EXHIBIT ___
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FIRST AMENDMENT TO
LETTER OF CREDIT FACILITY AGREEMENT
among
NGC CORPORATION,
as the Borrower,
and
CANADIAN IMPERIAL BANK OF COMMERCE,
Individually and As Agent,
and
THE LENDERS NAMED THEREIN
Dated as of April 23, 1997
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FIRST AMENDMENT TO LETTER OF CREDIT FACILITY AGREEMENT
THIS FIRST AMENDMENT TO LETTER OF CREDIT FACILITY AGREEMENT (the
"Amendment"), dated as of April 23, 1997, is among NGC Corporation, a Delaware
corporation, as Borrower (the "Borrower"), the Lenders parties thereto and
Canadian Imperial Bank of Commerce, a Delaware corporation, as Agent. The
parties hereto agree as follows:
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the Borrower, the Lenders and the Agent have heretofore entered
into a certain Letter of Credit Facility Agreement, dated as of September 1,
1996 (herein called the "Letter of Credit Facility Agreement"); and
WHEREAS, the Borrower and NGC Acquisition Corporation II, a wholly-owned
subsidiary of the Borrower, ("NACII") have entered into that certain Agreement
and Plan of Merger dated as of February 17, 1997 (hereinafter the "Destec
Contract") with Destec Energy, Inc., ("Destec") and The Dow Chemical Company,
whereby at the closing of the transaction contemplated thereby (the "Destec
Transaction"), Borrower will acquire the stock of Destec and NACII shall be
merged with and into Destec; and
WHEREAS, the Borrower, the Lenders and the Agent now intend to amend the
Letter of Credit Facility Agreement in certain respects as hereinafter provided;
NOW, THEREFORE, in consideration of the premises and the mutual agreements
herein contained, the Borrower, the Lenders and the Agent hereby agree as
follows:
SECTION 1. Amendments to Letter of Credit Facility Agreement
A. The following definitions are added to Section 1.1 of the Letter of
Credit Facility Agreement in alphabetical order:
"AES" means The AES Corporation, a Delaware corporation.
"AES Contract" means the Asset Purchase Agreement dated February 17, 1997
between the Borrower and AES.
"AES Transaction" means the sale by Borrower of the International Assets
(as defined in the AES Contract) of Destec pursuant to the AES Contract.
"Destec" means Destec Energy, Inc., a Delaware corporation.
"Destec Contract" means the Agreement and Plan of Merger dated February 17,
1997 among NGC Acquisition Corporation II, the Borrower, Destec and The Dow
Chemical Company.
"Destec Transaction" means the Borrower's acquisition of the stock of
Destec and the merger of NGC Acquisition Corporation II with and into
Destec pursuant to the Destec Contract.
"Guarantor Discontinuance Test" means, with respect to any Subsidiary of
the Borrower, a Subsidiary which at the end of a calendar quarter has (i)
consolidated fixed assets plus net working capital with a book value of
less than $80,000,000 or (ii) 12% or less of the Consolidated EBITD for
such calendar quarter, as determined by the then most recent financial
statements provided pursuant to Section 6.1.1.
"Institutionally Targeted Capital Securities" means the capital securities
to be issued in an aggregate amount of up to $250,000,000 by a Delaware
business trust, the proceeds of which will be loaned to the Borrower or one
or more of its Subsidiaries all on terms substantially similar to the
Summary of Terms previously delivered to the Agent on March 13, 1997.
B. Clause (c) of the definition of "Consolidated EBITD" appearing in
Section 1.1 of the Letter of Credit Facility Agreement is amended to read in its
entirety as follows:
"(c) to the extent taken into account in calculating Consolidated Net
Income (excluding income taxes) referred to in clause (a) of this
definition, the aggregate amount of all costs and expenses incurred as a
result of the Destec Transaction, the Trident Merger and of the Midstream
Merger, respectively, including, without limitation, all prepayment
premiums payable on Debt required to be prepaid as a result of the
occurrence of the Trident Merger plus".
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C. The definition of "Debt" appearing in Section 1.1 of the Letter of
Credit Facility Agreement is amended by inserting at the end of such definition
before the period the following:
"; provided, that for purposes of the foregoing clauses (a), (b), (c) and
(d), Debt shall only include, in the case of the Borrower and its
Subsidiaries, only such obligations as are shown as a liability on a
consolidated balance sheet of the Borrower and its Subsidiaries in
accordance with Agreement Accounting Principles; provided further that the
Institutionally Targeted Capital Securities shall not constitute Debt."
D. Section 5.11 of the Letter of Credit Facility Agreement is amended by
adding the phrase "other than the purchase of margin stock from time to time in
connection with transactions (i) authorized by the board of directors of the
Borrower, (ii) either (A) authorized by the board of directors or other
governing body of the Person which stock is being acquired or (B) involving less
than 5% of the stock of any Person and (iii) which would not cause the Borrower
to fail to be in compliance with the following sentence" at the end of the
second sentence of that Section 5.11 after the word "stock".
E. Section 5.16 is amended to read in its entirety as follows:
"Public Utility Holding Company Act. Each of the Borrower and each of its
Subsidiaries is not subject to, or is exempt from, regulation as a "holding
company", a "subsidiary company" of a "holding company", or an "affiliate"
of a "holding company", in each case as such terms are defined in the
Public Utility Holding Company Act of 1935, as amended and the rules and
regulations thereunder."
F. Section 6.1.2 is amended by adding the phrase "other than purchases
which comply with the second sentence of Section 5.11" at the end of the last
sentence of such Section before the period.
G. Section 6.1.3 of the Letter of Credit Facility Agreement is amended by
inserting the following at the end of the last sentence before the period: ";
provided further that notwithstanding anything to the contrary in this Section
6.1.3, no Subsidiary of Destec shall be required to deliver a Guaranty
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pursuant to this Section 6.1.3 to the extent (i) it does not incur any Debt or
issue any Guaranty after the effective date of the Destec Transaction and (ii)
the eighteenth month anniversary of the effective date of the Destec Transaction
has not yet occurred; provided, that if within such eighteen month period a
Destec Subsidiary which has provided a Subsidiary Guaranty pursuant to this
Section 6.1.3 is (A) sold or otherwise transferred and ceases to be a Subsidiary
of the Borrower or (B) sells or transfers assets and as a result thereof is not
(after giving effect to such sales and transfers) a Subsidiary which would be
obligated to deliver a Subsidiary Guaranty under this Section 6.1.3, then so
long as no Default or Event of Default has occurred and is continuing, such
Subsidiary Guaranty shall be automatically released upon such sale or other
transfer in the case of the foregoing (A) or upon request of the Borrower in the
case of the foregoing (B). In addition, a Subsidiary Guaranty delivered by a
Guarantor pursuant to this Agreement may be released and terminated upon written
request of the Borrower provided that (A) such Guarantor as of the end of the
most recent calendar quarter prior to the quarter in which such request is made
satisfies the Guarantor Discontinuance Test, (B) at the time of such release no
Default or Event of Default shall have occurred and be continuing and (C) upon
the effectiveness of such termination all other Guaranties of such Subsidiary
with respect to any Debt of the Borrower (other than the Obligations) shall
concurrently terminate and be of no further force or effect. The Administrative
Agent is hereby authorized by each of the Lenders to provide to the Borrower on
behalf of the Lenders written confirmation of the release and termination of any
Guarantor pursuant to either of the two preceding sentences."
H. Section 6.1.4 of the Letter of Credit Facility Agreement is amended by
adding the phrase: "(after giving effect to the Destec Transaction)" after the
word "contemplated" in the third line.
I. Section 6.2.4 of the Letter of Credit Facility Agreement is amended by
amending clause (i) thereof to read in its entirety as follows: "(i) sales of
inventory, Natural Gas, electricity, crude oil, natural gas liquids and other
forms of energy in the ordinary course of business," and by inserting at the end
of such Section before the period the following:
"or;
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(ix) the AES Transaction; or
(x) the sale of any of Destec's assets or any of Destec's
Subsidiaries, in whole or in part, within 18 months of the effective date
of the Destec Transaction;"
J. Clauses (vi) and (vii) of Section 6.2.7 of the Letter of Credit
Facility Agreement are hereby amended to read in their entirety as follows:
"(vi) Guaranties of (A) Debt of the Borrower and its Subsidiaries
otherwise permitted pursuant to the terms of this Agreement, (B)
obligations of the Borrower and its Subsidiaries under leases that do not
constitute Capitalized Lease Obligations at the time such leases are
entered into, and (C) other obligations of the Borrower and its
Subsidiaries (other than (1) Guaranties of Debt of Persons other than the
Borrower and its Subsidiaries (2) Guaranties of obligations set forth in
agreements, undertakings or other arrangements by which the Borrower and
its Subsidiaries agree to maintain the net worth, working capital or any
other financial condition of any other Person, (3) Guaranties of the type
referred to in clause (a) of the definition of the term Guaranty and not
otherwise permitted by clause (iv) of this Section 6.2.7, and (4)
completion guaranties or similar assurances that a project performs as
planned) of a type normally incurred in the industry and incurred in the
ordinary course of business; and
(vii) to the extent not included above, Guaranties of other
obligations (including, without limitation, agreements containing
completion guaranties or similar assurances that a project performs as
planned and excluding Guaranties of the type referred to in clause (a) of
the definition of Guaranty not otherwise permitted by clause (iv) of this
Section 6.2.7) which obligations are otherwise permitted pursuant to the
terms of this Agreement not to exceed in the aggregate at any time the
greater of $150,000,000 or 5% of the Borrower's tangible assets on a
consolidated basis at such time."
K. Section 6.2.10 of the Letter of Credit Facility Agreement is amended
to read in its entirety as follows:
"The Borrower will not, and will not permit any Subsidiary of the Borrower
to, enter into any transaction (including, without limitation, the purchase
or sale of any Property or
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service) with, or make any payment or transfer to, any Affiliate (other
than the Borrower or any of its Subsidiaries and other than dividends to
shareholders of the Borrower) except upon terms no less favorable to the
Borrower or such Subsidiary than the Borrower or such Subsidiary would
obtain in a comparable arms-length transaction and except the transactions
and payments contemplated in and made pursuant to the Destec Contract or
the Trident Merger Agreement or the Midstream Merger Agreement and together
with, in each case, the other agreements attached as Exhibits thereto and
except transactions and payments between Destec and its Affiliates pursuant
to agreements in effect at the time of the completion of the Destec
Transaction."
L. Section 6.3.1 of the Letter of Credit Facility Agreement is amended by
inserting at the end of such Section before the period the following:
"; provided that for purposes of this Section 6.3.1, the Institutionally
Targeted Capital Securities will not constitute equity of the Borrower and
its Subsidiaries".
M. Section 6.3.2 of the Letter of Credit Facility Agreement is amended to
read in its entirety as follows:
"The Borrower will not permit its Leverage Ratio to exceed 60%; provided
that notwithstanding the foregoing, until the earlier of (i) the end of the
quarter which ends the quarter containing the date which is 18 months from
the effective date of the Destec Transaction, and (ii) the effective date
of the AES Transaction, the foregoing 60% shall be 65%; provided further
that for purposes of determining the Leverage Ratio for purposes of this
Section 6.3.2, the Institutionally Targeted Capital Securities are deemed
to be included in stockholders' equity."
N. Sections 7.10 and 7.11 of the Letter of Credit Facility Agreement are
amended to read in their entirety as follows:
"7.10 Any Subsidiary Guaranty shall fail to remain in full force or effect
or any action shall be taken to discontinue or to assert the invalidity or
unenforceability of any Subsidiary Guaranty, or any Guarantor shall fail to
comply with any of the terms or provisions of any Subsidiary Guaranty to
which it is a party, or any Guarantor denies that it has any further
liability under any Subsidiary Guaranty to which it
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is a party, or gives notice to such effect; provided, however, that no
termination of a Subsidiary Guaranty resulting from the merger of one
Subsidiary of the Borrower which has executed a Subsidiary Guaranty into
another Subsidiary of the Borrower which has executed a Subsidiary Guaranty
shall constitute a Default so long as the Subsidiary Guaranty of the
corporation surviving such merger remains in full force and effect and that
any release or termination of a Subsidiary Guaranty pursuant to Section
6.1.3 shall not constitute a Default.
7.11 Subsidiaries. The Borrower shall cease to own, directly or
indirectly, free and clear of Liens, at least the following percentage (or
such lesser percentage of such Person as was owned at the time such Person
reached either of the thresholds described in (i)(A) or (i)(B) below,
without giving effect to transfers made in contemplation of such Person's
reaching such threshold) of the issued and outstanding capital stock or
other equity of a Guarantor other than as a result of the merger of such
Guarantor into another Subsidiary of the Borrower or as a result of a
transfer that did not result in a Default under this Section 7.11 at the
time made: (i) 80% of a Guarantor at any time either (A) having fixed
assets and net working capital with a book value equal to or greater than
$100,000,000 or (B) contributing 15% or more of the Consolidated EBITD for
an entire calendar quarter or (ii) 51% of any Guarantor other than a
Guarantor referred to in the foregoing clause (i); provided, however that
the failure to own a Guarantor that has been released, or whose Subsidiary
Guaranty has been terminated, pursuant to Section 6.1.3 shall not
constitute a Default."
O. Section 8.2(v) of the Credit is amended by adding at the end thereof
before the period the phrase "other than the release pursuant to Section 6.1.3
of a Subsidiary Guaranty."
SECTION 2. To induce the Lenders and the Agent to enter into this
Amendment, the Borrower hereby reaffirms, as of the date hereof, its
representations and warranties contained in Article V of the Letter of Credit
Facility Agreement (except to the extent such representations and warranties
relate solely to an earlier date).
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SECTION 3. The effectiveness of (a) paragraphs G (other than the
provisions relating to Destec and the Destec Transaction), N, and O of this
Amendment is conditioned upon counterparts of this Amendment being executed by
the Borrower, each Lender and the Agent and (b) the remainder of this Amendment
is conditioned upon the foregoing and upon receipt by the Agent on or before
September 30, 1997 of each of the following, each in form and substance
reasonably satisfactory to the Agent:
(i) A certificate of the Secretary or an Assistant Secretary of
the Borrower with respect to the resolutions in full force and effect
authorizing the execution, delivery and performance of this Amendment and
with respect to the names of its Authorized Officers authorized to sign
this Amendment together with a sample of the true signature of each such
officer;
(ii) Favorable opinions of counsel to the Borrower including,
without limitation, opinions with respect to the due authorization,
execution and delivery of this Amendment and the legality, validity and
enforceability of this Amendment and the Letter of Credit Facility
Agreement as amended hereby; and
(iii) Such other documents as the Agent, any Lender or its counsel
shall have reasonably requested.
Notwithstanding the foregoing, the effectiveness of the provisions of this
Amendment relating to Destec, Destec's Subsidiaries, the Destec Transaction,
AES, the AES Contract, and the AES Transaction are conditioned upon the
foregoing and upon receipt by the Agent on or before September 30, 1997 of a
copy of the fully executed Destec Contract certified by an officer of Borrower
as being true, correct and complete together with a certificate of an officer of
Borrower to the effect that the conditions of closing set forth therein have
been satisfied.
SECTION 4. Upon the effectiveness hereof as provided in the foregoing
Section 3, this Amendment (or the portions thereof) shall be deemed to be an
amendment to the Letter of Credit Facility Agreement, and the Letter of Credit
Facility Agreement, as amended hereby, is hereby ratified, approved and
confirmed in each and every respect. All references to the Letter of Credit
Facility Agreement in any other document, instrument, agreement or writing
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shall hereafter be deemed to refer to the Letter of Credit Facility Agreement as
amended hereby.
SECTION 5. THIS AMENDMENT SHALL BE A CONTRACT GOVERNED BY THE INTERNAL
LAWS OF THE STATE OF ILLINOIS. All obligations of the Borrower and rights of
the Lenders and the Agent expressed herein shall be in addition to and not in
limitation of those provided by applicable law. Whenever possible each
provision of this Amendment shall be interpreted in such manner as to be
effective and valid under applicable law, but if any provision of this Amendment
shall be prohibited by or invalid under applicable law, such provision shall be
ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of this
Amendment.
SECTION 6. This Amendment may be executed in any number of counterparts,
all of which taken together shall constitute one and the same instrument, and
any party hereto may execute this Amendment by signing one or more counterparts.
SECTION 7. This Amendment shall be binding upon the Borrower and the
Lenders and the Agent and their respective successors and assigns, and shall
inure to the benefit of each of the Borrower, the Lenders and the Agent and the
successors and assigns of any of the Lenders and the Agent.
SECTION 8. EACH OF THE BORROWER, THE LENDERS AND THE AGENT HEREBY
KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHTS THEY MAY HAVE TO A
TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON, OR ARISING OUT OF,
UNDER, OR IN CONNECTION WITH, THIS AMENDMENT OR ANY LOAN DOCUMENT, OR ANY COURSE
OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS
OF ANY OF THE BORROWER, THE LENDERS OR THE AGENT. THE BORROWER ACKNOWLEDGES AND
AGREES THAT IT HAS RECEIVED FULL AND SUFFICIENT CONSIDERATION FOR THIS PROVISION
(AND EACH OTHER PROVISION OF EACH OTHER LOAN DOCUMENT TO WHICH IT IS A PARTY)
AND THAT THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE LENDER ENTERING INTO
THIS AMENDMENT.
SECTION 9. THE BORROWER HEREBY IRREVOCABLY SUBMITS TO THE NON-EXCLUSIVE
JURISDICTION OF ANY UNITED STATES FEDERAL OR ILLINOIS STATE COURT SITTING IN
CHICAGO IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO ANY LOAN
DOCUMENTS AND THE BORROWER HEREBY IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT
OF SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN ANY SUCH COURT AND
IRREVOCABLY WAIVES ANY OBJECTION IT MAY NOW OR HEREAFTER HAVE AS TO THE VENUE OF
ANY SUCH SUIT, ACTION OR
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PROCEEDING BROUGHT IN SUCH A COURT OR THAT SUCH COURT IS AN INCONVENIENT FORUM.
NOTHING HEREIN SHALL LIMIT THE RIGHT OF THE AGENT OR ANY LENDER TO BRING
PROCEEDINGS AGAINST THE BORROWER IN THE COURTS OF ANY OTHER JURISDICTION.
IN WITNESS WHEREOF, the Borrower, the Lenders and the Agent have executed
this Agreement as of the date first above written.
NGC CORPORATION
By:___________________________________
Print Name:___________________________
Title:________________________________
CANADIAN IMPERIAL BANK OF COMMERCE
individually and as Agent
By:_______________________________
Its:______________________________
ABN AMRO BANK, N.V.
By:_______________________________
Print Name:_______________________
Title:____________________________
By:_______________________________
Print Name:_______________________
Title:____________________________
THE FIRST NATIONAL BANK OF BOSTON
By:_______________________________
Print Name:_______________________
Title:____________________________
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CREDIT LYONNAIS NEW YORK BRANCH
By:_______________________________
Print Name:_______________________
Title:____________________________
THE FIRST NATIONAL BANK OF CHICAGO
By:_______________________________
Print Name:_______________________
Title:____________________________
MELLON BANK, N.A. (WEST)
By:_______________________________
Print Name:_______________________
Title:____________________________
BANK OF MONTREAL
By:_______________________________
Print Name:_______________________
Title:____________________________
THE BANK OF NOVA SCOTIA
By:_______________________________
Print Name:_______________________
Title:____________________________
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THE CHASE MANHATTAN BANK (successor
by merger to The Chase Manhattan Bank
National Association)
By:_______________________________
Print Name:_______________________
Title:____________________________
NATIONSBANK OF TEXAS, N.A.
By:_______________________________
Print Name:_______________________
Title:____________________________
ROYAL BANK OF CANADA
By:_______________________________
Print Name:_______________________
Title:____________________________
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