CREDIT AGREEMENT
Dated as of February 14, 1997
Among
XXXXXX XXXXXX, INC.
as Borrower,
FIRST UNION NATIONAL BANK OF NORTH CAROLINA,
as Agent,
and
THE LENDERS SIGNATORY HERETO
TABLE OF CONTENTS
Page
ARTICLE I
Definitions and Accounting Matters
Section 1.01 Terms Defined Above................1
Section 1.02 Certain Defined Terms..............1
Section 1.03 Accounting Terms and
Determinations...................16
ARTICLE II
Commitments
Section 2.01 The Facilities....................16
Section 2.02 Borrowings, Continuations,
Conversions, Letters of Credit....17
Section 2.03 Changes of Facility A
Commitments.......................19
Section 2.04 Fees..............................19
Section 2.05 Several Obligations...............21
Section 2.06 Notes.............................21
Section 2.07 Prepayments.......................22
Section 2.08 Assumption of Risks...............22
Section 2.09 Obligation to Reimburse and to
Prepay............................23
Section 2.10 Lending Offices...................25
ARTICLE III
Payments of Principal and Interest
Section 3.01 Repayment of Loans................25
Section 3.02 Interest..........................25
ARTICLE IV
Payments; Pro Rata Treatment; Computations; Etc.
Section 4.01 Payments..........................26
Section 4.02 Pro Rata Treatment................26
Section 4.03 Computations......................27
Section 4.04 Non-receipt of Funds by the
Agent..... .......................27
Section 4.05 Set-off, Sharing of Payments,
Etc...............................27
Section 4.06 Taxes.............................28
ARTICLE V
Capital Adequacy
Section 5.01 Additional Costs..................31
Section 5.02 Limitation on LIBOR Loans.........33
Section 5.03 Illegality........................34
Section 5.04 Base Rate Loans Pursuant to
Sections 5.01, 5.02 and 5.03......34
Section 5.05 Compensation......................34
ARTICLE VI
Conditions Precedent
Section 6.01 Initial Funding...................35
Section 6.02 Initial and Subsequent Loans
and Letters of Credit.............36
Section 6.03 Conditions Relating to Letters
of Credit.........................37
Section 6.04 Conditions Relating to
Distribution LC...................37
ARTICLE VII
Representations and Warranties
Section 7.01 Corporate Existence...............38
Section 7.02 Financial Condition...............38
Section 7.03 Litigation........................38
Section 7.04 No Breach.........................39
Section 7.05 Authority.........................39
Section 7.06 Approvals.........................39
Section 7.07 Use of Facilities.................39
Section 7.08 ERISA.............................39
Section 7.09 Taxes.............................41
Section 7.10 Titles, etc.......................41
Section 7.11 No Material Misstatements.........41
Section 7.12 Investment Company Act............42
Section 7.13 Public Utility Holding
Company Act.......................42
Section 7.14 Subsidiaries......................42
Section 7.15 Location of Business and
Offices...........................42
Section 7.16 Defaults..........................42
Section 7.17 Environmental Matters.............42
Section 7.18 Compliance with the Law...........43
Section 7.19 Insurance.........................44
Section 7.20 Hedging Agreements................44
Section 7.21 Restriction on Liens..............44
Section 7.22 Kinder Xxxxxx X.X. Assets.........44
-ii-
Section 7.23 LP Units..........................44
Section 7.24 Acquisition Documents.............45
ARTICLE VIII
Affirmative Covenants
Section 8.01 Financial Statements..............45
Section 8.02 Litigation........................47
Section 8.03 Maintenance, Etc..................47
Section 8.04 Environmental Matters.............48
Section 8.05 Further Assurances................48
Section 8.06 Performance of Obligations........48
Section 8.07 ERISA Information and
Compliance........................49
Section 8.08 Collateral........................49
Section 8.09 Minimum Distribution..............49
ARTICLE IX
Negative Covenants
Section 9.01 Debt..............................50
Section 9.02 Liens.............................50
Section 9.03 Investments, Loans and Advances...51
Section 9.04 Dividends, Distributions and
Redemptions.......................51
Section 9.05 Sales and Leasebacks..............52
Section 9.06 Nature of Business................52
Section 9.07 Limitation on Leases..............52
Section 9.08 Mergers, Etc......................52
Section 9.09 Proceeds of Notes.................52
Section 9.10 ERISA Compliance..................52
Section 9.11 Sale or Discount of Receivables...54
Section 9.12 Current Ratio.....................54
Section 9.13 Debt Service Coverage Ratio.......54
Section 9.14 Margin Maintenance Ratio..........54
Section 9.15 Sale of Properties................54
Section 9.16 Environmental Matters.............54
Section 9.17 Transactions with Affiliates......55
Section 9.18 Subsidiaries......................55
Section 9.19 Negative Pledge Agreements........55
-iii-
ARTICLE X
Events of Default; Remedies
Section 10.01 Events of Default................55
Section 10.02 Remedies.........................57
ARTICLE XI
The Agent
Section 11.01 Appointment, Powers and
Immunities.......................58
Section 11.02 Reliance by Agent................59
Section 11.03 Defaults.........................59
Section 11.04 Rights as a Lender...............59
Section 11.05 Indemnification..................59
Section 11.06 Non-Reliance on Agent and
other Lenders....................60
Section 11.07 Action by Agent..................60
Section 11.08 Resignation or Removal of
Agent............................61
ARTICLE XII
Miscellaneous
Section 12.01 Waiver...........................61
Section 12.02 Notices..........................61
Section 12.03 Payment of Expenses,
Indemnities, etc.................62
Section 12.04 Amendments, Etc..................64
Section 12.05 Successors and Assigns...........64
Section 12.06 Assignments and Participations...65
Section 12.07 Invalidity.......................66
Section 12.08 Counterparts.....................66
Section 12.09 References.......................66
Section 12.10 Survival.........................67
Section 12.11 Captions.........................67
Section 12.12 No Oral Agreements...............67
Section 12.13 Governing Law; Submission to
Jurisdiction.....................67
Section 12.14 Interest.........................68
Section 12.15 Confidentiality..................69
Section 12.16 Effectiveness....................70
Section 12.17 Exculpation provisions...........70
-iv-
Annex I - List of Commitments
Exhibit A-1 - Form of Facility A Note
Exhibit A-2 - Form of Facility B Note
Exhibit A-3 - Form of Facility C Note
Exhibit B - Form of Borrowing, Continuation and Conversion Request
Exhibit C - Form of Compliance Certificate
Exhibit D - Form of Legal Opinion of Xxxxxxxx & Xxxxxx, L.L.P.
Exhibit E - List of Security Instruments
Exhibit F - Form of Assignment Agreement
Exhibit G - Form of Distribution LC
Schedule 7.02 - Liabilities
Schedule 7.03 - Litigation
Schedule 7.09 - Taxes
Schedule 7.10 - Titles, etc.
Schedule 7.14 - Subsidiaries and Partnerships
Schedule 7.17 - Environmental Matters
Schedule 7.19 - Insurance
Schedule 7.20 - Hedging Agreements
Schedule 7.21 - Restrictions on Liens
Schedule 7.24 - Acquisition Documents
Schedule 9.01 - Debt
Schedule 9.02 - Liens
Schedule 9.03 - Investments, Loans and Advances
-v-
THIS CREDIT AGREEMENT dated as of February 14, 1997 is among: XXXXXX
XXXXXX, INC., a corporation formed under the laws of the State of Delaware (the
"Borrower"); each of the lenders that is a signatory hereto or which becomes a
signatory hereto as provided in Section 12.06 (individually, together with its
successors and assigns, a "Lender" and, collectively, the "Lenders"); and FIRST
UNION NATIONAL BANK OF NORTH CAROLINA, a national banking association (in its
individual capacity, "First Union"), as agent for the Lenders (in such capacity,
together with its successors in such capacity, the "Agent").
R E C I T A L S
A. The Borrower has requested that the Lenders
provide certain loans to and extensions of credit on
behalf of the Borrower; and
B. The Lenders have agreed to make such loans and
extensions of credit subject to the terms and conditions
of this Agreement.
C. In consideration of the mutual covenants and
agreements herein contained and of the loans, extensions
of credit and commitments hereinafter referred to, the
parties hereto agree as follows:
ARTICLE I
Definitions and Accounting Matters
Section 1.01 Terms Defined Above. As used in this Agreement, the terms
"Agent," "Borrower," "First Union," "Lender" and "Lenders" shall have the
meanings indicated above.
Section 1.02 Certain Defined Terms. As used herein, the following terms
shall have the following meanings (all terms defined in this Article I or in
other provisions of this Agreement in the singular to have the same meanings
when used in the plural and vice versa):
"Acquisition" shall mean the acquisition by
the Borrower of all of the common stock of Enron
Liquids Pipeline Company pursuant to the
Purchase Agreement.
"Acquisition Documents" shall mean the Purchase Agreement and all other
documents executed in connection with the Acquisition.
"Additional Costs" shall have the meaning assigned such term in Section
5.01(a).
"Affected Loans" shall have the meaning
assigned such term in Section 5.04.
"Affiliate" of any Person shall mean (i) any Person directly or
indirectly controlled by, controlling or under common control with such
first Person, (ii)
any director or officer of such first Person or of any Person referred to
in clause (i) above and (iii) if any Person in clause (i) above is an
individual, any member of the immediate family (including parents, spouse
and children) of such individual and any trust whose principal beneficiary
is such individual or one or more members of such immediate family and any
Person who is controlled by any such member or trust. For purposes of this
definition, any Person which owns directly or indirectly 25% or more of the
securities having ordinary voting power for the election of directors or
other governing body of a corporation or 25% or more of the partnership or
other ownership interests of any other Person (other than as a limited
partner of such other Person) will be deemed to "control" (including, with
its correlative meanings, "controlled by" and "under common control with")
such corporation or other Person.
"Agreement" shall mean this Credit Agreement, as the same may from time
to time be amended or supplemented.
"Aggregate Commitments" at any time shall equal the sum of the
Aggregate Facility A Commitments, the Aggregate Facility B Commitments and
the Aggregate Facility C Commitments.
"Aggregate Facility A Commitments" at any time shall equal $10,000,000
as reduced or terminated as provided in accordance with Section 2.03
hereof.
"Aggregate Facility B Commitments" at any time shall equal the sum of
the Facility B Commitments of the Lenders.
"Aggregate Facility C Commitments" at any time shall equal the sum of
the Facility C Commitments of the Lenders in the aggregate amount of
$5,000,000.
"Applicable Lending Office" shall mean, for each Lender and for each
Type of Loan, the lending office of such Lender (or an Affiliate of such
Lender) designated for such Type of Loan on the signature pages hereof or
such other offices of such Lender (or of an Affiliate of such Lender) as
such Lender may from time to time specify to the Agent and the Borrower as
the office by which its Loans of such Type are to be made and maintained.
"Applicable Margin" shall mean (i) 1/2 of 1% per annum with respect to
Base Rate Loans; and (ii) 2.50% per annum with respect to LIBOR Loans.
"Assignment" shall have the meaning assigned
such term in Section 12.06(b).
"Base Rate" shall mean, with respect to any Base Rate Loan, for any
day, the higher of (i) the Federal Funds Rate for any such day plus 1/2 of
1% or (ii)
-2-
the Prime Rate for such day. Each change in any interest rate provided for
herein based upon the Base Rate resulting from a change in the Base Rate
shall take effect at the time of such change in the Base Rate.
"Base Rate Loans" shall mean Loans that bear interest at rates based
upon the Base Rate.
"Business Day" shall mean any day other than a day on which commercial
banks are authorized or required to close in Charlotte, North Carolina and,
where such term is used in the definition of "Quarterly Date" or if such
day relates to a borrowing or continuation of, a payment or prepayment of
principal of or interest on, or a conversion of or into, or the Interest
Period for, a LIBOR Loan or a notice by the Borrower with respect to any
such borrowing or continuation, payment, prepayment, conversion or Interest
Period, any day which is also a day on which dealings in Dollar deposits
are carried out in the London interbank market.
"Cash Flow" for the Borrower shall equal the cumulative amount of
dividends received from Kinder Xxxxxx X.X. for the period of calculation
less all cash expenditures for such period.
"Cash Flow After Debt Service" for the Borrower shall equal the
cumulative amount of dividends received from Kinder Xxxxxx X.X. for the
period of calculation less all cash expenditures and payments of principal,
interest and other amounts in respect of the Indebtedness for such period.
"Closing Date" shall mean February 14, 1997.
"Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time and any successor statute.
"Collateral" shall mean the Property owned by the Borrower which is
subject to the Liens existing and to exist under the terms of the Security
Instruments.
"Commitments" shall mean, for any Lender, its Facility A Commitment,
its Facility B Commitment and its Facility C Commitment.
"Consolidated Net Income" shall mean with respect to the Borrower and
its Consolidated Subsidiaries, for any period, the aggregate of the net
income (or loss) of the Borrower and its Consolidated Subsidiaries after
allowances for taxes for such period, determined on a consolidated basis in
accordance with GAAP; provided that there shall be excluded from such net
income (to the extent otherwise included therein) the following: (i) the
net income of any Person in
-3-
which the Borrower or any Consolidated Subsidiary has an interest (which
interest does not cause the net income of such other Person to be
consolidated with thenet income of the Borrower and its Consolidated
Subsidiaries in accordance with GAAP), except to the extent of the amount
of dividends or distributions actually paid in such period by such other
Person to the Borrower or to a Consolidated Subsidiary, as the case may be;
(ii) the net income (but not loss) of any Consolidated Subsidiary to the
extent that the declaration or payment of dividends or similar
distributions or transfers or loans by that Consolidated Subsidiary is not
at the time permitted by operation of the terms of its charter or any
agreement, instrument or Governmental Requirement applicable to such
Consolidated Subsidiary, or is otherwise restricted or prohibited in each
case determined in accordance with GAAP; (iii) the net income (or loss) of
any Person acquired in a pooling-of-interests transaction for any period
prior to the date of such transaction; (iv) any extraordinary gains or
losses, including gains or losses attributable to Property sales not in the
ordinary course of business; and (v) the cumulative effect of a change in
accounting principles and any gains or losses attributable to writeups or
writedowns of assets.
"Consolidated Subsidiaries" shall mean each Subsidiary of the Borrower
(whether now existing or hereafter created or acquired) the financial
statements of which shall be (or should have been) consolidated with the
financial statements of the Borrower in accordance with GAAP.
"Debt" shall mean, for any Person the sum of the following (without
duplication): (i) all obligations of such Person for borrowed money or
evidenced by bonds, debentures, notes or other similar instruments
(including principal, interest, fees and charges); (ii) all obligations of
such Person (whether contingent or otherwise) in respect of bankers'
acceptances, letters of credit, surety or other bonds and similar
instruments; (iii) all obligations of such Person to pay the deferred
purchase price of Property or services (other than for borrowed money);
(iv) all obligations under leases which shall have been, or should have
been, in accordance with GAAP, recorded as capital leases in respect of
which such Person is liable (whether contingent or otherwise); (v) all
obligations under leases which require such Person or its Affiliate to make
payments over the term of such lease, including payments at termination,
which are substantially equal to at least eighty percent (80%) of the
purchase price of the Property subject to such lease plus interest as an
imputed rate of interest; (vi) all Debt (as described in the other clauses
of this definition) and other obligations of others secured by a Lien on
any asset of such Person, whether or not such Debt is assumed by such
Person; (vii) all Debt (as described in the other clauses of this
definition) and other obligations of others guaranteed by such Person or in
which such Person otherwise assures a creditor against loss of the debtor
or obligations of others; (viii) all obligations or undertakings of such
Person to maintain or cause to be maintained the financial position or
covenants of others or to purchase the Debt or Property of others; (ix)
obligations to deliver goods or services in consideration of advance
payments;
-4-
(x) obligations to pay for goods or services whether or not such goods or
services are actually received or utilized by such Person; (xi) any capital
stock of such Person in which such Person has a mandatory obligation to
redeem such stock; (xii) any Debt of a Special Entity for which such Person
is liable either by agreement or because of a Governmental Requirement; and
(xiv) all obligations of such Person under Hedging Agreements.
"Default" shall mean an Event of Default or an event which with notice
or lapse of time or both would become an Event of Default.
"Distribution LC" shall mean that certain $10,851,096 letter of credit
in the form of Exhibit G issued to support Enron's obligations with respect
to the minimum quarterly distribution payable to the public unitholders of
Xxxxxx Xxxxxx Energy.
"Dollars" and "$" shall mean lawful money of
the United States of America.
"EBITDA" shall mean, for any period, the sum of Consolidated Net Income
for such period plus the following expenses or charges to the extent
deducted from Consolidated Net Income in such period: interest, taxes,
depreciation, depletion and amortization; minus all non cash income added
to Consolidated Net Income in such period.
"Effective Date" shall have the meaning assigned such term in Section
12.16.
"Enron" shall mean Enron Corp., a Delaware
corporation.
"Environmental Laws" shall mean any and all Governmental Requirements
pertaining to health or the environment in effect in any and all
jurisdictions in which the Borrower or any Subsidiary is conducting or at
any time has conducted business, or where any Property of the Borrower or
any Subsidiary is located, including without limitation, the Oil Pollution
Act of 1990 ("OPA"), the Clean Air Act, as amended, the Comprehensive
Environmental, Response, Compensation, and Liability Act of 1980
("CERCLA"), as amended, the Federal Water Pollution Control Act, as
amended, the Occupational Safety and Health Act of 1970, as amended, the
Resource Conservation and Recovery Act of 1976 ("RCRA"), as amended, the
Safe Drinking Water Act, as amended, the Toxic Substances Control Act, as
amended, the Superfund Amendments and Reauthorization Act of 1986, as
amended, the Hazardous Materials Transportation Act, as amended, and other
environmental conservation or protection laws. The term "oil" shall have
the meaning specified in OPA, the terms "hazardous substance" and "release"
(or "threatened release") have the meanings specified in CERCLA, and the
terms "solid waste" and "disposal" (or "disposed") have the
-5-
meanings specified in RCRA; provided, however, that (i) in the event either
OPA, CERCLA or RCRA is amended so as to broaden the meaning of any term
defined thereby, such broader meaning shall apply subsequent to the
effective date of such amendment and (ii) to the extent the laws of the
state in which any Property of the Borrower or any Subsidiary is located
establish a meaning for "oil," "hazardous substance," "release," "solid
waste" or "disposal" which is broader than that specified in either OPA,
CERCLA or RCRA, such broader meaning shall apply.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended from time to time and any successor statute.
"ERISA Affiliate" shall mean each trade or business (whether or not
incorporated) which together with the Borrower or any Subsidiary would be
deemed to be a "single employer" within the meaning of section 4001(b)(1)
of ERISA or subsections (b), (c), (m) or (o) of section 414 of the Code.
"ERISA Event" shall mean (i) a "Reportable Event" described in Section
4043 of ERISA and the regulations issued thereunder, (ii) the withdrawal of
the Borrower, any Subsidiary or any ERISA Affiliate from a Plan during a
plan year in which it was a "substantial employer" as defined in Section
4001(a)(2) of ERISA, (iii) the filing of a notice of intent to terminate a
Plan or the treatment of a Plan amendment as a termination under Section
4041 of ERISA, (iv) the institution of proceedings to terminate a Plan by
the PBGC or (v) any other event or condition which might constitute grounds
under Section 4042 of ERISA for the termination of, or the appointment of a
trustee to administer, any Plan.
"Event of Default" shall have the meaning assigned such term in Section
10.01.
"Excepted Liens" shall mean: (i) Liens for taxes, assessments or other
governmental charges or levies not yet due or which are being contested in
good faith by appropriate action and for which adequate reserves have been
maintained; (ii) Liens in connection with workmen's compensation,
unemployment insurance or other social security, old age pension or public
liability obligations not yet due or which are being contested in good
faith by appropriate action and for which adequate reserves have been
maintained in accordance with GAAP; (iii) operators', vendors', carriers',
warehousemen's, repairmen's, mechanics', workmen's, materialmen's,
construction or other like Liens arising by operation of law in the
ordinary course of business or statutory landlord's liens, each of which is
in respect of obligations that have not been outstanding more than 90 days
or which are being contested in good faith by appropriate proceedings and
for which adequate reserves have been maintained in accordance with GAAP;
(iv) any Liens reserved in leases or farmout agreements for rent or
royalties and for compliance with the terms of the farmout agreements or
leases in the case of
-6-
leasehold estates, to the extent that any such Lien referred to in this
clause does not materially impair the use of the Property covered by such
Lien for the purposes for which such Property is held by the Borrower or
any Subsidiary or materially impair the value of such Property subject
thereto; (v) encumbrances (other than to secure the payment of borrowed
money or the deferred purchase price of Property or services), easements,
restrictions, servitudes, permits, conditions, covenants, exceptions or
reservations in any rights of way or other Property of the Borrower or any
Subsidiary for the purpose of roads, pipelines, transmission lines,
transportation lines, distribution lines for the removal of gas, oil, coal
or other minerals or timber, and other like purposes, or for the joint or
common use of real estate, rights of way, facilities and equipment, and
defects, irregularities, zoning restrictions and deficiencies in title of
any rights of way or other Property which in the aggregate do not
materially impair the use of such rights of way or other Property for the
purposes of which such rights of way and other Property are held by the
Borrower or any Subsidiary or materially impair the value of such Property
subject thereto; (vi) deposits of cash or securities to secure the
performance of bids, trade contracts, leases, statutory obligations and
other obligations of a like nature incurred in the ordinary course of
business; and (vii) Liens permitted by the Security Instruments.
"Facilities" shall mean Facility A, Facility
B and Facility C.
"Facility A" shall mean the credit extended to the Borrower by the
Lenders pursuant to Section 2.01(a).
"Facility A Commitment" shall mean, as to each Lender under Facility A,
the amount set forth opposite such Lender's name on Annex I under the
caption "Facility A Commitment" (as the same may be reduced pursuant to
Section 2.03 hereof pro rata to each Lender based on its Percentage Share)
as modified from time to time to reflect any assignments permitted by
Section 12.06(b).
"Facility A Loans" shall mean Loans made pursuant to Section 2.01(a)(i)
hereof.
"Facility A Notes" shall mean the promissory note or notes (whether one
or more) of the Borrower described in Section 2.06 hereof and being in the
form of Exhibit A-1 hereto.
"Facility A Termination Date" shall mean
August 31, 1999.
"Facility B" shall mean the credit extended to the Borrower by First
Union pursuant to Section 2.01(b).
-7-
"Facility B Commitment" shall mean, for any Lender, its obligation to
participate in the Distribution LC up to its Percentage Share of the
original face amount of the Distribution LC.
"Facility B Loans" shall mean Loans made pursuant to Section 2.01(b)
hereof.
"Facility B Note" shall mean the promissory note of the Borrower
described in Section 2.06 hereof and being in the form of Exhibit A-2
hereto.
"Facility C" shall mean the credit extended to the Borrower by the
Lenders pursuant to Section 2.01(c).
"Facility C Commitment" shall mean, for any Lender, its obligation to
make Loans up to its Percentage Share as provided in Section 2.01(c).
"Facility C Loans" shall mean Loans made pursuant to Section 2.01(c)
hereof.
"Facility C Notes" shall mean the promissory note or notes (whether one
or more) of the Borrower described in Section 2.06 hereof and being in the
form of Exhibit A-3 hereto.
"Federal Funds Rate" shall mean, for any day, the rate per annum
(rounded upwards, if necessary, to the nearest 1/100 of 1%) equal to the
weighted average of the rates on overnight federal funds transactions with
a member of the Federal Reserve System arranged by federal funds brokers on
such day, as published by the Federal Reserve Bank of New York on the
Business Day next succeeding such day, provided that (i) if the date for
which such rate is to be determined is not a Business Day, the Federal
Funds Rate for such day shall be such rate on such transactions on the next
preceding Business Day as so published on the next succeeding Business Day,
and (ii) if such rate is not so published for any day, the Federal Funds
Rate for such day shall be the average rate charged to the Agent on such
day on such transactions as determined by the Agent.
"Fee Letter" shall mean that certain letter agreement from First Union
Corporation to the Borrower and agreed to by First Union dated of even date
with this Agreement concerning certain fees in connection with this
Agreement and any agreements or instruments executed in connection
therewith, as the same may be amended or replaced from time to time.
"Financial Statements" shall mean the financial statement or statements
of the Borrower and its Consolidated Subsidiaries described or referred to
in Section 7.02.
-8-
"First Union Corporation" shall mean First
Union Corporation of North Carolina, a North
Carolina corporation.
"Funded Debt" shall mean all outstanding Loans under the Facilities A
and B and the LC Exposure.
"GAAP" shall mean generally accepted accounting principles in the
United States of America in effect from time to time.
"Governmental Authority" shall include the country, the state, county,
city and political subdivisions in which any Person or such Person's
Property is located or which exercises valid jurisdiction over any such
Person or such Person's Property, and any court, agency, department,
commission, board, bureau or instrumentality of any of them including
monetary authorities which exercises valid jurisdiction over any such
Person or such Person's Property. Unless otherwise specified, all
references to Governmental Authority herein shall mean a Governmental
Authority having jurisdiction over, where applicable, the Borrower, its
Subsidiaries or any of their Property or the Agent, any Lender or any
Applicable Lending Office.
"Governmental Requirement" shall mean any law, statute, code,
ordinance, order, determination, rule, regulation, judgment, decree,
injunction, franchise, permit, certificate, license, authorization or other
directive or requirement (whether or not having the force of law),
including, without limitation, Environmental Laws, energy regulations and
occupational, safety and health standards or controls, of any Governmental
Authority.
"Hedging Agreements" shall mean any commodity, interest rate or
currency swap, cap, floor, collar, forward agreement or other exchange or
protection agreements or any option with respect to any such transaction.
"Highest Lawful Rate" shall mean, with respect to each Lender, the
maximum nonusurious interest rate, if any, that at any time or from time to
time may be contracted for, taken, reserved, charged or received on the
Notes or on other Indebtedness under laws applicable to such Lender which
are presently in effect or, to the extent allowed by law, under such
applicable laws which may hereafter be in effect and which allow a higher
maximum nonusurious interest rate than applicable laws now allow.
"Indebtedness" shall mean any and all amounts owing or to be owing by
the Borrower to First Union, the Agent and/or Lenders in connection with
the Loan Documents, the Letter of Credit Agreements, and any Hedging
Agreements now or hereafter arising between the Borrower and First Union or
any Lender and permitted by the terms of this Agreement and all renewals,
extensions and/or rearrangements of any of the above.
-9-
"Indemnified Parties" shall have the meaning assigned such term in
Section 12.03(b).
"Indemnity Matters" shall mean any and all actions, suits, proceedings
(including any investigations, litigation or inquiries), claims, demands
and causes of action made or threatened against a Person and, in connection
therewith, all losses, liabilities, damages (including, without limitation,
consequential damages) or reasonable costs and expenses of any kind or
nature whatsoever incurred by such Person whether caused by the sole or
concurrent negligence of such Person seeking indemnification.
"Initial Funding" shall mean the funding of the initial Loans or
issuance of the Distribution LC and the initial Letters of Credit pursuant
to Section 6.01 hereof.
"Interest Period" shall mean, with respect to any LIBOR Loan, the
period commencing on the date such LIBOR Loan is made and ending on the
numerically corresponding day in the first, second, third or sixth calendar
month thereafter, as the Borrower may select as provided in Section 2.02
(or such longer period as may be requested by the Borrower and agreed to by
the Majority Lenders), except that each Interest Period which commences on
the last Business Day of a calendar month (or on any day for which there is
no numerically corresponding day in the appropriate subsequent calendar
month) shall end on the last Business Day of the appropriate subsequent
calendar month.
Notwithstanding the foregoing: (i) no Interest Period may commence
before and end after the Facility A Termination Date; (ii) no Interest
Period for any LIBOR Loan may end after the due date of any installment, if
any, provided for in Section 3.01 hereof to the extent that such LIBOR Loan
would need to be prepaid prior to the end of such Interest Period in order
for such installment to be paid when due; (iii) each Interest Period which
would otherwise end on a day which is not a Business Day shall end on the
next succeeding Business Day (or, if such next succeeding Business Day
falls in the next succeeding calendar month, on the next preceding Business
Day); and (iv) no Interest Period shall have a duration of less than one
month and, if the Interest Period for any LIBOR Loans would otherwise be
for a shorter period, such Loans shall not be available hereunder.
"Xxxxxx Xxxxxx Energy" shall mean Xxxxxx
Xxxxxx Energy Partners, L.P., a Delaware limited
partnership.
"Kinder Xxxxxx X.X." shall mean Kinder Xxxxxx X.X., Inc., a Delaware
corporation.
-10-
"Xxxxxx Xxxxxx Operating A" shall mean
Xxxxxx Xxxxxx Operating L.P. "A", a Delaware
limited partnership.
"Xxxxxx Xxxxxx Operating B" shall mean
Xxxxxx Xxxxxx Operating L.P. "B", a Delaware
limited partnership.
"LC Commitment" at any time shall mean
$1,000,000.
"LC Exposure" at any time shall mean the aggregate face amount of all
undrawn and uncancelled Letters of Credit and the aggregate of all amounts
drawn under all Letters of Credit and not yet reimbursed.
"Letter of Credit Agreements" shall mean the written agreements with
the Agent, as issuing lender for any Letter of Credit or the Distribution
LC, executed or hereafter executed in connection with the issuance by the
Agent of the Letters of Credit and the Distribution LC, such agreements to
be on the Agent's customary form for letters of credit of comparable amount
and purpose as from time to time in effect or as otherwise agreed to by the
Borrower and the Agent.
"Letters of Credit" shall mean the letters of credit issued under
Facility A and all reimbursement obligations pertaining to any such letters
of credit, and "Letter of Credit" shall mean any one of the Letters of
Credit and the reimbursement obligations pertaining thereto.
"LIBOR" shall mean the rate of interest determined on the basis of the
rate for deposits in Dollars for a period equal to the applicable Interest
Period commencing on the first day of such Interest Period appearing on
Telerate Page 3750 as of 11:00 a.m. (London time) two (2) Business Days
prior to the first day of the applicable Interest Period. In the event that
such rate does not appear on Telerate Page 3750, "LIBOR" shall be
determined by the Agent to be the rate per annum at which deposits in
Dollars are offered by leading reference banks in the London interbank
market to First Union at approximately 11:00 a.m. (London time) two
Business Days prior to the first day of the applicable Interest Period for
a period equal to such Interest Period and in an amount substantially equal
to the amount of the applicable Loan.
"LIBOR Loans" shall mean Loans the interest rates on which are
determined on the basis of rates referred to in the definition of "LIBOR
Rate".
"LIBOR Rate" shall mean, with respect to any LIBOR Loan, a rate per
annum (rounded upwards, if necessary, to the nearest 1/100 of 1%)
determined by the Agent to be equal to the quotient of (i) LIBOR for such
Loan for the Interest Period for such Loan divided by (ii) 1 minus the
Reserve Requirement for such Loan for such Interest Period.
-11-
"Lien" shall mean any interest in Property securing an obligation owed
to, or a claim by, a Person other than the owner of the Property, whether
such interest is based on the common law, statute or contract, and whether
such obligation or claim is fixed or contingent, and including but not
limited to (i) the lien or security interest arising from a mortgage,
encumbrance, pledge, security agreement, conditional sale or trust receipt
or a lease, consignment or bailment for security purposes. The term "Lien"
shall include reservations, exceptions, encroachments, easements, rights of
way, covenants, conditions, restrictions, leases and other title exceptions
and encumbrances affecting Property. For the purposes of this Agreement,
the Borrower or any Subsidiary shall be deemed to be the owner of any
Property which it has acquired or holds subject to a conditional sale
agreement, or leases under a financing lease or other arrangement pursuant
to which title to the Property has been retained by or vested in some other
Person in a transaction intended to create a financing.
"Loan Documents" shall mean this Agreement, the Notes, the Distribution
LC, the Letters of Credit, the Letter of Credit Agreements, the Fee Letter,
and the Security Instruments.
"Loans" shall mean the loans as provided for by Sections 2.01(a)(i),
2.01(b) and 2.01(c). "Loans" shall include the Facility A Loans, the
Facility B Loans and the Facility C Loans.
"LP Units" shall mean the limited partner units of Xxxxxx Xxxxxx
Energy.
"Majority Lenders" shall mean, at any time while no Loans are
outstanding, Lenders having at least sixty-six and two-thirds percent
(66-2/3%) of the Aggregate Commitments and, at any time while Loans are
outstanding, Lenders holding at least sixty-six and two-thirds percent
(66-2/3%) of the outstanding aggregate principal amount of the Loans
(without regard to any sale by a Lender of a participation in any Loan
under Section 12.06(c)).
"Material Adverse Effect" shall mean any material and adverse effect on
(i) the assets, liabilities, financial condition, business, operations or
affairs of the Borrower and its Subsidiaries taken as a whole or from the
facts represented or warranted in any Loan Document, or (ii) the ability of
the Borrower and its Subsidiaries taken as a whole to carry out their
business as at the Closing Date or as proposed as of the Closing Date to be
conducted or meet their obligations under the Loan Documents on a timely
basis.
"Maturity Date" shall mean August 31, 1999.
"Multiemployer Plan" shall mean a Plan defined as such in Section 3(37)
or 4001(a)(3) of ERISA.
-12-
"Notes" shall mean the Notes provided for by Section 2.06, together
with any and all renewals, extensions for any period, increases,
rearrangements, substitutions or modifications thereof. The "Notes" shall
include the Facility A Notes, the Facility B Note and the Facility C Notes.
"Other Taxes" shall have the meaning assigned such term in Section
4.06(b).
"PBGC" shall mean the Pension Benefit Guaranty Corporation or any
entity succeeding to any or all of its functions.
"Percentage Share" shall mean the percentage of the Aggregate
Commitments to be provided by a Lender under this Agreement as indicated on
Annex I hereto, as modified from time to time to reflect any assignments
permitted by Section 12.06(b).
"Person" shall mean any individual, corporation, company, voluntary
association, partnership, joint venture, trust, unincorporated organization
or government or any agency, instrumentality or political subdivision
thereof, or any other form of entity.
"Plan" shall mean any employee pension benefit plan, as defined in
Section 3(2) of ERISA, which (i) is currently or hereafter sponsored,
maintained or contributed to by the Borrower, any Subsidiary or an ERISA
Affiliate or (ii) was at any time during the preceding six calendar years
sponsored, maintained or contributed to, by the Borrower, any Subsidiary or
an ERISA Affiliate.
"Post-Default Rate" shall mean, in respect of any principal of any Loan
or any other amount payable by the Borrower under this Agreement or any
Note, a rate per annum during the period commencing on the date of an Event
of Default until such amount is paid in full or all Events of Default are
cured or waived equal to 2% per annum above the Base Rate as in effect from
time to time plus the Applicable Margin (if any), but in no event to exceed
the Highest Lawful Rate provided that, for a LIBOR Loan, the "Post-Default
Rate" for such principal shall be, for the period commencing on the date of
the Event of Default and ending on the earlier to occur of the last day of
the Interest Period therefor or the date all Events of Default are cured or
waived, 2% per annum above the interest rate for such Loan as provided in
Section 3.02(ii), but in no event to exceed the Highest Lawful Rate.
"Prime Rate" shall mean the rate of interest from time to time
announced publicly by the Agent at the Principal Office as its prime
commercial lending rate. Such rate is set by the Agent as a general
reference rate of interest, taking into account such factors as the Agent
may deem appropriate, it being understood that many of the Agent's
commercial or other loans are priced in relation to such
-13-
rate, that it is not necessarily the lowest or best rate actually charged
to any customer and that the Agent may make various commercial or other
loans at rates of interest having no relationship to such rate.
"Principal Office" shall mean the principal office of the Agent,
presently located at 000 Xxxxx Xxxxxxx Xxxxxx, XX-00, Xxxxxxxxx, Xxxxx
Xxxxxxxx 28288- 0608 or such other location as designated by the Agent from
time to time.
"Property" shall mean any interest in any kind of property or asset,
whether real, personal or mixed, or tangible or intangible.
"Purchase Agreement" shall mean the Amended and Restated Purchase and
Sale Agreement between Enron Liquids Holding Corp. and the Borrower dated
February 14, 1997, as amended, providing for the purchase by the Borrower
of all of the outstanding stock of Enron Liquids Pipeline Company.
"Quarterly Dates" shall mean the last day of each March, June,
September, and December, in each year, the first of which shall be March
31, 1997; provided, however, that if any such day is not a Business Day,
such Quarterly Date shall be the next succeeding Business Day.
"Regulation D" shall mean Regulation D of the Board of Governors of the
Federal Reserve System (or any successor), as the same may be amended or
supplemented from time to time.
"Regulation U" shall mean Regulation U of the Board of Governors of the
Federal Reserve System (or any successor), as the same may be amended or
supplemented from time to time.
"Regulatory Change" shall mean, with respect to any Lender, any change
after the Closing Date in any Governmental Requirement (including
Regulation D) or the adoption or making after such date of any
interpretations, directives or requests applying to a class of lenders
(including such Lender or its Applicable Lending Office) of or under any
Governmental Requirement (whether or not having the force of law) by any
Governmental Authority charged with the interpretation or administration
thereof.
"Required Payment" shall have the meaning assigned such term in Section
4.04.
"Responsible Officer" shall mean, as to any Person, the Chief Executive
Officer, the President or any Vice President of such Person and, with
respect to financial matters, the term "Responsible Officer" shall include
the Chief Financial Officer of such Person. Unless otherwise specified, all
references to a Responsible Officer herein shall mean a Responsible Officer
of the Borrower.
-14-
"Rule 144" shall mean Rule 144 promulgated under the Securities Act of
1933, as amended.
"SEC" shall mean the Securities and Exchange
Commission or any successor Governmental
Authority.
"Security Instruments" shall mean the agreements or instruments
described or referred to in Exhibit E, and any and all other agreements or
instruments now or hereafter executed and delivered by the Borrower or any
other Person (other than participation or similar agreements between any
Lender and any other lender or creditor with respect to any Indebtedness
pursuant to this Agreement) in connection with, or as security for the
payment or performance of the Notes, this Agreement, or reimbursement
obligations under the Letters of Credit and the Distribution LC, as such
agreements may be amended, supplemented or restated from time to time.
"Special Entity" shall mean any joint venture, limited liability
company or partnership, general or limited partnership or any other type of
partnership or company other than a corporation in which the Borrower or
one or more of its other Subsidiaries is a member, owner, partner or joint
venturer and owns, directly or indirectly, at least a majority of the
equity of such entity or controls such entity, but excluding any tax
partnerships that are not classified as partnerships under state law. For
purposes of this definition, any Person which owns directly or indirectly
an equity investment in another Person which allows the first Person to
manage or elect managers who manage the normal activities of such second
Person will be deemed to "control" such second Person (e.g. a sole general
partner controls a limited partnership).
"Special Purpose Subsidiary" shall have the meaning assigned such term
in Section 9.18.
"Subsidiary" shall mean (i) any corporation of which at least a
majority of the outstanding shares of stock having by the terms thereof
ordinary voting power to elect a majority of the board of directors of such
corporation (irrespective of whether or not at the time stock of any other
class or classes of such corporation shall have or might have voting power
by reason of the happening of any contingency) is at the time directly or
indirectly owned or controlled by the Borrower or one or more of its
Subsidiaries or by the Borrower and one or more of its Subsidiaries and
(ii) any Special Entity. Unless otherwise indicated herein, each reference
to the term "Subsidiary" shall mean a Subsidiary of the Borrower. For
purposes of this Agreement Xxxxxx Xxxxxx Energy and its Subsidiaries shall
be deemed to be Subsidiaries of the Borrower commencing immediately upon
the Closing Date.
"Taxes" shall have the meaning assigned such
term in Section 4.06(a).
-15-
"Type" shall mean, with respect to any Loan, a Base Rate Loan or a
LIBOR Loan.
"Unrestricted Balance" shall mean at any time the sum of cash or cash
equivalents held by Xxxxxx Xxxxxx Energy free and clear of any Liens,
negative pledges or contracted restrictions with other Persons.
"Wholly-Owned Subsidiary" shall mean, as to the Borrower, any
Subsidiary of which all of the outstanding shares of stock having by the
terms thereof ordinary voting power to elect the board of directors of such
corporation, other than directors' qualifying shares, are owned or
controlled by the Borrower or one or more of the Wholly-Owned Subsidiaries
or by the Borrower and one or more of the Wholly-Owned Subsidiaries.
Section 1.03 Accounting Terms and Determinations. Unless otherwise
specified herein, all accounting terms used herein shall be interpreted, all
determinations with respect to accounting matters hereunder shall be made, and
all financial statements and certificates and reports as to financial matters
required to be furnished to the Agent or the Lenders hereunder shall be
prepared, in accordance with GAAP, applied on a basis consistent with the
audited financial statements of the Borrower referred to in Section 7.02 (except
for changes concurred with by the Borrower's independent public accountants).
ARTICLE II
Commitments
Section 2.01 The Facilities.
(a) Facility A.
(i) Loans. Each Lender severally agrees, on the terms of this
Agreement, to make Loans to the Borrower during the period from and
including (i) the Closing Date or (ii) such later date that such Lender
becomes a party to this Agreement as provided in Section 12.06(b), to but
excluding the Facility A Termination Date in an aggregate principal amount
at any one time outstanding up to but not exceeding the amount of such
Lender's Facility A Commitment as then in effect; provided, however, that
the aggregate principal amount of all such Loans by all Lenders hereunder
at any one time outstanding together with the LC Exposure shall not exceed
the Aggregate Facility A Commitments. Subject to the terms of this
Agreement, during the period from the Closing Date to but excluding the
Facility A Termination Date, the Borrower may borrow, repay and reborrow
the amount described in this Section 2.01(a).
-16-
(ii) Letters of Credit. During the period from and including the
Closing Date to but excluding the Facility A Termination Date, the Agent,
as issuing bank for the Lenders, agrees to extend credit for the account of
the Borrower at any time and from time to time by issuing renewing,
extending or reissuing Letters of Credit; provided however, the LC Exposure
at any one time outstanding shall not exceed the lesser of (i) the LC
Commitment or (ii) the Aggregate Facility A Commitments, as then in effect,
minus the aggregate principal amount of all Facility A Loans then
outstanding. The Lenders shall participate in such Letters of Credit
according to their respective Percentage Shares.
(b) Facility B. On the Closing Date, the Agent, as issuing bank for the
Lenders, agrees to extend credit for the account of the Borrower by issuing
the Distribution LC. The Lenders shall participate in the Distribution LC
according to their respective Percentage Shares.
(c) Facility C. Each Lender severally agrees, subject to the terms and
conditions of this Agreement, to make a term Loan to the Borrower not to
exceed its Facility C Commitment. Such Loan shall be made by way of a
single borrowing made on the Closing Date. Any portion of each Lender's
Facility C Commitment not utilized by such borrowing on such date shall be
permanently canceled.
(d) Limitation on Types of Loans. Subject to the other terms and
provisions of this Agreement, at the option of the Borrower, the Loans
outstanding under the Facilities may be Base Rate Loans or LIBOR Loans;
provided that, without the prior written consent of the Majority Lenders,
no more than four (4) LIBOR Loans may be outstanding at any time under all
of the Facilities.
Section 2.02 Borrowings, Continuations,
Conversions, Letters of Credit.
(a) Borrowings. The Borrower shall give the Agent (which shall promptly
notify the Lenders) advance notice as hereinafter provided of each
borrowing hereunder, which shall specify the aggregate amount of such
borrowing, the Type and the date (which shall be a Business Day) of the
Loans to be borrowed and (in the case of LIBOR Loans) the duration of the
Interest Period therefor.
(b) Minimum Amounts. If a borrowing consists in whole or in part of
LIBOR Loans, such LIBOR Loans with the same Interest Period shall be in
amounts of at least $500,000 or any whole multiple of $50,000 in excess
thereof.
(c) Notices. Each borrowing and all continuations and conversions shall
require advance written notice to the Agent (which shall promptly notify
the Lenders) in the form of Exhibit B hereto, which in each case shall be
irrevocable, from the Borrower to be received by the Agent not later than
11:00 a.m. Charlotte, North Carolina time at least one Business Day prior
to the date of each Base Rate Loan borrowing and three
-17-
Business Days prior to the date of each LIBOR Loan borrowing, continuation
or conversion.
(d) Continuation Options. Subject to the provisions made in this
Section 2.02(d), the Borrower may elect to continue all or any part of any
LIBOR Loan beyond the expiration of the then current Interest Period
relating thereto by giving advance notice as provided in Section 2.02(c) to
the Agent (which shall promptly notify the Lenders) of such election,
specifying the amount of such Loan to be continued and the Interest Period
therefor. In the absence of such a timely and proper election, the Borrower
shall be deemed to have elected to convert such LIBOR Loan to a Base Rate
Loan pursuant to Section 2.02(e). All or any part of any LIBOR Loan may be
continued as provided herein, provided that (i) any continuation of any
such Loan shall be (as to each Loan as continued for an applicable Interest
Period) in amounts of at least $500,000 or any whole multiple of $50,000 in
excess thereof and (ii) no Default shall have occurred and be continuing.
If a Default shall have occurred and be continuing, each LIBOR Loan shall
be converted to a Base Rate Loan on the last day of the Interest Period
applicable thereto.
(e) Conversion Options. The Borrower may elect to convert all or any
part of any LIBOR Loan on the last day of the then current Interest Period
relating thereto to a Base Rate Loan by giving advance notice to the Agent
(which shall promptly notify the Lenders) of such election. Subject to the
provisions made in this Section 2.02(e), the Borrower may elect to convert
all or any part of any Base Rate Loan at any time and from time to time to
a LIBOR Loan by giving advance notice as provided in Section 2.02(c) to the
Agent (which shall promptly notify the Lenders) of such election. All or
any part of any outstanding Loan may be converted as provided herein,
provided that (i) any conversion of any Base Rate Loan into a LIBOR Loan
shall be (as to each such Loan into which there is a conversion for an
applicable Interest Period) in amounts of at least $500,000 or any whole
multiple of $50,000 in excess thereof and (ii) no Default shall have
occurred and be continuing. If a Default shall have occurred and be
continuing, no Base Rate Loan may be converted into a LIBOR Loan.
(f) Advances. Not later than 11:00 a.m. Charlotte, North Carolina time
on the date specified for each borrowing hereunder, each Lender shall make
available the amount of the Loan to be made by it on such date to the
Agent, to an account which the Agent shall specify, in immediately
available funds, for the account of the Borrower. The amounts so received
by the Agent shall, subject to the terms and conditions of this Agreement,
be made available to the Borrower by depositing the same, in immediately
available funds, in an account of the Borrower, designated by the Borrower
and maintained at the Principal Office.
(g) Letters of Credit. The Borrower shall give the Agent (which shall
promptly notify the Lenders of such request) advance notice to be received
by the Agent not later than 11:00 a.m. Charlotte, North Carolina time not
less than three (3) Business Days prior thereto of each request for the
issuance and at least thirty (30) Business Days
-18-
prior to the date of the renewal or extension of a Letter of Credit
hereunder which request shall specify the amount of such Letter of Credit,
the date (which shall be a Business Day) such Letter of Credit is to be
issued, renewed or extended, the duration thereof, the name and address of
the beneficiary thereof, the form of the Letter of Credit and such other
information as the Agent may reasonably request all of which shall be
reasonably satisfactory to the Agent. Subject to the terms and conditions
of this Agreement, on the date specified for the issuance, renewal or
extension of a Letter of Credit, the Agent shall issue such Letter of
Credit to the beneficiary thereof.
In conjunction with the issuance of each Letter of Credit, the Borrower
shall execute a Letter of Credit Agreement. In the event of any conflict
between any provision of a Letter of Credit Agreement and this Agreement,
the Borrower, the Agent and the Lenders hereby agree that the provisions of
this Agreement shall govern.
The Agent will send to the Borrower and each Lender, upon issuance of
any Letter of Credit, or an amendment thereto, a true and complete copy of
such Letter of Credit, or such amendment thereto.
(h) Distribution LC. In conjunction with the issuance of the
Distribution LC, the Borrower shall execute a Letter of Credit Agreement.
In the event of any conflict between any provision of such Letter of Credit
Agreement and this Agreement, the Borrower, the Agent and the Lenders
hereby agree that the provisions of this Agreement shall govern.
The Agent will send to the Borrower and each Lender, upon issuance of
the Distribution LC, or an amendment thereto, a true and complete copy of
such Distribution LC, or such amendment thereto.
Section 2.03 Changes of Facility A Commitments. The Borrower shall have
the right to terminate or to reduce the amount of the Aggregate Facility A
Commitments at any time or from time to time upon not less than three (3)
Business Days' prior notice to the Agent (which shall promptly notify the
Lenders) of each such termination or reduction, which notice shall specify the
effective date thereof and the amount of any such reduction (which shall not be
less than $1,000,000 or any whole multiple of $100,000 in excess thereof) and
shall be irrevoca- ble and effective only upon receipt by the Agent. Once
terminated or reduced, the Aggregate Facility A Commitments may not be
reinstated.
Section 2.04 Fees.
(a) The Borrower shall pay to the Agent for the account of each Lender
a commitment fee on the daily average unused amount of the Aggregate
Facility A Commitments for the period from and including the Closing Date
up to but excluding the earlier of the date the Aggregate Facility A
Commitments are terminated or the Facility A Termination Date at a rate per
annum equal to 1/2 of 1%. Accrued commitment fees
-19-
shall be payable quarterly in arrears on each Quarterly Date and on the
earlier of the date the Aggregate Facility A Commitments are terminated or
the Facility A Termination Date. Outstanding Letters of Credit will be
treated as utilization of Facility A for purposes of determining the
commitment fee.
(b) The Borrower agrees to pay the Agent, for the account of each
Lender, commissions for issuing the Letters of Credit at the rate of 2.25%
per annum, provided that each Letter of Credit shall bear a minimum
commission of $500.
(c) The Borrower agrees to pay to the Agent, for its own account, a
fronting fee of 1/8% per annum for each Letter of Credit on the daily
average outstanding of the maximum liability of the Agent existing from
time to time under each Letter of Credit (calculated separately for each
Letter of Credit).
(d) The Borrower agrees to pay the Agent, for the account of each
Lender, commissions for issuing the Distribution LC at the rate of either
(i) 1/2 of 1% per annum, provided Xxxxxx Xxxxxx Energy maintains at all
times an Unrestricted Balance equal to the maximum liability of the Agent
existing from time to time under the Distribution LC or (ii) 2.25% per
annum, if Xxxxxx Xxxxxx Energy does not maintain the required Unrestricted
Balance.
(e) The Borrower agrees to pay to the Agent, for its own account, a
fronting fee of 1/8% per annum for the Distribution LC on the daily average
outstanding of the maximum liability of the Agent existing from time to
time under such Distribution LC.
(f) Upon each issuance of any Letter of Credit or the Distribution LC,
the Borrower shall pay to the Agent for its own account an issuance fee of
$85.
(g) Upon each transfer of any Letter of Credit to a successor
beneficiary in accordance with its terms, the Borrower shall pay the sum of
$200 to the Agent for its own account. The Distribution LC shall be
non-transferrable.
(h) Upon each drawing of any Letter of Credit or the Distribution LC,
the Borrower shall pay to the Agent for its own account a negotiation fee
of $100; provided that such fee shall not be a condition to any drawing.
(i) Upon each amendment of any Letter of Credit or the Distribution LC,
the Borrower shall pay to the Agent for its own account the sum of $50.
(j) Each Letter of Credit and the Distribution LC shall be deemed to be
outstanding up to its full face amount until the Agent has received (1) the
canceled Letter of Credit or the Distribution LC or a written cancellation
of the Letter of Credit or the Distribution LC from the beneficiary of such
Letter of Credit or Distribution LC in form and substance acceptable to the
Agent, or (2) for any reductions in the amount of the Letter of Credit or
the Distribution LC (other than from a drawing or a scheduled
-20-
reduction set forth in the Letter of Credit or the Distribution LC),
written notification from the beneficiary of such Letter of Credit or the
Distribution LC. The commissions and fronting fees in Sections 2.04(b),
(c), (d) and (e) are payable quarterly in advance on each Quarterly Date.
(k) The Borrower shall pay to First Union Corporation for its account
such other fees as are set forth in the Fee Letter on the dates specified
therein to the extent not paid prior to the Closing Date.
Section 2.05 Several Obligations. The failure of any Lender to make any
Loan to be made by it or to provide funds for disbursements or reimbursements
under Letters of Credit or the Distribution LC on the date specified therefor
shall not relieve any other Lender of its obligation to make its Loan or provide
funds on such date, but no Lender shall be responsible for the failure of any
other Lender to make a Loan to be made by such other Lender or to provide funds
to be provided by such other Lender.
Section 2.06 Notes.
(a) The Facility A Loans made by each Lender shall be evidenced by a
single promissory note of the Borrower in substantially the form of Exhibit
A-1 hereto, dated (i) the Closing Date or (ii) the effective date of an
Assignment pursuant to Section 12.06(b), payable to the order of such
Lender in a principal amount equal to its Percentage Share of the Aggregate
Facility A Commitments as in effect on the date of issue and otherwise duly
completed and such substitute Notes as required by Section 12.06(b).
(b) The Facility B Loans made by First Union shall be evidenced by a
single promissory note of the Borrower in substantially the form of Exhibit
A-2 hereto dated the Closing Date payable to the order of First Union.
(c) The Facility C Loans made by each Lender shall be evidenced by a
single promissory note of the Borrower in substantially the form of Exhibit
A-3 hereto dated (i) the Closing Date or (ii) the effective date of an
Assignment pursuant to Section 12.06(b), payable to the order of such
Lender in a principal amount equal to its Percentage Share of the Aggregate
Facility C Commitments as in effect on the date of issue and otherwise duly
completed.
(d) The date, amount, Type, interest rate and Interest Period of each
Loan made by each Lender, and all payments made on account of the principal
thereof, shall be recorded by such Lender on its books for its Notes, and,
prior to any transfer, may be endorsed by such Lender on schedules attached
to such Notes or any continuation thereof or on any separate record
maintained by such Lender. Failure to make any such notation or to attach a
schedule shall not affect any Lender's or the Borrower's rights or
obligations in respect of such Loans or affect the validity of such
transfer by any Lender of its Notes.
-21-
Section 2.07 Prepayments.
(a) The Borrower may prepay the Base Rate Loans upon not less than one
(1) Business Day's prior notice to the Agent (which shall promptly notify
the Lenders), which notice shall specify the prepayment date (which shall
be a Business Day) and the amount of the prepayment (which shall be at
least $100,000 or the remaining aggregate principal balance outstanding on
the Notes) and shall be irrevocable and effective only upon receipt by the
Agent, provided that interest on the principal prepaid, accrued to the
prepayment date, shall be paid on the prepayment date. The Borrower may
prepay LIBOR Loans on the same condition as for Base Rate Loans and in
addition such prepayments of LIBOR Loans shall be subject to the terms of
Section 5.05 and shall be in an amount equal to all of the LIBOR Loans for
the Interest Period prepaid.
(b) If, after giving effect to any termination or reduction of the
Aggregate Facility A Commitments pursuant to Section 2.03, the outstanding
aggregate principal amount of the Facility A Loans plus the LC Exposure
exceeds the Aggregate Facility A Commitments, the Borrower shall (i) prepay
the Facility A Loans on the date of such termination or reduction in an
aggregate principal amount equal to the excess, together with interest on
the principal amount paid accrued to the date of such prepayment and (ii)
if any excess remains after prepaying all of the Facility A Loans, pay to
the Agent on behalf of the Lenders an amount equal to the excess to be held
as cash collateral as provided in Section 2.09(b).
(c) Upon any sale of the LP Units or any liquidating distribution or
special distribution attributable to the LP Units, the Borrower shall pay
to the Agent on behalf of the Lenders an amount equal to the proceeds of
such sale or distribution. Such proceeds shall be first applied as a
mandatory payment of any outstanding Facility A Loans, second, held as cash
collateral for any LC Exposure as provided in Section 2.09(b), third, held
by cash collateral for the contingent expenses on the Distribution LC as
provided in Section 2.09(b), and fourth, applied as a mandatory prepayment
of Facility C Loans. The Aggregate Facility A Commitments shall be reduced
by the amount of such proceeds, but not less than zero.
(d) Prepayments permitted or required under this Section 2.07 shall be
without premium or penalty, except as required under Section 5.05 for
prepayment of LIBOR Loans. Any voluntary prepayments on the Facility A
Loans under Section 2.07(a) may be reborrowed subject to the then effective
Aggregate Facility A Commitments. Any voluntary prepayments on the Facility
B Loans and the Facility C Loans and any mandatory prepayments of any
Facility may not be reborrowed.
Section 2.08 Assumption of Risks. The Borrower assumes all risks of the
acts or omissions of any beneficiary of any Letter of Credit or the Distribution
LC or any transferee thereof with respect to its use of such Letter of Credit or
the Distribution LC. Neither the Agent (except in the case of willful misconduct
or bad faith on the part of the Agent or any of its employees), its
correspondents nor any Lender shall be responsible for the validity, sufficiency
-22-
or genuineness of certificates or other documents or any endorsements thereon,
even if such certificates or other documents should in fact prove to be invalid,
insufficient, fraudulent or forged; for errors, omissions, interruptions or
delays in transmissions or delivery of any messages by mail, telex, or
otherwise, whether or not they be in code; for errors in translation or for
errors in interpretation of technical terms; the validity or sufficiency of any
instrument transferring or assigning or purporting to transfer or assign any
Letter of Credit or the Distribution LC or the rights or benefits thereunder or
proceeds thereof, in whole or in part, which may prove to be invalid or
ineffective for any reason; the failure of any beneficiary or any transferee of
any Letter of Credit or the Distribution LC to comply fully with conditions
required in order to draw upon any Letter of Credit or the Distribution LC; or
for any other consequences arising from causes beyond the Agent's control or the
control of the Agent's correspondents. In addition, neither the Agent nor any
Lender shall be responsible for any error, neglect, or default of any of the
Agent's correspondents; and none of the above shall affect, impair or prevent
the vesting of any of the Agent's or any Lender's rights or powers hereunder or
under the Letter of Credit Agreements, all of which rights shall be cumulative.
The Agent and its correspondents may accept certificates or other documents that
appear on their face to be in order, without responsibility for further
investigation of any matter contained therein regardless of any notice or
information to the contrary. In furtherance and not in limitation of the
foregoing provisions, the Borrower agrees that any action, inaction or omission
taken or not taken by the Agent or by any correspondent for the Agent in good
faith in connection with any Letter of Credit or the Distribution LC, or any
related drafts, certificates, documents or instruments, shall be binding on the
Borrower and shall not put the Agent or its correspondents under any resulting
liability to the Borrower.
Section 2.09 Obligation to Reimburse and to Prepay.
(a) (i) If a disbursement by First Union is made under any Letter of
Credit, the Borrower shall pay to First Union within two (2) Business Days
after notice of any such disbursement is received by the Borrower, the
amount of each such disbursement made by First Union under the Letter of
Credit (if such payment is not sooner effected as may be required under
this Section 2.09 or under other provisions of the Letter of Credit),
together with interest on the amount disbursed from and including the date
of disbursement until payment in full of such disbursed amount at a varying
rate per annum equal to (1) the then applicable interest rate for Base Rate
Loans through the second Business Day after notice of such disbursement is
received by the Borrower and (2) thereafter, the Post-Default Rate for Base
Rate Loans (but in no event to exceed the Highest Lawful Rate) for the
period from and including the third Business Day following the date of such
disbursement to and including the date of repayment in full of such
disbursed amount.
(ii) If a disbursement by First Union is made under the
Distribution LC, such disbursement shall constitute an automatic borrowing
under the Facility B Note as a Base Rate Loan subject to the right to
continue or convert such Loan as provided in Section 2.02.
-23-
The obligations of the Borrower under this Agreement with respect to each
Letter of Credit and the Distribution LC shall be absolute, unconditional
and irrevocable and shall be paid or performed strictly in accordance with
the terms of this Agreement under all circumstances whatsoever, including,
without limitation, but only to the fullest extent permitted by applicable
law, the following circumstances: (1) any lack of validity or
enforceability of this Agreement, any Letter of Credit, the Distribution LC
or any of the Security Instruments; (2) any amendment or waiver of
(including any default), or any consent to departure from this Agreement
(except to the extent permitted by any amendment or waiver), any Letter of
Credit, the Distribution LC or any of the Security Instruments; (3) the
existence of any claim, set-off, defense or other rights which the Borrower
may have at any time against the beneficiary of any Letter of Credit or
Distribution LC or any transferee of any Letter of Credit or the
Distribution LC (or any Persons for whom any such beneficiary or any such
transferee may be acting), the Agent, any Lender or any other Person,
whether in connection with this Agreement, any Letter of Credit, the
Distribution LC, the Security Instruments, the transactions contemplated
hereby or any unrelated transaction; (4) any statement, certificate, draft,
notice or any other document presented under any Letter of Credit or the
Distribution LC proves to have been forged, fraudulent, insufficient or
invalid in any respect or any statement therein proves to have been untrue
or inaccurate in any respect whatsoever; (5) payment by First Union under
any Letter of Credit or the Distribution LC against presentation of a draft
or certificate which appears on its face to comply, but does not comply,
with the terms of such Letter of Credit or the Distribution LC; and (6) any
other circumstance or happening whatsoever, whether or not similar to any
of the foregoing.
Notwithstanding anything in this Agreement to the contrary, the Borrower
will not be liable for payment or performance that results from the gross
negligence or willful misconduct of First Union, except (1) where the
Borrower or any Subsidiary actually recovers the proceeds for itself or the
Agent of any payment made by First Union in connection with such gross
negligence or willful misconduct or (2) in cases where First Union makes
payment to the named beneficiary of a Letter of Credit or the Distribution
LC.
(b) In the event of the occurrence of any Event of Default, an amount
equal to the sum of the LC Exposure and the contingent exposure on the
Distribution LC shall be deemed to be forthwith due and owing by the
Borrower to First Union as of the date of any such occurrence; and the
Borrower's obligation to pay such amount shall be absolute and
unconditional, without regard to whether any beneficiary of any such Letter
of Credit or the Distribution LC has attempted to draw down all or a
portion of such amount under the terms of a Letter of Credit or the
Distribution LC, and, to the fullest extent permitted by applicable law,
shall not be subject to any defense or be affected by a right of set-off,
counterclaim or recoupment which the Borrower may now or hereafter have
against any such beneficiary, First Union, the Lenders or any other Person
for any reason whatsoever. Such payments shall be held by First Union on
behalf of the Lenders as cash collateral securing the LC Exposure and the
contingent exposure on the Distribution LC in an account or accounts at the
Principal Office; and the Borrower
-24-
hereby grants to and by its deposit with First Union grants to First Union
a security interest in such cash collateral. In the event of any such
payment by the Borrower of amounts contingently owing under outstanding
Letters of Credit or the Distribution LC and in the event that thereafter
drafts or other demands for payment complying with the terms of such
Letters of Credit or the Distribution LC are not made prior to the
respective expiration dates thereof, First Union agrees, if no Event of
Default has occurred and is continuing or if no Indebtedness is outstanding
under this Agreement, the Facility A Notes or the Security Instruments, to
remit to the Borrower amounts for which the contingent obligations
evidenced by the Letters of Credit or the Distribution LC have ceased.
(c) Each Lender severally and unconditionally agrees that it shall
promptly reimburse First Union an amount equal to such Lender's Percentage
Share of any disbursement made by First Union under any Letter of Credit or
the Distribution LC that is not reimbursed according to Section 2.09(a)(i).
Section 2.10 Lending Offices. The Loans of each Type made by each
Lender shall be made and maintained at such Lender's Applicable Lending Office
for Loans of such Type as shown on the signature pages hereof.
ARTICLE III
Payments of Principal and Interest
Section 3.01 Repayment of Loans. The Borrower will pay to the Agent,
for the account of each Lender, the principal payments required by this Section
3.01. On the Maturity Date the Borrower shall repay the outstanding aggregate
principal and accrued and unpaid interest under the Facility A Notes, the
Facility B Note and the Facility C Notes.
Section 3.02 Interest. The Borrower will pay to the Agent, for the
account of each Lender, interest on the unpaid principal amount of each Loan
made by such Lender for the period commencing on the date such Loan is made to
but excluding the date such Loan shall be paid in full, at the following rates
per annum:
(i) if such a Loan is a Base Rate Loan, the Base Rate (as in effect
from time to time) plus the Applicable Margin (as in effect from time to
time), but in no event to exceed the Highest Lawful Rate; and
(ii) if such a Loan is a LIBOR Loan, for each Interest Period relating
thereto, the LIBOR Rate for such Loan plus the Applicable Margin (as in
effect from time to time), but in no event to exceed the Highest Lawful
Rate.
Notwithstanding the foregoing, the Borrower will pay to the Agent, for the
account of each Lender, interest at the applicable Post-Default Rate on any
principal of any Loan made by such
-25-
Lender, and (to the fullest extent permitted by law) on any other amount payable
by the Borrower hereunder, under any Loan Document or under any Note held by
such Lender to or for account of such Lender, for the period commencing on the
date of an Event of Default until the same is paid in full or all Events of
Default are cured or waived.
Accrued interest on Base Rate Loans shall be payable on each Quarterly Date
commencing on March 31, 1997, and accrued interest on each LIBOR Loan shall be
payable on the last day of the Interest Period therefor and, if such Interest
Period is longer than three months at three-month intervals following the first
day of such Interest Period, except that interest payable at the Post-Default
Rate shall be payable from time to time on demand and interest on any LIBOR Loan
that is converted into a Base Rate Loan (pursuant to Section 5.04) shall be
payable on the date of conversion (but only to the extent so converted).
Promptly after the determination of any interest rate provided for herein
or any change therein, the Agent shall notify the Lenders to which such interest
is payable and the Borrower thereof. Each determination by the Agent of an
interest rate or fee hereunder shall, except in cases of manifest error, be
final, conclusive and binding on the parties.
ARTICLE IV
Payments; Pro Rata Treatment; Computations; Etc.
Section 4.01 Payments. Except to the extent otherwise provided herein,
all payments of principal, interest and other amounts to be made by the Borrower
under the Loan Documents shall be made in Dollars, in immediately available
funds, to the Agent at such account as the Agent shall specify by notice to the
Borrower from time to time, not later than 11:00 a.m. Charlotte, North Carolina
time on the date on which such payments shall become due (each such payment made
after such time on such due date to be deemed to have been made on the next
succeeding Business Day). Such payments shall be made without (to the fullest
extent permitted by applicable law) defense, set-off or counterclaim. Each
payment received by the Agent under this Agreement or any Note for account of a
Lender shall be paid promptly to such Lender in immediately available funds.
Except as provided in clause (iii) of the definition of "Interest Period", if
the due date of any payment under this Agreement or any Note would otherwise
fall on a day which is not a Business Day such date shall be extended to the
next succeeding Business Day and interest shall be payable for any principal so
extended for the period of such extension. At the time of each payment to the
Agent of any principal of or interest on any borrowing, the Borrower shall
notify the Agent of the Loans to which such payment shall apply. In the absence
of such notice the Agent may specify the Loans to which such payment shall
apply, but to the extent possible such payment or prepayment will be applied
first to the Loans comprised of Base Rate Loans.
Section 4.02 Pro Rata Treatment. Except to the extent otherwise
provided herein each Lender agrees that: (i) each borrowing from the Lenders
under Section 2.01 and each continuation and conversion under Section 2.02 shall
be made from the Lenders pro rata in
-26-
accordance with their Percentage Share, each payment of commitment fee or other
fees under Section 2.04(a) and Section 2.04(b) shall be made for account of the
Lenders pro rata in accordance with their Percentage Share, and each termination
or reduction of the amount of the Aggregate Facility A Commitments under Section
2.03(b) shall be applied to the Facility A Commitment of each Lender, pro rata
according to the amounts of its respective Facility A Commitment; (ii) each
payment of principal of Loans under a Facility by the Borrower shall be made for
account of the Lenders pro rata in accordance with the respective unpaid
principal amount of the Loans held by the Lenders under such Facility; and (iii)
each payment of interest on Loans by the Borrower shall be made for account of
the Lenders pro rata in accordance with the amounts of interest due and payable
to the respective Lenders; and (iv) each reimbursement by the Borrower of
disbursements under Letters of Credit and the Distribution LC shall be made for
account of the Agent or, if funded by the Lenders, pro rata for the account of
the Lenders, in accordance with the amounts of reimbursement obligations due and
payable to each respective Lender.
Section 4.03 Computations. Interest on LIBOR Loans and fees shall be
computed on the basis of a year of 360 days and actual days elapsed (including
the first day but excluding the last day) occurring in the period for which such
interest is payable, unless such calculation would exceed the Highest Lawful
Rate, in which case interest shall be calculated on the per annum basis of a
year of 365 or 366 days, as the case may be. Interest on Base Rate Loans shall
be computed on the basis of a year of 365 or 366 days, as the case may be, and
actual days elapsed (including the first day but excluding the last day)
occurring in the period for which such interest is payable.
Section 4.04 Non-receipt of Funds by the Agent. Unless the Agent shall
have been notified by a Lender or the Borrower prior to the date on which such
notifying party is scheduled to make payment to the Agent (in the case of a
Lender) of the proceeds of a Loan or a payment under a Letter of Credit or the
Distribution LC to be made by it hereunder or (in the case of the Borrower) a
payment to the Agent for account of one or more of the Lenders hereunder (such
payment being herein called the "Required Payment"), which notice shall be
effective upon receipt, that it does not intend to make the Required Payment to
the Agent, the Agent may assume that the Required Payment has been made and may,
in reliance upon such assumption (but shall not be required to), make the amount
thereof available to the intended recipient(s) on such date and, if such Lender
or the Borrower (as the case may be) has not in fact made the Required Payment
to the Agent, the recipient(s) of such payment shall, on demand, repay to the
Agent the amount so made available together with interest thereon in respect of
each day during the period commencing on the date such amount was so made
available by the Agent until but excluding the date the Agent recovers such
amount at a rate per annum which, for any Lender as recipient, will be equal to
the Federal Funds Rate, and for the Borrower as recipient, will be equal to the
Base Rate plus the Applicable Margin.
Section 4.05 Set-off, Sharing of Payments, Etc.
(a) The Borrower agrees that, in addition to (and without limitation
of) any right of set-off, bankers' lien or counterclaim a Lender may
otherwise have, each Lender
-27-
shall have the right and be entitled (after consultation with the Agent),
at its option, to offset balances held by it or by any of its Affiliates
for account of the Borrower at any of its offices, in Dollars or in any
other currency, against any principal of or interest on any of such
Lender's Loans, or any other amount payable to such Lender hereunder, which
is not paid when due (regardless of whether such balances are then due to
the Borrower), in which case it shall promptly notify the Borrower and the
Agent thereof, provided that such Lender's failure to give such notice
shall not affect the validity thereof.
(b) If any Lender shall obtain payment of any principal of or interest
on any Loan made by it to the Borrower under this Agreement (or
reimbursement as to any Letter of Credit) through the exercise of any right
of set-off, banker's lien or counterclaim or similar right or otherwise,
and, as a result of such payment, such Lender shall have received a greater
percentage of the principal or interest (or reimbursement) then due
hereunder by the Borrower to such Lender than the percentage received by
any other Lenders, it shall promptly (i) notify the Agent and each other
Lender thereof and (ii) purchase from such other Lenders participations in
(or, if and to the extent specified by such Lender, direct interests in)
the Loans (or participations in Letters of Credit or the Distribution LC)
made by such other Lenders (or in interest due thereon, as the case may be)
in such amounts, and make such other adjustments from time to time as shall
be equitable, to the end that all the Lenders shall share the benefit of
such excess payment (net of any expenses which may be incurred by such
Lender in obtaining or preserving such excess payment) pro rata in
accordance with the unpaid principal and/or interest on the Loans held by
each of the Lenders (or reimbursements of Letters of Credit or the
Distribution LC). To such end all the Lenders shall make appropriate
adjustments among themselves (by the resale of participations sold or
otherwise) if such payment is rescinded or must otherwise be restored. The
Borrower agrees that any Lender so purchasing a participation (or direct
interest) in the Loans made by other Lenders (or in interest due thereon,
as the case may be) may exercise all rights of set-off, banker's lien,
counterclaim or similar rights with respect to such participation as fully
as if such Lender were a direct holder of Loans (or Letters of Credit or
the Distribution LC ) in the amount of such participation. Nothing
contained herein shall require any Lender to exercise any such right or
shall affect the right of any Lender to exercise, and retain the benefits
of exercising, any such right with respect to any other indebtedness or
obligation of the Borrower. If under any applicable bankruptcy, insolvency
or other similar law, any Lender receives a secured claim in lieu of a
set-off to which this Section 4.05 applies, such Lender shall, to the
extent practicable, exercise its rights in respect of such secured claim in
a manner consistent with the rights of the Lenders entitled under this
Section 4.05 to share the benefits of any recovery on such secured claim.
Section 4.06 Taxes.
(a) Payments Free and Clear. Any and all
payments by the Borrower hereunder shall be made, in
accordance with Section 4.01, free and clear of and
without deduction for any and all present or future
taxes, levies, imposts, deductions, charges or
-28-
withholdings, and all liabilities with respect thereto, excluding, in the
case of each Lender and the Agent, taxes imposed on its income, and
franchise or similar taxes imposed on it, by (i) any jurisdiction (or
political subdivision thereof) of which the Agent or such Lender, as the
case may be, is a citizen or resident or in which such Lender has an
Applicable Lending Office, (ii) the jurisdiction (or any political
subdivision thereof) in which the Agent or such Lender is organized, or
(iii) any jurisdiction (or political subdivision thereof) in which such
Lender or the Agent is presently doing business in which taxes are imposed
solely as a result of doing business in such jurisdiction (all such
non-excluded taxes, levies, imposts, deductions, charges, withholdings and
liabilities being hereinafter referred to as "Taxes"). If the Borrower
shall be required by law to deduct any Taxes from or in respect of any sum
payable hereunder to the Lenders or the Agent (i) the sum payable shall be
increased by the amount necessary so that after making all required
deductions (including deductions applicable to additional sums payable
under this Section 4.06) such Lender or the Agent (as the case may be)
shall receive an amount equal to the sum it would have received had no such
deductions been made, (ii) the Borrower shall make such deductions and
(iii) the Borrower shall pay the full amount deducted to the relevant
taxing authority or other Governmental Authority in accordance with
applicable law.
(b) Other Taxes. In addition, to the fullest extent permitted by
applicable law, the Borrower agrees to pay any present or future stamp or
documentary taxes or any other excise or property taxes, charges or similar
levies that arise from any payment made hereunder or from the execution,
delivery or registration of, or otherwise with respect to, this Agreement,
any Assignment or any Security Instrument (hereinafter referred to as
"Other Taxes").
(c) Indemnification. To the fullest extent permitted by applicable law,
the Borrower will indemnify each Lender and the Agent for the full amount
of Taxes and Other Taxes (including, but not limited to, any Taxes or Other
Taxes imposed by any Governmental Authority on amounts payable under this
Section 4.06) paid by such Lender or the Agent (on their behalf or on
behalf of any Lender), as the case may be, and any liability (including
penalties, interest and expenses) arising therefrom or with respect
thereto, whether or not such Taxes or Other Taxes were correctly or legally
asserted unless the payment of such Taxes was not correctly or legally
asserted and such Lender's payment of such Taxes or Other Taxes was the
result of its gross negligence or willful misconduct. Any payment pursuant
to such indemnification shall be made within thirty (30) days after the
date any Lender or the Agent, as the case may be, makes written demand
therefor. if any Lender or the Agent receives a refund or credit in respect
of any Taxes or Other Taxes for which such Lender or the Agent has received
payment from the Borrower it shall promptly notify the Borrower of such
refund or credit and shall, if no default has occurred and is continuing,
within thirty (30) days after receipt of a request by the Borrower (or
promptly upon
-29-
receipt, if the Borrower has requested application for such refund or
credit pursuant hereto), pay an amount equal to such refund or credit to
the Borrower without interest (but with any interest so refunded or
credited), provided that the Borrower, upon the request of such Lender or
the Agent, agrees to return such refund or credit (plus penalties, interest
or other charges) to such Lender or the Agent in the event such Lender or
the Agent is required to repay such refund or credit.
(d) Lender Representations.
(i) Each Lender represents that it is either (1) a corporation or
banking association organized under the laws of the United States of
America or any state thereof or (2) it is entitled to complete
exemption from United States withholding tax imposed on or with respect
to any payments, including fees, to be made to it pursuant to this
Agreement (A) under an applicable provision of a tax convention to
which the United States of America is a party or (B) because it is
acting through a branch, agency or office in the United States of
America and any payment to be received by it hereunder is effectively
connected with a trade or business in the United States of America.
Each Lender that is not a corporation or banking association organized
under the laws of the United States of America or any state thereof
agrees to provide to the Borrower and the Agent on the Closing Date, or
on the date of its delivery of the Assignment pursuant to which it
becomes a Lender, and at such other times as required by United States
law or as the Borrower or the Agent shall reasonably request, two
accurate and complete original signed copies of either (A) Internal
Revenue Service Form 4224 (or successor form) certifying that all
payments to be made to it hereunder will be effectively connected to a
United States trade or business (the "Form 4224 Certification") or (B)
Internal Revenue Service Form 1001 (or successor form) certifying that
it is entitled to the benefit of a provision of a tax convention to
which the United States of America is a party which completely exempts
from United States withholding tax all payments to be made to it
hereunder (the "Form 1001 Certification"). In addition, each Lender
agrees that if it previously filed a Form 4224 Certification, it will
deliver to the Borrower and the Agent a new Form 4224 Certification
prior to the first payment date occurring in each of its subsequent
taxable years; and if it previously filed a Form 1001 Certification, it
will deliver to the Borrower and the Agent a new certification prior to
the first payment date falling in the third year following the previous
filing of such certification. Each Lender also agrees to deliver to the
Borrower and the Agent such other or supplemental forms as may at any
time be required as a result of changes in applicable law or regulation
in order to confirm or maintain in effect its entitlement to exemption
from United States withholding tax on any payments hereunder, provided
that the circumstances of such Lender at the relevant time and
applicable laws permit it to do so. If a Lender determines, as a result
of any change in either (i) a Governmental Requirement or (ii) its
circumstances, that it is unable to submit any form or certificate that
it is obligated to submit pursuant
-30-
to this Section 4.06, or that it is required to withdraw or cancel any
such form or certificate previously submitted, it shall promptly notify
the Borrower and the Agent of such fact. If a Lender is organized under
the laws of a jurisdiction outside the United States of America, unless
the Borrower and the Agent have received a Form 1001 Certification or
Form 4224 Certification satisfactory to them indicating that all
payments to be made to such Lender hereunder are not subject to United
States withholding tax, the Borrower shall withhold taxes from such
payments at the applicable statutory rate. Each Lender agrees to
indemnify and hold harmless the Borrower or Agent, as applicable, from
any United States taxes, penalties, interest and other expenses, costs
and losses incurred or payable by (i) the Agent as a result of such
Lender's failure to submit any form or certificate that it is required
to provide pursuant to this Section 4.06 or (ii) the Borrower or the
Agent as a result of their reliance on any such form or certificate
which such Lender has provided to them pursuant to this Section 4.06.
(ii) For any period with respect to which a Lender has failed to
provide the Borrower with the form required pursuant to this Section
4.06, if any, (other than if such failure is due to a change in a
Governmental Requirement occurring subsequent to the date on which a
form originally was required to be provided), such Lender shall not be
entitled to indemnification under Section 4.06 with respect to taxes
imposed by the United States which taxes would not have been imposed
but for such failure to provide such forms; provided, however, that
should a Lender, which is otherwise exempt from or subject to a reduced
rate of withholding tax becomes subject to taxes because of its failure
to deliver a form required hereunder, the Borrower shall take such
steps as such Lender shall reasonably request to assist such Lender to
recover such taxes.
(iii) Any Lender claiming any additional amounts payable pursuant
to this Section 4.06 shall use reasonable efforts (consistent with
legal and regulatory restrictions) to file any certificate or document
requested by the Borrower or the Agent or to change the jurisdiction of
its Applicable Lending Office or to contest any tax imposed if the
making of such a filing or change or contesting such tax would avoid
the need for or reduce the amount of any such additional amounts that
may thereafter accrue and would not, in the sole determination of such
Lender, be otherwise disadvantageous to such Lender.
ARTICLE V
Capital Adequacy
Section 5.01 Additional Costs.
(a) Eurodollar Regulations, etc. The Borrower
shall pay directly to each Lender from time to time
such amounts as such Lender may determine to be
necessary
-31-
to compensate such Lender for any costs which it determines are
attributable to its making or maintaining of any LIBOR Loans or issuing or
participating in Letters of Credit or the Distribution LC hereunder or its
obligation to make any LIBOR Loans or issue or participate in any Letters
of Credit or the Distribution LC hereunder, or any reduction in any amount
receivable by such Lender hereunder in respect of any of such LIBOR Loans,
Letters of Credit or the Distribution LC or such obligation (such increases
in costs and reductions in amounts receivable being herein called
"Additional Costs"), resulting from any Regulatory Change which: (i)
changes the basis of taxation of any amounts payable to such Lender under
this Agreement or any Note in respect of any of such LIBOR Loans, Letters
of Credit or the Distribution LC (other than taxes imposed on the overall
net income of such Lender or of its Applicable Lending Office for any of
such LIBOR Loans by the jurisdiction in which such Lender has its principal
office or Applicable Lending Office); or (ii) imposes or modifies any
reserve, special deposit, minimum capital, capital ratio or similar
requirements relating to any extensions of credit or other assets of, or
any deposits with or other liabilities of such Lender, or the Facility A
Commitment or Loans of such Lender or the Eurodollar interbank market; or
(iii) imposes any other condition affecting this Agreement or any Note (or
any of such extensions of credit or liabilities) or such Lender's Facility
A Commitment or Loans. Each Lender will notify the Agent and the Borrower
of any event occurring after the Closing Date which will entitle such
Lender to compensation pursuant to this Section 5.01(a) as promptly as
practicable after it obtains knowledge thereof and determines to request
such compensation, and will designate a different Applicable Lending Office
for the Loans of such Lender affected by such event if such designation
will avoid the need for, or reduce the amount of, such compensation and
will not, in the sole opinion of such Lender, be disadvantageous to such
Lender, provided that such Lender shall have no obligation to so designate
an Applicable Lending Office located in the United States. If any Lender
requests compensation from the Borrower under this Section 5.01(a), the
Borrower may, by notice to such Lender, suspend the obligation of such
Lender to make additional Loans of the Type with respect to which such
compensa- tion is requested until the Regulatory Change giving rise to such
request ceases to be in effect (in which case the provisions of Section
5.04 shall be applicable).
(b) Regulatory Change. Without limiting the effect of the provisions of
Section 5.01(a), in the event that, by reason of any Regulatory Change or
any other circumstances arising after the Closing Date affecting such
Lender, the Eurodollar interbank market or such Lender's position in such
market, any Lender either (i) incurs Additional Costs based on or measured
by the excess above a specified level of the amount of a category of
deposits or other liabilities of such Lender which includes deposits by
reference to which the interest rate on LIBOR Loans is determined as
provided in this Agreement or a category of extensions of credit or other
assets of such Lender which includes LIBOR Loans or (ii) becomes subject to
restrictions on the amount of such a category of liabilities or assets
which it may hold, then, if such Lender so elects by notice to the
Borrower, the obligation of such Lender to make additional LIBOR Loans
shall be suspended until such Regulatory Change or other circumstances
ceases to be in effect (in which case the provisions of Section 5.04 shall
be applicable).
-32-
(c) Capital Adequacy. Without limiting the effect of the foregoing
provisions of this Section 5.01 (but without duplication), the Borrower
shall pay directly to any Lender from time to time on request such amounts
as such Lender may reasonably determine to be necessary to compensate such
Lender or its parent or holding company for any costs which it determines
are attributable to the maintenance by such Lender or its parent or holding
company (or any Applicable Lending Office), pursuant to any Governmental
Requirement following any Regulatory Change, of capital in respect of its
Facility A Commitment, its Note, or its Loans or any interest held by it in
any Letter of Credit or the Distribution LC, such compensation to include,
without limitation, an amount equal to any reduction of the rate of return
on assets or equity of such Lender or its parent or holding company (or any
Applicable Lending Office) to a level below that which such Lender or its
parent or holding company (or any Applicable Lending Office) could have
achieved but for such Governmental Requirement. Such Lender will notify the
Borrower that it is entitled to compensation pursuant to this Section
5.01(c) as promptly as practicable after it determines to request such
compensation.
(d) Compensation Procedure. Any Lender notifying the Borrower of the
incurrence of additional costs under this Section 5.01 shall in such notice
to the Borrower and the Agent set forth in reasonable detail the basis and
amount of its request for compensation. Determinations and allocations by
each Lender for purposes of this Section 5.01 of the effect of any
Regulatory Change pursuant to Section 5.01(a) or (b), or of the effect of
capital maintained pursuant to Section 5.01(c), on its costs or rate of
return of maintaining Loans or its obligation to make Loans or issue
Letters of Credit or the Distribution LC, or on amounts receivable by it in
respect of Loans or Letters of Credit or the Distribution LC, and of the
amounts required to compensate such Lender under this Section 5.01, shall
be conclusive and binding for all purposes, provided that such
determinations and allocations are made on a reasonable basis. Any request
for additional compensation under this Section 5.01 shall be paid by the
Borrower within thirty (30) days of the receipt by the Borrower of the
notice described in this Section 5.01(d).
Section 5.02 Limitation on LIBOR Loans. Anything herein to the contrary
notwithstanding, if, on or prior to the determination of LIBOR for any Interest
Period:
(i) the Agent determines (which determination shall be conclusive,
absent manifest error) that quotations of interest rates for the relevant
deposits referred to in the definition of "LIBOR" in Section 1.02 are not
being provided in the relevant amounts or for the relevant maturities for
purposes of determining rates of interest for LIBOR Loans as provided
herein; or
(ii) the Agent determines (which determination shall be conclusive,
absent manifest error) that the relevant rates of interest referred to in
the definition of "LIBOR" in Section 1.02 upon the basis of which the rate
of interest for LIBOR Loans for such Interest Period is to be determined
are not sufficient
-33-
to adequately cover the cost to the Lenders of
making or maintaining LIBOR Loans;
then the Agent shall give the Borrower prompt notice thereof, and so long as
such condition remains in effect, the Lenders shall be under no obligation to
make additional LIBOR Loans.
Section 5.03 Illegality. Notwithstanding any other provision of this
Agreement, in the event that it becomes unlawful for any Lender or its
Applicable Lending Office to honor its obligation to make or maintain LIBOR
Loans hereunder, then such Lender shall promptly notify the Borrower thereof and
such Lender's obligation to make LIBOR Loans shall be suspended until such time
as such Lender may again make and maintain LIBOR Loans (in which case the
provisions of Section 5.04 shall be applicable).
Section 5.04 Base Rate Loans Pursuant to Sections 5.01, 5.02 and 5.03.
If the obligation of any Lender to make LIBOR Loans shall be suspended pursuant
to Sections 5.01, 5.02 or 5.03 ("Affected Loans"), all Affected Loans which
would otherwise be made by such Lender shall be made instead as Base Rate Loans
(and, if an event referred to in Section 5.01(b) or Section 5.03 has occurred
and such Lender so requests by notice to the Borrower, all Affected Loans of
such Lender then outstanding shall be automatically converted into Base Rate
Loans on the date specified by such Lender in such notice) and, to the extent
that Affected Loans are so made as (or converted into) Base Rate Loans, all
payments of principal which would otherwise be applied to such Lender's Affected
Loans shall be applied instead to its Base Rate Loans.
Section 5.05 Compensation. The Borrower shall pay to each Lender within
thirty (30) days of receipt of written request of such Lender (which request
shall set forth, in reasonable detail, the basis for requesting such amounts and
which shall be conclusive and binding for all purposes provided that such
determinations are made on a reasonable basis), such amount or amounts as shall
compensate it for any loss, cost, expense or liability which such Lender
determines are attributable to:
(i) any payment, prepayment or conversion of a LIBOR Loan properly made
by such Lender or the Borrower for any reason (including, without
limitation, the acceleration of the Loans pursuant to Section 10.02) on a
date other than the last day of the Interest Period for such Loan; or
(ii) any failure by the Borrower for any reason (including but not
limited to, the failure of any of the conditions precedent specified in
Article VI to be satisfied) to borrow, continue or convert a LIBOR Loan
from such Lender on the date for such borrowing, continuation or conversion
specified in the relevant notice given pursuant to Section 2.02(c).
Without limiting the effect of the preceding sentence, such compensation shall
include an amount equal to the excess, if any, of (i) the amount of interest
which would have accrued on the principal amount so paid, prepaid or converted
or not borrowed for the period from the date of
-34-
such payment, prepayment or conversion or failure to borrow to the last day of
the Interest Period for such Loan (or, in the case of a failure to borrow, the
Interest Period for such Loan which would have commenced on the date specified
for such borrowing) at the applicable rate of interest for such Loan provided
for herein over (ii) the interest component of the amount such Lender would have
bid in the London interbank market for Dollar deposits of leading banks in
amounts comparable to such principal amount and with maturities comparable to
such period (as reasonably determined by such Lender).
ARTICLE VI
Conditions Precedent
Section 6.01 Initial Funding.
The obligation of the Lenders to make the Initial Funding is subject to
the receipt by the Agent and the Lenders of all fees payable pursuant to Section
2.04 on or before the Closing Date and the receipt by the Agent of the following
documents and satisfaction of the other conditions provided in this Section
6.01, each of which shall be satisfactory to the Agent in form and substance:
(a) A certificate of the Secretary or an Assistant Secretary of the
Borrower and of Kinder Xxxxxx X.X. setting forth (i) resolutions of its
board of directors with respect to the authorization of the Borrower or
Kinder Xxxxxx X.X. to execute and deliver the Loan Documents and the
Acquisition Documents to which it is a party and to enter into the
transactions contemplated in those documents, (ii) the officers of the
Borrower or Kinder Xxxxxx X.X. (y) who are authorized to sign the Loan
Documents to which Borrower or Kinder Xxxxxx X.X. is a party and (z) who
will, until replaced by another officer or officers duly authorized for
that purpose, act as its representative for the purposes of signing
documents and giving notices and other communications in connection with
this Agreement and the transactions contemplated hereby, (iii) specimen
signatures of the authorized officers, and (iv) the articles or certificate
of incorporation and bylaws of the Borrower or Kinder Xxxxxx X.X.,
certified as being true and complete. The Agent and the Lenders may
conclusively rely on such certificate until the Agent receives notice in
writing from the Borrower or Kinder Xxxxxx X.X. to the contrary.
(b) Certificates of the appropriate state agencies with respect to the
existence, qualification and good standing of the Borrower and Kinder
Xxxxxx X.X.
(c) A compliance certificate which shall be substantially in the form
of Exhibit C, duly and properly executed by a Responsible Officer and dated
as of the date of the Initial Funding.
-35-
(d) The Notes, duly completed and executed.
(e) The Security Instruments, including those described on Exhibit E,
duly completed and executed in sufficient number of counterparts for
recording, if necessary.
(f) An opinion of Xxxxxxxx & Xxxxxx, L.L.P., special counsel to the
Borrower and Kinder Xxxxxx X.X., substantially in the form of Exhibit D
hereto.
(g) A certificate of insurance coverage of the Borrower evidencing that
the Borrower is carrying insurance in accordance with Section 7.19 hereof.
(h) The Agent shall have been furnished with appropriate UCC search
certificates reflecting the filing of all financing statements required to
perfect the security interests granted by the Security Instruments and
reflecting no prior liens or security interests.
(i) Evidence that the Borrower has (i) obtained all necessary or
advisable orders, consents, approvals and authorizations from, and (ii)
made all filings and notifications with, all Governmental Authorities and
other Persons required in connection with the Acquisition.
(j) The Agent shall have received a certificate of a Responsible
Officer of the Borrower certifying that (i) at least $9,000,000 of equity
has been contributed to the Borrower of which at least $1,486,651 has been
contributed by Xxxxxxx X. Xxxxxx (or his Affiliate) and $4,866,301 by
Xxxxxxx X. Xxxxxx (or his Affiliate), (ii) true and complete executed
copies of the Acquisition Documents, said agreements being in form and
substance reasonably satisfactory to the Agent, and being certified by such
Responsible Officer as being in full force and effect, and (iii) such other
related documents and information as the Agent shall have reasonably
requested.
(k) Evidence that the Acquisition shall be
completed with the Initial Funding.
(l) The Debt of Xxxxxx Xxxxxx Operating B shall have been refinanced on
terms acceptable to the Agent.
(m) The Agent shall have received an LP Unit Certificate registered in
the name of Kinder Xxxxxx X.X. (or Enron Liquids Pipeline Company which is
the prior corporate name of Kinder Xxxxxx X.X.), evidencing Kinder Xxxxxx
X.X.'s ownership of 431,000 LP Units, together with a stock power endorsed
in blank.
(n) Such other documents as the Agent or any Lender or special counsel
to the Agent may reasonably request.
Section 6.02 Initial and Subsequent Loans and Letters of Credit. The
obligation of the Lenders to make Loans to the Borrower upon the occasion of
each borrowing hereunder
-36-
and to issue, renew, extend or reissue Letters of
Credit or Distribution LC for the account of the Borrower (including the Initial
Funding) is subject to the further conditions precedent that, as of the date of
such Loans and after giving effect thereto: (i) no Default shall have occurred
and be continuing; (ii) no Material Adverse Effect shall have occurred; and
(iii) the representations and warranties made by the Borrower in Article VII and
in the Security Instruments shall be true on and as of the date of the making of
such Loans or issuance, renewal, extension or reissuance of a Letter of Credit
or Distribution LC with the same force and effect as if made on and as of such
date and following such new borrowing, except to the extent such representations
and warranties are expressly limited to an earlier date or the Majority Lenders
may expressly consent in writing to the contrary. Each request for a borrowing
or issuance, renewal, extension or reissuance of a Letter of Credit or
Distribution LC by the Borrower hereunder shall constitute a certification by
the Borrower to the effect set forth in the preceding sentence (both as of the
date of such notice and, unless the Borrower otherwise notifies the Agent prior
to the date of and immediately following such borrowing or issuance, renewal,
extension or reissuance of a Letter of Credit or Distribution LC as of the date
thereof).
Section 6.03 Conditions Relating to Letters of Credit. In addition to
the satisfaction of all other conditions precedent set forth in this Article VI,
the issuance, renewal, extension or reissuance of the Letters of Credit referred
to in Section 2.01(a) hereof is subject to the following conditions precedent:
(a) At least three (3) Business Days prior to the date of the issuance
and at least thirty (30) Business Days prior to the date of the renewal,
extension or reissuance of each Letter of Credit, the Agent shall have
received a written request for a Letter of Credit.
(b) Each of the Letters of Credit shall (i) be issued by the Agent,
(ii) contain such terms and provisions as are reasonably required by the
Agent, (iii) be for the account of the Borrower and (iv) expire not later
than the earlier of one (1) year from the date of issuance, renewal,
extension or reissuance or two (2) days before the Facility A Termination
Date.
(c) The Borrower shall have duly and validly executed and delivered to
the Agent a Letter of Credit Agreement pertaining to the Letter of Credit.
Section 6.04 Conditions Relating to Distribution LC. In addition to the
satisfaction of all other conditions precedent set forth in this Article VI, the
issuance, renewal, extension or reissuance of the Distribution LC is subject to
the following conditions precedent:
(a) the Distribution LC shall be issued by the
Agent in the form of Exhibit G.
(b) The Borrower shall have duly and validly executed and delivered to
the Agent a Letter of Credit Agreement pertaining to the Distribution LC.
-37-
ARTICLE VII
Representations and Warranties
The Borrower represents and warrants to the Agent and the Lenders that
(each representation and warranty herein is given as of the Closing Date and
shall be deemed repeated and reaffirmed on the dates of each borrowing and
issuance, renewal, extension or reissuance of a Letter of Credit as provided in
Section 6.02):
Section 7.01 Corporate Existence. Each of the Borrower and each
Subsidiary: (i) is duly organized, legally existing and in good standing under
the laws of the jurisdiction of its incorporation or formation; (ii) has all
requisite corporate or partnership power, and has all material governmental
licenses, authorizations, consents and approvals necessary to own its assets and
carry on its business as now being or as proposed to be conducted; and (iii) is
qualified to do business in all jurisdictions in which the nature of the
business conducted by it makes such qualification necessary and where failure so
to qualify would have a Material Adverse Effect. Schedule 7.01 sets forth as of
the Closing Date the capital structure for the Borrower including any Debt that
is convertible into equity and includes the owners and percent of ownership and
voting rights of all stock, and other equity issued and outstanding as of the
Closing Date.
Section 7.02 Financial Condition.
(a) The pro forma balance sheet of Borrower as of the Closing Date (the
"Pro Forma Balance Sheet") correctly and fairly represents the financial
condition of Borrower as of the Closing Date. Except as reflected in the Pro
Forma Balance Sheet, Borrower has no material Debt, contingent liabilities,
liabilities for taxes, unusual forward or long-term commitments or unrealized or
anticipated losses from any unfavorable commitments.
(b) The balance sheet of Kinder Xxxxxx X.X. as of September 30, 1996 which
was provided by Enron Liquid Holding Corp. to Borrower pursuant to the Purchase
Agreement, and the pro forma balance sheet for Kinder Xxxxxx X.X. included
therewith (which reflects the pro forma financial condition of Kinder Xxxxxx
X.X. following closing of the transactions described in the Purchase Agreement),
correctly and fairly represent the financial condition of Kinder Xxxxxx X.X. as
of the dates specified therein. Except as reflected in such balance sheets,
Kinder Xxxxxx X.X. has no material Debt, contingent liabilities, liabilities for
taxes, unusual forward or long-term commitments or unrealized or anticipated
losses from any unfavorable commitments.
Section 7.03 Litigation. Except as disclosed to the Lenders in Schedule
7.03 hereto, at the Closing Date there is no litigation, legal, administrative
or arbitral proceeding, investigation or other action of any nature pending or,
to the knowledge of the Borrower threatened against or affecting (a) the
Acquisition or (b) the Borrower or any Subsidiary which involves the possibility
of any judgment or liability against the Borrower or any Subsidiary not
-38-
fully covered by insurance (except for normal deductibles), and which would have
a Material Adverse Effect.
Section 7.04 No Breach. Neither the execution and delivery of the Loan
Documents and the Acquisition Documents, nor compliance with the terms and
provisions thereof will conflict with or result in a breach of, or require any
consent which has not been obtained as of the Closing Date under, the respective
charter or by-laws or partnership agreement of the Borrower or any Subsidiary,
or any Governmental Requirement or any agreement or instrument to which the
Borrower or any Subsidiary is a party or by which it is bound or to which it or
its Properties are subject, or constitute a default under any such agreement or
instrument, or result in the creation or imposition of any Lien upon any of the
revenues or assets of the Borrower or any Subsidiary pursuant to the terms of
any such agreement or instrument other than the Liens created by the Loan
Documents.
Section 7.05 Authority. The Borrower and Kinder Xxxxxx X.X. have all
necessary corporate power and authority to execute, deliver and perform its
obligations under the Loan Documents and the Acquisition Documents to which it
is a party; and the execution, delivery and performance by the Borrower and
Kinder Xxxxxx X.X. of the Loan Documents and the Acquisition Documents to which
it is a party, have been duly authorized by all necessary corporate action on
its part; and the Loan Documents and the Acquisition Documents constitute the
legal, valid and binding obligations of the Borrower and Kinder Xxxxxx X.X.,
enforceable in accordance with their terms.
Section 7.06 Approvals. No authorizations, approvals or consents of,
and no filings or registrations with, any Governmental Authority are necessary
for the execution, delivery or performance by the Borrower or any Subsidiary of
the Loan Documents or the Acquisition Documents or for the validity or
enforceability thereof, except for the recording and filing of the Security
Instruments as required by this Agreement.
Section 7.07 Use of Facilities. The proceeds of the Facility A Loans
shall be used to acquire the common stock of Enron Liquids Pipeline Company and
for general working capital and for the issuance of Letters of Credit for
general corporate purposes. The purpose of Facility B is for the issuance of the
Distribution LC. The proceeds of the Facility C Loans shall be used to acquire
the common stock of Enron Liquids Pipeline Company. The Borrower is not engaged
principally, or as one of its important activities, in the business of extending
credit for the purpose, whether immediate, incidental or ultimate, of buying or
carrying margin stock (within the meaning of Regulation G, U or X of the Board
of Governors of the Federal Reserve System). No part of the proceeds of any Loan
or extension of credit hereunder will be used to buy or carry any margin stock.
Section 7.08 ERISA.
(a) The Borrower, each Subsidiary and each ERISA Affiliate have
complied in all material respects with ERISA and, where applicable, the
Code regarding each Plan, except where the failure to so maintain would not
have a Material Adverse Effect.
-39-
(b) Each Plan is, and has been, maintained in substantial compliance
with ERISA and, where applicable, the Code, except where the failure to so
maintain a Plan would have a Material Adverse Effect.
(c) No act, omission or transaction has occurred which could result in
imposition on the Borrower, any Subsidiary or any ERISA Affiliate (whether
directly or indirectly) of (i) either a civil penalty assessed pursuant to
section 502(c), (i) or (l) of ERISA or a tax imposed pursuant to Chapter 43
of Subtitle D of the Code or (ii) breach of fiduciary duty liability
damages under section 409 of ERISA.
(d) No Plan (other than a defined contribution plan) or any trust
created under any such Plan has been terminated since September 2, 1974. No
liability to the PBGC (other than for the payment of current premiums which
are not past due) by the Borrower, any Subsidiary or any ERISA Affiliate
has been or is expected by the Borrower, any Subsidiary or any ERISA
Affiliate to be incurred with respect to any Plan. No ERISA Event with
respect to any Plan has occurred.
(e) Full payment when due has been made of all amounts which the
Borrower, any Subsidiary or any ERISA Affiliate is required under the terms
of each Plan or applicable law to have paid as contributions to such Plan,
and no accumulated funding deficiency (as defined in section 302 of ERISA
and section 412 of the Code), whether or not waived, exists with respect to
any Plan.
(f) The actuarial present value of the benefit liabilities under each
Plan which is subject to Title IV of ERISA does not, as of the end of the
Borrower's most recently ended fiscal year, exceed the current value of the
assets (computed on a plan termination basis in accordance with Title IV of
ERISA) of such Plan allocable to such benefit liabil- ities. The term
"actuarial present value of the benefit liabilities" shall have the meaning
specified in section 4041 of ERISA.
(g) None of the Borrower, any Subsidiary or any ERISA Affiliate
sponsors, maintains, or contributes to an employee welfare benefit plan, as
defined in section 3(1) of ERISA, including, without limitation, any such
plan maintained to provide benefits to former employees of such entities,
that may not be terminated by the Borrower, a Subsidiary or any ERISA
Affiliate in its sole discretion at any time without any material
liability.
(h) None of the Borrower, any Subsidiary or any ERISA Affiliate
sponsors, maintains or contributes to, or has at any time in the preceding
six calendar years, sponsored, maintained or contributed to, any
Multiemployer Plan.
(i) None of the Borrower, any Subsidiary or any ERISA Affiliate is
required to provide security under section 401(a)(29) of the Code due to a
Plan amendment that results in an increase in current liability for the
Plan.
-40-
Section 7.09 Taxes. Except as set out in Schedule 7.09, each of the
Borrower and its Subsidiaries has filed all United States Federal income tax
returns and all other tax returns which are required to be filed by them and
have paid all material taxes due pursuant to such returns or pursuant to any
assessment received by the Borrower or any Subsidiary. The charges, accruals and
reserves on the books of the Borrower and its Subsidiaries in respect of taxes
and other governmental charges are, in the opinion of the Borrower, adequate. No
tax lien has been filed and, to the knowledge of the Borrower, no claim is being
asserted with respect to any such tax, fee or other charge.
Section 7.10 Titles, etc.
(a) Except as set out in Schedule 7.10, each of the Borrower and its
Subsidiaries has good and defensible title to its material (individually or
in the aggregate) Properties, free and clear of all Liens except Liens
permitted by Section 9.02.
(b) All leases and agreements necessary for the conduct of the business
of the Borrower and its Subsidiaries are valid and subsisting, in full
force and effect and there exists no default or event or circumstance which
with the giving of notice or the passage of time or both would give rise to
a default under any such lease or leases, which would adversely affect in
any material respect the conduct of the business of the Borrower and its
Subsidiaries.
(c) The rights, Properties and other assets presently owned, leased or
licensed by the Borrower and its Subsidiaries including, without
limitation, all easements and rights of way, include all rights, Properties
and other assets necessary to permit the Borrower and its Subsidiaries to
conduct their business in all material respects in the same manner as its
business has been conducted prior to the Closing Date.
(d) Except as provided in Schedule 7.10, all of the assets and
Properties of the Borrower and its Subsidiaries which are reasonably
necessary for the operation of its business are in good working condition
and are maintained in accordance with prudent business standards.
(e) After the Initial Funding the Borrower shall own good and
marketable title to 100% of the common stock of Kinder Xxxxxx X.X., and
Kinder Xxxxxx X.X. shall have no other stock issued or outstanding other
than the common stock owned by the Borrower and pledged to the Agent for
the benefit of the Lenders.
Section 7.11 No Material Misstatements. No written information,
statement, exhibit, certificate, document or report furnished to the Agent by
the Borrower or any Subsidiary in connection with the negotiation of this
Agreement contained any material misstatement of fact or omitted to state a
material fact or any fact necessary to make the statement contained therein not
materially misleading in the light of the circumstances in which made and with
respect to the Borrower and its Subsidiaries taken as a whole. There is no fact
peculiar to the Borrower or any Subsidiary which has a Material Adverse Effect
or in the future is reasonably likely to
-41-
have (so far as the Borrower can now foresee) a Material Adverse Effect and
which has not been set forth in this Agreement or the other documents,
certificates and statements furnished to the Agent by or on behalf of the
Borrower or any Subsidiary prior to, or on, the Closing Date in connection with
the transactions contemplated hereby.
Section 7.12 Investment Company Act. Neither the Borrower nor any
Subsidiary is an "investment company" or a company "controlled" by an
"investment company," within the meaning of the Investment Company Act of 1940,
as amended.
Section 7.13 Public Utility Holding Company Act. Neither the Borrower
nor any Subsidiary is a "holding company," or a "subsidiary company" of a
"holding company," or an "affiliate" of a "holding company" or of a "subsidiary
company" of a "holding company," or a "public utility" within the meaning of the
Public Utility Holding Company Act of 1935, as amended.
Section 7.14 Subsidiaries. Except as set forth
on Schedule 7.14, the Borrower has no Subsidiaries.
Section 7.15 Location of Business and Offices. The Borrower's principal
place of business and chief executive offices are located at the address stated
on the signature page of this Agreement. The principal place of business and
chief executive office of each Subsidiary are located at the addresses stated on
Schedule 7.14.
Section 7.16 Defaults. Neither the Borrower nor any Subsidiary is in
default nor has any event or circumstance occurred which, but for the expiration
of any applicable grace period or the giving of notice, or both, would
constitute a default under any material agreement or instrument to which the
Borrower or any Subsidiary is a party or by which the Borrower or any Subsidiary
is bound which default would have a Material Adverse Effect. No Default
hereunder has occurred and is continuing.
Section 7.17 Environmental Matters. Except (i) as provided in Schedule
7.17 or (ii) as would not have a Material Adverse Effect (or with respect to
(c), (d) and (e) below, where the failure to take such actions would not have a
Material Adverse Effect):
(a) Neither any Property of the Borrower or any Subsidiary nor the
operations conducted thereon violate any order or requirement of any court
or Governmental Authority or any Environmental Laws;
(b) Without limitation of clause (a) above, no Property of the Borrower
or any Subsidiary nor the operations currently conducted thereon or, to the
best knowledge of the Borrower, by any prior owner or operator of such
Property or operation, are in violation of or subject to any existing,
pending or to the best knowledge of the Borrower threatened action, suit,
investigation, inquiry or proceeding by or before any court or Governmental
Authority or to any remedial obligations under Environmental Laws;
-42-
(c) All notices, permits, licenses or similar authorizations, if any,
required to be obtained or filed in connection with the operation or use of
any and all Property of the Borrower and each Subsidiary, including without
limitation past or present treatment, storage, disposal or release of a
hazardous substance or solid waste into the environment, have been duly
obtained or filed, and the Borrower and each Subsidiary are in compliance
with the terms and conditions of all such notices, permits, licenses and
similar authorizations;
(d) All hazardous substances, solid waste, and oil and gas exploration
and production wastes, if any, generated at any and all Property of the
Borrower or any Subsidiary have in the past been transported, treated and
disposed of in accordance with Environmental Laws and so as not to pose an
imminent and substantial endangerment to public health or welfare or the
environment, and, to the best knowledge of the Borrower, all such transport
carriers and treatment and disposal facilities have been and are operating
in compliance with Environmental Laws and so as not to pose an imminent and
substantial endangerment to public health or welfare or the environment,
and are not the subject of any existing, pending or threatened action,
investigation or inquiry by any Governmental Authority in connection with
any Environmental Laws;
(e) The Borrower has taken all steps reasonably necessary to determine
and has determined that no hazardous substances, solid waste, or oil and
gas exploration and production wastes, have been disposed of or otherwise
released and there has been no threatened release of any hazardous
substances on or to any Property of the Borrower or any Subsidiary [by
Borrower or its Subsidiaries] except in compliance with Environmental Laws
and so as not to pose an imminent and substantial endangerment to public
health or welfare or the environment;
(f) To the extent applicable, all Property of the Borrower and each
Subsidiary currently satisfies all design, operation, and equipment
requirements imposed by the OPA or scheduled as of the Closing Date to be
imposed by OPA during the term of this Agreement, and the Borrower does not
have any reason to believe that such Property, to the extent subject to
OPA, will not be able to maintain compliance with the OPA requirements
during the term of this Agreement; and
(g) Neither the Borrower nor any Subsidiary has any known contingent
liability in connection with any release or threatened release of any oil,
hazardous substance or solid waste into the environment.
Section 7.18 Compliance with the Law. Neither the Borrower nor any
Subsidiary has violated any Governmental Requirement or failed to obtain any
license, permit, franchise or other governmental authorization necessary for the
ownership of any of its Properties or the conduct of its business, which
violation or failure would have (in the event such violation or failure were
asserted by any Person through appropriate action) a Material Adverse Effect.
-43-
Section 7.19 Insurance. Schedule 7.19 attached hereto contains an
accurate and complete description of all material policies of fire, liability,
workmen's compensation and other forms of insurance owned or held by the
Borrower and each Subsidiary. All such policies are in full force and effect,
all premiums with respect thereto covering all periods up to and including the
date of the closing have been paid, and no notice of cancellation or termination
has been received with respect to any such policy. Such policies are sufficient
for compliance with all requirements of law and of all agreements to which the
Borrower or any Subsidiary is a party; are valid, outstanding and enforceable
policies; provide adequate insurance coverage in at least such amounts and
against at least such risks (but including in any event public liability) as are
usually insured against in the same general area by companies engaged in the
same or a similar business for the assets and operations of the Borrower and
each Subsidiary; will remain in full force and effect through the respective
dates set forth in Schedule 7.19 without the payment of additional premiums; and
will not in any way be affected by, or terminate or lapse by reason of, the
transactions contemplated by this Agreement. Schedule 7.19 identifies all
material risks, if any, which the Borrower and its Subsidiaries and their
respective Board of Directors or officers have designated as being self insured.
To the best knowledge of Borrower, neither the Borrower nor any Subsidiary has
been refused any insurance with respect to its assets or operations, nor has its
coverage been limited below usual and customary policy limits, by an insurance
carrier to which it has applied for any such insurance or with which it has
carried insurance during the last three years.
Section 7.20 Hedging Agreements. Schedule 7.20 sets forth, as of the
Closing Date, a true and complete list of all Hedging Agreements (including
commodity price swap agreements, forward agreements or contracts of sale which
provide for prepayment for deferred shipment or delivery of oil, gas or other
commodities) of the Borrower and Kinder Xxxxxx X.X., the material terms thereof
(including the type, term, effective date, termination date and notional amounts
or volumes), the net xxxx to market value thereof, all credit support agreements
relating thereto (including any margin required or supplied), and the
counterparty to each such agreement.
Section 7.21 Restriction on Liens. Except as provided in Schedule 7.21,
neither the Borrower nor Kinder Xxxxxx X.X. is a party to any agreement or
arrangement (other than this Agreement and the Security Instruments), or subject
to any order, judgment, writ or decree, which either restricts or purports to
restrict its ability to grant Liens to other Persons on or in respect of their
respective assets of Properties.
Section 7.22 Kinder Xxxxxx X.X. Assets. At the
closing of the Acquisition Kinder Xxxxxx X.X. shall own an
approximate: (i) 1.01% general partner interest in Xxxxxx
Xxxxxx Energy, (ii) 1.01% general partner interest in
Xxxxxx Xxxxxx Operating A, and (iii) 1.01% general partner
interest in Xxxxxx Xxxxxx Operating B.
Section 7.23 LP Units. Kinder Xxxxxx X.X. has held the 431,000 LP Units
pledged to the Agent for the benefit of the Lenders continuously for more than
three (3) years for purposes of Rule 144. The Agent can freely sell all of the
LP Units in the public markets without registration pursuant to Rule 144,
provided that the Agent is not an affiliate of Kinder
-44-
Xxxxxx Energy for purposes of Rule 144. Kinder Xxxxxx
X.X. has the right to register the 431, 000 LP Units.
Section 7.24 Acquisition Documents. Schedule
7.24 is a complete list of the Acquisition Documents.
ARTICLE VIII
Affirmative Covenants
The Borrower covenants and agrees that, so long as any of the Commitments
are in effect and until payment in full of all Indebtedness hereunder, all
interest thereon and all other amounts payable by the Borrower hereunder:
Section 8.01 Financial Statements. The Borrower shall deliver, or shall
cause to be delivered, to the Agent with sufficient copies of each for the
Lenders:
(a) As soon as available and in any event within 120 days after the end
of each fiscal year of the Borrower, the audited consolidated and unaudited
consolidating statements of income, stockholders' equity, changes in
financial position and cash flow of the Borrower and Kinder Xxxxxx X.X. for
such fiscal year, and the related consolidated and consolidating balance
sheets of the Borrower and Kinder Xxxxxx X.X. as at the end of such fiscal
year, and setting forth in each case in comparative form the corresponding
figures for the preceding fiscal year, and accompanied by the related
opinion of independent public accountants of recognized national standing
acceptable to the Agent which opinion shall state that said financial
statements fairly present the consolidated and consolidating financial
condition and results of operations of the Borrower and Kinder Xxxxxx X.X.
as at the end of, and for, such fiscal year and that such financial
statements have been prepared in accordance with GAAP except for such
changes in such principles with which the independent public accountants
shall have concurred and such opinion shall not contain a "going concern"
or like qualification or exception, and a certificate of such accountants
stating that, in making the examination necessary for their opinion, they
obtained no knowledge, except as specifically stated, of any Default.
(b) As soon as available and in any event within 60 days after the end
of each of the first three fiscal quarterly periods of each fiscal year of
the Borrower, unaudited consolidated and consolidating statements of
income, stockholders' equity, changes in financial position and cash flow
of the Borrower and Kinder Xxxxxx X.X. for such period and for the period
from the beginning of the respective fiscal year to the end of such period,
and the related unaudited consolidated and consolidating balance sheets as
at the end of such period, and setting forth in each case in comparative
form the corresponding figures for the corresponding period in the
preceding fiscal year, accompanied by the certificate of a Responsible
Officer, which certificate shall state that to the best of the Responsible
Officer's knowledge said financial statements fairly present
-45-
the consolidated and consolidating financial condition and results of
operations of the Borrower and Kinder Xxxxxx X.X. in accordance with GAAP,
as at the end of, and for, such period (subject to normal year-end audit
adjustments).
(c) Promptly after the Borrower knows that any Default or any Material
Adverse Effect has occurred, a notice of such Default or Material Adverse
Effect, describing the same in reasonable detail and the action the
Borrower proposes to take with respect thereto.
(d) Promptly upon receipt thereof, a copy of each other report or
letter submitted to the Borrower or any Subsidiary by independent
accountants in connection with any annual, interim or special audit made by
them of the books of the Borrower and its Subsidiaries, and a copy of any
response by the Borrower or any Subsidiary of the Borrower, or the Board of
Directors of the Borrower or any Subsidiary of the Borrower, to such letter
or report.
(e) Promptly upon its becoming available, each financial statement,
report, notice or proxy statement sent by the Borrower to stockholders
generally and Xxxxxx Xxxxxx Energy to partners generally and each regular
or periodic report and any registration statement, prospectus or written
communication (other than transmittal letters) in respect thereof filed by
the Borrower and Xxxxxx Xxxxxx Energy with or received by the Borrower or
Xxxxxx Xxxxxx Energy in connection therewith from any securities exchange
or the SEC or any successor agency.
(f) Promptly after the furnishing thereof, copies of any statement,
report or notice furnished to or any Person pursuant to the terms of any
indenture, loan or credit or other similar agreement, other than this
Agreement and not otherwise required to be furnished to the Agent pursuant
to any other provision of this Section 8.01.
(g) From time to time such other information regarding the business,
affairs or financial condition of the Borrower or any Subsidiary
(including, without limitation, any Plan or Multiemployer Plan and any
reports or other information required to be filed under ERISA) as the
Required Lenders or the Agent may reasonably request.
(h) As soon as available and in any event within forty-five (45)
Business Days after the last day of each calendar quarter, a report, in
form and substance satisfactory to the Agent, setting forth as of the last
Business Day of such calendar quarter a true and complete list of all
Hedging Agreements (including commodity price swap agreements, forward
agreements or contracts of sale which provide for prepayment for deferred
shipment or delivery of oil, gas or other commodities) of the Borrower and
Kinder Xxxxxx X.X., the material terms thereof (including the type, term,
effective date, termination date and notional amounts or volumes), the net
xxxx to market value therefor, any new credit support agreements relating
thereto not listed on Schedule 7.20, any margin required or supplied under
any credit support document, and the counterparty to each such agreement.
-46-
The Borrower will furnish to the Agent, at the time it furnishes each set of
financial statements pursuant to paragraph (a) or (b) above, a certificate
substantially in the form of Exhibit C hereto executed by a Responsible Officer
(i) certifying as to the matters set forth therein and stating that no Default
has occurred and is continuing (or, if any Default has occurred and is
continuing, describing the same in reasonable detail), and (ii) setting forth in
reasonable detail the computations necessary to determine whether the Borrower
is in compliance with Sections 9.12, 913 and 9.14 as of the end of the
respective fiscal quarter or fiscal year.
Section 8.02 Litigation. The Borrower shall promptly give to the Agent
notice of all legal or arbitral proceedings, and of all proceedings before any
Governmental Authority affecting the Borrower or any Subsidiary, except
proceedings which, if adversely determined, would not have a Material Adverse
Effect. The Borrower will, and will cause Kinder Xxxxxx X.X. to, promptly notify
the Agent of any claim, judgment, Lien or other encumbrance affecting any
Property of the Borrower or Kinder Xxxxxx X.X. if the value of the claim,
judgment, Lien, or other encumbrance affecting such Property shall exceed
$250,000.
Section 8.03 Maintenance, Etc.
(a) The Borrower shall and shall cause each Subsidiary to: preserve and
maintain its corporate existence and all of its material rights, privileges
and franchises; keep books of record and account in which full, true and
correct entries will be made of all dealings or transactions in relation to
its business and activities; comply with all Governmental Requirements if
failure to comply with such requirements will have a Material Adverse
Effect; pay and discharge all taxes, assessments and governmental charges
or levies imposed on it or on its income or profits or on any of its
Property prior to the date on which penalties attach thereto, except for
any such tax, assessment, charge or levy the payment of which is being
contested in good faith and by proper proceedings and against which
adequate reserves are being maintained; upon reasonable notice, permit
representatives of the Agent, during normal business hours, to examine,
copy and make extracts from its books and records, to inspect its
Properties, and to discuss its business and affairs with its officers, all
to the extent reasonably requested by such the Agent; and keep, or cause to
be kept, insured by financially sound and reputable insurers all Property
of a character usually insured by Persons engaged in the same or similar
business similarly situated against loss or damage of the kinds and in the
amounts customarily insured against by such Persons and carry such other
insurance as is usually carried by such Persons including, without
limitation, environmental risk insurance to the extent reasonably
available.
(b) Contemporaneously with the delivery of the financial statements
required by Section 8.01(a) to be delivered for each year, the Borrower
will furnish or cause to be furnished to the Agent a certificate of
insurance coverage from the insurer in form and substance satisfactory to
the Agent and, if requested, will furnish the Agent copies of the
applicable policies.
-47-
(c) The Borrower will and will cause each Subsidiary to operate its
Properties or cause such Properties to be operated in a careful and
efficient manner in accordance with the practices of the industry and in
compliance with all applicable contracts and agreements and in compliance
in all material respects with all Governmental Requirements.
Section 8.04 Environmental Matters.
(a) The Borrower will and will cause each Subsidiary to establish and
implement such procedures as may be reasonably necessary to continuously
determine and assure that any failure of the following does not have a
Material Adverse Effect: (i) all Property of the Borrower and its
Subsidiaries and the operations conducted thereon and other activities of
the Borrower and its Subsidiaries are in compliance with and do not violate
the requirements of any Environmental Laws, (ii) no oil, hazardous
substances or solid wastes are disposed of or otherwise released on or to
any Property owned by any such party except in compliance with
Environmental Laws, (iii) no hazardous substance will be released on or to
any such Property in a quantity equal to or exceeding that quantity which
requires reporting pursuant to Section 103 of CERCLA, and (iv) no oil, oil
and gas exploration and production wastes or hazardous substance is
released on or to any such Property so as to pose an imminent and
substantial endangerment to public health or welfare or the environment.
(b) The Borrower will promptly notify the Agent in writing of any
threatened action, investigation or inquiry by any Governmental Authority
of which the Borrower has knowledge in connection with any Environmental
Laws, excluding routine testing and corrective action.
Section 8.05 Further Assurances. The Borrower will and will cause
Kinder Xxxxxx X.X. to cure promptly any defects in the creation and issuance of
the Notes and the execution and delivery of the Security Instruments and this
Agreement. The Borrower at its expense will and will cause Kinder Xxxxxx X.X. to
promptly execute and deliver to the Agent upon request all such other documents,
agreements and instruments to comply with or accomplish the covenants and
agreements of the Borrower or Kinder Xxxxxx X.X., as the case may be, in the
Security Instruments and this Agreement, or to further evidence and more fully
describe the collateral intended as security for the Notes, or to correct any
omissions in the Security Instruments, or to state more fully the security
obligations set out herein or in any of the Security Instruments, or to perfect,
protect or preserve any Liens created pursuant to any of the Security
Instruments, or to make any recordings, to file any notices or obtain any
consents, all as may be necessary or appropriate in connection therewith.
Section 8.06 Performance of Obligations. The Borrower will pay the
Notes according to the reading, tenor and effect thereof; and the Borrower will
and will cause Kinder Xxxxxx X.X. to do and perform every act and discharge all
of the obligations to be performed and discharged by them under the Security
Instruments and this Agreement, at the time or times and in the manner
specified.
-48-
Section 8.07 ERISA Information and Compliance. The Borrower will
promptly furnish and will cause the Subsidiaries and any ERISA Affiliate to
promptly furnish to the Agent with sufficient copies to the Lenders (i) promptly
after the filing thereof with the United States Secretary of Labor, the Internal
Revenue Service or the PBGC, copies of each annual and other report with respect
to each Plan or any trust created thereunder, (ii) immediately upon becoming
aware of the occurrence of any ERISA Event or of any "prohibited transaction,"
as described in section 406 of ERISA or in section 4975 of the Code, in
connection with any Plan or any trust created thereunder, a written notice
signed by a Responsible Officer specifying the nature thereof, what action the
Borrower, the Subsidiary or the ERISA Affiliate is taking or proposes to take
with respect thereto, and, when known, any action taken or proposed by the
Internal Revenue Service, the Department of Labor or the PBGC with respect
thereto, and (iii) immediately upon receipt thereof, copies of any notice of the
PBGC's intention to terminate or to have a trustee appointed to administer any
Plan. With respect to each Plan (other than a Multiemployer Plan), the Borrower
will, and will cause each Subsidiary and ERISA Affiliate to, (i) satisfy in full
and in a timely manner, without incurring any late payment or underpayment
charge or penalty and without giving rise to any lien, all of the contribution
and funding requirements of section 412 of the Code (determined without regard
to subsections (d), (e), (f) and (k) thereof) and of section 302 of ERISA
(determined without regard to sections 303, 304 and 306 of ERISA), and (ii) pay,
or cause to be paid, to the PBGC in a timely manner, without incurring any late
payment or underpayment charge or penalty, all premiums required pursuant to
sections 4006 and 4007 of ERISA.
Section 8.08 Collateral. The Borrower shall and shall cause Kinder
Xxxxxx X.X. to have the following Property subject to a first and prior Lien for
the benefit of the Agent on behalf of the Lenders pursuant to the Security
Instruments: (a) 100% of the issued and outstanding stock of Kinder Xxxxxx X.X.,
and (b) 431,000 LP Units owned by Kinder Xxxxxx X.X. and (c) any additional LP
Units owned or acquired by the Borrower or Kinder Xxxxxx X.X.. The Borrower
shall cause the LP Units to be evidenced by a certificate of common units
representing limited partnership interest in Xxxxxx Xxxxxx Energy and deliver
such certificates to the Agent together with executed stockpowers within five
(5) Business Days of the Closing Date.
Section 8.09 Minimum Distribution. The Borrower shall cause Kinder
Xxxxxx X.X., as general partner of Xxxxxx Xxxxxx Energy to cause Xxxxxx Xxxxxx
Energy, to maintain a minimum cash distribution on each LP Unit equal to no less
than $0.55 per quarter.
ARTICLE IX
Negative Covenants
The Borrower covenants and agrees that, so long as any of the Commitments
are in effect and until payment in full of Indebtedness hereunder, all interest
thereon and all other amounts payable by the Borrower hereunder, without the
prior written consent of the Majority Lenders:
-49-
Section 9.01 Debt. The Borrower will not and
will not permit Kinder Xxxxxx X.X. to incur, create,
assume or suffer to exist any Debt, except:
(a) the Notes or other Indebtedness arising under the Loan Documents or
any guaranty of or suretyship arrangement for the Notes or other
Indebtedness arising under the Loan Documents;
(b) Debt of the Borrower and Kinder Xxxxxx X.X.
existing on the Closing Date which is reflected in
the Financial Statements or is disclosed in Schedule
9.01, and any renewals or extensions (but not
increases) thereof;
(c) accounts payable (for the deferred purchase price of Property or
services) from time to time incurred in the ordinary course of business
which, if greater than 90 days past the invoice or billing date, are being
contested in good faith by appropriate proceedings if reserves adequate
under GAAP shall have been established therefor;
(d) Debt under capital leases (as required to be reported on the
financial statements of the Borrower and Kinder Xxxxxx X.X. pursuant to
GAAP) not to exceed in the case of the Borrower, $50,000, and in the case
of Kinder Xxxxxx X.X., $600,000, outstanding at one time;
(e) Debt of the Borrower under Hedging
Agreements with the Agent or as approved by the
Majority Lenders;
(f) Debt of a Special Purpose Subsidiary which
is non recourse to the Borrower or Kinder Xxxxxx X.X.
on terms acceptable to the Majority Lenders;
(g) Debt of Kinder Xxxxxx X.X. arising by
operation of law as a result of Kinder Xxxxxx X.X.
being the general partner of Xxxxxx Xxxxxx Energy,
Xxxxxx Xxxxxx Operating A or Xxxxxx Xxxxxx Operating
B; and
(h) other Debt not to exceed in the case of the Borrower, $50,000, and
in the case of Kinder Xxxxxx X.X., $600,000, in the aggregate outstanding
at any time.
Section 9.02 Liens. The Borrower will not and will not permit Kinder
Xxxxxx X.X. to create, incur, assume or permit to exist any Lien on any Property
(now owned or hereafter acquired by the Borrower or Kinder Xxxxxx X.X.), except:
(a) Liens securing the payment of any
Indebtedness;
(b) Excepted Liens;
(c) Liens securing leases allowed under Section
9.01(d) but only on the Property under lease; and
-50-
(d) Liens disclosed on Schedule 9.02.
Section 9.03 Investments, Loans and Advances. The Borrower will not and
will not permit Kinder Xxxxxx X.X. to make or permit to remain outstanding any
loans or advances to or investments in any Person, except that the foregoing
restriction shall not apply to:
(a) investments, loans or advances reflected in
the Financial Statements or which are disclosed to
the Lenders in Schedule 9.03;
(b) accounts receivable arising in the ordinary
course of business;
(c) direct obligations of the United States or any agency thereof, or
obligations guaranteed by the United States or any agency thereof, in each
case maturing within one year from the date of creation thereof;
(d) commercial paper maturing within one year from the date of creation
thereof rated in the highest grade by Standard & Poors Corporation or
Xxxxx'x Investors Service, Inc.;
(e) deposits maturing within one year from the date of creation thereof
with, including certificates of deposit issued by, any Lender or any office
located in the United States of any other bank or trust company which is
organized under the laws of the United States or any state thereof, has
capital, surplus and undivided profits aggregating at least $100,000,000.00
(as of the date of such Lender's or bank or trust company's most recent
financial reports) and has a short term deposit rating of no lower than A2
or P2, as such rating is set forth from time to time, by Standard & Poors
Corporation or Xxxxx'x Investors Service, Inc., respectively;
(f) deposits in money market funds investing
exclusively in investments described in Section
9.03(c), 9.03(d) or 9.03(e); and
(g) investments, loans or advances made by the
Borrower or Kinder Xxxxxx X.X. in or to its
Subsidiaries, not to exceed at any one time
outstanding $150,000 in the aggregate.
Section 9.04 Dividends, Distributions and Redemptions. The Borrower
will not declare or pay any dividend, purchase, redeem or otherwise acquire for
value any of its stock now or hereafter outstanding, return any capital to its
stockholders or make any distribution of its assets to its stockholders, except
that the Borrower may pay dividends on and redeem its common and preferred stock
provided that (a) the Distribution LC shall have expired, (b) no Default shall
have occurred and be continuing or would result from such dividend or redemption
and (c) the cumulative dollar amount of the dividends and redemption made by the
Borrower for the period commencing with the date the Distribution LC expired
through the determination date shall not exceed in the aggregate 50% of Cash
Flow after Debt Service for the same period.
-51-
Section 9.05 Sales and Leasebacks. The Borrower will not and will not
permit Kinder Xxxxxx X.X. to enter into any arrangement, directly or indirectly,
with any Person whereby the Borrower or Kinder Xxxxxx X.X. shall sell or
transfer any of its Property, whether now owned or hereafter acquired, and
whereby the Borrower or Kinder Xxxxxx X.X. shall then or thereafter rent or
lease as lessee such Property or any part thereof or other Property which the
Borrower or Kinder Xxxxxx X.X. intends to use for substantially the same purpose
or purposes as the Property sold or transferred.
Section 9.06 Nature of Business. Neither the Borrower nor any
Subsidiary will allow any material change to be made in the character of its
business.
Section 9.07 Limitation on Leases. The Borrower will not and will not
permit Kinder Xxxxxx X.X. to create, incur, assume or suffer to exist any
obligation for the payment of rent or hire of Property of any kind whatsoever
(real or personal including capital leases but excluding leases of Hydrocarbon
Interests), under leases or lease agreements which would cause the aggregate
amount of all payments made pursuant to all such leases or lease agreements to
exceed $50,000 in the case of the Borrower and $600,000 in the case of Kinder
Xxxxxx X.X. in any period of twelve consecutive calendar months during the life
of such leases.
Section 9.08 Mergers, Etc. Neither the Borrower nor any Subsidiary will
merge into or with or consolidate with any other Person, or sell, lease or
otherwise dispose of (whether in one transaction or in a series of transactions)
all or substantially all of its Property or assets to any other Person.
Section 9.09 Proceeds of Notes. The Borrower will not permit the
proceeds of the Notes to be used for any purpose other than those permitted by
Section 7.07. Neither the Borrower nor any Person acting on behalf of the
Borrower has taken or will take any action which might cause any of the Loan
Documents to violate Regulation G, U or X or any other regulation of the Board
of Governors of the Federal Reserve System or to violate Section 7 of the
Securities Exchange Act of 1934 or any rule or regulation thereunder, in each
case as now in effect or as the same may hereinafter be in effect.
Section 9.10 ERISA Compliance. The Borrower will not at any time:
(a) Engage in, or permit any Subsidiary or ERISA Affiliate to engage
in, any transaction in connection with which the Borrower, any Subsidiary
or any ERISA Affiliate could be subjected to either a civil penalty
assessed pursuant to section 502(c), (i) or (l) of ERISA or a tax imposed
by Chapter 43 of Subtitle D of the Code;
(b) Terminate, or permit any Subsidiary or ERISA Affiliate to
terminate, any Plan in a manner, or take any other action with respect to
any Plan, which could result in any material liability to the Borrower, any
Subsidiary or any ERISA Affiliate to the PBGC;
-52-
(c) Fail to make, or permit any Subsidiary or ERISA Affiliate to fail
to make, full payment when due of all amounts which, under the provisions
of any Plan, agreement relating thereto or applicable law, the Borrower, a
Subsidiary or any ERISA Affiliate is required to pay as contributions
thereto;
(d) Permit to exist, or allow any Subsidiary or ERISA Affiliate to
permit to exist, any accumulated funding deficiency within the meaning of
Section 302 of ERISA or section 412 of the Code, whether or not waived,
with respect to any Plan;
(e) Permit, or allow any Subsidiary or ERISA Affiliate to permit, the
actuarial present value of the benefit liabilities under any Plan
maintained by the Borrower, any Subsidiary or any ERISA Affiliate which is
regulated under Title IV of ERISA to exceed the current value of the assets
(computed on a plan termination basis in accordance with Title IV of ERISA)
of such Plan allocable to such benefit liabilities. The term "actuarial
present value of the benefit liabilities" shall have the meaning specified
in section 4041 of ERISA;
(f) Contribute to or assume an obligation to contribute to, or permit
any Subsidiary or ERISA Affiliate to contribute to or assume an obligation
to contribute to, any Multiemployer Plan;
(g) Acquire, or permit any Subsidiary or ERISA Affiliate to acquire, an
interest in any Person that causes such Person to become an ERISA Affiliate
with respect to the Borrower, any Subsidiary or any ERISA Affiliate if such
Person sponsors, maintains or contributes to, or at any time in the
six-year period preceding such acquisition has sponsored, maintained, or
contributed to, (1) any Multiemployer Plan, or (2) any other Plan that is
subject to Title IV of ERISA under which the actuarial present value of the
benefit liabilities under such Plan exceeds the current value of the assets
(computed on a plan termination basis in accordance with Title IV of ERISA)
of such Plan allocable to such benefit liabilities;
(h) Incur, or permit any Subsidiary or ERISA Affiliate to incur, a
liability to or on account of a Plan under sections 515, 4062, 4063, 4064,
4201 or 4204 of ERISA;
(i) Contribute to or assume an obligation to contribute to, or permit
any Subsidiary or ERISA Affiliate to contribute to or assume an obligation
to contribute to, any employee welfare benefit plan, as defined in section
3(1) of ERISA, including, without limitation, any such plan maintained to
provide benefits to former employees of such entities, that may not be
terminated by such entities in their sole discretion at any time without
any material liability; or
(j) Amend or permit any Subsidiary or ERISA Affiliate to amend, a Plan
resulting in an increase in current liability such that the Borrower, any
Subsidiary or any ERISA Affiliate is required to provide security to such
Plan under section 401(a)(29) of the Code.
-53-
Section 9.11 Sale or Discount of Receivables.
The Borrower will not and will not permit Kinder Xxxxxx
X.X. to discount or sell (with or without recourse) any of
its notes receivable or accounts receivable.
Section 9.12 Current Ratio. The Borrower will not permit its ratio of
(i) consolidated current assets plus the amount of the unused Aggregate Facility
A Commitments to (ii) consolidated current liabilities (excluding current
maturities of the Notes, if any) to be less than 1.1 to 1.0 at any time.
Section 9.13 Debt Service Coverage Ratio. The Borrower will not permit
its Debt Service Ratio as of the end of any fiscal quarter of the Borrower
(calculated quarterly at the end of each fiscal quarter) to be less than the
amount for the applicable date set forth below:
Date Ratio
Closing Date to March 31, 1998 1.1 to 1.0
April 1, 1998 to December 31, 1998 1.3 to 1.0
January 1, 1999 to August 31, 1999 1.4 to 1.0
For purposes of this Section 9.13, "Debt Service Ratio" shall mean the ratio of
(i) Cash Flow for the four fiscal quarters ending on such date to (ii) cash
payments made for principal and interest for such four fiscal quarters of the
Borrower.
Section 9.14 Margin Maintenance Ratio. (a) The
Borrower will not permit the ratio of the market value of
the LP Units owned by Kinder Xxxxxx X.X. to Funded Debt to
be less than 1.20011 to 1.00 at any time.
(b) The Borrower will not permit the ratio of the market value of the LP
Units owned by Kinder Xxxxxx X.X. to Funded Debt to be less than 1.4001 to 1.00
for any ten (10) consecutive days that common units representing a limited
partner interest of Xxxxxx Xxxxxx Energy are publicly traded.
Section 9.15 Sale of Properties. The Borrower will not, and will not
permit Kinder Xxxxxx X.X. to, sell, assign, convey or otherwise transfer any
Property, except for non Mortgaged Property which shall not exceed $300,000 in
the aggregate in any fiscal year.
Section 9.16 Environmental Matters. Neither the Borrower nor any
Subsidiary will cause or permit any of its Property to be in violation of, or do
anything or permit anything to be done which will subject any such Property to
any remedial obligations under any Environmental Laws, assuming disclosure to
the applicable Governmental Authority of all relevant facts, conditions and
circumstances, if any, pertaining to such Property where such violations or
remedial obligations would have a Material Adverse Effect.
-54-
Section 9.17 Transactions with Affiliates. Neither the Borrower nor any
Subsidiary will enter into any transaction, including, without limitation, any
purchase, sale, lease or exchange of Property or the rendering of any service,
with any Affiliate unless such transactions are otherwise permitted under this
Agreement, are in the ordinary course of its business and are upon fair and
reasonable terms no less favorable to it than it would obtain in a comparable
arm's length transaction with a Person not an Affiliate.
Section 9.18 Subsidiaries. The Borrower shall
not, and shall not permit Kinder Xxxxxx X.X. to, create
any additional Subsidiaries or partnerships except for
Subsidiaries which are established solely for the purpose
of acquiring Properties financed by Debt which is non
recourse to the Borrower and Kinder Xxxxxx X.X. ("Special
Purpose Subsidiary"). The Borrower shall not and shall
not permit any Subsidiary to sell or to issue any stock or
ownership interest of a Subsidiary except to the Borrower
or Kinder Xxxxxx X.X. and except in compliance with
Section 9.03.
Section 9.19 Negative Pledge Agreements. The Borrower shall not, and
shall not permit Kinder Xxxxxx X.X. to create, incur, assume or suffer to exist
any contract, agreement or understanding (other than this Agreement and the
Security Instruments) which in any way prohibits or restricts the granting,
conveying, creation or imposition of any Lien on any of its Property or
restricts any Subsidiary from paying dividends to the Borrower, or which
requires the consent of or notice to other Persons in connection therewith.
ARTICLE X
Events of Default; Remedies
Section 10.01 Events of Default. One or more of
the following events shall constitute an "Event of
Default":
(a) the Borrower shall (i) default in the payment or prepayment when
due of any principal on any Loan or any reimbursement obligation for a
disbursement made under any Letter of Credit or the Distribution LC, (ii)
default, and such default shall continue unremedied for three (3) or more
Business Days, in the payment when due of any interest on any Loan or any
fees or other amount payable by it under the Loan Documents; or
(b) the Borrower or Kinder Xxxxxx X.X. shall default in the payment
when due of any principal of or interest on any of its other Debt
aggregating $100,000 or more, or any event specified in any note,
agreement, indenture or other document evidencing or relating to any such
Debt shall occur if the effect of such event is to cause, or (with the
giving of any notice or the lapse of time or both) to permit the holder or
holders of such Debt (or a trustee or agent on behalf of such holder or
holders) to cause, such Debt to become due prior to its stated maturity; or
-55-
(c) any representation, warranty or certification made or deemed made
herein or in any Security Instrument by the Borrower or Kinder Xxxxxx X.X.,
or any certificate furnished to or the Agent pursuant to the provisions
hereof or any Security Instrument, shall prove to have been false or
misleading as of the time made or furnished in any material respect; or
(d) the Borrower shall default in the performance of any of its
obligations under Article IX or any other Article of this Agreement other
than under Article VIII; or the Borrower shall default in the performance
of any of its obligations under Article VIII or any Security Instrument
(other than the payment of amounts due which shall be governed by Section
10.01(a)) and such default shall continue unremedied for a period of thirty
(30) days after the earlier to occur of (i) notice thereof to the Borrower
by the Agent, or (ii) the Borrower otherwise becoming aware of such
default; or
(e) the Borrower shall admit in writing its
inability to, or be generally unable to, pay its
debts as such debts become due; or
(f) the Borrower shall (i) apply for or consent to the appointment of,
or the taking of possession by, a receiver, custodian, trustee or
liquidator of itself or of all or a substantial part of its property, (ii)
make a general assignment for the benefit of its creditors, (iii) commence
a voluntary case under the Federal Bankruptcy Code (as now or hereafter in
effect), (iv) file a petition seeking to take advantage of any other law
relating to bankruptcy, insolvency, reorganization, winding-up, liquidation
or composition or readjustment of debts, (v) fail to controvert in a timely
and appropriate manner, or acquiesce in writing to, any petition filed
against it in an involuntary case under the Federal Bankruptcy Code, or
(vi) take any corporate action for the purpose of effecting any of the
foregoing; or
(g) a proceeding or case shall be commenced, without the application or
consent of the Borrower, in any court of competent jurisdiction, seeking
(i) its liquida- tion, reorganization, dissolution or winding-up, or the
composition or readjustment of its debts, (ii) the appointment of a
trustee, receiver, custodian, liquidator or the like of the Borrower of all
or any substantial part of its assets, or (iii) similar relief in respect
of the Borrower under any law relating to bankruptcy, insolvency,
reorganization, winding-up, or composition or adjustment of debts, and such
proceeding or case shall continue undismissed, or an order, judgment or
decree approving or ordering any of the foregoing shall be entered and
continue unstayed and in effect, for a period of 60 days; or (iv) an order
for relief against the Borrower shall be entered in an involuntary case
under the Federal Bankruptcy Code; or
(h) a judgment or judgments for the payment of money in excess of
$150,000 in the aggregate shall be rendered by a court against the Borrower
or any Subsidiary and the same shall not be discharged (or provision shall
not be made for such discharge), or a stay of execution thereof shall not
be procured, within thirty (30) days from the date of entry thereof and the
Borrower or such Subsidiary shall not, within said period of 30
-56-
days, or such longer period during which execution of the same shall have
been stayed, appeal therefrom and cause the execution thereof to be stayed
during such appeal; or
(i) the Security Instruments after delivery thereof shall for any
reason, except to the extent permitted by the terms thereof, cease to be in
full force and effect and valid, binding and enforceable in accordance with
their terms, or cease to create a valid and perfected Lien of the priority
required thereby on any of the collateral purported to be covered thereby,
except to the extent permitted by the terms of this Agreement, or the
Borrower shall so state in writing; or
(j) any Letter of Credit or the Distribution LC becomes the subject
matter of any order, judgment, injunction or any other such determination,
or if the Borrower or any other Person shall petition or apply for or
obtain any order restricting payment by First Union under any Letter of
Credit or the Distribution LC or extending First Union's liability under
any Letter of Credit or the Distribution LC beyond the expiration date
stated therein or otherwise agreed to by First Union; or
(k) the Borrower discontinues its usual business
or suffers to exist any material change in its
ownership, control or management; or
(l) Kinder Xxxxxx X.X. takes, suffers or permits
to exist any of the events or conditions referred to
in paragraphs (e), (f), (g) or (h) hereof or if any
provision of any Security Instrument to which it is a
party shall for any reason cease to be valid and
binding on Kinder Xxxxxx X.X. or if Xxxxxx Xxxxxx
X.X. shall so state in writing; or
(m) any Subsidiary takes, suffers or permits to exist any of the events
or conditions referred to in paragraphs (e), (f), (g) or (h) hereof which
would result in a Material Adverse Effect; or
(n) Xxxxxx Xxxxxx Energy or any of its Subsidiaries shall default in
the payment when due of any principal of or interest in any of its Debt
aggregating $5,000,000.
Section 10.02 Remedies.
(a) In the case of an Event of Default other than one referred to in
clauses (e), (f) or (g) of Section 10.01 or in clause (m) to the extent it
relates to clauses (e), (f) or (g), the Agent, upon request of the Majority
Lenders, shall, by notice to the Borrower, cancel the Commitments and/or
declare the principal amount then outstanding of, and the accrued interest
on, the Loans and all other amounts payable by the Borrower hereunder and
under the Notes (including without limitation the payment of cash
collateral to secure the LC Exposure and exposure under the Distribution
LC) to be forthwith due and payable, whereupon such amounts shall be
immediately due and payable without presentment, demand, protest, notice of
intent to accelerate, notice of acceleration or other formalities of any
kind, all of which are hereby expressly waived by the Borrower.
-57-
(b) In the case of the occurrence of an Event of Default referred to in
clauses (e), (f) or (g) of Section 10.01 or in clause (m) to the extent it
relates to clauses (e), (f) or (g), the Commitments shall be automatically
canceled and the principal amount then outstanding of, and the accrued
interest on, the Loans and all other amounts payable by the Borrower
hereunder and under the Notes (including without limitation the payment of
cash collateral to secure the LC Exposure and exposure under the
Distribution LC) shall become automatically immediately due and payable
without presentment, demand, protest, notice of intent to accelerate,
notice of acceleration or other formalities of any kind, all of which are
hereby expressly waived by the Borrower.
(c) All proceeds received after maturity of the Notes, whether by
acceleration or otherwise shall be applied first to reimbursement of
expenses and indemnities provided for in this Agreement and the Security
Instruments; second to accrued interest on the Notes; third to fees; fourth
pro rata to principal outstanding on the Notes and other Indebtedness;
fifth to serve as cash collateral to be held by First Union to secure the
LC Exposure and exposure under the Distribution LC; and any excess shall be
paid to the Borrower or as otherwise required by any Governmental
Requirement.
ARTICLE XI
The Agent
Section 11.01 Appointment, Powers and Immunities. Each Lender hereby
irrevocably appoints and authorizes the Agent to act as its agent hereunder and
under the Security Instruments with such powers as are specifically delegated to
the Agent by the terms of this Agreement and the Security Instruments, together
with such other powers as are reasonably incidental thereto. The Agent (which
term as used in this sentence and in Section 11.05 and the first sentence of
Section 11.06 shall include reference to its Affiliates and its and its
Affiliates' officers, directors, employees, attorneys, accountants, experts and
agents): (i) shall have no duties or responsibilities except those expressly set
forth in the Loan Documents, and shall not by reason of the Loan Documents be a
trustee or fiduciary for any Lender; (ii) makes no representation or warranty to
any Lender and shall not be responsible to the Lenders for any recitals,
statements, representations or warranties contained in this Agreement, or in any
certificate or other document referred to or provided for in, or received by any
of them under, this Agreement, or for the value, validity, effectiveness,
genuineness, execution, effectiveness, legality, enforceability or sufficiency
of this Agreement, any Note or any other document referred to or provided for
herein or for any failure by the Borrower or any other Person (other than the
Agent) to perform any of its obligations hereunder or thereunder or for the
existence, value, perfection or priority of any collateral security or the
financial or other condition of the Borrower, its Subsidiaries or any other
obligor or guarantor; (iii) except pursuant to Section 11.07 shall not be
required to initiate or conduct any litigation or collection proceedings
hereunder; and (iv) shall not be responsible for any action taken or omitted to
be taken by it hereunder or under any other document or instrument referred to
or provided for herein or in connection herewith including its own ordinary
negligence, except for its own gross
-58-
negligence or willful misconduct. The Agent may employ agents, accountants,
attorneys and experts and shall not be responsible for the negligence or
misconduct of any such agents, accountants, attorneys or experts selected by it
in good faith or any action taken or omitted to be taken in good faith by it in
accordance with the advice of such agents, accountants, attorneys or experts.
The Agent may deem and treat the payee of any Note as the holder thereof for all
purposes hereof unless and until a written notice of the assignment or transfer
thereof permitted hereunder shall have been filed with the Agent and consented
to by Agent and the Borrower (which consent shall not be unreasonably withheld).
The Agent is authorized to release any collateral that is permitted to be sold
or released pursuant to the terms of the Loan Documents.
Section 11.02 Reliance by Agent. The Agent shall be entitled to rely
upon any certification, notice or other communication (including any thereof by
telephone, telex, telecopier, telegram or cable) believed by it to be genuine
and correct and to have been signed or sent by or on behalf of the proper Person
or Persons, and upon advice and statements of legal counsel, independent
accountants and other experts selected by the Agent.
Section 11.03 Defaults. The Agent shall not be deemed to have knowledge
of the occurrence of a Default (other than the non-payment of principal of or
interest on Loans or of fees or failure to reimburse for Letter of Credit
drawings) unless the Agent has received notice from a Lender or the Borrower
specifying such Default and stating that such notice is a "Notice of Default."
In the event that the Agent receives such a notice of the occurrence of a
Default, the Agent shall give prompt notice thereof to the Lenders. In the event
of a payment Default, the Agent shall give each Lender prompt notice of each
such payment Default.
Section 11.04 Rights as a Lender. With respect to its Commitments and
the Loans made by it and its participation in the issuance of Letters of Credit,
First Union (and any successor acting as Agent) in its capacity as a Lender
hereunder shall have the same rights and powers hereunder as any other Lender
and may exercise the same as though it were not acting as the Agent, and the
term "Lender" or "Lenders" shall, unless the context otherwise indicates,
include the Agent in its individual capacity. First Union (and any successor
acting as Agent) and its Affiliates may (without having to account therefor to
any Lender) accept deposits from, lend money to and generally engage in any kind
of banking, trust or other business with the Borrower (and any of its
Affiliates) as if it were not acting as the Agent, and First Union and its
Affiliates may accept fees and other consideration from the Borrower for
services in connection with this Agreement or otherwise without having to
account for the same to the Lenders.
Section 11.05 Indemnification. The Lenders agree to indemnify the Agent
ratably in accordance with their Percentage Shares for the Indemnity Matters as
described in Section 12.03 to the extent not indemnified or reimbursed by the
Borrower under Section 12.03, but without limiting the obligations of the
Borrower under said Section 12.03 and for any and all other liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind and nature whatsoever which may be imposed
on, incurred by or asserted against the Agent in any way relating
-59-
to or arising out of: (i) this Agreement, the Security Instruments or any other
documents contemplated by or referred to herein or the transactions contemplated
hereby, but excluding, unless a Default has occurred and is continuing, normal
administrative costs and expenses incident to the performance of its agency
duties hereunder or (ii) the enforcement of any of the terms of this Agreement,
any Security Instrument or of any such other documents; whether or not any of
the foregoing specified in this Section 11.05 arises from the sole or concurrent
negligence of the Agent, provided that no Lender shall be liable for any of the
foregoing to the extent they arise from the gross negligence or willful
misconduct of the Agent.
Section 11.06 Non-Reliance on Agent and other Lenders. Each Lender
acknowledges and agrees that it has, independently and without reliance on the
Agent or any other Lender, and based on such documents and information as it has
deemed appropriate, made its own credit analysis of the Borrower and its
decision to enter into this Agreement, and that it will, independently and
without reliance upon the Agent or any other Lender, and based on such documents
and information as it shall deem appropriate at the time, continue to make its
own analysis and decisions in taking or not taking action under this Agreement.
The Agent shall not be required to keep itself informed as to the performance or
observance by the Borrower of this Agreement, the Notes, the Security
Instruments or any other document referred to or provided for herein or to
inspect the properties or books of the Borrower. Except for notices, reports and
other documents and information expressly required to be furnished to the
Lenders by the Agent hereunder, the Agent shall not have any duty or
responsibility to provide any Lender with any credit or other information
concerning the affairs, financial condition or business of the Borrower (or any
of its Affiliates) which may come into the possession of the Agent or any of its
Affiliates. In this regard, each Lender acknowledges that Xxxxxx & Xxxxxx L.L.P.
is acting in this transaction as special counsel to the Agent only, except to
the extent otherwise expressly stated in any legal opinion or any Loan Document.
Each Lender will consult with its own legal counsel to the extent that it deems
necessary in connection with the Loan Documents and the matters contemplated
therein.
Section 11.07 Action by Agent. Except for action or other matters
expressly required of the Agent hereunder, the Agent shall in all cases be fully
justified in failing or refusing to act hereunder unless it shall (i) receive
written instructions from the Majority Lenders (or all of the Lenders as
expressly required by Section 12.04) specifying the action to be taken, and (ii)
be indemnified to its satisfaction by the Lenders against any and all liability
and expenses which may be incurred by it by reason of taking or continuing to
take any such action.
The instructions of the Majority Lenders (or all of the Lenders as expressly
required by Section 12.04) and any action taken or failure to act pursuant
thereto by the Agent shall be binding on all of the Lenders. If a Default has
occurred and is continuing, the Agent shall take such action with respect to
such Default as shall be directed by the Majority Lenders (or all of the Lenders
as required by Section 12.04) in the written instructions (with indemnities)
described in this Section 11.07, provided that, unless and until the Agent shall
have received such directions, the Agent may (but shall not be obligated to)
take such action, or refrain from taking such action, with respect to such
Default as it shall deem advisable in the best interests of the Lenders. In
-60-
no event, however, shall the Agent be required to take any action which exposes
the Agent to personal liability or which is contrary to this Agreement and the
Security Instruments or applicable law.
Section 11.08 Resignation or Removal of Agent. Subject to the
appointment and acceptance of a successor Agent as provided below, the Agent may
resign at any time by giving notice thereof to the Lenders and the Borrower, and
the Agent may be removed at any time with or without cause by the Majority
Lenders. Upon any such resignation or removal, the Majority Lenders shall have
the right to appoint a successor Agent with the consent of Borrower (which shall
not be unreasonably withheld). If no successor Agent shall have been so
appointed by the Majority Lenders and shall have accepted such appointment
within thirty (30) days after the retiring Agent's giving of notice of
resignation or the Majority Lenders' removal of the retiring Agent, then the
retiring Agent may, on behalf of the Lenders, appoint a successor Agent with the
consent of Borrower (which shall not be unreasonably withheld). Upon the
acceptance of such appointment hereunder by a successor Agent, such successor
Agent shall thereupon succeed to and become vested with all the rights, powers,
privileges and duties of the retiring Agent, and the retiring Agent shall be
discharged from its duties and obligations hereunder. After any retiring Agent's
resignation or removal hereunder as Agent, the provisions of this Article XI and
Section 12.03 shall continue in effect for its benefit in respect of any actions
taken or omitted to be taken by it while it was acting as the Agent.
ARTICLE XII
Miscellaneous
Section 12.01 Waiver. No failure on the part of the Agent or any Lender
to exercise and no delay in exercising, and no course of dealing with respect
to, any right, power or privilege under any of the Loan Documents shall operate
as a waiver thereof, nor shall any single or partial exercise of any right,
power or privilege under any of the Loan Documents preclude any other or further
exercise thereof or the exercise of any other right, power or privilege. The
remedies provided herein are cumulative and not exclusive of any remedies
provided by law.
Section 12.02 Notices. All notices and other communications provided
for herein and in the other Loan Documents (including, without limitation, any
modifications of, or waivers or consents under, this Agreement or the other Loan
Documents) shall be given or made by telex, telecopy, courier or U.S. Mail or in
writing and telexed, telecopied, mailed or delivered to the intended recipient
at the "Address for Notices" specified below its name on the signature pages
hereof or in the Loan Documents, except that for notices and other
communications to the Agent other than payment of money, the Borrower need only
send such notices and communications to the Agent care of the Houston address of
First Union Corporation; or, as to any party, at such other address as shall be
designated by such party in a notice to each other party. Except as otherwise
provided in this Agreement or in the other Loan Documents, all such
communications shall be deemed to have been duly given when transmitted, if
transmitted before
-61-
1:00 p.m. local time on a Business Day (otherwise on the next succeeding
Business Day) by telex or telecopier and evidence or confirmation of receipt is
obtained, or personally delivered or, in the case of a mailed notice, three (3)
Business Days after the date deposited in the mails, postage prepaid, in each
case given or addressed as aforesaid.
Section 12.03 Payment of Expenses, Indemnities,
etc. The Borrower agrees:
(a) whether or not the transactions hereby contemplated are
consummated, pay all reasonable expenses of the Agent in the administration
(both before and after the execution hereof and including advice of counsel
as to the rights and duties of the Agent and the Lenders with respect
thereto) of, and in connection with the negotiation, syndication,
investigation, preparation, execution and delivery of, recording or filing
of, preservation of rights under, enforcement of, and refinancing,
renegotiation or restructuring of, the Loan Documents and any amendment,
waiver or consent relating thereto (including, without limitation, travel,
photocopy, mailing, courier, telephone and other similar expenses of the
Agent, the cost of environmental audits, surveys and appraisals at
reasonable intervals, the reasonable fees and disbursements of counsel and
other outside consultants for the Agent and, in the case of enforcement,
the reasonable fees and disbursements of counsel for the Agent and any of
the Lenders); and promptly reimburse the Agent for all amounts expended,
advanced or incurred by the Agent or the Lenders to satisfy any obligation
of the Borrower under this Agreement or any Security Instrument, including
without limitation, all costs and expenses of foreclosure;
(b) to indemnify the Agent and each Lender and each of their Affiliates
and each of their officers, directors, employees, representatives, agents,
attorneys, accountants and experts ("Indemnified Parties") from, hold each
of them harmless against and promptly upon demand pay or reimburse each of
them for, the Indemnity Matters which may be incurred by or asserted
against or involve any of them (whether or not any of them is designated a
party thereto) as a result of, arising out of or in any way related to (i)
any actual or proposed use by the Borrower of the proceeds of any of the
Loans or Letters of Credit, (ii) the execution, delivery and performance of
the Loan Documents, (iii) the operations of the business of the Borrower
and its Subsidiaries, (iv) the failure of the Borrower or any Subsidiary to
comply with the terms of any Security Instrument or this Agreement, or with
any Governmental Requirement, (v) any inaccuracy of any representation or
any breach of any warranty of the Borrower set forth in any of the Loan
Documents, (vi) the issuance, execution and delivery or transfer of or
payment or failure to pay under any Letter of Credit, (vii) the payment of
a drawing under any Letter of Credit notwithstanding the non-compliance,
non- delivery or other improper presentation of the manually executed
draft(s) and certification(s), (viii) any assertion that the Lenders were
not entitled to receive the proceeds received pursuant to the Security
Instruments or (ix) any other aspect of the Loan Documents, including,
-62-
without limitation, the reasonable fees and disbursements of counsel and
all other expenses incurred in connection with investigating, defending or
preparing to defend any such action, suit, proceeding (including any
investigations, litigation or inquiries) or claim and including all
Indemnity Matters arising by reason of the ordinary negligence of any
Indemnified Party, but excluding all Indemnity Matters arising solely by
reason of claims between the Lenders or any Lender and the Agent or a
Lender's shareholders against the Agent or Lender or by reason of the gross
negligence or willful misconduct on the part of the Indemnified Party; and
(c) to indemnify and hold harmless from time to time the Indemnified
Party from and against any and all losses, claims, cost recovery actions,
administrative orders or proceedings, damages and liabilities to which any
such Person may become subject (i) under any Environmental Law applicable
to the Borrower or any Subsidiary or any of their Properties, including
without limitation, the treatment or disposal of hazardous substances on
any of their Properties, (ii) as a result of the breach or non-compliance
by the Borrower or any Subsidiary with any Environmental Law applicable to
the Borrower or any Subsidiary, (iii) due to past ownership by the Borrower
or any Subsidiary of any of their Properties or past activity on any of
their Properties which, though lawful and fully permissible at the time,
could result in present liability, (iv) the presence, use, release,
storage, treatment or disposal of hazardous substances on or at any of the
Properties owned or operated by the Borrower or any Subsidiary, or (v) any
other environmental, health or safety condition in connection with the Loan
Documents, provided, however, no indemnity shall be afforded under this
Section 12.03(c) in respect of any Property for any occurrence arising from
the acts or omissions of the Agent or any Lender during the period after
which such Person, its successors or assigns shall have obtained possession
of such Property (whether by foreclosure or deed in lieu of foreclosure, as
mortgagee-in-possession or otherwise).
(d) No Indemnified Party may settle any claim to be indemnified without
the consent of the indemnitor, such consent not to be unreasonably
withheld; provided, that the indemnitor may not reasonably withhold consent
to any settlement that an Indemnified Party proposes, if the indemnitor
does not have the financial ability to pay all its obligations outstanding
and asserted against the indemnitor at that time, including the maximum
potential claims against the Indemnified Party to be indemnified pursuant
to this Section 12.03.
(e) In the case of any indemnification hereunder, the Agent or Lender,
as appropriate shall give notice to the Borrower of any such claim or
demand being made against the Indemnified Party and the Borrower shall have
the non-exclusive right to join
-63-
in the defense against any such claim or demand provided that if the
Borrower provides a defense, the Indemnified Party shall bear its own cost
of defense unless there is a conflict between the Borrower and such
Indemnified Party.
(f) The foregoing indemnities shall extend to the Indemnified Parties
notwithstanding the sole or concurrent negligence of every kind or
character whatsoever, whether active or passive, whether an affirma- tive
act or an omission, including without limitation, all types of negligent
conduct identified in the restatement (second) of torts of one or more of
the Indemnified Parties or by reason of strict liability imposed without
fault on any one or more of the Indemnified Parties. To the extent that an
Indemnified Party is found to have committed an act of gross negligence or
willful misconduct, this contractual obligation of indemnification shall
continue but shall only extend to the portion of the claim that is deemed
to have occurred by reason of events other than the gross negligence or
willful misconduct of the Indemnified Party.
(g) The Borrower's obligations under this Section 12.03 shall survive
any termination of this Agreement and the payment of the Notes and shall
continue thereafter in full force and effect.
(h) The Borrower shall pay any amounts due under this Section 12.03
within thirty (30) days of the receipt by the Borrower of notice of the
amount due.
Section 12.04 Amendments, Etc. Any provision of this Agreement or any
Security Instrument may be amended, modified or waived with the Borrower's and
the Majority Lenders' prior written consent; provided that (i) no amendment,
modification or waiver which extends the final maturity of the Loans, increases
the Aggregate Maximum Credit Amounts, forgives the principal amount of any
Indebtedness outstanding under this Agreement, releases any guarantor of the
Indebtedness or releases all or substantially all of the collateral, reduces the
interest rate applicable to the Loans or the fees payable to the Lenders
generally, affects Section 2.03, this Section 12.04 or Section 12.06(a) or
modifies the definition of "Majority Lenders" shall be effective without consent
of all Lenders; (ii) no amendment, modification or waiver which increases the
Maximum Credit Amount of any Lender shall be effective without the consent of
such Lender; and (iii) no amendment, modification or waiver which modifies the
rights, duties or obligations of the Agent shall be effective without the
consent of the Agent.
Section 12.05 Successors and Assigns. This Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors and permitted assigns.
-64-
Section 12.06 Assignments and Participations.
(a) The Borrower may not assign its rights or obligations hereunder or
under the Notes or any Letters of Credit without the prior consent of all
of the Lenders and the Agent.
(b) Any Lender may, upon the written consent of the Agent and the
Borrower (which consent will not be unreasonably withheld), assign to one
or more assignees all or a portion of its rights and obligations under this
Agreement pursuant to an Assignment Agreement substantially in the form of
Exhibit F (an "Assignment") provided, however, that (i) any such assignment
shall be in the amount of the lesser of (y) $5,000,000 or (z) the aggregate
rights and obligations of the Lender making such assignment immediately
before such assignment and (ii) the assignee or assignor shall pay to the
Agent a processing and recordation fee of $2,500 for each assignment. Any
such assignment will become effective upon the execution and delivery to
the Agent of the Assignment and the consent of the Agent and the Borrower.
Promptly after receipt of an executed Assignment, the Agent shall send to
the Borrower a copy of such executed Assignment. Upon receipt of such
executed Assignment and approval thereof by Borrower, the Borrower, will,
at its own expense, execute and deliver new Notes to the assignor and/or
assignee, as appropriate, in accordance with their respective interests as
they appear. Upon the effectiveness of any assignment pursuant to this
Section 12.06(b), the assignee will become a "Lender," if not already a
"Lender," for all purposes of this Agreement and the Security Instruments.
The assignor shall be relieved of its obligations hereunder to the extent
of such assignment (and if the assigning Lender no longer holds any rights
or obligations under this Agreement, such assigning Lender shall cease to
be a "Lender" hereunder except that its rights under Sections 4.06, 5.01,
5.05 and 12.03 shall not be affected). The Agent will prepare on the last
Business Day of each month during which an assignment has become effective
pursuant to this Section 12.06(b), a new Annex I giving effect to all such
assignments effected during such month, and will promptly provide the same
to the Borrower and each of the Lenders.
(c) Each Lender may transfer, grant or assign participations in all or
any part of such Lender's interests hereunder pursuant to this Section
12.06(c) to any Person, provided that: (i) such Lender shall remain a
"Lender" for all purposes of this Agreement and the transferee of such
participation shall not constitute a "Lender" hereunder; and (ii) no
participant under any such participation shall have rights to approve any
amendment to or waiver of any of the Loan Documents except to the extent
such amendment or waiver would (x) forgive any principal owing on any
Indebtedness or extend the final maturity of the Loans, (y) reduce the
interest rate (other than as a result of waiving the applicability of any
post-default increases in interest rates) or fees applicable to any of the
Commitments or Loans or Letters of Credit in which such participant is
participating, or postpone the payment of any thereof, or (z) release any
guarantor of the Indebtedness or release all or substantially all of the
collateral (except as provided in the Loan Documents) supporting any of the
Commitments or Loans or Letters of Credit in which such participant is
participating. In the case of any such
-65-
participation, the participant shall not have any rights under this
Agreement or any of the Security Instruments (the participant's rights
against the granting Lender in respect of such participation to be those
set forth in the agreement with such Lender creating such participation),
and all amounts payable by the Borrower hereunder shall be determined as if
such Lender had not sold such participation, provided that such participant
shall be entitled to receive additional amounts under Article V on the same
basis as if it were a Lender and be indemnified under Section 12.03 as if
it were a Lender. In addition, each agreement creating any participation
must include an agreement by the participant to be bound by the provisions
of Section 12.15.
(d) The Lenders may furnish any information concerning the Borrower in
the possession of the Lenders from time to time to assignees and
participants (including prospective assignees and participants); provided
that, such Persons agree to be bound by the provisions of Section 12.15
hereof.
(e) Notwithstanding anything in this Section 12.06 to the contrary, any
Lender may assign and pledge its Note to any Federal Reserve Bank or the
United States Treasury as collateral security pursuant to Regulation A of
the Board of Governors of the Federal Reserve System and any operating
circular issued by such Federal Reserve System and/or such Federal Reserve
Bank. No such assignment and/or pledge shall release the assigning and/or
pledging Lender from its obligations hereunder.
(f) Notwithstanding any other provisions of this Section 12.06, no
transfer or assignment of the interests or obligations of any Lender or any
grant of participations therein shall be permitted if such transfer,
assignment or grant would require the Borrower to file a registration
statement with the SEC or to qualify the Loans under the "Blue Sky" laws of
any state.
Section 12.07 Invalidity. In the event that any one or more of the
provisions contained in any of the Loan Documents or the Letters of Credit, [the
Letter of Credit Agreements] shall, for any reason, be held invalid, illegal or
unenforceable in any respect, such invalidity, illegality or unenforceability
shall not affect any other provision of the Notes, this Agreement or any
Security Instrument.
Section 12.08 Counterparts. This Agreement may be executed in any
number of counterparts, all of which taken together shall constitute one and the
same instrument and any of the parties hereto may execute this Agreement by
signing any such counterpart.
Section 12.09 References. The words "herein," "hereof," "hereunder" and
other words of similar import when used in this Agreement refer to this
Agreement as a whole, and not to any particular article, section or subsection.
Any reference herein to a Section shall be deemed to refer to the applicable
Section of this Agreement unless otherwise stated herein. Any reference herein
to an exhibit or schedule shall be deemed to refer to the applicable exhibit or
schedule attached hereto unless otherwise stated herein.
-66-
Section 12.10 Survival. The obligations of the parties under Section
4.06, Article V, and Sections 11.05 and 12.03 shall survive the repayment of the
Loans and the termination of the Commitments. To the extent that any payments on
the Indebtedness or proceeds of any collateral are subsequently invalidated,
declared to be fraudulent or preferential, set aside or required to be repaid to
a trustee, debtor in possession, receiver or other Person under any bankruptcy
law, common law or equitable cause, then to such extent, the Indebtedness so
satisfied shall be revived and continue as if such payment or proceeds had not
been received and the Agent's and the Lenders' Liens, security interests,
rights, powers and remedies under this Agreement and each Security Instrument
shall continue in full force and effect. In such event, each Security Instrument
shall be automatically reinstated and the Borrower shall take such action as may
be reasonably requested by the Agent and the Lenders to effect such
reinstatement.
Section 12.11 Captions. Captions and section headings appearing herein
are included solely for convenience of reference and are not intended to affect
the interpretation of any provision of this Agreement.
Section 12.12 No Oral Agreements. The Loan Documents embody the entire
agreement and understanding between the parties and supersede all other
agreements and understandings between such parties relating to the subject
matter hereof and thereof. The Loan Documents represent the final agreement
between the parties and may not be contradicted by evidence of prior,
contemporaneous or subsequent oral agreements of the parties. there are no
unwritten oral agreements between the parties.
Section 12.13 Governing Law; Submission to Jurisdiction.
(a) this Agreement and the Notes shall be
governed by, and construed in accordance with, the
laws of the state of Texas except to the extent that
United States federal law permits any Lender to
charge interest at the rate allowed by the laws of
the state where such Lender is located. Tex. Rev.
Civ. Stat. Xxx. Art. 0000, Xx. 15 (which regulates
certain revolving credit loan accounts and revolving
tri-party accounts) shall not apply to this Agreement
or the notes.
(b) any legal action or proceeding with respect to the Loan Documents
shall be brought in the courts of the state of Texas or of the United
States of America for the Southern District of Texas, and, by execution and
delivery of this Agreement, the Borrower hereby accepts for itself and (to
the extent permitted by law) in respect of its Property, generally and
unconditionally, the jurisdiction of the aforesaid courts. The Borrower
hereby irrevocably waives any objection, including, without limitation, any
objection to the laying of venue or based on the grounds of forum non
conveniens, which it may now or hereafter have to the bringing of any such
action or proceeding in such respective
-67-
jurisdictions. This submission to jurisdiction is
non-exclusive and does not preclude the Agent or any
Lender from obtaining jurisdiction over the Borrower
in any court otherwise having jurisdiction.
(c) the Borrower Irrevocably consents to the service of process of any
of the aforementioned courts in any such action or proceeding by the
mailing of copies thereof by registered or certified mail, postage prepaid,
to the Borrower at its said address, such service to become effective
thirty (30) days after such mailing.
(d) nothing herein shall affect the right of the Agent or any Lender or
any holder of a Note to serve process in any other manner permitted by law
or to commence legal proceedings or otherwise proceed against the Borrower
in any other jurisdiction.
(e) Borrower and each lender hereby (i) irrevocably waive, to the
maximum extent not prohibited by law, any right it may have to claim or
recover in any such litigation any special, exemplary, punitive or
consequential damages, or damages other than, or in addition to, actual
damages; certify that no party hereto nor any representative or agent of
counsel for any party hereto has represented, expressly or otherwise, or
implied that such party would not, in the event of litigation, seek to
enforce the foregoing waiver, and (iii) acknowledge that it has been
induced to enter into this Agreement, the Security Instruments and the
transactions contemplated hereby and thereby by, among other things, the
mutual waivers and certifications contained in this Section 12.13.
Section 12.14 Interest. It is the intention of the parties hereto that
each Lender shall conform strictly to usury laws applicable to it. Accordingly,
if the transactions contemplated hereby would be usurious as to any Lender under
laws applicable to it (including the laws of the United States of America and
the State of Texas or any other jurisdiction whose laws may be mandatorily
applicable to such Lender notwithstanding the other provisions of this
Agreement), then, in that event, notwithstanding anything to the contrary in any
of the Loan Documents or any agreement entered into in connection with or as
security for the Notes, it is agreed as follows: (i) the aggregate of all
consideration which constitutes interest under law applicable to any Lender that
is contracted for, taken, reserved, charged or received by such Lender under any
of the Loan Documents or agreements or otherwise in connection with the Notes
shall under no circumstances exceed the maximum amount allowed by such
applicable law, and any excess shall be canceled automatically and if
theretofore paid shall be credited by such Lender on the principal amount of the
Indebtedness (or, to the extent that the principal amount of the Indebtedness
shall have been or would thereby be paid in full, refunded by such Lender to the
Borrower); and (ii) in the event that the maturity of the Notes is accelerated
by reason of an election of the holder thereof resulting from any Event of
Default under this Agreement or otherwise, or in the event of any required or
permitted prepayment, then such consideration that constitutes interest under
law applicable to any Lender may never include
-68-
more than the maximum amount allowed by such applicable law, and excess
interest, if any, provided for in this Agreement or otherwise shall be canceled
automatically by such Lender as of the date of such acceleration or prepayment
and, if theretofore paid, shall be credited by such Lender on the principal
amount of the Indebtedness (or, to the extent that the principal amount of the
Indebtedness shall have been or would thereby be paid in full, refunded by such
Lender to the Borrower). All sums paid or agreed to be paid to any Lender for
the use, forbearance or detention of sums due hereunder shall, to the extent
permitted by law applicable to such Lender, be amortized, prorated, allocated
and spread throughout the full term of the Loans evidenced by the Notes until
payment in full so that the rate or amount of interest on account of any Loans
hereunder does not exceed the maximum amount allowed by such applicable law. If
at any time and from time to time (i) the amount of interest payable to any
Lender on any date shall be computed at the Highest Lawful Rate applicable to
such Lender pursuant to this Section 12.14 and (ii) in respect of any subsequent
interest computation period the amount of interest otherwise payable to such
Lender would be less than the amount of interest payable to such Lender computed
at the Highest Lawful Rate applicable to such Lender, then the amount of
interest payable to such Lender in respect of such subsequent interest
computation period shall continue to be computed at the Highest Lawful Rate
applicable to such Lender until the total amount of interest payable to such
Lender shall equal the total amount of interest which would have been payable to
such Lender if the total amount of interest had been computed without giving
effect to this Section 12.14. To the extent that Article 5069-1.04 of the Texas
Revised Civil Statutes is relevant for the purpose of determining the Highest
Lawful Rate, such Lender elects to determine the applicable rate ceiling under
such Article by the indicated weekly rate ceiling from time to time in effect.
Section 12.15 Confidentiality. In the event that the Borrower provides
to the Agent or the Lenders written confidential information belonging to the
Borrower, if the Borrower shall denominate such information in writing as
"confidential", the Agent and the Lenders shall thereafter maintain such
information in confidence in accordance with the standards of care and diligence
that each utilizes in maintaining its own confidential information. This
obligation of confidence shall not apply to such portions of the information
which (i) are in the public domain, (ii) hereafter become part of the public
domain without the Agent or the Lenders breaching their obligation of confidence
to the Borrower, (iii) are previously known by the Agent or the Lenders from
some source other than the Borrower, (iv) are hereafter developed by the Agent
or the Lenders without using the Borrower's information, (v) are hereafter
obtained by or available to the Agent or the Lenders from a third party who owes
no obligation of confidence to the Borrower with respect to such information or
through any other means other than through disclosure by the Borrower, (vi) are
disclosed with the Borrower's consent, (vii) must be disclosed either pursuant
to any Governmental Requirement or to Persons regulating the activities of the
Agent or the Lenders, or (viii) as may be required by law or regulation or order
of any Governmental Authority in any judicial, arbitration or governmental
proceeding. Further, the Agent or a Lender may disclose any such information to
any other Lender, any independent petroleum engineers or consultants, any
independent certified public accountants, any legal counsel employed by such
Person in connection with this Agreement or any Security Instrument, including
without limitation, the enforcement or exercise of all rights and remedies
thereunder, or any assignee or participant (including prospective assignees and
-69-
participants) in the Loans; provided, however, that the Agent or the Lenders
shall receive a confidentiality agreement from the Person to whom such
information is disclosed such that said Person shall have the same obligation to
maintain the confidentiality of such information as is imposed upon the Agent or
the Lenders hereunder. Notwithstanding anything to the contrary provided herein,
this obligation of confidence shall cease three (3) years from the date the
information was furnished, unless the Borrower requests in writing at least
thirty (30) days prior to the expiration of such three year period, to maintain
the confidentiality of such information for an additional three year period. The
Borrower waives any and all other rights it may have to confidentiality as
against the Agent and the Lenders arising by contract, agreement, statute or
law, except as expressly stated in this Section 12.13.
Section 12.16 Effectiveness. This Agreement
shall be effective on the Closing Date (the "Effective
Date").
Section 12.17 Exculpation Provisions. Each of the parties hereto
specifically agrees that it has a duty to read this Agreement and the Security
Instruments and agrees that it is charged with notice and knowledge of the terms
of this Agreement and the Security Instruments; that it has in fact read this
Agreement and is fully informed and has full notice and knowledge of the terms,
conditions and effects of this Agreement; that it has been represented by
independent legal counsel of its choice throughout the negotiations preceding
its execution of this Agreement and the Security Instruments; and has received
the advice of its attorney in entering into this Agreement and the Security
Instruments; and that it recognizes that certain of the terms of this Agreement
and the Security Instruments result in one party assuming the liability inherent
in some aspects of the transaction and relieving the other party of its
responsibility for such liability. Each party hereto agrees and covenants that
it will not contest the validity or enforceability of any exculpatory provision
of this Agreement and the Security Instruments on the basis that the party had
no notice or knowledge of such provision or that the provision is not
"conspicuous."
-70-
The parties hereto have caused this Agreement to be duly executed as of
the day and year first above written.
BORROWER: XXXXXX XXXXXX, INC.
By:_____________________________
Xxxxxxx X. Xxxxxx
President
Address for Notices:
0000 XxXxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Telecopier No.: (000) 000-0000
Telephone No.: (000) 000-0000
Attention: Xxxxxxx X. Xxxxxx
Chief Executive Office and Principal
Place of Business
0000 XxXxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
S-1
LENDER AND AGENT: FIRST UNION NATIONAL BANK OF
NORTH CAROLINA
By:_____________________________
Name: Xxxxxxx X. Xxxxxxxxxx
Title: Vice President
First Union National Bank of North Carolina
000 Xxxxx Xxxxxxx Xxxxxx, XX-00
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000-0000
Telecopier No.: (000) 000-0000
Telephone No.: (000) 000-0000
Attention: Syndication Agency Services
With copy to:
First Union Corporation of North Carolina
0000 Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Telecopier No.: (000) 000-0000
Telephone No.: (000) 000-0000
Attention: Xxxx X. Xxxxxx
S-2
ANNEX 1
LIST OF COMMITMENTS
Name of Lender Percentage Share Facility A Facility B Facility C
First Union National Bank
of North Carolina 100% $10,000,000 $10,518,000 $5,000,000
