Exhibit 10.6
LOAN AGREEMENT
among
KANEB SERVICES LLC ("KSL"),
KANEB PIPE LINE COMPANY LLC ("KPL"),
and
BANK OF SCOTLAND (the "Bank")
dated as of July 13, 2001
TABLE OF CONTENTS
Page No.
Section 1. DEFINITIONS......................................................................................... 1
Section 2. THE LOAN FACILITIES.................................................................................1
2.1 The Loans.........................................................................................1
2.2 Notice of Borrowing...............................................................................1
2.3 The Note..........................................................................................2
2.4 Wiring Account....................................................................................3
2.5 Mandatory Prepayments of Loans....................................................................3
2.6 Nature of Borrowers' Obligations; Effect of Notices...............................................3
2.7 Voluntary Repayment...............................................................................4
2.8 Reduction of Commitment...........................................................................4
SECTION 2A. LETTERS OF CREDIT..................................................................................4
2A.1 Requests.........................................................................................4
2A.2 Issuances and Extensions.........................................................................5
2A.3 Fees and Expenses................................................................................6
2A.4 Disbursements....................................................................................7
2A.5 Reimbursement....................................................................................7
2A.6 Deemed Disbursements.............................................................................7
2A.7 Nature of Reimbursement Obligations...............................................................8
2A.8 [intentionally omitted]...........................................................................9
2A.9 [intentionally omitted]...........................................................................9
2A.10 Collateralization.................................................................................9
Section 3. INTEREST..............................................................................................9
3.1 Rate of Interest...................................................................................9
3.2 Interest Payment Dates............................................................................10
3.3 Overdue Payment of Principal and Interest.........................................................10
3.4 Interest Periods..................................................................................10
3.5 Rollovers.........................................................................................11
3.6 Automatic Conversion.............................................................................11
3.7 Capital Adequacy; Qualification Requirements......................................................12
3.8 Determination of Rate of Borrowing................................................................13
3.9 Requirements of Law...............................................................................14
3.10 Required Termination and Prepayment...............................................................15
3.11 Compensation......................................................................................15
Section 4. COMMITMENT FEE, ETC.................................................................................16
4.1 Commitment Fee....................................................................................16
4.2 Facility Fee......................................................................................16
Section 5. PAYMENTS, ETC.......................................................................................16
5.1 Payments on NON-Business Days; Calculations.......................................................16
5.2 Net Payments; Application.........................................................................17
Section 6. CONDITIONS PRECEDENT TO INITIAL LOANS...............................................................19
6.1 Default, etc......................................................................................19
6.2 Note..............................................................................................19
6.3 Supporting Documents..............................................................................19
6.4 Security Documents................................................................................20
6.5 Approvals and Consents............................................................................20
6.6 Solvency Certificate..............................................................................20
6.7 Legal Opinions....................................................................................21
6.8 Change in Law.....................................................................................21
6.9 All Proceedings to be Satisfactory................................................................21
6.10 No Opposition.....................................................................................21
6.11 Adverse Change....................................................................................21
6.12 Fees and Expenses.................................................................................21
6.13 Distribution......................................................................................21
6.14 Consent to Service................................................................................21
6.15 Registration of LP Units..........................................................................21
Section 6A. CONDITIONS PRECEDENT TO SUBSEQUENT ..................................................................
LOANS AND LETTERS OF CREDIT....................................................................22
6A.1 Certain Conditions...............................................................................22
6A.2 Subsequent Opinions of Counsel...................................................................22
6A.3 Officer's Certificate............................................................................22
Section 7. AFFIRMATIVE COVENANTS...............................................................................23
7.1 Financial Statements..............................................................................23
7.2 Notice of Litigation..............................................................................25
7.3 Payment of Charges................................................................................26
7.4 Conduct of Business...............................................................................26
7.5 [intentionally omitted]...........................................................................26
7.6 [intentionally omitted]...........................................................................26
7.7 [intentionally omitted]...........................................................................26
7.8 Inspection of Books and Assets....................................................................26
7.9 Payment of Indebtedness............................................................................27
7.10 Further Assurances................................................................................27
7.11 Notice of Default.................................................................................27
7.12 Reserves..........................................................................................27
7.13 Affiliate Transactions............................................................................27
7.14 Solvency...........................................................................................27
Section 8. NEGATIVE COVENANTS..................................................................................27
8.1 Same Type of Business.............................................................................28
8.2 Liens.............................................................................................28
8.3 Other Indebtedness................................................................................29
8.4 Advances and Loans................................................................................30
8.5 Consolidation and Merger..........................................................................30
8.6 Sale of Assets....................................................................................30
8.7 Purchase of Assets................................................................................30
8.8 Accounting Changes................................................................................31
8.9 Related Transactions..............................................................................31
8.10 Subsidiaries; Other Securities....................................................................31
8.11[intentionally omitted]............................................................................31
8.12 Investments.......................................................................................31
8.13 Financial Covenants...............................................................................31
8.14 Compliance with ERISA.............................................................................32
8.15 Charter Documents.................................................................................32
Section 9. EVENTS OF DEFAULT...................................................................................32
9.1 Principal and Interest............................................................................32
9.2 Representations and Warranties....................................................................33
9.3 Negative Covenants................................................................................33
9.4 Other Covenants...................................................................................33
9.5 Other Obligations.................................................................................33
9.6 KPP Entities......................................................................................33
9.7 Insolvency........................................................................................34
9.8 Security Documents................................................................................35
9.9 Judgments.........................................................................................35
9.10 Material Adverse Change...........................................................................35
Section 10. REPRESENTATIONS AND WARRANTIES.....................................................................35
10.1 Status; Validity.................................................................................36
10.2 Compliance with Other Instruments................................................................36
10.3 Litigation.......................................................................................37
10.4 Compliance with Law..............................................................................37
10.5 Capitalization of Borrowers and Subsidiaries.....................................................37
10.6 Government Approvals.............................................................................38
10.7 Federal Reserve Margin Regulations; Use of Proceeds..............................................38
10.8 Taxes............................................................................................38
10.9 Investment Company Act, etc......................................................................39
10.10 Properties of the Borrower.......................................................................39
10.11 Financial Condition..............................................................................39
10.12 Disclosure.......................................................................................40
10.13 Compliance with ERISA............................................................................40
10.14 The Security Documents...........................................................................40
10.15 [intentionally omitted] .........................................................................41
Section 11. [INTENTIONALLY OMITTED]............................................................................41
Section 12. MISCELLANEOUS......................................................................................41
12.1 Calculations and Financial Data..................................................................41
12.2 Amendment and Waiver.............................................................................41
12.3 Expenses.........................................................................................41
12.4 Benefits of Agreement; Descriptive Headings......................................................42
12.5 Notices, Requests, Demands, etc..................................................................44
12.6 Governing Law....................................................................................44
12.7 Counterparts; Telecopies.........................................................................44
12.8 Waiver...........................................................................................45
12.9 Recoveries.......................................................................................45
12.10 Jurisdiction.....................................................................................45
12.11 Severability.....................................................................................46
12.12 Right of Set-off.................................................................................46
12.13 No Third Party Beneficiaries.....................................................................47
12.14 Effectiveness....................................................................................47
12.15 Survival; Integration............................................................................47
12.16 Domicile of Loans................................................................................47
12.17 No Usury.........................................................................................47
12.18 Waiver of Jury Trial.............................................................................48
12.19 Securities Act...................................................................................48
EXHIBITS
EXHIBIT A Note
EXHIBIT B Notice of Borrowing
EXHIBIT C Pledge Agreement
EXHIBIT D Guaranty Agreement
EXHIBIT E Solvency Certificate
EXHIBIT F Distribution Agreement
EXHIBIT G KSI Credit Agreement
EXHIBIT H Compliance Certificate
SCHEDULES
Schedule 8.2(f) Liens
Schedule 8.3(b) Indebtedness
Schedule 10.3 Litigation
Schedule 10.5(j) Subsidiaries
Schedule 10.6 Governmental Approvals
Schedule 10.10(b) Material Agreements
LOAN AGREEMENT
LOAN AGREEMENT dated as of July 13, 2001 among KANEB SERVICES LLC, a
Delaware limited liability company ("KSL"), KANEB PIPE LINE COMPANY LLC, a
Delaware limited liability company ("KPL"), and BANK OF SCOTLAND (the "Bank").
KSL and KPL are sometimes referred to herein, collectively, as the "Borrowers"
and, individually, as a "Borrower".
W I T N E S S E T H :
WHEREAS, Borrowers have requested that the Bank make available to them a
revolving credit facility of up to $50,000,000 in the aggregate; and
WHEREAS, the Bank is willing to extend such credit facility to the
Borrowers on the terms and conditions herein provided;
NOW, THEREFORE, the parties hereto hereby agree as follows:
Section 1. DEFINITIONS.
(a) Terms used in this Agreement which are defined in Annex I hereto shall
have the meanings specified in such Annex I (unless otherwise defined
herein) and shall include in the singular number the plural and in the
plural number the singular.
(b) All references to Sections in this Agreement or in Annex I hereto
shall be deemed references to Sections in this Agreement unless
otherwise specified.
Section 2. THE LOAN FACILITIES.
2.1 The Loans. Subject to the terms and conditions set forth herein, the
Bank agrees at any time and from time to time during the Commitment Period to
make loans to the Borrowers (each a "Loan" and collectively, the "Loans") up to
the Commitment; provided that on the date of the making of any Loan (and after
giving effect thereto), the aggregate principal amount of Loans outstanding on
such date (plus the aggregate amount of all LC Obligations on such date) shall
not exceed (A) the Commitment then in effect, or (B) 66.67% of the Collateral
Value on such day. During the Commitment Period, the Borrowers may utilize the
Commitment by borrowing, prepaying the Loans in whole or in part without penalty
or premium (except as otherwise provided by Section 3.11), and reborrowing, all
in accordance with the terms and conditions hereof.
2.2 Notice of Borrowing:
(a) The Borrowers shall give at least four Business Days' prior
written notice (a "Notice of Borrowing") to the Bank of the date (which
shall be a Business Day during the Commitment Period) of each proposed
borrowing hereunder (the "Borrowing Date"). Such notice shall specify
(subject to the provisions of this Agreement) (i) the Borrowing Date, (ii)
the total amount of the proposed borrowing, which shall be in a minimum
amount of $500,000 (and, if greater, in integral multiples of $100,000),
provided that the aggregate principal amount of such borrowing must equal
or be less than the Unutilized Commitment (after giving effect to all other
Notices of Borrowings for Loans and Issuance Requests pending at such time)
at such time, and (iii) unless such Loan will be a Base Rate Loan, the
requested Interest Period therefor. Unless otherwise agreed to by the Bank
and a Borrower, the Notice of Borrowing for all Loans shall be
substantially in the form of Exhibit B hereto. Unless otherwise agreed to
in writing by the Bank and a Borrower, or as otherwise specifically
provided in this Agreement, all Loans shall be LIBOR Loans.
(b) The Borrowers may not designate more than one Interest Period for
LIBOR Loans in the same Notice of Borrowing. No more than five LIBOR Loans
(whether by way of initial borrowing or conversion or otherwise) may be
outstanding at any time. Without the Bank's consent, no Loan shall be made
or maintained if the principal amount thereof is less than $500,000.
Without the consent of the Bank, the Borrowers shall not be entitled to
make borrowings under the Commitment more than once in any calendar week.
(c) [intentionally omitted]
(d) [intentionally omitted]
(e) The Bank will make the amount of its Loan or Loans available to
the Borrowers on the applicable Borrowing Date, in immediately available
Dollars, against delivery to the Bank at the Closing Office of such
instruments, documents and papers as are provided for herein.
(f) [intentionally omitted]
(g) [intentionally omitted]
2.3 The Note:
(a) The Borrowers' obligation to pay the principal of, and
interest on, the Loans shall be evidenced by a Note payable to the
order of the Bank. The Note is entitled to the benefits of this
Agreement and shall be secured by the Security Documents.
(b) The principal amount of all Loans outstanding from time to
time, and interest accrued thereon, shall be recorded on the records
of the Bank and, prior to any transfer of, or any action to collect,
the Note, the unpaid principal amount of the Loans evidenced thereby
shall be endorsed on the reverse side of the Note, together with the
date of such endorsement and the date to which interest has been paid;
any failure to make such endorsement and provide such other
information, however, shall not affect the Borrowers' obligations
hereunder or under the Note. The Borrowers' obligations to pay
principal and interest in respect of the Note shall be limited to the
unpaid principal amount of the Loans evidenced thereby and unpaid
interest accrued for the periods during which such Loans are
outstanding.
2.4 Wiring Account. The Borrowers agree that the proceeds of all Loans
shall (unless otherwise directed in a writing signed by both Borrowers) be
wired or otherwise transferred into an account in a Borrower's name as
directed in writing by a Borrower.
2.5 Mandatory Prepayments of Loans.
(a) The Borrowers shall prepay the Loans on the effective date of
any reduction or termination in the Commitment to the extent that the
aggregate principal amount of the Loans on such date shall exceed the
amount equal to (x) the amount of the Commitment in effect on such
date less (y) the amount of the LC Obligations at such time; if the
Commitment is terminated in full, then the Borrowers shall immediately
prepay in full the aggregate outstanding principal amount of all
Loans.
(b) (i) The Borrowers shall immediately prepay the Loans to the
extent that the sum of (x) the aggregate outstanding principal amount
thereof on any day, plus (y) the aggregate amount of LC Obligations
outstanding on such day, shall exceed 66.67% of the Collateral Value
on such day. Subject to the terms and conditions of this Agreement,
amounts prepaid under this clause (b)(i) may be reborrowed.
(ii) As an alternative to the prepayment required by the
foregoing clause (i) (but only if a Borrower so requests and the
Bank advises the Borrower in writing that, solely with respect to
such request, such alternative is acceptable to the Bank), the
Borrowers shall immediately deliver and pledge to the Bank that
number of additional LP Units which, when multiplied by the
Market Value of such LP Units, shall equal 150% of the amount of
such excess, together with a pledge agreement substantially
similar to the Pledge Agreement. No request by a Borrower in
accordance with this clause (b)(ii), nor any delay by the Bank in
responding to any such request, shall relieve either Borrower of
its obligations under clause (b)(i) immediately preceding; the
Borrower shall have the right to utilize the alternative provided
by this clause (b)(ii) only after receiving written
acknowledgement from the Bank that, as to the particular instance
in question, the Bank is amenable to such alternative.
(c) Repayments pursuant to the foregoing provisions of this
Section shall first be made against (to the extent available and
subject to the other provisions of this Agreement) outstanding LIBOR
Loans having an Interest Period ending on the date of such repayment,
or to Base Rate Loans, as directed by a Borrower by written (or
telephonic, promptly confirmed in writing) notice to the Bank or, in
the absence of such direction, by the Bank.
(d) The then-unpaid principal amount of the Loans shall be
payable in full on the Maturity Date.
2.6 Nature of Borrowers' Obligations; Effect of Notices. All of the
obligations of the Borrowers hereunder and under the Note are joint and several.
Each Borrower acknowledges that it will benefit from the proceeds of the Loans.
Any notice required to be given to the Borrowers (or either of them) by the Bank
pursuant to this Agreement or any other Loan Document may be given by the Bank
to either of the Borrowers, and each of the Borrowers hereby acknowledges that
any such notice given to the other Borrower shall be considered notice to both
Borrowers for all purposes of this Agreement and the other Loan Documents. Each
Borrower agrees and acknowledges that any notice, consent, election or other
action given or taken, or any right exercised, by either Borrower hereunder
(including, without limitation, any Notice of Borrowing and any selection of an
Interest Period pursuant to Section 3.4) shall be binding on both Borrowers for
all purposes of this Agreement and the other Loan Documents (and shall be deemed
given, taken or exercised (as the case may be) by both Borrowers, whether or not
it is expressly so provided in any other provision hereof or of the other Loan
Documents. In the case that more than one such notice is given by the Borrowers,
the first such notice to be received by the Bank shall be so binding.
2.7 Voluntary Repayment. The Borrowers shall have the right, at any time
and from time to time, by four Business Days' prior written notice to the Bank
to prepay the Loans, in whole, or in part in integral multiples of $100,000 and
without premium, but in each case subject to the payment of any compensation
payable under Section 3.11 hereof; provided that at the time of any prepayment
of the Loans in full, the Borrowers shall pay all interest accrued on the amount
of such prepayment and all other amounts owing to the Bank in respect thereof
including, without limitation, any compensation payable under Section 3.11
hereof. Subject to the terms and conditions of this Agreement, amounts prepaid
under this Section 2.7 may be reborrowed.
2.8 Reduction of Commitment.
(a) The Borrowers shall have the right at any time and from time to
time upon at least four Business Days' prior written notice to the Bank to
reduce permanently in amounts equal to $500,000 (and if greater, in
integral multiples thereof) or terminate the Commitment (but not in an
amount in excess of the Unutilized Commitment at such time unless the
provisions of Sections 2.5(a) and 2A.10 are complied with simultaneous with
such reduction or termination). Any reduction or termination of the
Commitment pursuant to this Section 2.8 shall be accompanied by the payment
in full of any Commitment Fee then accrued hereunder.
(b) Any reduction of the Commitment pursuant to this Section 2.8 below
the amount of the LC Commitment shall result in a reduction of the LC
Commitment on a dollar-for-dollar basis.
SECTION 2A. LETTERS OF CREDIT.
2A.1 Requests.
(a) By delivering to the Bank a written request (an "Issuance
Request") on or before 10:00 a.m. Closing Office Time on a Business Day,
the Borrowers may request, from time to time during the Commitment Period
and on not less than five (unless the Bank otherwise consents) nor more
than ten Business Days' notice, that the Bank issue an irrevocable standby
letter of credit in such form as shall be acceptable to the Bank and a
Borrower (a "Letter of Credit"), in support of such financial obligations
of a Borrower which are described in such Issuance Request and are
permitted by Section 2A.1(c). Each Issuance Request shall specify (i) the
proposed date of issuance (which shall be a Business Day during the
Commitment Period), (ii) the Stated Amount of the Letter of Credit, (iii)
the expiration date of the Letter of Credit, (iv) the name and address of
the beneficiary of the Letter of Credit, and (v) a precise description of
the documents and have attached the verbatim text of any certificate to be
presented by the beneficiary of such Letter of Credit which, if presented
by such beneficiary prior to the expiration date of the Letter of Credit,
would require the Bank to make payment or accept drafts under the Letter of
Credit.
(b) Each Letter of Credit shall by its terms (unless otherwise
consented to by the Bank):
(i) be issued for the account of the Borrowers, and the Stated
Amount of such Letter of Credit shall not exceed the then effective
Unutilized LC Commitment (after giving effect to all Notice of
Borrowings for Loans and other Issuance Requests pending at such
time);
(ii) be stated to expire on a date (its "Stated Expiry Date") no
later than the earlier of (x) one year from its date of issuance or
(y) the last day of the Commitment Period; and, if renewable by its
terms, shall not be renewed so as to expire on a date later than the
earlier of (x) one year from the date of renewal or (y) the last day
of the Commitment Period;
(iii) on or prior to its Stated Expiry Date
(A) terminate immediately upon notice to the Bank thereof
from the beneficiary thereunder that all obligations covered
thereby have been terminated, paid, or otherwise satisfied in
full, and
(B) reduce in part immediately to the extent the beneficiary
thereunder has notified the Bank that the obligations covered
thereby have been paid or otherwise satisfied in part; and
(iv) be denominated only in Dollars.
(c) Letters of Credit may be issued to support lease obligations,
statutory obligations, performance and return-of-money bonds,
self-insurance and other similar obligations of a Borrower.
2A.2 Issuances and Extensions.
(a) Subject to the terms and conditions of this Agreement (including
without limitation Section 6A), the Bank shall issue Letters of Credit in
accordance with the Issuance Requests made therefor. The Bank will make
each Letter of Credit available to the beneficiary thereof in accordance
with the Issuance Request therefor. No Letter of Credit shall be issued
unless the terms and conditions thereof are satisfactory to the Bank and a
Borrower.
(b) No Letter of Credit shall be issued if on the date of the proposed
issuance thereof (and after giving effect thereto), the aggregate principal
amount of Loans outstanding on such date (plus the aggregate amount of all
LC Obligations on such date) shall exceed (A) the Commitment then in
effect, or (B) 66.67% of the Collateral Value on such day.
2A.3 Fees and Expenses.
(a) The Borrowers agree to pay to the Bank on the date of the issuance
of each Letter of Credit a letter of credit fee with respect to such Letter
of Credit equal to the LIBOR Margin of the Stated Amount of such Letter of
Credit (the Letter of Credit Fee). Each such fee shall be payable by the
Borrowers immediately prior to the issuance of the Letter of Credit to
which it relates. In addition, the Borrowers shall at the same time pay to
the Bank an issuance fee of $500 for each Letter of Credit issued. For
purposes of this Section 2A.3, any renewal of a Letter of Credit shall be
treated as an issuance thereof.
(b) The fees referred to in Section 2A.3(a) shall be in addition to,
and not in lieu of, fees required to be paid by the Borrowers pursuant to
Section 4 hereof.
(c) If any Regulatory Change shall at any time (i) impose, modify or
deem applicable any reserve, special deposit or similar requirement against
letters of credit issued by the Bank or participated in by any Bank
Assignee, or (ii) subject letters of credit issued by the Bank or
participations therein held by any Bank Assignee to any assessment or other
cost imposed by the Federal Deposit Insurance Corporation or any successor
thereto or (iii) impose on the Bank or any Bank Assignee any other or
similar condition regarding any Letter of Credit, the commitment or
obligation of the Bank to issue Letters of Credit hereunder or any Bank
Assignee's participation therein and the result of any event referred to in
clause (i), (ii) or (iii) above shall be to increase the cost to the Bank
or any Bank Assignee of agreeing to issue, issuing or maintaining any
Letter of Credit or its participation therein by an amount which the Bank
or such Bank Assignee shall deem to be material (which increase in cost
shall be the result of the reasonable allocation by the Bank or such Bank
Assignee of the aggregate of such cost increases resulting from such
events), then and in each case upon demand from time to time by the Bank or
such Bank Assignee (furnished to either Borrower by the Bank), the
Borrowers shall promptly pay to the Bank (for its account or the account of
the such Bank Assignee, if applicable) additional amounts as directed by
the Bank which shall be sufficient to compensate the Bank (or such Bank
Assignee) for such increased cost from the date of such change, together
with interest on each such amount, commencing three Business Days from the
date demanded by the Bank (or such Bank Assignee), until payment in full
thereof (after as well as before judgment) at a rate per annum equal to the
Past Due Rate from time to time in effect. A certificate of the Bank (or
such Bank Assignee) submitted to either Borrower (through the Bank, if from
a Bank Assignee) as to any additional amount or amounts (including
calculations thereof, in reasonable detail) shall, in the absence of
manifest error, be conclusive and binding on the Borrowers. In determining
such amount or amounts, the Bank (or such Bank Assignee) shall act in good
faith and may use any reasonable method of averaging and attribution as it
shall deem applicable.
(d) The provisions of Section 2A.3(c) and the remaining Sections of
this Section 2A shall survive until one year after the later of (x) any
termination of this Agreement and (y) the payment in full of the Note.
2A.4 Disbursements.
(a) The Bank will notify a Borrower promptly of the presentment of
each demand for payment under any Letter of Credit together with notice of
the date (the "Disbursement Date") such payment shall be made.
(b) Prior to 10:00 a.m., Closing Office Time, on the Disbursement
Date, the Borrowers will reimburse the Bank by making payment to the Bank
at the Closing Office for all amounts disbursed or to be disbursed by the
Bank on that day (the "Disbursement") under such Letter of Credit (the
"Reimbursement Obligation"). To the extent the Bank is not reimbursed in
full in accordance with the foregoing provisions of this Section 2A.4(b),
the Borrowers' Reimbursement Obligation shall accrue interest (after as
well as before judgment) at a rate per annum equal to the Past-Due Rate
from time to time in effect, payable on demand.
2A.5 Reimbursement. The Borrowers' Reimbursement Obligation with respect to
each Disbursement (including interest thereon) shall be absolute and
unconditional under any and all circumstances and irrespective of any setoff,
counterclaim, or defense to payment which either Borrower may have or have had
against any beneficiary, the Bank or any Bank Assignee, including any defense
based upon the failure of any Disbursement to conform to the terms of the
applicable Letter of Credit or any application or misapplication by the
beneficiary of the proceeds of such Disbursement, or the legality, validity,
form, regularity, or enforceability of such Letter of Credit; provided, however,
that nothing herein shall adversely affect the right of the Borrowers to
commence any proceeding against the Bank for any wrongful Disbursement made by
the Bank under a Letter of Credit as a result of acts or omissions constituting
gross negligence or willful misconduct on the part of the Bank.
2A.6 Deemed Disbursements.
(a) Upon the occurrence of any Event of Default under Section 9.7
(with respect to either Borrower) and also, at the option of the Bank, upon
the occurrence and during the continuance of any other Event of Default, an
amount equal to the LC Outstandings shall, without demand upon or notice to
either Borrower, be deemed to have been paid or disbursed by the Bank
(each, a "Deemed Disbursement") under all outstanding Letters of Credit
(notwithstanding that such amount may not in fact have been so paid or
disbursed). Upon notification by the Bank to either Borrower of the
Borrowers' obligations under this Section 2A.6 (no such notification being
required in the case of an Event of Default under Section 9.7 with respect
to either Borrower), the Borrowers shall be immediately obligated to
reimburse the aggregate amount of the Deemed Disbursements by paying the
full amount thereof to the Bank prior to 10:00 a.m. Closing Office Time on
the date of such Deemed Disbursement and any amount not so reimbursed shall
accrue interest (after as well as before judgment) at a rate per annum
equal to the Past Due Rate from time to time in effect, payable on demand.
All Deemed Disbursements reimbursed by either Borrower pursuant to this
Section 2A.6(a) shall be deposited into a single special depository account
of the Borrower (the "Deemed Disbursement Account") maintained by the
Borrowers with, and under the control of, the Bank (in New York or such
other jurisdiction as the Bank and the Borrowers agree to) and titled
appropriately so as to identify the nature of such account. The Borrowers
shall take all such action, if any, as is necessary to assure that the Bank
has a perfected first priority security interest in said account to the
extent that such a security interest can be so granted and perfected in the
jurisdiction in which such account is held. All of Borrowers' right, title
and interest in and to all monies at any time in the Deemed Disbursement
Account (and all Disbursement Earnings, if any, thereon) are hereby
irrevocably pledged by the Borrowers to the Bank as security to secure the
prompt payment to the Bank of all the Borrowers' liabilities to the Bank
and to secure the performance by the Borrowers of their obligations under
this Agreement; and such amounts may be applied to such liabilities in such
order as the Bank may direct without notice to, or the consent of, either
Borrower. The Borrowers shall be entitled to receive monies from the Deemed
Disbursement Account only as permitted by Section 2A.6(b). The Bank shall
invest the monies in the Deemed Disbursement Account in such types of
investments as are agreed to by either Borrower and the Bank.
(b) If any such Letter of Credit shall thereafter terminate without
the Bank being required to pay the full amount of the Deemed Disbursement
with respect to such Letter of Credit to the beneficiary thereunder, then
(unless the Loans have matured, by acceleration or otherwise, or the
Borrowers have failed to pay any amount then due and payable by it under
this Agreement) the Bank will return to the Borrowers an aggregate amount
equal to that portion of the Deemed Disbursement with respect to such
terminated Letter of Credit not theretofore applied by the Bank to any
Reimbursement Obligation with respect to such Letter of Credit or applied
by the Bank in payment of the Note or any other obligation of the Borrowers
under this Agreement or any of the Loan Documents. At such time when all
Events of Default shall have been cured or waived, the Bank shall return to
either or both of the Borrowers all amounts then on deposit in the Deemed
Disbursement Account.
2A.7 Nature of Reimbursement Obligations. The Borrowers shall assume all
risks of the acts, omissions, or misuse of any Letter of Credit by the
beneficiary thereof. The Bank (except to the extent of its own gross negligence
or willful misconduct) shall not be responsible for:
(a) the form, validity, sufficiency, accuracy, genuineness, or legal
effect of any Letter of Credit or of any draft, demand or other document,
instrument or other paper relating to, or presented under, any Letter of
Credit, or any document submitted by any party in connection with the
application for and issuance of a Letter of Credit, even if it should in
fact prove to be in any or all respects invalid, insufficient, inaccurate,
fraudulent, or forged;
(b) the form, validity, sufficiency, accuracy, genuineness, or legal
effect of any instrument transferring or assigning or purporting to
transfer or assign a Letter of Credit 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;
(c) failure of the beneficiary to comply fully with conditions
required in order to demand payment under a Letter of Credit;
(d) errors, omissions, interruptions, or delays in transmission or
delivery of any messages, by mail, cable, telegraph, telex, telecopier or
otherwise; or
(e) any loss or delay in the transmission or otherwise of any document
or draft required in order to make a Disbursement under a Letter of Credit
or of the proceeds thereof.
None of the foregoing shall affect, impair, or prevent the vesting of any of the
rights or powers granted the Bank hereunder. In furtherance and extension and
not in limitation or derogation of any of the foregoing, any action taken or
omitted to be taken by the Bank in good faith shall be binding upon the
Borrowers and each Bank Assignee hereunder and shall not put the Bank or any
Bank Assignee under any resulting liability to either Borrower nor put the Bank
under any resulting liability to any Bank Assignee. Nothing herein shall
constitute a waiver by the Borrowers of any of their rights against any
beneficiary of a Letter of Credit.
2A.8 [intentionally omitted]
2A.9 [intentionally omitted]
2A.10 Collateralization. If, at any time (after giving effect to the
provisions of Section 2.5(a) or 2.5(b), if applicable at such time) when no
Loans are outstanding, the aggregate amount of the LC Obligations exceeds (x)
the amount of the Commitment then in effect or (y) 66.67% of the Collateral
Value, the Borrowers shall (if the Bank so requests):
(i) immediately deposit an amount, in Dollars, equal to the amount of
such excess in a cash collateral account (the "Shortfall Account") with the
Bank, or
(ii) as an alternative to the deposit required by the foregoing clause
(i) (but only if a Borrower so requests and the Bank advises the Borrower
in writing that, solely with respect to such request, such alternative is
acceptable to the Bank), immediately deliver and pledge to the Bank that
number of additional LP Units which, when multiplied by the Market Value of
such LP Units, shall equal 150% of the amount of such excess, together with
a Pledge Agreement, in each case on terms and conditions satisfactory to
the Bank and as security for the Obligations. No request by a Borrower in
accordance with clause (ii) preceding, nor any delay by the Bank in
responding to any such request, shall relieve either Borrower of its
obligations under clause (i) preceding; the Borrower shall have the right
to utilize the alternative provided by said clause (ii) only after
receiving written acknowledgement from the Bank that, as to the particular
instance in question, the Bank is amenable to such alternative.
Section 3. INTEREST.
3.1 Rate of Interest. The Borrowers agree to pay interest in respect of the
unpaid principal amount of each Loan from time to time outstanding from the date
the proceeds thereof are made available to either Borrower until maturity
(whether by acceleration or otherwise) at the following interest rates: (i) each
LIBOR Loan, at a rate per annum for each Interest Period applicable thereto
equal to (x) LIBOR for such Interest Period plus (y) the LIBOR Margin, and (ii)
each Base Rate Loan, at a rate per annum equal to (x) the Base Rate, such rate
to change as and when such Base Rate changes, plus (y) the Base Rate Margin.
3.2 Interest Payment Dates. Interest on and prior to maturity in respect of
each Loan shall be payable in arrears (i) if such Loan is (x) a LIBOR Loan, on
the last day of each Interest Period applicable thereto and, if such Interest
Period is longer than three months, at the end of each three-month interval
within such Interest Period or (y) a Base Rate Loan, on the last Business Day of
each calendar quarter after the making thereof and on the last day of any
Interest Period applicable thereto, (ii) upon any prepayment or repayment of
such Loan in full (to the extent accrued on the amount prepaid or repaid) and
(iii) at maturity (whether by acceleration or otherwise). The Bank shall
endeavor to notify the Borrowers prior to each such interest payment date of the
amount to be paid by the Borrowers on such date, but no failure by the Bank to
do so shall in any way affect the Borrowers' obligations hereunder to timely pay
the full amount of interest due when due; however, no such amount paid in
reliance on such a notice, or paid in accordance with the Borrowers' good faith
calculations in the absence of such a notice, shall constitute an Event of
Default under Section 9.1 unless the Borrowers shall fail to timely pay the full
amount of any further adjustment as may be appropriate pursuant to notice to a
Borrower from the Bank.
3.3 Overdue Payment of Principal and Interest. Overdue principal of, and
overdue interest in respect of, each Loan shall bear interest for each day,
payable on demand, at a rate per annum (the "Past-Due Rate") equal to 2% per
annum in excess of the interest rate otherwise applicable to such Loan (up to
the end of the then-current Interest Period therefor) and thereafter equal to 2%
per annum in excess of the Base Rate.
3.4 Interest Periods. For purposes of this Agreement the term "Interest
Period" shall mean (a) with respect to any LIBOR Loan:
(i) initially, the period commencing on the borrowing date with
respect to such Loan and ending one, two, three or six months thereafter,
as selected by a Borrower in the Notice of Borrowing given with respect
thereto; and
(ii) thereafter, each period commencing on the last day of the next
preceding Interest Period applicable to such Loan and ending one, two,
three or six months thereafter, as selected by the Borrowers by irrevocable
notice (each an "Interest Period Notice") to the Bank not later than 10:00
a.m., Closing Office Time, four Business Days prior to the last day of the
then current Interest Period with respect thereto;
provided that, all of the foregoing provisions relating to Interest Periods
for LIBOR Loans are subject to the following:
(1) if any Interest Period pertaining to a LIBOR Loan would
otherwise end on a day that is not a Business Day, such Interest
Period shall be extended to the next succeeding Business Day unless
the result of such extension would be to carry such Interest Period
into another calendar month in which event such Interest Period shall
end on the immediately preceding Business Day;
(2) any Interest Period that would otherwise extend beyond the
date final payment is due on the LIBOR Loan shall end on such date of
final payment;
(3) any Interest Period pertaining to a LIBOR Loan that begins on
the last Business Day of a calendar month (or on a day for which there
is no numerically corresponding day in the calendar month at the end
of such Interest Period) shall end on the last Business Day of a
calendar month;
(4) the Borrowers shall select Interest Periods so as not to
require a payment or prepayment of any LIBOR Loan during an Interest
Period for such Loan; and
(5) in the absence of timely selection by the Borrowers of an
Interest Period for a LIBOR Loan, the Interest Period shall be one
month (subject to the other terms of this proviso); and
(b) With respect to any Base Rate Loan, the period commencing on the
borrowing or conversion date, as the case may be, with respect to such Loan
and ending on the first to occur of the Maturity Date (whether by
acceleration or otherwise) of such Loan or the conversion date with respect
to such Loan.
3.5 Rollovers. Any LIBOR Loan may be continued as such upon the expiration
of the then current Interest Period with respect thereto by the Borrowers giving
an Interest Period Notice to the Bank, in accordance with Section 3.4, setting
forth the length of the next Interest Period to be applicable to such Loan,
provided that no LIBOR Loan may be continued (i) when any Default or Event of
Default has occurred and is continuing and the Bank has determined that such a
continuation is not appropriate, (ii) if, after giving effect thereto, Section
2.2(b) would be contravened or (iii) after the date that is one month prior to
the end of the Commitment Period and provided, further, that if such
continuation is not permitted, the Borrowers shall be required to pay such Loans
on the last day of such then expiring Interest Period.
3.6 Automatic Conversion. If, on or prior to a Eurodollar Interest
Determination Date for a LIBOR Loan, the Bank shall have determined (which
determination shall be conclusive and binding upon the Borrowers), that it would
be impossible or unlawful to continue such Loan for another Interest Period or
to make a LIBOR Loan then being requested because (i) the Bank does not expect
to be able to fund such Loan for the Interest Period applicable thereto by
obtaining a matching deposit in the London interbank market at the relevant time
or (ii) the Bank has determined that it would be impossible, unlawful or
contrary to a regulation, interpretation, order, directive or request (whether
or not having the force of law) applicable to the Bank of any Government
Authority, or any fiscal, monetary, central bank or other authority having
jurisdiction over the Bank, for the Bank to make such Loan available to the
Borrowers or to continue such Loan as a LIBOR Loan (as the case may be), then
the Bank shall promptly notify (in writing or by telephone, promptly confirmed
in writing) the Borrowers thereof and
(a) with respect to an existing LIBOR Loan otherwise to be continued
as such, such Loan shall at the end of the current Interest Period therefor
be converted into a Base Rate Loan (if permitted by the other provisions of
the Agreement) unless a Borrower shall have advised the Bank that the
Borrowers do not want same to be so converted, in which event the Borrowers
shall be required to repay such Loans at the end of such Interest Period;
and
(b) with request to a LIBOR Loan then being requested, such Loan shall
instead be made as a Base Rate Loan (unless the Borrowers shall have
requested prior to the Borrowing Date that such Loan not be made, in which
event such Loan shall not be made).
3.7 Capital Adequacy; Qualification Requirements.
(a) If the Bank shall have determined that the applicability after the
date hereof of any law, rule, regulation or guideline adopted pursuant to
or arising out of the July 1988 report of the Basle Committee on Banking
Regulations and Supervisory Practices entitled "International Convergence
of Capital Measurement and Capital Standards", or the adoption after the
date hereof of any other law, rule, regulation or guideline regarding
capital adequacy, or any change in any of the foregoing or in the
enforcement or interpretation or administration of any of the foregoing by
any court or any governmental authority, central bank or comparable agency
charged with the enforcement or interpretation or administration thereof,
or compliance by the Bank (or any lending office of the Bank) or any
holding company of the Bank with any request or directive regarding capital
adequacy (whether or not having the force of law) of any such authority,
central bank or comparable agency, has or would have the effect of reducing
the rate of return on the Bank's capital or on the capital of the Bank's
holding company, if any, as a consequence of its obligations hereunder to a
level below that which the Bank or the Bank's holding company could have
achieved but for such applicability, adoption, change or compliance (taking
into consideration the Bank's policies and the policies of the Bank's
holding company with respect to capital adequacy) by an amount reasonably
deemed by the Bank to be material, then, upon demand by the Bank, the
Borrowers shall pay to the Bank from time to time such additional amount or
amounts as will compensate the Bank or the Bank's holding company (as
determined by the Bank in good faith) for any such reduction suffered as a
consequence of the Bank's obligations hereunder, together with interest on
each such amount (commencing three Business Days from the date demanded)
until payment in full thereof at the Base Rate. A certificate of the Bank
submitted to the Borrowers as to any such additional amount or amounts
(including calculations thereof in reasonable detail) shall, in the absence
of manifest error, be conclusive and binding on the Borrowers. In
determining such amount or amounts, the Bank may use any reasonable method
of averaging and attribution as it shall deem applicable.
(b) If the Bank shall have determined that the applicability of any
Qualification Requirement, or any Regulatory Change or change in any
Qualification Requirement or in the enforcement or interpretation or
administration of any Qualification Requirement by any Governmental
Authority charged with the enforcement or interpretation or administration
thereof, has or would have the effect of reducing the rate of return on the
Bank's capital or on the capital of the Bank's holding company, if any, as
a consequence of its obligations hereunder to a level below that which the
Bank or the Bank's holding company could have achieved but for such
applicability, adoption, change or compliance by an amount reasonably
deemed by the Bank to be material, then, upon demand by the Bank, the
Borrowers shall pay to the Bank from time to time such additional amount or
amounts as will compensate the Bank or the Bank's holding company (as
determined by the Bank in good faith) for any such reduction suffered as a
consequence of the Bank's obligations hereunder, together with interest on
each such amount (commencing three Business Days from the date demanded)
until payment in full thereof at the Base Rate. A certificate of the Bank
submitted to the Borrowers as to any such additional amount or amounts
(including calculations thereof in reasonable detail) shall, in the absence
of manifest error, be conclusive and binding on the Borrowers. In
determining such amount or amounts, the Bank may use any reasonable method
of averaging and attribution as it shall deem applicable. "Qualification
Requirement" shall mean any Legal Requirement that solely by reason of (and
without regard to any other activities of the Bank in any jurisdiction in
which Collateral is located) the entering into, performance and enforcement
of this Agreement and the other Loan Documents by the Bank constitutes
"doing business" by the Bank in any jurisdiction, imposes on the Bank any
liability for taxes or other governmental charges, requires qualification
by the Bank to do business in any jurisdiction or requires a "business
activity," "doing business" or similar report or notice to be filed by the
Bank in any jurisdiction.
(c) No demand for compensation under this Section 3.7 shall be made by
the Bank unless the Bank is making similar demands upon similarly situated
borrowers.
3.8 Determination of Rate of Borrowing.
(a) As soon as practicable after 11:00 a.m., Closing Office time, on
each Eurodollar Interest Determination Date for a LIBOR Loan, the Bank
shall determine (which determination shall, absent manifest error, be
final, conclusive and binding upon all parties) LIBOR to be applicable to
such LIBOR Loan for the next succeeding Interest Period therefor and shall
promptly give notice thereof in writing or by telephone (confirmed in
writing) to the Borrowers.
(b) Notwithstanding the foregoing, in the event that prior to the
first day of any Interest Period for a LIBOR Loan:
(i) the Bank shall have determined (which determination shall be
conclusive and binding upon the Borrowers) that, by reason of
circumstances affecting the relevant market, adequate and reasonable
means do not exist for ascertaining the LIBOR for such Interest
Period, or
(ii) the Bank shall have reasonably determined (which
determination shall be conclusive and binding upon the Borrowers) that
LIBOR determined or to be determined for such Interest Period will not
adequately and fairly reflect the cost to the Bank of making or
maintaining its affected Loans during such Interest Period, the Bank
shall give written or telephonic (promptly confirmed in writing)
notice thereof to the Borrowers as soon as practicable thereafter. If
such notice is given (x) any LIBOR Loans requested to be made on the
first day of such Interest Period shall be made as Base Rate Loans,
and (y) any outstanding LIBOR Loans shall be converted, on the first
day of such Interest Period, to Base Rate Loans. No further LIBOR
Loans shall be made or continued as such until the circumstances
causing such suspension no longer exists.
3.9 Requirements of Law.
(a) If the Bank shall have reasonably determined (which determination
shall be final and conclusive and binding upon all parties) that by reason
of (x) the requirements of Regulation D of the Board of the Governors of
the Federal Reserve System or (y) any Regulatory Change after the date
hereof or (z) other circumstances affecting the Bank (such as for example
but not limited to a change in official reserve requirements or increased
capital reserves required or imposed by any regulatory authority or entity
(domestic or foreign) having jurisdiction over or with respect to the Bank
or any change in the basis of taxation of payments to the Bank of principal
or interest on any LIBOR Loan (other than taxes covered by Section 5.2 or
taxes on the Bank's overall income by the jurisdiction where the Bank's
principal or lending office or offices are located) to the extent not
provided for in clause (x) above), the Bank shall incur increased costs or
reductions in the amounts received or receivable hereunder in respect of
any LIBOR Loan, then, and in any such event, the Bank shall promptly give
notice in writing or by telephone (confirmed in writing) to the Borrowers
of such determination. Thereafter, the Borrowers shall pay to the Bank,
upon written demand therefor, such additional amounts (which may be in the
form of an increased rate of, or a different method of calculating,
interest if the Borrowers and the Bank so agree) as shall be sufficient to
compensate the Bank for such increased cost or reduction in amounts
received or receivable, provided that in the case of any such determination
pursuant to clause (x) with respect to any LIBOR Loan, the written notice
from the Bank to the Borrowers shall specify the additional amount required
to be paid with respect to such Loan (with such amount so stated to be
final with respect to each Interest Period therefor until notice is
received by the Borrowers from the Bank that the condition giving rise to
such determination is no longer applicable) and such additional amount
shall be paid at the same time, and together with, the interest otherwise
payable in respect of such LIBOR Loans for such affected Interest Periods.
Each such notice or demand shall, absent manifest error, be final and
conclusive and binding upon all of the parties hereto; provided that before
giving any such notice or making any such demand, the Bank agrees to use
reasonable efforts (consistent with its internal policy and legal and
regulatory restrictions and so long as such efforts would not be
disadvantageous to it, in its reasonable discretion, in any legal, economic
or regulatory manner) to designate a different lending office if the making
of such designation would avoid the need for, or materially reduce the
amount of, such increased cost.
(b) If the Bank has invoked the provisions of subsection 3.9(a) (other
than in respect of clause (x) thereof), the Borrowers may (subject to the
other provisions of this Agreement) exercise any one of the following
options if the exercise of such option shall eliminate the need to pay
compensation to the Bank pursuant to Section 3.9(a):
(i) If such determination relates only to LIBOR Loans then being
requested by the Borrowers pursuant to a Notice of Borrowing, the
Borrowers may, prior to the date on which such LIBOR Loans are to be
made, by giving notice in writing or by telephone (confirmed in
writing) to the Bank, withdraw such Notice of Borrowing.
(ii) Upon written notice to the Bank, the Borrowers may terminate
the obligation of the Bank to make or maintain Loans as LIBOR Loans
and, in such event, the Borrowers shall on the first day of the next
occurring Interest Period applicable thereto convert all LIBOR Loans
into Base Rate Loans by written notice to the Bank thereof.
(iii) The Borrowers may, by giving notice in writing or by
telephone (confirmed in writing) to the Bank, require the Bank to make
the LIBOR Loan then being requested as a Base Rate Loan and to convert
each LIBOR Loan then outstanding that is so affected into a Base Rate
Loan on the first day of the next occurring Interest Period applicable
thereto, or within such earlier period, as is required by law.
3.10 Required Termination and Prepayment. In the event that at any time the
Bank shall have reasonably determined (which determination shall be final and
conclusive and binding upon all parties) that the making or continuation of any
of its LIBOR Loans has become unlawful by compliance by the Bank in good faith
with any law, governmental rule, regulation, guideline or order (whether or not
having the force of law and whether or not failure to comply therewith would be
unlawful), the Bank shall promptly give notice in writing or by telephone
(confirmed in writing) to the Borrowers of such determination; provided that
before giving any such notice, the Bank agrees to use reasonable efforts
(consistent with its internal policy and legal and regulatory restrictions and
so long as such efforts would not be disadvantageous to it, in its reasonable
discretion, in any legal, economic or regulatory manner) to designate a
different lending office if the making of such a designation would allow the
Bank to continue to perform its obligations to make LIBOR Loans affected by such
determination. Upon receiving such notification, the Borrowers shall (subject to
the other provisions of this Agreement) forthwith take one of the actions
specified in Section 3.9(b) (to the extent required to cure such condition). If
the Borrowers have not exercised one of the options specified in Section 3.9(b)
within the time periods therein prescribed, the Borrowers shall be deemed to
have exercised the option set forth in clause (iii) of Section 3.9(b) (requiring
the making, continuance or conversion into Base Rate Loans) and to have given
the notice specified therein. If any such conversion of a LIBOR Loan occurs on a
day which is not the last day of the then current Interest Period with respect
thereto, the Borrowers shall pay to the Bank such amounts, if any, as may be
required pursuant to Section 3.11. If circumstances subsequently change so that
the Bank shall determine that it is no longer so affected, the Bank will
promptly notify the Borrowers, and upon receipt of such notice, the obligations
of the Bank to make or continue such LIBOR Loans or to convert Loans into such
LIBOR Loans shall be reinstated.
3.11 Compensation. The Borrowers shall compensate the Bank, upon written
request by the Bank (which request shall, absent manifest error, be final and
conclusive and binding upon all parties), for all reasonable losses, expenses
and liabilities (including, without limitation, any interest paid by the Bank to
lenders of funds borrowed by it to make or carry its LIBOR Loans and any
reasonable loss (including any loss of margin) sustained by the Bank in
connection with the liquidation or re-employment of such funds), which the Bank
may sustain: (i) if for any reason (other than a default by the Bank) a
borrowing of any LIBOR Loan does not occur on a date specified therefor in a
Notice of Borrowing (whether or not withdrawn), (ii) if any prepayment,
repayment or conversion of any of its LIBOR Loans occurs on a date which is not
the last day of the Interest Period applicable thereto, (iii) if any prepayment
of any of its LIBOR Loans is not made on any date specified in a notice of
prepayment given by a Borrower, or (iv) as a consequence of any default by a
Borrower hereunder.
Section 4. COMMITMENT FEE, ETC.
4.1 Commitment Fee. The Borrowers agree to pay to the Bank a commitment fee
with respect to the Commitment for the period commencing on the Closing Date, to
and including the date on which the Commitment has been permanently terminated
in full, equal to at a rate per annum equal to the Commitment Fee Rate on the
average daily Unutilized Commitment during the period for which payment is made
(the "Commitment Fee"). For the purposes of the preceding sentence, issuance of
Letters of Credit shall be deemed to be a utilization of the Bank's Commitment
in an amount equal to LC Outstandings. Such Commitment Fee shall be payable
quarterly in arrears on the last Business Day of each calendar quarter and on
the date upon which the Commitment shall be permanently terminated. The Bank
shall endeavor to notify the Borrowers prior to the end of each such calendar
quarter of the amount to be paid by the Borrowers at the end of such quarter,
but no failure by the Bank to do so shall in any way affect the Borrowers'
obligations hereunder to timely pay the full amount due when due; however, no
such amount paid in reliance on such a notice, or paid in accordance with the
Borrowers' good faith calculations in the absence of such a notice, shall
constitute an Event of Default under Section 9.1 unless the Borrowers shall fail
to timely pay the full amount of any further adjustment as may be appropriate
pursuant to notice to the Borrowers from the Bank.
4.2 Facility Fee. The Borrowers agree to pay to the Bank a facility fee
equal to 1.25% of the Commitment on the Effective Date (the "Facility Fee). The
Facility Fee shall be payable 1/3 on the Effective Date, 1/3 on the first
anniversary of the Effective Date and 1/3 on the second anniversary of the
Effective Date, provided that if the Commitment has been permanently terminated
in full, the balance of the Facility Fee shall be payable in full on the date
the Commitment has been permanently terminated in full.
Section 5. PAYMENTS, ETC.
5.1 Payments on Non-Business Days; Calculations. Except as otherwise set
forth in clause (1) of the proviso to Section 3.4(a), whenever any payment to be
made hereunder or otherwise in connection with any Loan shall be stated to be
due on a day which is not a Business Day, the due date thereof shall be extended
to the next succeeding Business Day and interest shall be payable at the
applicable rate during such extension. Interest hereunder (including, without
limitation, interest on the Loans) and under the Loan Documents (other than any
interest on the Deemed Disbursement Account) and Commitment Fees shall be
calculated on the basis of a 360 day year and the actual number of days elapsed;
if for any reason a Loan is repaid on the same day on which it is made, one
day's interest (subject to the other provisions of this Agreement) shall be paid
on that Loan. The Borrowers hereby authorize and direct the Bank to charge any
account of either Borrower maintained at any office of the Bank with the amount
of any principal, interest or fee when the same becomes due and payable under
the terms hereof or of the Note; provided, however, that the Bank shall not be
under any obligation to charge any such account.
5.2 Net Payments; Application.
(a) All payments hereunder and under the other Loan Documents
(including, without limitation, prepayments and repayments pursuant to
Section 2) shall be made by the Borrowers to the Bank in immediately
available, freely transferable, freely convertible same day Dollars at the
Closing Office without setoff or counterclaim and in such amounts as may be
necessary in order that all such payments (after (i) withholding for or on
account of any present or future taxes, levies, imposts, duties or other
similar charges of whatsoever nature imposed on the amounts described above
by any government or any political subdivision or taxing authority thereof,
other than any tax (other than such taxes referred to in clause (ii) below)
imposed on the Bank pursuant to the income tax laws of the jurisdiction
where the Bank's principal or lending office or offices are located
(collectively, the "Taxes") and (ii) deduction of an amount equal to any
taxes on or measured by the net income payable to the Bank with respect to
the amount by which the payments required to be made by this Section 5.2
exceed the amount otherwise specified to be paid under this Agreement and
the Note) shall not be less than the amounts otherwise specified to be paid
under this Agreement and the Note. With respect to each such deduction or
withholding, the Borrowers shall promptly (and in no event later than 30
days thereafter) furnish to the Bank such certificates, receipts and other
documents as may be required to establish any tax credit, exemption or
reduction in rate to which the Bank or any holder of a Note may be
entitled. The Bank, not being a bank organized and existing under the laws
of the United States of America or any political subdivision thereof,
agrees to furnish the Borrowers, as soon as practicable after any written
request of the Borrowers to such effect, any executed form reasonably
requested by the Borrowers such as IRS Form W-8BEN or W-8ECI, and any other
applicable form as to the Bank's entitlement, if any, to exemption from, or
a reduced rate of, or its subjection to withholding tax on amounts payable
to it hereunder or under the Note and the Bank undertakes to use its best
efforts promptly to notify the Borrowers of any material change in any
information, statement or form so furnished to the Borrowers; provided,
however, that any failure on the part of the Bank to furnish any such
information, statements or forms shall in no way affect the terms of this
Agreement or of the Note. Notwithstanding the foregoing, in the event the
Bank fails to furnish any such information, statements or forms, the
Borrowers shall only pay to the Bank such amounts under this Agreement and
the Note as are due without those additions described in clauses (i) and
(ii) above that would not have been required had such information,
statements or forms been provided in a timely fashion. As promptly as
practicable after the Bank becomes aware of the existence or occurrence of
an event giving rise to the imposition of withholding tax upon amounts
payable to it hereunder or under the Note, the Bank shall use its best
efforts to transfer its Loans or Commitment to another office of the Bank
with a view to avoiding or mitigating the consequences of such tax. If the
Bank determines that it is unable to effect such transfer on or before the
thirtieth day after the date the Bank becomes aware of the existence or
occurrence of an event giving rise to the imposition of withholding tax,
the Bank shall promptly give notice of such determination to the Borrowers.
If either Borrower receives notice of such determination from the Bank, the
Borrowers may, by notice to the Bank, indicate their intention to prepay
the affected Loan in full (but with all premiums, if any, provided for in
this Agreement and with interest accrued to the date of prepayment on such
Loan and all other amounts then payable to the Bank hereunder) on the tenth
Business Day after the date of such notice of intention. On or before the
tenth day after receipt of any such notice of intention, the Bank may, by
notice to the Borrowers, irrevocably elect to receive payments hereunder
reduced by the amount of such withholding. If such an election is so made,
the Borrowers (i) shall cease to be under any further obligation to pay any
such additional amount in respect of such withholding and (ii) shall cease
to be entitled so to prepay the Loan by virtue of being required to make
such withholding. If the Bank has become subject to such withholding tax,
it shall use its best efforts to provide the Borrowers with an affidavit,
within 30 days after the Bank files its tax return, setting forth the
amount of any tax credit it received with respect thereto.
(b) Unless otherwise specifically provided herein, all payments under
or pursuant to, or in satisfaction of any of the Borrowers' obligations
under this Agreement or under the Note will be applied in the following
order of priority: (i) to any amounts not otherwise listed in this Section
5.2(b) then due and payable under this Agreement, the Note or the Security
Documents, (ii) to any Commitment Fee, Facility Fee or other fees then due
and payable pursuant to Section 4.1 of this Agreement, (iii) to any
interest on the Loans then due and payable (unless otherwise specified by
Borrowers, pro rata according to the aggregate amount of interest then due
and payable on the Loans), (iv) to any principal amount then due on the
Loans, and (v) to any amounts owed by the Borrowers not then due on such
Loans.
(c) [intentionally omitted]
(d) If (i) the Borrowers make any payment to the Bank under Section
5.2(a), (ii) there are no amounts then payable, but unpaid, by the
Borrowers under this Agreement or the other Loan Documents, and (iii) no
Default or Event of Default has occurred which has not been remedied by the
Borrowers or waived by the Bank, the Bank shall negotiate with the
Borrowers with a view to reimbursing the Borrowers, following receipt by
the Bank (and the passage of all periods for the audit of the tax records
of the Bank by the appropriate tax authority for the period in question),
such proportion of any available credit against, or remission for, tax as
the Bank in good faith certifies to be attributable to this Agreement or
the other Loan Documents and the proportion which will leave it (after
reimbursement to the Borrowers) in no worse position than it would have
been in had the relative withholding or deduction never been required. This
Section shall not impose any obligation on the Bank:
(1) to manage its tax or other affairs in any particular manner;
or
(2) to claim any credit against, or remission for, tax payable on
amounts received by it under this Agreement or the other Loan
Documents in priority to any other tax relief, or allowance for tax
borne by it, on such amounts; or
(3) to disclose any information concerning its tax affairs to the
Borrowers or to any other Person.
Any reimbursement to the Borrowers shall be made promptly after any such
certification by the Bank of any amount due to the Borrowers.
Section 6. CONDITIONS PRECEDENT TO INITIAL LOANS.
The Bank shall not be obligated to make any Loan or issue any Letter of
Credit hereunder unless on or before the Closing Date the following conditions
(unless otherwise specifically indicated) have been fulfilled to the
satisfaction of the Bank (or waived by the Bank):
6.1 Default, etc. After giving effect to any Loans made and Letters of
Credit issued on the Closing Date, there shall exist no Default or Event of
Default and all representations and warranties made by the Loan Parties herein
or in the other Loan Documents or otherwise by the Loan Parties in writing in
connection herewith or therewith shall be true and correct in all material
respects with the same effect as though such representations and warranties have
been made at and as of such time.
6.2 Note. The Bank shall have received the Note, duly executed and
completed by the Borrowers.
6.3 Supporting Documents. There shall have been delivered to the Bank such
information and copies of documents, approvals (if any) and records (certified
where appropriate) of corporate and legal proceedings as the Bank may have
reasonably requested relating to the Loan Parties entering into, issuance and
performance of the Loan Documents and the other agreements and documents related
thereto to which each is a party. Such documents shall, in any event, include:
(a) certified copies of the Charter Documents of each Loan Party and
KPP, KPOP, STSI and STOP;
(b) certificates of authorized officers of each Loan Party, KPP and
KPOP, certifying the resolutions of each such entity relating to the
entering into and performance of the aforesaid documents to which such
entity is a party and the transactions contemplated thereby;
(c) certificates of authorized officers of each Loan Party, KPP and
KPOP with respect to the incumbency and specimen signatures of their
respective officers or representatives authorized to execute such documents
and any other documents and papers, and to take any other action, in
connection therewith; and
(d) a certificate of an authorized officer of each Borrower
certifying, as of the Closing Date, compliance with the conditions of
Section 6.1, 6.5, 6.6, 6.10 and 6.13 and also the absence of any Material
Adverse Changes of the type referred to in Section 6.11.
6.4 Security Documents. There shall have been delivered to the Bank:
(a) A Pledge Agreement executed by KSL covering all present and future
Equity Interests of KSL in any Subsidiary (other than KPL), together with
(x) any certificates representing such Equity Interests and (y) undated
stock or similar powers for such certificates executed in blank;
(b) A Pledge Agreement executed by KPL covering (1) 4,095,500 LP Units
owned by KPL, (2) all distributions, dividends, cash, interest and other
property from time to time received, receivable or otherwise distributed in
respect of, or in exchange for, any or all of KPL's interests or rights as
the general partner of KPP and KPOP, (3) all present and future Equity
Interests of KPL in any Subsidiary, together with (x) any certificates
representing such LP Units and Equity Interests and (y) undated stock or
similar powers for such certificates executed in blank;
(c) A Pledge Agreement executed by KI covering 500,000 LP Units owned
by KI, together with (x) any certificates representing such LP Units and
(y) undated stock or similar powers for such certificates executed in
blank;
(d) A Guaranty Agreement executed by each Loan Party other than the
Borrowers;
(e) Such consents of third parties as the Bank may reasonably request;
(f) Evidence of all filings of financing statements under the
applicable Uniform Commercial Code (to the extent required to perfect any
security interest in any collateral), satisfactory Lien search requests on
Form UCC-11 and analogous forms, confirming the absence of any perfected
Liens (except Permitted Liens) and all other actions with respect to the
Liens created by the Security Documents as are necessary or appropriate to
perfect such Liens; and
(g) To the extent required by the Bank, a release (in form and
substance satisfactory to the Bank) of all Liens (except Permitted Liens)
in all assets of the Loan Parties, including (to the extent applicable)
properly executed UCC-3 termination statements and similar documents under
the applicable laws of other relevant jurisdictions.
6.5 Approvals and Consents. All orders, permissions, consents, approvals,
licenses, authorizations and validations of, and filings, recordings and
registrations with, and exemptions by, any Government Authority, or any other
Person, required to authorize or required in connection with the Distribution or
the execution, delivery and performance of this Agreement, the other Loan
Documents and the transactions contemplated hereby and thereby by any Loan Party
or KPP Entity shall have been obtained.
6.6 Solvency Certificate. There shall have been delivered to the Bank a
certificate (substantially in the form of Exhibit E hereto) from the CFO of each
Borrower to the effect that, after giving effect to the transactions
contemplated by this Agreement and the Distribution Agreement each Borrower (x)
is Solvent, (y) does not have unreasonably small capital to conduct its
business, and (z) has not incurred debts beyond its ability to pay such debts as
they become due.
6.7 Legal Opinions.
(a) The Bank shall have received a legal opinion of Fulbright &
Xxxxxxxx L.L.P., counsel for the Loan Parties, in form and substance
reasonably satisfactory to the Bank, addressed to the Bank and dated the
Closing Date.
(b) If requested by the Bank, the Bank shall have received a legal
opinion of local counsel for the Bank, covering such matters incident to
the transactions contemplated hereby as the Bank may request.
6.8 Change in Law. No change shall have occurred in applicable law, or in
applicable regulations thereunder or in interpretations thereof by any
Government Authority or other Person which, in the opinion of the Bank, would
make it illegal for the Bank to make any Loan required to be made (or any Letter
of Credit required to be issued).
6.9 All Proceedings to be Satisfactory. All material corporate,
partnership, limited liability company and legal proceedings and all material
instruments in connection with the transactions contemplated by this Agreement
and the other documents referred to herein shall be satisfactory in form and
substance to the Bank, and the Bank shall have received information and copies
of all documents which the Bank may reasonably have requested in connection
herewith, such documents where appropriate to be certified by proper corporate
officers or Government Authorities.
6.10 No Opposition. No suit, action or proceeding shall be pending or
threatened before or by any Government Authority or other Person seeking to
restrain or prohibit the consummation of the transactions contemplated by this
Agreement.
6.11 Adverse Change. There shall have been, in the Bank's reasonable
opinion, no Material Adverse Change with respect to each Loan Party since the
later of its respective formation or January 1, 2001.
6.12 Fees and Expenses. The Letter of Credit Fees payable on issuance of
any Letters of Credit to be issued and the Facility Fee payable on or before
such date shall have been paid in full. The legal fees and expenses of the
Bank's counsel in connection with the transactions contemplated by this
Agreement shall (to the extent demand for payment thereof shall have been made)
have been paid in full.
6.13 Distribution. Each of the conditions set forth in Article 7 of the
Distribution Agreement shall have been fulfilled and the Distribution shall have
been effected.
6.14 Consent to Service. The Borrowers shall have delivered to the Bank the
consent of the Process Agent to acting as such, as more fully set forth in
Section 12.10 hereof.
6.15 Registration of LP Units. On or before September 30, 2001 an effective
registration statement covering resales of the LP Units and complying with the
relevant requirements of Federal securities laws covering the LP Units has been
declared effective by the SEC and the Bank shall have received a copy of the
notice from the SEC confirming such a registration statement is effective.
All documents and papers required by this Section 6 shall be in form and
substance reasonably satisfactory to the Bank and delivered to the Bank at its
Closing Office or as the Bank may otherwise direct.
Notwithstanding any other provision of this Agreement, if the conditions
set forth in Section 6 of this Agreement (except as specifically indicated in
Section 6.15) have not been fulfilled on or before July 31, 2001, the
commitments of the Bank to make the Loans or issue the Letters of Credit shall
be terminated in full.
Section 6A. CONDITIONS PRECEDENT TO SUBSEQUENT LOANS AND LETTERS OF CREDIT.
The Bank shall not be obligated to make any Loans or issue any Letters of
Credit after the Closing Date unless, at the time of the making of such Loan or
issuing such Letter of Credit (except as hereinafter indicated) the following
conditions (unless waived in writing by the Bank) have been satisfied:
6A.1 Certain Conditions. At the time of the making of such Loan or issuing
such Letter of Credit, and immediately after giving effect thereto, (a) all
deficiencies, if any, with respect to conditions precedent to any prior Loan or
Letter of Credit shall have been corrected, (b) all of the conditions specified
in Sections 6.1, 6.5, 6.8, 6.9, 6.10, 6.11, 6.12, 6.13 and 6.15 (by the date
indicated in Section 6.15) shall be satisfied in full (with any reference in any
of such Sections to the Closing Date or the initial Loans made to be deemed a
reference to the Loan or Letters of Credit (as the case may be) then requested
to be made), (c) each of the documents specified in Sections 6.2, 6.3, 6.4, 6.6
and 6.14 shall have been delivered and shall be in full force and effect and no
Loan Party thereto shall have failed to perform in any material respect any of
its obligations thereunder, (d) no issuer of any legal opinion issued in
connection with any Loan Document or the making of any Loan or issuance of any
Letter of Credit shall have rescinded or qualified any such legal opinion, and
(e) no issuer thereof shall have rescinded or qualified any of the financial
statements, certificates, letters, reports or other opinions referred to in
Section 6.
6A.2 Subsequent Opinions of Counsel. If reasonably requested by the Bank,
the Bank shall have received from any or all of the counsel referred to in
Section 6 or other counsel satisfactory to the Bank such favorable supplemental
legal opinions addressed to the Bank and dated the date of such Loan or Letter
of Credit and covering such matters incidental to the transactions contemplated
by this Agreement as the Bank shall reasonably request, each of which opinions
shall be in form and substance satisfactory to the Bank.
6A.3 Officer's Certificate.
(a) If requested by the Bank, the Bank shall have received a
certificate of authorized officers of the Borrowers certifying, as of the
date of the Loan then being made or Letter of Credit then being issued,
compliance with the provisions of Section 6.1 (with the reference therein
to Loan or Letter of Credit being deemed a reference to the Loan being made
or Letter of Credit being issued on the date of said certificate) and
further to the effect that the conditions specified in Section 6A.1 are
satisfied at such time. Any such certificate shall be given "to the best of
such officers' knowledge, based upon due and adequate investigation" or as
otherwise agreed by the Borrowers and the Bank.
(b) The making of each Loan and the issuance of each Letter of Credit
subsequent to the Closing Date shall constitute a representation and
warranty by the Borrowers to the Bank that, at the time of said subsequent
Loan or Letter of Credit (and after giving effect thereto), (i) all
representations and warranties contained herein or in the other Loan
Documents or otherwise made by a Loan Party in connection herewith or
therewith are true and correct in all material respects with the same
effect as though such representations and warranties were being made at and
as of such time, (ii) no Default or Event of Default exists and (iii) the
conditions specified in Section 6A.1 are satisfied at such time.
All of the documents and papers referred to in this Section 6A shall be in
form and substance reasonably satisfactory to the Bank and shall be delivered to
the Bank at its Closing Office or at such other office as the Bank may from time
to time specify to the Borrowers.
Section 7. AFFIRMATIVE COVENANTS.
The Borrowers jointly and severally covenant and agree hereby that, so long
as this Agreement is in effect and while any Letter of Credit is outstanding and
until the Commitment is terminated and all of the Loans, together with interest,
and all fees and all other obligations incurred hereunder (including Deemed
Disbursements and Reimbursement Obligations and fees and disbursements in
connection therewith), are paid in full, the Borrowers will perform, and will
cause to be performed, the obligations set forth in this Section 7 (unless the
Bank should otherwise consent in writing).
7.1 Financial Statements. Each Borrower will furnish to the Bank:
(a) As soon as practicable and in any event within 60 days after the
close of each of the first three quarters of each Fiscal Year, as at the
end of and for the period commencing at the end of the previous Fiscal Year
and ending with the end of such month, as the case may be, an unaudited
consolidated balance sheet of KSL and its consolidated Subsidiaries and a
consolidated statement of income and change in retained earnings of KSL and
its consolidated Subsidiaries, together with a cash flow statement, such
statements to be accompanied by consolidating balance sheets, income
statements and other relevant consolidating information for KSL and its
consolidated Subsidiaries, all in reasonable detail and certified by the
CFO of the Borrower subject to year-end audit and adjustments and setting
forth in comparative form (to the extent available) the corresponding
figures as of one year prior thereto or for the appropriate periods of the
preceding Fiscal Year, as the case may be;
(b) As soon as practicable and in any event within the earlier of (x)
five days after the Borrower receives same or (y) one hundred and five
(105) days after the close of each Fiscal Year of KSL, KPL and MOL, as at
the end of and for the Fiscal Year just closed, as the case may be,
consolidated balance sheet(s) of KSL and its consolidated Subsidiaries, KPL
and its consolidated Subsidiaries and MOL and its consolidated
Subsidiaries, and consolidated statement(s) of income and retained earnings
of KSL and its consolidated Subsidiaries, KPL and its consolidated
Subsidiaries and MOL and its consolidated Subsidiaries for such Fiscal Year
setting forth, in the case of consolidated balance sheets and statements,
the corresponding figures of the previous annual audit (to the extent
available) in comparative form, all in reasonable detail and accompanied by
the Auditors' opinion (without any qualification unacceptable to the Bank)
that such Financial Statements have been prepared in accordance with GAAP
consistently applied and fairly present the financial condition and results
of operations of KSL and its consolidated Subsidiaries, KPL and its
consolidated Subsidiaries and MOL and its consolidated Subsidiaries as at
the Fiscal Year-End and for the Fiscal Year indicated, such Financial
Statements to be accompanied by a cash flow statement and (x) consolidating
balance sheets, income statements and other relevant consolidating
information for KSL and its consolidated Subsidiaries, (y) a certificate of
said Auditors that, in conducting their audit in connection with such
Financial Statements, they obtained no knowledge of the existence of any
Event of Default or Default or, if in the opinion of such Auditors, any
Event of Default or Default exists, specifying the nature thereof and the
period of existence thereof, and (z) a certificate of said Auditors, in
form and substance satisfactory to the Bank, confirming the Borrowers'
calculations with respect to compliance with Section 8.13 for the
immediately preceding Fiscal Year;
(c) As soon as practicable and in any event within 60 days after the
close of each of the first three quarters of each Fiscal Year and 105 days
after the close of the fourth quarter of each Fiscal Year, a certificate in
form and substance satisfactory to the Bank and signed by the CFO of the
Borrower (each such certificate, a "Quarterly Certificate") stating (i)
that a review of the activities of the Consolidated Group and KPP Entities
during such quarter has been made under their supervision with a view to
determining whether each of the Loan Parties has observed, performed and
fulfilled all of its obligations under this Agreement and the other Loan
Documents, and (ii) that there exists no Event of Default or Default, or if
any Event of Default or Default exists, specifying the nature thereof, the
period of existence thereof and what action the affected Loan Party
proposes to take with respect thereto; together with a compliance
certificate of said CFO, substantially in form substantially in the form of
Exhibit H attached hereto (each such certificate, a "Compliance
Certificate"), setting forth among other things the Borrower's calculations
with respect to its compliance with Section 8.13;
(d) Promptly upon receipt thereof, copies of all detailed financial
reports and Management Letters, if any, submitted to any member of the
Consolidated Group by the Auditors, in connection with each annual or
interim audit of their respective books by such Auditors;
(e) As soon as possible and in any event (A) within 30 days after a
Loan Party, or any of its ERISA Affiliates knows that any Termination Event
described in clause (i) of the definition of Termination Event with respect
to any Pension Plan has occurred or is expected to occur and (B) within 10
days after a Loan Party or any of its ERISA Affiliates knows that any other
Termination Event with respect to any Pension Plan has occurred or is
expected to occur, a statement of the CFO of the Borrower describing such
Termination Event and the action, if any, which the affected Loan Party or
ERISA Affiliate proposes to take with respect thereto;
(f) Promptly and in any event within ten Business Days after receipt
thereof by a Loan Party or any of its ERISA Affiliates from the PBGC,
copies of each notice received by such Person of the PBGC's intention to
terminate any Pension Plan or to have a trustee appointed to administer any
Pension Plan, any notice of noncompliance issued by the PBGC with respect
to a proposed standard termination of a Pension Plan, and any notice issued
by the PBGC with respect to a proposed distress termination of a Pension
Plan;
(g) Promptly and in any event within 30 days after the filing thereof
with the IRS, copies of each Schedule B (Actuarial Information) to the
annual report (Form 5500 Series) with respect to each Pension Plan;
(h) Promptly and in any event within ten Business Days after receipt
thereof by a Loan Party or any of its ERISA Affiliates from a Multiemployer
Plan sponsor, a copy of each notice received by such Person concerning (x)
the imposition or amount of withdrawal liability under Subtitle E of Title
IV of ERISA or (y) any determination by a Multiemployer Plan sponsor that
such Multiemployer Plan is, or is expected to be, in "reorganization"
(within the meaning of Section 4241 of ERISA) or "insolvent" (within the
meaning of Section 4245 of ERISA), or has incurred or is expected to incur
an "accumulated funding deficiency" (within the meaning of Section 302 of
ERISA or Section 412 of the Code);
(i) No later than 30 days prior to each Fiscal Year-End, the operating
budgets of each member of the Consolidated Group (if one is prepared for a
member of the Consolidated Group) and KPP for the coming Fiscal Year, in
form reasonably satisfactory to the Bank and accompanied by such
information related thereto as the Bank may reasonably request;
(j) Promptly and in any event within five Business Days after receipt
thereof by a Loan Party, copies of the Financial Statements of any KPP
Entity, and promptly and in any event within five Business Days after the
filing or distribution thereof, copies of all periodic and other reports,
proxy statements and other materials filed by any Loan Party or any KPP
Entity with the SEC or with any national securities exchange or distributed
by any Loan Party or any KPP Entity to its security holders; and. (k) With
reasonable promptness, such other information respecting the business,
properties, operations, prospects or condition (financial or otherwise) of
any member of the Consolidated Group as the Bank may from time to time
reasonably request.
7.2 Notice of Litigation. Each Borrower will promptly give written notice
to the Bank of (i) any action or proceeding, or to the extent any executive
officer of any Loan Party may have any knowledge thereof, any claim, which may
reasonably be expected to be commenced or asserted against any member of the
Consolidated Group in which the amount involved is $500,000 or more, and (ii)
any dispute which may exist between any member of the Consolidated Group and any
Government Authority (including any audit by the IRS).
7.3 Payment of Charges. Each Loan Party will duly pay and discharge, and
will cause each of its Subsidiaries to duly pay and discharge (i) all taxes,
assessments and governmental charges or levies imposed upon or against it or its
property or assets, or upon any property leased by it, prior to the date on
which penalties attach thereto, unless and to the extent only that such taxes,
assessments and governmental charges or levies are being contested in good faith
and by appropriate proceedings diligently conducted and such Loan Party or its
Subsidiary has set aside on its books adequate reserves therefor in accordance
with GAAP, (ii) all lawful claims, whether for labor, materials, supplies,
services or anything else, which might or could, if unpaid, become a lien or
charge upon such property or assets, unless and to the extent only that the
validity thereof is being contested in good faith and by appropriate proceedings
diligently conducted, and (iii) all its trade bills when due in accordance with
their original terms, including any applicable grace periods, unless and to the
extent only that such trade bills are being contested in good faith and by
appropriate proceedings diligently conducted.
7.4 Conduct of Business. Each Loan Party will, and will cause each of its
Subsidiaries to, keep adequate insurance, maintain its existence and right to
carry on business, comply with all applicable Legal Requirements and otherwise
conduct its business in accordance with prudent business management.
7.5 [intentionally omitted]
7.6 [intentionally omitted]
7.7 [intentionally omitted]
7.8 Inspection of Books and Assets.
(a) Each Loan Party will allow any representative, officer or
accountant of the Bank to visit and inspect any of its property, to examine
its books of record and account and to discuss its affairs, finances and
accounts with its officers or directors, and at such reasonable time and as
often as the Bank may request and, in each such case, cause each of its
Subsidiaries so to do.
(b) Upon request by the Bank to the Borrowers, which request shall not
be unreasonably denied, each Loan Party will, subject to applicable Legal
Requirements (including without limitation, applicable securities laws),
allow any representative, officer or accountant of the Bank to discuss the
Financial Statements, the other financial information from time to time
delivered hereunder and the financial condition of members of the
Consolidated Group and KPP Entities with the Auditors. Any such discussions
will be held at times and locations reasonably acceptable to each of the
Bank, the Borrowers and the Auditors. No such discussions will be held
without the presence of an officer of the Borrowers, unless the Borrowers
consent otherwise.
7.9 Payment of Indebtedness. Each Loan Party will duly and punctually pay,
or cause to be paid, the principal of and the interest on all Indebtedness for
Money Borrowed heretofore or hereafter incurred or assumed by such Person, or in
respect of which such Person shall otherwise be liable, when and as the same
shall become due and payable, unless such Indebtedness for Money Borrowed be
renewed or extended, and will (and will cause each Subsidiary to) faithfully
observe, perform and discharge all the covenants, conditions and obligations
which are imposed on such Person by any and all indentures and other agreements
securing, relating to, or evidencing such Indebtedness for Money Borrowed or
pursuant to which such Indebtedness for Money Borrowed is incurred, and such
Person will not permit any act or omission to occur or exist which is or may be
declared to be a default thereunder, provided that the failure of any Loan Party
so to do shall not create an Event of Default under Section 9.4 hereof to the
extent such failure does not give rise to an Event of Default under Section 9.5
hereof.
7.10 Further Assurances. Each Loan Party will, and will cause each of its
Subsidiaries to, make, execute or endorse, and acknowledge and deliver or file,
all such vouchers, invoices, notices, and certifications and additional
agreements, undertakings, conveyances, transfers, assignments, or further
assurances, and take any and all such other action, as the Bank may, from time
to time, reasonably request in connection with this Agreement, the obligations
of such Loan Party hereunder or under the Note or any of the other Loan
Documents to which such Loan Party is a party, or for the better assuring and
confirming unto the Bank all or any part of the security for the Obligations.
7.11 Notice of Default. Forthwith upon any executive officer of any Loan
Party obtaining knowledge of the existence of a Default or Event of Default, the
Loan Party will deliver to the Bank a certificate signed by an officer or
director of the Loan Party specifying the nature thereof, the period of
existence thereof, and what action the affected Person proposes to take with
respect thereto.
7.12 Reserves. Each Loan Party will set up, and will cause each of its
Subsidiaries to set up, on its books from its earnings, reserves for bad debt in
accordance with GAAP and in an aggregate amount deemed adequate in the judgment
of such Loan Party and accepted by the Auditors in their annual audits.
7.13 Affiliate Transactions. Each Loan Party will conduct and cause each of
its Subsidiaries to conduct all material transactions with any of their
respective Affiliates on a commercially reasonable basis.
7.14 Solvency. Each Loan Party will continue to be Solvent and ensure each
of its Subsidiaries will continue to be Solvent.
Section 8. NEGATIVE COVENANTS.
The Borrowers jointly and severally covenant and agree that so long as this
Agreement is in effect and while any Letter of Credit is outstanding and until
the Commitment is terminated and all of the Loans, together with interest, and
all fees and all other obligations incurred hereunder (including Deemed
Disbursements and Reimbursement Obligations and fees and disbursements in
connection therewith), are paid in full, the Borrowers will perform, and will
cause to be performed, the obligations set forth in this Section 8 (unless it
shall first have procured the written consent of the Bank to do otherwise).
Nothing contained in Section 8.3, however, shall be construed to prevent
(x) a KPP Entity from contracting, creating, incurring or assuming any
Indebtedness for Borrowed Money or (y) KPL, as general partner of KPP and KPOP,
doing so on behalf of such KPP Entity or (z) STSI, as general partner of STOP,
doing so on behalf of STOP. Nothing contained in Section 8.7 or 8.12 shall
prohibit (x) KPL, as general partner of KPP and KPOP, from taking any action on
behalf of such KPP Entity otherwise prohibited by such section, or (y) STSI, as
general partner of STOP, from taking any action on behalf of STOP otherwise
prohibited by such section.
8.1 Same Type of Business.
(a) KSL will not enter into any business or activity other than its
ownership of the Equity Interests of its Subsidiaries and, to the extent
KSL's board of directors directs, its participation in the management and
business of its Subsidiaries.
(b) KPL will not enter into any business or activity other than (i)
acting as the general partner of KPP and KPOP, (ii) its ownership of the
Equity Interests of its Subsidiaries, (iii) its ownership of the LP Units,
(iv) other business and activities in which it is engaged as of the Closing
Date, and (v) to the extent KPL's board of directors directs, its
participation in the management and business of its Subsidiaries.
8.2 Liens. No Loan Party will contract, create, incur, assume or suffer to
exist any Lien upon or with respect to, or by transfer or otherwise subject to
the prior payment of any indebtedness (other than the Loans), any of its
property or assets (including without limitation any of the LP Units, any Equity
Interests in any Person, the General Partnership Interests, the Equity Interests
of KPL or any of its Subsidiaries and any Intercompany Notes), whether now owned
or hereafter acquired, or permit any of its Subsidiaries so to do (it being
acknowledged by the Bank that property or assets owned solely by a KPP Entity is
neither property nor assets of KPL); except (i) liens for tax assessments,
levies or governmental charges not yet due or which are being contested in good
faith by appropriate proceedings diligently conducted and for which appropriate
reserves have been established in accordance with GAAP, and (ii) other liens,
charges, and encumbrances incidental to the conduct of its business or the
ownership of its property and assets which were not incurred in connection with
the borrowing of money or the obtaining of advances or credit and which do not
materially detract from the value of its property or assets or materially impair
the use thereof in the operation of its business; and (iii) the following:
(a) Liens in connection with workmen's compensation, unemployment
insurance or other social security obligations;
(b) Deposits or pledges securing the performance of bids, tenders,
contracts (other than contracts for the payment of money), leases,
statutory obligations, surety and appeal bonds and other obligations of
like nature made in the ordinary course of business;
(c) Mechanics', carriers', warehousemen's, workmen's, materialmen's,
or other like liens arising in the ordinary course of business with respect
to obligations which are not due or which are being contested in good faith
by appropriate proceedings diligently conducted;
(d) Encumbrances consisting of zoning regulations, easements, rights
of way, survey exceptions and other similar restrictions on the use of real
property or minor irregularities in titles thereto which do not materially
impair use of such property by such Loan Party or its Subsidiaries in the
operation of the business of such Loan Party or the Subsidiary owning the
same;
(e) Liens in favor of the Bank securing such Loan Party's Obligations;
(f) Liens existing on the Closing Date and indicated on Schedule
8.2(f) to this Agreement (other than those (if any) indicated on such
Schedule with an asterisk, which shall be released or otherwise terminated
on or prior to the Closing Date);
(g) Liens on miscellaneous office furniture and equipment incurred in
connection with the lease thereof; provided that the aggregate amount of
obligations secured by all of such Liens does not exceed $100,000 at any
one time; and
(h) Liens against the assets of MOL in favor of Xxxxxx Bank under the
MOL Loan Agreement.
8.3 Other Indebtedness. No Loan Party will contract, create, incur, assume
or suffer to exist any Indebtedness for Money Borrowed or permit any of its
Subsidiaries so to do; except
(a) the Loans and LC Outstandings;
(b) indebtedness existing on the Closing Date listed on Schedule
8.3(b) to this Agreement;
(c) trade payables incurred in the ordinary course of business,
provided that such trade payables (except to the extent being contested in
good faith by appropriate proceedings diligently conducted and for which
appropriate reserves have been established in accordance with GAAP) are not
more than 60 days past due;
(d) Guarantees by such Person in favor of the Bank; and
(e) indebtedness of MOL to Xxxxxx Bank under the MOL Loan Agreement
not to exceed $20,000,000 in the aggregate at any time outstanding.
8.4 Advances and Loans. No Loan Party will lend money or credit or make
advances to any Person or permit any Subsidiary so to do; provided that KSL may
make loans to KSI pursuant to the KSI Credit Agreement (the "KSI Credit
Agreement") dated as of June 28, 2001 between KSL and KSI attached as Exhibit G
hereto (the "KSI Loan") if (i) the outstanding amount of the KSI Loan does not
exceed $25,000,000 in the aggregate at any time, (ii) the KSI Loan is evidenced
by the Note (as defined in the KSI Loan Agreement (the "KSI Note"), (iii) the
KSI Note is Satisfactorily Pledged to the Bank and (iv) the KSI Note is not
subject to any Lien in favor of any Person other than the Bank. Notwithstanding
the foregoing, any Loan Party may lend money or credit or make advances to any
other Loan Party (each such loan or advance, an "Intercompany Loan"); provided
that (i) each Intercompany Loan is evidenced by a promissory note or other
evidence of indebtedness (each such promissory note or evidence of indebtedness,
an "Intercompany Note"), (ii) each Intercompany Note is Satisfactorily Pledged
to the Bank and (iii) the Intercompany Notes are not subject to any Lien in
favor of any Person other than the Bank.
8.5 Consolidation and Merger. No Loan Party will wind up, liquidate or
dissolve its affairs or enter into any transaction of merger or consolidation or
permit any Subsidiary so to do (or agree to do any of the foregoing at any
future time) without the prior written consent of the Bank, which consent shall
not be unreasonably withheld.
8.6 Sale of Assets. Neither Borrower will Transfer (or agree to Transfer at
any future time) (i) all or a substantial part of its property or assets or any
part of such property or assets essential to the conduct of its business
substantially as now conducted by such Loan Party, or (ii) to the extent such
Transfer is not prohibited by any other Section of this Agreement, any of its
assets except in the ordinary course of business unless such assets are
Transferred for a price at least equal to their fair market value (as determined
in good faith by the board of directors of the Loan Party). No Loan Party other
than a Borrower will Transfer (or agree to Transfer at any future time) unless
such assets are Transferred for a price at least equal to their fair market
value (as determined in good faith by the board of directors of the Loan Party)
(i) all or a substantial part of its property or assets or any part of such
property or assets essential to the conduct of its business substantially as now
conducted by such Loan Party, or (ii) to the extent such Transfer is not
prohibited by any other Section of this Agreement, any of its assets except in
the ordinary course of business.
8.7 Purchase of Assets. Without the prior written consent of the Bank,
which consent shall not be unreasonably withheld, no Loan Party will other than
in the ordinary course of business (i) purchase, lease or otherwise acquire all
or any substantial part of the property or assets of any Person, or permit any
Subsidiary so to do, or (ii) purchase, lease or otherwise acquire property or
net assets in excess of $1,000,000 (for all Loan Parties combined) in any Fiscal
Year, or permit any Subsidiary so to do;
8.8 Accounting Changes.
(a) No Loan Party will make or permit any Subsidiary to make any
significant change in accounting treatment and reporting practices except
as permitted or required by GAAP.
(b) No Loan Party will change its Fiscal Year or permit any Subsidiary
to change its Fiscal Year unless the Bank consents in writing thereto
(which consent shall not be unreasonably withheld, it being agreed that it
shall not be unreasonable to withhold such consent if such proposed change
would affect any computation required by Section 8.13 hereof, until
appropriate amendments are made to this Agreement with respect thereto).
8.9 Related Transactions. No Loan Party will enter into any transaction
with any Person which is an Affiliate of such Loan Party or any Subsidiary or
with which any officer or director of such Loan Party or a Subsidiary has a
financial interest, or with any Associate of any such Person, on more favorable
terms than if such Person was totally unrelated, or permit any Subsidiary to so
do.
8.10 Subsidiaries; Other Securities.
(a) No Loan Party will (x) sell, assign, transfer or otherwise dispose
of, or in any way part with control of, any Equity Interests of a
Subsidiary or any indebtedness or obligations of any character of any of
its Subsidiaries, or permit any of its Subsidiaries so to do with respect
to any Equity Interests of any other Subsidiary or any indebtedness or
obligations of any character of such Loan Party or any of its Subsidiaries,
or (y) issue, or permit any of its Subsidiaries to issue, any additional
Equity Interests to any Person other than a Borrower or another Loan Party
all of the Equity Interests in which are owned (directly or indirectly) by
the Borrower and, in such case, no such Equity Interests shall be issued
unless the terms thereof are satisfactory to the Bank and such additional
Equity Interests are Satisfactorily Pledged.
(b) KPL will not sell, assign, transfer or otherwise dispose of, or in
any way part with control of, the General Partnership Interests or the LP
Units.
8.11 [intentionally omitted]
8.12 Investments. No Loan Party will invest in (by capital contribution or
otherwise), or acquire for investment or purchase or make any commitment to
purchase the obligations or stock of, any Person, except (i) the purchase of
marketable direct or guaranteed obligations of the national government of the
US; (ii) stock or obligations issued to such Loan Party or a Subsidiary in
settlement of claims against others by reason of an event of bankruptcy or a
composition or readjustment of debt or a reorganization of such Loan Party or a
Subsidiary; (iii) certificates of deposit and banker's acceptances of the Bank
or any branch of the Bank; (iv) Commercial Paper rated P-1 or A-1 by Standard &
Poors ("S&P") or Xxxxx'x Investors Service ("Moodys") or the equivalent rating
by any other rating agency nationally recognized in the US; (v) certificates of
deposit and banker's acceptances of any bank with a AA or better rating from
Moodys or the equivalent rating by S&P or any other rating agency nationally
recognized in the US. As used in this Agreement, "Commercial Paper" shall mean
short-term promissory notes due no later than 270 days from the date of issuance
of each such note.
8.13 Financial Covenants.
(a) Adjusted Debt/Free Cash Flow shall not exceed 4.2 to 1 as of the
end of each quarter of each Fiscal Year.
(b) The aggregate outstanding principal amount of the Loans plus the
aggregate amount of the LC Obligations outstanding shall not exceed 66.67%
of the Collateral Value at any time.
8.14 Compliance with ERISA. No Loan Party will terminate, or permit any
Subsidiary to terminate, any Pension Plan so as to result in any material (in
the opinion of the Bank) liability of any Loan Party or any Subsidiary to the
PBGC, (ii) permit to exist the occurrence of any Reportable Event (as defined in
Section 4043 of ERISA), or any other event or condition, which presents a
material (in the opinion of the Bank) risk of such a termination by the PBGC of
any Pension Plan, (iii) allow, or permit any Subsidiary to allow, the aggregate
amount of "benefit liabilities" (within the meaning of Section 4001(a)(16) of
ERISA) under all Pension Plans of which any Loan Party or any ERISA Affiliate is
a "contributing sponsor" (within the meaning of Section 4001(a)(13) of ERISA) to
exceed $250,000, (iv) allow, or permit any Subsidiary to allow, any Plan to
incur an "accumulated funding deficiency" (within the meaning of Section 302 of
ERISA or Section 412 of the Code), whether or not waived, (v) engage, or permit
any Subsidiary or any Plan to engage, in any "prohibited transaction" (within
the meaning of Section 406 of ERISA or Section 4975 of the Code) resulting in
any material (in the opinion of the Bank and considered by itself or together
with all other such liabilities of the Borrower and all ERISA Affiliates)
liability to any Loan Party or any ERISA Affiliate, (vi) allow, or permit any
Subsidiary to allow, any Plan to fail to comply with the applicable provisions
of ERISA and the Code in any material respect, (vii) fail, or permit any
Subsidiary to fail, to make any required contribution to any Multiemployer Plan,
or (viii) completely or partially withdraw, or permit a Subsidiary to completely
or partially withdraw, from a Multiemployer Plan, if such complete or partial
withdrawal will result in any material (in the opinion of the Bank) withdrawal
liability under Title IV of ERISA.
8.15 Charter Documents. No Loan Party will amend or otherwise modify,
directly or indirectly, any of its Charter Documents, without the prior written
consent of the Bank, which consent shall not be unreasonably withheld; provided
that any Loan Party may amend or modify its Charter Documents so long as such
amendments or modifications cannot reasonably be expected to have an adverse
effect on the validity, payment, performance or enforceability of this Agreement
or any of the other Loan Documents or any obligation of a Loan Party hereunder
or thereunder. Copies of any such amendments or modifications shall be promptly
delivered to the Bank.
Section 9. EVENTS OF DEFAULT.
Upon the occurrence of any of the following specified events (each an
"Event of Default"):
9.1 Principal and Interest. The Borrowers shall default in the due and
punctual payment of (i) any principal due on any Loan; or (ii) any interest on
any Loan or Note or in the due and punctual payment of the fees or other amounts
due hereunder; or (iii) any repayment of any Reimbursement Obligation or Deemed
Disbursement or any interest payable thereon; provided that failure to duly and
punctually make an interest payment shall not be an Event of Default under this
Section 9.1 if such interest payment is paid within five days after the date it
is due and the Borrowers have not been late in making an interest payment on the
Note more than once in the preceding 12 months; or
9.2 Representations and Warranties. Any representation, warranty or
statement made by a Loan Party or an officer thereof in any Loan Document to
which it is a party or otherwise in writing by such Person in connection with
any of the foregoing or in any certificate or statement furnished pursuant to or
in connection with any of the foregoing, shall be breached in a manner that
could reasonably be expected to have an adverse effect on the validity, payment,
performance or enforceability of this Agreement or any of the other Loan
Documents or any obligation of a Loan Party hereunder or thereunder or shall
prove to be untrue in any material and adverse respect on the date as of which
made; or
9.3 Negative Covenants. Any Loan Party shall default in the due performance
or observance of any term, covenant or agreement on its part to be performed or
observed pursuant to Section 8 of this Agreement; or
9.4 Other Covenants. Any Loan Party shall default in the due performance or
observance of any term, covenant (including without limitation the condition
described in Section 6.15 by the date indicated) or agreement on its part to be
performed or observed pursuant to any of the provisions of this Agreement (other
than those referred to in Sections 9.1, 9.2 or 9.3) and such default (which
shall be capable of cure) shall continue unremedied for a period of 30 days
after the earlier of the date on which (x) the Bank gives the Borrowers notice
thereof, or (y) an executive officer or director of the Borrowers becomes aware
thereof; or
9.5 Other Obligations. Any indebtedness of any Loan Party or a Subsidiary
or a KPP Entity (i) in respect of indebtedness in excess of $250,000 in
aggregate principal amount, shall be duly declared to be or shall become due and
payable prior to the stated maturity thereof, or (ii) in respect of indebtedness
in excess of $250,000 in aggregate principal amount, shall not be paid as and
when the same becomes due and payable including any applicable grace period, or
there shall occur and be continuing any event which constitutes an event of
default under any instrument, agreement or evidence of indebtedness relating to
any indebtedness of any Loan Party or a Subsidiary or a KPP Entity in excess of
$250,000 in aggregate principal amount which has not been waived by the holder
or holders of such instrument, agreement or evidence of indebtedness, or a
trustee, bank or other representative on behalf of such holder or holders; or
9.6 KPP Entities.
(a) KPL withdraws, is removed or otherwise ceases to be the sole
general partner of KPP or KPOP; or STSI withdraws, is removed or otherwise
ceases to be the sole general partner of STOP.; or
(b) KPL shall at any time own less than 100% of the general
partnership interests of KPP or any of the general partnership interests of
KPP is the subject of any Lien in favor of any Person other than the Bank;
or KPL shall at any time own less than 100% of the general partnership
interests of KPOP or any of the general partnership interests of KPOP is
the subject of any Lien in favor of any Person other than the Bank; or KPP
shall at any time own less than 100% of the limited partnership interests
of KPOP or any of the limited partnership interests of KPOP is the subject
of any Lien in favor of any Person other than the Bank; or KPOP shall at
any time own less than 100% of the Equity Interests of STSI or any of the
Equity Interests of STSI is the subject of any Lien in favor of any Person
other than the Bank; or STSI shall at any time own less than 100% of the
general partnership interests of STOP or any of the general partnership
interests of STOP is the subject of any Lien in favor of any Person other
than the Bank; or KPOP shall at any time own less than 100% of the limited
partnership interests of STOP or any of the limited partnership interests
of STOP is the subject of any Lien in favor of any Person other than the
Bank; or
(c) The Charter Documents of KPP, KPOP, STSI or STOP are amended,
altered, changed, repealed or rescinded in any respect that would have the
effect of reducing the percentage of the Partners (or an unidentified class
or other portion thereof) required to take any action; or
(d) The LP Units are not listed on a national securities exchange or
cannot be publicly sold without restriction or registration under
securities laws; or
9.7 Insolvency. Any Loan Party or any Subsidiary or any KPP Entity shall
dissolve or suspend or discontinue its business, or shall make an assignment for
the benefit of creditors or a composition with creditors, shall be unable or
admit in writing its inability to pay its debts as they mature, shall file a
petition in bankruptcy, shall become insolvent (howsoever such insolvency may be
evidenced), shall be adjudicated insolvent or bankrupt, shall petition or apply
to any tribunal for the appointment of any receiver, liquidator or trustee of or
for it or any substantial part of its property or assets, shall commence any
proceedings relating to it under any bankruptcy, reorganization, arrangement,
readjustment of debt, receivership, dissolution or liquidation law or statute of
any jurisdiction, whether now or hereafter in effect; or there shall be
commenced against any Loan Party or any Subsidiary or any KPP Entity any such
proceeding which shall remain undismissed for a period of 60 days or more, or
any order, judgment or decree approving the petition in any such proceeding
shall be entered; or any Loan Party or any Subsidiary or any KPP Entity shall by
any act or failure to act indicate its consent to, approval of or acquiescence
in, any such proceeding or in the appointment of any receiver, liquidator or
trustee of or for it or any substantial part of its property or assets, or shall
suffer any such appointment to continue undischarged or unstayed for a period of
60 days or more; or any Loan Party or any Subsidiary or any KPP Entity shall
take any action for the purpose of effecting any of the foregoing; or any court
of competent jurisdiction shall assume jurisdiction with respect to any such
proceeding or a receiver or trustee or other officer or representative of a
court or of creditors, or any court, governmental officer or agency, shall under
color of legal authority, take and hold possession of any substantial part of
the property or assets of any Loan Party or any Subsidiary or any KPP Entity; or
9.8 Security Documents. The breach by any Loan Party of any term or
provision of any Security Document or Loan Document (other than this Agreement)
to which such Person is a party, which default could reasonably be expected to
have an adverse effect on the validity, payment, performance or enforceability
of this Agreement or any of the other Security Documents or Loan Documents or
any obligation of a Loan Party hereunder or thereunder, or if any such Security
Document or Loan Document is at any time not in full force and effect; or any of
the Security Documents shall fail to grant to the Bank the Liens (if any)
intended to be created thereby unless such failure results solely from the
failure or refusal of the Bank to take some action which is in the sole and
absolute control and discretion of the Bank (for example, to file a continuation
statement) and such failure or refusal continues after reasonable written
request by the Borrowers; or
9.9 Judgments.
(a) Any final non-appealable judgment for the payment of money in
excess of $10,000,000 (after giving effect to any amount covered by
insurance as to which the insurer shall not have denied or questioned its
obligation to pay) shall be rendered against any Loan Party or any
Subsidiary or any KPP Entity; or
(b) Final judgment for the payment of money in excess of $5,000,000
shall be rendered against any Loan Party or any Subsidiary or any KPP
Entity, and the same shall remain undischarged for a period of 30 days
during which execution shall not be effectively stayed or contested in good
faith; or
9.10 Material Adverse Change. The occurrence of any Material Adverse Change
with respect to any Loan Party or any KPP Entity, as reasonably determined by
the Bank; then, and in any such event, and at any time thereafter, if any Event
of Default shall then be continuing the Bank may by written notice to the
Borrowers: (i) declare the principal of and accrued interest on the Loans to be,
whereupon the same shall forthwith become, due and payable without presentment,
demand, protest or other notice of any kind, all of which are hereby waived by
the Borrowers; and/or (ii) declare the commitments of the Bank to make the Loans
or issue the Letters of Credit hereunder terminated, whereupon such commitments
shall forthwith terminate immediately; provided that if any Event of Default
described in Section 9.7 shall occur with respect to either Borrower, the result
which would otherwise occur only upon the giving of written notice by the Bank
to the Borrowers as herein described shall occur automatically, without the
giving of any such notice.
Section 10. REPRESENTATIONS AND WARRANTIES.
In order to induce the Bank to enter into this Agreement and to make the
Loans and issue the Letters of Credit provided for herein, each Borrower jointly
and severally makes the following representations, covenants and warranties,
both as of the date hereof, as of the Closing Date and as of any Borrowing Date
(unless otherwise specified), which representations, covenants and warranties
shall survive the execution and delivery of this Agreement and the other
documents and instruments referred to herein:
10.1 Status; Validity.
(a) Each Loan Party and its Subsidiaries is a duly organized and
validly existing limited partnership, corporation or limited liability
company in good standing under the laws of the jurisdiction of its
organization and has the requisite power and authority (corporate or
otherwise to own or hold under lease its property and assets, to transact
the business in which it is engaged, to enter into and perform this
Agreement and the other Loan Documents to which it is party, and, as to the
Borrowers, to borrow hereunder. Each Loan Party is duly qualified or
licensed as a foreign limited partnership, corporation or limited liability
company in good standing in (x) each jurisdiction where failure to so
qualify would have a Material Adverse Effect on such Loan Party or the
Consolidated Group. Each Subsidiary is duly qualified or licensed as a
foreign limited partnership, corporation or limited liability company in
good standing in (x) each jurisdiction where failure to so qualify would
have a Material Adverse Effect on it.
(b) The execution, delivery and performance by the Loan Parties of
this Agreement and the other Loan Documents to which each is party and the
other documents, agreements or instruments provided for herein and therein
to which each is party, the consummation of the transactions contemplated
thereunder and the use of the proceeds of the Loans have been duly
authorized by all necessary limited liability company, partnership,
corporate, member, partner and stockholder action. This Agreement and the
other Loan Documents and the other documents, agreements or instruments
provided for herein and therein to which each such Person is party are the
legal, valid and binding obligations of the Loan Parties party thereto,
enforceable in accordance with their respective terms subject, as to
enforceability, to applicable bankruptcy, insolvency, reorganization and
similar laws affecting the enforcement of creditors' rights generally and
to general principles of equity (regardless of whether such enforcement is
considered in a proceeding in equity or at law).
10.2 Compliance with Other Instruments. No Loan Party or Subsidiary or KPP
Entity is in material default under any Material Agreement to which it is a
party, and neither the execution, delivery or performance by any Loan Party of
this Agreement and the other Loan Documents nor the consummation of the
transactions herein or therein contemplated, nor compliance with the terms and
provisions hereof or thereof, will contravene any provision of any Legal
Requirement or will conflict or will be inconsistent with or will result in any
breach of, any of the terms, covenants, conditions or provisions of, or
constitute a default under, or, except as provided by the Security Documents,
result in the creation or imposition of (or the obligation to create or impose)
any Lien upon any of the property or assets of any Loan Party or KPP Entity
pursuant to the terms of any indenture, mortgage, deed of trust or Material
Agreement to which such Person is a signatory or by which such Person is bound
or to which such Person may be subject or violate any provision of the Charter
Documents of such Person.
10.3 Litigation. There are no actions, suits or proceedings pending or, to
the knowledge of any Loan Party or any executive officer of a Loan Party,
threatened, against or affecting any Loan Party or any Subsidiary before any
Government Authority which, if adversely determined, would have a Material
Adverse Effect on any member of the Consolidated Group, except as disclosed on
Schedule 10.3 to this Agreement (or, with respect to actions, suits and
proceedings not pending or threatened prior to the Closing Date, as notified to
the Bank after the Closing Date pursuant to Section 7.2).
10.4 Compliance with Law. Except for matters which could not result in a
Material Adverse Change in respect of any member of the Consolidated Group: (a)
all business and operations of each Loan Party and the Subsidiaries have been
and are being conducted in accordance with all applicable Legal Requirements;
(b) each Loan Party and Subsidiary has obtained all permits, licenses and
authorizations, or consents which are otherwise necessary, for such Person to
conduct its business as it is or is proposed to be conducted; and (c) no Loan
Party or Subsidiary is a party to, has been threatened with, and there are no
facts existing as a basis for, any governmental or other proceeding which might
result in a suspension, limitation or revocation of any such permit, license or
authorization.
10.5 Capitalization of Borrowers and their Subsidiaries.
(a) All Equity Interests of each Loan Party have been duly and validly
issued, are fully paid and nonassessable.
(b) KSL is the sole owner of all of the Equity Interests of KPL, free
and clear of any Liens. KPL is the sole owner of the General Partnership
Interests, free and clear of any Liens other than Liens in favor of the
Bank. KPL is the sole general partner of KPP and KPOP; such general
partnership interests of KPL are evidenced by the General Partnership
Interests. The General Partnership Interests evidence a 1% partnership
interest in each of KPP and KPOP. KPL is also a limited partner of KPP.
(c) The aggregate number of LP Units owned by KPL on the Closing Date
is 4,095,500, none of which is subject to any Liens other than Liens in
favor of the Bank.
(d) The aggregate number of LP Units owned by KI on the Closing Date
is 500,000, none of which is subject to any Liens other than Liens in favor
of the Bank..
(e) The aggregate number of LP Units owned by MOL on the Closing Date
is 500,000, none of which is subject to any Liens (other than, from and
after the Closing Date, (x) Liens in favor of Xxxxxx Bank under the MOL
Loan Agreement and (y) Liens in favor of the Bank that may exist after the
Closing Date).
(f) No Loan Party owns any LP Units other than the Pledged Units owned
by KPL described in this Section 10.5(c), the Pledged Units owned by KI
described in Section 10.5(d) and the Non-Pledged Units owned by MOL
described in Section 10.5(e). None of the LP Units hereafter acquired by
any Loan Party will be subject to any Liens other than Liens in favor of
the Bank.
(g) All Equity Interests (other than LP Units hereafter acquired,
Non-Pledged Units and the Equity Interests of KPL) in any Person now owned
or hereafter acquired by any Loan Party will be Satisfactorily Pledged to
the Bank as security for the Obligations. None of the Equity Interests
(including LP Units and the Equity Interests of KPL) hereafter acquired by
any Loan Party will be subject to any Liens other than Liens in favor of
the Bank.
(h) KPOP owns 100% of the Equity Interests of STSI. STSI is the sole
general partner of STOP. KPOP is also the sole limited partner of STOP.
(i) Neither KPL nor any of its Subsidiaries has outstanding any
option, warrant, bonds, debentures or other right, put, call or commitment
to issue, or any obligation or commitment to purchase, any of its Equity
Interests or any securities convertible into or exchangeable for any of its
Equity Interests.
(j) Schedule 10.5(j) hereto accurately lists (x) each Subsidiary of
the Loan Parties and the ownership of Equity Interests issued by each such
Subsidiary. Each Loan Party is the sole owner of all of the Equity
Interests of its Subsidiaries (other than Kaneb LLC), free and clear of any
Liens other than Liens in favor of the Bank. KSL owns 99.9% of the Equity
Interests of Kaneb LLC and Kaneb, Inc. owns 0.1% of the Equity Interests of
Kaneb LLC.
10.6 Government Approvals. Except for those listed in Schedule 10.6, each
of which has been duly obtained and is in full force and effect (or, as to those
asterisked on such schedule, will be duly obtained by the Closing Date and be in
full force and effect thereafter), no order, permission, consent, approval,
license, authorization, registration or validation of, or filing with, or
exemption by, any Government Authority is required to authorize, or is required
in connection with the Distribution or the execution, delivery and performance
of this Agreement or the other Loan Documents by any Loan Party or Subsidiary,
or the taking of any action hereby or thereby contemplated.
10.7 Federal Reserve Margin Regulations; Use of Proceeds.
(a) No member of the Consolidated Group and no other Loan Party or
Subsidiary thereof is engaged principally, or as one of its important
activities, in the business of extending credit for the purpose of
purchasing or carrying any margin stock (within the meaning of Regulation U
of the Board of Governors of the Federal Reserve System). No part of the
proceeds of any Loan will be used to purchase or carry any such margin
stock or to extend credit to others for the purpose of purchasing or
carrying any such margin stock.
(b) The proceeds of the Loans shall be used strictly (i) to pay the
Actual Tax Liability, (ii) to pay the Expense Reimbursement, (iii) to fund
the KSI Note and (iv) for working capital purposes.
10.8 Taxes.
(a) All material tax returns of any nature whatsoever, including but
not limited to, all U.S. income, payroll, stock transfer, and excise tax
returns and all appropriate state and local income, sales, excise, payroll,
franchise and real and personal property tax returns, and corresponding
returns under the laws of any jurisdiction, which are required to be filed
by a Loan Party or any Subsidiary have been or will be filed by the due
date or extended due date of such returns.
(b) Except for amounts which in the aggregate do not exceed $250,000,
all taxes due and payable with respect to each member of the Consolidated
Group have been paid, and there are no liabilities, interest or penalties
payable with respect to any taxes which remain unpaid.
10.9 Investment Company Act, etc. Neither any Loan Party or Subsidiary nor
the entering into of the Loan Documents, nor the issuance of the Note is subject
to any of the provisions of the Investment Company Act of 1940, as amended.
Neither any Loan Party nor any Subsidiary is a "holding company" as defined in
the Public Utility Holding Company Act of 1935, as amended, or subject to any
other federal or state statute or regulation limiting its ability to incur
Indebtedness for Money Borrowed.
10.10 Properties of the Borrower.
(a) No Loan Party owns any real property. To the best of the knowledge
of each Borrower, each Loan Party has been and continues to be in
substantial compliance with all Environmental Laws the violation of which
would have a Material Adverse Effect.
(b) All Material Agreements or similar commitments of any Loan Party
or any Subsidiary are listed in Schedule 10.10(b) hereto and are in full
force and effect, none of the parties thereunder are in material default
thereunder and no written notice of default has been given or received.
Each Loan Party or its Subsidiaries, as the case may be, have full, valid
and existing right, title and interest (in fee simple where applicable) to
all of its or their material real and personal property and all tangible
and intangible rights, and the ownership rights of such Person in and to
all of such tangible and intangible rights are subject to no Liens, burdens
or defects other than Permitted Liens; any security interests indicated
with an asterisk on such schedule have been or will be terminated on the
Closing Date.
10.11 Financial Condition.
(a) At the time of, and after giving effect to, each Loan and the
issuance of each Letter of Credit, each Loan Party (i) is Solvent, and (ii)
possesses, in the opinion of the Borrowers sufficient capital to conduct
the business in which it is engaged or presently proposes to engage.
(b) The Financial Statements of each Loan Party furnished to the Bank
have been and will be prepared in accordance with GAAP consistently applied
and fairly present the financial condition and results of operations of
each Loan Party as at the end of and for the reporting period covered
thereby. There are no material liabilities or any material unrealized or
anticipated losses of the Loan Parties which are not disclosed in such
Financial Statements.
(c) There has been no Material Adverse Change with respect to any Loan
Party from that set forth in the Financial Statements of each Loan Party
furnished to the Bank.
10.12 Disclosure. Neither this Agreement or any Loan Document nor any
statement, list, certificate or other document or information, or any schedules
to this Agreement or any other Loan Document, delivered or to be delivered to
the Bank, contains or will contain any untrue statement of a material fact or
omits or will omit to state a material fact necessary to make statements
contained herein or therein, in light of the circumstances in which they are
made, not misleading.
10.13 Compliance with ERISA. Each Loan Party and each ERISA Affiliate and
each Plan and the trusts maintained pursuant to such plans are in compliance in
all material respects with the presently applicable provisions of Sections 401
through and including 417 of the Code, and of ERISA and (i) no event which
constitutes a Reportable Event as defined in Section 4043 of ERISA has occurred
and is continuing with respect to any Plan which is or was covered by Title IV
of ERISA, (ii) no Plan which is subject to Part 3 of Subtitle B of Title 1 of
ERISA has incurred any "accumulated funding deficiency" (within the meaning of
Section 302 of ERISA or Section 412 of the Code) whether or not waived, and
(iii) no written notice of liability has been received with respect to any Loan
Party or any Subsidiary for any "prohibited transaction" (within the meaning of
Section 4975 of the Code or Section 406 of ERISA), nor has any such prohibited
transaction resulting in liability to any Loan Party or ERISA Affiliate
occurred.
Neither any Loan Party nor any ERISA Affiliate (i) has incurred any
liability to the PBGC (or any successor thereto under ERISA), or to any trustee
of a trust established under Section 4049 of ERISA, in connection with any Plan
(other than liability for premiums under Section 4007 or ERISA), (ii) has
incurred any withdrawal liability under Subtitle E of Title IV of ERISA in
connection with any Plan which is a Multiemployer Plan, nor (iii) has
contributed or has been obligated to contribute on or after September 26, 1980,
to any "multiemployer plan" (within the meaning of Section 3(37) of ERISA) which
is subject to Title IV of ERISA.
The consummation of the transactions contemplated by this Agreement (i)
will not give rise to any liability on behalf of any Loan Party or its ERISA
Affiliates under Title IV of ERISA to the PBGC (other than ordinary and usual
PBGC premium liability), to the trustee of a trust established pursuant to
Section 4049 of ERISA, or to any Multiemployer Plan, and (ii) will not
constitute a "prohibited transaction" under Section 406 of ERISA or Section 4975
of the Code.
10.14 The Security Documents. Each Security Document when delivered will
xxxxx x Xxxx in the properties or rights intended to be covered thereby (the
"Collateral") which (i) will constitute a valid and enforceable security
interest under the Uniform Commercial Code of the State (x) in which the
Collateral is located and (y) by which any Security Document is governed (as
applicable, the "UCC"), (ii) will be entitled to all of the rights, benefits and
priorities provided by the UCC, and (iii) when such Security Documents or
financing statements with respect thereto are filed and recorded as required by
the UCC, will be superior and prior to the rights of all third Persons now
existing or hereafter arising whether by way of mortgage, pledge, lien, security
interest, encumbrance or otherwise, except for Permitted Liens. All such action
as is necessary in law has been taken, or prior to the Closing Date will have
been taken, to establish and perfect the security interest of the Bank in the
Collateral and to entitle the Bank to exercise the rights and remedies provided
in each of the Security Documents and the UCC, as applicable, and no filing,
recording, registration or giving of notice or other action is required in
connection therewith except such as has been made or given or will have been
made or given prior to such dates or except as provided for in Section 6.15. All
filing and other fees and all recording or other tax payable with respect to the
recording of any of the Security Documents and UCC financing statements have
been paid or provided for.
10.15 [intentionally omitted]
Section 11. [INTENTIONALLY OMITTED]
Section 12. MISCELLANEOUS.
12.1 Calculations and Financial Data. Calculations hereunder (including,
without limitation, calculations used in determining, or in any certificate of
any Loan Party reflecting, compliance by any Loan Party with the provisions of
this Agreement) shall be made and financial data required hereby shall be
prepared both as to classification of items and as to amount in accordance with
GAAP consistent with the Financial Statements of such Loan Party for its Fiscal
Year ended December 31, 2000 that were previously delivered to the Bank.
12.2 Amendment and Waiver.
(a) Except as otherwise provided, no provision of any of the Loan
Documents may be changed, waived, discharged or terminated orally, but only
by an instrument in writing signed by the Bank and a Borrower, except that
waivers of provisions relating to a Borrower's performance or
non-performance of its obligations hereunder or thereunder need not be
signed by such Borrower or any other Loan Party. Any such change, waiver,
discharge or termination shall be effective only in the specific instance
and for the specific purposes for which made or given.
(b) THIS WRITTEN AGREEMENT (AND THE OTHER LOAN DOCUMENTS) REPRESENTS
THE FINAL AGREEMENT AMONG THE PARTIES HERETO WITH RESPECT TO THE MATTERS
COVERED HEREBY AND THEREBY AND MAY NOT BE CONTRADICTED BY EVIDENCE OF
PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.
(c) THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
12.3 Expenses; Indemnification.
(a) Whether or not the transactions hereby contemplated shall be
consummated, the Borrowers shall upon demand of the Bank pay all reasonable
out-of-pocket costs and expenses of the Bank (x) incurred in connection
with the preparation, execution, delivery, administration, filing and
recording of, and (y) incurred in connection with the amendment (including
any waiver or consent), modification, and enforcement of or preservation of
any rights under, this Agreement, the Loan Documents, the making and
repayment of the Loans, the issuance of Letters of Credit and the
maintenance and operation of the Other Accounts, and the payment of all
interest and fees, including, without limitation, (A) the reasonable fees
and expenses of Xxxxxx & Xxxxxxxx, counsel for the Bank, and any special or
local or other counsel retained by the Bank, (B) the reasonable fees and
expenses of consultants and appraisers retained by the Bank in connection
with the transactions contemplated hereunder, and (C) printing, travel,
title insurance, recording, filing, communication and signing taxes and
costs.
(b) The Borrowers jointly and severally agree (x) to pay, and to save
the Bank harmless from all present and future stamp, filing and other
similar taxes, fees or charges (including interest and penalties, if any),
which may be payable in connection with the Loan Documents or the issuance
of the Note or of Letters of Credit or any modification of any of the
foregoing, and (y) to save the Bank harmless from all finder's and broker's
fees (other than any that may have been contracted for by the Bank) in
connection with the transactions contemplated by this Agreement and the
other Loan Documents.
(c) Without limiting any of the rights or obligations as set forth in
this Agreement on the part of the Bank, the Borrowers jointly and severally
agree to indemnify and hold harmless the Bank, any Bank Assignee and each
holder of a Note and their respective present and future officers,
directors, employees and banks (collectively, the "Indemnified Parties")
from and against all liability, losses, damages and expenses (including,
without limitation, legal fees and expenses) arising out of, or in any way
connected with, or as a result of (i) the execution and delivery of this
Agreement, the Note and the other Loan Documents or the documents or
transactions contemplated hereby and thereby or the performance by the
parties hereto or thereto of their respective obligations hereunder and
thereunder or relating thereto; or (ii) any claim, action, suit,
investigation or proceeding (in each case, regardless of whether or not the
Indemnified Party is a party thereto or target thereof) in any way relating
to any Collateral, either Borrower, any other Loan Party, any KPP Entity or
any Affiliate of any of the foregoing; or (iii) any violation by either
Borrower, any other Loan Party, any KPP Entity or any Affiliate of any of
the foregoing (or any predecessor in interest of any of them) of any
Environmental Law, any Environmental Claim or Environmental Cost or the
imposition of any Environmental Lien; provided that the Borrowers shall not
be liable to any Indemnified Party for any portion of such liabilities,
liabilities, losses, damages and expenses sustained or incurred as a direct
result of the gross negligence or willful misconduct of the Bank if such
gross negligence or willful misconduct is determined to have occurred by a
final and non-appealable decision of a court of competent jurisdiction.
(d) All obligations provided for in this Section 12.3 and any other
Sections of this Agreement shall survive any termination of this Agreement,
the expiration and termination of all Letters of Credit, the payment of all
Deemed Disbursements and Reimbursement Obligations and the payment in full
of the Loans.
12.4 Benefits of Agreement; Descriptive Headings
(a) This Agreement shall be binding upon and inure to the benefit of
and be enforceable by the parties hereto and their respective successors
and assigns, and, in particular, shall inure to the benefit of the holders
from time to time of the Note; provided, however, that neither Borrower may
assign or transfer any of its rights or obligations hereunder without the
prior written consent of the Bank and any such purported assignment or
transfer shall be void. In furtherance of the foregoing, the Bank shall be
entitled at any time to grant participations in or assign, sell or
otherwise transfer the whole or any part of its rights and obligations
under this Agreement, the Loan Documents or any Loan or the Note or any
Letter of Credit to any Person subject to obtaining the prior written
consent of the Borrowers (but no other Person), such consent not to be
unreasonably withheld. No such participation, assignment, sale or other
transfer pursuant to this Section 12.4(a) shall relieve the Bank from its
obligations hereunder and the Borrowers need deal solely with the Bank with
respect to waivers, modifications and consents to this Agreement, the Loan
Documents or the Note. Any such participant, assignee, purchaser or
transferee is referred to in this Agreement as a "Bank Assignee". The
Borrower agrees that the provisions of Sections 2A.3, 3.7, 3.9, 3.10, 3.11,
5.2 and 12.3 shall run to the benefit of each Bank Assignee and its
participations or interests herein, and the Bank may enforce such
provisions on behalf of any such Bank Assignee; provided, however, that if
the Bank or any Bank Assignee assigns, sells, or otherwise transfers or
grants participations in or otherwise disposes of all or any part of the
Borrowers' indebtedness under this Agreement to any party pursuant to this
Section 12.4(a), then the amounts that the Borrowers are required to pay
pursuant to this Agreement (including, without limitation, additional
amounts made pursuant to Section 5.2) shall not exceed the amounts that the
Borrowers would have been required to pay to the Bank pursuant to this
Agreement had the Bank not made such assignment, sale, transfer, grant,
participation or other disposition of the Borrowers' indebtedness under
this Agreement. The Borrowers hereby further agree that any such Bank
Assignee may, to the fullest extent permitted by applicable law, exercise
the right of setoff with respect to such participation (and in an amount up
to the amount of such participation) as fully as if such Bank Assignee were
the direct creditor of the Borrowers. Upon a participation, assignment,
sale or transfer in accordance with the foregoing, the Borrowers shall
execute such documents and do such acts as the Bank may reasonably request
to effect such assignment, provided that such documents and acts are
consistent with the terms and conditions of the Loan Documents. The Bank
may furnish any information concerning any Loan Party, any Subsidiary, any
member of the Consolidated Group or any KPP Entity in its possession from
time to time to Bank Assignees (including prospective Bank Assignees). The
Bank shall notify Borrowers of any participation, assignment, sale or
transfer granted by it pursuant to this Section 12.4(a). Borrowers shall
not be responsible for any due diligence costs or legal expenses of any
party (including any Bank Assignee) in connection with their entering into
such participation, assignment, sale or transfer. The Bank further agrees
that no holder of any participation hereunder, other than an Affiliate of
the Bank, shall be entitled to require the Bank to take or omit to take any
action hereunder, except that the Bank may agree with such participant that
the Bank will not, without such participant's consent, take any action to
decrease the interest rates applicable to the Loans, extend the final
maturity date of the Loans or decrease the principal amount of the Loans.
(b) The descriptive headings of the various provisions of this
Agreement are inserted for convenience of reference only and shall not be
deemed to affect the meaning or construction of any of the provisions
hereof.
(c) Notwithstanding anything to the contrary contained herein or in
any of the Loan Documents, the exhibits to this Agreement shall not be
required to be attached to the execution or any other copy of this
Agreement, and any references in this Agreement or the other Loan Documents
to such exhibits as "Exhibits hereto" or "Exhibits to this Agreement" or
words of similar effect shall be deemed to refer to such document as
executed by the parties thereto and delivered on the Closing Date (or such
other date on which they were executed and delivered).
(d) [intentionally omitted]
(e) [intentionally omitted]
12.5 Notices, Requests, Demands, etc. Except as otherwise expressly
provided herein, all notices, requests, demands or other communications to or
upon the respective parties hereto shall be deemed to have been duly given or
made when delivered (if sent by Federal Express or other similar overnight
delivery service), or 3 days after mailing (when mailed, postage prepaid, by
registered or certified mail, return receipt requested), or (in the case of
telex, telegraphic, telecopier or cable notice) when delivered to the telex,
telegraph, telecopier or cable company, or (in the case of telex or telecopier
notice sent over a telex or telecopier owned or operated by a party hereto) when
sent; in each case, addressed as follows, except that notices and communications
to the Bank pursuant to Sections 2 and 9 shall not be effective until received
by the Bank: (i) if to the Bank, at the Closing Office, (ii) [intentionally
omitted], and (iii) if to a Borrower, at its address specified with its
signature below (Attention: President), or to such other addresses as any of the
parties hereto may hereafter specify to the others in writing, provided that
communications with respect to a change of address shall be deemed to be
effective when actually received. As further set forth in Section 2.6 hereof,
notices and communications sent to either Borrower shall be deemed
satisfactorily sent to both Borrowers. Notices and communications sent to the
Bank by any Loan Party shall be deemed satisfactorily sent by all Loan Parties
if such notices and communications specifically reference this Agreement.
12.6 Governing Law. THIS AGREEMENT AND THE LOANS AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO
CONTRACTS EXECUTED WHOLLY WITHIN THE STATE OF NEW YORK (REGARDLESS OF THE PLACE
WHERE THIS AGREEMENT IS EXECUTED).
12.7 Counterparts; Telecopies. This Agreement and the other Loan Documents
may be executed in any number of counterparts, and by the different parties
hereto and thereto on the same or separate counterparts, each of which when so
executed and delivered shall be deemed to be an original; all the counterparts
for each such Loan Document shall together constitute one and the same
agreement. Telecopied signatures hereto and to the other Loan Documents shall be
of the same force and effect as an original of a manually signed copy.
12.8 Waiver. No failure or delay on the part of the Bank in exercising any
right, power or privilege under this Agreement or any other Loan Document, and
no course of dealing between any Loan Party and the Bank shall operate as a
waiver thereof; nor shall any single or partial exercise of any right, power or
privilege hereunder preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. The rights and remedies herein
expressly provided are cumulative and not exclusive of any rights or remedies
which the Bank would otherwise have pursuant to such documents or at law or
equity. No notice to or demand on any Loan Party in any case shall entitle such
Loan Party or any other Loan Party to any other or further notice or demand in
similar or other circumstances or constitute a waiver of the right of the Bank
to any other or further action in any circumstances without notice or demand.
12.9 Recoveries.
(a) Any Recoveries (after deduction and payment of all expenses and
costs permitted by this Agreement, the Security Documents or applicable
law), shall be applied against the Loans or against unpaid Reimbursement
Obligations (and, if no Loans or Reimbursement Obligations shall then be
outstanding, shall be held in trust by the Bank on behalf of the Borrowers
to the extent of the amount of the LC Outstandings from time to time in
existence until satisfaction in full of all amounts due thereunder).
(b) [intentionally omitted]
12.10 Jurisdiction. THE PARTIES HERETO AGREE THAT ANY LEGAL ACTION OR
PROCEEDING AGAINST ANY OTHER PARTY HERETO WITH RESPECT TO THIS AGREEMENT, THE
LOANS OR ANY OF THE LOAN DOCUMENTS OR THE DOCUMENTS DELIVERED IN CONNECTION
THEREWITH MAY BE BROUGHT IN XXX XXXXXX XX XXX XXXXX XX XXX XXXX LOCATED IN NEW
YORK CITY OR OF THE UNITED STATES OF AMERICA FOR THE SOUTHERN DISTRICT OF NEW
YORK AS SUCH PARTY MAY ELECT, AND, BY EXECUTION AND DELIVERY HEREOF, EACH OF THE
PARTIES HERETO ACCEPTS AND CONSENTS FOR ITSELF AND IN RESPECT TO ITS PROPERTY,
GENERALLY AND UNCONDITIONALLY, THE JURISDICTION OF THE AFORESAID COURTS. EACH OF
THE PARTIES HERETO AGREE THAT SUCH JURISDICTION SHALL BE EXCLUSIVE, UNLESS
WAIVED BY THE BANK (WITH RESPECT TO ACTIONS OR PROCEEDINGS BROUGHT BY A
BORROWER) OR BY THE BORROWERS (WITH RESPECT TO ACTIONS OR PROCEEDINGS BROUGHT BY
THE BANK) IN WRITING, AND WITH RESPECT TO ANY QUESTIONS RELATING TO USURY EXCEPT
THAT WITHOUT SUCH WRITTEN CONSENT THE BANK MAY BRING ACTIONS AND PROCEEDINGS IN
ANY OTHER JURISDICTION WHERE A BORROWER HAS PROPERTY OR DOES BUSINESS. EACH OF
THE PARTIES HERETO AGREES THAT SECTIONS 5-1401 AND 5-1402 OF THE GENERAL
OBLIGATIONS LAW OF THE STATE OF NEW YORK SHALL APPLY TO THE LOAN DOCUMENTS AND
WAIVES ANY RIGHT TO STAY OR TO DISMISS ANY ACTION OR PROCEEDING BROUGHT BEFORE
SAID NEW YORK OR US COURTS ON THE BASIS OF FORUM NON CONVENIENS. IN FURTHERANCE
OF THE FOREGOING, EACH BORROWER HEREBY IRREVOCABLY DESIGNATES AND APPOINTS CT
CORPORATION SYSTEM AT 0000 XXXXXXXX, XXX XXXX, XXX XXXX 00000, AS ITS AGENT (THE
"PROCESS AGENT") TO RECEIVE SERVICE OF ALL PROCESS BROUGHT AGAINST SUCH BORROWER
WITH RESPECT TO ANY SUCH PROCEEDING IN ANY SUCH COURT IN NEW YORK, SUCH SERVICE
BEING HEREBY ACKNOWLEDGED BY THE BORROWERS TO BE EFFECTIVE AND BINDING SERVICE
IN EVERY RESPECT. COPIES OF ANY SUCH PROCESS SO SERVED SHALL ALSO BE SENT BY
REGISTERED MAIL TO BORROWERS AT ITS ADDRESS SET FORTH NEXT TO ITS SIGNATURE
BELOW, BUT THE FAILURE OF EITHER BORROWER TO RECEIVE SUCH COPIES SHALL NOT
AFFECT IN ANY WAY THE SERVICE OF SUCH PROCESS AS AFORESAID. EACH BORROWER SHALL
FURNISH TO THE BANK A CONSENT OF THE PROCESS AGENT AGREEING TO ACT HEREUNDER
PRIOR TO THE CLOSING DATE. NOTHING HEREIN SHALL AFFECT THE RIGHT OF THE BANK TO
SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW. IF FOR ANY REASON THE
PROCESS AGENT SHALL RESIGN OR OTHERWISE CEASE TO ACT AS AGENT EACH BORROWER
HEREBY IRREVOCABLY AGREES TO (I) IMMEDIATELY DESIGNATE AND APPOINT A NEW AGENT
(ALSO, THE "PROCESS AGENT") ACCEPTABLE TO THE BANK TO SERVE IN SUCH CAPACITY
AND, IN SUCH EVENT, SUCH NEW AGENT SHALL BE DEEMED TO BE SUBSTITUTED FOR THE
PRIOR PROCESS BANK FOR ALL PURPOSES HEREOF AND (II) PROMPTLY DELIVER TO THE BANK
THE WRITTEN CONSENT (IN FORM AND SUBSTANCE SATISFACTORY TO THE BANK) OF SUCH NEW
AGENT AGREEING TO SERVE IN SUCH CAPACITY.
12.11 Severability. If any provision of this Agreement shall be held or
deemed to be or shall, in fact, be illegal, inoperative or unenforceable, the
same shall not affect any other provision or provisions herein contained or
render the same invalid, inoperative or unenforceable to any extent whatever.
12.12 Right of Set-off. In addition to any rights now or hereafter granted
under applicable law or otherwise and not by way of limitation of any such
rights, upon the occurrence of an Event of Default the Bank is hereby authorized
at any time or from time to time, without notice to either Borrower or to any
other Person, any such notice being hereby expressly waived, to set-off and to
appropriate and apply any and all deposits (general or special, time or demand,
provisional or final) and any other indebtedness at any time held or owing by
the Bank to or for the credit or the account of a Borrower against and on
account of the obligations and liabilities of such Borrower now or hereafter
existing under any of the Loan Documents irrespective of whether or not any
demand shall have been made thereunder and although said obligations,
liabilities or claims, or any of them, shall be contingent or unmatured. If the
Bank exercises any rights granted under this Section 12.12 it shall thereafter
notify the affected Borrower of such action; provided that the failure to give
such notice shall not affect the validity of such set-off and application.
12.13 No Third Party Beneficiaries. This Agreement is solely for the
benefit of the Bank and the Borrowers and their respective successors and
assigns, and nothing contained herein shall be deemed to confer upon anyone
other than the Bank and the Borrowers and their respective successors and
assigns any right to insist on or to enforce the performance or observance of
any of the obligations contained herein. All conditions to the obligations of
the Bank to make the Loans and issue Letters of Credit hereunder are imposed
solely and exclusively for the benefit of the Bank and its successors and
assigns and no other Person shall have standing to require satisfaction of such
conditions in accordance with their terms and no other Person shall under any
circumstances be deemed to be beneficiary of such conditions.
12.14 Effectiveness. This Agreement shall become effective when and as of
the date (the "Effective Date") that all of the parties hereto shall have signed
a copy hereof (whether the same or different counterparts) and the Borrowers
shall have delivered the same to the Bank.
12.15 Survival; Integration.
(a) Each of the representations, warranties, terms, covenants,
agreements and conditions contained in this Agreement shall specifically
survive the execution and delivery of this Agreement and the other Loan
Documents and the making of the Loans and shall, unless otherwise expressly
provided, continue in full force and effect until the Commitments have been
terminated and the Loans together with interest thereon, the fees and
compensation of the Bank, and all other sums payable hereunder or
thereunder have been indefeasibly paid in full.
(b) This Agreement, together with the other Loan Documents, comprises
the complete and integrated agreement of the parties on the subject matter
hereof and thereof and supersedes all prior agreements, written or oral, on
the subject matter hereof and thereof. In the event of any direct conflict
between the provisions of this Agreement and those of any other Loan
Document, the provisions of this Agreement shall control and govern;
provided that the inclusion of supplemental rights or remedies in favor of
the Bank in any other Loan Document shall not be deemed a conflict with
this Agreement. Each Loan Document was drafted with the joint participation
of the respective parties thereto and shall be construed neither against
nor in favor of any party, but rather in accordance with the fair meaning
thereof.
12.16 Domicile of Loans. The Bank may make, maintain or transfer any of its
Loans hereunder to, or for the account of, any branch office and (subject to the
prior consent of the Borrowers, such consent not to be unreasonably withheld) to
any subsidiary or affiliate of the Bank.
12.17 No Usury. It is expressly stipulated and agreed to be the intent of
the Bank and the Borrowers to comply at all times with applicable usury laws. If
at any time such laws would ever render usurious any amount called for under any
of the Loan Documents, then it is the express intention of the parties hereto
that such excess amount be immediately credited on the Note, or if the Note has
been fully paid, refunded by the Bank to the Borrowers (and the Borrowers shall
accept such refund) and the provisions hereof and thereof be immediately deemed
to be reformed to comply with the then applicable laws, without the necessity of
the execution of any further documents, but so as to permit the recovery to the
fullest amount otherwise called for hereunder and thereunder. Any such crediting
or refunding shall not cure or waive any default by the Borrowers under the Loan
Documents. If at any time following any such reduction to the interest rate
payable by the Borrowers there remains unpaid any principal amounts under the
Note and the maximum interest rate permitted by applicable law is increased or
eliminated, then the interest rate payable to the Bank shall be readjusted, to
the full extent permitted by applicable law, so that the total amount of
interest thereunder payable by the Borrowers to the Bank shall be equal to the
amount of interest which would have been paid by the Borrowers without giving
effect to applicable usury laws. The Borrowers agree, however, that in
determining whether or not any interest payable under the Note or any of the
other Loan Documents exceeds the highest rate permitted by law, any
non-principal payment (except payments specifically stated in the Note or such
other Loan Documents to be "interest"), including fees and commissions and all
other sums payable hereunder or thereunder or in connection herewith or
therewith, shall be deemed, to the full extent permitted by law, to be an
expense, fee, premium or penalty rather than interest.
12.18 Waiver of Jury Trial. EACH BORROWER AND THE BANK HEREBY KNOWINGLY,
VOLUNTARILY AND INTENTIONALLY WAIVE ANY AND ALL RIGHTS THEY MAY HAVE TO A TRIAL
BY JURY IN RESPECT OF ANY LITIGATION BASED ON, OR ARISING OUT OF, UNDER, OR IN
CONNECTION WITH, THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR ANY COURSE OF
CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN), OR ACTIONS
OF ANY SUBSIDIARY, ANY LOAN PARTY OR THE BANK. THIS PROVISION IS A MATERIAL
INDUCEMENT FOR THE BANK ENTERING INTO THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS.
12.19 Securities Act. The Bank agrees that it will not transfer the Note in
a manner that would subject the Note to the registration requirements of the
Securities Act of 1933 (the "1933 Act").
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered by their respective duly authorized officers as of
the date first above written.
KANEB SERVICES LLC
0000 X. Xxxxxxx Xxxxxxxxxx
Xxxxxxxxxx, Xxxxx 00000
Fax: 214/000-0000 By: _______________________
Name: Xxxxxx X. Xxxxxxxxx
Title: Vice President
KANEB PIPE LINE COMPANY LLC
0000 X. Xxxxxxx Xxxxxxxxxx
Xxxxxxxxxx, Xxxxx 00000
Fax: 214/000-0000 By: _______________________
Name: Xxxxxx X Xxxxxxxxx
Title: Vice President
000 Xxxxx Xxxxxx XXXX XX XXXXXXXX
Xxx Xxxx, Xxx Xxxx 00000
Fax: 212/000-0000
By: _______________________
Name:
Title:
ANNEX I
DEFINITIONS
As used in the Loan Agreement to which this Annex I is annexed, the
following terms shall have the meanings herein specified or as specified in the
Section of such Loan Agreement or in such other document herein referenced:
"Actual Tax Liability" shall mean the actual liability of the Group (as
defined in the Distribution Agreement) for Income Taxes (as defined in the
Distribution Agreement) resulting from the Distribution and restructuring
transactions resulting from it, and for operations in 2000 and 2001, taking into
account the Group's utilization of current-period net operating losses and
carryforwards (and other tax attributes and items) from prior years.
"Adjusted Debt/Free Cash Flow" shall mean, for KSL and its Subsidiaries as
of the end of any Fiscal Quarter, the ratio of (i) Adjusted Debt as of the end
of such Fiscal Quarter to (ii) Free Cash Flow for the preceding four fiscal
quarters. "Adjusted Debt" shall mean as of any date the difference between (x)
all Indebtedness for Borrowed Money of KSL and its Subsidiaries and (b) all
indebtedness of MOL permitted by Section 8.3 (e). "Free Cash Flow" shall mean
for any period the difference between (A) Adjusted EBITDA of KSL and its
Subsidiaries and (B) Adjusted EBITDA of MOL. "Adjusted EBITDA" shall mean, for
any Person for any period, EBITDA less capital expenditures. For the purpose of
the calculation of Adjusted Debt/Free Cash Flow only, Indebtedness for Borrowed
Money shall not include any Indebtedness for Borrowed Money of any KPP Entity.
"Affiliate" shall mean, with respect to any Person, any other Person which
directly or indirectly controls, or is under common control with, or is
controlled by, such first Person and, if such first Person is an individual, any
member of the immediate family (including parents, spouse, children and
siblings) 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. As used in this definition, "control"
(including, with its correlative meanings, "controlled by" and "under common
control") shall mean possession, directly or indirectly, of power to direct or
cause the direction of management or policies (whether through ownership of
securities or partnership or other ownership interests, by contract or
otherwise).
"Agreement" or "Loan Agreement" shall mean this Loan Agreement as it may
from time to time be amended, extended, restated, supplemented or otherwise
modified.
"Associate" when used to indicate a relationship with a Person, shall mean
(i) another Person (other than a Loan Party or a Subsidiary) of which such
Person is an officer or partner or is, directly or indirectly, the beneficial
owner of 10 percent or more of any class of equity securities, (ii) any trust or
other estate in which such Person has a substantial beneficial interest or as to
which such Person or an immediate member of his family serves as trustee or in a
similar capacity, and (iii) any relative or spouse of such Person or any
relative of such spouse.
"Auditors" shall mean, as to each Loan Party, such independent certified
public accountants of national recognized standing selected by a Loan Party (as
to itself).
"Bank" - introductory paragraph.
"Bank Assignee" - Section 12.4.
"Base Rate" shall mean, for any day, the higher of (x) the fluctuating
interest rate per annum, as in effect from time to time, established by the Bank
in New York from time to time as the Bank's base, prime or reference rate for
U.S. domestic commercial loans in Dollars, or (y) the Federal Funds Effective
Rate in effect on such day plus 1/2%. Any change in the interest rate resulting
from a change in such Base Rate shall be effective as of the opening of business
on the day on which such change becomes effective; it is understood and agreed
that the aforesaid rates and the Base Rate are reference rates only and do not
necessarily represent the lowest or best rate actually charged to any customer.
"Base Rate Margin" shall mean from day to day the applicable Base Rate
Margin set forth in the Pricing Grid.
"Base Rate Loan" shall mean a Loan during any period that it bears interest
determined by reference to the Base Rate.
"Borrower" - introductory paragraph.
"Borrowing Date" - Section 2.2(a).
"Business Day" shall mean any day that is not a Saturday, Sunday or legal
holiday in the State of New York or a day on which banking institutions
chartered by the State of New York or the United States are legally required or
authorized to close, and, when used in connection with LIBOR, means a day on
which deposits in Dollars may be dealt in on the London interbank market.
"Capitalized Lease Obligations" shall mean all rental obligations which,
under GAAP, are or would be required to be capitalized on the books of a Person,
in each case taken at the amount thereof accounted for as indebtedness (net of
interest expense) in accordance with such principles.
"CEO", as to any Loan Party shall mean such Loan Party's chief executive
officer.
"CFO", as to any Loan Party shall mean such Loan Party's chief financial
officer.
"Charter Document" shall mean (i) with respect to a corporation: its
certificate or articles of incorporation or association and its by-laws or
comparable documents under non-US laws; (ii) with respect to a partnership: its
partnership agreement, certificate of partnership (if a limited partnership) and
its certificate of doing business under an assumed name (if a general
partnership); (iii) with respect to a trust, its trust agreement or declaration
of trust; and (iv) with respect to a limited liability company, its certificate
of formation and limited liability company agreement or analogous documents.
"Closing Date" shall mean the date of the making of the initial Loan or
issuance of the initial Letter of Credit or, if earlier, the date that the
conditions in Section 6 of the Agreement have been fulfilled to the satisfaction
of the Bank (or waived by the Bank).
"Closing Office" shall mean the office of the Bank at 000 Xxxxx Xxxxxx, Xxx
Xxxx, Xxx Xxxx or such other office as may be designated in writing to the
Borrowers by the Bank.
"Closing Office Time" shall mean the local time in effect at the Closing
Office.
"Code" shall mean the Internal Revenue Code of 1986, as the same may be
amended from time to time.
"Collateral" - Section 10.14. Without limiting the generality of the
foregoing, the term "Collateral" also includes all other real and personal
property and interests therein granted or purported to be granted as security to
the Bank pursuant to any Security Document, whether before, on or after the
Closing Date.
"Collateral Value" shall mean, as of any date of computation, the product
of the number of Pledged Units multiplied by the Market Value of such Pledged
Units as of the close of business on the immediately preceding Business Day.
"Commercial Paper" - Section 8.12.
"Commitment" shall mean, as the same from time to time may be reduced or
terminated pursuant to Section 2.8, Section 9 or any other section of the
Agreement, (a) prior to the satisfaction of the conditions set forth in Section
6.15 of this Agreement, an amount equal to $10,000,000, and (b) after the
satisfaction of the conditions set forth in Section 6.15 of this Agreement, an
amount equal to $50,000,000.
"Commitment Fee" - Section 4.1.
"Commitment Fee Rate" shall mean from day to day the applicable Commitment
Fee Rate set forth in the Pricing Grid.
"Commitment Period" shall mean the period from the Closing Date to and
including the Maturity Date, or such earlier date as the Commitment shall
terminate as provided in the Loan Agreement.
"Compliance Certificate" - Section 7.2.
"Consolidated Group" shall mean KSL and its consolidated Subsidiaries.
"Contaminant" means any waste, pollutant, chemical, hazardous material,
hazardous substance, toxic substance, hazardous waste, special waste, petroleum
or petroleum-derived substance or waste, or any constituent of any such
pollutant material, substance or waste, including, without limitation, asbestos,
radiation and any pollutant, material, substance or waste regulated under any
Environmental Law.
"Control" (including the terms "controlling," "controlled by" and "under
common control with") shall mean the possession, direct or indirect, or the
power to direct or cause the direction of the management and policies of a
person, whether through the ownership of voting securities, by contract, or
otherwise.
"Deemed Disbursement" - Section 2A.6.
"Deemed Disbursement Account"-- Section 2A.6(a).
"Default" shall mean any event which with notice or lapse of time, or both,
would become an Event of Default.
"Disbursement" - Section 2A.4.
"Disbursement Date" - Section 2A.4.
"Disbursement Earnings" shall mean the amount (if any) earned by
investments (if any) made by the Bank with amounts in the Deemed Disbursement
Account.
"Distribution" shall have the meaning set forth in the Distribution
Agreement.
"Distribution Agreement" shall mean the Distribution Agreement dated June
28, 2001 by and between KSI and KSL and the Tax Subsidiaries (as defined in
Article 1 thereof) of KSL attached as Exhibit F hereto.
"Dollars", "U.S. $", "$" and "U.S. dollars" shall mean the lawful currency
of the United States of America.
"EBIT" for any Person for any period shall mean the consolidated Net Income
of such Person and its consolidated Subsidiaries for such period, before
interest expense and provision for taxes and without giving effect to any
extraordinary gains or losses and gains or losses from sales of assets (other
than sales of inventory in the ordinary course of business), for such period
(taken as one accounting period), determined in accordance with GAAP.
"EBITDA" for any Person for any period shall mean the EBIT of such Person
and its consolidated Subsidiaries for such period plus (to the extent deducted
in computing EBIT for such period) depreciation, amortization and other non-cash
items, determined in accordance with GAAP.
"Effective Date" - Section 12.14.
"Environmental Claim" shall mean any notice, complaint, request for
information, claim, demand or similar communication (whether written or oral) by
any Person (including, without limitation, the environmental protection
authorities of the jurisdiction in which any Property is located or any other
national or local regulatory or administrative body), whether based in contract,
tort, implied or express warranty, strict liability, criminal or civil statute
(including any Environmental Law, permit, order, approval, authorization,
license, variance or agreement with any Person), arising from or in respect of
(i) the presence of any Contaminant or any other environmental, health or safety
conditions or a Release or threatened Release on, in, under or emanating from
any Property or resulting from any past, present or future operation of any Loan
Party or KPP Entity (or any predecessor in interest of any of them) of any other
Person in connection with the business of any Loan Party or KPP Entity (or any
predecessor in interest of any of them), (ii) any Release for which any Loan
Party or KPP Entity is otherwise responsible under the Environmental Laws, (iii)
any other circumstance (including, without limitation, any off-site
transportation of a Contaminant) forming the basis of any violation or alleged
violation of, or liability or alleged liability under, any Environmental Law by
any Loan Party or KPP Entity (or any predecessor in interest of any of them),
(iv) any Remedial Action required to be taken by any Loan Party or KPP Entity
under the Environmental Laws, or (v) any harm, injury or damage to real or
personal property, natural resources, the environment or any Person alleged to
have resulted from any of the foregoing.
"Environmental Costs" shall mean all expenditures made by, all costs, fees,
disbursements and expenses (including, without limitation, any expenses of
engineers, experts, consultants, attorneys, contractors, surveyors, laboratories
and like Persons and costs of investigation and feasibility studies) incurred
by, and all liabilities, obligations and responsibilities assumed or incurred
by, any Loan Party or KPP Entity for or in respect of (i) any judgments, fines,
penalties, obligations, interest, losses, claims, amounts, impositions, damages,
punitive damages, consequential damages, treble damages or remedial action paid
or taken or agreed to be paid or taken by, due from or assessed against any Loan
Party or KPP Entity in respect of any Environmental Claim and (ii) all Remedial
Action (including, without limitation, any off-site transportation of a
Contaminant) taken by any Loan Party or KPP Entity, whether pursuant to any
Environmental Claim or otherwise.
"Environmental Laws" means all laws, rules, regulations, by-laws,
directives, codes, orders, decrees, judgments or injunctions issued,
promulgated, approved or entered thereunder by any Government Authority relating
to pollution or protection of the environment or occupational health and safety,
including, without limitation, laws relating to emissions, discharges, releases
or threatened releases of any waste, pollutant, chemical, hazardous material,
hazardous substance, toxic substance, hazardous waste, special waste, petroleum
or petroleum-derived substance or waste, or any constituent of any such
pollutant material, substance or waste, into the environment (including, without
limitation, ambient air, surface water, ground water, land surface or subsurface
strata) or otherwise relating to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport or handling of any waste, pollutant,
chemical, hazardous material, hazardous substance, toxic substance, hazardous
waste, special waste, petroleum or petroleum-derived substance or waste.
"Environmental Lien" means any Lien in favor of any Governmental Authority
for Environmental Costs.
"Equity Interests" shall mean any equity interests issued by any Person,
including, without limitation, shares of capital stock, partnership interests or
limited liability company interests, any other securities convertible into, or
exercisable for, any of the foregoing or other securities of such Person, and
options and warrants or other rights to acquire any of the foregoing.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended from time to time.
"ERISA Affiliate" shall mean any Person which is from time to time a member
of a controlled group or a group under common control with any Loan Party within
the meaning of Sections 414(b), 414(c), 414(m) or 414(o) of the Code or Section
4001(a)(14) of ERISA.
"Eurodollar Interest Determination Date" shall mean the date as of which
LIBOR is determined for a LIBOR Loan which shall be two Business Days prior to
the commencement of each Interest Period.
"Event of Default" shall mean each of the Events of Default defined in
Section 9.
"Expense Reimbursement" shall mean expenses incurred by KSI in connection
with the Distribution which KSL has agreed to pay to KSI, including
approximately $6,100,000 in expenses that KSI has incurred in connection with
its redemption of its Adjustable Rate Cumulative Class A Preferred Stock and
reasonable legal and professional and other expenses.
"Facility Fee" - Section 4.2.
"Federal Funds Effective Rate" shall mean the rate of interest charged by
banks with excess reserves at a Federal Reserve district bank to banks needing
overnight loans to meet reserve requirements.
"Financial Statements" shall mean, with respect to any Person, the
statement of financial position (balance sheet) and the statement of earnings,
cash flow and stockholders' (or partners') equity of such Person.
"Fiscal Year" shall mean each January 1 - December 31 period.
"Fiscal Year-End" shall mean, with respect to any Person, the last day of
such Person's Fiscal Year.
"GAAP" shall mean generally accepted accounting principles (as promulgated
by the Financial Accounting Standards Board or any successor entity).
"General Partnership Interests" shall mean the general partnership
interests in KPP and KPOP that are owned of record and beneficially by KPL at
any time.
"Government Authority" shall mean any nation or government, any state or
political subdivision thereof and any entity exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining to government.
"Guarantee" shall mean by any Person, any obligation, contingent or
otherwise, of such Person directly or indirectly guaranteeing any Indebtedness
for Borrowed Money or other obligation of any other Person and, without limiting
the generality of the foregoing, any obligation, direct or indirect, contingent
or otherwise, of such Person (i) to purchase or pay (or advance or supply funds
for the purchase or payment of) such Indebtedness for Borrowed Money or other
obligation (whether arising by virtue of partnership arrangements, by agreement
to keep-well, to purchase assets, goods, securities or services, to take-or-pay,
or to maintain financial statement conditions or otherwise) or (ii) entered into
for the purpose of assuring in any other manner the obligee of such Indebtedness
for Borrowed Money or other obligation of the payment thereof or to protect such
obligee against loss in respect thereof (in whole or in part), provided that the
term "Guarantee" shall not include endorsements for collection or deposits in
the ordinary course of business. The term "Guarantee" used as a verb has a
corresponding meaning.
"Guaranty Agreement" shall mean a guaranty agreement, substantially in the
form of Exhibit D hereto, as such guaranty agreement may be amended,
supplemented or otherwise modified from time to time.
"Xxxxxx Bank" shall mean Xxxxxx Trust and Savings Bank, Chicago, Illinois.
"Indebtedness for Borrowed Money" shall mean (i) all indebtedness of
(including, without limitation, all indebtedness assumed by) a Person in respect
of money borrowed (including, without limitation, the unpaid amount of the
purchase price of any property, incurred for such purpose in lieu of borrowing
money or using available funds to pay said amount, and not constituting an
account payable or expense accrual incurred or assumed in the ordinary course of
business), or evidenced by a promissory note, bond, debenture or other like
obligation to pay money, and including indebtedness under banker's acceptances
and with respect to letters of credit, and (ii) all obligations of (including,
without limitation, all obligations assumed by) a Person (x) constituting a
Capitalized Lease Obligation of such Person, or (y) constituting a Guarantee by
such Person.
"Indemnified Party" - Section 12.3.
"Intercompany Loan" - Section 8.4.
"Intercompany Note" - Section 8.4.
"Interest Period" - Section 3.4.
"Interest Period Notice" - Section 3.4.
"Issuance Request" - Section 2A.1.
"IRS" shall mean the Internal Revenue Service of the United States.
"KI" shall mean Kaneb Investment, LLC., a Delaware limited liability
company.
"KPL" - introductory paragraph.
"KPP Entity" or "KPP Entities" shall mean, individually and collectively,
KPP, KPOP, STSI and STOP and each of their respective material Subsidiaries.
"KPOP" shall mean Kaneb Pipe Line Operating Partnership, L.P., a Delaware
limited partnership.
"KPP" shall mean Kaneb Pipe Line Partners, L.P., a Delaware limited
partnership.
"KSI" shall mean Kaneb Services, Inc., a Delaware corporation.
"KSI Credit Agreement" - Section 8.4.
"KSI Loan" - Section 8.4.
"KSI Note" - Section 8.4.
"KSL" - introductory paragraph.
"LC Commitment" shall mean $5,000,000, as such amount may from time to time
be reduced or terminated pursuant to Section 2.8, Section 9 or any other section
of the Agreement.
"LC Obligations" shall mean the aggregate amount (without duplication) of
all LC Outstandings, Deemed Disbursements and Reimbursement Obligations.
"LC Outstandings" shall mean the aggregate Stated Amount (as it may be
reduced from time to time) of all Letters of Credit issued hereunder and
outstanding at any point in time.
"Legal Requirements" shall mean, with respect to any Person, all laws,
common law, statutes, rules and regulations of any Government Authority to which
such Person or any of its assets is subject or any judgment, decree, franchise,
order or permit of any Government Authority applicable to such Person or any of
its assets.
"Letter of Credit" - Section 2A.1.
"Letter of Credit Fee" - Section 2A.3.
"LIBOR" shall mean, for each Interest Period, (x) the per annum rate of
interest at which U.S. Dollar deposits in the amount of the outstanding
principal balance of the LIBOR Loan are or would be offered for such Interest
Period in the London interbank market at 11:00 A.M. London time two Business
Days prior to the start of such Interest Period by the Bank to prime banks and,
in case of variations in rates, the arithmetic average thereof rounded upward if
necessary to the nearest 1/16th of 1% calculated by the Bank, divided (and
rounded upward to the nearest 1/16 of 1%) by (y) a percentage equal to 100%
minus the then stated maximum rate of all reserve requirements (including
without limitation any marginal, emergency, supplemental, special or other
reserves required by applicable law) applicable to any member bank of the
Federal Reserve System in the United States in respect of Eurocurrency funding
or liabilities.
"LIBOR Loan" shall mean a Loan during any period that it bears interest
determined by reference to LIBOR.
"LIBOR Margin" shall mean from day to day the applicable LIBOR Margin set
forth in the Pricing Grid.
"Lien" shall mean any mortgage, deed of trust, security deed, pledge,
security interest, assignment, encumbrance, lien or other charge of any kind or
any other agreement or arrangement having the effect of conferring security
(including any agreement to give any of the foregoing, any lease in the nature
thereof, and any conditional sale or other title retention agreement), any lien
arising by operation of law, and the filing of or agreement to give any
financing statement under the Uniform Commercial Code of any jurisdiction.
"Loan" - Section 2.1.
"Loan Agreement" shall mean this Agreement as it may from time to time be
amended, extended, restated, supplemented or otherwise modified.
"Loan Documents" shall mean, individually and collectively, this Agreement,
the Note, the Security Documents, the Letters of Credit, and all other
instruments and agreements executed in connection herewith and therewith, in
each case as amended, supplemented or otherwise modified from time to time.
Without limiting the generality of the foregoing, each amendment to the
Agreement (as in effect at any time prior to such amendment) or to any other
Loan Document, each waiver of any provision of the Agreement (as in effect at
any time, before or after any amendment thereof or thereto) or any other Loan
Document, and each instrument and agreement executed in connection herewith or
therewith shall be deemed to be a Loan Document for all purposes of the
Agreement and the other Loan Documents.
"Loan Party" or Loan Parties" shall mean, individually and collectively,
KSL, KPL and each of their respective Subsidiaries. Unless otherwise indicated,
neither KPP nor any of its Subsidiaries shall be considered a Loan Party.
"LP Units" shall mean the securities issued by KPP that evidence or
otherwise constitute limited partnership interests in KPP which are listed on
the NYSE under the symbol KPP and which, upon satisfaction of the conditions set
forth in Section 6.15,can be publicly sold without restriction or registration
under securities laws.
"Management Letter" shall mean any correspondence or report submitted by
the Auditors to a Loan Party's CEO, CFO, its board of directors or any committee
thereof containing comments and suggestions concerning a Loan Party's accounting
procedures and systems based upon the work done by the Auditors during their
annual or other audit.
"Margin Regulations" shall mean Regulations G, T, U and X of the Board of
Governors of the Federal Reserve System, as the same have been amended or
supplemented from time to time, and any analogous future regulations.
"Market Value" shall mean, as of any date of computation, the closing price
of the security in question on the NYSE as of the close of business on the
immediately preceding Business Day.
"Material Adverse Change" in respect of a Person shall mean a material
adverse change in (i) the business, properties, operations, prospects or
condition (financial or otherwise) of such Person or (ii) if such Person is a
Loan Party, the ability of such Loan Party to perform, or of the Bank to
enforce, the Obligations.
"Material Adverse Effect" in respect of a Person shall mean an effect that
would result in a Material Adverse Change.
"Material Agreement" shall mean all outstanding contracts, agreements,
leases and other understandings to which any Person is a party, or by or under
which either has any rights or obligations, which (i) involve the payment to or
by any Person of an aggregate of $500,000 or more or (ii) is otherwise material
to any Person.
"Maturity Date" shall mean July 1, 2008.
"MOL" shall mean Xxxxxx Oil LLC, a Delaware limited liability company.
"MOL Loan Agreement" shall mean the Credit Agreement dated as of March 25,
1998 by and between MOL and Xxxxxx Bank, as amended by the First Amendment to
Credit Agreement dated as of March 18, 1999 and the Second Amendment to Credit
Agreement dated as of February 11, 2000.
"Moodys" - Section8.12.
"Multiemployer Plan" shall mean any employee benefit plan which is a
"multiemployer plan" within the meaning of Section 3(37) of ERISA and to which
any Loan Party or any ERISA Affiliate of either Borrower contributes or has been
obligated to contribute.
"Net Income" as to any Person for any period shall mean the consolidated
net income of such Person and its Subsidiaries for such period, determined in
accordance with GAAP.
"Net Worth" of a Person shall mean such Person's assets less its
liabilities, all determined in accordance with GAAP.
"1933 Act" - Section 12.19.
"Non-Pledged Units" shall mean the LP Units owned by MOL on the Closing
Date and pledged to Xxxxxx Bank under the MOL Loan Agreement.
"Note" shall mean a promissory note of the Borrowers substantially in the
form of Exhibit A to this Agreement, as such note may be from time to time
amended, supplemented, restated or otherwise modified.
"Notice of Borrowing" - Section 2.2(a).
"NYSE" shall mean The New York Stock Exchange, Inc.
"Obligations" shall mean (x) with respect to each Loan Party other than a
Borrower, all obligations of such Loan Party with respect to the repayment or
performance of any obligations (monetary or otherwise) of the Borrower arising
under or in connection with this Agreement, the Note and each other Loan
Document, and (y) with respect to a Borrower, all obligations of the Borrower
with respect to the repayment or performance of obligations (monetary or
otherwise) arising under or in connection with this Agreement, the Note and each
other Loan Document.
"Other Accounts" shall mean the Deemed Disbursement Account and the
Shortfall Account.
"Past-Due Rate" - Section 3.3.
"PBGC" shall mean the Pension Benefit Guaranty Corporation established
pursuant to Section 4002 of ERISA.
"Pension Plan" shall mean any employee pension benefit plan subject to
Title IV of ERISA and maintained by any Loan Party or any ERISA Affiliate of any
Loan Party or any such plan to which any Loan Party or any ERISA Affiliate is or
has been required to contribute on behalf of any of its employees, other than a
Multiemployer Plan.
"Permitted Liens" shall mean the Liens permitted by Section 8.2 of this
Agreement including the specific liens listed on Schedule 8.2(f) to this
Agreement (but not any that the Bank requires to be terminated on or prior to
the Closing Date).
"Person" shall mean and include an individual, a partnership, a corporation
(including a business trust), a joint stock company, a limited liability
company, a trust, an unincorporated association, a joint venture or other entity
or a government or an agency or political subdivision thereof.
"Plan" shall mean any "employee benefit plan" (within the meaning of
Section 3(3) of ERISA) maintained by any Loan Party or any ERISA Affiliate or
any such plan to which any Loan Party or any ERISA Affiliate is or has been
required to contribute on behalf of any of its employees, other than a
Multiemployer Plan.
"Pledge Agreement" shall mean a pledge agreement, substantially in the form
of Exhibit C hereto, as such pledge agreement may be amended, supplemented or
otherwise modified from time to time.
"Pledged Units" shall mean the LP Units Satisfactorily Pledged by the Loan
Parties to the Bank pursuant to the Security Documents.
"Pricing Grid" shall mean the following:
------------------------------- ---------------------------- ---------------------------- ----------------------------
Adjusted Debt/Free Cash Flow LIBOR Margin Base Rate Margin Commitment Fee Rate
------------------------------- ---------------------------- ---------------------------- ----------------------------
less than 1.5 1.00% 0.00% 0.25%
------------------------------- ---------------------------- ---------------------------- ----------------------------
equal to or greater than 1.5 1.50% 0.50% 0.35%
and less than 3.5
------------------------------- ---------------------------- ---------------------------- ----------------------------
equal to or greater than 3.5 1.75% 0.75% 0.50%
and less than 4.0
------------------------------- ---------------------------- ---------------------------- ----------------------------
equal to or greater than 4.0 2.00% 1.00% 0.75%
------------------------------- ---------------------------- ---------------------------- ----------------------------
"Process Agent" - Section 12.10.
"Property" shall mean any property owned, leased, controlled, used or
operated in the past, present or future by any Loan Party or any KPP Entity.
"Qualification Requirement" - Section 3.7.
"Quarterly Certificate" - Section 7.1(c).
"Recoveries" shall mean any funds, or substitution or receipts or
collateral, received by the Bank (a) from the sale, collection or other
disposition pursuant to the Security Documents of any collateral, or (b) from
any distribution to the Bank, or abandonment to the Bank, or substitute Lien or
payment given to the Bank pursuant to events or proceedings of the nature
referred to in Section 9.7 of the Agreement, or otherwise, and which
distribution or abandonment pertains to any collateral.
"Regulatory Change" means, relative to the Bank or any Bank Assignee, any
change after January 1, 2001 in any (or the adoption after January 1, 2001 of
any new):
(a) United States Federal, state or local law or foreign law
applicable to the Bank or any Bank Assignee; or
(b) regulation, interpretation, directive, or request (whether or not
having the force of law) applying to the Bank or such Bank Assignee of any
court or governmental authority charged with the interpretation or
administration of any law referred to in clause (a) or of any fiscal,
monetary, central bank or other authority having jurisdiction over the Bank
or such Bank Assignee.
"Reimbursement Obligation" - Section 2A.4.
"Release" shall mean any release, spill, emission, leaking, pumping,
injection, deposit, disposal, discharge, dispersal, pouring, emptying, escaping,
dumping, discarding, leaching or migration of a Contaminant into the indoor or
outdoor environment or into or out of any property, including without limitation
the movement of Contaminants through, on or in the air, soil, surface water or
groundwater or the abandonment or discarding of barrels, containers and other
closed receptacles containing any Contaminant.
"Remedial Action" shall mean all actions taken or required to be taken to
(i) clean up, remove, treat or in any other way address Contaminants in the
indoor or outdoor environment, (ii) prevent a Release or condition that is
reasonably likely to result in a Release or minimize further release of
Contaminants so they do not migrate or endanger or threaten to endanger present
or future public health or welfare or the indoor or outdoor environment, (iii)
perform pre-remedial studies and investigations and post-remedial monitoring and
care, or (iv) cure any other violation of any Environmental Laws.
"Reportable Event" shall mean a Reportable Event described in Section 4043
of ERISA and the regulations issued thereunder.
"S&P" - Section 8.12.
"Satisfactorily Pledged" shall mean pledged and delivered, by the Person
owning the relevant securities, to the Bank as collateral for the Obligations
pursuant to the Security Documents or a different agreement in form and
substance reasonably satisfactory to the Bank.
"SEC" shall mean the Securities and Exchange Commission or any successor
entity.
"Security Documents" shall be the collective reference to (i) each of the
agreements referred to in Section 6 (including, without limitation, Section 6.4)
pursuant to which Collateral is intended to be granted, directly or indirectly,
to the Bank, (ii) the sections of this Agreement pursuant to which the Other
Accounts are established, and (iii) each Pledge Agreement or other agreement
entered into after the Closing Date pursuant to which Collateral is intended to
be granted, directly or indirectly, to the Bank, and (iv) all amendments,
supplements or other modifications to such agreements or replacements thereof.
"Shortfall Account"-- Section 2A.10.
"Solvent" shall mean, with respect to any Person, that the fair saleable
value of the tangible and intangible property (including goodwill) of such
Person is, on the date of determination, greater than the total amount of
liabilities of such Person as of such date (including contingent liabilities of
such Person to the extent such Person considers it probable that it shall
actually be liable thereon) and that, as of such date, such Person is able to
pay all Indebtedness for Borrowed Money of such Person as such Indebtedness for
Borrowed Money matures.
"Stated Amount" shall mean, as to each Letter of Credit, the maximum amount
payable thereunder to the beneficiary thereof upon compliance with the terms and
conditions stated therein, as such amount may be reduced from time to time.
"Stated Expiry Date" - Section 2A.1(b).
"STOP" shall mean Support Terminals Operating Partnership, L.P., a Delaware
limited partnership.
"STSI" shall mean Support Terminal Services, Inc., a Delaware corporation.
"Subsidiary" of any Person shall mean any other firm, corporation,
partnership, trust or other unincorporated organization or association or other
enterprise, 50% or more of the indicia of equity rights (whether capital stock
or otherwise) of which is at the time owned, directly or indirectly, by such
Person and/or by one or more of such Person's Subsidiaries. Unless otherwise
indicated, references to Subsidiaries shall refer to Subsidiaries of KSL.
"Taxes" - Section 5.2.
"Termination Event" shall mean (i) a Reportable Event described in Section
4043 of ERISA and the regulations issued thereunder (other than a Reportable
Event not subject to the provision for 30-day notice to the PBGC under such
regulations), or (ii) the withdrawal of any Loan Party or any of its ERISA
Affiliates from a Pension Plan during a plan year in which it was a "substantial
employer" as defined in Section 4001(a)(2) of ERISA, or (iii) the issuance of a
notice of intent to terminate a Pension Plan or the treatment of a Pension Plan
amendment as a termination under Section 4041 of ERISA, or (iv) receipt by any
Loan Party or any ERISA Affiliate of notice of the PBGC's intention to terminate
any Pension Plan or to have a trustee or the PBGC appointed to administer any
Pension Plan 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 Pension Plan.
"Transfer" shall mean any sale, conveyance, lease or other disposition (and
"Transferred", "Transferring" and other variations thereof shall have
correlative meanings).
"UCC" - Section 10.14.
"Unutilized Commitment" shall mean the amount by which the Commitment at
any time exceeds the sum of (x) the aggregate principal amount of Loans then
outstanding plus (y) the LC Obligations.
"Unutilized LC Commitment" shall mean the amount by which the LC Commitment
at any time exceeds the LC Obligations.
"UK" shall mean the United Kingdom.
"United States," "US" or "U.S." shall mean the United States of America.
"Written" or "in writing" shall mean any form of written communication or a
communication by means of telex, telecopier device, telegraph or cable.
