0000950129-01-503624.txt : 20011029
0000950129-01-503624.hdr.sgml : 20011029
ACCESSION NUMBER: 0000950129-01-503624
CONFORMED SUBMISSION TYPE: 8-K
PUBLIC DOCUMENT COUNT: 9
CONFORMED PERIOD OF REPORT: 20011021
ITEM INFORMATION: Other events
ITEM INFORMATION: Financial statements and exhibits
FILED AS OF DATE: 20011024
FILER:
COMPANY DATA:
COMPANY CONFORMED NAME: UNIVERSAL COMPRESSION INC
CENTRAL INDEX KEY: 0001057233
STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-EQUIPMENT RENTAL & LEASING, NEC [7359]
IRS NUMBER: 741282680
STATE OF INCORPORATION: TX
FISCAL YEAR END: 0331
FILING VALUES:
FORM TYPE: 8-K
SEC ACT: 1934 Act
SEC FILE NUMBER: 333-48279
FILM NUMBER: 1765579
BUSINESS ADDRESS:
STREET 1: 4440 BRITTMOORE RD
CITY: HOUSTON
STATE: TX
ZIP: 77041
BUSINESS PHONE: 7134664103
MAIL ADDRESS:
STREET 1: 4440 BRITTMOORE RD
CITY: HOUSTON
STATE: TX
ZIP: 77041
FILER:
COMPANY DATA:
COMPANY CONFORMED NAME: UNIVERSAL COMPRESSION HOLDINGS INC
CENTRAL INDEX KEY: 0001057234
STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-EQUIPMENT RENTAL & LEASING, NEC [7359]
IRS NUMBER: 133989167
STATE OF INCORPORATION: DE
FISCAL YEAR END: 0331
FILING VALUES:
FORM TYPE: 8-K
SEC ACT: 1934 Act
SEC FILE NUMBER: 001-15843
FILM NUMBER: 1765580
BUSINESS ADDRESS:
STREET 1: 4440 BRITTMOORE RD
CITY: HOUSTON
STATE: TX
ZIP: 77041
BUSINESS PHONE: 7134664103
MAIL ADDRESS:
STREET 1: 4440 BRITTMOORE RD
CITY: HOUSTON
STATE: TX
ZIP: 77041
8-K
1
h91556e8-k.txt
UNIVERSAL COMPRESSION HOLDINGS, INC.
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
--------------------------
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): October 24, 2001
UNIVERSAL COMPRESSION HOLDINGS, INC.
UNIVERSAL COMPRESSION, INC.
-----------------------------------------------------------------
(Exact names of registrants as specified in their charters)
DELAWARE 001-15843 13-3989167
TEXAS 333-48279 74-1282680
(States or other jurisdictions (Commission File (IRS Employer
of incorporation) Numbers) Identification Nos.)
4440 BRITTMOORE ROAD, HOUSTON, TEXAS 77041
(Address of principal executive offices) (Zip Code)
(713) 335-7000
(Registrants' telephone number, including area code)
Item 5. Other Events and Regulation FD Disclosure
On October 23, 2001, Universal Compression, Inc. (a wholly owned
subsidiary of Universal Compression Holdings, Inc., collectively, the
"Company"), and its subsidiaries, sold $122 million of compression equipment to
BRL Universal Equipment 2001 A, L.P. and leased the equipment back under its
existing operating lease facility. BRL Universal Equipment 2001 A., L.P. and BRL
Universal Equipment Corp (collectively, "BRL") raised the proceeds to purchase
the equipment through the issuance of $100 million of 8 7/8% Senior Secured
Notes due 2008, additional borrowings under its term loan and the proceeds of an
additional equity investment. The Company will use the net proceeds from the
sale of the compression equipment to repay all of the outstanding indebtedness
under its revolving credit facility with the remaining proceeds used to repay a
portion of the obligations under its asset-backed securitization operating lease
facility and/or for other indebtedness and for general corporate purposes.
The notes issued by BRL were not registered under the Securities
Act of 1933 or applicable state securities laws and may not be offered or sold
in the United States absent registration or an applicable exemption from
registration requirements. This communication shall not constitute an offer to
sell or the solicitation of an offer to buy the notes.
Statements about the Company's outlook and all other statements in this
Report other than historical facts are forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995. These
forward-looking statements rely on a number of assumptions concerning future
events and are subject to a number of uncertainties and factors, many of which
are beyond the Company's control, that could cause its actual results to differ
materially from such statements. While the Company believes that the assumptions
concerning future events are reasonable, there are inherent difficulties in
predicting certain important factors that could impact our future performance.
Such risks and uncertainties include, but are not limited to, (1) failure to
consummate acquisitions or integrate acquired businesses, (2) conditions in the
oil and gas industry, including the demand for natural gas as well as impacts
from the price of natural gas and oil, (3) competition among the various
providers of contract compression services, (4) changes in safety and
environmental regulations pertaining to the production and transportation of
natural gas, (5) changes in economic or political conditions in the markets in
which the Company operates, (6) acts of war or terrorism or governmental or
military responses thereto, (7) introduction of competing technologies by other
companies, (8) the ability to retain and grow our customer base, (9) employment
workforce factors, including loss of key employees, and (10) liability claims
related to the use of the Company's products and services. These factors, when
applicable, are discussed in the Company's filings with the Securities and
Exchange Commission, copies of which are available to the public. The Company
disclaims any intention or obligation to revise any forward-looking statements,
whether as a result of new information, future events, or otherwise.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
(c) Exhibits
Exhibit No. Description
----------- -----------
4.1 First Supplemental Indenture dated as of September 11,
2001, among BRL Universal Equipment 2001 A, L.P. and BRL
Universal Equipment Corp., as Issuers, and The Bank of New
York, as Trustee
4.2 Registration Rights Agreement dated as of October 23, 2001,
among BRL Universal Equipment 2001 A, L.P., and BRL
Universal Equipment Corp., as Issuer, Universal Compression
Holdings, Inc. and Universal Compression, Inc., as Company,
Deutsche Banc Alex. Brown Inc., First Union Securities,
Inc., Banc One Capital Markets, Inc. and Scotia Capital
(USA), Inc. as Initial Purchasers
10.1 First Amendment to Equipment Lease Agreement dated as of
October 15, 2001 between BRL Universal Equipment 2001 A,
L.P., as Lessor, and Universal Compression, Inc., as Lessee
10.2 First Amended and Restated Participation Agreement, dated
as of October 15, 2001, among Universal Compression, Inc.,
as Lessee, Universal Compression Holdings, Inc., as
Guarantor, BRL Universal Compression Equipment 2001 A,
L.P., as Lessor, the financial institutions listed on the
signature pages as Tranche B Lenders, The Bank of New York,
not in its individual capacity but as Indenture Trustee,
Paying Agent, Transfer Agent and Registrar for the Tranche
A Noteholders, BRL Universal Equipment Management, Inc., as
Lessor General Partner, Bankers Trust Company, as
Administrative Agent and Collateral Agent for the Tranche B
Lenders and Indenture Trustee on behalf of the Tranche A
Noteholders, Deutsche Banc Alex. Brown Inc., as Arranger,
The Bank of Nova Scotia, as Syndicate Agent for Tranche B
Lenders, Bank One, N.A., as Documentation Agent for Tranche
B Lenders, and First Union National Bank, as Managing Agent
10.3 Participation Agreement Supplement No. 1, dated as of
October 23, 2001, among Universal Compression, Inc., as
Lessee, Universal Compression Holdings, Inc., as Guarantor,
BRL Universal Equipment 2001 A, L.P., as Lessor, , The Bank
of New York, not in its individual capacity but as
Indenture Trustee for the Tranche A Noteholders
10.4 First Amendment to Tranche B Loan Agreement, dated as of
October 15, 2001, among BRL Universal Equipment 2001 A,
L.P., Bankers Trust Company, as Administrative Agent for
Tranche B Lenders and as Collateral Agent
10.5 Purchase Agreement, dated October 16, 2001 by and among BRL
Universal Equipment 2001 A, L.P., BRL Universal Equipment
Corp., Deutsche Bank Alex. Brown Inc., First Union
Securities, Inc., Banc One Capital Markets, Inc. and Scotia
Capital (USA) Inc.
10.6 Engagement Letter Supplement, dated October 16, 2001, among
Universal Compression Holdings, Inc., Universal
Compression, Inc. and Deutsche Bank Alex. Brown Inc., First
Union Securities, Inc., Banc One Capital Markets, Inc. and
Scotia Capital (USA) Inc.
Item 9. Regulation FD Disclosure
The Company will release financial results for its fiscal 2002 second
quarter prior to the scheduled earnings release conference call on Thursday,
October 25, 2001. The Company will broadcast a conference call to investors on
Thursday, October 25, 2001, at 10:00 a.m., Central time (11:00 a.m. Eastern
Time), to discuss its second quarter results and other corporate matters.
Persons wishing to listen to the conference call live may do so by logging on to
http://www.videonewswire.com/event.asp?id=1638 at least 15 minutes prior to the
designated start time and following the directions provided there. This will
allow time to install any software needed to access the call. The call also will
be archived for seven days to provide an opportunity to those unable to listen
to the live broadcast.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrants have duly caused this report to be signed on their behalf by the
undersigned hereunto duly authorized.
UNIVERSAL COMPRESSION HOLDINGS, INC.
UNIVERSAL COMPRESSION, INC.
(Registrants)
Date: October 24, 2001 By: /s/ RICHARD W. FITZGERALD
---------------------------------
Richard W. FitzGerald
Senior Vice President and
Chief Financial Officer
EXHIBIT INDEX
Exhibit No. Description
----------- -----------
4.1 First Supplemental Indenture dated as of September 11,
2001, among BRL Universal Equipment 2001 A, L.P. and BRL
Universal Equipment Corp., as Issuers, and The Bank of New
York, as Trustee
4.2 Registration Rights Agreement dated as of October 23, 2001,
among BRL Universal Equipment 2001 A, L.P., and BRL
Universal Equipment Corp., as Issuer, Universal Compression
Holdings, Inc. and Universal Compression, Inc., as Company,
Deutsche Banc Alex. Brown Inc., First Union Securities,
Inc., Banc One Capital Markets, Inc. and Scotia Capital
(USA), Inc. as Initial Purchasers
10.1 First Amendment to Equipment Lease Agreement dated as of
October 15, 2001 between BRL Universal Equipment 2001 A,
L.P., as Lessor, and Universal Compression, Inc., as Lessee
10.2 First Amended and Restated Participation Agreement, dated
as of October 15, 2001, among Universal Compression, Inc.,
as Lessee, Universal Compression Holdings, Inc., as
Guarantor, BRL Universal Compression Equipment 2001 A,
L.P., as Lessor, the financial institutions listed on the
signature pages as Tranche B Lenders, The Bank of New York,
not in its individual capacity but as Indenture Trustee,
Paying Agent, Transfer Agent and Registrar for the Tranche
A Noteholders, BRL Universal Equipment Management, Inc., as
Lessor General Partner, Bankers Trust Company, as
Administrative Agent and Collateral Agent for the Tranche B
Lenders and Indenture Trustee on behalf of the Tranche A
Noteholders, Deutsche Banc Alex. Brown Inc., as Arranger,
The Bank of Nova Scotia, as Syndicate Agent for Tranche B
Lenders, Bank One, N.A., as Documentation Agent for Tranche
B Lenders, and First Union National Bank, as Managing Agent
10.3 Participation Agreement Supplement No. 1, dated as of
October 23, 2001, among Universal Compression, Inc., as
Lessee, Universal Compression Holdings, Inc., as Guarantor,
BRL Universal Equipment 2001 A, L.P., as Lessor, , The Bank
of New York, not in its individual capacity but as
Indenture Trustee for the Tranche A Noteholders
10.4 First Amendment to Tranche B Loan Agreement, dated as of
October 15, 2001, among BRL Universal Equipment 2001 A,
L.P., Bankers Trust Company, as Administrative Agent for
Tranche B Lenders and as Collateral Agent
10.5 Purchase Agreement, dated October 16, 2001 by and among BRL
Universal Equipment 2001 A, L.P., BRL Universal Equipment
Corp., Deutsche Bank Alex. Brown Inc., First Union
Securities, Inc., Banc One Capital Markets, Inc. and Scotia
Capital (USA) Inc.
10.6 Engagement Letter Supplement, dated October 16, 2001, among
Universal Compression Holdings, Inc., Universal
Compression, Inc. and Deutsche Bank Alex. Brown Inc., First
Union Securities, Inc., Banc One Capital Markets, Inc. and
Scotia Capital (USA) Inc.
EX-4.1
3
h91556ex4-1.txt
FIRST SUPPLEMENTAL INDENTURE - 09-11-2001
EXHIBIT 4.1
================================================================================
BRL UNIVERSAL EQUIPMENT 2001 A, L.P.
BRL UNIVERSAL EQUIPMENT CORP.
as Issuers
and
THE BANK OF NEW YORK,
as Trustee
FIRST SUPPLEMENTAL INDENTURE
Dated as of September 11, 2001
8 7/8% Senior Secured Notes due 2008
================================================================================
THIS FIRST SUPPLEMENTAL INDENTURE, dated as of September 11, 2001 (this
"First Supplemental Indenture"), is made and entered into by and between BRL
Universal Equipment 2001 A, L.P. ("BRL"), BRL Universal Equipment Corp. ("BRL
Corp." and together with BRL, the "Issuers") and The Bank of New York, as
trustee (the "Trustee"), under an Indenture dated as of February 9, 2001,
between the Issuers, as issuers, and the Trustee, as trustee (the "Original
Indenture"). All capitalized terms used in this First Supplemental Indenture
that are defined in the Original Indenture, either directly or by reference
therein, have the meanings assigned to them therein, except to the extent such
terms are defined in this First Supplemental Indenture or the context clearly
requires otherwise.
WHEREAS, Section 8.01 of the Original Indenture provides that the
Issuers and the Trustee may amend, waive or supplement the Original Indenture
to, (i) to cure any ambiguity, defect or inconsistency , provided that the same
does not adversely affect the rights of any Holder in any material respect; (ii)
to provide for uncertificated Notes in addition to certificated Notes; (iii) to
comply with any requirements of the Commission in order to effect or maintain
the qualification of the Original Indenture under the TIA; or (iv) to make any
change that would provide any additional benefit or rights to the Holders or
that does not adversely affect the rights of any Holder in any material respect,
without notice to or the consent of any Holder, upon the request of each Issuer
accompanied by a Board Resolution of each Issuer and the documents set forth in
Section 8.06 of the Original Indenture;
WHEREAS, the Board of Directors of the Issuers have adopted resolutions
authorizing and approving the amendment of Section 1.01 of the Original
Indenture for the purpose of (i) curing any ambiguity, defect or inconsistency
that does not adversely affect the rights of any Holder in any material respect
and (ii) to make changes that do not adversely affect the rights of any Holder
in any material respect, as more particularly described in this First
Supplemental Indenture, and the Issuers and the Trustee are executing and
delivering this First Supplemental Indenture to provide for such amendment;
WHEREAS, the Trustee has received the items listed in Section 8.06 and
Section 10.04 of the Original Indenture;
WHEREAS, the Issuers have determined that the amendments described
below do not adversely affect the interests of the Holders in any material
respect;
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties to this First
Supplemental Indenture hereby agree as follows:
ARTICLE I
AMENDMENTS TO ORIGINAL INDENTURE
Section 1.01 Amendments to Section 1.01. Section 1.01 of the Original
Indenture is hereby amended as follows:
(a) The definition of "Initial Notes" is hereby amended in its entirety
to read as follows:
"Initial Notes" means any (i) Notes issued under this
Indenture for so long as such securities constitute Restricted
Securities and (ii) any Notes issued under this Indenture that have
been registered with the Commission pursuant to an effective
registration statement filed by the Issuer, UCI and UCH and were not
issued as Exchange Notes."
(b) The definition of "Unrestricted Global Note" is hereby amended in
its entirety to read as follows:
"Unrestricted Global Note" means a permanent Global Note in
the form of Exhibit B attached hereto that bears the Global Note Legend
and that has the "Schedule of Exchanges of Interests in the Global
Note" attached thereto and that is deposited with or on behalf of and
registered in the name of the Depositary, representing a series of
Notes that do not bear the Private Placement Legend."
(c) The definition of "Registration Rights Agreement" is hereby amended
in its entirety to read as follows:
"Registration Rights Agreement" means (i) the Registration
Rights Agreement dated as of February 9, 2001 among the Issuers, UCI,
UCH and the Initial Purchasers, as such agreement may be amended,
supplemented, or modified in accordance with the terms thereof, and
(ii) any other registration rights agreement in form similar to the
Registration Rights Agreement defined in clause (i) relating to Initial
Notes that are not subject to the Registration Rights Agreement defined
in clause (i), as such agreement may be amended, supplemented, or
modified in accordance with the terms thereof,."
(d) The definition of "Issue Date" is hereby amended in its entirety to
read as follows:
"Issue Date" means (i) February 9, 2001, with respect to each
of Section 2.02, the Notes issued on February 9, 2001 and the
definitions of "BRL Term Loan Agreement," "Equipment Lease Agreement"
and "Participation Agreement," and (ii) the date of issuance of any
Notes other than the Notes referred to in (i) herein."
(e) The definitions of "BRL Term Loan Agreement" and "Limited
Partnership Agreement" are each amended by adding at the end thereof:
",as such agreement may amended, supplemented or modified in
accordance with the terms thereof."
ARTICLE II
GENERAL PROVISIONS
Section 2.01. Ratification of Indenture. The Original Indenture is in
all respects acknowledged, ratified and confirmed, and shall continue in full
force and effect in accordance with the terms thereof and as amended and
supplemented by this First Supplemental Indenture. The Original Indenture and
this First Supplemental Indenture shall be read, taken and construed as one and
the same instrument. All references to the Original Indenture in the Original
Indenture or in any other agreement, document or instrument delivered in
connection therewith or pursuant thereto shall be deemed to refer to the
Original Indenture as amended and supplemented by this First Supplemental
Indenture.
Section 2.02. Effect of Headings. The Article and Section headings in
this First Supplemental Indenture are for convenience only and shall not affect
the construction of this First Supplemental Indenture.
Section 2.03. Severability. In case any one or more of the provisions
in this First Supplemental Indenture shall be held invalid, illegal or
unenforceable, in any respect for any reason, the validity, legality and
enforceability of any such provision in every other respect and of the remaining
provisions
2
shall not in any way be affected or impaired thereby, it being intended that all
of the provisions hereof shall be enforceable to the full extent permitted by
law.
Section 2.04. Governing Law. This First Supplemental Indenture and the
Notes shall be governed by and construed in accordance with the law of the State
of New York but without giving effect to applicable principles of conflicts of
law.
Section 2.05. Counterparts. This First Supplemental Indenture may be
executed in any number of counterparts, each of which so executed shall be
deemed to be an original, but all such counterparts shall together constitute
the same instrument.
Section 2.06 Trustee Not Responsible for Recitals. The recitals
contained herein shall be taken as statements of the Issuers and the Trustee
assumes no responsibility for their correctness. The Trustee makes no
representations as to the validity or sufficiency of this First Supplemental
Indenture.
[REMAINDER OF THIS PAGE LEFT BLANK INTENTIONALLY;
SIGNATURES APPEAR ON THE FOLLOWING PAGES]
3
SIGNATURES
IN WITNESS WHEREOF, the parties to this First Supplemental Indenture
have caused this First Supplemental Indenture to be duly executed and effective
as of September 11, 2001.
BRL UNIVERSAL EQUIPMENT 2001 A, L.P.
BY: BRL UNIVERSAL EQUIPMENT MANAGEMENT,
INC., ITS GENERAL PARTNER
By: /s/ Gregory C. Greene
-----------------------
Gregory C. Greene, President
BRL UNIVERSAL EQUIPMENT CORP.
By: /s/ Gregory C. Greene
---------------------
Gregory C. Greene, President
THE BANK OF NEW YORK, AS TRUSTEE
By: /s/ Remo J. Reale
-----------------
Remo J. Reale, Vice President
4
EX-4.2
4
h91556ex4-2.txt
REGISTRATION RIGHTS AGREEMENT - 10-23-2001
EXHIBIT 4.2
================================================================================
REGISTRATION RIGHTS AGREEMENT
Dated as of
October 23, 2001
Among
BRL UNIVERSAL EQUIPMENT 2001 A, L. P. and
BRL UNIVERSAL EQUIPMENT CORP.
as Issuer
UNIVERSAL COMPRESSION HOLDINGS, INC. and
UNIVERSAL COMPRESSION, INC.,
as Company
and
DEUTSCHE BANC ALEX. BROWN INC.,
FIRST UNION SECURITIES, INC.
BANC ONE CAPITAL MARKETS, INC.,
SCOTIA CAPITAL (USA), INC.
as Initial Purchasers
================================================================================
$100 Million Aggregate Principal Amount
8 7/8% SENIOR SECURED NOTES DUE 2008
TABLE OF CONTENTS
Page
1. Definitions..........................................................1
2. Exchange Offer.......................................................5
3. Shelf Registration...................................................8
4. Additional Interest..................................................9
5. Registration Procedures.............................................11
6. Registration Expenses...............................................21
7. Indemnification.....................................................22
8. Rule 144 and 144A...................................................25
9. Underwritten Registrations..........................................26
10. Miscellaneous.......................................................26
(a) No Inconsistent Agreements.................................26
(b) Adjustments Affecting Registrable Notes....................26
(c) Amendments and Waivers.....................................26
(d) Notices....................................................27
(e) Successors and Assigns.....................................28
(f) Counterparts...............................................29
(g) Headings...................................................29
(h) Governing Law..............................................29
(i) Severability...............................................29
(j) Securities Held by the Issuer or the Company or
Its Affiliates...........................................29
(k) Third Party Beneficiaries..................................30
(l) Entire Agreement...........................................30
-i-
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (the "Agreement") is dated
as of October 23, 2001 by and among BRL Universal Equipment 2001 A, L.P., a
Delaware limited partnership ("BRL") and BRL Universal Equipment Corp., a
Delaware corporation ("BRL Corp.", and together with BRL, the "Issuer"),
Universal Compression, Inc., a Texas corporation ("UCI"), Universal Compression
Holdings, Inc., a Delaware corporation ("UCH", and together with UCI, the
"Company"), Deutsche Banc Alex. Brown Inc., First Union Securities, Inc., Banc
One Capital Markets, Inc. and Scotia Capital (USA), Inc. (together, the "Initial
Purchasers").
This Agreement is entered into in connection with the Purchase
Agreement, dated as of October 16, 2001 by and among the Issuer and the Initial
Purchasers (the "Purchase Agreement") that provides for the sale by the Issuer
to the Initial Purchasers of $100 million aggregate principal amount of the
Issuer's 8-7/8% Senior Secured Notes due 2008 (the "Notes"). In order to induce
the Initial Purchasers to enter into the Purchase Agreement, the Issuer and the
Company have agreed to provide the registration rights set forth in this
Agreement for the benefit of the Initial Purchasers and any subsequent holder or
holders of notes. The execution and delivery of this Agreement is a condition to
the Initial Purchasers' obligation to purchase the Notes under the Purchase
Agreement.
The parties hereby agree as follows:
1. Definitions
As used in this Agreement, the following terms shall have the
following meanings:
Advice: See the last paragraph of Section 5 hereof.
Agreement: See the first introductory paragraph hereto.
Applicable Period: See Section 2(b) hereof.
Business Day: Any day except a Saturday, a Sunday, or a day on
which banking institutions in New York, New York are required or authorized by
law or other governmental action to be closed.
Closing Date: The Closing Date as defined in the Purchase
Agreement.
Company: See the first introductory paragraph hereto.
-2-
Effectiveness Date: The date that is 180 days after the Issue
Date, provided, however, that with respect to any shelf registration, its
effectiveness date should be the 90th day after the Filing Date with respect
thereto.
Effectiveness Period: See Section 3(a) hereof.
Event Date: See Section 4(b) hereof.
Exchange Act: The Securities Exchange Act of 1934, as amended,
and the rules and regulations of the SEC promulgated thereunder.
Exchange Notes: See Section 2(a) hereof.
Exchange Offer: See Section 2(a) hereof.
Exchange Registration Statement: See Section 2(a) hereof.
Filing Date: (A) If no Exchange Offer Registration Statement
has been filed by the Issuers and the Company pursuant to this Agreement, the
90th day after the Issue Date; and (B) with respect to a Shelf Registration
Statement, the 90th day after the delivery of a Shelf Notice as required
pursuant to Section 2(c) hereof.
Holder: Any holder of a Registrable Note or Registrable
Notes.
Indemnified Person: See Section 7(c) hereof.
Indemnifying Person: See Section 7(c) hereof.
Indenture: The Indenture, dated as of February 9, 2001 between
the Issuer and The Bank of New York, as Trustee, pursuant to which the Notes are
being issued, as amended or supplemented from time to time in accordance with
the terms thereof.
Initial Purchasers: See the first introductory paragraph
hereto.
Inspectors: See Section 5(o) hereof.
Issue Date: The date on which the Notes were sold to the
Initial Purchasers pursuant to the Purchase Agreement.
NASD: See Section 5(t) hereof.
Notes: See the second introductory paragraph hereto.
-3-
Participant: See Section 7(a) hereof.
Participating Broker-Dealer: See Section 2(b) hereof.
Participation Agreement: See the second introductory paragraph
hereto.
Person: An individual, trustee, corporation, partnership,
limited liability company, joint stock company, trust, unincorporated
association, union, business association, firm or other legal entity.
Private Exchange: See Section 2(b) hereof.
Private Exchange Notes: See Section 2(b) hereof.
Prospectus: The prospectus included in any Registration
Statement (including, without limitation, any prospectus subject to completion
and a prospectus that includes any information previously omitted from a
prospectus filed as part of an effective registration statement in reliance upon
Rule 430A promulgated under the Securities Act), as amended or supplemented by
any prospectus supplement, and all other amendments and supplements to the
Prospectus, with respect to the terms of the offering of any portion of the
Registrable Notes covered by such Registration Statement including
post-effective amendments, and all material incorporated by reference or deemed
to be incorporated by reference in such Prospectus.
Purchase Agreement: See the second introductory paragraph
hereto.
Records: See Section 5(o) hereof.
Registrable Notes: Each Note upon original issuance of the
Notes and at all times subsequent thereto, each Exchange Note as to which
Section 2(c)(v) hereof is applicable upon original issuance and at all times
subsequent thereto and each Private Exchange Note upon original issuance thereof
and at all times subsequent thereto, until in the case of any such Note,
Exchange Note or Private Exchange Note, as the case may be, the earliest to
occur of (i) a Registration Statement (other than, with respect to any Exchange
Note as to which Section 2(c)(v) hereof is applicable, the Exchange Registration
Statement) covering such Note, Exchange Note or Private Exchange Note, as the
case may be, has been declared effective by the SEC and such Note, Exchange Note
or Private Exchange Note, as the case may be, has been disposed of in accordance
with such effective Registration Statement, (ii) such Note, Exchange Note or
Private Exchange Note, as the case may be, is sold in compliance with Rule 144,
(iii) such Note has been exchanged for an Exchange Note or Exchange Notes
pursuant to an Exchange Offer and is entitled to be resold without complying
with the prospectus delivery requirements of the Securities Act, (iv) such Note,
Exchange Note or Private
-4-
Exchange Note, as the case may be, ceases to be outstanding for purposes of the
Indenture or (v) such Note, Exchange Note or Private Exchange Note, as the case
may be, in the reasonable opinion of the Issuer and the Company, may be resold
without restriction pursuant to Rule 144(k) under the Securities Act.
Registration Statement: Any registration statement of the
Company under the Securities Act, including, but not limited to, the Exchange
Registration Statement and any registration statement filed in connection with a
Shelf Registration, filed with the SEC pursuant to the provisions of this
Agreement, including the Prospectus, amendments and supplements to such
registration statement, including post-effective amendments, all exhibits and
all material incorporated by reference or deemed to be incorporated by reference
in such registration statement.
Rule 144: Rule 144 promulgated under the Securities Act, as
such Rule may be amended from time to time, or any similar rule (other than Rule
144A) or regulation hereafter adopted by the SEC.
Rule 144A: Rule 144A promulgated under the Securities Act, as
such Rule may be amended from time to time, or any similar rule (other than Rule
144) or regulation hereafter adopted by the SEC.
Rule 415: Rule 415 promulgated under the Securities Act, as
such Rule may be amended from time to time, or any similar rule or regulation
hereafter adopted by the SEC.
SEC: The Securities and Exchange Commission.
Securities Act: The Securities Act of 1933, as amended, and
the rules and regulations of the SEC promulgated thereunder.
Shelf Notice: See Section 2(c) hereof.
Shelf Registration: See Section 3(a) hereof.
TIA: The Trust Indenture Act of 1939, as amended.
Trustee: The trustee under the Indenture and, if existent, the
trustee under any indenture governing the Exchange Notes and Private Exchange
Notes (if any).
Underwritten registration or underwritten offering: A
registration in which securities of the Issuer are sold to an underwriter for
reoffering to the public.
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2. Exchange Offer
(a) The Issuer and the Company shall file with the SEC a
registration statement, to the extent not prohibited by any applicable law or
applicable interpretation of the staff of the SEC, no later than the Filing Date
an offer to exchange (the "Exchange Offer") any and all of the Registrable Notes
(other than the Private Exchange Notes, if any) for a like aggregate principal
amount of debt securities of the Issuer that are identical in all material
respects to the Notes (the "Exchange Notes") (and that are entitled to the
benefits of the Indenture or a trust indenture that is identical in all material
respects to the Indenture (other than such changes to the Indenture or any such
identical trust indenture as are necessary to comply with any requirements of
the SEC to effect or maintain the qualification thereof under the TIA) and that,
in either case, has been qualified under the TIA), except that the Exchange
Notes (other than Private Exchange Notes, if any) shall have been registered
pursuant to an effective Registration Statement under the Securities Act and
shall contain no restrictive legend thereon. The Exchange Offer shall be
registered under the Securities Act on the appropriate form (the "Exchange
Registration Statement") and shall comply with all applicable tender offer rules
and regulations under the Exchange Act. The Issuer and the Company agree to use
their reasonable best efforts to (x) cause the Exchange Registration Statement
to be declared effective under the Securities Act on or before the Effectiveness
Date; (y) keep the Exchange Offer open for at least 20 business days (or longer
if required by applicable law) after the date that notice of the Exchange Offer
is mailed to Holders; and (z) consummate the Exchange Offer on or prior to the
210th day following the Issue Date. If after such Exchange Registration
Statement is declared effective by the SEC, the Exchange Offer or the issuance
of the Exchange Notes thereunder is interfered with by any stop order,
injunction or other order or requirement of the SEC or any other governmental
agency or court, such Exchange Registration Statement shall be deemed not to
have become effective for purposes of this Agreement, unless such interference
is cured within 5 business days. Each Holder who participates in the Exchange
Offer will be required to represent that any Exchange Notes received by it will
be acquired in the ordinary course of its business, that at the time of the
consummation of the Exchange Offer such Holder will have no arrangement or
understanding with any Person to participate in the distribution of the Exchange
Notes in violation of the provisions of the Securities Act and that such Holder
is not an affiliate of the Issuer or the Company within the meaning of the
Securities Act and is not acting on behalf of any persons or entities who could
not truthfully make the foregoing representations. Upon consummation of the
Exchange Offer in accordance with this Section 2, the provisions of this
Agreement shall continue to apply, mutatis mutandis, solely with respect to
Registrable Notes that are Private Exchange Notes and Exchange Notes held by
Participating Broker-Dealers, and the Issuer and the Company shall have no
further obligation to register Registrable Notes (other than Private Exchange
Notes and other than in respect of any Exchange Notes as to which clause 2(c)(v)
hereof applies) pursuant to Section 3 hereof.
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(b) The Issuer and the Company shall include within the
Prospectus contained in the Exchange Registration Statement a section entitled
"Plan of Distribution," reasonably acceptable to the Initial Purchasers, that
shall contain a summary statement of the positions taken or policies made by the
staff of the SEC with respect to the potential "underwriter" status of any
broker-dealer that is the beneficial owner (as defined in Rule 13d-3 under the
Exchange Act) of Exchange Notes received by such broker-dealer in the Exchange
Offer (a "Participating Broker-Dealer"), whether such positions or policies have
been publicly disseminated by the staff of the SEC or such positions or
policies, represent the prevailing views of the Staff of the SEC. Such "Plan of
Distribution" section shall also expressly permit the use of the Prospectus by
all Persons subject to the prospectus delivery requirements of the Securities
Act, including all Participating Broker-Dealers to the extent permitted by
applicable policies and regulations of the SEC and include a statement
describing the means by which Participating Broker-Dealers may resell the
Exchange Notes.
The Issuer and the Company shall use their reasonable best
efforts to keep the Exchange Registration Statement effective and to amend and
supplement the Prospectus contained therein in order to permit such Prospectus
to be lawfully delivered by all Persons subject to the prospectus delivery
requirements of the Securities Act for such period of time as is necessary to
comply with applicable law in connection with any resale of the Exchange Notes;
provided, however, that such period shall not exceed 180 days after the
consummation of the Exchange Offer (or such longer period if extended pursuant
to the last paragraph of Section 5 hereof) (the "Applicable Period").
If, prior to consummation of the Exchange Offer, the Initial
Purchasers hold any Notes acquired by it and having, or that are reasonably
likely to be determined to have, the status of an unsold allotment in the
initial distribution, the Issuer, upon the written request of the Initial
Purchasers simultaneously with the delivery of the Exchange Notes in the
Exchange Offer, shall issue and deliver to the Initial Purchasers in exchange
(the "Private Exchange") for such Notes held by the Initial Purchasers a like
principal amount of debt securities of the Issuer that are identical in all
material respects to the Exchange Notes (the "Private Exchange Notes") (and that
are issued pursuant to the same indenture as the Exchange Notes), except for the
placement of a restrictive legend on such Private Exchange Notes. The Private
Exchange Notes shall bear the same CUSIP number as the Exchange Notes.
Interest on the Exchange Notes and the Private Exchange Notes
will accrue from the Issue Date.
In connection with the Exchange Offer, the Issuer and the
Company shall:
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(1) mail to each Holder of record a copy of the Prospectus
forming part of the Exchange Registration Statement, together with an
appropriate letter of transmittal and related documents;
(2) utilize the services of a depositary for the Exchange
Offer with an address in the Borough of Manhattan, The City of New
York;
(3) permit Holders to withdraw tendered Notes at any time
prior to the close of business, New York time, on the last business day
on which the Exchange Offer remains open; and
(4) otherwise comply in all material respects with all
applicable laws, rules and regulations.
As soon as practicable after the close of the Exchange Offer
or the Private Exchange, as the case may be, the Issuer and the Company shall:
(1) accept for exchange all Notes properly tendered and not
validly withdrawn pursuant to the Exchange Offer or the Private
Exchange;
(2) deliver to the Trustee for cancellation all Notes so
accepted for exchange; and
(3) cause the Trustee to authenticate and deliver promptly to
each Holder of Notes, Exchange Notes or Private Exchange Notes, as the
case may be, equal in principal amount to the Notes of such Holder so
accepted for exchange.
The Exchange Notes and the Private Exchange Notes may be
issued under (i) the Indenture or (ii) an indenture identical in all material
respects to the Indenture, which in either event shall provide that (1) the
Exchange Notes shall not be subject to the transfer restrictions set forth in
the Indenture and (2) the Private Exchange Notes shall be subject to the
transfer restrictions set forth in the Indenture. The Indenture or such
indenture shall provide that the Exchange Notes, the Private Exchange Notes and
the Notes not exchanged in the Exchange Offer shall vote and consent together on
all matters as one class and that neither the Exchange Notes, the Private
Exchange Notes or such Notes will have the right to vote or consent as a
separate class on any matter.
(c) If (i) the Issuer and the Company are not permitted to
file the Exchange Offer Registration Statement or to consummate the Exchange
Offer because the Exchange Offer is not permitted by any applicable law or in
currently prevailing interpretations of the staff of the Commission or (ii) any
holder of a Note notifies the Issuer and the Company that (A) due to a change in
law or policy it is not entitled to participate in the Exchange Offer, (B) due
-8-
to a change in law or policy it may not resell Exchange Notes acquired by it in
the Exchange Offer to the public without delivering a prospectus and the
prospectus contained in the Exchange Registration Statement is not appropriate
or available for such resales by such holder or (C) it owns Notes (including any
Initial Purchaser that holds Notes as part of an unsold allotment from the
original offering of the Notes) acquired directly from the Issuer or an
affiliate of the Issuer or (iii) any holder of Private Exchange Notes so
requests after the consummation of the Private Exchange or (iv) the Issuer and
the Company have not consummated the Exchange Offer within 210 days after the
Issue Date (each such event referred to in clauses (i) through (iv), a "Shelf
Filing Event"), then the Issuer and the Company shall promptly deliver written
notice thereof (the "Shelf Notice") to the Holders and the Trustee and shall
file a Shelf Registration pursuant to Section 3 hereof.
3. Shelf Registration
If a Shelf Notice is delivered as contemplated by Section 2(c)
hereof, then:
(a) Shelf Registration. The Issuer and the Company shall as
promptly as reasonably practicable file with the SEC a Registration Statement
for an offering to be made on a continuous basis pursuant to Rule 415 covering
all of the Registrable Notes (the "Shelf Registration"). If the Issuer and the
Company shall not have yet filed an Exchange Registration Statement, the Issuer
and the Company shall use their reasonable best efforts to file with the SEC the
Shelf Registration on or prior to the Filing Date. The Shelf Registration shall
be on Form S-1 or another appropriate form permitting registration of such
Registrable Notes for resale by Holders in the manner or manners designated by
them (including, without limitation, one or more underwritten offerings). The
Issuer and the Company shall not permit any securities other than the
Registrable Notes and related securities to be included in the Shelf
Registration.
The Issuer and the Company shall use their reasonable best
efforts to cause the Shelf Registration to be declared effective under the
Securities Act on or prior to the Effectiveness Date and to keep the Shelf
Registration continuously effective under the Securities Act until the date that
is two years (or such shorter period as may be established by any amendment to
the two year period set forth in Rule 144(k) under the Securities Act) from the
Issue Date (the "Effectiveness Period"), or such shorter period ending when all
Registrable Notes covered by the Shelf Registration have been sold in the manner
set forth and as contemplated in the Shelf Registration; provided, however, that
no Holder shall be entitled to be named as a selling securityholder in the Shelf
Registration or to use the Prospectus forming a part thereof for resales of
Registrable Securities unless such Holder has provided the Issuers within 10
Business Days after receipt of a request therefor, with the information required
by Sections 5(v) and 5(w), as applicable.
-9-
(b) Withdrawal of Stop Orders. If the Shelf Registration
ceases to be effective for any reason at any time during the Effectiveness
Period (other than because of the sale of all of the securities registered
thereunder), the Issuer and the Company shall use their reasonable best efforts
to obtain the prompt withdrawal of any order suspending the effectiveness
thereof.
(c) Supplements and Amendments. The Issuer and the Company
shall promptly supplement and amend the Shelf Registration if required by the
rules, regulations or instructions applicable to the registration form used for
such Shelf Registration, if required by the Securities Act, or if reasonably
requested by the Holders of a majority in aggregate principal amount of the
Registrable Notes covered by such Registration Statement or by any underwriter
of such Registrable Notes; provided, that all requesting Holders have provided
the Issuer and the Company with the information required by Section 5(v).
4. Additional Interest
(a) The Issuer and the Company and the Initial Purchasers
agree that the Holders of Registrable Notes will suffer damages if the Issuer
and the Company fail to fulfill their respective obligations under Section 2 or
Section 3 hereof and that it would not be feasible to ascertain the extent of
such damages with precision. Accordingly, the Issuer agrees to pay as liquidated
damages, additional interest on the Notes (the "Additional Interest") under the
circumstances and to the extent as follows (without duplication):
(i) if (A) neither the Exchange Registration Statement nor the Shelf
Registration Statement has been filed with the SEC on or prior to the
Filing Date or (B) notwithstanding that the Issuer and the Company have
consummated or will consummate an Exchange Offer, the Issuer and the
Company are required to file a Shelf Registration Statement and such
Shelf Registration Statement is not filed on or prior to the Filing
Date applicable thereto, then commencing on the day after either such
required filing date, Additional Interest shall accrue on the principal
amount of the Notes at a rate of 0.25% per annum for the first 90 days
immediately following each such filing date, such Additional Interest
rate increasing by an additional 0.25% per annum at the beginning of
each subsequent 90 day period; or
(ii) if (A) neither the Exchange Registration Statement nor the Shelf
Registration Statement has been declared effective on or prior to 180
days after the Issue Date or (B) notwithstanding that the Issuer and
the Company have consummated or will consummate an Exchange Offer, the
Issuer and the Company are required to file a Shelf Registration
Statement and such Shelf Registration Statement is not declared
effective by the SEC on or prior to the 90th day following the date
such Shelf Registration Statement was filed, then, commencing on the
first day after the 180th day
-10-
following the Issue Date or the day after the 90th day such Shelf
Registration Statement was filed, as the case may be, Additional
Interest shall accrue on the principal amount of the Notes at a rate of
0.25% per annum for the first 90 days immediately following such date,
such Additional Interest rate increasing by an additional 0.25% per
annum at the beginning of each subsequent 90-day period; or;
(iii) if (A) the Issuer and the Company have not exchanged the Exchange
Notes for all Notes validly tendered in accordance with the terms of
the Exchange Offer on or prior to the 210th day after the Issue Date or
(B) if applicable, the Shelf Registration Statement has been declared
effective and such Shelf Registration Statement ceases to be effective
at any time prior to the second anniversary of its effective date
(other than after such time as all Notes have been disposed of
thereunder), then Additional Interest shall accrue on the principal
amount of the Notes at a rate of 0.25% per annum for the first 90 days
commencing on (x) the 211th day after the Issue Date, in the case of
(A) above, or (y) the day such Shelf Registration Statement ceases to
be effective in the case of (B) above, such Additional Interest rate by
increasing by an additional 0.25% per annum at the beginning of each
subsequent 90-day period;
provided, however, that the Additional Interest rate on the
Notes may not exceed in the aggregate 1.0% per annum; provided,
further, however, that (1) upon the filing of the Exchange Registration
Statement or a Shelf Registration Statement (in the case of Section
4(a)(i)), (2) upon the effectiveness of the Exchange Registration
Statement or Shelf Registration Statement (in the case of Section
4(a)(ii)), or (3) upon the exchange of Exchange Notes for all Notes
tendered (in the case of Section 4(a)(iii)(A)), or upon the
effectiveness of the Shelf Registration Statement which had ceased to
remain effective (in the case of Section 4(a)(iii)(B)), Liquidated
Damages on the Notes as a result of such Section, as the case may be,
shall cease to accrue and the interest rate borne by the registrable
notes will be reduced to the original interest rate.
(b) The Issuer and the Company shall notify the Trustee within
one business day after each and every date on which an event occurs in respect
of which Additional Interest is required to be paid (an "Event Date"). Any
amounts of Additional Interest due pursuant to (a)(i), (a)(ii) or (a)(iii) of
this Section 4 will be payable in cash semiannually on each February 15 and
August 15 (to the holders of record on February 1 and August 1), commencing with
the first such date occurring after any such Additional Interest commences to
accrue. The amount of Additional Interest will be determined by multiplying the
applicable Additional Interest rate by the principal amount of the Registrable
Notes, multiplied by a fraction, the numerator of which is the number of days
such Additional Interest rate was applicable during such period (determined on
the basis of a 360-day year comprised of twelve 30-day
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months and, in the case of a partial month, the actual number of days elapsed),
and the denominator of which is 360.
5. Registration Procedures
In connection with the filing of any Registration Statement
pursuant to Sections 2 or 3 hereof, the Issuer and the Company shall effect such
registrations to permit the sale of the securities covered thereby in accordance
with the intended method or methods of disposition thereof, and pursuant thereto
and in connection with any Registration Statement filed by the Issuer and the
Company hereunder, the Issuer and the Company shall:
(a) Prepare and file with the SEC on or prior to the Filing
Date, a Registration Statement or Registration Statements as prescribed
by Sections 2 or 3 hereof, and use their reasonable best efforts to
cause each such Registration Statement to become effective and remain
effective as provided herein; provided, however, that, if (1) such
filing is pursuant to Section 3 hereof or (2) a Prospectus contained in
an Exchange Registration Statement filed pursuant to Section 2 hereof
is required to be delivered under the Securities Act by any
Participating Broker-Dealer who seeks to sell Exchange Notes during the
Applicable Period, before filing any Registration Statement or
Prospectus or any amendments or supplements thereto, the Issuer and the
Company shall furnish to and afford the Holders of the Registrable
Notes covered by such Registration Statement or each such Participating
Broker-Dealer, as the case may be, their counsel and the managing
underwriters, if any, a reasonable opportunity to review copies of all
such documents (including copies of any documents to be incorporated by
reference therein and all exhibits thereto) proposed to be filed (in
each case at least two business days prior to such filing). The Issuer
and the Company shall not file any Registration Statement or Prospectus
or any amendments or supplements thereto if the Holders of a majority
in aggregate principal amount of the Registrable Notes covered by such
Registration Statement, or any such Participating Broker-Dealer, as the
case may be, or their counsel, or the managing underwriters, if any,
shall reasonably object on a timely basis; provided, however, that if
the Issuers' and the Company's failure to file a Registration Statement
or Prospectus, or any amendments or supplements thereto, in the
applicable time periods as set forth in Section 4, is based upon such
an objection, no Additional Interest shall accrue.
(b) Prepare and file with the SEC such amendments and
post-effective amendments to each Shelf Registration or Exchange
Registration Statement, as the case may be, as may be necessary to keep
such Registration Statement continuously effective for the
Effectiveness Period or the Applicable Period, as the case may be;
cause the related Prospectus to be supplemented by any prospectus
supplement required by applicable law, and as so supplemented to be
filed pursuant to Rule 424 (or any similar
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provisions then in force) promulgated under the Securities Act; and
comply in all material respects with the provisions of the Securities
Act and the Exchange Act applicable to it with respect to the
disposition of all securities covered by such Registration Statement as
so amended or in such Prospectus as so supplemented and with respect to
the subsequent resale of any securities being sold by a Participating
Broker-Dealer covered by any such Prospectus; the Issuer and the
Company shall be deemed not to have used their reasonable best efforts
to keep a Registration Statement effective during the Applicable Period
if the Issuer and the Company voluntarily take any action that would
result in selling Holders of the Registrable Notes covered thereby or
Participating Broker-Dealers seeking to sell Exchange Notes not being
able to sell such Registrable Notes or such Exchange Notes during that
period, unless such action is required by applicable law or unless the
Issuer and the Company comply in all material respects with this
Agreement, including without limitation, the provisions of paragraphs
5(k) and (w) hereof.
(c) If (1) a Shelf Registration is filed pursuant to Section 3
hereof or (2) a Prospectus contained in an Exchange Registration
Statement filed pursuant to Section 2 hereof is required to be
delivered under the Securities Act by any Participating Broker-Dealer
who seeks to sell Exchange Notes during the Applicable Period, notify
the selling Holders of Registrable Notes (with respect to the
Registration Statement filed pursuant to Section 3 hereof), or each
such Participating Broker-Dealer, as the case may be, their counsel and
the managing underwriters, if any, promptly (but in any event within
two business days) and confirm such notice in writing, (i) when a
Prospectus or any Prospectus supplement or post-effective amendment has
been filed, and, with respect to a Registration Statement or any
post-effective amendment, when the same has become effective under the
Securities Act (including in such notice a written statement that any
Holder may, upon written request, obtain, at the sole expense of the
Issuer and the Company, one conformed copy of such Registration
Statement or post-effective amendment including financial statements
and schedules, documents incorporated or deemed to be incorporated by
reference and exhibits), (ii) of the issuance by the SEC of any stop
order suspending the effectiveness of a Registration Statement or of
any order preventing or suspending the use of any preliminary
prospectus or the initiation of any proceedings for that purpose, (iii)
of the receipt by the Issuer or the Company of any notification with
respect to the suspension of the qualification or exemption from
qualification of a Registration Statement or any of the Registrable
Notes or the Exchange Notes to be sold by any Participating
Broker-Dealer for offer or sale in any jurisdiction, or the initiation
or written threat of any proceeding for such purpose, (iv) of the
happening of any event, the existence of any condition or any
information becoming known that makes any statement made in such
Registration Statement or related Prospectus or any document
incorporated or deemed
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to be incorporated therein by reference untrue in any material respect
or that requires the making of any material changes in or amendments or
supplements to such Registration Statement, Prospectus or documents so
that, in the case of the Registration Statement, it will not contain
any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements
therein not misleading, and that in the case of the Prospectus, it will
not contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary to make
the statements therein, in the light of the circumstances under which
they were made, not misleading and (v) of the Issuer or the Company's
determination that a post-effective amendment to a Registration
Statement would be appropriate.
(d) Use its reasonable best efforts to prevent the issuance of
any order suspending the effectiveness of a Registration Statement or
of any order preventing or suspending the use of a Prospectus or
suspending the qualification (or exemption from qualification) of any
of the Registrable Notes or the Exchange Notes for sale in any
jurisdiction and, if any such order is issued, to use its best efforts
to obtain the withdrawal of any such order at the earliest possible
moment.
(e) If a Shelf Registration is filed pursuant to Section 3 and
if requested by the managing underwriter or underwriters, if any, or
the Holders of a majority in aggregate principal amount of the
Registrable Notes being sold in connection with an underwritten
offering, (i) promptly incorporate in a prospectus supplement or
post-effective amendment such information as the managing underwriter
or underwriters, if any, such Holders or counsel for any of them
determine is reasonably necessary to be included therein, (ii) make all
required filings of such prospectus supplement or such post-effective
amendment as soon as practicable after the Issuer and the Company have
received notification of the matters to be incorporated in such
prospectus supplement or post-effective amendment and (iii) supplement
or make amendments to such Registration Statement, provided, however,
that the Issuer and the Company shall not be required to take any
action pursuant to this Section 5(e) that would, in the opinion of
counsel for the Company and Issuer, violate applicable law.
(f) If (1) a Shelf Registration is filed pursuant to Section 3
hereof or (2) a Prospectus contained in an Exchange Registration
Statement filed pursuant to Section 2 hereof is required to be
delivered under the Securities Act by any Participating Broker-Dealer
who seeks to sell Exchange Notes during the Applicable Period, furnish
to each selling Holder of Registrable Notes who so requests and to each
such Participating Broker-Dealer who so requests and to their
respective counsel and each managing underwriter, if any, at the sole
expense of the Issuer and the Company, one conformed copy of the
Registration Statement or Registration Statements and each
post-effective
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amendment thereto, including financial statements and schedules and, if
requested, all documents incorporated or deemed to be incorporated
therein by reference and all exhibits.
(g) If (1) a Shelf Registration is filed pursuant to Section 3
hereof or (2) a Prospectus contained in an Exchange Registration
Statement filed pursuant to Section 2 hereof is required to be
delivered under the Securities Act by any Participating Broker-Dealer
who seeks to sell Exchange Notes during the Applicable Period, deliver
to each selling Holder of Registrable Notes, or each such Participating
Broker-Dealer, as the case may be, their respective counsel and the
underwriters, if any, at the sole expense of the Issuer and the
Company, as many copies of the Prospectus or Prospectuses (including
each form of preliminary prospectus) and each amendment or supplement
thereto and any documents incorporated by reference therein as such
Persons may reasonably request; and, subject to Section 5(w), the
Issuer and the Company hereby consent to the use of such Prospectus and
each amendment or supplement thereto by each of the selling Holders of
Registrable Notes or each such Participating Broker-Dealer, as the case
may be, and the underwriters or agents, if any, and dealers, if any, in
connection with the offering and sale of the Registrable Notes covered
by, or the sale by Participating Broker-Dealers of the Exchange Notes
pursuant to, such Prospectus and any amendment or supplement thereto.
(h) Prior to any public offering of Registrable Notes or
Exchange Notes or any delivery of a Prospectus contained in the
Exchange Registration Statement by any Participating Broker-Dealer who
seeks to sell Exchange Notes during the Applicable Period, use their
reasonable best efforts to register or qualify and to cooperate with
the selling Holders of Registrable Notes or each such Participating
Broker-Dealer, as the case may be, the managing underwriter or
underwriters, if any, and their respective counsel in connection with
the registration or qualification (or exemption from such registration
or qualification) of such Registrable Notes for offer and sale under
the securities or Blue Sky laws of such jurisdictions within the United
States as any selling Holder, Participating Broker-Dealer or the
managing underwriter or underwriters reasonably request in writing;
provided, however, that where Exchange Notes held by Participating
Broker-Dealers or Registrable Notes are offered other than through an
underwritten offering, the Issuer and the Company agree to cause their
respective counsel to perform Blue Sky investigations and file
registrations and qualifications required to be filed pursuant to this
Section 5(h); keep each such registration or qualification (or
exemption therefrom) effective during the period such Registration
Statement is required to be kept effective and do any and all other
acts or things reasonably necessary or advisable to enable the
disposition in such jurisdictions of the Exchange Notes held by
Participating Broker-Dealers or the Registrable Notes covered by the
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applicable Registration Statement; provided, however, that neither the
Issuer nor the Company shall be required to (A) qualify generally to do
business in any jurisdiction where it is not then so qualified, (B)
take any action that would subject it to general service of process in
any such jurisdiction where it is not then so subject, (C) subject
itself to taxation in any such jurisdiction where it is not then so
subject, or (D) make any change to its respective certificate of
incorporation or bylaws (or similar organizational documents) or any
agreement between it and its shareholders.
(i) If a Shelf Registration is filed pursuant to Section 3
hereof, cooperate with the selling Holders of Registrable Notes and the
managing underwriter or underwriters, if any, to facilitate the timely
preparation and delivery of certificates representing Registrable Notes
to be sold, which certificates shall not bear any restrictive legends
and shall be in a form eligible for deposit with The Depository Trust
Company; and enable such Registrable Notes to be in such denominations
and registered in such names as the managing underwriter or
underwriters, if any, or Holders may reasonably request.
(j) Use their reasonable best efforts to cause the Registrable
Notes covered by the Registration Statement to be registered with or
approved by such other governmental agencies or authorities as may be
necessary to enable the Holders thereof or the underwriter or
underwriters, if any, to consummate the disposition of such Registrable
Notes, except as may be required solely as a consequence of the nature
of such selling Holder's business, in which case the Company will
cooperate in all reasonable respects with the filing of such
Registration Statement and the granting of such approvals.
(k) If (1) a Shelf Registration is filed pursuant to Section 3
hereof or (2) a Prospectus contained in an Exchange Registration
Statement filed pursuant to Section 2 hereof is required to be
delivered under the Securities Act by any Participating Broker-Dealer
who seeks to sell Exchange Notes during the Applicable Period, upon the
occurrence of any event contemplated by paragraph 5(c)(iv) or 5(c)(v),
hereof, as promptly as practicable prepare and (subject to Section 5(a)
hereof) file with the SEC, at the Issuer's and the Company's sole
expense, a supplement or post-effective amendment to the Registration
Statement or a supplement to the related Prospectus or any document
incorporated or deemed to be incorporated therein by reference, or file
any other required document so that, as thereafter delivered to the
purchasers of the Registrable Notes being sold thereunder or to the
purchasers of the Exchange Notes to whom such Prospectus will be
delivered by a Participating Broker-Dealer, any such Prospectus will
not contain an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they
were made, not misleading.
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(l) Use their reasonable best efforts to cause the Registrable
Notes covered by a Registration Statement or the Exchange Notes, as the
case may be, to be rated with the appropriate rating agencies, if so
requested by the Holders of a majority in aggregate principal amount of
Registrable Notes covered by such Registration Statement or the
Exchange Notes, as the case may be, or the managing underwriter or
underwriters, if any.
(m) Prior to the effective date of the first Registration
Statement relating to the Registrable Notes, (i) provide the Trustee
with certificates for the Registrable Notes or Exchange Notes, as the
case may be, in a form eligible for deposit with The Depository Trust
Company and (ii) provide a CUSIP number for the Registrable Notes or
Exchange Notes, as the case may be.
(n) In connection with any underwritten offering of
Registrable Notes pursuant to a Shelf Registration, enter into an
underwriting agreement as is customary in underwritten offerings of
debt securities similar to the Notes and take all such other actions as
are reasonably requested by the managing underwriter or underwriters in
order to expedite or facilitate the registration or the disposition of
such Registrable Notes and, in such connection, (i) make such
representations and warranties to, and covenants with, the underwriters
with respect to the business of the Company and its subsidiaries
(including any acquired business, properties or entity, if applicable)
and the Issuer and the Registration Statement, Prospectus and
documents, if any, incorporated or deemed to be incorporated by
reference therein, in each case, as are customarily made by issuers to
underwriters in underwritten offerings of debt securities similar to
the Notes, and confirm the same in writing if and when requested; (ii)
obtain the written opinions of counsel to each of the Company and the
Issuer, as the case may be, and written updates thereof in form, scope
and substance reasonably satisfactory to the managing underwriter or
underwriters, addressed to the underwriters covering the matters
customarily covered in opinions requested in underwritten offerings of
debt similar to the Notes and such other matters as may be reasonably
requested by the managing underwriter or underwriters; (iii) obtain
"cold comfort" letters and updates thereof in form, scope and substance
reasonably satisfactory to the managing underwriter or underwriters
from the independent certified public accountants of the Company and
the Issuer (and, if necessary, any other independent certified public
accountants of any subsidiary of the Company or of any business
acquired by the Company for which financial statements and financial
data are, or are required to be, included or incorporated by reference
in the Registration Statement), addressed to each of the underwriters,
such letters to be in customary form and covering matters of the type
customarily covered in "cold comfort" letters in connection with
underwritten offerings of debt securities similar to the Notes and such
other matters as reasonably requested by
-17-
the managing underwriter or underwriters; and (iv) if an underwriting
agreement is entered into, the same shall contain indemnification
provisions and procedures no less favorable than those set forth in
Section 7 hereof (or such other provisions and procedures acceptable to
Holders of a majority in aggregate principal amount of Registrable
Notes covered by such Registration Statement and the managing
underwriter or underwriters or agents) with respect to all parties to
be indemnified pursuant to said Section. The above shall be done at
each closing under such underwriting agreement, or as and to the extent
required thereunder.
(o) If (1) a Shelf Registration is filed pursuant to Section 3
hereof or (2) a Prospectus contained in an Exchange Registration
Statement filed pursuant to Section 2 hereof is required to be
delivered under the Securities Act by any Participating Broker-Dealer
who seeks to sell Exchange Notes during the Applicable Period, make
available for inspection by any selling Holder of such Registrable
Notes being sold, or each such Participating Broker-Dealer, as the case
may be, any underwriter participating in any such disposition of
Registrable Notes, if any, and any attorney, accountant or other agent
retained by any such selling Holder or each such Participating
Broker-Dealer, as the case may be, or underwriter (collectively, the
"Inspectors"), at the offices where normally kept, during reasonable
business hours and upon reasonable advance notice all relevant
financial and other records, pertinent corporate documents and
instruments of the Company and its subsidiaries and the Issuer
(collectively, the "Records") as shall be reasonably necessary to
enable them to exercise any applicable due diligence responsibilities,
and cause the respective officers, directors and employees of the
Company and its subsidiaries and the Issuer to supply all information
reasonably requested by any such Inspector in connection with such
Registration Statement. Any such access granted to the Inspectors under
this Section 5(o) shall be subject to the prior receipt by the Company
and the Issuer of written undertakings to preserve the confidentiality
of any information deemed by the Company or the Issuer to be
confidential in form and substance reasonably satisfactory to the
Company or the Issuer. Records that the Company or the Issuer
determines, in good faith, to be confidential and any Records that they
notify the Inspectors are confidential shall not be disclosed by the
Inspectors unless (i) the Issuer or the Company in their sole
discretion based on advice of counsel determine that disclosure of such
Records is necessary to avoid or correct a misstatement or omission in
such Registration Statement, (ii) the release of such Records is
ordered pursuant to a subpoena or other order from a court of competent
jurisdiction, (iii) disclosure of such information is, in the opinion
of counsel for any Inspector, necessary or advisable in connection with
any action, claim, suit or proceeding, directly or indirectly,
involving or potentially involving such Inspector and arising out of,
based upon, relating to or involving this Agreement or any transactions
contemplated hereby or arising hereunder or (iv) the information in
such
-18-
Records has been made generally available to the public. Each selling
Holder of such Registrable Securities and each such Participating
Broker-Dealer will be required to agree that information obtained by it
as a result of such inspections shall be deemed confidential and shall
not be used by it as the basis for any market transactions in the
securities of the Issuer or the Company unless and until such
information is generally available to the public. Each selling Holder
of such Registrable Notes and each such Participating Broker-Dealer
will be required to further agree that it will, upon learning that
disclosure of such Records is sought in a court of competent
jurisdiction, give notice to the Company or the Issuer, as applicable,
and allow the Company or the Issuer, as applicable, to undertake
appropriate action to prevent disclosure of the Records deemed
confidential at the Company's or the Issuer's, as applicable, sole
expense.
(p) Provide an indenture trustee for the Registrable Notes or
the Exchange Notes, as the case may be, and cause the Indenture or the
trust indenture provided for in Section 2(a) hereof, as the case may
be, to be qualified under the TIA not later than the effective date of
the Exchange Offer or the first Registration Statement relating to the
Registrable Notes; and in connection therewith, cooperate with the
trustee under any such indenture and the Holders of the Registrable
Notes, to effect such changes to such indenture as may be required for
such indenture to be so qualified in accordance with the terms of the
TIA; and execute, and use its reasonable best efforts to cause such
trustee to execute, all documents as may be required to effect such
changes and all other forms and documents required to be filed with the
SEC to enable such indenture to be so qualified in a timely manner.
(q) Comply in all material respects with all applicable rules
and regulations of the SEC and make generally available to its
securityholders earning statements satisfying the provisions of Section
11(a) of the Securities Act and Rule 158 thereunder (or any similar
rule promulgated under the Securities Act) no later than 45 days after
the end of any fiscal quarter (or 90 days after the end of any fiscal
year) (i) commencing at the end of any fiscal quarter in which
Registrable Notes are sold to underwriters in a firm commitment or best
efforts underwritten offering and (ii) if not sold to underwriters in
such an offering, commencing on the first day of the first fiscal
quarter of the Company and the Issuer after the effective date of a
Registration Statement, which statements shall cover said fiscal
periods.
(r) Upon consummation of an Exchange Offer or a Private
Exchange, obtain an opinion of counsel to the Issuer, who may, at the
Issuer's election, be internal counsel to the Issuer, in a form
customary for underwritten transactions, addressed to the Trustee for
the benefit of all Holders of Registrable Notes participating in the
Exchange Offer or the Private Exchange, as the case may be, that the
Exchange Notes or Private Exchange Notes, as the case may be, and the
related indenture constitute legal,
-19-
valid and binding obligations of the Issuer, enforceable against the
Issuer in accordance with its respective terms, subject to customary
exceptions and qualifications.
(s) If an Exchange Offer or a Private Exchange is to be
consummated, upon delivery of the Registrable Notes by Holders to the
Company or the Issuer (or to such other Person as directed by the
Issuer or the Company) in exchange for the Exchange Notes or the
Private Exchange Notes, as the case may be, the Issuer shall mark, or
cause to be marked, on such Registrable Notes that such Registrable
Notes are being cancelled in exchange for the Exchange Notes or the
Private Exchange Notes, as the case may be; in no event shall such
Registrable Notes be marked as paid or otherwise satisfied.
(t) Cooperate with each seller of Registrable Notes covered by
any Registration Statement and each underwriter, if any, participating
in the disposition of such Registrable Notes and their respective
counsel in connection with any filings required to be made with the
National Association of Securities Dealers, Inc. (the "NASD").
(u) Use its reasonable best efforts to take all other steps
necessary or advisable to effect the registration of the Registrable
Notes covered by a Registration Statement contemplated hereby.
(v) The Company and the Issuer may require each seller of
Registrable Notes as to which any registration is being effected to
furnish in writing to the Company and the Issuer such information
regarding such seller and the distribution of such Registrable Notes as
the Company and the Issuer may, from time to time, reasonably request.
The Company and the Issuer may exclude from such registration the
Registrable Notes of any seller who fails to furnish such information
within a reasonable time (but no later than 5 business days) after
receiving such request and in such event shall have no further
obligation under this Agreement (including, without limitation,
obligations under Section 4 hereof) with respect to such seller or any
subsequent holder of such Registrable Notes. Each seller as to which
any Shelf Registration is being effected agrees to furnish promptly to
the Company and the Issuer all information required to be disclosed in
order to make the information previously furnished to the Company and
the Issuer by such seller not materially misleading.
(w) Each Holder of Registrable Notes and each Participating
Broker-Dealer agrees by acquisition of such Registrable Notes or
Exchange Notes to be sold by such Participating Broker-Dealer, as the
case may be, that, upon actual receipt of any notice from the Company
or the Issuer of the happening of any event of the kind described in
Sections 5(c)(ii), 5(c)(iv) or 5(c)(v) hereof, such Holder will
forthwith discontinue disposition of such Registrable Notes covered by
such Registration Statement or
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Prospectus or Exchange Notes to be sold by such Holder or Participating
Broker-Dealer, as the case may be, until such Holder's or Participating
Broker-Dealer's receipt of the copies of the supplemented or amended
Prospectus contemplated by Section 5(k) hereof, or until it is advised
in writing (the "Advice") by the Company and the Issuer that the use of
the applicable Prospectus may be resumed, and has received copies of
any amendments or supplements thereto. In the event that the Company or
the Issuer shall give any such notice, each of the Effectiveness Period
and the Applicable Period shall be extended by the number of days
during such periods from and including the date of the giving of such
notice to and including the date when each seller of Registrable Notes
covered by such Registration Statement or Exchange Notes to be sold by
such Participating Broker-Dealer, as the case may be, shall have
received (x) the copies of the supplemented or amended Prospectus
contemplated by Section 5(k) hereof or (y) the Advice. Each holder of
Registrable Notes agrees that the Issuer and the Company has the right
to require such holders to discontinue dispositions for up to 90 days
if the Issuer and the Company gives notice of a material non-public
acquisition or event; provided, however, that each holder shall be
subject to the hold-back restrictions of this Section 5 only twice
during the term of this Agreement. During any such discontinuance, no
Additional Interest shall accrue or otherwise be payable to the
Holders.
In the event of a Shelf Registration, in addition to the
information required to be provided by each selling Holder in accordance with
the preceding paragraph, the Issuer and the Company may require such selling
Holder to furnish to the Issuer and the Company such additional information
regarding such selling Holder and such selling Holder's intended method of
distribution of Registrable Notes as may be required in order to comply with the
Securities Act. Each such selling Holder agrees to notify the Issuer and the
Company as promptly as practicable of any inaccuracy or change in information
previously furnished by such selling Holder to the Issuer and the Company or of
the occurrence of any event in either case as a result of which any prospectus
relating to such Shelf Registration contains or would contain an untrue
statement of a material fact regarding such selling Holder or such selling
Holder's intended method of disposition of such Registrable Notes required to be
stated or necessary to make the statements therein not misleading in light of
the circumstances then existing, and promptly to furnish to the Issuer and the
Company any additional information required to correct and update any previously
furnished information or required so that such prospectus shall not contain,
with respect to such selling Holder or the disposition of such Registrable
Notes, an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statement therein not
misleading in light of the circumstances then existing.
-21-
6. Registration Expenses
All fees and expenses incident to the performance of or
compliance with this Agreement by the Issuer and the Company (other than
underwriting discounts or commissions) shall be borne by the Issuer and the
Company whether or not the Exchange Offer or a Shelf Registration is filed or
becomes effective, including, without limitation, (i) all registration and
filing fees including, without limitation, (A) fees with respect to filings
required to be made with the NASD in connection with an underwritten offering
and (B) reasonable fees and expenses of compliance with state securities or Blue
Sky laws (including, without limitation, reasonable fees and disbursements of
counsel in connection with Blue Sky qualifications of the Registrable Notes or
Exchange Notes and determination of the eligibility of the Registrable Notes or
Exchange Notes for investment under the laws of such jurisdictions (x) where the
holders of Registrable Notes are located, in the case of the Exchange Notes, or
(y) as provided in Section 5(h) hereof, in the case of Registrable Notes or
Exchange Notes to be sold by a Participating Broker-Dealer during the Applicable
Period)), (ii) printing expenses, including, without limitation, expenses of
printing certificates for Registrable Notes or Exchange Notes in a form eligible
for deposit with The Depository Trust Company and of printing prospectuses if
the printing of prospectuses is requested by the managing underwriter or
underwriters, if any, by the Holders of a majority in aggregate principal amount
of the Registrable Notes included in any Registration Statement or sold by any
Participating Broker-Dealer, as the case may be, (iii) reasonable messenger,
telephone and delivery expenses, (iv) fees and disbursements of counsel for the
Company and the Issuer and fees and disbursements of not more than one special
counsel for the sellers of Registrable Notes, (v) fees and disbursements of all
independent certified public accountants referred to in Section 5(n)(iii) hereof
(including, without limitation, the expenses of any special audit and "cold
comfort" letters required by or incident to such performance), (vi) rating
agency fees, if any, and any fees associated with making the Registrable Notes
or Exchange Notes eligible for trading through the Depository Trust Company,
(vii) Securities Act liability insurance, if the Issuer or the Company desire
such insurance, (viii) fees and expenses of all other Persons retained by the
Issuer and the Company, (ix) internal expenses of the Issuer and the Company
(including, without limitation, all salaries and expenses of officers and
employees of the Issuer or the Company performing legal or accounting duties),
(x) the expense of any annual audit, (xi) the fees and expenses incurred in
connection with the listing of the securities to be registered on any securities
exchange, if applicable, and (xii) the expenses relating to printing, word
processing and distributing of all Registration Statements, underwriting
agreements, securities sales agreements, indentures and any other documents
necessary to comply with this Agreement.
7. Indemnification
(a) The Issuer and the Company, severally and not jointly,
agree to indemnify and hold harmless each Holder of Registrable Notes offered
pursuant to a Shelf
-22-
Registration Statement and each Participating Broker-Dealer selling Exchange
Notes during the Applicable Period, the officers and directors of each such
Person or its affiliates, and each other Person, if any, who controls any such
Person or its affiliates within the meaning of either Section 15 of the
Securities Act or Section 20 of the Exchange Act (each, a "Participant"), from
and against any and all losses, claims, damages and liabilities (including,
without limitation, the reasonable legal fees and other expenses actually
incurred in connection with any suit, action or proceeding or any claim
asserted) caused by, arising out of or based upon any untrue statement or
alleged untrue statement of a material fact contained in any Registration
Statement pursuant to which the offering of such Registrable Notes or Exchange
Notes, as the case may be, is registered (or any amendment thereto) or related
Prospectus (or any amendments or supplements thereto) or any related preliminary
prospectus, or caused by, arising out of or based upon any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading; provided, however, that the Issuer
and the Company will not be required to indemnify a Participant if (i) such
losses, claims, damages or liabilities are caused by any untrue statement or
omission or alleged untrue statement or omission made in reliance upon and in
conformity with information relating to any Participant furnished to the Issuer
and the Company in writing by or on behalf of such Participant expressly for use
therein or (ii) if such Participant sold to the person asserting the claim the
Registrable Notes or Exchange Notes that are the subject of such claim and such
untrue statement or omission or alleged untrue statement or omission was
contained or made in any preliminary prospectus and corrected in the Prospectus
or any amendment or supplement thereto and the Prospectus does not contain any
other untrue statement or omission or alleged untrue statement or omission of a
material fact that was the subject matter of the related proceeding and
Participant failed to deliver or provide a copy of the Prospectus (as amended or
supplemented) to such Person with or prior to the confirmation of the sale of
such Registrable Notes or Exchange Notes sold to such Person if required by
applicable law, unless such failure to deliver or provide a copy of the
Prospectus (as amended or supplemented) was a result of noncompliance by the
Company or the Issuer, as the case may be, with Section 5 of this Agreement.
(b) Each Participant agrees, severally and not jointly, to
indemnify and hold harmless each of the Issuer and the Company, their respective
directors and officers and each Person who controls the Company and to Issuer
within the meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act to the same extent as the foregoing indemnity from the Issuer and
the Company to each Participant, but only (i) with reference to information
relating to such Participant furnished to the Issuer and the Company in writing
by or on behalf of such Participant expressly for use in any Registration
Statement or Prospectus, any amendment or supplement thereto or any preliminary
prospectus or (ii) with respect to any untrue statement or representation made
by such Participant in writing to the Issuer and the Company. The liability of
any Participant under this paragraph shall in no event exceed the
-23-
proceeds received by such Participant from sales of Registrable Notes or
Exchange Notes giving rise to such obligations.
(c) If any suit, action, proceeding (including any
governmental or regulatory investigation), claim or demand shall be brought or
asserted against any Person in respect of which indemnity may be sought pursuant
to either of the two preceding paragraphs, such Person (the "Indemnified
Person") shall promptly notify the Person against whom such indemnity may be
sought (the "Indemnifying Person") in writing, and the Indemnifying Person, upon
request of the Indemnified Person, shall retain counsel reasonably satisfactory
to the Indemnified Person to represent the Indemnified Person and any others the
Indemnifying Person may reasonably designate in such proceeding and shall pay
the reasonable fees and expenses actually incurred by such counsel related to
such proceeding; provided, however, that the failure to so notify the
Indemnifying Person shall not relieve it of any obligation or liability that it
may have hereunder or otherwise (unless and only to the extent that such failure
directly results in material prejudice to the Indemnifying Person and the
Indemnifying Person was not otherwise aware of such action or claim). In any
such proceeding, any Indemnified Person shall have the right to retain its own
counsel, but the fees and expenses of such counsel shall be at the expense of
such Indemnified Person unless (i) the Indemnifying Person and the Indemnified
Person shall have mutually agreed in writing to the contrary, (ii) the
Indemnifying Person shall have failed within a reasonable period of time to
retain counsel reasonably satisfactory to the Indemnified Person or (iii) the
named parties in any such proceeding (including any impleaded parties) include
both the Indemnifying Person and the Indemnified Person and representation of
both parties by the same counsel would be inappropriate due to actual or
potential differing interests between them. It is understood that, unless there
exists a conflict among Indemnified Persons, the Indemnifying Person shall not,
in connection with any one such proceeding or separate but substantially similar
related proceedings in the same jurisdiction arising out of the same general
allegations, be liable for the fees and expenses of more than one separate firm
(in addition to any local counsel) for all Indemnified Persons, and that all
such fees and expenses shall be reimbursed promptly as they are incurred,
subject to an undertaking by such Indemnified Persons that all such amounts to
which any Indemnified Person is not entitled pursuant to this Section 7, as
determined by a final non-appealable judicial determination, shall be returned
promptly to the relevant Indemnifying Persons. Any such separate firm for the
Participants and such control Persons of Participants shall be designated in
writing by Participants who sold a majority in interest of Registrable Notes and
Exchange Notes sold by all such Participants and shall be reasonably acceptable
to the Company and the Issuer and any such separate firm for the Issuer and the
Company, its respective directors, its officers and such control Persons of the
Issuer and the Company shall be designated in writing by the Issuer and the
Company. The Indemnifying Person shall not be liable for any settlement of any
proceeding effected without its prior written consent (which consent shall not
be unreasonably withheld or delayed), but if settled with such consent or if
there be a final
-24-
non-appealable judgment for the plaintiff for which the Indemnified Person is
entitled to indemnification pursuant to this Agreement, the Indemnifying Person
agrees to indemnify and hold harmless each Indemnified Person from and against
any loss or liability by reason of such settlement or judgment. No Indemnifying
Person shall, without the prior written consent of the Indemnified Person (which
consent shall not be unreasonably withheld or delayed), effect any settlement or
compromise of any pending or threatened proceeding in respect of which any
Indemnified Person is or could have been a party, and indemnity could have been
sought hereunder by such Indemnified Person, unless such settlement (A) includes
an unconditional written release of such Indemnified Person, in form and
substance reasonably satisfactory to such Indemnified Person, from all liability
on claims that are the subject matter of such proceeding and (B) does not
include any statement as to an admission of fault, culpability or failure to act
by or on behalf of any Indemnified Person.
(d) If the indemnification provided for in the first and
second paragraphs of this Section 7 is for any reason unavailable to, or
insufficient to hold harmless, an Indemnified Person in respect of any losses,
claims, damages or liabilities referred to therein, then each Indemnifying
Person under such paragraphs, in lieu of indemnifying such Indemnified Person
thereunder and in order to provide for just and equitable contribution, shall
contribute to the amount paid or payable by such Indemnified Person as a result
of such losses, claims, damages or liabilities in such proportion as is
appropriate to reflect the relative fault of the Indemnifying Person or Persons
on the one hand and the Indemnified Person or Persons on the other in connection
with the statements or omissions or alleged statements or omissions that
resulted in such losses, claims, damages or liabilities (or actions in respect
thereof). The relative fault of the parties shall be determined by reference to,
among other things, whether the untrue or alleged untrue statement of a material
fact or the omission or alleged omission to state a material fact relates to
information supplied by the Issuer and the Company on the one hand or such
Participant or such other Indemnified Person, as the case may be, on the other,
the parties' relative intent, knowledge, access to information and opportunity
to correct or prevent such statement or omission, and any other equitable
considerations appropriate in the circumstances.
(e) The parties agree that it would not be just and equitable
if contribution pursuant to this Section 7 were determined by pro rata
allocation (even if the Participants were treated as one entity for such
purpose) or by any other method of allocation that does not take account of the
equitable considerations referred to in the immediately preceding paragraph. The
amount paid or payable by an Indemnified Person as a result of the losses,
claims, damages and liabilities referred to in the immediately preceding
paragraph shall be deemed to include, subject to the limitations set forth
above, any reasonable legal or other expenses actually incurred by such
Indemnified Person in connection with investigating or defending any such action
or claim. Notwithstanding the provisions of this Section 7, in no event shall a
-25-
Participant be required to contribute any amount in excess of the amount by
which proceeds received by such Participant from sales of Registrable Notes or
Exchange Notes, as the case may be, exceeds the amount of any damages that such
Participant has otherwise been required to pay or has paid by reason of such
untrue or alleged untrue statement or omission or alleged omission. No Person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) shall be entitled to contribution from any Person who was
not guilty of such fraudulent misrepresentation.
(f) Any losses, claims, damages, liabilities or expenses for
which an indemnified party is entitled to indemnification or contribution under
this Section 7 shall be paid by the Indemnifying Persons to the Indemnified
Person as such losses, claims, damages, liabilities or expenses are incurred,
subject to an undertaking by such Indemnified Person that all such amounts to
which such Indemnified Person is not entitled pursuant to this Section 7, as
determined by a final non-appealable judicial determination, shall be returned
promptly to the relevant Indemnifying Persons.
(g) The indemnity and contribution agreements contained in
this Section 7 will be in addition to any liability that the Indemnifying
Persons may otherwise have to the Indemnified Persons referred to above.
8. Rule 144 and 144A
The Issuer and the Company covenant that they will file the
reports required to be filed by them under the Securities Act and the Exchange
Act and the rules and regulations adopted by the SEC thereunder in a timely
manner in accordance with the requirements of the Securities Act and the
Exchange Act and, if at any time the Issuer or the Company is not required to
file such reports, it will, upon the request of any Holder of Registrable Notes,
make available annual reports and such information, documents and other reports
of the type specified in Sections 13 and 15(d) of the Exchange Act. The Issuer
and the Company further covenant for so long as any Registrable Notes remain
outstanding, to make available to any Holder or beneficial owner of Registrable
Notes in connection with any sale thereof and any prospective purchaser of such
Registrable Notes from such Holder or beneficial owner the information required
by Rule 144A(d)(4) under the Securities Act in order to permit resales of such
Registrable Notes pursuant to Rule 144A and take such further action as any
Holder of Registrable Notes may reasonably request and to the extent required
from time to time to enable such holder to sell Registrable Notes without
registration under the Securities Act within the limitation of the exemptions
provided by Rule 144(K) under the Securities Act.
-26-
9. Underwritten Registrations
If any of the Registrable Notes covered by any Shelf
Registration are to be sold in an underwritten offering, the investment banker
or investment bankers and manager or managers that will manage the offering will
be selected by the Holders of a majority in aggregate principal amount of such
Registrable Notes included in such offering and reasonably acceptable to the
Issuer and the Company.
No Holder of Registrable Notes may participate in any
underwritten registration hereunder unless such Holder (a) agrees to sell such
Holder's Registrable Notes on the basis provided in any underwriting
arrangements approved by the Persons entitled hereunder to approve such
arrangements and (b) completes and executes all questionnaires, powers of
attorney, indemnities, underwriting agreements and other documents required
under the terms of such underwriting arrangements.
10. Miscellaneous
(a) No Inconsistent Agreements. The Issuer and the Company
have not, as of the date hereof, and shall not, after the date of this
Agreement, enter into any agreement with respect to any of the Issuer's or the
Company's securities that is inconsistent with the rights granted to the Holders
of Registrable Notes in this Agreement or otherwise conflicts with the
provisions hereof. Neither the Issuer nor the Company has entered into and will
not enter into, any agreement with respect to any of their respective debt
securities that will grant to any Person piggy-back registration rights with
respect to a Registration statement.
(b) Adjustments Affecting Registrable Notes. Neither the
Issuer nor the Company shall, directly or indirectly, take any action with
respect to the Registrable Notes as a class that would adversely affect the
ability of the Holders of Registrable Notes to include such Registrable Notes in
a registration undertaken pursuant to this Agreement.
(c) Amendments and Waivers. The provisions of this Agreement
may not be amended, modified or supplemented, and waivers or consents to
departures from the provisions hereof may not be given, otherwise than with the
prior written consent of (i) the Company and the Issuer and (ii) the Holders of
not less than a majority in aggregate principal amount of the then outstanding
Registrable Notes. Notwithstanding the foregoing, a waiver or consent to depart
from the provisions hereof with respect to a matter that relates exclusively to
the rights of Holders of Registrable Notes whose securities are being sold
pursuant to a Registration Statement and that does not directly or indirectly
affect, impair, limit or compromise the rights of other Holders of Registrable
Notes may be given by Holders of at least a majority in aggregate principal
amount of the Registrable Notes being sold by such Holders pursuant to such
Registration Statement; provided, however, that the provisions of this sentence
may not
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be amended, modified or supplemented except in accordance with the
provisions of the immediately preceding sentence.
(d) Notices. All notices and other communications (including
without limitation any notices or other communications to the Trustee) provided
for or permitted hereunder shall be made in writing by hand-delivery, registered
first-class mail, next-day air courier or facsimile:
1. if to a Holder of the Registrable Notes or any
Participating Broker-Dealer, at the most current address of such Holder
or Participating Broker-Dealer, as the case may be, set forth on the
records of the registrar under the Indenture, with a copy in like
manner to the Initial Purchasers as follows:
DEUTSCHE BANC ALEX. BROWN INC.
130 Liberty Street
New York, New York 10006
Facsimile No.: (212) 250-7200
Attention: Corporate Finance Department
with a copy to:
Cahill Gordon & Reindel
80 Pine Street
New York, New York 10005
Facsimile No.: (212) 269-5420
Attention: William B. Gannett, Esq.
2. if to the Initial Purchasers, at the addresses specified in
Section 10(d)(1);
3. if to the Company, at the address as follows:
UNIVERSAL COMPRESSION, INC.
4440 Brittmoore Road
Houston, TX 77241
Telephone: (713) 466-4103
Facsimile: (713) 466-6574
-28-
with a copy to:
GARDERE WYNNE SEWELL LLP
1000 Louisiana Street, Suite 3400
Houston, TX 77002
(713) 276-5561
(713) 276-6561
Attn: Carol Burke, Esq.
4. If to the Issuer to:
2911 Turtle Creek Blvd.
Dallas, TX 75219
Telephone: (214) 522-7296
with a copy to:
Robert R. Veach, Jr.
2911 Turtle Creek Boulevard
Suite 1240A, Lockbox 406
Dallas, TX
Telephone: (214) 520-7544
Facsimile: (214) 520-7806
All such notices and communications shall be deemed to have
been duly given: when delivered by hand, if personally delivered; five business
days after being deposited in the mail, postage prepaid, if mailed; one business
day after being timely delivered to a next-day air courier; and when receipt is
acknowledged by the addressee, if sent by facsimile.
Copies of all such notices, demands or other communications
shall be concurrently delivered by the Person giving the same to the Trustee at
the address and in the manner specified in such Indenture.
(e) Successors and Assigns. This Agreement shall inure to the
benefit of and be binding upon the successors and assigns of each of the parties
hereto; provided, however, that this Agreement shall not inure to the benefit of
or be binding upon a successor or assign of a Holder unless and to the extent
such successor or assign holds Registrable Notes. If any transferee of any
holder shall acquire Registrable Notes, in any manner, whether by operation of
law or otherwise, such Registrable Notes shall be held subject to all of the
terms of this Agreement, and by taking and holding such Registrable Notes, such
person shall be conclusively deemed to have agreed to be bound by and to perform
all of the terms and provisions
-29-
of this Agreement, including the restrictions on resale set forth in this
Agreement and, if applicable, the Purchase Agreement, and such person shall be
entitled to receive the benefits hereof.
(f) Counterparts. This Agreement may be executed in any number
of counterparts and by the parties hereto in separate counterparts, each of
which when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(g) Headings. The headings in this Agreement are for
convenience of reference only and shall not limit or ----------------- otherwise
affect the meaning hereof.
(h) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AS APPLIED TO
CONTRACTS MADE AND PERFORMED WHOLLY WITHIN THE STATE OF NEW YORK, WITHOUT REGARD
TO PRINCIPLES OF CONFLICTS OF LAW. EACH OF THE PARTIES HERETO AGREES TO SUBMIT
TO THE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK IN ANY ACTION OR
PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT.
(i) Severability. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction to be
invalid, illegal, void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions set forth herein shall remain in full force and
effect and shall in no way be affected, impaired or invalidated, and the parties
hereto shall use their best efforts to find and employ an alternative means to
achieve the same or substantially the same result as that contemplated by such
term, provision, covenant or restriction. It is hereby stipulated and declared
to be the intention of the parties that they would have executed the remaining
terms, provisions, covenants and restrictions without including any of such that
may be hereafter declared invalid, illegal, void or unenforceable.
(j) Securities Held by the Issuer or the Company or Its
Affiliates. Whenever the consent or approval of Holders of a specified
percentage of Registrable Notes is required hereunder, Registrable Notes held by
the Issuer or the Company or its affiliates (as such term is defined in Rule 405
under the Securities Act) shall not be counted in determining whether such
consent or approval was given by the Holders of such required percentage.
(k) Third Party Beneficiaries. Holders of Registrable Notes
and Participating Broker-Dealers are intended third party beneficiaries of this
Agreement and this Agreement may be enforced by such Persons.
-30-
(l) Entire Agreement. This Agreement, together with the
Purchase Agreement and the Indenture, is intended by the parties as a final and
exclusive statement of the agreement and understanding of the parties hereto in
respect of the subject matter contained herein and therein and any and all prior
oral or written agreements, representations, or warranties, contracts,
understandings, correspondence, conversations and memoranda between the Initial
Purchasers on the one hand and the Issuer and the Company on the other, or
between or among any agents, representatives, parents, subsidiaries, affiliates,
predecessors in interest or successors in interest with respect to the subject
matter hereof and thereof are merged herein and replaced hereby.
S-1
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date first written above.
BRL UNIVERSAL EQUIPMENT
2001 A, L.P.
By: BRL Universal Equipment
Management, Inc.,
its General Partner
By: Gregory C. Greene
---------------------------------
Gregory C. Greene
President
BRL UNIVERSAL EQUIPMENT CORP.
By: Gregory C. Greene
---------------------------------
Gregory C. Greene
President
UNIVERSAL COMPRESSION, INC.
By: /s/ Richard W. Fitzgerald
---------------------------------
Richard W. Fitzgerald
Senior Vice President
S-2
UNIVERSAL COMPRESSION HOLDINGS, INC.
By: /s/ Richard W. Fitzgerald
----------------------------------
Richard W. Fitzgerald
Senior Vice President
DEUTSCHE BANC ALEX. BROWN INC.
FIRST UNION SECURITIES, INC.
BANC ONE CAPITAL MARKETS, INC.
SCOTIA CAPITAL (USA) INC.
By: DEUTSCHE BANC ALEX. BROWN
INC.
By: /s/ Steven M. Cowan
----------------------------------
Steven M. Cowan
Vice President
By: /s/ C. Mitchell Cox
----------------------------------
C. Mitchell Cox
Managing Director
EX-10.1
5
h91556ex10-1.txt
1ST AMEND. TO EQUIPMENT LEASE AGREEMENT - 10-15-01
EXHIBIT 10.1
FIRST AMENDMENT TO
EQUIPMENT LEASE AGREEMENT
This FIRST AMENDMENT TO EQUIPMENT LEASE AGREEMENT, dated as of
October 15, 2001 (this "Amendment") is among BRL UNIVERSAL EQUIPMENT 2001 A,
L.P., a Delaware limited partnership ("Lessor") and UNIVERSAL COMPRESSION, INC.,
a Texas corporation ("Lessee").
WITNESSETH:
WHEREAS, the parties hereto are parties to an Equipment Lease
Agreement dated as of February 9, 2001 (together with all amendments and
supplements thereto, the "Lease Agreement"); and
WHEREAS, the parties hereto desire to amend certain Sections
of the Lease Agreement.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements set forth herein and in the First Amended and Restated Participation
Agreement of even date hereof (the "Participation Agreement") among Lessee,
Universal Compression Holdings, Inc., as Guarantor, Lessor, The Bank of New
York, not in its individual capacity but for the benefit of Tranche A
Noteholders, the financial institutions that may become party thereto, as
Tranche B Lenders, BRL Universal Equipment Management, Inc., as Lessor General
Partner, Bankers Trust Company as Administrative Agent and Bankers Trust Company
as Collateral Agent, the parties hereto agree as follows:
1. Definitions. Unless the context otherwise requires,
capitalized terms used herein and not otherwise defined herein shall have the
meanings set forth or referred to in Appendix A to the Participation Agreement,
which Appendix A also includes the rules of usage and interpretation applicable
hereto.
2. Effectiveness. This Amendment shall become effective as of
the date first written above upon (i) the execution and delivery hereof by
Lessor, Lessee and Collateral Agent and (ii) the First Amended and Restated
Participation Agreement becoming effective in accordance with the terms thereof.
3. Amendments.
(a) Section 4 is hereby amended and restated as
follows:
"Lessor shall not be liable to Lessee for
any failure or delay in the delivery of any Item of Equipment
to Lessee. Forthwith upon delivery of each Item of Equipment
to Lessee, Lessee shall evidence its acceptance of such Item
of Equipment hereunder and of the condition of such Item of
Equipment by executing and delivering to Lessor a Lease
Supplement for such Item, dated the first Funding Date of such
Item. THE EXECUTION BY LESSOR AND LESSEE OF A
LEASE SUPPLEMENT FOR AN ITEM OF EQUIPMENT SHALL (i) EVIDENCE
THAT SUCH ITEM IS LEASED UNDER, AND IS SUBJECT TO ALL OF THE
TERMS, PROVISIONS AND CONDITIONS OF, THIS LEASE AGREEMENT, AND
(II) CONSTITUTE LESSEE'S UNCONDITIONAL AND IRREVOCABLE
ACCEPTANCE OF SUCH ITEM FOR ALL PURPOSES OF THIS LEASE
AGREEMENT."
(b) Section 5 is hereby amended and restated as
follows:
"The Term for each Item of Equipment shall
commence on the Funding Date therefor, and, unless this Lease
Agreement is sooner terminated with respect to such Item of
Equipment or all Items of Equipment pursuant to the provisions
hereof, shall end on the Termination Date."
(c) Section 7.1.2 is hereby amended and restated as
follows:
"7.1.2 Floating Lease Payment. Lessee hereby
agrees to pay Lessor for each Item of Equipment in arrears on
each Floating Payment Date during the Term, in an amount equal
to the sum of (i) the interest accrued at the Blended Tranche
B Rate on the Tranche B Component for such Item under the
terms of the Tranche B Loan Agreement (and if the Tranche B
Loans have been repaid or Lessor's obligations thereunder
otherwise discharged prior to the Termination Date, the amount
of interest that would have accrued had the Tranche B Loans
not been so paid or otherwise discharged (ii) the Equity Yield
accrued at the Blended Equity Yield Rate on the Equity
Component for such Item in accordance with the terms of the
Limited Partnership Agreement and (iii) an amount equal to
yield accrued on the Acquisition Cost for such Item at the
rate per annum set forth in the Lessor Margin Letter. Amounts
due on a Floating Payment Date under this Section 7.1.2 shall
be calculated for each day (from and including the first day
of such Floating Payment Period to but excluding the last day
of such Floating Payment Period) elapsed during the Floating
Payment Period then ending."
(d) Section 7.1.3 is hereby added as follows:
"7.1.3 Lease Premium. Lessee hereby agrees
to pay Lessor as a one-time, non-refundable lease rental
payment on each Funding Date an amount equal to the Tranche A
Discount, if any, resulting from the issuance by Lessor of
Tranche A Notes on such Funding Date which amount shall be
deemed earned by Lessor and due and owing as of such Funding
Date and shall not constitute a pre-paid Lease Payment for any
period after such Funding Date. Lessee may credit the
aggregate amount of any such Tranche A Discounts against any
amounts owed by Lessor to Lessee on such Funding Date.
(e) Section 23(h) is hereby amended by replacing the
words "Lessee or any of its Subsidiaries" with "Guarantor,
Lessee or any of Lessee's Subsidiaries" each place that phrase
appears in such Section.
-2-
(f) Section 28.4.1 is hereby amended and restated as
follows:
28.4.1 Partial Purchase Option. Provided
this Lease Agreement shall not have been earlier terminated
and no Lease Event of Default shall have occurred and is
continuing and subject to the provisions of Section 28.4.4,
Lessee or its designee shall be entitled, at Lessee's option,
(i) on any Floating Payment Date prior to February 15, 2004,
to purchase with the proceeds of one or more Equity Offerings,
within the first 120 days after the consummation of the
related Equity Offering all but not less than all of Lessor's
rights and interests in one or more Items of Equipment which
in the aggregate for all such purchases under this Section
28.4.1 have Acquisition Costs not in excess of thirty five
(35%) percent of the aggregate Acquisition Costs of all Items
of Equipment acquired by Lessor and leased to Lessee hereunder
on the Closing Date and each Funding Date thereafter prior to
such Floating Payment Date and (ii) on any Floating Payment
Date on or after February 15, 2005 to purchase all but not
less than all of Lessor's rights and interest in one or more
Items of Equipment.
(g) Section 28.4.4 is hereby amended by replacing the
phrase "Permitted Investments" with the phrase "investments of
the type described in clause (i) through (iii) of Section 7.17
of the Participation Agreement".
4. Miscellaneous. Sections 30, 31 and 33 of the Lease
Agreement are incorporated herein by reference mutatis mutandis.
-3-
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be duly executed and delivered by their respective duly authorized
officers as of the date first above written.
BRL UNIVERSAL EQUIPMENT 2001 A, L.P.,
as Lessor
By BRL Universal Equipment Management, Inc.
Its General Partner
By: /s/ Gregory C. Greene
-------------------------------------------
President
UNIVERSAL COMPRESSION, INC.,
as Lessee
By: /s/ Richard W. FitzGerald
------------------------------------------
Senior Vice President and
Chief Financial Officer
-Signature Page-
[First Amendment to Equipment Lease Agreement]
EX-10.2
6
h91556ex10-2.txt
1ST AMEND. TO RESTATED PARTICIPATION AGREEMENT
EXHIBIT 10.2
FIRST AMENDED AND RESTATED
PARTICIPATION AGREEMENT
among
UNIVERSAL COMPRESSION, INC.
as Lessee
UNIVERSAL COMPRESSION HOLDINGS, INC.
as Guarantor
BRL UNIVERSAL EQUIPMENT 2001 A, L.P.
as Lessor
The financial institutions listed on the signature pages
hereof as Tranche B Lenders
THE BANK OF NEW YORK,
not in its individual capacity but as Indenture Trustee, Paying Agent,
Transfer Agent and Registrar for the Tranche A Noteholders
BRL UNIVERSAL EQUIPMENT MANAGEMENT, INC.
as Lessor General Partner
BANKERS TRUST COMPANY
as Administrative Agent and Collateral Agent for
Tranche B Lenders and Indenture Trustee, on behalf of the
Tranche A Noteholders
DEUTSCHE BANC ALEX. BROWN INC.
as Arranger
THE BANK OF NOVA SCOTIA
as Syndication Agent for Tranche B Lenders
BANK ONE, NA
as Documentation Agent for Tranche B Lenders
and
FIRST UNION NATIONAL BANK
as Managing Agent
October 15, 2001
----------------------------------------------------
UNIVERSAL COMPRESSION, INC.,
GAS COMPRESSION EQUIPMENT
FINANCING FACILITY
----------------------------------------------------
TABLE OF CONTENTS
Page
----
1. Definitions and Usage....................................................................................2
1A. Effectiveness............................................................................................2
2. Representations and Warranties...........................................................................2
2.1. Lessee Representations and Warranties...........................................................2
2.2. Guarantor Representations and Warranties.......................................................11
2.3. Lessor Representations and Warranties For Benefit of All Parties...............................12
2.4. Lessor Representations and Warranties For Benefit of Indenture Trustee, Tranche B
Lenders, Administrative Agent and Collateral Agent.............................................13
2.5. Representations and Warranties of Lessor General Partner.......................................14
2.6. Tranche B Lenders Representations and Warranties...............................................15
2.7. Private Offering Representations; etc..........................................................15
2.8. Warranty Disclaimers...........................................................................16
3. Conditions Precedent....................................................................................16
3.2. Tranche B Lender Conditions....................................................................20
4. Commitments and Fundings................................................................................21
4.1. Tranche B Commitments..........................................................................21
4.2. Lessor Commitment to Purchase..................................................................22
4.3. Lease Supplements..............................................................................22
4.4. Rights in Equipment............................................................................22
4.5. Funding Dates..................................................................................22
4.6. Limitation on Size of Facility.................................................................23
5. Selection of Floating Lease Payment Period..............................................................23
6. Default Purchase Options and Cure Rights................................................................23
6.1. Right to Cure Certain Lease Events of Default..................................................23
6.2. Lessee Cure Right..............................................................................24
7. Security................................................................................................25
7.1. Security Interest..............................................................................25
7.2. Further Assurances.............................................................................26
7.3. Termination....................................................................................27
7.4. Other Security.................................................................................27
(i)
Page
----
7.5. Power of Attorney..............................................................................27
7.6. Assignment of Rights...........................................................................28
7.7. Transfer of the Collateral by Collateral Agent.................................................28
7.8. No Segregation of Monies; No Interest..........................................................28
7.9. Distribution of Moneys.........................................................................28
(a) Scheduled and End of Term Purchase Option Payments....................................28
(b) Prepayments...........................................................................29
(c) Payments after an End of Term Sale or Redelivery of Equipment.........................29
7.10. Payments after a Loan Event of Default.........................................................30
7.11. Application of Certain Other Payments..........................................................30
7.12. Other Payments.................................................................................31
7.13. Retention of Amounts by Collateral Agent.......................................................31
7.14. Exercise of Remedies..................................................................31
7.14.1. Rights in Collateral..................................................................31
7.14.2. Delivery of Documents; Taking Possession of Collateral................................31
7.14.4. Possession of Collateral..............................................................32
7.14.5. Sale of Collateral....................................................................32
7.14.6. Discharge.............................................................................33
7.14.7. Appointment of Receiver...............................................................33
7.14.8. Redemption............................................................................33
7.14.9. Rights Cumulative; No Waiver..........................................................33
7.14.10. Termination of Proceedings............................................................34
7.15. No Commingling of Funds........................................................................34
7.16. Lessor Collateral..............................................................................34
7.17. Conflicts......................................................................................34
8. Guaranty................................................................................................35
9. Covenants...............................................................................................36
9.1. Lessor and Lessor General Partner Covenants....................................................36
9.2. Lessee Covenants for the Benefit of Indenture Trustee and Tranche A Noteholders................38
9.3. Lessee Covenants for the Benefit of Lessor and Tranche B Lenders...............................47
9.4. Covenant of Tranche B Lenders, Lessor, Administrative Agent and Collateral Agent and
Limited Partners...............................................................................58
9.5. Covenant of Lessee and Lessor..................................................................58
10. Indemnities.............................................................................................58
10.1. Lessee General Indemnification.................................................................58
10.2. Exceptions to Lessee's General Indemnification.................................................60
10.3. Tax Indemnity..................................................................................61
10.3.1. General Indemnity.....................................................................61
10.3.2. Exceptions to Tax Indemnity...........................................................62
-2-
Page
----
10.3.3. Payment of Taxes......................................................................63
10.3.4. Tax Filings...........................................................................63
10.3.5. Withholdings..........................................................................64
10.3.6. Tax Contests..........................................................................64
10.3.7. Special Tax Indemnity.................................................................66
10.4. Increased Costs, Illegality, etc. .............................................................66
10.5. Lessee Indemnity...............................................................................67
10.6. Survival.......................................................................................67
11. Administrative Agent and Collateral Agent...............................................................67
11.1. Authorization and Action of Administrative Agent...............................................67
11.2. Delegation of Duties...........................................................................69
11.3. Agent's Reliance, etc. ........................................................................69
11.4. Administrative Agent, Collateral Agent and Affiliates..........................................70
11.5. Credit Decisions...............................................................................70
11.6. Indemnification................................................................................70
11.7. Successor Administrative Agent and Collateral Agent; Termination of Agency.....................71
11.8. Registration...................................................................................71
12. Miscellaneous...........................................................................................72
12.1. Expenses.......................................................................................72
12.2. Amendments, Consents and Waivers...............................................................73
12.3. GOVERNING LAW; SUBMISSION TO JURISDICTION; VENUE; WAIVER OF JURY TRIAL.........................74
12.4. Notices........................................................................................75
12.5. Interests in the Equipment.....................................................................78
12.6. Descriptive Headings, etc. ....................................................................78
12.7. Benefit of Agreement; Assignment...............................................................78
12.8. Execution and Effectiveness....................................................................81
12.9. Survival.......................................................................................81
12.10. Severability...................................................................................81
12.11. No Broker......................................................................................82
12.12. Limited Recourse Against Limited Partners and Lessor General Partner...........................82
12.13. Consent and Agreement of Lessee and Guarantor..................................................83
12.14. Consent to Amendments..........................................................................83
-3-
APPENDICES, EXHIBITS AND SCHEDULES
APPENDIX A Definitions
SCHEDULE 1 Reserved
SCHEDULE 2 Notice Addresses and Payment Instructions
SCHEDULE 3 Subsidiaries
SCHEDULE 4 Insurance
SCHEDULE 5 Liabilities
SCHEDULE 6 Taxes
SCHEDULE 7 Titles, Etc.
SCHEDULE 8 Environmental Matters
SCHEDULE 9 Hedging Agreements
SCHEDULE 10 Negative Pledges
SCHEDULE 11 Debt
SCHEDULE 12 Liens
SCHEDULE 13 Investments, Loans and Advances
SCHEDULE 14 Transactions with Affiliates
EXHIBIT A-1 Form of Bill of Sale
EXHIBIT A-2 Form of Bill of Sale and Title Warranty
EXHIBIT B Form of Certificate of Sale/Leaseback Equipment
Relating to Lease Supplement
EXHIBIT C Form of Funding Notice and Instructions re Funds on
Funding Date
SCHEDULE 1 Amounts to be Funded
EXHIBIT D Form of Compliance Certificate
EXHIBIT E Form of Participation Agreement Supplement
EXHIBIT F Form of Security Supplement
EXHIBIT G Form of Funding Escrow Agreement
(iv)
This FIRST AMENDED AND RESTATED PARTICIPATION AGREEMENT, dated
as of October 15, 2001 (together with all amendments and supplements hereto,
this "Agreement") is among UNIVERSAL COMPRESSION, INC., a Texas corporation
("Lessee"), UNIVERSAL COMPRESSION HOLDINGS, INC., a Delaware corporation
("Guarantor"), BRL UNIVERSAL EQUIPMENT 2001 A, L.P., a Delaware limited
partnership ("Lessor"), THE BANK OF NEW YORK, not in its individual capacity but
solely as Indenture Trustee, Paying Agent, Transfer Agent and Registrar for the
Tranche A Noteholders ("Indenture Trustee"), the financial institutions listed
on the signature pages hereof or that may hereafter become party hereto by
execution and delivery of a Participation Agreement Supplement as a Tranche B
Lender or as an Eligible Transferee of a Tranche B Lender, (each a "Tranche B
Lender" and collectively "Tranche B Lenders") BRL UNIVERSAL EQUIPMENT
MANAGEMENT, INC., a Delaware corporation ("Lessor General Partner"), BANKERS
TRUST COMPANY, as Administrative Agent for Tranche B Lenders and Indenture
Trustee acting on behalf of the Tranche A Noteholders (in such capacity,
"Administrative Agent") and BANKERS TRUST COMPANY, as Collateral Agent for
Tranche B Lenders and Indenture Trustee acting on behalf of the Tranche A
Noteholders (in such capacity, "Collateral Agent").
WITNESSETH:
WHEREAS, Lessor has agreed to lease to Lessee certain natural
gas compressor equipment pursuant to the Equipment Lease Agreement dated as of
February 9, 2001 between Lessee and Lessor (the "Original Lease Agreement") and
a Participation Agreement dated as of February 9, 2001 (as amended and modified
by the First Amendment to Participation Agreement dated March 20, 2001, the
"Original Participation Agreement");
WHEREAS, Lessee is a subsidiary of Guarantor and to induce
Lessor to lease the natural gas compressor equipment to Lessee and to induce
Tranche A Noteholders to purchase Tranche A Notes and Tranche B Lenders to make
a loan or loans to Lessor, Guarantor agreed to guarantee all of Lessee's
obligations under the Operative Documents;
WHEREAS, to induce Tranche A Noteholders to purchase Tranche A
Notes and Tranche B Lenders to make a loan or loans to Lessor, Lessor has agreed
to provide Collateral Agent on behalf of Tranche A Noteholders and Tranche B
Lenders and Indenture Trustee on behalf of Tranche A Noteholders certain
security in accordance with the terms thereof;
WHEREAS, the parties hereto desire to amend the Original Lease
Agreement and amend and restate the Original Participation Agreement to allow
Lessor to issue additional Tranche A Notes and Tranche B Notes to finance the
acquisition of additional natural gas compressor equipment and lease it to
Lessee.
NOW, THEREFORE, in consideration of the premises and mutual
agreements contained herein, the parties hereto amend and restate the Original
Participation Agreement in its entirety and agree as follows:
1. Definitions and Usage.
Unless the context otherwise requires, capitalized terms used
herein and not otherwise defined herein shall have the meanings set forth or
referred to in Appendix A which Appendix A also contains the rules of usage that
shall apply hereto.
1A. Effectiveness.
This Agreement shall become effective as of the Amendment Date
upon execution and delivery of:
(a) This Agreement by Lessee, Guarantor, Lessor, Majority
Tranche B Lenders holding Tranche B Notes for Tranche B Loans made on February
9, 2001, Indenture Trustee, Paying Agent, Transfer Agent and Registrar for
Tranche A Notes, Lessor General Partner, Administrative Agent and Collateral
Agent;
(b) The First Amendment to Lease Agreement dated the date
hereof by Lessor and Lessee; and
(c) The First Amendment to Tranche B Loan Agreement dated the
date hereof by Lessor, Administrative Agent, Collateral Agent and Majority
Tranche B Lenders holding Tranche B Notes for Tranche B Loans made on February
9, 2001.
2. Representations and Warranties.
2.1. Lessee Representations and Warranties. Lessee hereby
represents and warrants as of the Closing Date, the Amendment Date and on each
Funding Date for the benefit of each other party hereto as follows.
(a) Lessee (i) is a duly organized and validly existing
corporation in good standing under the laws of the jurisdiction of its
incorporation, (ii) has the corporate power and authority to own its property
and assets and to transact the business in which it is engaged and presently
proposes to engage and (iii) is duly qualified and is authorized to do business
and is in good standing in each jurisdiction where the ownership, leasing or
operation of its property or the conduct of its business requires such
qualifications except for failures to be so qualified which, individually or in
the aggregate, could not reasonably be expected to have a Material Adverse
Effect or a material adverse effect on Lessee's ability to perform its
obligations under the Operative Documents.
(b) Lessee has the corporate power and authority to execute,
deliver and perform the terms and provisions of each of the Operative Documents
to which it is party and has taken all necessary corporate action to authorize
the execution, delivery and performance by it of each of such Operative
Documents. Lessee has duly executed and delivered each of the Operative
Documents to which it is party, and each of such Operative Documents constitutes
its legal, valid and binding obligation enforceable in accordance with its
terms, except to the extent that the enforceability thereof may be limited by
applicable bankruptcy, insolvency,
-2-
reorganization, moratorium or other similar laws generally affecting creditors'
rights and by equitable principles (regardless of whether enforcement is sought
in equity or at law).
(c) Neither the leasing of the Equipment, the execution,
delivery or performance by Lessee of the Operative Documents to which it is a
party, nor compliance by it with the terms and provisions thereof, (i) will
contravene any provision of any law, statute, rule or regulation or any order,
writ, injunction or decree of any court or governmental instrumentality, (ii)
will, after giving effect to any waivers obtained by Lessee, conflict with or
result in any material breach of any of the terms, covenants, conditions or
provisions of, or constitute a default under, or result in the creation or
imposition of (or the obligation to create or impose) any Lien (other than
Permitted Liens) upon any of the property or assets of Lessee, pursuant to the
terms of any indenture, mortgage, deed of trust, credit agreement or loan
agreement, or any other material agreement, contract or instrument, to which
Lessee is a party or by which it or any of its property or assets is bound or to
which it may be subject or (iii) will violate any provision of the Certificate
of Incorporation or By-Laws of Lessee.
(d) No order, consent, approval, license, authorization or
validation of, or filing, recording or registration with (other than the filing
of the Lessee Financing Statements and except as have otherwise been obtained or
made on or prior to the date of this representation), or exemption by, any
governmental or public body or authority, or any subdivision thereof, is
required to authorize, or is required in connection with, (i) the execution,
delivery and performance by Lessee of any Operative Document to which it is a
party or (ii) the legality, validity, binding effect or enforceability against
Lessee of any such Operative Document.
(e) There is no action, suit or other proceeding pending or,
to the best knowledge of Lessee, threatened, (i) with respect to the Revolver,
Senior Notes, Asset Backed Securities, Merger or the transactions contemplated
herein or (ii) that could reasonably be expected to result in a Material Adverse
Effect.
(f) There is no tax, levy, impost, deduction, charge or
withholding which may be imposed on or asserted against the Lessee Collateral or
any part thereof or any interest therein, or against Indenture Trustee, any
Tranche A Noteholder, any Tranche B Lender, Administrative Agent or Collateral
Agent either (i) on or by virtue of the execution or delivery of Operative
Documents or any other document contemplated thereby or (ii) on any payment to
be made by Lessee pursuant to the Operative Documents or any other document
contemplated thereby to which Lessee is a party.
(g) No Lease Default has occurred and is continuing.
(h) All representations and warranties of Lessee set forth in
the other Operative Documents are true and correct in all material respects.
(i) Lessee's chief executive office and its principal place of
business are located at 4440 Brittmoore Road, Houston, Texas, and Lessee is
incorporated in the State of Texas.
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(j) The transaction contemplated hereby (i) is not required to
be registered pursuant to Code Section 6111(d) or any regulation promulgated
thereunder or (ii) was properly and timely registered in accordance with Code
Section 6111(d) and any regulations promulgated thereunder as of the date of
this representation and the correct registration number was (or will be within
ten (10) Business Days of receipt by Lessee) provided to Lessor, Indenture
Trustee and each Tranche A Noteholder, and Tranche B Lender identified in the
Operative Documents on the date of this representation by name and address. Each
party hereto hereby agrees to provide to Lessee promptly after written request
therefor any information requested by Lessee on or prior to the date of this
representation and necessary for Lessee to register the transaction.
(k) [Reserved]
(l) There are no Liens other than Permitted Liens and Lessor
Liens on any Item of Equipment, the proceeds of any Item of Equipment or the
insurance required under the Lease Agreement.
(m) Each Item of Equipment is personal property and not a
fixture attached to realty under Applicable Law.
(n) Each Item of Equipment has permanently affixed thereto the
unit number or other identification number set forth therefor on the related
Lease Supplement.
(o) The provisions of this Agreement and the Lease Supplement
are effective to create in favor of Lessor and Collateral Agent a legal, valid
and enforceable security interest in each Item of Equipment; Lessor and
Collateral Agent shall be entitled to all of the rights and benefits and
priorities provided to a holder of a perfected first priority Lien under
Applicable Law subject to no Liens other than Permitted Liens or Lessor Liens,
and all recordations and filings have been accomplished in each jurisdiction as
required by law to establish and perfect Lessor's and Collateral Agent's
respective rights in and to such Lessee Collateral or Lessor Collateral, as the
case may be, or due provision has been made therefor, and any giving of notice
or any other action to such end required by Applicable Law has been given or
taken.
(p) The provisions of this Agreement are effective to create
in favor of Collateral Agent a legal, valid and enforceable security interest in
all right, title and interest of Lessor in Lessor Collateral, and, in reliance
on the accuracy of the representation and warranty of Lessor in Section 2.4(b),
the filing of the financing statements executed by Lessor as debtor with the
Secretary of State for the States of Delaware and in the applicable filing
office(s) in each state where Revised Article 9 of the UCC has not been adopted
or is not yet effective in which Items of Equipment are located perfects such
security interest in the Lessor Collateral, subject to no Liens other than
Permitted Liens and Lessor Liens, and Collateral Agent shall be entitled to all
of the rights, benefits, and priorities provided to a holder of liens of such
type under Applicable Law.
(q) [Reserved]
(r) [Reserved]
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(s) [Reserved]
(t) No Item of Equipment is intended by Lessee to be
"equipment used in farming operations" as such terms are used in Section 9-401
of the New York Uniform Commercial Code or any correlative provision of any
other applicable state's Uniform Commercial Code and no Item of Equipment shall
be "goods covered by a certificate of title issued under a statute of this state
or of another jurisdiction under the law of which indication of a security
interest on the certificate is required as a condition of perfection" within the
meaning of Section 9-103 of the New York Uniform Commercial Code or any
correlative provision of any other applicable state's Uniform Commercial Code.
(u) The audited consolidated balance sheet of Guarantor and
its consolidated subsidiaries as at March 31, 2001 and the related consolidated
statement of income, stockholders' equity and cash flow of Guarantor and its
consolidated subsidiaries for the fiscal year ended on said date, with the
opinion thereon of Deloitte Touche heretofore furnished to Lessor, each Tranche
B Lender and Administrative Agent are complete and correct and fairly present
the consolidated financial condition of Guarantor and its consolidated
subsidiaries as at said dates and the results of its operations for the fiscal
year on said dates in all material respects, all in accordance with GAAP, as
applied on a consistent basis. Neither Lessee nor any Subsidiary has on the
Amendment Date any material Debt, contingent liabilities, liabilities for taxes,
unusual forward or long-term commitments or unrealized or anticipated losses
from any unfavorable commitments, except as referred to or reflected or provided
for in the Financial Statements or in Schedule 5. Since March 31, 2001, there
has been no change or event having a Material Adverse Effect. Since the date of
the Financial Statements, neither the business nor the Properties of Lessee or
any Subsidiary have been materially and adversely affected as a result of any
fire, explosion, earthquake, flood, drought, windstorm, accident, strike or
other labor disturbance, embargo, requisition or taking of Property or
cancellation of contracts, permits or concessions by any Governmental Equity,
riot, activities of armed forces or acts of God or of any public enemy. With
respect to the Closing Date and the Amendment Date, notwithstanding anything
contained herein to the contrary, the "Financial Statements" referenced in this
Section 2.1(u) and in Sections 9.3(f) and 9.3(h) are the proforma financial
statements contained in the Offering Memorandum which gives effect to the Merger
and for each Funding Date thereafter, notwithstanding anything contained herein
to the contrary, such "Financial Statements" are the Financial Statements
identified as such in the Participation Agreement Supplement for such Funding
Date.
(v) ERISA.
(i) Lessee, each Subsidiary and each ERISA Affiliate
have complied in all material respects with ERISA and, where
applicable, the Code regarding each Plan.
(ii) Each Plan is, and has been, maintained in
substantial compliance with ERISA and, where applicable, the Code.
(iii) No act, omission or transaction has occurred
which could result in imposition on Lessee, any Subsidiary or any ERISA
Affiliate (whether directly or indirectly) of
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(i) either a civil penalty assessed pursuant to section 502(c), (i) or
(l) of ERISA or a tax imposed pursuant to Chapter 43 of Subtitle D of
the Code or (ii) breach of fiduciary duty liability damages under
section 409 of ERISA.
(iv) No Plan (other than a defined contribution plan)
or any trust created under any such Plan has been terminated since
September 2, 1974. No liability to the PBGC (other than for the payment
of current premiums which are not past due) by Lessee, any Subsidiary
or any ERISA Affiliate has been or is expected by Lessee, any
Subsidiary or any ERISA Affiliate to be incurred with respect to any
Plan. No ERISA Event with respect to any Plan has occurred.
(v) Full payment when due has been made of all
amounts which Lessee, any Subsidiary or any ERISA Affiliate is required
under the terms of each Plan or applicable law to have paid as
contributions to such Plan, and no accumulated funding deficiency (as
defined in section 302 of ERISA and section 412 of the Code), whether
or not waived, exists with respect to any Plan.
(vi) The actuarial present value of the benefit
liabilities under each Plan which is subject to Title IV of ERISA does
not, as of the end of Lessee's most recently ended fiscal year, exceed
the current value of the assets (computed on a plan termination basis
in accordance with Title IV of ERISA) of such Plan allocable to such
benefit liabilities. The term "actuarial present value of the benefit
liabilities" shall have the meaning specified in section 4041 of ERISA.
(vii) None of Lessee, any Subsidiary or any ERISA
Affiliate sponsors, maintains, or contributes to an employee welfare
benefit plan, as defined in section 3(1) of ERISA, including, without
limitation, any such plan maintained to provide benefits to former
employees of such entities, that may not be terminated by Lessee, a
Subsidiary thereof or any ERISA Affiliate in its sole discretion at any
time without any material liability.
(viii) None of Lessee, any Subsidiary or any ERISA
Affiliate sponsors, maintains or contributes to, or has at any time in
the preceding six (6) calendar years, sponsored, maintained or
contributed to, any Multiemployer Plan.
(ix) None of Lessee, any Subsidiary or any ERISA
Affiliate is required to provide security under section 401(a)(29) of
the Code due to a Plan amendment that results in an increase in current
liability for the Plan.
(x) Assuming the accuracy at all times of the
representation and warranty of each Tranche B Lender in Section 2.6 of
this Agreement, the execution and delivery of this Agreement will be
exempt from, or will not involve any transaction which is subject to,
the prohibitions of either Section 406 of ERISA or Section 4975 of the
Code and will not involve any transaction in connection with which a
penalty could be imposed under Section 502(i) of ERISA or a tax could
be imposed pursuant to Section 4975 of the Code.
-6-
(w) Taxes. Except as set out in Schedule 6, each of Lessee and
its Subsidiaries has filed all United States federal income tax returns and all
other tax returns which are required to be filed by them and have paid all
material taxes due pursuant to such returns or pursuant to any assessment
received by Lessee or any Subsidiary. The charges, accruals and reserves on the
books of Lessee and its Subsidiaries in respect of taxes and other governmental
charges are, in the opinion of Lessee, adequate. No tax lien has been filed and,
to the knowledge of Lessee, no claim is being asserted with respect to any such
tax, fee or other charge.
(x) Titles, etc.
(i) Except as set out in Schedule 7, Lessee and its
Subsidiaries have good and marketable title to its material properties
(i) except in cases where the failure to have said good and marketable
title would not reasonably cause a Material Adverse Effect and (ii)
free and clear of all Liens, except Liens permitted by Section 9.3(g).
(ii) All leases and agreements necessary for the
conduct of the business of Lessee and its Subsidiaries are valid and
subsisting, in full force and effect and there exists no default or
event or circumstance which with the giving of notice or the passage of
time or both would give rise to a default under any such lease or
leases, which would affect in any material respect the conduct of the
business of Lessee and its Subsidiaries.
(iii) Rights, Properties and other assets presently
owned, leased or licensed by Lessee or its Subsidiaries including,
without limitation, all easements and rights of way, include all
rights, Properties and other assets necessary to permit Lessee or its
Subsidiaries to conduct their business in all material respects in the
same manner as its business has been conducted prior to the date of
this representation.
(iv) All of the assets and Properties of Lessee or
its Subsidiaries thereof which are reasonably necessary for the
operation of its business are in good working condition and are
maintained in accordance with prudent business standards.
(y) No Material Misstatements. No written information,
statement, exhibit, certificate, document or report furnished to Administrative
Agent and the Tranche B Lenders (or any of them) by Lessee or any Subsidiary in
connection with the negotiation of this Agreement contained any material
misstatement of fact or omitted to state a material fact or any fact necessary
to make the statement contained therein not materially misleading in the light
of the circumstances in which made and with respect to Lessee and its
Subsidiaries taken as a whole. To Lessee's knowledge, there is no fact peculiar
to Lessee or any Subsidiary which has a Material Adverse Effect or in the future
is reasonably likely to have (so far as Lessee can now reasonably foresee) a
Material Adverse Effect and which has not been set forth in this Agreement or
the other documents, certificates and statements furnished to Administrative
Agent by or on behalf of Lessee or any Subsidiary or otherwise prior to, or on,
the date of this representation in connection with the transactions contemplated
hereby.
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(z) Investment Company Act. Neither Lessee nor any Subsidiary
is an "investment company" or a company "controlled" by an "investment company,"
within the meaning of the Investment Company Act of 1940, as amended.
(aa) Public Utility Holding Company Act. Neither Lessee nor
any Subsidiary is a "holding company," or a "subsidiary company" of a "holding
company," or an "affiliate" of a "holding company" or of a "subsidiary company"
of a "holding company," or a "public utility" within the meaning of the Public
Utility Holding Company Act of 1935, as amended.
(bb) Subsidiaries. Except as set forth on Schedule 3, Lessee
has no Subsidiaries.
(cc) Defaults. Neither Lessee nor any Subsidiary is in
material default nor has any event or circumstance occurred which, but for the
expiration of any applicable grace period or the giving of notice, or both,
would constitute a material default under any material agreement or instrument
to which Lessee or any Subsidiary is a party or by which Lessee or any
Subsidiary is bound which default would have a Material Adverse Effect.
(dd) Environmental Matters. Except (i) as provided in Schedule
8 or (ii) as would not have a Material Adverse Effect (or with respect to (c),
(d) and (e) below, where the failure to take such actions would not have a
Material Adverse Effect):
(i) Neither any Property of Lessee or any Subsidiary
nor the operations conducted thereon violate any order or requirement
of any court or Governmental Entity or any Environmental Law;
(ii) Without limitation of clause (a) above, no
Property of Lessee or any Subsidiary nor the operations currently
conducted thereon or, to the best knowledge of Lessee, by any prior
owner or operator of such Property or operation, are in violation of or
subject to any existing, pending or threatened action, suit,
investigation, inquiry or proceeding by or before any court or
Governmental Entity or to any remedial obligations under Environmental
Laws;
(iii) All notices, permits, licenses or similar
authorizations, if any, required to be obtained or filed in connection
with the operation or use of any and all Property of Lessee and each
Subsidiary, including without limitation past or present treatment,
storage, disposal or release of a hazardous substance or solid waste
into the environment, have been duly obtained or filed, and Lessee and
each Subsidiary are in compliance with the terms and conditions of all
such notices, permits, licenses and similar authorizations;
(iv) All hazardous substances, solid waste, and oil
and gas exploration and production wastes, if any, generated at any and
all Property of Lessee or any Subsidiary have in the past been
transported, treated and disposed of in accordance with Environmental
Laws and so as not to pose an imminent and substantial endangerment to
public health or welfare or the environment, and, to the best knowledge
of Lessee, all
-8-
such transport carriers and treatment and disposal facilities have been
and are operating in compliance with Environmental Laws and so as not
to pose an imminent and substantial endangerment to public health or
welfare or the environment, and are not the subject of any existing,
pending or threatened action, investigation or inquiry by any
Governmental Entity in connection with any Environmental Law;
(v) Lessee has taken all steps reasonably necessary
to determine and has determined that no hazardous substances, solid
waste, or oil and gas exploration and production wastes, have been
disposed of or otherwise released and there has been no threatened
release of any hazardous substances on or to any Property of Lessee or
any Subsidiary except in compliance with Environmental Laws and so as
not to pose an imminent and substantial endangerment to public health
or welfare or the environment;
(vi) To the extent applicable, all Property of Lessee
and each Subsidiary currently satisfies all design, operation, and
equipment requirements imposed by the OPA or scheduled to be imposed by
OPA during the term of the Lease Agreement, and Lessee does not have
any reason to believe that such Property, to the extent subject to OPA,
will not be able to maintain compliance with the OPA requirements
during the term of the Lease Agreement; and
(vii) Neither Lessee nor any Subsidiary has any known
contingent liability in connection with any release or threatened
release of any oil, hazardous substance or solid waste into the
environment.
(ee) Compliance with the Law. Neither Lessee nor any
Subsidiary has violated any Governmental Requirement or failed to obtain any
license, permit, franchise or other governmental authorization necessary for the
ownership of any of its Properties or the conduct of its business, which
violation or failure would have (in the event such violation or failure were
asserted by any Person through appropriate action) a Material Adverse Effect.
(ff) Insurance. Schedule 4 attached hereto contains an
accurate and complete description of all material policies of fire, liability,
workmen's compensation and other forms of insurance owned or held by Lessee and
each Subsidiary. All such policies are in full force and effect, all premiums
with respect thereto covering all periods up to and including the date of the
closing have been paid, and no notice of cancellation or termination has been
received with respect to any such policy. Such policies are sufficient for
compliance with all requirements of law and of all agreements to which Lessee or
any Subsidiary is a party; are valid, outstanding and enforceable policies;
provide adequate insurance coverage in at least such amounts and against at
least such risks (but including in any event public liability) as are usually
insured against in the same general area by companies engaged in the same or a
similar business for the assets and operations of Lessee and each Subsidiary;
will remain in full force and effect through the respective dates set forth in
the binders for said insurance without the payment of additional premiums; and
will not in any way be affected by, or terminate or lapse by reason of, the
transactions contemplated by this Agreement. Neither Lessee nor any Subsidiary
has been refused any insurance with respect to its assets or operations, nor has
its coverage been limited
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below usual and customary policy limits, by an insurance carrier to which it has
applied for any such insurance or with which it has carried insurance during the
last three (3) years.
(gg) Hedging Agreements. Schedule 9 sets forth a true and
complete list of all Hedging Agreements as of the Amendment Date (including
commodity price swap agreements, forward agreements or contracts of sale which
provide for prepayment for deferred shipment or delivery of oil, gas or other
commodities) of Lessee and each Subsidiary, the material terms thereof
(including the type, term, effective date, termination date and notional amounts
or volumes), the net mark to market value thereof, all credit support agreements
relating thereto (including any margin required or supplied), and the counter
party to each such agreement.
(hh) Restriction on Liens. Except as set forth on Schedule 10,
neither Lessee nor any of Subsidiary is a party to any agreement or arrangement
(other than the Operative Documents, the Revolver and the Security Instruments),
or subject to any order, judgment, writ or decree, which either restricts or
purports to restrict its ability to grant Liens to other Persons on or in
respect of their respective assets or Properties.
(ii) As of each Funding Date, the projections identified on
the Participation Agreement Supplement for such Funding Date (or in the case of
the first Funding Date, the projections made a part of the final Offering
Memorandum of the Lessor dated February 6, 2001 furnished to the Administrative
Agent, the Lessor, the Indenture Trustee and the Tranche B Lenders prior to the
Closing Date) (the "Projections") have been prepared in good faith and are based
on reasonable assumptions, and there are no statements or conclusions in the
Projections which are based upon or include information known to Lessee to be
misleading in any material respect or which fail to take into account material
information known to Lessee regarding the matters reported therein. Lessee
believes that the Projections are reasonable and attainable, it being recognized
by Lessor and Tranche B Lenders, however, that projections as to future events
are not to be viewed as facts and that the actual results during the period or
periods covered by the Projections may differ from the projected results and
that the differences may be material.
(jj) Lessee has no knowledge of the falsity of, or any reason
to believe, any of the representations of Lessor and Co-Obligor contained in any
Note Purchase Agreement or Underwriting Agreement are untrue or incorrect in any
material respect.
(kk) There has been no change to the written description of
Lessee Maintenance Practices delivered to the Administrative Agent prior to the
Amendment Date, except as otherwise provided on the related Participation
Agreement Supplement for the most recent Funding Date.
2.1A Further Lessee Representations and Warranties. Lessee
hereby represents as of each Funding Date for the benefit of each other party
hereto as follows:
(a) Immediately prior to giving effect to the sale thereof to
Lessor, the Seller thereof has good and marketable title to each Subject Item.
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(b) Each Subject Item is or will be within a reasonable period
of time in compliance with identification mark requirements of Section 15 of the
Lease Agreement.
(c) Each Subject Item is in proper working order.
(d) No Event of Loss or event which with the passage of time
would become an Event of Loss has occurred with respect to any Subject Item.
2.2. Guarantor Representations and Warranties. Guarantor
represents and warrants as of the Closing Date, Amendment Date and on each
Funding Date for the benefit of each party hereto as follows.
(a) Guarantor (i) is a duly organized and validly existing
corporation in good standing under the laws of the jurisdiction of its
incorporation, (ii) has the corporate power and authority to own its property
and assets and to transact the business in which it is engaged and presently
proposes to engage and (iii) is duly qualified and authorized to do business and
is in good standing in each jurisdiction where the ownership, leasing or
operation of its property or the conduct of its business requires such
qualifications except for failures to be so qualified which, individually or in
the aggregate, could not reasonably be expected to have a Material Adverse
Effect.
(b) Guarantor has the corporate power and authority to
execute, deliver and perform the terms and provisions of each of the Operative
Documents to which it is party and has taken all necessary corporate action to
authorize the execution, delivery and performance by it of each of such
Operative Documents. Guarantor has duly executed and delivered each of the
Operative Documents to which it is party, and each of such Operative Documents
constitutes its legal, valid and binding obligation enforceable in accordance
with its terms, except to the extent that the enforceability thereof may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
other similar laws generally affecting creditors' rights and by equitable
principles (regardless of whether enforcement is sought in equity or at law).
(c) Neither the execution, delivery or performance by
Guarantor of the Operative Documents to which it is a party, nor compliance by
it with the terms and provisions thereof, (i) will contravene any provision of
any law, statute, rule or regulation or any order, writ, injunction or decree of
any court or governmental instrumentality, (ii) will, after giving effect to any
waivers obtained by Guarantor, conflict with or result in any material breach of
any of the terms, covenants, conditions or provisions of, or constitute a
default under, or result in the creation or imposition of (or the obligation to
create or impose) any Lien (other than Permitted Liens) upon any of the property
or assets of Guarantor or any of its Subsidiaries pursuant to the terms of any
indenture, mortgage, deed of trust, credit agreement or loan agreement, or any
other material agreement, contract or instrument, to which Guarantor or any of
its Subsidiaries is a party or by which it or any of its property or assets is
bound or to which it may be subject or (iii) will violate any provision of the
Certificate of Incorporation or By-Laws of Guarantor or any of its Subsidiaries.
-11-
(d) No order, consent, approval, license, authorization or
validation of, or filing, recording or registration with (except as have
otherwise been obtained or made on or prior to the date of this representation),
or exemption by, any governmental or public body or authority, or any
subdivision thereof, is required to authorize, or is required in connection
with, (i) the execution, delivery and performance by Guarantor of any Operative
Document to which it is a party or (ii) the legality, validity, binding effect
or enforceability against Guarantor of any such Operative Document.
(e) Guarantor has no knowledge of the falsity of, or any
reason to believe, any of the representations and warranties of Lessor and
Co-Obligor contained in any Note Purchase Agreement or Underwriting Agreement
are untrue or incorrect in any material respect.
2.3. Lessor Representations and Warranties For Benefit of All
Parties. Lessor hereby represents and warrants as of the Closing Date, Amendment
Date and on each Funding Date for the benefit of each party hereto as follows:
(a) Lessor is a limited partnership duly established and
validly existing under the laws of the State of Delaware, has full power,
authority and legal right under such laws to execute, deliver and perform its
obligations under the Operative Documents to which it is a party.
(b) The leasing and financing of the Equipment, the execution
and delivery of the Operative Documents and the other related instruments,
documents and agreements to which Lessor is a party, and the compliance by
Lessor with the terms hereof and thereof and the payments and performance by
Lessor of any of its obligations hereunder and thereunder (i) have been duly and
legally authorized by all necessary action on the part of Lessor, (ii) are not
in contravention of, and will not result in a violation or breach of, any of the
terms of Lessor's Limited Partnership Agreement or Certificate of Limited
Partnership, (iii) will not violate or constitute a breach of any provision of
law, any order of any court or other agency of government, or any indenture,
agreement or other instrument to which Lessor is a party, or by or under which
Lessor or any of Lessor's property is bound, or be in conflict with, result in a
breach of, or constitute (with due notice and/or lapse of time) a default under
any such indenture, agreement or instrument, or result in the creation or
imposition of any Lien, other than Permitted Liens, upon any of Lessor's
property or assets and (iv) will not require, on the part of Lessor, the consent
or approval of, the giving of notice to, the registration with, or the taking of
any other action in respect of, any United States federal, state or local
governmental or public commission, board, authority or agency except for
filings, if any, made pursuant to any notice reporting requirement applicable to
it.
(c) Each Operative Document to which Lessor is a party has
been executed by the duly authorized officer or officers of Lessor General
Partner and delivered to the other parties thereto and constitutes, or when
executed by the duly authorized officer or officers of Lessor General Partner
and delivered to the other parties thereto, will constitute, the legal, valid
and binding obligation of Lessor, enforceable in accordance with its terms
except as limited by any applicable bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting the enforcement of creditors' rights from
time to time in effect and by general principles of equity including those
applicable to the enforceability of the remedy of specific performance.
-12-
(d) There is no action, suit or other proceeding now pending
or, to Lessor's knowledge, threatened, against or affecting Lessor, in any court
or before any regulatory commission, board or other administrative governmental
agency (i) which will materially and adversely affect the interest of Lessor in
any Item of Equipment or any Operative Document, or the interest of Collateral
Agent in any such Item or any Operative Document or (ii) that could reasonably
be expected to materially and adversely affect the business, operations,
property, assets, liabilities, condition (financial or otherwise) or prospects
of Lessor.
(e) There is no tax, levy, impost, deduction, charge or
withholding which may be imposed on or asserted against the Lessor Collateral or
any part thereof or any interest therein, or against Indenture Trustee, any
Tranche A Noteholder, any Tranche B Lender, Administrative Agent or Collateral
Agent either (i) on or by virtue of the execution or delivery of Operative
Documents or any other document contemplated thereby or (ii) on any payment to
be made by Lessor pursuant to the Operative Documents or any other document
contemplated thereby to which Lessor is a party.
(f) Lessor has no indebtedness or other liabilities, whether
contingent or otherwise, other than its obligations under and as contemplated by
the Operative Documents.
(g) No Loan Default or Loan Event of Default not caused by a
Lease Default or Lease Event of Default has occurred and is continuing.
(h) Neither Lessor nor any Person authorized to act on its
behalf has directly or indirectly offered to sell any interests in the Lessor
Collateral, Tranche A Notes, Tranche B Notes or Equity Certificates or any
security similar thereto, to, or otherwise approved or negotiated with respect
thereto with anyone. Neither Lessor nor any Person authorized to act on its
behalf will so offer or sell in violation of Section 5 of the Securities Act of
1933, as amended, or any securities or blue sky law of any applicable
jurisdiction.
(i) The representations and warranties of Lessor in each Note
Purchase Agreement and Underwriting Agreement are true and correct in all
material respects and Lessor has complied with all of its covenants in each such
agreement in all material respects.
2.4. Lessor Representations and Warranties For Benefit of
Indenture Trustee, Tranche B Lenders, Administrative Agent and Collateral Agent.
Lessor hereby represents and warrants as of the Closing Date, Amendment Date and
on each Funding Date for the benefit of Indenture Trustee, each Tranche B
Lender, Administrative Agent and Collateral Agent as follows:
(a) No Lease Default or Lease Event of Default of which it has
knowledge has occurred and is continuing.
(b) Lessor's chief executive office and principal place of
business is located at 2911 Turtle Creek Boulevard, Suite 1240, Dallas, Texas
and Lessor's records with respect to the transactions contemplated by the
Operative Documents are located at such address.
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(c) Lessor is duly qualified and is authorized to do business
and is in good standing in each jurisdiction where ownership, leasing or
operation of its property or the conduct of its business requires such
qualifications except for failures to be so qualified which, individually or in
the aggregate, could not reasonably be expected to have a material adverse
effect on Lessor's ability to perform its obligations or exercise its rights
under the Operative Documents to which it is a party or on the business,
property, assets, liabilities, condition (financial or otherwise) or prospects
of Lessor.
(d) After giving effect to each Bill of Sale therefor, Lessor
has good and marketable title to each Item of Equipment (including the parts and
components thereof) and the Lessor Collateral is free and clear of all Liens
other than Permitted Liens.
(e) The provisions of this Agreement are effective to create
in favor of Collateral Agent a legal, valid and enforceable security interest in
all right, title and interest of Lessor in the Lessor Collateral, and the filing
of the financing statements executed by Lessor as debtor with the Secretary of
State for the State of Delaware, and in the applicable filing office(s) in each
state where Revised Article 9 of the UCC has not been adopted or is not yet
effective in which Items of Equipment are located perfects such security
interest in the Lessor Collateral, subject to no Liens other than Permitted
Liens and Lessor Liens and Collateral Agent shall be entitled to all of the
rights, benefits, and priorities provided to a holder of liens of such type
under Applicable Law.
(f) Neither Lessor nor any Person authorized to act on its
behalf will permit any transfer of any interest in Lessor, directly or
indirectly, that would result in the Lessor being treated as a Publicly Traded
Partnership pursuant to Code Section 7704.
2.5. Representations and Warranties of Lessor General Partner.
Lessor General Partner represents and warrants that as of the Closing Date,
Amendment Date and on each Funding Date for the benefit of each other party
hereto as follows:
(a) It is duly organized under the laws of its jurisdiction of
incorporation, has full corporate power and authority and legal right under such
laws to execute, deliver and perform its obligations under the Operative
Documents to which it is a party and is qualified to do business in and is in
good standing in all material respects in, each jurisdiction in which the nature
of its business makes such qualification necessary, except where failure to be
so qualified and in good standing would not have a material adverse effect on
its ability to perform its obligations under the Operative Documents to which it
is a party.
(b) The execution and delivery of the Operative Documents and
the other related instruments, documents and agreements to which it is a party,
and the compliance by it with the terms hereof and thereof and the payments and
performance by it of any its obligations hereunder and thereunder (i) have been
duly and legally authorized by all necessary corporate action on its part, (ii)
are not in contravention of, and will not result in a violation or breach of,
any of the terms of its certificate of incorporation (or equivalent document),
its by-laws or any provisions relating to its capital stock, (iii) will not
violate or constitute a breach of any provision of law, any order of any court
or other agency of government, or any indenture, agreement or
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other instrument to which it is a party, or by or under which it is bound, or be
in conflict with, result in a breach of, or constitute (with due notice and/or
lapse of time) a default under any such indenture, agreement or instrument, or
result in the creation or imposition of any Lien upon any of its property or
assets and (iv) will not require, on its part or any Affiliate's part thereof,
the consent or approval of, the giving of notice to, the registration with, or
the taking of any other action in respect of, any United State federal, state or
local governmental or public commission, board, authority or agency except for
filings, if any, made pursuant to any notice reporting requirement applicable to
it.
(c) Each Operative Document to which it is a party has been
executed by its duly authorized officer or officers and delivered to the other
parties thereto and constitutes, or when executed by its duly authorized officer
or officers and delivered to the other parties thereto, such Operative Documents
will constitute, legal, valid and binding obligations enforceable in accordance
with their terms except as limited by any applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditors' rights from time to time in effect and by general principles of
equity including those applicable to the enforceability of the remedy of
specific performance.
(d) It is not in breach of any covenants or agreements made by
it in the Limited Partnership Agreement or in this Agreement.
(e) There are no actions, suits or proceedings pending or, to
the best of its knowledge, threatened before any court or by or before any other
Government Entity, or any arbitrator, which either individually or in the
aggregate, would have a material adverse effect on the Lessor Collateral or on
the right, power and authority or its ability to perform its obligations under
any Operative Document to which it is a party.
(f) There are no Lessor Liens attributable to it on the assets
of Lessor or on any part thereof, and the execution, delivery and performance by
it of the Operative Documents to which it is a party will not subject the assets
of Lessor to any Lessor Liens attributable to it.
(g) It does not have, has not used and shall not use the
assets of an "employee benefit plan" as defined in Section 3(3) of ERISA or a
"plan" as defined in Section 4975(e) of the Code to make any capital
contribution or other payment under the Operative Documents.
2.6. Tranche B Lenders Representations and Warranties. Each of
the Tranche B Lenders solely with respect to itself, severally represents and
warrants as of each Funding Date on which it makes a Tranche B Loan, for the
benefit of each party hereto, that it has not used and shall not use the assets
of an "employee benefit plan" as defined in Section 3(3) of ERISA or a "plan" as
defined in Section 4975(e) of the Code to fund any Loan or make any other
payment under the Operative Documents.
2.7. Private Offering Representations; etc. Each of Lessee,
Guarantor and Lessor General Partner represents to each other party hereto that
(a) neither it, nor any of its Affiliates, nor anyone it has authorized or
employed to act on its behalf as agent, broker, dealer or otherwise in
connection with the offering or sale of (i) the Tranche A Notes or any similar
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security or (ii) any interest in and to Lessor Collateral or any similar
security, as the case may be, has, directly or indirectly, offered any such
security for sale to, or solicited any offer to acquire any of the same from,
anyone, except that Lessee represents that it and its Affiliates have offered
Tranche A Notes and an interest in the Lessor Collateral to the Tranche A
Noteholders, Tranche B Lenders, Limited Partners, respectively, and, with
respect to an interest in the Lessor Collateral, to other "accredited investors"
as defined in Rule 501(a) of Regulation D promulgated pursuant to the Securities
Act of 1933, as amended, and (b) neither it nor anyone it has authorized to act
on its behalf has offered or sold, or will so offer to sell, (i) any Tranche A
Notes or any interest in and to the Lessor Collateral, or (ii) any securities
similar thereto, in violation of the provisions of Section 5 of the Securities
Act of 1933, as amended. The representations and warranties of each of the
parties pursuant to this Section 2.7 are several and not joint.
2.8. Warranty Disclaimers. EACH OF LESSOR, INDENTURE TRUSTEE,
TRANCHE B LENDER, ADMINISTRATIVE AGENT AND COLLATERAL AGENT AS APPLICABLE
DEMISE, LEASE AND FINANCE THE ITEMS OF EQUIPMENT HEREUNDER AS-IS AND WHERE-IS
WITH ALL FAULTS IF ANY AND IN WHATEVER CONDITION THEY MAY BE IN AND EXPRESSLY
DISCLAIMS AND MAKES NO REPRESENTATION OR WARRANTY, EITHER EXPRESSED OR IMPLIED,
AS TO THE DESIGN, CONDITION, QUALITY, CAPACITY, MERCHANTABILITY, DURABILITY,
SUITABILITY OR ITS FITNESS FOR ANY PARTICULAR PURPOSE, OR QUALIFICATION FOR ANY
PARTICULAR TRADE OR ANY OTHER MATTER CONCERNING, THE ITEMS OF EQUIPMENT. LESSEE
HEREBY WAIVES ANY CLAIM (INCLUDING ANY CLAIM BASED ON STRICT OR ABSOLUTE
LIABILITY IN TORT OR INFRINGEMENT) IT MIGHT HAVE AGAINST LESSOR, INDENTURE
TRUSTEE, ANY TRANCHE A NOTEHOLDER, ANY INITIAL PURCHASER, ANY TRANCHE B LENDER,
ARRANGER, ANY LIMITED PARTNER, LESSOR GENERAL PARTNER, ADMINISTRATIVE AGENT OR
COLLATERAL AGENT FOR ANY LOSS, DAMAGE (INCLUDING INCIDENTAL OR CONSEQUENTIAL
DAMAGE) OR EXPENSE CAUSED BY ANY ITEM OF EQUIPMENT EXCEPT TO THE EXTENT CAUSED
BY SUCH PARTY'S GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OR BY LESSEE'S LOSS OF
USE THEREOF FOR ANY REASON WHATSOEVER. LESSOR HEREBY WAIVES ANY CLAIM (INCLUDING
ANY CLAIM BASED ON STRICT OR ABSOLUTE LIABILITY IN TORT OR INFRINGEMENT) IT
MIGHT HAVE AGAINST LESSOR, INDENTURE TRUSTEE, ANY TRANCHE A NOTEHOLDER, ANY
INITIAL PURCHASER, ANY TRANCHE B LENDER, ARRANGER, ANY LIMITED PARTNER, LESSOR
GENERAL PARTNER, ADMINISTRATIVE AGENT OR COLLATERAL AGENT FOR ANY LOSS, DAMAGE
(INCLUDING INCIDENTAL OR CONSEQUENTIAL DAMAGE) OR EXPENSE CAUSED BY ANY ITEM OF
EQUIPMENT EXCEPT TO THE EXTENT CAUSED BY SUCH PARTY'S GROSS NEGLIGENCE OR
WILLFUL MISCONDUCT OR LESSOR'S BREACH OF ITS COVENANT OF QUIET ENJOYMENT IN
SECTION 2 OF THE LEASE FOR ANY REASON WHATSOEVER.
3. Conditions Precedent.
3.1. Lessor Conditions. Lessor shall have no obligation to
acquire any Item of Equipment proposed by Lessee to be leased under the Lease
Agreement on any Funding Date (with respect to any Funding Date, each such Item
of Equipment to be so leased, a "Subject
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Item") and subject it to the Lease Agreement unless on or before such Funding
Date each of the following conditions are fulfilled:
(a) There shall exist no Lease Default or Lease Event of
Default and all representations and warranties of Lessee and Guarantor contained
herein and in the other Operative Documents shall be true and correct in all
material respects as of such Funding Date.
(b) Each Subject Item is reasonably acceptable to Lessor and
Administrative Agent.
(c) Each Item of Equipment is free of all Liens other than
Permitted Liens and Lessor Liens.
(d) The aggregate of the Acquisition Costs of each Subject
Item is less than or equal to the Maximum Acquisition Cost for such Funding
Date.
(e) Lessor and Administrative Agent shall have received a
Lessee Certificate, dated such Funding Date with respect to such Subject Item
duly executed by a Responsible Officer of Lessee.
(f) Lessor shall have received the related Participation
Agreement Supplement, the related Lease Supplement, a Note Purchase Agreement or
Underwriting Agreement for the Tranche A Notes to be first issued on such
Funding Date in the aggregate equal to aggregate of Tranche A Components of all
Subject Items to be first leased on such Funding Date, a Bill of Sale for each
Subject Item, a Funding Escrow Agreement and each other agreement described
under the heading "Additional Conditions Precedent" on the related Participation
Agreement Supplement in each case duly authorized, executed and delivered by
each other party thereto.
(g) All licenses, registrations, permits, consents and
approvals required by Applicable Laws or by any Governmental Entity (i) in
connection with Lessor's rights and interests in such Item of Equipment to the
extent such licenses, registrations, permits, consents or approvals are required
because of the nature of the Equipment and (ii) in connection with the delivery,
acquisition, use and operation of such Subject Item shall have been obtained to
the satisfaction of Lessor.
(h) Lessor shall have received from Lessee, in form and
substance satisfactory to Lessor, resolutions of the board of directors of
Lessee or other written evidence of appropriate corporate action, and the
certificate of incorporation and by-laws, each certified as of such Funding Date
by the secretary of Lessee, duly authorizing the execution, delivery and
performance of this Agreement, the Lease Agreement and each other document to be
delivered in connection therewith to which it is a party, together with an
incumbency certificate as to the person or persons authorized to execute and
deliver such documents on behalf of Lessee.
(i) Lessor shall have received from Guarantor, in form and
substance satisfactory to Lessor, resolutions of the board of directors of
Guarantor or other written evidence of appropriate corporate action, and the
certificate of incorporation and by-laws, each certified by
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the secretary of Guarantor as of such Funding Date, duly authorizing the
execution, delivery and performance of the Participation Agreement and each
other document to be delivered in connection therewith to which it is a party,
together with an incumbency certificate as to the person or persons authorized
to execute and deliver such documents on behalf of Guarantor.
(j) Lessor shall have received from Lessee, in form and
substance satisfactory to Lessor, a certificate dated such Funding Date executed
by a duly authorized officer of Lessee, the truth and accuracy of which shall be
a condition to Lessor to acquire such Item of Equipment, confirming that each of
the representations and warranties set forth in Section 2.1 and 2.1A are true
and correct as if made on and as of such date except to the extent such
representations and warranties expressly provide that they relate solely to an
earlier date.
(k) Lessor shall have received from Guarantor, in form and
substance satisfactory to Lessor, a certificate dated such Funding Date,
executed by a duly authorized officer of Guarantor, the truth and accuracy of
which shall be a condition to Lessor to acquire such Item of Equipment,
confirming that each of the representations and warranties set forth in Section
2.2 are true and correct as if made on and as of such date except to the extent
such representations and warranties expressly provide that they relate solely to
an earlier date.
(l) Lessor shall have received written opinions of Gardere
Wynne Sewell LLP, counsel to Lessee and Guarantor, dated such Funding Date and
addressed to Lessor, Indenture Trustee, the Initial Purchasers, each Tranche B
Lender, Administrative Agent and Collateral Agent in form and substance
reasonably satisfactory to Lessor.
(m) Lessor shall have received a written opinion of Mark
Carlton, Esq., in-house counsel to Lessee and Guarantor, dated such Funding Date
and addressed to Lessor, Indenture Trustee, the Initial Purchasers, each Tranche
B Lender, Administrative Agent and Collateral Agent in form and substance
reasonably satisfactory to Lessor.
(n) Lessee shall have delivered a good standing certificate
dated within five (5) days of such Funding Date from the State of Texas and
state in which Lessee is incorporated and Guarantor shall have delivered a good
standing certificate dated within five (5) days of such Funding Date from the
State of Texas and state in which Guarantor is incorporated.
(o) Lessor shall have received for each Subject Item on or
before the Funding Date an Appraisal dated within thirty (30) days of such
Funding Date confirming that the aggregate Acquisition Costs of such Subject
Item and all other Subject Items is less than or equal to both the aggregate
Initial Fair Market Values and the aggregate Residual Values of all Subject
Items.
(p) Lessee shall have paid all of the reasonable costs and
expenses incurred by Lessor, Lessor General Partner, Indenture Trustee, Bankers
Trust Company as Tranche B Lender, Administrative Agent and Collateral Agent (in
each case including attorneys' fees), and required to be paid by Lessee under
the Operative Documents, in each case invoiced at least one day prior to such
Funding Date.
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(q) Lessor and Administrative Agent shall have received at
least three (3) LIBOR Banking Days before the Funding Date a Funding Notice
executed and delivered by Lessee with the amounts to be funded by each Tranche B
Lender with a commitment to make a Tranche B Loan on such date identified
thereon.
(r) Lessor shall have received the proceeds of the Tranche A
Notes to be issued on such Funding Date as contemplated by the Note Purchase
Agreement or Underwriting Agreement for such Tranche A Notes.
(s) Lessor shall have received the proceeds of the Tranche B
Loans set forth in the Funding Notice for such Funding Date.
(t) Lessor shall have received from Limited Partners any
amounts required of them in the Limited Partnership Agreement.
(u) Lessor shall have received from Lessee payment of any
Lease Premium due on such Funding Date or there shall be due and owing by Lessor
to Lessee on such Funding Date an amount equal to or greater than such Lease
Premium against which Lessor may credit in accordance with Section 7.13 of the
Lease Agreement the full amount of such Lease Premium.
(v) Lessor shall have received an insurance certificate in
form and substance satisfactory to Lessor confirming that the Equipment is
insured in accordance with the provisions of Section 20 of the Lease Agreement.
(w) Administrative Agent shall have received the payment of
all fees due on or before such Funding Date as may be set forth in the letter
agreement between Administrative Agent and Lessee.
(x) Lessee shall have executed and delivered to Administrative
Agent Lessee Financing Statements for the Subject Items.
(y) Lessor shall have received at any time prior to the
Funding Date lien search results in form and substance reasonably acceptable to
it searching the Uniform Commercial Code records of, with respect to Guarantor,
the state of its incorporation and the State of Texas, and with respect to
Lessee, the state of its incorporation, the State of Texas, each state in which
a Subject Item is located, and in states that require filings in local
jurisdictions in order to perfect a security interest in a Subject Item, each
such local jurisdiction, each indicating that, after the filing of those UCC
release or termination statements, if any, executed and delivered by Lessee and
all other relevant Persons to Administrative Agent on or before such Funding
Date, the representations set forth in Section 2.1(l) will be accurate and
complete in all respects to the extent determinable from such searches.
(z) Lessor shall have received such other confirmatory
assignments, conveyances, financing and continuation statements, transfer
endorsements and other assurances or instruments other than estoppel
certificates or other agreements, certificates or other documents to be
delivered by any Sublessee or other Person (other than an Affiliate of Lessee)
which Lessor may reasonably request to perfect, preserve or protect Lessor's
security interest granted under
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Section 9 of the Lease Agreement, in form and substance satisfactory to Lessor,
as Lessor may reasonably request in writing at least five (5) Business Days
before such Funding Date.
The leasing of each Item of Equipment by Lessee hereunder
shall constitute a representation and warranty by Lessee as of the date such
leasing commences that the conditions contained in Section 3.1 have been
satisfied.
3.2. Tranche B Lender Conditions. No Tranche B Lender shall
have any obligation to make a Tranche B Loan for the acquisition of any Subject
Item hereunder unless on or before the Funding Date therefor each of the
following conditions are fulfilled:
(a) The conditions precedent to Lessor's obligation to lease
such Subject Item in accordance with the terms hereof (except for the condition
precedent set forth in Sections 3.1(s)) shall have been satisfied, without
waiver or modification (except as consented to by Administrative Agent), and
such Tranche B Lender shall have received copies of all documents and opinions
with respect thereto.
(b) There shall exist no Loan Default or Loan Event of Default
and all representations and warranties of Lessor and Lessor General Partner
contained herein and in the other Operative Documents shall be true and correct.
(c) Each other Tranche B Lender with a commitment to make a
Tranche B Loan on such Funding Date shall have funded its pro rata share of the
Tranche B Loans to be funded on such Funding Date based upon its Tranche B
Commitment and the amount of the Tranche B Loan to be made by such Tranche B
Lender does not exceed its Tranche B Commitment.
(d) Such Tranche B Lender shall have received original
counterparts (unless otherwise specified) in each case duly authorized, executed
and delivered by each other party thereto in form and substance satisfactory to
such Tranche B Lender and in full force and effect of this Agreement, the
related Participation Agreement Supplement, such Tranche B Lender's related
Tranche B Note, a copy of the related Security Supplement and a Funding Escrow
Agreement.
(e) Such Tranche B Lender shall have received from Lessor, in
form and substance satisfactory to such Tranche B Lender, a copy of Lessor's
Certificate of Limited Partnership and the Limited Partnership Agreement, each
certified as of such Funding Date by the secretary of Lessor General Partner.
(f) Such Tranche B Lender shall have received from Lessor
General Partner, in form and substance satisfactory to such Tranche B Lender,
Lessor General Partner's Certificate of Incorporation, By-Laws, and resolutions
of its board of directors duly authorizing the execution, delivery and
performance of this Agreement, the Lease Agreement, and each other document to
be delivered in connection therewith to which it is a party, each certified as
of such Funding Date by the secretary of Lessor General Partner, together with
an incumbency certificate
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as to the person or persons authorized to execute and deliver such documents on
behalf of Lessor General Partner.
(g) Such Tranche B Lender shall have received a certificate in
form and substance satisfactory to such Tranche B Lender dated such Funding Date
from Lessor General Partner, the truth and accuracy of which shall be a
condition to the obligation of such Tranche B Lender to make its Tranche B Loan,
confirming that each of the representations and warranties of Lessor and Lessor
General Partner set forth in Sections 2.3, 2.4 and 2.5 are true and correct as
if made on and as of such date except to the extent such representations and
warranties expressly provide that they relate solely to an earlier date.
(h) Such Tranche B Lender shall have received written opinions
of counsel to Lessor and Lessor General Partner dated such Funding Date and
addressed to Indenture Trustee, the Initial Purchasers of the Tranche A Notes to
be issued on such date, each Tranche B Lender making a Tranche B Loan on such
date, Administrative Agent, and Collateral Agent, in form and substance
reasonably acceptable to such Tranche B Lender.
(i) Each of Lessor and Lessor General Partner shall have
delivered a good standing certificate dated within ten (10) days of such Funding
Date from the State of Delaware.
(j) Administrative Agent shall have received, in each case
duly authorized, executed and delivered by Lessor in form and substance
satisfactory to Administrative Agent and in full force and effect, the Lessor
Financing Statements for such Subject Item.
(k) Administrative Agent shall have received such other
confirmatory assignments, conveyances, financing and continuation statements,
transfer endorsements and other assurances or instruments other than estoppel
certificates or other agreements, certificates or other documents to be
delivered by any Sublessee or other Person (other than an Affiliate of Lessee)
which Majority Lenders may reasonably request to perfect, preserve or protect
Collateral Agent's security interest granted hereunder, in form and substance
satisfactory to Majority Lenders as Majority Lenders may reasonably request in
writing at least five (5) Business Days before such Funding Date.
4. Commitments and Fundings.
4.1. Tranche B Commitments. Subject to and upon the terms and
conditions set forth in Section 3 for the benefit of Tranche B Lenders, each
Tranche B Lender agrees to make on a Funding Date a single, non-revolving loan
to Lessor in an aggregate principal amount up to the amount of its Tranche B
Commitment set forth on the Participation Agreement Supplement for such Funding
Date (each such loan, a "Tranche B Loan"). Each party hereto agrees that, except
as provided below, no Tranche B Lender shall be required to make any Tranche B
Loan on any Funding Date hereunder in an amount in excess of its pro rata share
(based upon the aggregate of the Tranche B Commitments) of the aggregate Tranche
B Components to be funded on such Funding Date. Each Tranche B Lender's
obligation hereunder is several, such that the failure of any Tranche B Lender
to make a Tranche B Loan or satisfy any other obligation shall not relieve any
other Tranche B Lender of its obligations hereunder, and if
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any Tranche B Lender with a commitment to make a Tranche B Loan on any Funding
Date shall fail to make a Tranche B Loan on such date each other Tranche B
Lender shall make an additional Tranche B Loan in an amount equal to its pro
rata share (based upon the aggregate of the Tranche B Commitments for such
Funding Date of the non-defaulting Tranche B Lenders) of the Tranche B Loan that
was to have been made by the defaulting Tranche B Lender, provided that the
maximum aggregate amount of Tranche B Loans that any Tranche B Lender shall be
obligated to make on any Funding Date shall not exceed its Tranche B Commitment
set forth on the Participation Agreement Supplement for such Funding Date. Any
Tranche B Loan made by another Tranche B Lender of a portion of a Tranche B Loan
to have been made by a defaulting Tranche B Lender shall not relieve such
defaulting Tranche B Lender of its obligations hereunder. If the conditions to
the obligations of any Tranche B Lender specified in Section 3.2 have not been
fulfilled or waived by it on or before the Commitment Termination Date at the
time in effect, such Tranche B Lender shall be relieved of all further
obligations to make any Tranche B Loan. Nothing in this Section 4.1 shall
operate to relieve Lessor, Lessee or Guarantor from their respective obligations
under the Operative Documents or to waive any Tranche B Lender's rights against
Lessor, Lessee or Guarantor.
4.2. Lessor Commitment to Purchase. Subject to and upon the
terms and conditions herein set forth for the benefit of Lessor, Lessee may
cause Sellers to sell to Lessor on any Funding Date and in such event Lessor
agrees to buy for the Acquisition Cost thereof and lease to Lessee on such
Funding Date certain natural gas compressor equipment. If the conditions to the
obligations of Lessor in Section 3.1 have not been fulfilled or waived by it on
or before the Commitment Termination Date at the time in effect, Lessor shall be
relieved of all further obligations to acquire from or lease to Lessee any
natural gas compressor equipment.
4.3. Lease Supplements. Upon the sale and lease of an Item of
Equipment in accordance with Section 4.2 Lessee shall execute and deliver to
Lessor a Lease Supplement for such Item of Equipment which Lease Supplement upon
satisfaction of the conditions precedent in Section 3.1 shall thereafter be
executed by Lessor and a signed counterpart provided to Lessee. Upon execution
and delivery by Lessee of such Lease Supplement, such Item of Equipment shall
automatically become in accordance with this Section 4.3 subject to the Lease
Agreement and an "Item of Equipment" thereunder.
4.4. Rights in Equipment. Upon the execution and delivery by
Lessee of a Lease Supplement relating to an Item of Equipment and satisfaction
of the other applicable conditions precedent set forth in Section 3, Lessor
shall have good and marketable title to such Item of Equipment subject only to
Permitted Liens and Lessor Liens and shall be obligated to pay or reimburse
Lessee in full for the Acquisition Cost of such Item of Equipment in accordance
with the provisions of this Agreement, provided that nothing in this Section 4.4
shall affect in any manner the respective rights and obligations of Lessor and
Lessee under the Lease Agreement or shall reduce or diminish any claim or remedy
for damages which Lessor or Lessee might assert for any breach or violation of
the terms of the Lease Agreement or of this Agreement.
4.5. Funding Dates. Each Funding Date after the Closing Date
shall occur only during a Commitment Period and, unless otherwise provided on
the related Participation
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Agreement Supplement, there shall be no more than one Funding Date during any
Commitment Period.
4.6. Limitation on Size of Facility. Notwithstanding anything
to the contrary in the Operative Documents, the aggregate of all Tranche A Notes
at any time issued and all Tranche B Loans and Equity Contributions at any time
made shall not exceed $793,000,000.
5. Selection of Floating Lease Payment Period.
Provided no lease Event of Default shall have occurred and is
continuing Lessee shall at least three (3) LIBOR Banking Days prior to each
Floating Payment Date (other than a Floating Payment Date in the third-month of
a six-month LIBOR Floating Payment Period) deliver to Lessor written irrevocable
notice of its election to have both the Applicable Equity Rate and the
Applicable Tranche B Rate components of Floating Lease Payments for all Items of
Equipment be based on one-month, two-month, three-month, or six-month LIBOR or
on the Alternate Rate and Lessor shall promptly deliver notice of such election
to Administrative Agent. The Floating Lease Period based on one-month,
two-month, three-month or six-month LIBOR shall commence on such Floating
Payment Date and shall end on the calendar date corresponding to the first day
of such Floating Lease Period in the first, second, third or six month after
such Floating Payment Date, respectively; provided however, if such day is not a
LIBOR Banking Day, then the last day of such Floating Lease Period shall be the
next LIBOR Banking Day, provided further, if such next LIBOR Banking Day would
be in the next calendar month, then the last day of such Floating Lease Period
shall be the immediately preceding LIBOR Banking Day. The Floating Lease Period
for Alternate Rate based Floating Lease Payments shall commence on such Floating
Payment Date and shall end on the date specified for such in Lessee's notice of
election, provided such date shall not be more than ninety (90) days from such
Floating Payment Date. Lessee shall not make an election that would cause the
new Floating Payment Date resulting from such election to be later than the
Scheduled Termination Date. If Lessee fails to provide such notice of election
at least three (3) LIBOR Banking Days before any Floating Payment Date, Lessee
shall be deemed to have elected a one-month LIBOR based Applicable Equity Rate
and Applicable Tranche B Rate. At any time while a Lease Event of Default
exists, the Floating Payment Period shall be based on one-month LIBOR.
6. Default Purchase Options and Cure Rights.
6.1. Right to Cure Certain Lease Events of Default.
(a) If Lessee shall fail to make any Lease Payment when the
same shall have become due, and if such failure of Lessee to make such Lease
Payment shall not constitute the third consecutive such failure, then Lessor,
any Tranche B Lender or Tranche B Lenders (the "Curing Party") may (but is not
obligated to) pay to Collateral Agent for the benefit of Secured Parties, at any
time prior to the earlier of the expiration of ten (10) Business Days after the
Curing Party shall have received notice from Administrative Agent of the failure
of Lessee to make such Lease Payment, an amount equal to the Lease Payment or
Lease Payments then due by reason of the failure of Lessee to pay such Lease
Payment (otherwise than by declaration of acceleration) on such
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Payment Date, and such payment by the Curing Party shall be deemed to have cured
any Loan Event of Default which arose or would have arisen from such failure of
Lessee.
(b) If Lessee shall fail to make any Supplemental Payment when
the same shall become due, or otherwise fail to perform any of its obligations
(other than the payment of a Lease Payment under the Lease Agreement) under any
Operative Document to which it is a party, which failure shall continue until
such time as such failure shall constitute a Lease Event of Default upon notice
to Lessee and can be cured by the payment of money, then a Curing Party may (but
is not obligated to) make such payment or perform such obligation through the
payment of money at any time prior to the expiration of ten (10) Business Days
after such Curing Party shall have received notice of the occurrence of any such
failure, and such payment or performance by such Curing Party shall be deemed to
have cured any Loan Event of Default which arose or would have arisen from such
failure of Lessee.
(c) Upon such payment or performance by a Curing Party, such
Curing Party shall (to the extent of such payment made by it and the costs and
expenses incurred in connection with such payments and performance thereof
together with interest thereon) be subrogated to the rights of Lessor and
Secured Parties to receive from Lessee the Lease Payment or Supplemental
Payment, as the case may be, paid by such Curing Party. If Collateral Agent
shall thereafter receive from Lessee such Lease Payment or Supplemental Payment,
Collateral Agent shall forthwith remit such payment to such Curing Party in
reimbursement for the funds so advanced by it.
(d) Until the expiration of the period during which the Curing
Party shall be entitled to exercise rights under Section 6.1(a) or (b) with
respect to any failure by Lessee referred to therein, neither Administrative
Agent, Collateral Agent, Indenture Trustee nor any Secured Party shall take or
commence any action it would otherwise be entitled to take or commence under the
Operative Documents as a result of such failure by Lessee.
6.2. Lessee Cure Right. Notwithstanding anything to the
contrary contained in this Agreement or any of the other Operative Documents,
each of Lessor, Indenture Trustee, each Tranche B Lender, Administrative Agent
and Collateral Agent hereby agrees with and for the benefit of Lessee as
follows:
(a) Lessee shall have the right to satisfy any conditions
precedent set forth in Section 3.2 in the event that Lessor fails to do so on a
timely basis, to the extent such condition precedent may be satisfied by a party
other than Lessor and to the extent it may be satisfied without violating any
law, court order or contractual obligation applicable thereto.
(b) Lessee shall have the right, in place of Lessor, to cure
within the grace periods provided therefor, to the extent capable of cure by a
party other than Lessor, any Loan Default or Loan Event of Default.
(c) Copies of all notices from Indenture Trustee, any Secured
Party, Administrative Agent or Collateral Agent to Lessor hereunder or under the
Indenture or Tranche B Loan Agreement shall be sent to Lessee by the sending
party and no such notice shall be effective for any purpose hereunder or
thereunder unless sent to Lessee.
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(d) Lessor will, promptly upon becoming aware of any Loan
Default or Loan Event of Default, other than a Loan Default or Loan Event of
Default arising from a Lease Default or Lease Event of Default, notify Lessee of
the occurrence of such Loan Default or Loan Event of Default.
(e) Each payment by Lessee or Guarantor to Collateral Agent
under the Operative Documents shall be deemed to constitute a payment to
Indenture Trustee, any Tranche A Noteholder, any Tranche B Lender,
Administrative Agent or Collateral Agent, as the case may be, of the
corresponding payment obligation owing by Lessor to such Indenture Trustee,
Tranche A Noteholder, Tranche B Lender, Administrative Agent or Collateral Agent
under any of the Operative Documents solely for the purpose of determining
amounts owed by Lessee under the Operative Documents.
7. Security.
7.1. Security Interest. For valuable consideration, and to
secure the due payment and performance of all principal of, premium, if any, and
interest on the Tranche A Notes and the Tranche B Loans, Premium, Makewhole, and
Breakage Costs, if any, and all indebtedness and other liabilities and
obligations, whether now existing or hereafter arising (including any
obligations to indemnify, reimburse or pay costs and/or expenses) of Lessor to
Indenture Trustee, any Secured Party, Administrative Agent or Collateral Agent
arising out of or in any way connected with the Operative Documents and all
instruments, agreements and documents executed, issued and delivered pursuant
thereto (collectively, the "Secured Obligations"), Lessor hereby assigns,
conveys, mortgages, pledges, hypothecates, transfers and sets over to Collateral
Agent, and grants to Collateral Agent, for the benefit of the Secured Parties, a
first Lien on and security interest in the rights, title and interest of Lessor
now held or hereafter acquired in and to the following, except for Excepted
Payments and Excepted Rights with respect thereto (collectively, along with all
other rights, titles and interest pledged by Lessor to Collateral Agent pursuant
to any Security Supplements, the "Lessor Collateral"):
(a) the Items of Equipment;
(b) all Subleases pertaining to the Items of Equipment;
(c) any Bill of Sale and all warranties (including, without
limitation, warranties of title, merchantability, fitness for a
particular purpose, quality and freedom from defects) and rights of
recourse against manufacturers, assemblers, sellers and others in
connection with the Items of Equipment;
(d) the Security Documents, all Accrued Interest Premium, all
Tranche A Premium and all Lease Payments and Supplemental Payments
payable under this Agreement and the Lease Agreement and all other sums
payable thereunder;
(e) all accounts, contract rights, general intangibles and all other property
rights of any nature whatsoever arising out of or in connection with this
Agreement, the Lease Agreement or the Items of Equipment, including, without
limitation, Lease
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Payments, Supplemental Payments and Lessee Collateral and any other
payments due and to become due under this Agreement, the Lease
Agreement and the Subleases whether as repayments, reimbursements,
contractual obligations, indemnities, damages or otherwise;
(f) all moneys now or hereafter paid or required to be paid to
Indenture Trustee or any Secured Party pursuant to any Operative
Document;
(g) all proceeds of Lessor Collateral including, without
limitation, all rentals, income and profits in respect of the Items of
Equipment, whether under the Lease Agreement or otherwise, all credits
granted by any manufacturer or vendor with respect to the return of any
Item of Equipment and the proceeds of any insurance payable with
respect to the Items of Equipment;
(h) all claims, rights, powers, or privileges and remedies of
Lessor under this Agreement and the Lease Agreement;
(i) all rights of Lessor under this Agreement and the Lease
Agreement to make determinations to exercise any election (including,
but not limited to, election of remedies) or option or to give or
receive any notice, consent, waiver or approval, together with full
power and authority to demand, receive, enforce, collect or receipt for
any of the foregoing or any property which is the subject of this
Agreement or the Lease Agreement, to enforce or execute any checks, or
other instruments or orders, to file any claims and to take any action
which (in the opinion of Collateral Agent) may be necessary or
advisable in connection with any of the foregoing; and
(j) all moneys and investments held by Lessor as security
under Section 28.4.4 of the Lease Agreement.
provided, however, Collateral Agent agrees for the benefit of Lessor that so
long as no Loan Event of Default has occurred and is continuing, it will not
exercise any of the rights assigned to it under clauses (h) and (i) of this
Section 7, other than the right to receive amounts due under the Lease Agreement
and Section 9 of this Agreement, without the prior written consent of Lessor and
Administrative Agent.
7.2. Further Assurances. For each Item of Equipment, Lessor
will, at Lessee's expense, make, execute, endorse, acknowledge, file and/or
deliver to Collateral Agent from time to time such confirmatory assignments,
conveyances, financing and continuation statements, transfer endorsements and
other assurances or instruments other than estoppel certificates or other
agreements, certificates and other documents to be delivered by any Sublessee or
other Person (other than an Affiliate of Lessee) which Administrative Agent may
reasonably request to perfect, preserve or protect Collateral Agent's security
interest granted hereunder. To the extent permitted by Applicable Law, Lessor
authorizes Collateral Agent to file any such financing and continuation
statements without the signature of Lessor and Lessor will pay all applicable
filing fees and related expenses. Lessor will, at Lessee's expense and upon the
request of Administrative Agent, qualify with the Texas Secretary of State to do
business in the State of Texas as a foreign limited partnership.
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7.3. Termination. Upon the full and final discharge and
satisfaction of Lessor's obligations with respect to (i) all amounts owed under
the Operative Documents, (ii) all amounts owed under Sections 2.5.1 and 2.5.2 of
the Tranche B Loan Agreement and Article 3 or Sections 4.13, 4.14 or 7.01 of the
Indenture in relation to the purchase by Lessee of any Item of Equipment and
(iii) any Item of Equipment replaced in accordance with Section 13 of the Lease
Agreement, unless in the case of clause (ii) or (iii) a Lease Event of Default
shall have occurred and be continuing, the provisions of this Section 7 and each
Security Supplement shall terminate with respect to all Lessor Collateral or
such Items of Equipment (as applicable) and all right, title and interest of
Collateral Agent in and to all Lessor Collateral or such Items of Equipment (as
applicable) and the proceeds thereof shall revert to Lessor. Following payment
or substitution in accordance with the foregoing sentence, Lessor's obligations
to Indenture Trustee, Secured Parties, Administrative Agent and Collateral Agent
in and to all Items of Equipment or such Items of Equipment (as applicable)
shall terminate. Upon the occurrence and during the continuation of a Lease
Event of Default, the foregoing discharge shall be made only following
satisfaction of all of Lessee's obligations to purchase the Items of Equipment
under Section 24(d) of the Lease Agreement. Collateral Agent shall, at Lessor's
expense, execute and deliver any evidence of such release as Lessor may
reasonably require and furnish to Collateral Agent.
7.4. Other Security. To the extent that the obligations of
Lessor under any Operative Document are now or hereafter secured by property
other than Lessor Collateral or by the guarantee, endorsement or property of any
other Person, then at the written request of Administrative Agent, and in
accordance with its written instructions, Collateral Agent shall have the right
to pursue, relinquish, subordinate, modify or take any other action with respect
thereto, without in any way modifying or affecting any of Collateral Agent's
rights and remedies hereunder.
7.5. Power of Attorney. Lessor irrevocably authorizes
Collateral Agent and does hereby make, constitute and appoint Collateral Agent
and any officer of Collateral Agent, with full power of substitution, as
Lessor's true and lawful attorney-in-fact, with power, in its own name or in the
name of Lessor, to endorse any notes, checks, drafts, money orders, or other
instruments of payment (including payments payable under or in respect of any
policy of insurance) in respect of Lessor Collateral that may come into
possession of Collateral Agent; to sign and endorse any invoice, freight or
express bill, bill of lading, storage or warehouse receipts, drafts against
debtors, assignments, verifications and notices in connection with accounts, and
other documents relating to Lessor Collateral; to pay or discharge Taxes, Liens,
security interests or other encumbrances at any time levied or placed on or
threatened against Lessor Collateral; to demand, collect, receipt for,
compromise, settle and sue for monies due in respect of Lessor Collateral; and
generally, to do, at Collateral Agent's option and at Lessor's expense, at any
time, or from time to time, all acts and things which Collateral Agent deems
necessary to protect, preserve and realize upon Lessor Collateral and Collateral
Agent's security interests therein and in order to effect the intent of the
Operative Documents all as fully and effectually as Lessor might or could do;
and Lessor hereby ratifies all that said attorney shall lawfully do or cause to
be done by virtue hereof. This power of attorney shall be coupled with an
interest and irrevocable for the term of this Agreement and thereafter as long
as any of the obligations of Lessor under any Operative Document shall be
outstanding. The powers conferred on Collateral Agent hereunder are solely to
protect the security interest in Lessor Collateral and shall not impose any
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duty upon Collateral Agent to exercise any such powers. Collateral Agent shall
be accountable only for amounts that it actually receives as a result of the
exercise of such powers and neither it nor any of its officers, directors or
employees shall be responsible to Lessor for any act or failure to act, except
for its own gross negligence or willful misconduct.
7.6. Assignment of Rights. Lessor agrees that the assignments
herein are irrevocable and it will not, while said assignments are in effect or
thereafter until Lessor has received from Administrative Agent notice of the
termination thereof, take any action as Lessor under the Lease Agreement or
otherwise which is inconsistent with this Agreement or make any other
assignment, designation or direction inconsistent herewith and that any
assignment, designation or direction inconsistent herewith shall be void. Lessor
and Collateral Agent agree that the following are, without limitation, rights,
powers, privileges, options, and benefits exclusively assigned by Lessor to
Collateral Agent (to the exclusion of Lessor) hereunder: (i) all of Lessor's
right to make claim for, receive, collect and receipt for (and to apply the same
to the payment of the principal of, Premium, Makewhole or Breakage Costs, if
any, and interest on the Tranche A Notes and Tranche B Loans) all rents, income,
revenues, issues, profits, insurance proceeds, condemnation awards, sales
proceeds and other sums payable or receivable under this Agreement and the Lease
Agreement or pursuant hereto or thereto, (ii) all of Lessor's right to make
waivers and agreements, to give and receive all notices and other instruments in
its capacity as Lessor under the Operative Documents, (iii) all of Lessor's
right to take action upon the happening of Lease Event of Default, including the
commencement, conduct and consummation of proceedings at law or in equity as
shall be permitted under any provision of the Lease Agreement or by law, and
(iv) all of Lessor's right to do all other things which Lessor is or may become
entitled to do under the Lease Agreement.
7.7. Transfer of the Collateral by Collateral Agent.
Collateral Agent, Indenture Trustee or any Secured Party may be a transferee of
Lessor Collateral or of any part thereof or of any interest therein at any sale
thereof, whether pursuant to foreclosure or power of sale or otherwise
hereunder, and may apply upon the transfer price the indebtedness secured hereby
owing to such transfer, to the extent of such transferee's distributive share of
the transfer price to the extent permitted by Applicable Law. Any such
transferee shall, upon any such transfer, acquire title to the properties so
transferred, free of the Lien of this Agreement.
7.8. No Segregation of Monies; No Interest. Any monies paid to
or retained by Collateral Agent pursuant to any provision hereof and not then
required to be distributed to any party as provided in this Section 7 need not
be segregated in any manner except to the extent required by law, and may be
deposited under such general conditions as may be prescribed by law, without
interest.
7.9. Distribution of Moneys. Except as may be otherwise
provided in this Section 7 and for so long as no Loan Event of Default or Loan
Default resulting from any failure to make a payment under the Indenture or
Tranche B Loan has occurred and is continuing, all moneys received by Collateral
Agent shall be applied in accordance with this Section 7.9:
(a) Scheduled and End of Term Purchase Option Payments. Moneys
received by Collateral Agent constituting Lease Payments other than any payment
due under Section 29.1
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or 29.2 of the Lease Agreement (including the payment of interest on any such
overdue amount), shall be applied without duplication (as determined by
Administrative Agent) on the date received by Collateral Agent:
First, to Indenture Trustee for the benefit of Tranche A
Noteholders and to each Tranche B Lender for all principal, interest,
Premium, Makewhole and Breakage, if any, due each such Person, in each
case on a pari passu basis;
Second, to each Lessor Indemnified Person on a pari passu
basis, all other amounts then due such Person under the Operative
Documents;
Third, to Lessor all amounts then due Lessor under Section 10;
Fourth, for the benefit of Lessor, to each Limited Partner on
a pari passu basis, for all amounts then due Limited Partners, under
the Limited Partnership Agreement and the Lessor Indemnity Agreement;
and
Fifth, the balance, if any, of such payment remaining
thereafter shall be distributed to Lessor to be distributed in
accordance with the Lease Agreement and Limited Partnership Agreement.
(b) Prepayments. Moneys received by Collateral Agent
constituting payment of Acquisition Cost with respect to any Early Purchase
Option under Section 28.4.1, 28.4.2 or 28.4.3 of the Lease Agreement shall be
applied without duplication (as determined by Administrative Agent) on the date
received by Collateral Agent:
First, to Indenture Trustee for the benefit of Tranche A
Noteholders and to each Tranche B Lender for all principal, interest,
Premium, Makewhole and Breakage Costs, if any, then due such Person in
each case on a pari passu basis, provided however, if the amount
received under Section 28.4.3 of the Lease Agreement is less than the
Equity Redemption Target or the Net Proceeds Redemption Target, as the
case may be, then the amounts to be paid to Tranche B Lenders hereunder
shall be reduced by the amount of such shortfall.;
Second, for the benefit of Lessor, to each Limited Partner on
a pari passu basis for all amounts then due under the Limited
Partnership Agreement and its pro rata share (based upon the aggregate
Equity Contributions of all Limited Partners) of the Equity Component
of each Item of Equipment so purchased; and
Third, to each other party hereto in accordance with clauses
Second, Third and Fifth of Section 7.9(a).
(c) Payments after an End of Term Sale or Redelivery of
Equipment. All moneys received by Collateral Agent in accordance with Sections
28.3, 29.1 and 29.2 of the Lease Agreement shall be applied without duplication
(as determined by Administrative Agent) on the date received by Collateral
Agent:
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First, to Indenture Trustee for the benefit of Tranche A
Noteholders for principal and interest due on the Tranche A Notes;
Second, to Tranche B Lenders on a pari passu basis for
principal and interest due on the Tranche B Loans; and
Third, to each other party hereto in accordance with clauses
Second through Fifth of Section 7.9(a).
(d) Excepted Payments. Moneys received by Collateral Agent
constituting Excepted Payments shall be paid promptly after receipt thereof to
the Persons entitled thereto in accordance with the Operative Documents.
7.10. Payments after a Loan Event of Default. All payments
received and all amounts held or realized by Collateral Agent (including any
amounts realized by Collateral Agent from the exercise of any remedies) after
the occurrence and during the continuance of a Loan Event of Default or Loan
Default resulting from any failure to make a payment under the Indenture or
Tranche B Loan, and all payments or amounts then held or thereafter received by
Collateral Agent hereunder or under the Operative Documents other than Excepted
Payments, shall, so long as such Loan Event of Default continues and shall not
have been waived in writing by (i) Indenture Trustee, acting on behalf of the
Tranche A Noteholders, in the event of a Tranche A Event of Default that is not
also a Tranche B Event of Default, (ii) Majority Tranche B Lenders in the event
of a Tranche B Event of Default that is not also a Tranche A Event of Default or
(iii) Indenture Trustee, acting on behalf of the Tranche A Noteholders, and
Majority Tranche B Lenders for any Loan Event of Default that is both a Tranche
A Event of Default and a Tranche B Event of Default, be applied on the date
received:
First, so much of such payments or amounts held or realized by
Collateral Agent as shall be required to reimburse Collateral Agent,
Administrative Agent and Indenture Trustee for any expenses not
reimbursed by Lessor in connection with the collection or distribution
of such amounts held or realized by Collateral Agent or in connection
with the expenses incurred in enforcing its remedies hereunder and
preserving Lessor Collateral including, without limitation, those
expenses contemplated under Section 12.1 of this Agreement, shall be
retained by Collateral Agent or paid to Administrative Agent or
Indenture Trustee, as the case may be; and
Second, to each other party hereto in accordance with clauses
First through Third of Section 7.9(a) with any amounts remaining to be
held as security for Lessor's and Lessee's obligations under the
Operative Documents for so long as any Event of Default has occurred
and is continuing and thereafter clauses Fourth and Fifth of Section
7.9(a).
7.11. Application of Certain Other Payments. Any payments
received by Indenture Trustee or any Secured Party for which provision as to the
application thereof is made in this Agreement or any other Operative Document
shall be applied forthwith to the purpose for which such payment was made in
accordance with the terms of this Agreement, or such other Operative Document.
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7.12. Other Payments. Except as otherwise provided in Sections
7.9 and 7.10, (i) any payments received by Collateral Agent for which no
provision as to the application thereof is made in the Operative Documents, or
elsewhere in this Section 7, and (ii) all payments received and amounts realized
by Collateral Agent with respect to Lessor Collateral (including, without
limitation, all amounts realized upon the sale, release or other disposition of
Lessor Collateral upon foreclosure of this Agreement), to the extent received or
realized at any time after payment in full of the amounts then due the parties
hereto shall be paid to Lessor or its designee.
7.13. Retention of Amounts by Collateral Agent. If at the time
of receipt by Collateral Agent of any payment or amount which would otherwise be
distributable to Lessor, there shall have occurred and be continuing a Loan
Default or a Loan Event of Default, Collateral Agent shall not distribute any
such amount to Lessor or its designee and shall hold it as security for Lessor's
obligations to Secured Parties under the Operative Documents until such time as
there shall not be continuing such Loan Default or Loan Event of Default.
7.14. Exercise of Remedies.
7.14.1. Rights in Collateral. If a Loan Event of
Default shall have occurred and be continuing, then and in every such case
Collateral Agent shall, upon written request by Administrative Agent or
Indenture Trustee, acting on behalf of the Tranche A Noteholders after a Tranche
A Event of Default, subject to Lessee's right of quiet enjoyment pursuant to
Section 2 of the Lease Agreement, exercise any or all of the rights and powers
and pursue any and all of the remedies pursuant to this Section 7.14, any and
all remedies under the other Security Documents, and any and all remedies
available to a secured party under the UCC or any other provision or law and, in
the event such Loan Event of Default is related to a Lease Event of Default,
subject to Lessee's rights to purchase the Items of Equipment pursuant to
Section 24 of the Lease Agreement, may take possession of all or any part of
Lessor Collateral and may exclude Lessor, and, subject to the terms of the Lease
Agreement, Lessee, any sublessee and all Persons claiming under any of them
wholly or partly therefrom; provided, however, Collateral Agent shall not sell
or re-lease the Equipment for a period of thirty (30) days after such Event of
Default during which time Lessor, Administrative Agent, Collateral Agent and any
Tranche B Lender may remarket the Equipment.
7.14.2. Delivery of Documents; Taking Possession of
Collateral. Upon the occurrence of a Loan Event of Default, at the request of
Administrative Agent, Lessor shall promptly execute and deliver to Collateral
Agent such instruments of title and other documents as Administrative Agent may
deem necessary or advisable to enable Collateral Agent or a representative
designated by Collateral Agent, at such time or times and place or places as
Collateral Agent may specify, to obtain possession of all or any part of Lessor
Collateral to whose possession Collateral Agent shall at the time be entitled
hereunder. If Lessor shall for any reason fail to execute and deliver such
instruments and documents after the request by Collateral Agent, Collateral
Agent may (i) obtain a judgment conferring on Collateral Agent the right to
immediate possession and requiring Lessor to execute and deliver such
instruments and documents to Collateral Agent, to the entry of which judgment
Lessor hereby specifically consents, and (ii) pursue all or part of such Lessor
Collateral wherever it may be found and may enter any of the premises of Lessee
or Lessor wherever such Lessor Collateral may be or is
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purported to be and search for such Lessor Collateral and take possession of and
remove such Lessor Collateral. All expenses of obtaining such judgment or of
pursuing, searching for and taking such property shall, until paid, be secured
by the Lien of this Agreement.
7.14.4. Possession of Collateral. Subject to the
proviso in Section 7.14.1, upon taking of possession pursuant hereto and at the
written request of Administrative Agent, Collateral Agent or a representative
designated by Collateral Agent may, from time to time, at the expense of Lessee,
make all such expenditures for maintenance, insurance, repairs, replacements and
alterations to any of Lessor Collateral, as it may deem appropriate and
commercially reasonable. In such case, Collateral Agent or a representative of
Collateral Agent shall have the right (but not the obligation) to maintain, use,
operate, store, lease, control or manage Lessor Collateral and to carry on the
business and to exercise all rights and powers of Lessor relating to Lessor
Collateral, as Administrative Agent shall deem best, including the right to
enter into any and all such agreements with respect to the maintenance, use,
operation, storage, leasing, control, management or disposition of Lessor
Collateral or any part thereof as Administrative Agent may determine; and
Collateral Agent shall be entitled to collect and receive directly all tolls,
rents (including Lease Payments and Supplemental Payments), revenues, issues,
income, products and profits of Lessor Collateral and every part thereof,
without prejudice, however, to the right of Secured Parties or Collateral Agent
under any provision of this Agreement to collect and receive all cash held by,
or required to be deposited with, Lessor hereunder. Such tolls, rents (including
Lease Payments and Supplemental Payments), revenues, issues, income, products
and profits shall be applied to pay the expenses of the use, operation, storage,
leasing, control, management or disposition of Lessor Collateral and of
conducting the business thereof, and of all maintenance, repairs, replacements,
alterations, additions and improvements, and to make all payments which
Collateral Agent may be required or may elect to make, if any, for Taxes,
assessments, insurance or other proper charges upon Lessor Collateral or any
part thereof (including the employment of engineers and accountants to examine,
inspect and make reports upon the properties and books and records of Lessor or
Lessee), and all other payments which Collateral Agent may be required or
authorized to make under any provision of this Agreement, as well as just and
reasonable compensation for the services of Collateral Agent, and of all Persons
properly engaged and employed by Collateral Agent.
7.14.5. Sale of Collateral. Subject to the proviso in
Section 7.14.1, in addition, Collateral Agent may, in accordance with the
written instructions of Administrative Agent and, if any such transaction or
related series of transactions relates to Equipment with value in excess of
$30,000,000, the Indenture Trustee, sell, assign, transfer and deliver the
whole, or from time to time to the extent permitted by law, any part of Lessor
Collateral or any interest therein, at any private sale or public auction with
or without demand, advertisement or notice (except as herein required or as may
be required by law) of the date, time and place of sale and any adjustment
thereof for cash or credit or other property for immediate or future delivery
and for such price or prices and on such terms as Administrative Agent may
determine, or as may be required by law. It is agreed that ten (10) Business
Days' notice to Lessor of the date, time and place (and terms, in the case of a
private sale) of any proposed sale by Collateral Agent of Lessor Collateral or
any part thereof or interest therein is reasonable. Each of Administrative
Agent, Collateral Agent and any Secured Party may be a purchaser of Lessor
Collateral or any part thereof or any interest therein at any sale thereof,
whether pursuant to foreclosure or power of
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sale or otherwise. In accordance with the written instructions of Administrative
Agent, Collateral Agent may apply against the purchase price therefor all or
part of the amount then due under the Secured Obligations. Collateral Agent
shall, upon any such purchase, acquire good title to the property so purchased,
to the extent permitted by Applicable Law, free of all rights of redemption.
7.14.6. Discharge. Upon any sale of Lessor Collateral
or any part thereof or interest therein, whether pursuant to foreclosure or
power of sale or otherwise, the receipt of the purchase money by the official
making the sale by judicial proceeding or by Collateral Agent shall be
sufficient discharge to the purchaser for the purchase money and neither such
official nor such purchaser shall be obliged to see to the application thereof.
7.14.7. Appointment of Receiver. If a Loan Event of
Default shall have occurred and be continuing, Collateral Agent shall, as a
matter of right, be entitled to appoint a receiver or trustee or representative
(who may be Collateral Agent or any successor or nominee thereof, or any Tranche
B Lender appointed by Collateral Agent) for all or any part of Lessor
Collateral, whether such receivership or agency or representation be incidental
to a proposed sale of Lessor Collateral or the taking of possession thereof, the
exercise of remedies under this Agreement or the Lease Agreement or otherwise,
and Lessor hereby consents to the appointment of such a receiver, trustee or
representative. Any receiver, trustee or representative appointed for all or any
part of Lessor Collateral shall be entitled to exercise all rights of Collateral
Agent under this Agreement and the other Operative Documents to the extent
provided in such appointment and shall be entitled to exercise all the powers
and pursue all the remedies of Collateral Agent hereunder with respect to Lessor
Collateral.
7.14.8. Redemption. Any sale of Lessor Collateral or
any part thereof or any interest therein, whether pursuant to foreclosure or
power of sale or otherwise hereunder, shall forever be a perpetual bar against
Lessor, after the expiration of the period, if any, during which Lessor shall
have the benefit of redemption laws which may not be waived pursuant to Section
7.14.5 and this Section 7.14.8. Subject to the provisions of this Agreement,
Lessor covenants (to the extent that it may lawfully do so) that it will not at
any time insist upon, or plead, or in any manner whatsoever claim or take the
benefit or advantage of, any appraisement, valuation, stay or extension law
wherever enacted, nor at any time hereafter in force, in order to prevent or
hinder the enforcement of this Agreement or the execution of any power granted
herein to Secured Parties or Collateral Agent, or the absolute sale of Lessor
Collateral, or any part thereof, or the possession thereof by any transfer at
any sale under this Section 7.14; and Lessor for itself and all who may claim
under it, so far as it or any of them now or thereafter lawfully do so, waives
all right to have Lessor Collateral marshaled upon any foreclosure hereof, and
agrees that any court having jurisdiction to foreclose this Agreement may order
the sale of Lessor Collateral as an entirety.
7.14.9. Rights Cumulative; No Waiver. Each and every
right, power and remedy herein given to Secured Parties, Administrative Agent
and Collateral Agent specifically or otherwise in this Agreement shall be
cumulative and shall be in addition to every other right, power and remedy
herein specifically given or now or hereafter existing at law, in equity or by
statute, and each and every right, power and remedy whether specifically herein
given or
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otherwise existing may be exercised from time to time and as often and in such
order as may be deemed expedient by Administrative Agent or Collateral Agent,
and the exercise or the beginning of the exercise of any power or remedy shall
not be construed to be a waiver of the right to exercise at the same time or
thereafter any other right, power or remedy. No delay or omission by Indenture
Trustee, any Secured Party, Administrative Agent or Collateral Agent in the
exercise of any right, remedy or power or in the pursuance of any remedy shall
impair any such right, power or remedy or be construed to be a waiver of any
default on the part of Lessor, Lessee or Guarantor or to be an acquiescence
therein.
7.14.10. Termination of Proceedings. If
Administrative Agent, Indenture Trustee, Secured Parties or Collateral Agent
shall have instituted any proceeding to enforce any right, power or remedy under
this Agreement by foreclosure, entry or otherwise, and such proceedings shall
have been discontinued or abandoned for any reason or shall have been determined
adversely to Administrative Agent, Indenture Trustee, Secured Parties or
Collateral Agent, then and in every such case Lessor, Administrative Agent,
Indenture Trustee, Secured Parties, Collateral Agent, Lessee and Guarantor
shall, subject to any binding determination in such proceeding, be restored to
their former positions and rights hereunder with respect to Lessor Collateral,
and all rights, remedies and powers of Administrative Agent, Indenture Trustee,
Secured Parties and Collateral Agent shall continue as if no such proceedings
had been instituted.
7.15. No Commingling of Funds. If at any time during a Loan
Default or Loan Event of Default Lessor should receive any amounts payable by
Lessee under the Lease Agreement or by Guarantor under the Participation
Agreement other than Excepted Payments, or any other proceeds for or with
respect to Lessor Collateral, it will hold such amounts in trust for Collateral
Agent and not commingle such amounts with any other amounts belonging to or held
by Borrower, advise Collateral Agent of such receipt and promptly forward such
amounts directly to Collateral Agent.
7.16. Lessor Collateral. Upon the occurrence and continuance
of any Loan Event of Default, Lessor will immediately upon receipt of all
checks, drafts, cash or other remittances in payment of any of its accounts,
contract rights or general intangible constituting part of Lessor Collateral, or
in payment for any Lessor Collateral sold, transferred, leased or otherwise
disposed of, or in payment or on account of its accounts, contracts, contract
rights, notes, drafts, acceptances, general intangibles, choses in action and
all other forms of obligation relating to any of Lessor Collateral so sold,
transferred or otherwise disposed of, deliver any such items to Collateral Agent
accompanied by a remittance report in form supplied or approved by Collateral
Agent, such items to be delivered to Collateral Agent in the same form received,
endorsed or otherwise assigned by Lessor where necessary to permit collection of
items and, regardless of the form of such endorsement, Lessor hereby waives
presentment, demand, notice of dishonor, protest and notice of protest.
7.17. Conflicts. If any provision of this Section 7 conflicts
with any provision contained in any other Operative Document, such provision
contained in this Section 7 shall prevail.
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8. Guaranty.
For the benefit of each Person to whom the Lessee owes any
payment or other obligation under the Operative Documents (each a "Guaranty
Party"), Guarantor irrevocably and unconditionally guarantees the full and
prompt payment when due (whether by acceleration or otherwise) of Lease
Payments, Supplemental Payments and any interest due thereon and of all
obligations and liabilities (including, without limitation, indemnities, fees
and interest thereon) of Lessee now existing or hereafter incurred under,
arising out of or in connection with this Agreement or any other Operative
Document and the due performance and compliance by Lessee with the terms of the
Lease Agreement and the Operative Documents binding on Lessee (all such
payments, interest, obligations and liabilities, collectively, the "Guaranteed
Obligations"). All payments by Guarantor under this guaranty shall be made on
the same basis as payments by Lessee under the Operative Documents. Guarantor
hereby waives notice of acceptance of this guaranty and notice of any liability
to which it may apply, and waives presentment, demand of payment, protest,
notice of dishonor or nonpayment of any such liability, suit or taking of other
action by an Guaranty Party against, and any other notice to, any party liable
thereon (including such Guarantor or any other guarantor). Any Guaranty Party
may at any time and from time to time unless otherwise prohibited under the
Operative Documents without the consent of, or notice to Guarantor, without
incurring responsibility to Guarantor and without impairing or releasing the
obligations of Guarantor hereunder, upon or without any terms or conditions and
in whole or in part:
(a) change the manner, place or terms of payment of, and/or
change or extend the time of payment of, renew or alter, any of the Guaranteed
Obligations, any security therefor, or any liability incurred directly or
indirectly in respect therof, and the guaranty herein made shall apply to the
Guaranteed Obligations as so changed, extended, renewed or altered;
(b) sell, exchange, release, surrender, realize upon or
otherwise deal with in any manner and in any order any property by whomsoever at
any time pledged or mortgaged to secure, or howsoever securing, the Guaranteed
Obligations or any liability is (including any of those hereunder) incurred
directly or indirectly in respect thereof or hereof, and/or any offset there
against;
(c) exercise or refrain from exercising any rights against
Lessee or others or otherwise act or refrain from acting;
(d) settle or compromise any of the Guaranteed Obligations,
any security therefor or any liability (including any of those hereunder)
incurred directly or indirectly in respect thereof or hereof;
(e) apply any sums by whomsoever paid or howsoever realized to
any liability or liabilities of Lessee to any Guaranty Party regardless of what
liabilities or liabilities of Lessee remain unpaid; and/or
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(f) consent to or waive any breach of, or any act, omission or
default under, any of the Operative Documents or otherwise amend, modify or
supplement any of the Operative Documents or any of such other instruments or
agreements.
The obligations of Guarantor under this Section 8 are absolute
and unconditional and shall remain in full force and effect without regard to,
and shall not be released, suspended, discharged, terminated or otherwise
affected by, any circumstance or ocurrence whatsoever, including,without
limitation (i) any action or inaction by any Guaranty Party; or (ii) any
invalidity, irregularity or unenforceability of all or part of the Guaranteed
Obligations or of any security therefor. The obligations under this Section 8
are primary obligations of Guarantor. If and to the extent that Guarantor makes
any payment to any Guaranty Party or to any other Person pursuant to or in
respect of this Section 8, any claim which Guarantor may have against Lessee by
reason thereof shall be subject and subordinate to the prior payment in full of
the Guaranteed Obligations.
The obligations under this Section 8 are continuing and all
liabilities to which they apply or may apply under the terms hereof shall be
conclusively presumed to have been created in reliance hereon. No failure or
delay on the part of any Guaranty Party in exercising any right, power or
privilege hereunder and no course of dealing between Guarantor, any Guaranty
Party or the holder of any Tranche A Note or Tranche B Note shall operate as a
waiver thereof; nor shall any single or partial exercise of any right, power or
privilege hereunder preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. The rights, powers and remedies
herein expressly provided are cumulative and not exclusive of any rights, powers
and remedies which any Guaranty Party would otherwise have. No notice to or
demand on Guarantor in any case shall entitle Guarantor to any other further
notice or demand in similar or other circumstances or constitute a waiver of the
rights of any Guaranty Party to any other or further action in any circumstances
without notice or demand.
This guaranty shall continue to be effective, or be
reinstated, as the case may be, if at any time payment, or any part thereof, or
of any of the Guaranteed Obligations is rescinded or must otherwise be restored
or returned by the Guaranty Parties upon the insolvency, bankruptcy,
dissolution, liquidation or reorganization of Lessee or Guarantor, or upon or as
a result of the appointment of a receiver, intervenor, or conservator of, or
trustee or similar officer for, Lessee or Guarantor or any substantial part of
its property, all as though such payment had not been made and any statute of
limitations in favor of Guarantor against any Guaranty Party relating to any
such amount to be restored or returned shall be tolled, or deemed to have been
tolled, to the extent permitted by law, during the period from the date such
payment was made to such Guaranty Party until the date such Guaranty Party so
restores or returns such amount.
9. Covenants.
9.1. Lessor and Lessor General Partner Covenants. Each of
Lessor and Lessor General Partner covenants for the benefit of each other party
hereto (unless each shall have otherwise waived in writing compliance herewith)
during the term of this Agreement as follows:
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(a) It shall take all actions as are required to keep the
representations and warranties made by it in Section 2.4 (with respect to
Lessor) and in Section 2.5 (with respect to Lessor General Partner) (except, in
the case of clause (b) of Section 2.4 (with respect to Lessor), if the location
of such office shall change, it shall provide each other party hereto with not
less than ten (10) days' prior written notice of such change), true and correct
in all material respects (but without regard to the date when such
representations and warranties were made or are expressed to be effective) until
such time as all of the obligations secured hereby have been paid in full.
(b) The proceeds of each Tranche A Note and Tranche B Loan
shall be used solely to finance Lessor's acquisitions of Items of Equipment in
accordance with the terms of this Agreement and for costs related to such
transactions. No part of the proceeds of any Tranche A Note or Tranche B Loan
will be used to purchase or carry any Margin Stock or to extend credit for the
purpose of purchasing or carrying any Margin Stock. Neither the issuing of any
Tranche A Note, the making of any Tranche B Loan nor the use of the proceeds
thereof will violate or be inconsistent with the provisions of Regulation T, U
or X of the Board of Governors of the Federal Reserve System.
(c) It shall comply in all material respects with all
Applicable Laws, rules, regulations and orders of any jurisdiction, such
compliance to include paying when due all Taxes imposed upon it or upon its
property by any Governmental Entity except to the extent contested in good faith
and for which adequate reserves have been segregated.
(d) It shall promptly take, and maintain the effectiveness of,
all action of the type referred to in clause (b) of Section 2.3 or otherwise
that may, from time to time, be necessary or appropriate under Applicable Law in
connection with the performance by Lessor of its obligations under the Operative
Documents, or the taking of any action hereby or thereby contemplated, or
necessary for the legality, validity, binding effect or enforceability of the
Operative Documents, or for the making of any payment or the transfer or
remittance of any funds by Lessor under the Operative Documents.
(e) It shall duly pay and discharge (i) immediately upon the
attachment thereof (A) in the case of Lessor General Partner, all Liens
attributable to Lessor General Partner (other than Permitted Liens) on any
Lessor Collateral, and (B) in the case of Lessor, all Liens other than Permitted
Liens on any Lessor Collateral, (ii) as and when due, all of its indebtedness
and other obligations before the time that any Lien attaches unless and only to
the extent that any such amounts are not yet due and payable or the validity
thereof is being contested in good faith by appropriate proceedings so long as
such proceedings do not involve any material danger of the sale, forfeiture or
loss of the Items of Equipment or any interest therein and Lessor maintains
appropriate reserves with respect thereto or has made adequate provision for the
payment thereof, in accordance with generally accepted accounting principles and
approved by Administrative Agent and (iii) all Taxes imposed upon or against it
or its property or assets, or upon any property leased by it, prior to the date
on which penalties attach thereto.
(f) It shall keep at all times books of record and account in
which full, true and correct entries will be made of all dealings or
transactions in relation to its business and
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affairs, and provide or cause to be provided adequate protection against loss or
damage to such books of record and account.
(g) It shall not operate in a manner that would result in an
actual, constructive or substantive consolidation with Limited Partners or any
other Person other than Lessee or Lessor General Partner in the case of Lessor
or other than Lessee or Lessor in the case of Lessor General Partner, and in
such connection Lessor shall observe all limited partnership formalities,
maintain records separately and independently from those of Limited Partners or
other Person and enter into any transactions with Limited Partners only on an
arm's-length contractual basis.
(h) It shall not, and shall cause Co-Obligor not to, without
the consent of Indenture Trustee acting on behalf of Majority Tranche A
Noteholders, the consent of all Tranche B Lenders and the consent of
Administrative Agent (i) enter into any business other than its acquisition,
leasing, financing and sale of the Equipment, (ii) create, incur, assume or
permit to exist any Indebtedness, except as expressly permitted by this
Agreement, (iii) enter into, or be a party to, any transaction with any Person,
except the transactions set forth in the Operative Documents and as expressly
permitted thereby, (iv) acquire any assets other than the Equipment and the
rights of Lessor set forth under the Operative Documents, or (v) make any
investment in, guarantee the obligations of, or make or advance money to any
Person (other than capital contributions to Co-Obligor for the sole purpose of
maintaining Co-Obligor's corporate existence), through the direct or indirect
lending of money, holding of securities or otherwise except the transactions set
forth in the Operative Documents and as expressly permitted thereby.
(i) It shall not wind up, liquidate or dissolve its affairs or
enter into any transaction of merger or consolidation, or convey, sell, lease
(substantially as a whole), or otherwise dispose of (whether in one or in a
series of transactions) its assets except as expressly permitted by this
Agreement.
(j) It shall notify Lessee of any Loan Event of Default except
any such Loan Event of Default caused by or related to a Lease Event of Default.
(k) It shall not claim ownership of any Item of Equipment on
any federal, state, local or foreign tax return or filing.
9.2. Lessee Covenants for the Benefit of Indenture Trustee and
Tranche A Noteholders. Lessee covenants and agrees solely for the benefit of
Lessor, Co-Obligor, Indenture Trustee and each Tranche A Noteholder (unless
Indenture Trustee or Majority Tranche A Noteholders shall otherwise waive in
writing compliance herewith or the Tranche A Notes shall have been defeased
pursuant to and in accordance with the terms of Article 7 of the Indenture) that
on the Closing Date and thereafter during the remaining term of this Agreement
as follows:
(a) Limitation on Incurrence of Additional Indebtedness.
Lessee will not, and will not permit any of its Restricted Subsidiaries to,
directly or indirectly, create, incur, assume, guarantee, become liable,
contingently or otherwise, with respect to, or otherwise become responsible for
payment of (collectively, "incur") any Indebtedness (other than Permitted
Indebtedness); provided, however, that if no Tranche A Event of Default shall
have occurred and
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be continuing at the time of or as a consequence of the incurrence of any such
Indebtedness, Lessee and its Restricted Subsidiaries may incur Indebtedness
(including, without limitation, Acquired Indebtedness) if on the date of the
incurrence of such Indebtedness, after giving effect to the incurrence thereof,
the Consolidated Fixed Charge Coverage Ratio of Lessee is greater than 2.25 to
1.0.
For purposes of determining compliance with this covenant, (i)
in the event that an item of Indebtedness meets the criteria of more than one of
the types of Indebtedness permitted by this covenant, Lessee in its sole
discretion will classify such item of Indebtedness and will only be required to
include the amount and type of each class of Indebtedness in the test specified
in the first paragraph of this covenant or in one of the clauses of the
definition of the term "Permitted Indebtedness", (ii) the amount of Indebtedness
(other than Indebtedness consisting of an Operating Lease Facility) issued at a
price which is less than the principal amount thereof shall be equal to the
amount of liability in respect thereof determined in accordance with GAAP, (iii)
Indebtedness incurred in connection with, or in contemplation of, any
transaction described in the definition of the term "Acquired Indebtedness"
shall be deemed to have been incurred by Lessee or one of its Restricted
Subsidiaries, as the case may be, at the time an acquired Person becomes such a
Restricted Subsidiary (or is merged into Lessee or such a Restricted Subsidiary)
or at the time of the acquisition of assets, as the case may be, (iv) the
maximum amount of Indebtedness that Lessee and its Restricted Subsidiaries may
incur pursuant to this covenant shall not be deemed to be exceeded, with respect
to any outstanding Indebtedness, due solely to the result of fluctuations in the
exchange rates of currencies, and (v) guarantees or Liens supporting
Indebtedness permitted to be incurred under this covenant may be issued or
granted if otherwise issued or granted in accordance with the terms of this
Section 9.2.
(b) Limitation on Restricted Payments. Lessee will not, and
will not cause or permit any of its Restricted Subsidiaries to, directly or
indirectly, (i) declare or pay any dividend or make any distribution (other than
dividends or distributions payable in Qualified Capital Stock of Lessee or in
options, warrants, or other rights to purchase such Qualified Capital Stock (but
excluding any debt security or Disqualified Capital Stock convertible into, or
exchangeable for, such Qualified Capital Stock)) on or in respect of shares of
Lessee's Capital Stock to holders of such Capital Stock, (ii) purchase, redeem
or otherwise acquire or retire for value any Capital Stock of Lessee or any
warrants, rights or options to purchase or acquire shares of any class of such
Capital Stock (in each case, other than in exchange for Qualified Capital Stock
of Lessee or options, warrants or other rights to purchase such Qualified
Capital Stock (but excluding any debt security, or Disqualified Capital Stock
convertible into, or exchangeable for, such Qualified Capital Stock)), (iii)
make any principal payment on, purchase, defease, redeem, prepay, decrease or
otherwise acquire or retire for value, prior to any scheduled final maturity,
scheduled repayment or scheduled sinking fund payment, any Indebtedness of
Lessee that is subordinate or junior in right of payment to Lessee's rental
payment obligations under the Lease Agreement or (iv) make any Investment (other
than Permitted Investments) (each of the foregoing actions set forth in clauses
(i), (ii), (iii) and (iv) being referred to as a "Restricted Payment"), if at
the time of such Restricted Payment or immediately after giving effect thereto,
(A) a Tranche A Default or a Tranche A Event of Default shall have occurred and
be continuing or (B) Lessee is not able to incur at least $1.00 of additional
Indebtedness (other than Permitted Indebtedness) in compliance with Section
9.2(a) or (C) the aggregate amount of Restricted Payments (including such
proposed
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Restricted Payment) made subsequent to the Issue Date (the amount expended for
such purposes, if other than in cash, being the fair market value of such
property as determined reasonably and in good faith by the Board of Directors of
Lessee) shall exceed the sum of: (1) 50% of the cumulative Consolidated Net
Income (or if cumulative Consolidated Net Income shall be a loss, minus 100% of
such loss) of Lessee earned subsequent to the Issue Date and on or prior to the
date the Restricted Payment occurs (the "Reference Date") (treating such period
as a single accounting period); plus (2) 100% of (x) the aggregate net cash
proceeds and (y) the aggregate fair market value (as determined in good faith by
the Board of Directors of Lessee as evidenced by a Board Resolution), of
property other than cash, received by Lessee from any Person (other than a
Subsidiary of Lessee) from the issuance and sale subsequent to the Issue Date
and on or prior to the Reference Date of Qualified Capital Stock of Lessee or
options, warrants or other rights to purchase such Qualified Capital Stock (but
excluding any debt security or Disqualified Capital Stock convertible into, or
exchangeable for, such Qualified Capital Stock); plus (3) without duplication of
any amounts included in clause (C)(2) above, 100% of the aggregate net cash
proceeds of any equity contribution received by Lessee from a holder of Lessee's
Capital Stock (excluding, in the case of clauses (C)(3) and (4), any net cash
proceeds from an Equity Offering to the extent used to purchase Equipment in
accordance with Section 28.4.1 of the Lease Agreement and in compliance with
Section 3.03(b) of the Indenture; plus (4) 100% of the aggregate net cash
proceeds received by Lessee from any Person (other than a Subsidiary of Lessee)
from the issuance and sale (subsequent to the Issue Date) of debt securities or
shares of Disqualified Capital Stock that have been converted into or exchanged
for Qualified Capital Stock of Lessee, together with the aggregate cash received
by Lessee at the time of such conversion or exchange; plus (5) without
duplication, the sum of (a) the aggregate amount returned in cash to Lessee or a
Restricted Subsidiary of Lessee on or with respect to Investments (other than
Permitted Investments) made subsequent to the Issue Date whether through
interest payments, principal payments, dividends or other distributions or
payments, (b) the net cash proceeds received by Lessee or any of its Restricted
Subsidiaries from the disposition of all or any portion of such Investments
(other than to a Subsidiary of Lessee) and (c) upon redesignation of an
Unrestricted Subsidiary as a Restricted Subsidiary, the fair market value of
such Subsidiary; provided, however, that the sum of clauses (a), (b) and (c)
above shall not exceed the aggregate amount of all such Investments made
subsequent to the Issue Date; plus (6) $15,000,000.
Notwithstanding the foregoing, the provisions set forth in the
immediately preceding paragraph do not prohibit: (i) the payment of any dividend
within sixty (60) days after the date of declaration of such dividend if the
dividend would have been permitted on the date of declaration; (ii) the
acquisition of any shares of Capital Stock of Lessee, either (A) solely in
exchange for shares of Qualified Capital Stock of Lessee or options, warrants,
or other rights to purchase such Qualified Capital Stock (other than any debt
security or Disqualified Capital Stock convertible into, or exchangeable for,
such Qualified Capital Stock) or (B) through the application of net proceeds of
a substantially concurrent sale for cash (other than to a Subsidiary of Lessee)
of shares of Qualified Capital Stock of Lessee or options, warrants, or other
rights to purchase such Qualified Capital Stock (other than any debt security or
Disqualified Capital Stock convertible into, or exchangeable for, such Qualified
Capital Stock); (iii) the acquisition of any Indebtedness of Lessee that is
subordinate or junior in right of payment to Lessee's rental payment obligations
under the Lease Agreement either (A) solely in exchange for shares of
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Qualified Capital Stock of Lessee, or options, warrants, or other rights to
purchase such qualified Capital Stock or (B) through the application of net
proceeds of a substantially concurrent sale for cash (other than to a Subsidiary
of Lessee) of (1) shares of Qualified Capital Stock of Lessee or (2) Refinancing
Indebtedness; (iv) dividends or payments to Guarantor of cash to be immediately
applied to repurchases by Guarantor of Qualified Capital Stock of Guarantor or
options to purchase such Qualified Capital Stock from directors or employees or
former directors or former employees of Guarantor or any of its Subsidiaries or
their authorized representatives upon the death, disability or termination of
employment of such persons or pursuant to the terms of any customary agreement
under which such Qualified Capital Stock or options were issued, in an aggregate
amount not to exceed $1,000,000 plus any life insurance proceeds in any calendar
year; (v) the repurchase of any Indebtedness which is subordinated to Lessee's
rental payment obligations under the Lease Agreement at a purchase price not
greater than 101% of the principal amount of such Indebtedness in the event of a
change of control in accordance with provisions similar to Section 9.2(i)
hereof; provided that, prior to or simultaneously with the purchase, the Lessor
has made the Change of Control Offer as provided in the Indenture with respect
to the Tranche A Notes and has repurchased all Tranche A Notes validly tendered
for payment in connection with such Change of Control Offer; (vi) payments or
distributions to dissenting stockholders pursuant to applicable law, pursuant to
or in connection with a consolidation, merger or transfer of assets that
complies with the provisions of Section 9.2 hereof applicable to mergers,
consolidating and transfers of all or substantially all of the property and
assets of Lessee, (vii) any dividends or payments to Guarantor in respect of
overhead expenses, legal, accounting, commissions reporting and other
professional fees and expenses of Guarantor that are directly attributable to
the operations of Lessee and its restricted subsidiaries; (viii) payments to
holders of Qualified Capital Stock of Lessee or Guarantor (A) in lieu of the
issuance of fractional shares of Qualified Capital Stock of Lessee or Guarantor
or (B) to redeem or repurchase stock purchase of similar rights issued as a
shareholder rights device; provided that the payments made pursuant to this
clause (viii) from the Issue Date through the final stated maturity of the
Tranche A Notes may not exceed $2,000,000; and (ix) repurchases, acquisitions or
retirements of shares of Qualified Capital Stock of Lessee or Guarantor deemed
to occur upon the exercise of stock options or similar rights issued under
employee benefits plans of Lessee or Guarantor if such shares represent all or a
portion of the exercise price or are surrendered in connection with satisfying
any income tax obligation; provided that, except in the case of clauses (i) and
(ii), no Tranche A Default or Tranche A Event of Default shall have occurred and
be continuing or occur as a consequence of the actions or payments set forth
therein. In determining the aggregate amount of Restricted Payments made
subsequent to the Issue Date in accordance with clause (C) of the immediately
preceding paragraph, amounts expended, without duplication, pursuant to clauses
(i), (ii)(B), (iv) through (vi) and (viii) shall be included in such
calculation.
Not later than ten (10) days after the date of making any
Restricted Payment (but not including any transaction described in the preceding
paragraph), Lessee shall deliver to Indenture Trustee an officers' certificate
stating that such Restricted Payment complies with Section 9.2 and setting forth
in reasonable detail the basis upon which the required calculations were
computed, which calculations may be based upon Lessee's latest available
internal quarterly financial statements.
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(c) Limitation on Asset Sales. Lessee will not, and will not
permit any of its Restricted Subsidiaries to, consummate an Asset Sale unless
(i) Lessee or the applicable Restricted Subsidiary, as the case may be, receives
consideration at the time of such Asset Sale at least equal to the fair market
value of the assets sold or otherwise disposed of (as determined in good faith
by Lessee's Board of Directors) and (ii) at least 75% of the consideration
received by Lessee or the Restricted Subsidiary, as the case may be, from such
Asset Sale shall be in the form of cash or Cash Equivalents; provided that (A)
the amount of any liabilities of Lessee or any such Restricted Subsidiary (other
than liabilities that are by their terms subordinated to Lessee's rental payment
obligations under the Lease Agreement) that are assumed by the transferee of any
such assets and (B) the fair market value of any marketable securities received
by Lessee or any such Restricted Subsidiary in exchange for any such assets that
are promptly converted into cash shall be deemed to be cash for purposes of this
provision; and provided, further, that in no event shall the aggregate fair
market value at the time of receipt of consideration received by Lessee in a
form other than cash or Cash Equivalents exceed 15% of Lessee's Consolidated
Total Assets. In the event of an Asset Sale, Lessee shall apply, or cause such
Restricted Subsidiary to apply, the Net Cash Proceeds relating to such Asset
Sale within 720 days of receipt thereof either (A) to repay or prepay any
indebtedness under the Credit Agreement, and effect a permanent reduction
thereof, (B) to make an investment in either (x) properties and assets that
replace the properties and assets that were the subject of such Asset Sale or
(y) properties or assets that will be used in the business of Lessee and its
Restricted Subsidiaries as existing on the Issue Date or in businesses similar
or reasonably related thereto or in the capital stock of any entity a majority
of whose assets consists of the properties or assets described under (x) or (y)
("Replacement Assets"), or (C) to a combination of prepayment and investment
permitted by the immediately foregoing clauses (A) and (B). After the day on
which the aggregate amount of Net Cash Proceeds which have not been applied as
permitted in the immediately foregoing clauses (A), (B) and (C) of the next
preceding sentence (a "Net Proceeds Offer Amount") exceeds $15,000,000 (the "Net
Proceeds Offer Trigger Date"), Lessee shall make an offer to apply such Net Cash
Proceeds to purchase Equipment from Lessor at the Acquisition Cost thereof;
provided, Lessee shall have the option of applying a portion of the Net Proceeds
Offer Amount to the repurchase of any Indebtedness not subordinated to its
rental payment obligations under the Lease Agreement, pro rata based on the
amount of Tranche A Notes, the Tranche B Loans and the Equity Contributions
outstanding on the one hand, and the amount of such other Indebtedness
outstanding on the other hand. The purchase price for such other Indebtedness
will not exceed 100% of the principal amount thereof, plus accrued and unpaid
interest thereon. If Lessee elects to so repay such other Indebtedness, the
amount of Equipment purchased by it will be reduced by the amount of such other
Indebtedness so repurchased.
If at any time any non-cash consideration received by Lessee
or any Restricted Subsidiary of Lessee, as the case may be, in connection with
any Asset Sale is converted into or sold or otherwise disposed of for cash
(other than interest received with respect to any such non-cash consideration),
then such conversion or disposition shall be deemed to constitute an Asset Sale
and the Net Cash Proceeds thereof shall be applied in accordance with this
covenant. To the extent that the aggregate principal amount of the Tranche A
Notes, the Tranche B Loans and the Equity Contributions repurchased is less than
the Net Proceeds Offer Amount, Lessee and its
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Restricted Subsidiaries may use such deficiency for general corporate purposes.
Upon completion of such Net Proceeds Offer, the Net Proceeds Offer Amount will
be reset to zero.
Notwithstanding the two (2) immediately preceding paragraphs,
Lessee and its Restricted Subsidiaries will be permitted to consummate an Asset
Sale without complying with the foregoing paragraphs to the extent (i) at least
80% of the consideration for such Asset Sale constitutes Replacement Assets and
(ii) such Asset Sale is for fair market value; provided that any consideration
not constituting Replacement Assets received by Lessee or any of its Restricted
Subsidiaries in connection with any Asset Sale permitted to be consummated under
this paragraph shall constitute Net Cash Proceeds subject to the provisions of
the preceding paragraph.
If at any time any non-cash consideration received by Lessee
or any Restricted Subsidiary of Lessee, as the case may be, in connection with
any Asset Sale is converted into or sold or otherwise disposed of for cash
(other than interest received with respect to any such non-cash consideration),
then such conversion or disposition shall be deemed to constitute an Asset Sale
and the Net Cash Proceeds thereof shall be applied in accordance with this
covenant. To the extent that the aggregate principal amount of Tranche A Notes,
tendered pursuant to such Net Proceeds Offer is less than the net Proceeds Offer
Amount allocable to the Tranche A Notes, Lessee and its Restricted Subsidiaries
may use such deficiency for general corporate purposes.
(d) Limitation on Dividend and Other Payment Restrictions
Affecting Subsidiaries. Lessee will not, and will not cause or permit any of its
Restricted Subsidiaries to, directly or indirectly, create or otherwise cause or
permit to exist or become effective any encumbrance or restriction on the
ability of any Restricted Subsidiary of Lessee to (i) pay dividends or make any
other distributions on or in respect of its Capital Stock; (ii) make loans or
advances or to pay any Indebtedness or other obligation owed to Lessee or any
other Restricted Subsidiary of Lessee; or (iii) transfer any of its property or
assets to Lessee or any other Restricted Subsidiary of Lessee, except for such
encumbrances or restrictions existing under or by reason of: (A) applicable law;
(B) a Securitized Operating Lease Facility; (C) the Credit Agreement; (D) any
agreement or instrument governing Acquired Indebtedness, which encumbrance or
restriction is not applicable to any Person, or the properties or assets of any
Person, other than the Person or the properties or assets of the Person so
acquired; (E) agreements existing on the Issue Date to the extent and in the
manner such encumbrances and restrictions are contemplated by such agreements;
(F) in the case of clause (iii) above: (1) agreements or instruments arising or
agreed to in the ordinary course of business that restrict in a customary manner
the subletting, assignment or transfer of any property or asset subject to a
lease, license, conveyance or other contract and (2) any transfer of, agreement
to transfer, option or right with respect to, or Lien on, any property or assets
of Lessee or any Restricted Subsidiary entered into in compliance with Section
9.2 hereof; (G) an agreement that has been entered into for the sale or
disposition of all or substantially all of the Capital Stock of, or property and
assets of, any Restricted Subsidiary of Lessee; (H) provisions in agreements or
instruments which prohibit the payment of dividends or the making of other
distributions with respect to any Capital Stock of a Person other than on a pro
rata basis; or (I) an agreement governing Indebtedness incurred to Refinance the
Indebtedness issued, assumed or incurred pursuant to an agreement referred to in
clause (B), (C), (D) or (E) above; provided, however, that the provisions
relating to
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such encumbrance or restriction contained in any such Indebtedness are no less
favorable to Lessee or the relevant Restricted Subsidiary of Lessee in any
material respect as determined by the Board of Directors of Lessee in its
reasonable and good faith judgment than the provisions relating to such
encumbrance or restriction contained in agreements referred to in such clause
(B), (C), (D) or (E). Nothing contained in clause (iii) of this Section 9.2(d)
shall prevent Lessee or any of its Restricted Subsidiaries from creating,
incurring, assuming or suffering to exist any Lien created, incurred, assumed or
suffered to exist in accordance with the other terms of this Agreement.
(e) Limitation on Preferred Stock of Restricted Subsidiaries.
Lessee will not and will not permit any of its Restricted Subsidiaries to issue
any Preferred Stock (other than to Lessee or to a Wholly Owned Restricted
Subsidiary of Lessee) or permit any Person (other than Lessee or a Wholly Owned
Restricted Subsidiary of Lessee) to own any Preferred Stock of any Restricted
Subsidiary of Lessee; provided that the foregoing shall not prohibit (i) the
creation of a Lien in any such Preferred Stock under the Credit Agreement and
otherwise created in accordance with this Agreement or (ii) issuances of sales
to directors of directors' qualifying shares or issuances or sales to foreign
nationals of such Preferred Stock, in each case to the extent required by
applicable law.
(f) Limitation on Liens. Lessee will not, and will not cause
or permit any of its Restricted Subsidiaries to, directly or indirectly, create,
incur, assume or permit or suffer to exist any Liens of any kind against or upon
any property or assets of Lessee or any of its Restricted Subsidiaries whether
owned on the Issue Date or acquired after the Issue Date, or any proceeds
therefrom, or assign or otherwise convey any right to receive income or profits
therefrom except for (i) Liens existing as of the Issue Date (other than Liens
securing Indebtedness under the Credit Agreement) to the extent and in the
manner such Liens are in effect on the Issue Date and Liens to the extent
contemplated by the Operative Documents; (ii) Liens securing Indebtedness under
the Credit Agreement incurred pursuant to Section 9.2(a); (iii) Liens securing
an Operating Lease Facility, including Liens securing or relating to any
obligations with respect to such Operating Lease Facility or with respect to
guarantees provided to such Operating Lease Facilities; (iv) Liens of Lessee or
a Wholly Owned Restricted Subsidiary of Lessee on assets of any Restricted
Subsidiary of Lessee; (v) Liens securing Refinancing Indebtedness which is
incurred to Refinance any Indebtedness which has been secured by a Lien
permitted under this Agreement and which has been incurred in accordance with
the provisions of this Agreement; provided, however, that such Liens (1) are no
less favorable to the Tranche A Noteholders and are not more favorable to the
lienholders with respect to such Liens than the Liens in respect of the
Indebtedness being Refinanced and (2) do not extend to or cover any property or
assets of Lessee or any of its Restricted Subsidiaries not securing the
Indebtedness so Refinanced; and (vi) Tranche A Permitted Liens.
(g) Merger, Consolidation and Sale of Assets. Lessee will not,
in a single transaction or series of related transactions, consolidate or merge
with or into any Person, or sell, assign, transfer, lease, convey or otherwise
dispose of (or cause or permit any Restricted Subsidiary of Lessee to sell,
assign, transfer, lease, convey or otherwise dispose of) all or substantially
all of Lessee's assets (determined on a consolidated basis for Lessee and
Lessee's Restricted Subsidiaries) whether as an entirety or substantially as an
entirety to any Person
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unless: (i) either (A) Lessee shall be the surviving or continuing corporation
or (B) the Person (if other than Lessee) formed by such consolidation or into
which Lessee is merged or the Person which acquires by sale, assignment,
transfer, lease, conveyance or other disposition the properties and assets of
Lessee and of Lessee's Restricted Subsidiaries substantially as an entirety (the
"Surviving Entity") (1) shall be a corporation organized and validly existing
under the laws of the United States or any State thereof or the District of
Columbia and (2) shall expressly assume all obligations of Lessee under the
Lease Agreement on the part of Lessee to be performed or observed by Lessee;
(ii) immediately after giving effect to such transaction and the assumption
contemplated by clause (i)(B)(2) above (including giving effect to any
Indebtedness and Acquired Indebtedness incurred in connection with or in respect
of such transaction), Lessee or such Surviving Entity, as the case may be, (a)
shall have a Consolidated Net Worth equal to or greater than the Consolidated
Net Worth of Lessee immediately prior to such transaction, and (b) shall be able
to incur at least $1.00 of additional Indebtedness (other than Permitted
Indebtedness) pursuant to Section 9.2(a); (iii) immediately after giving effect
to such transaction and the assumption contemplated by clause (i)(B)(2) above
(including, without limitation, giving effect to any Indebtedness and Acquired
Indebtedness incurred or anticipated to be incurred and any Lien granted in
connection with or in respect of the transaction), no Tranche A Default or
Tranche A Event of Default shall have occurred or be continuing; and (iv) Lessee
or the Surviving Entity shall have delivered to Indenture Trustee an officers'
certificate and an opinion of counsel, each stating that such consolidation,
merger, sale, assignment, transfer, lease, conveyance or other disposition and
that all conditions precedent in this Agreement relating to such transaction
have been satisfied.
(h) Limitations on Transactions with Affiliates.
(i) Lessee will not, and will not permit any of its
Restricted Subsidiaries to, directly or indirectly, enter into or
permit to exist any transaction or series of related transactions
(including, without limitation, the purchase, sale, lease or exchange
of any property or the rendering of any service) with, or for the
benefit of, any of its Affiliates (each an "Affiliate Transaction"),
other than (A) Affiliate Transactions permitted under paragraph (ii)
below and (B) Affiliate Transactions on terms that are no less
favorable than those that might reasonably have been obtained in a
comparable transaction at such time on an arm's-length basis from a
Person that is not an Affiliate of Lessee or such Restricted
Subsidiary. All Affiliate Transactions (and each series of related
Affiliate Transactions which are similar or part of a common plan)
involving aggregate payments or other property with a fair market value
in excess of $5,000,000 shall be approved by the unaffiliated members
of the Board of Directors of Lessee or such Restricted Subsidiary, as
the case may be, such approval to be evidenced by a Board Resolution
stating that such unaffiliated members of the Board of Directors has
determined that such transaction complies with the foregoing
provisions. If Lessee or any Restricted Subsidiary of Lessee enters
into an Affiliate Transaction (or a series of related Affiliate
Transactions related to a common plan) that involves an aggregate fair
market value of more than $10,000,000, Lessee or such Restricted
Subsidiary, as the case may be, shall, prior to the consummation
thereof, obtain a favorable opinion as to the fairness of such
transaction or series of related transactions to Lessee or the relevant
Restricted Subsidiary, as the case may be, from a financial point of
view, from a nationally
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recognized firm qualified to do the business for which it is engaged
and file the same with Indenture Trustee.
(ii) The restrictions set forth in clause (i) above
shall not apply to (A) reasonable fees and compensation paid to and
indemnity provided on behalf of, officers, directors, employees or
consultants of Lessee or any Restricted Subsidiary of Lessee as
determined in good faith by Lessee's Board of Directors or senior
management; (B) transactions exclusively between or among Lessee and
any of its Wholly Owned Restricted Subsidiaries or exclusively between
or among such Wholly Owned Restricted Subsidiaries, provided such
transactions are not otherwise prohibited by this Agreement; (C) any
agreement as in effect as of the Issue Date (including, but not limited
to, the Weatherford Transition Services Agreement) or any amendment
thereto or any transaction contemplated thereby (including, but not
limited to, pursuant to any amendment thereto) in any replacement
agreement thereto so long as any such amendment or replacement
agreement is not more disadvantageous to the Tranche A Noteholders in
any material respect than the original agreement as in effect on the
Issue Date; (D) Restricted Payments permitted by Section 9.2(b); (E)
the Tax Sharing Agreement; (F) employment agreements with officers and
employees of Lessee and its Restricted Subsidiaries, in the ordinary
course of business; (G) loans and advances to employees not to exceed
$5,000,000 outstanding at any one time, in the ordinary course of
business; (H) arrangements with directors of Lessee existing on the
Issue Date as disclosed in the Offering Memorandum; (I) the Acquisition
of Gas Services International Ltd. and related entities including
International Pumps & Compressions Pty. Ltd. for consideration of
approximately $21 million, if consummated within six (6) months of the
Issue Date, and documents related thereto; and (J) the provision of
compression or related services to Weatherford or any other Affiliate
in the ordinary course of business on market terms; provided, however,
that if aggregate payments or property involved in any such transaction
or series of related transactions exceeds $5,000,000, such transaction
or transactions shall be approved by the unaffiliated members of the
Board of Directors of Lessee.
(i) Change of Control. Upon a Change of Control, Lessee shall
comply with Section 28.4.3 of the Lease Agreement.
(j) Conduct of Business. Lessee and its Restricted
Subsidiaries will not engage in any businesses which are not the same, similar
or reasonably related to the businesses in which Lessee and its Restricted
Subsidiaries are engaged on the Issue Date.
(k) Reports to Indenture Trustee. Lessee will deliver to
Indenture Trustee within fifteen (15) days after the filing of the same with the
Commission, copies of the quarterly and annual reports and of the information,
documents and other reports, if any, which Lessee is required to file with the
Commission pursuant to Section 13 or 15(d) of the Exchange Act. Further,
notwithstanding that Lessee may not be subject to the reporting requirements of
Section 13 or 15(d) of the Exchange Act, Lessee will provide Indenture Trustee
and Tranche A Noteholders with such annual reports and such information,
documents and other reports specified in Sections 13 and 15(d) of the Exchange
Act.
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(l) Lessee and Guarantor deliveries to Indenture Trustee.
Lessee and Guarantor will promptly deliver to Indenture Trustee the following:
(i) Any Opinions of Counsel, Board Resolutions or
other documents required to be delivered to Indenture Trustee pursuant
to Sections 9.2(a)-(k).
(ii) Notice to Indenture Trustee if either Lessee or
Guarantor become the beneficial owners of any Tranche A Notes.
(iii) An annual compliance certificate stating that
there is no Lease Default or Lease Event of Default.
(iv) Copies of all appraisals and Opinions of Counsel
required under the TIA, including without limitation those required
under Sections 9.02, 9.03, 9.04 and 9.05 of the Indenture.
(v) Prompt notice by Lessee to Indenture Trustee of a
Lease Default or Lease Event of Default.
(vi) Prompt notice by Lessee to Indenture Trustee of
the resignation or inability to act of Collateral Agent.
9.3. Lessee Covenants for the Benefit of Lessor and Tranche B
Lenders. Lessee covenants and agrees for the benefit of Lessor, Co-Obligor and
each Tranche B Lender that on the Closing Date therefore and thereafter during
the remaining term of this Agreement as follows:
(a) Reporting Requirements. Lessee shall deliver, or shall
cause to be delivered, to Lessor, Administrative Agent with sufficient copies of
each for each Tranche B Lender:
(i) Annual Financial Statements. As soon as available
and in any event within 120 days after the end of each fiscal year of
Guarantor, the audited consolidated and unaudited consolidating
statements of income, stockholders' equity, changes in financial
position and cash flow of Guarantor and its consolidated subsidiaries
for such fiscal year, and the related consolidated and consolidating
balance sheets of Guarantor and its consolidated subsidiaries as at the
end of such fiscal year, and setting forth in each case in comparative
form the corresponding figures for the preceding fiscal year, and
accompanied by the related opinion of independent public accountants of
recognized national standing acceptable to Administrative Agent which
opinion shall state that said financial statements fairly present the
consolidated and consolidating financial condition and results of
operations of Guarantor and its consolidated subsidiaries as at the end
of, and for, such fiscal year and that such financial statements have
been prepared in accordance with GAAP, except for such changes in such
principles with which the independent public accountants shall have
concurred and such opinion shall not contain a "going concern" or like
qualification or exception, and a certificate of
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such accountants stating that, in making the examination necessary for
their opinion, they obtained no knowledge, except as specifically
stated, of any Lease Default.
(ii) Quarterly Financial Statements. As soon as
available and in any event within 60 days after the end of each of the
first three fiscal quarterly periods of each fiscal year of Guarantor,
consolidated and consolidating statements of income, stockholders'
equity, changes in financial position and cash flow of Guarantor and
its consolidated subsidiaries for such period and for the period from
the beginning of the respective fiscal year to the end of such period,
and the related consolidated and consolidating balance sheets as at the
end of such period, and setting forth in each case in comparative form
the corresponding figures for the corresponding period in the preceding
fiscal year, accompanied by the certificate of a Responsible Officer,
which certificate shall state that said financial statements fairly
present the consolidated and consolidating financial condition and
results of operations of Guarantor and its consolidated subsidiaries in
accordance with GAAP, as at the end of, and for, such period (subject
to normal year-end audit adjustments).
(iii) Notice of Default, Etc. Promptly after Lessee
knows that any Lease Default or any Material Adverse Effect (Tranche B)
has occurred, a notice of such Lease Default or Material Adverse Effect
(Tranche B), describing the same in reasonable detail and the action
Lessee proposes to take with respect thereto and at Lessor's or any
Tranche B Lender's option, a copy of notice of such Lease Default.
(iv) Management Letters. Promptly after Lessee's or
any Subsidiaries' receipt thereof, a copy of any "management letter"
addressed to the Board of Directors of Lessee or such Subsidiary from
its certified public accountants and any internal control memoranda
relating thereto.
(v) SEC Filings, Etc. Promptly upon its becoming
available, each financial statement, report, notice or proxy statement
sent by Lessee to stockholders generally and each regular or periodic
report and any registration statement, prospectus or written
communication (other than transmittal letters) in respect thereof filed
by Lessee with or received by Lessee in connection therewith from any
securities exchange or the SEC or any successor agency.
(vi) Other Matters. From time to time such other
information regarding the business, affairs or financial condition of
Lessee or any Subsidiary (including, without limitation, any Plan or
Multiemployer Plan and any reports or other information required to be
filed under ERISA) as any Tranche B Lender or Administrative Agent may
reasonably request.
(vii) Hedging Agreements. As soon as available and in
any event within ten (10) Business Days after each Quarterly Date, a
report, in form and substance satisfactory to Administrative Agent,
setting forth as of the last Business Day of such Quarterly Date a true
and complete list of all Hedging Agreements (including commodity price
swap agreements, forward agreements or contracts of sale which provide
for
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prepayment for deferred shipment or delivery of oil, gas or other
commodities) of Lessee and each Subsidiary, the material terms thereof
(including the type, term, effective date, termination date and
notional amounts or volumes), the net mark to market value therefor,
any new credit support agreements relating thereto not listed on
Schedule 9, any margin required or supplied under any credit support
document, and the counter party to each such agreement.
(viii) Labor Disputes. Promptly upon becoming aware
of any labor dispute which could reasonably be expected to have a
Material Adverse Effect (Tranche B), a notice of such dispute
describing same in detail and the action of Lessee proposes to take
with respect thereto.
Lessee will furnish to Administrative Agent, at the time it furnishes each set
of financial statements pursuant to paragraph (i) or (ii) above, a certificate
substantially in the form of Exhibit D executed by a Responsible Officer (i)
certifying as to the matters set forth therein and stating that no Lease Default
has occurred and is continuing (or, if any Lease Default has occurred and is
continuing, describing the same in reasonable detail), and (ii) setting forth in
reasonable detail the computations necessary to determine whether Lessee is in
compliance with Section 9.3(o)(i), (ii) and (iii) as of the end of the
respective fiscal quarter or fiscal year.
(b) Litigation. Lessee shall promptly give to Administrative
Agent notice of any litigation or governmental investigation or proceeding
pending against Lessee or any of its Subsidiaries which could reasonably be
expected to materially and adversely affect the business, operations, property,
assets, liabilities, condition (financial or otherwise) or prospects of Lessee
or any its Subsidiaries.
(c) Maintenance, Etc.
(i) Generally. Lessee shall and shall cause each
Subsidiary to (A) preserve and maintain its legal entity existence and
all of its material rights, privileges, franchises, patents,
trademarks, copyrights and licenses, (B) keep books of record and
account in which full, true and correct entries will be made of all
dealings or transactions in relation to its business and activities,
(C) comply with all Governmental Requirements if failure to comply with
such requirements will have a Material Adverse Effect (Tranche B), (D)
pay and discharge all taxes, assessments and governmental charges or
levies imposed on it or on its income or profits or on any of its
Property prior to the date on which penalties attach thereto, except
for any such tax, assessment, charge or levy the payment of which is
being contested in good faith and by proper proceedings and against
which adequate reserves are being maintained, and (E) upon reasonable
notice, permit representatives of Administrative Agent or any Tranche B
Lender, during normal business hours, to examine, copy and make
extracts from its books and records, to inspect its Properties, and to
discuss its business and affairs with its officers, all to the extent
reasonably requested by such Tranche B Lender or Administrative Agent
(as the case may be).
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(ii) Proof of Insurance. Contemporaneously with the
delivery of the financial statements required by Section 9.3(a)(i) to
be delivered for each year, Lessee will furnish or cause to be
furnished to Administrative Agent and the Tranche B Lenders a
certificate of insurance coverage from the insurer in form and
substance satisfactory to Administrative Agent and, if requested, will
furnish Administrative Agent and the Tranche B Lenders copies of the
applicable policies.
(iii) Operation of Properties. Lessee will and will
cause each Subsidiary to operate its Properties or cause such
Properties to be operated in a careful and efficient manner in
accordance with the practices of the industry and in compliance with
all applicable contracts and agreements and in compliance in all
material respects with all Governmental Requirements.
(d) Environmental Matters.
(i) Establishment of Procedures. Lessee will and will
cause each Subsidiary to establish and implement such procedures as may
be reasonably necessary to continuously determine and assure that any
failure of the following does not have a Material Adverse Effect
(Tranche B): (A) all Property of Lessee and its Subsidiaries and the
operations conducted thereon and other activities of Lessee and its
Subsidiaries are in compliance with and do not violate the requirements
of any Environmental Laws, (B) no oil, hazardous substances or solid
wastes are disposed of or otherwise released on or to any Property
owned by any such party except in compliance with Environmental Laws,
(C) no hazardous substance will be released on or to any such Property
in a quantity equal to or exceeding that quantity which requires
reporting pursuant to Section 103 of CERCLA, and (D) no oil, oil and
gas exploration and production wastes or hazardous substance is
released on or to any such Property so as to pose an imminent and
substantial endangerment to public health or welfare or the
environment.
(ii) Notice of Action. Lessee will promptly notify
Administrative Agent and the Tranche B Lenders in writing of any
threatened action, investigation or inquiry by any Governmental Entity
of which Lessee has knowledge in connection with any Environmental Law,
excluding routine testing and corrective action.
(e) ERISA Information and Compliance. Lessee will promptly
furnish and will cause the Subsidiaries and any ERISA Affiliate to promptly
furnish to Administrative Agent with sufficient copies to the Tranche B Lenders
(i) promptly after the filing thereof with the United States Secretary of Labor,
the Internal Revenue Service or the PBGC, copies of each annual and other report
with respect to each Plan or any trust created thereunder, (ii) immediately upon
becoming aware of the occurrence of any ERISA Event or of any "prohibited
transaction," as described in section 406 of ERISA or in section 4975 of the
Code, in connection with any Plan or any trust created thereunder, a written
notice signed by a Responsible Officer specifying the nature thereof, what
action Lessee, the Subsidiary or the ERISA Affiliate is taking or proposes to
take with respect thereto, and, when known, any action taken or proposed by the
Internal Revenue Service, the Department of Labor or the PBGC with respect
thereto, and (iii) immediately upon receipt thereof, copies of any notice of the
PBGC's intention to terminate
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or to have a trustee appointed to administer any Plan. With respect to each Plan
(other than a Multiemployer Plan), Lessee will, and will cause each Subsidiary
and ERISA Affiliate to, (A) satisfy in full and in a timely manner, without
incurring any late payment or underpayment charge or penalty and without giving
rise to any lien, all of the contribution and funding requirements of section
412 of the Code (determined without regard to subsections (d), (e), (f) and (k)
thereof) and of section 302 of ERISA (determined without regard to sections 303,
304 and 306 of ERISA), and (B) pay, or cause to be paid, to the PBGC in a timely
manner, without incurring any late payment or underpayment charge or penalty,
all premiums required pursuant to sections 4006 and 4007 of ERISA.
(f) Debt. Without the prior consent of the Majority Tranche B
Lenders, neither Lessee, Guarantor nor any Subsidiary will incur, create, assume
or permit to exist any Debt, except:
(i) Debt (including unfunded commitments) of Lessee
or Guarantor existing on the Closing Date which is reflected in the
Financial Statements or is disclosed in Schedule 11, and any renewals,
extensions, refinancings and modifications (but not increases) thereof;
(ii) accounts payable (for the deferred purchase
price of Property or services) from time to time incurred in the
ordinary course of business which, if greater than 90 days past the
invoice or billing date, are being contested in good faith by
appropriate proceedings if reserves adequate under GAAP shall have been
established therefor;
(iii) Debt of Lessee under Hedging Agreements which
are for bona fide business purposes and are not speculative; and
(iv) Operating Equipment Lease Obligations;
(v) other Debt of Lessee and its Domestic
Subsidiaries, incurred or assumed, not to exceed $35,000,000 in the
aggregate;
(vi) Debt evidenced by Capital Lease Obligations and
Purchase Money Debt, provided that in no event shall the aggregate
principal amount of Capital Lease Obligations and Purchase Money Debt
permitted by this clause (vi) exceed $30,000,000 at any time
outstanding;
(vii) Debt with respect to surety bonds, appeal bonds
or custom bonds required in the ordinary course of business or in
connection with the enforcement of rights or claims of the Lessee or
any of its Subsidiaries or in connection with judgments that do not
result in a Lease Default or a Lease Event of Default, provided that
the aggregate outstanding amount of all cash surety bonds, appeal bonds
and custom bonds permitted by this clause (vii) shall not at any time
exceed $5,000,000; and
(viii) Debt of any Foreign Subsidiary of Lessee or
Guarantor the proceeds of which Debt are used for such Foreign
Subsidiary's and/or their Foreign
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Subsidiaries' working capital and general corporate purposes ("Foreign
Subsidiary Indebtedness")
(ix) Debt for borrowed money assumed by Lessee or one
of its Subsidiaries, or of a Subsidiary of Lessee acquired, pursuant to
an acquisition or merger permitted pursuant to the terms of this
Agreement, provided that such Debt shall not exceed $65,000,000 in the
aggregate at any time and such Debt was not incurred in connection
with, or in anticipation or contemplation of such permitted acquisition
or merger; and provided further that the aggregate amount of Debt
permitted pursuant to this clause (ix) that has a scheduled maturity
date that is earlier than the Revolver shall not exceed $30,000,000.
(g) Liens. Without the prior written consent of the Majority
Tranche B Lenders, neither Lessee nor any Subsidiary will create, incur, assume
or permit to exist any Lien on any of its Properties (now owned or hereafter
acquired), except:
(i) Liens securing the payment of any Revolver
Indebtedness;
(ii) Excepted Liens;
(iii) Liens securing Capital Lease Obligations and
Purchase Money Debt allowed under Section 9.3(f)(vi), but only on the
Property under lease or purchased;
(iv) Liens on assets created in connection with the
ABS Operating Lease Facility, Liens on assets of any bankruptcy remote
subsidiaries created for the purpose and as a condition to an Operating
Equipment Lease Facility and its Liens securing Operating Equipment
Lease Obligations with respect to any Operating Equipment Lease
Facility and any guaranties thereof, provided that such Liens do not
extend to or cover any Property or assets of Lessee or any of its
Subsidiaries other than the Property subject to or pledged to such
Operating Equipment Leases, any Property or rights (including rights
under subleases) relating to such leased property and the equity
interests of the lessee in any such Operating Equipment Lease,
provided, however, that at the time of entering into (and immediately
after giving effect to) any such lease, no Lease Default shall have
occurred or be continuing under this Agreement;
(v) Liens disclosed on Schedule 12;
(vi) Liens arising out of Hedging Agreements with
lenders under the Revolver or Affiliates (Tranche B) thereof;
(vii) Liens relating to Debt permitted under Section
9.3(f)(v) provided that the aggregate amount of Debt by such Liens
shall not exceed $20,000,000;
(viii) Liens on assets of Foreign Subsidiaries under
Foreign Credit Facilities (Tranche B); and
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(ix) Liens securing acquired Debt permitted under
Section 9.3(f)(ix); provided, however, such Liens do not extend to or
cover any property other than the property or assets that secured such
Debt prior to the time it was acquired or assumed.
(h) Investments, Loans and Advances. Without the prior written
consent of the Majority Tranche B Lenders, neither Lessee nor any Subsidiary
will make or permit to remain outstanding any loans or advances to or
Investments (Tranche B) in any Person, except that, so long as no Lease Event of
Default has occurred and is continuing, the foregoing restriction shall not
apply to:
(i) Investments (Tranche B), loans or advances
reflected in the Financial Statements or which are disclosed to the
Lenders in Schedule 13;
(ii) accounts receivable arising in the ordinary
course of business;
(iii) direct obligations of the United States or any
agency thereof, or obligations guaranteed by the United States or any
agency thereof, in each case maturing within one year from the date of
creation thereof;
(iv) commercial paper maturing within one year from
the date of creation thereof rated in the highest grade by S&P or
Moody's;
(v) deposits maturing within one year from the date
of creation thereof with, including certificates of deposit issued by,
any Tranche B Lender or any office located in the United States of any
other bank or trust company which is organized under the laws of the
United States or any state thereof, has capital, surplus and undivided
profits aggregating at least $100,000,000.00 (as of the date of such
Tranche B Lender's or bank or trust company's most recent financial
reports) and has a short term deposit rating of no lower than A2 or P2,
as such rating is set forth from time to time, by S&P or Moody's,
respectively;
(vi) deposits in money market funds investing
exclusively in Investments (Tranche B) described in clause (iii), (iv)
or (v) above;
(vii) other Investments (Tranche B), loans or
advances not to exceed $100,000,000 in any single fiscal year or
$250,000,000 in the aggregate at any time outstanding, provided
however, for the purposes of this clause (vii), Investments (Tranche
B), loans or advances of approximately $98,700,000 with respect to
Lessee's acquisition of KCI, Inc., of approximately $25,000,000 with
respect to Lessee's acquisition of Louisiana Compressor Maintenance
Co., and of approximately $30,000,000 with respect to Lessee's
acquisition of Compressor Systems, Inc. shall not be included in
calculating Investments (Tranche B), loans or advances; and
(viii) payroll advances and employee loans up to
$5,000,000.
(i) Dividends, Distributions and Redemptions. Without the
prior written consent of the Majority Tranche B Lenders, Lessee will not declare
or pay any dividend,
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purchase, redeem or otherwise acquire for value any of its stock now or
hereafter outstanding, return any capital to its stockholders or make any
distribution of its assets to its stockholders; except that so long as there
shall exist no Lease Default or Lease Event of Default (both before and after
giving effect to the payment thereof) (i) Lessee may pay cash dividends to
Guarantor so long as the proceeds thereof are immediately used by Guarantor to
purchase shares of common stock or options to purchase shares of common stock of
Guarantor held by former employees of Lessee following the termination of their
employment by Lessee or any of its Subsidiaries provided that the aggregate
amount of cash dividends paid pursuant to this Section 9.3(i)(i), not during any
fiscal year of Lessee exceed $7,500,000; or (ii) Lessee may make other
distributions provided that the aggregate amount of such distributions shall not
exceed $5,000,000 during any fiscal year.
(j) Nature of Business. Without the prior written consent of
the Majority Tranche B Lenders, neither Lessee nor any Subsidiary will allow any
material change to be made in the character of its business.
(k) Mergers, Etc. Without the prior written consent of the
Majority Tranche B Lenders, neither Lessee nor any Subsidiary will merge into or
with or consolidate with any other Person, or sell, lease or otherwise dispose
of (whether in one transaction or in a series of transactions) all or
substantially all of its Property or assets to any other Person except that (i)
any Subsidiary of Lessee may be merged into or consolidated with or sell, lease
or otherwise dispose of all or substantially all of its Property or assets to
(A) Lessee, so long as Lessee is the surviving business entity, or (B) another
Subsidiary of Lessee and (ii) Lessee may merge into or consolidate with any
Person provided, in each case (A) immediately thereafter and giving effect
thereto, no event shall occur and be continuing which constitutes a Lease
Default or Lease Event of Default and (B) Lessee is the surviving business
entity.
(l) Sales Proceeds. Without the prior written consent of the
Majority Tranche B Lenders, neither Lessee nor any Person acting on behalf of
Lessee has taken or will take any action which might cause any of the Operative
Documents to violate Regulation T, U or X or any other regulation of the Board
of Governors of the Federal Reserve System or to violate Section 7 of the
Exchange Act or any rule or regulation thereunder, in each case as now in effect
or as the same may hereinafter be in effect.
(m) ERISA Compliance. Without the prior written consent of the
Majority Tranche B Lenders, Lessee will not at any time:
(i) Engage in, or permit any Subsidiary or ERISA
Affiliate to engage in, any transaction in connection with which
Lessee, any Subsidiary or any ERISA Affiliate could be subjected to
either a civil penalty assessed pursuant to section 502(c), (i) or (l)
of ERISA or a tax imposed by Chapter 43 of Subtitle D of the Code;
(ii) Terminate, or permit any Subsidiary or ERISA
Affiliate to terminate, any Plan in a manner, or take any other action
with respect to any Plan, which could result in any liability to
Lessee, any Subsidiary or any ERISA Affiliate to the PBGC;
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(iii) Fail to make, or permit any Subsidiary or ERISA
Affiliate to fail to make, full payment when due of all amounts which,
under the provisions of any Plan, agreement relating thereto or
applicable law, Lessee, a Subsidiary or any ERISA Affiliate is required
to pay as contributions thereto;
(iv) Permit to exist, or allow any Subsidiary or
ERISA Affiliate to permit to exist, any accumulated funding deficiency
within the meaning of Section 302 of ERISA or section 412 of the Code,
whether or not waived, with respect to any Plan;
(v) Permit, or allow any Subsidiary or ERISA
Affiliate to permit, the actuarial present value of the benefit
liabilities under any Plan maintained by Lessee, any Subsidiary or any
ERISA Affiliate which is regulated under Title IV of ERISA to exceed
the current value of the assets (computed on a plan termination basis
in accordance with Title IV of ERISA) of such Plan allocable to such
benefit liabilities. The term "actuarial present value of the benefit
liabilities" shall have the meaning specified in section 4041 of ERISA;
(vi) Contribute to or assume an obligation to
contribute to, or permit any Subsidiary or ERISA Affiliate to
contribute to or assume an obligation to contribute to, any
Multiemployer Plan;
(vii) Acquire, or permit any Subsidiary or ERISA
Affiliate to acquire, an interest in any Person that causes such Person
to become an ERISA Affiliate with respect to Lessee, any Subsidiary or
any ERISA Affiliate if such Person sponsors, maintains or contributes
to, or at any time in the six-year period preceding such acquisition
has sponsored, maintained, or contributed to, (A) any Multiemployer
Plan, or (B) any other Plan that is subject to Title IV of ERISA under
which the actuarial present value of the benefit liabilities under such
Plan exceeds the current value of the assets (computed on a plan
termination basis in accordance with Title IV of ERISA) of such Plan
allocable to such benefit liabilities;
(viii) Incur, or permit any Subsidiary or ERISA
Affiliate to incur, a liability to or on account of a Plan under
sections 515, 4062, 4063, 4064, 4201 or 4204 of ERISA;
(ix) Contribute to or assume an obligation to
contribute to, or permit any Subsidiary or ERISA Affiliate to
contribute to or assume an obligation to contribute to, any employee
welfare benefit plan, as defined in section 3(1) of ERISA, including,
without limitation, any such plan maintained to provide benefits to
former employees of such entities, that may not be terminated by such
entities in their sole discretion at any time without any material
liability; or
(x) Amend or permit any Subsidiary or ERISA Affiliate
to amend, a Plan resulting in an increase in current liability such
that Lessee, any Subsidiary or any ERISA Affiliate is required to
provide security to such Plan under section 401(a)(29) of the Code.
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(n) Sale or Discount of Receivables. Without the prior written consent
of the Majority Tranche B Lenders, neither Lessee nor any Subsidiary will
discount or sell (with or without recourse) any of its notes receivable or
accounts receivable, except in the ordinary course of business.
(o) Certain Financial Covenants. Without the prior written consent of
the Majority Tranche B Lenders:
(i) Current Ratio. Lessee will not permit its ratio of (A)
Consolidated Current Assets to (B) Consolidated Current Liabilities to be
less than 1.0 to 1.0 at any time.
(ii) Total Debt to EBITDAR. Lessee will not permit its Total
Leverage Ratio as of the end of any Testing Period to be greater than the
ratios and for the periods indicated below:
Period Ratio
------ -----
Closing Date through 3/31/02 4.75 to 1.00
4/01/02 and at all times thereafter 4.50 to 1.00
(iii) Interest Coverage Ratio. Lessee will not permit its
Interest Coverage Ratio as of the end of any Testing Period to be less than
the ratios and for the periods indicated below:
Period Ratio
------ -----
Closing Date through 3/31/02 2.00 to 1.00
4/01/02 through 3/31/04 2.25 to 1.00
4/01/04 and at all times thereafter 2.50 to 1.00
(iv) Test and Calculations of Financial Ratios. Until the
fiscal quarter beginning April 1, 2002, the financial ratios set forth in
clauses (i), (ii) and (iii) above will be tested on a quarterly basis
beginning March 31, 2001. Said financial ratios will be calculated
utilizing annualized results for the period from and including the Closing
Date through the applicable quarterly determination date. From and
including April 1, 2002 and at all times thereafter, said financial ratios
will be determined on a rolling four-quarter basis.
(p) Sale of Properties. Without the prior written consent of the
Majority Tranche B Lenders, Lessee will not, and will not permit any Subsidiary
to, sell, assign, convey or otherwise transfer any Property; except that Lessee
and any Subsidiary:
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(i) may sell or otherwise dispose of any Property which, in
the reasonable judgment of such Person, is obsolete, worn out or otherwise
no longer useful in the conduct of such Person's business;
(ii) may sell or lease inventory or equipment to their
respective customers in the ordinary course of business; and
(iii) may dispose of Property necessary to effectuate
Operating Equipment Lease Facilities otherwise permitted hereby; provided,
however, the net proceeds received in connection with any such disposition
of property shall be used first to prepay the outstanding principal
balance, if any, of the amounts borrowed under the Revolver pursuant to an
Equipment Loan (as defined in the Revolver) on a dollar for dollar basis.
(q) Environmental Matters. Without the prior written consent of the
Majority Tranche B Lenders, neither Lessee nor any Subsidiary will cause or
permit any of its Property to be in violation of, or do anything or permit
anything to be done which will subject any such Property to any remedial
obligations under any Environmental Law, assuming disclosure to the applicable
Governmental Entity of all relevant facts, conditions and circumstances, if any,
pertaining to such Property where such violations or remedial obligations would
have a Material Adverse Effect (Tranche B).
(r) Transactions with Affiliates. Without the prior written consent of
the Majority Tranche B Lenders, except for certain transition service agreements
entered into in conjunction with the Merger on or prior to the Closing Date and
disclosed to Administrative Agent and the Tranche B Lenders on Schedule 14,
neither Lessee nor any Subsidiary will enter into any transaction, including,
without limitation, any purchase, sale, lease or exchange of Property or the
rendering of any service, with any Affiliate (Tranche B) unless such
transactions are otherwise permitted under this Agreement, are in the ordinary
course of its business and are upon fair and reasonable terms no less favorable
to it than it would obtain in a comparable arm's length transaction with a
Person not an Affiliate (Tranche B).
(s) Subsidiaries. Without the prior written consent of the Majority
Tranche B Lenders, Lessee shall not, and shall not permit any Subsidiary to,
create any additional Subsidiaries except for (i) Subsidiaries formed in
connection with Operating Equipment Lease Facilities permitted hereunder, (ii)
Subsidiaries resulting from the Merger or from future mergers or acquisitions
permitted hereunder, and (iii) new Subsidiaries created by Lessee in compliance
with Section 9.3(h). Lessee shall not and shall not permit any Subsidiary to
sell or to issue any stock or ownership interest of a Subsidiary, except to
Lessee and except in compliance with Section 9.3(h).
(t) [Reserved].
(u) Use of ERISA Assets. At no time shall Lessee use or attempt to use
any assets which would be deemed to be "plan assets" under the "plan asset
regulations" promulgated pursuant to ERISA to satisfy any or all obligations
under the Operative Documents.
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9.4. Covenant of Tranche B Lenders, Lessor, Administrative Agent and
Collateral Agent and Limited Partners. If Lessor, any Tranche B Lender,
Administrative Agent or Collateral Agent is not a U.S. Person, it shall provide,
to Lessee and to any other party making payments to it under the Operative
Documents, on the Closing Date (or, if later at the time it becomes Lessor, a
Tranche B Lender, Administrative Agent or Collateral Agent, as the case may be)
and at such times as may be necessary thereafter under Applicable Law as in
effect on the Closing Date (including Section 1441 of the Code) and at such
other times as shall be reasonably requested by Lessee or any other party making
payments to it under the Operative Documents, a fully completed Internal Revenue
Service Form W-8 or successor form (including an appropriate Internal Revenue
Service Form W-8 completed as specified in Treasury Regulations section
1.1441-4(a)), along with any other forms or documents required to be attached to
such forms upon which Lessee or such other party can rely establishing that all
payments to each such Person under the Operative Documents can be made free and
clear of any requirement to withhold any United States federal income tax
therefrom; provided, however, that each such Person shall not be required to
provide such forms if, solely as a result of a change after the Closing Date in
Applicable Law as in effect on the Closing Date (or such later date) such Person
is not legally entitled to deliver such form. In the event of a failure to
provide any form as required under this Section 9.4 by any Tranche B Lender,
Lessor, Administrative Agent or Collateral Agent, the relevant party shall be
entitled to withhold from any payment made pursuant to the Operative Documents
to such Person the appropriate amount of federal income tax, notwithstanding the
provisions of the Operative Documents to the contrary and provided further, that
Lessee shall not have any indemnity obligation to such Person pursuant to
Section 10.3.5 hereof to the extent related to such failure.
9.5. Covenant of Lessee and Lessor. Each of Lessor and Lessee agrees
for the benefit of each Tranche B Lender that no item of equipment shall be
leased under the Lease Agreement (other than by way of a substitution of
equipment in accordance with Section 13 of the Lease Agreement) on a Funding
Date without satisfaction of the condition precedent set forth in Section 3.1(o)
with respect to such item, notwithstanding any waiver of such condition by any
other Tranche B Lenders.
10. Indemnities.
10.1. Lessee General Indemnification. Lessee hereby assumes liability
for, and does hereby agree to indemnify, protect, save, defend, and hold
harmless each Lessee Indemnified Person (and, with respect to clause (ix) below,
Arrangers) on an After-Tax Basis, from and against any and all obligations,
fees, expenses, costs, liabilities, losses, damages, penalties, claims, demands,
actions, suits, judgments and related costs and expenses, including reasonable
legal fees and expenses, of every kind and nature whatsoever, imposed on,
incurred by, or asserted against such Lessee Indemnified Person (collectively,
"Losses"), which relate in any way relate to or arise in any way out of (i) the
manufacture, construction, ordering, transfer, acceptance or rejection,
ownership, transfer of ownership, titling or re-titling, registration or
re-registration, delivery, leasing, subleasing, possession, use, operation,
maintenance, storage, removal, redelivery, repossession, mortgaging, granting of
any interest in, transfer of title to, acquisition, sale or other application or
disposition, disposition of licensing, documentation, of any Item of Equipment,
or any part thereof, including, without limitation, any of such as may
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arise from (A) loss or damage to any property or death or injury to any Persons,
(B) patent or latent defects in any Items of Equipment (whether or not
discoverable by Lessee or any Lessee Indemnified Person, (C) any claims based on
strict liability in tort or negligence, (D) any claims related to the release of
any substance into the environment and (E) any claims based on patent,
trademark, trade name or copyright infringement, or (ii) the Operative Documents
or the transactions contemplated hereby or thereby, or (iii) any failure on the
part of Lessee or Guarantor to perform or comply with any Applicable Law, any of
the terms of any Operative Document to which it is a party or any instrument
referred to or contemplated hereby or thereby or the nonconformity of any
Equipment with Applicable Law, or (iv) reliance on any representation or
warranty made or deemed made by Lessee or Guarantor or any of their respective
officers under or in connection with any Operative Document which shall have
been false or incorrect in any material respect when made or deemed made or
delivered, or (v) any repayment to Lessee by Lessor of any amount previously
distributed hereunder which amount such Person is required to repay, or (vi) any
investigation, litigation or proceeding related to any Operative Document or the
use of proceeds of Tranche A Notes, Tranche B Loans or Equity Contributions or
the ownership of the Tranche A Notes, Tranche B Notes or Equity Certificates or
in respect of the Lease Agreement, or (vii) the failure to vest or maintain
vested in Lessor and Collateral Agent or to transfer to Lessor or Collateral
Agent an undivided security interest in the Lessee Collateral or the Lessor
Collateral, respectively, including collections free and clear of Liens to the
extent required by the Operative Documents, or (viii) any agreement by Lessor to
pay any amounts under Section 6.5 of the Limited Partnership Agreement or to
indemnify any Person under the Lessor Indemnity Agreement, or (ix) the
engagement of the Appraiser with respect to the delivery of any Appraisal to be
delivered in accordance with the Operative Documents. Lessee shall be subrogated
to a Lessee Indemnified Person's rights in any matter with respect to which
Lessee has actually reimbursed such Lessee Indemnified Person for amounts
expended by it or has actually paid such amounts directly pursuant to this
Section 10.1. In case any claim, action, suit or proceeding is made or brought
against any Lessee Indemnified Person in connection with any claim indemnified
against hereunder, such Lessee Indemnified Person will, promptly after receipt
of notice of such claim or the commencement of such action, suit or proceeding,
notify Lessee thereof, enclosing a copy of all papers served upon such Lessee
Indemnified Person, but failure to give such notice or to enclose such papers
shall not relieve Lessee from any liability hereunder unless such failure
materially and adversely affects Lessee's defense of such claim resulting in a
material increase in liability of Lessee in respect of such claim or preventing
it from reducing liability therefor, in which case Lessee shall not be required
to indemnify such Lessee Indemnified Person for the amount by which such
liability was increased or not reduced for failure to give such notice. Provided
no Lease Event of Default has occurred, Lessee will be entitled to participate
in, and assume the defense of, such claim, action, suit or proceeding, or cause
the same to be resisted or defended by counsel selected by Lessee and reasonably
acceptable to the Lessee Indemnified Person; provided, however, if such claim,
action, suit or proceeding involves any material risk of loss or forfeiture of
title to the Equipment (unless Lessee shall have posted a bond or other security
reasonably satisfactory to Administrative Agent in respect of such risk) or any
material risk of criminal penalty being assessed against any Lessee Indemnified
Person, upon such Lessee Indemnified Person's request, Lessee will at its
expense, cause such claim, action, suit or proceeding to be resisted or defended
by counsel selected by such Lessee Indemnified Person and reasonably acceptable
to Lessee. After notice from Lessee
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to such Lessee Indemnified Person of Lessee's election to so assume the defense
of such claim, action, suit or proceeding, Lessee will not be liable to such
Lessee Indemnified Person for any costs and expenses of any settlement of such
claim, action, suit or proceeding effected by such Lessee Indemnified Person
without the prior written consent of Lessee (which consent will not be
unreasonably withheld). Such Lessee Indemnified Person may participate at its
own expense in any such claim, action, suit or proceeding controlled by Lessee
pursuant hereto; provided such participation does not, in the opinion of
independent counsel appointed by Lessee, interfere with such control) and such
participation will not constitute a waiver of the indemnification provided in
this Section 10. In the event of any failure by Lessee to satisfy its
obligations under this Section 10.1, Lessee shall pay all reasonable costs and
expenses (including, without limitation, attorney's fees and expenses) incurred
by such Lessee Indemnified Person in connection with such action, suit or
proceeding. Additionally, if outside counsel to such Lessee Indemnified Person
determines that a conflict of interest exists between such Person and Lessee
regarding any Loss indemnified hereunder, Lessee agrees to pay the reasonable
fees and expenses of separate counsel for and as selected by such Lessee
Indemnified Person. The provisions of this Section 10.1, and the obligations of
Lessee under this Section 10.1, shall apply from the date of this Agreement
notwithstanding that the Term may not have commenced, and shall survive and
continue in full force and effect notwithstanding the expiration or earlier
termination of this Agreement, the Lease Agreement or any other Operative
Document in whole or in part, including the expiration of termination of the
Term with respect to any Item of Equipment, and are expressly made for the
benefit of, and shall be enforceable by Lessor.
10.2. Exceptions to Lessee's General Indemnification. Notwithstanding
the terms of Section 10.1, Lessee shall not be required to indemnify any Lessee
Indemnified Person under Section 10.1 for any of the following: (i) any Loss to
the extent resulting from the willful misconduct or gross negligence of such
Lessee Indemnified Person (it being understood that Lessee shall be required to
indemnify any Lessee Indemnified Person even if the ordinary (but not gross)
negligence of such Lessee Indemnified Person caused or contributed to such
Loss), (ii) any Loss resulting from Lessor Liens attributable to such Lessee
Indemnified Person, (iii) any Loss to the extent attributable to acts or events
occurring after the end of the Term, if any, so long as no Lease Event of
Default shall have occurred and be continuing and the Equipment has either been
purchased or redelivered in accordance with the terms of Section 6.1, 28.2, 28.3
or 28.4 of the Lease Agreement, (iv) any Loss (other than a Loss attributable to
a Lease Event of Default) arising from a breach by such Lessee Indemnified
Person of any agreement entered into in connection with the assignment or
participation of any interest of such Lessee Indemnified Person under the Lease
Agreement or the other Operative Documents, (v) any Loss to the extent arising
or resulting from the failure of such Lessee Indemnified Person to comply with
laws applicable to financial institutions or their affiliates generally or the
failure of such Lessee Indemnified Person to file any material notice, report,
filing or other document required by any Governmental Entity regulating banks or
their affiliates in connection with such Lessee Indemnified Person's execution
of, and participation in the transactions contemplated by, the Operative
Documents except to the extent resulting from the acts or omissions of Lessee or
Guarantor, (vi) any other expense or Loss to the extent expressly provided under
any of the Operative Documents to be paid or borne by such Lessee Indemnified
Person at its own expense, (vii) any Loss to the extent resulting from the
offer, sale, disposition or transfer by such Lessee
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Indemnified Person of all or part of its interest in the Operative Documents,
other than a Loss arising as a result of the occurrence of a Lease Event of
Default, (viii) any Loss that is a Tax or based on a Tax, (ix) any Loss to the
extent resulting from any business, transaction or other activity in which such
Lessee Indemnified Person is engaged, which has no relation to the transactions
contemplated hereby or by any of the Operative Documents, (x) any Loss resulting
from a Tranche A Event of Default or Tranche B Event of Default not attributable
to a Lease Event of Default, (xi) any Loss which is an ordinary and usual
operating or overhead expense of such Lessee Indemnified Person except expenses
incurred relating to an Lease Event of Default, (xii) any Loss in connection
with any dispute between or among Lessee Indemnified Persons other than Losses
caused by a Lease Event of Default and (xiii) any Loss arising under Section
406(a) of ERISA or Section 4975 of the Code (a) as a result of Loans or funds
advanced by Tranche B Lenders or Lessor being deemed to be "plan assets" under
the "plan asset regulations" promulgated pursuant to ERISA or (b) as a result of
a violation of Section 406(b) of ERISA or Section 4975(c)(1) (E) or (F) of the
Code by Tranche B Lenders or Lessor. Section 10.1 shall be construed as an
indemnity only and not a guaranty of residual value of the Items of Equipment.
10.3. Tax Indemnity.
10.3.1. General Indemnity. Subject to the other provisions of
this Section 10.3, Lessee agrees to pay, defend and indemnify and hold Lessor,
Indenture Trustee, Administrative Agent and Collateral Agent and their
respective Affiliates, successors and assigns (including any consolidated or
combined group of which any such Person is a member) (each a "Tax Indemnitee")
harmless on an After-Tax Basis from any and all federal, state, local and
foreign taxes, excise taxes, fees, withholdings, levies, documentary stamps,
imposts, duties, assessments, penalties and charges of any kind and nature
whatsoever, together with any penalties, fines or interest thereon (herein
called "Taxes") howsoever imposed, whether levied or imposed upon or asserted
against a Tax Indemnitee, Lessee, any Item of Equipment, or any part thereof, by
any federal, state or local government or taxing authority in the United States,
or by any taxing authority of a foreign country or subdivision thereof, upon or
with respect to (i) the Items of Equipment, any Item of Equipment or any part
thereof, (ii) the manufacture, construction, ordering, transfer, ownership,
transfer of ownership, titling or re-titling, registration or re-registration,
delivery, leasing, subleasing, possession, use, operation, maintenance, storage,
removal, return, mortgaging, granting of any interest in, transfers of title to,
acquisition, sale or other disposition of licensing, documentation,
repossession, sale or other acquisition or disposition of the Items of
Equipment, any Item of Equipment or any part thereof, (iii) the revenues, rent,
receipts or earnings arising from any Item of Equipment or any part thereof,
(iv) any Operative Document, (v) any Lease Payment or Supplemental Payment or
any payment made to Lessor, Indenture Trustee or any Tranche A Noteholder, any
Tranche B Lender, by Lessor or Lessee pursuant to the Operative Documents, or
(vi) otherwise in respect of the Operative Documents or any thereof or any
transaction or transactions contemplated hereby or thereby. Lessee further
agrees to defend and indemnify and hold Lessor harmless on an After-Tax Basis
from any and all Taxes howsoever imposed, whether levied or imposed upon or
asserted against any Person by any federal, state or local government or taxing
authority in the United States, or by any taxing authority of a foreign country
or subdivision thereof against which Lessor has agreed to indemnify such Person
under the Lessor Indemnity Agreement.
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10.3.2. Exceptions to Tax Indemnity. Notwithstanding anything
to the contrary in Section 10.3.1, the following shall be excluded from the
indemnity provided under Section 10.3.1: (i) Taxes (other than Taxes that are,
or are in the nature of, sales, use, rental, value added, transfer or property
taxes) that are imposed on a Tax Indemnitee by the United States federal
government that are based on or measured by the gross or net income or gross or
net receipts, taxes based on capital gains and minimum taxes and any and all
withholding Taxes (which, for the avoidance of doubt, are dealt with in Section
10.3.5 hereof) of such Person; provided, that this clause (i) shall not be
interpreted to prevent a payment from being made hereunder on an After-Tax Basis
if such payment is otherwise required to be so made; (ii) Taxes (other than
Taxes that are, or are in the nature of, sales, use, rental, value added,
transfer or property taxes) that are imposed on any Tax Indemnitee (other than
Lessor) by any state, local or foreign jurisdiction or taxing authority within
any state or local or foreign jurisdiction and that are net income taxes, or are
franchise taxes, any gross income or gross receipts taxes imposed in lieu of a
net income tax, taxes based on capital gains and minimum taxes and any and all
withholding Taxes (which, for the avoidance of doubt, are dealt with in Section
10.3.5 hereof) of such Person; provided that such Taxes shall not be excluded
under this clause (ii) to the extent such Taxes would have been imposed had the
location, possession or use of any Equipment in, the location or the operation
of Lessee, Lessor or Guarantor in, or Lessor's, Lessee's or Guarantor's making
payments under the Operative Documents from, the jurisdiction imposing such
Taxes been the sole connection between such Tax Indemnitee and the jurisdiction
imposing such Taxes, unless, however, such Tax Indemnitee would have been
subject to tax in such jurisdiction absent the transactions contemplated by the
Operative Documents; provided further, that Lessor is indemnified for all Taxes
excluded by this subsection (ii); provided further, that this clause (ii) shall
not be interpreted to prevent a payment from being made on an After-Tax Basis if
such payment is otherwise required to be so made; (iii) provided that all
amounts due from Lessee under the Operative Documents have been paid, any Tax to
the extent it relates to any act, event or omission that occurs after the
termination of the Lease Agreement and, if required, redelivery or sale of an
Item of Equipment in accordance with the terms of the Lease Agreement (but not
any Tax that is otherwise excluded herein or is imposed with respect to such
termination, redelivery or sale or to any period prior to such termination,
redelivery or sale); (iv) any Taxes which are imposed on a Tax Indemnitee as a
result of the gross negligence or willful misconduct of such Tax Indemnitee
itself, as determined by a court of competent jurisdiction (as opposed to gross
negligence or willful misconduct imputed to such Tax Indemnitee), but not Taxes
imposed as a result of ordinary negligence of such Tax Indemnitee; (v) Taxes
imposed on, or increased (under Applicable Law in effect on the date of the
transfer) as a result of a voluntary transfer by the Tax Indemnitee or any
transfer as a result of the bankruptcy of such Tax Indemnitee not caused by a an
Event of Default under Section 23(a) of the Lease Agreement of any Item of
Equipment or interest therein or any interest in or arising under any Operative
Document or any transactions contemplated thereby other than any such transfer
required by law or by the Operative Document, occurring pursuant to the exercise
of remedies during the continuance of a Lease Event of Default or requested by
Lessee; (vi) with respect to Lessor, any Tax that results from or would not have
been imposed but for the breach or inaccuracy of any representation set forth in
Section 2.3 or 2.4 hereof, as the case may be; (vii) any Tax to the extent
resulting in whole or in part from the failure of any Tax Indemnitee to file a
return that is proper and timely unless such failure results from the failure of
Lessee to perform its obligations
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under Section 10.3.4 hereof; and (viii) any Tax that results from or would not
have imposed but for the failure of any Tax Indemnitee, at Lessee's sole cost,
to provide any form, certificate or other document reasonably requested by,
prepared by and timely provided to such Tax Indemnitee by Lessee, legally able
to be provided by such Tax Indemnitee and necessary to avoid the imposition of
such Tax provided that such Tax Indemnitee reasonably determines that to so
provide such form, certificate or other document would have no adverse effect on
it.
10.3.3. Payment of Taxes. Subject to the terms of Section
10.3.6, Lessee agrees to pay or cause to be paid all Taxes indemnified pursuant
to Section 10.3.1 directly to the taxing authorities where feasible and
otherwise to the Tax Indemnitee, as appropriate, and Lessee shall at its own
expense, upon such Tax Indemnitee's reasonable request, furnish to such Tax
Indemnitee copies of official receipts or other reasonably satisfactory evidence
of such payment. In the case of Taxes for which no contest is conducted pursuant
to Section 10.3.6 and which Lessee pays directly to the taxing authorities,
Lessee shall pay such Taxes prior to the latest time permitted by the relevant
taxing authority for timely payment. In the case of Taxes for which a Lessee
reimburses a Tax Indemnitee, Lessee shall do so within thirty (30) days after
receipt by Lessee of demand by such Tax Indemnitee describing in reasonable
detail the nature of the Tax and the basis for the demand (including without
limitation the computation of the amount payable), accompanied by receipts or
other reasonable evidence of payment of the Tax in respect of such demand. In
the case of Taxes for which a contest is conducted pursuant to Section 10.3.6
Lessee agrees to pay such Taxes or reimburse such Tax Indemnitee for such Taxes,
to the extent not previously paid or reimbursed pursuant to Section 10.3.1,
prior to the latest time permitted by the relevant taxing authority for timely
payment after conclusion of all contests hereunder.
At Lessee's written request, the amount of any indemnification
payment by Lessee pursuant to Section 10.3.1 shall be verified and certified by
the independent public accounting firm regularly engaged by such Tax Indemnitee.
The fees and expenses of such independent public accounting firm shall be paid
by Lessee unless such verification shall result in an adjustment in Lessee's
favor of five percent (5%) or more of the payment as computed by the Tax
Indemnitee, in which case such fee shall be paid by the Tax Indemnitee.
10.3.4. Tax Filings. Lessee shall be responsible for preparing
and filing any real and personal property or ad valorem tax returns in respect
of the Equipment. In the case of any other report, statement or tax return that
shall be required to be made with respect to any Taxes which are indemnified by
Lessee pursuant to Section 10.3.1, Lessee, at its sole cost and expense, shall
notify the relevant Tax Indemnitee of such requirement and (except if such Tax
Indemnitee notifies Lessee that such Tax Indemnitee intends to prepare and file
such report or return) (i) to the extent required or permitted by and consistent
with filing requirements in the applicable jurisdiction, make and file in
Lessee's name such return, statement or report and (ii) in the case of any other
such return, statement or report required to be made in the name of such Tax
Indemnitee, advise such Tax Indemnitee of such fact and prepare such return,
statement or report for filing by such Tax Indemnitee or, where such return,
statement or report shall be required to reflect items in addition to any
obligations of Lessee under or arising out of Section 10.3.1, provide such Tax
Indemnitee at Lessee's expense with information sufficient to permit such
return, statement or report to be properly made with respect to any obligations
of Lessee under or arising out of Section 10.3.1. Such Tax Indemnitee shall,
upon Lessee's request and at
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Lessee's expense, provide any data not deemed confidential by such Tax
Indemnitee maintained by such Tax Indemnitee (and not otherwise available to or
within the control of Lessee) with respect to the Equipment which Lessee may
reasonably require to prepare any required Tax returns or reports.
10.3.5. Withholdings. As between Lessee on one hand, and
Lessor, Administrative Agent and Collateral Agent (each a "Withholding Party")
on the other hand, Lessee shall be responsible for, and Lessee shall indemnify
and hold harmless each Withholding Party on an After Tax Basis against, any
obligation for United States or foreign withholding taxes or similar levies,
imposts, charges, fees, deductions or withholdings (collectively,
"Withholdings") imposed in respect of any part of the Lease Payments, interest
or other amounts payable by Lessee or Lessor to any Withholding Party, or with
respect to any other payments under the Operative Documents (all such payments
being referred to herein as "Exempt Payments" to be made without deduction,
withholding or set off) (and, if any Withholding Party receives a demand for
such payment from any taxing authority or a Withholding is otherwise required
with respect to any Exempt Payment, Lessee shall discharge such demand on behalf
of such Withholding Party); provided, however, that the obligation of Lessee
under this Section 10.3.5 shall not apply to any Withholdings that would not
have been imposed but for such Withholding Party's failure to comply with
Section 9.4.
If a Tax Indemnitee or a Withholding Party or any Affiliate
with whom such Tax Indemnitee or a Withholding Party files a consolidated tax
return (or equivalent) subsequently receives the benefit in any country of a tax
credit, deduction or other allowance or reduction resulting from Taxes or Losses
with respect to which it or an Affiliate has received a payment of an indemnity
amount from Lessee under Section 10.1 or 10.3, such Person will pay to Lessee
such part of that benefit as in the sole discretion of such Person will leave it
(after such payment) in a position no more and no less favorable than it would
have been in if no additional payment had been required to be paid, provided
always that (i) such Person will determine in its sole discretion, exercised in
good faith, the amount and allocation of any such benefit and of the date on
which it is received and of any After-Tax Basis calculation required with
respect to payments to or from it, (ii) such Person will have the absolute
discretion as to the order and manner in which it employs or claims tax credits
and allowances available to it and (iii) such Person will not be obliged to
disclose to Lessee any information regarding its tax affairs or tax
computations.
10.3.6. Tax Contests. If a claim is made in writing against
any Tax Indemnitee for any Taxes which Lessee is required to pay or indemnify
against pursuant to Section 10.3.1, such Tax Indemnitee shall promptly notify
Lessee in writing, provided that, without prejudice to any rights or claims for
damages Lessee may have as a result of such failure, the failure to so notify
Lessee will not reduce Lessee's obligation under Section 10.3 except if such
failure precludes the contest of such claim. Subject to the next sentence, if
requested by Lessee in writing within thirty (30) days after receipt by Lessee
of a notice described in the preceding sentence, such Tax Indemnitee and, if
required or appropriate to prosecute such contest, any other Tax Indemnitee,
shall permit such Lessee, to contest in the name of Lessee, and if such contest
by such Lessee in the name of such Lessee is not permissible or allowed, shall,
at the request of Lessee, permit such Lessee to contest in the name of the Tax
Indemnitee
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and, if such contest by Lessee in the name of the Tax Indemnitee is not
permissible or allowed, shall, at the request of Lessee diligently contest in
good faith (including pursuing all administrative and judicial appeals) the
validity, applicability or amount of such Taxes in appropriate administrative or
judicial proceedings; provided that (i) prior to taking such action Lessee shall
have agreed to pay and shall have provided an undertaking reasonably acceptable
to such Tax Indemnitee with respect thereto or shall have paid each Tax
Indemnitee that is engaged in such contest in a satisfactory manner for all
out-of-pocket costs and expenses which such Tax Indemnitee may incur in
connection with contesting such claim, including, without limitation, all
reasonable legal and accountant's fees and disbursements and costs of
administrative and judicial proceedings, and the amount of any interest or
penalties which may be payable as a result of contesting such claim, (ii) if
such contest is to be initiated by the payment of, and the claiming of a refund
for, such Taxes (such election to be within the sole discretion of Lessee),
Lessee shall have advanced such Tax Indemnitee sufficient funds (on an
interest-free basis and on an After-Tax Basis) to make such payment, (iii) any
action to be taken will not result in a material risk of sale, forfeiture or
loss of Lessor's title to, or Lessor's or Collateral Agent's interest in, any
Item of Equipment unless Lessee shall have made provision against such risk in a
manner acceptable to such Tax Indemnitee in its sole discretion, (iv) such Tax
Indemnitee shall not have determined, based on an opinion of such Tax
Indemnitee's counsel, that such action is reasonably likely to result in adverse
consequences to the future tax liability of such Tax Indemnitee not indemnified
to such Tax Indemnitee's satisfaction and (v) Lessee shall have delivered to
such Tax Indemnitee a written acknowledgment of its liability hereunder for such
Taxes, provided that such acknowledgment shall not be binding on such Lessee if
the contest of such Taxes is resolved through a written opinion of an
adjudicator stating a basis for such resolution that demonstrates Lessee has no
liability to such Tax Indemnitee hereunder for such Taxes and provided further,
that such Lessee shall have no right to contest in the name of a Tax Indemnitee,
and such Tax Indemnitee shall itself contest, if the contest involves issues
with respect to which Lessee would not be required to indemnify such Tax
Indemnitee hereunder and which cannot be severed by reasonable efforts of such
Tax Indemnitee from all issues with respect to which Lessee would be liable
hereunder or the severance of which would adversely affect the position of such
Tax Indemnitee, and in any such contest such Tax Indemnitee may in its sole
discretion select the forum for such contest and determine in good faith the
manner in which such contest shall be conducted, including, without limitation,
the pursuit of appeals, but shall consult with Lessee and its counsel in good
faith with respect to such Lessee's interests with respect to contest. If a
claim for Taxes is made in writing against any Tax Indemnitee and such Tax
Indemnitee complies with its obligations under this Section 10.3.6, Lessee and
such Tax Indemnitee shall, for purposes of determining the amount, if any,
payable to such Tax Indemnitee under Section 10.3, be bound by the results of
any contest under this Section 10.3.6 (or by the final written assessment by the
relevant taxing authority, if Lessee elect not to contest under this Section
10.3.6) as to the amount of Tax due to the relevant taxing jurisdiction, the
validity and applicability of such Tax, and any stated reason as to the basis
for the imposition of such Tax contained in the final determination with respect
to such contest. If any Tax Indemnitee shall determine in its sole discretion
that it has either obtained a refund of or been granted a credit, deduction or
other allowance or reduction against Taxes for which Lessee is not obligated to
indemnify such Tax Indemnitee hereunder for amounts corresponding to all or any
part of any Taxes which Lessee shall have paid to any Tax Indemnitee or for
which Lessee shall have
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reimbursed any Tax Indemnitee hereunder, such Tax Indemnitee shall, provided
that no Lease Event of Default shall have occurred and be continuing, pay to
Lessee an amount which is equal to the sum of the amount of such refund or
credit, deduction or other allowance or reduction, plus any interest received
(or credited against Taxes for which Lessee is not obligated to indemnify such
Tax Indemnitee hereunder) on such refund fairly attributable to any Taxes paid
by such Lessee or with funds provided by Lessee prior to the receipt of such
refund, reduced by any Taxes incurred by such Tax Indemnitee by reason of the
receipt or accrual of such refund and interest, and increased by any tax benefit
realized by Tax Indemnitee as a result of any payment by such Tax Indemnitee
made pursuant to this sentence so as to return such Tax Indemnitee to the same
net after-tax position it would have been in if the Taxes so refunded or
credited had not been imposed; provided further, that a Tax Indemnitee shall not
be obligated to pay any Lessee an amount in excess of all amounts of Taxes (and
additional amounts described in Section 10.3) previously paid by Lessee pursuant
to Section 10.3 to such Tax Indemnitee, provided further, however, that such Tax
Indemnitee shall pay any amounts that it is not required to pay to Lessee solely
by reason of the foregoing proviso at such time as Lessee shall have made any
additional payments to such Indemnitee pursuant to Section 10.3 hereof equal to
such amounts, and if a Lease Event of Default shall have occurred and be
continuing, such Tax Indemnitee shall have the option of applying the amount
otherwise due any Lessee pursuant to this sentence against Lessee obligations
under any Operative Document or of holding such amount as security for Lessee
full performance of such obligations until the earlier of (x) the date all
obligations owed to such Tax Indemnitee under the Operative Documents have been
paid in full and (y) the curing of such Lease Event of Default, after which such
Tax Indemnitee shall pay such amount to Lessee. Any Tax Indemnitee shall be
entitled to settle any claim that is the subject of a contest hereunder without
the consent of Lessee provided that, in so doing, such Tax Indemnitee shall
waive any rights to indemnification by Lessee with respect to such settled claim
and any other claim the contest of which would be precluded as a result of such
settlement hereunder and shall repay to Lessee any amounts advanced to pay such
contested Taxes with interest actually received in respect thereof and release
any undertaking required hereunder.
10.3.7. Special Tax Indemnity. Lessee shall pay and assume all
liability for, and does hereby agree to indemnify each Tax Indemnitee on an
After Tax Basis for any tax, addition to tax, penalty, or other cost as a result
of the breach, inaccuracy or incorrectness of the representation found in
Section 2.1(j). Notwithstanding anything to the contrary in this Section 10.3.7,
Lessee shall not be obligated to indemnify any Tax Indemnitee pursuant to this
Section 10.3.7 in respect of any tax, penalty, or other cost that results from
or would not have occurred but for any failure by such Tax Indemnitee to provide
the information requested by Lessee in accordance with Section 2.1(j). Any claim
under this Section 10.3.7 shall be subject to the contest provisions of Section
10.3.6 (applied as if such claim were in respect of a Tax indemnified by Lessee
under Section 10.3.1) and the verification provisions of Section 10.3.3 (applied
as if the amount to be paid under this Section 10.3.7 was a payment required
under Section 10.3.1 hereof).
10.4. Increased Costs, Illegality, etc. Lessee hereby assumes liability
for, and does hereby agree to indemnify, protect, save, defend and hold harmless
Lessor on an After-Tax Basis, from and against any and all amounts that Lessor
is obligated to pay any Tranche B Lender
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under Section 2.7 of the Tranche B Loan Agreement or any Limited Partner under
Section 6.5 of the Limited Partnership Agreement.
Lessor shall promptly, or Administrative Agent may, give notice (by
telephone promptly confirmed in writing) to Lessee of each claim under this
Section 10.4 which written notice shall show in reasonable detail the basis for
the calculation thereof and shall, absent manifest error, be final and
conclusive and binding on all the parties hereto).. Lessee shall pay to Lessor,
or at Administrative Agent's direction, the Person to whom Lessor has obligation
to pay such amount, within fifteen (15) days of the earlier of Lessor's and
Administrative Agent's written request therefor, such amounts owed by Lessor to
such Person.
10.5. Lessee Indemnity. Lessee hereby assumes liability for, and does
hereby agree to indemnify, protect, save, defend, and hold harmless Lessor on an
After-Tax Basis from and against any and all Losses and each Tax Indemnitee
against any and all amounts owed by Lessor under the Loan Agreement to the
extent that there is a Lease Payment corresponding to the Loan payment for which
the indemnity is claimed under Section 10.2 hereof.
10.6. Survival. All obligations provided for in this Section 10 shall
survive the resignation or removal of Administrative Agent or Collateral Agent
under Section 11.7, the sale of any Item of Equipment, any termination of the
Lease Agreement, the termination of this Agreement, and the payment in full of
the Tranche A Notes, the Tranche B Loans, the Equity Certificates and all
amounts arising under the Lease Agreement, Tranche A Notes, Tranche B Loans and
Limited Partnership Agreement.
11. Administrative Agent and Collateral Agent.
11.1. Authorization and Action of Administrative Agent.
(a) (i) Indenture Trustee for itself and on behalf of Tranche A
Noteholders and (ii) each Tranche B Lender hereby appoints and authorizes
Administrative Agent to take such action as agent on their behalf and to
exercise such powers under this Agreement and the other Operative Documents as
are delegated to Administrative Agent by the terms hereof and thereof, together
with such powers as are reasonably incidental thereto. Except as otherwise
provided in the Limited Partnership Agreement, Administrative Agent shall act
solely as agents for Indenture Trustee and Tranche B Lenders and does not assume
nor shall be deemed to assume any obligation or relationship of trust or agency
with any of Lessee, Lessor, or Guarantor. As to any matters not expressly
provided for by a Operative Document (including enforcement or collection of the
Tranche A Notes or Tranche B Loans), Administrative Agent shall not be required
nor authorized to exercise any discretion or take any action, but shall be
required to act or to refrain from acting (and shall be fully protected in so
acting or refraining from acting) upon the instructions of (i) Indenture Trustee
acting on behalf of Majority Tranche A Noteholders, and (ii) Majority Tranche B
Lenders, and such instructions shall be binding, in the case of instructions
under clause (i), upon Indenture Trustee and each Tranche A Noteholder and, in
the case of instructions under clause (ii), upon each Tranche B Lender;
provided, however, Administrative Agent shall not be required to take any action
which exposes it to personal liability or which is contrary to any Operative
Document or Applicable Law. Administrative
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Agent agrees to give to Indenture Trustee, and Tranche B Lenders prompt notice
of each notice given to it by Lessor or Lessee pursuant to the terms of this
Agreement; provided, however, Administrative Agent shall not be deemed to have
any notice of a Loan Default or Loan Event of Default unless it has received
notice of such from another party hereto. Administrative Agent may, with the
prior consent of Indenture Trustee acting on behalf of Majority Tranche A
Noteholders, or Majority Tranche B Lenders, as the case may be, agree to any
waiver or amendment of the Operative Documents on behalf of all Tranche A
Noteholders, or all Tranche B Lenders, as the case may be; provided, however,
Administrative Agent will not, without the prior consent of (i) Indenture
Trustee acting on behalf of all Tranche A Noteholders, and (ii) all Tranche B
Lenders, agree to any waiver or amendment that would (A) postpone the time or
times for payment of any amount payable under this Agreement or the Lease
Agreement or (B) reduce any Lease Payment payable under this Agreement or the
Lease Agreement. Administrative Agent will not, without the prior consent of (i)
Indenture Trustee on behalf of all Tranche A Noteholders and (ii) all Tranche B
Lenders, agree to any waiver or amendment that would, prior to the payment in
full of the Secured Obligations, release all or substantially all of the Lessor
Collateral from the Lien created by the Security Documents, other than in
accordance with the terms of the Operative Documents. Administrative Agent shall
pursue the remedies under the Operative Documents following a Loan Event of
Default in good faith and in a commercially reasonable manner and in accordance
with the instructions of Majority Tranche B Lenders provided, however,
Administrative Agent shall be under no obligation to pursue such remedies unless
such Majority Tranche B Lenders have offered to Administrative Agent security or
indemnity satisfactory to it as to the terms, coverage, duration, amount or
otherwise with respect to the costs, expenses and liabilities that may be
incurred by it in compliance with such written instructions, requests or
directions; provided further Administrative Agent shall not, without the consent
of (i) Indenture Trustee in accordance with the terms of the Indenture and (ii)
Majority Tranche B Lenders (A) approve any plan of reorganization or liquidation
arising out of a Lease Event of Default of the type described in Section 23(h)
of the Lease Agreement, a Tranche A Event of Default of the type described in
Sections 5.01(h) and (i) of the Indenture or a Tranche B Event of Default of the
type described in Section 5.1.4 of the Tranche B Loan Agreement (B) approve,
sell or cause the sale of Equipment in a single transaction or a series of
related transactions of Equipment with value in excess of $30,000,000 (other
than a sale in accordance with the terms of the Lease Agreement provided no
Lease Event of Default has occurred and is continuing). The appointment and
authority of Administrative Agent hereunder shall terminate upon the
indefeasible payment in full of all amounts owed Indenture Trustee, each Secured
Party, Administrative Agent and Collateral Agent under the Operative Documents.
(b) (i) Indenture Trustee, for itself and on behalf of Tranche A
Noteholders, and (ii) each Tranche B Lender hereby appoints and authorizes
Collateral Agent to take such action as agent on their behalf and to exercise
such powers under this Agreement and the other Operative Documents as are
delegated to Collateral Agent by the terms hereof and thereof, together with
such powers as are reasonably incidental thereto. Collateral Agent shall act
solely as agent for Indenture Trustee and Tranche B Lenders and does not assume
nor shall be deemed to assume any obligation or relationship of trust or agency
with any of Lessee, Lessor, Limited Partners, Lessor General Partner or
Guarantor. As to any matters not expressly provided for by a Operative Document
(including enforcement or collection of the Tranche A Notes or the Tranche
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B Loans), Collateral Agent shall not be required nor authorized to exercise any
discretion or take any action, but shall be required to act or to refrain from
acting (and shall be fully protected in so acting or refraining from acting)
upon the instructions of Administrative Agent acting on behalf of Secured
Parties, and such instructions shall be binding upon Indenture Trustee and all
Secured Parties; provided, however, Collateral Agent shall not be required to
take any action which exposes it to personal liability or which is contrary to
any Operative Document or Applicable Law. Collateral Agent agrees to give to
Indenture Trustee and Tranche B Lenders prompt notice of each notice given to it
by Lessor or Lessee pursuant to the terms of this Agreement; provided, however,
Collateral Agent shall not be deemed to have any notice of a Loan Default or
Loan Event of Default unless it has received notice of such from another party
hereto. Collateral Agent shall pursue the remedies of Secured Parties under the
Operative Documents following a Loan Event of Default in accordance with the
instructions of Administrative Agent; provided, however, Collateral Agent shall
be under no obligation to pursue such remedies unless one or more Tranche B
Lenders have offered to Collateral Agent security or indemnity satisfactory to
it as to the terms, coverage, duration, amount or otherwise with respect to the
costs, expenses and liabilities that may be incurred by it in compliance with
such written instructions, requests or directions. The appointment and authority
of Collateral Agent hereunder shall terminate upon the indefeasible payment in
full of all amounts owed Indenture Trustee, each Secured Party, Administrative
Agent and Collateral Agent under the Operative Documents.
(c) Lessor and Tranche B Lenders hereby designate Administrative Agent,
and Administrative Agent hereby agrees, to calculate the interest due on the
Tranche B Loans, the Equity Yield and the Floating Lease Payments on each
Floating Payment Date and give notice of such amounts to Lessee, Lessor, and
each Tranche B Lender at least two (2) Business Days before such Floating
Payment Date.
11.2. Delegation of Duties. Administrative Agent and Collateral Agent
may execute any of their duties under these Operative Documents through agents
or attorneys-in-fact and shall be entitled to advice of counsel concerning all
matters pertaining to such duties. Neither Administrative Agent nor Collateral
Agent shall be responsible for the negligence or misconduct of any agents or
attorneys-in-fact selected by it with reasonable care.
11.3. Agent's Reliance, etc. Neither Administrative Agent nor
Collateral Agent nor any of their respective directors, officers, agents or
employees shall be liable for any action taken or omitted by it or them under or
in connection with any Operative Document, except for its or their own gross
negligence or willful misconduct. Without limitation of the generality of the
foregoing, each of Administrative Agent and Collateral Agent (i) may consult
with legal counsel (including counsel for Lessee), independent public
accountants and other experts selected by it and shall not be liable for any
action taken or omitted in good faith by it in accordance with the advice of
such counsel, accountants or experts, (ii) makes no warranty or representation
to Indenture Trustee or Secured Parties and shall not be responsible to
Indenture Trustee or Secured Parties for any statements, warranties or
representations made in or in connection with any Operative Document, (iii)
shall not have any duty to ascertain or to inquire as to the performance or
observance of any of the terms, covenants or conditions of any Operative
Document on the part of Lessee or Lessor or to inspect the property (including
the books and records) of Lessee or Lessor, (iv) shall not be responsible to
Indenture Trustee or
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Secured Parties for the due execution, legality, validity, enforceability,
genuineness, sufficiency or value of any Operative Document or any other
instrument or document furnished pursuant thereto, and (v) shall incur no
liability under or in respect of any Operative Document by acting upon any
notice, consent, certificate or other instrument or writing (which may be by
fax, telegram, cable or telex) believed by it to be genuine and signed or sent
by the proper party or parties (including, but not limited to any notice,
consent, certification, other instrument or writing from Indenture Trustee
purportedly on behalf of Tranche A Noteholders or from Administrative Agent
purportedly on behalf of any Tranche A Noteholders or from Administrative Agent
purportedly on behalf of any Secured Parties. The permissive right of
Administrative Agent and Collateral Agent to take the actions permitted by this
Agreement shall not be construed as an obligation or duty to do so.
11.4. Administrative Agent, Collateral Agent and Affiliates. With
respect to any Tranche B Loans or Equity Contributions made by it, any Tranche A
Note purchased by it or any Equity Certificate held by it, each of
Administrative Agent and Collateral Agent shall have the same rights and powers
under each Operative Document as any other Tranche B Lender or Limited Partner
as the case may be and may exercise the same as though it were not an agent
hereunder. Administrative Agent and Collateral Agent and their respective
Affiliates may accept deposits from, lend money to, act as trustee under
indentures of, and generally engage in any kind of business with, Lessor, Lessee
or Guarantor, any of their Affiliates and any Person who may do business with or
own securities of Lessor, Lessee or Guarantor or any such Affiliate, all as if
Administrative Agent and Collateral Agent were not an agent hereunder and
without any duty to account therefor to any other party hereto.
11.5. Credit Decisions. Each Tranche B Lender acknowledges that it has,
independently and without reliance upon Administrative Agent or Collateral
Agent, and based on the financial statements of Lessee and Guarantor and such
other documents and information as it has deemed appropriate, made its own
credit analysis and decision to enter into this Agreement and the other
Operative Documents. Each Tranche B Lender also acknowledges that it will,
independently and without reliance upon Administrative Agent or Collateral
Agent, as the case may be and based on such documents and information as it
shall deem appropriate at the time, continue to make its own credit decisions in
taking or not taking action under the Operative Documents.
11.6. Indemnification. Each Tranche B Lender agrees to indemnify
Administrative Agent and Collateral Agent, (to the extent not reimbursed by
Lessor or Lessee) ratably according to its pro rata share on the aggregate
outstanding balances of the Tranche B Loans ("Indemnity Pro Rata Share"), from
and against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements of any kind or
nature whatsoever which may be imposed on, incurred by or asserted against
Administrative Agent or Collateral Agent in any way relating or arising out of
any Operative Document or any action taken or omitted by Administrative Agent or
Collateral Agent under any Operative Document in their capacities as agents for
such Person; provided that no Tranche B Lender shall be liable to Administrative
Agent or Collateral Agent hereunder for any portion of such liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements resulting from such Administrative Agent's or such
Collateral Agent's gross
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negligence or willful misconduct. Without limitation of the foregoing, each
Tranche B Lender agrees to reimburse Administrative Agent and Collateral Agent
ratably according to its Indemnity Pro Rata Share promptly upon demand for
out-of-pocket expenses (including counsel fees) incurred by Administrative Agent
or Collateral Agent in connection with the preparation, execution, delivery,
administration, modification, amendment or enforcement (whether through
negotiations, legal proceedings or otherwise) of, or legal advice in respect of
rights or responsibilities under, Operative Document in their capacities as
agents for such Person, to the extent that Administrative Agent or Collateral
Agent is not reimbursed for such expenses by Lessor or Lessee. Neither Lessee's
nor Lessor's indemnity obligations shall be reduced by this Section 11.6.
11.7. Successor Administrative Agent and Collateral Agent; Termination
of Agency. Administrative Agent and Collateral Agent may resign at any time by
giving at least fifteen (15) days written notice thereof to Indenture Trustee,
each Tranche B Lender, Lessor and Lessee, and each of Administrative Agent and
Collateral Agent may be removed at any time with or without cause by Indenture
Trustee acting on behalf of Majority Tranche A Noteholders together with
Majority Tranche B Lenders. Upon any resignation or removal of Administrative
Agent or Collateral Agent, Majority Tranche B Lenders shall have the right with,
provided no Lease Event of Default shall have occurred and be continuing, the
consent of Lessee (such consent not to be unreasonably withheld or delayed) to
appoint a successor Administrative Agent who shall be reasonably acceptable to
Lessee (it being understood and agreed that any non-defaulting Tranche B Lender
is deemed to be acceptable to Lessee) and not objected to by Indenture Trustee
on behalf of Majority Tranche A Noteholders. If no successor Administrative
Agent or Collateral Agent shall have been so appointed by Majority Tranche B
Lenders within thirty (30) days after any such resignation of removal, the
retiring Administrative Agent or Collateral Agent may, appoint a successor
Administrative Agent or Collateral Agent which shall be a commercial bank
organized under the laws of the United States of America or of any State thereof
and having a combined capital and surplus of at least $100,000,000. Upon the
acceptance of any appointment as Administrative Agent or Collateral Agent
hereunder by a successor Administrative Agent or Collateral Agent, such
successor Administrative Agent or Collateral Agent shall thereupon succeed to
and become vested with all the rights, powers, privileges and duties of the
retiring Administrative Agent or Collateral Agent, and the obligations under
each Operative Document. Any Administrative Agent or Collateral Agent resigning
in accordance with this Section 11.7 shall retain the benefits of Section 11 as
to any actions taken or omitted to be taken by it while it was Administrative
Agent or Collateral Agent.
11.8. Registration.
(a) Tranche A Notes. The Tranche A Notes shall be registered in
accordance with the terms of the Indenture.
(b) Tranche B Notes. Administrative Agent shall preserve registration
books identifying each Tranche B Lender's interest in the Tranche B Notes and a
list of the names and addresses of the holders of the Tranche B Notes, which
register and list shall be available to each Party hereto or their respective
representatives for inspection (the "Register"). Ownership of the Tranche B
Notes shall be proved by the Register. No transfer by any holder of a Tranche B
Note
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or any portion thereof shall be effective unless and until such transfer is made
upon the registration books maintained by Administrative Agent. Prior to due
presentment for registration of transfer of any Tranche B Note, Administrative
Agent, Collateral Agent, Lessee and Lessor shall deem and treat the Person in
whose name any Tranche B Note is registered as the absolute owner of such
Tranche B Note for the purpose of receiving payment of principal of, and
Breakage Costs, if any, and interest on such Tranche B Note and for all other
purposes whatsoever, whether or not such Tranche B Note is overdue, and neither
Administrative Agent, Collateral Agent, Lessor, nor Lessee shall be affected by
any notice to the contrary.
(c) Lease Agreement. Administrative Agent shall preserve registration
books identifying each Person holding any interest of Lessor in the Lease
Agreement and registering any assignment of such interest effected in compliance
with Section 12.7. Except for the interests of Collateral Agent pursuant to the
Operative Documents, no transfer by Lessor of any holder of Lessor's interest in
the Lease Agreement shall be effective unless and until such transfer is made
upon the registration books maintained by Administrative Agent.
12. Miscellaneous.
12.1. Expenses. Lessor agrees to pay, to the extent that it has Tranche
A Premium or Accrued Interest Premium available to it for the payment of such,
within ten (10) Business Days of written notice thereof (or such earlier time as
may be agreed by Lessor or Lessee) (i) the reasonable fees and expenses (initial
and ongoing) of Indenture Trustee for serving as Indenture Trustee to Tranche A
Noteholders, of Lessor General Partner for serving as such and of Indenture
Trustee, Lessor, Lessor General Partner, Bankers Trust Company as a Tranche B
Lender, Deutsche Bank AG, New York Branch as Limited Partner, Administrative
Agent and Collateral Agent (including, without limitation, reasonable counsel
fees and disbursements other than Excluded Expenses) in connection with the
negotiation, preparation, execution and delivery of the Operative Documents and
the issuance of the Tranche A Notes, Tranche B Notes and Equity Certificates and
the consummation of the transactions contemplated thereby including the expenses
of Lessor and Co-Obligor for auditing, legal, filing fees and related expenses
associated with the registration of the Tranche A Notes, compliance with its
obligations under the Indenture and Registration Rights Agreement and compliance
with TIA, the Securities Exchange Act and the Securities Act and (ii) any fees
payable to Arranger or any other Person as agreed in writing by either Lessor or
Lessee in connection with the issuance of Tranche A Notes or the making of
Tranche B Loans. Lessor agrees to pay Lessee on each Funding Day an inspection
and overhaul fee equal to the aggregate amount of Tranche A Premium and Accrued
Interest Premium received by Lessor on such day, if any, less the amount of any
of the expenses and fees paid by Lessor on such date in accordance with the
previous sentence. Lessee agrees to pay all of the fees and expenses described
in clauses (i) and (ii) of the first sentence of this Section 12.1 (other than
the payment of principal or interest on the Tranche A Notes or Tranche B Loans
or other than as a result of a Loan Event of Default not caused by or arising
out of a Lease Event of Default) to the extent such fees and expenses are not
paid by Lessor on the due date therefor. Lessee agrees to pay the reasonable
fees and disbursements of special counsel to each of Lessor, Lessor General
Partner, Indenture Trustee, Administrative Agent and Collateral Agent (other
than Excluded Expenses) in connection with any amendments, waivers or consents
requested by Lessor, Lessee or Guarantor under any Operative Document. Upon the
occurrence and during
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the continuance of any Lease Event of Default, Lessee agrees to pay or reimburse
each of Indenture Trustee, each Tranche A Noteholder, each Tranche B Lender,
Lessor, Lessor General Partner, Administrative Agent and Collateral Agent for
reasonable costs and expenses of counsel and of financial advisors as shall have
been selected by such Person to assist them in connection with such Lease Event
of Default.
12.2. Amendments, Consents and Waivers.
(a) Except as otherwise expressly provided and subject to the rights
assigned by Lessor to Collateral Agent hereunder, neither this Agreement nor any
other Operative Document (other than the Limited Partnership Agreement) nor any
terms hereof or thereof may be amended, supplemented, waived or modified without
the written agreement and consent of the parties thereto and Lessee, provided
that where the consent of Indenture Trustee, or Tranche B Lenders is required,
such consent (except as provided below) may be given by (x) Indenture Trustee
acting on behalf of Majority Tranche A Noteholders, or (y) Administrative Agent
acting on behalf of Majority Tranche B Lenders, as the case may be, and any such
consent shall be binding in the case of clause (x) on Indenture Trustee and all
Tranche A Noteholders, and in the case of clause (y), on all Tranche B Lenders,
provided further, that no such amendment, modification, waiver or supplement
shall, (i) without the consent of a Tranche A Noteholder (A), extend the final
scheduled maturity of such Tranche A Note, or reduce the rate or extend the time
of payment of interest thereon (except (x) in connection with the waiver of
applicability of any post-default increase in interest rates and (y) that any
amendment or modification that is agreed to by Indenture Trustee acting on
behalf of Majority Tranche A Noteholders directly affected thereby to the
financial definitions in the Operative Documents shall not constitute a
reduction in the rate of interest or fees for purposes of this clause (A)
notwithstanding the fact that such amendment or modification would otherwise
actually result in such a reduction, so long as the primary purpose (as
determined in good faith by Lessee and Administrative Agent) of the respective
amendment or modification was not to decrease the pricing pursuant to this
Agreement and the other Operative Documents), or reduce the principal amount
thereof (except to the extent repaid in cash), (B) release all or substantially
all of Collateral Agent's interest in the Lessor Collateral (except as expressly
provided herein), (C) reduce the percentage specified in the definition of
Majority Tranche A Noteholders or (D) amend this Section 12.2 (other than
clauses (ii) through (vi) of this Section 12.2(a)), (ii) without the consent of
a Tranche B Lender (A) extend the final scheduled maturity of its Tranche B Loan
or extend the time of payment of interest thereon (except (x) in connection with
the waiver of applicability of any post-default increase in interest rates and
(y) that any amendment or modification that is agreed to by Administrative Agent
acting on behalf of Majority Tranche B Lenders directly affected thereby to the
financial definitions in the Operative Documents shall not constitute a
reduction in the rate of interest or fees for purposes of this clause (A),
notwithstanding the fact that such amendment or modification would otherwise
actually result in such a reduction, so long as the primary purpose (as
determined in good faith by Lessee and Administrative Agent) of the respective
amendment or modification was not to decrease the pricing pursuant to this
Agreement and the other Operative Documents), or reduce the principal amount
thereof (except to the extent repaid in cash), (B) release all or substantially
all of Collateral Agent's interest in the Lessor Collateral (except as expressly
provided herein), (C) reduce the percentage specified in the definition of
Majority Tranche B Lenders, (D) amend this Section 12.2 (other than clauses (i)
through (vi) of
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this Section 12.2(a)) or (E) extend or increase the amount of its Tranche B
Commitment, (iii) without the consent of Indenture Trustee, amend, modify or
waive any provision relating to the rights of Indenture Trustee, (iv) without
the consent of Administrative Agent, amend, modify or waive any provision
relating to the rights or obligations of Administrative Agent, (v) without the
consent of Collateral Agent, amend, modify or waive any provision relating to
the rights or obligations of Collateral Agent or (vi) without the consent of
Lessor General Partner, amend, modify or waive any provision relating to the
rights or obligations of Lessor General Partner or Lessor.
(b) Notwithstanding anything to the contrary in Section 12(a) above,
(i) subject to clause (i) of Section 12.2(a), Lessee, Lessor and Indenture
Trustee acting on behalf of Majority Tranche A Noteholders may amend,
supplement, modify or waive any of the Lessee covenants set forth in Section 9.2
hereof and with the written consent of Lessor amend, supplement, modify or waive
any of the terms of the Indenture or Tranche A Notes in accordance with the
terms thereof and (ii) subject to clause (ii) of Section 12.2(a), Lessee, Lessor
and Administrative Agent acting on behalf of Majority Tranche B Lenders may
amend, supplement, modify or waive any of the Lessee covenants set forth in
Section 9.3 hereof, any of the terms of the Tranche B Loan Agreement and Tranche
B Notes, any of the terms of Sections 6, 10(b), 11 (except where any such
amendment, supplement, waiver or modification of maintenance obligations would
impair the value of any Item of Equipment in any material respect), 17, 28.3,
29.3 and 29.4 of the Lease Agreement. Administrative Agent agrees to deliver to
Indenture Trustee notice of any amendment of Section 11 of the Lease Agreement
made in accordance with this Section 12.2.(b).
(c) If, in connection with any proposed change, waiver, discharge or
termination to any of the provisions of this Agreement or any other Operative
Document, the consent of all Tranche B Lenders is required and the consent of
Majority Tranche B Lenders (but not all Tranche B Lenders) is obtained, then
Lessee shall have the right to replace each such non-consenting Tranche B Lender
(so long as all non-consenting Tranche B Lenders are so replaced) with one or
more Replacement Tranche B Lenders, pursuant to Section 12.7 so long as at the
time of such replacement, each such Replacement Tranche B Lender consents to the
proposed change, waiver, discharge or termination; provided however, no Tranche
B Lender shall be obligated to assign its rights hereunder unless all of its
interest or the interest of any Affiliate thereof in Lessor is assigned in
accordance with the terms of the Limited Partnership Agreement.
12.3. GOVERNING LAW; SUBMISSION TO JURISDICTION; VENUE; WAIVER OF JURY
TRIAL.
(a) THIS AGREEMENT AND THE OTHER OPERATIVE DOCUMENTS AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES HEREUNDER AND THEREUNDER SHALL, BE CONSTRUED IN
ACCORDANCE WITH AND BE GOVERNED BY THE LAW OF THE STATE OF NEW YORK. ANY LEGAL
ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY OTHER OPERATIVE
DOCUMENT MAY BE BROUGHT IN THE COURTS OF THE STATE OF NEW YORK OR OF THE UNITED
STATES FOR THE SOUTHERN DISTRICT OF NEW YORK, AND, BY EXECUTION AND DELIVERY OF
THIS AGREEMENT, EACH OF GUARANTOR AND LESSEE
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HEREBY IRREVOCABLY ACCEPTS FOR ITSELF AND IN RESPECT OF ITS PROPERTY, GENERALLY
AND UNCONDITIONALLY, THE JURISDICTION OF THE AFORESAID COURTS. EACH OF GUARANTOR
AND LESSEE HEREBY IRREVOCABLY DESIGNATES, APPOINTS AND EMPOWERS CT CORPORATION
SYSTEM, WITH OFFICES ON THE DATE HEREOF AT 111 EIGHTH AVENUE, NEW YORK, NEW YORK
100011 AS ITS DESIGNEE, APPOINTEE AND AGENT TO RECEIVE, ACCEPT AND ACKNOWLEDGE
FOR AND ON ITS BEHALF, AND IN RESPECT OF ITS PROPERTY, SERVICE OF ANY AND ALL
LEGAL PROCESS, SUMMONS, NOTICES AND DOCUMENTS WHICH MAY BE SERVED IN ANY SUCH
ACTION OR PROCEEDING. IF FOR ANY REASON SUCH DESIGNEE, APPOINTEE AND AGENT SHALL
CEASE TO BE AVAILABLE TO ACT AS SUCH, EACH OF GUARANTOR AND LESSEE AGREES TO
DESIGNATE A NEW DESIGNEE, APPOINTEE AND AGENT IN NEW YORK CITY ON THE TERMS AND
FOR THE PURPOSES OF THIS PROVISION SATISFACTORY TO THE AGENT UNDER THIS
AGREEMENT. EACH OF THE PARTIES HERETO FURTHER IRREVOCABLY CONSENTS TO THE
SERVICE OF PROCESS OUT OF ANY OF THE AFOREMENTIONED COURTS IN ANY SUCH ACTION OR
PROCEEDING BY THE MAILING OF COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL,
POSTAGE PREPAID, TO SUCH PARTY HEREUNDER AT ITS ADDRESS SET FORTH OPPOSITE ITS
SIGNATURE BELOW, SUCH SERVICE TO BECOME EFFECTIVE THIRTY (30) DAYS AFTER SUCH
MAILING. NOTHING HEREIN SHALL AFFECT THE RIGHT OF ANY PARTY TO THIS AGREEMENT,
TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL
PROCEEDINGS OR OTHERWISE PROCEED AGAINST ANY OTHER PARTY IN ANY OTHER
JURISDICTION.
(b) EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES ANY OBJECTION
WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY OF THE
AFORESAID ACTIONS OR PROCEEDINGS ARISING OUT OF OR IN CONNECTION WITH THIS
AGREEMENT OR ANY OTHER OPERATIVE DOCUMENT BROUGHT IN THE COURTS REFERRED TO IN
CLAUSE (a) ABOVE AND HEREBY FURTHER IRREVOCABLY WAIVES AND AGREES NOT TO PLEAD
OR CLAIM IN ANY SUCH COURT THAT ANY SUCH ACTION OR PROCEEDING BROUGHT IN ANY
SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.
(c) EACH OF THE PARTIES TO THIS AGREEMENT HEREBY IRREVOCABLY WAIVES ALL
RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT
OF OR RELATING TO THIS AGREEMENT, THE OTHER OPERATIVE DOCUMENTS OR THE
TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.
12.4. Notices. All notifications, notices, demands, requests and other
communications herein provided for or made pursuant hereto shall be in writing
(including telegraphic, telex, telecopier or cable communication) and mailed,
telegraphed, telexed, telecopied, cabled or delivered via courier to the
addresses listed below. All such notices and communications shall, when mailed,
telegraphed, telexed, telecopied, or cabled or sent by overnight courier, be
effective when deposited in the mails, delivered to the telegraph company, cable
company or overnight
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courier, as the case may be, or sent by telex or telecopier, except that notices
and communications to Administrative Agent, Lessor and Lessee shall not be
effective until received by Administrative Agent, Lessor or Lessee, as the case
may be. A copy of all notices Lessee is required to deliver under the Operative
Documents shall be delivered to Indenture Trustee, Administrative Agent and
Collateral Agent. The initial address of the parties hereto are as follows:
to Lessee: Universal Compression, Inc.
4440 Brittmoore Road
Houston, Texas 77041
Attention: Richard W. FitzGerald
Senior Vice President & Chief Financial Officer
Telephone: (713) 335-7000
Telefax: (713) 466-6720
with a copy to
Mark L. Carlton
Senior Vice President & General Counsel
Universal Compression, Inc.
4440 Brittmoore Road
Houston, Texas 77041
Telephone: (713) 335-7000
Telefax: (713) 466-6720
to Guarantor: Universal Compression Holdings, Inc.
4440 Brittmoore Road
Houston, Texas 77041
Attention: Richard W. FitzGerald
Senior Vice President & Chief Financial Officer
Telephone: (713) 335-7000
Telefax: (713) 466-6720
with a copy to
Mark L. Carlton
Senior Vice President & General Counsel
Universal Compression, Inc.
4440 Brittmoore Road
Houston, Texas 77041
Telephone: (713) 335-7000
Telefax: (713) 466-6720
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to Lessor: BRL Universal Equipment Management, Inc.
c/o BRL Universal Equipment Management, Inc.
2911 Turtle Creek Blvd.
Suite 1240
Dallas, Texas 75219
Attention: Gregory C. Greene
President
Telephone: (214) 522-7296
Telefax: (214) 520-2006
with a copy to
Universal Compression, Inc.
4440 Brittmoore Road
Houston, Texas 77041
Attention: Richard W. FitzGerald
Senior Vice President & Chief Financial Officer
Telephone: (713) 335-7000
Telefax: (713) 466-6720
to Lessor General Partner: BRL Universal Equipment Management, Inc.
2911 Turtle Creek Blvd., Dallas, Texas 75219
Attention: Gregory C. Greene, President
Telephone: (214) 522-7296
Telefax: (214) 520-2006
to Indenture Trustee, on The Bank of New York
behalf of Tranche A 101 Barclay Street, Floor 21 West
Noteholders New York, NY 10286
Attention: Corporate Trust Trustee
Administration
Telephone: (212) 815-3703
Telefax: (212) 815-5915
to Tranche B Lenders and See Schedule 2 hereto.
Limited Partners:
Administrative Agent: Bankers Trust Company
130 Liberty Street, M.S. 2344
New York, New York 10006
Attention: Marcus Tarkington
Internal Mail Code: NYC 02-2802
Telephone: (212) 250-7684
Telefax: (212) 250-8693
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With a copy of all notices and documents delivered in accordance with the Lease
Agreement or Sections 3.1 hereof to:
Deutsche Banc Alex. Brown Inc.
31 West 52nd Street, Mail Stop 1411
New York, NY 10019
Attention: Robert Martorano, Jr., Director
Global Asset Finance and Leasing
Telephone: (212) 469-7393
Telefax: (212) 469-7398
Collateral Agent: Bankers Trust Company
130 Liberty Street, M.S. 2344
New York, New York 10006
Attention: Marcus Tarkington
Internal Mail Code: NYC 02-2802
Telephone: (212) 250-7684
Telefax: (212) 250-8693
12.5. Interests in the Equipment. The parties hereto intend that (i)
for financial accounting purposes with respect to Lessee, Lessor will be treated
as the owner and the lessor of each Item of Equipment and Lessee will be treated
as the lessee of each Item of Equipment and (ii) for all federal, state and
local income tax purposes, state sales, use and other transaction tax purposes,
(A) the Operative Documents will be treated as a financing arrangement, (B)
Lessor will be deemed a lender making loans to Lessee in an amount equal to the
sum of the aggregate of the outstanding Equity Contributions and the outstanding
principal amount of the Tranche A Notes and Tranche B Loans and (C) Lessee will
be treated as the owner of each Item of Equipment and will be entitled to all
tax benefits ordinarily available to an owner of equipment like the Equipment
for such tax purposes. Lessor shall take no action inconsistent with the
intention of the parties set forth in clause (ii)(C) of this Section 12.5.
Notwithstanding the intentions of the parties expressed herein, each party
hereto acknowledges and agrees that Lessor has not made, and no other party
hereto nor Arranger, any Tranche A Noteholder or Limited Partner has made, any
representations or warranties concerning the tax, accounting or legal
characteristics of the Operative Documents and that such party has obtained and
relied upon and agree that they will obtain and rely upon such tax, accounting
and legal advice from their own accountants and counsel concerning the Operative
Documents as they deems appropriate.
12.6. Descriptive Headings, etc. The descriptive headings used in this
Agreement are for convenience only and shall not be deemed to affect the meaning
or construction of any provision hereof.
12.7. Benefit of Agreement; Assignment. This Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors and permitted assigns and in particular any holder from time to time
of any Tranche A Note or Tranche B Note. Subject to the following proviso,
neither Lessor, Lessee, Indenture Trustee, nor any Tranche B
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Lender without the prior written consent of each other party hereto, may assign
any or all of its rights or obligations hereunder or under any other Operative
Document to which it is a party; provided, however,
(i) Lessor General Partner may at any time transfer or assign
any or all of its rights or obligations under the Operative Documents in
accordance with the provisions of Article 9 of the Limited Partnership
Agreement;
(ii) Indenture Trustee may at any time transfer or assign any
or all of its rights or obligations under the Operative Documents in
accordance with the provisions of Section 6.8 or 6.9 of the Indenture;
(iii) Any Tranche B Lender may transfer, assign or grant
participations in its rights in the Operative Documents; provided, however,
such Tranche B Lender shall remain a "Tranche B Lender" for all purposes
hereunder and the transferee, assignee or participant, as the case may be,
shall not constitute a "Tranche B Lender" hereunder and, provided further,
that no Tranche B Lender shall transfer or grant any participation under
which the participant shall have rights to approve any amendment to or
waiver of this Agreement or any other Operative Document except to the
extent such amendment or waiver would (A) extend the final scheduled
maturity of any Tranche B Loan which such participant is participating, or
reduce the rate or extend the time of payment of interest or fees thereon
(except in connection with a waiver of applicability of any post-default
increase in interest rates) or reduce the principal amount thereof, or
increase the amount of the participant's participation over the amount
thereof then in effect (it being understood that a waiver of any Loan
Default or Loan Event of Default shall not constitute a change in the terms
of such participation, and that an increase in any Tranche B Loan shall be
permitted without the consent of any participant if the participant's
participation is not increased as a result thereof), (B) consent to the
assignment or transfer by Lessor or Lessee of any of its rights and
obligations under the Operative Documents or (C) release all or
substantially all of the Collateral under all of the Security Documents
(except as expressly provided in the Operative Documents) securing the
Tranche B Loans in which such participant is participating. In the case of
any such participation, the participant shall not have any rights under any
Operative Documents (the participant's rights against such Tranche B Lender
in respect of such participation to be those set forth in the agreement
executed by such Tranche B Lender in favor of the participant relating
thereto) and all amounts payable by Lessor and Lessee under the Operative
Documents shall be determined as if such Tranche B Lender had not sold such
participation;
(iv) Notwithstanding the foregoing, any Tranche B Lender (or
any Tranche B Lender together with one or more other Tranche B Lenders) may
(A) assign all or a portion of its rights and obligations under the
Operative Documents to (x) its parent company and/or any affiliate of such
Tranche B Lender which is at least 50% owned by such Tranche B Lender or
its parent company or to one or more Tranche B Lenders or (y) in the case
of any Tranche B Lender that is a fund that invests in loans, any other
fund that invests in loans and is managed or advised by the same investment
advisor of such Tranche B Lender or by an Affiliate of such investment
advisor or (B) assign all, or if less
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than all, a portion of outstanding principal balance equal to at least
$5,000,000 in the aggregate for the assigning Tranche B Lender or assigning
Tranche B Lenders of such Tranche B Loan and related outstanding
obligations hereunder or under the Tranche B Loan Agreement to one or more
Eligible Transferees (treating any fund that invests in loans and any other
fund that invests in loans and is managed or advised by the same investment
advisor of such fund or by an Affiliate of such investment advisor as a
single Eligible Transferee), each of which assignees shall become a party
to this Agreement and the Tranche B Loan Agreement as a Tranche B Lender by
execution of an Assignment and Assumption Agreement, provided that (w) new
Tranche B Notes will be issued, at Lessee's expense, to such new Tranche B
Lender and to the assigning Tranche B Lender upon the request of such
Person, such new Tranche B Notes to be in conformity with the requirements
of Section 2.3 of the Tranche B Loan Agreement, (x) the consent of
Administrative Agent, Lessee and Lessor shall be required in connection
with any assignment to an Eligible Transferee pursuant to clause (B) above
(which consents shall not be unreasonably withheld), provided that the
consent of Lessor shall not be required at any time that a Loan Event of
Default has occurred and is continuing and the consent of Lessee shall not
be required at any time that a Lease Event of Default has occurred and is
continuing, (y) Administrative Agent shall receive for its own account at
the time of each such assignment, from the assigning or assignee Tranche B
Lender, the payment of a non-refundable assignment fee of $3,500 and (z)
promptly after such assignment, Lessor and Lessee shall have received from
Administrative Agent notice of any such assignment, together with the copy
of the Assignment and Assumption Agreement relating thereto. To the extent
of any assignment pursuant to this Section 12.7, the assigning Tranche B
Lender shall be relieved of its obligations hereunder. At the time of each
assignment pursuant to this Section 12.7 to a Person which is not already a
Tranche B Lender hereunder and which is not a U.S. Person (as such term is
defined in Section 7701(a)(30) of the Code) for federal income tax
purposes, the respective assignee Tranche B Lender shall, to the extent
legally entitled to do so, provide to Lessor and Lessee, the forms
described in such Section 9.4 of the Participation Agreement. To the extent
that an assignment of all or any portion of a Tranche B Lender's interests
would, at the time of such assignment, result in additional increased costs
under Section 2.7 of the Tranche B Loan Agreement from those that would
have been incurred by the respective assigning Tranche B Lender prior to
such assignment, then Lessee shall not be obligated to pay such incremental
additional increased costs (although Lessee shall be obligated to pay any
other increased costs of the type described above resulting from changes
after the date of the respective assignment);
(v) Each Tranche B Lender shall provide written notice to
Administrative Agent of any assignment or participation by such Tranche B
Lender of any interest it may have under any Operative Document. In the
case of any participations, other than to which Lessee otherwise consents,
the right of any such participant to indemnification or other amounts under
Section 10 shall be limited to amounts which would have been due had no
such participation been granted;
(vi) Notwithstanding any other provision in the Operative
Documents, any Tranche B Lender may at any time create a security interest
in, or pledge, all or any
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portion of its rights under and interest in any of the Operative Documents
in favor of any Federal Reserve Bank in accordance with Regulation A of the
Federal Reserve Board or U.S. Treasury Regulation 31 CFR 203.14, and such
Federal Reserve Bank may enforce such pledge or security interest in any
manner permitted under Applicable Law; and
(vii) Provided no Lease Event of Default has occurred and is
continuing, on any Floating Payment Date after at least thirty (30) days,
but no more than sixty (60) days advance written notice to each party
hereto, Lessee may cause all, but not less than all Tranche B Lenders to
sell with recourse, representation or warranties their rights and interests
in the Tranche B Loans, to any financial institutions selected by Lessee
for an amount equal to (A) the outstanding balance of such Person's Tranche
B Loan plus (B) all interest accrued on such amount plus (C) any Breakage
Costs suffered by such Person, plus (D) any other amount due such person
under the Operative Documents (the "Tranche B Transfer Amount") provided
such financial institution purchases from such Tranche B Lender (or any
Affiliate thereof) any interest it or such Affiliate may have in Lessor for
an amount equal to (A) the outstanding balance of such Person's Equity
Contribution, plus (B) all Equity Yield accrued on such amount plus (C) any
Breakage Costs suffered by such Person (the "Equity Transfer Amount"). Such
sale or sales shall become effective upon delivery of an Assignment and
Assumption Agreement and payment to each Tranche B Lender and, if
applicable, Limited Partner in immediately available funds its respective
Tranche B Transfer Amount or Equity Transfer Amount. Lessor agrees to amend
the Applicable Tranche B Rates as such replacement Tranche B Lenders may
agree.
12.8. Execution and Effectiveness. This Agreement may be executed (i)
in multiple counterparts, each of which shall be regarded as an original and all
of which shall constitute a single instrument and shall become effective on the
Closing Date when each of the parties hereto shall have signed a copy hereof
(whether the same or different copies) and (ii) by facsimile signature and each
such signature shall be treated in all respects as having the same effect as an
original signature.
12.9. Survival. Each of the representations, warranties, terms,
covenants, agreements and conditions contained in this Agreement shall
specifically survive the execution and delivery of this Agreement and the other
Operative Documents, the issuing of the Tranche A Notes and the making of the
Tranche B Loans and Equity Contributions and shall, unless otherwise expressly
provided therein, continue in full force and effect until the Tranche A Notes
and Tranche B Loans, together with interest thereon, the Equity Contributions
together with the Equity Yield and all other sums payable hereunder or
thereunder have been indefeasibly paid in full.
12.10. Severability. The provisions of this Agreement are severable,
and if any section or provision shall be held invalid or unenforceable in whole
or in part in any jurisdiction, then such invalidity or unenforceability shall
affect only such clause or provision, or part thereof, in such jurisdiction and
shall not in any manner affect such clause or provision in any other
jurisdiction, or any other clause or provision of this Agreement in any
jurisdiction.
-81-
12.11. No Broker. Each party hereto hereby represents and warrants to
the other parties that no broker other than Arranger (whose fees shall be paid
solely by Lessee) brought about the transactions contemplated hereby and each
party hereby agrees to indemnify (the "Indemnifying Party") and hold each other
party harmless from, any and all other liabilities and costs (including, without
limitation, costs of counsel) to any Person claiming brokerage commissions or
finder's fees as a result of any agreement with the Indemnifying Party.
12.12. Limited Recourse Against Limited Partners and Lessor General
Partner. Without impairing any of the other rights, powers, privileges, liens or
security interests of Indenture Trustee, any Secured Party, Administrative Agent
or Collateral Agent pursuant to Operative Documents, except for such Limited
Partner's or Lessor General Partner's gross negligence, willful misconduct,
misrepresentations or fraud and as expressly provided in this Agreement or any
other Operative Document, and subject to the proviso below, Indenture Trustee
and each Secured Party agrees that as between it and each Limited Partner or
Lessor General Partner, no recourse shall be had with respect to this Agreement
or such other Operative Documents against Limited Partners or Lessor General
Partner, or any officer, director, employee, agent or Affiliate thereof for
amounts owed by Lessor under the Operative Documents; and no Limited Partner or
Lessor General Partner, or any officer, director, employee, agent or Affiliate
thereof shall have any personal liability for any amounts owed by Lessor under
the Operative Documents, notwithstanding any other provision of this Agreement
or the other Operative Documents. The Indenture Trustee Tranche B Lenders,
Administrative Agent and Collateral Agent each agree that the personal liability
of Lessor shall be strictly and absolutely limited to the Lessor Collateral and
no recourse for the payment of any amount due under this Agreement or any other
agreement contemplated hereby, or for any claim based thereon or otherwise in
respect thereof, shall be had against any other assets of Lessor, of Lessor
General Partner or any Limited Partner or any incorporator, shareholder,
partner, officer, director or Affiliate (past, present or future) or of any
successor corporation to Lessor General Partner or any Affiliate of either, it
being understood that the Borrower is a limited partnership formed for the
purpose of the transactions involved in and relating to this Agreement on the
express understanding aforesaid; provided, however, that nothing contained in
this Section 12.12 or elsewhere shall be construed to (i) prevent recourse to
and the enforcement against the Lessor Collateral of all liabilities,
obligations and undertakings contained in the Operative Documents, (ii) limit,
restrict, or impair the right of Indenture Trustee or any Secured Party to
accelerate the maturity of any Trance A Note or Tranche B Loan upon the
occurrence of a Loan Event of Default, (iii) prevent the bringing of an action
or obtaining a judgment against any Limited Partner or Lessor General Partner
for fraud, any breach of any of its representations, warranties or covenants
under any of the Operative Documents, or any negligent mishandling of funds or
any failure to apply any amounts received from any party hereto in accordance
with the terms of the Operative Documents, (iv) prevent the bringing of an
action or obtaining a judgment over Lessor to obtain jurisdiction over the
Lessor Collateral, Lessee or Guarantor; provided that no judgment or any such
action shall seek a deficiency judgment against Lessor or hold Lessor General
Partner, any Limited Partner or any incorporator, shareholder, partner, officer,
director of Lessor General Partner or any Limited Partner personally liable
therefor, or (v) prevent the bringing of an action or obtaining of a judgment to
foreclose the lien of this Agreement or Security Documents or otherwise realize
upon the Lessor Collateral or the sums due or to
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become due under the Lease Agreement or the other Operative Documents to which
any such Person is a party.
12.13. Consent and Agreement of Lessee and Guarantor. Lessee and
Guarantor hereby consent to the assignment set forth in Section 7. Lessor and
Collateral Agent hereby instruct, and Lessee and Guarantor agree, that until
further notified by Collateral Agent, Lessee, Guarantor and Lessor shall pay all
amounts payable by Lessee or Guarantor under the Operative Documents other than
Excepted Payments to the account of Collateral Agent or as Collateral Agent may
otherwise designate in a written notice to Lessee, Guarantor and Lessor. If
there is any disagreement between Administrative Agent and Lessor as to whether
any amount is an Excepted Payment, Lessor, Lessee and Guarantor shall abide by
Administrative Agent's determination with respect to such amount.
12.14. Consent to Amendments. By execution and delivery of this
Agreement, each of the parties hereto acknowledges receipt of and consents to
the amendments to the Lease Agreement set forth in the First Amendment to Lease
Agreement of even date herewith between Lessor and Lessee and the amendments to
the Tranche B Loan Agreement set forth in the First Amendment to Tranche B Loan
Agreement of even date herewith among Lessor, Tranche B Lenders, Administrative
Agent and Collateral Agent.
* * *
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered by their respective duly authorized officers as of
the date first above written.
UNIVERSAL COMPRESSION, INC.,
as Lessee
By /s/ Richard W. FitzGerald
-------------------------------------------
Senior Vice President and
Chief Financial Officer
UNIVERSAL COMPRESSION HOLDINGS, INC.,
as Guarantor
By /s/ Richard W. FitzGerald
-------------------------------------------
Senior Vice President and
Chief Financial Officer
BRL UNIVERSAL EQUIPMENT 2001 A, L.P.,
as Lessor
By BRL Universal Equipment Management, Inc.
Its General Partner
By /s/ Gregory C. Greene
-------------------------------------------
President
BRL UNIVERSAL EQUIPMENT MANAGEMENT, INC.
as Lessor General Partner
By /s/ Gregory C. Greene
-------------------------------------------
President
THE BANK OF NEW YORK,
not individually but as Indenture Trustee
for Tranche A Noteholders
By /s/ Remo J. Reale
-------------------------------------------
Vice President
FIRST UNION NATIONAL BANK,
as Tranche B Lender
[Percentage of Tranche B Notes
immediately prior to Amendment
Date: 7.75887357%]
By /s/ David E. Humphreys
-------------------------------------------
Vice President
BANK ONE, NA (Main Office
Chicago) as Tranche B
Lender [Percentage of
Tranche B Notes
immediately prior to
Amendment Date:
12.51588931%]
By /s/ Dianne L. Russell
-------------------------------------------
Vice President
THE BANK OF NOVA SCOTIA,
as Tranche B Lender
[Percentage of Tranche B Notes
immediately prior to Amendment
Date: 12.51588931%]
By /s/ F.C.H. Ashby
-------------------------------------------
Senior Manager, Loan Operations
2
CITADEL HILL 2000 LTD.,
as Tranche B Lender
[Percentage of Tranche B Notes
immediately prior to Amendment
Date: 7.82243082%]
By
-------------------------------------------
Name
Title
NATEXIS BANQUES POPULAIRES,
as Tranche B Lender
[Percentage of Tranche B Notes
immediately prior to Amendment
Date: 12.51588931%]
By
-------------------------------------------
Name
Title
LANDMARK CDO LIMITED,
as Tranche B Lender
[Percentage of Tranche B Notes
immediately prior to Amendment
Date: 12.51588931%]
By /s/ Gilles Marchand
-------------------------------------------
Authorized Signatory
CSAM FUNDING I,
as Tranche B Lender
[Percentage of Tranche B Notes
immediately prior to Amendment
Date: 10.8878459%]
By
-------------------------------------------
Name
Title
3
FIRST DOMINION FUNDING I,
as Tranche B Lender
[Percentage of Tranche B Notes
immediately prior to Amendment
Date: 14.08037548%]
By
-------------------------------------------
Name
Title
FIRST DOMINION FUNDING II,
as Tranche B Lender
[Percentage of Tranche B Notes
immediately prior to Amendment
Date: 9.386916984%]
By
-------------------------------------------
Name
Title
BANKERS TRUST COMPANY,
as Administrative Agent
By /s/ Calli S. Hayes
-------------------------------------------
Managing Director
BANKERS TRUST COMPANY,
as Collateral Agent
By /s/ Calli S. Hayes
-------------------------------------------
Managing Director
4
APPENDIX A TO
PARTICIPATION
AGREEMENT
UNIVERSAL COMPRESSION, INC.
GAS COMPRESSION EQUIPMENT
FINANCING FACILITY
The definitions stated herein shall equally apply to both the
singular and plural forms of the terms defined. Any agreement defined or
referred to below means such agreement as amended, supplemented or modified from
time to time, and includes all exhibits, supplements and appendices thereto.
Unless otherwise specified, any Person defined or referred to below includes its
successors, permitted transferees and assigns. The word "including," when used
below or in any Operative Document, is deemed to be followed by "without
limitation," whether or not such words appear.
"ABS Operating Lease Facility" means the Operating Lease
Facility of UCC Compression LLC, a wholly owned subsidiary of Lessee, dated the
Issue Date, arranged by First Union Securities, Inc., which provides for funding
of up to $200,000,000.
"Accrued Interest Premium" means with respect to any Tranche A
Note, that portion of the proceeds from the issuance of any Tranche A Note
received by Lessor or BRL Universal Equipment Corp. representing interest that
would have accrued on such Tranche A Note had it been issued on the Semi-Annual
Payment Date immediately preceding its date of issuance.
"Acquired Indebtedness" means Indebtedness (including any
Operating Lease Facility) of a Person or any of its Subsidiaries existing at the
time such Person becomes a Restricted Subsidiary of Lessee or at the time it
merges or consolidates with Lessee or any of the Lessee's Subsidiaries or
assumed in connection with the acquisition of assets from such Person and in
each case not incurred by such Person in connection with, or in anticipation or
contemplation of, such Person becoming a Restricted Subsidiary of Lessee or such
acquisition, merger or consolidation.
"Acquisition Cost" of each Item of Equipment means the amount
set forth therefor on the Lease Supplement or Notice of Substitution therefor.
"Administrative Agent" means Bankers Trust Company.
"Affiliate" means, as to any Person, any other Person which,
directly or indirectly through one or more intermediaries, is in control of, is
controlled by, or is under common control with, such Person. For purposes of
this definition, "control" of a Person means the possession, directly or
indirectly, of the power, to direct or cause the direction of the management and
policies of such Person, whether through the ownership of voting securities, by
contract or otherwise; and the terms "controlling" and "controlled" have
meanings correlative of the foregoing.
"Affiliate (Tranche B)" of any Person shall mean (i) any
Person directly or indirectly controlled by, controlling or under common control
with such first Person, (ii) any director or officer of such first Person or of
any Person referred to in clause (i) above and (iii) if any Person in clause (i)
above is an individual, any member of the immediate family (including parents,
spouse and children) of such individual and any trust whose principal
beneficiary is such individual or one or more members of such immediate family
and any Person who is controlled by any such member or trust. For purposes of
this definition, any Person which owns directly or indirectly 10% or more of the
securities having ordinary voting power for the election of directors or other
governing body of a corporation or 10% or more of the partnership or other
ownership interests of any other Person (other than as a limited partner of such
other Person) will be deemed to control (including, with its correlative
meanings, controlled by and under common control with) such corporation or other
Person.
"After-Tax Basis" means in respect of an amount (the "base
amount") with respect to a Person, (i) the base amount supplemented by (ii) an
additional payment, if necessary, to such Person such that, after reduction (but
not below zero) for the net amount of all Taxes (taking into account credits,
offsets, deductions or other benefits realized or to be realized by such Person
or its Affiliates in respect of such base amount and such Taxes, calculated
assuming that such credits reduce such taxes, and any deductions or other
benefits reduce income that would otherwise be subject to such tax, at the
then-maximum marginal rate generally applicable to such Person), if any, imposed
on such Person (calculated at the then maximum marginal rates generally
applicable to such Person) in respect of the sum of the base amount and such
additional payment shall be equal to the base amount.
"Alternate Rate" means a variable rate equal to the greater of
(i) the sum of the Federal Funds Rate from time to time in effect and 0.5% and
(ii) the rate of interest from time to time announced by Deutsche Bank AG, New
York Branch at its principal office in New York, New York from time to time as
its "prime commercial lending rate" (which rate is a reference rate and does not
necessarily represent the lowest or best rate actually charged to any customer,
and Deutsche Bank AG, New York Branch may make commercial loans or other loans
at rates of interest at, above or below such reference rate), with any per diem
determination based on a 365 or 366-day year, as the case may be.
"Amendment Date" means the date of the First Amended and
Restated Participation Agreement among Lessee, Guarantor, Tranche B Lenders,
Indenture Trustee, Paying Agent, Registrar, Lessor General Partner,
Administrative Agent and Collateral Agent.
"Applicable Equity Rate" for any Floating Payment Period with
respect to an Equity Contribution means, subject to Section 6.5 of the Limited
Partnership Agreement, an interest rate per annum equal to (i) the one (1)
month, two (2) month, three (3) month or six (6) month LIBOR Rate or Alternate
Rate at the time in effect in accordance with Section 5.7 of the Limited
Partnership Agreement, plus (ii) the Equity Margin.
"Applicable Law" means, with respect to any Person or Item of
Equipment, all existing and future laws, rules, guidelines, regulations
(including proposed, temporary and final income tax regulations), statutes,
treaties, codes, ordinances, permits, certificates, orders and
-2-
licenses of and interpretations by any Governmental Entity and judgments,
decrees, injunctions, writs, or orders of any court, arbitrator or other
administrative, judicial, or quasi-judicial tribunal or agency of competent
jurisdiction applicable to such Person of Item of Equipment.
"Applicable Tranche B Rate" for any Floating Payment Period
with respect to a Tranche B Loan, means, subject to Section 2.7 of the Tranche B
Loan Agreement, an interest rate per annum equal to (i) the one (1) month, two
(2) month, three (3) month or six (6) month LIBOR Rate or Alternate Rate at the
time in effect in accordance with Section 2.3.3 of the Tranche B Loan Agreement,
plus (ii) the Tranche B Margin.
"Appraisal" means, with respect to an Item of Equipment, an
appraisal reasonably acceptable to Administrative Agent prepared by the
Appraiser at Lessee's expense conducted by, or in the presence of, the Appraiser
and based upon a physical inspection to the extent reasonably deemed necessary
by the Appraiser, that states the fair market value of such Item as of the date
of such Appraisal and estimates such Item's Residual Value.
"Appraisal Date" has the meaning set forth in Section 14 of
the Lease Agreement.
"Appraiser" means American Appraisal Associates, Inc., or an
independent expert selected by Lessee and acceptable to the Lessor and
Administrative Agent.
"Arranger" means Deutsche Banc Alex. Brown Inc.
"Asset Acquisition" means (a) an Investment by Lessee or any
Restricted Subsidiary of Lessee in any other Person pursuant to which such
Person shall become a Restricted Subsidiary of Lessee or any Restricted
Subsidiary of Lessee, or shall be merged with or into Lessee or any Restricted
Subsidiary of Lessee, or (b) the acquisition by Lessee or any Restricted
Subsidiary of Lessee of the assets of any Person (other than a Restricted
Subsidiary of Lessee) which constitute all or substantially all of the assets of
such Person or comprise any division or line of business of such Person or any
other properties or assets of such Person other than in the ordinary course of
business.
"Asset Backed Securities" means up to $200,000,000 asset
backed securitization facility BRL Universal Compression Funding I, L.P.
"Asset Sale" means any direct or indirect sale, issuance,
conveyance, transfer, lease (other than operating leases entered into with
customers in the ordinary course of business consistent with past practice or
sales of equipment pursuant to purchase options entered into with customers by
Lessee or a Restricted Subsidiary of Lessee in the ordinary course of business
consistent with past practice), assignment or other transfer for value by Lessee
or any of its Restricted Subsidiaries (excluding any Lien granted in accordance
with Section 9.2(f) of the Participation Agreement, but including any Sale and
Leaseback Transaction) to any Person other than Lessee or a Wholly Owned
Restricted Subsidiary of Lessee of (a) any Capital Stock of any Restricted
Subsidiary of Lessee; or (b) any other property or assets of Lessee or any
Restricted Subsidiary of Lessee other than in the ordinary course of business;
provided, however, that Asset Sales shall not include (i) a transaction or
series of related transactions for which Lessee or its
-3-
Restricted Subsidiaries receive aggregate consideration of less than $2,000,000
and (ii) the sale, lease, conveyance, disposition or other transfer of all or
substantially all of the assets of Lessee as permitted under Section 9.2(g) of
the Participation Agreement, (iii) the transfer of assets to the lessor under a
Securitized Operating Lease Facility to cure a default related to an
under-collateralization event thereunder and (iv) any Restricted Payment (other
than, for purpose of calculating the Consolidated Fixed Change Coverage Ratio
only, any non-cash Restricted Payment) permitted under Section 9.2(b) of the
Participation Agreement.
"Assignee" means the Collateral Agent and its successors and
permitted assigns.
"Assignment and Assumption Agreement" for a Tranche B Lender
means the Assignment and Assumption Agreement substantially in the form of
Exhibit B to the Tranche B Loan Agreement.
"Bankruptcy Code" means Title 11 of the United States Code
entitled "Bankruptcy" as now or hereafter in effect or any successor thereto.
"Bill of Sale" means, for any Item of Equipment sold by Lessee
to Lessor, in the form of Exhibit A-1 to the Participation Agreement and for any
Item of Equipment sold by a Person other than Lessee to Lessor, a Bill of Sale
in the form of Exhibit A-2 to the Participation Agreement, in each case executed
and delivered by the Seller thereof and, where Lessee is not the Seller, by
Lessee.
"Blended Equity Yield Rate" means the weighted average of the
Applicable Equity Rate on all Equity Contributions outstanding at the time of
determination (such weighted average based upon the principal balances of such
Equity Contributions).
"Blended Tranche B Rate" means the weighted average rate of
interest on all Tranche B Notes outstanding at the time of determination (such
weighted average based upon the principal balances of such Tranche B Notes).
"Board of Directors" means, as to any Person, the board of
directors, management committee or other bodies governing the management of such
Person or the general partner of such Person or any duly authorized committee
thereof.
"Board Resolution" means, with respect to any Person, a copy
of a resolution certified by the Secretary or an Assistant Secretary of such
Person to have been duly adopted by the Board of Directors of such Person and to
be in full force and effect on the date of such certification, and delivered to
the Indenture Trustee.
"Borrower" means the Lessor in its capacity as borrower under
the Tranche B Loan Agreement.
"Breakage Costs" means any amount or amounts as shall
compensate a Tranche B Lender or Limited Partner for any reasonable loss
(excluding loss of profit), expense or liabilities incurred after using good
faith and reasonable efforts to minimize such loss, cost or expense by a Tranche
B Lender or Limited Partner as a result of a prepayment by Lessor of principal,
interest,
-4-
Equity Yield or Equity Component pursuant to the terms of the Operative
Documents or as a result of a funding that does not occur on a date specified
therefor in the Funding Notice. The amount of the loss, expense or liabilities
shall be determined by the Person seeking such, and notice thereof shall be
provided to Lessee in the form of a certificate of such Person stating that the
calculations set forth therein are in accordance with the terms of the
Participation Agreement and setting forth in reasonable detail the basis for
such calculations, such certificate being conclusive and binding for all
purposes absent manifest error.
"Business Day" means any day other than a day on which banking
institutions in the State of New York are authorized by law to close.
"Capital Lease" means a lease of (or other arrangement
conveying the right to use) real and/or personal Property, or a combination
thereof, with respect to which the lessee is required concurrently to recognize
the acquisition of an asset and the incurrence of a Debt in accordance with
GAAP.
"Capital Lease Obligations" means as to any Person, all
obligations of such Person as lessee under any Capital Lease, which obligations
are required to be classified and accounted for as capital leases on a balance
sheet of such Person under GAAP, and the amount of such obligations shall be the
capitalized amount thereof determined in accordance with GAAP.
"Capital Stock" means (i) with respect to any Person that is a
corporation, any and all shares, interests, participations or other equivalents
(however designated and whether or not voting) of corporate stock, including
each class of Common Stock and Preferred Stock of such Person and (ii) with
respect to any Person that is not a corporation, any and all partnership or
other equity interests of such Person.
"Capitalized Lease" means a lease that is required to be
classified and accounted for as a capitalized lease under GAAP.
"Capitalized Lease Obligation" means, as to any Person, the
obligations of such Person under a Capitalized Lease and, for purposes of this
definition, the amount of such obligations at any date shall be the capitalized
amount of such obligations at such date, determined in accordance with GAAP.
"Cash Equivalents" means (i) marketable direct obligations
issued by, or unconditionally guaranteed by, the United States Government or
issued by any agency thereof and backed by the full faith and credit of the
United States, in each case maturing within one year from the date of
acquisition thereof; (ii) marketable direct obligations issued by any state of
the United States of America or any political subdivision of any such state or
any public instrumentality thereof maturing within one year from the date of
acquisition thereof and, at the time of acquisition, having one of the two
highest ratings obtainable from either S&P or Moody's; (iii) commercial paper
maturing no more than one year from the date of creation thereof and, at the
time of acquisition, having a rating of at least A-1 from S&P or at least P-1
from Moody's; (iv) certificates of deposit or bankers' acceptances maturing
within one year from the date of acquisition thereof issued by any bank
organized under the laws of the United States
-5-
of America or any state thereof or the District of Columbia or any U.S. branch
of a foreign bank having at the date of acquisition thereof combined capital and
surplus of not less than $250,000,000; (v) repurchase obligations with a term of
not more than seven days for underlying securities of the types described in
clause (i) above entered into with any bank meeting the qualifications specified
in clause (iv) above; (vi) investments in money market funds which invest
substantially all their assets in securities of the types described in clauses
(i) through (v) above; and (vii) investments made by Foreign Restricted
Subsidiaries in local currencies in instruments issued by or with entities of
such jurisdiction having correlative attributes to the foregoing.
"Change of Control" means the occurrence of one or more of the
following events: (i) any sale, lease, exchange or other transfer (in one
transaction or a series of related transactions, but other than by the granting
of a Lien in accordance with the Participation Agreement or by way of
consolidation or merger in accordance with the Participation Agreement) of all
or substantially all of the assets of Lessee and its Subsidiaries, or Guarantor
and its Subsidiaries, in each case taken as a whole, to any Person or group (as
defined in Section 13(d)(3) of the Exchange Act) (whether or not otherwise in
compliance with the provisions of the Participation Agreement) other than to the
Permitted Holders; (ii) the approval by the holders of Capital Stock of
Guarantor or Lessee of any plan or proposal for the liquidation or dissolution
of Guarantor or Lessee (whether or not otherwise in compliance with the
provisions of the Participation Agreement); (iii) any Person or group within the
meaning of Section 13(d) of the Exchange Act (other than the Permitted Holders
and Guarantor) shall become the beneficial owner as defined in Rule 13d-3 under
the Exchange Act, of shares representing more than 50% of the aggregate voting
power represented by the Capital Stock of Guarantor or Lessee; or (iv) the
replacement of the majority of the Board of Directors of Guarantor or Lessee
over a two-year period from the directors who constituted the Board of Directors
of Guarantor or Lessee, as the case may be, at the beginning of such period, and
such replacement shall not have been approved by a vote of at least a majority
of the Board of Directors of Guarantor or Lessee, as the case may be, then still
in office who either were members of such Board of Directors at the beginning of
such period or whose election as a member of such Board of Directors was
previously so approved.
"CHP" means Castle Harlan Partners III, L.P., a private
investment fund managed by Castle Harlan, Inc., a Delaware corporation.
"Closing Date" means February 9, 2001.
"Code" means the Internal Revenue Code of 1986, as the same
may be amended from time to time, and the regulations promulgated and rulings
issued thereunder. Section references to the Code are to the Code, as in effect
at the date the Participation Agreement and any subsequent provisions of the
Code, amendment thereof, supplement thereto or substituted therefor.
"Collateral" means the Lessee Collateral and Lessor
Collateral.
"Collateral Agent" means Bankers Trust Company.
-6-
"Collateral Agent Lien" means any Lien over the Lessor
Collateral granted to Collateral Agent under the Operative Documents.
"Commitment Period" means, from time to time, the period
commencing on the date of any Participation Agreement Supplement and ending on
the Commitment Termination Date set forth on such Participation Agreement
Supplement.
"Commitment Termination Date" means for Lessor and each
Tranche B Lender, from time to time, the later of the Closing Date and the date
identified as such on the most recent Participation Agreement Supplement to
which such Person is a party.
"Common Stock" of any Person means any and all shares,
interests or other participations in, and other equivalents (however designated
and whether voting or non-voting) of such Person's common stock, whether
outstanding on the Issue Date or issued after the Issue Date, and includes,
without limitation, all series and classes of such common stock.
"Consolidated Current Assets" shall mean all assets of Lessee
and its Consolidated Subsidiaries which under GAAP would be classified as
current assets.
"Consolidated Current Liabilities" shall mean all liabilities
of Lessee and its Consolidated Subsidiaries which under GAAP would be classified
as current liabilities but excluding the current maturities on long-term Debt.
"Consolidated EBITDA" means, with respect to any Person, for
any period, the sum (without duplication) of (i) Consolidated Net Income and
(ii) to the extent Consolidated Net Income has been reduced thereby, (A) all
income taxes of such Person and its Restricted Subsidiaries paid or accrued in
accordance with GAAP for such period (other than income taxes attributable to
extraordinary or nonrecurring gains or losses or taxes attributable to sales or
dispositions outside the ordinary course of business), (B) Consolidated Interest
Expense, (C) Consolidated Rental Expense, (D) Consolidated Non-cash Charges less
any non-cash items increasing Consolidated Net Income for such period, all as
determined on a consolidated basis for such Person and its Restricted
Subsidiaries in accordance with GAAP and (E) any expense of Lessee or its
Restricted Subsidiaries incurred in connection with the overhaul of equipment
that can be reclassified as a capital expenditure in accordance with GAAP.
"Consolidated Fixed Charge Coverage Ratio" means, with respect
to any Person, the ratio of Consolidated EBITDA of such Person during the four
full fiscal quarters (the "Four Quarter Period") ending on or prior to the date
of the transaction giving rise to the need to calculate the Consolidated Fixed
Charge Coverage Ratio (the "Transaction Date") to Consolidated Fixed Charges of
such Person for the Four Quarter Period. In addition to and without limitation
of the foregoing, for purposes of this definition, "Consolidated EBITDA" and
"Consolidated Fixed Charges" shall be calculated after giving effect on a pro
forma basis for the period of such calculation to (i) the incurrence or
repayment of any Indebtedness of such Person or any of its Restricted
Subsidiaries (and the application of the proceeds thereof) giving rise to the
need to make such calculation and any incurrence or repayment of other
Indebtedness (and the application of the proceeds thereof), other than the
incurrence or repayment of Indebtedness
-7-
in the ordinary course of business for working capital purposes pursuant to
working capital facilities, occurring during the Four Quarter Period or at any
time subsequent to the last day of the Four Quarter Period and on or prior to
the Transaction Date, as if such incurrence or repayment, as the case may be
(and the application of the proceeds thereof), occurred on the first day of the
Four Quarter Period and (ii) any Asset Sales or Asset Acquisitions (including,
without limitation, any Asset Acquisition giving rise to the need to make such
calculation as a result of such Person or one of its Restricted Subsidiaries
(including any Person who becomes a Restricted Subsidiary as a result of the
Asset Acquisition) incurring, assuming or otherwise being liable for Acquired
Indebtedness and also including any Consolidated EBITDA (including any pro forma
expense and cost reductions calculated on a basis consistent with Regulation S-X
under the Securities Act) attributable to the assets which are the subject of
the Asset Acquisition or Asset Sale during the Four Quarter Period) occurring
during the Four Quarter Period or at any time subsequent to the last day of the
Four Quarter Period and on or prior to the Transaction Date, as if such Asset
Sale or Asset Acquisition (including the incurrence, assumption or liability for
any such Acquired Indebtedness) occurred on the first day of the Four Quarter
Period. Furthermore, in calculating "Consolidated Fixed Charges" for purposes of
determining the denominator (but not the numerator) of this "Consolidated Fixed
Charge Coverage Ratio," (1) interest on outstanding Indebtedness determined on a
fluctuating basis as of the Transaction Date and which will continue to be so
determined thereafter shall be deemed to have accrued at a fixed rate per annum
equal to the rate of interest on such Indebtedness in effect on the Transaction
Date; and (2) notwithstanding clause (1) above, interest on Indebtedness
determined on a fluctuating basis, to the extent such interest is covered by
agreements relating to Interest Swap Obligations, shall be deemed to accrue at
the rate per annum resulting after giving effect to the operation of such
agreements.
"Consolidated Fixed Charges" means, with respect to any Person
for any period, the sum, without duplication, of (i) Consolidated Interest
Expense and (ii) Consolidated Rental Expense, plus (iii) the product of (x) the
amount of all dividend payments on any series of Preferred Stock of such Person
(other than dividends paid in Qualified Capital Stock) paid, accrued or
scheduled to be paid or accrued during such period times (y) a fraction, the
numerator of which is one and the denominator of which is one minus the then
current effective consolidated federal, state and local tax rate of such Person,
expressed as a decimal.
"Consolidated Interest Expense" means, with respect to any
Person for any period, the sum of, without duplication: (i) the aggregate of the
interest expense of such Person and its Restricted Subsidiaries for such period
determined on a consolidated basis in accordance with GAAP, including without
limitation, (a) any amortization of debt discount and amortization of deferred
financing costs, (b) the net costs under Interest Swap Obligations and Currency
Agreements, (c) all capitalized interest and (d) the interest portion of any
deferred payment obligation; (ii) the interest component of Capitalized Lease
Obligations paid, accrued and/or scheduled to be paid or accrued by such Person
and its Restricted Subsidiaries during such period as determined on a
consolidated basis in accordance with GAAP; and (iii) fees and charges related
to letters of credit, bankers acceptances and similar transactions; excluding,
however, (1) any amount of such interest expense of any Restricted Subsidiary if
the net income of such Restricted Subsidiary is excluded in the calculation of
Consolidated Net Income pursuant to clause (d) of the definition thereof (but
only in the same proportion as the net income of such
-8-
Restricted Subsidiary is excluded from the calculation of Consolidated Net
Income pursuant to clause (d) of the definition thereof) and (2) any non-cash
amortization or write-off of fees and expenses incurred in connection with
financing arrangements for the Merger.
"Consolidated Net Income" means, with respect to any Person,
for any period, the aggregate net income (or loss) of such Person and its
Restricted Subsidiaries for such period on a consolidated basis, determined in
accordance with GAAP; provided that there shall be excluded therefrom (without
duplication) (a) after-tax gains or losses from Asset Sales, (b) after-tax items
classified as extraordinary or nonrecurring gains or losses, (c) the net income
or loss of any Person acquired in a "pooling of interests" transaction accrued
prior to the date it becomes a Restricted Subsidiary of the referent Person or
is merged or consolidated with the referent Person or any Restricted Subsidiary
of the referent Person, (d) the net income (but not loss) of any Restricted
Subsidiary of the referent Person to the extent that the declaration of
dividends or similar distributions by that Restricted Subsidiary of that income
is restricted by a contract, operation of law or otherwise, except for any
dividends or distributions actually paid by such Restricted Subsidiary to the
referent Person, (e) the net income but not loss of any Person, other than a
Restricted Subsidiary of the referent Person, except to the extent of cash
dividends or distributions paid to the referent Person or to a Wholly Owned
Restricted Subsidiary of the referent Person by such Person, (f) income or loss
attributable to discontinued operations (including, without limitation,
operations disposed of during such period whether or not such operations were
classified as discontinued) and (g) the cumulative effect of a change in
accounting principles.
"Consolidated Net Income (Tranche B)" means with respect to
Lessee and its Consolidated Subsidiaries, for any period, the aggregate of the
net income (or loss) of Lessee and its Consolidated Subsidiaries after
allowances for taxes for such period, determined on a consolidated basis in
accordance with GAAP; provided that there shall be excluded from such net income
(to the extent otherwise included therein) the following: (i) the net income of
any Person in which Lessee or any Consolidated Subsidiary has an interest (which
interest does not cause the net income of such other Person to be consolidated
with the net income of Lessee and its Consolidated Subsidiaries in accordance
with GAAP), except to the extent of the amount of dividends or distributions
actually paid in such period by such other Person to Lessee or to a Consolidated
Subsidiary, as the case may be; (ii) the net income (but not loss) of any
Consolidated Subsidiary to the extent that the declaration or payment of
dividends or similar distributions or transfers or loans by that Consolidated
Subsidiary is not at the time permitted by operation of the terms of its charter
or any agreement, instrument or Governmental Requirement applicable to such
Consolidated Subsidiary, or is otherwise restricted or prohibited in each case
determined in accordance with GAAP; (iii) the net income (or loss) of any Person
acquired in a pooling-of-interests transaction for any period prior to the date
of such transaction; (iv) any extraordinary gains or losses, including gains or
losses attributable to Property sales not in the ordinary course of business;
and (v) the cumulative effect of a change in accounting principles and any gains
or losses attributable to writeups or write downs of assets.
"Consolidated Net Worth" of any Person means the consolidated
stockholders' equity of such Person, determined on a consolidated basis in
accordance with GAAP, less (without duplication) amounts attributable to
Disqualified Capital Stock of such Person.
-9-
"Consolidated Non-Cash Charges" means, with respect to any
Person, for any period, the aggregate depreciation, amortization and other
non-cash expenses of such Person and its Restricted Subsidiaries reducing
Consolidated Net Income of such Person and its Restricted Subsidiaries for such
period, determined on a consolidated basis in accordance with GAAP (excluding
any such charges which require an accrual of or a reserve for cash charges for
any future period).
"Consolidated Rental Expense" means, with respect to any
Person, for any period, the aggregate of the rental expense of such Person and
its Restricted Subsidiaries related to operating lease facilities of such Person
and its Restricted Subsidiaries for such period, determined on a consolidated
basis.
"Consolidated Subsidiaries" means each Subsidiary of Lessee
(whether now or hereafter created or acquired) the financial statements of which
shall be (or should have been) consolidated with the financial statements of
Lessee in accordance with GAAP.
"Consolidated Total Assets" of any Person means such Person's
total consolidated assets calculated in accordance with GAAP.
"Contingent Obligation" means, as to any Person, any
obligation of such Person guaranteeing or intended to guarantee any
Indebtedness, leases, dividends or other obligations ("primary obligations") of
any other Person (the "primary obligor") in any manner, whether directly or
indirectly, including, without limitation, any obligation of such Person,
whether or not contingent, (a) to purchase any such primary obligation or any
property constituting direct or indirect security therefor, (b) to advance or
supply funds (i) for the purchase or payment of any such primary obligation or
(ii) to maintain working capital or equity capital of the primary obligor or
otherwise to maintain the net worth or solvency of the primary obligor, (c) to
purchase property, securities or services primarily for the purpose of assuring
the owner of any such primary obligation of the ability of the primary obligor
to make payment of such primary obligation or (d) otherwise to assure or hold
harmless the holder of such primary obligation against loss in respect thereof;
provided, however, that the term Contingent Obligation shall not include
endorsements of instruments for deposit or collection in the ordinary course of
business. The amount of any Contingent Obligation shall be deemed to be an
amount equal to the stated or determinable amount of the primary obligation in
respect of which such Contingent Obligation is made or, if not stated or
determinable, the maximum reasonably anticipated liability in respect thereof
(assuming such Person is required to perform thereunder) as determined by such
Person in good faith.
"Continuing Directors" means the directors of Guarantor on the
Closing Date (after giving effect to the Merger) and each other director of
Guarantor if such other director's nomination or election to the Board of
Directors of Guarantor is recommended by a majority of the then Continuing
Directors.
"Co-Obligor" means BRL Universal Equipment Corp.
-10-
"Credit Agreement" means one or more credit agreements,
including without limitation, the Credit Agreement dated as of the Issue Date,
among Lessee, the lenders party thereto in their capacities as lenders
thereunder and, First Union National Bank, as agent, and any Foreign Credit
Facility together with the documents related thereto (including, without
limitation, any guarantee agreements and security documents), in each case as
such agreements may be amended (including any amendment and restatement
thereof), supplemented or otherwise modified from time to time, including any
agreement extending the maturity of, refinancing, replacing or otherwise
restructuring (including increasing the amount of available borrowings
thereunder or adding Restricted Subsidiaries of Lessee as additional borrowers
or guarantors thereunder) all or any portion of the Indebtedness under such
agreement or any successor or replacement agreement and whether by the same or
any other agent, lender or group of lenders.
"Curing Party" has the meaning set forth in Section 6.1(a) of
the Participation Agreement.
"Currency Agreement" means any foreign exchange contract,
currency swap agreement or other similar agreement or arrangement designed to
protect Lessee or any Restricted Subsidiary of Lessee against fluctuations in
currency values.
"Date of Manufacture" with respect to any Item of Equipment,
means the date the manufacturer or vendor thereof sold as new the oldest of the
(i) compressor, (ii) natural gas driver and (iii) air cooler installed on such
Item of Equipment.
"Date of Overhaul" with respect to any Item of Equipment,
means the date Lessee or its designee completes a complete overhaul of such Item
of Equipment.
"Debt" shall mean, for any Person the sum of the following
(without duplication): (i) all obligations of such Person for borrowed money or
evidenced by bonds, debentures, notes or other similar instruments (including
principal, interest, fees and charges); (ii) all obligations of such Person
(whether contingent or otherwise) in respect of bankers' acceptances, letters of
credit, surety or other bonds and similar instruments; (iii) all obligations of
such Person to pay the deferred purchase price of Property or services (other
than for borrowed money); (iv) all Capital Lease Obligations in respect of which
such Person is liable (whether contingent or otherwise); (v) all Operating
Equipment Lease Obligations which require such Person or its Affiliate (Tranche
B) to make payments over the term of such lease; (vi) all Debt (as described in
the other clauses of this definition) and other obligations of others secured by
a Lien on any asset of such Person, whether or not such Debt is assumed by such
Person; (vii) all Debt (as described in the other clauses of this definition)
and other obligations of others guaranteed by such Person or in which such
Person otherwise assures a creditor against loss of the debtor or obligations of
others; (viii) all obligations or undertakings of such Person to maintain or
cause to be maintained the financial position or covenants of others or to
purchase the Debt or Property of others; (ix) obligations to deliver goods or
services in consideration of advance payments; (x) obligations to pay for goods
or services whether or not such goods or services are actually received or
utilized by such Person; (xi) any capital stock of such Person in which such
Person has a mandatory obligation to redeem such stock; (xii) any Debt of a
Special Entity for which such Person is liable
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either by agreement or because of a Governmental Requirement; and (xiv) all net
obligations of such Person under Hedging Agreements.
"Deficiency" has the meaning set forth in Section 29.1 of the
Lease Agreement.
"Disqualified Capital Stock" means that portion of any
Person's Capital Stock which, by its terms (or by the terms of any security into
which it is convertible or for which it is exchangeable), or upon the happening
of any event, matures or is mandatorily redeemable, pursuant to a sinking fund
obligation or otherwise, or is redeemable at the sole option of the holder
thereof on or prior to the final maturity date of the Tranche A Notes, provided
that any Capital Stock that would not constitute Disqualified Capital Stock but
for provisions thereof giving holders thereof the right to require such Person
to repurchase or redeem such Capital Stock upon the occurrence of an "asset
sale" or "change of control" occurring prior to the stated maturity of the
Tranche A Notes shall not constitute Disqualified Capital Stock if the "asset
sale" or "change of control" provisions applicable to such Capital Stock are no
more favorable to the holders of such Capital Stock than the provisions
contained Section 9.2(c) and 9.2(i) of the Participation Agreement and such
Capital Stock specifically provides that such Person will not repurchase or
redeem any such stock pursuant to such provision prior to Lessor's repurchase of
Equipment from Lessee as required to be repurchased pursuant to such covenants.
"Dollar" means freely transferable, lawful money of the United
States.
"Domestic Subsidiary" means each Subsidiary of Lessee which is
not a Foreign Subsidiary.
"Early Purchase Option" means the Lessee's purchase rights
under Section 28.4.1 and 28.4.2 of the Lease Agreement.
"EBITDAR" shall mean, for any period, the sum of Consolidated
Net Income (Tranche B) for such period plus the following expenses or charges to
the extent deducted from Consolidated Net Income (Tranche B) in such period:
Total Interest Expense, taxes, depreciation, amortization and rental expense
excluding non-recurring charges. EBITDAR will be:
(a) adjusted on a pro forma basis (reasonably acceptable to
Administrative Agent) for future acquisitions and divestitures including
projected synergies;
(b) calculated utilizing annualized results for the period
from and including the Closing Date up to but excluding the applicable quarterly
determination date; and
(c) from and after April 1, 2002, and at all times thereafter,
calculated on a rolling four-quarter basis.
"Eligible Transferee" means and includes a commercial bank,
financial institution or other "accredited investor" (as defined in Regulation D
of the Securities Act) other than any such Person that is directly involved in a
Permitted Business.
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"Environmental Claims" means any and all administrative,
regulatory or judicial actions, suits, demands, demand letters, directives,
claims, liens, notices of noncompliance or violation, investigations or
proceedings relating in any way to any Environmental Law or any permit issued,
or any approval given, under any such Environmental Law (hereafter, "Claims"),
including, without limitation, (i) any and all Claims by governmental or
regulatory authorities for enforcement, cleanup, removal, response, remedial or
other actions or damages pursuant to any applicable Environmental Law, and (ii)
any and all Claims by any third party seeking damages, contribution,
indemnification, cost recovery, compensation or injunctive relief in connection
with alleged injury or threat of injury to health, safety or the environment due
to the presence of Hazardous Materials.
"Environmental Law" means any Federal, state, foreign or local
statute, law, rule, regulation, ordinance, code, guideline, written policy and
rule of common law now or hereafter in effect and in each case as amended, and
any judicial or administrative interpretation thereof, including any judicial or
administrative order, consent decree or judgment, relating to the environment,
employee health and safety or Hazardous Materials, including, without
limitation, CERCLA; RCRA; the Federal Water Pollution Control Act, 33 U.S.C.
Section 1251 et seq.; the Toxic Substances Control Act, 15 U.S.C. Section 2601
et seq.; the Clean Air Act, 42 U.S.C. Section 7401 et seq.; the Safe Drinking
Water Act, 42 U.S.C. Section 3803 et seq.; the Oil Pollution Act of 1990, 33
U.S.C. Section 2701 et seq.; the Emergency Planning and the Community
Right-to-Know Act of 1986, 42 U.S.C. Section 11001 et seq.; the Hazardous
Material Transportation Act, 49 U.S.C. Section 1801 et seq.; the Occupational
Safety and Health Act, 29 U.S.C. Section 651 et seq.; and any state and local or
foreign counterparts or equivalents, in each case as amended from time to time.
"Equipment" means the equipment described on the Schedules of
Equipment attached to the Lease Supplements and all related appliances, parts,
accessories, appurtenances, accessions, additions, improvements, replacements
and other equipment or components of any nature from time to time incorporated
or installed therein.
"Equity Administrative Agent" means Deutsche Bank AG, New
York Branch.
"Equity Certificate" has the meaning set forth in Section
17.1.3 of the Limited Partnership Agreement.
"Equity Commitment" means for each Limited Partner the Dollar
amount as of the most recent date set forth in Exhibit B to the Limited
Partnership Agreement below the term "Equity Commitment".
"Equity Component" for each Item of Equipment, means the
dollar amount of the Acquisition Cost financed by Limited Partners on the
Funding Date therefor, which amount shall be equal to 3.06352459% of such
Acquisition Cost.
"Equity Contribution" means the equity contribution made by
each Equity Participant to Lessor on any Funding Date, the aggregate of such
contributions to be equal to 3.06352459% of such Acquisition Cost of all Items
of Equipment purchased by Lessor on such Funding Date.
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"Equity Margin" means 5.25% (525 basis points).
"Equity Offering" means an underwritten public offering or
private placement of Qualified Capital Stock of Lessee or Guarantor, subsequent
to the Closing Date.
"Equity Redemption Target" has the meaning set forth in
Section 28.4.3 of the Lease Agreement.
"Equity Yield" means the amounts accrued at the Applicable
Equity Rate on the outstanding balance of any Equity Contribution.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended, and the regulations promulgated thereunder. Section references
to ERISA are to ERISA, as in effect at the date of the Participation Agreement
and any subsequent provisions of ERISA, amendment thereof, supplemented thereto
or substituted therefor.
"ERISA Affiliate" shall mean each trade or business (whether
or not incorporated) which together with Lessee or any Subsidiary would be
deemed to be a "single employer" within the meaning of section 4001(b)(1) of
ERISA or subsections (b), (c), (m) or (o) of section 414 of the Code.
"ERISA Event" shall mean (i) a "Reportable Event" described in
Section 4043 of ERISA and the regulations issued thereunder, (ii) the withdrawal
of Lessee, any Subsidiary or any ERISA Affiliate from a Plan during a plan year
in which it was a "substantial employer" as defined in Section 4001(a)(2) of
ERISA, (iii) the filing of a notice of intent to terminate a Plan or the
treatment of a Plan amendment as a termination under Section 4041 of ERISA, (iv)
the institution of proceedings to terminate a Plan by the PBGC or (v) any other
event or condition which might constitute grounds under Section 4042 of ERISA
for the termination of, or the appointment of a trustee to administer, any Plan.
"Eurodollar" means U.S. currency held in banks outside the
U.S. and used for settling international transactions.
"Event of Loss" with respect to any Item of Equipment means
(i) the loss of such Item of Equipment or any substantial part thereof, or (ii)
the loss of the use of such Item of Equipment due to theft or disappearance for
a period in excess of 45 days during the Term, or existing at the expiration or
earlier termination of the Term, or (iii) the destruction, damage beyond repair,
or rendition of such Item of Equipment or any substantial part thereof
permanently unfit for normal use for any reason whatsoever, or (iv) the
condemnation, confiscation, seizure, or requisition of use or title to such Item
of Equipment or any substantial part thereof by any Governmental Entity under
the power of eminent domain or otherwise beyond the earlier of fifteen (15) days
and the end of the Term.
"Excepted Liens" shall mean: (i) Liens for taxes, assessments
or other governmental charges or levies not yet due or which are being contested
in good faith by appropriate action and for which adequate reserves have been
maintained; (ii) Liens in connection with workmen's compensation, unemployment
insurance or other social security, old
-14-
age pension or public liability obligations not yet due or which are being
contested in good faith by appropriate action and for which adequate reserves
have been maintained in accordance with GAAP; (iii) operators', vendors',
carriers', warehousemen's, repairmen's, mechanics', workmen's, materialmen's,
construction or other like Liens arising by operation of law in the ordinary
course of business or statutory landlord's liens, each of which is in respect of
obligations that have not been outstanding more than 90 days or which are being
contested in good faith by appropriate proceedings and for which adequate
reserves have been maintained in accordance with GAAP; (iv) any Liens reserved
in leases or farmout agreements for rent or royalties and for compliance with
the terms of the farmout agreements or leases in the case of leasehold estates,
to the extent that any such Lien referred to in this clause does not materially
impair the use of the Property covered by such Lien for the purposes for which
such Property is held by Lessee or any Subsidiary or materially impair the value
of such Property subject thereto; (v) encumbrances (other than to secure the
payment of borrowed money or the deferred purchase price of Property or
services), easements, restrictions, servitudes, permits, conditions, covenants,
exceptions or reservations in any rights of way or other Property of Lessee or
any Subsidiary for the purpose of roads, pipelines, transmission lines,
transportation lines, distribution lines for the removal of gas, oil, coal or
other minerals or timber, and other like purposes, or for the joint or common
use of real estate, rights of way, facilities and equipment, and defects,
irregularities, zoning restrictions and deficiencies in title of any rights of
way or other Property which in the aggregate do not materially impair the use of
such rights of way or other Property for the purposes of which such rights of
way and other Property are held by Lessee or any Subsidiary or materially impair
the value of such Property subject thereto; (vi) deposits of cash or securities
to secure the performance of bids, trade contracts, leases, statutory
obligations and other obligations of a like nature incurred in the ordinary
course of business; and (vii) Liens permitted by the Security Instruments;
(viii) Liens arising out of fully bonded, judgment liens; and (ix) liens for
Lessor's title to property leased under Capital Leases.
"Excepted Payments" means (i) indemnity payments paid or
payable in favor of Lessor under the Operative Documents, (ii) proceeds of
public liability insurance (or government indemnities in lieu thereof) payable
to Lessor either pursuant to the Lease Agreement or the Participation Agreement
(which shall include proceeds of any self-insurance by Lessee) or maintained by
Lessee or Lessor and not required to be maintained under the Lease Agreement,
(iii) costs or expenses paid or payable by Lessee to, or for the benefit of
Lessor, (iv) where any amount payable to Lessor is expressed to be payable on an
After-Tax Basis, the increment to the underlying payment obligation arising by
virtue of the operation of the definition of "After-Tax Basis," (v) any payments
in respect of interest to the extent attributable to payments referred to in
clauses (i) through (iv) above and otherwise required to be paid thereon, and
(vi) the proceeds of enforcement of any right to receive the proceeds of any
amount referred to in clauses (i) through (v) above; provided, however, Excepted
Payments shall not include any Lease Payment or part thereof.
"Excepted Rights" means all rights of Lessor to receive, claim
or compromise Excepted Payments.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, or any successor statute or statutes thereto.
-15-
"Excluded Expenses" means fees and disbursements of counsel to
any party to the Operative Documents other than Lessor, Lessee, Lessor General
Partner, Guarantor or Indenture Trustee in connection with (a) the negotiation,
preparation, execution and delivery of the First Amended and Restated
Participation Agreement dated as of October __, 2001 or the other Operative
Documents dated the date thereof or executed in connection therewith or (b) the
issuance of any Tranche A Notes or the making of any Tranche B Loans; provided
however, "Excluded Expenses" shall not include fees or disbursements of counsel
in connection with the enforcement or collection of any Tranche A Notes or
Tranche B Loans or any amendments to the Operative Documents requested by
Lessor, Lessee, Lessor General Partner or Guarantor other than those amendments
described in clause (a).
"Fair Market Value" means, with respect to a calculation of
Fair Market Value under Section 9.2 of the Participation Agreement (and the
definitions related thereto) for any asset or property, the price which could be
negotiated in an arm's-length, free market transaction, for cash, between a
willing seller and a willing and able buyer, neither of whom is under undue
pressure or compulsion to complete the transaction which amount shall be
determined by the Board of Directors of Lessee acting in good faith and shall be
evidenced by a Board Resolution of the Board of Directors of Lessee delivered to
Indenture Trustee.
"Federal Funds Rate" means, for any day, the rate per annum
(rounded upwards, if necessary, to the nearest 1/100 of one percent) equal to
the weighted average of the rates on overnight Federal funds transactions with
members of the Federal Reserve System arranged by Federal funds brokers on such
day, as published by the Federal Reserve Bank of New York on the Business Day
next succeeding such day, provided that (i) if the day for which such rate is to
be determined is not a Business Day, the Federal Funds Rate for such day shall
be such rate on such transactions on the next preceding Business Day as so
published on the next succeeding Business Day, and (ii) if such rate is not so
published for any day which is a Business Day, the average of the quotations at
approximately 11:00 a.m. (New York time) for such day on such transactions
received by Agent from three federal funds brokers of recognized standing
selected by Agent.
"Financial Statements" shall mean the financial statement or
statements of Guarantor and its Consolidated Subsidiaries described or referred
to in Section 2.1(u) of the Participation Agreement.
"Financing Statements" means the Lessee Financing Statements
and the Lessor Financing Statements.
"Floating Lease Payment" means the Lease Payment payable
during the Term pursuant to Section 7.1.2 of the Lease Agreement.
"Floating Payment Date" means, with respect to any Item of
Equipment (i) in the case of any Item of Equipment the last day of each Floating
Payment Period or Tranche B Loan or Equity Contribution to finance such, as
elected by Lessee in accordance with Section 5 of the Participation Agreement,
in the case of any Tranche B Loan, as elected by Lessor in accordance with
Section 2.3.3 of the Tranche B Loan Agreement and in the case of any Equity
Contribution,
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as elected by Lessor in accordance with Section 5.7 of the Limited Partnership
Agreement and (ii) the Termination Date therefor; provided, however, if Lessee
and Lessor elect a Floating Payment Period based on six-month LIBOR, the
calendar date in the third calendar month of such Floating Payment Period
corresponding to the first day of such period shall also be a Floating Payment
Date; provided further if such day is not a LIBOR Banking Day, then such
Floating Payment Date therefor shall be the next LIBOR Banking Day, provided
further, if such next LIBOR Banking Day would be in the next calendar month,
then such Floating Payment Date shall be the immediately preceding LIBOR Banking
Day.
"Floating Payment Period" means for each Item of Equipment
means the period commencing on the Funding Date for such Item of Equipment and
ending on the next Floating Payment Date for all other Items of Equipment and
thereafter each period elected by Lessee in accordance with Section 5 of the
Participation Agreement, for each Tranche B Loan, each period selected by Lessor
in accordance with Section 2.3.3 of the Tranche B Loan Agreement and for each
Equity Contribution, each period selected by Lessor in accordance with Section
5.7 of the Limited Partnership Agreement.
"Foreign Credit Facility" means any credit facility of a
Foreign Restricted Subsidiary.
"Foreign Credit Facility (Tranche B)" means any credit
facility of any Subsidiary of Lessee (i) whose jurisdiction of incorporation is
other than the United States of America, any state thereof, the District of
Columbia or any possession thereof and (ii) which derives substantially all of
it income from jurisdictions other than the United States of America.
"Foreign Pension Plan" means any plan, fund (including,
without limitation, any superannuation fund) or other similar program
established or maintained outside the United States of America by Guarantor or
any one or more of its Subsidiaries primarily for the benefit of employees of
Guarantor or such Subsidiaries residing outside the United States of America,
which plan, fund or other similar program provides, or results in, retirement
income, a deferral of income in contemplation of retirement or payments to be
made upon termination of employment, and which plan is not subject to ERISA or
the Code.
"Foreign Restricted Subsidiary" means any Restricted
Subsidiary of Lessee (i) whose jurisdiction of incorporation is other than the
United States of America, any state thereof, the District of Columbia or any
possession thereof and (ii) which derives substantially all of its income from
jurisdictions other than the United States of America.
"Foreign Subsidiary" means each Subsidiary of Lessee that is
incorporated under the laws of any jurisdiction other than the United States of
America, any State thereof, or any territory thereof.
"Funding Date" means each date on which Tranche A Notes are
issued and Tranche B Loans are made in accordance with the Operative Documents,
which date shall be a LIBOR Banking Day.
-17-
"Funding Escrow Agreement" means for each Funding Date the
Funding Escrow Agreement substantially in the form attached to the Participation
Agreement as Exhibit G, to be executed by Lessee, Lessor, Indenture Trustee,
purchasers or underwriters of the Tranche A Notes, Tranche B Lenders making
Tranche B Loans on such Funding Date, Administrative Agent and Collateral Agent.
"Funding Notice" means a Funding Notice and Instructions Re
Funds On Funding Date, substantially in the form of Exhibit C to the
Participation Agreement.
"GAAP" means generally accepted accounting principles set
forth in the opinions and pronouncements of the Accounting Principles Board of
the American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as may be approved by a significant segment of
the accounting profession of the United States, which are in effect as of the
Closing Date, provided, however, that all reports and other financial
information provided by Lessee to Tranche A Noteholders or Indenture Trustee
shall be prepared in accordance with GAAP as in effect on the date of such
report or other financial information.
"Governmental Entity" means any Federal, state, municipal or
other governmental department, commission, board, bureau, agency, central bank
or instrumentality or any court, in each case whether of the United States or
any foreign country.
"Governmental Requirement" shall mean any law, statute, code,
ordinance, order, determination, rule, regulation, judgment, decree, injunction,
franchise, permit, certificate, license, authorization or other directive or
requirement (whether or not having the force of law), including, without
limitation, Environmental Laws, energy regulations and occupational, safety and
health standards or controls, of any Governmental Entity.
"GSI Acquisition" means the acquisition of Gas Services
International Ltd. and related entities including International Pumps and
Compressory Pts. Ltd. for consideration of approximately $21,000,000.
"Guaranteed Obligations" has the meaning set forth in Section
8 of the Participation Agreement.
"Guarantor" means Universal Compression Holdings, Inc., a
Delaware corporation.
"Guaranty Party" has the meaning set forth in Section 8 of the
Participation Agreement.
"Hazardous Materials" means (i) any petroleum or petroleum
products, radioactive materials, asbestos in any form that is or could become
friable, urea formaldehyde foam insulation, transformers or other equipment that
contain dielectric fluid containing levels of polychlorinated biphenyls, and
radon gas; (ii) any chemicals, materials or substances defined as or included in
the definition of "hazardous substances," "hazardous waste," "hazardous
materials," "extremely hazardous substances," "restricted hazardous waste,"
"toxic substances,"
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"toxic pollutants," "contaminants," or "pollutants," or words of similar import,
under any applicable Environmental Law; and (iii) any other chemical, material
or substance, the Release of which is prohibited, limited or regulated by any
governmental authority.
"Hedging Agreements" shall mean any commodity, interest rate
or currency swap, cap, floor, collar, forward agreement or other exchange or
protection agreements or any option with respect to any such transaction.
"Indebtedness" means with respect to any Person, without
duplication, (i) all Obligations of such Person for borrowed money, (ii) all
Obligations of such Person evidenced by bonds, debentures, notes or other
similar instruments, (iii) (A) all Capitalized Lease Obligations of such Person
and (B) all Obligations in respect of any Operating Lease Facility, (iv) all
Obligations of such Person issued or assumed as the deferred purchase price of
property (including any purchase price adjustment(s) related to the acquisition
of Tidewater Compression), all conditional sale obligations and all Obligations
under any title retention agreement (but excluding trade accounts payable and
other accrued liabilities arising in the ordinary course of business that are
not overdue by 120 days or more or are being contested in good faith by
appropriate proceedings promptly instituted and diligently conducted), (v) all
Obligations of such Person for the reimbursement of any obligor on any letter of
credit, banker's acceptance or similar credit transaction, (vi) guarantees and
other contingent obligations in respect of Indebtedness of other Persons of the
type referred to in clauses (i) through (v) above and clause (viii) below to the
extent such Indebtedness is so guaranteed, (vii) all Obligations of any other
Person of the type referred to in clauses (i) through (vi) above which are
secured by any lien on any property or asset of such Person, the amount of such
Obligation being deemed to be the lesser of the fair market value of such
property or asset and the amount of the Obligation so secured, (viii) all
Obligations of such Person under Currency Agreements and Interest Swap
Obligations of such Person (other than effective hedging instruments designated
as such by such Person) and (ix) all Disqualified Capital Stock issued by such
Person with the amount of Indebtedness represented by such Disqualified Capital
Stock being equal to the greater of its voluntary or involuntary liquidation
preference and its maximum fixed repurchase price, but excluding accrued
dividends, if any. For purposes hereof, the "maximum fixed repurchase price" of
any Disqualified Capital Stock which does not have a fixed repurchase price
shall be calculated in accordance with the terms of such Disqualified Capital
Stock as if such Disqualified Capital Stock were purchased on any date on which
Indebtedness shall be required to be determined pursuant to the Indenture, and
if such price is based upon, or measured by, the fair market value of such
Disqualified Capital Stock, such fair market value shall be determined in good
faith by the Board of Directors of the issuer of such Disqualified Capital
Stock. The amount of Indebtedness of any Person at any date shall be the
outstanding balance at such date of all unconditional obligations as described
above and, with respect to contingent obligations, the maximum liability upon
the occurrence of the contingency giving rise to the obligation, provided that
(A) the amount outstanding at any time of any Indebtedness issued with original
issue discount is the original issue price of such indebtedness and (B)
"Indebtedness" shall not include any money borrowed and set aside, at the time
of the incurrence of related Indebtedness, to fund cash interest payments on
such related Indebtedness.
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"Indemnifying Party" has the meaning set forth in Section
12.11 of the Participation Agreement.
"Indenture" means the Indenture Agreement dated as of February
9, 2001 among Lessor, Co-Obligor and Indenture Trustee.
"Indenture Trustee" means The Bank of New York and any
successor thereto appointed in accordance with the terms of the Indenture.
"Interest Coverage Ratio" shall mean the ratio of (i) EBITDAR
for the applicable Testing Period to (ii) Total Interest Expense for the
applicable Testing Period.
"Initial Fair Market Value" with respect to any Item of
Equipment, means the amount identified as the fair market value of such Item on
the Appraisal delivered to Lessor in accordance with Section 3.1(o) of the
Participation Agreement.
"Initial Purchaser" means each Underwriter and each purchaser
party to a Note Purchase Agreement.
"Interest Rate Protection Agreement" means any interest rate
swap agreement, interest rate cap agreement, interest collar agreement, interest
rate hedging agreement or other similar agreement or arrangement.
"Interest Swap Obligations" means the obligations of any
Person pursuant to any arrangement with any other Person, whereby, directly or
indirectly, such Person is entitled to receive from time to time periodic
payments calculated by applying either a floating or a fixed rate of interest on
a stated notional amount in exchange for periodic payments made by such other
Person calculated by applying a fixed or a floating rate of interest on the same
notional amount and shall include, without limitation, interest rate swaps,
caps, floors, collars and similar agreements.
"Investment" means, with respect to any Person, any direct or
indirect loan or other extension of credit (including, without limitation, a
guarantee) or capital contribution to (by means of any transfer of cash or other
property to others or any payment for property or services for the account or
use of others), or any purchase or acquisition by such Person of any Capital
Stock, bonds, notes, debentures or other securities or evidences of Indebtedness
issued by, any Person. "Investment" shall exclude (i) extensions of trade credit
by Lessee and its Restricted Subsidiaries on commercially reasonable terms in
accordance with normal trade practices of Lessee or such Restricted Subsidiary,
as the case may be, and (ii) the acquisition of Capital Stock, securities or
other properties or assets by Lessee or any of its Restricted Subsidiaries for,
and to the extent of consideration consisting of Capital Stock of Lessee. For
the purposes of Section 9.2(b) of the Participation Agreement, (i) "Investment"
shall (A) include and be valued at the fair market value of the net assets of
any Restricted Subsidiary at the time that such Restricted Subsidiary is
designated an Unrestricted Subsidiary and (B) exclude the fair market value of
the net assets of any Unrestricted Subsidiary at the time that such Unrestricted
Subsidiary is designated a Restricted Subsidiary and (ii) the amount of any
Investment shall be
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the original cost of such Investment plus the cost of all additional Investments
by Lessee or any of its Restricted Subsidiaries, without any adjustments for
increases or decreases in value, or write-ups, write-downs or write-offs with
respect to such Investment, reduced by the payment of dividends or distributions
in connection with such Investment or any other amounts received in respect of
such Investment; provided that no such payment of dividends or distributions or
receipt of any such other amounts shall reduce the amount of any Investment if
such payment of dividends or distributions or receipt of any such amounts would
be included in Consolidated Net Income. If Lessee or any Restricted Subsidiary
of Lessee sells or otherwise disposes of any Common Stock of any direct or
indirect Restricted Subsidiary of Lessee such that, after giving effect to any
such sale or disposition, Lessee no longer owns, directly or indirectly, greater
than 50% of the Common Stock of such Restricted Subsidiary, Lessee shall be
deemed to have made an investment on the date of such sale equal to the fair
market value of the Common Stock of such Restricted Subsidiary not sold or
disposed of.
"Investment (Tranche B)" means with respect to any Person, any
direct or indirect loan or other extension of credit (including, without
limitation, a guarantee) or capital contribution to (by means of any transfer of
cash or other property to others or any payment for property or services for the
account or use of others), or any purchase or acquisition by such Person of any
Capital Stock, bonds, notes, debentures or other securities or evidences of
Revolver Indebtedness issued by, any Person. Investment shall exclude extensions
of trade credit by Lessee and its Subsidiaries on commercially reasonable terms
in accordance with normal trade practices of Lessee or such Subsidiary, as the
case may be.
"Issue Date" means February 9, 2001.
"Item of Equipment" or "Item" means any of the items of
Equipment separately identified on any Schedule of Equipment attached to a Lease
Supplement other than those Items purchased pursuant to Section 28 of the Lease
Agreement or substituted pursuant to Section 13 of the Lease Agreement.
"Lease Agreement" means the Equipment Lease Agreement dated as
of February 9, 2001 between Lessee and Lessor and each Lease Supplement.
"Lease Default" means any event, action or condition which
with notice or lapse of time or both would constitute a Lease Event of Default.
"Lease Event of Default" has the meaning set forth in Section
23 of the Lease Agreement.
"Lease Payment" means each Semi-Annual Lease Payment, Floating
Lease Payment, any Lease Premium, any Deficiency, any end of term rent
adjustment payable in accordance with Section 29.2 or 29.4 of the Lease
Agreement and any payments due under Sections 28.2 or 28.4 of the Lease
Agreement.
"Lease Period" for each Item of Equipment means each
Semi-Annual Payment Period and each Floating Payment Period therefor.
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"Lease Premium" means the Lease Payment payable on a Funding
Date pursuant to Section 7.1.3 of the Lease Agreement.
"Lease Supplement" means each Lease Supplement substantially
in the form attached to the Lease Agreement as Exhibit A, to be executed by
Lessor and Lessee on a Funding Date.
"Leasehold" of any Person means all the right, title and
interest of such Person as lessee or licensee in, to and under leases or
licenses of land, improvements and/or fixtures.
"Lessee" means Universal Compression, Inc., a Texas
corporation.
"Lessee Certificate" means a certificate by Lessee executed by
a Responsible Officer in the form of Exhibit B to the Participation Agreement.
"Lessee Collateral" has the meaning set forth in Section 9 of
the Lease Agreement.
"Lessee Financing Statement" means the financing statements
and any supplement or amendment thereto in form and substance reasonably
acceptable to Lessor and the Administrative Agent appropriately completed and
executed by Lessee for filing in each jurisdiction necessary or desirable (as
reasonably determined by Agent or Lessor) to perfect Lessor's interest in the
Lessee Collateral to the extent the Lease Agreement is a security agreement.
"Lessee Indemnified Person" means Lessor, Co-Obligor,
Indenture Trustee and each of their respective partners, shareholders, officers,
directors, contractors, employees, agents and servants.
"Lessee Maintenance Practices" means from time to time
Lessee's practices and policies with respect to the maintenance and servicing of
natural gas compressors owned, managed and leased by Lessee.
"Lessor" means BRL Universal Equipment 2001 A, L.P.
"Lessor Collateral" has the meaning set forth in Section 7.1
of the Participation Agreement.
"Lessor Financing Statements" means financing statements in
form and substance reasonably acceptable to the Administrative Agent and
appropriately completed and executed by Lessor for filing in each jurisdiction
necessary or desirable (as reasonably determined by the Administrative Agent) to
perfect a security interest in favor of the Collateral Agent in the Lessor
Collateral.
"Lessor General Partner" means BRL Universal Equipment
Management, Inc.
"Lessor Indemnified Person" means each of Indenture Trustee,
each Tranche A Noteholder, each Tranche B Lender, Administrative Agent and
Collateral Agent, and each of
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their respective Affiliates, officers, directors, employees, beneficiaries,
stockholders, agents and servants.
"Lessor Indemnity Agreement" means the Indemnity and Security
Agreement dated as of February 9, 2001 among Lessor, each Limited Partner and
Equity Administrative Agent.
"Lessor Lien" means any Lien on or against any Item of
Equipment, the Lease Agreement, or Lessor's interest therein arising as a result
of (i) any claim against Lessor not resulting from the transactions contemplated
by the Operative Documents, (ii) any act or omission of Lessor which is not
required or expressly permitted by the Operative Documents or is in violation of
any of the terms of the Operative Documents, (iii) any claim against Lessor with
respect to Taxes or obligations of such Person against which Lessee is not
required to indemnify such Person pursuant to the Participation Agreement or the
other Operative Documents or (iv) any claim against Lessor arising out of any
transfer by Lessor of all or any portion of the interest of such Person in any
Item or the Operative Documents other than the transfer of interest in or
possession of such Item by such Person pursuant to and in accordance with the
Operative Documents or pursuant to the exercise of any remedy set forth in the
Operative Documents.
"Lessor Margin Letter" means the letter agreement dated as of
February 9, 2001 between Lessee, Lessor and Administrative Agent regarding the
amount to be paid by Lessee under clause (iii) of Section 7.1.2 of the Lease
Agreement.
"Letters of Credit" shall mean the letters of credit issued
pursuant to Section 2.01(b) of the Revolver and all reimbursement obligations
pertaining to any such letters of credit, and "Letter of Credit" shall mean any
one of the Letters of Credit and the reimbursement obligations pertaining
thereto and shall include Offshore Currency Letters of Credit.
"Liability Insurance" has the meaning set forth in Section 20
of the Lease Agreement.
"LIBOR Banking Day" means any day other than a day on which
banking institutions in New York, New York or London, England are authorized by
law to close.
"LIBOR Rate" means (i) the offered quotation to first-class
banks in the New York interbank Eurodollar market by Bankers Trust Company for
Dollar deposits of amounts in immediately available funds comparable to the
outstanding principal amount of the Tranche B Loans with maturities comparable
to the applicable Floating Payment Period applicable for such Tranche B Loans
commencing two LIBOR Banking Days thereafter as of 10:00 A.M. (New York time) on
the date which is two LIBOR Banking Days prior to the commencement of such
Floating Payment Period, divided (and rounded off to the nearest 1/16 of 1%) by
(ii) a percentage equal to 100% minus the then stated maximum rate of all
reserve requirements (including, without limitation, any marginal, emergency,
supplemental, special or other reserves required by applicable law) applicable
to any member bank of the Federal Reserve System in respect of Eurocurrency
funding or liabilities as defined in Regulation D (or any
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successor category of liabilities under Regulation D) in the case of both clause
(i) and clause (ii) as determined by Administrative Agent.
"Lien" means any lien, mortgage, deed of trust, pledge,
security interest, charge or encumbrance of any kind (including any conditional
sale or other title retention agreement, any lease in the nature thereof and any
agreement to give any security interest).
"Limited Event of Default" has the meaning provided in Section
17.6 of the Lease Agreement.
"Limited Partners" means Deutsche Bank AG, New York Branch,
First Union National Bank and any Eligible Transferee that is an assignee
thereof and any other Eligible Transferees who from time to time become party to
the Limited Partnership Agreement as Limited Partners in accordance with the
terms of the Limited Partnership Agreement.
"Limited Partnership Agreement" means that certain Amended and
Restated Limited Partnership Agreement of the Lessor, dated as of February 9,
2001.
"Limited Partnership Agreement Supplement" means the
supplement substantially in the form attached to the Limited Partnership
Agreement as Exhibit D to be delivered in accordance with the terms thereof.
"Loan Default" means an event, which with the giving of notice
or lapse of time or both, would become a Loan Event of Default.
"Loan Event of Default" means a Tranche A Event of Default or
a Tranche B Event of Default.
"Loss, Damage and Destruction" has the meaning set forth in
Section 19 of the Lease Agreement.
"Losses" has the meaning provided in Section 10.1 of the
Participation Agreement.
"Majority Tranche A Noteholders" means the Tranche A
Noteholders holding a majority in aggregate principal amount of the Tranche A
Notes then outstanding (as determined in accordance with the terms of the
Indenture).
"Majority Tranche B Lenders" means the Tranche B Lenders
holding more than fifty percent (50%) of the outstanding principal amount of the
Tranche B Notes.
"Makewhole" means, with respect to a Tranche A Note, an amount
equal to the greater of (i) 1.0% of the outstanding principal amount of such
Tranche A Note and (ii) the excess of (a) the present value of the remaining
interest, premium and principal payments due on such Tranche A Note as if such
Tranche A Note were redeemed on February 15, 2005, computed using a discount
rate equal to the Treasury Rate on such date plus 0.50%, over (b) the
outstanding principal amount of such Tranche A Note.
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"Material Adverse Effect" means any material and adverse
effect on (i) the assets, liabilities, financial condition, business, operations
or affairs of Lessee, Guarantor and their Subsidiaries taken as a whole as
reflected in the Financial Statements or from the facts represented or warranted
in any Operative Documents and the Offering Memorandum prepared in connection
with the issuance of the Tranche A Notes as the case may be, or (ii) the ability
of Lessee, Guarantor and their Subsidiaries taken as a whole to carry out their
business as at the Closing Date or as proposed as of the Closing Date to be
conducted or meet their obligations under the Operative Documents, as the case
may be, on a timely basis.
"Material Adverse Effect (Tranche B)" means any material and
adverse effect on (i) the assets, liabilities, financial condition, business,
operations or affairs of Lessee, Guarantor and their Subsidiaries taken as a
whole as reflected in the Financial Statements or from the facts represented or
warranted in any Operative Documents and the Offering Memorandum prepared in
connection with the issuance of the Tranche A Notes, as the case may be, or (ii)
the ability of Lessee, Guarantor and their Subsidiaries taken as a whole to meet
their obligations under the Operative Documents, as the case may be, on a timely
basis.
"Maturity Date" for each Tranche A Note and each Tranche B
Loan means the earlier of (i) the last day of the Term for the Items of
Equipment financed with the proceeds of such Tranche A Note or Tranche B Loan
and (ii) the date on which such Tranche A Note or Tranche B Loan becomes due and
payable in accordance with the terms thereof.
"Maximum Acquisition Cost" for all Items of Equipment to be
acquired by Lessor and leased to Lessee under the Lease Agreement on any Funding
Date, means the amount identified as such on the Participation Agreement
Supplement for such Funding Date.
"Maximum Lessee Risk Amount" for any Item of Equipment on any
date of determination means an amount obtained by multiplying (i) the percentage
set forth as the "Maximum Lessee Risk Percentage" in the Lease Supplement for
such Item (which percentage will be the maximum amount permitted in order to
allow Lessee to get off balance sheet treatment for the Equipment (approximately
82%)) by (ii) the Acquisition Cost for such Item.
"Maximum Lessor Risk Amount" for any Item of Equipment on any
date of determination means an amount obtained by multiplying (i) the percentage
set forth as "Maximum Lessor Risk Percentage" in the Lease Supplement (which
percentage will be 100% less the Maximum Lessee Risk Amount) by (ii) the
Acquisition Cost for such Item.
"Merger" means the merger pursuant to that certain Agreement
and Plan of Merger dated as of October 23, 2000 among Enterra Compression
Company, WEUS Holding, Inc., Weatherford International, Inc., Guarantor and
Lessee, and related agreements.
"Moody's shall mean Moody's Investors Services, Inc.
"Multiemployer Plan" shall mean a Plan defined as such in
Section 3(37) or 4001(a)(3) of ERISA.
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"Net Cash Proceeds" means, with respect to any Asset Sale, the
proceeds in the form of cash or Cash Equivalents including payments in respect
of deferred payment obligations when received in the form of cash or Cash
Equivalents (other than the portion of any such deferred payment constituting
interest) received by Lessee or any of its Restricted Subsidiaries from such
Asset Sale net of (a) reasonable out-of-pocket expenses and fees relating to
such Asset Sale (including, without limitation, legal, accounting and investment
banking fees and sales or brokerage commissions), (b) net taxes paid or payable
as a result of such Asset Sale, (c) repayment of Indebtedness that is required
to be repaid in connection with such Asset Sale, (d) amounts required to be paid
to any Person (other than Lessee or any of its Restricted Subsidiaries) owning a
beneficial interest in the assets which are subject to such Asset Sale and (e)
appropriate amounts to be provided by Lessee or any Restricted Subsidiary, as
the case may be, as a reserve, in accordance with GAAP, against any liabilities
associated with such Asset Sale and retained by Lessee or any Restricted
Subsidiary, as the case may be, after such Asset Sale, including, without
limitation, pension and other post-employment benefit liabilities, liabilities
related to environmental matters and liabilities under any indemnification
obligations associated with such Asset Sale.
"Net Proceeds of Sale" means with respect to each Item of
Equipment sold by Lessor pursuant to Section 24(c) or 28.3 of the Lease
Agreement or sold by Lessor as referenced in Section 29.2 of the Lease
Agreement, the net amount of the proceeds of sale of such Item, after deducting
from the gross proceeds of such sale (i) all sales taxes and other taxes as may
be applicable to the sale or transfer of such Item, (ii) all fees, costs and
expenses of such sale reasonably incurred by Lessor or Lessee in the case of a
sale on the Termination Date or by Lessor in the case of a sale after the
Termination Date and (iii) any other amounts for which, if not paid, Lessor
would be liable as a result of such sale or which, if not paid, would constitute
a Lien on such Item.
"Net Proceeds Offer Trigger Date" has the meaning set forth in
Section 9.2(c) of the Participation Agreement.
"Net Proceeds Redemption Target" has the meaning set forth in
Section 28.4.3 of the Lease Agreement.
"9 7/8% Senior Discount Notes" means those certain unsecured 9
7/8% Senior Discount Notes due 2008, issued by Lessee pursuant to that certain
Indenture dated as of February 20, 1998, between TW Acquisition Corporation (now
known as Universal Compression, Inc.) and the United States Trust Company of New
York.
"Non-U.S. Person" means any Person that is not a U.S. Person.
"Note Purchase Agreement" means any note purchase agreement
executed and delivered by Lessor with respect to the sale of any Tranche A Notes
issued in accordance with the Indenture.
"Notice of Substitution" has the meaning set forth in Section
13(b) of the Lease Agreement.
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"Obligations" means all obligations for principal, premium,
interest, penalties, fees, indemnifications, reimbursements, damages and other
liabilities payable under the documentation governing any Indebtedness.
"Offshore Currency" shall mean any lawful currency (other than
Dollars) that the relevant Issuing Bank with respect to any Offshore Currency
Letter of Credit, in its sole reasonable opinion, at any time determines to be
(a) freely traded in the offshore interbank foreign exchange markets, (b) freely
transferable, and (c) freely convertible into Dollars.
"Offshore Currency Letter of Credit" shall mean any Letter of
Credit denominated in an Offshore Currency.
"Operating Equipment Lease" means, as to any Person, any asset
backed securitization transaction (other than the ABS Operating Lease Facility)
entered into for the purpose of financing gas compression equipment and any
operating lease transaction relating to gas compression equipment that is
treated as an operating lease for purposes of accounting in accordance with GAAP
but not for tax purposes.
"Operating Equipment Lease Facility" means each operating
lease transaction or asset backed securitization transaction (other than the ABS
Operating Lease Facility) contemplated by an Operating Equipment Lease,
including without limitation, the Lease Agreement.
"Operating Equipment Lease Obligations" shall mean, as to any
Person, all obligations of such Person as lessee under any Operating Equipment
Lease.
"Operating Lease Facility" means any operating lease
transaction entered into by Lessee or its Restricted Subsidiaries resulting in
the off-balance sheet financing of any Lessee's or such Restricted Subsidiary's
gas compression equipment.
"Operative Documents" means the Participation Agreement, each
Participation Agreement Supplement, Security Supplement, the Indenture, each
Note Purchase Agreement, each Underwriting Agreement, any Registration Rights
Agreement, the Tranche B Loan Agreement, the Tranche A Notes, the Tranche B
Notes, the Bills of Sale, the Funding Notices, the Lease Agreement, the Lease
Supplements, the Limited Partnership Agreement, the Quiet Enjoyment and
Indemnity Agreement (Tranche A), the Quiet Enjoyment and Indemnity Agreement
(Tranche B), the Funding Escrow Agreement, the Lessor Indemnity Agreement, the
Lessor Margin Letter, the Security Documents, and each other document identified
as an "Operative Document" in a Participation Agreement Supplement and in each
case, all exhibits and supplements thereto, in each case as amended and modified
from time to time.
"Optional Alteration" has the meaning set forth in Section
12(c) of the Lease Agreement.
"Original Participation Agreement" has the meaning set forth
in the recitals to the Participation Agreement.
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"Other Hedging Agreement" means any foreign exchange contract,
currency swap agreement or other similar agreement or arrangement designed to
protect against the fluctuations in currency values.
"Overdue Rate" (i) with respect to any amount due any Tranche
A Noteholder means the Tranche A Rate applicable to such Person's Tranche A Note
plus two (2) percent (200 basis points), (ii) with respect to any amount due any
Tranche B Lender means the Applicable Tranche B Rate for such Lender's Tranche B
Loan at the time in effect plus two (2) percent (200 basis points) and (iii)
with respect to any amount due a Limited Partner means the Applicable Equity
Rate for such Limited Partner's Equity Contribution at the time in effect plus
two (2) percent (200 basis points).
"Participation Agreement" means the First Amended and Restated
Participation Agreement dated as of October __, 2001, among Lessee, Guarantor,
Lessor, Lessor General Partner, Indenture Trustee, Tranche B Lenders,
Administrative Agent and Collateral Agent.
"Participation Agreement Supplement" for each Funding Date
after the Closing Date means the Participation Agreement Supplement
substantially in the form attached to the Participation Agreement as Exhibit E
and sequentially numbered to be executed by the Lessee, Guarantor, Lessor, the
Tranche B Lenders who have committed to make a Tranche B Loan on such Funding
Date, the Indenture Trustee and consented to by the Administrative Agent.
"Payment Date" for the lease of each Item of Equipment each
Semi-Annual Payment Date and Floating Payment Date, for each Tranche A Note,
means each Semi-Annual Payment Date and for each Tranche B Loan and Equity
Contribution, means each Floating Payment Date.
"Payment Date Option Amount" has the meaning set forth in
Section 28.4 of the Lease Agreement.
"PBGC" means the Pension Benefit Guaranty Corporation or
established pursuant to Section 4002 of ERISA, or any successor thereto.
"Permitted Business" means the business in which Lessee is
engaged on the Closing Date and reasonable extensions thereof.
"Permitted Holder(s)" means (i) Weatherford and any Affiliate
of Weatherford and (ii) each of CHP and Castle Harlan Inc. and employees,
management, directors and Affiliates of the foregoing.
"Permitted Indebtedness" means, without duplication, each of
the following:
(i) Indebtedness under the Lease Agreement as in effect on the
Issue Date (which Lease Agreement will relate to Equipment with an appraised
fair market value of at least $427,000,000);
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(ii) Indebtedness incurred pursuant to the Credit Agreement in
an aggregate principal amount at any time outstanding not to exceed (A)
$125,000,000 in the aggregate with respect to Indebtedness under the Revolving
Credit Loans, reduced by any required permanent repayments (which are
accompanied by a corresponding permanent commitment reduction) thereunder and
(B) under one or more any Foreign Credit Facilities, reduced by any required
permanent repayments thereof as a result of any asset sales, but not to exceed
$25,000,000 outstanding at any one time;
(iii) other Indebtedness of Lessee and its Restricted
Subsidiaries outstanding on the Issue Date reduced by the amount of any
scheduled amortization payments or mandatory prepayments when actually paid or
permanent reductions thereon;
(iv) Interest Swap Obligations of Lessee covering Indebtedness
of Lessee or any of its Restricted Subsidiaries and Interest Swap Obligations of
any Restricted Subsidiary of Lessee covering Indebtedness of such Restricted
Subsidiary and its Restricted Subsidiaries; provided, however, that such
Interest Swap Obligations are entered into to protect Lessee and its Restricted
Subsidiaries from fluctuations in interest rates on Indebtedness incurred in
accordance with Section 9.2(c) of the Participation Agreement to the extent the
notional principal amount of such Interest Swap Obligation does not exceed the
principal amount of the Indebtedness to which such Interest Swap Obligation
relates;
(v) Indebtedness under Currency Agreements; provided that in
the case of Currency Agreements which relate to Indebtedness, such Currency
Agreements do not increase the Indebtedness of Lessee and its Restricted
Subsidiaries outstanding other than as a result of fluctuations in foreign
currency exchange rates or by reason of fees, indemnities and compensation
payable thereunder;
(vi) Indebtedness of a Restricted Subsidiary of Lessee to
Lessee or to a Restricted Subsidiary of Lessee for so long as such Indebtedness
is held by Lessee or a Restricted Subsidiary of Lessee, in each case subject to
no Lien held by a Person other than Lessee or a Restricted Subsidiary of Lessee;
provided that if as of any date any Person other than Lessee or a Restricted
Subsidiary of Lessee owns or holds any such Indebtedness or holds a Lien, other
than a Tranche A Permitted Lien, in respect of such Indebtedness, such date
shall be deemed the incurrence of Indebtedness not constituting Permitted
Indebtedness by the issuer of such Indebtedness;
(vii) Indebtedness of Lessee to a Restricted Subsidiary of
Lessee for so long as such Indebtedness is held by a Restricted Subsidiary of
Lessee, in each case subject to no Lien, other than a Tranche A Permitted Lien;
provided that (a) any Indebtedness of Lessee to any Restricted Subsidiary of
Lessee is unsecured and subordinated, pursuant to a written agreement, to
Lessee's obligations under the Lease Agreement and (b) if as of any date any
Person other than a Restricted Subsidiary of Lessee owns or holds any such
Indebtedness or any Person, other than pursuant to the Credit Agreement, holds a
Lien in respect of such Indebtedness, such date shall be deemed the incurrence
of Indebtedness not constituting Permitted Indebtedness by Lessee;
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(viii) Indebtedness arising from the honoring by a bank or
other financial institution of a check, draft or similar instrument
inadvertently (except in the case of daylight overdrafts) drawn against
insufficient funds in the ordinary course of business; provided, however, that
such Indebtedness is extinguished within three business days of incurrence;
(ix) Indebtedness of Lessee or any of its Restricted
Subsidiaries represented by letters of credit for the account of Lessee or such
Restricted Subsidiary, as the case may be, in order to provide security for
workers' compensation claims, payment obligations in connection with
self-insurance or similar requirements in the ordinary course of business;
(x) Indebtedness represented by Capitalized Lease Obligations
and Purchase Money Indebtedness of Lessee or Guarantor and their Restricted
Subsidiaries incurred in the ordinary course of business not to exceed
$20,000,000 at any one time outstanding;
(xi) Indebtedness (A) in respect of performance, surety or
appeal bonds or letters of credit provided in the ordinary course of business,
or (B) arising from agreements providing for indemnification, adjustment of
purchase price or similar obligations, or from guarantees or letters of credit,
surety bonds or performance bonds securing any such obligations of Lessee or any
of its Restricted Subsidiaries, in any case incurred in connection with the
disposition of any business, assets or Restricted Subsidiary of Lessee
(excluding herefrom any guarantees of Indebtedness incurred by any Person
acquiring all or any portion of such business, assets or Restricted Subsidiary
of Lessee for the purpose of financing such acquisition), in a principal amount
not to exceed the gross proceeds actually received by Lessee or any of its
Restricted Subsidiaries in connection with such disposition;
(xii) Indebtedness of Lessee or any of its Restricted
Subsidiaries, to the extent the net proceeds thereof are substantially
contemporaneously used to purchase Equipment from Lessor to fund (A) the
repurchase of Tranche A Notes tendered in a Change of Control Offer or (B) a
deposit to defease the Tranche A Notes;
(xiii) guarantees of Indebtedness of Lessee or any of its
Restricted Subsidiaries by any Restricted Subsidiary; and guarantees of
Indebtedness of any Restricted Subsidiary of Lessee by Lessee provided that such
Indebtedness is permitted by Section 9.2(a) of the Participation Agreement;
(xiv) Indebtedness of Lessee and its Restricted Subsidiaries
under the ABS Operating Lease Facility to the extent of the initial draw
thereunder on the issue date thereof and, thereafter, additional draws to the
extent that Lessee or its Restricted Subsidiaries apply the proceeds of such
draws to permanently repay Indebtedness of Lessee or its Restricted
Subsidiaries;
(xv) Refinancing Indebtedness; and
(xvi) additional Indebtedness of Lessee and its Restricted
Subsidiaries in an aggregate principal amount not to exceed $20,000,000 at any
one time outstanding.
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"Permitted Investments" means (i) Investments by Lessee or any
Restricted Subsidiary of Lessee in any Person that is or will become immediately
after such Investment a Restricted Subsidiary of Lessee or that will merge or
consolidate into Lessee or a Restricted Subsidiary of Lessee; (ii) Investments
in Lessee by any Restricted Subsidiary of Lessee; provided that any Indebtedness
evidencing such Investment in Lessee is unsecured and subordinated, pursuant to
a written agreement, to Lessee's obligations under the Lease Agreement; (iii)
investments in cash and Cash Equivalents; (iv) loans and advances to employees
and officers of Lessee and its Restricted Subsidiaries in the ordinary course of
business for bona fide business purposes not in excess of $500,000 at any one
time outstanding; (v) Currency Agreements and Interest Swap Obligations entered
into in the ordinary course of Lessee's or its Restricted Subsidiaries'
businesses and otherwise in compliance with the Participation Agreement; (vi)
Investments in Unrestricted Subsidiaries and joint ventures not to exceed
$10,000,000 at any one time outstanding; (vii) Investments in securities of
trade creditors or customers received pursuant to any plan of reorganization or
similar arrangement upon the bankruptcy or insolvency of such trade creditors or
customers; (viii) Investments made by Lessee or its Restricted Subsidiaries as a
result of consideration received in connection with an Asset Sale made in
compliance with the Section 9.2(c) of the Participation Agreement; (ix) other
Investments not to exceed $10,000,000 at any one time outstanding and (x)
Investments existing on the Issue Date.
"Permitted Liens" means, as to any Item of Equipment (i) the
respective rights and interests of the parties under the Operative Documents as
provided in the Operative Documents (including any Lien created pursuant to or
expressly permitted by the terms of the Operative Documents), (ii) Liens for
Taxes that either are not yet due and payable or are being contested in good
faith, (iii) any Sublease, (iv) Liens arising by operation of law,
materialmen's, mechanics', workers', repairmen's, employees', carriers',
warehousemen's and other like Liens in connection with any alterations,
modifications or replacements to the extent permitted by Sections 12 and 13 of
the Lease Agreement for amounts that are not more than sixty (60) days past due
or are being diligently contested in good faith by appropriate proceedings, so
long as such proceedings satisfy the conditions for contest proceedings set
forth in Section 10 of the Participation Agreement, (v) Liens arising out of
judgments or awards with respect to which appeals or other proceedings for
review are being prosecuted in good faith and for the payment of which adequate
reserves have been provided as required by GAAP or other appropriate provisions
have been made, and (vi) Liens created by Lessee with the written consent of
Lessor and any Assignee.
"Person" means any individual, corporation, partnership,
limited liability company, joint venture, association, joint stock company,
trust, trustee(s) of a trust, unincorporated organization, or government or
Governmental Entity, agency or political subdivision thereof.
"Plan" means any pension plan as defined in Section 3(2) of
ERISA, which is maintained or contributed to by (or to which there is an
obligation to contribute of) Guarantor or a Subsidiary of Guarantor or an ERISA
Affiliate, and each such plan for the five year period immediately following the
latest date on which Guarantor, or a Subsidiary of Guarantor or an ERISA
Affiliate maintained, contributed to or had an obligation to contribute to such
plan.
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"Preferred Stock" of any Person means any Capital Stock of
such Person that has preferential rights to any other Capital Stock of such
Person with respect to dividends or redemptions or upon liquidation.
"Premium" means, with respect to the Tranche A Notes, any
premium (including any Makewhole), payable upon an optional redemption of the
Tranche A Notes by Lessor (whether following an Equity Offering, a Change of
Control or otherwise), the premium payable pursuant to an offer to repurchase
Tranche A Notes upon the occurrence of a Change of Control, any amounts in
excess of the principal amount thereof payable upon acceleration of the Tranche
A Notes and, if applicable, such amount in excess of the aggregate principal
amount of the Tranche A Notes as may be necessary to be deposited by Lessor in
connection with either a covenant defeasance or a legal defeasance of the
Tranche A Notes under the Indenture.
"Projections" has the meaning set forth in Section 2.1(ii) of
the Participation Agreement.
"Property" shall mean any interest in any kind of property or
asset, whether real, personal or mixed, or tangible or intangible.
"Property Insurance" has the meaning set forth in Section 20
of the Lease Agreement.
"Purchase Date" has the meaning set forth in Section 28.4.4 of
the Lease Agreement.
"Purchase Money Debt" means Revolver Indebtedness, the
proceeds of which are used to finance the acquisition, construction or
improvement of inventory, equipment or other property in the ordinary course of
business.
"Purchase Money Indebtedness" means Indebtedness of Lessee and
its Restricted Subsidiaries incurred in the normal course of business for the
purpose of financing all or any part of the purchase price, or the cost of
installation, construction or improvement, of property or equipment.
"Purchase Option Amount" has the meaning set forth in Section
28.2 of the Lease Agreement.
"Qualified Capital Stock" means any Capital Stock that is not
Disqualified Capital Stock.
"Quarterly Date" shall mean the last day of each March, June,
September and December, in each year, the first of which shall be March 31,
2001; provided, however, that if any such day is not a Business Day, such
Quarterly Date shall be the next succeeding Business Day.
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"Quiet Enjoyment and Indemnity Agreement (Tranche A)" means
the Quiet Enjoyment and Indemnity Agreement dated February 9, 2001 among Lessee,
Indenture Trustee, Administrative Agent and Collateral Agent.
"Quiet Enjoyment and Indemnity Agreement (Tranche B)" means
the Quiet Enjoyment and Indemnity Agreement dated February 9, 2001 among Lessee,
Tranche B Lenders, Administrative Agent and Collateral Agent.
"Real Property" of any Person means all the right, title and
interest of such Person in and to land, improvements and fixtures, including
Leaseholds.
"Redelivery Location" means, with respect to any Item of
Equipment that is to be returned by Lessee to Lessor, a location or locations
within the United States designated by Administrative Agent; provided that the
total number of Redelivery Locations shall not exceed four (4) locations.
"Redelivery Notice" has the meaning set forth in Section
28.3.1 of the Lease Agreement.
"Refinance" means, in respect of any security or Indebtedness,
to refinance, extend, renew, refund, repay, prepay, redeem, defease or retire,
or to issue a security or Indebtedness in exchange or replacement for, such
security or Indebtedness in whole or in part. "Refinanced" and "Refinancing"
shall have correlative meanings.
"Refinancing Indebtedness" means any Refinancing by Lessee or
any Restricted Subsidiary of Lessee of Indebtedness incurred in accordance with
Section 9.2(a) of the Participation Agreement (other than pursuant to clause
(ii), (iv), (v), (vi), (vii), (viii), (ix), (x), (xi), (xii), (xiii) or (xvi) of
the definition of Permitted Indebtedness), in each case (other than Refinancing
Indebtedness incurred to Refinance all of the Tranche A Notes) that does not (1)
result in an increase in the aggregate principal amount of Indebtedness of such
Person as of the date of such proposed Refinancing (plus accrued interest and
plus the amount of any premium required to be paid under the terms of the
instrument governing such Indebtedness and plus the amount of reasonable fees,
expenses and other amounts payable by the Lessee or any of its Restricted
Subsidiaries in connection with such Refinancing) or (2) create Indebtedness
with (A) a Weighted Average Life to Maturity that is less than the Weighted
Average Life to Maturity of the Indebtedness being Refinanced or (B) a final
maturity earlier than the final maturity of the Indebtedness being Refinanced;
provided that if such Indebtedness being Refinanced is subordinate or junior to
Lessee's rental payment obligations under the Lease Agreement, then such
Refinancing Indebtedness shall be subordinate to Lessee's rental payment
obligations under the Lease at least to the same extent and in the same manner
as the Indebtedness being Refinanced.
"Register" has the meaning set forth in Section 11.8 of the
Participation Agreement.
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"Registration Rights Agreement" means the Registration Rights
Agreement, if any, executed and delivered by Lessor, Co-Obligor, Lessee,
Guarantor and the Initial Purchaser party thereto relating to the issuance and
registration of Tranche A Notes.
"Regulation D" shall mean Regulation D of the Board of
Governors of the Federal Reserve System (or any successor), as the same may be
amended or supplemented from time to time.
"Remarketing Period" has the meaning set forth in Section
28.3.2 of the Lease Agreement.
"Replaced Equipment" has the meaning provided in Section 13(a)
of the Lease Agreement.
"Reportable Event" means an event described in Section 4043(c)
of ERISA with respect to a Plan that is subject to Title IV of ERISA other than
those events as to which the 30-day notice period is waived under PBGC
Regulation Section 4043.
"Required Alteration" has the meaning set forth in Section
12(b) of the Lease Agreement.
"Residual Value" means, for any Item of Equipment, the
estimated fair market value of such Item as of the Scheduled Termination Date
with consideration given to the effects of inflation or deflation measured from
the date on which such value is determined, assuming such Item is in good
condition and will continue to be maintained in good operating condition with
normal preventive maintenance, and assuming the market for used equipment of the
same nature on the Scheduled Termination Date will not reflect unusual
conditions of supply and demand.
"Responsible Officer" means, with respect to any Person, the
chief executive officer, the president, the chief financial officer, the chief
operating officer, the treasurer or the vice president for financial or legal
affairs of such Person, or in the case of any partnership, of any of such
Person's general partners.
"Restricted Subsidiary" of any Person means any Subsidiary of
such Person which at the time of determination is not an Unrestricted
Subsidiary.
"Revised Article 9" means Article 9 of the UCC as revised and
made effective on or after July 1, 2001, in any applicable jurisdiction in which
it has been enacted.
"Revolver" means the Revolving Credit Facility dated as of
February 9, 2001, between the Lessee, First Union Bank N.A. as Administrative
Agent (as defined therein) and the lenders that become a party thereto, and if
such agreement is no longer in effect, any other credit agreement or loan
agreement which provides Lessee directly or indirectly, with a primary source of
working capital borrowings and if no such credit agreement or loan agreement is
in effect, then such last credit agreement or loan agreement as in effect
immediately prior to its termination or expiration.
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"Revolver Indebtedness" means (without duplication) any and
all amounts owing or to be owing by Lessee in connection with the Revolver and
the Letter of Credit Application under the Revolver, and any Hedging Agreements
now or hereafter arising between Lessee and any lender under the Revolver or any
Affiliate thereof and permitted by the terms of the Revolver and all renewals,
extensions and/or rearrangements of any of the foregoing.
"Revolving Credit Loans" means one or more revolving credit
facilities under the Credit Agreement.
"Sale and Leaseback Transaction" means any direct or indirect
arrangement with any Person or to which any such Person is a party, providing
for the leasing to Lessee or a Restricted Subsidiary of Lessee of any property,
whether owned by Lessee or any Restricted Subsidiary of Lessee at the Issue Date
or later acquired, which has been or is to be sold or transferred by Lessee or
such Restricted Subsidiary to such Person or to any other Person from whom funds
have been or are to be advanced by such Person on the security of such Property.
"Scheduled Termination Date" means February 15, 2008.
"SEC" shall mean the Securities and Exchange Commission or any
successor Governmental Entity.
"Secured Obligations" has the meaning set forth in Section 7.1
of the Participation Agreement.
"Secured Parties" means the Tranche A Noteholders and the
Tranche B Lenders.
"Securities Act" means the Securities Act of 1933, as amended,
and the rules and regulations promulgated thereunder.
"Securitized Operating Lease Facility" means an Operating
Lease Facility pursuant to which the lessor thereunder receives, directly or
indirectly, the benefit of Liens on property or assets of Lessee or its
Restricted Subsidiaries other than the property subject to such leases, any
property or rights (including rights under subleases) relating to such leased
property and the equity interest of the lessee in any such lease.
"Security Documents" means the Participation Agreement, Lease
Agreement, Lease Supplement, Lessee Financing Statements and Lessor Financing
Statements.
"Security Instruments" shall mean the Letters of Credit, the
Fee Letter, the agreements or instruments described or referred to in Exhibit D
of the Revolver, and any and all other agreements or instruments now or
hereafter executed and delivered by Lessee or any other Person (other than
participation or similar agreements between any lender under the Revolver and
any other lender or creditor with respect to any Revolver Indebtedness pursuant
to the Revolver in connection with, or as security for the payment or
performance of the Lease Agreement, or the Revolver, or reimbursement
obligations under the Letters of Credit, as such agreements may be amended,
supplemented or restated from time to time.
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"Security Supplement" for each Funding Date means the Security
Supplement substantially in the form attached to the Participation Agreement as
Exhibit F and sequentially numbered executed by Lessor and Collateral Agent.
"Seller" means with respect to each Item of Equipment,
whichever of Lessee, or other Person identified as a "Seller" of such Item on
the related Participation Agreement Supplement or in the case of the first
Funding Date, the Persons identified in the definition of "Seller" in Appendix A
to the Original Participation Agreement.
"Semi-Annual Lease Payment" means the Lease Payment payable
during the Term pursuant to Section 7.1.1 of the Lease Agreement.
"Semi-Annual Payment Date" means each February 15 and August
15 during the Term commencing with August 15, 2001, the Termination Date and
Maturity Date; provided, however, if any such calendar date is not a Business
Day, then the Semi-Annual Payment Date shall be the next Business Day.
"Semi-Annual Payment Period" means initially the period from
and including the Closing Date to but excluding the next Semi-Annual Payment
Date and thereafter each six month period from and including the last
Semi-Annual Payment Date to but excluding the next Semi-Annual Payment Date.
"Senior Discount Notes" means the 9-7/8% Senior Discount
Notes due February 15, 2008 issued by Lessee.
"Significant Subsidiary" with respect to any Person, means any
Restricted Subsidiary of such Person that satisfies the criteria for a
"significant subsidiary" set forth in Rule 1.02(w) of Regulation S-X under the
Securities Act.
"Similar Type" means, with respect to any Item of Equipment
with (i) a horsepower rating of less than 100, a natural gas compressor with any
horsepower rating, (ii) a horsepower rating of 100 or more but less than 200, a
natural gas compressor with a horsepower rating of 100 or more, (iii) a
horsepower rating of 300 or more but less than 600, a natural gas compressor
with a horsepower rating of 300 or more, (iv) a horsepower rating of 600 or more
but less than 1000, a natural gas compressor with a horsepower rating of 600 or
more and (v) a horsepower rating of 1000 or more, a natural gas compressor with
a horsepower rating of 1000 or more.
"Special Entity" means any joint venture, limited liability
company or partnership, general or limited partnership or any other type of
partnership or company other than a corporation in which the Lessee or one or
more of its other Subsidiaries is a member, owner, partner or joint venturer and
owns, directly or indirectly, at least a majority of the equity of such entity
or controls such entity, but excluding any tax partnerships that are not
classified as partnerships under state law. For purposes of this definition, any
Person which owns directly or indirectly an equity investment in another Person
which allows the first Person to manage or
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elect managers who manage the normal activities of such second Person will be
deemed to "control" such second Person (e.g. a sole general partner controls a
limited partnership).
"Subject Item" has the meaning set forth in Section 3.1 of the
Participation Agreement.
"Sublease" has the meaning set forth in Section 17 of the
Lease Agreement.
"Sublessee" has the meaning set forth in Section 17 of the
Lease Agreement.
"Subsidiary" means, with respect to any Person, (i) any
corporation of which the outstanding Capital Stock having at least a majority of
the votes entitled to be cast in the election of directors under ordinary
circumstances shall at the time be owned, directly or indirectly, by such Person
or (ii) any other Person of which at least a majority of the voting interest
under ordinary circumstances is at the time, directly or indirectly, owned by
such Person.
"Substitution Date" has the meaning set forth in Section 13(a)
of the Lease Agreement.
"Supplemental Payments" means all amounts, liabilities and
obligations which Lessee assumes or agrees to pay under the Operative Documents.
"S&P" shall mean Standard & Poors Ratings Group, a division of
The McGraw-Hill Companies, Inc.
"Tax Sharing Agreement" means the tax sharing agreement
between Lessee and Guarantor as in effect on the date hereof, and as thereafter
modified in any way not adverse to Lessee or the Tranche A Noteholders.
"Taxes" has the meaning set forth in Section 10.3.1 of the
Participation Agreement.
"Term" for each Item of Equipment means the period from and
including the Funding Date therefor and ending on the Termination Date therefor.
"Termination Date" for each Item of Equipment means the
earliest of (i) the Scheduled Termination Date, and (ii) if the Lessee exercises
its early transfer option pursuant to Section 28.4 of the Lease Agreement, the
applicable Floating Payment Date so elected by Lessee.
"Testing Period" shall mean (a) for any determination made
during the period from and including Closing Date through fiscal quarter ending
March 31, 2002, a single period consisting of the fiscal quarter of Lessee last
ended, utilizing annualized results for the period from and including the
Closing Date through such fiscal quarter end, and (b) for any determination made
from and including April 1, 2002, and at all times thereafter, a single period
consisting of the four consecutive fiscal quarters of Lessee then last ended
(whether or not such quarters are all within the same fiscal year); provided,
however, that if a particular provision of the Revolver indicates that a Testing
Period shall be a different specified duration, such Testing
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Period shall consist of the particular fiscal quarter or quarters then last
ended which are so indicated in such provision.
"TIA" means the Trust Indenture Act of 1939, as amended.
"Tidewater Compression" means Tidewater Compression Service,
Inc.
"Total Debt" shall mean, at any time (without duplication),
the sum of (i) 100% of Debt reflected on the balance sheet of Lessee in
accordance with GAAP, plus (ii) 82% of any amount funded (Debt and equity) under
Operating Equipment Lease Facilities including the Lease Agreement, plus (iii)
85% of any amount funded (Debt and equity) in connection with the ABS Operating
Equipment Lease Facility.
"Total Interest Expense" shall mean, for any period, the total
consolidated cash interest expense net of cash interest income of Lessee and its
Consolidated Subsidiaries for such period (including, without limitation, the
cash equivalent of the interest expense associated with Capital Lease
Obligations and all interest paid on the 9 7/8% Senior Discount Notes but
excluding (i) upfront fees paid in connection with the Lease Agreement, the ABS
Facility or Revolver , (ii) Debt or lease issuance costs which have to be
amortized, (iii) lease payments on any office equipment or real property and
(iv) any principal components paid on all lease payments) plus rental payments
made in connection with Operating Equipment Lease Obligations and the ABS
Facility (excluding any principal amortization components).
"Total Leverage Ratio" means the ratio of Total Debt to
EBITDAR.
"Tranche A Component" for each Item of Equipment means the
dollar amount of the Acquisition Cost of such Item financed by Tranche A
Noteholders on the Funding Date therefor, which amount shall be equal to the
Maximum Lessee Risk Amount for such Item.
"Tranche A Noteholders" means the holders of the Tranche A
Notes.
"Tranche A Notes" means the senior secured notes issued
pursuant to the terms of the Indenture.
"Tranche A Default" means an event or condition the occurrence
of which is, or with the lapse of time or the giving of notice of both would be
a Tranche A Event of Default.
"Tranche A Discount" means with respect to any Funding Date,
the amount, if any, by which the principal amount of the Tranche A Notes issued
on such Funding Date exceeds the proceeds (other than Accrued Interest Premium)
received by Lessor from the issuance of such Tranche A Notes.
"Tranche A Event of Default" has the meaning set forth in
Section 5.01 of the Indenture.
"Tranche A Permitted Liens" means the following types of
Liens:
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(i) Liens for taxes, assessments or governmental charges or
claims either (a) not delinquent or (b) being contested in good faith by
appropriate proceedings and as to which Lessee or its Restricted Subsidiaries
shall have set aside on its books such reserves as may be required pursuant to
GAAP;
(ii) statutory Liens of landlords and Liens of carriers,
warehousemen, mechanics, suppliers, materialmen, repairmen and other Liens
imposed by law incurred in the ordinary course of business for sums not yet
delinquent or being contested in good faith, if such reserve or other
appropriate provision, if any, as shall be required by GAAP shall have been made
in respect thereof;
(iii) Liens incurred or deposits made in the ordinary course
of business in connection with workers' compensation, unemployment insurance and
other types of social security, including any Lien securing letters of credit
issued in the ordinary course of business consistent with past practice in
connection therewith, or to secure the performance of tenders, statutory
obligations, surety and appeal bonds, bids, leases, government contracts,
performance and return-of-money bonds and other similar obligations (exclusive
of obligations for the payment of borrowed money);
(iv) Liens arising by reason of any judgment, decree or order
of any court but not giving rise to a Lease Event of Default so long as such
Lien is adequately bonded and any appropriate legal proceedings which may have
been duly initiated for the review of such judgment, decree or order shall not
have been finally terminated or the period within which such proceedings may be
initiated shall not have expired;
(v) easements, rights-of-way, zoning restrictions and other
similar charges or encumbrances in respect of real property not interfering in
any material respect with the ordinary conduct of the business of Lessee or any
of its Restricted Subsidiaries;
(vi) Liens representing the interest or title of a lessor
under any Capitalized Lease; provided that such Liens do not extend to any
property or assets which is not leased property subject to such Capitalized
Lease;
(vii) Liens upon specific items of inventory or other goods
and proceeds of Lessee or any of its Restricted Subsidiaries securing such
Person's obligations in respect of bankers' acceptances issued or created for
the account of such Person to facilitate the purchase, shipment or storage of
such inventory or other goods;
(viii) Liens securing reimbursement obligations with respect
to letters of credit which encumber documents and other property relating to
such letters of credit and products and proceeds thereof;
(ix) Liens encumbering deposits made to secure obligations
arising from statutory, regulatory, contractual, or warranty requirements of
Lessee or any of their Restricted Subsidiaries, including rights of offset and
set-off;
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(x) Liens securing Interest Swap Obligations which Interest
Swap Obligations relate to Indebtedness that is otherwise permitted under the
Participation Agreement;
(xi) Liens securing Capitalized Lease Obligations and Purchase
Money Indebtedness permitted pursuant to Section 9.2(a) of the Participation
Agreement; provided, however, that in the case of Purchase Money Indebtedness
(A) the Indebtedness shall not exceed the cost of such property or assets and
shall not be secured by any property or assets of Lessee or any Restricted
Subsidiary of Lessee other than the property and assets so acquired or
constructed and (B) the Lien securing such Indebtedness shall be created within
180 days of such acquisition or construction or, in the case of a refinancing of
any Purchase Money Indebtedness, within 180 days of such refinancing;
(xii) Liens securing Indebtedness under Currency Agreements;
and
(xiii) Liens securing Acquired Indebtedness incurred in
accordance with the Section 9.2(a) of the Participation Agreement; provided that
(A) such Liens secured such Acquired Indebtedness at the time of and prior to
the incurrence of such Acquired Indebtedness by Lessee or a Restricted
Subsidiary of Lessee and were not granted in connection with, or in anticipation
of, the incurrence of such Acquired Indebtedness by Lessee or a Restricted
Subsidiary of Lessee and (B) such Liens do not extend to or cover any property
or assets of Lessee or of any of its Restricted Subsidiaries other than the
property or assets that secured the Acquired Indebtedness prior to the time such
Indebtedness became Acquired Indebtedness of Lessee or a Restricted Subsidiary
of Lessee.
"Tranche A Premium" means with respect to any Funding Date,
any proceeds other than Accrued Interest Premium from the issuance of any
Tranche A Notes on such Funding Date received by Lessor or BRL Universal
Equipment Corp. in excess of the principal amount of such Tranche A Notes.
"Tranche A Rate" means for any Tranche A Note the interest
rate set forth on such Tranche A Note.
"Tranche B Commitment" for the first Funding Date, has the
meaning set forth in the definition of "Tranche B Commitment" in Appendix A to
the Original Participation Agreement and for each Tranche B Lender on any
Funding Date thereafter means the Dollar amount set forth for such Lender in the
related Participation Agreement Supplement.
"Tranche B Component" for each Item of Equipment, means the
dollar amount of the Acquisition Cost of such Item financed by Tranche B Lenders
on the Funding Date therefor, which amount shall be equal to a pro rata portion
(based on the Initial Fair Market Value of such Item and the aggregate Initial
Fair Market Values of all Equipment first being leased under the Lease Agreement
on such Funding Date) of the aggregate principal balances of the Tranche B Loans
made on such Funding Date.
"Tranche B Default" means an event, which with the giving of
notice or lapse of time or both, would become a Tranche B Event of Default.
-40-
"Tranche B Event of Default" has the meaning set forth in
Section 5.1 of the Tranche B Loan Agreement.
"Tranche B Lenders" means First Union National Bank, Bank One,
NA, The Bank of Nova Scotia, Citadel Hill 2000 Ltd., Natexis Banques Populaires,
Landmark CDO Limited, CSAM Funding I, First Dominion Funding I and First
Dominion Funding II and any Eligible Transferee that is an assignee thereof and
any other Eligible Transferee who from time to time becomes a party to the
Participation Agreement and Tranche B Loan Agreement as a Tranche B Lender in
accordance with the terms thereof.
"Tranche B Loan" has the meaning set forth in Section 4.1 of
the Participation Agreement.
"Tranche B Loan Agreement" means the Tranche B Loan Agreement,
dated as of February 9, 2001, among Lessor, the Administrative Agent, the
Collateral Agent and the Tranche B Lenders as amended by the First Amendment to
Tranche B Loan Agreement dated September __, 2001.
"Tranche B Margin" means 3.25% (325 basis points).
"Tranche B Note" has the meaning set forth in Section 2.2 of
the Tranche B Loan Agreement.
"Treasury Rate" for any date, means the yield to maturity at
the time of computation of United States Treasury securities with a constant
maturity (as compiled and published in the most recent Federal Reserve
Statistical Release H.15 (519) that has become publicly available at least two
(2) business days prior to the date the redemption is effected pursuant to
Section 3.03(c) of the Revolver (the "Change of Control Redemption Date") (or,
if such Statistical Release is no longer published, any publicly available
source or similar market date) most nearly equal to the period from the Change
of Control Redemption Date to February 15, 2005; provided, however, that if the
period from the Change of Control Redemption Date to February 15, 2005 is not
equal to the constant maturity of a United States Treasury security for which a
weekly average yield is given, the Treasury Rate shall be obtained by linear
interpolation (calculated to the nearest one-twelfth of a year) from the weekly
average yields of United States Treasury securities for which such yields are
given except that if the period from Change of Control Redemption Date to
February 15, 2005 is less than one year, the weekly average yield on actually
traded United States Treasury securities adjusted to a constant maturity of one
year shall be used.
"UCC" means the Uniform Commercial Code, as in effect in any
applicable jurisdiction.
"UCO Compression LLC" shall mean UCO Compression LLC, a
Delaware limited liability company, which is the bankruptcy remote, special
purpose, wholly-owned Subsidiary of Lessee created to own and lease gas
compression equipment in conjunction with the ABS Operating Lease Facility.
-41-
"Underwriter" means each underwriter party to an Underwriting
Agreement.
"Underwriting Agreement" means any underwriting agreement
executed and delivered by Lessor with respect to the issuance of any Tranche A
Notes in accordance with the Indenture.
"Unfunded Current Liability" of any Plan means the amount, if
any, by which the value of the accumulated plan benefits under the Plan
determined on a plan termination basis in accordance with actuarial assumptions
at such time consistent with those prescribed by the PBGC for purposes of
Section 4044 of ERISA, exceeds the fair market value of all plan assets
allocable to such liabilities under Title IV of ERISA (excluding any accrued but
unpaid contributions).
"Unrestricted Subsidiary" of Lessee means (i) any Subsidiary
of Lessee that at the time of determination shall be or continue to be
designated an Unrestricted Subsidiary by the Board of Directors of Lessee in the
manner provided below and (ii) any Subsidiary of an Unrestricted Subsidiary. The
Board of Directors of Lessee may designate any Subsidiary (including any newly
acquired or newly formed Subsidiary) to be an Unrestricted Subsidiary unless
such Subsidiary owns any Capital Stock of, or owns or holds any Lien on any
property of, Lessee or any other Subsidiary of Lessee that is not a Subsidiary
of the Subsidiary to be so designated; provided that (x) Lessee certifies to
Indenture Trustee that such designation complies with Section 9.2(b) of the
Participation Agreement and (y) each Subsidiary to be so designated and each of
its Subsidiaries has not at the time of designation, and does not thereafter,
create, incur, issue, assume, guarantee or otherwise become directly or
indirectly liable with respect to any Indebtedness pursuant to which the lender
has recourse to any of the assets of Lessee or any of its Restricted
Subsidiaries. The Board of Directors may designate any Unrestricted Subsidiary
to be a Restricted Subsidiary only if (x) immediately after giving effect to
such designation, Lessee is able to incur at least $1.00 of additional
Indebtedness (other than Permitted Indebtedness) in compliance with Section
9.2(a) of the Participation Agreement and (y) immediately before and immediately
after giving effect to such designation, no Tranche A Default or Tranche A Event
of Default shall have occurred and be continuing. Any such designation by the
Board of Directors shall be evidenced to Indenture Trustee by promptly filing
with Indenture Trustee a copy of the Board Resolution giving effect to such
designation and an officers' certificate certifying that such designation
complied with the foregoing provisions.
"U.S. Person" has the meaning set forth in Section 7701(a)(30)
of the Code.
"Weatherford Transition Services Agreement" means the
agreement dated as of the Closing Date between Weatherford International Inc.
and Weatherford Global Compression Services, L.P. related to the provision of
transition services by Weatherford to Lessee.
"Weighted Average Life to Maturity" means, when applied to any
Indebtedness at any date, the number of years obtained by dividing (a) the then
outstanding aggregate principal amount of such Indebtedness into (b) the sum of
the total of the products obtained by multiplying (i) the amount of each then
remaining installment, sinking fund, serial maturity or other required payment
of principal, including payment at final maturity, in respect thereof, by (ii)
the number
-42-
of years (calculated to the nearest one-twelfth) which will elapse between such
date and the making of such payment.
"Wholly Owned Restricted Subsidiary" of any Person means any
Restricted Subsidiary of such Person of which all the outstanding voting
securities (other than directors' qualifying shares or an immaterial amount of
shares required to be owned by other Persons, in each case pursuant to
applicable law) are owned by such Person or any Wholly Owned Restricted
Subsidiary of such Person.
When used in any Operative Document the words "this
Agreement", "herein", "hereunder", "hereof" or other like words mean and include
such Operative Document and each amendment and supplement thereto (including,
without limitation, with respect to the Lease Agreement, each Lease Supplement
and with respect to the Participation Agreement, each Participation Agreement
Supplement and Security Supplement). Each of the Operative Documents is the
result of arm's-length negotiations among, and has been review by, each party
thereto and its counsel. Accordingly, each of the Operative Documents shall be
deemed to be the product of each of the parties thereto, and no ambiguity shall
be construed in favor of or against any party. Headings in the Operative
Documents are for convenience of reference only and are not part of the
substance thereof. All references to sections, schedules and exhibits in any
Operative Document are to sections, schedules and exhibits in or to such
Operative Document unless otherwise specified. Unless otherwise specified
herein, all accounting terms used herein shall be interpreted, all accounting
determinations hereunder shall be made, and all financial statements required to
be delivered hereunder shall be prepared in accordance with United States
generally accepted accounting principles as in effect from time to time, applied
on a basis consistent (except for changes concurred in by Guarantor's
independent public accountants) with the then most recent audited consolidated
financial statements of Guarantor and its Consolidated Subsidiaries provided
that, if either (i) Guarantor notifies Administrative Agent that Guarantor
wishes to eliminate the effect of any change in generally accepted accounting
principles on the operation of any covenant contained in the Participation
Agreement or (ii) Administrative Agent notifies Guarantor that it wishes to
effect such an elimination, then Guarantor's compliance with such covenant shall
be determined on the basis of generally accepted accounting principles in effect
immediately before the relevant change in generally accepted accounting
principles becomes effective, until either (A) such notice is withdrawn by the
party giving such notice or (B) such covenant is amended in a manner
satisfactory to Guarantor and Administrative Agent to reflect such change in
generally accepted accounting principles. All calculations of interest, fees and
other amounts for any period shall include the first day of such period and
exclude the last day of such period unless otherwise specified. All words
importing any gender shall be deemed to include the other gender. All references
to statutes are to be construed as including all statutory provisions
consolidating, amending or replacing the statute referred to. Unless otherwise
specified, references to agreements and other contractual instruments shall be
deemed to include all subsequent amendments, modifications and supplements
thereto, and references to any Person shall be deemed to include all successors
and permitted assigns of such Person.
-43-
EX-10.3
7
h91556ex10-3.txt
PARTICIPATION AGREEMENT SUPPLEMENT NO. 1
EXHIBIT 10.3
PARTICIPATION AGREEMENT SUPPLEMENT
NO. 1
This Participation Agreement Supplement (this "Supplement")
dated as of October 23, 2001 is executed pursuant to, and incorporates by
reference all of the terms, conditions and provisions of, the First Amended and
Restated Participation Agreement (as amended, modified and supplemented prior to
delivery of this Supplement, "Participation Agreement"), dated as of October 23,
2001, among Universal Compression, Inc. ("Lessee"), Universal Compression
Holdings, Inc., BRL Universal Equipment 2001 A, L.P., The Bank of New York not
in its individual capacity but as indenture trustee for Tranche A Noteholders,
BRL Universal Equipment Management, Inc., Tranche B Lenders from time to time
party thereto, Bankers Trust Company, as Administrative Agent, and Bankers Trust
Company, as Collateral Agent. Capitalized terms not otherwise defined herein
have the meanings given in Appendix A to the Participation Agreement which
Appendix A also contains rules of usage and interpretation applicable hereto.
Maximum Acquisition Cost of Equipment to be acquired by Lessor and leased to
Lessee pursuant to the Participation Agreement and Lease Agreement on the next
Funding Date:
$122,000,000.00
Commitment Termination Date:
October 23, 2001
Aggregate Tranche B Commitments for equipment to be acquired by Lessor and
leased to Lessee pursuant to the Participation Agreement and Lease Agreement on
the next Funding Date: $18,262,500.00
Tranche B Commitment for financing equipment
to be acquired by Lessor and leased to Lessee
pursuant to the Participation Agreement and
Tranche B Lender Lease Agreement on the next Funding Date ($)
---------------- --------------------------------------------
Bankers Trust Company $9,131,250.00
130 Liberty Street, M.S. 2344
New York, New York 10006
Attention: Marcus Tarkington
Internal Mail Code: NYC 02-2802
Telephone: (212) 250-7684
Telefax: (212) 250-8693
First Union National Bank $6,391,875.00
301 South College Street
Charlotte, NC 28288
Attn: Robert Wateroff
Tel: (704) 374-6221
Fax: (704) 374-6249
Bank of Nova Scotia $1,826,250.00
1100 Louisiana Street, Suite 3000
Houston, TX 77002
Attn: Jean Paul Purdy
Tel: (713) 759-3433
Fax: (713) 752-2425
Bank One, NA $ 913,125.00
(Main Office Chicago)
201 St. Charles Avenue
29th Floor
New Orleans, LA 70170
Attn: Charles Freel, Jr.
Tel: (504) 623-1638
Fax: (504) 623-6555
As of the date hereof, each of the Tranche B Lenders a party hereto and not
already a party to the Operative Documents assumes the rights and obligations of
a Tranche B Lender under the Operative Documents and shall be deemed a party to
each of the Operative Documents to which the Tranche B Lenders are a party.
Sellers:
Universal Compression, Inc.
KCI, Inc.
KCI Leasing, Inc.
KCI Compression, L.P.
Projections:
Projections referenced in Section 2.1(ii) of the Participation Agreement shall
mean the pro forma financial statements of Guarantor made a part of the draft
Offering Memorandum of the Lessor dated October 15, 2001.
Financial Statements:
Financial Statements referenced in the last sentence of Section 2.1(u) of the
Participation Agreement shall mean the financial statements contained in the
Registration Statement filed with the SEC on August 10, 2001.
-2-
Additional Conditions Precedent:
1. Execution of and delivery by all parties thereto of the First Amendment to
Senior Secured Revolving Credit Agreement dated October 23, 2001 relating to the
amendment of Section 9.14 thereof in form and substance reasonably acceptable to
Administrative Agent.
Additional Operative Documents:
None
-3-
UNIVERSAL COMPRESSION, INC.,
as Lessee
By: /s/ Richard W. FitzGerald
------------------------------------------------
Senior Vice President
UNIVERSAL COMPRESSION HOLDINGS, INC., as Guarantor
By: /s/ Richard W. FitzGerald
------------------------------------------------
Senior Vice President
BRL UNIVERSAL EQUIPMENT 2001 A, L.P., as Lessor
By BRL Universal Equipment Management, Inc.
Its General Partner
By: /s/ Gregory C. Greene
------------------------------------------------
President
THE BANK OF NEW YORK,
not individually but as Indenture Trustee for
Tranche A Noteholders
By: /s/ Remo Reale
------------------------------------------------
Vice President
-Signature Page-
[Participation Agreement Supplement No. 1]
We hereby consent to the terms of this Supplement:
BANKERS TRUST COMPANY,
as Administrative Agent
By: /s/ Marcus M. Tarkington
------------------------------------------
Director
BANKERS TRUST COMPANY
as Tranche B Lender
By: /s/ Marcus M. Tarkington
------------------------------------------
Director
FIRST UNION NATIONAL BANK
as Tranche B Lender
By: /s/ David E. Humphreys
------------------------------------------
Vice President
BANK ONE, N.A.
(Main Office Chicago)
as Tranche B Lender
By: /s/ Dianne Russell
------------------------------------------
Vice President
-Signature Page-
[Participation Agreement Supplement No. 1]
THE BANK OF NOVA SCOTIA
as Tranche B Lender
By: /s/ M.D. Smith
------------------------------------------
Agent
-Signature Page-
[Participation Agreement Supplement No. 1]
EX-10.4
8
h91556ex10-4.txt
1ST AMEND. TO TRANCHE B LOAN AGREEMENT - 10-15-01
EXHIBIT 10.4
FIRST AMENDMENT TO
TRANCHE B LOAN AGREEMENT
This FIRST AMENDMENT TO TRANCHE B LOAN AGREEMENT, dated as of
October 15, 2001 (this "Amendment") is among BRL UNIVERSAL EQUIPMENT 2001 A,
L.P., a Delaware limited partnership ("Borrower"), the several financial
institutions listed on the signature pages hereof as Tranche B Lenders, (each a
"Tranche B Lender" and collectively "Tranche B Lenders"), BANKERS TRUST COMPANY,
as Administrative Agent for Tranche B Lenders (in such capacity, "Administrative
Agent") and BANKERS TRUST COMPANY, as Collateral Agent (in such capacity,
"Collateral Agent").
WITNESSETH:
WHEREAS, Borrower, Administrative Agent, Collateral Agent and
Tranche B Lenders have entered into that certain Tranche B Loan Agreement dated
as of February 9, 2001 (together with all amendments and supplements thereto,
the "Tranche B Loan Agreement"); and
WHEREAS, the parties hereto desire to amend certain Sections
of the Tranche B Loan Agreement.
NOW, THEREFORE, in consideration of the premises and mutual
agreements contained herein and in the Participation Agreement, the parties
hereto agree as follows:
1. Definitions. Unless the context otherwise requires,
capitalized terms used herein and not otherwise defined herein shall have
meanings set forth or referred to in Appendix A to the First Amended and
Restated Participation Agreement dated as of October 15, 2001 (the
"Participation Agreement") among Universal Compression Inc., Universal
Compression Holdings, Inc., Borrower, The Bank of New York, the Tranche B
Lenders party thereto, BRL Universal Equipment Management, Inc., Administrative
Agent and Collateral Agent, which Appendix A also contains the rules of usage
that shall apply hereto.
2. Effectiveness. This Amendment shall become effective as of
the date first written above upon (i) the execution and delivery hereof by
Majority Tranche B Lenders, Lessee and Borrower and (ii) the First Amended and
Restated Participation Agreement becoming effective in accordance with the terms
thereof.
3. Amendments.
(a) The introductory paragraph is hereby amended and
restated as follows:
This TRANCHE B LOAN AGREEMENT, dated as of
February 9, 2001 (the "Agreement") is among BRL UNIVERSAL
EQUIPMENT 2001 A, L.P., a Delaware limited partnership
("Borrower"), the several financial institutions listed on the
signature pages hereof as Tranche B Lenders or who became
party to the Participation Agreement (as defined below) in
accordance
with its terms (each a "Tranche B Lender" and collectively
"Tranche B Lenders"), BANKERS TRUST COMPANY, as Administrative
Agent for Tranche B Lenders (in such capacity, "Administrative
Agent") and BANKERS TRUST COMPANY, as Collateral Agent (in
such capacity, "Collateral Agent").
(b) Section 2.1 is hereby amended and restated as
follows:
"Subject to and upon the terms and
conditions set forth in this Agreement and the Participation
Agreement, each Tranche B Lender agrees to make one or more
non-revolving loans in accordance with Section 4.1 of the
Participation Agreement."
(c) Section 2.2(b) is hereby amended and restated as
follows:
"Each Tranche B Note issued to a Tranche B
Lender shall (i) be executed by Borrower, (ii) be payable to
such Tranche B Lender or registered assigns and be dated the
Funding Date therefor, (iii) be in a stated principal amount
equal to the principal amount funded by such Tranche B Lender
on such Funding Date, (iv) mature on the Maturity Date, (v)
bear interest as provided in Section 2.3.2, (vi) be subject to
mandatory repayment as provided in Section 2.5 and (vii) be
entitled to the benefits of this Agreement and the other
Operative Documents."
(d) Section 2.3.2 is hereby amended and restated as
follows:
"Borrower agrees to pay to each Tranche B
Lender on each Floating Payment Date interest accrued on the
unpaid principal amount of such Tranche B Lender's Tranche B
Loan (or Tranche B Loans) from the date the proceeds thereof
are disbursed to Borrower in accordance with Section 2.2 until
the date on which such Tranche B Loan (together with accrued
and unpaid interest thereon) is repaid in full (whether on the
Maturity Date, by acceleration or otherwise) at the Applicable
Tranche B Rate calculated for each day elapsed since the
immediately preceding Floating Payment Date, or in the case of
the first Floating Payment Date following the making of such
Tranche B Loan, since the Funding Date therefor as follows:
-2-
AR x P x 1/D
where,
AR = the Applicable Tranche B Rate for such Tranche B Loan for
such day;
P = the unpaid principal balance of such Tranche B Loan on such
day; and
D = 360 or, to the extent the Applicable Tranche B Rate is
based on the Alternate Rate, 365 or 366 days, as applicable."
4. Authorization. By executing and delivering this Amendment,
each Lender hereby authorizes and instructs Collateral Agent to execute and
deliver the First Amended and Restated Participation Agreement and the First
Amendment to Equipment Lease Agreement, in each case, of even date herewith.
5. Miscellaneous. Sections 6.1, 6.2, 6.5, 6.7, 6.8, 6.10, 6.11
and 6.12 of the Tranche B Loan Agreement are incorporated herein by reference
mutatis mutandis.
-3-
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be duly executed and delivered by their respective duly authorized
officers as of the date first above written.
BRL UNIVERSAL EQUIPMENT 2001 A, L.P.,
as Borrower
By BRL Universal Equipment Management, Inc.
Its General Partner
By:/s/ Gregory C. Greene
---------------------------------------------
President
BANKERS TRUST COMPANY
as Administrative Agent
By: /s/ Calli S. Hayes
------------------- -------------------------
Managing Director
BANKERS TRUST COMPANY
as Collateral Agent
By: /s/ Calli S. Hayes
--------------------------------------------
Managing Director
FIRST UNION NATIONAL BANK
as a Tranche B Lender
By: /s/ David E. Humphreys
--------------------------------------------
Vice President
BANK ONE, NA
(Main Office Chicago)
as a Tranche B Lender
By: /s/ Dianne L. Russell
--------------------------------------------
Vice President
THE BANK OF NOVA SCOTIA
-Signature Page-
[First Amendment to Tranche B Loan Agreement]
as a Tranche B Lender
By:/s/ F.C.H. Ashby
---------------------------------------------
Senior Manager, Loan Operations
CITADEL HILL 2000 Ltd.,
as a Tranche B Lender
By:/s/ Stephen Lockhart
---------------------------------------------
Authorized Signatory
NATEXIS BANQUES POPULAIRES
as a Tranche B Lender
By:
--------------------------------------------
Name:
Title:
LANDMARK CDO LIMITED,
as Tranche B Lender
By
----------------------------------------------
Name:
Title:
CSAM FUNDING I,
as Tranche B Lender
By
----------------------------------------------
Name:
Title:
FIRST DOMINION FUNDING I,
as Tranche B Lender
By
----------------------------------------------
Name:
Title:
-Signature Page-
[First Amendment to Tranche B Loan Agreement]
FIRST DOMINION FUNDING II,
as Tranche B Lender
By
----------------------------------------------
Name:
Title:
-Signature Page-
[First Amendment to Tranche B Loan Agreement]
EX-10.5
9
h91556ex10-5.txt
PURCHASE AGREEMENT - DATED OCTOBER 16, 2001
EXHIBIT 10.5
BRL UNIVERSAL EQUIPMENT 2001 A, L.P.
BRL UNIVERSAL EQUIPMENT CORP.
$100,000,000
8 7/8% SENIOR SECURED NOTES DUE 2008
PURCHASE AGREEMENT
October 16, 2001
DEUTSCHE BANC ALEX. BROWN INC.
FIRST UNION SECURITIES, INC.
BANC ONE CAPITAL MARKETS, INC.
SCOTIA CAPITAL (USA) INC.
c/o Deutsche Banc Alex. Brown Inc.
130 Liberty Street
New York, New York 10006
Ladies and Gentlemen:
BRL Universal Equipment 2001 A, L.P., a Delaware limited
partnership ("BRL"), and BRL Universal Equipment Corp., a Delaware corporation
("BRLC" and together with BRL the "Issuers"), hereby confirm their agreement
with you (the "Initial Purchasers"), as set forth below.
1. The Securities. Subject to the terms and conditions herein
contained, the Issuers propose to issue and sell to the Initial Purchasers
$100,000,000 aggregate principal amount of their 8-7/8% Secured Notes due 2008,
Series A (the "Notes"). The Notes are to be issued under an indenture dated as
of February 9, 2001, as supplemented by a First Supplemental Indenture dated
September 11, 2001 (the "Indenture") by and among the Issuers and The Bank of
New York, as Trustee (the "Trustee").
The Notes will be offered and sold to the Initial Purchasers
without being registered under the Securities Act of 1933, as amended (the
"Act"), in reliance on exemptions therefrom.
-2-
In connection with the sale of the Notes, the Issuers and
Universal Compression, Inc., a Texas corporation (the "Company"), have prepared
an offering memorandum dated the date hereof (the "Memorandum") setting forth or
including a description of the terms of the Notes, the terms of the offering of
the Notes, a description of the Issuers, the Company and any material
developments relating to the Issuers and the Company occurring after the date of
the most recent historical financial statements included therein.
The Initial Purchasers and their direct and indirect
transferees of the Notes will be entitled to the benefits of the Registration
Rights Agreement, substantially in the form attached hereto as Exhibit A (the
"Registration Rights Agreement"), pursuant to which the Issuers, the Company and
Universal Compression Holdings, Inc., a Delaware corporation ("UCH"), have
agreed, among other things, to file a registration statement (the "Registration
Statement") with the Securities and Exchange Commission (the "Commission")
registering the Notes or the Exchange Notes (as defined in the Registration
Rights Agreement) under the Act.
The Notes are being issued in connection with (i) BRL
borrowing approximately $18,300,000 (the "BRL Term Loan") under the Tranche B
Loan Agreement (as amended, the "BRL Term Loan Agreement") and (ii) the issuance
by BRL of limited partnership interests (the "Partnership Contribution") for
aggregate consideration of $3,737,500 pursuant to Amendment No. 2 to the First
Amended and Restated Agreement of Limited Partnership of BRL Universal Equipment
2001 A, L.P. (the "Partnership Agreement"). BRL will apply the proceeds from the
issuance of the Notes, the BRL Term Loan and the Partnership Contribution to
acquire at least $122,000,000 of appraised value of domestic gas compression
equipment (the "Equipment") from the Company. Contemporaneously with the
acquisition of the Equipment, BRL will lease the Equipment to the Company
pursuant to an Equipment Lease Agreement dated February 9, 2001, as amended by a
First Amendment to Equipment Lease Agreement dated October 15, 2001 (the
"Lease"), between BRL and the Company and also enter into a First Amended and
Restated Participation Agreement (the "Participation Agreement"), dated October
15, 2001, among BRL, the Company, the Trustee and the other parties thereto. The
BRL Term Loan Agreement, the Partnership Agreement, the Lease and the
Participation Agreement are collectively referred to herein as the "Transaction
Documents."
2. Representations and Warranties. Each Issuer, severally and
jointly, represents and warrants to and agrees with each of the Initial
Purchasers that:
(a) Neither the Memorandum nor any amendment or supplement
thereto as of the date thereof and at all times subsequent thereto up
to the Closing Date contained or contains any untrue statement of a
material fact or omitted or omits to state a material fact necessary to
make the statements therein, in the light of the circumstances under
-3-
which they were made, not misleading, except that the representations
and warranties set forth in this Section 2(a) do not apply to
statements or omissions made in reliance upon and in conformity with
information relating to any of the Initial Purchasers furnished to the
Issuers in writing by the Initial Purchasers expressly for use in the
Memorandum or any amendment or supplement thereto.
(b) As of June 30, 2001, BRL had the authorized, issued and
outstanding capitalization set forth in the Memorandum under the
"Capitalization of BRL" table; as of the Closing Date, all of the
outstanding partnership interests of BRL as of the Closing Date will be
duly authorized and validly issued, are fully paid and nonassessable
and were not issued in violation of any preemptive or similar rights of
any securityholders of the Issuers; except as set forth in the
Memorandum, all of the outstanding partnership interests of BRL will be
free and clear of all liens, encumbrances, equities and claims or
restrictions on transferability (other than those imposed by the Act
and the securities or "Blue Sky" laws of certain jurisdictions and
other than pursuant to the terms of the Partnership Agreement) or
voting; except as set forth in the Memorandum, there are no (i)
options, warrants or other rights to purchase, (ii) agreements or other
obligations to issue or (iii) other rights to convert any obligation
into, or exchange any securities for, partnership interests of BRL
outstanding. BRL does not own, directly or indirectly, any shares of
capital stock or any other equity or long-term debt securities or have
any equity interest in any firm, partnership, joint venture or other
entity other than 100% of the capital stock of BRLC.
(c) Each Issuer is duly organized, validly existing and in
good standing under the laws of its jurisdiction of organization and
has all requisite partnership or corporate power and authority to own
its properties and conduct its business as now conducted and as
described in the Memorandum; each Issuer is duly qualified to do
business as a foreign corporation in good standing in all other
jurisdictions where the ownership or leasing of its properties or the
conduct of its business requires such qualification, except where the
failure to be so qualified would not, individually or in the aggregate,
have a material adverse effect on the business, condition (financial or
otherwise) or results of operations of the Issuers, taken as a whole
(any such event, a "Material Adverse Effect").
(d) Each Issuer has all requisite corporate power and
authority to execute, deliver and perform each of its obligations under
the Notes, the Exchange Notes and the Private Exchange Notes (as
defined in the Registration Rights Agreement). The Notes, when issued,
will be in the form contemplated by the Indenture. The Notes, the
Exchange Notes and the Private Exchange Notes have each been duly and
validly authorized by each Issuer and, when executed by each Issuer and
authenticated by the Trustee in accordance with the provisions of the
Indenture and, in the case of the
-4-
Notes, when delivered to and paid for by the Initial Purchasers in
accordance with the terms of this Agreement, will constitute valid and
legally binding obligations of the Issuers, entitled to the benefits of
the Indenture, and enforceable against the Issuers in accordance with
their terms, except that the enforcement thereof may be subject to (i)
bankruptcy, insolvency, reorganization, moratorium or other similar
laws now or hereafter in effect relating to creditors' rights
generally, and (ii) general principles of equity and the discretion of
the court before which any proceeding therefor may be brought.
(e) Each Issuer has all requisite partnership or corporate
power and authority to execute, deliver and perform its obligations
under the Indenture. The Indenture has been qualified under the Trust
Indenture Act of 1939, as amended (the "TIA"). The Indenture has been
duly and validly authorized by each Issuer and, when executed and
delivered by each Issuer (assuming the due authorization, execution and
delivery by the Trustee), will constitute a valid and legally binding
agreement of each Issuer, enforceable against each Issuer in accordance
with its terms, except that the enforcement thereof may be subject to
(i) bankruptcy, insolvency, reorganization, moratorium or other similar
laws now or hereafter in effect relating to creditors' rights generally
and (ii) general principles of equity and the discretion of the court
before which any proceeding therefor may be brought.
(f) Each Issuer has all requisite partnership or corporate
power and authority to execute, deliver and perform its obligations
under the Registration Rights Agreement. The Registration Rights
Agreement has been duly and validly authorized by each Issuer and, when
executed and delivered by each Issuer, will constitute a valid and
legally binding agreement of each Issuer enforceable against each
Issuer in accordance with its terms, except that (A) the enforcement
thereof may be subject to (i) bankruptcy, insolvency, reorganization,
moratorium or other similar laws now or hereafter in effect relating to
creditors' rights generally and (ii) general principles of equity and
the discretion of the court before which any proceeding therefor may be
brought and (B) any rights to indemnity or contribution thereunder may
be limited by federal and state securities laws and public policy
considerations.
(g) Each Issuer has all requisite corporate or partnership
power and authority to execute, deliver and perform its obligations
under this Agreement, each of the Transaction Documents (to the extent
a party thereto) and to consummate the transactions contemplated hereby
and thereby. This Agreement, each of the Transaction Documents and the
consummation by the Issuers of the transactions contemplated hereby and
thereby have been duly and validly authorized by the Issuers (to the
extent a party thereto). This Agreement and each of the Transaction
Documents have been duly executed and delivered by the Issuers, to the
extent a party thereto. Each Trans-
-5-
action Document will constitute a valid and legally binding agreement
of BRL, enforceable against BRL in accordance with its terms, except
that (A) the enforcement thereof may be subject to (i) bankruptcy,
insolvency, reorganization, moratorium or other similar laws now or
hereafter in effect relating to creditors' rights generally and (ii)
general principles of equity and the discretion of the court before
which any proceeding therefor may be brought and (B) any rights to
indemnity or contribution thereunder may be limited by federal and
state securities laws and public policy considerations.
(h) No consent, approval, authorization or order of any court
or governmental agency or body, or third party is required for the
issuance and sale by the Issuers of the Notes to the Initial Purchasers
or the consummation by the Issuers of each of the Transaction Documents
and the other transactions contemplated hereby and thereby, except such
as have been obtained and such as may be required under state
securities or "Blue Sky" laws in connection with the purchase and
resale of the Notes by the Initial Purchasers, or except as would not
reasonably be expected to, individually or in the aggregate, have a
Material Adverse Effect. Neither Issuer is (i) in violation of its
organizational documents, (ii) in breach or violation of any statute,
judgment, decree, order, rule or regulation applicable to it or any of
its properties or assets, except for any such breach or violation which
would not be reasonably expected to, individually or in the aggregate,
have a Material Adverse Effect, or (iii) in breach of or default under
(nor has any event occurred which, with notice or passage of time or
both, would constitute a default under) or in violation of any of the
terms or provisions of any indenture, mortgage, deed of trust, loan
agreement, note, lease, license, franchise agreement, permit,
certificate, contract or other agreement or instrument to which it is a
party or to which it or any of its properties or assets is subject
(collectively, "Contracts"), except for any such breach, default,
violation or event which would not reasonably be expected to,
individually or in the aggregate, have a Material Adverse Effect.
(i) The execution, delivery and performance by the Issuers of
this Agreement, the Indenture, the Registration Rights Agreement and
each of the Transaction Documents (to the extent a party thereto) and
the consummation by the Issuers of the transactions contemplated hereby
and thereby (including, without limitation, the issuance and sale of
the Notes to the Initial Purchasers) will not conflict with or
constitute or result in a breach of or a default under (or an event
which with notice or passage of time or both would constitute a default
under) or violation of any of (i) the terms or provisions of any
Contract, except for any such breach, default, violation or event which
would not reasonably be expected to, individually or in the aggregate,
have a Material Adverse Effect, (ii) the organizational documents of
the Issuers, or (iii) (assuming
-6-
compliance with all applicable state securities or "Blue Sky" laws and
assuming the accuracy of the representations and warranties of the
Initial Purchasers in Section 8 hereof) any statute, judgment, decree,
order, rule or regulation applicable to the Issuers or any of their
respective properties or assets, except for any such conflict, breach,
default or violation which would not reasonably be expected,
individually or in the aggregate, to have a Material Adverse Effect.
(j) The audited consolidated balance sheet of the Issuers
included in the Memorandum or incorporated by reference therein present
fairly in all material respects the financial position of the Issuers
at March 31, 2001 and has been prepared in accordance with generally
accepted accounting principles applied on a consistent basis, except as
otherwise stated therein. The Issuers have no reason to believe that
the financial statements in the Memorandum relating to Enterra
Compression Company, Weatherford Compression and Global Compression
Holdings, Inc. do not present fairly in all material respects the
information shown therein and have not been prepared and compiled on a
basis consistent with the audited financial statements included
therein, except as otherwise stated therein. Deloitte & Touche LLP,
and, to the knowledge of the Issuers, Arthur Andersen LLP and KPMG LLP
(the "Independent Accountants") are independent public accounting firms
within the meaning of the Act and the rules and regulations promulgated
thereunder.
(k) The pro forma financial statements (including the notes
thereto) and the other pro forma financial information included in the
Memorandum (i) comply as to form in all material respects with the
applicable requirements of Regulation S-X promulgated under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), (ii)
have been prepared in all material respects in accordance with the
Commission's rules and guidelines with respect to pro forma financial
statements, and (iii) have been properly computed on the bases
described therein; the assumptions used in the preparation of the pro
forma financial data and other pro forma financial information included
in the Memorandum are reasonable and the adjustments used therein are
appropriate in all material respects to give effect to the transactions
or circumstances referred to therein.
(l) There is not pending or, to the knowledge of the Issuers,
threatened any action, suit, proceeding, inquiry or investigation to
which either Issuer is a party, or to which the property or assets of
either Issuer are subject, before or brought by any court, arbitrator
or governmental agency or body which would reasonably be expected to
have, individually or in the aggregate, a Material Adverse Effect or
which seeks to restrain, enjoin, prevent the consummation of or
otherwise challenge the issuance or sale of the Notes to be sold
hereunder or the consummation of the other transactions described in
the Memorandum.
-7-
(m) To the knowledge of the Issuers, each Issuer possesses all
licenses, permits, certificates, consents, orders, approvals and other
authorizations from, and has made all declarations and filings with,
all federal, state, local and other governmental authorities, all
self-regulatory organizations and all courts and other tribunals,
presently required or necessary to own or lease, as the case may be,
and to operate its properties and to carry on its businesses as now or
proposed to be conducted as set forth in the Memorandum ("Permits"),
except where the failure to obtain such Permits would not reasonably be
expected to, individually or in the aggregate, have a Material Adverse
Effect; each Issuer has fulfilled and performed all of its obligations
with respect to such Permits and no event has occurred which allows, or
after notice or lapse of time would allow, revocation or termination
thereof or results in any other material impairment of the rights of
the holder of any such Permit, except where such revocation,
termination or impairment would not reasonably be expected to,
individually or in the aggregate, result in a Material Adverse Effect;
no Issuer has received any notice of any proceeding relating to
revocation or modification of any such Permit, except as described in
the Memorandum and except where such revocation or modification would
not reasonably be expected to, individually or in the aggregate, have a
Material Adverse Effect.
(n) Since the date of the most recent financial statements of
the Issuers appearing or incorporated by reference in the Memorandum,
except as described in the Memorandum, (i) neither Issuer has incurred
any liabilities or obligations, direct or contingent, or entered into
or agreed to enter into any transactions or contracts (written or oral)
not in the ordinary course of business which liabilities, obligations,
transactions or contracts would, individually or in the aggregate, be
material to the business, condition (financial or otherwise), or
results of operations of either Issuer, (ii) neither Issuer has
purchased any of its outstanding capital stock or declared, paid or
otherwise made any dividend or distribution of any kind on its capital
stock and (iii) except as described in the Memorandum, there shall not
have been any change in the capital stock or long-term indebtedness of
either Issuer.
(o) Each Issuer has filed all necessary federal, state and
foreign income and franchise tax returns, except where the failure to
so file such returns would not reasonably be expected to, individually
or in the aggregate, have a Material Adverse Effect, and has paid all
taxes shown due with respect to the periods covered by such returns;
there is no tax deficiency that has been asserted against either
Issuer.
(p) Neither Issuer nor any agent acting on its behalf has
taken or will take any action that would cause this Agreement or the
sale of the Notes to violate Regulation T, U or X of the Board of
Governors of the Federal Reserve System, in each case as in effect, or
as the same may hereafter be in effect, on the Closing Date.
-8-
(q) BRL has good and marketable title to all real property or
good title to all personal property described in the Memorandum as
being owned by it free and clear of all liens, charges, encumbrances or
restrictions, except as described in the Memorandum or as permitted by
the Lease. All leases, contracts and agreements material to BRL's
business to which BRL is a party or by which it is bound are valid and
enforceable against BRL, and are valid and enforceable against the
other party or parties thereto and are in full force and effect.
(r) There are no legal or governmental proceedings involving
or affecting either Issuer or any of their respective properties or
assets which would be required to be described in a prospectus pursuant
to the Act that are not described in the Memorandum, nor are there any
material contracts or other documents which would be required to be
described in a prospectus pursuant to the Act that are not described in
the Memorandum.
(s) Except as described in the Memorandum and except as would
not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect, (A) neither of the Issuers is in violation of
any federal, state, local or foreign statute, law, rule, regulation,
ordinance, code, policy or rule of common law or any judicial or
administrative interpretation thereof, including any judicial or
administrative order, consent decree or judgment, relating to pollution
or protection of human health, the environment (including, without
limitation, ambient air, indoor air, surface water, groundwater, land
surface or subsurface strata), natural resources or wildlife,
including, without limitation, laws and regulations relating to the
release or threatened release of chemicals, pollutants, contaminants,
wastes, toxic substances, hazardous substances, hazardous materials,
petroleum (including petroleum products, constituents or wastes)
(collectively, "Hazardous Materials") or to the manufacture,
processing, distribution, use, generation, treatment, storage,
disposal, transport or handling of Hazardous Materials (collectively,
"Environmental Laws"), (B) each of the Issuers has all permits,
authorizations and approvals required under applicable Environmental
Laws and each is in compliance with their requirements, (C) there are
no pending or threatened administrative, regulatory or judicial
actions, suits, demands, demand letters, claims, liens, notices of
noncompliance or violation, investigations or proceedings relating to
any Environmental Law against either of the Issuers and (D) there are
no events or circumstances that might reasonably be expected to form
the basis of an order for investigation, cleanup or remediation in an
action, suit or proceeding by any private party or governmental body or
agency against or affecting either of the Issuers relating to Hazardous
Materials or Environmental Laws.
-9-
(t) BRLC has no assets or liabilities other than in connection
with the issuance of the Notes to be issued as contemplated by this
Agreement and the 8-7/8% Senior Secured Notes due 2008 as issued on
February 9, 2001.
(u) Each Issuer (i) makes and keeps books and records which,
in reasonable detail, accurately and fairly reflect the transactions
and disposition of assets of such Issuer and (ii) maintains internal
accounting controls which provide reasonable assurance that (A)
transactions are executed in accordance with management's
authorization, (B) transactions are recorded as necessary to permit
preparation of its financial statements and to maintain accountability
for its assets, (C) access to its assets is permitted only in
accordance with management's general or specific authorization and (D)
the reported accountability for its assets is compared with existing
assets at reasonable intervals.
(v) Neither Issuer will be an "investment company" or
"promoter" or "principal underwriter" for an "investment company," as
such terms are defined in the Investment Company Act of 1940, as
amended, and the rules and regulations thereunder.
(w) The Notes, the Indenture, the Registration Rights
Agreement and each of the Transaction Documents will conform in all
material respects to the descriptions thereof in the Memorandum.
(x) No holder of securities of either Issuer will be entitled
to have such securities registered under the registration statements
required to be filed by the Issuers and the Company pursuant to the
Registration Rights Agreement other than as expressly permitted
thereby.
(y) Immediately after the consummation of the transactions
contemplated by this Agreement, the fair value and present fair
saleable value of the assets of BRL will exceed the sum of its stated
liabilities and identified contingent liabilities; BRL is not nor will
BRL be, after giving effect to the execution, delivery and performance
of this Agreement and the consummation of the transactions contemplated
hereby, (a) left with unreasonably small capital with which to carry on
its business as it is proposed to be conducted, (b) unable to pay its
debts (contingent or otherwise) as they mature or (c) otherwise
insolvent.
(z) Neither Issuer or any of its Affiliates (as defined in
Rule 501(b) of Regulation D under the Act) have directly, or through
any agent, (i) sold, offered for sale, solicited offers to buy or
otherwise negotiated in respect of any "security" (as defined in the
Act) which is or could be integrated with the sale of the Notes in a
manner that would require the registration under the Act of the Notes
or (ii) engaged in any form of
-10-
general solicitation or general advertising (as those terms are used in
Regulation D under the Act) in connection with the offering of the
Notes or in any manner involving a public offering within the meaning
of Section 4(2) of the Act. Assuming the accuracy of the
representations and warranties of the Initial Purchasers in Section 8
hereof, it is not necessary in connection with the offer, sale and
delivery of the Notes to the Initial Purchasers in the manner
contemplated by this Agreement to register any of the Notes under the
Act or to qualify the Indenture under the TIA.
(aa) No securities of either Issuer are of the same class
(within the meaning of Rule 144A under the Act) as the Notes and listed
on a national securities exchange registered under Section 6 of the
Exchange Act, or quoted in a U.S. automated inter-dealer quotation
system.
(bb) Neither Issuer has taken, nor will it take, directly or
indirectly, any action designed to, or that might be reasonably
expected to, cause or result in stabilization or manipulation of the
price of the Notes.
(cc) Neither Issuer nor any of their Affiliates or any person
acting on its or their behalf (other than the Initial Purchasers) has
engaged in any directed selling efforts (as that term is defined in
Regulation S under the Act ("Regulation S")) with respect to the Notes;
the Issuers and their respective Affiliates and any person acting on
their behalf (other than the Initial Purchasers) have complied with the
offering restrictions requirement of Regulation S.
(dd) BRL has delivered to counsel to the Initial Purchasers a
true and correct copy of each of the Transaction Documents that have
been executed and delivered prior to the date of this Agreement and
each other Transaction Document in the form substantially as it will be
executed and delivered on or prior to the Closing Date, together with
all related agreements and all material schedules and exhibits thereto,
and there shall have been no amendments, alterations, modifications or
waivers of any of the provisions of any of the Transaction Documents
since their respective dates of execution or from the form in which it
has been delivered to the Initial Purchasers, other than any such
amendments, alterations, modifications and waivers as to which the
Initial Purchasers have been advised would not be required to be
disclosed in the Memorandum; there exists no event or condition which
would constitute a default or an event of default under any of the
Transaction Documents.
(ee) The provisions of the Participation Agreement are
effective to create in favor of the Collateral Agent (as defined in the
Participation Agreement), for the ratable benefit of the Trustee acting
on behalf of the holders of Notes and the existing notes and the
lenders under the BRL Term Loan Agreement, a legal, valid and
-11-
enforceable security interest in all right, title and interest of BRL
in the Lessor Collateral (as defined in the Participation Agreement),
and the filing of the financing statements executed by BRL as debtor
with the Secretary of State for the States of Delaware and Texas, and
in the applicable filing office(s) in each state in which items of
equipment constituting Lessor Collateral are located perfects such
security interest in the Lessor Collateral, subject to no liens other
than those permitted under the Participation Agreement; and the
Collateral Agent shall be entitled to all of the rights, benefits and
priorities provided to a holder of liens of such type under applicable
law.
Any certificate signed by any officer of an Issuer and
delivered to any Initial Purchaser or to counsel for the Initial Purchasers
shall be deemed a joint and several representation and warranty by such Issuer
to each Initial Purchaser as to the matters covered thereby.
3. Purchase, Sale and Delivery of the Notes. On the basis of
the representations, warranties, agreements and covenants herein contained and
subject to the terms and conditions herein set forth, the Issuers agree to issue
and sell to the Initial Purchasers, and the Initial Purchasers, acting severally
and not jointly, agree to purchase the Notes in the respective amounts set forth
on Schedule 1 hereto, from the Issuers at 98.49% of their principal amount
(which amount is equal to 98.0% of the gross proceeds to be received by the
Initial Purchasers upon their resale of the Notes to investors). One or more
certificates in definitive form for the Notes that the Initial Purchasers have
agreed to purchase hereunder, and in such denomination or denominations and
registered in such name or names as the Initial Purchasers request upon notice
to the Issuers at least 36 hours prior to the Closing Date, shall be delivered
by or on behalf of the Issuers to the Initial Purchasers, against payment by or
on behalf of the Initial Purchasers of the purchase price therefor by wire
transfer (same day funds), to such account or accounts as the Issuers shall
specify prior to the Closing Date, or by such means as the parties hereto shall
agree prior to the Closing Date. Such delivery of and payment for the Notes
shall be made at the offices of Gardere Wynne Sewell LLP, 1000 Louisiana, Suite
3400, Houston, TX 77002, at 9:00 A.M., Houston time, on October 23, 2001, or at
such other place, time or date as the Initial Purchasers, on the one hand, and
the Issuers, on the other hand, may agree upon, such time and date of delivery
against payment being herein referred to as the "Closing Date." The Issuers will
make such certificate or certificates for the Notes available for checking and
packaging by the Initial Purchasers at the offices of Deutsche Banc Alex. Brown
Inc. in New York, New York, or at such other place as Deutsche Banc Alex. Brown
Inc. may designate, at least 24 hours prior to the Closing Date.
4. Offering by the Initial Purchasers. The Initial Purchasers
propose to make an offering of the Notes at the price and upon the terms set
forth in the Memorandum, as soon as practicable after this Agreement is entered
into and as in the judgment of the Initial Purchasers is advisable.
-12-
5. Covenants of the Issuers. The Issuers covenant and agree,
jointly and severally, with each of the Initial Purchasers that:
(a) The Issuers will not amend or supplement the Memorandum or
any amendment or supplement thereto of which the Initial Purchasers
shall not previously have been advised and furnished a copy for a
reasonable period of time prior to the proposed amendment or supplement
and as to which the Initial Purchasers shall reasonably object to in
writing; any objection to such amendment or supplement shall be made
within two business days after receiving a draft copy thereof. The
Issuers will promptly, upon the reasonable request of the Initial
Purchasers or counsel for the Initial Purchasers, make any amendments
or supplements to the Memorandum that may be necessary or advisable in
connection with the resale of the Notes by the Initial Purchasers.
(b) Each of the Issuers will cooperate with the Initial
Purchasers in arranging for the qualification of the Notes for offering
and sale under the securities or "Blue Sky" laws of such jurisdictions
as the Initial Purchasers may designate and will continue such
qualifications in effect for as long as may be necessary to complete
the distribution of the Notes; provided, however, that in connection
therewith neither of the Issuers shall be required to qualify as a
foreign corporation or to execute a general consent to service of
process in any jurisdiction or subject itself to taxation in excess of
a nominal dollar amount in any such jurisdiction where it is not then
so subject.
(c) If, at any time prior to the completion of the
distribution by the Initial Purchasers of the Notes or the Private
Exchange Notes, any event occurs or information becomes known as a
result of which the Memorandum as then amended or supplemented would
include any untrue statement of a material fact, or omit to state a
material fact necessary to make the statements therein, in the light of
the circumstances under which they were made, not misleading, or if for
any other reason it is necessary at any time to amend or supplement the
Memorandum to comply with applicable law, the Issuers will promptly
notify the Initial Purchasers thereof and will prepare, at the expense
of the Issuers, an amendment or supplement to the Memorandum that
corrects such statement or omission or effects such compliance.
(d) The Issuers will, without charge, provide to the Initial
Purchasers and to counsel for the Initial Purchasers as many copies of
the Memorandum or any amendment or supplement thereto as the Initial
Purchasers may reasonably request.
(e) The Issuers will apply the net proceeds from the sale of
the Notes as set forth under "Use of Proceeds" in the Memorandum.
-13-
(f) For a period of one year after the Closing Date, the
Issuers will furnish to the Initial Purchasers copies of all reports
and other communications (financial or otherwise) furnished by the
Issuers to the Trustee or to the holders of the Notes and, as soon as
available, copies of any reports or financial statements furnished to
or filed by the Issuers with the Commission or any national securities
exchange on which any class of securities of the Issuers may be listed.
(g) None of the Issuers or any of their respective Affiliates
will sell, offer for sale or solicit offers to buy or otherwise
negotiate in respect of any "security" (as defined in the Act) which
could be integrated with the sale of the Notes in a manner which would
require the registration under the Act of the Notes.
(h) The Issuers will not engage in any form of general
solicitation or general advertising (as those terms are used in
Regulation D under the Act) in connection with the offering of the
Notes or in any manner involving a public offering within the meaning
of Section 4(2) of the Act.
(i) So long as any of the Notes remain outstanding and have
not been registered pursuant to the Act, the Issuers will make
available at their expense, upon reasonable request, to any holder of
such Notes and any prospective purchasers thereof the information
specified in Rule 144A(d)(4) under the Act, unless the Issuers are
subject to Section 13 or 15(d) of the Exchange Act.
(j) The Issuers will use their respective reasonable best
efforts to (i) permit the Notes to be designated PORTAL securities in
accordance with the rules and regulations adopted by the NASD relating
to trading in the Private Offerings, Resales and Trading through
Automated Linkages market (the "Portal Market") and (ii) permit the
Notes to be eligible for clearance and settlement through The
Depository Trust Company.
(k) In connection with Notes offered and sold in an off shore
transaction (as defined in Regulation S) the Issuers will not register
any transfer of such Notes not made in accordance with the provisions
of Regulation S and will not, except in accordance with the provisions
of Regulation S, if applicable, issue any such Notes in the form of
definitive securities.
6. Expenses. The Issuers agree to pay all costs and expenses
incident to the performance of their obligations under this Agreement, whether
or not the transactions contemplated herein are consummated or this Agreement is
terminated pursuant to Section 11 hereof, including all costs and expenses
incident to (i) the printing, word processing or other production of documents
with respect to the transactions contemplated hereby, including any
-14-
costs of printing the Memorandum and any amendment or supplement thereto, and
any "Blue Sky" memoranda, (ii) all costs relating to the delivery to the Initial
Purchasers of copies of the foregoing documents, (iii) the reasonable fees and
disbursements of the counsel, the accountants and any other experts or advisors
retained by the Issuers, (iv) preparation (including printing), issuance and
delivery to the Initial Purchasers of the Notes, (v) the qualification of the
Notes under state securities and "Blue Sky" laws, including reasonable filing
fees and reasonable fees and disbursements of counsel for the Initial Purchasers
relating thereto, (vi) fees and expenses of the Trustee including reasonable
fees and expenses of counsel for the Trustee, (vii) all expenses and listing
fees incurred in connection with the application for quotation of the Notes on
the Portal Market and (viii) any fees charged by investment rating agencies for
the rating of the Notes; provided, however, that other than as set forth in
clause (v) of this sentence and in the next succeeding sentence, the Issuers
shall not be required to reimburse any expenses (including without limitation
fees and expenses of counsel) incurred by the Initial Purchasers in connection
with the proposed purchase and sale of the Notes. If the sale of the Notes
provided for herein is not consummated because any condition to the obligations
of the Initial Purchasers set forth in Section 7 hereof is not satisfied,
because this Agreement is terminated pursuant to Section 11(a)(i) or because of
any failure, refusal or inability on the part of the Issuers to perform all
obligations and satisfy all conditions on their part to be performed or
satisfied hereunder (other than solely by reason of a default by the Initial
Purchasers of their obligations hereunder or by reason of Section 11(a)(ii),
(iii) or (iv)) the Issuers agree to promptly reimburse the Initial Purchasers
upon demand for all reasonably documented out-of-pocket expenses (including
reasonable fees, disbursements and charges of Cahill Gordon & Reindel, counsel
for the Initial Purchasers) that shall have been incurred by the Initial
Purchasers in connection with the proposed purchase and sale of the Notes.
7. Conditions of the Initial Purchasers' Obligations. The
obligation of the Initial Purchasers to purchase and pay for the Notes shall, in
their sole discretion, be subject to the satisfaction or waiver of the following
conditions on or prior to the Closing Date:
(a) On the Closing Date, the Initial Purchasers shall have
received the opinion, dated as of the Closing Date and addressed to the
Initial Purchasers, of Robert Veach, counsel for the Issuers, in form
and substance reasonably satisfactory to counsel for the Initial
Purchasers, to the effect that:
(i) Each Issuer is duly organized, validly existing
and in good standing under the laws of its jurisdiction of
organization and has all requisite partnership or corporate
power and authority to own its properties and to conduct its
business as described in the Memorandum. Each Issuer is duly
qualified to do business as a foreign corporation or
partnership in good standing in all other domestic
jurisdictions where it conducts operations as disclosed in the
Memorandum except where the failure to be so qualified would
not, individually
-15-
or in the aggregate, reasonably be expected to have a Material
Adverse Effect.
(ii) BRL's capitalization set forth in the Memorandum
under the heading "Capitalization of BRL" is correct as of the
dates set forth therein; as of the Closing Date, all of the
outstanding partnership interests of BRL and capital stock of
BRLC have been duly authorized and validly issued, are fully
paid and nonassessable and were not issued in violation of any
preemptive or similar rights.
(iii) Except as set forth in or contemplated by the
Memorandum, (A) no options, warrants or other rights to
purchase from either Issuer shares of capital stock or
ownership interests in such Issuer are outstanding, (B) no
agreements or other obligations to issue, or other rights to
convert, any obligation into, or exchange any securities for,
shares of capital stock or ownership interests in either
Issuer are outstanding and (C) no holder of securities of
either Issuer is entitled to have such securities registered
under a registration statement filed by the Issuers except
pursuant to the terms of the Registration Rights Agreement.
(iv) Each Issuer has all requisite partnership or
corporate power and authority to execute, deliver and perform
each of its obligations under the Indenture, the Notes, the
Exchange Notes and the Private Exchange Notes; the Indenture
has been duly qualified under the TIA in all material
respects; the Indenture has been duly and validly authorized
by the Issuers and, when duly executed and delivered by the
Issuers (assuming the due authorization, execution and
delivery thereof by the Trustee), will constitute the valid
and legally binding agreement of the Issuers.
(v) The Notes are in the form contemplated by the
Indenture. The Notes have each been duly and validly
authorized by the Issuers and, when duly executed and
delivered by the Issuers and paid for by the Initial
Purchasers in accordance with the terms of this Agreement
(assuming the due authorization, execution and delivery of the
Indenture by the Trustee and due authentication and delivery
of the Notes by the Trustee in accordance with the Indenture),
will constitute the valid and legally binding obligations of
the Issuers, entitled to the benefits of the Indenture.
(vi) The Exchange Notes and the Private Exchange
Notes have been duly and validly authorized by the Issuers,
and when the Exchange Notes and the Private Exchange Notes
have been duly executed and delivered by the Issuers
-16-
in accordance with the terms of the Registration Rights
Agreement and the Indenture (assuming the due authorization,
execution and delivery of the Indenture by the Trustee and due
authentication and delivery of the Exchange Notes and the
Private Exchange Notes by the Trustee in accordance with the
Indenture), will constitute the valid and legally binding
obligations of the Issuers, entitled to the benefits of the
Indenture.
(vii) Each Issuer has all requisite partnership or
corporate power and authority to execute, deliver and perform
its obligations under the Registration Rights Agreement; the
Registration Rights Agreement has been duly and validly
authorized by the Issuers and, when duly executed and
delivered by the Issuers (assuming due authorization,
execution and delivery thereof by the Initial Purchasers),
will constitute the valid and legally binding agreement of
each Issuer.
(viii) Each Issuer has all requisite partnership or
corporate power and authority to execute, deliver and perform
its obligations under this Agreement, and to consummate the
transactions contemplated hereby; this Agreement and the
consummation by the Issuers of the transactions contemplated
hereby have been duly and validly authorized by the Issuers.
This Agreement has been duly executed and delivered by each
Issuer.
(ix) The Issuers have all requisite partnership or
corporate power and authority to execute, deliver and perform
its respective obligations under each of the Transaction
Documents; each of the Transaction Documents has been duly and
validly authorized by the Issuers and, when duly executed and
delivered by the Issuers (assuming due authorization,
execution and delivery thereof by the other parties thereto),
will constitute the valid and legally binding agreement of the
Issuers.
(x) To the knowledge of such counsel, no legal or
governmental proceedings are pending or, to the knowledge of
such counsel, threatened to which either Issuer is a party or
to which the property or assets of either Issuer are subject,
or which seek to restrain, enjoin, prevent the consummation of
or otherwise challenge the issuance or sale of the Notes to be
sold hereunder or the consummation of the transactions
contemplated by the Transaction Documents.
(xi) The execution, delivery and performance of this
Agreement, the Indenture, the Registration Rights Agreement,
each of the Transaction Documents and the consummation of the
transactions contemplated hereby and
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thereby (including, without limitation, the issuance and sale
of the Notes to the Initial Purchasers) will not conflict with
or constitute or result in a breach or a default under (or an
event which with notice or passage of time or both would
constitute a default under) or violation of any of (i) the
terms or provisions of any Contract, (ii) the organizational
documents of the Issuers or (iii) (assuming compliance with
all applicable state securities or "Blue Sky" laws and
assuming the accuracy of the representations and warranties of
the Initial Purchasers in Section 8 hereof) any statute,
judgment, decree, order, rule or regulation known to such
counsel to be applicable to the Issuers or any of their
respective properties or assets, except for any such conflict,
breach, default or violation which would not reasonably be
expected individually or in the aggregate to have a Material
Adverse Effect.
(xii) No consent, approval, authorization or order of
any governmental authority is required for the issuance and
sale by the Issuers of the Notes to the Initial Purchasers,
the consummation by the Issuers of each of the Transaction
Documents or of the other transactions contemplated hereby and
thereby, except such as may be required under the
Hart-Scott-Rodino Act, as amended, the Federal Securities laws
or Blue Sky laws, as to which such counsel need express no
opinion, and those which have previously been obtained.
(b) On the Closing Date, the Initial Purchasers shall have
received the opinion, in form and substance satisfactory to the Initial
Purchasers, dated as of the Closing Date and addressed to the Initial
Purchasers, of Cahill Gordon & Reindel, counsel for the Initial
Purchasers, with respect to certain legal matters relating to this
Agreement and such other related matters as the Initial Purchasers may
reasonably require. In rendering such opinion, Cahill Gordon & Reindel
shall have received and may rely upon such certificates and other
documents and information as it may reasonably request to pass upon
such matters.
(c) The Initial Purchasers shall have received from Arthur
Andersen LLP, KPMG LLP and Deloitte & Touche LLP a comfort letter or
letters dated the date hereof and the Closing Date, in form and
substance reasonably satisfactory to counsel for the Initial
Purchasers.
(d) The representations and warranties of the Issuers
contained in this Agreement shall be true and correct in all material
respects on and as of the date hereof and on and as of the Closing Date
as if made on and as of the Closing Date; the statements of the
Issuers' officers made pursuant to any certificate delivered in
accordance with the provisions hereof shall be true and correct in all
material respects on and as of the date made and on and as of the
Closing Date; the Issuers shall have performed in all
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material respects all covenants and agreements and satisfied all
conditions on their part to be performed or satisfied hereunder at or
prior to the Closing Date; and, except as described in the Memorandum
(exclusive of any amendment or supplement thereto after the date
hereof), subsequent to the date of the most recent financial statements
of the Issuers included or incorporated by reference in such
Memorandum, there shall have been no event or development, and no
information shall have become known, that, individually or in the
aggregate, has or would be reasonably likely to have a Material Adverse
Effect.
(e) The sale of the Notes hereunder shall not be enjoined
(temporarily or permanently) on the Closing Date.
(f) Subsequent to the date of the most recent financial
statements of the Issuers in the Memorandum (exclusive of any amendment
or supplement thereto after the date hereof), the Issuers shall not
have sustained any loss or interference with respect to its business or
properties from fire, flood, hurricane, accident or other calamity,
whether or not covered by insurance, or from any strike, labor dispute,
slowdown or work stoppage or from any legal or governmental proceeding,
order or decree, which loss or interference, individually or in the
aggregate, has or would be reasonably likely to have a Material Adverse
Effect.
(g) The Initial Purchasers shall have received a certificate
of the Issuers, dated the Closing Date, signed on behalf of the Issuers
by their respective officers or, to the effect that:
(i) The representations and warranties of the Issuers
contained in this Agreement are true and correct in all
material respects on and as of the date hereof and on and as
of the Closing Date, and the Issuers have performed in all
material respects all covenants and agreements and satisfied
all conditions on their part to be performed or satisfied
hereunder at or prior to the Closing Date; and
(ii) At the Closing Date, since the date hereof or
since the date of the most recent financial statements in the
Memorandum (exclusive of any amendment or supplement thereto
after the date hereof), no event or development has occurred,
and no information has become known, that, individually or in
the aggregate, has or would be reasonably likely to have a
Material Adverse Effect.
(h) On the Closing Date, the Initial Purchasers shall have
received the Registration Rights Agreement executed by the Issuers and
the other parties thereto.
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(i) On the Closing Date, all conditions to the consummation of
the Transaction Documents (including the BRL Term Loan Agreement and
the making of the loans thereunder and the Partnership Agreement) shall
have been satisfied and each Transaction Document shall be in full
force and effect, with BRL in receipt of the Partnership Contribution
prior to the consummation of the offering of the Notes. Since the date
of this Agreement, except as previously disclosed to the Initial
Purchasers and reasonably acceptable to them, there have been no
amendments, modifications, restatements or waivers to any Transaction
Document which would be required to be disclosed in the Memorandum and
are not so disclosed. The BRL Term Loan Agreement and the Partnership
Agreement conform in all material respects to the description thereof
in the Memorandum.
(j) The Initial Purchasers shall have received each document
to be delivered to them under the Participation Agreement.
(k) The letter agreement attached hereto as Annex A shall have
been executed by the parties thereto and be in full force and effect
with all conditions specified in Section 3 thereof satisfied.
On or before the Closing Date, the Initial Purchasers and
counsel for the Initial Purchasers shall have received such further documents,
opinions, certificates, letters and schedules or instruments relating to the
business, corporate, legal and financial affairs of the Issuers as they shall
have heretofore reasonably requested from the Issuers.
All such documents, opinions, certificates, letters, schedules
or instruments delivered pursuant to this Agreement will comply with the
provisions hereof only if they are reasonably satisfactory in all material
respects to the Initial Purchasers and counsel for the Initial Purchasers. The
Issuers shall furnish to the Initial Purchasers such conformed copies of such
documents, opinions, certificates, letters, schedules and instruments in such
quantities as the Initial Purchasers shall reasonably request.
8. Offering of Notes; Restrictions on Transfer. (a) Each of
the Initial Purchasers represents and warrants (as to itself only) that it is a
QIB. Each of the Initial Purchasers agrees with the Issuers (as to itself only)
that (i) it has not and will not solicit offers for, or offer or sell, the Notes
by any form of general solicitation or general advertising (as those terms are
used in Regulation D under the Act) or in any manner involving a public offering
within the meaning of Section 4(2) of the Act; and (ii) it has and will solicit
offers for the Notes only from, and will offer the Notes only to (A) in the case
of offers inside the United States, persons whom the Initial Purchasers
reasonably believe to be QIBs or, if any such person is buying for one or more
institutional accounts for which such person is acting as fiduciary or agent,
only when such person has represented to the Initial Purchasers that each such
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account is a QIB, to whom notice has been given that such sale or delivery is
being made in reliance on Rule 144A, and, in each case, in transactions under
Rule 144A and (B) in the case of offers outside the United States, to persons
other than U.S. persons ("foreign purchasers," which term shall include dealers
or other professional fiduciaries in the United States acting on a discretionary
basis for foreign beneficial owners (other than an estate or trust)); provided,
however, that, in the case of this clause (ii), in purchasing such Notes such
persons are deemed to have represented and agreed as provided under the caption
"Notice to Investors" contained in the Memorandum.
(b) Each of the Initial Purchasers represents and warrants (as
to itself only) with respect to offers and sales outside the United States that
(i) it has and will comply with all applicable laws and regulations in each
jurisdiction in which it acquires, offers, sells or delivers Notes or has in its
possession or distributes any Memorandum or any such other material, in all
cases at its own expense; (ii) the Notes have not been and will not be offered
or sold within the United States or to, or for the account or benefit of, U.S.
persons except in accordance with Regulation S under the Act or pursuant to an
exemption from the registration requirements of the Act; (iii) it has offered
the Notes and will offer and sell the Notes (A) as part of its distribution at
any time and (B) otherwise until 40 days after the later of the commencement of
the offering and the Closing Date, only in accordance with Rule 903 of
Regulation S and, accordingly, neither it nor any persons acting on its behalf
have engaged or will engage in any directed selling efforts (within the meaning
of Regulation S) with respect to the Notes, and any such persons have complied
and will comply with the offering restrictions requirement of Regulation S; and
(iv) it agrees that, at or prior to confirmation of sales of the Notes, it will
have sent to each distributor, dealer or person receiving a selling concession,
fee or other remuneration that purchases Notes from it during the restricted
period a confirmation or notice to substantially the following effect:
"The Securities covered hereby have not been registered under the
United States Securities Act of 1933 (the "Securities Act") and may not
be offered and sold within the United States or to, or for the account
or benefit of, U.S. persons (i) as part of the distribution of the
Securities at any time or (ii) otherwise until 40 days after the later
of the commencement of the offering and the closing date of the
offering, except in either case in accordance with Regulation S (or
Rule 144A if available) under the Securities Act. Terms used above have
the meaning given to them in Regulation S."
Terms used in this Section 8 and not defined in this Agreement
have the meanings given to them in Regulation S.
9. Indemnification and Contribution. (a) The Issuers agree,
jointly and severally, to indemnify and hold harmless the Initial Purchasers,
and each person, if any, who
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controls any Initial Purchaser within the meaning of Section 15 of the Act or
Section 20 of the Exchange Act, against any losses, claims, damages or
liabilities to which any Initial Purchaser or such controlling person may become
subject under the Act, the Exchange Act or otherwise, insofar as any such
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of or are based upon:
(i) any untrue statement or alleged untrue statement of any
material fact contained in the Memorandum or any amendment or
supplement thereto; or
(ii) the omission or alleged omission to state, in the
Memorandum or any amendment or supplement thereto, a material fact
required to be stated therein or necessary to make the statements
therein, in the light of the circumstances under which they were made,
not misleading,
and will reimburse, as incurred, the Initial Purchasers and each such
controlling person for any legal or other expenses reasonably incurred by the
Initial Purchasers or such controlling person in connection with investigating,
defending against or appearing as a third-party witness in connection with any
such loss, claim, damage, liability or action; provided, however, the Issuers
will not be liable in any such case to the extent that any such loss, claim,
damage, or liability arises out of or is based upon any untrue statement or
alleged untrue statement or omission or alleged omission made in any Memorandum
or any amendment or supplement thereto in reliance upon and in conformity with
written information concerning the Initial Purchasers furnished to the Issuers
by the Initial Purchasers specifically for use therein. This indemnity agreement
will be in addition to any liability that the Issuers may otherwise have to the
indemnified parties. The Issuers shall not be liable under this Section 9 for
any settlement of any claim or action effected without its prior written
consent, which shall not be unreasonably withheld, delayed or conditioned. The
Initial Purchasers shall not, without the prior written consent of the Issuers,
effect any settlement or compromise of any pending or threatened proceeding in
respect of which the Issuers are or could have been a party, or indemnity could
have been sought hereunder by the Issuers, unless such settlement (A) includes
an unconditional written release of the Issuers, in form and substance
reasonably satisfactory to the Issuers, from all liability on claims that are
the subject matter of such proceeding and (B) does not include any statement as
to an admission of fault, culpability or failure to act by or on behalf of the
Issuers.
(b) The Initial Purchasers agree, severally and not jointly,
to indemnify and hold harmless the Issuers, their directors and officers, its
general partner and, its officers and directors and each person, if any, who
controls the Issuers within the meaning of Section 15 of the Act or Section 20
of the Exchange Act against any losses, claims, damages or liabilities to which
the Issuers or any such director, officer or controlling person may become
subject under the Act, the Exchange Act or otherwise, insofar as such losses,
claims, damages or liabilities
-22-
(or actions in respect thereof) arise out of or are based upon (i) any untrue
statement or alleged untrue statement of any material fact contained in the
Memorandum or any amendment or supplement thereto, or (ii) the omission or the
alleged omission to state therein a material fact required to be stated in the
Memorandum or any amendment or supplement thereto, or necessary to make the
statements therein not misleading, in each case to the extent, but only to the
extent, that such untrue statement or alleged untrue statement or omission or
alleged omission was made in reliance upon and in conformity with written
information concerning such Initial Purchaser, furnished to the Issuers by the
Initial Purchasers specifically for use therein; and subject to the limitation
set forth immediately preceding this clause, will reimburse, as incurred, any
legal or other expenses reasonably incurred by the Issuers or any such director,
general partner, officer or controlling person in connection with investigating
or defending against or appearing as a third party witness in connection with
any such loss, claim, damage, liability or action in respect thereof. This
indemnity agreement will be in addition to any liability that the Initial
Purchasers may otherwise have to the indemnified parties. The Initial Purchasers
shall not be liable under this Section 9 for any settlement of any claim or
action effected without their consent, which shall not be unreasonably withheld.
The Issuers shall not, without the prior written consent of the Initial
Purchasers, effect any settlement or compromise of any pending or threatened
proceeding in respect of which any Initial Purchaser is or could have been a
party, or indemnity could have been sought hereunder by any Initial Purchaser,
which settlement or compromise would be applicable to the Initial Purchasers
unless such settlement (A) includes an unconditional written release of the
Initial Purchasers, in form and substance reasonably satisfactory to the Initial
Purchasers, from all liability on claims that are the subject matter of such
proceeding and (B) does not include any statement as to an admission of fault,
culpability or failure to act by or on behalf of any Initial Purchaser.
(c) Promptly after receipt by an indemnified party under this
Section 9 of notice of the commencement of any action for which such indemnified
party is entitled to indemnification under this Section 9, such indemnified
party will, if a claim in respect thereof is to be made against the indemnifying
party under this Section 9, notify the indemnifying party of the commencement
thereof in writing; but the omission to so notify the indemnifying party (i)
will not relieve it from any liability under paragraph (a) or (b) above unless
and to the extent such failure results in the forfeiture by the indemnifying
party of substantial rights and defenses and (ii) will not, in any event,
relieve the indemnifying party from any obligations to any indemnified party
other than the indemnification obligation provided in paragraphs (a) and (b)
above. In case any such action is brought against any indemnified party, and it
notifies the indemnifying party of the commencement thereof, the indemnifying
party will be entitled to participate therein and, to the extent that it may
wish, jointly with any other indemnifying party similarly notified, to assume
the defense thereof, with counsel reasonably satisfactory to such indemnified
party; provided, however, that if (i) the use of counsel chosen by the
indemnifying party to represent the indemnified party would present such counsel
with a conflict of
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interest, (ii) the defendants in any such action include both the indemnified
party and the indemnifying party and the indemnified party shall have been
advised by counsel in writing that there may be one or more legal defenses
available to it and/or other indemnified parties that are different from or
additional to those available to the indemnifying party, or (iii) the
indemnifying party shall not have employed counsel reasonably satisfactory to
the indemnified party to represent the indemnified party within a reasonable
time after receipt by the indemnifying party of notice of the institution of
such action, then, in each such case, the indemnifying party shall not have the
right to direct the defense of such action on behalf of such indemnified party
or parties and such indemnified party or parties shall have the right to select
separate counsel to defend such action on behalf of such indemnified party or
parties. After notice from the indemnifying party to such indemnified party of
its election so to assume the defense thereof and approval by such indemnified
party of counsel appointed to defend such action, the indemnifying party will
not be liable to such indemnified party under this Section 9 for any legal or
other expenses, other than reasonable costs of investigation, subsequently
incurred by such indemnified party in connection with the defense thereof,
unless (i) the indemnified party shall have employed separate counsel in
accordance with the proviso to the immediately preceding sentence (it being
understood, however, that in connection with such action the indemnifying party
shall not be liable for the expenses of more than one separate counsel (in
addition to local counsel) in any one action or separate but substantially
similar actions in the same jurisdiction arising out of the same general
allegations or circumstances, designated by the Initial Purchasers in the case
of paragraph (a) of this Section 9 or the Issuers in the case of paragraph (b)
of this Section 9, representing all of the indemnified parties under such
paragraph (a) or paragraph (b), as the case may be, who are parties to such
action or actions) or (ii) the indemnifying party has authorized in writing the
employment of counsel for the indemnified party at the expense of the
indemnifying party. After such notice from the indemnifying party to such
indemnified party, the indemnifying party will not be liable for the costs and
expenses of any settlement of such action effected by such indemnified party
without the prior written consent of the indemnifying party (which consent shall
not be unreasonably withheld), unless such indemnified party waived in writing
its rights under this Section 9, in which case the indemnified party may effect
such a settlement without such consent.
(d) In circumstances in which the indemnity agreement provided
for in the preceding paragraphs of this Section 9 is unavailable to, or
insufficient to hold harmless, an indemnified party in respect of any losses,
claims, damages or liabilities (or actions in respect thereof), each
indemnifying party, in order to provide for just and equitable contribution,
shall contribute to the amount paid or payable by such indemnified party as a
result of such losses, claims, damages or liabilities (or actions in respect
thereof) in such proportion as is appropriate to reflect (i) the relative
benefits received by the indemnifying party or parties on the one hand and the
indemnified party on the other from the offering of the Notes or (ii) if the
allocation provided by the foregoing clause (i) is not permitted by applicable
law, not only such
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relative benefits but also the relative fault of the indemnifying party or
parties on the one hand and the indemnified party on the other in connection
with the statements or omissions or alleged statements or omissions that
resulted in such losses, claims, damages or liabilities (or actions in respect
thereof). The relative benefits received by the Issuers on the one hand and any
Initial Purchaser on the other shall be deemed to be in the same proportion as
the total proceeds from the offering (before deducting expenses) received by the
Issuers bear to the total discounts and commissions or other compensation
received by such Initial Purchaser with respect to the Notes purchased
hereunder. The relative fault of the parties shall be determined by reference
to, among other things, whether the untrue or alleged untrue statement of a
material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Issuers on the one hand, or such Initial
Purchaser on the other, the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission or
alleged statement or omission, and any other equitable considerations
appropriate in the circumstances. The Issuers and the Initial Purchasers agree
that it would not be equitable if the amount of such contribution were
determined by pro rata or per capita allocation or by any other method of
allocation that does not take into account the equitable considerations referred
to in the first sentence of this paragraph (d). Notwithstanding any other
provision of this paragraph (d), no Initial Purchaser shall be obligated to make
contributions hereunder that in the aggregate exceed the total discounts,
commissions and other compensation received by such Initial Purchaser under this
Agreement, less the aggregate amount of any damages that such Initial Purchaser
has otherwise been required to pay by reason of the untrue or alleged untrue
statements or the omissions or alleged omissions to state a material fact, and
no person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. For purposes of this paragraph (d),
each person, if any, who controls an Initial Purchaser within the meaning of
Section 15 of the Act or Section 20 of the Exchange Act shall have the same
rights to contribution as the Initial Purchasers, and each director or general
partner of the Issuers, each officer of the Issuers and each person, if any, who
controls the Issuers within the meaning of Section 16 of the Act or Section 20
of the Exchange Act, shall have the same rights to contribution as the Issuers.
10. Survival Clause. The respective representations,
warranties, agreements, covenants, indemnities and other statements of the
Issuers, their respective officers (including, in the case of BRL, officers of
its general partner) and the Initial Purchasers set forth in this Agreement or
made by or on behalf of them pursuant to this Agreement shall remain in full
force and effect, regardless of (i) any investigation made by or on behalf of
the Issuers, any of their respective officers (including, in the case of BRL,
officers of its general partner) or directors, the Initial Purchasers or any
controlling person referred to in Section 9 hereof and (ii) delivery of and
payment for the Notes. The respective agreements, covenants, indemnities
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and other statements set forth in Sections 6, 9 and 15 hereof shall remain in
full force and effect, regardless of any termination or cancellation of this
Agreement.
11. Termination. (a) This Agreement may be terminated in the
sole discretion of the Initial Purchasers by written notice to the Issuers given
prior to the Closing Date in the event that the Issuers shall have failed,
refused or been unable to perform in all material respects all obligations and
satisfy all conditions on its part to be performed or satisfied hereunder at or
prior thereto or if, at or prior to the Closing Date:
(i) the Company or the Issuers shall have sustained any loss
or interference with respect to its businesses or properties from fire,
flood, hurricane, accident or other calamity, whether or not covered by
insurance, or from any strike, labor dispute, slowdown or work stoppage
or any legal or governmental proceeding, which loss or interference, in
the sole judgment of the Initial Purchasers, has had or has a Material
Adverse Effect, or there shall have been, in the sole judgment of the
Initial Purchasers, any event or development that, individually or in
the aggregate, has or could be reasonably likely to have a Material
Adverse Effect (including without limitation a change in control of the
Issuers or the Company), except in each case as described in the
Memorandum (exclusive of any amendment or supplement thereto);
(ii) trading in securities generally on the New York Stock
Exchange, American Stock Exchange or the NASDAQ National Market shall
have been suspended or minimum or maximum prices shall have been
established on any such exchange or market;
(iii) a banking moratorium shall have been declared by New
York or United States authorities; or
(iv) there shall have been (A) an outbreak or escalation of
hostilities between the United States and any foreign power, or (B) an
outbreak or escalation of any other insurrection or armed conflict
involving the United States or any other national or international
calamity or emergency, or (C) any material change in the financial
markets of the United States which, in the case of (A), (B) or (C)
above and in the sole judgment of the Initial Purchasers, makes it
impracticable or inadvisable to proceed with the offering or the
delivery of the Notes as contemplated by the Memorandum.
(b) Termination of this Agreement pursuant to this Section 11
shall be without liability of any party to any other party except as provided in
Section 10 hereof.
12. Default by One of the Initial Purchasers. If one or more
of the Initial Purchasers shall fail at the Closing Date to purchase the Notes
which it or they are obligated to
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purchase under this Agreement (the "Defaulted Securities"), then Deutsche Banc
Alex Brown Inc. shall have the right, within 24 hours thereafter, to make
arrangements for one or more of the non-defaulting Initial Purchasers, or any
other Initial Purchasers, to purchase all, but not less than all, of the
Defaulted Securities in such amounts as may be agreed upon and upon the terms
herein set forth; if, however, Deutsche Banc Alex. Brown shall not have
completed such arrangements within such 24-hour period, then:
(a) if the number of Defaulted Securities does not exceed 10%
of the aggregate principal amount of the Notes to be purchased
hereunder, each of the non-defaulting Initial Purchasers shall be
obligated, severally and not jointly, to purchase the full amount
thereof in the proportions that their respective underwriting
obligations hereunder bear to the underwriting obligations of all
non-defaulting Initial Purchasers, or
(b) if the number of Defaulted Securities exceeds 10% of the
aggregate principal amount of the Notes to be purchased hereunder, this
Agreement shall terminate without liability on the part of any
non-defaulting Initial Purchaser.
No action taken pursuant to this Section shall relieve any
defaulting Initial Purchaser from liability in respect of its default.
In the event of any such default which does not result in a
termination of this Agreement, either Deutsche Banc Alex. Brown or the Issuers,
shall have the right to postpone the Closing Date for a period not exceeding
seven days in order to effect any required changes in the Memorandum or in any
other documents or arrangements. As used herein, the term "Initial Purchaser"
includes any person substituted for an Initial Purchaser under this Section 12.
13. Information Supplied by the Initial Purchasers. The
statements set forth in the third paragraph, the second and third sentences of
the fifth paragraph and the seventh, eighth, ninth and tenth paragraph under the
heading "Private Placement" in the Memorandum constitute the only information
furnished by the Initial Purchasers to the Issuers for the purposes of Sections
2(a) and 9 hereof.
14. Notices. All communications hereunder shall be in writing
and, if sent to the Initial Purchasers, shall be mailed or delivered to Deutsche
Banc Alex. Brown Inc., 130 Liberty Street, New York, New York 10006, Attention:
Corporate Finance Department; if sent to the Issuers, shall be mailed or
delivered to the Issuers at 2911 Turtle Creek Boulevard, Suite 1240, Dallas, TX
75219; with a copy (which shall not constitute notice) to the Company at 4440
Brittmoore Road, Houston, TX 77041, Attention: General Counsel.
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All such notices and communications shall be deemed to have
been duly given: when delivered by hand, if personally delivered; five business
days after being deposited in the mail, postage prepaid, if mailed; and one
business day after being timely delivered to a next-day air courier.
15. Successors. This Agreement shall inure to the benefit of
and be binding upon the Initial Purchasers, the Issuers and their respective
successors and legal representatives, and nothing expressed or mentioned in this
Agreement is intended or shall be construed to give any other person any legal
or equitable right, remedy or claim under or in respect of this Agreement, or
any provisions herein contained; this Agreement and all conditions and
provisions hereof being intended to be and being for the sole and exclusive
benefit of such persons and for the benefit of no other person except that (i)
the indemnities of the Issuers contained in Section 9 of this Agreement shall
also be for the benefit of any person or persons who control the Initial
Purchasers within the meaning of Section 15 of the Act or Section 20 of the
Exchange Act and (ii) the indemnities of the Initial Purchasers contained in
Section 9 of this Agreement shall also be for the benefit of the general partner
and directors of the Issuers, officers of the Issuers and any person or persons
who control the Issuers within the meaning of Section 15 of the Act or Section
20 of the Exchange Act. No purchaser of Notes from the Initial Purchasers will
be deemed a successor because of such purchase.
16. APPLICABLE LAW. THE VALIDITY AND INTERPRETATION OF THIS
AGREEMENT, AND THE TERMS AND CONDITIONS SET FORTH HEREIN SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO
CONTRACTS MADE AND TO BE PERFORMED WHOLLY THEREIN, WITHOUT GIVING EFFECT TO ANY
PROVISIONS THEREOF RELATING TO CONFLICTS OF LAW.
17. Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
-28-
If the foregoing correctly sets forth our understanding,
please indicate your acceptance thereof in the space provided below for that
purpose, whereupon this letter shall constitute a binding agreement between each
of you and the Initial Purchasers.
Very truly yours,
BRL UNIVERSAL EQUIPMENT 2001 A, L.P.
By: BRL Universal Equipment
Management, Inc., its general partner
By: /s/ Daniel D. Boeckman
----------------------
Daniel D. Boeckman, Executive Vice
President
BRL UNIVERSAL EQUIPMENT CORP.
By: /s/ Daniel D. Boeckman
----------------------
Daniel D. Boeckman, Executive Vice
President
-29-
The foregoing Agreement is hereby confirmed and accepted as of the date first
above written.
DEUTSCHE BANC ALEX. BROWN INC.
FIRST UNION SECURITIES, INC.
BANC ONE CAPITAL MARKETS, INC.
SCOTIA CAPITAL (USA) INC.
By: DEUTSCHE BANC ALEX. BROWN INC.
By: /s/ Steven M. Cowan
-------------------
Steven M. Cowan, Vice President
By: /s/ C. Mitchell Cox
-------------------
C. Mitchell Cox, Managing Director
SCHEDULE 1
Principal
Amount of
Initial Purchaser Notes
----------------- ------------
Deutsche Banc Alex. Brown Inc. ......................... $ 55,000,000
First Union Securities, Inc. ........................... 35,000,000
Banc One Capital Markets, Inc. ......................... 5,000,000
Scotia Capital (USA) Inc. .............................. 5,000,000
------------
Total.......................................... $100,000,000
============
EX-10.6
10
h91556ex10-6.txt
ENGAGEMENT LETTER SUPPLEMENT - OCTOBER 16, 2001
EXHIBIT 10.6
ANNEX A
UNIVERSAL COMPRESSION HOLDINGS, INC.
UNIVERSAL COMPRESSION, INC.
4440 BRITTMOORE ROAD
HOUSTON, TEXAS 77041
October 16, 2001
Deutsche Banc Alex. Brown Inc.
First Union Securities, Inc.
Banc One Capital Markets, Inc.
Scotia Capital (USA) Inc.
c/o Deutsche Banc Alex. Brown Inc.
130 Liberty Street
New York, New York 10006
Re: Universal Compression Synthetic Lease Financing
Ladies and Gentlemen:
Reference is made to that certain letter agreement dated
January 21, 2001 among Deutsche Banc Alex. Brown Inc. ("DBAB"), BRL Universal
Equipment 2001 A, L.P. ("BRL"), BRL Universal Equipment Corp. ("BRLC") and
Universal Compression, Inc. (the "Company") (the "Letter Agreement") and the
indemnity letter referred to in Section 3(c) thereof (the "Indemnity Letter")
(the Letter Agreement and the Indemnity Letter (not including the supplement
thereto dated February 6, 2001) are referred to collectively herein as the
"Engagement Letter"). Capitalized terms used herein without definition have the
meanings given such terms in the Engagement Letter.
In consideration of (i) the intention of BRL to acquire
additional domestic gas compression equipment with an aggregate appraised value
of at least $122.0 million from the Company and (ii) the intention of BRL, BRLC
UCH and UCI to raise additional funds of $122.0 million in the aggregate
pursuant to the provisions of the documents governing the Financing to finance
the acquisition of the additional equipment, the parties to the Engagement
Letter wish to execute this letter agreement (this "Agreement") supplementing
certain provisions of the Engagement Letter. Contemporaneously herewith the
Initial Purchasers are entering into a purchase agreement with BRL and BRLC (the
"Purchase Agreement") relating to the purchase of $100,000,000 aggregate
principal amount of 8-7/8% Senior Secured Notes
-2-
due 2008 of BRL and BRLC (the "Notes") offered pursuant to the offering
memorandum dated the date hereof prepared by UCH, UCI, BRL and BRLC (the
"Memorandum").
Section 1. Representations and Warranties. Each of UCH and
UCI, severally and jointly, represents and warrants to (provided, each such
representation and warranty shall be true and correct on the date hereof and at
and as of the Closing Date unless expressly stated to relate to another date)
and agrees with each of the Initial Purchasers that:
(a) Neither the Memorandum nor any amendment or supplement
thereto as of the date thereof and at all times subsequent thereto up
to the Closing Date (as defined in the Purchase Agreement) contained or
contains any untrue statement of a material fact or omitted or omits to
state a material fact necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading,
except that the representations and warranties set forth in this
Section 1(a) do not apply to the Initial Purchaser Information or the
Issuer Information.
(b) The audited and unaudited consolidated financial
statements of UCH and UCI included or incorporated by reference into
the Memorandum present fairly in all material respects the financial
position, results of operations and cash flows of each of UCH and UCI
at the respective dates and for the respective periods to which they
relate and have been prepared in accordance with generally accepted
accounting principles applied on a consistent basis, except as
otherwise stated therein. Deloitte & Touche LLP, and, to the knowledge
of UCI and UCH, Arthur Andersen LLP and KPMG LLP (the "Independent
Accountants") are independent public accounting firms within the
meaning of the Act and the rules and regulations promulgated thereunder
(c) The pro forma financial statements (including the notes
thereto) and the other pro forma financial information included or
incorporated by reference in the Memorandum (i) comply as to form in
all material respects with the applicable requirements of Regulation
S-X promulgated under the Exchange Act, (ii) have been prepared in all
material respects in accordance with the Commission's rules and
guidelines with respect to pro forma financial statements, and (iii)
have been properly computed on the bases described therein; the
assumptions used in the preparation of the pro forma financial data and
other pro forma financial information included in the Memorandum are
reasonable and the adjustments used therein are appropriate in all
material respects to give effect to the transactions or circumstances
referred to therein.
(d) The statistical and market-related data included in the
Memorandum are based on or derived from sources which UCH and UCI
believe to be in all material respects reliable and accurate.
-3-
(e) Neither UCH nor UCI nor any agent acting on their behalf
has taken or will take any action that might cause this Agreement or
the sale of the Notes to violate Regulation T, U or X of the Board of
Governors of the Federal Reserve System, in each case as in effect on
the Closing Date.
(f) Each of UCH and UCI (i) makes and keeps books and records
which, in reasonable detail, accurately and fairly reflect the
transactions and disposition of assets of such entity and (ii)
maintains internal accounting controls which provide reasonable
assurance that (A) transactions are executed in accordance with
management's general or specific authorization, (B) transactions are
recorded as necessary to permit preparation of its financial statements
and to maintain accountability for its assets, (C) access to its assets
is permitted only in accordance with management's authorization and (D)
the reported accountability for its assets is compared with existing
assets at reasonable intervals.
(g) The Notes, the Indenture, the Registration Rights
Agreement (as defined in the Memorandum) and each of the Operative
Documents (as defined in the Memorandum) will conform in all material
respects to the descriptions thereof in the Memorandum.
(h) No holder of securities of UCH or UCI will be entitled to
have such securities registered under the registration statements
required to be filed pursuant to the Registration Rights Agreement (as
defined in the Memorandum) other than as expressly permitted thereby.
(i) Neither UCH nor UCI nor any of their respective affiliates
as defined in Rule 501(b) of Regulation D under the Act ("Affiliates")
have directly, or through any agent, (i) sold, offered for sale,
solicited offers to buy or otherwise negotiated in respect of any
"security" (as defined in the Act) which is or could be integrated with
the sale of the Notes in a manner that would require the registration
under the Act of the Notes or (ii) engaged in any form of general
solicitation or general advertising (as those terms are used in
Regulation D under the Act) in connection with the offering of the
Notes or in any manner involving a public offering within the meaning
of Section 4(2) of the Act.
(j) Neither UCH nor UCI has taken, nor will it take, directly
or indirectly, any action designed to, or that might be reasonably
expected to, cause or result in stabilization or manipulation of the
price of the Notes.
(k) Neither UCH nor UCI nor any of their Affiliates or any
person acting on its or their behalf (other than the Initial
Purchasers) has engaged in any directed
-4-
selling efforts (as that term is defined in Regulation S under the Act
("Regulation S")) with respect to the Notes.
(l) On the Closing Date, all the representations and
warranties made by UCH and UCI in the Participation Agreement (as
defined in the Memorandum) shall be true and correct.
(m) This Agreement and the Registration Rights Agreement have
been duly authorized, executed and delivered by each of UCH and UCI.
Section 2. Covenants. Each of UCH and UCI covenants and
agrees, jointly and severally, with each of the Initial Purchasers that:
(a) UCH and UCI will not amend or supplement the Memorandum or
any amendment or supplement thereto of which the Initial Purchasers
shall not previously have been advised and furnished a copy for a
reasonable period of time prior to the proposed amendment or supplement
and as to which the Initial Purchasers shall reasonably object to in
writing; any objection to such amendment or supplement shall be made
within two business days after receiving a draft copy thereof. UCH and
UCI will promptly, upon the reasonable request of the Initial
Purchasers or counsel for the Initial Purchasers, make any amendments
or supplements to the Memorandum that may be necessary or advisable in
connection with the resale of the Notes by the Initial Purchasers.
(b) If, at any time prior to the completion of the
distribution by the Initial Purchasers of the Notes or the Private
Exchange Notes (as defined in the Registration Rights Agreement), any
event occurs or information becomes known as a result of which the
Memorandum as then amended or supplemented would include any untrue
statement of a material fact, or omit to state a material fact
necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading, or if for any
other reason it is necessary at any time to amend or supplement the
Memorandum to comply with applicable law, UCH and UCI will promptly
notify the Initial Purchasers thereof and will prepare, at the expense
of UCH and UCI, an amendment or supplement to the Memorandum that
corrects such statement or omission or effects such compliance.
(c) UCH and UCI will, without charge, provide to the Initial
Purchasers and to counsel for the Initial Purchasers as many copies of
the Memorandum or any amendment or supplement thereto as the Initial
Purchasers may reasonably request.
-5-
(d) For a period of one year after the Closing Date, UCH and
UCI will furnish to the Initial Purchasers copies of any reports or
financial statements furnished to or filed by UCH or UCI with the
Commission or any national securities exchange on which any class of
securities of UCH or UCI may be listed.
(e) For so long as any of the Notes remain outstanding and
have not been registered pursuant to the Act, UCH and UCI will make
available at their expense, upon reasonable request, to any holder of
such Notes and any prospective purchasers thereof the information
specified in Rule 144A(d)(4) under the Act, unless UCH or UCI, as the
case may be, are subject to Section 13 or 15(d) of the Exchange Act.
Section 3. Conditions Precedent. The obligation of the Initial
Purchasers to fulfill any obligation to BRL and BRLC as contemplated by the
Purchase Agreement shall, in the sole discretion of the Initial Purchasers, be
subject to the satisfaction or waiver of the following conditions on or prior to
the Closing Date (and BRL and BRLC so agree):
(a) The Initial Purchasers shall have received a certificate
of each of UCH and UCI, dated the Closing Date and addressed to BRL and
the Initial Purchasers, signed on behalf of UCH and UCI by their
respective duly authorized officers to the effect that:
(i) The representations and warranties of UCH and UCI
contained in this Agreement are true and correct in all
material respects on and as of the Closing Date, and UCH and
UCI have performed in all material respects all covenants and
agreements and satisfied all conditions on their part to be
performed or satisfied hereunder at or prior to the Closing
Date;
(ii) At the Closing Date, since the date of the
Memorandum or since the date of the most recent financial
statements in the Memorandum (exclusive of any amendment or
supplement thereto after the date of the Memorandum), no event
or development has occurred, and no information has become
known, that, individually or in the aggregate, has or would
reasonably be expected to have a material adverse effect on
the business, condition (financial or otherwise) or results of
operations of UCH and UCI, taken as a whole (any such event, a
"Material Adverse Effect"); and
(iii) The sale of the Notes has not been enjoined
(temporarily or permanently).
(b) On the Closing Date, the Initial Purchasers shall have
received the opinions to be delivered to the parties pursuant to the
Participation Agreement, dated
-6-
as of the Closing Date and addressed to the Initial Purchasers, of King
& Spalding, Gardere Wynne Sewell LLP and Mark Carlton, counsel for UCH
and UCI, in form and substance satisfactory to counsel for the Initial
Purchasers.
(c) The representations and warranties of each of UCH and UCI
contained in this Agreement shall be true and correct on and as of the
date hereof and on and as of the Closing Date in all material respects
as if made on and as of the Closing Date; the statements of the
officers of UCH or UCI made pursuant to any certificate delivered in
accordance with the provisions hereof shall be true and correct in all
material respects on and as of the date made and on and as of the
Closing Date; each of UCH and UCI shall have performed in all material
respects all covenants and agreements and satisfied all conditions on
its part to be performed or satisfied hereunder at or prior to the
Closing Date; and, except as described in the Memorandum (exclusive of
any amendment or supplement thereto after the date hereof), subsequent
to the date of the most recent financial statements in such Memorandum,
there shall have been no event or development, and no information shall
have become known, that, individually or in the aggregate, has or would
reasonably be expected to have a Material Adverse Effect.
(d) Subsequent to the date of the most recent financial
statements of UCH or UCI incorporated by reference in the Memorandum
(exclusive of any amendment or supplement thereto after the date
hereof), neither UCH nor UCI shall have sustained any loss or
interference with respect to its business or properties from fire,
flood, hurricane, accident or other calamity, whether or not covered by
insurance, or from any strike, labor dispute, slowdown or work stoppage
or from any legal or governmental proceeding, order or decree, which
loss or interference, individually or in the aggregate, has or would
reasonably be expected to have a Material Adverse Effect.
(e) On the Closing Date, the Initial Purchasers shall have
received the Registration Rights Agreement executed by UCH and UCI and
the other parties thereto.
(f) On the Closing Date, all conditions of UCH or UCI to the
consummation of the transactions contemplated by the Operative
Documents shall have been satisfied and each Operative Document shall
be in full force and effect as to UCH and UCI. Since the date of this
Agreement, except in connection with the offering of the Notes or as
previously disclosed to the Initial Purchasers and reasonably
acceptable to them, there have been no amendments, modifications,
restatements or waivers to any Operative Documents which would be
required to be disclosed in the Memorandum and are not so disclosed.
-7-
On or before the Closing Date, the Initial Purchasers and
counsel for the Initial Purchasers shall have received such further documents,
opinions, certificates, letters and schedules or instruments relating to the
business, corporate, legal and financial affairs of UCH and UCI as they shall
have heretofore reasonably requested from UCH and UCI.
All such documents, opinions, certificates, letters, schedules
or instruments delivered pursuant to this Agreement will comply with the
provisions hereof only if they are reasonably satisfactory in all material
respects to the Initial Purchasers and counsel for the Initial Purchasers. UCH
and UCI shall furnish to the Initial Purchasers such conformed copies of such
documents, opinions, certificates, letters, schedules and instruments in such
quantities as the Initial Purchasers shall reasonably request.
Section 4. Indemnification and Contribution.
(a) UCH and UCI agree to indemnify and hold harmless the
Initial Purchasers and each person, if any, who controls any Initial Purchaser
within the meaning of Section 15 of the Securities Act of 1933, as amended (the
"Act") or Section 20 of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), against any losses, claims, damages or liabilities to which any
Initial Purchaser or such controlling person may become subject under the Act,
the Exchange Act or otherwise, insofar as any such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon:
(i) any untrue statement or alleged untrue statement of any
material fact contained in any Memorandum or any amendment or
supplement thereto; or
(ii) the omission or alleged omission to state, in any
Memorandum or any amendment or supplement thereto, a material fact
required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading
and will reimburse, as incurred, the Initial Purchasers and each such
controlling person for any legal or other expenses reasonably incurred by the
Initial Purchasers or such controlling person in connection with investigating,
defending against or appearing as a third-party witness in connection with any
such loss, claim, damage, liability or action; provided, however, UCH and UCI
will not be liable in any such case to the extent that any such loss, claim,
damage, or liability arises out of or is based upon any untrue statement or
alleged untrue statement or omission or alleged omission made in the Memorandum
or any amendment or supplement thereto in reliance upon and in conformity with
written information concerning the Initial Purchasers furnished to UCH or UCI,
as the case may be, by the Initial Purchasers specifically for use therein. This
indemnity agreement will be in addition to any liability that UCH or UCI may
otherwise have to the indemnified parties. UCH and UCI shall not be liable under
this
-8-
Section 4 for any settlement of any claim or action effected without their
prior written consent, which shall not be unreasonably withheld, delayed or
conditioned. The Initial Purchasers shall not, without the prior written consent
of UCH and UCI, effect any settlement or compromise of any pending or threatened
proceeding in respect of which UCH and UCI are or could have been a party, or
indemnity could have been sought hereunder by UCH and UCI, unless such
settlement (A) includes an unconditional written release of UCH and UCI, in form
and substance reasonably satisfactory to UCH and UCI, from all liability on
claims that are the subject matter of such proceeding and (B) does not include
any statement as to an admission of fault, culpability or failure to act by or
on behalf of UCH and UCI.
(b) The Initial Purchasers agree to indemnify and hold
harmless UCH and UCI, their respective directors, officers and each person, if
any, who controls UCH and UCI within the meaning of Section 15 of the Act or
Section 20 of the Exchange Act against any losses, claims, damages or
liabilities to which UCH and UCI or any such director, officer or controlling
person may become subject under the Act, the Exchange Act or otherwise, insofar
as such losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon (i) any untrue statement or alleged untrue
statement of any material fact contained in the Memorandum or any amendment or
supplement thereto, or (ii) the omission or the alleged omission to state
therein a material fact required to be stated in the Memorandum or any amendment
or supplement thereto, or necessary to make the statements therein not
misleading, in each case to the extent, but only to the extent, that such untrue
statement or alleged untrue statement or omission or alleged omission was made
in reliance upon and in conformity with written information concerning such
Initial Purchaser, furnished to UCH or UCI, as the case may be, by the Initial
Purchasers specifically for use therein; and subject to the limitation set forth
immediately preceding this clause, will reimburse, as incurred, any legal or
other expenses reasonably incurred by UCH or UCI or any such director, officer
or controlling person in connection with investigating or defending against or
appearing as a third party witness in connection with any such loss, claim,
damage, liability or action in respect thereof. This indemnity agreement will be
in addition to any liability that the Initial Purchasers may otherwise have to
the indemnified parties. The Initial Purchasers shall not be liable under this
Section 4 for any settlement of any claim or action effected without their
consent, which shall not be unreasonably withheld. Neither UCH nor UCI shall,
without the prior written consent of the Initial Purchasers, effect any
settlement or compromise of any pending or threatened proceeding in respect of
which any Initial Purchaser is or could have been a party, or indemnity could
have been sought hereunder by any Initial Purchaser, which settlement or
compromise would be applicable to the Initial Purchasers unless such settlement
(A) includes an unconditional written release of the Initial Purchasers, in form
and substance reasonably satisfactory to the Initial Purchasers, from all
liability on claims that are the subject matter of such proceeding and (B) does
not include any statement as to an admission of fault, culpability or failure to
act by or on behalf of any Initial Purchaser.
-9-
(c) Promptly after receipt by an indemnified party under this
Section 4 of notice of the commencement of any action for which such indemnified
party is entitled to indemnification under this Section 4, such indemnified
party will, if a claim in respect thereof is to be made against the indemnifying
party under this Section 4, notify the indemnifying party of the commencement
thereof in writing; but the omission to so notify the indemnifying party (i)
will not relieve it from any liability under paragraph (a) or (b) above unless
and to the extent such failure results in the forfeiture by the indemnifying
party of substantive rights and defenses and (ii) will not, in any event,
relieve the indemnifying party from any obligations to any indemnified party
other than the indemnification obligation provided in paragraphs (a) and (b)
above. In case any such action is brought against any indemnified party, and it
notifies the indemnifying party of the commencement thereof, the indemnifying
party will be entitled to participate therein and, to the extent that it may
wish, jointly with any other indemnifying party similarly notified, to assume
the defense thereof, with counsel reasonably satisfactory to such indemnified
party; provided, however, that if (i) the use of counsel chosen by the
indemnifying party to represent the indemnified party would present such counsel
with a conflict of interest, (ii) the defendants in any such action include both
the indemnified party and the indemnifying party and the indemnified party shall
have been advised by counsel in writing that there may be one or more legal
defenses available to it and/or other indemnified parties that are different
from or additional to those available to the indemnifying party, or (iii) the
indemnifying party shall not have employed counsel reasonably satisfactory to
the indemnified party to represent the indemnified party within a reasonable
time after receipt by the indemnifying party of notice of the institution of
such action, then, in each such case, the indemnifying party shall not have the
right to direct the defense of such action on behalf of such indemnified party
or parties and such indemnified party or parties shall have the right to select
separate counsel to defend such action on behalf of such indemnified party or
parties. After notice from the indemnifying party to such indemnified party of
its election so to assume the defense thereof and approval by such indemnified
party of counsel appointed to defend such action, the indemnifying party will
not be liable to such indemnified party under this Section 4 for any legal or
other expenses, other than reasonable costs of investigation, subsequently
incurred by such indemnified party in connection with the defense thereof,
unless (i) the indemnified party shall have employed separate counsel in
accordance with the proviso to the immediately preceding sentence (it being
understood, however, that in connection with such action the indemnifying party
shall not be liable for the expenses of more than one separate counsel (in
addition to local counsel) in any one action or separate but substantially
similar actions in the same jurisdiction arising out of the same general
allegations or circumstances, designated by the Initial Purchasers in the case
of paragraph (a) of this Section 4 or UCH or UCI in the case of paragraph (b) of
this Section 4, representing all of the indemnified parties under such paragraph
(a) or paragraph (b), as the case may be, who are parties to such action or
actions) or (ii) the indemnifying party has authorized in writing the employment
of counsel for the indemnified party at the expense of the indemnifying party.
After such notice from the
-10-
indemnifying party to such indemnified party, the indemnifying party will not be
liable for the costs and expenses of any settlement of such action effected by
such indemnified party without the prior written consent of the indemnifying
party (which consent shall not be unreasonably withheld), unless such
indemnified party waived in writing its rights under this Section 4, in which
case the indemnified party may effect such a settlement without such consent.
(d) In circumstances in which the indemnity agreement provided
for in the preceding paragraphs of this Section 4 is unavailable to, or
insufficient to hold harmless, an indemnified party in respect of any losses,
claims, damages or liabilities (or actions in respect thereof), each
indemnifying party, in order to provide for just and equitable contribution,
shall contribute to the amount paid or payable by such indemnified party as a
result of such losses, claims, damages or liabilities (or actions in respect
thereof) in such proportion as is appropriate to reflect (i) the relative
benefits received by the indemnifying party or parties on the one hand and the
indemnified party on the other from the offering of the Notes or (ii) if the
allocation provided by the foregoing clause (i) is not permitted by applicable
law, not only such relative benefits but also the relative fault of the
indemnifying party or parties on the one hand and the indemnified party on the
other in connection with the statements or omissions or alleged statements or
omissions that resulted in such losses, claims, damages or liabilities (or
actions in respect thereof). The relative benefits received by UCH and UCI on
the one hand and any Initial Purchaser on the other shall be deemed to be in the
same proportion as the total proceeds from the offering of the Notes (before
deducting expenses) received bear to the total discounts and commissions or
other compensation received by such Initial Purchaser with respect to the Notes
purchased by such Initial Purchaser. The relative fault of the parties shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by UCH and UCI on the one hand,
or such Initial Purchaser on the other, the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such statement or
omission or alleged statement or omission, and any other equitable
considerations appropriate in the circumstances. UCH and UCI and the Initial
Purchasers agree that it would not be equitable if the amount of such
contribution were determined by pro rata or per capita allocation or by any
other method of allocation that does not take into account the equitable
considerations referred to in the first sentence of this paragraph (d).
Notwithstanding any other provision of this paragraph (d), no Initial Purchaser
shall be obligated to make contributions hereunder that in the aggregate exceed
the total discounts, commissions and other compensation received by such Initial
Purchaser, less the aggregate amount of any damages that such Initial Purchaser
has otherwise been required to pay by reason of the untrue or alleged untrue
statements or the omissions or alleged omissions to state a material fact, and
no person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. For purposes of this paragraph (d),
each person, if any, who controls an
-11-
Initial Purchaser within the meaning of Section 15 of the Act or Section 20 of
the Exchange Act shall have the same rights to contribution as the Initial
Purchasers, and each director of either UCH or UCI, each officer of either UCH
or UCI and each person, if any, who controls either UCH or UCI within the
meaning of Section 15 of the Act or Section 20 of the Exchange Act, shall have
the same rights to contribution as UCH or UCI, as the case may be. The indemnity
and contribution agreements contained in this Section 4 will be in addition to
any liability that the indemnifying parties may otherwise have to the
indemnified parties referred to above.
Section 5. Certain Information. The statements set forth in
the third paragraph and the second and third sentences in the fifth paragraph
and the seventh, eighth, ninth and tenth paragraphs under the heading "Private
Placement" in the Memorandum constitute the only information furnished by the
Initial Purchasers to UCH or UCI for the purposes of Sections 1(a) and 4 hereof
(the "Initial Purchaser Information"). The statements set forth in the
penultimate paragraph on page 11 and the last paragraph on page 85 on pages 37,
41, 53 through 55, 74, 75, 83 and F-1 through F-5 constitute the only
information furnished by BRL and BRLC (the "Issuer Information").
Section 6. Survival Clause. Notwithstanding anything to the
contrary in the other provisions of the Engagement Letter, the respective
representations, warranties, agreements, covenants, indemnities and other
statements of UCH and UCI, their respective officers and the Initial Purchasers
set forth in this Agreement or made by or on behalf of them pursuant to this
Agreement shall remain in full force and effect, regardless of (i) any
investigation made by or on behalf of UCH or UCI, any of their respective
officers or directors, the Initial Purchasers or any controlling person referred
to in Section 4 hereof and (ii) delivery of and payment for the Notes. The
respective agreements, covenants, indemnities and other statements set forth in
Section 4 hereof shall remain in full force and effect, regardless of any
termination or cancellation of this Agreement.
Section 7. Other Agreements; Parties. Upon the execution
hereof by the parties hereto, this Agreement shall be a binding agreement, in
full force and effect, among the parties hereto. The Engagement Letter, as
specifically supplemented hereby, shall continue to be in full force and effect
and is in all respects ratified and confirmed, except with respect to Sections
2(a), 2(b), 2(c), 3(b) and 3(c) thereof, which are terminated and superseded in
their entirety hereby.
Section 8. Termination. Notwithstanding anything to the
contrary in the other provisions of the Engagement Letter, the Engagement Letter
shall be deemed to be in full force and effect as supplemented by this
Agreement; provided that this Agreement may be terminated at the same time as
any termination of the Purchase Agreement; provided, however, that the
indemnification provisions hereof set forth in Section 4 shall survive any such
termination as provided in Section 6.
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Please confirm that the foregoing is in accordance with your
understanding by signing and returning to us the enclosed duplicate of this
letter.
Very truly yours,
UNIVERSAL COMPRESSION, INC.
By: /s/ Richard W. Fitzgerald
-----------------------------------
Richard W. Fitzgerald
Senior Vice President and
Chief Financial Officer
UNIVERSAL COMPRESSION HOLDINGS, INC.
By: /s/ Richard W. Fitzgerald
-----------------------------------
Richard W. Fitzgerald
Senior Vice President and
Chief Financial Officer
AGREED TO AND ACCEPTED as of the
date first written above:
DEUTSCHE BANC ALEX. BROWN INC.
FIRST UNION SECURITIES, INC.
BANC ONE CAPITAL MARKETS, INC.
SCOTIA CAPITAL (USA) INC.
By: Deutsche Banc Alex. Brown Inc.
By: /s/ Steven M. Cowan
--------------------------------
Steven M. Cowan
Vice President
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BRL UNIVERSAL EQUIPMENT 2001 A, L.P.
By: BRL Universal Equipment Management, Inc.,
its General Partner
By: /s/ Daniel D. Boeckman
---------------------------------------------
Daniel D. Boeckman
Executive Vice President
BRL UNIVERSAL EQUIPMENT CORP.
By: /s/ Daniel D. Boeckman
---------------------------------------------
Daniel D. Boeckman
Executive Vice President