PARTICIPATION AGREEMENT
(1996-A)
among
ENSERCH EXPLORATION, INC.,
Lessee
XXXXXX PROJECT, L.L.C.
WILMINGTON TRUST COMPANY,
Corporate Grantor Trustee
XXXXXX X. XXXXXXXX,
Individual Grantor Trustee
THE BANK OF NEW YORK
Pass Through Trustee and Loan Participant
THE BANK OF NEW YORK
Corporate Indenture Trustee
and
XXXXXXXXX X. XXXXX,
Individual Indenture Trustee
Dated as of November 15, 1996
Lease of an Undivided Interest in an
Oil and Gas Production System
TABLE OF CONTENTS
Page
RECITALS . . . . . . . . . . . . . . . . . . . . . . . . . . .1
SECTION 1. DEFINITIONS; INTERPRETATION . . . . . . . . . . . .4
SECTION 2. COMMITMENTS OF PARTICIPANTS; CLOSING;
FUNDING; TRANSACTION EXPENSES . . . . . . . . . .4
2.1 Commitment of Owner Participant. . . . . . . . . . . .4
2.2 Commitment of Pass Through Trustee; Secured Notes. . .5
2.3 Expiration of Commitments. . . . . . . . . . . . . . .5
2.4 Notice of Closing Dates. . . . . . . . . . . . . . . .5
2.5 Time and Place of Closing. . . . . . . . . . . . . . .6
2.6 Delivery of Funds. . . . . . . . . . . . . . . . . . .6
2.7 Application of Funds by Grantor Trustee. . . . . . . .6
2.8 Actions on Closing Date. . . . . . . . . . . . . . . .7
2.9 Transaction Expenses . . . . . . . . . . . . . . . . .7
2.10 Authorization to Grantor Trustee. . . . . . . . . . .8
2.11 Nonwaiver Provision . . . . . . . . . . . . . . . . .9
SECTION 3. CONDITIONS TO CLOSING BY THE LESSEE . . . . . . . .9
3.1 Termination of Master Lease. . . . . . . . . . . . . .9
3.2 Operative Documents. . . . . . . . . . . . . . . . . .9
3.3 Legality, Etc. . . . . . . . . . . . . . . . . . . . 10
3.4 Event of Loss. . . . . . . . . . . . . . . . . . . . 11
3.5 Consents and Approvals . . . . . . . . . . . . . . . 11
3.6 Representations and Warranties; Certificates . . . . 12
3.7 Opinions . . . . . . . . . . . . . . . . . . . . . . 12
3.8 Litigation . . . . . . . . . . . . . . . . . . . . . 12
3.9 Appraisal and Reports. . . . . . . . . . . . . . . . 13
3.10 Equity Offering . . . . . . . . . . . . . . . . . . 13
3.11 Payment of Lessor's Cost. . . . . . . . . . . . . . 13
3.12 Sale of Pass Through Certificates . . . . . . . . . 13
3.13 Officer's Certificates and Resolutions, Etc.. . . . 13
SECTION 4. CONDITIONS TO CLOSING BY PARTICIPANTS . . . . . . 13
4.1 Termination of Master Lease. . . . . . . . . . . . . 14
4.2 Notice of Closing. . . . . . . . . . . . . . . . . . 14
4.3 Operative Documents. . . . . . . . . . . . . . . . . 14
4.4 Legality, Etc. . . . . . . . . . . . . . . . . . . . 15
4.5 Event of Loss. . . . . . . . . . . . . . . . . . . . 15
4.6 Final Appraisal and Reports. . . . . . . . . . . . . 15
4.7 Insurance. . . . . . . . . . . . . . . . . . . . . . 16
4.8 Opinions . . . . . . . . . . . . . . . . . . . . . . 16
4.9 Taxes. . . . . . . . . . . . . . . . . . . . . . . . 18
4.10 Officer's Certificates. . . . . . . . . . . . . . . 18
4.11 Resolutions, Etc. . . . . . . . . . . . . . . . . . 20
4.12 Litigation. . . . . . . . . . . . . . . . . . . . . 22
4.13 Equity Offering . . . . . . . . . . . . . . . . . . 23
4.14 Investment and Loans. . . . . . . . . . . . . . . . 23
4.15 Consents and Approvals. . . . . . . . . . . . . . . 23
4.16 Title; Filings and Recordings . . . . . . . . . . . 24
4.17 Sale of Pass Through Certificates . . . . . . . . . 25
4.18 No Default Under Operating Agreement, Etc.. . . . . 25
4.19 No Default Under Lease. . . . . . . . . . . . . . . 25
4.20 No Material Adverse Change. . . . . . . . . . . . . 25
4.21 Credit Support . . . . . . . . . . . . . . . . . . 25
4.22 Notice to MPTM . . . . . . . . . . . . . . . . . . 25
4.23 No Change In Tax Law.. . . . . . . . . . . . . . . 26
SECTION 5. REPRESENTATIONS AND WARRANTIES OF THE LESSEE. . . 26
5.1 Due Organization . . . . . . . . . . . . . . . . . . 26
5.2 Authorization. . . . . . . . . . . . . . . . . . . . 26
5.3 Execution; Enforceability. . . . . . . . . . . . . . 27
5.4 No Violation . . . . . . . . . . . . . . . . . . . . 27
5.5 Consents and Approvals . . . . . . . . . . . . . . . 27
5.6 Securities Act . . . . . . . . . . . . . . . . . . . 29
5.7 Title; Liens Filings and Recordings. . . . . . . . . 29
5.8 Chief Place of Business. . . . . . . . . . . . . . . 30
5.9 Litigation . . . . . . . . . . . . . . . . . . . . . 30
5.10 No Default. . . . . . . . . . . . . . . . . . . . . 31
5.11 Event of Loss . . . . . . . . . . . . . . . . . . . 31
5.12 Environmental Matters . . . . . . . . . . . . . . . 31
5.13 Description of Production System. . . . . . . . . . 31
5.14 Certain Documents . . . . . . . . . . . . . . . . . 31
5.15 Payment of Taxes, Etc.. . . . . . . . . . . . . . . 32
5.16 Investment Company Act. . . . . . . . . . . . . . . 32
5.17 No Brokers' Fees. . . . . . . . . . . . . . . . . . 32
5.18 Federal Reserve Regulations . . . . . . . . . . . . 32
5.19 Holding Company . . . . . . . . . . . . . . . . . . 33
5.20 Not Subject to Governmental Regulation. . . . . . . 33
5.21 Condition of Production System. . . . . . . . . . . 33
5.22 ERISA . . . . . . . . . . . . . . . . . . . . . . . 34
5.23 Financial Statements. . . . . . . . . . . . . . . . 34
5.24 Disclosure. . . . . . . . . . . . . . . . . . . . . 34
5.25 Tax Returns . . . . . . . . . . . . . . . . . . . . 35
5.26 Insurance . . . . . . . . . . . . . . . . . . . . . 35
5.27 Compliance with Governmental Rules. . . . . . . . . 35
5.28 Adequate Rights . . . . . . . . . . . . . . . . . . 35
5.29 Solvency. . . . . . . . . . . . . . . . . . . . . . 35
5.30 Patent and Trademarks . . . . . . . . . . . . . . . 36
5.31 Representations and Warranties of Head Lessor . . . 36
5.32 Head Lease. . . . . . . . . . . . . . . . . . . . . 36
SECTION 6. REPRESENTATIONS AND WARRANTIES OF OWNER
PARTICIPANT . . . . . . . . . . . . . . . . . . 37
6.1 Due Organization . . . . . . . . . . . . . . . . . . 37
6.2 Authorization; Execution; Enforceability . . . . . . 38
6.3 No Violation . . . . . . . . . . . . . . . . . . . . 38
6.4 Owner Participant's Liens. . . . . . . . . . . . . . 39
6.5 Acquisition for Investment . . . . . . . . . . . . . 39
6.6 Securities Act . . . . . . . . . . . . . . . . . . . 39
6.7 ERISA. . . . . . . . . . . . . . . . . . . . . . . . 39
6.8 Investment Company Act . . . . . . . . . . . . . . . 40
6.9 Litigation . . . . . . . . . . . . . . . . . . . . . 40
6.10 No Default. . . . . . . . . . . . . . . . . . . . . 40
6.11 Federal Reserve Regulations . . . . . . . . . . . . 40
6.12 No Brokers' Fees. . . . . . . . . . . . . . . . . . 40
SECTION 7. REPRESENTATIONS AND WARRANTIES OF PASS
THROUGH TRUSTEE . . . . . . . . . . . . . . . . 40
7.1 Due Organization . . . . . . . . . . . . . . . . . . 41
7.2 Authorization; Execution; Enforceability . . . . . . 41
7.3 No Violation . . . . . . . . . . . . . . . . . . . . 42
7.4 Litigation . . . . . . . . . . . . . . . . . . . . . 42
7.5 Intentionally Omitted. . . . . . . . . . . . . . . . 42
7.6 Securities Act . . . . . . . . . . . . . . . . . . . 42
7.7 No Taxes Payable . . . . . . . . . . . . . . . . . . 42
7.8 ERISA . . . . . . . . . . . . . . . . . . . . . . . 43
SECTION 8. REPRESENTATIONS AND WARRANTIES OF TRUST
COMPANY AND THE CORPORATE GRANTOR
TRUSTEE . . . . . . . . . . . . . . . . . . . . 43
8.1 Due Organization . . . . . . . . . . . . . . . . . . 43
8.2 Authorization; Execution; Enforceability . . . . . . 44
8.3 No Violation . . . . . . . . . . . . . . . . . . . . 45
8.4 No Default . . . . . . . . . . . . . . . . . . . . . 46
8.5 Litigation . . . . . . . . . . . . . . . . . . . . . 46
8.6 Lessor's Liens . . . . . . . . . . . . . . . . . . . 47
8.7 Securities Act . . . . . . . . . . . . . . . . . . . 47
8.8 Chief Place of Business. . . . . . . . . . . . . . . 47
8.9 No Taxes Payable . . . . . . . . . . . . . . . . . . 47
8.10 Federal Reserve Regulations . . . . . . . . . . . . 48
SECTION 9. REPRESENTATIONS AND WARRANTIES OF THE
CORPORATE INDENTURE TRUSTEE . . . . . . . . . . 48
9.1 Due Organization . . . . . . . . . . . . . . . . . . 48
9.2 Authorization; Execution; Enforceability . . . . . . 49
9.3 No Violation . . . . . . . . . . . . . . . . . . . . 49
9.4 Litigation . . . . . . . . . . . . . . . . . . . . . 50
9.5 Indenture Trustee's Liens. . . . . . . . . . . . . . 50
9.6 No Taxes Payable . . . . . . . . . . . . . . . . . . 51
SECTION 10. LESSEE COVENANTS . . . . . . . . . . . . . . . . 51
10.1 Officer's Certificate . . . . . . . . . . . . . . . 51
10.2 Financial Statements and Other Requested
Information . . . . . . . . . . . . . . . . . . 51
10.3 Maintenance of Corporate Existence, Etc.. . . . . . 53
10.4 Merger, Consolidation, Sale, Etc. . . . . . . . . . 53
10.5 Change in Name or Chief Place of Business . . . . . 55
10.6 Further Assurances. . . . . . . . . . . . . . . . . 55
10.7 Inspection. . . . . . . . . . . . . . . . . . . . . 56
10.8 Limitation on Acquisition of Secured Notes or
Pass Through Certificates; Pass Through Trust
Agreement . . . . . . . . . . . . . . . . . . . 57
10.9 Operating Agreement . . . . . . . . . . . . . . . . 57
10.10 Documentation of Platform. . . . . . . . . . . . . 58
10.11 Notice of Certain Events . . . . . . . . . . . . . 59
10.12 Environmental Notices. . . . . . . . . . . . . . . 59
10.13 Abandonment of Production System . . . . . . . . . 59
10.14 Credit Support . . . . . . . . . . . . . . . . . . 60
10.15 Fees and Expenses. . . . . . . . . . . . . . . . . 61
10.16 Transfer of Title to Undivided Interest. . . . . . 61
10.17 Agency and Support Agreement . . . . . . . . . . . 61
10.18 Equipment List . . . . . . . . . . . . . . . . . . 62
SECTION 11. OTHER COVENANTS AND AGREEMENTS . . . . . . . . . 62
11.1 Agreements of Owner Participant . . . . . . . . . . 62
11.2 Agreements of Xxxxxxxx, Trust Company and
Grantor Trustee . . . . . . . . . . . . . . . . 66
11.3 Agreements of Pass Through Trustee. . . . . . . . . 68
11.4 Agreements of Indenture Trustee . . . . . . . . . . 69
11.5 Confidentiality . . . . . . . . . . . . . . . . . . 70
11.6 Assumption of Secured Notes . . . . . . . . . . . . 71
SECTION 12. INDEMNIFICATION. . . . . . . . . . . . . . . . . 72
12.1 General Indemnification . . . . . . . . . . . . . . 72
12.2 General Tax Indemnification . . . . . . . . . . . . 81
12.3 No Guarantee. . . . . . . . . . . . . . . . . . . . 97
12.4 Opinion in Connection with Refunding of Senior
Notes or Adjustments to Rent Percentages. . . . 97
SECTION 13. TRANSFER OF OWNER PARTICIPANT'S INTEREST . . . . 98
13.1 Restrictions on Transfer. . . . . . . . . . . . . . 98
13.2 Permitted Transfers . . . . . . . . . . . . . . . . 98
13.3 Request for Acknowledgment. . . . . . . . . . . . .100
13.4 Effect of Transfer. . . . . . . . . . . . . . . . .101
SECTION 14. FINANCING FOR MODIFICATIONS. . . . . . . . . . .102
14.1 Financing for Modifications . . . . . . . . . . . .102
SECTION 15. REFUNDING OF SECURED NOTES . . . . . . . . . . .102
15.1 Refunding of Secured Notes. . . . . . . . . . . . .102
15.2 Notice. . . . . . . . . . . . . . . . . . . . . . .105
15.3 Rights of Parties . . . . . . . . . . . . . . . . .105
SECTION 16. BENEFICIAL INTEREST PURCHASE OPTION. . . . . . .106
16.1 Option to Purchase. . . . . . . . . . . . . . . . .106
16.2 Notice of Election; Manner of Purchase; Transfer
After Purchase. . . . . . . . . . . . . . . . .106
SECTION 17. MISCELLANEOUS. . . . . . . . . . . . . . . . . .107
17.1 Survival. . . . . . . . . . . . . . . . . . . . . .107
17.2 Binding Effect. . . . . . . . . . . . . . . . . . .108
17.3 Notices . . . . . . . . . . . . . . . . . . . . . .108
17.4 Counterpart Execution . . . . . . . . . . . . . . .108
17.5 GOVERNING LAW . . . . . . . . . . . . . . . . . . .108
17.6 Amendments, Supplements, Etc. . . . . . . . . . . .109
17.7 Headings; Table of Contents . . . . . . . . . . . .109
17.8 Severability of Provisions. . . . . . . . . . . . .109
17.9 Entire Agreement. . . . . . . . . . . . . . . . . .110
17.10 Limitation of Liability of Grantor Trustee,
Indenture Trustee and Pass Through Trustee. . .110
17.11 Jurisdiction; Service of Process; Waiver of
Jury Trial. . . . . . . . . . . . . . . . . . .113
17.12 Instructions . . . . . . . . . . . . . . . . . . .114
Appendix A Definitions
SCHEDULES
Schedule 1 Addresses for Notices and Payments
Schedule 2 Pricing Assumptions
Schedule 3 Filings and Recordings
Schedule 4 Disclosure
Schedule 5 Original Cost; Investment; Principal Amount of
Secured Notes
EXHIBITS
Exhibit A-1 Form of Opinion of X.X. Xxxxxxxxxxx, General
Counsel to the parent of the Head Lessor
Exhibit A-2 Form of Opinion of Xxxxxxx X. Xxxxxxx, General
Counsel to the Lessee
Exhibit A-3 Form of Opinion of Xxxxxxxxxx & Xxxxx LLP,
special counsel to the Lessee and the Head
Lessor
Exhibit A-4 Form of Opinion of Gordon, Arata, XxXxxxxx &
Xxxxxxxxx LLP, special Louisiana and admiralty
counsel
Exhibit A-5 Form of Opinion of The Law Department of The
First National Bank of Chicago
Exhibit A-6 Form of Opinion of Skadden, Arps, Slate, Xxxxxxx
& Xxxx Illinois, special counsel to the Owner
Participant and the Guarantor
Exhibit A-7 Form of Opinion of Morris, James, Hitchens &
Xxxxxxxx, special counsel to the Trust Company
and the Grantor Trustee
Exhibit A-8 Form of Opinion of Xxxxx, Xxxxxx & Xxxxxx LLP,
special counsel to the Indenture Trustee
Exhibit A-9 Form of Opinion of Xxxxx, Xxxxxx & Xxxxxx LLP,
special counsel to the Pass Through Trustee
Exhibit A-10 Form of Opinion of Xx Xxxxxx & Xxxxxx, special
Panama counsel
Exhibit A-11 Form of Opinion of Xxxxxx Xxxxx, Legal Counsel
to the Initial Letter of Credit Bank
Exhibit A-12 Form of Opinion of Xxxxx, Xxxxx & Xxxxx, special
counsel to the Initial Letter of Credit Bank
Exhibit B Form of Assignment and Assumption Agreement
Exhibit C Form of Quit Claim and Release Agreement
Exhibit D Form of Assignment and Assumption and Security
Agreement
PARTICIPATION AGREEMENT
(1996-A)
THIS PARTICIPATION AGREEMENT (1996-A) (as the same
may be amended, supplemented or modified from time to time, the
"Agreement"), dated as of November 15, 1996, is among ENSERCH
EXPLORATION, INC., a Texas corporation, XXXXXX PROJECT, L.L.C.,
a Delaware limited liability company, THE BANK OF NEW YORK, a
New York banking corporation, not in its individual capacity
except to the extent expressly set forth herein but solely as
Pass Through Trustee under the Pass Through Trust Agreement,
WILMINGTON TRUST COMPANY, a Delaware banking corporation, not
in its individual capacity except to the extent expressly set
forth herein but solely as Corporate Grantor Trustee under the
Trust Agreement, XXXXXX X. XXXXXXXX, not in his individual
capacity except to the extent expressly set forth herein but
solely as Individual Grantor Trustee under the Trust Agreement,
THE BANK OF NEW YORK, a New York banking corporation, not in
its individual capacity except to the extent expressly set
forth herein but solely as Corporate Indenture Trustee under
the Indenture, and XXXXXXXXX X. XXXXX, not in his individual
capacity except to the extent expressly set forth herein but
solely as Individual Indenture Trustee under the Indenture.
RECITALS:
A. In connection with the transactions contemplated
by the Funding Agreement dated as of September 30, 1992 among
EP Operating Company, Ltd. (predecessor in interest to Enserch
Holdings), ENSERCH Corporation, State Street Bank and Trust
Company of Connecticut, N.A., as Trustee for the Garden Banks
Trust (the "Garden Banks Trustee"), The Chase Manhattan Bank,
N.A., as agent for the Note Holders and Certificate Holders and
the Note Holders and Certificate Holders party thereto, as
amended (the "Funding Agreement"), (i) Enserch Holdings
purchased the Undivided Interest on behalf of the Garden Banks
Trustee, (ii) the Garden Banks Trustee leased the Undivided
Interest to Enserch Holdings, and (iii) Enserch Holdings
subleased the Undivided Interest to Enserch Exploration.
B. On the Closing Date, Enserch Holdings will
terminate the Master Lease Agreement dated as of September 30,
1992 between the Trustee, as Lessor, and EP Operating Company,
Ltd., as Lessee, as amended (the "Master Lease"), and will pay
all amounts due thereunder.
C. Subject to the terms and conditions set forth
herein, (1) the Lessee desires to cause Enserch Holdings to
transfer all of its right, title and interest in and to the
Undivided Interest to the Grantor Trustee pursuant to the Head
Lease and to transfer all of its right, title and interest in
and to the Head Lease to the Lessee pursuant to the Assignment
and Assumption and Security Agreement, (2) the Lessee desires
to assume all of the obligations of Enserch Holdings under the
Head Lease pursuant to the Assignment and Assumption and
Security Agreement and to lease the Undivided Interest from the
Grantor Trustee pursuant to the Lease and (3) the Grantor
Trustee desires to accept all of the right, title and interest
of Enserch Holdings in and to the Undivided Interest from
Enserch Holdings pursuant to the Head Lease and to lease the
Undivided Interest to the Lessee pursuant to the Lease.
D. Concurrently with the execution and delivery of
this Agreement, Enserch Holdings and the Grantor Trustee have
entered into the Head Lease, pursuant to which Enserch Holdings
has agreed, among other things, to transfer all of the right,
title and interest of Enserch Holdings in and to the Undivided
Interest to the Grantor Trustee and the Grantor Trustee has
agreed to accept all of the right, title and interest of
Enserch Holdings in and to the Undivided Interest from Enserch
Holdings on the terms specified therein.
E. Concurrently with the execution and delivery of
this Agreement, the Grantor Trustee and the Lessee have entered
into the Lease, pursuant to which the Grantor Trustee has
agreed, among other things, to lease the Undivided Interest to
Lessee and the Lessee has agreed to lease the Undivided
Interest from the Grantor Trustee on the terms specified
therein.
F. Concurrently with the execution and delivery of
this Agreement, the Owner Participant and the Grantor Trustee
have entered into the Trust Agreement, pursuant to which the
Grantor Trustee has agreed, among other things, to hold the
Trust Estate for the benefit of the Owner Participant on the
terms specified therein, subject, however, to the Lien created
under the Indenture.
G. Concurrently with the execution and delivery of
this Agreement, the Grantor Trustee and the Indenture Trustee
have entered into the Indenture, pursuant to which the Grantor
Trustee, for the benefit of the Loan Participant, has agreed,
among other things, to mortgage and pledge unto the Indenture
Trustee, all of the Grantor Trustee's right, title and interest
in and to the Indenture Estate.
H. Concurrently with the execution and delivery of
this Agreement, the Lessee has entered into the Tax Indemnity
Agreement, pursuant to which, among other things, the Lessee
has agreed to provide, in addition to the indemnities provided
to the Indemnitees pursuant to Section 12 hereof, certain
indemnities to the Owner Participant.
I. Concurrently with the execution and delivery of
this Agreement, the Pass Through Trustee and the Lessee have
entered into the Pass Through Trust Agreement pursuant to
which, among other things, the Pass Through Certificates will
be issued.
J. Concurrently with the execution and delivery of
this Agreement, the Guarantor has entered into the Guaranty
whereby the Guarantor will guaranty the Owner Participant's
obligations hereunder and under the other Operative Documents
to which the Owner Participant is a party.
K. Concurrently with the execution and delivery of
this Agreement, the Grantor Trustee and the Lessee have entered
into the Agency and Support Agreement, pursuant to which, among
other things, the Lessee has agreed to act as agent for the
Grantor Trustee for the purposes of subjecting the Undivided
Interest to the provisions of the Operating Agreement following
the expiration or earlier termination of the Lease.
L. Concurrently with the execution and delivery of
this Agreement, Enserch Exploration has executed the Ship
Mortgage in favor of the Grantor Trustee, pursuant to which
Enserch Exploration has granted the Grantor Trustee a first
priority mortgage over its interests in the Platform to secure
its obligations under the Head Lease.
M. Concurrently with the execution and delivery of
this Agreement, the Grantor Trustee has executed a Collateral
Assignment of Ship Mortgage in favor of the Indenture Trustee,
pursuant to which the Grantor Trustee has collaterally assigned
to the Indenture Trustee the Ship Mortgage.
N. The Owner Participant desires to participate in
the payment of Lessor's Cost by providing its Investment to the
Grantor Trustee. The Pass Through Trustee, as a Loan
Participant, desires to participate in the payment of Lessor's
Cost by purchasing the Secured Notes from the Grantor Trustee.
Accordingly, in consideration of the premises and of
other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties
hereto hereby agree as follows:
SECTION 1. DEFINITIONS; INTERPRETATION.
For the purposes hereof, capitalized terms used
herein (including those used in the preamble and the foregoing
recitals) and not otherwise defined shall have the meanings
assigned to them in Appendix A, which Appendix A shall for all
purposes constitute part of this Agreement and shall be subject
to amendment in accordance with the terms hereof. References
in this Agreement to Sections, subsections, paragraphs,
Schedules, Appendices and Exhibits are to Sections, subsections
and paragraphs in, and Schedules, Appendices and Exhibits to,
this Agreement unless otherwise indicated.
SECTION 2. COMMITMENTS OF PARTICIPANTS; CLOSING; FUNDING;
TRANSACTION EXPENSES.
2.1 Commitment of Owner Participant. Subject to the
terms and conditions of this Agreement, the Owner Participant
agrees to participate on the Closing Date in the payment of
Lessor's Cost by making an equity investment (the "Investment")
in the beneficial ownership of the Undivided Interest in an
amount equal to the product of (i) Lessor's Cost and (ii) the
Equity Percentage, and shall, on the Closing Date, take and
cause the Grantor Trustee to take the respective actions
specified in Sections 2.7 and 2.8 to be taken by the Owner
Participant and the Grantor Trustee.
2.2 Commitment of Pass Through Trustee; Secured
Notes. Subject to the terms and conditions of this Agreement,
the Pass Through Trustee, as a Loan Participant, agrees to
participate on the Closing Date in the payment of Lessor's Cost
by purchasing from the Grantor Trustee the Secured Notes at a
purchase price equal to 100% of the aggregate original
principal amount of such Secured Notes, and shall, on the
Closing Date, take and cause the Indenture Trustee to take the
respective actions specified in Section 2.8 to be taken by the
Pass Through Trustee, as a Loan Participant, and the Indenture
Trustee. The Secured Notes shall be issued to the Pass Through
Trustee, as a Loan Participant, under and in accordance with
the terms of the Indenture.
2.3 Expiration of Commitments. Unless the Owner
Participant shall agree to a later date, the Owner
Participant's commitment to make the Investment on the Closing
Date pursuant to Section 2.1 shall expire if the Closing Date
shall not have occurred before midnight on the Cut-off Date.
Unless the Pass Through Trustee, as Loan Participant, shall
agree to a later date, the Pass Through Trustee's commitment,
as Loan Participant, to purchase the Secured Notes pursuant to
Section 2.2 shall expire if the Closing Date or purchase shall
not have occurred before midnight on the Cut-off Date.
2.4 Notice of Closing Dates. On or before the
second Business Day prior to the Closing Date, the Lessee shall
deliver to each Participant written notice of the Closing Date,
which notice shall contain (a) the date of the Closing Date,
(b) the amount of Lessor's Cost, (c) the amount of the
Investment set forth on Schedule 5 hereto and (d) the principal
amount of the Secured Notes set forth on Schedule 5 hereto to
be purchased by the Pass Through Trustee, as a Loan
Participant, on the Closing Date; provided, however, that the
funding of the Owner Participant's Investment or the funding of
the purchase price for the Secured Notes to be purchased by the
Pass Through Trustee, as Loan Participant, on the Closing Date,
as the case may be, and the taking of the other actions
contemplated to be taken hereby in each case on the Closing
Date shall be deemed a waiver of the requirement of notice of
the Closing Date set forth in this Section 2.4.
2.5 Time and Place of Closing. The closing on the
Closing Date shall commence at 12:00 noon, New York City time,
at the offices of Xxxxxxxxxx & Xxxxx LLP, New York, New York,
or at such other location in New York City as the Lessee may
specify in the notice of closing for the Closing Date delivered
pursuant to Section 2.4.
2.6 Delivery of Funds. Subject to the terms and
conditions of this Agreement, on or before 12:00 noon, New York
City time, on the Closing Date, the Owner Participant shall
deliver to the Grantor Trustee by wire transfer of immediately
available funds an amount equal to the Investment to be made by
the Owner Participant on the Closing Date and the Pass Through
Trustee, as a Loan Participant, shall deliver to the Grantor
Trustee by wire transfer of immediately available funds an
amount equal to the purchase price of the Secured Notes to be
purchased by the Pass Through Trustee, as a Loan Participant,
on the Closing Date, in each case to the account of the Grantor
Trustee specified in Schedule 1 or to such other account as
shall be specified in writing by the Grantor Trustee to the
Owner Participant and the Pass Through Trustee, as a Loan
Participant, at least one Business Day prior to the Closing
Date, which amounts shall be held by the Grantor Trustee in
trust, solely on behalf of the Participant delivering or
transferring such amount (and not as part of the Trust Estate),
until such Participant shall have instructed the Grantor
Trustee that such amount is available to be applied by the
Grantor Trustee pursuant to Section 2.7. No Participant shall
be obligated to deliver such instruction if the conditions to
its participation set forth in Section 4 have not been met to
its satisfaction or waived by it.
2.7 Application of Funds by Grantor Trustee. On the
Closing Date, upon receipt by the Grantor Trustee of (a) the
amount of the Investment to be made by the Owner Participant on
the Closing Date, (b) the purchase price of the applicable
Secured Notes to be paid by the Pass Through Trustee, as a Loan
Participant, on the Closing Date, and (c) the instruction
pursuant to Section 2.6 that each of such amounts is available
to be applied by the Grantor Trustee pursuant to this Section
2.7, the Grantor Trustee shall pay to Enserch Holdings by wire
transfer of immediately available funds to the account of
Enserch Holdings specified in Schedule 1 an amount equal to
Lessor's Cost.
2.8 Actions on Closing Date. Subject to
satisfaction of the applicable conditions precedent set forth
in Sections 3 and 4, on the Closing Date:
(a) the Owner Participant shall make the
Investment required to be made by it on the Closing Date;
(b) the Pass Through Trustee, as a Loan
Participant, shall pay to the Grantor Trustee the purchase
price for the Secured Notes on the Closing Date, the
Grantor Trustee shall execute and deliver to the Indenture
Trustee the Secured Notes, and the Indenture Trustee shall
authenticate and register the Secured Notes and shall
deliver the Secured Notes to the Pass Through Trustee, as
a Loan Participant;
(c) the Grantor Trustee shall lease from
Enserch Holdings and Enserch Holdings shall lease to the
Grantor Trustee, the Undivided Interest;
(d) the Grantor Trustee shall pay all Lessor's
Cost to Enserch Holdings;
(e) Enserch Holdings shall assign all of its
right, title and interest in and to the Head Lease to the
Lessee and the Lessee shall assume all of the obligations
of Enserch Holdings thereunder pursuant to the Assignment
and Assumption and Security Agreement;
(f) the Grantor Trustee shall lease to the
Lessee, and the Lessee shall lease from the Grantor
Trustee, the Undivided Interest pursuant to the Lease; and
(g) the Lessee shall provide the Grantor
Trustee and the Owner Participant with Credit Support.
2.9 Transaction Expenses. (a) If the transactions
contemplated by this Agreement are consummated, the Grantor
Trustee shall as soon as practicable after the Closing Date
pay, or reimburse the Lessee for, all Transaction Expenses and
Additional Transaction Expenses, and the Owner Participant will
provide to the Grantor Trustee funds therefor and instructions
with respect to the payment thereof; provided that the
underwriting commissions of PaineWebber Incorporated as
underwriter of the Pass Through Certificates shall be paid by
the Grantor Trustee in immediately available funds on the
Closing Date. If the transactions contemplated by this
Agreement to be consummated on the Closing Date are not
consummated for any reason whatsoever, the Lessee shall pay all
Transaction Expenses; provided, however, that if such
transactions shall not be consummated by reason of a breach by
Owner Participant of its obligations hereunder or under any
other Operative Document to which Owner Participant is a party
or a failure by Owner Participant to negotiate in good faith,
the Lessee shall not be obligated to pay the fees and expenses
of counsel of the Owner Participant. Except for its obligation
to pay the fees and expenses of its counsel, neither the Owner
Participant nor any of its Affiliates shall incur any liability
as a result of the breach of its obligation to make its
Investment pursuant to Section 2.1.
(b) [Intentionally Omitted]
(c) Each of the Transaction Expenses shall be
evidenced by appropriate bills or invoices taking into account
the agreement with respect to fees and out-of-pocket expenses.
The Lessee shall have the right to receive and review but not
to approve any substantiation relating to any Transaction
Expenses as it may reasonably request.
2.10 Authorization to Grantor Trustee. The Owner
Participant agrees that on the Closing Date the receipt by the
Grantor Trustee of an instruction from each Participant
pursuant to Section 2.6 making the amount delivered by each
such Participant to the Grantor Trustee available for
application pursuant to Section 2.7 shall constitute, without
further act, authorization and direction by each such
Participant to the Grantor Trustee to take the actions
contemplated to be taken by the Grantor Trustee on the Closing
Date in the Operative Documents, including, without limitation,
the execution and delivery of all other documents and
instruments contemplated to be executed and delivered by the
Grantor Trustee on or prior to the Closing Date in the
Operative Documents.
2.11 Nonwaiver Provision. Notwithstanding anything
else set forth herein or in any other Operative Document, the
execution and delivery of this Agreement or any other Operative
Document shall not constitute a waiver by the Owner Participant
of any condition to closing set forth herein.
SECTION 3. CONDITIONS TO CLOSING BY THE LESSEE.
The obligation of the Lessee pursuant to Section 2
(i) to cause Enserch Holdings to lease the Undivided Interest
to the Grantor Trustee and to transfer all of its right, title
and interest in and to the Head Lease to the Lessee, (ii) to
assume all of the obligations of Enserch Holdings under the
Head Lease and (iii) to sublease the Undivided Interest from
the Grantor Trustee and take the other actions contemplated by
Section 2 to be taken by it on the Closing Date are subject
only to the fulfillment on the Closing Date to the satisfaction
of or waiver by the Lessee of each of the following conditions
precedent, except that the obligations of the Lessee shall not
be subject to the Lessee's or Enserch Holdings' own performance
or, if Enserch Holdings or the Lessee shall have the power to
cause another Person to perform, Enserch Holdings' or the
Lessee's failure to cause such performance:
3.1 Termination of Master Lease. Enserch Holdings
shall have terminated the Master Lease in accordance with the
terms thereof.
3.2 Operative Documents. Each of the following
documents shall have been duly authorized, executed and
delivered by the respective parties thereto (other than the
Lessee or Enserch Holdings):
(a) this Agreement;
(b) the Head Lease;
(c) Head Lease Supplement No. 1;
(d) the Lease;
(e) Lease Supplement No. 1;
(f) the Guaranty;
(g) the Indenture;
(h) Indenture Supplement No. 1;
(i) the Tax Indemnity Agreement;
(j) the Secured Notes;
(k) the Trust Agreement;
(l) the Initial Letter of Credit;
(m) the Reimbursement Agreement;
(n) the Agency and Support Agreement;
(o) the Ship Mortgage;
(p) the Collateral Assignment of Ship Mortgage;
(q) the Pass Through Trust Agreement; and
(r) the Placement Agreement
and (i) each such document shall be in full force and effect on
the Closing Date, and an executed counterpart of each of the
same shall have been delivered to the Lessee (except that each
original Secured Note shall be delivered only to the Pass
Through Trustee), (ii) the Federal Leases, the Operating
Agreement and the Unit Agreement shall be in full force and
effect on the Closing Date and (iii) no event or condition
shall have occurred that, with or without the lapse of time or
the giving of notice, shall give any other party to any
document described in the foregoing clauses (i) or (ii) the
right to terminate such document.
3.3 Legality, Etc. No material change shall have
occurred from October 23, 1996 to the Closing Date in
Governmental Rules that, in the reasonable opinion of the
Lessee, would render it illegal for the Lessee, the Guarantor,
the Trust Company, the Grantor Trustee, the Indenture Trustee,
the Pass Through Trustee or any Participant to participate in
any of the transactions contemplated by the Operative Documents
to be consummated on the Closing Date or would materially
adversely affect any of the foregoing. No change or
prospective or proposed change shall have occurred from October
23, 1996 to the Closing Date in Governmental Rules that, in the
reasonable opinion of the Lessee, would render the transactions
contemplated by the Operative Documents to be consummated on
the Closing Date insufficiently economic, which in the case of
the Lessee, exceeds the thresholds provided in Section 4.1(d)
of the Lease.
3.4 Event of Loss. No Event of Loss shall have
occurred and no event described in clause (c) of the definition
of Event of Loss shall have occurred.
3.5 Consents and Approvals. On the Closing Date,
all Governmental Actions required to be taken, given, obtained,
filed or recorded, as the case may be, on or prior to the
Closing Date by, from or with any Governmental Authority and
all other consents, filings or approvals which are required to
have been taken, given, obtained, filed or recorded, as the
case may be, on or prior to the Closing Date by, from or with
any other Person in each case, in connection with the
transactions contemplated by the Operative Documents and the
Pass Through Trust Agreement, or to authorize the execution,
delivery and performance by the Lessee, the Guarantor, the
Owner Participant, the Grantor Trustee, the Indenture Trustee
or the Pass Through Trustee of the Pass Through Trust
Agreement, the Placement Agreement, and each of the Operative
Documents to which it is a party, or the legality, validity,
binding effect or enforceability thereof as against the
Guarantor, other than those constituting filings, recordings or
other actions of the types referred to in Section 4.16, shall
have been duly taken, given, obtained, filed or recorded, as
the case may be, and all such approvals shall have been duly
taken, given, obtained, filed or recorded, as the case may be,
shall be in full force and effect on the Closing Date, shall
not be subject to any pending proceedings or appeals
(administrative, judicial or otherwise) and shall be adequate
to authorize the consummation of the transactions contemplated
by the Pass Through Trust Agreement, the Placement Agreement
and the Operative Documents and the performance by the Lessee
of its obligations under such thereof to which it is a party,
except such as may be required to be taken, obtained, given,
accomplished or renewed from time to time in connection with
the maintenance or operation of the Production System or which
are otherwise required in connection with the transactions
contemplated by the Pass Through Trust Agreement, the Placement
Agreement and the Operative Documents which have been applied
for but which cannot be obtained, or which are not normally
applied for or taken, given or obtained, prior to the Closing
Date, and which in the normal course would be granted; provided
that the failure to obtain such Governmental Actions, consents
or approvals by the Closing Date would not materially adversely
affect the ability of the Lessee to perform its obligations
under this Agreement, the Pass Through Trust Agreement or any
other Operative Document to which it is a party.
3.6 Representations and Warranties; Certificates.
The representations and warranties of each of the Owner
Participant, the Pass Through Trustee, the Trust Company and
the Grantor Trustee, and the Indenture Trustee contained in
Sections 6, 7, 8 and 9, respectively, and of the Guarantor
contained in Section 1.1 of the Guaranty, shall be true and
accurate on and as of the Closing Date as though made on and as
of such date, except to the extent that such representations
and warranties relate solely to an earlier date (in which case
the same shall be true and accurate as of such earlier date),
and the Lessee shall have received executed copies of each of
the certificates referred to in Section 4.10 and Section 4.11
(other than Section 4.10(a) and Section 4.11(a)) required to be
delivered on the Closing Date, which certificates shall be
dated the Closing Date.
3.7 Opinions. A signed original of each opinion
referred to in Section 4.8 (other than Section 4.8(a), (b), (c)
and (j)) shall have been addressed to and delivered to the
Lessee.
3.8 Litigation. There shall be no actions, suits,
investigations or proceedings pending or, to the knowledge of
the Lessee, threatened against the Lessee, the Guarantor, the
Owner Participant, the Pass Through Trustee, the Grantor
Trustee or the Indenture Trustee or the properties of any of
such Persons before any Governmental Authority to set aside,
restrain, enjoin or prevent the consummation of this Agreement
or the transactions contemplated hereby or by any of the other
Operative Documents, the Pass Through Trust Agreement, the
Federal Leases, the Operating Agreement, the Unit Agreement or
the Placement Agreement.
3.9 Appraisal and Reports. The Lessee shall have
received a summary of the conclusions set forth in the Final
Appraisal and a copy of the Reserve Report, the Engineer's
Report and the Environmental Report.
3.10 Equity Offering. The Lessee shall have
received an executed copy of the letter referred to in Section
4.13, which letter shall be dated the Closing Date.
3.11 Payment of Lessor's Cost. Enserch Holdings
shall have received payment of an amount equal to Lessor's Cost
in accordance with Section 2.7.
3.12 Sale of Pass Through Certificates. The Pass
Through Certificates shall have been issued pursuant to the
Pass Through Trust Agreement and sold pursuant to the Placement
Agreement and the Underwriters shall have transferred to the
Pass Through Trustee in immediately available funds an amount
equal to the purchase price for the Pass Through Certificates
sold pursuant to the Pass Through Trust Agreement.
3.13 Officer's Certificates and Resolutions, Etc.
On the Closing Date, the Lessee shall have received each of the
Officer's Certificates referred to in Section 4.10 (other than
Section 4.10(a)) and each of the Secretary's Certificates
referred to in Section 4.11 (other than Section 4.11(a) and
(g)).
SECTION 4. CONDITIONS TO CLOSING BY PARTICIPANTS.
The obligations of the Owner Participant and the Pass
Through Trustee pursuant to Section 2 to participate in the
payment of Lessor's Cost and to take the other actions
contemplated by Section 2 to be taken by them on the Closing
Date are subject only to the fulfillment on the Closing Date to
the satisfaction of (including, with respect to writings, such
writings being in form and substance reasonably satisfactory to
the addressee or the beneficiary thereof) or waiver by such
Participant of each of the following conditions precedent
(other than (i) in the case of the Owner Participant, Sections
4.6(b), 4.8(e), 4.8(f), 4.10(b) and 4.11(b), and (ii) in the
case of the Pass Through Trustee, Sections 4.6(a), 4.8(h) and
(i), 4.9, 4.10(e) and 4.11(e)), except that the obligations of
such Participant shall not be subject to such Participant's own
performance or, if such Participant shall have the power to
cause another Person to perform, such Participant's failure to
cause such performance:
4.1 Termination of Master Lease. Enserch Holdings
shall have terminated the Master Lease in accordance with the
terms thereof.
4.2 Notice of Closing. Such Participant shall have
received the notice of closing for such Closing Date required
to be delivered pursuant to Section 2.4.
4.3 Operative Documents. Each of the following
documents shall have been duly authorized, executed and
delivered by the respective parties thereto:
(a) this Agreement;
(b) the Head Lease;
(c) Head Lease Supplement No. 1;
(d) the Lease;
(e) Lease Supplement No. 1;
(f) the Guaranty;
(g) the Assignment and Assumption and Security
Agreement;
(h) the Indenture;
(i) Indenture Supplement No. 1;
(j) the Tax Indemnity Agreement;
(k) the Secured Notes;
(l) the Trust Agreement;
(m) the Initial Letter of Credit;
(n) the Reimbursement Agreement;
(o) the Agency and Support Agreement;
(p) the Ship Mortgage; and
(q) the Collateral Assignment of Ship Mortgage;
and each such document and the Pass Through Trust Agreement,
the Federal Leases, the Operating Agreement, the Unit
Agreement, the Release, the Quit Claim and Release Agreement
and the Waiver and Consent Agreement shall be in full force and
effect on the Closing Date, and no event or condition shall
have occurred that, with or without the lapse of time or the
giving of notice, shall give any other party thereto the right
to terminate such document and an executed counterpart (or, in
the case of the Pass Through Trust Agreement, the Federal
Leases, the Operating Agreement, the Unit Agreement, the
Release, the Quit Claim and Release Agreement and the Waiver
and Consent Agreement, a true, correct and complete copy) of
each of the same shall have been delivered to such Participant
(except that the Tax Indemnity Agreement shall be delivered
only to the parties thereto and each original Secured Note
shall be delivered only to the Pass Through Trustee).
4.4 Legality, Etc. No change shall have occurred
from October 23, 1996 to the Closing Date in Governmental Rules
that, in the reasonable opinion of such Participant, would
render it illegal or unduly burdensome for the Trust Company,
the Grantor Trustee, the Lessee, the Indenture Trustee, the
Pass Through Trustee, the Guarantor or any Participant to
participate in any of the transactions contemplated by the
Operative Documents to be consummated on the Closing Date or
would materially adversely affect any of the foregoing. No
change or prospective or proposed change shall have occurred
from October 23, 1996 to the Closing Date in Governmental Rules
that, in the reasonable opinion of the Owner Participant, would
render the transactions contemplated by the Operative Documents
to be consummated on the Closing Date insufficiently economic.
4.5 Event of Loss. No Event of Loss shall have
occurred and no event described in clause (c) of the definition
of Event of Loss shall have occurred.
4.6 Final Appraisal and Reports. (a) The Owner
Participant shall have received an appraisal of the Appraiser
dated the Closing Date with respect to the Undivided Interest
(the "Final Appraisal") which shall be satisfactory in form and
substance to the Owner Participant.
(b) The Indenture Trustee shall have received a
letter from the Appraiser setting forth the conclusions of the
Appraiser with respect to the fair market value of the
Undivided Interest as of the Closing Date.
(c) The Owner Participant shall have received the
Reserve Report in form and substance satisfactory to the Owner
Participant.
(d) The Owner Participant shall have received the
Engineer's Report which shall be in form and substance
satisfactory to the Owner Participant.
(e) The Owner Participant shall have received the
Environmental Report which shall be in form and substance
satisfactory to the Owner Participant.
(f) The Owner Participant shall have received a
certificate of classification from the American Bureau of
Shipping as to the existing classification of the Platform.
4.7 Insurance. Insurance complying in all respects
with the provisions of Section 13.1(a) of the Lease shall be in
full force and effect and the Owner Participant and the
Indenture Trustee shall have received a certificate of an
independent insurance broker or consultant, which broker or
consultant may be the Lessee's independent insurance broker or
consultant, dated the Closing Date, setting forth in reasonable
detail the insurance obtained by or on behalf of the Lessee in
accordance with Section 13.1(a) of the Lease and as then in
effect, stating that such insurance is in full force and effect
and that all premiums then due thereon have been paid and an
Officer's Certificate of the Lessee, dated the Closing Date,
stating that such insurance complies in all respects with the
provisions of such Section 13.1(a).
4.8 Opinions. Opinions dated the Closing Date of
the following counsel, each such opinion substantially in the
form of the indicated Exhibit hereto (with such changes to such
form as contemplated by such Exhibit) and addressed as provided
in such Exhibit (or, in lieu of including the Underwriter as an
addressee, such counsel may deliver a reliance letter to the
Underwriter), shall have been executed and delivered by such
counsel:
(a) X.X. Xxxxxxxxxxx, General Counsel to the
parent of the Head Lessor, substantially in the form of
Exhibit A-1;
(b) Xxxxxxx X. Xxxxxxx, General Counsel to the
Lessee, substantially in the form of Exhibit A-2;
(c) Xxxxxxxxxx & Xxxxx LLP, special counsel to
the Lessee and the Head Lessor, substantially in the form
of Exhibit A-3;
(d) Gordon, Arata, XxXxxxxx & Xxxxxxxxx LLP,
special Louisiana and admiralty counsel, substantially in
the form of Exhibit A-4;
(e) The Law Department of the First National
Bank of Chicago, counsel to the Owner Participant and the
Guarantor substantially in the form of Exhibit A-5;
(f) Skadden, Arps, Slate, Xxxxxxx & Xxxx
Illinois, special counsel to the Owner Participant and the
Guarantor, substantially in the form of Exhibit A-6;
(g) Morris, James, Hitchens & Xxxxxxxx, special
counsel to the Trust Company and the Grantor Trustee,
substantially in the form of Exhibit A-7;
(h) Xxxxx, Xxxxxx & Xxxxxx LLP, special counsel
to the Indenture Trustee, substantially in the form of
Exhibit A-8;
(i) Xxxxx, Xxxxxx & Xxxxxx LLP, counsel to the
Pass Through Trustee, substantially in the form of Exhibit
A-9;
(j) Skadden, Arps, Slate, Xxxxxxx & Xxxx
Illinois, special counsel to the Owner Participant, in
form and substance satisfactory to the Owner Participant
as to such tax matters related to the transactions
contemplated hereby as the Owner Participant may
reasonably request;
(k) Xx Xxxxxx & Xxxxxx, special Panama counsel,
substantially in the form of Exhibit A-10;
(l) Xxxxxx Xxxxx, Legal Counsel to the Initial
Letter of Credit Bank, substantially in the form of
Exhibit A-11; and
(m) Xxxxx, Xxxxx & Xxxxx, special counsel to
the Initial Letter of Credit Bank, substantially in the
form of Exhibit A-12.
4.9 Taxes. All Taxes, fees and other charges, if
any, payable on or prior to the Closing Date in connection with
the consummation of the transactions contemplated by the
Operative Documents occurring on or prior to the Closing Date
shall have been duly paid in full on the Closing Date by the
Lessee.
4.10 Officer's Certificates. On the Closing Date,
each Participant, the Grantor Trustee and the Indenture Trustee
shall have received:
(a) an Officer's Certificate of the Lessee,
dated the Closing Date, stating that (i) the
representations and warranties of the Lessee contained in
any Operative Document (other than the tax representations
and warranties set forth in Section 3 of the Tax Indemnity
Agreement) are true and accurate on and as of the Closing
Date as though made on and as of such date except to the
extent that such representations and warranties
specifically relate solely to an earlier date (in which
case such representations and warranties shall have been
true and accurate on and as of such earlier date),
(ii) each Operative Document to which it is a party and
the Pass Through Trust Agreement remains in full force and
effect with respect to it; and (iii) the Lessee has
performed all covenants and fulfilled all conditions
required to be performed or fulfilled by it on or prior to
the Closing Date;
(b) an Officer's Certificate of the Owner
Participant, dated the Closing Date, stating that (i) the
representations and warranties of the Owner Participant
contained in Section 6 are true and accurate on and as of
the Closing Date as though made on and as of such date
except to the extent that such representations and
warranties specifically relate solely to an earlier date
(in which case such representations and warranties shall
have been true and accurate on and as of such earlier
date); (ii) each Operative Document to which it is a party
remains in full force and effect with respect to it; and
(iii) the Owner Participant has performed all covenants
and fulfilled all conditions required to be performed or
fulfilled by it on or prior to the Closing Date;
(c) an Officer's Certificate of the Trust
Company and the Corporate Grantor Trustee, dated the
Closing Date, stating that (i) the representations and
warranties of the Trust Company and the Grantor Trustee
contained in Section 8 are true and accurate on and as of
the Closing Date as though made on and as of such date
except to the extent that such representations and
warranties specifically relate solely to an earlier date
(in which case such representations and warranties shall
have been true and accurate on and as of such earlier
date); and (ii) each Operative Document to which the Trust
Company, Xxxxxxxx or the Grantor Trustee is a party
remains in full force and effect with respect to it or
him, as the case may be;
(d) an Officer's Certificate of the Corporate
Indenture Trustee, dated the Closing Date, stating that
(i) the representations and warranties of the Indenture
Trustee contained in Section 9 are true and accurate on
and as of the Closing Date as though made on and as of
such date except to the extent that such representations
and warranties specifically relate solely to an earlier
date (in which case such representations and warranties
shall have been true and accurate on and as of such
earlier date); and (ii) each Operative Document to which
The Bank of New York or Xxxxx is a party remains in full
force and effect with respect to it or him, as the case
may be;
(e) an Officer's Certificate of The Bank of New
York (in its individual capacity and as Pass Through
Trustee, as applicable), dated the Closing Date, stating
that (i) the representations and warranties of The Bank of
New York and the Pass Through Trustee contained in Section
7 are true and accurate on and as of the Closing Date as
though made on and as of such date except to the extent
that such representations and warranties specifically
relate solely to an earlier date (in which case such
representations and warranties shall have been true and
accurate on and as of such earlier date); and (ii) each of
the Participation Agreement and the Pass Through Trust
Agreement remains in full force and effect with respect to
it; and
(f) an Officer's Certificate of the Guarantor,
dated the Closing Date, stating that (i) the
representations and warranties of the Guarantor contained
in Section 1.1 of the Guaranty are true and accurate on
and as of the Closing Date as though made on and as of
such date except to the extent that such representations
and warranties specifically relate solely to an earlier
date (in which case such representations and warranties
shall have been true and accurate on and as of such
earlier date); and (ii) the Guaranty remains in full force
and effect.
4.11 Resolutions, Etc. Each Participant, the
Grantor Trustee and the Indenture Trustee shall have received
the following, in each case in form and substance reasonably
satisfactory to such Person:
(a) a Secretary's or an Assistant Secretary's
certificate of the Lessee, dated the Closing Date,
attaching and certifying as to (i) resolutions of its
Board of Directors duly authorizing the execution,
delivery and performance by the Lessee of each Operative
Document to which it is a party, and the Pass Through
Trust Agreement and the transactions contemplated thereby,
certified to be in full force and effect without
modification as of the Closing Date, (ii) its charter
documents, (iii) its by-laws, and (iv) the incumbency and
signature of persons authorized to execute and deliver
such documents on behalf of the Lessee;
(b) a certificate of the Manager of the Owner
Participant, dated the Closing Date, (i) certifying as to
(x) due authorization of the execution, delivery and
performance by the Owner Participant of each Operative
Document to which it is a party, and the transactions
contemplated thereby, and (y) the incumbency and signature
of persons authorized to execute and deliver such
documents on behalf of the Owner Participant, and
(ii) attaching (x) its certificate of formation and
(y) its limited liability company agreement.
(c) a Secretary's or an Assistant Secretary's
certificate of the Trust Company and the Grantor Trustee,
dated the Closing Date, attaching and certifying as to (i)
resolutions of its Board of Directors duly authorizing the
execution, delivery and performance by the Trust Company
and the Grantor Trustee of each Operative Document to
which it is a party, and the transactions contemplated
thereby, certified to be in full force and effect without
modification as of the Closing Date, (ii) its charter
documents, (iii) its by-laws, and (iv) the incumbency and
signature of persons authorized to execute and deliver
such documents on behalf of the Trust Company and the
Grantor Trustee;
(d) a certificate of the Indenture Trustee,
dated the Closing Date, (i) certifying as to due
authorization of the execution, delivery and performance
by the Indenture Trustee of each Operative Document to
which it is a party, and the transactions contemplated
thereby, and (ii) attaching (x) an extract from the By-laws of
the Corporate Indenture Trustee, duly adopted by
its Board of Directors, respecting the signing authority
of such Persons who have signed each Operative Document to
which it is a party and (y) a letter from an Executive
Vice President of the Corporate Indenture Trustee
authorizing, pursuant to such By-laws, such signing
authority, which By-laws and letter are in full force and
effect without modification as of the Closing Date;
(e) a Secretary's or an Assistant Secretary's
certificate of the Pass Through Trustee, dated the Closing
Date, (i) certifying as to due authorization of the
execution, delivery and performance by the Pass Through
Trustee of the Pass Through Trust Agreement and the
Participation Agreement, and the transactions contemplated
thereby, and (ii) attaching (x) an extract from the By-laws of
the Pass Through Trustee, duly adopted by its
Board of Directors who have signed the Pass Through Trust
Agreement and the Participation Agreement and (y) a letter
from an Executive Vice President of the Pass Through
Trustee authorizing, pursuant to such By-laws, such
signing authority, which By-laws and letter are in full
force and effect without modification as of the Closing
Date;
(f) a Secretary's or an Assistant Secretary's
certificate of the Guarantor, dated the Closing Date,
attaching and certifying as to (i) resolutions of its
Board of Directors duly authorizing the execution,
delivery and performance by the Guarantor of the Guaranty
and its obligations thereunder, certified to be in full
force and effect without modification as of the Closing
Date, (ii) its charter documents, (iii) its by-laws and
(iv) the incumbency and signature of persons authorized to
execute and deliver the Guaranty on behalf of the
Guarantor; and
(g) a Secretary's or an Assistant Secretary's
certificate of the Head Lessor, dated the Closing Date,
attaching and certifying as to (i) resolutions of its
Board of Directors duly authorizing the execution,
delivery and performance by the Head Lessor of each
Operative Document to which it is a party, and the
transactions contemplated thereby, certified to be in full
force and effect without modification as of the Closing
Date, (ii) its charter documents, (iii) its by-laws, and
(iv) the incumbency and signature of persons authorized to
execute and deliver such documents on behalf of the Head
Lessor.
4.12 Litigation. There shall be no actions, suits,
investigations or proceedings pending or, to the knowledge of
the Guarantor, the Owner Participant, the Pass Through Trustee,
the Grantor Trustee or the Indenture Trustee, threatened
against any of such Persons or the Lessee or the properties of
any of such Persons or the Lessee before any Governmental
Authority which, if determined adversely to any of such
Persons, would affect the legality, validity or enforceability
of the Operative Documents, the Pass Through Trust Agreement,
the Placement Agreement, the Reimbursement Agreement or the
Initial Letter of Credit, nor shall any orders have been issued
by any Governmental Authority at the time of the Closing Date,
to set aside, restrain, enjoin or prevent the consummation of
this Agreement or the transactions contemplated hereby or by
any of the other Operative Documents, the Pass Through Trust
Agreement, the Placement Agreement, the Reimbursement Agreement
or the Initial Letter of Credit.
4.13 Equity Offering. The Owner Participant and the
Indenture Trustee shall have received a letter dated the
Closing Date from PaineWebber Incorporated with respect to the
number of offerees of the beneficial interest in the Trust
Estate and the manner of offering thereof.
4.14 Investment and Loans. The Owner Participant
shall have made available to the Grantor Trustee the full
amount of its Investment and the Pass Through Trustee shall
have purchased the applicable Secured Notes required to be
purchased by it on the Closing Date pursuant to Section 2.
4.15 Consents and Approvals. All Governmental
Actions which are required to have been taken, given, obtained,
filed or recorded, as the case may be, on or prior to the
Closing Date by, from or with any Governmental Authority, and
all other consents, filings or approvals which are required to
have been taken, given, obtained, filed or recorded, as the
case may be, on or prior to the Closing Date by, from or with
any other Person, in each case, (a) in connection with the
transactions contemplated by the Operative Documents and the
Pass Through Trust Agreement, or to authorize the execution,
delivery and performance by the Lessee, the Guarantor, the
Owner Participant, the Grantor Trustee, the Indenture Trustee
or the Pass Through Trustee of the Pass Through Trust
Agreement, the Reimbursement Agreement and each of the
Operative Documents to which it is a party, or the legality,
validity, binding effect or enforceability thereof as against
the Lessee, other than those constituting filings, recordings
or other actions of the type referred to in Section 4.16, (b)
in order that the Production System may be operated as of the
Closing Date for its intended purposes (including, without
limitation, all Environmental Permits and all approvals,
certificates, permits, authorizations, licenses or other
actions relating to the operation and maintenance of the
Production System), or (c) otherwise in connection with the
transactions contemplated by the Operative Documents
(including, without limitation, all filings or other actions as
may be required to be taken with respect to all leasehold
interests relating to the Production System and with respect to
the Undivided Interest), shall have been duly taken, given,
obtained, filed or recorded, as the case may be, and all such
approvals shall have been duly taken, given, obtained, filed or
recorded, as the case may be, shall be in full force and effect
on the Closing Date, shall not be subject to any pending
proceedings or appeals (administrative, judicial or otherwise)
and shall be adequate to authorize the consummation of the
transactions contemplated by the Pass Through Trust Agreement,
the Placement Agreement, the Reimbursement Agreement and the
Operative Documents and the performance by each of the Lessee
and the Guarantor of its obligations under such thereof to
which it is a party, except such as may be required to be
taken, obtained, given, accomplished or renewed from time to
time in connection with the maintenance or operation of the
Production System or which are otherwise required in connection
with the transactions contemplated by the Pass Through Trust
Agreement, the Placement Agreement, the Reimbursement Agreement
and the Operative Documents which have been applied for but
which cannot be obtained, or which are not normally applied for
or taken, given or obtained, prior to the Closing Date, and
which in the normal course would be granted; provided that the
failure to obtain such Governmental Actions, consents or
approvals by the Closing Date would not materially adversely
affect the ability of the Lessee to perform its obligations
under this Agreement, the Pass Through Trust Agreement or any
other Operative Document to which it is a party.
4.16 Title; Filings and Recordings. On the Closing
Date, after giving effect to the transactions contemplated
hereby, (a) good and marketable title in and to the Undivided
Interest shall have been transferred to the Grantor Trustee,
free and clear of all Liens other than Permitted Liens (other
than Permitted Liens described in clause (e) of the definition
thereof), except for record title to the Undivided Interest,
which will continue to be held by Enserch Exploration, (b) all
filings and recordings listed on Schedule 3 shall have been
duly made or arrangements reasonably satisfactory to the Owner
Participant and the Indenture Trustee shall have been made for
the due filing or recording thereof, subject to requirements
for filing continuation statements at appropriate intervals,
and (c) no other action shall be required to perfect the
mortgage Lien on and security interest in the Indenture Estate
created by the Indenture and Collateral Assignment of the Ship
Mortgage (other than the taking of possession by the Indenture
Trustee of the original executed counterpart of the Lease and
of any cash proceeds included in the Indenture Estate and the
filing of the Ship Mortgage and the Collateral Assignment of
Ship Mortgage for definitive recordation at the Panama Public
Registry within six months of the date of preliminary
recordation).
4.17 Sale of Pass Through Certificates. The Lessee
shall have entered into the Placement Agreement and the Pass
Through Trust Agreement, the Pass Through Certificates shall
have been issued pursuant to the Pass Through Trust Agreement
and sold pursuant to the Placement Agreement and the
Underwriter shall have transferred to the Pass Through Trustee
in immediately available funds an amount equal to the purchase
price for the Pass Through Certificates.
4.18 No Default Under Operating Agreement, Etc. No
material breach by MPTM or Enserch Exploration under the
Federal Leases, or by any party to the Operating Agreement or
the Unit Agreement shall have occurred and be continuing.
4.19 No Default Under Lease. No Lease Default or
Lease Event of Default shall have occurred and be continuing.
4.20 No Material Adverse Change. There shall have
been no material adverse change in the business, operations or
financial condition of the Lessee from October 23, 1996 to the
Closing Date.
4.21 Credit Support. The Lessee and the Initial
Letter of Credit Bank shall have entered into the Reimbursement
Agreement and the Grantor Trustee shall have received the
Initial Letter of Credit substantially in the form of Exhibit A
to the Reimbursement Agreement.
4.22 Notice to MPTM. The Lessee shall have
delivered notice of the transactions contemplated by the
Operative Documents to MPTM in accordance with the terms of the
Operating Agreement.
4.23 No Change In Tax Law. There shall not have
been any proposed or actual amendment, modification, addition
or change in or to the provisions of, or the interpretation of
any tax law, regulation, rule or case (including any
interpretation of U.S. Federal income tax law as in effect on
October 23, 1996) the effect of which would or might render
invalid any of the tax assumptions set forth in the Tax
Indemnity Agreement (including, but not limited to, changes to
the applicable statutory tax rate) or adversely affect the
Owner Participant's Net Economic Return, which amendment,
modification, addition or change shall have been enacted,
promulgated, issued or proposed on or after October 23, 1996
and prior to the time of closing on the Closing Date.
SECTION 5. REPRESENTATIONS AND WARRANTIES OF THE LESSEE.
The Lessee represents and warrants to each of the
other parties hereto that as of the date hereof and as of the
Closing Date:
5.1 Due Organization. The Lessee is a corporation
duly organized, validly existing and in good standing under the
laws of the State of Texas and has the corporate power and
authority to carry on its business as presently conducted and
as it is contemplated it will be conducted in connection with
the Undivided Interest, to own or hold under lease its
properties, and to enter into and perform its obligations under
this Agreement, the Pass Through Trust Agreement, the
Reimbursement Agreement and each other Operative Document to
which it is a party. The Lessee has not failed to qualify to
do business in any jurisdiction where failure so to qualify
could reasonably be expected to materially adversely affect its
ability to conduct its business as it is presently conducted
and as it is contemplated it will be conducted in connection
with the Undivided Interest, to own or hold under lease its
properties or to perform any of its obligations under this
Agreement, the Pass Through Trust Agreement, the Reimbursement
Agreement or any other Operative Document to which it is a
party.
5.2 Authorization. The execution, delivery and
performance by the Lessee of this Agreement, the Pass Through
Trust Agreement, the Reimbursement Agreement and each other
Operative Document to which it is a party and of the
transactions contemplated hereby and thereby have been duly
authorized by all necessary corporate action on the part of the
Lessee and do not and will not require the consent or approval
of any shareholder of the Lessee or any trustee or holder of
any indebtedness or other obligation of the Lessee.
5.3 Execution; Enforceability. This Agreement, the
Pass Through Trust Agreement, the Reimbursement Agreement and
each other Operative Document to which the Lessee is a party
have been, or on the Closing Date will be, duly executed and
delivered by the Lessee; and, assuming the due authorization,
execution and delivery hereof and thereof by the other parties
hereto and thereto are, or on the Closing Date will be, legal,
valid and binding obligations of the Lessee, enforceable
against the Lessee in accordance with their respective terms,
except as such enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, liquidation, moratorium
or similar laws affecting creditors' or lessors' rights
generally and by the application of general equitable
principles which may limit the availability of certain
remedies.
5.4 No Violation. The execution and delivery by the
Lessee of this Agreement, the Pass Through Trust Agreement, the
Reimbursement Agreement and each other Operative Document to
which it is a party do not and will not, and the performance by
the Lessee of its obligations under each thereof do not and
will not, (i) violate or be inconsistent with its charter
documents or by-laws, (ii) contravene any Governmental Rule or
Governmental Action applicable to it, which, in the case of
such performance, noncompliance with which would materially
adversely affect the Undivided Interest or the ability of the
Lessee to perform its obligations under the Operative
Documents; provided that no representation or warranty is made
with respect to ERISA, which is the subject of Section 5.21
(iii) contravene any provision of, or constitute a default
under, any indenture, mortgage, contract or other agreement or
instrument to which the Lessee is a party or by which it or any
of its properties are bound, (iv) result in or, require the
creation or imposition of any Lien (other than Permitted Liens)
upon any of its properties or assets.
5.5 Consents and Approvals. All Governmental
Actions which are required to have been taken, given, obtained,
filed or recorded, as the case may be, on or prior to the
Closing Date by, from or with any Governmental Authority and
all other consents, filings or approvals which are required to
have been taken, given, obtained, filed or recorded, as the
case may be, on or prior to the Closing Date by, from or with
any other Person, in each case, (a) in connection with the
transactions contemplated by the Operative Documents, the Pass
Through Trust Agreement and the Reimbursement Agreement, or to
authorize the execution, delivery and performance by the Lessee
of the Pass Through Trust Agreement, the Reimbursement
Agreement and the Operative Documents to which it is a party,
or the legality, validity, binding effect or enforceability
thereof as against the Lessee, other than those constituting
filings, recordings or other actions of the type referred to in
Section 5.7 or (b) in order that the Production System may be
operated as of the Closing Date for its intended purposes
(including, without limitation, all Environmental Permits and
all approvals, certificates, permits, authorizations, licenses
or other actions relating to the operation and maintenance of
the Production System), shall have been duly taken, given,
obtained, filed or recorded, as the case may be, and shall be
in full force and effect on the Closing Date, shall not be
subject to any pending proceedings or appeals (administrative,
judicial or otherwise) and shall be adequate to authorize the
consummation by the Lessee of the transactions contemplated by
the Pass Through Trust Agreement, the Placement Agreement, the
Reimbursement Agreement and the Operative Documents and the
performance by the Lessee of its obligations under such thereof
to which it is a party, except such as may be required to be
taken, obtained, given, accomplished or renewed from time to
time in connection with the maintenance or operation of the
Production System or which are otherwise required in connection
with the transactions contemplated by the Pass Through Trust
Agreement, the Placement Agreement, the Reimbursement Agreement
and the Operative Documents which have been applied for but
which cannot be obtained, or which are not normally applied for
or taken, given or obtained, prior to the Closing Date, and
which in the normal course would be granted, provided that the
failure to obtain such Governmental Actions, consents, filings
and approvals by the Closing Date would not materially
adversely affect the ability of the Lessee to perform its
obligations under this Agreement, the Pass Through Trust
Agreement, the Reimbursement Agreement or any other Operative
Document to which it is a party.
5.6 Securities Act. Neither the Lessee nor any
Person authorized on its behalf has directly or indirectly
offered or sold any interest in the Trust Estate, or in any
similar security relating to the Undivided Interest, or in any
security the offering of which for purposes of the Securities
Act would be deemed to be part of the same offering as the
offering of the aforementioned interest or similar security to,
or solicited any offer to acquire any of the same from, any
Person other than the Owner Participant and the institutions
referred to in the letter referred to in Section 4.13 from
PaineWebber Incorporated. Neither the Lessee nor any Person
authorized on its behalf has directly or indirectly offered or
sold any Pass Through Certificates, or solicited any offer to
acquire the same from, any Person other than in a manner
required by the Securities Act. Except in connection with a
refunding under Section 15, neither the Lessee nor any Person
authorized to act on its behalf has taken or will take any
action which would subject the issuance or sale of any interest
in the Trust Estate or the Secured Notes to the provisions of
Section 5 of the Securities Act or require the qualification of
the Indenture under the Trust Indenture Act.
5.7 Title; Liens Filings and Recordings. On the
Closing Date, after giving effect to the transactions
contemplated hereby, (a) good and marketable title in and to
the Undivided Interest shall have been transferred to the
Grantor Trustee, free and clear of all Liens other than
Permitted Liens (other than Permitted Liens described in clause
(e) of the definition thereof), except for record title to the
Undivided Interest, which will continue to be held by Enserch
Exploration, (b) the filings and recordings listed in Schedule
3 will be all the filings and recordings necessary to establish
the Grantor Trustee's right, title and interest in and to the
Undivided Interest, to perfect the mortgage Lien and security
interest in the Undivided Interest granted to secure the
obligations of Enserch Exploration under the Head Lease and to
perfect the mortgage Lien on and security interest in the
Indenture Estate created by the Indenture and the Collateral
Assignment of Ship Mortgage (subject only to Permitted Liens)
and all such filings and recordings will have been duly made or
arrangements satisfactory to the Owner Participant and the
Indenture Trustee shall have been made for the due filing or
recording thereof, subject to requirements for filing
continuation statements at appropriate intervals and subject to
Permitted Liens, and (c) no other action will be required to
perfect such mortgage Lien and security interest (other than
the taking of possession by the Indenture Trustee of the
original executed counterpart of the Lease and of any cash
proceeds included in the Indenture Estate and the filing of the
Ship Mortgage and the Collateral Assignment of Ship Mortgage
for definitive recordation at the Panama Public Registry within
six months of the date of preliminary recordation).
5.8 Chief Place of Business. The chief place of
business and chief executive office of the Lessee is located at
0000 Xxxxxxxxxx Xxxxxx, Xxxxx 0000, Xxxxxx, Xxxxx 00000-0000.
5.9 Litigation. There is no action, suit,
investigation or proceeding pending or, to the Actual Knowledge
of the Lessee, threatened against the Lessee or affecting it or
its properties or rights before any Governmental Authority that
questions the validity of any Operative Document or Enserch
Document which, individually or in the aggregate, is reasonably
likely materially and adversely to affect (x) the consummation
of the transactions under this Agreement, the Pass Through
Trust Agreement, the Reimbursement Agreement or any other
Operative Document to which it is a party or (y) the business,
operations or properties of the Lessee, its ability to perform
its obligations under the Reimbursement Agreement or any of the
Operative Documents to which it is a party, or the continued
economic operation of the Production System. The Lessee is not
in default with respect to any order of any Governmental
Authority, where such default would materially and adversely
affect the business, operations or properties of the Lessee as
it relates to the Production System, its ability to perform its
obligations under the Reimbursement Agreement or any of the
Operative Documents to which it is a party, or the continued
economic operation of the Production System or would result in
the creation or imposition of any Lien (other than a Permitted
Lien) upon the Production System or the Undivided Interest.
5.10 No Default. No Lease Default or Lease Event of
Default has occurred and is continuing.
5.11 Event of Loss. No Event of Loss has occurred
and, to the Actual Knowledge of the Lessee, no event described
in clause (c) of the definition of Event of Loss has occurred.
5.12 Environmental Matters. Except as set forth in
Schedule 4:
(a) the Lessee has obtained all Environmental
Permits and is in compliance with all Environmental Laws
and Environmental Permits applicable to the Production
System, except where such failure would not in the
aggregate materially adversely affect the Production
System or the Lessee's ability to perform its obligations
under the Operative Documents;
(b) there have been no Releases of Hazardous
Materials at or from the Production System which have been
required to be reported to any Governmental Authority
pursuant to any applicable Environmental Laws, except for
Releases which would not in the aggregate materially
adversely affect the Production System or the Lessee's
ability to perform its obligations under the Operative
Documents; and
(c) neither Enserch Holdings, the Lessee nor
any of their respective Affiliates has received any
written notice that such Person is subject to any
threatened, pending or outstanding Claim relating to the
Production System with respect to any Environmental Law or
any Remedial Action, which if decided adversely to such
Person, would in the aggregate materially adversely affect
the Production System or the Lessee's ability to perform
its obligations under the Operative Documents.
5.13 Description of Production System. The
description set forth in Exhibit A of the Lease is a true and
accurate description in all material respects of the Production
System.
5.14 Certain Documents. True, correct and complete
copies of the Federal Leases, the Operating Agreement, the Unit
Agreement, the Release, the Waiver and Consent Agreement and
the Quit Claim and Release Agreement (the "Garden Banks
Documents") have been delivered to the Owner Participant. Each
of the Garden Banks Documents is in full force and effect, and
no material breach thereof by the Lessee or, to the Lessee's
Actual Knowledge, by any other party thereto, has occurred and
is continuing. The Participation Agreement dated as of June
15, 1994 between the Lessee and MPTM does not apply to the
Garden Banks Documents, the Production System or the Operative
Documents in any manner that would reasonably be expected to be
adverse to the interests of the Owner Participant, the Grantor
Trustee, the Indenture Trustee or the holder of the Secured
Notes.
5.15 Payment of Taxes, Etc. All Taxes, fees and
other charges payable on or prior to the Closing Date in
connection with the execution, delivery, recordation or filing
of all documents and instruments, including the Operative
Documents, and the consummation of the transactions
contemplated by the Operative Documents occurring on or prior
to the Closing Date, have been paid in full.
5.16 Investment Company Act. The Lessee is not an
"investment company" or a company "controlled" by an
"investment company" within the meaning of the Investment
Company Act of 1940, as amended.
5.17 No Brokers' Fees. Neither the Lessee nor any
Person acting on its behalf has taken any actions the effect of
which would be to cause the Grantor Trustee, the Indenture
Trustee or any Participant to be liable for any brokers',
finders' or agents' fees or commissions or costs of any nature
or kind claimed by or on behalf of brokers, finders or agents
in respect of the transactions contemplated by this Agreement
other than fees payable to PaineWebber Incorporated, all of
which fees, commissions or costs are included in Transaction
Expenses or will be paid or indemnified against by the Lessee.
5.18 Federal Reserve Regulations. Neither the
Lessee nor Enserch Holdings is engaged principally in, and does
not have as one of its important activities, the business of
extending credit for the purpose of purchasing or carrying any
margin stock (within the meaning of Regulation U of the Board
of Governors of the Federal Reserve System of the United
States), and no part of the proceeds of the Secured Notes will
be used to purchase or carry any such margin stock or, to its
knowledge, to extend credit to others for the purpose of
purchasing or carrying any such margin stock or for any purpose
that violates, or is inconsistent with, the provisions of
Regulation G, T, U or X of the Board of Governors of the
Federal Reserve System of the United States.
5.19 Holding Company. The Lessee is not subject to
regulation as a "holding company," an "affiliate" of a "holding
company," or a "subsidiary company" of a "holding company,"
within the meaning of the Public Utility Holding Company Act of
1935, as amended.
5.20 Not Subject to Governmental Regulation.
Neither the Owner Participant nor the Grantor Trustee will
become, solely by reason of its entering into the Operative
Documents to which either is or is to be a party or the
consummation of the transactions contemplated thereby, subject
to regulation by any Governmental Authority (other than banking
regulations or regulations relating to leasing generally)
having jurisdiction or regulatory authority over (i) the
production, processing, transportation or sale of oil or gas or
(ii) the ownership, use, leasing, operation or maintenance of
the Production System or the subject matter of the Operating
Agreement or any Garden Banks Document.
5.21 Condition of Production System. (i) The
Production System, taken as a whole, and each Major Component
thereof, is substantially complete and is ready and available
to perform the function for which it was designed and
installed; (ii) the Production System has been maintained,
serviced and repaired in accordance with the applicable
provisions of the Operating Agreement and in compliance in all
material respects with (A) Governmental Rules, and (B) the
requirements of any insurance policy required to be maintained
pursuant to Section 13 of the Lease; and (iii) the Lessee knows
of no event or condition currently existing which presently
materially and adversely affects the operation or maintenance
of the Production System or which would materially and
adversely affect the capability of the Production System (A) to
operate as an oil and gas exploration facility or
(B) materially impair the value, utility or remaining useful
life of the Production System from that determined in the Final
Appraisal.
5.22 ERISA. Based upon the representations of the
Owner Participant in Section 6.7 and the Loan Participant in
Section 7.8 and assuming that the Pass Through Certificates are
distributed in the manner set forth in the Preliminary Offering
Memorandum dated November 14, 1996 and assuming compliance with
the restrictions on transfer set forth therein, the execution
and delivery of this Participation Agreement and the other
Operative Documents the consummation of the transactions
contemplated hereby and thereby will not involve any
"prohibited transaction" within the meaning of ERISA or
Section 4975 of the Code.
5.23 Financial Statements. Each of the consolidated
financial statements of the Lessee set forth in its annual
report on Form 10-K for the year ended December 31, 1995 and
the consolidated financial statements of the Lessee set forth
in its quarterly report on Form 10-Q for the quarter ended
September 30, 1996 fairly presents the consolidated financial
position of the Lessee and its Subsidiaries as at the
respective dates thereto and the consolidated results of
operations and changes in financial position of the Lessee and
its Subsidiaries for each of the periods covered thereby
(subject, in the case of any unaudited interim financial
statements, to changes resulting form normal year-end
adjustments) and is in conformity with GAAP applied on a
consistent basis (except as disclosed in the notes thereto).
Since December 31, 1995, there has been no material adverse
change in the financial condition of the Lessee and its
Subsidiaries.
5.24 Disclosure. No information or report furnished
in writing to the Participants contains any untrue statement of
material fact or omits to state a material fact necessary to
make the statements contained therein not misleading. There is
no fact of which the Lessee has Actual Knowledge that has not
been disclosed in writing to each of the Participants that
materially adversely affects the ability of the Lessee to
perform its obligations under the Operating Agreement, this
Participation Agreement and the other Operative Documents to
which it is a party. The Lessee is not in default nor has any
event or circumstance occurred which, but for the expiration of
any applicable grace period or the giving of notice, or both,
would constitute a default under any agreement or instrument
for borrowed money to which the Lessee is a party or by which
the Lessee is bound.
5.25 Tax Returns. The Lessee has filed or caused to
be filed all United States Federal and all other material tax
returns that are required to be filed by the Lessee, and has
paid or caused to be paid all taxes shown to be due and payable
on such returns or on any assessment received by the Lessee to
the extent such taxes have become due and payable, and to the
extent, if any, that such taxes are not due and payable, has
established or caused to be established reserves that are
adequate for the payment thereof in accordance with GAAP.
5.26 Insurance. The insurance required by Section
13(a) of the Lease is in full force and effect.
5.27 Compliance with Governmental Rules. The
present location, use, occupancy and operation of the
Production System comply in all material respects with all
Governmental Rules.
5.28 Adequate Rights. Based upon the Lessee's
reasonable expectations and subject to Governmental Rules, the
rights and interests made available to the Grantor Trustee
pursuant to the Agency and Support Agreement, to the extent
such rights and interests are to be made available to the
Grantor Trustee or its permitted transferees, together with the
rights to be made available under the Operating Agreement,
permit the Grantor Trustee or its permitted transferee to use
(as distinguished from possessing) the Production System
(either directly or through the exercise of rights under the
Operating Agreement) on a commercially practicable basis and to
earn a market fee for any hydrocarbons from interests in the
Blocks (as defined in the Agency and Support Agreement) owned
by the Lessee or its Affiliates and processed by the Production
System during the period following the expiration or earlier
termination of the Lease and the taking of possession of the
Undivided Interest in the exercise of remedies under Section 16
of the Lease, as the case may be.
5.29 Solvency. The conveyance of the Undivided
Interest by Enserch Holdings pursuant to the Head Lease and the
transfer by Enserch Holdings of its right, title and interest
in the Head Lease pursuant to the Assignment and Assumption and
Security Agreement and the assumption by the Lessee of Enserch
Holdings' obligations under the Head Lease will not render
Enserch Holdings or the Lessee insolvent nor are such
transactions being consummated in the contemplation of the
insolvency of Enserch Holdings or the Lessee; the property
remaining in the hands of Enserch Holdings after such
conveyances is not unreasonably small capital; the property
remaining in the hands of the Lessee after the consummation of
such transactions is not unreasonably small capital; neither
Enserch Holdings nor the Lessee intends or believes that it
will incur debts beyond their respective abilities to pay as
such debts mature; and neither Enserch Holdings nor the Lessee
has an actual intent to hinder, delay or defraud present or
future creditors.
5.30 Patent and Trademarks. There are no material
patents, patent rights, trademarks, service marks, trade names,
copyrights, licenses or other intellectual property rights with
respect to the Production System that are necessary for the
continued economic operation of the Production System and that
are not provided pursuant to the Agency and Support Agreement.
5.31 Representations and Warranties of Head Lessor.
The representations and warranties of the Head Lessor contained
in Section 11 of the Head Lease are true and correct.
5.32 Head Lease. (a) Enserch Holdings has the power
to convey to the Grantor Trustee all right, title and interest
Enserch Holdings has in the Production System and every part
thereof under all Governmental Rules; the Head Lease is
effective to convey all such rights and interests in accordance
with the terms thereof; and, assuming the filings contemplated
by Section 5.7 are made, such conveyance is effective against
third parties.
(b) Enserch Exploration has the power to make an
effective conveyance to the Grantor Trustee of all right, title
and interest of Enserch Exploration in the Production System
and every part thereof (other than the Satellite Template)
under all Governmental Rules; the provisions of Section 2 of
the Assignment and Assumption and Security Agreement, taken
together with the Head Lease, are effective to convey all
rights and interests of Enserch Exploration, in accordance with
the terms thereof; and, assuming the filings contemplated by
Section 5.7 are made, such conveyance is effective against
third parties.
(c) Enserch Exploration has the power to convey to
the Grantor Trustee all rights and interests of Enserch
Exploration in the Satellite Template under a 99 year lease
such as the Head Lease provided that Enserch Exploration does
not purport to convey record title to the Satellite Template
and, assuming the filings contemplated by Section 5.7 are made,
such conveyance is enforceable against all third parties.
NOTWITHSTANDING ANYTHING CONTAINED HEREIN OR IN ANY
OTHER OPERATIVE DOCUMENT, THE LESSEE DOES NOT MAKE NOR SHALL THE
LESSEE BE DEEMED TO HAVE MADE, AND THE LESSEE HEREBY DISCLAIMS,
ANY REPRESENTATION OR WARRANTY (OTHER THAN THOSE MADE IN THIS
SECTION, IN ANY OFFICER'S CERTIFICATE OF THE LESSEE OR EXPRESSLY
MADE IN ANY OTHER OPERATIVE DOCUMENT), EITHER EXPRESS OR IMPLIED,
AS TO THE DESIGN OR CONDITION OF THE PRODUCTION SYSTEM OR ANY
PART THEREOF, THE MERCHANTABILITY THEREOF OR THE FITNESS THEREOF
FOR ANY PARTICULAR PURPOSE, THE ABILITY OF THE PRODUCTION SYSTEM
TO PERFORM ANY FUNCTION, THE QUALITY OF THE MATERIALS OR
WORKMANSHIP THEREOF OR CONFORMITY THEREOF TO SPECIFICATIONS, OR
THE PRESENCE OR ABSENCE OF ANY LATENT OR OTHER DEFECTS, WHETHER
OR NOT DISCOVERABLE; PROVIDED THAT THE FOREGOING SHALL NOT EXCUSE
THE PERFORMANCE BY THE LESSEE OF ITS OBLIGATIONS UNDER THIS
AGREEMENT OR ANY OTHER OPERATIVE DOCUMENT.
SECTION 6. REPRESENTATIONS AND WARRANTIES OF OWNER
PARTICIPANT.
The Owner Participant represents and warrants to each
of the other parties hereto that as of the date hereof and as
of the Closing Date:
6.1 Due Organization. The Owner Participant is a
limited liability company duly organized, validly existing and
in good standing under the laws of the State of Delaware and
has the requisite power and authority to enter into and perform
its obligations under this Agreement and each other Operative
Document to which it is a party.
6.2 Authorization; Execution; Enforceability. The
execution, delivery and performance by the Owner Participant of
this Agreement and each other Operative Document to which it is
a party and of the transactions contemplated hereby and thereby
have been, or on the Closing Date will be, duly authorized by
all necessary action on the part of the Owner Participant and
do not and will not require the consent or approval of any
shareholder of the Owner Participant. This Agreement and each
other Operative Document to which the Owner Participant is a
party have been duly authorized, executed and delivered by the
Owner Participant and, assuming the due authorization,
execution and delivery hereof and thereof by the other parties
hereto and thereto, are, or on the Closing Date will be, legal,
valid and binding obligations of the Owner Participant,
enforceable against the Owner Participant in accordance with
their respective terms, except as such enforceability may be
limited by applicable bankruptcy, insolvency, reorganization,
liquidation, moratorium or similar laws affecting creditors'
rights generally and by the application of general equitable
principles which may limit the availability of certain
remedies. Any direction given by the Owner Participant to the
Grantor Trustee on the Closing Date pursuant to the Trust
Agreement will have been duly authorized.
6.3 No Violation. The execution and delivery by the
Owner Participant of this Agreement and each other Operative
Document to which it is a party do not and will not, and the
performance by the Owner Participant of its obligations under
each thereof do not and will not, (i) violate or be
inconsistent with or in violation of its certificate of
formation or limited liability company agreement, (ii) assuming
that the Owner Participant does not become subject to
regulation by any Governmental Authority solely by reason of
the execution, delivery and performance of the Operative
Documents and not in whole or in part as a result of its or any
of its Affiliate's business or other activities other than the
activities engaged in solely by reason of the transactions
contemplated under the Operative Documents, contravene any
provision of any Governmental Rule or Governmental Action
applicable to it or require any Governmental Action, provided
that no representation or warranty is made with respect to
ERISA (except as set forth in Section 6.7), and (iii)
contravene any provision of, or constitute any default or
require any consent under, any provision of any indenture,
mortgage, contract or other instrument to which the Owner
Participant is a party or by which it or any of its property is
bound.
6.4 Owner Participant's Liens. There are no Owner
Participant's Liens on the Trust Estate or the Indenture
Estate, or on any part of either thereof and the execution,
delivery and performance by the Owner Participant of the
Operative Documents to which it is a party will not subject the
Trust Estate or the Indenture Estate to any Owner Participant's
Liens.
6.5 Acquisition for Investment. The Owner
Participant is acquiring its interest in the Trust Estate for
its own account for investment and not with a view to, or for
sale in connection with, any distribution of any such interest
(it being understood that at all times the disposition of its
property shall remain within its control), except that the
Owner Participant reserves the right to transfer or assign any
of or all such interest to the extent permitted by the terms of
this Agreement and the Trust Agreement.
6.6 Securities Act. Neither the Owner Participant
nor any Person authorized by the Owner Participant has directly
or indirectly offered or sold any interest in the Trust Estate
or the Secured Notes, or in any similar security relating to
the Undivided Interest, or in any security the offering of
which for the purposes of the Securities Act would be deemed to
be part of the same offering as the offering of the
aforementioned securities to, or solicited any offer to acquire
any of the same from, any Person other than, in the case of the
Secured Notes, the Loan Participant, and neither the Owner
Participant nor any Person authorized to act on its behalf have
taken or will take any action which would subject the issuance
or sale of any interest in the Trust Estate or the Secured
Notes to the provisions of Section 5 of the Securities Act or
require the qualification of the Indenture under the Trust
Indenture Act except to the extent required under Section 15
hereof.
6.7 ERISA. The Owner Participant is not acquiring
any part of its interest in the Trust Estate with any ERISA
Plan Assets.
6.8 Investment Company Act. The Owner Participant
is not an "investment company" or a company "controlled" by an
"investment company" within the meaning of the Investment
Company Act of 1940, as amended.
6.9 Litigation. There is no action, suit,
investigation or proceeding pending or, to the Actual Knowledge
of the Owner Participant, threatened against the Owner
Participant or the Guarantor or the properties of either of
such Persons before any Governmental Authority which,
individually or in the aggregate, is reasonably likely
materially and adversely to affect the ability of the Owner
Participant or the Guarantor to perform its obligations under
this Agreement or any other Operative Document to which it is a
party.
6.10 No Default. No Indenture Default or Indenture
Event of Default attributable to the Owner Participant has
occurred and is continuing.
6.11 Federal Reserve Regulations. No part of the
proceeds of the Secured Notes will be used by the Owner
Participant to purchase or carry any margin stock (within the
meaning of Regulation U of the Board of Governors of the
Federal Reserve System of the United States) or, assuming the
accuracy of the representation set forth in Section 5.18, to
extend credit to others for the purpose of purchasing or
carrying any such margin stock.
6.12 No Brokers' Fees. Neither the Owner
Participant nor any Person acting on its behalf has taken any
actions the effect of which would be to cause the Lessee or any
Loan Participant to be liable for any brokers', finders' or
agents' fees or commissions or costs of any nature or kind
claimed by or on behalf of brokers, finders or agents in
respect of the transactions contemplated by this Agreement not
included in Transaction Expenses.
SECTION 7. REPRESENTATIONS AND WARRANTIES OF PASS THROUGH
TRUSTEE.
The Bank of New York represents and warrants in its
individual capacity with respect to Sections 7.1, 7.2(a), 7.3,
7.4, 7.5(a), 7.6 and 7.7 and not in its individual capacity,
but solely in its capacity as Pass Through Trustee under the
Pass Through Trust Agreement, with respect to Sections 7.2(b)
and 7.5(b), to each of the other parties hereto that as of the
date hereof and as of the Closing Date:
7.1 Due Organization. The Bank of New York is a New
York banking corporation duly organized, validly existing and
in good standing under the laws of the State of New York and
has the corporate power and authority to enter into and perform
its obligations under this Agreement and the Pass Through Trust
Agreement.
7.2 Authorization; Execution; Enforceability. (a)
This Agreement and the Pass Through Trust Agreement have been,
or on the Closing Date will be, duly authorized, executed and
delivered by The Bank of New York, in its individual capacity
and, assuming the due authorization, execution and delivery
hereof and thereof by the other parties hereto and thereto,
are, or on the Closing Date will be, legal, valid and binding
obligations of The Bank of New York, in its individual capacity
(to the extent it is a party hereto or thereto in such
capacity), enforceable against it in accordance with their
respective terms, except as such enforceability may be limited
by applicable bankruptcy, insolvency, reorganization,
liquidation, receivership, moratorium or similar laws affecting
creditors' rights generally and by the application of general
equitable principles which may limit the availability of
certain remedies.
(b) This Agreement, the Pass Through Trust Agreement
and the Pass Through Certificates have been duly authorized,
executed and delivered by the Pass Through Trustee and,
assuming the due authorization, execution and delivery hereof
and thereof by the other parties hereto or thereto, are legal,
v valid and binding obligations of the Pass Through Trustee,
enforceable against it in accordance with their respective
terms, except as such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, liquidation,
receivership, moratorium or similar laws affecting creditors'
rights generally and the application of general equitable
principles may limit the availability of certain remedies.
7.3 No Violation. The execution, delivery and
performance by The Bank of New York of this Agreement and the
Pass Through Trust Agreement, the purchase by the Pass Through
Trustee of the applicable Secured Notes pursuant to this
Agreement and the issuance of the Pass Through Certificates
pursuant to the Pass Through Trust Agreement are not and will
not be inconsistent with its constitutional documents or do not
and will not contravene any Governmental Rule of the United
States of America or the State of New York governing with
respect to its banking or trust powers, and will not contravene
any provision of, or constitute a default under, any indenture,
mortgage, contract or other instrument to which The Bank of New
York, in its individual capacity, is a party, or by which it or
any of its properties are bound, or require any Governmental
Action of the United States of America or the State of New York
governing its banking or trust powers.
7.4 Litigation. There is no action, suit,
investigation or proceeding pending or, to the Actual Knowledge
of The Bank of New York, threatened against it, whether in its
individual capacity or as Pass Through Trustee, before any
Governmental Authority governing its banking or trust powers
which, individually or in the aggregate (so far as The Bank of
New York, now can reasonably foresee), is reasonably likely
materially and adversely to affect the ability of the Pass
Through Trustee (in either such capacity) to perform its
obligations under this Agreement or the Pass Through Trust
Agreement (in either such capacity).
7.5 [Intentionally Omitted].
7.6 Securities Act. The Bank of New York has not
offered any interest in the Pass Through Certificates or any
Secured Note or any similar securities for sale to, or
solicited any offer to acquire the same from, anyone, other
than the Grantor Trustee, and no responsible officer or
responsible employee of The Bank of New York has knowledge of
any such offer or solicitation, except as set forth in the
Operative Documents and the Pass Through Trust Agreement.
7.7 No Taxes Payable. Except for Taxes based upon
the income of any Person, there are no Taxes payable in the
state in which the principal place of business of the Pass
Through Trustee is located in connection with the execution,
delivery, consummation or recordation of this Agreement and the
other Operative Documents or the Pass Through Trust Agreement,
upon or with respect to the Trust Estate or the Indenture
Estate, or in connection with the consummation of the
transactions contemplated hereby and by the other Operative
Documents (including, without limitation, the filing of
financing statements with respect thereto or the sale or
transfer of the Undivided Interest).
7.8. ERISA. Assuming that the Pass Through
Certificates are distributed in the manner set forth in the
Preliminary Offering Memorandum dated November 14, 1996, the
Loan Participant is not purchasing any of the Secured Notes
with any ERISA Plan Assets, and no Employer Plan of the Loan
Participant is acquiring the Pass Through Certificates.
SECTION 8. REPRESENTATIONS AND WARRANTIES OF TRUST COMPANY
AND THE CORPORATE GRANTOR TRUSTEE.
The Trust Company represents and warrants with
respect to Sections 8.1, 8.2 (other than clause (b)(ii)
thereof), 8.3, 8.4(a), 8.5, 8.6 (as specified therein), 8.7 (as
specified therein), 8.8, 8.9 and 8.10, and in its capacity as
Corporate Grantor Trustee represents and warrants with respect
to Sections 8.2(b)(ii), 8.4(b), 8.6 (as specified therein), 8.7
(as specified therein) and 8.11, to each of the other parties
hereto that as of the date hereof and as of the Closing Date:
8.1 Due Organization. The Trust Company is a
Delaware banking corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware
and has the corporate power and authority to enter into and
perform its obligations under the Trust Agreement, this
Agreement and each other Operative Document to which it is a
party and assuming due authorization, execution and delivery by
the Owner Participant of the Trust Agreement and upon due
direction by the Owner Participant pursuant thereto, will have
the power and authority to enter into and perform its
obligations as Corporate Grantor Trustee under the Trust
Agreement, this Agreement and each other Operative Document to
which Corporate Grantor Trustee is a party. The Lessor is a
business trust duly organized, validly existing and in good
standing under the laws of the State of Delaware and has the
power and authority to enter into and perform its obligations
hereunder.
8.2 Authorization; Execution; Enforceability. (a)
This Agreement, the Trust Agreement and each other Operative
Document to which the Trust Company or Xxxxxxxx is a party have
been, or on the Closing Date will be, duly authorized, executed
and delivered by the Trust Company and Xxxxxxxx, respectively,
and, assuming due authorization, execution and delivery by the
other parties hereto and thereto, are, or on the Closing Date
will be, legal, valid and binding obligations of the Trust
Company and Xxxxxxxx, respectively, enforceable against it or
him in accordance with their respective terms, except as such
enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, liquidation, moratorium or similar
laws affecting creditors' rights generally and by the
application of general equitable principles which may limit the
availability of certain remedies.
(b) This Agreement and each other Operative Document
to which the Grantor Trustee is a party (i) have been, or on
the Closing Date will be, (assuming due authorization,
execution and delivery by the Owner Participant of the Trust
Agreement and upon due direction by the Owner Participant
pursuant thereto), in the case of the Corporate Grantor
Trustee, duly authorized, executed and delivered by one of its
officers who is duly authorized to execute and delivery such
Operative Document on behalf of the Corporate Grantor Trustee
and, in the case of the Individual Grantor Trustee, duly
executed by Xxxxxxxx, and (ii) assuming due authorization,
execution and delivery by the other parties hereto and thereto,
are, or on the Closing Date will be, legal, valid and binding
obligations of the Grantor Trustee enforceable against the
Grantor Trustee in accordance with their respective terms,
except as such enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, liquidation, moratorium
or similar laws affecting creditors' rights generally and the
application of general equitable principles may limit the
availability of certain remedies. Upon execution of the
Secured Notes by the Grantor Trustee, authentication thereof by
the Indenture Trustee and delivery thereof against payment or
the giving of consideration therefor in accordance with the
Indenture and this Agreement, the Secured Notes will be legal,
valid and binding obligations of the Grantor Trustee
enforceable against the Grantor Trustee in accordance with
their respective terms, except as such enforceability may be
limited by applicable bankruptcy, insolvency, reorganization,
liquidation, moratorium or similar laws affecting creditors'
rights generally and the application of general equitable
principles may limit the availability of certain remedies.
8.3 No Violation. (a) The execution and delivery
by the Trust Company of the Trust Agreement and, to the extent
it is a party hereto or thereto in its individual capacity,
this Agreement and each other Operative Document, are not or
will not be, and the performance by the Trust Company of its
obligations under each will not be, inconsistent with the
charter documents or by-laws of the Trust Company, do not and
will not contravene any United States federal or Delaware
Governmental Rule governing its banking or Trust powers
relating to or affecting its capacity to act as contemplated by
the Trust Agreement or the other Operative Documents to which
it is a party and do not and will not contravene any provision
of, or constitute a default under, any indenture, mortgage,
contract or other instrument to which the Trust Company is a
party or by which it or any of its property is bound, or
require any United States federal or Delaware Governmental
Action relating to or affecting its capacity to act as
contemplated by the Trust Agreement or the other Operative
Documents to which it is a party. The execution and delivery
by Xxxxxxxx of the Trust Agreement and, to the extent he is a
party hereto or thereto in his individual capacity, this
Agreement and each other Operative Document, and the
performance by Xxxxxxxx of his obligations under each do not
and will not, contravene any United States federal or Delaware
Governmental Rule governing his banking or trust powers
relating to or affecting his capacity to act as contemplated by
the Trust Agreement or the other Operative Documents to which
he is a party and do not and will not contravene any provision
of, or constitute a default under, any indenture, mortgage,
contract or other instrument to which he is a party or by which
he or any of his property is bound, or require any United
States federal or Delaware Governmental Action relating to or
affecting his capacity to act as contemplated by the Trust
Agreement or the other Operative Documents to which he is a
party.
(b) The execution and delivery by the Grantor
Trustee of each Operative Document to which the Grantor Trustee
is a party are not, and the performance by the Grantor Trustee
of the Grantor Trustee's obligations under each will not be,
inconsistent with the charter documents or by-laws of the Trust
Company, do not and will not contravene any United States
federal or Delaware Governmental Rule regulating the Grantor
Trustee's banking or trust powers relating to or affecting the
Grantor Trustee's capacity to act as contemplated by the Trust
Agreement or the Grantor Trustee Documents and do not and will
not contravene any provision of, or constitute a default under,
any indenture, mortgage, contract or other instrument to which
the Grantor Trustee is a party or by which the Grantor Trustee
or the Grantor Trustee's property is bound or, assuming the
accuracy of the Lessee's representation in Section 5.20,
require any United States federal or Delaware Governmental
Action relating to or affecting the Grantor Trustee's capacity
to act as contemplated by the Trust Agreement or the Grantor
Trustee Documents.
8.4 No Default. (a) No Indenture Default or
Indenture Event of Default attributable to the Trust Company or
Xxxxxxxx has occurred and is continuing.
(b) No Indenture Default or Indenture Event of
Default attributable to the Grantor Trustee has occurred and is
continuing.
8.5 Litigation. (a) There is no action, suit,
investigation or proceeding pending or, to the Actual Knowledge
of the Trust Company, threatened against the Trust Company or
Xxxxxxxx before any Governmental Authority which, individually
or in the aggregate (so far as the Trust Company now can
reasonably foresee), is reasonably likely materially and
adversely to affect the ability of the Trust Company or
Xxxxxxxx to perform its or his obligations under this Agreement
or any other Operative Document to which it or he is a party.
(b) There is no action, suit, investigation or
proceeding pending or, to the Actual Knowledge of the Trust
Company, threatened against the Grantor Trustee before any
Governmental Authority which, individually or in the aggregate
(so far as the Trust Company now can reasonably foresee), is
reasonably likely materially and adversely to affect the
ability of the Trust Company to perform its obligations under
this Agreement or any other Operative Document to which it is a
party.
8.6 Lessor's Liens. There are no Lessor's Liens
attributable to the Grantor Trustee, Xxxxxxxx or the Trust
Company on the Trust Estate or the Indenture Estate, or on any
part of either thereof and the execution, delivery and
performance by any of the Grantor Trustee, the Trust Company or
Xxxxxxxx of the Operative Documents to which any of them is a
party will not subject the Trust Estate or the Indenture Estate
to any such Lessor's Liens.
8.7 Securities Act. None of the Trust Company,
Xxxxxxxx, the Grantor Trustee or any Person authorized by any
of the Trust Company, Xxxxxxxx or the Grantor Trustee to act on
its or his behalf, has directly or indirectly offered or sold
any interest in the Trust Estate or the Secured Notes, or in
any similar security relating to the Undivided Interest, or in
any security the offering of which for the purposes of the
Securities Act would be deemed to be part of the same offering
as the offering of the aforementioned securities to, or
solicited any offer to acquire any of the same from, any
Person, other than, in the case of the Secured Notes, the Loan
Participants, and none of the Trust Company, Xxxxxxxx, the
Grantor Trustee or any Person authorized by either of the Trust
Company, Xxxxxxxx or the Grantor Trustee to act on its or his
behalf will take any action which would subject the issuance or
sale of any interest in the Trust Estate or the Secured Notes
to the provisions of Section 5 of the Securities Act or require
the qualification of the Indenture under the Trust Indenture
Act except to the extent required under Section 15, it being
understood that no Person has been authorized to act on behalf
of the Grantor Trustee, Xxxxxxxx or the Trust Company in
connection with the issuance and sale of the Pass Through
Certificates.
8.8 Chief Place of Business. The Trust Company's
chief place of business, chief executive office and office
where the documents, accounts and records relating to the
transactions contemplated by this Agreement and each other
Operative Document are kept are located in Wilmington,
Delaware.
8.9 No Taxes Payable. Except for Taxes based upon
the income of any Person, there are no Taxes payable in the
state in which the principal place of business of the Trust
Company, or the Grantor Trustee, as the case may be, is located
in connection with the execution, delivery, consummation or
recordation of this Agreement and the other Operative
Documents, upon or with respect to the Trust Estate or the
Indenture Estate, or in connection with the consummation of the
transactions contemplated hereby and by the other Operative
Documents (including, without limitation, the filing of
financing statements with respect thereto or the sale or
transfer of the Undivided Interest, solely because the Trust
Company has its principal place of business in the State of
Delaware).
8.10 Federal Reserve Regulations. The Grantor
Trustee is not engaged principally in, and does not have as one
of its important activities, the business of extending credit
for the purpose of purchasing or carrying any margin stock
(within the meaning of Regulation U of the Board of Governors
of the Federal Reserve System of the United States), and no
part of the proceeds of the Secured Notes will be used by it or
him to purchase or carry any such margin stock or, assuming the
accuracy of the representation set forth in Section 5.18, to
extend credit to others for the purpose of purchasing or
carrying any such margin stock or for any purpose that
violates, or is inconsistent with, the provisions of Regulation
G, T, U or X of the Board of Governors of the Federal Reserve
System of the United States.
SECTION 9. REPRESENTATIONS AND WARRANTIES OF THE CORPORATE
INDENTURE TRUSTEE.
The Bank of New York represents and warrants in its
individual capacity with respect to Sections 9.1, 9.2(a), 9.3,
9.4, 9.5(a) and 9.6, and not in its individual capacity, but
solely in its capacity as Corporate Indenture Trustee with
respect to Sections 9.2(b) and 9.5(b), to each of the other
parties hereto that as of the date hereof and as of the Closing
Date:
9.1 Due Organization. The Bank of New York is a New
York banking corporation duly organized, validly existing and
in good standing under the laws of the State of New York and
has the corporate power and authority to enter into and perform
its obligations under this Agreement and each other Operative
Document to which it is a party.
9.2 Authorization; Execution; Enforceability. (a)
This Agreement and each other Operative Document to which The
Bank of New York or Xxxxx, in its or his individual capacity is
a party have been, or on the Closing Date will be, duly
authorized, executed and delivered by The Bank of New York and
Xxxxx, respectively, each in its individual capacity and,
assuming the due authorization, execution and delivery hereof
and thereof by the other parties hereto and thereto, are, or on
the Closing Date will be, legal, valid and binding obligations
of the Indenture Trustee in its or his individual capacity, as
the case may be, (to the extent it or he is a party hereto or
thereto in such capacity), enforceable against it or him in
accordance with their respective terms, except as such
enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, liquidation, receivership,
moratorium or similar laws affecting creditors' rights
generally and the application of general equitable principles
may limit the availability of certain remedies. Assuming due
authorization, execution and delivery thereof by the Grantor
Trustee, each Secured Note issued on the Closing Date pursuant
to the terms of this Agreement and the Indenture on the Closing
Date will have been duly authenticated.
(b) This Agreement and each other Operative Document
to which the Indenture Trustee is a party have been duly
authorized, executed and delivered by the Indenture Trustee
and, assuming the due authorization, execution and delivery
hereof and thereof by the other parties hereto or thereto, are
legal, valid and binding obligations of the Indenture Trustee,
enforceable against the Indenture Trustee in accordance with
their respective terms, except as such enforceability may be
limited by applicable bankruptcy, insolvency, reorganization,
liquidation, receivership, moratorium or similar laws affecting
creditors' rights generally and the application of general
equitable principles may limit the availability of certain
remedies.
9.3 No Violation. The execution and delivery by The
Bank of New York of this Agreement and each other Operative
Document to which it is a party are not and will not be, and
the performance by it of its obligations under each will not
be, inconsistent with its charter documents or do not and will
not contravene any Governmental Rule of the United States of
America or New York governing with respect to its banking or
Trust powers, and will not contravene any provision of, or
constitute a default under, any indenture, mortgage, contract
or other instrument to which The Bank of New York, in its
individual capacity, is a party, or by which it or any of its
properties are bound, or require any Governmental Action of the
United States of America or New York governing its banking or
trust powers. The execution and delivery by Xxxxx of this
Agreement and each other Operative Document to which he is a
party do not and will not contravene any Governmental Rule of
the United States of America or New York governing with respect
to his banking or trust powers, and will not contravene any
provision of, or constitute a default under, any indenture,
mortgage, contract or other instrument to which Xxxxx, in his
individual capacity, is a party, or by which he or any of his
properties are bound, or require any Governmental Action of the
United States of America or New York governing his banking or
trust powers.
9.4 Litigation. There is no action, suit,
investigation or proceeding pending or, to the Actual Knowledge
of the Indenture Trustee, threatened against the Indenture
Trustee, whether in its or his individual capacity or as
Corporate Indenture Trustee or Individual Indenture Trustee, as
the case may be, before any Governmental Authority governing
its banking or trust powers which, individually or in the
aggregate (so far as the Indenture Trustee now can reasonably
foresee), is reasonably likely materially and adversely to
affect the ability of the Indenture Trustee (in either such
capacity) to perform the Indenture Trustee's obligations under
this Agreement or any other Operative Document to which the
Indenture Trustee is a party (in either such capacity).
9.5 Indenture Trustee's Liens. (a) There are no
Indenture Trustee's Liens attributable to The Bank of New York
or Xxxxx in its or his individual capacity on the Indenture
Estate or on any part thereof.
(b) There are no Indenture Trustee's Liens on the
Indenture Estate or any part thereof.
9.6 No Taxes Payable. Except for Taxes based upon
the income of any Person, there are no Taxes payable in the
state in which the principal place of business of the Indenture
Trustee is located in connection with the execution, delivery,
consummation or recordation of this Agreement and the other
Operative Documents, upon or with respect to the Trust Estate
or the Indenture Estate, or in connection with the consummation
of the transactions contemplated hereby and by the other
Operative Documents (including, without limitation, the filing
of financing statements with respect thereto or the sale or
transfer of the Undivided Interest).
SECTION 10. LESSEE COVENANTS.
The Lessee covenants and agrees that:
10.1 Officer's Certificate. The Lessee will deliver
to the Owner Participant, the Grantor Trustee and the Indenture
Trustee on or before May 1 of each year during the Lease Term
commencing in 1997, an Officer's Certificate of the Lessee
signed on behalf of the Lessee by the Chief Financial Officer
of the Lessee to the effect that the signer has made, or caused
to be made under his supervision a review of the relevant terms
of the Lease and the other Operative Documents to which the
Lessee is a party and the signer does not have knowledge of the
existence, as of the date of such certificate, of any condition
or event which constitutes a Lease Default, Lease Event of
Default, an Event of Loss or an event described in clause (c)
of the definition of Event of Loss, or if any such condition or
event exists, specifying the nature thereof, the period of
existence thereof and what action the Lessee has taken or
proposes to take with respect thereto. Such Officer's
Certificate shall be accompanied by a summary of any material
items during the preceding year in the use, operation or
maintenance of the Production System not otherwise reported in
the Lessee's Form 10-K for such year or any other reports filed
with the SEC.
10.2 Financial Statements and Other Requested
Information.
(i) SEC Reports. The Lessee shall provide to the
Owner Participant, the Grantor Trustee and the Indenture
Trustee (x) within 30 days after the same is required to
be filed with the SEC or any successor agency, a copy of
each annual report and any amendment to an annual report
filed with the SEC or any successor agency pursuant to
Section 13 or 15(d) of the Securities Exchange Act of 1934
(currently Form 10-K), as the same may be amended from
time to time, (y) within 30 days after the same is
required to be filed with the SEC or any successor agency,
a copy of each quarterly report and any amendment to any
quarterly report filed with the SEC or any successor
agency pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 (currently Form 10-Q), as the same
may be amended from time to time, and (z) promptly after
the same become available, but in any event within 30 days
following the date the same are required to be filed with
the SEC, all other reports, notices, proxy statements or
other documents that are distributed by the Lessee to its
shareholders and all regular and periodic final reports
(including, without limitation, reports on Form 8-K) filed
by the Lessee with the SEC, which are publicly available,
except for reports on XXX Xxxxx 0, 0 xx 0 xxx 00-X.
(xx) Financial Statements. If at any time the
Lessee shall cease to be subject to the reporting
requirements of Sections 13 or 15(d) of the Securities
Exchange Act of 1934, the Lessee shall furnish the
following reports:
(a) As soon as available, but in any event not
later than 75 days after the end of each of the first
three quarterly periods of each fiscal year of the Lessee,
the unaudited consolidated balance sheet of Lessee and its
consolidated Subsidiaries as at the end of such quarter
and the related unaudited consolidated statements of
income and of cash flows of Lessee and its consolidated
Subsidiaries for the portion of the fiscal year through
the end of such quarter, and setting forth in each case in
comparative form figures for the related period in the
prior fiscal year, all of which shall be certified by the
Chief Financial Officer of the Lessee, subject to normal
year-end audit adjustments; and
(b) As soon as available, but in any event
within 120 days after the end of each fiscal year of the
Lessee, a copy of the audited and consolidated balance
sheet of Lessee and its consolidated Subsidiaries as at
the end of such year and the related audited consolidated
statements of income and of cash flows for such year, and
setting forth in each case in comparative form the figures
for the previous year and such consolidated statements
shall be accompanied by a balance sheet as of such date,
and a statement of income and cash flows for such period;
(iii) Other Information. With reasonable
promptness, the Lessee will deliver to the Owner
Participant, the Grantor Trustee and the Indenture Trustee
such data and information as to the Production System, the
Undivided Interest as from time to time may be reasonably
available to the Lessee and reasonably requested by any of
such parties.
10.3 Maintenance of Corporate Existence, Etc.
Subject to the provisions of Section 10.4, the Lessee shall at
all times maintain its corporate existence and preserve and
keep in full force and effect its rights and franchises, the
loss of which, individually or in the aggregate, would have a
material adverse effect on the financial condition of the
Lessee or its ability to comply with its obligations under the
Operative Documents.
10.4 Merger, Consolidation, Sale, Etc. (a) Except
as may occur in conjunction with the Enserch Transactions, so
long as any of the Secured Notes remain Outstanding or any
amounts with respect thereto remain due and owing by the Lessee
to the Loan Participant under any Operative Document remain
unpaid and so long as the Lease Term shall not have expired or
been terminated, the Lessee shall not consolidate with or merge
with or into any other corporation under circumstances where
the Lessee is not the surviving corporation, or sell, assign,
convey, transfer, lease or otherwise dispose of all or
substantially all of its assets as an entirety to any Person,
unless:
(i) the successor or transferee corporation (x)
is generally paying its debts as they become due and (y)
is not subject to bankruptcy, insolvency or similar
proceedings;
(ii) the successor or transferee corporation shall
be a corporation organized and existing under the laws of
the United States of America or any State thereof or the
district of Columbia, and shall execute and deliver to the
Grantor Trustee, the Owner Participant, the Indenture
Trustee and the Loan Participant an agreement (in form and
substance reasonably satisfactory to each thereof)
containing the assumption by such successor corporation of
the due and punctual performance and observance of each
covenant and condition of each Operative Document to which
the Lessee is a party to be performed, complied with or
observed by the Lessee;
(iii) immediately prior to and immediately after
giving effect to such transaction, no Lease Default
described in Sections 15(a), (b), (c) or (g) of the Lease
or Lease Event of Default shall have occurred and be
continuing; and
(iv) the Lessee shall have delivered to each of
the Grantor Trustee, the Owner Participant and the
Indenture Trustee an Officer's Certificate of the Lessee
signed on behalf of the Lessee by the Chief Financial
Officer of the Lessee, and an opinion of counsel to the
Lessee, each stating that such consolidation, merger,
conveyance, transfer or lease and the assumption agreement
referred to in clause (ii) above comply with this Section
10.4 and that all conditions precedent herein provided for
relating to such transaction have been satisfied and, in
the case of such opinion, that (x) such assumption
agreement has been duly authorized, executed and delivered
by such successor corporation or transferee and is
enforceable against such successor corporation or
transferee in accordance with its terms, except as the
same may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the
rights of creditors generally and by general principles of
equity and (y) all filings or recordations necessary to
protect the interests of the Grantor Trustee, Indenture
Trustee and the Owner Participant in and to the Production
System have been made.
(b) Upon any consolidation or merger, or any
conveyance, transfer or lease of all or substantially all of
the assets of the Lessee as an entirety in accordance with this
Section 10.4, the successor corporation formed by such
consolidation or into which the Lessee is merged or to which
such conveyance, transfer or lease is made shall succeed to,
and be substituted for, and may exercise every right and power
of, the Lessee under this Agreement and the other Operative
Documents to which the Lessee is a party with the same effect
as if such successor corporation had been named as the Lessee
herein and therein. No such consolidation, merger, conveyance,
transfer or lease of all or substantially all of the assets of
the Lessee as an entirety shall have the effect of releasing
the Lessee or any successor corporation which shall theretofore
have become such in the manner prescribed in this Section 10.4
from its liability hereunder or under any other Operative
Document. Nothing contained herein shall permit any lease,
sublease or other arrangement with respect to the Undivided
Interest except in compliance with the applicable provisions of
the Lease.
(c) Immediately prior to the consummation of the
Enserch Transactions, General Counsel to the Lessee shall
confirm to the Owner Participant paragraph 9 of its opinion
delivered pursuant to Section 4.8(b).
(d) Notwithstanding anything herein to the contrary,
subject to satisfaction of Section 10.4(c), no consent shall be
required in connection with the Enserch Transactions.
10.5 Change in Name or Chief Place of Business. The
Lessee shall give notice to the Grantor Trustee, the Owner
Participant and the Indenture Trustee promptly but in any event
within 30 days after any change in its name or chief place of
business or chief executive office.
10.6 Further Assurances. The Lessee, at its own
cost and expense, will cause to be promptly and duly taken,
executed, acknowledged and delivered all such further acts,
documents and assurances as the Grantor Trustee, the Owner
Participant, the Loan Participant or the Indenture Trustee
reasonably may request from time to time in order to carry out
more effectively the intent and purposes of this Agreement, the
other Operative Documents and the transactions contemplated
hereby and thereby. The Lessee, at its own cost and expense,
will cause the Indenture and the Lease, any supplements or
amendments thereto and restatements thereof and all financing
statements, fixture filings and other documents, to be recorded
or filed at such places and times and in such manner, and will
take all such other actions or cause such actions to be taken,
as may be necessary or as may be reasonably requested (x) by
the Grantor Trustee, the Owner Participant or the Indenture
Trustee in order to establish, preserve and protect the
interest of the Grantor Trustee in and to the Undivided
Interest and the Grantor Trustee's rights under this Agreement
and the other Operative Documents and (y) so long as any
Secured Notes are Outstanding, by the Indenture Trustee, the
Loan Participant or the Grantor Trustee in order to establish,
preserve, protect and perfect the mortgage and security
interest of the Indenture Trustee in the Indenture Estate
granted or intended to be created under the Indenture and the
Ship Mortgage and the Indenture Trustee's rights under this
Agreement and the other Operative Documents, subject only to
Permitted Liens.
10.7 Inspection. (a) The Lessee shall permit the
Indenture Trustee, the Owner Participant and the Grantor
Trustee (and any authorized representatives thereof), at such
Person's risk (including, without limitation, as to personal
injury and death) and, unless there exists a continuing Lease
Event of Default, expense, including, without limitation, the
cost and expense for such Person's transportation to and from
the Production System by helicopter (whether the Lessee's or
any other Person's helicopter), and under conditions reasonably
acceptable to the Lessee and subject to Section 11.5 hereof, to
visit and inspect the Production System, to make copies of and
extracts from the books and records of the Lessee related
thereto, and to have access to officers and the independent
public accountants of the Lessee, all upon reasonable notice
and at such reasonable times during normal business hours and
as may be reasonably requested; provided, however, that (A)
unless there exists a continuing Lease Default described in
Section 15(d) but only to the extent such Lease Default relates
to the maintenance of the Production System) or Section 15(g)
of the Lease or a Lease Event of Default, the Indenture
Trustee, the Owner Participant and the Grantor Trustee may not
make more than one (1) such inspection in any calendar year
without the Lessee's prior written consent, (B) so long as the
Operating Agreement is in effect, such inspection rights must
be exercised subject to the provisions of the Operating
Agreement and under the supervision of the Operator, (C) the
Lessee shall be liable for any losses caused by the gross
negligence or willful misconduct of the Lessee in connection
with any inspection pursuant to this Section 10.7 and (D) the
Lessee will cooperate with the Grantor Trustee, the Owner
Participant and the Indenture Trustee to minimize the
transportation cost associated with an inspection conducted
pursuant to this Section 10.7. The Lessee will make available
for the Indenture Trustee, the Owner Participant and the
Grantor Trustee (or any authorized representatives thereof) for
examination during any inspection pursuant to this Section
10.7, any written reports in its possession relating to the
use, operation and maintenance of the Production System,
including reserve reports, subject to the restrictions set
forth in Section 11.5.
(b) No Person entitled to make any inspection or
inquiry referred to in this Section 10.7 shall have any duty to
make such inspection or inquiry, or shall incur any liability
or obligation by reason of not making any such inspection or
inquiry.
10.8 Limitation on Acquisition of Secured Notes or
Pass Through Certificates; Pass Through Trust Agreement. The
Lessee will not, and will not permit any of its Affiliates to,
acquire directly or through a nominee or agent by purchase or
otherwise any interest in any Secured Notes or any Pass Through
Certificates) (a) prior to the second anniversary of the
Closing Date, (b) if the result of such acquisition would be to
prevent the Owner Participant from accounting for the Lease as
a leveraged lease in accordance with FASB 13 or (c) if the
aggregate principal amount of all Secured Notes and Pass
Through Certificates held directly or indirectly by or for the
account of the Lessee and its Affiliates immediately after such
acquisition would exceed 25% of the outstanding principal
amount of Secured Notes or the Pass Through Certificates,
respectively or collectively, immediately prior to such
acquisition.
10.9 Operating Agreement. (a) Unless the Owner
Participant and the Indenture Trustee shall otherwise consent,
which consent shall not be unreasonably withheld or delayed,
the Lessee shall not accept or approve any amendment to the
Operating Agreement, the effect of which would be to adversely
affect the interests of the Grantor Trustee, the Indenture
Trustee or the Owner Participant in the Production System or
the Undivided Interest or under the Operative Documents.
(b) The Lessee may (i) at any time terminate (or
allow to be terminated) the Operating Agreement and (ii) enter
into (or allow to be entered into) a new operating agreement
with respect to the Production System provided: (1) if such
new operating agreement is with Enserch Exploration or any of
its Affiliates as the operator and does not involve any bona
fide substantive negotiation with additional parties that are
not Affiliates of either Enserch Exploration or MPTM, the
provisions of such operating agreement shall not adversely
affect the interests of the Owner Participant or the Indenture
Trustee without the prior written consent of the Owner
Participant and the Indenture Trustee, which consent shall not
be unreasonably withheld or delayed; or (2) in all other cases,
the provisions of such operating agreement shall not (A) be
less favorable in any material respect (including income taxes)
to the interests of the Owner Participant, the Grantor Trustee
or the Indenture Trustee than the Operating Agreement in effect
on the Closing Date, (B) reduce the revenue to which the
Grantor Trustee would be contractually entitled under the
provisions of such operating agreement upon the expiration or
termination of the Lease and the effectiveness of the Agency
and Support Agreement except to a de minimis extent or (C)
increase the monetary obligations to which the Grantor Trustee
would be contractually subject under the provisions of such
operating agreement upon the expiration or termination of the
Lease and the effectiveness of the Agency and Support
Agreement, except to a de minimis extent. The Lessee shall
upon such execution furnish to the Owner Participant, the
Grantor Trustee and the Indenture Trustee a copy of any such
amendment or modification as executed.
10.10 Documentation of Platform. The Lessee shall
throughout the Lease Term maintain the documentation of the
Platform in the Republic of Panama (or in any other
jurisdiction selected by the Lessee provided such other
jurisdiction provides substantially equivalent protection for
the rights of owner participants, lessors, lenders for similar
transactions as the law of the Republic of Panama), and shall
not do or suffer or permit to be done anything which would
prevent the maintenance of the documentation of the Platform
under the laws and the flag of the Republic of Panama (or such
other jurisdiction) or which would constitute or result in a
violation of any applicable law or regulation of the Republic
of Panama (or such other jurisdiction) non-compliance with
which could create any material risk of or danger of the sale,
forfeiture or loss of any material part of or interest in the
Platform.
10.11 Notice of Certain Events. Promptly after the
Lessee has Actual Knowledge that any Lease Default has occurred
and has continued for thirty days, or any Lease Event of
Default, Event of Loss or event described in clause (c) of the
definition of Event of Loss has occurred, the Lessee shall
deliver to the Indenture Trustee and the Owner Participant a
notice of such Lease Default, Lease Event of Default, Event of
Loss or event described in clause (c) of the definition of
Event of Loss which with the giving of notice or lapse of time
would become an Event of Loss describing the same in reasonable
detail and, together with such notice or as soon thereafter as
possible, a description of the action that the Owner
Participant has taken, is taking and proposes to take with
respect thereto.
10.12 Environmental Notices. The Lessee shall,
promptly after the Lessee's receipt thereof, provide the Owner
Participant, the Grantor Trustee and the Indenture Trustee with
copies of all written communications from any Governmental
Authority (a) asserting any violation of or noncompliance with
Environmental Laws or any Release, discharge or emission of
Hazardous Materials into the environment at or from the
Production System, or (b) relating to any Environmental Claim
against the Lessee, MPTM, or the Production System that is
pending or has been threatened in writing, in each case which
is reasonably likely to materially adversely effect the
Production System or the Lessee's ability to perform its
obligations under the Operative Documents.
10.13 Abandonment of Production System. The Lessee
shall use commercially reasonable efforts to exercise its
rights under the Operating Agreement to prevent the abandonment
of the Production System prior to January 2, 2001; provided
that, except for its obligations under Section 12 of the Lease,
the Lessee shall have no liability for its failure to prevent
any such abandonment prior to January 2, 2001 if the Lessee has
used all such commercially reasonable efforts. The Lessee
shall have no obligation under this Section 10.13 or otherwise
to prevent the abandonment of the Production System on or after
January 2, 2001.
10.14 Credit Support. The Lessee shall cause Credit
Support to be maintained at all times during the period from
the Closing Date (or any subsequent Reinstatement Date) to the
applicable Release Date. Such Credit Support and the related
Reimbursement Agreement shall meet the following requirements:
(1) the original stated term of any Letter of Credit or Surety
Bond shall not be less than two years and the Letter of Credit
or Surety Bond shall be irrevocable except upon the occurrence
of a Release Date, (2) (x) any Letter of Credit or Surety Bond
shall permit the beneficiary or owner thereof, as applicable,
to assign its interest therein to a Transferee without the
consent of the Issuing Bank or the Surety Bond Issuer, as
applicable, or the Lessee in connection with a transfer made in
accordance with Section 13 or (y) the Reimbursement Agreement
pursuant to which such Letter of Credit or Surety Bond is
issued shall unconditionally require the Issuing Bank or the
Surety Bond Issuer, as applicable, to issue a Letter of Credit
or Surety Bond, as applicable, to a Transferee in connection
with a transfer made in accordance with Section 13, (3) at the
time of the issuance of any Letter of Credit or Surety Bond,
such Letter of Credit or Surety Bond shall be accompanied by an
opinion of counsel in form and substance satisfactory to the
Owner Participant, (4) the Issuing Bank or Surety Bond Issuer,
as the case may be, shall expressly waive any rights of
subrogation in respect thereof and (5) such Letter of Credit or
Surety Bond shall be drawable or payable, as the case may be,
upon presentation of a drawing certificate pursuant to which a
beneficiary of the Letter of Credit or the holder of a Surety
Bond, as applicable, certifies either (I) a Lease Event of
Default has occurred and all amounts due to the Lessor and the
Owner Participant pursuant to the Operative Documents
(determined without regard to any bankruptcy, insolvency or
similar law) have not been paid in full or (II) the Letter of
Credit or Surety Bond then in effect is stated to expire within
30 days and no new Credit Support has been provided. The
obligations of the Lessee under any Reimbursement Agreement
between the Lessee and the Issuing Bank relating to a Letter of
Credit or between the Surety Bond Issuer and the Lessee
relating to a Surety Bond shall be unsecured (except to the
extent permitted by Section 9.4 of the Initial Reimbursement
Agreement or any similar provision contained in any other
Reimbursement Agreement) and any such Reimbursement Agreement
shall require that the Issuing Bank (or, if applicable, the
Surety Bond Issuer) pay any draws on the Letter of Credit (or
if applicable, make payments in respect of the Surety Bond)
from general funds.
The Lessee shall give the Owner Participant notice of
the scheduled termination of each Letter of Credit or Surety
Bond not more than 90 nor less than 30 days before its
scheduled termination date. If the Lessee has not secured a
commitment for a renewal or replacement of an expiring Letter
of Credit or Surety Bond not later than 30 days prior to the
stated expiration date of such expiring Letter of Credit or
Surety Bond, the Lessee shall notify the Owner Participant of
such fact.
10.15. Fees and Expenses. Without limiting the
terms of Section 12.1 hereof, the Lessee shall pay (i) the
reasonable ongoing fees and expense of the Grantor Trustee
under the Trust Agreement, (ii) the reasonable ongoing fees and
expenses of the Indenture Trustee under the Indenture and
(iii) the reasonable ongoing fees and expenses of the Pass
Through Trustee under the Pass Through Trust Agreement.
10.16. Transfer of Title to Undivided Interest. The
Lessee shall not, without the prior written consent of the
Owner Participant, directly or indirectly transfer title to the
Undivided Interest or any portion thereof or interest therein,
except as provided in the Operative Documents.
10.17. Agency and Support Agreement. Lessee shall
not transfer, assign, sell, pledge, mortgage, hypothecate,
grant a security interest in, convey all or any portion of its
right, title or interest in or to the Blocks (as defined in the
Agency and Support Agreement), including, without limitation,
any right, title or interest in any Garden Banks Document
without obtaining from such assignee, transferee, mortgagee,
secured party or grantee, its written stipulation and agreement
that the interest in the Blocks (as defined in the Agency and
Support Agreement) so acquired is specifically subject to and
bound by the rights and obligations of the parties established
and set forth in the Agency and Support Agreement. The parties
and their successors and assigns to the Agency and Support
Agreement shall be express third party beneficiaries of any
stipulation and agreement made in accordance with this Section
10.17.
10.18. Equipment List. Within 12 months from the
Closing Date, the Lessee shall provide the Owner Participant,
the Grantor Trustee and the Indenture Trustee with a complete
list of the equipment constituting the Production System as of
the Closing Date.
SECTION 11. OTHER COVENANTS AND AGREEMENTS.
11.1 Agreements of Owner Participant. The Owner
Participant covenants and agrees that:
(a) Discharge of Liens. The Owner Participant
will not create or permit to exist at any time, and will,
at its own cost and expense, promptly take such action as
may be necessary duly to discharge, or to cause to be
discharged, (i) all Owner Participant's Liens and (ii) all
Lessor's Liens resulting from any act or failure to act by
the Grantor Trustee at the express written direction of
the Owner Participant in violation of the Operative
Documents on all or any part of the Undivided Interest,
the Trust Estate, the Indenture Estate, or title thereto
or any interest therein; provided, however, that the Owner
Participant shall not be required to remove any such Owner
Participant's Lien or Lessor's Lien (other than any such
Lien affirmatively imposed by the Owner Participant) for
so long as the same is being diligently contested in good
faith by appropriate proceedings so long as such
proceedings do not involve any material danger of (1) the
sale, forfeiture or loss of any part of any the Production
System, the Trust Estate or the Indenture Estate, or title
thereto or any interest therein, (2) the interference with
the use or disposition of any of the foregoing or any part
thereof, or title thereto or any interest therein, or (3)
interference with the payment of Rent. The Owner
Participant shall indemnify, protect, defend, save and
keep harmless the Lessee, the Loan Participant, and the
Indenture Trustee from and against any and all Claims that
may be imposed on, incurred by or asserted against such
Person or the Undivided Interest arising out of any such
Owner Participant's Liens or any Lessor's Liens described
in clause (ii) of the preceding sentence.
(b) Prepayment. Unless the Lease shall have
been declared in default pursuant to Section 16.1 thereof
or as otherwise contemplated by Section 6.1(g) of the
Lease, the Owner Participant will not, and will not cause
or permit the Grantor Trustee to, directly or indirectly
prepay, redeem, refund, refinance or acquire any Secured
Note, or give a notice of redemption, with respect
thereto, without the prior written consent of the Lessee,
other than in the event of a redemption or purchase of
Secured Notes by the Grantor Trustee or the Owner
Participant pursuant to Section 3.06 of the Indenture or
as provided in Section 15. This Section 11.1(b) shall not
be deemed to permit prepayment of Secured Notes except as
permitted by the Indenture. If (i) the Lessee shall have
irrevocably elected (A) to purchase the Undivided Interest
pursuant to the Lease or (B) to terminate the Lease with
respect to the Undivided Interest or a Significant Portion
thereof pursuant to Section 7 of the Lease, and the Lessee
shall not have elected to assume the Secured Notes
pursuant to Section 11.6 or to purchase the Beneficial
Interest pursuant to Section 16, or (ii) an Event of Loss
with respect to the Production System or a Significant
Portion thereof shall have occurred, then the Owner
Participant agrees, upon request of the Lessee specifying
the relevant information, to instruct the Grantor Trustee
to give a notice of redemption pursuant to Section 3.10 of
the Indenture with respect to the Secured Notes to be
redeemed in connection with such purchase, termination or
Event of Loss, which notice shall be given in accordance
with, the terms of the Indenture.
(c) Cooperation with Lessee. The Owner
Participant shall, to the extent reasonably so requested
by the Lessee, cooperate with the Lessee, at the Lessee's
expense, to enable the Lessee to make the filings and
recordings listed in Schedule 3, including, without
limitation, at any time and from time to time, upon the
request of the Lessee promptly and duly executing and
delivering, any and all such further instruments and
documents as the Lessee may reasonably request in order to
perform such covenants and to make such filings and
recordings.
(d) Successor Grantor Trustee. Unless the
Lease shall have been declared in default pursuant to
Section 16.1 thereof, the Owner Participant shall not
appoint or cause or allow to be appointed a successor to
any Corporate Grantor Trustee under the Trust Agreement
without obtaining the prior written consent of the Lessee
and the Indenture Trustee, which consent shall not
unreasonably be withheld. The Owner Participant shall (at
the Lessee's expense) cause any such successor Corporate
Grantor Trustee, simultaneously with its assumption of
duties in such capacity, to take all actions as may be
reasonably requested by the Indenture Trustee, the Loan
Participants or the Lessee (including, without limitation,
the filing of financing statements) in order to establish,
preserve, protect and perfect the title of such successor
trustee in and to the Undivided Interest and its rights
under this Agreement and the other Operative Documents
and, so long as any Secured Notes are Outstanding, the
mortgage and security interest of the Indenture Trustee in
the Indenture Estate granted or intended to be created
under the Indenture and the Ship Mortgage and the
Indenture Trustee's rights under this Agreement and the
other Operative Documents, subject only to Permitted
Liens.
(e) Performance of Obligations. The Owner
Participant will perform and comply with all obligations
imposed on the Owner Participant pursuant to Section
4.4(c) of the Lease and Section 5.01(h) of the Indenture
in accordance with the terms and conditions of each
thereof. In addition, the Owner Participant agrees to
pay, or cause the Lessor to pay, all fees and expenses
that are for the account of the Lessor in connection with
an Appraisal Procedure.
(f) Instructions to Grantor Trustee. The Owner
Participant will not instruct or otherwise direct the
Grantor Trustee to take, or omit to take, any action in
violation of the express covenants and agreements of the
Grantor Trustee in any Operative Document. The Owner
Participant will not unreasonably withhold its consent to
or authorization of any consent requested of the Grantor
Trustee under the terms of any Operative Document which by
its express terms is not to be unreasonably withheld by
the Grantor Trustee.
(g) Termination of Trust Agreement. The Owner
Participant will not terminate or revoke, or consent to
the termination or revocation of, the Trust Agreement
prior to the release of the Lien of the Indenture on the
Indenture Estate or, except in connection with the
exercise of remedies by the Lessor following a declaration
by the Lessor pursuant to Section 16.1 of the Lease that
the Lease is in default, prior to the expiration or
earlier termination of the Lease pursuant to its terms.
The Owner Participant will not, prior to the release of
the Lien of the Indenture on the Indenture Estate, amend
or modify the Trust Agreement in any manner that would
materially adversely affect the Indenture Estate or limit
in any material manner the rights of the Indenture Trustee
set forth therein.
(h) Election to Retain Undivided Interest. If
the Grantor Trustee shall elect to retain the Undivided
Interest pursuant to Section 7.4 of the Lease, the Owner
Participant will cause the Grantor Trustee to perform its
obligations under such Section 7.4 in accordance with the
terms thereof.
(i) Notice of Indenture Event of Default.
Promptly after the Owner Participant has Actual Knowledge
that any Indenture Event of Default attributable to the
Owner Participant has occurred and is continuing, the
Owner Participant shall deliver to the Indenture Trustee
and the Lessee a notice of such Indenture Event of Default
describing the same in reasonable detail and, together
with such notice or as soon thereafter as possible, a
description of the action that the Owner Participant has
taken, is taking and proposes to take with respect
thereto; provided that the Owner Participant shall not
have any liability nor shall any Person have any rights as
a result of any failure to provide such notice.
11.2 Agreements of Xxxxxxxx, Trust Company and
Grantor Trustee. The Trust Company and Xxxxxxxx, each in its
or his individual capacity, covenant and agree, jointly and
severally, with respect to Sections 11.2(a)(i) and 11.2(b) and
the Grantor Trustee covenant and agree with respect to Sections
11.2(a)(ii), 11.2(c), 11.2(d), 11.2(e), 11.2(f), 11.2(g),
11.2(h) and 11.2(i) that:
(a) Discharge of Liens. (i) The Trust Company
and Xxxxxxxx will not create or permit to exist at any
time, and will, at its or his own cost and expense,
promptly take such action as may be necessary duly to
discharge all Lessor's Liens on all or any part of the
Undivided Interest, the Trust Estate, the Indenture
Estate, or title thereto or any interest therein
attributable to itself or Xxxxxxxx. Except for the Owner
Participant's obligation pursuant to Section 11.1(a)(ii),
the Trust Company and Xxxxxxxx shall indemnify, protect,
defend, save and keep harmless the Lessee, the Owner
Participant, the Loan Participant and the Indenture
Trustee from and against any and all Claims that may be
imposed on, incurred by or asserted against such Person or
the Undivided Interest arising out of or secured by any
such Lien.
(ii) The Corporate Grantor Trustee will not
create or permit to exist at any time, and will, at its
own cost and expense, promptly take such action as may be
necessary duly to discharge all Lessor's Liens on all or
any part of the Undivided Interest, the Trust Estate, the
Indenture Estate, or title thereto or any interest therein
attributable to the Corporate Grantor Trustee; provided,
however, that the Corporate Grantor Trustee shall not be
required to remove any such Lessor's Lien (other than any
such Lien affirmatively imposed by the Corporate Grantor
Trustee) for so long as the same is being diligently
contested in good faith by appropriate proceedings so long
as such proceedings do not involve any material danger of
(1) the sale, forfeiture or loss of any part of any the
Production System, the Trust Estate or the Indenture
Estate, or title thereto or any interest therein, (2)
interference with the use or disposition of any of the
foregoing or any part thereof, or title thereto or any
interest therein, or (3) interference with the payment of
Rent.
(b) Change of Chief Place of Business. The
Trust Company shall give notice to the Lessee, the Owner
Participant and the Indenture Trustee promptly after any
change in its chief place of business or chief executive
office, or the office where the records concerning the
accounts, contract rights or general intangibles relating
to the transactions contemplated hereby are kept or any
change in the state of residency of Xxxxxxxx.
(c) Cooperation with the Lessee. The Grantor
Trustee shall, to the extent reasonably so requested by
the Lessee, cooperate with the Lessee, at the Lessee's
expense, to enable the Lessee to make the filings and
recordings listed in Schedule 3, including, without
limitation, at any time and from time to time, upon the
request of the Lessee promptly and duly executing and
delivering any and all such further instruments, documents
and financing statements (and continuation statements
related thereto) as the Lessee may request in order to
perform such covenants and to make such filings and
recordings.
(d) Notice of Transfer of Assets. The Grantor
Trustee shall not transfer any of the estates, properties,
rights, powers, duties or trusts of the Grantor Trustee to
any successor trustee or to any additional or separate
trustee under the Trust Agreement without giving prior
written notice of such transfer to the Owner Participant,
the Lessee, the Loan Participant and the Indenture Trustee
in accordance with Section 11 of the Trust Agreement.
(e) Certain Transfers; Termination. Except as
expressly permitted hereby or by the terms of any other
Operative Document, unless the Lease shall have been
declared in default in accordance with Section 16.1
thereof, the Grantor Trustee will not transfer the
Undivided Interest to any Person prior to the expiration
or earlier termination of the Lease pursuant to its terms,
other than a successor Grantor Trustee appointed in
accordance with the provisions of Section 11 of the Trust
Agreement, or terminate the Trust Agreement or distribute
all or any part of the Trust Estate to any Person.
(f) Grantor Trustee's Activities. The Grantor
Trustee will not incur any indebtedness for money
borrowed, or enter into any other activity, except as
contemplated by the Operative Documents or as may be
necessary or advisable to carry out its obligations or
enforce its rights thereunder.
(g) Notice of Indenture Event of Default.
Promptly after the Grantor Trustee has Actual Knowledge
that any Indenture Event of Default attributable to the
Grantor Trustee has occurred and is continuing, the
Grantor Trustee shall deliver to the Lessee a notice of
such Indenture Event of Default which is not also a Lease
Event of Default describing the same in reasonable detail
and, together with such notice or as soon thereafter as
possible, a description of the action that the Grantor
Trustee has taken, is taking and proposes to take with
respect thereto; provided that the Grantor Trustee shall
not have any liability nor shall any Person have any
rights as a result of any failure to provide such notice.
11.3 Agreements of Pass Through Trustee. The Pass
Through Trustee covenants and agrees that:
(a) Transfer of Secured Notes. Any sale,
transfer or assignment (including, without limitation, a
transfer pursuant to the exercise of remedies with respect
to any Secured Note) by the Pass Through Trustee of any
Secured Note or of all or any part of its interest
hereunder or under the Indenture shall be on the express
condition that the purchaser, transferee or assignee, as
the case may be, shall agree to be bound by the terms and
provisions applicable to the Pass Through Trustee
contained in this Agreement, the Secured Notes and the
Indenture. The acceptance by any Person of any Secured
Note shall constitute such Person's agreement to be bound
by the terms and provisions of this Agreement and the
Indenture. The Pass Through Trustee will not make any
such sale, transfer or assignment to any Person unless
such Person delivers to the Lessee, the Grantor Trustee,
the Indenture Trustee and the Owner Participant (i) a
written representation and warranty by such Person and an
opinion of counsel reasonably satisfactory to the Lessee,
the Grantor Trustee and the Owner Participant to the
effect that such sale, transfer or assignment to and the
holding of any such interest by, such Person (1) will not
result in a "prohibited transaction" as defined in Section
406 of ERISA or Section 4975 of the Code, or (2) are
covered by an exemption contained in ERISA or an
administrative exemption adopted thereunder and (ii) a
written undertaking by such Person that is substantially
identical to the covenant made by the Pass Through Trustee
in this Section 11.3(a) (including this clause (ii)).
(b) Instructions to Indenture Trustee. The
Pass Through Trustee will not instruct or otherwise direct
the Indenture Trustee to take, or omit to take, any action
in violation of the express covenants and agreements of
the Indenture Trustee in any Operative Document.
11.4 Agreements of Indenture Trustee. The Bank of
New York and Xxxxx, each in its or his individual capacity, to
the extent set forth herein, and as Indenture Trustee covenant
and agree, jointly and severally, as follows:
(a) Discharge of Liens. The Bank of New York
and Xxxxx, each in its or his individual capacity,
covenant and agree, jointly and severally, that it and he
will not create or permit to exist at any time, and will,
at its own cost and expense, promptly take such action as
may be necessary to discharge, all of Indenture Trustee's
Liens on all or any part of the Undivided Interest, the
Trust Estate or the Indenture Estate, or title thereto or
any interest therein. The Bank of New York and Xxxxx,
each in its or his individual capacity, covenant and
agree, jointly and severally, that it and he shall
indemnify, protect, defend, save and keep harmless the
Lessee, the Owner Participant, each Loan Participant and
the Grantor Trustee from and against any and all Claims
imposed on, incurred by or asserted against such Person
arising out of any Indenture Trustee's Lien.
(b) Cooperation with the Lessee. The Indenture
Trustee shall, to the extent reasonably requested by the
Lessee, cooperate with the Lessee, at the Lessee's
expense, to enable the Lessee to perform the Lessee
covenants contained in Section 10.6 and to make the
filings and recordings listed in Schedule 3, including,
without limitation, at any time and from time to time,
upon request of the Lessee promptly and duly executing and
delivering any and all such further instruments, documents
and financing statements (and continuation statements
related thereto) as the Lessee may request in order to
perform such covenants and to make such filings and
recordings.
(c) Original Lease. Except to the extent
otherwise required by the Indenture, The Bank of New York
agrees, in its individual capacity, that it will maintain
possession of the original executed counterpart of the
Lease in order to preserve the perfection of the Lien of
the Indenture thereon.
(d) Performance of Obligations. The Indenture
Trustee will perform and comply with the provisions of the
Indenture which, upon satisfaction of any applicable
conditions set forth therein, require payment or the
tendering of performance to the Lessee.
11.5 Confidentiality. Each of the parties hereto
agrees that all matters relating to this Agreement, the other
Operative Documents, the Federal Leases, the Pass Through Trust
Agreement, the Placement Agreement, the Operating Agreement and
the Unit Agreement and the transactions contemplated hereby
shall be kept strictly confidential, including, without
limitation, the substance of its commercial terms, and any
disclosure of such matters shall be made only with the prior
written consent of the other parties hereto. The obligations
set forth in this Section shall survive any termination or
rescission of this Agreement, the Operative Documents, the
Federal Leases, the Pass Through Trust Agreement, the Operating
Agreement and the Unit Agreement, as the case may be. Nothing
in this Section shall prevent, or require the consent of any
party to, any disclosure:
(a) required by any court of competent
jurisdiction;
(b) as may be required by any Governmental Rule
or Governmental Authority;
(c) by either party to its legal and other
professional advisers, or in the course of or for the
purpose of any arbitration or court proceedings;
(d) of information which has otherwise become
public information through no breach of this Section 11.5
by the disclosing party; or
(e) to a prospective assignee of such party's
interest that has executed a confidentiality agreement
containing the terms set forth in this Section 11.5
11.6 Assumption of Secured Notes. Each of the Owner
Participant, the Grantor Trustee, each Loan Participant and the
Indenture Trustee agrees that if, pursuant to Section 6.1(c),
(d), (e), (f) or (g) of the Lease, the Lessee elects to
purchase the Undivided Interest, (i) the Lessee may elect (and
in the case of an election pursuant to Section 6.1(g) of the
Lease, shall elect) to assume the obligations of the Grantor
Trustee under the Secured Notes and under the Indenture by
giving notice of such election at least 30 days prior to the
applicable purchase date in accordance with and with the effect
provided in Section 3.04 of the Indenture. In the event that
the Relevant Amendment becomes effective, this Agreement, the
other Operative Documents and the Pass Through Trust Agreement
shall be deemed amended as provided in the Relevant Amendment
and (ii) upon such assumption the Grantor Trustee shall be
released from all of its obligations under the Operative
Documents except as may be expressly provided in the Relevant
Amendment.
SECTION 12. INDEMNIFICATION.
12.1 General Indemnification.
(a) Indemnification. The Lessee agrees whether
or not any of the transactions contemplated hereby are
consummated, to assume liability for, and to indemnify,
protect, save and keep harmless each Indemnitee, on an
After-Tax Basis, from and against any and all Claims that
may be imposed on, incurred by or asserted against any
Indemnitee (whether because of an action or omission by
such Indemnitee or otherwise and whether or not such
Indemnitee shall also be indemnified as to any such Claim
by any other Person), in any way relating to or arising
out of (i) the Production System or the Undivided Interest
or any part thereof, (ii) the Operative Documents, the
Pass Through Trust Agreement, the Reimbursement Agreement,
any Credit Support, the Operating Agreement, the Federal
Leases, the Unit Agreement, any other Garden Banks
Document or the transactions contemplated thereby or the
issuance or refinancing of the Secured Notes or the Pass
Through Certificates (including Claims arising under the
Securities Act with respect to any offering of any Secured
Notes or Pass Through Certificates or any other securities
issued in connection therewith) or the making of any
investment (including the Investment) in the Production
System, payments made pursuant to any thereof or the
enforcement by any Indemnitee of any of its rights under
the Operative Documents, or any other transaction
contemplated by the Operative Documents, including the
giving or withholding by such Indemnitee of any future
amendments, supplements, waivers or consents with respect
thereto (whether or not entered into), (iii) the
manufacture, financing, refinancing, design, construction,
inspection, purchase, ownership, acquisition, acceptance,
rejection, delivery, nondelivery, possession,
transportation, lease, sublease, mortgaging, granting of a
security interest in, preparation, installation,
condition, transfer of title, rental, use, operation,
storage, maintenance, modification, alteration, repair,
assembly, sale, return, registration, abandonment or other
application or disposition of all or any part of the
Production System or the Undivided Interest or any
interest therein, including, without limitation, (A)
Claims or penalties arising from any violation of law or
liability in tort (strict or otherwise), (B) loss of or
damage to any property or the environment (including,
without limitation, all Claims associated with
remediation, response, removal, corrective action,
clean-up, Remedial Action, treatment, compliance,
restoration, abatement, encapsulation, containment,
revegetation, monitoring, sampling, investigation,
assessment, financial assurance, natural resource damages,
the protection of wildlife, aquatic resources and
organisms and vegetation, the interference with or
contamination of any wetland or body of water (whether
surface or subsurface) or aquifer, and any relevant
mitigative action under any Environmental Law and any
Claims resulting from or relating to the existence or
presence of any Hazardous Material, oil, petroleum or
natural gas, at, in, or under the Production System, any
parts thereof, or the undivided interests therein, or the
Release, emission or discharge of any Hazardous Material,
oil, petroleum or natural gas into the environment
(including air, water vapor, surface water, ground water,
and land (whether surface or subsurface)) or death or
injury to any Person, (C) latent or other defects, whether
or not discoverable, and (D) any claim for patent,
trademark or copyright infringement, (iv) any breach of or
failure to perform or observe, or any other breach of or
failure to perform or observe, or any other non-compliance
with, any covenant, condition or agreement or other
obligation to be performed by the Lessee under any
Operative Document, the Federal Leases, the Operating
Agreement, the Pass Through Trust Agreement, the
Reimbursement Agreement or the Unit Agreement or any other
Garden Banks Document, or the falsity of any
representation or warranty of the Lessee in any of the
Operative Documents, any Pass Through Trust Agreement, the
Reimbursement Agreement or in any certificate delivered by
the Lessee, (v) the imposition of any Lien on the
Production System or the Undivided Interest, (vi) any
violation of any Governmental Rule with respect to the
Lessee, the Production System or the Undivided Interest,
(vii) any violation of ERISA or Section 4975 of the Code
other than occasioned by a breach by the Owner Participant
of its representation in Section 6.7; provided that Claims
for indemnification under this clause (vii) shall not be
subject to any of the exclusions set forth in the
following proviso to this Section 12.1(a) or (viii) the
failure to provide Credit Support; provided, however,
except as expressly set forth in clause (vii) above, that
the Lessee shall not be required to indemnify any
Indemnitee under this Section 12.1 for (1) any Claim in
respect of the Production System to the extent
attributable to acts, events, circumstances or conditions
which arise, occur or exist after (1) (i) the return of
the Undivided Interest (other than a return under
conditions not in accordance with the Operative Documents
or a return in connection with a Lease Event of Default)
or (ii) the purchase of the Lessor's right, title and
interest in and to the Undivided Interest and payment in
full of the applicable purchase price provided for under
the Operative Documents and payment of all other amounts
due under the Operative Documents (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 (i) or (ii); (2) any Claim to the
extent resulting from the willful misconduct or gross
negligence of such Indemnitee (unless (i) such willful
misconduct or gross negligence is caused by any Lessee
Person or (ii) such willful misconduct or gross negligence
is imputed to such Indemnitee by reason of its interest in
the Undivided Interest), (3) any Transaction Expense
(other than any Transaction Expense that the Lessee is
obligated to pay pursuant to Section 2.9), (4) (A) in the
case of the Grantor Trustee and Claims related to the
Indenture, any other expense or Claim to the extent
expressly provided under the Indenture to be paid or borne
by the Grantor Trustee at its own expense and for which
the Grantor Trustee is expressly not entitled to indemnity
or reimbursement and (B) in the case of any other
Indemnitee and Claim, any other expense or Claim to the
extent expressly provided under any of the Operative
Documents to be paid or borne by such Indemnitee at its
own expense or for which such Indemnitee is expressly not
entitled to indemnity or reimbursement, (5) any Claim to
the extent resulting from the offer, sale, disposition or
transfer by such Indemnitee of all or part of its interest
in the Undivided Interest, the Secured Notes, the Pass
Through Certificates or the Trust Estate, other than any
such transfer or disposition (i) made while a Lease Event
of Default is continuing, (ii) in connection with an Event
of Loss or any replacement, removal, substitution,
destruction, damage, theft, governmental taking,
confiscation, seizure, requisition of or to the Undivided
Interest or any part or portion thereof, (iii) pursuant to
Section 6 or 7 of the Lease or Section 16 of this
Agreement, (iv) to a successor Grantor Trustee, (v) made
to the Lessee or at the written request of the Lessee or
(vi) otherwise expressly required by the Operative
Documents, and in any case this exclusion (5) shall apply
only to the extent such Claim is in excess of the total
Claims that would have been indemnifiable but for such
offer, sale, disposition or transfer, (6) any Claim to the
extent resulting from a breach by such Indemnitee of any
of its representations, warranties or covenants in the
Pass Through Trust Agreement or in any of the Operative
Documents or in any Officer's Certificate delivered
pursuant thereto or to the extent resulting from a
violation of law by such Indemnitee (other than any
violation caused by any Lessee Person or imputed to an
Indemnitee solely by reason of its interest in the
Undivided Interest), unless such violation of law or
breach is the result of the failure of any other party to
comply with its obligations under any Operative Document
to which it is a party (other than, in the case of the
Owner Participant, such a failure by the Grantor Trustee
as a result of the written direction or instruction of the
Owner Participant in violation of the Operative Documents
and, in the case of any Loan Participant, such a failure
by the Indenture Trustee as a result of the direction or
instruction of (or a vote or consent in favor of such
direction or instruction by) such Loan Participant), (7)
any Claim to the extent relating to Taxes (other than
Taxes required to be paid to indemnify such Indemnitee
under this Section 12.1 on an After-Tax Basis) whether or
not the Lessee is obligated to indemnify for such Taxes
under Section 12.2 or the Tax Indemnity Agreement,
(8) [Intentionally Omitted], (9) any Claim to the extent
attributable to the authorization or giving or withholding
by such Indemnitee of any future amendments, supplements,
waivers or consents (whether or not entered into) with
respect to any Operative Document or the Pass Through
Trust Agreement, other than such as have been requested by
the Lessee, or such that occur while a Lease Event of
Default has occurred and is continuing, or such as are
expressly required by any Operative Document or the Pass
Through Trust Agreement or such as are required to comply
with any Governmental Rule, (10) any Claim resulting from
any Indenture Event of Default except to the extent caused
by a Lease Default or Lease Event of Default, (11) with
respect to the Grantor Trustee, the Trust Company,
Xxxxxxxx and the Owner Participant, any Claim resulting
from the indemnity given by the Owner Participant pursuant
to Section 6.3 of the Trust Agreement or any
indemnification pursuant thereto, except to the extent
that the Indemnitee under such Section 6.3 would be
otherwise entitled to indemnification from the Lessee
under this Section 12.1, (12) any Claim of the Pass
Through Trustee to the extent that it is indemnified by
the Lessee pursuant to the Pass Through Trust Agreement,
(13) in the case of any Indemnitee other than the Owner
Participant, the failure on the part of the Indenture
Trustee, the Grantor Trustee or the Pass Through Trustee,
as the case may be, to distribute in accordance with the
Indenture, or the Trust Agreement, or the Pass Through
Trust Agreement, as the case may be, any amounts received
and distributable by it thereunder, (14) in the case of
the Owner Participant, failure on the part of the Grantor
Trustee to distribute in accordance with the Trust
Agreement any amounts received and distributable by it
thereunder, and (15) any Claim to the extent resulting
from the imposition of any Lien which such Indemnitee is
required to lift and discharge pursuant to any Operative
Document (including for purposes of this clause (15) any
Lien which such Indemnitee would be required to lift and
discharge but for the proviso set forth in Section 11.1(a)
or 11.2(a)(ii)). The obligation to provide indemnities in
accordance with the terms of this Section 12.1 shall
survive the termination of the Lease.
(b) Notices. If the Lessee shall obtain
knowledge of any action, suit, proceeding or written
notice of any Claim indemnified against under this Section
12.1, the Lessee shall give prompt notice thereof to the
appropriate Indemnitee or Indemnitees, as the case may be,
and if any Indemnitee shall obtain any such knowledge,
such Indemnitee shall give prompt notice thereof to the
Lessee provided that the failure of such Indemnitee to so
notify the Lessee shall not affect the Lessee's
indemnification obligations under this Section 12.1 to
such Indemnitee except to the extent of any increase in
the amount of such Claim resulting from such failure or to
the extent the Lessee is effectively precluded from
contesting such Claim as a result of such failure.
(c) Contests. Subject to the rights of
insurers under policies of insurance maintained pursuant
to Section 13 of the Lease, the Lessee shall have the
right, at its sole cost and expense, to investigate, and
the right in its sole discretion to defend or contest by
appropriate proceedings or compromise, any Claim for which
indemnification is sought under this Section 12.1, and the
Indemnitee shall cooperate, at the Lessee's expense, with
all reasonable requests of the Lessee in connection
therewith, provided that the Lessee shall not have the
right without the consent of the Indemnitee to defend,
contest or compromise any claim with respect to such
Indemnitee (i) if a Lease Event of Default shall have
occurred and be continuing, (ii) if such proceeding
involves any material danger of the sale, forfeiture or
loss of the Undivided Interest, or (iii) if such Claim
involves a realistic possibility of criminal sanctions or
criminal liability to such Indemnitee, in which event the
Indemnitee shall be entitled to control and assume
responsibility for the defense of such Claim at the
expense of the Lessee. The Lessee will not be required to
acknowledge liability as a condition to exercising its
contest rights hereunder unless the Lessee assumes control
of such contest. With respect to any Claim, liability for
which the Lessee shall have acknowledged to the relevant
Indemnitee in writing, in the event that in the course of
the investigation or defense of such Claim, the Lessee
shall in good faith reasonably determine that it is not
liable for indemnification with respect thereto, it may
give notice to the applicable Indemnitee of such fact;
and, in such case, any acknowledgment therefore made by
the Lessee of its liability with respect to such Claim
shall be deemed revoked, and the Lessee may thereupon
cease to defend such Claim, provided that (i) it shall
have given the Indemnitee reasonable prior notice of its
intention to renounce such acknowledgment, (ii) the
Lessee's conduct regarding the defense of such Claim or
any decision to withdraw from such defense shall not
materially prejudice or have materially prejudiced the
Indemnitee's ability to contest such Claim (taking into
account, among other things, the time of the Lessee's
withdrawal and the theory or theories upon which the
Lessee shall have based its defense), and (iii) the Lessee
shall have given such Indemnitee all materials, documents
and records relating to its defense of such Claim as such
Indemnitee shall have reasonably requested in connection
with the assumption by such Indemnitee of the defense of
such Claim at the cost and expense of such Indemnitee
unless it is determined that the Lessee is required to
indemnify such Indemnitee for such Claim, in which case at
the cost and expense of the Lessee. In the event that the
Lessee shall cease to defend any Claim pursuant to the
preceding sentence, the Lessee shall indemnify each
Indemnitee to the extent that the actions of the Lessee in
defending such Claim or the manner or time of the Lessee's
election to withdraw from the defense of such Claim shall
have caused such Indemnitee to incur any loss, cost,
liability or expense which such Indemnitee might not have
incurred had the Lessee not ceased to defend such Claim in
such manner or such time; provided, however, that the
Lessee shall not be required to indemnify such Indemnitee
to the extent that the Lessee shall have proven (in a
judicial proceeding or otherwise) that neither its manner
of defending such Claim nor the manner of time of its
withdrawal from the defense of such Claim caused such
loss, cost, liability or expense. The Lessee will provide
the Indemnitee with such information not within the
control of such Indemnitee, as is in the Lessee's control
or is reasonably available to the Lessee, which such
Indemnitee may reasonably request and shall otherwise
cooperate with such Indemnitee so as to enable such
Indemnitee to investigate or defend any Claim. The Lessee
shall keep the Indemnitee which is the subject of such
proceeding fully apprised of the status of such proceeding
and shall provide such Indemnitee with all information
with respect to such proceeding as such Indemnitee shall
reasonably request. In the event an Indemnitee has
assumed control of any such proceeding, it shall keep the
Lessee fully apprised of the status of such proceeding and
shall provide the Lessee with all information, including
the receipt of all settlement offers, with respect to such
proceeding as such Indemnitee shall reasonably request.
Where the Lessee or the insurers under a policy of
insurance maintained by the Lessee undertake the defense
of an Indemnitee with respect to a Claim, no additional
legal fees or expenses of such Indemnitee in connection
with the defense of such claim shall be indemnified
hereunder unless such fees or expenses were incurred at
the request of the Lessee or such insurers; provided that,
if (i) in the written opinion of counsel to such
Indemnitee an actual or potential material conflict of
interest exists where it is advisable for such Indemnitee
to be represented by separate counsel or (ii) such
Indemnitee has been indicted or otherwise charged in a
criminal complaint in connection with a Claim not excluded
by Section 12.1(a) and such Indemnitee informs the Lessee
that such Indemnitee desires to be represented by separate
counsel, the reasonable fees and expenses of such separate
counsel shall be borne by the Lessee. Subject to the
requirements of any policy of insurance, an Indemnitee may
participate at its own expense in any judicial proceeding
controlled by the Lessee pursuant to the preceding
provisions and such participation shall not constitute a
waiver of the right to receive the indemnification
provided in this Section 12.1. Notwithstanding anything
to the contrary contained herein, except as otherwise
provided in the following sentence, during the continuance
of a Lease Event of Default, the Lessee shall not
compromise any Claim without the consent of the applicable
Indemnitee unless such Claim is simultaneously discharged,
such consent not to be unreasonably withheld.
Notwithstanding anything to the contrary contained in this
Section 12.1, to the extent the defense or settlement of
any Claim in respect of which an Indemnitee is entitled to
indemnification hereunder is governed by the terms of the
Operating Agreement, such defense or settlement shall be
governed by the Operating Agreement; provided, that the
defense or settlement of such Claim in accordance with the
Operating Agreement shall not limit the Lessee's
obligations to indemnify such Claim pursuant to this
Section 12.1.
(d) Subrogation. Upon payment in full of any
Claim by the Lessee pursuant to this Section 12.1 to or on
behalf of an Indemnitee, the Lessee, without any further
action, shall be subrogated to any and all claims that
such Indemnitee may have in respect of the matters against
which such indemnity was given (other than claims under
any insurance policies maintained by such Indemnitee).
Such Indemnitee agrees to cooperate with the Lessee and to
execute such further instruments to permit the Lessee, at
the Lessee's expense, to pursue such claims, to the extent
reasonably requested by the Lessee.
(e) Refunds. Upon receipt by any Indemnitee of
a repayment or reimbursement of all or any part of any
Claim for which the Lessee shall have paid for any
Indemnitee or for which the Lessee shall have reimbursed
any Indemnitee pursuant to this Section 12.1, such
Indemnitee shall pay to the Lessee, as promptly as
practicable after the receipt thereof, the amount of such
repayment or reimbursement plus any interest received by
such Indemnitee on such amount plus the amount of any tax
savings realized by such Indemnitee as a result of such
payment made to the Lessee, but not in excess of the
amount of all prior payments made by the Lessee pursuant
to this Section 12.1 with respect to such Claim less the
amount of all prior refunds paid by such Indemnitee with
respect to such Claim pursuant to this subsection (e).
(f) Payments; Verification. Any amount payable
to any Indemnitee pursuant to this Section 12.1 shall be
paid to such Indemnitee promptly upon receipt of a written
demand therefor from such Indemnitee, accompanied by a
written statement describing the basis for such indemnity
and the computation of the amount so payable and, if
requested by the Lessee, such determination shall be
verified by a nationally recognized independent accounting
firm mutually acceptable to the Lessee and the Indemnitee
at the Lessee's expense, unless such accounting firm
determines that the amount payable by the Lessee is less
than 95 percent (95%) of the amount shown on such written
statement, in which case such verification shall be at
such Indemnitee's expense.
12.2 General Tax Indemnification. (a) (1) Payment
of Taxes. The Lessee agrees that each payment of Rent pursuant
to the Lease shall be free of all withholding with respect to
Taxes of any nature whatsoever, and in the event that the
Lessee shall be required by applicable law to make any such
withholding for any such payment, (x) Basic Rent payable shall
be increased so that after making all required withholdings the
Tax Indemnitee receives an amount equal to the Rent it would
have received had such withholdings not been made, (y) the
Lessee shall make such withholdings and (z) the Lessee shall
pay the full amount withheld to the relevant taxing authority
in accordance with applicable law. If for any reason, the
Lessee is required to make any payment to a taxing authority or
to any Tax Indemnitee as a result of the application of the
preceding sentence or otherwise that relates to or is a result
of any Tax imposed on or with respect to any Tax Indemnitee
which Tax (in whole or in part) is an Excluded Tax under the
terms of Section 12.2(b), then the Tax Indemnitee in respect of
whom such Tax is an Excluded Tax hereunder shall, within 30
days after receipt of notice of payment of the Tax and
appropriate payment documentation with respect thereto, pay to
the Lessee an amount which equals the amount paid by the Lessee
with respect to or as a result of such Excluded Tax (including
any expenses or other charges borne by the Lessee) increased by
(but subject to the proviso in Section 12.2(f)) the amount of
tax savings to such Tax Indemnitee attributable to the making
of such payment to the Lessee. Each Tax Indemnitee also agrees
(subject to the proviso in Section 12.2(f)) to reimburse the
Lessee for any amounts withheld for which such Tax Indemnitee
obtains a credit or refund, within 30 days after receipt of
such credit or refund.
(2) Indemnity. Except as provided in Section
12.2(b), the Lessee agrees to pay, and to indemnify, protect,
defend, save and keep harmless each Tax Indemnitee, on an
After-Tax Basis, whether or not any or all of the transactions
contemplated hereby are consummated in whole or in part, from
and against any and all taxes, impositions, fees, levies,
assessments, duties, withholdings, governmental claims or other
charges of any nature whatsoever (together with any related
interest, fines, penalties or additions to tax), including,
without limitation, rental, income, withholding, sales, use,
transfer, leasing, personal property, excise, receipts,
franchise, value-added, stamp, filing, recording, documentation
or license taxes, however imposed or asserted, by any United
States federal, state or local government or taxing authority
(including any possession or territory thereof) or any foreign
government or taxing authority or subdivision thereof, or any
international taxing authority or any subdivision or taxing
authority of any thereof (all the foregoing being herein
collectively called "Taxes" or, separately, a "Tax"), upon or
with respect to (i) the Undivided Interest or any portion
thereof or interest therein, (ii) the acquisition, purchase,
sale, financing, leasing, subleasing, sub-subleasing and sub-sub-
subleasing, ownership, maintenance, repair, redelivery,
alteration, insuring, control, use, operation, manufacture,
assembly, delivery, possession, repossession, location,
storage, importation, exportation, refinancing, refunding,
transfer of title, registration, reregistration, transfer of
registration, return or other disposition thereof of all or any
part of the Undivided Interest or any portion thereof or
interest therein, (iii) the rental payments (including, without
limitation, all Basic Rent and Supplemental Rent), receipts or
earnings arising from the Undivided Interest or any portion
thereof or interest therein, or payable pursuant to the Lease,
or any other payment or right to receive payment pursuant to
the Operative Documents or the Pass Through Trust Agreement or
Pass Through Certificates (including, without limitation, any
payment of principal, interest, discount or premium on or with
respect to the Secured Notes), (iv) any Modification or
replacement, removal, substitution or repair of a Component or
Replacement Component, (v) the Operating Agreement or the
Operative Documents and any other documents contemplated hereby
or thereby and amendments and supplements thereto, or the
issuance, refunding, refinancing or resetting of the Secured
Notes or the Pass Through Certificates or any other document
executed and delivered in connection with the consummation of
the transactions contemplated by the Operative Documents or the
Pass Through Trust Agreement or the interest of any Tax
Indemnitee in any of the foregoing, or the execution,
amendment, issuance or delivery of any of the foregoing, (vi)
the Indenture Estate or Trust Estate or Pass Through Trusts or
the property, or the income or other proceeds received with
respect to the property, held by the Indenture Trustee under
the Indenture or the Grantor Trustee under the Trust Agreement,
or (vii) otherwise arising out of, with respect to, or in
connection with the transactions contemplated by the Operating
Agreement or the Operative Documents, the Pass Through
Certificates, or the Pass Through Trust Agreement.
(b) Exclusions from General Tax Indemnity. Each of
the following shall constitute an Excluded Tax for purposes of
Section 12.2(a)(1), and the provisions of Section 12.2(a)(2)
shall not apply to, and the Lessee shall have no liability to a
Tax Indemnitee under Section 12.2(a)(2) with respect to:
(1) Taxes on a Tax Indemnitee (other than such
Taxes that are sales, use, rental, property, stamp,
document filing, license, or ad valorem Taxes, or
value added Taxes that are in the nature of or in
lieu of such Taxes) imposed on a Tax Indemnitee that
are franchise Taxes, privilege Taxes, doing business
Taxes, capital gains Taxes, excess profits Taxes,
minimum and/or alternative minimum Taxes, accumulated
earnings Taxes, personal holding company Taxes,
succession Taxes, estate Taxes, value added Taxes
(imposed in lieu of net income Taxes) or Taxes
imposed on, based on or measured by, gross or net
income, receipts, capital, or net worth of such Tax
Indemnitee (including, without limitation, any such
Taxes collected by withholding) which are imposed by
any state, local, or other taxing authority within
the United States or by any foreign or international
taxing authority that would not have been imposed but
for such Tax Indemnitee having a place of business,
being incorporated or organized or being otherwise
subject to such Tax, in each case, as a result of
transactions or activities unrelated to the
transactions contemplated by the Operative Documents,
the Operating Agreement or the Pass Through Trust
Agreement;
(2) Taxes on a Tax Indemnitee, including,
without limitation, sales and transfer Taxes, that
result from any voluntary or involuntary transfer by
such Tax Indemnitee of any interest in the Undivided
Interest, the Trust Estate, the Lease or any portion
of any of the foregoing, or any interest arising out
of the Operative Documents or any Pass Through Trust
Agreement or the Secured Notes or Pass Through
Certificates; provided, however, that this Section
12.2(b)(2) shall not apply to any transfer that (A)
with respect to the Owner Participant, and its
respective Affiliates, officers, directors, agents,
and employees, occurs after a Lease Event of Default
has occurred and is continuing, or, in the case of
any other Tax Indemnitee, relates to the exercise of
remedies in connection with a Lease Event of Default;
(B) results from an Event of Loss or from any other
destruction, damage, theft, or governmental taking,
confiscation, seizure, or requisition of or to the
Production System or any material part thereof that
does not yet constitute an Event of Loss; (C) is
required by the Operative Documents; (D) is made to
the Lessee or another Person at the Lessee's
direction; (E) results from the replacement, removal,
substitution, or subleasing of all or any part of the
Undivided Interest; or (F) occurs on the Closing Date
in connection with the consummation of the
transactions contemplated by the Operative Documents;
(3) Taxes imposed by any jurisdiction on a Tax
Indemnitee solely as a result of its activities in
such jurisdiction unrelated to the transactions
contemplated by the Operative Documents or the Pass
Through Trust Agreement;
(4) Taxes on a Tax Indemnitee that result from
(A) the willful misconduct, gross negligence, or
fraud of such Tax Indemnitee, (B) the breach or
inaccuracy by such Tax Indemnitee of any of its
representations, warranties or covenants and the
failure to perform or observe any agreement under the
Operative Documents or Pass Through Trust Agreement,
unless, in the case of the Owner Participant and its
respective Affiliates, officers, directors, agents,
and employees, any such breach, inaccuracy or failure
is caused by or results from any act, failure to act,
or breach of representation, warranty, or covenant by
any Lessee Person or any other party to the Operative
Documents, the Operating Agreement or the Pass
Through Trust Agreement;
(5) Taxes on a Tax Indemnitee that result from
(A) the failure of such Tax Indemnitee to file tax
returns properly and on a timely basis or to claim a
deduction or credit to which it is entitled, or (B)
the failure of such Tax Indemnitee to comply with
certification, reporting or other similar
requirements of the jurisdiction imposing such Tax;
provided, however, that the exclusions set forth in
subclauses (A) and (B) shall not apply if any such
failure is the result of (x) the failure of the
Lessee to (I) perform its obligations under Section
12.2(c), or to perform its duties and
responsibilities pursuant to any of the Operative
Documents or the Operating Agreement, (II) timely and
properly notify such Tax Indemnitee of the applicable
filing, certification, reporting or other similar
requirements (including the availability of any
deduction or credit other than with respect to any
Taxes described as not indemnifiable in Section
12.2(b)(1)), or (III) provide reasonable assistance
in complying with any such requirement; or (y) a
determination by the Owner Participant in good faith
that taking any action otherwise required in clause
(A) or (B) of this subsection could result in any
unindemnified adverse tax consequences or risk of
unindemnified adverse tax consequences to the Grantor
Trustee, the Trust Estate, or the Owner Participant
or its respective Affiliates, officers, directors,
agents, or employees, provided that the Owner
Participant shall promptly (but, (i) with respect to
reports, returns, certifications and statements
required to be provided by the Lessee pursuant to
Section 12.2(c) hereof, in no event later than 10
Business Days following the date any such item is
provided, (ii) with respect to reports, returns and
statements relating to Taxes described in Section
12.2(b)(1) hereof that are indemnifiable
notwithstanding that section, in no event later than
10 Business Days following the date the Lessee has
provided information necessary to file such reports,
returns, or statements (but only to the extent the
Lessee is required to file such reports, returns or
statements hereunder), and (iii) with respect to
reports, returns or statements relating to Taxes
described in Section 12.2(b)(1) hereof that are not
indemnifiable, in no event later than 10 Business
Days before the date the reports, returns, or
statements are to be filed) provide the Lessee
written notice identifying the nature of the
unindemnified adverse tax consequences, (and, if the
Lessee indemnifies the Grantor Trustee, the Trust
Estate or the Owner Participant, as the case may be,
and its respective Affiliates, officers, directors,
agents and employees promptly for such unindemnified
adverse tax consequences in a manner reasonably
satisfactory to such Tax Indemnitee (including for
credit purposes), the exclusions set forth in
subclauses (A) and (B) shall apply;
(6) Taxes which are attributable to any period
or circumstance occurring after the expiration or
earlier termination of the Lease, except to the
extent attributable to (A) a failure of the Lessee to
fully discharge its obligations under the Operative
Documents, (B) Taxes imposed on or with respect to
any payments that are due after the expiration or
earlier termination of the Lease and which are
attributable to a period or circumstance occurring
prior to or simultaneously with such expiration or
earlier termination;
(7) Taxes on the Grantor Trustee, the Indenture
Trustee or the Pass Through Trustee which are based
on or measured by fees or compensation received by
the Grantor Trustee for acting as Grantor Trustee
under the Trust Agreement, the Indenture Trustee for
acting as Indenture Trustee under the Indenture or
the Pass Through Trustee for acting as Pass Through
Trustee under the Pass Through Trust Agreement;
(8) Taxes on a Tax Indemnitee to the extent such
Taxes would not have been imposed if such Tax
Indemnitee were a United States person for United
States federal income tax purposes;
(9) any Tax that is being contested in
accordance with the provisions of Section 12.2(e)
during the pendency of such contest, but only for so
long as such contest is continuing in accordance with
such Section and payment is not otherwise required
pursuant to such Section;
(10) Taxes on a Tax Indemnitee as to which such
Tax Indemnitee fails to comply with its contest
obligations under Section 12.2(e) but only to the
extent such failure precludes a contest and the
Lessee has a reasonable basis for such contest;
provided, however, that this Section 12.2(b)(10)
shall not constitute a waiver by the Lessee of its
rights, if any, to assert and xxx upon any claims it
may have against the Tax Indemnitee by reason of its
failure to comply with its obligations under Section
12.2(e) of this Agreement;
(11) Taxes imposed as a result of (A) in the
case of the Owner Participant, the Grantor Trustee,
and their respective Affiliates, officers, directors,
agents, and employees, the trust described in the
Trust Agreement not being treated as a grantor trust
or other conduit entity for federal, state or local
tax purposes and (B) in the case of all other Tax
Indemnitees, any of the Pass Through Trusts not being
treated as a grantor trust or other conduit entity
for federal, state, or local tax purposes;
(12) any Taxes imposed on a transferee or
subsequent transferee to the extent of the excess of
such Taxes over the total amount of the Taxes of the
same or similar nature that would have been imposed
had there not been a transfer by the initial Tax
Indemnitee after the Closing Date (except in the case
of a transfer by the Owner Participant or the Lessor
which is described in clauses (A), (B), (C) or (E) of
Section 12.2(b)(2) above) of (i) an interest in the
Undivided Interest, or of a beneficial interest in
the Trust Estate or any portion of any of the
foregoing, or (ii) any interest arising under any
Operative Document or any Pass Through Trust
Agreement or any Secured Note or Pass Through
Certificate;
(13) Taxes which have been included in Lessor's
Cost;
(14) Taxes imposed on a Tax Indemnitee that are
United States federal net income Taxes of such
Indemnitee including any Taxes which are the subject
of the Tax Indemnity Agreement;
(15) Taxes imposed on the Grantor Trustee or the
Owner Participant resulting from a Lessor's Lien or
an Owner Participant's Lien, respectively;
(16) Taxes imposed on a Tax Indemnitee resulting
from an amendment to an Operative Document to which
such Tax Indemnitee is a party which amendment is not
consented to by the Lessee in writing or required by
the Operative Documents;
(17) any Tax (other than a Tax imposed on the
Owner Participant or the Grantor Trustee) in the
nature of an intangible tax or similar tax upon or
with respect to the value of the interest of the
Indenture Estate or a Certificateholder, as the case
may be, in any of the Secured Notes or Certificates
imposed by any government or taxing authority; or
(18) Taxes resulting from any violation of ERISA
or Section 4975 of the Code.
If the Lessee is required to pay any indemnity hereunder
on an After-Tax Basis, none of the exclusions in
Section 12.2(b)(1) through (18) above shall be read to
exclude any Taxes that are not necessary to pay such
indemnity on an After-Tax Basis. Notwithstanding anything
contained herein or any other Operative Document to the
contrary, the Lessee acknowledges and agrees to indemnify
and hold harmless the Owner Participant and Grantor
Trustee (in their respective trust and individual
capacities) on an After-Tax Basis against any and all
withholding Taxes (inclusive of any interest and penalties
imposed for any failure to timely withhold such Taxes)
imposed on or with respect to any amounts paid to a Loan
Participant or any successor, assignee or Affiliate
thereof, as an indemnified Tax for purposes of this
Section 12.2, unless such withholding is due to the Owner
Participant or the Grantor Trustee not being a United
States person for United States federal income tax
purposes. If a Tax (including any related interest,
fines, penalties or addition to Tax) (other than, in the
case of the Owner Participant and the Grantor Trustee,
withholding taxes referred to in the previous sentence)
results from a breach or inaccuracy of any Tax Indemnitee
of any of its representations, warranties or covenants, or
the failure to perform or observe any agreements under the
Operative Documents or the Pass Through Trust Agreement,
unless, in the case of the Owner Participant and its
respective Affiliates, officers, directors, agents and
employees, any such breach, inaccuracy or failure is
caused by or results from any act, failure to act or
breach of representation, warranty or covenant, or the
failure to perform any agreement of any Lessee Person or
any other party to the Operative Documents, the Operating
Agreement or the Pass Through Trust Agreement, and the
Lessee is required to indemnify another Tax Indemnitee
against the imposition of such Tax, then the Tax
Indemnitee whose breach or failure resulted in the
imposition of such Tax shall, within 30 days after receipt
of notice of payment of the Tax and appropriate payment
documentation with respect thereto, pay to the Lessee an
amount which equals the amount paid by the Lessee with
respect to or as a result of such Tax (including any
expenses or other charges borne by the Lessee) increased
by (but subject to the proviso in Section 12.2(f)) the
amount of tax savings to such Tax Indemnitee attributable
to the making of such payment to the Lessee.
The provisions of this Section 12.2(b) shall not
apply to any Taxes imposed in respect of the receipt or
accrual of any payment made by the Lessee pursuant to
Section 12.1 hereof, this Section 12.2 or pursuant to the
Tax Indemnity Agreement.
(c) Reports. If any report, return,
certification or statement is required to be filed with
respect to any Tax that is subject to indemnification
under this Section 12.2, the Lessee shall timely prepare
and file the same (except for (i) any report, return or
statement relating to any net income Taxes described in
Section 12.2(b)(1) or any Taxes in lieu of or enacted in
substitution for any of the foregoing, (ii) any report,
return or statement relating to any other Taxes described
in Section 12.2(b)(1) or any Taxes in lieu of or enacted
in substitution for any of the foregoing, except that, in
such cases, the Lessee shall timely provide information
necessary to file such report, return or statement (but
only to the extent the Lessee collects and maintains such
information in the ordinary course of its operations if
the relevant Tax Indemnitee otherwise collects and
maintains such information in the ordinary course of its
operations) or (iii) any other report, return,
certification or statement which the Tax Indemnitee has
notified the Lessee that the Tax Indemnitee intends to
prepare and file); provided that such Tax Indemnitee shall
have furnished the Lessee, at the Lessee's expense, with
such information reasonably necessary to prepare and file
such returns as is within such Tax Indemnitee's control.
The Lessee shall either file such report, return,
certification or statement (so as to show the ownership of
the Undivided Interest for tax purposes in the Grantor
Trustee) and send a copy of such report, return,
certification or statement to the Owner Participant and
the Grantor Trustee, or, where not so permitted to file,
shall notify the Owner Participant and the Grantor Trustee
of such requirement within a reasonable period of time
prior to the due date for filing (without regard to any
applicable extensions) and prepare and deliver such
report, return, certification or statement to the Owner
Participant and the Grantor Trustee. In addition, within
a reasonable time prior to the time such report, return,
certification or statement is to be filed the Lessee
shall, to the extent permitted by law, cause all xxxxxxxx
of such Taxes to be made to each Tax Indemnitee in care of
the Lessee, make payment thereof and furnish written
evidence of such payment. The Lessee shall furnish
promptly upon written request such data, records and
documents as any Tax Indemnitee may reasonably require of
the Lessee to enable such Tax Indemnitee to comply with
requirements of any taxing jurisdiction arising out of
such Tax Indemnitee's participation in the transactions
contemplated by this Agreement, including, without
limitation, requirements relating to Taxes described in
Section 12.2(b)(1).
(d) Payments. Any Tax indemnified hereunder
shall be paid directly when due to the applicable taxing
authority if direct payment is permitted, or shall be
reimbursed to a Tax Indemnitee on demand if paid by such
Tax Indemnitee in accordance herewith. Except as
otherwise provided in this Section 12.2, all amounts
payable to a Tax Indemnitee hereunder shall be paid
promptly in immediately available funds, but in no event
later than the later of (i) 10 Business Days after the
date of such demand or (ii) 2 Business Days before the
date the Tax to which such amount payable hereunder
relates is due or is to be paid (ignoring extension of
time) and shall be accompanied by a written statement
(which written statement shall, at the Lessee's request,
as long as payment is not delayed, be verified by a
nationally recognized independent accounting firm mutually
acceptable to the Lessee and the Tax Indemnitee, such
verification to be at the Lessee's expense unless such
accountants determine that the amount payable by the
Lessee is less than ninety-five percent (95%) of the
amount shown on such written statement, in which event
such expense will be paid by the Tax Indemnitee)
describing in reasonable detail the Tax and the
computation of the amount payable. In the case of a Tax
subject to indemnification under this Section 12.2 which
is properly subject to a contest in accordance with
Section 12.2(e), the Lessee (i) shall be obligated to make
any advances with respect to such Tax whenever required
under Section 12.2(e) and (ii) shall pay such Tax (in the
amount finally determined to be owing in such contest) on
an After-Tax Basis prior to the latest time permitted by
the relevant taxing authority for timely payment after a
Final Determination.
(e) Contests; Refunds. (i) In the event a
taxing jurisdiction makes a claim with respect to any Tax
for which the Lessee is liable under this Section 12.2 (a
"Tax Claim"), the Lessee may cause the applicable Tax
Indemnitee to contest such Tax Claim as set forth herein.
In the event any Tax Indemnitee receives notice of a Tax
Claim or potential Tax Claim which is indemnifiable under
this Section 12.2, such Tax Indemnitee shall promptly
notify the Lessee thereof, but the failure to give such
notice shall not diminish the Lessee's obligation
hereunder, except to the extent that the Lessee's right to
contest such Tax Claim or potential Tax Claim is
foreclosed thereby, unless the Tax Indemnitee delivers an
opinion of independent tax counsel that no reasonable
basis exists for the Tax Indemnitee to prevail (except if
the Lessee shall have provided to the Tax Indemnitee at
the Lessee's sole expense an opinion of the Lessee's
independent tax counsel, such tax counsel being reasonably
acceptable to the Tax Indemnitee, to the effect that a
reasonable basis exists for such contest). If requested
by the Lessee in writing within 30 days of receipt of such
notice (or, if sooner, on or before the last date upon
which the contest of such Tax can practicably be initiated
in good faith, provided that the Tax Indemnitee's notice
to the Lessee discloses such date), such Tax Indemnitee
shall, provided that (I) it has received an indemnity
satisfactory to it whereby the Lessee shall have agreed to
pay and shall pay to such Tax Indemnitee on an After-Tax
Basis all reasonable costs, expenses, losses, legal and
accountants' fees and disbursements, and all penalties,
fines, additions to tax and interest in connection with
contesting such Tax Claim and (II) no Lease Event of
Default or Lease Default described in Section 15(a), (b),
(c), (f) or (g) of the Lease shall have occurred and be
continuing, and at the expense of the Lessee, contest or
permit the Lessee to contest the imposition of any Tax
Claim by (1) resisting payment thereof, if such Tax
Indemnitee in its reasonable discretion shall determine
such course of action to be appropriate, (2) not paying
the same except under protest, if protest is necessary and
proper, or (3) if payment shall be made, using reasonable
efforts to obtain a refund thereof in appropriate
administrative and judicial proceedings, or both;
provided, however, that (i) in no event will such Tax
Indemnitee be required to contest or permit a contest or
continue to contest any Tax Claim unless such Tax
Indemnitee and the Owner Participant shall have reasonably
determined that the action to be taken will not result in
(a) any material risk of sale, forfeiture or loss of, or
the creation of any lien (except if the Lessee shall have
adequately bonded such lien, or otherwise made provision
to protect the interests of such Tax Indemnitee and the
Owner Participant in a manner reasonably satisfactory to
such Tax Indemnitee and the Owner Participant) on, the
Undivided Interest, any part thereof or interest therein
or (b) any risk of criminal penalties and (ii) if such
contest shall involve payment of the Tax Claim, the Lessee
shall have advanced to such Tax Indemnitee the amount of
such payment plus interest, penalties and additions to tax
with respect thereto on an interest-free basis, and shall
indemnify the Tax Indemnitee, on an After-Tax Basis, for
any adverse tax consequences resulting from such advance.
If permitted by applicable law, the Lessee may contest, at
its own expense, the imposition of any Tax Claim if (i)
the proviso in the preceding sentence is satisfied, (ii)
such claim involves only Taxes for which the Lessee is
liable to the taxing authority, (iii) the Lessee shall
have delivered to the Tax Indemnitee a written
acknowledgment of its liability under this Section 12.2
for such Taxes (provided, however, that the Lessee will
not be bound by its acknowledgment of liability if the
contest is resolved on the basis of a written decision of
the adjudicator that clearly indicates the basis for the
conclusion that the Lessee has no liability under this
Section 12.2 with respect to such Tax, unless the Lessee's
conduct of the contest has materially prejudiced the Tax
Indemnitee), (iv) the participation of the Tax Indemnitee
is not required, (v) no Tax return of the Tax Indemnitee
is held open as a result of such contest, and (vi) the Tax
Indemnitee may not be reasonably viewed as having actual
or potential liability for Taxes not indemnifiable by the
Lessee hereunder relating to the contest. In any contest
controlled by a Tax Indemnitee, the Tax Indemnitee shall
consult in good faith with the Lessee concerning the
method and forum of such contest, but the Tax Indemnitee
shall retain the ultimate control over such contest. The
Lessee shall have control over any contest conducted by
the Lessee pursuant to the terms hereof, but shall consult
in good faith with the Tax Indemnitee concerning the
method and forum of such contest. The Lessee shall keep
the Tax Indemnitee fully informed as to the nature,
conduct and results of any contest conducted in the name
of the Tax Indemnitee. Notwithstanding anything contained
in this Section 12.2 to the contrary, no Tax Indemnitee
shall be required to contest any Tax Claim (in a
proceeding that involves taxes unrelated to the
transactions contemplated by the Operative Documents)
unless such Tax Indemnitee shall have received an opinion
of such independent tax counsel as may be selected by the
Tax Indemnitee and reasonably acceptable to the Lessee,
furnished at the Lessee's sole expense, to the effect that
there is a reasonable basis to contest such Tax Claim. A
Tax Indemnitee shall not make, accept or enter into a
settlement or other compromise with respect to any Taxes
indemnified pursuant to this Section 12.2 (which
proceeding the Tax Indemnitee is required to continue), or
forego or terminate any such proceeding with respect to
Taxes indemnified pursuant to this Section 12.2, without
the prior written consent of the Lessee provided that the
Lessee shall have acknowledged that the contest is with
respect to a Tax Claim that would result in a Tax
indemnifiable under this Section 12.2. Notwithstanding
the foregoing, if a Tax Indemnitee refuses to contest any
Tax Claim or effects a settlement or compromise of any
such Tax that the Tax Indemnitee is required to contest or
is required not to settle or compromise or otherwise
terminates any such contest in violation of the terms
hereof without such prior written consent of the Lessee
(but not with respect to any reasonable out-of-pocket
costs and expenses incurred by the Tax Indemnitee to
contest such Tax Claim), such Tax Indemnitee shall be
deemed to have waived its right to any indemnity payment
by the Lessee that would otherwise be payable by the
Lessee pursuant to this Section 12.2 in respect of such
Tax Claim and any other tax claim the contest of which may
be effectively precluded by such settlement or compromise,
and shall have no further obligation or liability to the
Lessee with respect to such contest or settlement.
Notwithstanding anything contained in this Section 12.2 to
the contrary, the Tax Indemnitee shall not be required to
contest any claim if the subject matter thereof shall be
of a continuing nature and shall have previously been
decided adversely by a court of competent jurisdiction
pursuant to the contest provisions of this Section 12.2,
unless there shall have been a change in law (or
interpretation thereof) or a change in facts after the
date with respect to which such previous contest shall
have been decided, and the Tax Indemnitee shall have
received, at the Lessee's expense, an opinion of
independent tax counsel selected by the Lessee and
reasonably acceptable to such Tax Indemnitee to the effect
that as a result of such change in law (or interpretation
thereof) or a change in facts, there is substantial
authority (applying the principles of Section 6662(d) of
the Code and the Treasury Regulations thereunder) for the
position asserted by the Tax Indemnitee in such contest.
(ii) Upon receipt by any Tax Indemnitee of a
repayment or refund of all or any part of any Tax which
the Lessee shall have paid for, or advanced to, such Tax
Indemnitee or for which the Lessee shall have reimbursed
such Tax Indemnitee pursuant to this Section 12.2, such
Tax Indemnitee shall pay to the Lessee, as promptly as
practicable after the receipt thereof, the amount of such
repayment or refund plus any interest received by, or
credited to, such Tax Indemnitee on such amounts net of
Taxes thereon plus the amount of any net tax savings
actually realized by such Tax Indemnitee as a result of
the payment made to the Lessee; provided, however, that:
(A) such Tax Indemnitee shall not be obligated to make
such payment with respect to any net tax savings to the
extent that the amount of such payment would exceed (x)
all prior indemnity payments (excluding costs and expenses
incurred with respect to contests) made by the Lessee with
respect to such Tax pursuant to this Section 12.2 and less
(y) the amount of all prior payments by such Tax
Indemnitee to the Lessee hereunder with respect to such
Tax (but any such excess shall be applied against, and
reduce pro tanto, any future payment due such Tax
Indemnitee pursuant to this Section 12.2); (B) if there is
(1) a subsequent loss of any such tax savings or refund
realized by the Tax Indemnitee or (2) a reduction of an
amount otherwise payable to a Tax Indemnitee hereunder as
a result of any such tax savings or refund, such loss or
reduction shall be treated as a Tax for which the Lessee
must indemnify such Tax Indemnitee pursuant to this
Section 12.2 without regard to the exclusions set forth in
Sections 12.2(b) and 12.2(c), other than the exclusions
set forth in Sections 12.2(b)(4)(A), (7) and (13); and (C)
no payment shall be made by any Tax Indemnitee while a
Lease Event of Default shall have occurred and be
continuing.
(f) Tax Savings. If, by reason of any payment
made to or for the account of a Tax Indemnitee by the
Lessee pursuant to this Section 12.2, such Tax Indemnitee
at any time realizes a reduction in any Taxes for which
the Lessee is not required to indemnify such Tax
Indemnitee pursuant to this Section 12.2 and which was not
taken into account previously in computing such payment by
the Lessee to or for the account of such Tax Indemnitee,
then such Tax Indemnitee shall promptly pay to the Lessee
an amount equal to such actual reduction in Taxes, plus
the amount of any additional reduction in Taxes of such
Tax Indemnitee attributable to the payment made by such
Tax Indemnitee to the Lessee pursuant to this sentence.
Notwithstanding the previous sentence, (A) such Tax
Indemnitee shall not be obligated to make such payment
with respect to any net tax savings to the extent that the
amount of such payment would exceed (x) all prior
indemnity payments (excluding costs and expenses incurred
with respect to contests) made by the Lessee with respect
to such Tax pursuant to this Section 12.2 and less (y) the
amount of all prior payments by such Tax Indemnitee to the
Lessee hereunder with respect to such Tax (but any such
excess shall be applied against, and reduce pro tanto, any
future payment due such Tax Indemnitee pursuant to this
Section 12.2); (B) if there is a (i) subsequent loss of
any such tax savings or refund realized by the Tax
Indemnitee or any tax savings taken into account for
purposes of determining "After-Tax Basis" or (ii) a
reduction of an amount otherwise payable to a Tax
Indemnitee hereunder as a result of any such tax savings
or refund, such loss or reduction shall be treated as a
Tax for which the Lessee must indemnify such Tax
Indemnitee pursuant to this Section 12.2 without regard to
the exclusions set forth in Sections 12.2(b) and 12.2(c),
other than the exclusions set forth in Sections
12.2(b)(4)(A), (7) and (13); and (C) no payment shall be
made by any Tax Indemnitee while a Lease Event of Default
shall have occurred and be continuing.
(g) Definition of Owner Participant. For
purposes of this Section 12.2, the term "Owner
Participant" and the term Tax Indemnitee as applied to the
Owner Participant shall include any member of an
affiliated group, within the meaning of Section 1504 of
the Code (or any successor provision thereof), of which
the Owner Participant is, or may become, a member, if
consolidated, joint or combined returns are filed for such
affiliated group for federal, state or local income tax
purposes. The Owner Participant undertakes on behalf of
such other members of its affiliated group to perform or
cause to be performed all obligations of such affiliated
group hereunder.
12.3 No Guarantee. Nothing in Section 12.1 or 12.2
shall be construed as a guaranty by the Lessee of the useful
life or residual value in the Undivided Interest or as a
guaranty of the Secured Notes.
12.4. Opinion in Connection with Refunding of Senior
Notes or Adjustments to Rent Percentages. In connection with
any refunding or refinancing of the Secured Notes pursuant to
Section 15 of this Agreement or any adjustment of the Basic
Rent Percentages pursuant to Section 4 of the Lease to which
the proviso set forth in Section 4.2 of the Lease applies, if
the Lessee shall fail to provide the Owner Participant with an
opinion of tax counsel selected by the Lessee but reasonably
acceptable to the Owner Participant in form and substance to
the effect that such refunding (or refinancing) or adjustment,
as the case may be, more likely than not will not result in a
greater risk of an unindemnified tax liability on the part of
the Owner Participant, then the Lessee shall provide the Owner
Participant with tax indemnity in form and substance reasonably
satisfactory to the Owner Participant (including credit
support).
SECTION 13. TRANSFER OF OWNER PARTICIPANT'S INTEREST.
13.1 Restrictions on Transfer. Without the prior
written consent of, so long as the Lease shall be in effect,
the Lessee, and, so long as the Lien of the Indenture shall be
in effect, the Indenture Trustee, the Owner Participant shall
not, directly or indirectly, assign, convey or otherwise
transfer (whether by consolidation, merger, sale of assets or
otherwise) any of its right, title or interest in and to the
Trust Estate, this Agreement, the Trust Agreement or any other
Operative Document except in accordance with the terms and
conditions of this Section 13; provided that in the case of any
transfer that occurs while a Lease Event of Default has
occurred and is continuing, (i) the conditions to transfer set
forth in Sections 13.2(d) and (e) shall not apply, (ii) the
conditions to transfer set forth in Section 13.2(a) shall be
modified such that the only remaining requirement under such
Section is that the transferee shall have a net worth at the
time of transfer of at least $10,000,000 and (iii) the
conditions to transfer in Section 13.2(f) shall be modified
such that the Lessee shall not be entitled to require that the
opinion referred to in said Section be in form and substance
satisfactory to the Lessee.
13.2 Permitted Transfers. The Owner Participant may
transfer all or part of its right, title and interest in and to
the Trust Estate (whether or not the same shall then have been
pledged or mortgaged under the Indenture, but subject to the
Lien of the Indenture if then in effect) and in and to this
Agreement and the other Operative Documents to any Person (a
"Transferee") only in compliance with and upon satisfaction of
the following conditions:
(a) the Transferee (i) shall be, or shall be an
Affiliate of, a financial institution, leasing company or
other institutional investor having a tangible net worth
at the time of at least $75,000,000 (or shall provide a
guarantee in form and substance reasonably satisfactory to
the Lessee and the Indenture Trustee of all its
obligations under the Operative Documents to which it is a
party by an entity having a tangible net worth at the time
of at least $75,000,000), or (ii) shall be an Affiliate of
the Owner Participant that either (x) has a net worth of
at least $75,000,000 or (y) has its obligations under the
Operative Documents guaranteed by the Owner Participant
(or if at the time of transfer the Owner Participant's
obligations are guaranteed pursuant to the Guaranty, by
the Guarantor) pursuant to a guaranty in form and
substance reasonably satisfactory to the Lessee and the
Indenture Trustee; and in the case of either (i) or (ii)
such Transferee shall not be a Competitor of the Lessee;
(b) no such transfer shall violate any
provision of, or create a relationship which would be in
violation of, any applicable Governmental Rules,
including, without limitation, applicable securities laws,
any agreement to which the Owner Participant or the
Transferee is a party or by which it or any of its
property is bound or any Governmental Actions;
(c) the Transferee shall enter into an
agreement substantially in the form of Exhibit B and shall
have delivered to the Grantor Trustee and the Lessee an
Officer's Certificate of the Transferee stating that the
representations and warranties contained therein shall be
true and correct on the date of transfer;
(d) the transferring Owner Participant shall
have provided 10 Business Days prior written notice of
such transfer to the Grantor Trustee, the Indenture
Trustee and the Lessee, which notice shall specify (i)
such information and be accompanied by evidence as shall
be reasonably necessary to establish compliance with this
Section 13 and Section 12.7 of the Trust Agreement and
(ii) the name and address (for the purpose of giving
notice as contemplated by the Operative Documents) of the
Transferee;
(e) the transferring Owner Participant shall
pay or cause to be paid all reasonable fees, out-of-pocket
expenses, disbursements and costs (including, without
limitation, legal and other professional fees and
expenses) incurred by the Grantor Trustee, the Loan
Participants, the Indenture Trustee or the Lessee in
connection with any transfer pursuant to this Section 13
(other than fees and expenses incurred in unsuccessfully
challenging, through any action, suit or proceeding, the
Owner Participant's right to make such transfer);
(f) the transferring Owner Participant or the
Transferee shall have delivered to the Grantor Trustee and
the Lessee and, if the Lien of the Indenture shall then be
in effect, the Indenture Trustee, an opinion of counsel in
form and substance reasonably satisfactory to each of
them, as to the due authorization, execution, delivery and
enforceability of the agreement or agreements referred to
in clause (c) of this Section 13.2, and as to the matters
referred to in clause (b) of this Section 13.2; and
(g) the Transferee shall be a "United States
Person" as defined in the Code.
13.3 Request for Acknowledgment. In connection with
any proposed transfer, assignment or assumption under Section
13.2, the Owner Participant may by notice to the Lessee, the
Indenture Trustee and Xxxxxxxxxx & Xxxxx LLP, at the addresses
set forth for such Persons in Schedule 1 hereto, at least 20
Business Days prior to the anticipated date of the proposed
transfer or assignment, request that the Lessee and the
Indenture Trustee acknowledge that any or all of the conditions
precedent or requirements contained in Section 13.2 have been
met, and such acknowledgment shall be promptly (and in any
event with respect to each such party no more than 10 Business
Days after such notice shall have been given) granted to the
extent that such conditions or requirements are met. In
connection therewith, the Owner Participant shall provide the
Lessee and the Indenture Trustee with (a) an Officer's
Certificate of the Owner Participant signed on behalf of the
Owner Participant by a Responsible Officer of the Owner
Participant to the effect that all of the conditions precedent
or requirements contained in Section 13.2 have been met and
(b) all the information necessary, or with any information that
the Lessee or the Indenture Trustee may reasonably request, in
order for the Lessee and the Indenture Trustee to make such
determination. If the Lessee or the Indenture Trustee fails to
respond on or prior to the 30th day after receipt of any such
notice, the Lessee or the Indemnitee Trustee, as the case may
be, shall be deemed to have given its acknowledgment that such
conditions precedent or requirements have been met.
13.4 Effect of Transfer. From and after any
transfer effected in accordance with this Section 13, the Owner
Participant making such transfer shall be released, to the
extent of the obligations assumed by the Transferee, from its
liability hereunder and under the other Operative Documents to
which it is or is to be a party and under the Agency and
Support Agreement in respect of obligations to be performed on
or after the date of such transfer. Upon any transfer by the
Owner Participant in accordance with this Section 13, the
Transferee shall be deemed an "Owner Participant" for all
purposes of the Operative Documents and each reference herein
to the Owner Participant making such transfer shall thereafter
be deemed a reference to such Transferee for all purposes,
except as provided in the preceding sentence. In addition,
except in the case of a transfer to an Affiliate of the Owner
Participant in accordance with Section 13.2(a)(ii)(y), upon any
transfer made in accordance with this Section 13, the Guaranty,
if any, shall be released to the extent the obligation of the
Owner Participant under the Operative Documents are assumed by
the Transferee or, if applicable a new Guarantor. Any transfer
that is not in accordance with this Section 13 shall be a
breach of this Agreement and shall be null and void; provided
that the failure by the transferring Owner Participant to
provide 10 Business Days prior written notice of a transfer in
accordance with Section 13.2(d) shall not constitute a breach
of this Agreement if such failure is cured within 10 days after
the earlier of receipt by the Owner Participant of written
notice thereof from the Lessee or the date the Owner
Participant obtains Actual Knowledge of such failure; and
provided further that the failure by the Owner Participant to
pay fees and expenses in accordance with Section 13.2(e) shall
not constitute a breach of this Agreement if such failure is
cured within 60 days after the earlier of receipt by the Owner
Participant of written notice thereof from the Lessee, the
Grantor Trustee, the Loan Participants or the Indenture Trustee
or the date the Owner Participant obtains Actual Knowledge of
such failure.
SECTION 14. FINANCING FOR MODIFICATIONS.
14.1 Financing for Modifications. The Lessee shall
give the Grantor Trustee, the Owner Participant and the
Indenture Trustee any required notice of a Modification to the
Production System pursuant to Section 11.6(b) of the Lease.
Upon receipt of such notice, and so long as no Lease Default
described in paragraphs (a), (b), (c) or (g) of the definition
of Lease Event of Default in Section 15 of the Lease and no
Lease Event of Default shall have occurred and be continuing,
the Owner Participant shall cause the Lessor to finance the
cost of the Lessor's Share of such Modification through the
issuance of Additional Notes under the Indenture, on terms and
conditions (including additional credit support to the extent
required by Section 10.14 after giving effect to any adjustment
in Stipulated Loss Value as a result of the issuance of
Additional Notes) mutually acceptable to the Owner Participant
and the Lessee; provided that any issuance and sale by the
Grantor Trustee of Additional Notes shall be in accordance with
and subject to the conditions set forth in Section 2.08 of the
Indenture (including, without limitation, the condition that
such Additional Notes may not rank senior (but may rank pari
passu or junior) in any respect to other Secured Notes issued
under the Indenture).
On the closing date of any Supplemental Financing, the Basic
Rent Percentages, Stipulated Loss Value Percentages,
Termination Value Percentages, Early Buy-Out Percentages and
Fixed Price Purchase Amount shall be adjusted in accordance
with Section 4 of the Lease. No Additional Notes may be issued
without the prior written consent of the Lessee.
SECTION 15. REFUNDING OF SECURED NOTES.
15.1 Refunding of Secured Notes. Upon compliance
with the terms and conditions of this Section 15, including,
without limitation, the satisfaction of the conditions set
forth in Section 15.2 and in Section 3.05 of the Indenture, the
Lessee shall have the right, at its option and expense, on two
occasions during the Lease Term to cause the Grantor Trustee to
refund or refinance the Secured Notes and/or any Additional
Notes then Outstanding (the "Refunded Secured Notes") through
the issuance and sale in the public or private market of one or
more additional series of Secured Notes (the "Refunding Secured
Notes"), in an aggregate principal amount which shall be equal
to the unpaid principal amount of the Refunded Secured Notes
plus any accrued and unpaid interest on the Refunded Secured
Notes not paid by Lessee as contemplated in clause (d) of this
Section 15.1, the proceeds of such issuance and sale to be
applied to prepay or redeem the principal amount of such
Refunded Secured Notes and subject to the following conditions:
(a) the expenses of any such refunding or
refinancing (including, without limitation, any premium
payable with respect to the Secured Notes) shall be borne
by the Lessee;
(b) the Owner Participant will not suffer any
unindemnified adverse tax consequences (as determined in
accordance with and subject to Section 12.4) and Owner
Participant will receive an opinion of its counsel and
reasonably acceptable to the Lessee to such effect;
provided, however, that, in the absence of a change in
applicable tax law, Treasury Regulations or Internal
Revenue Service published revenue ruling, revenue
procedure or notice after the Closing Date, the Secured
Notes are "qualified nonrecourse indebtedness" and any
such refinancing taken together with each other
refinancing, that does not (i) result in an increase in
principal amount greater than 5.0% of the remaining
principal amount of the Secured Notes or, as applicable
any Additional Notes or (ii) increase in term or average
life that exceeds the remaining term or average life, as
applicable, of the original Secured Notes by more than six
months, shall be treated as not causing a material adverse
tax effect under Section 861 of the Code;
(c) the appropriate parties will enter into a
note purchase agreement providing for the issuance and
sale by the Grantor Trustee or such other party as may be
appropriate on the date specified in such agreement (for
the purposes of this Section 15.1, the "Refunding Date")
of Refunding Secured Notes the proceeds of which shall be
used to repay all of the Outstanding Refunded Secured
Notes on the Refunding Date;
(d) if the Refunding Date is during the Basic
Lease Term, the Lessee and the Grantor Trustee will amend
the Lease such that if the Refunding Date is not a Basic
Rent Payment Date, the Lessee shall on the Refunding Date
prepay that portion of the next succeeding installment of
Basic Rent to the extent necessary to pay the aggregate
interest accrued on the Refunded Secured Notes not payable
with the proceeds of the Refunding Secured Notes;
(e) the Grantor Trustee will enter into an
agreement to provide for the securing thereunder of the
Refunding Secured Notes in like manner as the Refunded
Secured Notes and/or will enter into such amendments and
supplements to the Indenture as may be necessary to effect
a refunding or refinancing under this Section 15.1, which
agreements, amendments and/or supplements shall be
satisfactory in form and substance to the Owner
Participant;
(f) the identity of the Owner Participant shall
not be disclosed in offering materials used in connection
with such refunding or refinancing pursuant to a public
offering;
(g) unless otherwise agreed by the Owner
Participant, the Lessee shall pay to the Grantor Trustee
as Supplemental Rent an amount equal to the Premium, if
any, payable in respect of the Refunded Secured Notes and
all reasonable fees, costs, expenses of such refunding or
refinancing, including, without limitation, the Owner
Participant's out-of-pocket expenses and reasonable
counsel fees and expenses;
(h) the Lessee shall cause a legal opinion in
form and substance reasonably satisfactory to the Owner
Participant, the Grantor Trustee, the Indenture Trustee
and the Pass Through Trustee to be addressed to the Owner
Participant, the Grantor Trustee, the Indenture Trustee
and the Pass Through Trustee with respect to federal or
state securities laws and insofar as such laws relate to
the refunding or refinancing; and
(i) such additional documents, certificates,
opinions as shall be reasonably requested by, and
acceptable to, the Grantor Trustee and the Indenture
Trustee, including, but not limited to, such documents,
financing statements and opinions as are reasonably
necessary to confirm that the refinancing of all Secured
Notes of the series as to which the refinancing is
occurring is being carried out.
In connection with any such refunding or refinancing,
the Basic Rent Percentages, Stipulated Loss Value Percentages,
Termination Value Percentages and the Early Buy-Out Percentages
and the amount of Credit Support shall be adjusted in
accordance with Section 4 of the Lease. The Secured Notes may
not be refunded or refinanced without the prior written consent
of the Lessee.
15.2 Notice. The Lessee shall give the other
parties to this Agreement at least 90 days' prior written
notice of any desired refunding or refinancing pursuant to
Section 15.1, which notice shall set forth to the extent
practicable the proposed terms and conditions of such refunding
or refinancing, including the desired date therefor. The
Lessee, the Grantor Trustee, the Owner Participant and, as
necessary, the Indenture Trustee and the Loan Participants,
shall consult thereafter on the good faith negotiation of such
terms and conditions to the end that, subject to the provisions
of this Section 15, the final terms and conditions of such
refunding shall be agreed among the parties thereto in due
course thereafter. The Lessee will provide notice promptly to
such Persons in the event that it determines not to proceed
with such proposed refunding or refinancing pursuant to Section
15.1.
15.3 Rights of Parties. Notwithstanding anything to
the contrary contained in this Section 15, in no event shall
the Owner Participant have any obligation to initiate or
structure any refunding or refinancing of Secured Notes or to
take, or to cause the Grantor Trustee to take, any action in
connection therewith other than such as may be requested by the
Lessee, the Owner Participant or the Indenture Trustee as
provided in this Section 15.
SECTION 16. BENEFICIAL INTEREST PURCHASE OPTION.
16.1 Option to Purchase. In the event and at the
time that the Lessee has the right to purchase all of Lessor's
right, title and interest in and to the Undivided Interest
pursuant to Section 6.1 of the Lease, the Lessee in lieu of
exercising such right may elect to purchase the right, title
and interest of the Owner Participant in and to the Trust
Estate (the "Beneficial Interest") at a purchase price equal to
the excess of (i) the applicable purchase price payable under
Section 6.1 over (ii) the outstanding principal and accrued
interest on the Secured Notes as of the applicable purchase
date (after giving effect to the payment of all amounts
required to be paid by the Lessee pursuant to Section 16.2(b))
(the "Beneficial Interest Purchase Price"). It is intended
among the parties hereto that the purchase of the Beneficial
Interest by the Lessee shall not effect a merger of the
Lessee's interest, as lessee, in the Lease and the beneficial
interest in the Trust Estate to be purchased by the Lessee.
Such purchase shall be consummated pursuant to an assignment
and assumption agreement which shall at a minimum preserve
Owner Participant's rights which are expressly stated to
survive any purchase.
16.2 Notice of Election; Manner of Purchase;
Transfer After Purchase. (a) In order to exercise its right
to purchase the Beneficial Interest pursuant to Section 16.1,
the Lessee shall notify the Owner Participant irrevocably in
writing no later than 90 days prior to the applicable purchase
date under Section 6.1 of the Lease that it desires to purchase
the Beneficial Interest.
(b) On the date of purchase, upon receipt by the
Owner Participant of the Beneficial Interest Purchase Price,
and all Basic Rents due by the Lessee to or distributable to
the Owner Participant on or prior to such date of purchase (but
excluding any Basic Rent payable in advance on such date of
purchase) and all Supplemental Rent due by the Lessee to or
distributable to the Owner Participant to and including such
date of purchase (without giving effect to any applicable grace
periods), the Owner Participant shall transfer the Beneficial
Interest free and clear of all Liens to the Lessee pursuant to
an instrument of conveyance in form and substance reasonably
satisfactory to the Lessee.
(c) Each of the Participants, the Grantor Trustee
and the Indenture Trustee, at the cost and expense of the
Lessee, will cause to be promptly and duly taken, executed,
acknowledged and delivered all such further acts, documents and
assurances as the Lessee reasonably may request in order to
carry out the intent and purposes of this Section 16 and the
transactions contemplated hereby.
(d) As a condition to the Lessee's right to purchase
the Beneficial Interest pursuant to Section 16.1 (unless the
Lessee shall assume the obligations of the Grantor Trustee
pursuant to the next sentence), on the date of purchase the
Lessee shall have provided to the Indenture Trustee an opinion
of counsel for the Lessee, dated the date of purchase, which,
subject to usual or customary exceptions, shall be to the
effect that upon consummation of such purchase, this Agreement,
the Trust Agreement and the Lease constitute the legal, valid
and binding obligation of the Lessee, enforceable against the
Lessee in accordance with its terms except as the same may be
limited by applicable bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting the rights of creditors
generally and by general principles of equity, and except as
limited by applicable laws that may affect the remedies
provided for in the Lease, which laws, however, do not in the
opinion of such counsel make the remedies provided for in the
Lease inadequate for the practical realization of the rights
and benefits provided for in the Lease. In the event the
Lessee is unable to provide such opinion, concurrently with the
purchase of the Beneficial Interest the Lessee shall assume the
obligations of the Grantor Trustee under the Secured Notes and
under the Indenture in accordance with and with the effect
provided in Section 3.04 of the Indenture and Section 11.6
hereof.
SECTION 17. MISCELLANEOUS.
17.1 Survival. All agreements, representations,
warranties and indemnities contained in this Agreement and the
other Operative Documents and in any agreement, document or
certificate delivered pursuant hereto or thereto or in
connection herewith or therewith shall survive and continue in
effect following the execution and delivery of this Agreement
and the other Operative Documents and the participation by the
Owner Participant and the Loan Participants in the payment of
Lessor's Cost as contemplated hereby and by the other Operative
Documents.
17.2 Binding Effect. All agreements,
representations, warranties and indemnities in this Agreement
and the other Operative Documents and in any agreement,
document or certificate delivered pursuant hereto or thereto or
in connection herewith or therewith shall bind the Person
making the same and its successors and assigns, and shall inure
to the benefit of each Person for whom made and their
respective successors and permitted assigns.
17.3 Notices. All communications, notices and
consents provided for in this Agreement shall be in writing and
shall be given in person or by courier or by means of telecopy
or other wire transmission (with request for assurance of
receipt in a manner typical with respect to communications of
that type), or mailed by registered or certified first class
mail, return receipt requested, or overnight courier, addressed
as set forth in Schedule 1 or at such other address as any such
Person may from time to time designate by notice duly given in
accordance with the provisions of this Section 17.3 to the
other parties hereto. Any notice delivered by hand shall
become effective when delivered. Any notice delivered by
courier service shall become effective on the date of receipt
(which may be established, without limitation, by reference to
evidence of delivery provided by the courier service). Any
notice delivered by telecopy shall become effective on the date
such telecopy is sent, as established by evidence of receipt of
such transmission.
17.4 Counterpart Execution. This Agreement may be
executed in any number of counterparts and by the different
parties hereto on separate counterparts, each of which, when so
executed and delivered, shall be an original, but all such
counterparts shall together constitute but one and the same
instrument.
17.5 GOVERNING LAW. THIS AGREEMENT SHALL BE
GOVERNED BY, AND BE CONSTRUED IN ACCORDANCE WITH, THE INTERNAL
LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO ITS CONFLICT
OF LAWS PRINCIPLES.
17.6 Amendments, Supplements, Etc. (a) Neither this
Agreement nor any of the terms hereof may be amended,
supplemented, waived or modified orally, but only by an
instrument in writing signed by the party against which
enforcement of such change is sought.
(b) Prior to the Lease Termination Date, neither the
Trust Agreement nor the Indenture may be amended, waived,
supplemented or modified to permit any action contrary to, or
disturb the Lessee's rights under, the Lease, or otherwise
adversely affect the Lessee's rights, or increase the Lessee's
obligations or liabilities, under any Operative Document
without the consent of the Lessee.
(c) Prior to the Lease Termination Date, neither
Section 1.04(c) nor any other provision of the Pass Through
Trust Agreement that would have the effect of amending,
modifying or waiving such Section 1.04(c) shall be amended,
modified or waived without the consent of the Owner
Participant.
17.7 Headings; Table of Contents. The division of
this Agreement into Sections, subsections and paragraphs, the
provision of a table of contents and the insertion of headings
are for convenience of reference only and shall not affect the
construction or interpretation hereof.
17.8 Severability of Provisions. Any provision of
this Agreement which may be determined by competent authority
to be invalid or unenforceable in such jurisdiction shall, as
to such jurisdiction, be ineffective to the extent of such
invalidity or unenforceability without invalidating or
rendering unenforceable any remaining terms and provisions
hereof, and any such invalidity or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such
provision in any other jurisdiction. The parties shall
negotiate in good faith to replace such provision with an
appropriate, legal provision. To the extent permitted by
applicable law, the parties hereto hereby waive any provision
thereof that renders any term or provision hereof invalid or
unenforceable in any respect.
17.9 Entire Agreement. This Agreement (including
the schedules and exhibits hereto), the Pass Through Trust
Agreement, the Reimbursement Agreement, the Initial Letter of
Credit and the other Operative Documents, and all certificates,
instruments and other documents relating thereto delivered and
to be delivered from time to time pursuant to the Operative
Documents and the Pass Through Trust Agreement, supersede all
agreements (other than any Operative Document) prior to the
date of this Agreement, written or oral, between or among any
of the parties hereto relating to the transactions contemplated
hereby and thereby.
17.10 Limitation of Liability of Grantor Trustee,
Indenture Trustee and Pass Through Trustee. (a) It is
expressly understood and agreed by and among all of the parties
hereto that, except as otherwise expressly provided herein or
in any other Operative Document (other than the Trust
Agreement), (i) this Agreement is executed and delivered by the
Grantor Trustee not in its or his individual capacity but
solely as trustee under the Trust Agreement in the exercise of
the power and authority conferred and vested in it or him as
such Grantor Trustee, (ii) certain of the representations,
undertakings and agreements made herein by the Grantor Trustee
are not personal representations, undertakings and agreements,
but are binding only on the Trust Estate and the Grantor
Trustee, as trustee, (iii) except as set forth in the proviso
to this sentence, nothing herein contained shall be construed
as creating any liability of the Trust Company or Xxxxxxxx or
any incorporator or any past, present or future subscriber to
the capital stock of, or stockholder, officer or director of
the Trust Company to perform any covenant, whether express or
implied, contained herein, all such liability, if any, being
expressly waived by each of the other parties hereto and by any
Person claiming by, through or under any such party, and (iv)
so far as the Grantor Trustee is concerned, each of the other
parties hereto and any Person claiming by, through or under any
such party shall (other than with respect to Claims arising
from the willful misconduct or gross negligence of the Grantor
Trustee or the failure of the Corporate Grantor Trustee to
distribute funds in accordance with the terms of the Operative
Documents) look solely to the Trust Estate and the Indenture
Estate for the performance of any obligation under any of the
instruments referred to herein; provided, however, that
notwithstanding anything in this Section 17.10 to the contrary,
the Trust Company and Xxxxxxxx, shall be liable (A) each in its
or his individual capacity and as Grantor Trustee to the Owner
Participant as expressly set forth in the Trust Agreement, (B)
each in its or his individual capacity, in respect of its or
his representations, warranties and agreements made in its or
his individual capacity as expressly set forth herein
(including, without limitation, Sections 8 and 11) or in any
other Operative Document to which it or he is a party or in any
Officer's Certificate of the Trust Company, delivered pursuant
hereto, and (C) each in its or his individual capacity for the
consequences of its or his gross negligence or willful
misconduct or its or his failure to distribute funds in
accordance with the terms of the Operative Documents
(including, without limitation, willful breach of contract)
with respect to any Grantor Trustee Document or Operative
Document to which it or he is a party.
(b) It is expressly understood and agreed by and
among all of the parties hereto that, except as otherwise
expressly provided herein or in any other Operative Document
(including, without limitation, subsection (c) of this Section
17.10), (i) this Agreement is executed and delivered by The
Bank of New York and Xxxxx not in its or his individual
capacity but solely as trustee under the Indenture in the
exercise of the power and authority conferred and vested in it
as such Indenture Trustee, (ii) certain of the representations,
undertakings and agreements made herein by the Indenture
Trustee are not personal representations, undertakings and
agreements, but are binding only on the Indenture Trustee, as
Trustee, (iii) except as set forth in the proviso to this
sentence, nothing herein contained shall be construed as
creating any liability of Xxxxx or The Bank of New York or any
incorporator or any past, present or future subscriber to the
capital stock of, or stockholder, officer or director of, The
Bank of New York to perform any covenant, whether express or
implied, contained herein, all such liability, if any, being
expressly waived by each of the other parties hereto and by any
Person claiming by, through or under any such party, and (iv)
so far as the Indenture Trustee is concerned, each of the other
parties hereto and any Person claiming by, through or under any
such party shall (other than with respect to Claims arising
from the willful misconduct or gross negligence of the
Indenture Trustee and for failure of the Corporate Indenture
Trustee to distribute funds in accordance with the terms of the
Operative Documents) look solely to the Indenture Trustee, as
trustee for the performance of any obligation under any of the
instruments referred to herein; provided, however, that
notwithstanding anything in this Section 17.10 to the contrary,
The Bank of New York and Xxxxx shall be liable (A) each in its
or his individual capacity, in respect of its or his
representations, warranties and agreements made in its
individual capacity as expressly set forth herein (including,
without limitation, in Sections 9 and 11) or in any other
Operative Document to which it or he is a party or in any
Officer's Certificate of The Bank of New York, made in its
individual capacity delivered pursuant hereto, and (B) in its
or his individual capacity for the consequences of its or his
gross negligence or willful misconduct and for its or his
failure to use ordinary care to disburse funds in accordance
with any Operative Document to which it or he is a party.
(c) It is expressly understood and agreed by and
among all of the parties hereto that, except as otherwise
expressly provided herein (including, without limitation,
subsection (b) of this Section 17.10), or in the Pass Through
Trust Agreement, (i) this Agreement is executed and delivered
by The Bank of New York, not in its individual capacity but
solely as trustee under the Pass Through Trust Agreement in the
exercise of the power and authority conferred and vested in it
as the Pass Through Trustee, (ii) certain of the
representations, undertakings and agreements made herein by the
Pass Through Trustee are not personal representations,
undertakings and agreements, but are binding only on the Pass
Through Trustee, as trustee, (iii) except as set forth in the
proviso to this sentence, nothing herein contained shall be
construed as creating any liability of The Bank of New York, or
any incorporator or any past, present or future subscriber to
the capital stock of, or stockholder, officer or director of,
The Bank of New York, to perform any covenant, whether express
or implied, contained herein, all such liability, if any, being
expressly waived by each of the other parties hereto and by any
Person claiming by, through or under any such party, and (iv)
so far as the Pass Through Trustee is concerned, each of the
other parties hereto and any Person claiming by, through or
under any such party shall (other than with respect to Claims
arising from the willful misconduct or negligence of the Pass
Through Trustee and for its failure to distribute funds in
accordance with the terms of the Pass Through Trust Agreement)
look solely to the Pass Through Trustee, as trustee for the
performance of any obligation under any of the instruments
referred to herein; provided, however, that notwithstanding
anything in this Section 17.10 to the contrary, The Bank of New
York, shall be liable (A) in its individual capacity, in
respect of the representations, warranties and agreements of
the Pass Through Trustee made in its individual capacity as
expressly set forth herein (including, without limitation, in
Sections 7 and 11) or in the Pass Through Trust Agreement or in
any Officer's Certificate made in its individual capacity
delivered pursuant hereto, and (8) in its individual capacity
for the consequences of its own negligence or willful
misconduct and for its failure to use ordinary care to disburse
funds in accordance with the Pass Through Trust Agreement.
17.11 Jurisdiction; Service of Process; Waiver of
Jury Trial. Any legal action or proceeding with respect to
this Agreement or any other Operative Document to which any
party hereto is a signatory or against any such party or
against the Indenture Estate or Trust Estate may be brought, at
the option of any such party, in any of the courts in the State
of New York or the Federal courts of the United States of
America located in The City of New York, and each party hereto
hereby unconditionally accepts the nonexclusive jurisdiction of
the aforesaid courts, expressly waiving any other jurisdiction
to which any such party may be entitled by reason of its
present and future domicile. Each party hereto irrevocably
waives any objection it may now or hereafter have to the laying
of venue of any such action or proceeding in any of the
aforesaid courts and any claim it may now or hereafter have
that any such action or proceeding has been brought in an
inconvenient forum. Each party hereto further irrevocably
consents to the service of process out of any of the aforesaid
courts in any such action or proceeding by the mailing of
copies thereof by registered or certified mail to such party's
address for notices specified herein. Nothing herein shall
affect the right to serve process in any other manner permitted
by law. Each party hereto hereby waives any right to trial by
jury in any suit, action or proceeding arising out of any
Operative Document.
17.12 Instructions. By their respective execution
and delivery of this Agreement, each of the Owner Participant
and the Pass Through Trustee hereby instructs the Grantor
Trustee and the Indenture Trustee to execute and deliver this
Agreement.
IN WITNESS WHEREOF, the parties hereto have each
caused this Agreement to be duly executed as of the date first
above written.
LESSEE: ENSERCH EXPLORATION, INC.
By: /s/ X. X. Xxxxx
Name: X. X. Xxxxx
Title: Vice President, Finance
and Treasurer
OWNER PARTICIPANT: XXXXXX PROJECT, L.L.C.
By: /s/ X. X. Xxxxxxxx
Name: M. C. Buchanan
Title: Vice President
CORPORATE GRANTOR TRUSTEE: WILMINGTON TRUST COMPANY, not
in its individual capacity,
except as provided herein, but
solely as Corporate Grantor
Trustee
By: /s/ Xxxxxx X. Xxxxxxxx
Name: Xxxxxx X. Xxxxxxxx
Title: Vice President
INDIVIDUAL GRANTOR TRUSTEE: XXXXXX X. XXXXXXXX, not in his
individual capacity, except as
provided herein, but solely as
Individual Grantor Trustee
/s/ Xxxxxx X. Xxxxxxxx
CORPORATE INDENTURE THE BANK OF NEW YORK, not in
TRUSTEE: its individual capacity,
except as provided herein, but
solely as Corporate Indenture
Trustee
By: /s/ Xxxxxxx X. Xxxxxxxxx
Name: Xxxxxxx X. Xxxxxxxxx
Title: Assistant Vice President
INDIVIDUAL INDENTURE XXXXXXXXX X. XXXXX, not in his
TRUSTEE: individual capacity, except as
provided herein, but solely as
Individual Indenture Trustee
/s/ Xxxxxxxxx X. Xxxxx
PASS THROUGH TRUSTEE: THE BANK OF NEW YORK, not in
its individual capacity, except
as provided herein, but solely
as Pass Through Trustee
By: /s/ Xxxxxxx X. Xxxxxxxxx
Name: Xxxxxxx X. Xxxxxxxxx
Title: Vice President
