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Aquila Gas Pipeline Corporation
File Number 1-12426
Exhibit 10.2
Note Agreement dated July 1, 1996 between Aquila
Energy Corporation and AQP Holdings L.P.
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NOTE AGREEMENT
Note Agreement ("Agreement") dated as of July 1, 1996 between AQUILA
ENERGY CORPORATION, a Missouri corporation ("Company") and AQP HOLDINGS L. P.,
a Delaware limited partnership ("Subsidiary").
RECITALS
1. AQP Holdings L. P., a partially-owned subsidiary of the
Company, from time to time requires advances of funds to enable it to meet
temporary working capital needs and operating expenses and make acquisitions of
assets.
AGREEMENT
1. The Advances. As evidenced by the Contract Note ("Note"),
which is attached hereto and a part of this Agreement, the Company hereto
agrees on the terms and conditions hereinafter set forth, to make advances (the
"Advances") to Subsidiary from time to time in an aggregate amount not to
exceed $3,000,000. (The term "Lender" shall refer to the Company in its
capacity as a maker of Advances, and the term "Borrower" shall refer to
Subsidiary in its capacity as the recipient of Advances.) Within the limits of
such amount, the Borrower may borrow, repay and reborrow under this paragraph
1: provided, however, that Borrower may not borrow or reborrow hereunder if
demand for payment is made by Lender pursuant to the express provisions of
paragraph 3 or following an Event of Default (as defined in paragraph 10), as
the case may be. Each Advance shall be made pursuant to pre-authorized
instructions or as Lender and Borrower shall otherwise agree.
2. Interest on Advances. Borrower shall pay interest on the
unpaid principal amount of each Advance made by Lender from the date of such
Advance until such principal amount shall be paid in full at the Prime Rate or
rates offered from time to time by Lender calculated on a 360-day year basis.
The "Prime Rate" means the rate of interest per annum established and
announced from time to time by Citibank, N. A. of New York as its prime rate or
such other base rate established and announced by Citibank in the event the
Prime Rate is not established or announced by Citibank.
The Interest Period, for each loan made, is the period commencing on
the date of such Loan and ending on the last day of the period selected by the
Borrower pursuant to the provisions below, and, thereafter, each subsequent
period commencing on the last day of the immediately preceding Interest Period
and ending on the last day of the period selected by the Borrower pursuant to
the provisions below.
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(i) whenever the last day of any Interest Period would otherwise
occur on a day other than a Business Day, the last day of such Interest
Period shall be extended to occur on the next succeeding Business Day.
3. Repayment; Evidence of Indebtedness. Unless a fixed date for
repayment is expressly agreed, Borrower shall repay, no later than the Expiry
Date of this Agreement, at such place and by such means as Lender may select,
the aggregate unpaid principal amount of all Advances made to Borrower as
evidenced by such Lender's ledger balance. All advances and payments shall be
evidenced by notation by the Company on the attached Note, provided that the
failure to make such notation shall not affect the obligations of the Borrower.
4. Prepayment. Borrower may prepay the Advances made to it in
whole or in part at any time; provided, however, that if the obligations of
Borrower hereunder shall be payable on a fixed date, no such prepayment shall
be made without the prior written consent of Lender.
5. Conditions to Advances.
5.1 Conditions to Initial Advance. The obligation of the
Lender to make its initial Advance is subject to the following conditions
precedent:
(a) Notes. The Lender shall have received the
Note, confirming to the requirements hereof and executed by duly
authorized officers of the Borrower.
(b) Organizational Documents. The Lender shall have
received copies of the Certificate or Articles of Limited Partnership,
and all amendments and restatements thereof, of the Borrower certified
as of or as close as possible to the date the initial Advance is made
as correct and complete by the Secretary of State of the Borrower's
jurisdiction of incorporation.
(c) Corporate Proceedings and Incumbency. The Lender
shall have received a certificate of the secretary or assistance
secretary of the General Partner of Borrower, dated the date the
initial Advance is made, certifying: (i) the due adoption and continued
force and effect of attached resolutions of the Board of Directors of
the General Partner of Borrower authorizing the borrowing of the
Advances and the execution and delivery by specified officers and
performance by the Borrower of this Agreement and the Notes; (ii) the
incumbency and signatures of the officers of the General Partner of
Borrower executing this Agreement and the Notes, together with evidence
of the incumbency and signature of such secretary or assistance
secretary; and (iii) attached copies of the By-laws of the General
Partner of Borrower.
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(d) Required Approvals. The Lender shall have received
certified copies of any consent or approval of any public authority or
other Person which is required in connection with the transactions
contemplated by this Agreement.
(e) Additional Matters. All proceedings and other
documents and legal matters in connection with the transactions
contemplated by this Agreement shall be satisfactory in form and
substance to the Lender and its counsel.
5.2 Conditions to All Advances. The obligations of the
Lender to make each Advance (including the initial Advance) to be made by it
hereunder is subject to the following additional conditions precedent:
(a) Representations and Warranties. The representations
and warranties made by the Borrower contained in this Agreement, and
any certificate, document or financial or other written statement
furnished at any time under or in connection herewith shall be true and
correct in all material respects on and as of the date of such Advance
and after giving effect thereto as if made on and as of such date and
otherwise in exactly the same language.
(b) Covenants. On the date of the Advance and after
giving effect thereto, the Borrower shall have complied and shall then
be in compliance in all material respects with all the terms, covenants
and conditions of this Agreement which are binding upon it.
(c) No Event of Default. No Event or Event of Default
shall have occurred and be continuing as of the date of such Advance or
after giving effect to such Advance.
(d) No Material Adverse Change. At the date of such
Advance and after giving effect thereto, there shall have occurred no
material adverse change in the Borrower's business or financial
condition as a whole since the date the immediately preceding Advance
was made.
Whenever the Borrower makes, or is deemed to make, a request to
borrow, the Borrower shall be deemed to have represented and warranted to the
Lender that the conditions precedent to such Advance set forth above have been
satisfied, to the same extent as if the Borrower so represented and warranted
at that time in a written certificate delivered to the Lender.
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6. Books and Records; Examination; Financial Information;
Notices. So long as any Obligations remain unpaid or this Agreement is in
effect, the Borrower shall; (a) maintain, at all times, true and complete
books, records and accounts in which true and correct entries are made of its
transactions in accordance with GAAP and (b) by means of appropriate entries,
reflect in such accounts and in all financial statements proper liabilities and
reserves for all taxes and proper provision for depreciation and amortization
of properties and bad debts, all in accordance with GAAP. The Lender may at
all reasonable times have access to examine, audit, make extracts from and
inspect the Borrower's records, files and books of account. The Borrower will
deliver to the Lender any instrument necessary for the Lender to obtain records
from any Person maintaining records for the Borrower.
7. General Warranties and Representations. The Borrower
continuously warrants and represents to the Lender, until all Advances have
been paid, that, except as hereafter disclosed to and accepted by the Lender in
writing:
7.1 Organization and Qualification; Power and Authority.
The Borrower (a) is duly incorporated and organized and validly
existing in good standing under the laws of the State of Delaware,
(b) is qualified to do business and is in good standing in all
states in which qualification and good standing are necessary in order
for it to conduct its business and own or lease its property, and (c)
has all requisite power and authority to conduct its business and to
own and lease its property.
7.2 No Material Adverse Change. No material adverse
change has occurred in the property, business, operations or conditions
(financial or otherwise) of the Borrower and its subsidiaries since the
date of the most recent financial statements delivered to the Lender.
7.3 Adequate Assets. The Borrower and its subsidiaries
possess adequate assets for the conduct of their respective
businesses.
7.4 Margin Securities. The Borrower does not own any
"margin security", as that term is defined in Regulation U of the
Federal Reserve Board. None of the Advances will be used, directly or
indirectly, for the purpose of purchasing or carrying any margin
security, for the purpose of reducing or retiring any Indebtedness
which was originally incurred to purchase or carry any margin security
or for any other purpose which might cause any of such Advances to be
considered a "purpose credit" within the meaning of, or otherwise to
violate, Regulation G, T, U or X of the Federal Reserve Board. The
Borrower will neither take nor permit any agent acting on its behalf to
take any action which might cause any transaction, obligation or right
created by this Agreement, or any document or instrument delivered
pursuant hereto, to violate any regulation of the Federal Reserve Board.
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7.5 Authorization, Validity and Enforceability of this
Agreement and the Note.
The Borrower has the power and authority to execute, deliver and perform
this Agreement and the Note. Both the Agreement and the Note has been
duly authorized by the Borrower by all required action, has been duly
executed and delivered by the Borrower, and constitutes its legal, valid
and binding agreement and obligation, enforceable against it in
accordance with its terms without defense, setoff or counterclaim. The
execution and delivery of this Agreement and Note by the Borrower and
the carrying out of their terms and provisions do not and will not: (a)
contravene in any material respect any provision of law, statute, rule
or regulation or any order, writ, decree or injunction of any
governmental authority; (b) conflict with, or violate in any material
respect the terms of, or result in the breach of, any of the terms or
conditions or provisions of any material indenture, deed of trust,
mortgage, agreement or other instrument to which the Borrower or any of
its subsidiaries is a party, (c) result in the creation or imposition of
any material Lien upon the property of the Borrower or any of its
subsidiaries, or (d) violate any provision of the Certificate of
Articles of Limited Partnership or By-laws of the Borrower or any of its
subsidiaries.
7.6 Disclosure. Neither this Agreement nor any document
or statement furnished to the Lender by or on behalf of the Borrower
hereunder contains any untrue statement of a material fact or omits to
state any material fact necessary in order to make the statements
contained herein or therein not misleading.
8. Affirmative Covenants. The Borrower covenants that, so long
as any of the Advances remain outstanding, the Borrower and each subsidiary
shall:
8.1 Partnership Existence and Good Standing. Maintain its
partnership existence and its qualification and good standing in all
states necessary to conduct its business and own or lease its property,
and maintain all licenses, permits, franchises and governmental
authorizations necessary to conduct its business and own or lease its
property.
8.2 Insurance. Maintain insurance (including product and
other liability insurance) with responsible insurance companies against
such risks and in such amounts as is customarily maintained by entities
engaged in the same or similar business and similarly situated
(provided that the Borrower or any subsidiary may self-insure to the
extent that adequate reserves have been established and maintained and
exist with respect thereto in accordance with GAAP).
8.3 Maintenance of Property. Maintain all of its
property necessary and useful in its business in good operating
condition and repair, ordinary wear and tear excepted.
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8.4 Environmental Laws. Obtain all applicable permits,
licenses and other authorization which are required under all
Environmental Laws except to the extent failure to have any such
permit, license or authorization would not have a material adverse
effect on the business of Borrower or its financial condition,
operations or prospects. Borrower shall also maintain compliance
with the terms and conditions of all such applicable permits, licenses
and authorizations, and shall also maintain compliance with all other
limitations, restrictions, conditions, standards, prohibitions,
requirements, obligations, schedules and timetables contained in
any applicable Environmental Law or in any regulation, code, plan,
order, decree, judgement, injunction, notice or demand letter issued,
entered, promulgated, or approved thereunder, except to the extent
failure to comply would not have a material adverse effect on its
financial condition, operations, business or prospects.
8.5 Further Assurances. Execute and deliver to the
Lender, upon request, such documents and agreements as the Lender may,
from time to time, reasonably request to carry out the terms and
conditions of this Agreement.
9. Negative Covenants. The Borrower covenants that, so long as
any of the Advances remain outstanding, the Borrower shall not, without the
Lender's prior written consent:
9.1 Conduct of Business. Engage, directly or indirectly,
in any line of business other than the business of purchasing,
transportation, processing and sale of natural gas and natural gas
liquids and other businesses reasonably related thereto.
9.2 Mergers, Consolidations or Sales of Assets.
(a) Merge, consolidate, combine with or into, or acquire
all or a substantial part of the assets or business of, any Person,
except that this paragraph 9.2 shall not apply to (i) the merger,
consolidation or combination of the Borrower, with or into any other
person, or the acquisition by the Borrower, of all or a substantial
part of the assets or business of any other person, and (ii) the
merger, consolidation or combination with or into any direct or
indirect wholly-owned subsidiary, so long as (x) no Default shall have
occurred and be continuing at the time of such merger, consolidation,
combination or acquisition or would result therefrom, and (y) in the
case of clause (i), such merger, consolidation, combination or
acquisition would not, in the reasonable judgement of the Lender, have
an adverse effect on the perfection, validity or enforceability of any
of the rights of the Lender under this Agreement and the person
surviving such merger, consolidation or combination, if other than the
Borrower, shall have assumed, in a manner and pursuant to a written
instrument in form, scope and substance reasonably satisfactory to the
Lender, all of the liabilities and obligations of the Borrower, as the
case may be, under the Agreement.
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(b) Sell, lease, transfer or otherwise dispose of a
majority of its assets, except that this paragraph 9.2(b) shall not
apply to (i) sales of assets (or, in the case of natural gas and
natural gas liquids inventory, exchanges thereof), other than assets
consisting of real property, in the ordinary course of business and
(ii) sales of obsolete or retired property not used or useful in its
business.
10. Events of Default. If the obligations of Borrower hereunder
shall not be payable on demand pursuant to the express provisions of paragraph
3, then in such event if any of the following events ("Events of Default")
shall occur and be continuing:
(a) Borrower shall fail to pay the principal of, or
interest on, any Advance when due, which failure is not cured within 30
days;
(b) Borrower or any subsidiary of Borrower shall
generally not pay its debts as such debts become due, or shall admit in
writing its inability to pay its debts generally, or shall make a
general assignment for the benefit of creditors; or any proceeding
shall be instituted by or against Borrower or any subsidiary of
Borrower seeking to adjudicate it as bankrupt or insolvent, or seeking
liquidation, winding up, reorganization, arrangement, adjustment,
protection, relief, or composition of it or its debts under any law
relating to bankruptcy, insolvency or reorganization or relief of
debtors, or seeking the entry of an order for relief or the appointment
of a receiver, trustee, or other similar official for it or for any
substantial part of its property; or Borrower or any subsidiary of
Borrower shall take any partnership action to authorize any of the
actions set forth above in this subparagraph (b);
(c) At any time Lender shall cease to be majority
beneficial owner of Borrower within the meaning of Section 13d-3 of the
Securities Exchange Act; or
(d) Borrower shall make or commit to make a transfer,
sale or assignment of the major portion of its assets (other than the
sale of accounts receivable).
Then and in such event, Lender thereby may, by notice to Borrower, (i) declare
its obligation to make Advances to be terminated, whereupon the same shall
forthwith terminate, and (ii) declare the Advances made to Borrower, and all
other amounts payable under this Agreement to be forthwith due and payable,
whereupon such Advances, and such amounts shall become and be forthwith due and
payable without presentment, demand, protest, or further notice of any kind,
all of which are hereby expressly waived by Borrower. Borrower agrees to pay
Lender on demand all costs and expenses, including without limitation
reasonable fees and expenses of counsel, incurred by Lender in connection with
the enforcement of this Agreement.
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11. Notices. All notices required hereunder shall be directed to
the parties hereto as follows:
(a) If to Aquila Energy Corporation
at 0000 X. 000xx Xxx.
Xxxxx, Xxxxxxxx 00000
Attention: Vice President - Finance
Telephone: 000-000-0000
Facsimile: 000-000-0000
(b) If to AQP Holdings L.P.
c/o Aquila Gas Pipeline Corporation
at 000 X.X. Xxxx 000, Xxxxx 0000
Xxx Xxxxxxx, Xxxxx 00000-0000
Attention: Vice President - Finance
Telephone: 000-000-0000
Facsimile: 000-000-0000
12. Amendments, Etc. No amendments or waiver of any provision of
this Agreement shall be effective unless the same shall be in writing and
signed by Borrower and Lender. No delay or failure of Lender in exercising any
right, power, privilege or remedy hereunder or under to Note shall affect such
right, power, privilege or remedy or be deemed a waiver thereof, nor shall any
single or partial exercise thereof or any failure to exercise the same in any
instance preclude any future exercise thereof.
13. Expiry Date. This Agreement shall expire on December 31,
1999, or such later date that may be established at the sole discretion of
Lender.
14. Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Texas.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed as of the date first provided above.
AQUILA ENERGY CORPORATION AQP NEWCO CORPORATION
Title: The General Partner
By: /s/ Xxxxxxxx Xxxxxxx By: /s/ Xxxxx X. Button
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Title: Vice President Title: Vice President
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ADVANCES BY THE COMPANY AND REPAYMENTS BY
AQP HOLDINGS L. P.
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Amount of
Amount of Principal Notation
Date Advance Repaid Made By
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CONTRACT NOTE
U.S. $3,000,000
Date: July 1, 1996
For value received, AQP HOLDINGS L.P., a Delaware limited partnership
(the "Borrower"), promises to pay to the order of AQUILA ENERGY CORPORATION, a
Missouri corporation (the "Lender"), the principal sum of Three Million and
No/l00 Dollars ($3,000,000.00) or, if less, the aggregate unpaid principal
amount of the Advances made by the Lender to the Borrower pursuant to Paragraph
1 of the Note Agreement referred to below. The Borrower promises to pay
interest on the unpaid principal amount hereof on the dates and at the rate or
rates provided for in the Note Agreement. All such payments of principal and
interest shall be made in lawful money of the United States in federal or other
immediately available funds at the office of the Lender in Omaha, Nebraska.
The date and amount of each Advance made by the Lender, the date and
amount of each repayment of the principal thereof made pursuant to Paragraph 4
of the Note Agreement shall be recorded by the Lender and, prior to any
transfer hereof, endorsed by the Lender on the schedule attached hereto, or on
a continuation of such schedule attached to and made a part hereof, provided
that the failure of the Lender to make any such recordation or endorsement
shall not affect the obligations of the borrower hereunder or under the Note
Agreement.
This note is the Contract Note referred to in the Note Agreement dated
as of July 1, 1996 between the Borrower and the Lender (the "Note Agreement")
and is entitled to the benefits thereof. Terms defined in the Note Agreement
are used herein with the same meanings. Reference is made to the Note
Agreement for provisions for the payment and prepayment hereof and the
acceleration of the maturity hereof.
The Borrower hereby waives diligence, presentment, protest and notice
of any kind, and assents to extensions of the time of payment, release,
surrender or substitution of security, or forbearance of other indulgence,
without notice.
This note may not be changed, modified or terminated orally, but only
by an agreement in writing signed by the Borrower or any successor or assign of
the borrower, and the Lender or any holder thereof.
This note shall be governed by, and construed in accordance with, the
laws of the State of Texas, and shall be binding upon the successors and
assigns of the Borrower and insure to the benefit of the Lender, its
successors, endorses and assigns. If any term or provisions of this note shall
be held invalid, illegal or unenforceable, the validity of all other terms and
provisions thereof shall in no way be affected thereby.
AQP NEWCO CORPORATION
Title: The General Partner
By: /s/ Xxxxx X. Button
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Name: Xxxxx X. Button
Title: Vice President
