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SCHEDULES

Schedule 7.2

No Conflicts

Schedule 7.7

Environmental Matters

Schedule 7.8(g)

Other Material Assets

Schedule 7.8(i)

Mechanics’ or Materialmen’s Liens

Schedule 7.11

Governmental Authorizations

Schedule 7.12

Bonds, Letters of Credit, Guaranties

Schedule 7.14

Consents

Schedule 7.16(a)

Material Agreements

Schedule 7.18

Adverse Change

Schedule 7.20

Capital Expenditures

Schedule 7.22

Insurance

Schedule 7.23

Financial Statements

Schedule 8.2

Power and Authority

Schedule 10.4

Purchase Price Allocation

Schedule 11.2(c)

Required Consents

EXHIBITS

Exhibit A

Assignment and Bill of Sale

Exhibit B

Building Lease

Exhibit C

Buyer Servitude Agreement

Exhibit D

Designation and Reimbursement Agreement

Exhibit E

Escrow Agreement

Exhibit F

EXXI Servitude Agreement

Exhibit G

Right of Use Agreements

Exhibit H

Gas Supply Agreement

Exhibit I

Heliport License

Exhibit J

Improvements

Exhibit K

Land

Exhibit L

Lease

Exhibit M

Liquids Transportation System

Exhibit N

Title Policy Right of Use Agreements

Exhibit O

Mortgages and UCC Financing Statements for Release

Exhibit P

Non-Foreign Affidavit

Exhibit Q

OSFR Agreement

Exhibit R

ROW Assignments

Exhibit S

Water Supply Agreement

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8

9

10

11

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13

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2.3          Nonrefundable Consideration .  Contemporaneously with the execution and delivery of this Agreement, Buyer has delivered to Seller, and Seller hereby acknowledges the receipt of, a check in the amount of $100.00 (the “ Independent Contract Consideration ”), which amount the Parties bargained for and agreed to as consideration for Buyer’s right to inspect and purchase the Assets pursuant to this Agreement, and for Seller’s execution, delivery and performance of this Agreement.  The Independent Contract Consideration is in addition to and independent of any other consideration or payment provided in this Agreement, is nonrefundable, and is fully earned and shall be retained by Seller notwithstanding any other provision of this Agreement.

 

2.4          Acknowledgement and Disclaimer .  Buyer and Seller acknowledge that the transactions contemplated by this Agreement and the Lease contain real economic substance for Buyer, Seller, and Tenant, and the Parties specifically disclaim any presumption of Louisiana Civil Code article 2480.

 

2.5            Intent; Precautionary Mortgage and Security Interest .  The Parties intend and agree that the Transaction is intended to constitute, and does constitute, (a) a true sale and absolute conveyance of the Assets from Seller to Buyer for legal, accounting and all other purposes and (b) a true lease of the Assets from Buyer to Tenant for legal, accounting and all other purposes and in neither case constitutes a financing or joint venture of any kind.  Solely as a precaution in the event that the Transaction, or any component thereof, is recharacterized as a financing and not a true sale and absolute conveyance of the Assets and a true lease, and without derogating from the Parties’ intent in any way, Seller grants Buyer a precautionary mortgage and security interest in the Assets to secure [payment of the amounts due by Seller under this Agreement and by Tenant under the Lease ] 

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9.8            Joint Use Improvements and Personal Property .  Seller’s computer hardware and some monitoring equipment used in the operation of the Liquids Transportation System are also used by Seller for other assets of Seller that are not the subject of this Agreement.  On or before the one year anniversary of the Closing Date, Seller will transfer the monitoring of Seller’s other assets to separate equipment and computer software.

 

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LEASE

 

between

 

ENERGY XXI GIGS SERVICES, LLC,

 

as Tenant,

 

and

 

GRAND ISLE CORRIDOR, LP

 

as Landlord

 

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TABLE OF CONTENTS

 

 

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TABLE OF CONTENTS

(continued)

 

 

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EXHIBITS

 

 

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B.                    Landlord desires to lease the Leased Property to Tenant, and Tenant desires to lease the Leased Property from Landlord, in accordance with the terms and conditions of this Lease.

 

AGREEMENT

 

In consideration of the rents and the other terms, covenants and conditions set forth in this Lease, Landlord leases to Tenant and Tenant leases from Landlord all of Landlord’s rights, title, and interests in and to the Leased Property (defined below) upon the following terms and conditions:

 

ARTICLE I

DEFINITIONS AND INTERPRETIVE PROVISIONS

 

1.1                  Definitions .  For all purposes of this Lease, except as may be expressly set forth herein or unless the context clearly indicates a contrary intent, the following terms have the following definitions:

 

“ Actual Knowledge ” means (a) with respect to any EXXI Entity Person, as of any date, the then-current actual knowledge of the Chief Accounting Officer, Chief Operating Officer, Chief Financial Officer, and Senior Vice President (Legal) of EXXI Parent, or, if the title of any such officer changes, an officer of EXXI Parent with an equivalent title, as of such date, and not any implied, imputed or constructive knowledge of such individuals, and without any independent investigation or inquiry having been made or any implied duty to investigate, make any inquiries or review any information, (b) with respect to Grand Isle Corridor, as of any date, the then-current actual knowledge of the Chairman of the Board, Chief Executive Officer and Chief Accounting Officer of CorEnergy, or, if the title of any such officers changes, an officer of CorEnergy with an equivalent title, as of such date, and not any implied, imputed or constructive knowledge of such individuals, and without any independent investigation or inquiry having been made or any implied duty to investigate, make any inquiries or review any information, and (c) with respect to any other Person, as of any date, the then-current actual knowledge of the Responsible Officers of such Person as of such date, and not any implied, imputed or constructive knowledge of such individuals, and without any independent investigation or inquiry having been made or any implied duty to investigate, make any inquiries or review any information.  The foregoing qualification of Actual Knowledge shall in no event give rise to any personal liability on the part of any such Person or any other officer or employee of such Party or its Affiliates on account of any breach hereunder.

 

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“ Actual Oil Price ” means, the average of the following price for each day (excluding weekends and holiday) of any calendar month or portion thereof during the Term, the OIL-ICE-BRENT price per barrel of Brent crude oil published by the Intercontinental Exchange ("ICE") of the "First Nearby Month Futures Contract" for delivery on such day, stated in U.S. dollars and rounded to three (3) decimal places, as published by ICE such day (or, if such price is not available for any particular trading day, an alternative reference price for Brent crude oil, as agreed upon by the Parties, acting reasonably).

 

“ Actual Oil Revenue ” means, for any calendar month or portion thereof during the Term, Actual Oil Volume multiplied by Actual Oil Price.

 

“ Actual Oil Volume ” means, for any calendar month or portion thereof during the Term, the total volume (bbls) of oil produced by or on behalf of Tenant or any of its Affiliates physically transported through the Liquids Transportation System, measured by the Lease Automatic Custody Transfer unit meter located at ExxonMobil Pipeline Company’s Grand Isle Station (or, if such meter is not available for such purpose, at such point as the Parties agree, acting reasonably).  For the avoidance of doubt, Actual Oil Volume shall include the oil physically transported through the Liquids Transportation System that is produced by or on behalf of Tenant or its Affiliates (but shall not include any volumes produced by or on behalf of owned by third parties), including any oil produced by or on behalf of by Tenant or its Affiliates received into the Liquids Transportation System from Additional Lines, if any, even if such Additional Lines do not become part of the Leased Property as provided in Section 10.1 .

 

“ Additional Lines ” means such additional easements and rights of way and such additional pipelines (including gathering lines, distribution, or sales lines) and appurtenances that connect to the Leased Property but that are, in all cases, either upstream or downstream of the Liquids Transportation System, as Tenant may from time-to-time desire or be required to use, acquire or make.

 

“ Additional Rent ” means all amounts, costs, expenses, Losses, liabilities, indemnities and other monetary obligations (including Tenant’s obligation to pay any interest at the Default Interest Rate hereunder) which Tenant is required to pay pursuant to the terms of this Lease, other than Base Rent.

 

“ Adverse Party ” means, as of any date, (a) any Person who (i) is a substantial investor in Tenant or any Affiliate of Tenant, and (ii) has a pending proposal to merge with, acquire or takeover Tenant or any Affiliate of Tenant, which merger, acquisition or other takeover shall not have been approved by the board of directors of Tenant or such Affiliate, or otherwise be perceived by Tenant or such Affiliate to be hostile to the management of Tenant or such Affiliate, (b) any Affiliate of each Person in subsection (a) , and (c) any Person that has a net short position with respect to at least one-half of one percent (0.5%) of, or has, within the last twelve (12) months, made public adverse comments about, the stock of Tenant Guarantor or any Affiliate of Tenant.  Within ten (10) Business Days after written request therefor from Landlord, Tenant shall advise Landlord if a Person(s) named by Landlord in such notice is an Adverse Party within the scope of this definition.

 

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“ Affiliate ” has the meaning ascribed to such term in Rule 12b-2 of the General Rules and Regulations under the Exchange Act and, with respect to a Person, includes any Subsidiary of that Person.

 

“ Aggregate Minimum Rent ” has the meaning given in Section 23.2(a)(i)(E) .

 

“ Agreed FMV Rent ” has the meaning given in Section 25.1(b) .

 

“ Applicable Legal Requirements ” mean all statutes, ordinances, regulations, procedures and codes of any Governmental Authority having jurisdiction, including, without limitation, zoning, health, fire, safety and building codes, applicable to the Leased Property (or portion thereof at issue), applicable to Tenant (with respect only to Tenant’s (rather than Landlord’s) obligations hereunder regarding compliance with Applicable Legal Requirements), or applicable to Landlord (with respect only to Landlord’s (rather than Tenant’s) obligations hereunder regarding compliance with Applicable Legal Requirements).

 

“ Auditor’s Report ” means, with respect to financial statements or information of Tenant Guarantor or Tenant required to be delivered pursuant to Section 26.7(b)(ii) , (a) the written report of the auditor for Tenant Guarantor or Tenant, as applicable, with respect to such financial statements or information (excluding any auditor’s report on internal controls), manually executed by such auditor, and (b) a manually executed consent of such auditor to the inclusion of such auditor’s report (and any auditor consent with respect thereto) in filings to be made by Landlord or Landlord Guarantor with the Securities and Exchange Commission.

 

“ Base Oil Revenue ” means for each calendar month during the Initial Term, the amount specified for such month on Exhibit A , prorated for any partial calendar month during the Initial Term.

 

“ Base Rent ” means (a) during the Initial Term, for any calendar month (or portion thereof) during the Initial Term, Minimum Rent plus Variable Rent for such calendar month (or portion thereof), and (b) during the Renewal Term, the amount determined pursuant to Section 25.1 hereof.

 

“ Beneficial Owner ” a Person (“such Person”) shall be deemed the “ Beneficial Owner ” of, and shall be deemed to “ beneficially own ” and have “ beneficial ownership   of ,” any equity interests or other securities which:

 

(a)                  such Person or any of such Person’s Affiliates, directly or indirectly, has the right to acquire (whether such right is exercisable immediately or only after the passage of time) pursuant to any agreement, arrangement or understanding (whether or not in writing) or upon the exercise of conversion rights, exchange rights, rights, warrants or options, or otherwise;

 

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(b)                  such Person or any of such Person’s Affiliates, directly or indirectly, has the right to vote or dispose of or has “beneficial ownership” of (as determined pursuant to Rule 13d-3 of the General Rules and Regulations under the Exchange Act), including pursuant to any agreement, arrangement or understanding, whether or not in writing; provided , however , that such Person shall not be deemed the “Beneficial Owner” of, or to “beneficially own,” any equity interest or other security under this subsection (b ) as a result of an agreement, arrangement or understanding to vote such equity interest or other security if such agreement, arrangement or understanding: (i) arises solely from a revocable proxy given in response to a public proxy or consent solicitation made pursuant to, and in accordance with, the applicable provisions of the General Rules and Regulations under the Exchange Act, and (ii) is not also then reportable by such Person on a Schedule 13D under the Exchange Act (or any comparable or successor report); or

 

(c)                  are “beneficially owned,” directly or indirectly, by any other Person (or any Affiliate thereof) with which such Person (or any of such Person’s Affiliates) has any agreement, arrangement or understanding (whether or not in writing), for the purpose of acquiring, holding, voting (except pursuant to a revocable proxy as described in the proviso to subsection (b) above) or disposing of any voting equity interests or other securities;

 

provided , however , that (A) if such Person is engaged in business as an underwriter of securities such Person shall not be deemed the “Beneficial Owner” of or to “beneficially own” any securities acquired through such Person’s participation in good faith in a firm commitment underwriting, (B) the existence of rights of first bid, rights of first refusal, pre-emptive rights, drag-along rights, tag-along rights or other similar rights, if any, set forth in the Landlord’s Governing Documents shall not themselves cause such Person to be deemed the Beneficial Owner of Landlord Equity Interests held by one or more other Equity Investors, (C) such Person shall not be deemed the “Beneficial Owner” of or to “beneficially own” any securities solely by virtue of holding a lien on such securities to secure Indebtedness, and (D) such Person shall be deemed to be a “Beneficial Owner” of or to “beneficially own” any securities, whether or not publicly traded, only if such Person owns more than ten percent (10%) of all such securities outstanding.

 

“ BOEM ” means the Bureau of Ocean Energy Management, an agency within the U.S. Department of the Interior.

 

“ BSEE ” means the Bureau of Safety and Environmental Enforcement, an agency within the U.S. Department of the Interior.

 

“ Business Day ” means any day that is not a Saturday, Sunday or other day on which commercial banks in New York, New York or Houston, Texas, are authorized or required by law to remain closed.  If the last day of any time period under this Lease, or the last day for performance of any obligation, or for giving any notice, or for taking any other action under this Lease falls on a day that is not a Business Day, then the last day of such time period shall be extended to the first day thereafter that is a Business Day.

 

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“ Capital Improvements ” means such alterations, additions and replacements to any of the Improvements or Personal Property as Tenant may from time-to-time desire or be required to make.

 

“ Casualty Date ” means the date fire or other casualty damages any portion of the Leased Property.

 

“ Casualty Proceeds ” means the insurance proceeds actually received by, or that the insurer has agreed in writing are payable to, Tenant with respect to a fire or other casualty of the Leased Property, but excluding from such insurance proceeds (a) Tenant’s reasonable third party costs and expenses (including reasonable attorneys’ fees and expenses) incurred in collecting same, (b) as of any date, proceeds previously paid to Tenant and used to repair, restore, replace, or remediate (as to environmental matters) the Leased Property as a result of such fire or other casualty, and (c) the proceeds of any business interruption or similar insurance with respect to such fire or other casualty.

 

“ Casualty Response Notice ” has the meaning assigned to such term in Section 15.1(c).

 

“ Casualty Termination Date ” has the meaning assigned to such term in Section 15.1(d ).

 

“ Code ” means Title 11 of the United States Code, 11 U.S.C. Sec. 101 et seq. , as amended.

 

“ Competitor ” means, as of any date, (a) any Person engaged in the business of exploration and/or production of oil or gas, and (b) any Affiliate of such Person.

 

“ Confidential Information ” means (a) all Proprietary Information, and (b) all other information furnished to Landlord by or on behalf of Tenant, Tenant Guarantor or any of their respective Affiliates prior to, on or after the Effective Date and designated as confidential.  Notwithstanding the foregoing, Confidential Information shall not include information that is publicly available other than as a result of actions in violation of Section 26.10 hereof.

 

“ Control ” or any derivation thereof has the meaning set forth in Rule 12b-2 under the Exchange Act.  “ Controlling ” and “ Controlled ” have meanings correlative thereto.

 

“ CorEnergy ” means CorEnergy Infrastructure Trust, Inc., a Maryland corporation.

 

“ Corrective Action ” means any investigation, study, assessment, evaluation, sampling, testing, monitoring, containment, response or response action, removal or removal action, disposal, closure, corrective action, remediation or remedial action (regardless of whether active or passive), natural attenuation, restoration, bioremediation, response, repair, corrective measure, cleanup, or abatement that is required under any Environmental Law.

“ Current Lease Term End ” means the end of the then-current Term assuming that this Lease will not be renewed at the end thereof.

 

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“ Debtor Relief Law ” means the Code and all other liquidation, conservatorship, bankruptcy, assignment for the benefit of creditors, moratorium, rearrangement, receivership, insolvency, reorganization, or similar debtor relief laws of the United States of America or other applicable jurisdictions from time-to-time in effect and affecting the rights of creditors generally.

 

“ Default Interest Rate ” means, for any period, (a) with respect to any obligation of any Tenant, Tenant Guarantor, or their respective Affiliates hereunder, if, as of the date of such Tenant’s acquisition of the leasehold estate under this Lease, either such Tenant or Tenant Guarantor is an Investment Grade Person, the lesser of (A) the annual rate of two percent (2%) over the average base, non-default rate of interest for such period (and without imputation of any gross-up components or default interest), under such Person’s Indebtedness which is Material Debt and which is held by a third party not an Affiliate of such Person, or, if such Person does not have any such Material Debt, then the Prime Rate for such period, and (B) the highest rate permitted by Applicable Legal Requirements, and (b) with respect to any obligation of (i) Grand Isle Corridor, CorEnergy or any of their respective Affiliates, and (ii) any other Landlord or Landlord Guarantor hereunder or their respective Affiliates if, as of the date of such Landlord’s acquisition of the leasehold estate under this Lease, either such Landlord or Landlord Guarantor is an Investment Grade Person, the lesser of (A) the annual rate of two percent (2%) over the average base, non-default rate of interest for such period (and without imputation of any gross-up components or default interest), under the Landlord Indebtedness of such Person which is held by a third party not an Affiliate of such Person or, if such Person does not have any such Landlord Indebtedness, then the Prime Rate for such period, and (B) the highest rate permitted by Applicable Legal Requirements, and (c) with respect to any other Tenant, Tenant Guarantor, Landlord or Landlord Guarantor, and their respective Affiliates, with respect to their respective obligations under or related to this Lease, the lesser of (i) the annual rate of six percent (6%) over the Prime Rate for such period, and (ii) the highest rate permitted by Applicable Legal Requirements.

 

“ Designation Notice ” has the meaning given in Section 25.1(c) .

 

“ Discount Rate ” means seven percent (7%).

 

“ Disqualified Person ” means, as of any date, each Competitor and each Adverse Party; provided , however , that (a) for so long as Landlord is owned, in whole or in part, by CorEnergy or by direct or indirect Subsidiaries of CorEnergy, then no direct or indirect wholly-owned Subsidiary of CorEnergy shall be a Disqualified Person for purposes of this Lease, and (b) a Disqualified Person shall not include any banking and lending company that (i) is a Landlord Lender (in its capacity as such, or as the holder of an Equity Investor Interest or Landlord Interest as a result of enforcing any Permitted Landlord Lien) and (ii) would, but for this clause (b), be a Disqualified Person because it is an Affiliate of another Disqualified Person.

 

“ Due Date for Other Additional Rent ” has the meaning given in Section 5.4 .

 

“ Easement Land ” means the land underlying, subject to and covered by the Right of Use Agreements.

 

“ Effective Date ” has the meaning specified in the preamble.

 

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“ Effective Date Recorded Documents ” means all restrictions and charges created or imposed pursuant to documents and instruments recorded in the Official Public Records against the Leased Property as of the time of conveyance of the Leased Property by EXXI USA to Landlord pursuant to the Purchase Agreement.

 

“ Enhanced Response ” has the meaning given in Section 22.2(a) .

 

“ Environmental Laws ” means all applicable U.S. federal, state, and local laws, statutes, rules, regulations, orders, judgments, ordinances, codes, injunctions, decrees, and other legally enforceable requirements relating to (a) pollution or protection of the environment or natural resources or human health and safety (to the extent such health and safety relate to human exposure to Hazardous Substances), (b) any Release into the environment of, or any exposure to, any Hazardous Substances, or (c) the generation, manufacture, processing, distribution, use, treatment, storage, transport, disposal or handling of any Hazardous Substances; including the federal Comprehensive Environmental Response, Compensation and Liability Act, the Superfund Amendments and Reauthorization Act, the Emergency Planning and Community Right-to-Know Act, the Resource Conservation and Recovery Act, the Clean Air Act, the Clean Water Act, the Safe Drinking Water Act, the Toxic Substances Control Act, the Oil Pollution Act of 1990, the Outer Continental Shelf Lands Act, the Federal Hazardous Substances Transportation Law, the Marine Mammal Protection Act, the Endangered Species Act, the National Environmental Policy Act, and the Occupation, Safety and Health Act, as each is amended during the Term.

 

“ Equity Investor ” means any Person that beneficially owns any Equity Investor Interest.

 

“ Equity Investor Interest ” means each beneficial ownership interest greater than ten 10% in the equity of the Landlord.

 

“ ERISA ” means the Employee Retirement Income Security Act of 1974, as amended.

 

“ Estimates ” has the meaning given in Section 25.1(c).

 

“ Evaluation Period ” has the meaning given in Section 10.1(d)(ii)(A) .

 

“ Excess Oil Revenue ” means, for any calendar month (or portion thereof) during the Term, the greater of (a) zero or (b) Actual Oil Revenue for such month (or portion thereof) minus Base Oil Revenue for such month (or portion thereof).

 

“ Exchange Act ” means the Securities Exchange Act of 1934.

 

“ Excluded Matters ” has the meaning given in Section 6.3 .

 

“ Exclusions from Tenant’s Indemnification Obligations ”   has the meaning given in Section 21.1(a) .

 

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“ EXXI Entity Person ” means EXXI GIGS and any Affiliate of or successor to EXXI GIGS so long as EXXI GIGS or such Affiliate or successor is Controlled, directly or indirectly, by EXXI Parent or a Permitted EXXI Parent Successor.

 

“ EXXI GIGS ” means Energy XXI GIGS Services, LLC, a Delaware limited liability company, the initial Tenant under this Lease; however, the term EXXI GIGS shall not include any successor or assignee of the interest of EXXI GIGS hereunder.

 

“ EXXI Parent ” means Energy XXI Ltd, a Bermuda company, an initial Tenant Guarantor; however, the term “EXXI Parent” shall not include any successor Tenant Guarantor under this Lease.

 

“ EXXI USA ” means Energy XXI USA, Inc., a Delaware corporation.

 

“ Fair Market Rent ” means, with respect to the Leased Property during the proposed Renewal Term (or, for purposes of Landlord’s Lease termination remedy during the continuance of a Level 1 Tenant Default, during the portion of the Term which would have occurred after termination of this Lease as a result of such Level 1 Tenant Default), a rental rate that is a fair market value rental rate that would apply assuming that the Leased Property is offered on the open market as a rental property for the proposed Renewal Term (or, with respect to termination of this Lease by Landlord as a result of a Level 1 Tenant Default, during the portion of the Term which would have occurred after such termination of this Lease), taking into account all relevant factors.  The Fair Market Rent will be assumed to be a monthly rent payable in advance on the first day of each calendar month.  The Fair Market Rent may, but is not required to, follow the model of the current rent structure (i.e., using a Base Rent formulation).

 

“ Fair Market Rent Determination Notice ” has the meaning given in Section 25.1(c ).

 

“ Fair Market Value ” or “ fair market value ” means the price that would be agreed on between a willing buyer and a willing seller, with neither being required to act, and both having reasonable knowledge of the relevant facts.

 

“ Federal ROWs ” means the federal Outer Continental Shelf pipeline rights-of-way included in the Right of Use Agreements, as specified in Exhibit B .

 

“ Financing Notice ” has the meaning given in Section 10.1(d)(ii)(A) .

 

“ Flow and Volume Information ”   means the flow and volume information of the type to be furnished by Tenant pursuant to Section 26.7(b)(i) .

 

“ FMV Estimates ” has the meaning given in Section 25.3(g ).

 

“ Force Majeure ” has the meaning given in Section 26.2 .

 

“ GAAP ” means generally accepted accounting principles in effect from time-to-time in the United States of America.

 

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“ Grand Isle Corridor ”   means Grand Isle Corridor, LP, a Delaware limited partnership, the initial Landlord under this Lease; however, the term Grand Isle Corridor shall not include any successor or assignee of the interest of Grand Isle Corridor hereunder.

 

“ Good Condition and Repair ” means good condition and repair consistent with (a) Tenant’s past practices and industry standards, and (b) the condition and repair that a reasonably prudent operator would maintain for a system of a similar size, nature, use, age and location as the Liquids Transportation System.

 

“ Governing Documents ” means (a) with respect to a Person that is a limited partnership, its limited partnership agreement and certificate of limited partnership, (b) with respect to a Person that is a general partnership, its partnership agreement, (c) with respect to a Person that is a limited liability company, its limited liability company agreement, together with its certificate of formation and any operating agreement, regulations and similar agreements or documents of such Person, (d) with respect to a Person that is a corporation, its articles of organization and bylaws, together with any shareholders agreement and similar agreements and documents of such Person, (e) in the case of any other form of entity, its organizational agreements, certificates and documents, and (f) in each case, with respect to subsections (a)-(e) , as such agreements, certificates and documents may be amended or restated from time-to-time, subject however to the limitations on amendments set forth herein.

 

“ Governmental Authority ” means any governmental authority, agency, department, commission, bureau, board, instrumentality, court or quasi-governmental authority having jurisdiction or supervisory or regulatory authority over any of the Leased Property, applicable to Tenant (with respect only to Tenant’s (rather than Landlord’s) obligations hereunder regarding compliance or interaction with Governmental Authority), or applicable to Landlord (with respect only to Landlord’s (rather than Tenant’s) obligations hereunder regarding compliance or interaction with Governmental Authority).

 

“ Hazardous Substances ”   means (i) any substance that is regulated as a hazardous waste, solid waste, hazardous material, pollutant, contaminant or toxic or hazardous substance under any Environmental Law (ii) any petroleum, petroleum hydrocarbons, petroleum products and petrochemical products, any crude oil or any components, fractions or derivatives thereof, any oil or natural gas exploration or production waste, and any natural gas, synthetic gas, and any mixtures thereof, as each is regulated under Environmental Law, and (iii) radioactive materials or polychlorinated biphenyls, as each is regulated under Environmental Law.

 

“ Impositions ” mean, collectively, all charges, fees and expenses imposed on the Leased Property under any Easement or any other Record Agreement during and accruing with respect to the Term, but excluding in any event all Excluded Matters.

 

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“ Improvements ” means all of the improvements and fixtures used as part of the Liquids Transportation System, including: any and all surface or subsurface pipelines; surface or subsurface machinery and equipment, line pipe, pipe connections, fittings, flanges, welds, other interconnections, and valves (including subsea tie-in valves); control and monitoring equipment; cathodic or electrical protection units; by-passes; regulators; drips; brine pumps, salt water disposal pumps, and oil pumps; salt water filter systems; treating, dehydration, separation, processing equipment; crude oil and produced water storage tanks; gas compressors; vapor recovery units and associated gas lines; towers and storage sheds; gas and electric fixtures; electrical generators, fuel tanks, switchgear, transformers, and switches; and motor control center, in each case, that are downstream of the inlet flange to each pipeline pig launcher trap on oil platforms GI 22L, ST 54G, WD 73A, WD 30J, MC 268A, MC 397A, SP 93A, and MC 280A in the Gulf of Mexico to, and including, the Grand Isle terminal facility on the Land, including any of the foregoing described on the attached Exhibit C .  The term “ Improvements ” includes all of the improvements and fixtures which are a part of the Liquids Transportation System as described herein, regardless of whether they are included or properly described in Exhibit C .

 

“ Inception Date Present Value ” has the meaning given in Section 23.2(a)(i)(E) .

 

“ Indebtedness ” means with respect to a Person, such Person’s (a) liabilities for borrowed money, (b) liabilities for the deferred purchase price of property acquired by it (excluding accounts payable arising in the ordinary course of businesses), (c) obligations that are required to be accounted for as capital leases on a balance sheet under GAAP (and the amount of such obligations shall be the capitalized amount thereof determined in accordance with GAAP), (d) agreements to mitigate interest rate risk in connection with other Indebtedness, and (e) guaranty obligations with respect to liabilities of another Person of the type described in the preceding subsections (a) - (d) .

 

“ Indemnified Party ” means a Landlord Indemnified Party or a Tenant Indemnified Party, as applicable.

 

“ Indemnifying Party ” has the meaning given in Section 21.3.

 

“ Independent Appraiser ” means an independent valuation firm with at least five (5) years’ experience in undertaking valuations of oil or other commodity pipeline properties.

 

“ Initial Term ” means that period beginning on the day after the Effective Date and ending on the last day of the one hundred thirty-second (132 ^nd ) full calendar month thereafter.

 

“ Interconnection Agreements ” means agreements pursuant to which the Liquids Transportation System, or any component thereof, is interconnected to other pipeline systems, facilities, or assets, including the agreements listed on Exhibit D .

 

“ Investment Grade Person ”   means (a) a Person that has a long term issuer corporate credit rating or long-term unsecured debt rating of “BBB-” or higher from Standard & Poor’s or Fitch, or “Baa3” or higher from Moody’s Investor Service Inc., or (b) an Affiliate of such Person whose obligations under this Lease are guaranteed by such Person.

 

“ Involuntary ” means, with respect to a Transfer or Lien, any transaction, proceeding or action by or in which Landlord or an Equity Investor is involuntarily deprived or involuntarily divested of any right, title or interest in and to its applicable property, rights or interests (including any seizure under levy of attachment or execution, transfer in connection with bankruptcy or other court proceeding to a trustee or receiver or other officer or agency or any transfer to a state or to a public officer or agency pursuant to any statute pertaining to escheat or abandoned property).

 

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“ Landlord ” has the meaning given in the preamble.

 

“ Landlord Environmental Liabilities ” means Losses arising or resulting from any of the following: (a) the presence, use, storage, generation, transportation or Release of any Hazardous Substances on, under, from or at the Leased Property, or any portion thereof, or at any real property offsite the Leased Property where such Hazardous Substances from such Leased Property have been transported or disposed or arranged for transport or disposal, in each case during the Term and to the extent caused by or resulting from the negligence, gross negligence or willful misconduct of Landlord, any other Landlord Party or any Landlord Lender and for which Tenant or any other Tenant Party or Landlord, any other Landlord Party or any Landlord Lender has or may have any legal obligation, (b) allegations made in writing by a third party that is neither Tenant nor another Tenant Party (but only so long as neither Tenant nor any Tenant Party has voluntarily initiated contact with such third party and affirmatively caused such third party to raise such allegation unless such contact is required to be made by Tenant or any other Tenant Party under Environmental Law or such allegation is required to be made by such third party under Environmental Law) regarding the presence, use, storage, generation, transportation or Release of any Hazardous Substances on, under, from or at the Leased Property, or any portion thereof, or at any real property offsite the Leased Property where such Hazardous Substances from such Leased Property have been transported or disposed or arranged for transport or disposal, in each case, during the Term and for which Tenant or any other Tenant Party or Landlord, any other Landlord Party or any Landlord Lender has or may have any legal obligation, to the extent caused by or resulting from the negligence, gross negligence or willful misconduct of Landlord, any other Landlord Party or any Landlord Lender, or (c) any violation of Environmental Laws occurring during the Term at or affecting any portion of the Leased Property and for which Tenant or any other Tenant Party or Landlord, any other Landlord Party or any Landlord Lender has or may have any legal obligation, to the extent caused by or resulting from the negligence, gross negligence or willful misconduct of Landlord, any other Landlord Party or any Landlord Lender; provided , however , that the term “negligence” as used in this definition shall not include negligence imputed as a matter of law to Landlord solely by reason of Landlord’s failure to act in respect of matters to the extent such matters are or were the sole obligation of Tenant under this Lease or solely as a result of Landlord’s ownership of the Leased Property.

 

“ Landlord Equity Interests ” means the equity interests issued by Landlord including, as applicable, any general or limited partnership interests, limited liability company membership interests, common or preferred stock, or other interest which would be classified as equity on Landlord’s balance sheet under GAAP and any right to acquire such equity interests in Landlord, including upon conversion or exercise of securities (but, for clarity, not including the right to acquire such equity interests by enforcing any pledge of Landlord Equity Interests to secure Landlord Indebtedness).  References herein to a percentage of Landlord Equity Interests means Landlord Equity Interests which confer on the holder thereof the right to vote the applicable percentage of votes for the election of directors or a similar governing body, or to receive the applicable percentage of dividends, distributions, including liquidating distributions or other payments with respect to the Landlord Equity Interests.

 

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“ Landlord Equity Interest Owner ” means each owner of a Landlord Equity Interest.

 

“ Landlord Event of Default ” has the meaning given in Section 23.3 .

 

“ Landlord Guarantor ” means CorEnergy and any successor Landlord Guarantor (i) with a tangible net worth of $50,000,000 and (ii) that executes a Landlord Guaranty, until CorEnergy or any such successor Landlord is released from further liability upon a Permitted Sale as provided in Section 17.5(b) .

 

“ Landlord Guaranty ” means that certain Landlord Guaranty executed by CorEnergy and dated as of the Effective Date and any subsequent Landlord Guaranty executed after the Effective Date and in substantially the form of Landlord Guaranty attached as Exhibit E unless and until the Landlord Guarantor under such Landlord Guaranty is released to the extent provided in Section 17.5(b) upon a Permitted Sale.

 

“ Landlord Indebtedness ” means Indebtedness (a) of Landlord (which, for clarity, may also be Indebtedness of one or more Affiliates of Landlord) or (b) secured by all or any portion of the Landlord Interests or the Landlord Equity Interests.

 

“ Landlord Indemnified Parties ” means Landlord, Landlord Guarantor and their respective Related Parties (solely in their capacity as such), and permitted successors and assigns of any of the foregoing, including any permitted successors by merger, consolidation or acquisition of all or substantially all of the Landlord’s rights under this Lease.

 

“ Landlord Interests ” means (a) all or any portion of Landlord’s right, title and interest in and to the Leased Property, and (b) all or any portion of Landlord’s right, title and interest under this Lease.

 

“ Landlord Lease Transaction ” means a transaction pursuant to which Landlord enters into a lease or other agreement or arrangement with respect to the use or occupancy by a third party of all or any portion of the Leased Property.

 

“ Landlord Lender ” means (a) any holder of Landlord Indebtedness (including any Lien on any of the Landlord Interests or Landlord Equity Interests) or (b) any agent or trustee for any such holder.

 

“ Landlord Loan Documents ” means the agreements and instruments evidencing or governing Landlord Indebtedness.

 

“ Landlord Majority Owner ” means any Person (a) that is not (i) an individual or (ii) a Disqualified Person; (b) whose tangible net worth, or the tangible net worth of an Affiliate providing an appropriate guarantee, both immediately before and after giving effect to the applicable transfer, is at least $50,000,000 determined in accordance with GAAP, provided , that , such Person or such Affiliate having such tangible net worth guarantees (i) all of Landlord’s obligations under this Lease, and (ii) the obligations, if any, of such Person under the SNDA to which such Person is subject; and (c) that owns or controls, at all times, over fifty percent (50%) of the Lease Rights.

 

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“ Landlord Observer ” has the meaning given in Section 23.2(b)(vii) .

 

“ Landlord Parent ” means (a) for so long as Grand Isle Corridor is the Landlord, CorEnergy, and (b) for so long as any other Person is the Landlord, such Person’s ultimate parent company.

 

“ Landlord Party ” means Landlord, any Equity Investor, and their respective officers, employees, agents, servants, or assignees.

 

“ Lease ” has the meaning given in the preamble.

 

“ Lease Assignment ” means a Transfer by Tenant of its interest under this Lease or its interest in the Leased Property hereunder.

 

“ Lease Rights” means the rights to vote on, consent to, or approve of decisions made by Landlord with respect to actions, decisions, approvals, waivers, consents, declarations of default, exercise of remedies or other matters under this Lease, whether through ownership of securities, the ability to exercise voting power, by contract, arrangement, understanding, course of conduct or otherwise, but not including veto rights held by passive minority investors.

 

“ Leased Property ” means the Liquids Transportation System, the Personal Property, and the Interconnection Agreements.

 

“ Level 1 Landlord Default ” means (a) any Landlord Event of Default under Sections 23.3(c),   23.3(f) , 23.3(g) , 23.3(i) or 23.3(j) and (b) any Landlord Event of Default arising out of a breach of Article XI or Section 26.10 .

 

“ Level 1 Tenant Default ” means any Tenant Event of Default described in Sections 23.1(a) , 23.1(b) , 23.1(d) , 23.1(g) , 23.1(h) , 23.1(j) , 23.1(k) , or 23.1(l)  

 

“ Lien ”   means any mortgage lien, deed of trust lien, Tax lien, deed to secure debt, vendor’s lien, security interest, pledge, collateral assignment, mechanic’s or materialman’s lien, or other similar instruments and all restatements, modifications, amendments, consolidations, extensions, renewals or substitutions thereto or thereof.

 

“ Liquids Transportation System ” (a) means, generally, the system of pipelines, storage tanks, collection and separation facilities, salt water disposal wells and facilities, and related properties, facilities, equipment and rights, as highlighted or otherwise identified on Exhibit F , as such system exists as of the Effective Date and as it may be subsequently modified as permitted by this Lease, that is capable of (i) transporting, collecting, separating, storing, and delivering for sale or transport oil produced from oil wells located in the Gulf of Mexico, and (ii) transporting, collecting, separating, and disposing of salt water associated with the production of such oil, and (b) includes, specifically, the Land, the Right of Use Agreements, and the Improvements.  The Liquids Transportation System begins at the inlet flange to each pipeline pig launcher trap on oil platforms GI 22L, ST 54G, WD 73A, WD 30J, MC 268A, MC 397A, SP 93A, and MC 280A in the Gulf of Mexico, extends through an interconnected system of pipelines and subsea tie-in valves to the collection, separation equipment, storage tanks, disposal wells, and pipelines located at the Grand Isle terminal facility on the Land, and includes the pipeline from such terminal facility to the interconnection point under the Interconnection Agreement, dated December 17, 2010, with ExxonMobil Pipeline Company (as such agreement may be amended or replaced from time to time).

 

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“ Loss ” or “ Losses ” means mean any actual losses, costs, expenses (including court costs, reasonable fees and expenses of attorneys, technical experts and expert witnesses and the cost of Corrective Action), liabilities, damages, demands, suits, claims, and sanctions of every kind and character (including civil fines) arising from, related directly or indirectly or reasonably incident to, matters indemnified against, excluding   however all of the following:

 

(d)                  Consequential and Similar Damages .  Any consequential, punitive or exemplary damages or loss of profits incurred by an Indemnified Party hereto; and

 

(e)                  Diminution in Value .  Any diminution in value incurred or suffered (i) by a Landlord Indemnified Party except to the extent, and proportionately to the extent, such diminution in value results directly from the actions of, or the failure to act by, Tenant, any Affiliate of Tenant, any Tenant Party, or any Tenant Indemnified Party, and (ii) by a Tenant Indemnified Party except to the extent, and proportionately to the extent, such diminution in value results directly from the actions of, or the failure to act by, Landlord, any Affiliate of Landlord, any Landlord Party, or any Landlord Indemnified Party; and

 

(f)                   Third Party Indemnities .  Any such Losses incurred by an Indemnified Party and arising as a result of such Indemnified Party indemnifying a third party (i) with respect to a Landlord Indemnified Party, if (A) such third party is either (I) an Affiliate of such Landlord Indemnified Party, (II) another Landlord Indemnified Party or (III) a Landlord Party, or (B) any Person described in subsections (I)-(III) above causes such third party to raise such claim (except to the extent such Person is required by Applicable Legal Requirements to cause such third party to raise such claim), (ii) with respect to a Tenant Indemnified Party, if (A) such third party is either (I) an Affiliate of such Tenant Indemnified Party, (II) another Tenant Indemnified Party or (III) a Tenant Party, or (B) any Person described in subsections (I)-(III) above causes such third party to raise such claim (except to the extent such Person is required by Applicable Legal Requirements to cause such third party to raise such claim), or (iii) to the extent such third party indemnified claim duplicates or exceeds the loss, cost or expense to the Indemnified Party; and

 

(g)                  Excluded Matters .  Any such Losses which constitute an Excluded Matter; and

 

(h)                  Section 2.1 Waivers .  Any such Losses with respect to claims and other matters waived in Section 2.1(b) .

 

“ Louisiana ROW ” means the State of Louisiana right-of-way included in the Right of Use Agreements, as specified in Exhibit B .

 

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“ Lowest Cost Response ” shall mean the Corrective Action response required or allowed under Environmental Laws that addresses Hazardous Substances present at the lowest cost (considered as a whole taking into consideration any negative impact such response may have on the business conducted on the property and any potential additional costs or liabilities that may arise as a result of such response) as compared to any other response that is consistent with Environmental Laws.  Taking no action shall constitute the Lowest Response Cost if, after investigation, taking no action is determined to be consistent with Environmental Laws.  If taking no action is not consistent with Environmental Laws, the least costly non-permanent remedy (such as mechanisms to contain or stabilize Hazardous Substances including caps, dikes, encapsulation, leachate collection systems, etc.) shall be the Lowest Cost Response, provided that such non-permanent remedy is consistent with Environmental Laws and less costly than the least costly permanent remedy (such as excavation and removal of soil).

 

“ LTS Land ” is described in the attached Exhibit G .

 

“ Material Adverse Event ” means any event or circumstance resulting in a material adverse effect on (a) the ability of Tenant to perform the monetary and other material obligations under this Lease, or (b) the ownership, financial condition or operation of the Leased Property taken as a whole.

 

“ Material Amendment ” means (a) with respect to Section 25.3 hereof, (i) any decrease in the purchase price; (ii) any change in the identity of the direct or indirect owners of the proposed purchaser; (iii) any change in the Landlord Interests included in the Transfer that is the subject of such ROFR rights of Tenant, or (iv) any other change in the terms of the Transfer that, taken together with any other changes after the relevant ROFR Asset Sale Notice, results in economic or business terms of the relevant Transfer that are materially more favorable to the proposed purchaser than the terms first disclosed to Tenant, and (b) with respect to Section 25.4 hereof, (i) any decrease in the annual rent for the Leased Property; (ii) any change in the identity of the direct or indirect owners of the proposed tenant, licensee or subtenant; or (iii) any other change in the terms of the Landlord Lease Transaction that, taken together with any other changes after the relevant ROFR Lease Notice, results in economic or business terms of the relevant Landlord Lease Transaction that are materially more favorable to the proposed tenant, licensee or subtenant than the terms first disclosed to Tenant.

 

“ Material Debt ” means, (a) with respect to any Tenant who is an Investment Grade Person or whose Affiliate is a Tenant Guarantor that is an Investment Grade Person, in each case at the time such Person became the Tenant, Indebtedness of Tenant or Tenant Guarantor, the principal balance of which is in excess of $100,000,000, and (b) with respect to any other Tenant, Indebtedness of Tenant or Tenant Guarantor, the principal balance of which is in excess of $20,000,000.

 

“ Minimum Rent ” means (a) for each calendar month during the Initial Term, the amount of rent specified for such month on Exhibit A , prorated for any partial calendar month during the Term, and (b) during the Renewal Term, the amount determined pursuant to Section 25.1 hereof.

 

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“ Multi-Platform Access Agreement ” means the Multi-Platform Pipeline Connection and Access Agreement by and between Landlord and Energy XXI GOM, LLC, dated as of the date hereof and attached hereto as Exhibit H in respect of (i) oil platforms GI 22L, ST 54G, WD 73A, WD 30J, MC 268A, MC 397A, and SP 93A in the Gulf of Mexico and (ii) the Connection Points specified therein.

 

“ Non-Consent Matters ” means a change of direct or indirect ownership of Tenant as a result of a merger, consolidation, reorganization, sale, distribution, contribution or other transfer of assets or equity interests, joint venture, or public offering of common stock or other equity interests, provided that following such change, Tenant and the Person that owns all or substantially all of the oil production assets and related rights in connection with which the Leased Property is used either are the same Person or are Affiliates.

 

“ Non-Cash Consideration ” has the meaning given in Section 25.3(g ).

 

“ Non-Cash Consideration Value ” has the meaning given in Section 25.3(g) .

 

“ Non-Separable Addition ” has the meaning given in Section 10.1(b ).

 

“ Notice ” has the meaning given in Section 24.1 .

 

“ Notice of Lease ” means the Notice of Lease in the form attached to this Agreement as Exhibit I .

 

“ Notice of Non-Separable Addition ” has the meaning set forth in Section 10.1(b) .

 

“ Notice of Separable Addition ” has the meaning given in Section 10.1(c) .

 

“ O&M Agreement ” means the Operation and Maintenance Services Agreement in the form attached hereto as Exhibit J .

 

“ Offered Terms ” has the meaning given in Section 10.1(d)(ii)(B) .

 

“ Official Public Records ” means the mortgage or conveyance records of the Louisiana Parish (a) where the Leased Property is located or (b) with respect to Leased Property located on the Outer Continental Shelf, to which such Leased Property is adjacent.

 

“ Other Recorded Document ” means any easement agreement, restrictive covenant, declaration, right-of-way or any other similar agreement or document affecting, benefiting or burdening all or any portion of the Liquids Transportation System, but excluding Liens.

 

“ Parts ” has the meaning given in Section 10.2 .

 

“ Party ” means either Tenant or Landlord individually, and “ Parties ” means Tenant and Landlord collectively.

 

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“ Permitted Capital Improvements and Additional Lines ” means Capital Improvements and Additional Lines which (a) will not materially and adversely affect the structural integrity of the then existing Improvements, (b) will not materially and adversely affect the use or functionality of the Leased Property,  and (c) will not adversely affect the value of the Leased Property in any material respect.

 

“ Permitted Equity Transfer ” has the meaning given in Section 17.5(c) .

 

“ Permitted EXXI Parent Successor ” means any successor to EXXI Parent so long as no change in control has occurred with respect to EXXI Parent.  As used in this defined term, “change in control” means an event or series of events by which any “person” or “group” (as such terms are used in Sections 13(d) and 14(d) of the Exchange Act, but excluding any employee benefit plan, and any Person acting in its capacity as trustee, agent or other fiduciary or administrator of any such plan) becomes the Beneficial Owner, directly or indirectly, of 50% or more of the equity interests of EXXI Parent entitled to vote, on a fully diluted basis, for members of the board of directors or equivalent governing body of EXXI Parent.

 

“ Permitted Landlord Contest ” has the meaning given in Section 27.1(e) .

 

“ Permitted Landlord Liens ” means (a) Liens on the Leased Property or Landlord’s right, title and interest under this Lease but only if (i) such Liens secure only Landlord Indebtedness, (ii) Landlord and each Landlord Lender with respect to such Liens have executed and delivered to Tenant an SNDA, and (iii) Landlord has complied with Section 20.1 with respect to such Liens, and (b) Liens on any Landlord Equity Interest but only if (i) such Liens secure only Landlord Indebtedness and (ii) Landlord and each Landlord Lender with respect to such Liens have executed and delivered to Tenant an SNDA.

 

“ Permitted Lease Assignment ” has the meaning given in Section 17.1(a ).

 

“ Permitted Liens ” means   (a) Liens placed on the Tenant’s interest in the Leased Property by, through, or under Tenant, (b) Liens placed on the Leased Property prior to the Effective Date, (c) Liens securing obligations for which Tenant is responsible hereunder, (d) Liens recorded in the Official Public Records as of the Effective Date, (e) Liens imposed by law for taxes, assessments, or similar charges, incurred in the ordinary course of business that are not yet due and payable, or that are subject to a Permitted Landlord Contest, Tax Challenge or Permitted Tenant Contest, (f) Liens of mechanics, materialmen, warehousemen, carriers, landlords or other like Liens, securing obligations incurred in the ordinary course of business that are not yet due and payable, or that are subject to a Permitted Landlord Contest and that do not attach to Landlord’s interest in the Leased Property, (g) the exercise or enforcement by Governmental Authorities or other Persons of eminent domain or condemnation rights, or any other rights or restrictions under Applicable Legal Requirements on or with respect to the use of real property in effect on the Effective Date or that are imposed after the Effective Date, including zoning restrictions and requirements under permits, (h) Permitted Landlord Liens, (i) inchoate Liens in respect of royalty owners, and (j) any other Liens that would not reasonably be expected to result in, individually or in the aggregate, a Material Adverse Event.

 

“ Permitted Sale ” has the meaning given in Section 17.5(b).

 

“ Permitted Sublease ” has the meaning in Section 17.1(b ).

 

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“ Permitted Tenant Contest ” means any contest made in accordance with Section 26.12 .

 

“ Permitted Tenant Transferee ” means, with respect to any Tenant, (a) any EXXI Entity Person, (b) any Affiliate of a Tenant, (c) any Person who purchases or otherwise accepts a transfer or assignment of all or substantially all of the interest of such Tenant or its Affiliates in the oil production assets and related rights in connection with which the Leased Property is used, (d) any Affiliate of the Person acquiring such oil production assets, if such Person guarantees the obligations of such Affiliate under this Lease, (e) any Investment Grade Person approved by Landlord, which approval shall not be unreasonably withheld and which approval shall be based solely on the following: (i) a review of such Investment Grade Person’s experience in the oil exploration and production business or midstream energy transportation business, and (ii) the proposed use of the Leased Property by such Investment Grade Person would not (A) constitute a breach of Article IX , or (B) in Landlord’s reasonable judgment, impair the structural integrity, functionality or value of the Leased Property in any material respect, and (f) any other Person approved by Landlord, which approval shall not be unreasonably withheld and which approval shall be based solely on the following: (i) such other Person’s current and future projected financial strength and creditworthiness, management style, financial philosophy and reputation, (ii) such other Person’s experience in the oil exploration and production business, (iii) such other Person’s ability to recover costs or pass them on to its customers and other Persons, and (iv) the proposed use of the Leased Property by such other Person would not (A) constitute a breach of Article IX , or (B) in Landlord’s reasonable judgment, impair the structural integrity, functionality or value of the Leased Property in any material respect. For the avoidance of doubt, any Permitted Tenant Transferee must provide, or have a Guarantor that can provide, audited financials to satisfy the requirements of Sections 4.2(d) and 26.7(b) .

 

“ Person ”   means any individual, firm, corporation, partnership, limited liability company, incorporated or unincorporated association, joint venture, Governmental Authority or any other entity of any kind.

 

“ Personal Property ” means (a)   the monitoring equipment located in or on the Liquids Transportation System, (b) the computer hardware and software used in respect of the Liquids Transportation System, (c) the wires and other connectors between such computer hardware and such monitoring equipment, (d) all office furnishings, computers and associated hardware located at the Grand Isle terminal facility, (e) spare parts and stores for the Liquids Transportation System, and (f) the Records, all as of the Effective Date and as such personal property may be modified or replaced as permitted or required by this Lease.

 

“ Planned Additional Line ” has the meaning given in Section 10.1(d)(ii) .

 

“ Prime Rate ” means the prime rate of interest as reported in The Wall Street Journal or, if The Wall Street Journal is no longer published or no longer reports such prime rate, the prime rate of interest as reported in another authoritative publication or news retrieval service.

 

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“ Proprietary Information ” means (a) the business concept, operating techniques, marketing methods, financial information, plans, site and system renderings, schedules, itemized costs, development plans and all related trade secrets or confidential or proprietary information treated as such by Tenant, whether by course of conduct, by letter or report or by use of any appropriate proprietary stamp of legend designating such information item to be confidential or proprietary, by communication to such effect made prior to or at the time any such Proprietary Information is disclosed to Landlord, or otherwise, (b) all financial statements and financial information that relates to the Liquids Transportation System delivered to Landlord by an EXXI Entity Person pursuant to Section 26.7(b ) and similar financial statements and financial information that relates to the Liquids Transportation System delivered to Landlord by an EXXI Entity Person prior to the Effective Date, and (c) all Flow and Volume Information and similar information that relates to the Liquids Transportation System delivered to Landlord by an EXXI Entity Person prior to the Effective Date.  Notwithstanding the foregoing, Proprietary Information shall not include information that is publicly available other than as a result of actions in violation of Section 26.10 hereof.

 

“ Protective Mortgage ” has the meaning given in Section 2.1(e) .

 

“ Protective UCCs ” has the meaning given in Section 2.1(e) .

 

“ Purchase Agreement ” means the Purchase and Sale Agreement dated as of June 22, 2015, between EXXI USA, as Seller, and Grand Isle Corridor, as Buyer, with respect to the transfer of the Leased Property to Landlord.

 

“ Record Agreements ” shall mean the agreements constituting (a) the Effective Date Recorded Documents (and including, without limitation, those evidencing the Right of Use Agreements), (b) any Other Recorded Document executed by Tenant after the Effective Date other than in violation of this Lease, and (c) any Other Recorded Document executed by Landlord other than in violation of this Lease.  In no event shall any Lien or document that creates, or may create, an interest that could ripen into a Lien, constitute a “Record Agreement”.

 

“ Records ” means the following, to the extent acquired by Landlord (a) from Tenant under the Purchase Agreement or (b) in connection with the making or constructing of Permitted Capital Improvements and Additional Lines paid for by Landlord and made or constructed by Tenant for Landlord hereunder: all engineering drawings or plans and specifications of or covering the Liquids Transportation System or any component thereof, site assessments and environmental reports regarding or covering the Liquids Transportation System or any component thereof, manuals relating to the operation of the Leased Property, and “as-built” surveys of the pipelines and drawings of the Liquids Transportation System.

 

“ Related Parties ” of a Person means such Person’s directors, officers, employees, agents, trustees, administrators, managers, advisors, accountants, attorneys and representatives.

 

“ Release ” (a) any leaking, spilling, pouring, pumping, emitting, injecting, escaping, leaching, dumping, discharging, depositing or disposing of any Hazardous Substances into the environment (including the air, soil, groundwater or surface water) in sufficient quantity or concentration such that notification to a Governmental Authority is required under Environmental Laws or permitting is required under Environmental Laws, or (b) any presence or discovery of Hazardous Substances in soils, surface waters or groundwater on or under the Assets that exceeds screening standards under the Louisiana Risk Evaluation and Corrective Action Program, as may be modified or amended from time to time.

 

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“ Renewal Notice Date ” has the meaning given in Section 25.1(b ) .

 

“ Renewal Option ” has the meaning given in Section 25.1(a ).

 

“ Renewal Term ” has the meaning given in Section 25.1(a) .

 

“ Repairs ” means any repairs, restoration, replacement, or rebuilding, on or at the Leased Property due to any damage to the Leased Property under Articles XV or XVI of this Lease.

 

“ Responsible Officer ” means (a) with respect to any EXXI Entity Person, the Chief Accounting Officer, Chief Operating Officer, Chief Financial Officer, and Senior Vice President (Legal) of EXXI Parent or, if the title of any such officer changes, an officer of EXXI Parent with an equivalent title, (b) with respect to any other Tenant, any of the chief executive officer, chief operating officer, chief financial officer, principal accounting officer, chief legal officer, treasurer and controller of Tenant or its Tenant Guarantor, if applicable, and (c) with respect to Landlord, any of the chief executive officer, chief operating officer, chief financial officer, principal accounting officer, chief legal officer, treasurer and controller of Landlord or its Landlord Guarantor, if applicable.

 

“ Right of Use Agreements ” means the easements, servitudes, rights of way, and similar agreements and instruments listed in Exhibit B , including all rights of the grantee thereunder.

 

“ ROFR Asset Acceptance Notice ” has the meaning given in Section 25.3(e) .

 

“ ROFR Asset Election Period ” has the meaning given in Section 25.3(e).

 

“ ROFR Asset Offer ” has the meaning given in Section 25.3(d).

 

“ ROFR Asset Sale Notice ” has the meaning given in Section 25.3(c).

 

“ ROFR Asset Transfer Deadline ” has the meaning given in Section 25.3(e) .

 

“ ROFR Lease Election Period ” has the meaning given in Section 25.4(e).

 

“ ROFR Lease Notice ” has the meaning given in Section 25.4(c).

 

“ ROFR Lease Offer ” has the meaning given in Section 25.4(d).

 

“ ROFR Lease Period ” means the period beginning at the end of the Term and ending two (2) years later.

 

“ ROFR Lease Transfer Deadline ” has the meaning given in Section 25.4(e) .

 

“ ROFR Transfer Period ” means (a) the period during the Term, and (b) the period beginning at the end of the Term and ending two (2) years thereafter.

 

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“ Separable Addition ” has the meaning given in Section 10.1(c) .

 

“ SNDA ” means each Subordination, Non-Disturbance and Attornment Agreement, in the form of Exhibit K hereto, (a) entered into as of the Effective Date among each of Landlord’s Lenders, Landlord and Tenant, and consented to by the Landlord Guarantor and the Tenant Guarantor and (b) entered into after the Effective Date between each Landlord Lender, Landlord and Tenant, and consented to by the Landlord Guarantor and the Tenant Guarantor, and in each case as the same may be subsequently amended, supplemented or restated.

 

“ Solvent ” means, with respect to any Person on a particular date, that on such date, (i) the present fair salable value of the property and assets of such Person exceeds the debts and liabilities, including contingent liabilities, of such Person, (ii) the present fair salable value of the property and assets of the such Person is greater than the amount that will be required to pay the probable liability of such Person on its debts and other liabilities, including contingent liabilities, as such debts and other liabilities become absolute and matured in the ordinary course, (iii) such Person does not intend to incur, or believe that it will incur, debts and liabilities, including contingent liabilities, beyond its ability to pay such debts and liabilities as they become absolute and matured in the ordinary course, and (iv) such Person does not have unreasonably small capital with which to conduct the business in which it is engaged as such business is now conducted and is proposed to be conducted.  For purposes of this definition, the amount of a Person’s contingent liabilities at any time shall be computed as the amount that, in the light of all the facts and circumstances existing at such time, represents the amount that can reasonably be expected to become an actual or matured liability

 

“ Specified Discount Rate ” has the meaning given in Section 23.2(a)(i)(E) .

 

“ Sublease ” means a sublease by Tenant of a portion of or less than all of Tenant’s rights under this Lease or in the Leased Property hereunder.

 

“ Subsidiaries ” means, with respect to any parent company at any date, any corporation, limited liability company, partnership, association or other entity the accounts of which would be consolidated with those of the parent in the parent’s consolidated financial statements if such financial statements were prepared in accordance with GAAP as of such date, as well as any other corporation, limited liability company, partnership, association or other entity (a) of which securities or other ownership interests representing more than fifty percent (50%) of the equity or more than fifty percent (50%) of the ordinary voting power or, in the case of a partnership, more than fifty percent (50%) of the general partnership interests are, as of such date, owned, controlled or held by the parent or one or more subsidiaries of the parent or by the parent and one or more subsidiaries of the parent, or (b) that is, as of such date, otherwise Controlled, by the parent or one or more subsidiaries of the parent or by the parent and one or more subsidiaries of the parent.

 

“ Taking ” means acquisition of all or any portion of the Leased Property for any public or quasi-public use through taking by condemnation, eminent domain or any like proceeding, or purchase in lieu thereof.

 

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“ Taking Proceeds ” means damages and proceeds accruing and paid by or on behalf of the applicable Governmental Authority on account of any Taking of the Leased Property, save and except (a) the reasonable third party costs and expenses (including reasonable attorneys’ fees and expenses) incurred by Tenant in connection with the collection of same, (b) the amount incurred by Tenant prior to the date of payment of such Taking Proceeds to repair, restore, replace or remediate (as to environmental matters) the Leased Property, and (c) any Tenant Condemnation Proceeds.

 

“ Taking Response Notice ” has the meaning assigned to such term in Section 16.2(c) .

 

“ Taking Termination Date ” has the meaning assigned to such term in Section 16.2(d) .

 

“ Tax Challenge ” has the meaning given in Section 6.6 .

 

“ Taxes ” means all federal, state, local, foreign and other income, gross receipts, sales, use, production, ad valorem, transfer, franchise, registration, profits, license, lease, service, service use, withholding, payroll, employment, unemployment, estimated, excise, severance, environmental, stamp, occupation, premium, property (real or personal), real property gains, windfall profits, customs, duties or other taxes, fees, assessments, levies, duties, imposts, customs or charges of any kind whatsoever, together with any and all interest, additions or penalties thereon, and including the costs of any contest or appeal pursued by Tenant with respect to any of such taxes, fees, assessments, levies, duties, imposts, customs or charges, but excluding in all cases all Excluded Matters.

 

“ Tenant ” has the meaning given in the preamble.

 

“ Tenant Casualty Termination Notice ” has   the meaning given in Section 15.1(b) .

 

“ Tenant Condemnation Proceeds ” has the meaning given in Section 16.1 .

 

“ Tenant Environmental Liabilities ” means Losses arising or resulting from (a) the presence, use, storage, generation, transportation or Release of any Hazardous Substances on, under, from or at the Leased Property, or any portion thereof, or at any real property offsite the Leased Property where such Hazardous Substances from such Leased Property have been transported or disposed or arranged for transport or disposal, in each case, prior to or during the Term and for which Tenant or any other Tenant Party or Landlord, any other Landlord Party or any Landlord Lender has or may have any legal obligation, (b) allegations made in writing by a third party not Landlord, another Landlord Party or a Landlord Lender (but only so long as neither Landlord, any Landlord Party nor any Landlord Lender has voluntarily initiated contact with such third party and affirmatively caused such third party to raise such allegation unless such contact is required to be made by Tenant or any other Tenant Party under Environmental Law or such allegation is required to be made by such third party under Environmental Law) regarding the presence, use, storage, generation, transportation or Release of any Hazardous Substances on, under, from or at the Leased Property, or any portion thereof, or at any real property offsite the Leased Property where such Hazardous Substances from such Leased Property have been transported or disposed or arranged for transport or disposal, in each case, prior to or during the Term and for which Tenant or any other Tenant Party or Landlord, any other Landlord Party or any Landlord Lender has any legal obligation, or (c) any violation of Environmental Laws occurring prior to or during the Term or affecting any portion of the Leased Property, or at any real property offsite the Leased Property where such Hazardous Substances from such Leased Property have been transported or disposed or arranged for transport or disposal, in each case, and for which Tenant or any other Tenant Party or Landlord, any other Landlord Party, or any Landlord Lender has or may have any legal obligation, but (x) in any case with respect to subsections (a), (b) and (c) , subject to Section 22.2(a) and (y) excluding in any case with respect to subsections (a), (b) and (c) , all Landlord Environmental Liabilities, all Excluded Matters and the matters described in Section 21.1(a)(A)-(I) and Section 21.1(b) .

 

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“ Tenant   Event of Default ” has the meaning given in Section 23.1 .

 

“ Tenant Guarantor ” means EXXI Parent and any successor Tenant Guarantor executing a Tenant Guaranty until any such Person is released from further liability upon a Lease Assignment as provided in Section 17.4 .

 

“ Tenant Guaranty ” means that certain Tenant Guaranty executed by EXXI Parent and dated as of the Effective Date and any subsequent Tenant Guaranty executed after the Effective Date and in substantially the form of Tenant Guaranty attached as Exhibit L unless and until the Tenant Guarantor under such Tenant Guaranty is released to the extent provided in Section 17.4 .

 

“ Tenant Indemnified Parties ” means Tenant, Tenant Guarantor, and their respective Related Parties (solely in their capacity as such), and permitted successors and assigns of any of the foregoing, including any permitted successors by merger, consolidation or acquisition of all or substantially all of Tenant’s rights under this Lease.

 

“ Tenant Other Activities ” has the meaning given in Section 3.3 .

 

“ Tenant Party ” means Tenant, any direct or indirect owner of Tenant, and their respective officers, employees, agents, servants or assignees.

 

“ Tenant Property ” means (a) the Permitted Capital Improvements and Additional Lines which Landlord does not purchase and which, accordingly, do not become a part of the Leased Property during the Term as provided in Section 10.1 , and (b) the other real and personal property now or hereafter owned or used by Tenant or its Affiliates upstream or downstream of the Liquids Transportation System in connection with operation of the Leased Property by Tenant or its Affiliates or in connection with Tenant Other Activities.

 

“ Tenant Taking Termination Notice ” has   the meaning given in Section 16.2(b) .

 

“ Term ” means the Initial Term, as it may be extended by Tenant’s exercise of the extension and renewal rights set forth in Section 25.1 , or as it may be sooner terminated as provided in this Lease.

 

“ Third Party Asset Offer ” means a bona fide outstanding offer or binding contract (that is subject to Section 25.3 of this Lease) that Landlord receives with respect to Landlord’s proposed Transfer of all of Landlord’s interest in the Leased Property and the Lease from a Person that is not an Affiliate of Landlord which Landlord intends to accept and which complies with the following requirements:

 

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(i)                    the offer (or contract) must be in writing and must be executed by the proposed buyer (or, if a contract, executed by both the proposed buyer and Landlord);

 

(j)                    the offer (or contract) must be by (or entered into by) the proposed buyer identified in the offer (or contract), and not by an agent acting on behalf of an undisclosed principal;

 

(k)                  the offer (or contract) must identify the direct and indirect owners of the proposed buyer, including buyer’s ultimate parent company, and must specifically provide that the offer is not assignable by the proposed buyer except to an Affiliate thereof; and

 

(l)                   the offer (or contract) must include an agreement by the proposed buyer to provide evidence, as reasonably requested, as to the business, character, reputation and financial capacity of the proposed buyer and the direct and indirect owners associated therewith (and the Person that will be the Landlord Majority Owner) to carry out the terms of the offer (or contract) as well as other information and documentation as may be required to evidence that the proposed Transfer will be a Permitted Sale.

 

“ Third Party Lease Offer ” means a bona fide outstanding offer or binding contract for a Landlord Lease Transaction that is subject to Section 25.4 of this Lease, which Landlord receives from a Person that is not an Affiliate of Landlord, which Landlord intends to accept and which complies with the following requirements:

 

(m)                 the offer (or contract) must be in writing and must be executed by the proposed tenant (or, if a contract, executed by both the proposed tenant and Landlord);

 

(n)                  the offer (or contract) must be by (or entered into by) the proposed tenant identified in the offer (or contract), and not by an agent acting on behalf of an undisclosed principal;

 

(o)                  the offer (or contract) must identify the direct and indirect owners of the proposed tenant and must specifically provide that the offer is not assignable by the proposed tenant except to an Affiliate thereof; and

 

(p)                  the offer (or contract) must include an agreement by the proposed tenant to provide evidence, as reasonably requested, as to the business, character, reputation and financial capacity of the proposed tenant and the direct and indirect owners and ultimate parent company of such proposed tenant to carry out the terms of the offer (or contract).

 

“ Transfer ” means with respect to any property or rights, the sale, conveyance, transfer, exchange, gift, contribution or assignment, in whole or in part, of any right, title or interest in and to such property or rights, whether voluntary or Involuntary.  As to an Equity Investor Interest or a Landlord Equity Interest, Transfer shall also include (i) a change in the Person or Persons who have beneficial ownership of a Landlord Equity Interest and (ii) a transfer to a Person or Persons that, upon such transfer, becomes the Landlord Majority Owner. The granting, attachment or creation of any Lien on all or any portion of such property or rights shall not constitute a voluntary or Involuntary Transfer of such property or rights.

 

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“ Uniform Commercial Code ” means The Uniform Commercial Code as adopted in the State of Louisiana (La. R.S. Title 10).

 

“ Variable Rent ” means, for any calendar month (or portion thereof) during the Term, the lesser of (a) 10% of Excess Oil Revenue for such month (or portion thereof) and (b) 28% of Base Rent (i.e., 38.9% of Minimum Rent) for such month (or portion thereof).

 

1.2                  Certain Interpretive Provisions .

 

As used in this Lease:  (a) the word “or” is not exclusive and the words “include,” “includes,” and “including” are not limiting, (b) references to a law include any rule or regulation issued under the law and any amendment to the law, rule or regulation, (c) whenever the words “include,” “includes,” or “including” appear, they shall be deemed to be followed by the words “without limitation,” (d) personal pronouns shall be deemed to include the other genders and the singular shall include the plural and vice versa, (e) the words “herein,” “hereof’ and “hereunder” and other words of similar import refer to this Lease as a whole and not to any particular Article, Section or other subdivision, and (f) any reference to “$” or “dollars” shall refer to U.S. dollars.  Wherever a period of time is stated in this Lease as commencing or ending on specified dates, such period of time shall be deemed (i) inclusive of such stated commencement and ending dates, and (ii) to commence at 12:00 A.M. Central Time on such stated commencement date and to end at 11:59 P.M. Central Time on such stated ending date.  Unless the context otherwise requires, (A) any definition or reference to any agreement, instrument or other document shall be construed as referring to such agreement, instrument or other document as from time-to-time amended, supplemented or otherwise modified (subject to any restrictions on such amendments, supplements or modifications set forth herein), (B) subject to the restrictions on Transfers, Liens and assignments in this Lease, any reference herein to any Person shall be construed to include such Person’s successor and assigns, and (C) any reference to any law shall include all statutory and regulation provisions consolidating, amending, replacing or interpreting such law and reference to any law or regulation shall, unless otherwise specified, refer to such law or regulation as amended, modified or supplemented from time-to-time. Section headings herein are included for convenience of reference only and shall not affect the interpretation of this Agreement or any other document executed in connection herewith.

 

ARTICLE II

LEASE CHARACTERIZATION

 

2.1                  Lease Characterization .

 

(a)                 True Lease .  Landlord and Tenant intend, and agree, that this Lease is a “true lease” for Tax and creditors’ rights purposes and an “operating lease” for accounting purposes and not a joint venture, financing lease, capital lease, mortgage, equitable mortgage, deed of trust, trust agreement, security agreement or other financing or trust arrangement, and the economic realities of this Lease are those of a true lease.  Landlord and Tenant agree that Landlord is the real and beneficial owner of the Leased Property for legal, accounting and all other purposes.  Landlord and Tenant intend that the business relationship created by this Lease and any related documents is solely that of a long-term commercial lease between Landlord and Tenant.  Landlord and Tenant acknowledge and agree that the transactions contemplated by the Purchase Agreement and the Lease contain real economic substance for each of Landlord and Tenant, and the Parties specifically disclaim any presumption of Louisiana Civil Code article 2480.

 

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(b)                 Waivers and Stipulations .  Each of the Parties (i) waives any claim or defense relating to the characterization of this Lease as anything other than a “true lease” or an “operating Lease” or that asserts that this Lease is anything other than a “true lease” or an “operating lease,” (ii) stipulates and agrees not to challenge the validity, enforceability or characterization of the lease of the Leased Property as a “true lease” or “operating lease,” (iii) stipulates and agrees that nothing contained in this Lease creates or is intended to create a joint venture, partnership (either de jure or de facto), equitable mortgage, trust, financing device or arrangement, security interest or the like, (iv) stipulates that Landlord is the legal and beneficial owner of the Leased Property for legal, accounting and all other purposes and waives any claim or defense to the contrary, and (v) shall support, at such Party’s sole cost and expense, the intent of the Parties that (A) the lease of the Leased Property pursuant to this Lease is a true lease and does not create a joint venture, partnership (either de jure or de facto), equitable mortgage, trust, financing device or arrangement, security interest or the like, if, and to the extent that, any challenge occurs, and (B) Landlord is the legal and beneficial owner of the Leased Property for legal accounting and all other purposes and waives any claim or defense to the contrary.

 

(c)                  Material Inducement .  The expressions of intent, the waivers, the representations and warranties, the covenants, the agreements and the stipulations set forth in this Section are a material inducement to each of Landlord and Tenant in entering into this Lease.

 

(d)                  Lease Continuation .  Except as limited in and otherwise provided in this Lease, this Lease shall not terminate and Tenant shall not have any right to terminate this Lease during the Term.  Except as limited in and otherwise provided in this Lease: (1) this is a net lease and Tenant shall not be entitled to any setoff, counterclaim, recoupment, abatement, suspension, deferment, diminution, deduction, reduction or defense of or to the payment of Base Rent or Additional Rent, and (2) the obligations of Tenant under this Lease shall not be affected by any circumstance or event, or for any reason, including but not limited to the following:  (i) any damage to or destruction of any of the Leased Property by any cause whatsoever, (ii) any Taking, (iii) the prohibition, limitation or restriction of, or interference with, Tenant’s use of any of the Leased Property, (iv) any eviction by paramount title or otherwise, (v) Tenant’s acquisition of ownership of any of the Leased Property other than pursuant to an express provision of this Lease, (vi) any default on the part of Landlord under this Lease or under any other agreement, (vii) any latent or other defect in, or any theft or loss of, any of the Leased Property, (viii) the breach of any warranty of any seller or manufacturer of any of the Improvements or Personal Property or Tenant Property, or (ix) any other cause, whether similar or dissimilar to the foregoing, any present or future Applicable Legal Requirement to the contrary notwithstanding.  It is the intention of the Parties hereto that except as limited in and otherwise provided in this Lease: (A) the obligations of Tenant under this Lease shall be separate and independent covenants and agreements, (B) Base Rent and Additional Rent shall continue to be payable in all events (or, in lieu thereof, Tenant shall pay amounts equal thereto), and (C) the obligations of Tenant under this Lease shall continue unaffected, unless this Lease shall have been terminated pursuant to an express provision of this Lease.

 

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(e)                  Precautionary Mortgage and Security Interest .  Solely as a precaution in the event that the transactions under the Purchase Agreement and this Lease are recharacterized as a financing and not a true sale and absolute conveyance of the Assets (as defined in the Purchase Agreement) and a true lease of the Leased Property, and without derogating from the Parties’ intent in any way, Tenant grants Landlord a precautionary mortgage and security interest in the Leased Property to secure Tenant’s performance of its obligations under this Lease and amounts due from Seller under the Purchase Agreement.  To further evidence and perfect such precautionary mortgage and security interest, (i) Tenant shall, and shall cause EXXI USA to, execute and deliver to Landlord on the Effective Date an Act of Mortgage and Security Agreement in the form attached hereto as Exhibit M (the “ Protective Mortgage ”), to be filed by Landlord in the Official Public Records, and (ii) Tenant hereby authorizes, and shall cause EXXI USA to authorize, Landlord, to file, with the Delaware Secretary of State and such other places as Landlord deems necessary or advisable, one or more UCC financing statements describing the Leased Property as collateral (the “ Protective UCCs ”).

 

ARTICLE III

LEASED PROPERTY

 

3.1                  Lease of Leased Property .  Landlord leases to Tenant and Tenant leases from Landlord the Leased Property, subject to the Record Agreements and the Permitted Liens, for the Term, upon the terms and conditions of this Lease.  Tenant shall have exclusive use and possession of the Leased Property subject to the Record Agreements and the Permitted Liens.  The Leased Property is leased to Tenant subject to the Record Agreements, the Permitted Liens and all Applicable Legal Requirements now or hereafter in effect.  LANDLORD LEASES AND WILL LEASE AND TENANT TAKES AND WILL TAKE THE LEASED PROPERTY “AS IS”, AND TENANT ACKNOWLEDGES THAT LANDLORD (WHETHER ACTING AS LANDLORD HEREUNDER OR IN ANY OTHER CAPACITY) HAS NOT MADE AND WILL NOT MAKE, NOR SHALL LANDLORD BE DEEMED TO HAVE MADE, ANY WARRANTY OR REPRESENTATION, EXPRESS OR IMPLIED, WITH RESPECT TO ANY OF THE LEASED PROPERTY, INCLUDING ANY WARRANTY OR REPRESENTATION AS TO ITS FITNESS FOR USE OR DESIGN OR CONDITION FOR ANY PARTICULAR USE OR PURPOSE, AS TO THE QUALITY OF THE MATERIAL OR WORKMANSHIP THEREIN, LATENT OR PATENT, AS TO LANDLORD’S TITLE THERETO, OR AS TO VALUE, COMPLIANCE WITH SPECIFICATIONS, LOCATION, USE, CONDITION, MERCHANTABILITY, QUALITY, DESCRIPTION, DURABILITY OR OPERATION, IT BEING AGREED THAT ALL RISKS INCIDENT THERETO ARE TO BE BORNE BY TENANT.  In the event of any defect or deficiency in any of the Leased Property of any nature, whether patent or latent, except as otherwise expressly provided herein, Landlord shall not have any responsibility or liability with respect thereto or for any incidental or consequential damages (including strict liability in tort).  The provisions of this Section 3.1 have been negotiated, and the foregoing provisions are intended to be a complete exclusion and negation of any warranties by Landlord, express or implied, with respect to the physical condition of any of the Leased Property, and arising pursuant to the Uniform Commercial Code, the Civil Code of the State of Louisiana,   or any other Applicable Legal Requirements now or hereafter in effect or otherwise.

 

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(i)                 Execution by Landlord .  During the Term, Landlord shall not enter into, create, place of record, amend, assign, restate, modify, or terminate any Record Agreement (including any document or instrument creating or governing any of the Right of Use Agreements) or any Other Recorded Document except (A) the “Closing Deliverables” of Landlord and EXXI USA under the Purchase Agreement, (B) as requested by Tenant in writing, or (C) as consented to by Tenant in writing prior to the date of Landlord’s execution thereof.

 

(ii)               Execution by Tenant .  During the Term, Tenant shall not enter into, create, place of record, amend, assign, restate, modify, or terminate any Record Agreement (including any document or instrument creating or governing any of the Right of Use Agreements) or any Other Recorded Document except (i) the “Closing Deliverables” of Landlord and EXXI USA under the Purchase Agreement, or (ii) as Tenant from time-to-time in good faith deems necessary or appropriate for (A) use and operation of the Liquids Transportation System and Tenant Other Activities by Tenant and its Affiliates, (B) compliance with Applicable Legal Requirements and contractual arrangements with third parties regarding operation of the Liquids Transportation System, (C) compliance by Tenant with its obligations under this Lease, or (D) compliance with the requirements of this Lease regarding Tax Challenges and Permitted Tenant Contests.

 

(iii)              Notice Prior to Execution .  Landlord and Tenant shall each give the other Party not less than ten (10) Business Days’ notice prior to executing any document creating, amending, assigning, restating, modifying or terminating any Record Agreement or Other Recorded Document, and in the event Landlord and Tenant disagree on the need for, or benefit or adverse effects of, any such document, Landlord and Tenant shall work together in good faith to resolve their differences, but in any event in a manner consistent with the rights and obligations of Landlord and Tenant under this Lease.

 

(iv)             Landlord Delegation of Enforcement Authority .  Landlord authorizes Tenant to enforce all Record Agreements (including any document or instrument creating or governing any of the Right of Use Agreements) and any Other Recorded Documents on Landlord’s and/ or Tenant’s behalf, and Landlord shall cooperate and furnish any pertinent information reasonably necessary to facilitate Tenant’s enforcement of same, at no cost or expense to Landlord other than any de minimis cost or expense.

 

(v)              Tenant Compliance .  During the Term, Tenant shall be obligated to comply in all material respects with the Record Agreements and the Permitted Liens, provided , however , it being understood and agreed that Tenant shall not be responsible for compliance with or payment of any obligations, charges or liabilities arising out of the Permitted Landlord Liens or any other matters of record that were voluntarily created or imposed by, through or under Landlord or an Affiliate of Landlord after the Effective Date in violation of this Lease.

 

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(b)                 Creation of Liens by Tenant on Landlord’s Interest in the Leased Property .  Subject to the provisions of Sections 6.6 and 12.1 , without the prior written consent of Landlord (which consent shall not be unreasonably withheld), Tenant shall not, directly or indirectly, create or permit to be created or to remain, and shall promptly discharge, any Lien on Landlord’s interest in (i) the Leased Property, (ii) this Lease, or (iii) the Base Rent or any Additional Rent, in the case of subsections (i) , (ii) or (iii) preceding, created by or resulting from any act or omission of Tenant or those claiming by, through or under Tenant (except Landlord and its Affiliates).  Notice is hereby given that Landlord   shall not be liable for any labor, services or materials furnished or to be furnished to Tenant, or to anyone holding any of the Leased Property through or under Tenant, and that no mechanic’s or other liens for any such labor, services or materials shall attach to or affect the interest of Landlord in and to any of the Leased Property.  Notwithstanding the foregoing, Tenant has no liability for, or any obligation to cause to be paid or discharged, any Lien created by, through or under Landlord or any Landlord Party.

 

3.3                 Tenant Other Activities .  Landlord and Tenant acknowledge and confirm that (a) Tenant or its Affiliates own and operate oil and gas wells and other rights and properties in and around the Leased Property separate and apart from the Liquids Transportation System, the Personal Property and the Tenant Property, and (b) after the Effective Date, Tenant or its Affiliates intend to continue to operate such oil and gas wells and other rights and properties and to own other rights and property in and around the Leased Property for the foreseeable future ( subsections (a) and (b) , collectively, the “ Tenant Other Activities ”).

 

ARTICLE IV

REPRESENTATIONS AND WARRANTIES

 

4.1                  Representations and Warranties of Landlord .  Landlord represents and warrants to Tenant as of the Effective Date as follows, it being understood and agreed that the following representations and warranties shall be deemed to be remade by a successor Landlord as of the effective date of any Permitted Sale (and with applicable revisions to subsection (a) with respect to such successor Landlord’s organization and owners):

 

(a)                  Existence and Ownership .  Landlord is duly organized, validly existing and in good standing under the laws of the State of Delaware, is qualified to do business and in good standing in the State of Louisiana (to the extent Landlord is required to be so by Applicable Legal Requirements) and has full power, authority and legal right to execute and deliver and to perform and observe the provisions of this Lease to be observed or performed by Landlord.  The sole general partner of Landlord is Grand Isle GP, Inc., a Delaware corporation and a wholly-owned subsidiary of CorEnergy.

 

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(b)                  Binding Obligation .  This Lease has been duly authorized, executed and delivered by Landlord, and constitutes the valid and binding obligations of Landlord enforceable against Landlord in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium and other laws affecting creditors’ rights generally and subject to general principles of equity, whether considered in a proceeding in equity or at law.

 

(c)                  Solvency .  Each of Landlord and Landlord Guarantor is Solvent, and immediately after the closing of the transactions contemplated by this Lease, each of Landlord and Landlord Guarantor will be Solvent. Each of Landlord and Landlord Guarantor has timely and accurately filed all Tax returns and extensions required to be filed by Landlord or Landlord Guarantor, as applicable, and is not in default in the payment of any material Taxes levied or assessed against Landlord, Landlord Guarantor or any of their respective material assets, and is not subject to any judgment, order, decree, rule or regulation of any Governmental Authority having jurisdiction over Landlord or Landlord Guarantor which would, in the aggregate, otherwise materially and adversely affect Landlord’s or Landlord Guarantor’s condition, financial or otherwise, or Landlord’s interest in the Leased Property. There are no bankruptcy proceedings pending, being contemplated by, or to Landlord’s Actual Knowledge, threatened against Landlord or Landlord Guarantor.  Landlord has determined, and Landlord has not taken any action or made any statement inconsistent with the position, that Landlord is receiving “reasonably equivalent value” and “fair consideration” in exchange for each of its obligations (including any contingent obligations) under or in connection with this Lease.

 

(d)                  No Violations .  The execution of this Lease by Landlord and the performance by Landlord of its obligations hereunder will not (i) violate any provision of the Governing Documents of Landlord, (ii) result in a material breach of any agreement to which Landlord, Landlord Guarantor, and any of their respective Affiliates is a party, (iii) violate in any material respect any provision of any judgment or order binding on Landlord, Landlord Guarantor, or any of their respective Affiliates, or (iv) to Landlord’s Actual Knowledge, constitute a material violation by Landlord or Landlord Guarantor of any law or governmental regulation applicable to Landlord or Landlord Guarantor.

 

4.2                  Representations and Warranties of Tenant .  Tenant represents and warrants to Landlord as of the Effective Date as follows, it being understood and agreed that the following representations and warranties shall be deemed to be remade by a successor Tenant as of the effective date of any Permitted Lease Assignment (and with applicable revisions to subsection (a) with respect to such successor Tenant’s organization):

 

(a)                   Existence .  Tenant is duly organized, validly existing and in good standing under the laws of the State of Delaware, is qualified to do business and in good standing in the State of Louisiana and has full power, authority and legal right to execute and deliver and to perform and observe the provisions of this Lease to be observed or performed by Tenant.

 

(b)                 Binding Obligation .  This Lease has been duly authorized, executed and delivered by Tenant, and constitutes the valid and binding obligations of Tenant enforceable against Tenant in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium and other laws affecting creditors’ rights generally and subject to general principles of equity, whether considered in a proceeding in equity or at law.

 

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(c)                  Solvency .  Each of Tenant and Tenant Guarantor is Solvent, and immediately after the closing of the transactions contemplated by this Lease, each of Tenant and Tenant Guarantor will be Solvent.  Each of Tenant and Tenant Guarantor has timely and accurately filed all Tax returns and extensions required to be filed by Tenant or Tenant Guarantor, as applicable, and is not in default in the payment of any material Taxes levied or assessed against Tenant, Tenant Guarantor or any of their respective material assets, and is not subject to any judgment, order, decree, rule or regulation of any Governmental Authority having jurisdiction over Tenant or Tenant Guarantor which would, in the aggregate, otherwise materially and adversely affect Tenant’s or Tenant Guarantor’s condition, financial or otherwise, or Tenant’s interests in the Leased Property.  There are no bankruptcy proceedings pending, being contemplated by, or to Tenant’s Actual Knowledge, threatened against Tenant or Tenant Guarantor.  Tenant has determined, and Tenant has not taken any action or made any statement inconsistent with the position, that Tenant is receiving “reasonably equivalent value” and “fair consideration” in exchange for each of its obligations (including any contingent obligations) under or in connection with this Lease.

 

(d)                 Financial Statements .  If and to the extent any financial information is provided prior to the date of this representation for a particular Tenant, the audited consolidated balance sheet and related statements of operations, stockholders’ equity and cash flows of Tenant Guarantor or, if there is no Tenant Guarantor, of Tenant, copies of which were provided to Landlord by Tenant Guarantor or Tenant prior to Tenant becoming the Tenant hereunder, present fairly in all material respects the financial condition and results of operations for such Person and its consolidated subsidiaries on a consolidated basis in accordance with GAAP consistently applied for such periods, and with respect to quarterly statements, subject to normal year-end audit adjustments and absence of footnotes.

 

(e)                  No Violations.   The execution of this Lease by Tenant and the performance by Tenant of its obligations hereunder will not (i) violate any provision of the Governing Documents of Tenant, (ii) result in a material breach of any agreement to which Tenant, Tenant Guarantor, or any of their respective Affiliates is a party, (iii) violate in any material respect any provision of any judgment or order binding on Tenant, Tenant Guarantor, or any of their respective Affiliates, or (iv) to Tenant’s Actual Knowledge, constitute a material violation by Tenant or Tenant Guarantor of any law or governmental regulation applicable to Tenant or Tenant Guarantor.

 

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ARTICLE V

RENT

 

5.1                  Base Rent .  Tenant agrees to pay to Landlord the Base Rent, without setoff, deduction, notice or demand except as expressly set forth in this Lease.  Minimum Rent shall be payable on the first day of each calendar month, in advance, during the Term, with the first payment payable on the Effective Date.  Variable Rent shall be payable on the 45 ^th day following the last day of the month for which Variable Rent is calculated.  By way of example, Variable Rent for the month of May in a given year is due on July 15 of that year (i.e., forty-five (45) days after May 31).  If Tenant is obligated to pay Base Rent for less than a full calendar month, Base Rent shall be prorated on a daily basis based upon the actual number of days in the prorated month.

 

5.2                 Payment of Base Rent .  All payments of Base Rent and Additional Rent, if any, shall be made to Regions Bank, Birmingham, AL (Wire Routing Number: 062005690; Account Number: 0215367452; Account Name: Grand Isle Corridor, LP) or such other account as Landlord shall advise Tenant in writing from time-to-time, with any such notification by Landlord provided to Tenant at least ten (10) Business Days before the date any accrued Base Rent or Additional Rent is payable.

 

5.3                  Payment to Party Claiming Rent .  If any party other than Landlord demands payment of Base Rent or Additional Rent due hereunder and alleges its right to receive the Base Rent or Additional Rent as a result of a Transfer of Landlord’s interest in this Lease, Tenant shall not be obligated to honor such demand unless Tenant receives written instructions to do so from the party to whom Tenant is then paying Base Rent or shall have otherwise received evidence acceptable to Tenant of the right of the party making the demand.  The withholding by Tenant of Base Rent or Additional Rent pending the determination of the rights of the party making the demand shall not be a default by Tenant hereunder and no interest at the Default Interest Rate or otherwise shall be due with respect to the delay in payment pending such determination.

 

5.4                  Past Due Rent .  If any installment of Base Rent is not paid when due, Tenant shall pay to Landlord, on demand, as Additional Rent, interest on such installment from the date such installment was due to the date such installment is paid at the Default Interest Rate.  If any other Additional Rent (except for such payments as Tenant is contesting in good faith or pursuant to a Tax Challenge or a Permitted Tenant Contest) is not paid within ten (10) Business Days following written demand from Landlord to Tenant (the “ Due Date for Other Additional Rent ”), Tenant shall pay to Landlord, on demand, as Additional Rent, interest on such installment from the applicable Due Date for Other Additional Rent to the date such other Additional Rent is paid, at the Default Interest Rate.

 

ARTICLE VI

TAXES AND IMPOSITIONS

 

6.1                 Taxes and Impositions .  Subject to the other terms and provisions of this Article VI , Tenant agrees to pay and assume liability for, and to indemnify, hold harmless and defend each Landlord Indemnified Party from and against, any and all Taxes and Impositions imposed or asserted against any Landlord Indemnified Party, Tenant, the Leased Property or any portion thereof or any Landlord Indemnified Party's interest in any of the foregoing or otherwise, by any federal, state or local Governmental Authority in the United States of America or any territory or possession of the United States of America or any foreign country or any foreign government or any subdivision or taxing authority thereof, or by any international taxing authority, upon or with respect to (a) the Leased Property or any portion thereof or interest therein, (b) the manufacture, construction, purchase, ownership, acquisition, acceptance, rejection, delivery, nondelivery, possession, transportation, lease, sublease, preparation, installation, condition, transfer of title, rental, use, operation, storage, maintenance, modification, alteration, repair, assembly, sale, return, abandonment or other application or disposition of all or any part of the Leased Property, (c) the rental payments (including without limitation all Base Rent and Additional Rent), receipts or earnings arising from or received with respect to the Leased Property or any portion thereof or interest therein or payable pursuant to this Lease or any other payment or right to receive payment pursuant to, or (d) otherwise with respect to or in connection with the transactions contemplated by the Purchase Agreement and this Lease, except to the extent such Taxes or Impositions are the responsibility of Landlord or its Affiliates under the Purchase Agreement and this Lease.

 

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6.2                  Payment .  In the event that any Taxes or Impositions against any of the Leased Property may be paid in installments, Tenant shall have the option to pay such Taxes or Impositions in installments; and in such event, Tenant shall be liable only for those installments which become due and payable during the Term and which accrue or arise with respect to the Leased Property during the Term.  Tenant shall prepare and file all Tax reports required by Governmental Authorities which relate to the Taxes which accrue or arise with respect to the Leased Property during the Term.  Tenant shall be deemed to have satisfied its obligation to pay Taxes as required hereby by paying such Taxes before the earlier of the date (i) any penalty (other than non-delinquent interest) accrues thereon, or (ii) any Lien is imposed against any Leased Property pursuant to Applicable Legal Requirements as a result of such failure (excluding Permitted Liens).

 

6.3                  Exclusions from Taxes and Impositions .  Notwithstanding the foregoing and for the avoidance of doubt, in no event will Tenant be required to pay, assume liability for, indemnify, hold harmless or defend each Landlord Indemnified Party from and against, and the terms “Taxes” and “Impositions” shall exclude, any and all of the following (collectively, the “ Excluded Matters ”):

 

(a)                   net income taxes (however denominated), gross receipts, net receipts or gross income taxes (however denominated, including Taxes that are imposed in lieu of net or gross receipts or income taxes) or franchise taxes of Landlord, any Equity Investor, any Affiliate of Landlord, or any Landlord Lender; and

 

(b)                  any Tax imposed with respect to the sale, exchange or other disposition by Landlord, any Equity Investor, any Affiliate of Landlord, or any Landlord Lender in whole or in part, of (i) the Leased Property, (ii) Landlord’s interest in this Lease or (iii) any Equity Investor Interest; and

 

(c)                 Taxes on, or with respect to or measured by the capital or net worth of Landlord, any Equity Investor or any Affiliate of Landlord or in the nature of a franchise, use, or margin tax or a Tax for the privilege of doing business, in any case in respect of Landlord, any Affiliate of Landlord, or any Landlord Lender; and

 

(d)                 Taxes or impositions imposed with respect to any period after the Term; and

 

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(e)                   excess profits taxes, accumulated earnings taxes, capital gains taxes, succession or estate taxes or personal holding company taxes, in each case of Landlord, any Affiliate of Landlord, or any Landlord Lender; and

 

(f)                  Taxes imposed on or against or with respect to Landlord, any Equity Investor or any Affiliate of Landlord to the extent such Taxes would not have been imposed if Landlord, any Equity Investor, any Affiliate of Landlord, or any Landlord Lender had not engaged in activities, or had a presence in, the taxing jurisdiction which activities or presence is unrelated to this Lease; and

 

(g)                 Taxes imposed as a result of any Transfer of any interest in the Leased Property by Landlord, any Equity Investor or any Affiliate of Landlord or any Landlord Lender (unless such Transfer occurs during or as a result of a Tenant Event of Default); and

 

(h)                  any Tax resulting from or that would not have been imposed but for the existence of Liens attributable to Landlord, any Equity Investor or any Affiliate of Landlord or any Landlord Lender; and

 

(i)                   Taxes imposed under the Code or ERISA with respect to any Person other than Tenant and its Affiliates; and

 

(j)                    Sales, use, conveyance, transfer, recording, mortgage and similar Taxes (including any related interest, penalties or legal costs) which Landlord is required to pay pursuant to the Purchase Agreement; and

 

(k)                  any Taxes attributable to a change in Tax classification, domicile or jurisdiction of incorporation of the Landlord, any Equity Investor or any Affiliate of the Landlord; and

 

(l)                   any increase in Taxes resulting from a Transfer by Landlord, any Equity Investor or any Landlord Lender of all or any portion of the Leased Property or Landlord Equity Interests or any interest therein (unless such Transfer occurs during or as a result of a Tenant Event of Default); and

 

(m)                Taxes, fees or amounts due and owing under or in connection with any Lien against the Leased Property, this Lease or any Equity Investor Interest.

 

6.4                  Payment of Taxes and Impositions .  If bills or invoices in respect of a Tax or an Imposition are received by Landlord, Landlord shall, within ten (10) Business Days of Landlord’s receipt thereof, but in any event at least ten (10) Business Days prior to the due date for the related Tax or Imposition ( provided , that Landlord has received such bill or invoice prior to ten (10) Business Days preceding such due date), deliver to Tenant any bill or invoice with respect to any Tax or Imposition.  All taxing authorities shall be instructed to send all Tax invoices to Tenant.  Within thirty (30) days after Landlord or Tenant has received confirmation of payment on account of Taxes, such Party shall provide to the other Party a copy of such confirmation that such Tax was paid.

 

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6.5                 Abatements .  For the purpose of determining payments due from Tenant under this Article VI , Taxes and Impositions shall be the Taxes and Impositions assessed until such time as the Taxes and Impositions are reduced by abatement, refund or rebate.  If any abatement, refund or rebate is granted, the Taxes or Impositions, as applicable, shall be the Taxes or Impositions as so reduced.  Any rebate, refund or abatement received subsequent to payment of such Taxes or Impositions by Tenant shall be refunded to Tenant by Landlord within ten (10) Business Days of receipt by Landlord, even if the abatement is received after the expiration or earlier termination of this Lease, and such obligations shall survive termination of this Lease.  If Landlord or any taxing authority applies any rebate, refund or abatement as a credit against Taxes or Impositions due for a period following the termination of this Lease, then the rebate, refund or abatement shall be deemed received by Landlord upon granting of the rebate, refund or abatement.  If Landlord or any taxing authority fails to refund any rebate, refund or abatement to Tenant within thirty (30) days after receipt (other than any rebate, refund or abatement that will be applied as a credit against Taxes and Impositions due for another period), Tenant shall be entitled to interest calculated at the Default Interest Rate from the date payment was due until the date payment is made.  Any rebate, refund or abatement realized by Landlord prior to payment of the Taxes and Impositions by Tenant shall result in the immediate reduction of Taxes and Impositions then due from Tenant to Landlord.

 

6.6                 Right to Contest Taxes .  Tenant shall have the right to file and prosecute to completion an application contesting the amount, validity, or application of any Taxes, contesting the assessed value of all or any portion of the Leased Property, or seeking an abatement of any Taxes (any such application, a “ Tax Challenge ”) either in its own name or in the name of Landlord, at no cost or expense to Landlord other than any de minimis cost or expense and throughout all administrative and judicial proceedings (trial court and all appeals) until there is a final, nonappealable determination.  Tenant may discontinue a Tax Challenge at any time.  If Tenant files or prosecutes a Tax Challenge, Landlord and its Affiliates shall cooperate and furnish any pertinent information needed for the Tax Challenge, at no cost or expense to Landlord other than any de minimis cost or expense.  Tenant shall be entitled to be reimbursed out of the award for the reasonable costs and expenses incurred in connection with a Tax Challenge.  Landlord shall not have the right to file a Tax Challenge with respect to any Taxes accruing during the Term unless the taxing authority requires the Tax Challenge to be filed by Landlord and Tenant requests Landlord to do so.  Landlord shall immediately provide Tenant with a copy of any notices or demands from any Governmental Authority or other Persons which concerns Taxes.  Upon the request of Landlord at any time or from time-to-time, Tenant shall provide a written report to Landlord regarding the status of any such Tax Challenge.

 

6.7                  Limitation on Tenant’s Tax Challenges. In no event shall the manner in which Tenant pursues any Tax Challenge exacerbate in any material respect the risk to Landlord of civil or criminal liability, penalty or sanction, in addition to such risks as may exist for the matters that are the subject of the Tax Challenge prior to such Tax Challenge, and except for liabilities, penalties or sanctions for which Tenant may, and in fact does, post a bond.  Further, the manner in which Tenant pursues a Tax Challenge shall not exacerbate in any material respect the risk to Landlord of defeasance of its interest in the Leased Property in addition to the risk of such defeasance as may exist for the matters that are the subject of the Tax Challenge prior to such Tax Challenge and except for such risk which Tenant may, and in fact does, bond around.  Tenant agrees that Tenant shall use commercially reasonable efforts to diligently prosecute any such Tax Challenge to a final conclusion, except that Tenant shall have the right to attempt to settle or compromise such contest through negotiations and to discontinue any such Tax Challenge at any time.  Tenant shall promptly after the final determination of such Tax Challenge, fully pay and discharge the amounts which shall be levied, assessed, charged or imposed or be determined to be payable therein or in connection therewith, together with all penalties, fines, interest, costs and expenses thereof or in connection therewith, and perform all acts the performance of which shall be ordered or decreed as a result thereof.

 

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6.8                  Right to Contest Impositions .  Tenant shall have the right to contest Impositions pursuant to Permitted Tenant Contests.

 

ARTICLE VII

CONDITION OF LEASED PROPERTY; MAINTENANCE

 

7.1                 Tenant Maintenance of Leased Property .  During the Term, Tenant shall (a) maintain the Leased Property and any Non-Separable Additions in Good Condition and Repair, subject to reasonable and ordinary wear and tear, and subject to the provisions of Articles X, XV and XVI , and (b) pay all maintenance and operating costs of the Leased Property and any Non-Separable Additions in the ordinary course of business.  Tenant waives any right to (i) require Landlord to maintain or Repair all or any part of the Leased Property or (ii) make Repairs at the expense of Landlord pursuant to any Applicable Legal Requirements in effect at any time.  Subject to Permitted Tenant Contests and the other provisions of this Lease, Tenant, at its own expense, will make (or cause to be made) such alterations and modifications in and additions to the Improvements and Personal Property as may be required from time-to-time to satisfy Applicable Legal Requirements in all material respects in a manner consistent with Article X .  Nothing in this Section 7.1 or otherwise in this Lease imposes any obligations upon Tenant, or waives any of Tenant’s rights, with respect to Landlord’s Environmental Liabilities.

 

7.2                  No Trespass .  Landlord authorizes Tenant to enforce any no trespass actions regarding any portion of the Liquids Transportation System, including the LTS Land, and to initiate any proceedings to remove any third parties from the Easement Land (to the extent allowable under the applicable Right of Use Agreements) which Tenant, in Tenant’s reasonable business judgment, deems necessary or appropriate for Tenant’s continued quiet enjoyment of the Leased Property.  Tenant shall give Landlord notice when exercising rights under this Section 7.2 .

 

ARTICLE VIII

UTILITIES; INTERCONNECTION AGREEMENTS

 

8.1                  Payment of Utility Charges .  Tenant shall contract for, in its own name, and pay when due, all charges for the connection and use of water, gas, electricity, and other utility services, if any, supplied to the Leased Property during the Term.  Under no circumstances shall Landlord be responsible for any interruption of any such utility service unless caused by the negligence, gross negligence or willful acts or omissions of any Landlord Party.  If utilities serving the Leased Property are so disrupted on account of the negligence, gross negligence, or willful act or omission of any such Landlord Party, Landlord shall promptly restore the utilities at Landlord’s sole cost and expense.

 

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8.2                  Interconnection Agreements .  Landlord hereby designates Tenant as Landlord’s agent with respect to, and, except as otherwise provided in this Lease, solely with respect to, the exercise of Landlord’s rights and carrying out of Landlord’s obligations under the Interconnection Agreements, but only during the Term of and to the limited extent set forth in this Lease.  This designation creates a special agency relationship, and Tenant and Landlord expressly acknowledge that, except as otherwise provided in this Lease, the scope of Tenant’s authority to act as agent for Landlord is expressly limited to the use and administration of the Interconnection Agreements as set forth in this Lease.  Except for such use, and except as otherwise provided in this Lease, Tenant has and shall have no other power, authority or right to act as agent for Landlord, and Tenant shall have no implied powers or authority to act as agent for Landlord.  Tenant shall (a) use commercially reasonable efforts to maintain the Interconnection Agreements in full force and effect, (b) administer the Interconnection Agreements such that Landlord is not in breach of any provision thereof, and (c) provide Landlord with copies of any material correspondence or other communications with counterparties under the Interconnection Agreements.  Tenant may amend any Interconnection Agreement as it deems necessary or advisable in connection with the operation and use of the Liquids Transportation System, but Tenant shall promptly provide a copy of any such amendment to Landlord, and any such amendment that would reasonably be expected to increase Landlord’s obligations thereunder shall require Landlord’s consent (not to be unreasonably withheld).  Tenant may not terminate any Interconnection Agreement without Landlord’s prior written consent (not to be unreasonably withheld).  If Tenant determines, acting reasonably and in good faith, that it would be advisable to enter into a new agreement pursuant to which the Liquids Transportation System, or any component thereof, is interconnected to other pipeline systems, facilities, or assets, Tenant may, with Landlord’s prior written consent (not to be unreasonably withheld), enter into such agreement either directly or on Landlord’s behalf, in which case (x) Tenant shall promptly provide a copy of the executed agreement to Landlord, (y) if Tenant enters into such agreement directly, it shall immediately thereafter assign such agreement to Landlord, and (z) such agreement, whether entered into by Tenant directly or on Landlord’s behalf, shall become an Interconnection Agreement included in the Leased Property, without any increase in Base Rent.  During the Term, all fees and other payments due under or in respect of the Interconnection Agreements shall be paid by Tenant or, if paid by Landlord, shall be reimbursed to Landlord by Tenant as Additional Rent.

 

ARTICLE IX

USE

 

9.1                 Tenant Use .  The Leased Property may be used for any use permitted by Applicable Legal Requirements and the terms and conditions of the Right of Use Agreements and other Record Agreements.  During such time as this Lease is in effect, Tenant shall, at Tenant’s sole cost and expense and subject to Permitted Tenant Contests, comply in all material respects with all Applicable Legal Requirements now or hereafter in force relating to or affecting the Leased Property and Tenant’s use, occupancy, operation, maintenance, alteration or improvement thereof.  Notwithstanding the preceding or any other provision of this Lease to the contrary, (a) Landlord shall be fully responsible for any violation of Applicable Legal Requirements caused at any time by (i) any Landlord Party or (ii) any Landlord Lender; or (iii) any of their respective officers, agents, contractors, servants or employees, except to the extent such violation is caused by the failure of Tenant to perform its obligations hereunder, and (b) Tenant shall have no responsibility for any such matter described in clause 9.1(a ).  Tenant shall have the right to delay making the changes, alterations or additions Tenant is responsible for making pursuant to the immediately preceding provisions of this Section 9.1 while Tenant is contesting in good faith the action or actions being taken by a Governmental Authority pursuant to a Permitted Tenant Contest.

 

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9.2                 Operating Requirement .  In no event shall Tenant be obligated to keep all or any part of the Leased Property operating.  If Tenant discontinues operations, Tenant shall comply in all material respects with all Applicable Legal Requirements and otherwise comply in all material respects with the terms and conditions of this Lease except as to the continuing operation of the Leased Property.  Subject to the other terms and conditions of this Lease regarding Tenant’s right in certain circumstances to terminate this Lease or to offset Base Rent and Additional Rent against amounts due from Landlord hereunder, Tenant shall pay the Base Rent as and when due under this Lease during any period in which Tenant discontinues operations in whole or in part.

 

ARTICLE X

PERMITTED CAPITAL IMPROVEMENT AND ADDITIONAL LINES, PARTS AND TENANT OTHER ACTIVITIES

 

10.1               Permitted Capital Improvements and Additional Lines .

 

(a)                  Permitted Capital Improvements and Additional Lines .  Notwithstanding anything set forth in this Lease, Tenant, at its own expense and without Landlord’s approval, shall have the right, at any time and from time-to-time as Tenant deems necessary or desirable, to make Permitted Capital Improvements and Additional Lines.

 

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(b)                  Non-Separable Additions .  If Tenant proposes to make Permitted Capital Improvements and Additional Lines that are not readily separable or cannot be detached from the Liquids Transportation System without adversely affecting the structural integrity or functionality of the Liquids Transportation System as operated prior to the making of the Permitted Capital Improvements and Additional Lines (each, a “ Non-Separable Addition ”), Tenant may provide Landlord written notice (a “ Notice of Non-Separable Addition ”), which Notice of Non-Separable Addition shall (i) describe the Non-Separable Addition in reasonable detail, (ii) provide a good faith estimate of the total cost of making the Non-Separable Addition, (iii) offer Landlord the option to both (A) pay for such Non-Separable Addition, and (B) engage the services of Tenant as construction agent for Landlord with respect to the making of such Non-Separable Addition, and (iv) specify an increase in the Base Rent if Landlord elects to pay for and engage Tenant as Landlord’s construction agent for such Non-Separable Addition. Landlord shall not have the option to pay for such Non-Separable Addition unless Landlord also engages the services of Tenant as construction agent for such Non-Separable Addition.  Landlord shall consider such offer as set forth in such Notice of Non-Separable Addition in good faith and use commercially reasonable efforts to obtain financing for such Non-Separable Addition. Landlord shall, by written notice delivered to Tenant within ten (10) Business Days after receipt of the Notice of Non-Separable Addition, elect in writing either to pay for and engage Tenant as Landlord’s construction agent for such Non-Separable Addition or to refrain from paying for such Non-Separable Addition. Failure to give such timely notice shall constitute Landlord’s election not to pay for such Non-Separable Addition.  If Landlord accepts such offer, (a) Landlord shall pay for such Non-Separable Addition and engage Tenant as Landlord’s construction agent for such Non-Separable Addition and (b) Landlord and Tenant shall (1) execute the documents required to evidence such amendment to this Lease or a new lease for such Non-Separable Addition, as applicable, and (2) execute documents, reasonably satisfactory to each of them, governing advances by Landlord to pay the costs of such Non-Separable Addition. Non-Separable Additions that Landlord elects to pay for shall become a part of the Leased Property under this Lease, with an increase in Base Rent as proposed by Tenant in the Notice of Non-Separable Addition, unless Landlord and Tenant instead agree that such Non-Separable Addition shall be the subject of a separate lease, upon substantially the same terms as this Lease, but with Base Rent as proposed by Tenant in the Notice of Non-Separable Addition.  If Landlord elects not to pay for such Non-Separable Addition and Tenant elects to proceed with making the Non-Separable Addition, then subject to subsection (e) below, such Non-Separable Addition shall remain the sole property of Tenant, and this Lease shall continue in full force and effect unaffected by the Non-Separable Addition.

 

(c)                  Separable Additions .  If Tenant proposes to make Permitted Capital Improvements and Additional Lines that are not Non-Separable Additions (each, a “ Separable Addition ”), Tenant may provide Landlord written notice (a “ Notice of Separable Addition ”), which Notice of Separable Addition shall (i) describe the Separable Addition in reasonable detail, (ii) provide a good faith estimate of the total cost of making the Separable Addition, (iii) offer Landlord the option to both (A) pay for such Separable Addition, and (B) engage the services of Tenant as construction agent for Landlord with respect to the making of such Separable Addition, and (iv) specify an increase in the Base Rent if Landlord elects to pay for and engage Tenant as Landlord’s construction agent for such Separable Addition.  Landlord shall not have the option to pay for such Separable Addition unless Landlord also engages the services of Tenant as construction agent for such Separable Addition.  Landlord shall consider such offer as set forth in such Notice of Separable Addition in good faith and use commercially reasonable efforts to obtain financing for such Separable Addition.  Landlord shall, by written notice delivered to Tenant within ten (10) Business Days after receipt of the Notice of Separable Addition, elect in writing either to pay for and engage Tenant as Landlord’s construction agent for such Separable Addition or to refrain from paying for such Separable Addition. Failure to give such timely notice shall constitute Landlord’s election not to pay for such Separable Addition.  If Landlord accepts such offer, (a) Landlord shall pay for such Separable Addition on the terms in the Notice of Separable Addition and engage Tenant as Landlord’s construction agent for making such Separable Addition, and (b) Landlord and Tenant shall (1) execute the documents required to evidence such amendment to this Lease or a new lease for such Separable Addition, as applicable, and (2) execute documents, reasonably satisfactory to each of them, governing advances by Landlord to pay the costs of such Separable Addition.  Separable Additions that Landlord elects to pay for shall become a part of the Leased Property under this Lease, with an increase in Base Rent as proposed by Tenant in the Notice of Separable Addition, unless Landlord and Tenant instead agree that such Separable Addition shall be the subject of a separate lease, upon substantially the same terms as this Lease, but with Base Rent as proposed by Tenant in the Notice of Separable Addition.  If Landlord elects not to pay for such Separable Addition and Tenant elects to proceed with making the Separable Addition, then subject to subsection (e) below, such Separable Addition shall remain the sole property of Tenant, and this Lease shall continue in full force and effect unaffected by the Separable Addition.

 

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(d)                  Financing for Permitted Capital Improvements and Additional Lines .

 

(i)                Except as set forth in Section 10.1(d)(ii) , Tenant shall at all times have the right to finance any Permitted Capital Improvements and Additional Lines with a third party, regardless of whether the same are Separable Additions or Non-Separable Additions, without Landlord’s consent; provided , however , that Tenant will notify Landlord in advance of entering into any such financing secured by a Lien on such Permitted Capital Improvements and Additional Lines (as applicable) and give Landlord an opportunity to make a proposal (non-binding on Tenant) to pay for, and engage Tenant as Landlord’s construction agent for, such Permitted Capital Improvements and Additional Lines (as applicable).  If requested by Tenant, Landlord agrees to cooperate in good faith with Tenant in the financing of any such Permitted Capital Improvements and Additional Lines (as applicable) that Tenant deems to be necessary or desirable for the operation of the Leased Property or the Tenant Other Activities.

 

(ii)               If Tenant or any of its Affiliates seeks third-party financing for an Additional Line to connect oil platform WD 30J and the Grand Isle terminal facility (the “ Planned Additional Line ”), then, in accordance with this Section 10.1(d)(ii) , Tenant shall provide Landlord the right to offer to finance the Planned Additional Line, including under an arrangement whereby the Planned Additional Line would become either (x) part of the Leased Property under this Lease, with an increase in Base Rent, or (y) the leased property under a separate lease agreement between Landlord and Tenant.

 

(A)             Promptly after Tenant or any of its Affiliates determines to seek third-party financing of the Planned Additional Line, Tenant shall deliver notice thereof to Landlord (the “ Financing Notice ”), which Financing Notice shall describe the Planned Additional Line in reasonable detail and provide a good faith estimate of the total cost of constructing the Planned Additional Line.  Landlord will have a period of thirty (30) days after receipt of the Financing Notice (the “ Evaluation Period ”) to review and evaluate the opportunity to finance the Planned Additional Line, and during such period Tenant shall promptly provide Landlord with such additional information about the Planned Additional Line as Landlord may reasonably request.

 

(B)              In the event that Landlord desires to make an offer to finance the Planned Additional Line, then prior to the expiration of the Evaluation Period, Landlord shall deliver to Tenant the material terms and conditions under which Landlord is willing to provide such financing (the “ Offered Terms ”).

 

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(C)              If Landlord does not timely deliver the Offered Terms, then Tenant or any of its Affiliates shall have the right, for a period of six (6) months from the end of the Evaluation Period, to obtain financing for the Planned Additional Line from any Person on such terms and conditions as Tenant or such Affiliate determines in its sole discretion.

 

(D)              If Landlord timely delivers the Offered Terms, then Tenant shall, in its sole discretion, either accept or reject the Offered Terms, by providing written notice of such acceptance or rejection within ten (10) days after its receipt of the Offered Terms.  If Tenant accepts the Offered Terms, then Landlord and Tenant shall proceed to work together cooperatively and in good faith to finalize the agreements for Landlord to finance the Planned Additional Line in accordance with the Offered Terms.  If Tenant rejects the Offered Terms, then (i) Tenant or any of its Affiliates shall have the right, for a period of six (6) months from the end of the Evaluation Period, to obtain financing for the Planned Additional Line from any non-Affiliate, (ii) during the period of six (6) months from the end of the Evaluation Period, Tenant and Landlord may meet to discuss the Offered Terms rejected by Tenant, including any of the Offered Terms that Tenant would like Landlord to consider further, and (iii) based on such meeting between Landlord and Tenant, Landlord may submit a counterproposal to Tenant revising its initial Offered Terms, within the period of time requested by Tenant at such meeting (but non less than three (3) Business days after such meeting), and Tenant shall consider such counterproposal (if any) in good faith.

 

(E)              If Tenant or one of its Affiliates does not enter into agreements to finance the Planned Additional Line within six (6) months following the end of the Evaluation Period, then Landlord’s right of first offer set forth in this Section 10.1(d)(ii) will be reinstated for any future proposed financing of the Planned Additional Line.

 

(e)                   End of Term Ownership .  At the end of the Term, (i) all Non-Separable Additions which Landlord elected not to pay for and make a part of the Leased Property pursuant to subsection (b) , above, will become the property of Landlord without compensation or reimbursement to Tenant; and (ii) all Separable Additions which Landlord elected not to pay for and make a part of the Leased Property pursuant to subsection (c) , above shall be removed or otherwise detached by Tenant from the Liquids Transportation System unless otherwise agreed by Landlord in writing, and Tenant shall repair any damage to the Leased Property caused by such removal.  The transfer of all Non-Separable Additions which become the property of Landlord at the end of the Term pursuant to subsection (i) above, (A) shall be made on an AS IS WHERE IS basis, without any express or implied warranties from Tenant other than special warranties of title (except as otherwise expressly agreed between the Parties at the time of such transfer), provided , however , that such conveyance shall in any event be made by Tenant to Landlord free and clear of (I) any Liens placed on the Leased Property by, through or under Tenant, and (II) any Other Recorded Documents executed by, through or under Tenant in violation of this Lease, and (B) shall be evidenced by Tenant’s execution of such deeds, bills of sale, or other appropriate documents conveying title to such Non-Separable Additions as Landlord and Tenant may reasonably agree, consistent with subsection (A) of this sentence.

 

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10.2              Replacement of Parts .  Tenant may, at its own cost and expense, remove in the ordinary course of maintenance, service, repair, overhaul or testing, or as otherwise required or permitted by this Lease, any Parts, whether or not worn out, lost, stolen, destroyed, seized, confiscated, damaged beyond repair or permanently rendered unfit for use.  Tenant will, at its own cost and expense, replace any such Parts as may be necessary to maintain the Leased Property in accordance with the standards for Tenant’s maintenance obligations as set forth in Section 7.1 of this Lease.  All replacement Parts shall be in as good operating condition as, and shall have a value (including the residual value), utility and remaining useful life at least equal to the Parts replaced, assuming such replaced Parts were in condition and repair required to be maintained by, and otherwise in compliance with, the terms of this Lease (nothing in this Lease, however, shall be construed to require Tenant to replace any Parts having a useful life adequate to operate the Leased Property through the end of the Term).  All Parts at any time removed from any item or portion of the Leased Property shall remain the property of Landlord until such time as such Parts shall be replaced by Parts which have been incorporated or installed in or attached to such item or portion of the Leased Property and which meet the requirements for replacement Parts specified above.  Immediately upon any replacement Part becoming incorporated into or installed in or attached to any item or portion of the Leased Property, without further action by either Party (except in the case of replacement property temporarily installed on an emergency basis), (a) title to such replacement Part shall thereupon vest in Landlord, (b) such replacement Part shall become subject to this Lease and be deemed part of the Leased Property for all purposes to the same extent as the Parts originally incorporated or installed in or attached to the Leased Property, and (c) title to the removed Part shall thereupon vest in Tenant AS IS WHERE IS , free and clear of all rights of Landlord, and shall no longer be deemed a part of the Leased Property.  Notwithstanding the foregoing, “ Parts ” means all appliances, parts, instruments, appurtenances, accessories, furnishings, spare parts, and other equipment and property of whatever nature which constitute a portion of the Improvements or Personal Property and any replacements or substitutions therefor made under this Section 10.2 .  “ Parts ” shall not in any event include (i) any Tenant Property, (ii) removed Parts as provided in subsection (c ), above, or (iii) any Permitted Capital Improvements and Additional Lines, which Permitted Capital Improvements and Additional Lines shall be governed by Section 10.1 , above.   Title to replacements and substitutions for Parts made under this Section 10.2 shall remain a part of the Leased Property.

 

10.3              Tenant Other Activities .  Notwithstanding anything set forth in this Lease, Tenant, at its own expense and without Landlord’s approval, shall have the right at any time and from time-to-time to conduct Tenant Other Activities.

 

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ARTICLE XI

REGULATORY ISSUES

 

11.1              Tenant’s Rights and Obligations .

 

(a)                 Leased Property .  Tenant shall have the right and obligation to deal with all Governmental Authorities, including BOEM and BSEE, and to conduct all regulatory proceedings governing or affecting the Leased Property or the use or operation thereof, and in connection therewith to comply with all Applicable Legal Requirements.

 

(b)                Tenant Property and Tenant Other Activities .  Tenant shall have the exclusive right and obligation to (i) deal with all Governmental Authorities, and (ii) conduct all regulatory proceedings governing or affecting the ownership, use or operation of the Tenant Property or the Tenant Other Activities.

 

(c)                  Right of Use Agreements .

 

(i)                Consistent with the foregoing subsections of this Section 11.1 , Landlord hereby designates Tenant as Landlord’s agent with respect to, and, except as otherwise provided in this Lease, solely with respect to, the exercise of Landlord’s rights and carrying out of Landlord’s obligations under the Right of Use Agreements, including the Federal ROWs, but only during the Term of and to the limited extent set forth in this Lease.  This designation creates a special agency relationship, and Tenant and Landlord expressly acknowledge that, except as otherwise provided in this Lease, the scope of Tenant’s authority to act as agent for Landlord is expressly limited to the use and administration of the Right of Use Agreements as set forth in this Lease and those certain BOEM and BSEE regulatory matters which are enumerated in subsections (a) and (b) of this Section 11.1 .  Except for such use and enumerated matters, and except as otherwise provided in this Lease, Tenant shall have no other power, authority or right to act as agent for Landlord, and Tenant shall have no implied powers or authority to act as agent for Landlord.  During the Term, Tenant shall (i) maintain the Right of Use Agreements in full force and effect, to the extent such Right of Use Agreements are being used for their intended purposes, (ii) administer the Right of Use Agreements such that Landlord is not in breach of any provision thereof, (iii) promptly notify Landlord of Tenant’s exercise of any agency authority under this Section 11.1(c)(i) , and (iii) provide Landlord with copies of any filings, correspondence, or other communications with BOEM or BSEE relating to the Leased Property or the use or operation thereof.  If, notwithstanding Landlord’s designation of Tenant as Landlord’s agent under this Section 11.1(c)(i) , Landlord is required under Applicable Legal Requirements to directly make any filings or take any other action under or in connection with the Right of Use Agreements (including filings with BOEM or BSEE in respect of the Federal ROWs), Tenant shall provide Landlord with such information to allow Landlord to make such filings or take such other action in a timely manner and otherwise in accordance with Applicable Legal Requirements.  Landlord and Tenant shall work together cooperatively and in good faith to implement the agency arrangement described in Sections 11.1(a) and 11.1(c)(i)   including by making such filings with BOEM or BSEE as may be required.  Furthermore, Landlord agrees that, at Tenant’s request, Landlord shall, in lieu of designating Tenant as Landlord’s agent for purposes of BOEM and BSEE regulatory matters (including matter relating to the Federal ROWs), designate with BOEM and BSEE an Affiliate of Tenant selected by Tenant, or named representatives of Tenant or of such Affiliate, and approved by Landlord (such approval not to be unreasonably withheld) to serve as such agent, in which case Tenant shall cause such Affiliate to perform all obligations of Tenant as such agent under Sections 11.1(a) and 11.1(c)(i) .  During the Term, all fees and other payments due under or in respect of the Right of Use Agreements shall be paid by Tenant or, if paid by Landlord, shall be reimbursed to Landlord by Tenant as Additional Rent.

 

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(ii)               Landlord and Tenant acknowledge that in accordance with current regulations at 30 CFR 550.1011 and 556.53, Landlord is required to furnish general and supplemental bonds related to the Federal ROWs showing Landlord as principal on the bonds.  Landlord will maintain all general and supplemental bonds as may be required now or in the future by, and in accordance with, all Applicable Legal Requirements governing the Federal ROWs.  During the Term, the premiums for all such bonds, as well as the collateral requirements with respect thereto, now or hereafter furnished by Landlord for the Federal ROWs, to the extent subject to this Lease, shall be reimbursed to Landlord by Tenant as Additional Rent, and Landlord agrees to return such collateral to Tenant upon any release thereof by the surety.

 

(iii)             Tenant agree to cause one of its Affiliates to be (A) recognized by BOEM as the designated Oil Spill Financial Responsibility applicant for the Federal ROWs and the Louisiana ROW for the duration of the Term, to the extent the Federal ROWs and the Louisiana ROW are subject to this Lease (and to be duly qualified for such purpose), and (B) responsible for the premiums and costs for demonstrating oil spill financial responsibility for the Federal ROWs and the Louisiana ROW.   Tenant further agrees to cause such Affiliate to cover the Federal ROWs and the Louisiana ROW on such Affiliate’s oil spill response plan filed with BSEE for the duration of the Term, and to promptly provide Landlord with a copy of said oil spill response plan and all renewals thereof for the duration of the Term.

 

(d)                  Landlord Cooperation .  At Tenant’s request, Landlord shall execute all such documents and take all such action as may be necessary to ensure or evidence Tenant’s rights under this Section 11.1 unless, in Landlord’s reasonable and good faith judgment, such documents or actions will directly result in payments required to be made by Landlord that Tenant is unwilling to pay on behalf of Landlord and, upon such determination by Landlord and prior to taking any such action, Landlord shall promptly notify Tenant in writing of such determination by Landlord, and Landlord and Tenant shall work diligently and in good faith to resolve their differences with respect to the requested action or document(s).  Notwithstanding the foregoing, Landlord shall in any event be required to execute such documents and take all such actions as may be required for Tenant to pursue a Tax Challenge or a Permitted Tenant Contest.  Notwithstanding the foregoing, the Parties will cooperate to execute such documents as may be required to extend the terms of the Right of Use Agreements if such documents are required to extend the term of the Right of Use Agreements beyond the Term, it being understood, however, that nothing set forth herein shall obligate Landlord or Tenant for the payment of any extension fee or similar charge imposed as a condition to such extension other than de minimis costs and expenses.

 

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(e)                   Except as required by Applicable Legal Requirements, Landlord shall not engage in any written or verbal communication with any Governmental Authority regarding or in any way relating to the ownership, use or operation of the Tenant Property or Tenant Other Activities.

 

(f)                    Landlord acknowledges and stipulates that Tenant may suffer irreparable harm in the event of a breach of the provisions of this Section 11.1 by Landlord for which Tenant has no adequate remedy at law. Therefore, in addition to all other remedies available pursuant to the terms of this Lease or at law, Tenant shall have the right to obtain immediate injunctive or other equitable relief upon a breach of this Section 11.1 by Landlord.

 

11.2               Landlord’s Rights and Obligations .  Notwithstanding the foregoing Section 11.1 , but subject in any event to Tenant’s right to pursue Tax Challenges and Permitted Tenant Contests, if Landlord determines, in Landlord’s reasonable judgment, that Tenant has not taken sufficient action to protect the interests of Landlord in regard to any such regulatory matter (including, without limitation, regulatory proceedings) with respect to the Leased Property, upon prior written notice to Tenant, Landlord may take such action as may be necessary in order for Landlord to be and remain in compliance with Applicable Legal Requirements as they relate to Landlord and the Leased Property, or as Landlord otherwise deems reasonably necessary to protect Landlord’s interests in regard to such regulatory matter, consistent with Tenant’s rights hereunder.  Landlord shall promptly provide Tenant with a copy of any notices or demands received by Landlord from any Governmental Authority which concerns any Applicable Legal Requirement that relates to the Leased Property.

 

11.3               No Application to Condemnation. Landlord and Tenant acknowledge and agree that the provisions of this Article XI shall not excuse Landlord from cooperating in condemnation proceedings as required by Article XVI .

 

ARTICLE XII

MECHANIC’S LIENS

 

12.1              Tenant’s Obligations .  If any mechanic’s, materialmen’s or other Liens against any of the Landlord’s interest in the Leased Property in connection with any materials, labor or equipment furnished or claimed to have been furnished to or for any Tenant Party are filed against Landlord’s interests in the Leased Property on account of action or inaction by any Tenant Party (including by Tenant in its capacity as Landlord’s construction agent for Separable Additions or Non-Separable Additions under Article X , other than any such Liens filed as a result of materials, labor or services for Separable Additions or Non-Separable Additions and for which Landlord has failed to satisfy its obligation to pay the cost of such materials, labor or services), then Tenant shall promptly cause such Lien to be discharged (whether by payment or bond), or, if Tenant desires to contest the Lien, Tenant may do so as long as the enforcement of the Lien is stayed pursuant to a Permitted Tenant Contest. If a Landlord Lender with respect to Landlord Indebtedness requires Landlord’s interest in the Leased Property to be free of such mechanic’s or materialmen’s liens, then upon request of Landlord or such Landlord Lender, Tenant shall either discharge the Lien or post a bond sufficient to cover the amount of the Lien and interest, penalties and costs that will be payable to discharge the Lien assuming its validity.  Notwithstanding the foregoing, Tenant shall have no obligation whatsoever for or with respect to Liens arising from Landlord’s failure to advance payments for Non-Separable Additions or Separable Additions for which Landlord has engaged Tenant as Landlord’s construction agent as provided in Section 10.1 .

 

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12.2               Landlord’s Obligations .  Landlord shall not permit any mechanic’s, materialmen’s or other Liens against any Leased Property in connection with any materials, labor or equipment furnished, or claimed to have been furnished, to or for Landlord, and if any such Liens shall be filed against any Leased Property on account of any action or inaction by Landlord (other than any action or inaction alleged against Landlord resulting from the failure of Tenant to perform its obligations hereunder), Landlord shall cause the Lien to be discharged, provided , that if Landlord desires to contest any such Lien (whether by payment or bond), it may do so as long as enforcement of the Lien is stayed pursuant to a Permitted Landlord Contest.

 

ARTICLE XIII

TENANT PROPERTY

 

13.1               No Lien .  Tenant is and shall remain the owner of the Tenant Property, other than Non-Separable Additions at the end of the Term as provided in Section 10.1(e) .  Landlord shall not have any Lien on any of the Tenant Property for the performance of Tenant’s obligations under this Lease or otherwise.  LANDLORD WAIVES AND DISCLAIMS ALL STATUTORY AND CONTRACTUAL LIEN RIGHTS IN TENANT PROPERTY NOW OR HEREAFTER PLACED AT OR WITH THE LEASED PROPERTY.   Landlord agrees to execute an agreement with Tenant or Tenant’s lender to evidence such waiver of Landlord’s Lien rights in Tenant Property and, following a default by Tenant under any Tenant mortgage, allow Tenant’s lender access to the Leased Property to seize and remove Tenant Property subject to the terms of such agreement, provided , that the form and substance of any such agreement is reasonably satisfactory to Landlord, Tenant and Tenant’s lender (including in such agreement reasonable conditions and time periods within which such Tenant Property may be removed).  Tenant shall have the right to remove Tenant Property at any time or times during the Term and for a period of thirty (30) days after the expiration of the Term, without any obligation to pay Landlord holdover rent under Section 26.4 .

 

13.2              Sole Risk of Tenant .  Tenant bears the sole risk of Loss for all of the Tenant Property, and if any of the Tenant Property is destroyed or damaged other than as a result of the negligence or willful misconduct of a Landlord Party, no part of the destruction or damage shall be the responsibility of Landlord.  If the damage is caused by the negligence or willful misconduct of a Landlord Party, Landlord shall be responsible for any damage or destruction, subject, however, to the waiver of subrogation provisions of Section 14.3 .  The term “negligence” as used in this Section 13.2 shall not include negligence imputed as a matter of law to Landlord solely by reason of Landlord’s failure to act in respect of matters which are or were the obligation of Tenant under this Lease or solely as a result of Landlord’s ownership of the Leased Property.

 

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13.3              Tenant’s Ability to Grant Liens on Tenant Property.  Nothing contained in this Lease shall be deemed to limit or otherwise restrict Tenant’s ability to grant a Lien on Tenant’s interest in the Leased Property under this Lease or on Tenant Property, in any such case to a lender   for the purpose of securing indebtedness of Tenant or its Affiliates to such lender.  Landlord acknowledges and agrees, following a default by Tenant under any Tenant mortgage, to allow Tenant’s lender access to the Leased Property to seize and remove all or any of the Tenant Property and Landlord agrees to execute an SNDA with Tenant’s lender to evidence such right as provided in Section 13.1 .

 

ARTICLE XIV

INSURANCE

 

14.1               Insurance Coverage .  From and after the Effective Date, Tenant shall maintain with respect to the Leased Property at all times during the Term, at no cost or expense to Landlord, the types and amounts of insurance set forth in Exhibit N; provided , that, if any such types of insurance (including the limits or deductibles thereof) are not, in Tenants's reasonable judgement, available on commercially reasonable terms in the applicable insurance market, Tenant, acting as a reasonably prudent operator, shall have the right, in consultation with Landlord, to reduce the limits, increase the deductibles, or combine coverages with insurance coverages or one or more of Tenant's Affiliates in order to provide insurance for the Leased Property. 

 

14.2              Waiver of Subrogation .  Each of Landlord and Tenant hereby releases the other from any and all liability for loss or damage caused by fire or any of the extended coverage casualties or any other casualty which shall be brought about by the fault or negligence of the other party or any persons for whom such other party is responsible, provided , that this release shall be in force and effect only with respect to loss or damage occurring during such time as the respective party’s policies of property insurance shall contain a clause to the effect that this release shall not affect such policies or right of the releasing party to recover thereunder, and the release shall apply only to the extent of the releasing party’s insurance coverage.  Any insurance policy held by Tenant or Landlord, to the extent that waiver is reasonably and customary for the policy in question, shall include a waiver of subrogation clause so long as the same is obtainable.  Nothing herein shall be deemed an obligation on the part of Landlord to maintain any insurance and any insurance maintained by Landlord shall serve as excess coverage.

 

14.3               No Release from Liability .  Except as provided in Section 14.2 , nothing in this Article XIV or Exhibit N shall be deemed to release either Party from liability for damages resulting from the negligence or willful misconduct of such Party or from responsibility for repairs necessitated by such negligence or willful misconduct.  By requiring insurance as provided herein, neither Landlord nor Tenant represents that coverage and limits will necessarily be adequate to protect Tenant or Landlord, and such coverage and limits shall not be deemed as a limitation of the liability of Tenant or Landlord under any indemnification provisions in this Lease.  Failure of Landlord to demand such certificate or other evidence of full compliance with these insurance requirements or failure of Landlord to identify a deficiency from evidence that is provided shall not be construed as a waiver of Tenant’s obligation to maintain such insurance.

 

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ARTICLE XV

FIRE AND OTHER CASUALTY

 

15.1               Fire and Other Casualty .

 

(a)                 General Provisions .  If all or any part of the Leased Property is damaged or destroyed by fire or other casualty during the Term, then Tenant shall give prompt notice of such event to Landlord. Notwithstanding the foregoing or anything to the contrary in this Article XV or otherwise, if this Lease is terminated under this Article XV as a result of such fire or other casualty, (i) Tenant shall not be obligated to Repair the Leased Property after such fire or other casualty or to pay for such Repairs and (ii) neither Landlord nor any other Landlord Indemnified Party shall have any claim against Tenant with respect to the Repair of the Leased Property or Losses arising from termination of this Lease or Tenant’s purchase of the Leased Property pursuant to this Section 15.1 .  Unless this Lease is terminated pursuant to this Section 15.1 as a result of such fire or other casualty, (A) this Lease shall remain in effect following such fire or other casualty and Tenant waives the right to terminate this Lease pursuant to articles 2714 and 2715 of the Louisiana Civil Code and other Applicable Legal Requirements, (B) Tenant shall, at Tenant’s cost and expense, promptly Repair the Leased Property, or any part thereof, as a result of such fire or other casualty, to substantially the same condition it was in immediately prior to the casualty (subject to any changes to all or any such part of the Leased Property that Tenant intends to make to the extent permitted under this Lease), (C) the rights and obligations of Landlord and Tenant shall remain in effect without abatement, (D) all Base Rent shall continue unabated, and (E) subject to Section 15.2 , all Casualty Proceeds recovered on account of any damage or destruction to all or any part of the Leased Property by fire or other casualty shall be paid to Tenant.

 

(b)                  Lease Termination Option and Purchase Offer .  Notwithstanding the above, if the value, as determined by Tenant in good faith, of the damaged or destroyed portions of the Leased Property (determined as of the Casualty Date as if such damage or destruction had not occurred) is greater than one hundred and twenty-five million dollars ($125,000,000) then Tenant may, by written notice delivered to Landlord within sixty (60) days after such determination, either (i) propose to continue this Lease in effect, or (ii) propose to terminate this Lease and purchase the Leased Property for the purchase price as specified by Tenant in such notice (any such written notice by Tenant electing under subsection (ii) to terminate this Lease and purchase the Leased Property shall be referred to as a “ Tenant Casualty Termination Notice ”).  Tenant’s failure to deliver its Tenant Casualty Termination Notice within such sixty (60) day period shall constitute Tenant’s election to continue the Lease in effect and to Repair the damaged or destroyed Leased Property as provided in Section 15.1(a) .

 

(c)                  Casualty Response Notice .  If Tenant delivers its Tenant Casualty Termination Notice to Landlord, then Landlord shall have a period of no more than fifteen (15) days in which to notify Tenant in writing of Landlord’s acceptance or rejection of the Tenant Casualty Termination Notice (“ Casualty Response Notice ”).  Landlord’s failure to provide its Casualty Response Notice within such fifteen (15) day period shall be deemed a rejection of the Tenant Casualty Termination Notice.

 

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(d)                 Acceptance of Tenant Casualty Termination Notice and Termination of Lease .  If Landlord accepts the Tenant Casualty Termination Notice, (i) Tenant shall purchase the Leased Property from Landlord as provided in Section 15.1(e) on a date no later than sixty (60) days after Landlord’s Casualty Response Notice and this Lease shall terminate on such date (the “ Casualty Termination Date ”), (ii) except for the terms and provisions of this Lease which survive termination, neither Landlord nor Tenant shall have any rights or obligations under this Lease arising from and after the Casualty Termination Date, (iii) no further Base Rent or Additional Rent shall accrue with respect to the period after the Casualty Termination Date, (iv) Tenant shall have no Repair obligations with respect to the fire or other casualty giving rise to the Tenant Casualty Termination Notice and no obligation to pay for such Repair, (v) neither Landlord nor any other Landlord Indemnified Party shall have any claim against Tenant with respect to the Repair of the Leased Property or Losses arising from termination of this Lease or Tenant’s purchase of the Leased Property pursuant to this Section 15.1 , (vi) each Tenant Guarantor shall be released from liability and obligations under its Tenant Guaranty, and each Landlord Guarantor shall be released from liability and obligations under its Landlord Guaranty,  it being understood and agreed, however, that Tenant Guarantors and Landlord Guarantors shall remain liable with respect to matters or claims (x) arising or accruing prior to the Casualty Termination Date and (y) in respect of obligations that survive the termination of this Lease, and (vii) all Casualty Proceeds shall be paid to Tenant.

 

(e)                  Closing of Purchase Offer .  In addition, if Landlord accepts the Tenant Casualty Termination Notice, on the Casualty Termination Date, (i) Tenant shall pay to Landlord the purchase price specified by Tenant in the Tenant Casualty Termination Notice or such other purchase price as Landlord and Tenant may mutually agree, (ii) Landlord shall convey the Leased Property to Tenant or its designee on an AS IS WHERE IS basis, without any express or implied warranties from Landlord other than a limited warranty of title against Landlord’s own acts, provided , however , that such conveyance shall in any event be made by Landlord to Tenant or its designee free and clear of (A) all Permitted Landlord Liens, (B) any other Liens placed on the Leased Property by, through or under Landlord, and (C) any Other Recorded Documents executed by, through or under Landlord in violation of Section 3.2(a)(i) of this Lease, and (iii) Landlord will deliver to Tenant or its designee such conveyance and release documents, each in form and substance reasonably satisfactory to Tenant, as Tenant may reasonably request, to transfer the ownership of the Leased Property to Tenant free and clear of the Liens and other items described in subsections (A)-(C) above.

 

(f)                   Continuation of Lease if Landlord Rejects the Tenant Casualty Termination Notice .  If Landlord rejects or is deemed to have rejected the Tenant Casualty Termination Notice, such Tenant Casualty Termination Notice with respect to termination of the Lease and Tenant’s offer to purchase the Leased Property shall be deemed to be automatically rescinded and this Lease shall remain in full force and effect in accordance with its terms.

 

(g)                  No Waiver .  Upon each occurrence of a fire or other casualty for which Tenant has the right under this Section 15.1 to give a Tenant Casualty Termination Notice, Tenant shall be entitled to give a Tenant Casualty Termination Notice with respect to such fire or other casualty, even if (i) Tenant previously elected not to give such notice with respect to the occurrence of a prior fire or other casualty, or (ii) if prior Tenant Casualty Termination Notice(s) were rejected or deemed rejected by Landlord hereunder.

 

 

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15.2               Restoration Conditions .  Provided that this Lease has not been terminated pursuant to this Article XV , then Tenant’s Repair of the Leased Property shall be subject to the following requirements:

 

(a)                  Payment of Casualty Proceeds to Tenant .  All Casualty Proceeds shall be paid by the insurer to Tenant.

 

(b)                 Repair Costs in Excess of $2,000,000 .  If the cost of Repairs as a result of a casualty exceeds $2,000,000 with respect to such casualty, (A) Tenant shall provide to Landlord and Landlord Lender such reasonable documentation related to such Repairs as Landlord and Landlord Lender may reasonably request to confirm that such Repairs have been made in the manner required by this Lease, (B) if such Repairs have not been completed within ninety (90) days following the date of such casualty, Tenant shall pay to Landlord (or, if requested in writing by Landlord, to a Landlord Lender) the amount by which the total cost of such Repairs exceeds the sum of (i) $2,000,000 and (ii) the cost of the Repairs completed and paid by Tenant or its Affiliates as of such date, which amounts shall be held and disbursed by Landlord (or such Landlord Lender) to Tenant as such Repairs progress, and (C) Landlord (and, if requested in writing by Landlord, Landlord Lenders) will have the right to inspect the Leased Property during normal business hours and after prior reasonable written notice, with Tenant’s representative present and upon the condition that Landlord and, if applicable, Landlord Lenders comply with Tenant’s reasonable rules, including with respect to health, safety and security, (I) to inspect the damage, and (II) to confirm that such Repairs are being or have been made in the manner required by this Lease; provided , that no such inspection shall unreasonably interfere with the normal operation of the Leased Property or the business of Tenant or its Affiliates.

 

ARTICLE XVI

CONDEMNATION

 

16.1               Condemnation Damages and Awards .  Except to the extent Landlord may be required to make the same available to Tenant under this Article XVI and as otherwise set forth in this Article XVI , Tenant assigns to Landlord any and all rights it may have to any Taking Proceeds to be applied as described in this Article XVI and agrees to execute such instruments as may be requested by Landlord to evidence the assignment of such Taking Proceeds to Landlord.  Notwithstanding the foregoing, Tenant may make a separate claim for any damages payable for any of the Tenant Property, any other damages to Tenant for interruption to Tenant’s operations, or temporary loss of use of Tenant’s Property, or otherwise, or any damages for relocation (collectively, the “ Tenant Condemnation Proceeds ”), and none of such Tenant Condemnation Proceeds shall constitute Taking Proceeds.  Unless this Lease is terminated pursuant to this Article XVI in connection with a Taking, this Lease shall remain in effect, and the rights and obligations of Landlord and Tenant shall remain in effect without abatement.  Landlord and Tenant shall cooperate in good faith to maximize the Taking Proceeds (but without impairing Tenant’s claim for Tenant Condemnation Proceeds) consistent with the terms of this Lease.

 

 

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16.2              Apportionment of Award, Termination and Purchase Offer .

 

(a)                 General Taking Provisions .  If all or any part of the Leased Property is subject to a Taking during the Term, then Tenant shall give prompt notice of such event to Landlord and except as otherwise provided in this Article, Tenant shall, if applicable, at Tenant’s cost and expense, promptly thereafter Repair the Leased Property, or any such part thereof, to substantially the same condition it was in immediately prior to the Taking (subject to any changes to all or any such part of the Leased Property that Tenant intends to make to the extent permitted under this Lease).  Notwithstanding the foregoing or anything to the contrary in this Article XVI or otherwise, if this Lease is terminated under this Article XVI as a result of such Taking, (i) this Lease shall remain in effect following such Taking and Tenant waives the right to terminate this Lease pursuant to articles 2714 and 2715 of the Louisiana Civil Code and other Applicable Legal Requirements (ii) Tenant shall not be obligated to Repair the Leased Property after such Taking or to pay for such Repairs, and (iii) neither Landlord nor any other Landlord Indemnified Party shall have any claim against Tenant with respect to such Repairs of the Property or Losses arising from termination of this Lease or Tenant’s purchase of the Leased Property pursuant to this Section 16.2 .  Unless this Lease is terminated pursuant to this Section 16.2 in connection with such Taking, (A) this Lease shall remain in effect following such Taking and Tenant waives the right to terminate this Lease pursuant to articles 2714 and 2715 of the Louisiana Civil Code and other Applicable Legal Requirements, (B) the rights and obligations of Landlord and Tenant shall remain in effect without abatement, (C) all Base Rent shall continue unabated, and (D) all Tenant Condemnation Proceeds and, subject to Section 16.3 , below, Taking Proceeds recovered on account of such Taking shall be paid to Tenant.

 

(b)                  Lease Termination Option and Purchase Offer .  Notwithstanding the above, if as a result of the Taking, in Tenant’s good faith judgment, the Leased Property can no longer be profitably operated   or is no longer suitable for its intended use, then Tenant may, in lieu of Repairing the same, by written notice delivered to Landlord within sixty (60) days after such determination, either (i) propose to continue this Lease in effect, or (ii) propose to terminate this Lease and purchase the Leased Property for the purchase price specified by Tenant in such notice (any such written notice by Tenant electing under subsection (ii) to terminate this Lease and purchase the Leased Property shall be referred to as a “ Tenant Taking Termination Notice ”).  Tenant’s failure to deliver its Tenant Taking Termination Notice within such sixty (60) day period shall constitute Tenant’s election to continue the Lease in effect and to Repair the damaged or destroyed Leased Property as provided in subsection (i) of this Section 16.2(b) .

 

(c)                  Taking Response Notice .  If Tenant delivers its Tenant Taking Termination Notice to Landlord, then Landlord shall have a period of no more than fifteen (15) days in which to notify Tenant in writing of Landlord’s acceptance or rejection of the Tenant Taking Termination Notice (“ Taking Response Notice ”).  Landlord’s failure to provide its Taking Response Notice within such fifteen (15) day period shall be deemed a rejection of the Tenant Taking Termination Notice.

 

(d)                 Acceptance of Tenant Taking Termination Notice and Termination of Lease .  If Landlord accepts the Tenant Taking Termination Notice, (i) Tenant shall purchase the Leased Property from Landlord as provided in Section 16.2(e) on a date no later than sixty (60) days after Landlord’s Taking Response Notice and this Lease shall terminate on such date (the “ Taking Termination Date ”), (ii) except as provided in Sections 25.2, 25.3 and 25.4 , and the other terms and provisions of this Lease which survive termination, neither Landlord nor Tenant shall have any rights or obligations under this Lease arising from and after the Taking Termination Date, (iii) no further Base Rent or Additional Rent shall accrue with respect to the period after the Taking Termination Date, (iv) Tenant shall have no Repair obligations or payment obligations with respect to the Leased Property or this Lease subject to such Taking or damages caused thereby, (v) neither Landlord nor any other Landlord Indemnified Party shall have any claim against Tenant with respect to Repairs of the Leased Property or Losses arising from termination of this Lease or Tenant’s purchase of the Leased Property pursuant to this Section 16.2 , (vi) each Tenant Guarantor shall be released from liability and obligations under its Tenant Guaranty, and each Landlord Guarantor shall be released from liability and obligations under its Landlord Guaranty,  it being understood and agreed, however, that Tenant Guarantors and Landlord Guarantors shall remain liable with respect to matters or claims (x) arising or accruing prior to the Taking Termination Date and (y) in respect of obligations that survive the termination of this Lease, and (vii) all Taking Proceeds shall be paid to Tenant.

 

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