caused this Head
Lease to be duly executed by their duly authorized representatives as of the
date first above written.
BRL UNIVERSAL COMPRESSION
FUNDING I, L.P., as Head Lessor
by: BRL Universal Compression Management, Inc.
By: /s/ XXXXXXX X. XXXXXX
---------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: President
UCO COMPRESSION LLC, as Head Lessee
By: /s/ XXXXXXX X. XXXXXXXXXX
---------------------------------
Name: Xxxxxxx X. XxxxXxxxxx
Title: Senior Vice President
HEAD LEASE AGREEMENT
