NOTE PURCHASE AGREEMENT

EXHIBIT 4.1

CAMERON HIGHWAY OIL PIPELINE COMPANY

$415,000,000

5.86% Series A Senior Secured Notes due December 15, 2017

Floating Rate Series B Senior Secured Notes due December 15, 2017

	NOTE PURCHASE AGREEMENT

Dated December 15, 2005

 

 

TABLE OF CONTENTS

 

i

TABLE OF CONTENTS

(continued)

 

ii

TABLE OF CONTENTS

(continued)

 

iii

Schedules and Exhibits

 

 

Schedule A	--	Information Relating To Purchasers
Schedule B	--	Defined Terms
Schedule C	--	Information Relating To Borrower
Schedule I	--	Material Project Documents
Schedule 5.3	--	Disclosure Materials
Schedule 5.4	--	Officers
Schedule 5.5	--	Financial Statements
Schedule 5.10	--	Borrower Assets
Schedule 6.3	--	Note Legend
Schedule 9.2	--	Insurance
Schedule 10.1	--	Existing Affiliate Transactions
Schedule 10.3	--	Permitted Disposition
Schedule 10.6	--	Restrictive Agreements
Exhibit 1.1	--	Form of 5.86% Series A Senior Secured Note due December 15, 2017
Exhibit 1.2	--	Form of Floating Rate Series B Senior Secured Note due December 15, 2017
Exhibit 4.4(a)	--	Form of Opinion of Bracewell & Giuliani LLP, Special Counsel for the Borrower, Enterprise Chops and Manta Ray
Exhibit 4.4(b)	--	Form of Opinion of Carol F. Melcher, Associate General Counsel of Enterprise
Exhibit 4.4(c)	--	Form of Opinion of Baker Botts L.L.P., Special Counsel for Valero CHOPS
Exhibit 4.4(d)	--	Form of Opinion of Jay Browning, Vice President - Corporate Law and Secretary of Valero
Exhibit 4.4(e)	--	Form of Opinion of Liskow & Lewis, Special Louisiana Counsel of the Borrower
Exhibit 4.4(f)	--	Form of Opinion of Special Counsel for the Purchasers
Exhibit 4.11(a)	--	Form of Collateral Agency Agreement
Exhibit 4.11(b)	--	Form of Deposit and Disbursement Agreement
Exhibit 4.11(c)	--	Form of Security Agreement
Exhibit 4.11(d)	--	Form of Pledge Agreement
Exhibit 4.11(e)	--	Form of Mortgage
Exhibit 4.11(f)	--	Form of JPMorgan Account Control Agreement
Exhibit A	--	Manta Ray Consent
Exhibit B	--	Terms of Subordination

 

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CAMERON HIGHWAY OIL PIPELINE COMPANY

2727 North Loop West

Suite 700

Houston, Texas 77008

 

5.86 % Series A Senior Secured Notes due December 15, 2017

Floating Rate Series B Senior Secured Notes due December 15, 2017

December 15, 2005

To each of the Purchasers

listed in Schedule A hereto:

Ladies and Gentlemen:

CAMERON HIGHWAY OIL PIPELINE COMPANY , a Delaware general partnership (the “Borrower” ), agrees with each of the purchasers whose names appear at the end hereof (each, a “Purchaser” and, collectively, the “Purchasers” ) as follows:

WHEREAS , pursuant to a certain Amended and Restated Credit Agreement dated as of June 29, 2005 (the " SunTrust Credit Agreement "), by and among the Borrower, SunTrust Bank, as Administrative Agent and Collateral Agent, and the other lenders party thereto, the lenders under the SunTrust Credit Agreement made certain term loans to the Borrower in an aggregate original principal amount of $415,000,000 for the purposes described therein; and

WHEREAS , the parties hereto wish to amend and restate the SunTrust Credit Agreement in its entirety as more fully set forth herein and to have such indebtedness be governed by the terms and conditions of this Agreement and the other Financing Documents.

NOW, THEREFORE , the Borrower and the Purchasers agree that as of the date of Closing, the SunTrust Credit Agreement shall be amended and restated in its entirety as set forth herein.

SECTION 1.

AUTHORIZATION OF NOTES.

The Borrower will authorize the issue and sale of:

(a)          $365,000,000 aggregate principal amount of its 5.86% Series A Senior Secured Notes due December 15, 2017 (including any amendments, restatements or modifications from time to time, the “Series A Notes” , such term to include any such notes issued in substitution therefor pursuant to Section 13), and

(b)          $50,000,000 aggregate principal amount of its Floating Rate Series B Senior Secured Notes due December 15, 2017 (including any amendments, restatements or modifications from time to time, the “Series B Notes” , such term to include any such notes issued in substitution therefor pursuant to Section 13).

The Series A Notes and the Series B Notes are referred to herein, collectively, as the “Notes” . The Series A Notes and the Series B Notes shall be substantially in the forms set out in Exhibit 1.1 and Exhibit 1.2, respectively, in each case with such changes therefrom, if any, as may be approved in writing by the Purchasers and the Borrower. Certain capitalized and other terms used in this Agreement are defined in Schedule B; and references to a “Schedule” or an “Exhibit” are, unless otherwise specified, references to a Schedule or an Exhibit attached to this Agreement.

SECTION 2.

SALE AND PURCHASE OF NOTES.

Subject to the terms and conditions of this Agreement, the Borrower will issue and sell to each Purchaser and each Purchaser will purchase from the Borrower, at the Closing provided for in Section 3, Notes in the principal amount and in the Series specified opposite such Purchaser’s name in Schedule A at the purchase price of 100% of the principal amount thereof, provided that the Borrower’s obligation to sell the Notes shall be contingent upon the purchase of all the Notes by the Purchasers. The Purchasers’ obligations hereunder are several and not joint obligations and no Purchaser shall have any liability to any Person for the performance or non-performance of any obligation by any other Purchaser hereunder.

SECTION 3.

CLOSING.

The sale and purchase of the Notes to be purchased by each Purchaser shall occur at the offices of Bingham McCutchen LLP, 399 Park Avenue, New York, New York 10022, at 10:00 a.m., local time, at a closing (the “Closing” ) on December 15, 2005 or on such other Business Day thereafter on or prior to December 30, 2005 as may be agreed upon by the Borrower and the Purchasers. At the Closing the Borrower will deliver the Global Notes to DTC or the Fiscal Agent, as custodian for DTC, evidencing the aggregate principal amount of the Notes to be purchased by the Purchasers, against delivery by each of the Purchasers of the respective principal amounts specified opposite such Purchaser’s name in Schedule A to the Borrower or its order in immediately available funds in the amount of the purchase price therefor by wire transfer of immediately available funds for the account of the Borrower to account number 908 800 1944 at SunTrust Bank, 303 Peachtree Street, Atlanta, Georgia 30308, ABA number 061000104, SunTrust Agency Services, Reference CHOPS. If at the Closing the Borrower shall fail to tender such Global Notes as provided above in this Section 3, or any of the conditions specified in Section 4 shall not have been fulfilled to such Purchaser’s satisfaction, such Purchaser shall, at its election, be relieved of all further obligations under this Agreement, without thereby waiving any rights such Purchaser may have by reason of such failure or such nonfulfillment.

SECTION 4.

CONDITIONS TO CLOSING.

Each Purchaser’s obligation to purchase and pay for the Notes to be sold to such Purchaser at the Closing is subject to the fulfillment to such Purchaser’s satisfaction, prior to or at the Closing, of the following conditions:

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Section 4.1.

Representations and Warranties .

The representations and warranties of the Borrower in this Agreement shall be correct when made and at the time of the Closing.

Section 4.2.

Performance; No Default .

The Borrower shall have performed and complied with all agreements and conditions contained in this Agreement required to be performed or complied with by it prior to or at the Closing and after giving effect to the issue and sale of the Notes (and the application of the proceeds thereof as contemplated by Section 5.14) no Default or Event of Default shall have occurred and be continuing. The Borrower shall not have entered into any transaction since the date of the Memorandum that would have been prohibited by Sections 10.1, 10.2, 10.3, 10.4, 10.6, 10.7 (except for the Indebtedness under the SunTrust Credit Agreement being refinanced hereby), 10.8 (except for Liens securing the Indebtedness under the SunTrust Credit Agreement being refinanced hereby), 10.9, 10.10, 10.11, 10.12, 10.13 or 10.14 had such Sections applied since such date.

Section 4.3.

Compliance Certificates .

(a)           Officer’s Certificate . The Borrower shall have delivered to such Purchaser an Officer’s Certificate, dated the date of the Closing, certifying that the conditions specified in Sections 4.1, 4.2 and 4.9 have been fulfilled.

(b)           Secretary’s Certificates . The Borrower shall have delivered to such Purchaser a certificate of the Secretary or Assistant Secretary of the Borrower, each of the Partners and Manta Ray, dated the date of Closing, certifying as to (i) the resolutions attached thereto and other partnership or limited liability company proceedings relating to the authorization, execution and delivery of the Notes, this Agreement and the other Financing Documents and (ii) copies (attached to such certificate) of (A) all agreements, indentures or notes governing the terms of any Indebtedness of the Borrower in an aggregate principal amount of $5,000,000 or more, (B) all Purchase and Sale Agreements, (C) all Material Project Documents, (D) the Assignment (CHOPS) and (E) the Participation Agreement, which together shall constitute all material agreements, documents and instruments to which the Borrower or its assets are bound.

Section 4.4.

Opinions of Counsel .

Such Purchaser shall have received opinions in form and substance satisfactory to such Purchaser, dated the date of the Closing (a) from Bracewell & Giuliani LLP, counsel for the Borrower, Enterprise Chops and Manta Ray, covering the matters set forth in Exhibit 4.4(a) and covering such other matters incident to the transactions contemplated hereby as such Purchaser or its counsel may reasonably request (and the Borrower hereby requests such counsel to deliver such opinion to the Purchasers), (b) from Carol F. Melcher, Associate General Counsel of Enterprise, covering the matters set forth in Exhibit 4.4(b) and covering such other matters incident to the transactions contemplated hereby as such Purchaser or its counsel may reasonably request (and the Borrower hereby requests such counsel to deliver such opinion to the Purchasers), (c) from Baker Botts L.L.P., counsel for Valero CHOPS, covering the matters set

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forth in Exhibit 4.4(c) and covering such other matters incident to the transactions contemplated hereby as such Purchaser or its counsel may reasonably request (and the Borrower hereby requests such counsel to deliver such opinion to the Purchasers), (d) from Jay Browning, Vice President - Corporate Law and Secretary of Valero, covering the matters set forth in Exhibit 4.4(d) and covering such other matters incident to the transactions contemplated hereby as such Purchaser or its counsel may reasonably request (and the Borrower hereby requests such counsel to deliver such opinion to the Purchasers), (e) from Liskow & Lewis, Louisiana counsel for the Borrower covering the matters set forth in Exhibit 4.4(e) and covering such other matters incident to the transactions contemplated hereby as such Purchaser or its counsel may reasonably request (and the Borrower hereby requests its counsel to deliver such opinion to the Purchasers) and (f) from Bingham McCutchen LLP, the Purchasers’ special counsel in connection with such transactions, substantially in the form set forth in Exhibit 4.4(f) and covering such other matters incident to such transactions as such Purchaser may reasonably request.

Section 4.5.

Purchase Permitted By Applicable Law, Etc .

On the date of the Closing such Purchaser’s purchase of Notes shall (a) be permitted by the laws and regulations of each jurisdiction to which such Purchaser is subject, without recourse to provisions (such as section 1405(a)(8) of the New York Insurance Law) permitting limited investments by insurance companies without restriction as to the character of the particular investment, (b) not violate any applicable law or regulation (including, without limitation, Regulation T, U or X of the Board of Governors of the Federal Reserve System) and (c) not subject such Purchaser to any tax (other than income, franchise or similar taxes), penalty or liability under or pursuant to any applicable law or regulation, which law or regulation was not in effect on the date hereof. If requested by such Purchaser, such Purchaser shall have received an Officer’s Certificate certifying as to such matters of fact as such Purchaser may reasonably specify to enable such Purchaser to determine whether such purchase is so permitted.

Section 4.6.

Sale of Other Notes .

Contemporaneously with the Closing the Borrower shall sell to each other Purchaser and each other Purchaser shall purchase the Notes to be purchased by it at the Closing as specified in Schedule A.

Section 4.7.

Payment of Special Counsel Fees .

Without limiting the provisions of Section 15.1, the Borrower shall have paid on or before the Closing the fees, charges and disbursements of the Purchasers’ special counsel referred to in Section 4.4 to the extent reflected in a statement of such counsel rendered to the Borrower at least one Business Day prior to the Closing.

Section 4.8.

Private Placement Number .

A CUSIP Number issued by Standard & Poor’s CUSIP Service Bureau (in cooperation with the SVO) shall have been obtained for each Series of Notes.

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Section 4.9.

Changes in Structure .

The Borrower shall not have changed its jurisdiction of formation, or been a party to any merger or consolidation or succeeded to all or any substantial part of the liabilities of any other entity, at any time following the date of the most recent financial statements referred to in Schedule 5.5.

Section 4.10.

Funding Instructions .

At least three Business Days prior to the date of the Closing, each Purchaser shall have received written instructions signed by a Responsible Officer on letterhead of the Borrower confirming the information specified in Section 3 including (a) the name and address of the transferee bank, (b) such transferee bank’s ABA number and (c) the account name and number into which the purchase price for the Notes is to be deposited.

Section 4.11.

Security Documents .

(a)           Collateral Agency Agreement . The Purchasers, the Collateral Agent, the Borrower, the Partners and Manta Ray shall have entered into a Collateral Agency Agreement, substantially in the form of Exhibit 4.11(a) (as the same may be amended, restated or otherwise modified from time to time, the “ Collateral Agency Agreement ”).

(b)           Deposit and Disbursement Agreement . The Borrower and the Collateral Agent shall have entered into a Deposit and Disbursement Agreement, substantially in the form of Exhibit 4.11(b) (as the same may be amended, restated or otherwise modified from time to time, the “ Deposit and Disbursement Agreement ”).

(c)           Security Agreement . The Borrower shall have executed and delivered an amended and restated security agreement to the Purchasers in favor of the Collateral Agent on behalf of the holders of Notes, substantially in the form of Exhibit 4.11(c) (as the same may be amended, restated or otherwise modified from time to time, the “ Security Agreement ”).

(d)           Pledge Agreements . Each Partner shall have executed and delivered an amended and restated pledge agreement to the Purchasers in favor of the Collateral Agent on behalf of the holders of Notes, substantially in the form of Exhibit 4.11(d) (as the same may be amended, restated or otherwise modified from time to time, collectively, the “ Pledge Agreements ”).

(e)           Mortgages . The Borrower and Manta Ray shall have executed and delivered amended and restated mortgages, deeds of trust, security agreements and fixture filings in favor of the Collateral Agent on behalf of the holders of Notes, substantially in the form of Exhibit 4.11(e) in respect of the Real Estate (as the same may be amended, restated or otherwise modified from time to time, collectively, the “ Mortgages ”).

(f)            JPMorgan Account Control Agreement.   The Borrower, the Collateral Agent and the Disbursement Agent shall have entered into a Blocked Accounts Control

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Agreement, substantially in the form of Exhibit 4.11(f) (as the same may be amended, restated or otherwise modified from time to time, the “ JPMorgan Account Control Agreement ”).

(g)           Registration and Filings . The Borrower shall have delivered to the Purchasers and caused to be filed UCC-1 financing statements in respect of the security interests created by the Security Agreement in the office of each appropriate Governmental Authority.

Section 4.12.

Existing Purchase and Sale Agreements .

Each Existing Purchase and Sale Agreement, reflecting the dedication by the Material Producer party thereto of specified volumes of Dedicated Production (as defined in such Purchase and Sale Agreement) for delivery on the Cameron Highway Oil Pipeline, shall be on terms and conditions satisfactory to the Purchasers.

Section 4.13.

Debt Service Reserve Amount .

The Borrower shall have provided the Purchasers with evidence that the Debt Service Reserve Account is fully funded with the Debt Service Reserve Amount or one or more Debt Service Reserve Letters of Credit have been issued in lieu thereof for the benefit of the Collateral Agent.

Section 4.14.

Pro Forma Projections .

The Borrower shall have provided the Purchasers with pro forma projections demonstrating that the Borrower will have a Debt Service Coverage Ratio of not less than 1.50 to 1.00 for each period of four consecutive fiscal quarters commencing on March 31, 2006 and continuing through the Maturity Date, such projections to be in form and detail satisfactory to the Purchasers (such projections, as updated pursuant to Section 7.1(h) are referred to as the “ Projections ”) .

Section 4.15.

Independent Engineers Report .

The Purchasers shall have received copies of the report of the Independent Engineer relating to the Project.

Section 4.16.

Independent Reserve Engineers Report .

The Purchasers shall have received copies of the report of the Independent Reserve Engineer regarding the fields served or to be served by the Project .

Section 4.17.

Insurance .

The Purchasers shall have received (a) a copy of the report from Moore-McNeil, LLC (the " Insurance Consultant "), stating that all insurance policies required by Section 9.2 have been obtained, provide coverages that are reasonably expected to protect the Borrower and the Project and the Borrower’s properties and businesses, are fully paid and in full force and effect

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and contain all the respective provisions required to be contained therein under Section 9.2, and (b) a certificate of an authorized representative of the Insurance Consultant certifying that the insurance specified in such certificate is in full force and effect, that such insurance complies with Section 9.2 and that all premiums on such insurance are current.

Section 4.18.

Payoff of SunTrust Credit Agreement .

The Borrower shall have provided the Purchasers with a payoff letter from the Administrative Agent, indicating the amount of the loan obligations of the Borrower under the SunTrust Credit Agreement to be discharged on the date of Closing.

Section 4.19.

Consents .

The Borrower shall have provided the Purchasers with duly executed copies of the Consents and the Borrower shall have sent a notice to the counterparties to such Consents (other than in respect of the Manta Ray Consent which shall be in the form of a new Consent substantially in the form of Exhibit A) notifying them that the Collateral Agent is the successor collateral agent to SunTrust Bank, in its capacity as the collateral agent under the SunTrust Credit Agreement.

 

Section 4.20.

Perfection Certificates and Lien Search Results .

The Borrower and each of the Partners shall have provided the Purchasers with a completed and fully executed perfection certificate and the results of Lien searches indicating no Liens other than (a) Permitted Encumbrances and (b) those Liens securing the SunTrust Credit Agreement and otherwise in form and substance satisfactory to the Purchasers.

Section 4.21.

Validity of Liens .

The Security Documents shall be effective to create in favor of the Collateral Agent a legal, valid and enforceable first (except for Permitted Encumbrances) security interest in and Lien upon the Collateral. All filings, recordings, deliveries of instruments and other actions necessary or desirable in the opinion of the Collateral Agent to perfect such security interests shall have been duly effected. The Collateral Agent shall have received evidence thereof in form and substance satisfactory to the Collateral Agent.

Section 4.22.

Proceedings and Documents .

All partnership and other proceedings in connection with the transactions contemplated by this Agreement and all documents and instruments incident to such transactions shall be satisfactory to such Purchaser and its special counsel, and such Purchaser and its special counsel shall have received all such counterpart originals or certified or other copies of such documents as such Purchaser or such special counsel may reasonably request.

SECTION 5.

REPRESENTATIONS AND WARRANTIES OF THE BORROWER.

The Borrower represents and warrants to each Purchaser that:

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Section 5.1.

Organization; Power and Authority .

The Borrower is a general partnership duly organized, validly existing and in good standing under the laws of its jurisdiction of formation, and is duly qualified and is in good standing in each jurisdiction in which such qualification is required by law, other than those jurisdictions as to which the failure to be so qualified or in good standing could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. The Borrower has the partnership power and authority to own or hold under lease the properties it purports to own or hold under lease, to transact the business it transacts and proposes to transact, to execute and deliver the Financing Documents to which it is a party and to perform the provisions hereof and thereof.

Section 5.2.

Authorization .

This Agreement, the Notes, the other Financing Documents and the Project Documents to which the Borrower, any Partner or Manta Ray is a party have been duly authorized by all necessary action on the part of such Person, and the Financing Documents and the Project Documents constitute, and upon execution and delivery thereof each Note will constitute, a legal, valid and binding obligation of the Borrower, each Partner and Manta Ray, as applicable, enforceable against each such Person in accordance with its terms, except as such enforceability may be limited by (a) applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting the enforcement of creditors’ rights generally and (b) general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law).

Section 5.3.

Disclosure .

The Borrower, through its agent, SunTrust Capital Markets, Inc., has delivered to each Purchaser a copy of a Confidential Offering Memorandum, dated November 2005 (including the exhibits and attachments thereto, the “Memorandum” ), relating to the transactions contemplated hereby. The Memorandum fairly describes, in all material respects, the Project, the general nature of the business and principal properties of the Borrower. This Agreement, the Memorandum, the documents, certificates or other writings identified in Schedule 5.3 by or on behalf of the Borrower in connection with the transactions contemplated hereby and the financial statements listed in Schedule 5.5, in each case, delivered to the Purchasers prior to the date of Closing (this Agreement, the Memorandum and such documents, certificates or other writings and such financial statements being referred to, collectively, as the “Disclosure Documents” ), taken as a whole, do not contain any untrue statement of a material fact or omit to state any material fact necessary to make the statements therein not misleading in light of the circumstances under which they were made, except that the Disclosure Documents do not undertake to describe matters of a general economic nature or the statutes, rules and regulations (although, to the knowledge of the Borrower, none of such matters, statutes, rules or regulations could reasonably be expected to have a Material Adverse Effect) that apply to pipeline companies generally; provided, however, that, with respect to any estimates or projections contained in any such statements, exhibits, documents, reports, financial statements, certificates or other information the Borrower represents only that such estimates or projections are based upon information that was reasonably believed to be correct on the date of Closing and upon

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reasonable assumptions on the date of Closing and the Borrower does not warrant that such estimates and projections will ultimately prove to have been accurate. Except as disclosed in the Disclosure Documents, since December 31, 2004, there has been no change in the financial condition, operations, business, properties or prospects of the Borrower or the Project except changes that individually or in the aggregate could not reasonably be expected to have a Material Adverse Effect. There is no fact known to the Borrower that could reasonably be expected to have a Material Adverse Effect that has not been set forth herein or in the Disclosure Documents and, to the knowledge of the Borrower, the statutes, rules and regulations referenced above could not reasonably be expected to have a Material Adverse Effect.

Section 5.4.

Subsidiaries; Partners; Officers .

The Borrower has no Subsidiaries. The Borrower has no directors. The Partners are the only partners of the Borrower. Schedule 5.4 contains a complete and correct list of the Borrower’s officers.

Section 5.5.

Financial Statements; Material Liabilities .

The Borrower has delivered to each Purchaser copies of the financial statements of the Borrower listed on Schedule 5.5. All of said financial statements (including in each case the related schedules and notes) fairly present in all material respects the financial position of the Borrower as of the respective dates specified in such Schedule and the results of its operations and cash flows for the respective periods so specified and have been prepared in accordance with GAAP consistently applied throughout the periods involved except as set forth in the notes thereto (subject, in the case of any interim financial statements, to normal year-end adjustments). The Borrower does not have any Material liabilities that are not disclosed on such financial statements or otherwise disclosed in the Disclosure Documents.

Section 5.6.

Compliance with Laws, Other Instruments, Etc .

The execution, delivery and performance by the Borrower of each of the Financing Documents to which it is a party will not (a) violate the Partnership Agreement, (b) violate or constitute a default under, or result in the creation of any Lien (other than any Lien which is a Permitted Encumbrance) in respect of any property of the Borrower under, any indenture, mortgage, deed of trust, loan, purchase or credit agreement, lease, corporate charter or by-laws, or any other agreement or instrument to which the Borrower is bound or by which the Borrower or any of its properties may be bound or affected, (c) conflict with or result in a breach by the Borrower, any Partner or Manta Ray of any of the terms, conditions or provisions of any order, judgment, decree, or ruling of any court, arbitrator or Governmental Authority applicable to the Borrower, any Partner or Manta Ray or (d) violate any provision of any statute or other rule or regulation of any Governmental Authority applicable to the Borrower, any Partner or Manta Ray.

Section 5.7.

Governmental Authorizations, Etc .

(a)          All Governmental Approvals, including without limitation, all Material Permits, that are at any time required to be obtained or made by the Borrower in connection with (i) the development, use, ownership, financing and maintenance of the Project and (ii) the granting of Liens under, and the execution, delivery and performance

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by the Borrower of, the Transaction Documents, have been (or will be at such time as it is necessary for them to be) obtained and are in full force and effect except to the extent that failure to obtain or maintain such Governmental Approvals and Material Permits could not reasonably be expected to have a Material Adverse Effect. No material change in the facts or circumstances reported or assumed in the applications for the granting of such Material Permits exists (except such change which could not reasonably be expected to result in any revocation of such Material Permits or any material fine, penalty or other action being taken against the Borrower by any Governmental Authority), and there are no proceedings pending or, to the knowledge of the Borrower, threatened which would reasonably be expected to jeopardize the validity of such Material Permits or have a Material Adverse Effect. The Borrower does not have any reason to believe that it will be unable to obtain or maintain the Material Permits in the ordinary course of business and at such time or times as may be necessary to avoid any substantial delay in, or material impairment to, the consummation and performance of the transactions contemplated by the Transaction Documents.

(b)          All Governmental Approvals and other filings, recordings, registrations and other actions have been or will in connection with the Closing, be made, obtained and taken in all relevant jurisdictions that are necessary to create and perfect the Liens provided for in the Security Documents, and the Security Documents shall constitute a valid, direct, continuing first priority Lien on the Collateral, subject only to Permitted Encumbrances and other Liens permitted by the Financing Documents.

Section 5.8.

Litigation; Observance of Agreements, Statutes and Orders .

(a)          There are no actions, suits, investigations or proceedings pending or, to the knowledge of the Borrower, threatened against or affecting the Borrower, any Partner, Manta Ray, the Project or any other property of the Borrower in any court or before any arbitrator of any kind or before or by any Governmental Authority that, individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect.

(b)          Neither the Borrower, any Partner or Manta Ray is in default under any term of any agreement or instrument to which it is a party or by which it is bound, or any order, judgment, decree or ruling of any court, arbitrator or Governmental Authority or is in violation of any applicable law, ordinance, rule or regulation (including without limitation Environmental Laws, the USA Patriot Act, the Outer Continental Shelf Lands Act of 1953, as amended from time to time, or any regulations of FERC) of any Governmental Authority, which default or violation, individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect.

Section 5.9.

Taxes .

The Borrower has filed all tax returns that are required to have been filed in any jurisdiction, and has paid all taxes shown to be due and payable on such returns and all other taxes and assessments levied upon it or its properties, assets, income or franchises, to the extent such taxes and assessments have become due and payable and before they have become delinquent, except for any taxes and assessments (a) the amount of which is not individually or

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in the aggregate Material or (b) the amount, applicability or validity of which is currently being contested in good faith by appropriate proceedings and with respect to which the Borrower has established adequate reserves in accordance with GAAP. The Borrower knows of no basis for any other tax or assessment that could reasonably be expected to have a Material Adverse Effect. The charges, accruals and reserves on the books of the Borrower in respect of federal, state or other taxes for all fiscal periods are adequate. The federal income tax liabilities of the Borrower have been finally determined (whether by reason of completed audits or the statute of limitations having run) for all calendar years up to and including the calendar year ended December 31, 2001.

Section 5.10.

Title to Property; Leases .

The Borrower has good and sufficient title to its properties that individually or in the aggregate are Material, including all such properties reflected in the most recent audited balance sheet referred to in Section 5.5 or purported to have been acquired by the Borrower after said date (except as sold or otherwise disposed of in the ordinary course of business), in each case free and clear of Liens prohibited by this Agreement. As of the date of Closing, the Borrower has no Material assets other than the Project Documents and the other assets listed on Schedule 5.10 and has not entered into any material agreements or incurred any material obligations other than as contemplated by this Agreement or the Project Documents. All leases that individually or in the aggregate are Material are valid and subsisting and are in full force and effect in all material respects.

Section 5.11.

Licenses, Permits, Etc .

(a)          The Borrower owns or possesses all licenses, permits, franchises, authorizations, patents, copyrights, proprietary software, service marks, trademarks and trade names, or rights thereto, that individually or in the aggregate are Material, without known conflict with the rights of others, except for such failures to own or possess and such conflicts that could not reasonably be expected to result in a Material Adverse Effect.

(b)          To the best knowledge of the Borrower, no product or service of the Borrower infringes in any material respect any license, permit, franchise, authorization, patent, copyright, proprietary software, service mark, trademark, trade name or other right owned by any other Person, except for such infringements that could not reasonably be expected to result in a Material Adverse Effect.

(c)          To the best knowledge of the Borrower, there is no Material violation by any Person of any right of the Borrower with respect to any patent, copyright, proprietary software, service mark, trademark, trade name or other right owned or used by the Borrower, except for such violations that could not reasonably be expected to result in a Material Adverse Effect.

Section 5.12.

Compliance with ERISA .

(a)          The Borrower does not maintain, sponsor or contribute to any Plan and does not have any ERISA Affiliates. The Borrower has no employees.

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(b)          The execution and delivery of this Agreement and the issuance and sale of the Notes hereunder will not involve any transaction that is subject to the prohibitions of section 406 of ERISA or in connection with which a tax could be imposed pursuant to section 4975(c)(1)(A)(D) of the Code. The representation by the Borrower to each Purchaser in the first sentence of this Section 5.12(b) is made in reliance upon and subject to the accuracy of such Purchaser’s representation in Section 6.2 as to the sources of the funds used to pay the purchase price of the Notes to be purchased by such Purchaser.

Section 5.13.

Private Offering by the Borrower .

Neither the Borrower nor anyone acting on its behalf has offered the Notes or any similar Securities for sale to, or solicited any offer to buy any of the same from, or otherwise approached or negotiated in respect thereof with, any Person other than the Purchasers and not more than three (3) other Institutional Investors (as defined in clause (c) of the definition of such term), each of which has been offered the Notes at a private sale for investment. Neither the Borrower nor anyone acting on its behalf has taken, or will take, any action that would subject the issuance or sale of the Notes to the registration requirements of section 5 of the Securities Act or to the registration requirements of any securities or blue sky laws of any applicable jurisdiction.

Section 5.14.

Use of Proceeds; Margin Regulations .

The Borrower will apply the proceeds of the sale of the Notes as set forth in “Executive Summary - Sources and Uses” of the Memorandum. No part of the proceeds from the sale of the Notes hereunder will be used, directly or indirectly, for the purpose of buying or carrying any margin stock within the meaning of Regulation U of the Board of Governors of the Federal Reserve System (12 CFR 221), or for the purpose of buying or carrying or trading in any Securities under such circumstances as to involve the Borrower in a violation of Regulation X of said Board (12 CFR 224) or to involve any broker or dealer in a violation of Regulation T of said Board (12 CFR 220). Margin stock does not constitute more than 5% of the value of the assets of the Borrower and the Borrower does not have any present intention that margin stock will constitute more than 5% of the value of such assets. As used in this Section, the terms “margin stock” and “purpose of buying or carrying” shall have the meanings assigned to them in said Regulation U.

Section 5.15.

Existing Indebtedness; Future Liens .

(a)          After giving effect to the issuance of the Notes and the application of the proceeds therefrom as described in Section 5.14, the Borrower will have no Indebtedness outstanding other than the Indebtedness evidenced by the Notes. The Borrower is not in default and no waiver of default is currently in effect, in the payment of any principal or interest on any Indebtedness of the Borrower and no event or condition exists with respect to any Indebtedness of the Borrower that would permit (or that with notice or the lapse of time, or both, would permit) one or more Persons to cause such Indebtedness to become due and payable before its stated maturity or before its regularly scheduled dates of payment.

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(b)          The Borrower has not agreed or consented to cause or permit in the future (upon the happening of a contingency or otherwise) any of its property, whether now owned or hereafter acquired, to be subject to a Lien other than Permitted Encumbrances.

(c)          Except as pursuant to the terms of this Agreement, the Borrower is not a party to, or otherwise subject to any provision contained in, any instrument evidencing Indebtedness of the Borrower, any agreement relating thereto or any other agreement (including, but not limited to, its partnership agreement or other organizational document) which limits the amount of, or otherwise imposes restrictions on the incurring of, Indebtedness of the Borrower.

Section 5.16.

Foreign Assets Control Regulations, Etc .

(a)          Neither the sale of the Notes by the Borrower hereunder nor its use of the proceeds thereof will violate the Trading with the Enemy Act, as amended, or any of the foreign assets control regulations of the United States Treasury Department (31 CFR, Subtitle B, Chapter V, as amended) or any enabling legislation or executive order relating thereto.

(b)          Neither the Borrower nor any Partner or Sponsor (i) is a Person described or designated in the Specially Designated Nationals and Blocked Persons List of the Office of Foreign Assets Control or in section 1 of the Anti-Terrorism Order or (ii) engages in any dealings or transactions with any such Person. The Borrower, the Partners and the Sponsors are in compliance, in all material respects, with the USA Patriot Act.

(c)          No part of the proceeds from the sale of the Notes hereunder will be used, directly or indirectly, for any payments to any governmental official or employee, political party, official of a political party, candidate for political office, or anyone else acting in an official capacity, in order to obtain, retain or direct business or obtain any improper advantage, in violation of the United States Foreign Corrupt Practices Act of 1977, as amended, assuming in all cases that such Act applies to the Borrower, any Partner or any Sponsor.

Section 5.17.

Status under Certain Statutes .

Neither the Borrower nor any Partner is, and after giving effect to the offering and sale of the Notes and the application of the proceeds thereof as described in Section 5.14, none of them will be (1) a “holding company” or “public-utility company” within the meaning of the Public Utility Holding Company Act of 1935, as amended, and the rules and regulations promulgated thereunder, or the Public Utility Holding Company Act of 2005, or (2) a "natural-gas company" within the meaning of the Natural Gas Act, 15 U.S.C. § 717, et seq. Neither the Borrower nor any Partner is subject to regulation under (A) the Investment Company Act of 1940, as amended, (B) the ICC Termination Act of 1995, as amended, and the regulations and orders thereunder, (C) the Federal Power Act, as amended (including any of the regulations and orders of the FERC thereunder), or (D) either the Interstate Commerce Act, or the Act of August 29, 1916 (known as

13

the Pomerene Bills of Lading Act) as either was in effect on October 1, 1977, pursuant to 49 U.S.C. § 60502 (including, in each case, any regulation and orders thereunder).

Section 5.18.

Environmental Matters .

(a)          The Borrower has no knowledge of any claim or has received any notice of any claim, and no proceeding has been instituted raising any claim against the Borrower or the Project or any of the Borrower’s other real properties now or formerly owned, leased or operated by it, alleging any damage to the environment or violation of any Environmental Laws, except, in each case, such as could not reasonably be expected to result in a Material Adverse Effect.

(b)          The Borrower has no knowledge of any facts which would give rise to any claim, public or private, of violation of Environmental Laws or damage to the environment emanating from, occurring on or in any way related to the Project or other real properties now or formerly owned, leased or operated by it or their use, except, in each case, such as could not reasonably be expected to result in a Material Adverse Effect.

(c)          The Borrower has not, in a manner contrary to any Environmental Law, stored any Hazardous Materials on the Real Estate or the Project or other real properties now or formerly owned, leased or operated by it and has not disposed of any Hazardous Materials, in each case in any manner that could reasonably be expected to result in a Material Adverse Effect; and

(d)          The Project and all buildings on all real properties now owned, leased or operated by the Borrower are in compliance with applicable Environmental Laws, except where failure to comply could not reasonably be expected to result in a Material Adverse Effect.

Section 5.19.

Business of Borrower .

(a)          The sole business of the Borrower is the ownership, financing and operation of the Project.

(b)

All insurance required by Section 9.2 is in full force and effect.

(c)          No event of force majeure under any Transaction Document has occurred and is continuing that could reasonably be expected to result in the termination of any Transaction Document or to have a Material Adverse Effect. Neither the business nor the property of the Borrower has been affected in any manner as a result of any Taking.

(d)          All easements, leaseholds, other property interests, all utility and other services, means of transportation, facilities, other materials and other rights that are necessary for the development and operation of the Project in accordance with all Governmental Requirements and the Transaction Documents (including, without limitation, gas, electrical, water and sewage services and facilities) have been procured pursuant to Transaction Documents or, to the best of the Borrower’s knowledge, are

14

otherwise commercially available to the Project and, to the extent appropriate, arrangements have been made on commercially reasonable terms for such easements, leaseholds, interests, services, means of transportation, facilities, materials and rights, except where the failure to possess any of the foregoing could not reasonably be expected to have a Material Adverse Effect.

Section 5.20.

Ranking of Obligations .

The Borrower’s payment obligations under this Agreement and the other Financing Documents, will upon the issuance of the Notes to the extent paid from proceeds of the Collateral, rank senior to all other Indebtedness of the Borrower and will otherwise rank at least pari passu without preference or priority, with all other unsecured and unsubordinated Indebtedness of the Borrower.

SECTION 6.		REPRESENTATIONS OF THE PURCHASER.
	Section 6.1.		Purchase for Investment .

Each Purchaser severally represents that (a) it is purchasing the Notes for its own account or for one or more separate accounts maintained by such Purchaser or for the account of one or more pension or trust funds and not with a view to the distribution thereof, provided that the disposition of such Purchaser’s or their property shall at all times be within such Purchaser’s or their control, (b) it is a sophisticated entity with experience in investment and financing matters and is capable of understanding the merits and risks of an investment in the Notes, (c) it has been provided the opportunity to request information from and ask questions of the Borrower and (d) it (or the account or accounts on whose behalf it is purchasing) is an “accredited investor” within the meaning of subparagraph (a)(1), (2), (3) or (7) of Rule 501 under the Securities Act. Each Purchaser understands that the Notes have not been registered under the Securities Act and may be resold only if registered pursuant to the provisions of the Securities Act or if an exemption from registration is available, except under circumstances where neither such registration nor such an exemption is required by law, and that the Borrower is not required to register the Notes.

Section 6.2.

Source of Funds .

Each Purchaser severally represents that at least one of the following statements is an accurate representation as to each source of funds (a “ Source ”) to be used by such Purchaser to pay the purchase price of the Notes to be purchased by such Purchaser hereunder:

(a)          the Source is an “insurance company general account” (as the term is defined in the United States Department of Labor’s Prohibited Transaction Exemption (“ PTE ”) 95-60) in respect of which the reserves and liabilities (as defined by the annual statement for life insurance companies approved by the NAIC (the “ NAIC Annual Statement ”)) for the general account contract(s) held by or on behalf of any employee benefit plan together with the amount of the reserves and liabilities for the general account contract(s) held by or on behalf of any other employee benefit plans maintained by the same employer (or affiliate thereof as defined in PTE 95-60) or by the same employee organization in the general account do not exceed 10% of the total reserves and

15

liabilities of the general account (exclusive of separate account liabilities) plus surplus as set forth in the NAIC Annual Statement filed with such Purchaser’s state of domicile; or

(b)          the Source is a separate account that is maintained solely in connection with such Purchaser’s fixed contractual obligations under which the amounts payable, or credited, to any employee benefit plan (or its related trust) that has any interest in such separate account (or to any participant or beneficiary of such plan (including any annuitant)) are not affected in any manner by the investment performance of the separate account; or

(c)          the Source is either (i) an insurance company pooled separate account, within the meaning of PTE 90-1 or (ii) a bank collective investment fund, within the meaning of the PTE 91-38 and, except as disclosed by such Purchaser to the Borrower in writing pursuant to this clause (c), no employee benefit plan or group of plans maintained by the same employer or employee organization beneficially owns more than 10% of all assets allocated to such pooled separate account or collective investment fund; or

(d)          the Source constitutes assets of an “investment fund” (within the meaning of Part V of PTE 84-14 (the “ QPAM Exemption ”)) managed by a “qualified professional asset manager” or “QPAM” (within the meaning of Part V of the QPAM Exemption), no employee benefit plan’s assets that are included in such investment fund, when combined with the assets of all other employee benefit plans established or maintained by the same employer or by an affiliate (within the meaning of section V(c)(1) of the QPAM Exemption) of such employer or by the same employee organization and managed by such QPAM, exceed 20% of the total client assets managed by such QPAM, the conditions of Part I(c) and (g) of the QPAM Exemption are satisfied, neither the QPAM nor a person controlling or controlled by the QPAM (applying the definition of “control” in section V(e) of the QPAM Exemption) owns a 5% or more interest in the Borrower and (i) the identity of such QPAM and (ii) the names of all employee benefit plans whose assets are included in such investment fund have been disclosed to the Borrower in writing pursuant to this clause (d); or

(e)          the Source constitutes assets of a “plan(s)” (within the meaning of section IV of PTE 96-23 (the “ INHAM Exemption ”)) managed by an “in-house asset manager” or “INHAM” (within the meaning of Part IV of the INHAM exemption), the conditions of Part I(a), (g) and (h) of the INHAM Exemption are satisfied, neither the INHAM nor a person controlling or controlled by the INHAM (applying the definition of “control” in section IV(d) of the INHAM Exemption) owns a 5% or more interest in the Borrower and (i) the identity of such INHAM and (ii) the name(s) of the employee benefit plan(s) whose assets constitute the Source have been disclosed to the Borrower in writing pursuant to this clause (e); or

(f)

the Source is a governmental plan; or

(g)          the Source is one or more employee benefit plans, or a separate account or trust fund comprised of one or more employee benefit plans, each of which has been identified to the Borrower in writing pursuant to this clause (g); or

16

(h)          the Source does not include assets of any employee benefit plan, other than a plan exempt from the coverage of ERISA.

As used in this Section 6.2, the terms “employee benefit plan,” “governmental plan,” and “separate account” shall have the respective meanings assigned to such terms in section 3 of ERISA.

Section 6.3.

Legends .

Until the Resale Restriction Termination Date, the Notes shall bear the legend set forth on Schedule 6.3.

SECTION 7.

INFORMATION AS TO BORROWER.

Section 7.1.        Financial and Business Information . The Borrower shall (or shall cause the Fiscal Agent to) deliver to each beneficial holder of Notes that is an Institutional Investor:

(a)           Quarterly Statements - within 60 days after the end of each quarterly fiscal period in each fiscal year of the Borrower (other than the last quarterly fiscal period of each such fiscal year), duplicate copies of,

(i)

a balance sheet of the Borrower as at the end of such quarter, and

(ii)          statements of income, changes in partners’ equity and cash flows of the Borrower, for such quarter and (in the case of the second and third quarters) for the portion of the fiscal year ending with such quarter,

setting forth in each case in comparative form the figures for the corresponding periods in the previous fiscal year, all in reasonable detail, prepared in accordance with GAAP applicable to quarterly financial statements generally, and certified by a Senior Financial Officer as fairly presenting, in all material respects, the financial position of the Borrower and its results of operations and cash flows, subject to changes resulting from year-end adjustments, provided that the Borrower shall be deemed to have made such delivery required above if it shall have timely made such materials available on Intralinks (at the date of this Agreement located at: http//www.intralinks.com) or a comparable electronic posting medium as to which the holders of Notes have been notified and provided access information and Borrower shall (A) have given each beneficial holder of Notes prior electronic notice of such availability on Intralinks in connection with each delivery (such availability and electronic notice thereof being referred to as “Electronic Delivery” ) and (B) deliver paper copies of such materials to any beneficial holder of Notes that requests that the Borrower deliver paper copies until a written request to cease delivering paper copies is given by such beneficial holder of Notes;

(b)           Annual Statements - within 120 days after the end of each fiscal year of the Borrower, duplicate copies of:

(i)

a balance sheet of the Borrower as at the end of such year, and

17

(ii)          statements of income, changes in partners’ equity and cash flows of the Borrower for such year,

setting forth in each case in comparative form the figures for the previous fiscal year, all in reasonable detail, prepared in accordance with GAAP, and accompanied by an opinion thereon of independent public accountants of recognized national standing, which opinion shall state that such financial statements present fairly, in all material respects, the financial position of the Borrower and its results of operations and cash flows and have been prepared in conformity with GAAP, and that the examination of such accountants in connection with such financial statements has been made in accordance with generally accepted auditing standards, and that such audit provides a reasonable basis for such opinion in the circumstances, provided, that the Borrower shall be deemed to have made delivery of such required materials if it shall (A) have made timely Electronic Delivery thereof and (B) have delivered paper copies of such materials to any beneficial holder of Notes that requests that the Borrower deliver paper copies until a written request to cease delivering paper copies is given by such beneficial holder of Notes;

(c)           SEC and Other Reports - promptly upon their becoming available, one copy of (i) each financial statement, report, notice or proxy statement sent by the Borrower to its principal lending banks as a whole (excluding information sent to such banks in the ordinary course of administration of a bank facility, such as information relating to pricing and borrowing availability) or to its public Securities holders generally, and (ii) each regular or periodic report, each registration statement (without exhibits except as expressly requested by such beneficial holder), and each prospectus and all amendments thereto filed by the Borrower with the SEC and of all press releases and other statements made available generally by the Borrower to the public concerning developments that are Material, provided, that the Borrower shall be deemed to have made delivery of such required materials if it shall (A) have made timely Electronic Delivery thereof and (B) have delivered paper copies of such materials to any beneficial holder of Notes that requests that the Borrower deliver paper copies until a written request to cease delivering paper copies is given by such beneficial holder of Notes;

(d)           Notice of Default or Event of Default - promptly, and in any event within five days after a Responsible Officer becoming aware of the existence of any Default or Event of Default or that any Person has given any notice or taken any action with respect to a claimed default hereunder or that any Person has given any notice or taken any action with respect to a claimed default of the type referred to in Section 11(f), a written notice specifying the nature and period of existence thereof and what action the Borrower is taking or proposes to take with respect thereto;

(e)           ERISA Matters - promptly, and in any event within 30 days after a Responsible Officer becoming aware of any of the following, a written notice setting forth the nature thereof and the action, if any, that the Borrower or an ERISA Affiliate proposes to take with respect thereto:

18

(i)           with respect to any Plan, any reportable event, as defined in section 4043(c) of ERISA and the regulations thereunder, for which notice thereof has not been waived pursuant to such regulations as in effect on the date hereof; or

(ii)          the taking by the PBGC of steps to institute, or the threatening by the PBGC of the institution of, proceedings under section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any Plan, or the receipt by the Borrower or any ERISA Affiliate of a notice from a Multiemployer Plan that such action has been taken by the PBGC with respect to such Multi-employer Plan; or

(iii)         any event, transaction or condition that could result in the incurrence of any liability by the Borrower or any ERISA Affiliate pursuant to Title I or IV of ERISA or the penalty or excise tax provisions of the Code relating to employee benefit plans, or in the imposition of any Lien on any of the rights, properties or assets of the Borrower or any ERISA Affiliate pursuant to Title I or IV of ERISA or such penalty or excise tax provisions, if such liability or Lien, taken together with any other such liabilities or Liens then existing, could reasonably be expected to have a Material Adverse Effect;

(f)            Notices from Governmental Authority - promptly, and in any event within 30 days of receipt thereof, copies of any notice to the Borrower or any Partner from any Federal or state Governmental Authority relating to any order, ruling, statute or other law or regulation that could reasonably be expected to have a Material Adverse Effect;

(g)           Material Documents - promptly, and in any event within 30 days of receipt thereof, copies of any termination or event of default notice under any Material Document;

(h)           Projections - promptly, and in any event not less than 30 days prior to the incurrence of any Permitted Indebtedness (of the type defined in clause (a) of such definition), revised Projections as of the day of incurrence of such Permitted Indebtedness through the Maturity Date, which revised Projections shall take into account the actual then financial results for the period of four consecutive fiscal quarters most recently ended and any facts and circumstances relevant to the Projections that have changed between the date of Closing (or the date of delivery of the then most recently delivered Projections) and the date that such updated Projections are delivered to the holders of Notes, which revised Projections shall, in each case, be in form and based upon assumptions reasonably acceptable to the Required Holders and which will set forth a summary description of any changes in the assumptions used in preparation of previous Projections delivered to the holders of the Notes, provided, that the Borrower shall be deemed to have made delivery of such Projections if it shall (A) have made timely Electronic Delivery thereof and (B) have delivered paper copies of such Projections to any beneficial holder of Notes that requests that the Borrower deliver paper copies until a written request to cease delivering paper copies is given by such beneficial holder of Notes;

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(i)            Governmental Jurisdiction - promptly, and in any event within 30 days after a Responsible Officer becoming aware thereof, notice of the occurrence of the commencement of any proceeding before any Governmental Authority seeking to subject the Project to the jurisdiction of any Governmental Authority;

(j)            Notices regarding Material Producers - promptly, and in any event within 30 days of the Responsible Officer obtaining actual knowledge thereof, notice that any Material Producer is engaged in ongoing, bona fide negotiations relating to the transfer of, or is transferring or has transferred, its obligations under its Purchase and Sale Agreement, in whole or in part;

(k)           Information Required by Rule 144A - promptly, upon the request of the holder or beneficial holder of any Note, provide such holder or such beneficial holder, and any Qualified Institutional Buyer designated by such holder or beneficial holder, such financial and other information as such holder or beneficial holder may reasonably determine to be necessary in order to permit compliance with the information requirements of Rule 144A under the Securities Act in connection with the resale of Notes or the resale of beneficial interests in the Notes, except at such times as the Borrower is subject to and in compliance with the reporting requirements of section 13 or 15(d) of the Exchange Act; and

(l)            Requested Information - with reasonable promptness, such other data and information relating to the business, operations, affairs, financial condition, assets or properties of the Borrower or any Partner or relating to the ability of the Borrower to perform its obligations under the Financing Documents as from time to time may be reasonably requested by any such beneficial holder of Notes.

Section 7.2.        Officer’s Certificate . Each set of financial statements delivered to a beneficial holder of Notes pursuant to Section 7.1 (a) or Section 7.1(b) shall be accompanied by a certificate of a Senior Financial Officer setting forth:

(a)           Covenant Compliance - the information (including reasonably detailed calculations) required in order to establish whether the Borrower was in compliance with the requirements of Section 10.15 during the quarterly or annual period covered by the statements then being furnished (including with respect to each such Section, where applicable, the calculations of the maximum or minimum amount, ratio or percentage, as the case may be, permissible under the terms of such Sections, and the calculation of the amount, ratio or percentage then in existence and any computation required to show that any Indebtedness incurred by the Borrower during such period was Permitted Indebtedness); and

(b)           Event of Default - a statement that such Senior Financial Officer has reviewed the relevant terms hereof and has made, or caused to be made, under his or her supervision, a review of the transactions and conditions of the Borrower from statements then being furnished to the date of the certificate and that such review shall not have disclosed the existence during such period of any condition or event that constitutes a Default or an Event of Default or, if any such condition or event existed or exists

20

(including, without limitation, any such event or condition resulting from the failure of the Borrower to comply with any Environmental Law), specifying the nature and period of existence thereof and what action the Borrower shall have taken or proposes to take with respect thereto,

provided, that the Borrower shall be deemed to have made delivery of such required certificates if it shall (A) have made timely Electronic Delivery thereof and (B) have delivered paper copies of such certificates to any beneficial holder of Notes that requests that the Borrower deliver paper copies until a written request to cease delivering paper copies is given by such beneficial holder of Notes

Section 7.3.       Visitation . The Borrower shall permit the representatives of each beneficial holder of Notes that is an Institutional Investor:

(a)           No Default - if no Default or Event of Default then exists, at the expense of such beneficial holder and upon reasonable prior notice to the Borrower, (i) to visit the principal executive office of the Borrower, to discuss the affairs, finances and accounts of the Borrower with the Borrower’s officers, and (with the consent of the Borrower, which consent will not be unreasonably withheld) its independent public accountants, and (with the consent of the Borrower, which consent will not be unreasonably withheld) to visit the other offices and properties of the Borrower (other than the Project), all at such reasonable times and as often as may be reasonably requested in writing; provided, however, that the Borrower shall be provided with an opportunity to be present at any such discussion with such accountants and (ii) no more frequently than once each calendar year for all of the Noteholders (such visit to be coordinated among all of the Noteholders), to visit the Project; and

(b)           Default - if a Default or Event of Default then exists, at the expense of the Borrower to visit and inspect the Project or any of the offices or properties of the Borrower, to examine all of its books of account, records, reports and other papers, to make copies and extracts therefrom, and to discuss its affairs, finances and accounts with its officers and independent public accountants (and by this provision the Borrower authorizes said accountants to discuss the affairs, finances and accounts of the Borrower), all at such times and as often as may be requested; provided, however, that the Borrower shall be provided with an opportunity to be present at any such discussion with such accountants;

provided, however, that the Borrower (except to the extent of the Borrower’s, Manta Ray’s or any of their Affiliates’ negligence or misconduct) shall not be liable for any injury to, or the death of, any person participating in the exercise of such inspection rights.

Section 7.4.        Limitation on Disclosure Obligation . The Borrower shall not be required to disclose information pursuant to Sections 7.1(j) and (l) and Section 7.3 that:

(a)          the Borrower determines after consultation with counsel (which may be internal counsel) qualified to advise on such matters that, notwithstanding the confidentiality requirements of Section 21, it would be prohibited from disclosing such information by applicable law or regulations; or

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(b)          the Borrower determines after consultation with counsel (which may be internal counsel) qualified to advise on such matters that, notwithstanding the confidentiality requirements of Section 21, the Borrower is prohibited from disclosing such information by the terms of an obligation of confidentiality contained in any agreement with any non-Affiliate binding upon the Borrower and not entered into in contemplation of this clause (b), or the Borrower could be otherwise subject to legal liability as a result of such disclosure, provided that the Borrower shall use commercially reasonable efforts to obtain consent from the party in whose favor the obligation of confidentiality was made to permit the disclosure of the relevant information.

SECTION 8.		PAYMENT AND PREPAYMENT OF THE NOTES.
	Section 8.1.		Required Payments .

(a)          The Borrower will prepay the principal amount of the Series A Notes on the dates and in the amounts (or such lesser principal amount as shall then be outstanding) set forth in the table below, at par and without payment of the Make-Whole Amount or any premium, provided that upon any partial prepayment of the Series A Notes pursuant to Section 8.2, the principal amount of each required prepayment of the Series A Notes becoming due under this Section 8.1(a) on and after the date of such prepayment shall be reduced in the same proportion as the aggregate unpaid principal amount of the Series A Notes is reduced as a result of such prepayment.

Date	Principal Amount of Series A Notes to be Prepaid
March 31, 2008	$5,496,987.95
June 30, 2008	$5,496,987.95
September 30, 2008	$5,496,987.95
December 31, 2008	$5,496,987.95
March 31, 2009	$5,496,987.95
June 30, 2009	$5,496,987.95
September 30, 2009	$5,496,987.95
December 31, 2009	$5,496,987.95
March 31, 2010	$10,993,975.90
June 30, 2010	$10,993,975.90
September 30, 2010	$10,993,975.90
December 31, 2010	$10,993,975.90
March 31, 2011	$12,093,373.49
June 30, 2011	$12,093,373.49
September 30, 2011	$12,093,373.49
December 31, 2011	$12,093,373.49
March 31, 2012	$13,192,771.08

 

 

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Date	Principal Amount of Series A Notes to be Prepaid
June 30, 2012	$13,192,771.08
September 30, 2012	$13,192,771.08
December 31, 2012	$13,192,771.08
March 31, 2013	$13,192,771.08
June 30, 2013	$13,192,771.08
September 30, 2013	$13,192,771.08
December 31, 2013	$13,192,771.08
March 31, 2014	$12,093,373.49
June 30, 2014	$12,093,373.49
September 30, 2014	$12,093,373.49
December 31, 2014	$12,093,373.49
March 31, 2015	$10,993,975.90
June 30, 2015	$10,993,975.90
September 30, 2015	$10,993,975.90
December 31, 2015	$10,993,975.90
March 31, 2016	$4,397,590.36
June 30, 2016	$4,397,590.36
September 30, 2016	$4,397,590.36
December 31, 2016	$4,397,590.36
March 31, 2017	$3,298,192.77
June 30, 2017	$3,298,192.77
September 30, 2017	$3,298,192.77
December 15, 2017	$3,298,192.77

 

(b)          On the Interest Payment Dates closest to the dates set forth in the table below the Borrower will prepay the principal amount (or such lesser principal amount as shall then be outstanding) of the Series B Notes in the amounts set forth in the table below opposite the applicable date, at par and without payment of the LIBOR Breakage Amount or any premium, provided that upon any partial prepayment of the Series B Notes pursuant to Section 8.2, the principal amount of each required prepayment of the Series B Notes becoming due under this Section 8.1(b) on and after the date of such prepayment shall be reduced in the same proportion as the aggregate unpaid principal amount of the Series B Notes is reduced as a result of such prepayment.

 

 

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Date	Principal Amount of Series B Notes to be Prepaid
March 31, 2008	$753,012.05
June 30, 2008	$753,012.05
September 30, 2008	$753,012.05
December 31, 2008	$753,012.05
March 31, 2009	$753,012.05
June 30, 2009	$753,012.05
September 30, 2009	$753,012.05
December 31, 2009	$753,012.05
March 31, 2010	$1,506,024.10
June 30, 2010	$1,506,024.10
September 30, 2010	$1,506,024.10
December 31, 2010	$1,506,024.10
March 31, 2011	$1,656,626.51
June 30, 2011	$1,656,626.51
September 30, 2011	$1,656,626.51
December 31, 2011	$1,656,626.51
March 31, 2012	$1,807,228.92
June 30, 2012	$1,807,228.92
September 30, 2012	$1,807,228.92
December 31, 2012	$1,807,228.92
March 31, 2013	$1,807,228.92
June 30, 2013	$1,807,228.92
September 30, 2013	$1,807,228.92
December 31, 2013	$1,807,228.92
March 31, 2014	$1,656,626.51
June 30, 2014	$1,656,626.51
September 30, 2014	$1,656,626.51
December 31, 2014	$1,656,626.51
March 31, 2015	$1,506,024.10
June 30, 2015	$1,506,024.10
September 30, 2015	$1,506,024.10
December 31, 2015	$1,506,024.10
March 31, 2016	$602,409.64
June 30, 2016	$602,409.64
September 30, 2016	$602,409.64

 

 

24

Date	Principal Amount of Series B Notes to be Prepaid
December 31, 2016	$602,409.64
March 31, 2017	$451,807.23
June 30, 2017	$451,807.23
September 30, 2017	$451,807.23
December 15, 2017	$451,807.23

 

Section 8.2.

Optional Prepayments .

(a)           Series A Notes . The Borrower may, at its option, upon notice as provided below, prepay at any time all, or from time to time any part of, the Series A Notes (but if in part, in an amount not less than $5,000,000 or such lesser amount of the Series A Notes as shall then be outstanding), at 100% of the principal amount so prepaid, plus the Make-Whole Amount determined for the prepayment date with respect to such principal amount. The Borrower will give (or will cause the Fiscal Agent to give) each beneficial holder of Series A Notes written notice of each optional prepayment under this Section 8.2(a) not less than 30 days and not more than 60 days prior to the date fixed for such prepayment. Each such notice shall specify such date (which shall be a Business Day), the aggregate principal amount of the Series A Notes to be prepaid on such date, the principal amount of each Series A Note beneficially held by such beneficial holder to be prepaid (determined in accordance with Section 8.5), and the interest to be paid on the prepayment date with respect to such principal amount being prepaid, and shall be accompanied by a certificate of a Senior Financial Officer as to the estimated Make-Whole Amount due in connection with such prepayment (calculated as if the date of such notice were the date of the prepayment), setting forth the details of such computation. Two Business Days prior to such prepayment, the Borrower shall deliver (or shall cause the Fiscal Agent to deliver) to each beneficial holder of Series A Notes a certificate of a Senior Financial Officer specifying the calculation of such Make-Whole Amount as of the specified prepayment date.

(b)           Series B Notes . On or before the second anniversary of the date of the Closing, the Borrower may not, except as provided in Sections 8.3 and 8.4, prepay the outstanding principal balance of the Series B Notes in whole or in part. At any time after the second anniversary of the date of Closing, the Borrower may, at its option, upon notice as provided below, prepay at any time all, or from time to time any part of, the Series B Notes (but if in part, in an amount not less than $5,000,000 or such lesser amount of the Series B Notes as shall then be outstanding), at 100% of the principal amount so prepaid, and if such prepayment is made on any date other than the last day of the applicable Interest Period for any Series B Note, plus any LIBOR Breakage Amount in respect thereof. The Borrower will give (or will cause the Fiscal Agent to give) each beneficial holder of Series B Notes written notice of each optional prepayment under this Section 8.2(b) not less than 30 days and not more than 60 days prior to the date fixed for such prepayment. Each such notice shall specify such date (which shall be a Business

25

Day), the aggregate principal amount of such Series B Notes to be prepaid on such date, the principal amount of each Series B Note beneficially held by such beneficial holder to be prepaid (determined in accordance with Section 8.5), and the interest to be paid on the prepayment date with respect to such principal amount being prepaid. At the request of the Borrower, the holders of the Series B Notes will provide a certificate to the Borrower setting forth, in reasonable detail, the calculation of the LIBOR Breakage Amount, if any, due in respect of such prepayment. Two Business Days prior to such prepayment, the Borrower shall deliver (or shall cause the Fiscal Agent to deliver) to each beneficial holder of Series B Notes a certificate of a Senior Financial Officer specifying the date of such prepayment and the calculation of interest to be paid on the prepayment date with respect to such principal amount being prepaid, as of the specified prepayment date.

Section 8.3.

Prepayment of Notes Upon a Change of Control .

(a)           Notice of Change of Control . The Borrower will, within five Business Days after any Responsible Officer has knowledge of the occurrence of any Change of Control, give written notice of such Change of Control to each holder of Notes. In the case that a Change of Control has occurred, such notice shall contain and constitute an offer to prepay Notes as described in subparagraph (b) of this Section 8.3 and shall be accompanied by the certificate described in subparagraph (e) of this Section 8.3.

(b)           Offer to Prepay Notes . The offer to prepay Notes contemplated by subparagraph (a) of this Section 8.3 shall be an offer to prepay, in accordance with and subject to this Section 8.3, all, but not less than all, of the Notes held by each holder (in this case only, “holder” in respect of any Note registered in the name of a nominee for a disclosed beneficial owner shall mean such beneficial owner) on a date specified in such offer (the “ Change of Control Prepayment Date ”) that is not less than 35 days and not more than 90 days after the date of such offer (if the Change of Control Prepayment Date shall not be specified in such offer, the Change of Control Prepayment Date shall be the 35th day after the date of such offer).

(c)           Acceptance; Rejection . A holder of Notes may accept the offer to prepay made pursuant to this Section 8.3 by causing a notice of such acceptance to be delivered to the Borrower not more than 20 days after the date the written offer notice referred to in subsection (a) of this Section 8.3 is given to the holders of the Notes. A failure by a holder of Notes to respond to an offer to prepay made pursuant to this Section 8.3 shall be deemed to constitute a rejection of such offer by such holder.

(d)           Prepayment . Prepayment of the Notes to be prepaid pursuant to this Section 8.3 shall be (i) with respect to the Series A Notes, at 100% of the principal amount of such Series A Notes so prepaid, together with interest on such Series A Notes accrued to the applicable Change of Control Prepayment Date but without payment of a Make-Whole Amount or other premium; and (ii) with respect to the Series B Notes, at 100% of the principal amount of such Series B Notes so prepaid, plus the LIBOR Breakage Amount, if any, with respect thereto, together with interest on such Series B Notes accrued to the applicable Change of Control Prepayment Date. Each prepayment

26

of Notes pursuant to this Section 8.3 shall be made on the applicable Change of Control Prepayment Date.

(e)           Officer’s Certificate . Each offer to prepay the Notes pursuant to this Section 8.3 shall be accompanied by a certificate, executed by a Senior Financial Officer of the Borrower and dated the date of such offer, specifying: (i) the proposed Change of Control Prepayment Date; (ii) that such offer is made pursuant to this Section 8.3; (iii) the principal amount of each Note offered to be prepaid; (iv) the interest that would be due on each Note offered to be prepaid as of the Change of Control Prepayment Date; (v) that the conditions of this Section 8.3 have been fulfilled; and (vi) in reasonable detail, the nature and date of the Change of Control (including, if known, the name or names of the Person or Persons acquiring control).

(f)            “Change of Control” Defined . A “ Change of Control ” shall occur if either (i) either (A) Enterprise, Valero and Valero LP, collectively, fail to own, directly or indirectly at least 50% of the legal, beneficial and Voting Stock of the Borrower, or (B) unless the Required Holders agree otherwise, at any time, Enterprise, Valero or Valero LP or a Subsidiary of Enterprise, Valero or Valero LP fails to be the operator of, and otherwise to operate and maintain, the Project or (ii) a change of control or similar type of event shall occur under any agreement, instrument or other document evidencing any Indebtedness in an aggregate outstanding principal amount of at least $25,000,000 to which the Borrower is a party and, as a result thereof (with or without the giving of notice or the passage of time) the Borrower is required to offer to prepay such Indebtedness or any other party thereto has the right to tender such Indebtedness for purchase, require such Indebtedness to be repurchased or declare that an event of default has occurred thereunder.

Section 8.4.

Prepayment of Notes Upon a Material Event of Loss .

(a)           Notice of Event of Loss . The Borrower will, within (i) sixty (60) days after any Responsible Officer has knowledge of the occurrence of any Material Event of Loss or (ii) ninety (90) days after a Material Event of Loss occurs, whichever is earlier, give written notice of such Material Event of Loss to each holder of Notes. In the case of a Material Event of Loss for which the Borrower does not use the Loss Proceeds received to rebuild or repair the Project as provided in the Deposit and Disbursement Agreement, the Borrower will offer to prepay the Notes as described in subparagraph (b) of this Section 8.4 and such offer shall be accompanied by the certificate described in subparagraph (e) of this Section 8.4.

(b)           Offer to Prepay Notes . The offer to prepay Notes contemplated by subparagraph (a) of this Section 8.4 shall be an offer to prepay, in accordance with and subject to this Section 8.4, all or a portion of the Notes held by each holder (in this case only, “holder” in respect of any Note registered in the name of a nominee for a disclosed beneficial owner shall mean such beneficial owner) in an amount equal to such beneficial holder’s ratable portion of such Loss Proceeds on a date specified in such offer (the “ Event of Loss Prepayment Date ”) that is not more than 90 days after the date of receipt of such Loss Proceeds (if the Event of Loss Prepayment Date shall not be

27

specified in such offer, the Event of Loss Prepayment Date shall be the 90th day after the date of receipt of such Loss Proceeds).

(c)           Acceptance; Rejection . A holder of Notes may accept the offer to prepay made pursuant to this Section 8.4 by causing a notice of such acceptance to be delivered to the Borrower not more than 30 days after the date the written offer notice referred to in subsection (a) of this Section 8.4 is given to the holders of the Notes. A failure by a holder of Notes to respond to an offer to prepay made pursuant to this Section 8.4 shall be deemed to constitute a rejection of such offer by such holder.

(d)           Prepayment . Prepayment of the Notes to be prepaid pursuant to this Section 8.4 shall be (i) with respect to the Series A Notes, at 100% of the principal amount of such Series A Notes so prepaid, together with interest on such Series A Notes accrued to the applicable Event of Loss Prepayment Date but without payment of a Make-Whole Amount or other premium; and (ii) with respect to the Series B Notes, at 100% of the principal amount of such Series B Notes so prepaid, plus the LIBOR Breakage Amount, if any, with respect thereto, together with interest on such Series B Notes accrued to the applicable Event of Loss Prepayment Date. Each prepayment of Notes pursuant to this Section 8.4 shall be made on the applicable Event of Loss Prepayment Date, and any such partial prepayment shall be applied ratably to the required payments of principal due thereon.

(e)           Officer’s Certificate . Each offer to prepay the Notes pursuant to this Section 8.4 shall be accompanied by a certificate, executed by a Senior Financial Officer of the Borrower and dated the date of such offer, specifying: (i) the proposed Event of Loss Prepayment Date; (ii) that such offer is made pursuant to this Section 8.4; (iii) the principal amount of each Note offered to be prepaid; (iv) the interest that would be due on each Note offered to be prepaid as of the Event of Loss Prepayment Date; (v) that the conditions of this Section 8.4 have been fulfilled; and (vi) in reasonable detail, the nature and date of the Event of Loss.

Section 8.5.

Allocation of Partial Prepayments .

(a)          In the case of each partial prepayment of the Notes pursuant to Section 8.1 or Section 8.2, on or before the second anniversary of the date of Closing, such prepayment shall be applied only to the Series A Notes, and such prepayment shall be allocated among all of the Series A Notes at the time outstanding in proportion, as nearly as practicable, to the respective unpaid principal amounts thereof not theretofore called for prepayment, and any such partial prepayment shall be applied ratably to the required payments of principal due thereon.

(b)          In the case of each partial prepayment of the Notes pursuant to Section 8.1 or Section 8.2 after the second anniversary of the date of Closing, the principal amount of the Series to be prepaid by the Borrower shall be allocated among all of the Notes of such Series at the time outstanding in proportion, as nearly as practicable, to the respective unpaid principal amounts thereof not theretofore called for prepayment, and any such

28

partial prepayment shall be applied ratably to the required payments of principal due thereon.

Section 8.6.

Maturity; Surrender, Etc .

In the case of each prepayment of Notes pursuant to this Section 8, the principal amount of each Note to be prepaid shall mature and become due and payable on the date fixed for such prepayment (which shall be a Business Day), together with interest on such principal amount accrued to such date and the applicable Make-Whole Amount or LIBOR Breakage Amount, if any. From and after such date, unless the Borrower shall fail to pay such principal amount when so due and payable, together with the interest and Make-Whole Amount or LIBOR Breakage Amount, if any, as aforesaid, interest on such principal amount shall cease to accrue. Any Note paid or prepaid in full shall be surrendered to the Borrower and cancelled and shall not be reissued, and no Note shall be issued in lieu of any prepaid principal amount of any Note.

Section 8.7.

Purchase of Notes .

The Borrower will not and will not permit any Affiliate to purchase, redeem, prepay or otherwise acquire, directly or indirectly, any of the outstanding Notes except upon the payment or prepayment of the Notes in accordance with the terms of this Agreement and the Notes. The Borrower will promptly cancel all Notes acquired by it or any Affiliate pursuant to any payment or prepayment of Notes pursuant to any provision of this Agreement and no Notes may be issued in substitution or exchange for any such Notes.

Section 8.8.

Make-Whole Amount .

“Make-Whole Amount” means, with respect to any Series A Note, an amount equal to the excess, if any, of the Discounted Value of the Remaining Scheduled Payments with respect to the Called Principal of such Series A Note over the amount of such Called Principal, provided that the Make-Whole Amount may in no event be less than zero. For the purposes of determining the Make-Whole Amount, the following terms have the following meanings:

“Called Principal” means, with respect to any Series A Note, the principal of such Note that is to be prepaid pursuant to Section 8.2 or has become or is declared to be immediately due and payable pursuant to Section 12.1, as the context requires.

“Discounted Value” means, with respect to the Called Principal of any Series A Note, the amount obtained by discounting all Remaining Scheduled Payments with respect to such Called Principal from their respective scheduled due dates to the Settlement Date with respect to such Called Principal, in accordance with accepted financial practice and at a discount factor (applied on the same periodic basis as that on which interest on the Series A Notes is payable) equal to the Reinvestment Yield with respect to such Called Principal.

“Reinvestment Yield” means, with respect to the Called Principal of any Series A Note, 0.50% over the yield to maturity implied by (i) the yields reported as of 10:00 a.m. (New York City time) on the second Business Day preceding the Settlement Date with respect to such Called Principal, on the display designated as “Page PX1” (or such other display as may replace Page PX1 on Bloomberg Financial Markets (“Bloomberg”) or, if Page PX1 (or its successor screen on

29

Bloomberg) is unavailable, the Telerate Access Service screen which corresponds most closely to Page PX1 for the most recently issued actively traded U.S. Treasury securities having a maturity equal to the Remaining Average Life of such Called Principal as of such Settlement Date, or (ii) if such yields are not reported as of such time or the yields reported as of such time are not ascertainable (including by way of interpolation), the Treasury Constant Maturity Series Yields reported, for the latest day for which such yields have been so reported as of the second Business Day preceding the Settlement Date with respect to such Called Principal, in Federal Reserve Statistical Release H.15 (519) (or any comparable successor publication) for actively traded U.S. Treasury securities having a constant maturity equal to the Remaining Average Life of such Called Principal as of such Settlement Date. Such implied yield will be determined, if necessary, by (a) converting U.S. Treasury bill quotations to bond equivalent yields in accordance with accepted financial practice and (b) interpolating linearly between (1) the actively traded U.S. Treasury security with the maturity closest to and greater than such Remaining Average Life and (2) the actively traded U.S. Treasury security with the maturity closest to and less than such Remaining Average Life. The Reinvestment Yield shall be rounded to the number of decimal places as appears in the interest rate of the applicable Series A Note.

“Remaining Average Life” means, with respect to any Called Principal of any Series A Note, the number of years (calculated to the nearest one-twelfth year) obtained by dividing (i) such Called Principal into (ii) the sum of the products obtained by multiplying (a) the principal component of each Remaining Scheduled Payment with respect to such Called Principal by (b) the number of years (calculated to the nearest one-twelfth year) that will elapse between the Settlement Date with respect to such Called Principal and the scheduled due date of such Remaining Scheduled Payment.

“Remaining Scheduled Payments” means, with respect to the Called Principal of any Series A Note, all payments of such Called Principal and interest thereon that would be due after the Settlement Date with respect to such Called Principal if no payment of such Called Principal were made prior to its scheduled due date, provided that if such Settlement Date is not a date on which interest payments are due to be made under the terms of the Series A Notes, then the amount of the next succeeding scheduled interest payment will be reduced by the amount of interest accrued to such Settlement Date and required to be paid on such Settlement Date pursuant to Section 8.2 or Section 12.1.

“Settlement Date” means, with respect to the Called Principal of any Series A Note, the date on which such Called Principal is to be prepaid pursuant to Section 8.2 or has become or is declared to be immediately due and payable pursuant to Section 12.1, as the context requires.

Section 8.9.

Interest Rate and Interest Payment Dates .

(a)           Series A Notes . Subject to the next succeeding sentence, each Series A Note shall bear interest on the outstanding principal amount thereof at the rate of five and eighty-six one hundredths of one percent (5.86%) per annum and such interest shall be payable to the holders of the Series A Notes, in arrears, quarterly on the last day of March, June, September and December in each year, commencing on March 31, 2006, until the principal amount of the Series A Notes in respect of which such interest shall have accrued shall become due and payable, all as more particularly set forth in the Series

30

A Notes. While an Event of Default is continuing, interest on the Series A Notes shall be payable at the rate set forth in Section 8.9(g)(i). Interest on the Series A Notes shall be calculated on the basis of a 360 day year of twelve 30 day months.

(b)           Series B Notes . Subject to Sections 8.9(e), (f) and (g) Section 8.10, the outstanding principal amount of each Series B Note shall bear interest, for each Interest Period, at the relevant LIBOR Rate for such Interest Period.

(c)           Calculation of Series B Interest . Interest on the Series B Notes shall be calculated on the basis of a 360 day year and the actual number of days elapsed, calculated as to each Interest Period or other period during which interest accrues from and including the first day thereof to but excluding the last day thereof.

(d)           Payment of Interest on Series B Notes . Subject to Section 8.9(b), interest on each Series B Note shall be payable (i) if the Interest Period is 3 months or less, on the last Business Day of each applicable Interest Period and (ii) if the Interest Period is more than 3 months, the date that is 3 months from the first day of such Interest Period (and if such date is not a Business Day, such date shall be extended to the next succeeding Business Day) and, in addition, the last Business Day of each applicable Interest Period (each such date, an “ Interest Payment Date ”).

(e)           Inability to Determine LIBOR Rate . If, prior to the first Business Day of any Interest Period, the basis for determining the LIBOR Rate ceases to be reported on Bloomberg page “Currency BBAM 1” (or in such other manner as provided for in the definition of LIBOR Rate) or such other service as has been nominated by the British Bankers’ Association as an authorized information vendor for purposes of displaying the basis for determining such rate) and if the Series B Required Holders, or their designated agent, shall have reasonably determined (which determination shall be conclusive and binding upon the Borrower) that, by reason of circumstances affecting the relevant market, other adequate and reasonable means do not exist for ascertaining the LIBOR Rate for such Interest Period, then the Series B Required Holders shall forthwith give notice thereof to the Borrower. If such notice is given, (i) the interest rate applicable to all Series B Notes for such Interest Period shall be the Prime Rate, determined and effective as of the first day of such Interest Period, (ii) each reference herein and in the Series B Notes to the “LIBOR Rate” shall be deemed thereafter to be a reference to the Prime Rate, and (iii) subject to Section 8.9(f) below, such substituted rate shall thereafter be determined by the Series B Required Holders in accordance with the terms hereof. Until notice contemplated by Section 8.9(f) is furnished by the Series B Required Holders, the LIBOR Rate (defined without giving effect to clause (ii) of this Section 8.9(e)) shall not apply to the Series B Notes.

(f)            Reinstatement of LIBOR Rate . If there has been at any time an interest rate substituted for the LIBOR Rate in accordance with Section 8.9(b) or Section 8.9(e) and if in the reasonable opinion of the Series B Required Holders, the circumstances causing such substitution have ceased, then the Series B Required Holders shall promptly notify the Borrower in writing of such cessation, and on the first day of the next succeeding Interest Period the LIBOR Rate shall be determined as originally defined

 

31

 

hereby. Nevertheless, thereafter the provisions of Section 8.9(b) and Section 8.9(e) above shall continue to be effective.

(g)

Default Rate; Overdue Amounts .

(i)            Increase in Interest Rate; Event of Default .  Upon the occurrence of an Event of Default, the outstanding principal amount of each Note shall bear interest from and including the date of the occurrence of such Event of Default to, but excluding, the date when no Event of Default shall be continuing, at a rate per annum equal to the Default Rate.

(ii)           Interest and Other Amounts .  Any overdue payment of interest on the outstanding principal amount of any Notes, and any other overdue amount payable in accordance with the terms of the Financing Documents (regardless of whether the failure to make such payment constitutes an Event of Default), shall bear interest, payable on demand, for each day from and including the date payment thereof was due to but excluding the date of actual payment, at a rate per annum equal to the greater of (1) the highest interest rate in effect from time to time with respect to any Note then outstanding prior to the occurrence of an Event of Default plus two percent (2%) per annum, and (2) the Prime Rate plus two percent (2%) per annum. This Section 8.9(g)(ii) shall not apply at any time when Section 8.9(g)(i) applies.

	Section 8.10.		Yield Protection and Illegality .
		(a)	Illegality .

(i)           Notwithstanding any other provision of this Agreement, if, after the date hereof, any change in any law or regulation or in the interpretation thereof by any Governmental Authority charged with the administration or interpretation thereof shall make it unlawful for any holder of the Series B Notes to maintain the LIBOR Rate on the Series B Notes, then by written notice to the Borrower:

(A)         such holder shall promptly notify the Borrower of such circumstances, including a description of and the effective date of such law, regulation or interpretation (which notice shall be withdrawn whenever such circumstances no longer exist);

(B)         such holder may require that the Series B Notes bear interest at the Prime Rate, in which event all such Series B Notes shall bear interest at the Prime Rate as of the effective date specified in such notice; and

(C)         such notice shall cease to be effective at such time as it shall no longer be unlawful for such holder to maintain the LIBOR Rate on the Series B Notes, and, effective as of the first day of the next

32

succeeding Interest Period, the Notes shall bear interest in accordance with the provisions of Section 8.9(b).

(ii)          For purposes of this Section 8.10(a), a notice to the Borrower by a holder of any Series B Note shall be effective on the last day of the Interest Period during which such notice is given unless the effective date specified in such notice is an earlier date (which earlier date may be specified only if required by such change in law, regulation or interpretation), in which event such notice shall be effective as of such earlier date. If any such conversion to the Prime Rate occurs on a day which is not the last day of an Interest Period, the Borrower shall pay to such holder such amounts, if any, as may be required pursuant to Section 8.10(b).

(b)           Breakage Cost Indemnity . The Borrower agrees to indemnify each holder of the Series B Notes for, and promptly to pay to each such holder upon the written request of such holder, any amounts required to compensate such holder for any losses, costs or expenses sustained or incurred by such holder arising out of:

(i)           any event (including any acceleration of the Series B Notes in accordance with Section 12.1 and any prepayment of the Series B Notes pursuant to Section 8.2 or Section 8.3) which results in:

(A)         such holder receiving any amount on account of the principal of any Series B Note prior to the end of the Interest Period in effect therefor, or

(B)         the conversion of the interest rate applicable to any Series B Notes from the LIBOR Rate to the Prime Rate other than on the last day of the Interest Period in effect therefor; or

(ii)          the failure by the Borrower to pay any amount in respect of a payment or prepayment of the Series B Notes on the date due in respect thereof,

including, without limitation, any loss, cost or expense incurred by reason of the liquidation or reemployment of deposits or other funds acquired by such holder to fund or maintain the LIBOR Rate (all such amounts, collectively, the “ LIBOR Breakage Amount ”).

A certificate of any such holder of the Notes setting forth, in reasonable detail, the calculations of any amount or amounts which such holder is entitled to receive pursuant to this Section 8.10(b), and the basis therefor, shall be delivered to the Borrower and shall be prima facie evidence of such amount absent manifest error unless the Borrower notifies such holder in writing to the contrary within thirty (30) days after such certificate is delivered to the Borrower. The provisions of this Section 8.10(b) shall remain operative and in full force and effect regardless of prepayment of the Series B Notes, the consummation of the transactions contemplated hereby, the repayment of any other of the Notes, the invalidity or unenforceability of any other term or provision of this

33

Agreement or any other Financing Document or any investigation made by or on behalf of any such holder.

(c)

Reserve Requirements; Change in Circumstances .

(i)           Notwithstanding any other provision of this Agreement, if after the date of this Agreement any change in applicable law or regulation or in the interpretation or administration thereof by any Governmental Authority charged with the interpretation or administration thereof (whether or not having the force of law) shall change the basis of taxation of payments to any holder of the Series B Notes of the principal thereof or interest thereon or any fees, expenses or indemnities payable hereunder (other than changes in respect of taxes imposed on the gross revenues or overall net income of any such holder by the United States of America or the jurisdiction in which such holder is organized or has its principal office or by any political subdivision or taxing authority therein), or shall impose, modify or deem applicable any reserve, special deposit or similar requirement against assets of, deposits with or for the account of, or credit extended by any holder or shall impose on such holder or the London interbank market any other condition affecting this Agreement, or the Series B Notes, and the collective result of the foregoing shall be to increase the cost to any such holder of maintaining the LIBOR Rate on the Series B Notes or to reduce the amount of any sum received or receivable by any such holder hereunder or under the Series B Notes (whether of principal, interest or otherwise) by an amount deemed by such holder to be material, then such holder shall deliver a certificate setting forth such additional amount or amounts as will compensate such holder for such additional costs incurred or reduction suffered (and, in reasonable detail, the basis therefor).

(ii)          If, after the date of Closing, any holder of the Series B Notes shall have reasonably determined that

(A)         the adoption of any law, rule, regulation, agreement or guideline applicable to such holder regarding capital adequacy, or any amendment or other modification to or of any such law, rule, regulation, agreement or guideline (whether such law, rule, regulation, agreement or guideline was originally adopted before or after the date of the Closing),

(B)         any change in the interpretation or administration of any law, rule, regulation, agreement or guideline regarding capital adequacy applicable to such holder by any Governmental Authority charged with the interpretation or administration thereof, or

(C)         compliance by any holder with any request or directive regarding capital adequacy (whether or not having the force of law) of any Governmental Authority issued after the date of Closing,

34

has or would have the effect of reducing the rate of return on such holder’s capital as a consequence of the Series B Notes to a level below that which such holder could have achieved but for such applicability, adoption, change or compliance (taking into consideration such holder’s policies with respect to capital adequacy) by an amount deemed by such holder to be material, then from time to time the Borrower agrees to pay to such holder such additional amount or amounts as will compensate such holder for any such reduction suffered.

(iii)        A certificate of any holder of the Series B Notes setting forth, in reasonable detail, the calculation of the amount or amounts necessary to compensate such holder as specified in clause (i) or clause (ii) above and the basis therefor (which shall include notice of the law, regulations, guidelines, request or any interpretation thereof, of any Governmental Authority (whether or not having the force of law), as applicable, giving rise to such increased costs or reductions), shall be delivered to the Borrower and