EXHIBIT 10.1
------------
ATMOS ENERGY CORPORATION
8.07% SENIOR NOTES DUE 2006
AND
8.26% SENIOR NOTES DUE 2014
NOTE PURCHASE AGREEMENT
WITH
NEW YORK LIFE INSURANCE COMPANY,
NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION,
THE VARIABLE ANNUITY LIFE INSURANCE COMPANY,
AMERICAN GENERAL LIFE INSURANCE COMPANY, AND
MERIT LIFE INSURANCE COMPANY
DATED: November 14, 1994
PPN: 049560 C* 4 (8.07% Notes)
049560 C@ 2 (8.26% Notes)
TABLE OF CONTENTS
PAGE
ARTICLE I DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 1.1. Terms Defined Elsewhere . . . . . . . . . . . . . . . . . . 2
Section 1.2. Certain Definitions . . . . . . . . . . . . . . . . . . . . 2
Section 1.3. Accounting Principles . . . . . . . . . . . . . . . . . . . 8
Section 1.4. Singular and Plural . . . . . . . . . . . . . . . . . . . . 8
ARTICLE II PURCHASE AND SALE OF NOTES . . . . . . . . . . . . . . . . 8
Section 2.1. Closing . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 2.2. Conditions Precedent to Purchasers' Obligations . . . . . . 9
Section 2.3 Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . 12
Section 2.4. Investment Purpose . . . . . . . . . . . . . . . . . . . . 12
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY . . . . . . . 13
Section 3.1. Organization and Authority of the Company and the
Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . 13
Section 3.2. Execution, Delivery, and Binding Nature of
Obligations . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 3.3. Franchises, Etc. . . . . . . . . . . . . . . . . . . . . . 14
Section 3.4. Financial Statements . . . . . . . . . . . . . . . . . . . 14
Section 3.5. Changes, Etc. . . . . . . . . . . . . . . . . . . . . . . . 14
Section 3.6. Tax Returns and Payments . . . . . . . . . . . . . . . . . 15
Section 3.7. Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 3.8. Pending Litigation . . . . . . . . . . . . . . . . . . . . 15
Section 3.9. Compliance with Other Instruments . . . . . . . . . . . . . 16
Section 3.10.Employee Retirement Income Security Act of 1974 . . . . . . . 16
Section 3.11.Consent . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Section 3.12.Patents and Trademarks . . . . . . . . . . . . . . . . . . . . 17
Section 3.13.Offer of Notes . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 3.14.Investment Company Act . . . . . . . . . . . . . . . . . . . . 18
Section 3.15.Public Utility . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 3.16.Good and Marketable Title . . . . . . . . . . . . . . . . . . 18
Section 3.17.Regulation G, Etc. . . . . . . . . . . . . . . . . . . . . . . 18
Section 3.18.Foreign Credit Restraints . . . . . . . . . . . . . . . . . . 19
Section 3.19.Brokers . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 3.20.Full Disclosure . . . . . . . . . . . . . . . . . . . . . . . 19
Section 3.21.Investments . . . . . . . . . . . . . . . . . . . . . . . . . 20
Section 3.22.Solvency . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Section 3.23.Environmental Matters . . . . . . . . . . . . . . . . . . . . 20
ARTICLE IV COVENANTS OF THE COMPANY . . . . . . . . . . . . . . . . . 21
Section 4.1. Corporate Existence . . . . . . . . . . . . . . . . . . . . 21
Section 4.2. Payment of Taxes . . . . . . . . . . . . . . . . . . . . . 21
Section 4.3. Compliance with Laws and Stock Exchange Rules . . . . . . . 21
Section 4.4. Sale, Dissolution, Merger, or Consolidation . . . . . . . . 22
Section 4.5. Change in Business, Sales, Leases, Etc. . . . . . . . . . . 22
Section 4.6. Performance of Agreements . . . . . . . . . . . . . . . . . 23
Section 4.7. Limitations on Debt . . . . . . . . . . . . . . . . . . . . 24
Section 4.8. Operating Cash Flow . . . . . . . . . . . . . . . . . . . . 24
Section 4.9. Dividends . . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 4.10.Liens and Title Defects . . . . . . . . . . . . . . . . . . . 25
Section 4.11.Transactions with Affiliates . . . . . . . . . . . . . . . . . 27
Section 4.12.Fees and Expenses . . . . . . . . . . . . . . . . . . . . . . 27
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Section 4.13.Inspections . . . . . . . . . . . . . . . . . . . . . . . . . 28
Section 4.14.Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Section 4.15.Investments . . . . . . . . . . . . . . . . . . . . . . . . . 29
Section 4.16.Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Section 4.17.Maintenance and Insurance . . . . . . . . . . . . . . . . . . 33
Section 4.18.Purchase of Notes . . . . . . . . . . . . . . . . . . . . . . 34
Section 4.19.ERISA Compliance . . . . . . . . . . . . . . . . . . . . . . . 34
Section 4.20.Downstream Transfers . . . . . . . . . . . . . . . . . . . . . 35
Section 4.21.To Keep Books . . . . . . . . . . . . . . . . . . . . . . . . 35
Section 4.22.Environmental Law Compliance . . . . . . . . . . . . . . . . . 35
Section 4.23.Notification and Remediation of Releases of
Hazardous Materials . . . . . . . . . . . . . . . . . . . . 35
Section 4.24.Environmental Indemnification . . . . . . . . . . . . . . . . 36
Section 4.25.Notification . . . . . . . . . . . . . . . . . . . . . . . . . 37
Section 4.26.No Foreign Subsidiaries . . . . . . . . . . . . . . . . . . . 37
ARTICLE V PAYMENTS ON NOTES . . . . . . . . . . . . . . . . . . . . . 37
Section 5.1. Interest Payments . . . . . . . . . . . . . . . . . . . . . 37
Section 5.2. Mandatory Prepayment . . . . . . . . . . . . . . . . . . . 38
Section 5.3. Optional Prepayment . . . . . . . . . . . . . . . . . . . . 39
Section 5.4. Payment Procedure . . . . . . . . . . . . . . . . . . . . . 40
Section 5.5. Nonbusiness Days . . . . . . . . . . . . . . . . . . . . . 41
Section 5.6. Mandatory Prepayment Offer Following Change of
Control . . . . . . . . . . . . . . . . . . . . . . . . . . 41
Section 5.7. Mandatory Prepayment Offer Following Certain
Mergers, Consolidations, or Acquisitions . . . . . . . . . 42
ARTICLE VI EVENTS OF DEFAULT AND REMEDIES . . . . . . . . . . . . . . 43
Section 6.1. Events of Default . . . . . . . . . . . . . . . . . . . . . 43
Section 6.2. Acceleration . . . . . . . . . . . . . . . . . . . . . . . 45
Section 6.3. Actions for Enforcement . . . . . . . . . . . . . . . . . . 45
Section 6.4. Remedies Cumulative . . . . . . . . . . . . . . . . . . . . 46
Section 6.5. Remedies Not Waived . . . . . . . . . . . . . . . . . . . . 46
Section 6.6. Other Lenders . . . . . . . . . . . . . . . . . . . . . . . 46
ARTICLE VII REGISTRATION, TRANSFER, AND EXCHANGE OF NOTES . . . . . . . 47
Section 7.1. Form, Registration, Transfer, and Exchange of
Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Section 7.2. Replacement of Notes . . . . . . . . . . . . . . . . . . . 47
ARTICLE VIII MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . 48
Section 8.1. Successors and Assigns . . . . . . . . . . . . . . . . . . 48
Section 8.2. Governing Law, Submission to Process, and Usury . . . . . . 48
Section 8.3. Entire Agreement . . . . . . . . . . . . . . . . . . . . . 50
Section 8.4. Survival of Representations, Warranties,
Covenants, and Agreement . . . . . . . . . . . . . . . . . 50
Section 8.5. Partial Invalidity . . . . . . . . . . . . . . . . . . . . 50
Section 8.6. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . 50
Section 8.7. Further Assurances . . . . . . . . . . . . . . . . . . . . 51
Section 8.8. Amendment . . . . . . . . . . . . . . . . . . . . . . . . . 51
Section 8.9. No Waiver . . . . . . . . . . . . . . . . . . . . . . . . . 52
Section 8.10.Headings; Internal References . . . . . . . . . . . . . . . . 52
Section 8.11.Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . 52
Section 8.12.Limitation on Rights of Certain Holders . . . . . . . . . . . 52
Section 8.13.Construction of Representations and Warranties . . . . . . . . 52
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Section 8.14.Statutory Notice No Oral Agreements . . . . . . . . . . . . . 53
ARTICLE I DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 1.1. Terms Defined Elsewhere . . . . . . . . . . . . . . . . . 2
Section 1.2. Certain Definitions . . . . . . . . . . . . . . . . . . . 2
Section 1.3. Accounting Principles . . . . . . . . . . . . . . . . . . 7
Section 1.4. Singular and Plural . . . . . . . . . . . . . . . . . . . 7
ARTICLE II PURCHASE AND SALE OF NOTES . . . . . . . . . . . . . . . . . . 8
Section 2.1. Closing . . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 2.2. Conditions Precedent to Purchasers' Obligations . . . . . 8
Section 2.3 Use of Proceeds . . . . . . . . . . . . . . . . . . . . . 11
Section 2.4. Investment Purpose . . . . . . . . . . . . . . . . . . . 11
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY . . . . . . . . 12
Section 3.1. Organization and Authority of the Company
and the Subsidiaries . . . . . . . . . . . . . . . . . . 12
Section 3.2. Execution, Delivery, and Binding Nature of
Obligations . . . . . . . . . . . . . . . . . . . . . . . 12
Section 3.3. Franchises, Etc. . . . . . . . . . . . . . . . . . . . . 12
Section 3.4. Financial Statements . . . . . . . . . . . . . . . . . . 13
Section 3.5. Changes, Etc. . . . . . . . . . . . . . . . . . . . . . . 13
Section 3.6. Tax Returns and Payments . . . . . . . . . . . . . . . . 13
Section 3.7. Debt . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Section 3.8. Pending Litigation . . . . . . . . . . . . . . . . . . . 14
Section 3.9. Compliance with Other Instruments . . . . . . . . . . . . 14
Section 3.10.Employee Retirement Income Security Act of 1974 . . . . . . 15
Section 3.11.Consent . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 3.12.Patents and Trademarks . . . . . . . . . . . . . . . . . . . 16
Section 3.13.Offer of Notes . . . . . . . . . . . . . . . . . . . . . . . 16
Section 3.14.Investment Company Act . . . . . . . . . . . . . . . . . . . 16
Section 3.15.Public Utility . . . . . . . . . . . . . . . . . . . . . . . 16
Section 3.16.Good and Marketable Title . . . . . . . . . . . . . . . . . 16
Section 3.17.Regulation G, Etc. . . . . . . . . . . . . . . . . . . . . . 16
Section 3.18.Foreign Credit Restraints . . . . . . . . . . . . . . . . . 17
Section 3.19.Brokers . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Section 3.20.Full Disclosure . . . . . . . . . . . . . . . . . . . . . . 17
Section 3.21.Investments . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 3.22.Solvency . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 3.23.Environmental Matters . . . . . . . . . . . . . . . . . . . 18
ARTICLE IV COVENANTS OF THE COMPANY . . . . . . . . . . . . . . . . . . . 19
Section 4.1. Corporate Existence . . . . . . . . . . . . . . . . . . . 19
Section 4.2. Payment of Taxes . . . . . . . . . . . . . . . . . . . . 19
Section 4.3. Compliance with Laws and Stock Exchange Rules . . . . . . 19
Section 4.4. Sale, Dissolution, Merger, or Consolidation . . . . . . . 19
Section 4.5. Change in Business, Sales, Leases, Etc. . . . . . . . . . 20
Section 4.6. Performance of Agreements . . . . . . . . . . . . . . . . 21
Section 4.7. Limitations on Debt . . . . . . . . . . . . . . . . . . . 21
Section 4.8. Operating Cash Flow . . . . . . . . . . . . . . . . . . . 22
Section 4.9. Dividends . . . . . . . . . . . . . . . . . . . . . . . . 22
Section 4.10.Liens and Title Defects . . . . . . . . . . . . . . . . . . 23
Section 4.11.Transactions with Affiliates . . . . . . . . . . . . . . . . 24
Section 4.12.Fees and Expenses . . . . . . . . . . . . . . . . . . . . . 24
Section 4.13.Inspections . . . . . . . . . . . . . . . . . . . . . . . . 25
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Section 4.14.Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 4.15.Investments . . . . . . . . . . . . . . . . . . . . . . . . 26
Section 4.16.Reports . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Section 4.17.Maintenance and Insurance . . . . . . . . . . . . . . . . . 30
Section 4.18.Purchase of Notes . . . . . . . . . . . . . . . . . . . . . 30
Section 4.19.ERISA Compliance . . . . . . . . . . . . . . . . . . . . . . 30
Section 4.20.Downstream Transfers . . . . . . . . . . . . . . . . . . . . 31
Section 4.21.To Keep Books . . . . . . . . . . . . . . . . . . . . . . . 31
Section 4.22.Environmental Law Compliance . . . . . . . . . . . . . . . . 31
Section 4.23.Notification and Remediation of Releases of
Hazardous Materials . . . . . . . . . . . . . . . . . . . 31
Section 4.24.Environmental Indemnification . . . . . . . . . . . . . . . 32
Section 4.25.Notification . . . . . . . . . . . . . . . . . . . . . . . . 32
Section 4.26.No Foreign Subsidiaries . . . . . . . . . . . . . . . . . . 33
ARTICLE V PAYMENTS ON NOTES . . . . . . . . . . . . . . . . . . . . . . . 33
Section 5.1. Interest Payments . . . . . . . . . . . . . . . . . . . . 33
Section 5.2. Mandatory Prepayment . . . . . . . . . . . . . . . . . . 34
Section 5.3. Optional Prepayment . . . . . . . . . . . . . . . . . . . 35
Section 5.4. Payment Procedure . . . . . . . . . . . . . . . . . . . . 35
Section 5.5. Nonbusiness Days . . . . . . . . . . . . . . . . . . . . 36
Section 5.6. Mandatory Prepayment Offer Following Change of
Control . . . . . . . . . . . . . . . . . . . . . . . . . 36
Section 5.7. Mandatory Prepayment Offer Following Certain
Mergers, Consolidations, or Acquisitions . . . . . . . . 37
ARTICLE VI EVENTS OF DEFAULT AND REMEDIES . . . . . . . . . . . . . . . . 38
Section 6.1. Events of Default . . . . . . . . . . . . . . . . . . . . 38
Section 6.2. Acceleration . . . . . . . . . . . . . . . . . . . . . . 39
Section 6.3. Actions for Enforcement . . . . . . . . . . . . . . . . . 40
Section 6.4. Remedies Cumulative . . . . . . . . . . . . . . . . . . . 40
Section 6.5. Remedies Not Waived . . . . . . . . . . . . . . . . . . . 41
Section 6.6. Other Lenders . . . . . . . . . . . . . . . . . . . . . . 41
ARTICLE VII REGISTRATION, TRANSFER, AND EXCHANGE OF NOTES . . . . . . . . 41
Section 7.1. Form, Registration, Transfer, and Exchange
of Notes . . . . . . . . . . . . . . . . . . . . . . . . 41
Section 7.2. Replacement of Notes . . . . . . . . . . . . . . . . . . 42
ARTICLE VIII MISCELLANEOUS . . . . . . . . . . . . . . . 42
Section 8.1. Successors and Assigns . . . . . . . . . . . . . . . . . 42
Section 8.2. Governing Law, Submission to Process, and Usury . . . . . 42
Section 8.3. Entire Agreement . . . . . . . . . . . . . . . . . . . . 44
Section 8.4. Survival of Representations, Warranties,
Covenants, and Agreement . . . . . . . . . . . . . . . . 44
Section 8.5. Partial Invalidity . . . . . . . . . . . . . . . . . . . 44
Section 8.6. Notices . . . . . . . . . . . . . . . . . . . . . . . . . 44
Section 8.7. Further Assurances . . . . . . . . . . . . . . . . . . . 45
Section 8.8. Amendment . . . . . . . . . . . . . . . . . . . . . . . . 45
Section 8.9. No Waiver . . . . . . . . . . . . . . . . . . . . . . . . 46
Section 8.10.Headings; Internal References . . . . . . . . . . . . . . . 46
Section 8.11.Counterparts . . . . . . . . . . . . . . . . . . . . . . . . 46
Section 8.12.Limitation on Rights of Certain Holders . . . . . . . . . . 46
Section 8.13.Construction of Representations and Warranties . . . . . . . 46
Section 8.14.Statutory Notice No Oral Agreements . . . . . . . . . . . . 46
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Exhibit A: Purchasers and Amounts of Notes
Exhibit B-1: Form of 8.07% Note
Exhibit B-2: Form of 8.26% Note
Exhibit C-1: Legal Opinion Atmos Energy Corporation
Exhibit C-2: Legal Opinion Locke Purnell Rain Harrell
Exhibit D: Partnerships and Joint Ventures
Exhibit E: Subsidiaries
Exhibit F: Changes in Financial Condition
Exhibit G: Debt
Exhibit H: Material Agreements
Exhibit I: ERISA Matters
Exhibit J: Investments
Exhibit K: Environmental Matters
Exhibit L: Payment and Notice Procedures
Exhibit M: Form of Transfer of Notes
Exhibit N: Form of Delaware Legality Certificate
Exhibit O: Litigation
-v-
NOTE PURCHASE AGREEMENT
PPN: 049560 C* 4 (8.07% Notes)
049560 C@ 2 (8.26% Notes)
This NOTE PURCHASE AGREEMENT (this "Agreement") is made and entered into
as of this 14th day of November, 1994, by and among ATMOS ENERGY CORPORATION,
a Texas corporation (together with all successors and assigns, the "Company"),
and NEW YORK LIFE INSURANCE COMPANY, a mutual life insurance company organized
and existing under the laws of the State of New York, NEW YORK LIFE INSURANCE
AND ANNUITY CORPORATION, a Delaware corporation, THE VARIABLE ANNUITY LIFE
INSURANCE COMPANY, a life insurance company organized and existing under the
laws of the State of Texas, AMERICAN GENERAL LIFE INSURANCE COMPANY, a life
insurance company organized and existing under the laws of the State of Texas,
and MERIT LIFE INSURANCE COMPANY, a life insurance company organized and
existing under the laws of the State of Texas (each a "Purchaser",
collectively the "Purchasers").
W I T N E S S E T H:
WHEREAS, the Company has authorized the issuance and sale of (i)
$20,000,000 aggregate principal amount of its 8.07% Senior Notes due
October 31, 2006 (the "8.07% Notes", and each such 8.07% Senior Note called an
"8.07% Note", including any new or replacement 8.07% Note issued pursuant to
Article VII of this Agreement) and (ii) $20,000,000 aggregate principal amount
of its 8.26% Senior Notes due October 31, 2014 (the "8.26% Notes", and each
such 8.26% Senior Note called an "8.26% Note", including any new or
replacement 8.26% Note issued pursuant to Article VII of this Agreement), in
each case at 100% of their stated principal amounts; and
WHEREAS, the Company wishes to sell to the Purchasers, and the
Purchasers are willing to purchase, the 8.07% Notes and the 8.26% Notes in the
stated principal amounts set forth on Exhibit A of this Agreement, on the
terms and conditions hereinafter set forth;
NOW, THEREFORE, for and in consideration of the premises, the mutual
covenants, conditions, and terms in this Agreement, and other good and
valuable consideration, the receipt and the sufficiency of which are hereby
acknowledged by the Purchasers and the Company, the Purchasers and the Company
hereby agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1. Terms Defined Elsewhere. The terms "Agreement",
"Company", "8.07% Note", "8.07% Notes", "8.26% Note", "8.26% Notes",
"Purchaser" and "Purchasers" and other terms defined elsewhere herein, shall
have the meanings so given them.
Section 1.2. Certain Definitions. As used herein, the following terms
shall have the following meanings:
"Affiliate" has the meaning set forth in Section 4.11.
"Business Day" means a day other than a Saturday, Sunday, or legal
holiday for commercial banks under the laws of the State of Texas and New
York.
"CERCLA" has the meaning specified below in the definition of
"Environmental Law."
"Change of Control" has the meaning given in Section 5.6.
"Claim" means any and all claims, demands, causes of action, suits,
proceedings, administrative proceedings, losses, judgments, decrees, debts,
damages, liabilities, court costs and attorneys' fees and other expenses
incurred, assessed or sustained by or against the Company or a Subsidiary.
"Closing" has the meaning given it in Section 2.1.
"Closing Date" means November 14, 1994 or such earlier date on which all
conditions contained in Section 2.2 have been met to the Purchasers'
satisfaction.
"Consolidated Funded Indebtedness" means (a) Total Consolidated
Indebtedness in respect of borrowed money, whether secured or unsecured, which
by its terms matures more than one (1) year from the date as of which the
calculation of Consolidated Funded Indebtedness is made (other than sinking
fund, serial maturity, periodic installment, and amortization payments on
account of such Total Consolidated Indebtedness that are required to be made
within such year), including, without limitation, indebtedness described in
the following clause (b) of this paragraph following any election by the
obligor to extend or renew the maturity date to a date beyond one (1) year
from such date or following the occurrence of any other event which results in
an extension or renewal of the maturity date to a date beyond one (1) year
from such date and (b) Total Consolidated Indebtedness in respect of borrowed
money maturing within one (1) year from such date which is renewable or
extendible at the option of the obligor to a date beyond one (1) year from
such date, including any such Total Consolidated Indebtedness renewable or
extendible (whether or not theretofore renewed or extended) under, or payable
from the proceeds of other Total Consolidated Indebtedness which may be
incurred pursuant to the provisions of, any revolving credit agreement or
other similar agreement (provided that there shall be excluded from
Consolidated Funded Indebtedness indebtedness described in this clause (b)
that has been outstanding for one year or less and which has been incurred
under a revolving credit agreement or other similar agreement entered into to
support commercial paper or similar short term working capital credit
facilities).
"Consolidated Net Property" shall mean the aggregate amount of assets of
the Company and all its Subsidiaries properly includible under generally
accepted accounting principles, consistently applied, under the categories
"property, plant and equipment" on the consolidated balance sheet of the
Company and all its Subsidiaries, less the amount of accumulated depreciation
and amortization attributable thereto.
2
"Contested in Good Faith" means, as to any payment, tax, assessment,
charge, levy, lien, encumbrance, or claim, contesting the amount,
applicability, or validity thereof in good faith by appropriate proceedings or
other appropriate actions promptly initiated and diligently conducted,
provided that the Company or Subsidiary contesting the same shall have
established on its books such reserves, if any, with respect thereto as are
deemed adequate by the Company or such Subsidiary and its independent public
accountants, and provided further that enforcement of the payment, tax,
assessment, charge, levy, lien, encumbrance, or claim is stayed pending the
resolution of such contest.
"Contract Rate 8.07% Notes" has the meaning specified in Section 5.1(a).
"Contract Rate 8.26% Notes" has the meaning specified in Section 5.1(b).
"Debt" of any Person means at any date, without duplication and
determined in accordance with generally accepted accounting principles
consistently applied, (a) all obligations of such Person, contingent or
otherwise, which should be reflected as liabilities on such Person's balance
sheet (including, without limitation, obligations of such Person as lessee
under capital leases), excluding however common stock, preferred stock,
surplus, and retained earnings and excluding reserves for taxes in respect of
income deferred to the future and other deferred credits and reserves, (b) all
obligations that are secured by any Lien existing on property owned by such
Person regardless of whether the obligations secured thereby shall have been
assumed by such Person, and (c) all Guaranties by such Person.
"Default" means any event which, with notice or lapse of time or both,
would constitute an Event of Default.
"Environmental Law" shall mean all federal, state, local, or foreign
laws, statutes, ordinances and regulations presently in effect (as the same
may be amended or modified from time to time) or enacted or promulgated in the
future regulating or relating to environmental, health or safety matters,
including the production, generation, emission, discharge, release, threatened
release, treatment, or transportation of Hazardous Materials, including,
without limitation, (a) the Comprehensive Environmental Response Compensation
and Liability Act of 1980, 42 U.S.C. Sec.9601, et seq. ("CERCLA"), as amended,
(b) the Resource Conservation and Recovery Act of 1976, 42 U.S.C. Sec6901, et
seq. ("RCRA"), (c) the Hazardous Materials Transportation Act, 49 U.S.C.
Sec6901, et seq., and (d) similar legislation in any jurisdiction where the
Company or any Subsidiary owns property or is doing business, performing a
contract, or pursuant to which a contract was let to the Company or any
Subsidiary.
"ERISA" has the meaning specified in Section 3.10.
"ERISA Affiliate" shall mean each trade or business (regardless of
whether incorporated or unincorporated) which together with the Company or a
Subsidiary would be deemed to be a "single employer" within the meaning of
section 4001(b)(1) of the Employee Retirement Income Security Act of 1974, as
amended, or subsections (b), (c), (m), or (o) of section 414 of the Internal
Revenue Code of 1986, as amended.
"Event of Default" has the meaning given it in Section 6.1.
3
"Governmental Authority" means any nation or government, any state,
county, city, or other political subdivision, agency, or instrumentality
exercising executive, legislative, judicial, regulatory, or administrative
functions of or pertaining to government.
"Greeley Indenture" means the Indenture of Mortgage and Deed of Trust
dated as of March 1, 1957 between Greeley Gas Company and The Central Bank and
Trust Company (now Colorado National Bank) as trustee, as amended and restated
in its entirety in the Seventh Supplemental Indenture dated as of October 1,
1983 and as further supplemented by the Eighth through Tenth Supplemental
Indentures thereto.
"Guaranty" or "Guaranties" by any Person shall mean (a) all guaranties,
sales with recourse, endorsements (other than for collection or deposit in the
ordinary course of business), and other obligations (contingent or otherwise)
to pay, purchase, repurchase, or otherwise acquire or become liable upon or in
respect of any Debt of others and (b) without limiting the generality of the
foregoing, all obligations (contingent or otherwise) to purchase products,
supplies, or other property or services from others under agreements requiring
payment therefor regardless of the non-delivery or non-furnishing thereof, or
to make investments in others, or to maintain the capital, working capital,
solvency, or the general financial conditions of others, or to indemnify
others against and hold them harmless from damages, losses, and liabilities,
all under circumstances intended by such Person to enable others to incur or
discharge any of their Debt or to comply with agreements relating to their
Debt or otherwise to assure or protect their creditors against loss in respect
of such Debt.
"Hazardous Materials" means any substance or material (a) which is or
becomes defined as a hazardous waste, hazardous substance, pollutant,
contaminant, or toxic substance under any Environmental Law; (b) which is
toxic, explosive, corrosive, flammable, infectious, radioactive, mutagenic, or
otherwise hazardous and is or becomes regulated, prohibited or limited by any
Governmental Authority; (c) the presence of which requires investigation or
remediation under any Environmental Law; or (d) which contains, without
limitation, polychlorinated biphenyls, urea formaldehyde foam insulation,
petroleum hydrocarbons, crude oil or any fraction thereof.
"Holder" means any Purchaser (for as long as it is the owner and holder
of any Note or any portion thereof) or any other owner and holder of any Note,
determined as provided in Article VII, including any successor thereof.
"Holders" means, collectively, as of any time, all of the holders who
then hold the Senior Notes.
"Lien" means, with respect to any asset, (a) any mortgage, lien, pledge,
charge, security interest, or encumbrance of any kind in respect of such asset
(including, without limitation, any production payment, advance payment, or
similar arrangement with respect to minerals in place), regardless of whether
filed, recorded, or otherwise perfected under applicable law, (b) the interest
of a vendor or lessor under any conditional sale agreement, capital lease, or
other title retention agreement relating to such asset, or (c) any option to
purchase or lease such asset or similar encumbrance.
"Limited Investments" has the meaning given it in Section 4.15.
4
"Make-Whole Premium" means, for any Note, the amount, if any, by which
(a) the net present value of all scheduled payments of principal and interest
due on such Note, which payments are now being paid or prepaid (as the case
may be), obtained by discounting each payment, from the date such payment was
scheduled to be made to the Settlement Date (discounted to the net present
value at a rate equal to one half of one percent plus the applicable
Reinvestment Yield), exceeds (b) the amount of principal being so paid or
prepaid (as the case may be).
"Margin Stock" has the meaning specified in Section 3.17.
"Minority Interests in Subsidiaries" means interests held by others in
Subsidiaries in which less than 100% of the voting securities are owned
directly or indirectly by the Company.
"Notes" means, collectively, the 8.07% Notes and the 8.26% Notes.
"Overdue Rate 8.07% Notes" has the meaning specified in Section 5.1(a).
"Overdue Rate 8.26% Notes" has the meaning specified in Section 5.1(b).
"PBGC" has the meaning specified in Section 3.10.
"Permitted Investments" has the meaning given it in Section 4.15.
"Person" means any individual, partnership, corporation, trust,
unincorporated organization, or government or agency or political subdivision
thereof.
"Plan" has the meaning specified in Section 3.10.
"Prepayment Date" has the meaning specified in Section 5.3.
"Pro Rata" with respect to the Notes or any group of Notes, or any
Holder or group of Holders, means proportionally allocated among such Notes or
Holders based on the aggregate outstanding principal amounts of such Notes or
the Notes held by such Holders, as the case may be.
"Property" has the meaning given to it in Section 4.22.
"Purchase Documents" means this Agreement, the Notes and all other
agreements, certificates, documents, instruments and writings at any time
delivered in connection herewith or therewith.
"RCRA" has the meaning specified in the above definition of
"Environmental Law."
"Reinvestment Yield" means, with respect to each payment or prepayment
(as the case may be), the yield to maturity implied by (i) the yields reported
on the Business Day next preceding the applicable Settlement Date, for the
close of the previous day, on the display designated as "Page C-13, Page 2 of
2" on The Bloomberg, Bloomberg Financial Markets, Government, which lists U.S.
Treasuries Yield data for the current day and the close of the previous day
(or such other display as may replace Page C-13, Page 2 of 2 on The Bloomberg,
Bloomberg Financial Markets, Government) for actively traded U.S. Treasury
5
securities having a maturity equal to (or very closely approximating) the
Remaining Average Life of the outstanding principal balance of the applicable
Note as of such Settlement Date, or (ii) if yields shall not be reported as of
such time or the yields reported as of such time shall not be ascertainable,
the Treasury Constant Maturity Series yields reported, for the latest day for
which such yields shall have been so reported as of the Business Day next
preceding the Settlement Date, in Federal Reserve Statistical Release H.15
(519) (or any comparable successor publication) for actively traded U.S.
treasury securities having a constant maturity equal to (or very closely
approximating) the Remaining Average Life of the outstanding principal balance
of the applicable Note as of such Settlement Date. Such implied yield shall
be determined, if necessary, by (A) converting U.S. Treasury bill quotations
to bond-equivalent yields in accordance with accepted financial practice and
(B) interpolating linearly between reported yields.
"Remaining Average Life" means, with respect to the outstanding
principal balance of any Note as of a Settlement Date, the number of years
(calculated to the nearest 1/12 year) obtained by (x) multiplying each
scheduled principal payment then being prepaid on such Note by the number of
years (calculated to the nearest 1/12 year) that will elapse between the
Settlement Date and the scheduled due date for such payment, (y) adding each
of such products together, and (z) dividing such sum by the total outstanding
principal balance of such Note as of the Settlement Date.
"Requisite Holders," as of any time, means, with respect to the Notes,
Holders who then hold Notes which represent at least two-thirds of the
aggregate principal balance then outstanding under all Notes, exclusive of
any Notes held by the Company, any Subsidiary or any Affiliate.
"Settlement Date" means (i) when used in calculating a Make-Whole
Premium pursuant to Section 5.3, the related Prepayment Date, and (ii) when
used in calculating a Make-Whole Premium pursuant to Section 6.2, the related
date of acceleration.
"Shareholders' Equity" means the sum (determined in accordance with
generally accepted accounting principles) of the Company's (a) common stock,
(b) preferred stock, (c) retained earnings, (d) capital surplus, and (e) paid
in capital.
"Stephens Inc." means Stephens Inc., an Arkansas corporation.
"Subsidiary" means each corporation, trust, partnership, or association
in which the Company owns, directly or through another such corporation,
trust, partnership, or association, 50% or more of the voting securities.
"Title Defects" has the meaning given it in Section 3.16.
"Total Consolidated Indebtedness" means all Debt of the Company and its
Subsidiaries, including Consolidated Funded Indebtedness plus current
maturities thereof and Debt with maturities less than one year.
"Wholly-Owned Subsidiary" means any Subsidiary in which the Company
owns, either directly or indirectly, 100% of the voting securities.
6
Section 1.3. Accounting Principles. Whenever any provision hereof
calls for a determination of accounts, assets, or liabilities to be made,
unless otherwise expressly provided, such determination shall be made in
accordance with generally accepted accounting principles.
Section 1.4. Singular and Plural. Words used herein in the singular,
where the context so permits, shall be deemed to include the plural and vice
versa. The definitions of words in the singular herein shall apply to such
words when used in the plural where the context so permits and vice versa.
ARTICLE II
PURCHASE AND SALE OF NOTES
Section 2.1. Closing.
(a) The Company hereby agrees to issue and sell to the Purchasers,
and, subject to the terms and conditions and in reliance upon the
representations and warranties of the Company set forth in this Agreement and
the other Purchase Documents, the Purchasers agree to purchase from the
Company, on the Closing Date, Notes in the aggregate principal amount of
$40,000,000. The purchase price for each of the Notes shall be equal to 100%
of the principal amount thereof, and shall be fully paid in federal funds or
other immediately available funds on the Closing Date for the purchase and
sale of such Note by wiring such funds to the account of Company as follows:
Name of Bank: NationsBank of Texas, Dallas, Texas
ABA: 111-0000-25
Account of Atmos Energy Corporation
Account Number: 0180347500
(b) The Closing shall be held in the offices of Hopkins & Sutter,
1717 Main Street, Suite 3700, in Dallas, Texas (or at such other location as
the Company and the Purchasers may mutually determine). The Notes being
delivered to each Purchaser at the Closing shall consist of one or more Notes,
as specified by such Purchaser, in the aggregate stated principal amount being
purchased by such Purchaser at the Closing, and bearing the coupon rate, as
specified on Exhibit A, duly authorized and issued and duly registered in the
name of such Purchaser. Each 8.07% Note shall be in the form of Exhibit B-1,
and each 8.26% Note shall be in the form of Exhibit B-2.
Section 2.2. Conditions Precedent to Purchasers' Obligations. The
obligations of each Purchaser to purchase and pay for the Notes to be acquired
by it hereunder at the Closing shall, unless waived by the Purchasers in
writing, be subject to the performance by the Company prior to or on such
Closing Date of all of its agreements then or theretofore to be performed
under this Agreement and other Purchase Documents, and to the satisfaction,
prior to or concurrently with the Closing, of the following further
conditions:
(a) Legal Opinions. The Purchasers shall have each received at the
Closing favorable opinions dated the Closing Date from Donald E. James, Esq.,
Senior Vice President and General Counsel of the Company, and from Locke
Purnell Rain Harrell (a Professional Corporation), counsel to the Company,
7
substantially in the forms of Exhibits C-1 and C-2, respectively, and with
respect to such other matters as the Purchasers may reasonably request. The
Purchasers shall also have each received from Hopkins & Sutter, its special
Texas counsel, its favorable opinion, dated the Closing Date, with respect to
such matters pertaining to this Agreement and the purchase and sale of the
Notes hereunder as the Purchasers may reasonably request.
(b) Representations and Warranties True. The representations and
warranties of the Company contained in Article III of this Agreement and
otherwise made in writing by or on behalf of the Company or any Subsidiary in
connection with the transactions contemplated hereby shall be true and correct
when made and at and as of the time of the Closing, with the same effect as
though such representations and warranties had been made on and as of the
Closing Date.
(c) No Default. As of the Closing, no "event of default" or
condition or event that with the passage of time or the giving of notice or
both could become an "event of default" under any instrument evidencing,
creating, or securing Debt of the Company or any Subsidiary, or under any
agreement to which the Company or any Subsidiary is a party which is material
to the Company and the Subsidiaries on a consolidated basis, shall have
occurred, unless the same shall have been waived in writing to the
satisfaction of the Purchasers by the holders of such Debt or the other
parties thereto (as the case may be).
(d) Compliance with this Agreement. As of the Closing Date, unless
waived by the Purchasers in writing, (i) the Company shall not have taken or
suffered to be taken any action which it would have been prohibited from
taking or suffering to be taken, and shall have not omitted or permitted the
omission of any action which it would have been required to take or cause to
be taken, if the Notes had been outstanding from the date hereof, and (ii) no
condition or event which, if the Notes had been outstanding from the date
hereof, would constitute a Default or an Event of Default shall have occurred.
(e) Officers' Certificate. The Purchasers shall have each received a
certificate dated the Closing Date signed by the President and the Chief
Financial Officer of the Company, in form and substance satisfactory to the
Purchasers and their special counsel, certifying that the conditions specified
in Sections 2.2(b), (c), and (d) have been satisfied.
(f) Consolidated Balance Sheet. The Purchasers shall have each
received the audited consolidated balance sheet of the Company and the
Subsidiaries dated as of September 30, 1993 and unaudited consolidating and
consolidated balance sheets of the Company and the Subsidiaries dated as of
the last day of the calendar month immediately preceding the Closing Date (or,
if such balance sheets cannot reasonably be prepared by the Closing Date, then
dated as of the last day of the next prior calendar month), each accompanied
by the certificate of the Chief Financial Officer of the Company certifying
that each of them has been prepared in accordance with generally accepted
accounting principles, consistently applied, subject to normal year-end
adjustments, and that they fairly reflect the financial condition of the
Company and the Subsidiaries as at their respective dates. The Purchasers
shall also have each received the additional unaudited consolidated balance
sheet of the Company and the Subsidiaries incorporating pro forma entries and
adjustments prepared in accordance with generally accepted accounting
8
principles, applied to give effect to the transactions contemplated by this
Agreement, which show that the Company and the Subsidiaries (after giving such
effect) are solvent as of the date of the unaudited consolidated and
consolidating balance sheets delivered at the Closing pursuant to the
preceding provisions of this Section 2.2(f).
(g) No Default; Fulfillment of Conditions. The Purchasers shall have
each received from the Company a certificate from the President and Chief
Financial Officer of the Company dated as of the Closing Date certifying (i)
that there does not exist and there has not occurred any Event of Default or
any condition or event that, with the lapse of time or the taking of any
action or both, would constitute an Event of Default, and (ii) that the
financial standards and other covenants set forth in Sections 4.5, 4.7, 4.8,
4.9, 4.10(b), and 4.15 have been and then continue to be met.
(h) Sale and Purchase of All Notes. The Company shall have sold, and
the Purchasers shall have purchased, all of the Notes which are to be sold and
purchased on the Closing Date pursuant to this Agreement.
(i) Legal Investment. The purchase of and payment for the Notes by
each of the Purchasers shall constitute a legal investment for such Purchaser
under the laws of any applicable jurisdiction without reference to any
"basket" or "leeway" provision thereof and shall not be prohibited by any
applicable law or governmental regulation and shall not subject such Purchaser
to any penalty under any applicable law or governmental regulation.
(j) Proceedings Satisfactory. All instruments and legal and
corporate proceedings in connection with the transactions contemplated by this
Agreement shall be satisfactory in form and substance to the Purchasers and to
the Purchasers' special counsel, and the Purchasers shall have each received
all documents or other evidence which any of them or their special counsel may
reasonably have requested in connection with such transactions, including,
without limitation, (i) a copy of the articles of incorporation of the
Company, certified by the appropriate state governmental authority, (ii)
copies of the articles of incorporation of each of the Subsidiaries, the
bylaws of the Company and each Subsidiary, and resolutions of the Company's
board of directors authorizing the transactions contemplated hereby, each
certified by the secretary or an assistant secretary of the Company or, in the
case of the articles of incorporation or bylaws of a Subsidiary, by the
secretary or assistant secretary of such Subsidiary, and (iii) certificates or
telegrams from appropriate state governmental authorities relating to the good
standing and authority to do business of the Company and the Subsidiaries,
each of the foregoing in form and substance satisfactory to the Purchasers and
their special counsel.
(k) Delivery of the Notes. The Purchasers shall have each received
all Notes to be delivered to it upon the Closing, each of which shall comply
in all respects with the provisions of Section 2.1.
(l) Approval of Issuance of Notes by State Regulatory Agencies. The
Purchasers shall have each received from the Company evidence of the approval
by the Kentucky Public Service Commission, Colorado Public Utilities
Commission, Kansas Corporation Commission, and Missouri Public Service
Commission of the issuance of the Notes.
9
(m) Private Placement Number. The 8.07% Notes and the 8.26% Notes
shall have each been assigned, and shall bear on the face thereof, a private
placement number by Standard and Poor's CUSIP Service Bureau.
(n) Certification of Insurance. The Purchasers shall have each
received a certificate from the Company describing all of the Company's
insurance and self-insurance coverages, specifying the types and amounts
thereof and otherwise in detail, form and substance satisfactory to the
Purchasers.
(o) Investment Letter. The Purchasers shall have each received a
confirmation from the Company's investment bankers as to matters described in
Section 3.13.
(p) Delaware Legality Certificate. The Purchasers shall have each
received a duly executed and completed Delaware Legality Certificate in the
form attached hereto as Exhibit N with appropriate insertions.
(q) Payment of Special Counsel Fees. The Company shall have paid the
fees and disbursements of Hopkins & Sutter, the Purchasers' special Texas
counsel.
Section 2.3 Use of Proceeds. The Company shall use the proceeds from
the sale of the Notes, first to repay Debt of the Company presently owing to
NationsBank of Texas, N.A. and Amarillo National Bank, and second for the
Company's general corporate purposes.
Section 2.4. Investment Purpose. Each Purchaser represents and
warrants to the Company that (a) it is an "accredited investor" within the
meaning of Rule 501 under the Securities Act of 1933, as amended (in this
section, the "Act"), and (b) the Note(s) which it is purchasing are being
acquired for its own account for investment, and not with a view to the sale
or distribution thereof, nor with any present intention of selling or
distributing such Note, but subject, nevertheless, to its right to have the
disposal of all or any part of its property (including such Note(s)) at all
times be within its control.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
As of the date hereof and as of the time of the Closing, and subject to
the provisions of Section 8.13 regarding the construction of certain
representations and warranties, the Company represents and warrants to each
Holder that:
Section 3.1. Organization and Authority of the Company and the
Subsidiaries.
(a) The Company is a corporation duly organized, validly existing,
and in good standing under the laws of the State of Texas. Each Subsidiary is
a corporation duly organized, validly existing, and in good standing under the
laws of its state of incorporation. Each of the Company and the Subsidiaries
has all requisite corporate power and authority to own and operate its
10
properties and to carry on its business as now conducted and as presently
proposed to be conducted, including, in the case of the Company, all requisite
power and authority to enter into this Agreement, to issue the Notes, and to
carry out the terms of this Agreement and the Notes. Each of the Company and
the Subsidiaries is qualified to do business in each jurisdiction where it
maintains any place of business or where the nature of its business or
properties requires such qualification as set forth in Exhibit E. Neither the
Company nor any Subsidiary is a partner (general or limited) or member in any
partnership or joint venture except as disclosed on Exhibit D.
(b) The Company has no Subsidiaries other than those identified on
Exhibit E. All of the outstanding capital stock of each Subsidiary has been
duly authorized and validly issued, is fully paid and non-assessable, and is
owned by the Company or another Subsidiary as shown on Exhibit E free and
clear of all Liens or other charges, encumbrances, or restrictions on
transfer, and there are no options, warrants or other rights to acquire shares
outstanding with respect thereto.
Section 3.2. Execution, Delivery, and Binding Nature of Obligations.
The execution, delivery, and performance of this Agreement and the Notes have
been duly authorized by all requisite actions of the Company (no action by the
stockholders being required). This Agreement and each of the Notes has been
duly executed and delivered by the Company and constitutes a legal, valid, and
binding obligation of the Company, enforceable against the Company in
accordance with its respective terms, subject as to enforcement of remedies to
applicable bankruptcy, insolvency, moratorium, reorganization, or similar laws
relating to or affecting the enforcement of creditors' rights, and provided
that no representation or warranty is made as to the availability of specific
performance, injunctive relief, or other equitable remedies.
Section 3.3. Franchises, Etc. Each of the Company and the Subsidiaries
has all such franchises, certificates of convenience and necessity, operating
rights, licenses, permits, consents, approvals, authorizations, and orders of
governmental bodies, political subdivisions, and regulatory authorities as are
necessary for the ownership of the properties now owned by it, the maintenance
and operation of the properties now maintained or operated by it, and the
conduct of the business now conducted by it (other than those, if any, the
lack of which will not result in any material adverse effect on the
properties, operations, business, or financial condition of the Company and
the Subsidiaries on a consolidated basis).
Section 3.4. Financial Statements. Subject to any qualifications set
forth in the accompanying reports of independent certified public accountants,
where applicable, all financial statements of the Company and the Subsidiaries
(or of any Subsidiary) that have been delivered to the Purchasers (including,
without limitation, the financial statements contained in the Company's Forms
10-K for its reporting periods ended September 30, 1989, 1990, 1991, 1992, and
1993 and the Company's Forms 10-Q for its fiscal quarters ended December 31,
1993, March 31, 1994, and June 30, 1994), are complete and correct in all
material respects (subject, in the case of any such financial statements that
are unaudited, to year-end audit adjustments) and have been prepared in
accordance with generally accepted accounting principles applied on a
consistent basis throughout the periods covered thereby. Such financial
statements (together with the pertinent notes thereto) fairly present the
financial condition of the Company and the Subsidiaries at the respective
11
dates indicated, all in accordance with generally accepted accounting
principles.
Section 3.5. Changes, Etc. Other than as disclosed in Exhibit F, since
June 30, 1994, there has been no material adverse change in the financial
condition, operations, properties, or business of the Company or any
Subsidiary; and, except as disclosed in Exhibit F or in the financial
statement of the Company as of June 30, 1994 previously delivered to the
Purchasers, all matters set forth in any other document, certificate, or
written statement furnished to any Purchaser by the Company or on behalf of
the Company by Stephens Inc. in connection with the Notes (including, without
limitation, in connection with their purchase and sale hereunder) remain true
and correct in all material respects as of the date hereof, and there has
occurred no event or fact which has not been disclosed to the Purchasers in
writing, the disclosure of which is necessary in order to make the matters set
forth therein not misleading as of the date hereof.
Section 3.6. Tax Returns and Payments. Each of the Company and the
Subsidiaries has filed all tax returns required by law to be filed and paid
all taxes, assessments, and other governmental charges levied upon any of
their respective properties, assets, income, or franchises, other than those
not yet delinquent and except such of the foregoing as are being Contested in
Good Faith by the Company or Subsidiary and except for certain county, city,
school district or similar ad valorem taxes the failure of which to have been
paid will not have any material adverse effect on the properties, operations,
business, or financial condition of the Company and the Subsidiaries on a
consolidated basis. Neither the Company nor any Subsidiary has executed any
waiver or waivers that would have the effect of extending the applicable
statutes of limitations in respect of their income tax liabilities. The
charges, accruals, and reserves on the books of the Company and the
Subsidiaries in respect of income taxes for all fiscal periods are adequate,
and there is no unpaid assessment for additional income taxes for any fiscal
period or, to the best knowledge of the Company, any basis therefor.
Section 3.7. Debt. Neither the Company nor any Subsidiary has any Debt
whatsoever except for (a) the loans under the Notes, (b) trade accounts
payable, accrued tax liabilities and other current and accrued liabilities, in
each case incurred in the ordinary course of business and (c) Debt described
on Exhibit G hereto; and no Debt of the Company or any Subsidiary is senior to
or has collection rights preferential to those under the Notes (except to the
extent certain preferential collection rights may exist with respect to
certain assets of the Company located in the States of Colorado, Kansas, and
Missouri that are encumbered by the Lien of the Greeley Indenture, which Lien
secures Debt outstanding on the date of this Agreement in an aggregate
principal amount of $17,000,000).
Section 3.8. Pending Litigation. Except as disclosed in Exhibit O,
there is no action, proceeding, or investigation pending or, to the best of
the Company's knowledge, threatened against or affecting the Company or any
Subsidiary in any court or before or by any federal, state, or other
governmental department, commission, agency, or other instrumentality, or
before any arbitrator that involve any of the transactions herein contemplated
or, that if adversely determined, would have a material adverse effect on the
Company and the Subsidiaries on a consolidated basis or on the Company's
ability to perform under this Agreement or the other Purchase Documents.
12
Section 3.9. Compliance with Other Instruments. Neither the Company
nor any Subsidiary is in violation of its articles of incorporation or bylaws.
Neither the Company nor any Subsidiary nor any of their properties is in
default under or violation of, and there exists no temporary waiver of
compliance or temporary waiver of default with respect to, any agreement,
instrument, bond, debenture, note, judgment, writ, injunction, award, decree,
order, law, statute, or governmental or stock exchange rule or regulation
applicable to the Company or any Subsidiary (including, without limitation,
Environmental Laws and applicable statutes or governmental rules, regulations,
and orders relating to safety and other similar standards or controls) which
would have a material adverse effect on the properties, operations, business,
or financial condition of the Company and the Subsidiaries on a consolidated
basis or that affects the Company's or any Subsidiary's ability to perform any
of its obligations under this Agreement or any of the Notes; and none of the
execution, delivery, or performance of this Agreement or any of the Notes will
result in any such default or violation or result in the creation of any Lien
upon any of the properties or assets of the Company or any Subsidiary. There
is no provision in the agreements, instruments, bonds, debentures, notes,
judgments, writs, injunctions, awards, decrees, orders, laws, statutes, rules,
and regulations specified in the preceding provisions of this Section 3.9, nor
is there any charter or other restriction, that materially adversely affects
or that may reasonably be expected, as of the date hereof, to materially
adversely affect in the future the properties, operations, business, or
financial condition of the Company and the Subsidiaries on a consolidated
basis or the Company's ability to perform its obligations under this Agreement
or any of the Notes. Exhibit H hereto contains a correct and complete list
and description of all of the agreements to which the Company or any
Subsidiary is a party which are material to the Company and the Subsidiaries
on a consolidated basis, as the case may be.
Section 3.10. Employee Retirement Income Security Act of 1974.
Without in any way limiting the scope of Section 3.9, except as disclosed on
Exhibit I, (a) neither the Company, nor any Subsidiary or ERISA Affiliate,
maintains any plan (a "Plan") subject to the Employee Retirement Income
Security Act of 1974, as amended ("ERISA") and (b) neither the Company nor any
Subsidiary nor any ERISA Affiliate has incurred or expects to incur (i) any
material accumulated funding deficiency within the meaning of section 302 of
ERISA or (ii) any material liability to the Pension Benefit Guaranty
Corporation ("PBGC") in connection with any employee benefit plan; and neither
the Company nor any Subsidiary has had any tax assessed against it by the
Internal Revenue Service for any alleged "prohibited transaction" or other
violation under section 4975 of the Internal Revenue Code of 1986, as amended,
with respect to any such plan. Neither the Company nor any Subsidiary nor any
ERISA Affiliate maintains any plan covered by Title IV of ERISA with an
actuarial present value of accrued plan benefits in excess of net assets. No
plan maintained by the Company or any Subsidiary or any ERISA Affiliate has
been terminated in a termination which would result in the imposition of a
lien pursuant to section 4068 of ERISA. Neither the Company, nor any
Subsidiary or any ERISA Affiliate, is making or accruing an obligation to make
any contribution to a plan which is a "multi-employer plan" (as defined in
section 3(37) of ERISA) nor has any such contribution been made within five
years of the date hereof. The Company and each of the Subsidiaries and ERISA
Affiliates is in compliance in all material respects with the applicable
provisions of ERISA as to any such plan, and no "reportable event" (other than
a reportable event not subject to the provision for 30-day notice to the
13
Pension Benefit Guaranty Corporation) has occurred with respect to any such
plan. The purchase of any of the Notes by any Purchaser pursuant to this
Agreement is not and will not constitute or involve a "prohibited transaction"
within the meaning of ERISA or section 4975 of the Internal Revenue Code of
1986, as amended. Except as disclosed in Exhibit I, the Company does not, nor
does any Subsidiary or ERISA Affiliate, have or maintain any Plan subject to
ERISA which has invested funds with, or purchased a contract from, any
Purchaser. No conditions exists nor has any event or transaction occurred in
connection with any Plan which could reasonably be foreseen to result in the
incurrence by the Company, any Subsidiary or any ERISA Affiliate of any
material liability, fine or penalty under ERISA or the Internal Revenue Code
of 1986, as amended.
Section 3.11. Consent. Neither the Company nor any Subsidiary has
been or is required to obtain any consent, approval, or authorization of, or
to make any declaration or filing with, any governmental authority or stock
exchange or any other Person as a condition precedent to the valid execution,
delivery, and performance of this Agreement or any of the Notes, other than
the consent of the Public Service Commissions of Kentucky and Missouri, the
Public Utilities Commission of Colorado, and the Kansas Corporation
Commission, which consents have been obtained by the Company.
Section 3.12. Patents and Trademarks. Each of the Company and the
Subsidiaries has all patents, trademarks, service marks, trade names,
copyrights, and licenses, or rights with respect to the foregoing, as are
adequate for the conduct of its business as now conducted and presently
proposed to be conducted, without any known conflict with the rights of
others.
Section 3.13. Offer of Notes. Neither the Company nor any
Subsidiary nor anyone acting on behalf of the Company or any Subsidiary has
taken or will take any action that would require registration of the issuance
and sale of any Note under the provisions of section 5 of the Securities Act
of 1933, as amended, or qualification under the provisions of any applicable
state blue sky or other securities law or regulation. Neither the Company nor
any agent acting on its behalf has, either directly or indirectly, sold or
offered for sale or disposed of, or attempted or offered to dispose of, the
Notes or any part thereof, or any similar obligation of the Company, to, or
has solicited any offers to buy any of the Notes or any part thereof from, or
has otherwise approached or negotiated in respect of the Notes or any part
thereof with, any Person or Persons other than the Purchasers and not more
than 20 other institutional investors.
Section 3.14. Investment Company Act. Neither the Company nor any
Subsidiary is an "investment company" or a company directly or indirectly
"controlled" by or "acting on behalf of" an "investment company" as such terms
are defined in the Investment Company Act of 1940, as amended.
Section 3.15. Public Utility. Neither the Company nor any
Subsidiary is required to register under the Public Utility Holding Company
Act of 1935, as amended (the "Holding Company Act"), or the rules and
regulations thereunder.
Section 3.16. Good and Marketable Title. Each of the Company and
the Subsidiaries has good and marketable title, or valid and subsisting
14
leasehold interests, to all real property assets, and good and indefeasible
title to all personal property assets, in each case necessary or appropriate
for the operation of its respective businesses (subject to no Liens other than
those permitted under Section 4.10 and free and clear of all other title
defects, exceptions, and encumbrances which, if present, would have a material
adverse effect on the business, properties, operations or financial condition
of the Company and the Subsidiaries on a consolidated basis ("Title
Defects")), and collectively have such title to all assets accounted for on
the unaudited consolidated financial statements of the Company dated June 30,
1994 delivered by the Company to the Purchasers, subject to no Liens other
than those permitted under Section 4.10.
Section 3.17. Regulation G, Etc. The Company does not now own or
presently intend to own, and will not use any of the proceeds of the sale of
any Note to purchase or carry any "margin security" within the meaning of
Regulation G, 12 C.F.R. Part 207, of the Board of Governors of the Federal
Reserve System ("Margin Stock"), nor will the Company use any of the proceeds
of the sale of any Note to reduce or retire any indebtedness which was
originally incurred to purchase or carry any Margin Stock. The Company will
not use any of such proceeds, directly or indirectly, for any purpose that
might constitute the transaction contemplated hereby a "purpose credit" within
the meaning of said Regulation G. The proceeds of the sale of the Notes will
be used in their entirety for the purposes set forth in Section 2.3, and for
no other purpose. None of the proceeds will be used, directly or indirectly,
in a fashion that might, nor shall the Company or any Person acting on the
Company's behalf take any action that might, cause any of the Notes or this
Agreement, or the transactions contemplated herein and therein, to violate
Regulation G, Regulation T, Regulation U, Regulation X, or any other
regulation of the Board of Governors of the Federal Reserve System or the
Securities Exchange Act of 1934, each as now in effect or as the same may
hereinafter be in effect. None of the transactions contemplated herein or in
the Notes will require any Holder to complete a Federal Reserve System Form
G-3.
Section 3.18. Foreign Credit Restraints. The Company is not a
"national" of any foreign country designated in the Foreign Assets Control
Regulations, the Transaction Control Regulations, the Foreign Funds Control
Regulations, the Iranian Assets Control Regulations, the Cuban Assets Control
Regulations, the Nicaraguan Trade Control Regulations, the Iraqi Sanctions
Regulations, the Haitian Transactions Regulations or the Libyan Sanctions
Regulations of the United States Treasury Department (31 CFR Subtitle B,
Chapter V, as amended). None of the proceeds of the sale of the Notes will be
used, directly or indirectly, for the purpose of engaging in any transaction
which violates any of such Regulations or which violates the Foreign Funds
Control Regulations or the Transaction Control Regulations of the United
States Treasury Department (31 CFR Subtitle B, Chapter V, as amended), or any
regulation or ruling issued thereunder.
Section 3.19. Brokers. Neither the Company nor any Subsidiary has
employed the services of any broker or finder in connection with the
transactions contemplated by this Agreement other than Stephens Inc., and
neither the Company nor any Subsidiary owes any broker's or finder's fee or
commission in connection with such transactions other than the fee to Stephens
Inc.
15
Section 3.20. Full Disclosure. Neither this Agreement nor any other
document, certificate, or statement furnished to any Purchaser by the Company
or on behalf of the Company by Stephens Inc. in connection with the
transactions contemplated hereby and thereby (including without limitation the
Information Memorandum of the Company dated August 1994) either (a) contains
any statement of a material fact that is untrue as of the date of such
agreement, document, certificate, or statement or as of the date hereof or (b)
omits to state a material fact necessary to make the statements contained
herein or therein not misleading.
Section 3.21. Investments. Exhibit J hereto sets forth a list,
complete and correct in all material respects, of all outstanding investments
of the Company, together with the outstanding amount of each such investment,
the name of the Person in which such investment is made and a brief
description of the terms of such investment.
Section 3.22. Solvency. The Company is now, and upon giving effect
to the issuance of the Notes will be, a "solvent institution", as such term is
used in Section 1405(c) of the New York Insurance Law and Section 1308(2) of
the Delaware Insurance Code, whose "obligations, if any, are not in default as
to principal or interest," as such terms are used in such Section 1405(c).
The Company is not now, and upon giving effect to the issuance of the Notes
will not be, "insolvent," as such term is used in Section 24.003 of the Texas
Business and Commercial Code.
Section 3.23. Environmental Matters. Except as disclosed in Exhibit
K:
(a) the Company and the Subsidiaries are in compliance with all
applicable federal, state and local laws and regulations relating to pollution
control and environmental contamination, including all laws and regulations
governing the generation, use, collection, treatment, storage, transportation,
recovery, removal, discharge or disposal of Hazardous Materials and all laws
and regulations with regard to recordkeeping, notification and reporting
requirements respecting Hazardous Materials, the failure of which to comply
would have a material adverse effect on the Company and the Subsidiaries on a
consolidated basis or on the Company's ability to perform under this Agreement
or the other Purchase Documents; and
(b) none of the Company and the Subsidiaries has been alleged in
writing to be in violation of or to have any obligation for remediation under
(nor does the Company or any Subsidiary otherwise have any knowledge of any
violation of or any obligation for remediation under), nor has the Company or
any Subsidiary been subject to, any administrative or judicial proceeding
pursuant to, such laws or regulations, either now or any time prior to the
Closing Date, nor has any Claim under CERCLA, RCRA or any other federal, state
or local environmental statute or regulation been asserted against the
Company, except in each case as to matters that have been finally and fully
resolved (with any judgment, fine or other payment owing by the Company in
connection therewith having been paid in full), which if adversely determined
would have a material adverse effect on the Company and the Subsidiaries on a
consolidated basis or on the Company's ability to perform under this Agreement
or the other Purchase Documents.
16
ARTICLE IV
COVENANTS OF THE COMPANY
Until such time as the principal and interest on the Notes shall have
been paid in full, the Company covenants and agrees with each Holder that it
shall duly perform and observe, and shall cause each of the Subsidiaries to
duly perform and observe, each and all of the covenants and agreements
hereinafter set forth and shall bear any and all costs and expenses arising
therefrom:
Section 4.1. Corporate Existence. Except as herein expressly permitted
to the contrary, each of the Company and the Subsidiaries will do all things
necessary to preserve and keep in full force and effect its corporate
existence and all rights and franchises the failure to maintain which would
have a material adverse effect on the business, operations, properties, or
financial condition of the Company and the Subsidiaries on a consolidated
basis; provided, however, that the corporate existence of any Subsidiary need
not be preserved or kept in full force and effect if termination or
abandonment thereof is in the best interest of the Company and not
disadvantageous to the Holders of the Notes.
Section 4.2. Payment of Taxes. Each of the Company and the
Subsidiaries shall pay and discharge, or cause to be paid and discharged,
promptly as they become due and payable, all taxes, assessments, and other
governmental charges or levies imposed upon it or its income or upon any of
its property (real, personal, or mixed) or upon any part thereof, as well as
all claims of any kind, including claims for labor, materials, and supplies,
that, if unpaid, would by law become a Lien upon such property; provided,
however, that neither the Company nor any Subsidiary shall be required to pay
any such tax, assessment, charge, levy, or claim if and for so long as the
same is being Contested in Good Faith.
Section 4.3. Compliance with Laws and Stock Exchange Rules. Each of the
Company and the Subsidiaries shall comply in all material respects with all
applicable statutes, rules, regulations, and orders of, and all applicable
restrictions imposed by, all governmental authorities and stock exchanges in
respect of the conduct of its business and the ownership of its property,
including, without limitation, applicable statutes, rules, regulations,
orders, and restrictions relating to environmental, safety, and other similar
standards or controls.
Section 4.4. Sale, Dissolution, Merger, or Consolidation. Neither the
Company nor any Subsidiary shall, directly or indirectly (including, without
limitation, by sale or other transfer of the stock of any Subsidiary), (a)
sell, lease, abandon, or otherwise dispose of any of its properties or assets
that constitute a substantial portion of the property and assets of the
Company and its Subsidiaries in the aggregate (other than sales, leases or
other dispositions of assets in the ordinary course of business, provided that
such sales, leases or other dispositions do not, either individually or in the
aggregate, materially adversely affect the business, operations or financial
condition of the Company and the Subsidiaries on a consolidated basis); (b)
take any action to dissolve the Company or any Subsidiary other than the
dissolution of a Subsidiary as permitted under Section 4.1 and unless the
dissolution of a Subsidiary is in the best interest of the Company and not
17
disadvantageous to the Holders; or (c) merge or consolidate with or into any
other corporation or other entity or permit any other corporation or entity to
merge or consolidate with or into the Company or any Subsidiary; provided,
however, that any Subsidiary may merge or consolidate with or into, the
Company or any other Subsidiary, provided, however, that, in the case of any
merger or consolidation involving two or more Subsidiaries, the surviving
entity remains a Subsidiary, and provided further that the Company may merge
or consolidate with or into any other corporation if (i) the successor
corporation shall be organized under the laws of the United States of America
or of any state thereof and is not "insolvent" (as defined in 11 U.S.C.
101(32)(A)), (ii) immediately before and immediately upon such merger or
consolidation, no Event of Default (or condition or event that, with lapse of
time or the taking of any action or both, would constitute an Event of
Default) shall exist, (iii) immediately upon such merger or consolidation,
such successor corporation expressly shall assume, by written instrument
executed by such successor corporation in form and substance satisfactory to
the Requisite Holders, the due and punctual payment of principal and of
interest on the Notes, according to their tenor, and the due and punctual
performance and observance of all the terms, covenants, and conditions of this
Agreement and the other Purchase Documents then and thereafter to have been
performed and observed by the Company, and (iv) the provisions of Section 5.7
hereof shall be complied with by the Company.
Section 4.5. Change in Business, Sales, Leases, Etc. The Company and
the Subsidiaries shall at all times maintain the general nature of their
operations and businesses such that at least 80% of the consolidated gross
revenues of the Company and the Subsidiaries for each period of four
consecutive fiscal quarters are derived from, and at least 80% of the
consolidated total assets of the Company and the Subsidiaries are used
primarily in and related to, the businesses of gas, electric, water, and other
utilities and, where relevant to the particular utility involved, the
generation, transportation, transmission, and distribution thereof. In
addition, the Company and the Subsidiaries shall not, directly or indirectly
(including without limitation by sale or other transfer of the stock of any
Subsidiary) make any sale, lease, abandonment or other disposition of any
property or other assets that will materially impair on a consolidated basis
the Company's and the Subsidiaries' financial conditions, operations, or
businesses, or enter into any arrangement, directly or indirectly, whereby the
Company or any Subsidiary shall sell or transfer and then or thereafter rent
or lease back any of their properties ("Sale/Leaseback Transactions"). The
preceding notwithstanding, Sale/Leaseback Transactions shall be permitted (a)
with respect to the General Purpose Real Property of the Company or any
Subsidiary without regard to the limitation set forth in the following clause
(b) (provided that they are not otherwise prohibited under another provision
of this Agreement), and (b) with respect to other property of the Company or
any Subsidiary provided that the aggregate amount of all properties subject to
Sale/Leaseback Transactions (excluding General Purpose Real Property) shall
not at any time exceed 10% of the Consolidated Net Property of the Company and
its Subsidiaries (excluding General Purpose Real Property). For purposes of
this Section, "General Purpose Real Property" shall mean real property that
has been improved for use as, and is being used for no purpose other than, an
office, warehouse, service center, meter shop, computer center, training
center, parking lot, or other similar use.
18
Section 4.6. Performance of Agreements. The Company shall, and shall
cause each Subsidiary to:
(a) pay or cause to be paid the principal of and the premium or other
prepayment charge, if any, and the interest on all Debt thereof (including the
Debt evidenced by the Notes), whether heretofore or hereafter incurred or
assumed by it, when and as the same shall become due and payable (taking into
account applicable grace or cure periods, if any);
(b) faithfully perform, observe, and discharge (taking into account
applicable grace or cure periods, if any) all covenants, conditions, and
obligations imposed on it by this Agreement and the Notes and, in all material
respects, all covenants, conditions, and obligations imposed on it by all
other agreements, contracts, and other instruments binding the Company; and
(c) not suffer or permit there to occur any default or event of
default under any of the foregoing (taking into account applicable grace or
cure periods, if any);
provided, however, that (i) this Section 4.6 shall not require the Company to
make any payment in respect of any Debt (other than Debt due under this
Agreement or evidenced by any Note) if (A) such payment would prevent the
Company from repaying any amount due under this Agreement or any of the Notes
when the same shall be due or (B) such payment in respect of such Debt (other
than Debt evidenced by any Note) is being Contested in Good Faith; and (ii)
nothing in this Section 4.6 shall be construed to relieve the Company of the
restrictions imposed by Sections 4.7 or 4.10 or to modify or restrict the
terms and conditions of Article VI or any Holder's rights or remedies
thereunder.
Section 4.7. Limitations on Debt. The Company shall not permit any of
the following conditions to exist:
(a) Consolidated Funded Indebtedness to exceed 65% of the sum of (i)
Consolidated Funded Indebtedness plus (ii) the Company's Shareholders' Equity
plus (iii) Minority Interests in Subsidiaries;
(b) Total Consolidated Indebtedness (excluding trade accounts payable
and other current and accrued liabilities other than liabilities for borrowed
money) to exceed 70% of the sum of (i) Total Consolidated Indebtedness
(excluding trade accounts payable and other current and accrued liabilities
other than liabilities for borrowed money) plus (ii) the Company's
Shareholders' Equity plus (iii) Minority Interests in Subsidiaries; or
(c) The existence of any Consolidated Funded Indebtedness that would
be senior to or have collection rights preferential to those of the Holders
under the Notes unless (i) such Consolidated Funded Indebtedness would be used
to pay in full all amounts due or to become due (including any amounts called
for in the event of voluntary prepayment) under this Agreement, the other
Purchase Documents and all of the Notes, or (ii) such Consolidated Funded
Indebtedness is secured by Liens permitted under Section 4.10(b), provided in
the case of this clause (ii) that any such Consolidated Funded Indebtedness
that is undersecured or otherwise not fully secured by such Liens shall, to
the extent undersecured or otherwise not fully secured, not be senior to or
have collection rights preferential to those of the Holders under the Notes,
19
which shall be evidenced by documentation satisfactory in form and substance
to the Requisite Holders.
Section 4.8. Operating Cash Flow. The Company shall use its best
efforts to cause, for each consecutive four fiscal quarter period, the sum of
the Company and the Subsidiaries consolidated net incomes plus the aggregate
amount of depreciation deducted in calculating such net incomes plus the
aggregate amount of deferred taxes deducted in calculating such net incomes
plus the aggregate amount of all other noncash charges deducted in calculating
such net incomes, to be equal to or greater than 12.5% of Total Consolidated
Indebtedness (excluding trade accounts payable and other current and accrued
liabilities other than liabilities for borrowed money) as of the end of the
last such fiscal quarter. In the event that, at the end of any fiscal
quarter, the standards set forth in the immediately preceding sentence shall
not be met with respect to the latest four consecutive fiscal quarters
(including such fiscal quarter), the Company shall cause valid and perfected
first-priority Liens to be created and maintained at all times thereafter
pursuant to documentation satisfactory to the Requisite Holders, securing Pro
Rata the repayment of the Notes, against properties of the Company (and/or
Subsidiaries, if necessary) reasonably acceptable to the Requisite Holders and
having a book value as of the end of such fiscal quarter equal to at least one
and one-half times the aggregate principal balance outstanding under the Notes
as of the end of such fiscal quarter.
Section 4.9. Dividends. The aggregate cash dividends paid on the stock
of the Company and the Subsidiaries (other than, in the case of any
Subsidiary, dividends paid to the Company or a Wholly-Owned Subsidiary) after
the Closing Date, shall not exceed the sum of (a) 75% of the aggregate
consolidated net income (loss) of the Company and the Subsidiaries for periods
after September 30, 1990, plus (b) 100% of the net cash proceeds to the
Company from any issuance of its capital stock after September 30, 1990, plus
(c) $20,000,000; provided, however, that no such dividends shall be paid at
any time after the occurrence of an Event of Default or an event or condition
which, upon the passing of time or the giving of notice or both, would become
an Event of Default; and provided further that the amount of dividends that
may be paid pursuant to this Section 4.9 shall be reduced by the aggregate
amount of Limited Investments (as defined in Section 4.15) then maintained by
the Company or any Subsidiary.
Section 4.10. Liens and Title Defects. Neither the Company nor any
Subsidiary shall create, assume, incur, or suffer to exist against any of its
assets, any Lien or Title Defect; provided, however, that the following Liens
shall be permitted:
(a) Liens arising in the ordinary course of business and not incurred
in connection with the borrowing of money, provided that the obligations
secured by such Liens are not yet due or payable or, if then due or payable,
are being Contested in Good Faith and, in either such case, if not paid would
not singly or in the aggregate result in any material adverse effect on the
business, properties, operations, or financial condition of the Company and
the Subsidiaries on a consolidated basis;
(b) Liens described in the following clauses (i) and (ii) of this
Section 4.10(b), provided that: (x) at no time shall the aggregate principal
amount of all Debt secured by Liens described in the following clauses (i) and
20
(ii) then outstanding exceed 30% of the Consolidated Net Property of the
Company and the Subsidiaries, (y) no Lien described in the following clauses
(i) and (ii) shall be incurred at any time following (or if the same would
result in) the occurrence of an Event of Default or an event or condition
which, upon the passing of time or the giving of notice or both, would
constitute an Event of Default and (z) no Lien described in the following
clauses (i) and (ii) shall be incurred at any time when the Consolidated Net
Property of the Company and the Subsidiaries is (or if the same would result
in the Consolidated Net Property of the Company and the Subsidiaries becoming)
less than 150% of Consolidated Funded Indebtedness of the Company and the
Subsidiaries then outstanding:
(i) Liens securing nonrecourse Debt of the Company or a
Subsidiary incurred in conjunction with acquiring assets and covering
solely the assets so acquired (but excluding assets acquired in
connection with any merger, consolidation, or Permitted Investment);
provided that in no event shall the principal amount of Debt secured by
any such Lien exceed 70% of the cost (including the secured Debt) or the
fair value (without deducting the secured Debt), whichever is less, of
the asset subject to such Lien (determined individually with respect to
each such asset), and
(ii) Liens existing on any real property (including leaseholds)
and fixtures thereon (and, in the case of the Lien of the Greeley
Indenture, other property covered by the Greeley Indenture as described
therein) at the time of acquisition of such property by the Company or
by such Subsidiary through a merger or consolidation permitted under
Section 4.4 above, whether or not assumed, or on any such property of a
Subsidiary at the time such Subsidiary is acquired by the Company or
another Subsidiary in an acquisition permitted under Section 4.15;
provided, however, that every such Lien described in this clause (ii)
shall apply and attach only to the specific items of property originally
subject thereto and fixed improvements constructed thereon (and
including repairs thereto and replacements thereof) and any extensions
and other after acquired properties as are subject to the Lien of the
Greeley Indenture as set forth therein and shall not extend to any other
assets or property whatsoever (including, without limitation, to any
property or assets of the acquiring entity or of the other corporation
or corporations which are party to the merger or consolidation), other
than such assets of the acquired company for so long as the acquired
company shall remain a separate corporate entity; and provided further
that at no time shall the aggregate principal amount of all Debt secured
by Liens described in this clause (ii), including, without limitation,
the Lien of the Greeley Indenture, exceed 55% of the aggregate cost
(including the secured Debt) or fair value (without deducting the
secured Debt), whichever is less, of the assets subject thereto (with
the lower of cost or fair value to be determined separately with respect
to each such asset);
(c) Liens for taxes and other assessments not yet due or payable (or,
if then due or payable, are being Contested in Good Faith);
(d) zoning ordinances, rights of eminent domain, and other powers
vested in governmental agencies;
21
(e) Liens securing repayment of the Notes Pro Rata; and
(f) rights of offset arising by law or contract in favor of
depository institutions in which the Company or a Subsidiary has placed funds
pursuant to the terms hereof that have not been exercised by the holder of
such rights.
Section 4.11. Transactions with Affiliates. Neither the Company nor
any Subsidiary shall enter into any transaction with any Affiliate of the
Company or of such Subsidiary except in the ordinary course of, and pursuant
to the reasonable requirements of, the Company's or such Subsidiary's
operations and business and upon terms found in good faith by the Board of
Directors of the Company or such Subsidiary to be fair and reasonable and no
less favorable than those the Company or such Subsidiary could obtain in a
comparable arm's-length transaction with a Person other than an Affiliate.
For purposes hereof, an "Affiliate" of any Person shall mean any other Person
that directly or indirectly through one or more intermediaries controls, or is
controlled by, or is under common control with, such Person (the term
"control" meaning the possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies of a Person,
directly or indirectly, whether through the ownership of voting securities, by
contract or otherwise).
Section 4.12. Fees and Expenses. Whether or not the transactions
contemplated herein or therein (as the case may be) shall be consummated, the
Company shall pay all reasonable expenses of each Holder incident or relating
to the preparation, execution, delivery, performance, amendment, modification,
waiver, grant of Liens securing, collection, and enforcement of this
Agreement, the other Purchase Documents, and each of the Notes, including,
without limitation, each Holder's out-of-pocket expenses, the fees required to
obtain a private placement number from Standard and Poor's CUSIP Service
Bureau, the fees and disbursements of any special counsel of the Purchasers or
any other Holders in regard to such matters (including, without limitation,
the fees and disbursements of Hopkins & Sutter, as the Purchasers' special
Texas counsel), regardless of whether the transactions contemplated hereby or
thereby (as the case may be) are consummated, and all taxes, fees, or other
assessments by governmental authorities that may arise in connection with the
execution or delivery of this Agreement or any of the Notes, and the Company's
broker's and finder's fees and commissions due and payable in respect of the
execution or delivery of this Agreement or any of the Notes. The Company's
obligations pursuant to this Section 4.12 shall survive the full payment of
all amounts due under the Notes and the expiration or termination of this
Agreement.
Section 4.13. Inspections. The Company shall permit any Holder or
other Person designated by any Holder, during normal business hours and upon
reasonable notice, to visit and inspect any of the offices or properties of
the Company or any Subsidiary, to examine any of their books of account, and
to discuss the financial condition, operations, or business of the Company or
any Subsidiary with, and to be advised as to the same by the Company's or any
Subsidiary's officers and employees, and the Company's or any Subsidiary's
independent public accountants, all at such reasonable intervals as such
Holder may desire; and, by its execution hereof, the Company, for itself and
the Subsidiaries, hereby consents to such discussions. Such Holder and the
Company shall each be responsible for the payment of its respective expenses
22
incident to the matters referred to in the preceding sentence. Upon and after
the occurrence of a Default or an Event of Default, any Holder or other Person
designated by such Holder may, in addition to the foregoing, and at the
Company's expense (including, without limitation, travel expenses) conduct
such visits and inspections without any requirement of prior notice or
reasonable intervals and, at the Company's expense, make copies of and take
extracts from such books of account.
Section 4.14. Indemnity. The Company agrees to indemnify each
Holder from and against any and all liabilities, obligations, claims, losses,
damages, penalties, fines, actions, judgments, suits, settlements, costs,
expenses or disbursements (including reasonable fees of attorneys,
accountants, experts and advisors) of any kind or nature whatsoever (in this
section collectively called "liabilities and costs") which to any extent (in
whole or in part) may be imposed on, incurred by, or asserted against such
Holder growing out of, resulting from or in any other way associated with any
of this Agreement, the Notes or the other Purchase Documents, or the
transactions and events (including the enforcement or defense thereof) at any
time associated therewith or contemplated therein. As used in this section
the term "Holder" shall refer not only to the Person designated as such in
Section 1.1 but also to each director, officer, agent, attorney, employee,
representative and Affiliate of such Person. The Company's obligations
pursuant to this Section 4.14 shall survive the full payment of all amounts
due under the Notes and the expiration and termination of this Agreement.
Section 4.15. Investments. Neither the Company nor any Subsidiary,
directly or indirectly, shall (a) purchase or otherwise acquire or own any
stock or other securities of any other Person; (b) make or permit to be
outstanding any loan, advance, or capital contribution to, or any Guaranties
of the obligations of, any other Person (other than receivables in the
ordinary course of business); (c) enter into any agreements for the purchase
or other acquisition of any product, materials, or supplies, or for
transportation or for the payment for services, if in any such case payment
therefor is to be made regardless of the nondelivery of the product,
materials, or supplies or the nonfurnishing of the transportation or services
for reasons other than the failure or refusal of the purchaser to accept the
same; provided, however, that the following (herein called "Permitted
Investments") shall be permitted:
(i) marketable direct obligations of the United States of
America and obligations guaranteed by the United States of America,
which have the full faith and credit of the United States of America,
including repurchase agreements involving United States government
securities if such repurchase agreements are with a bank or trust
company that is organized under the laws of the United States or any
State thereof;
(ii) commercial paper issued by any corporation organized under
the laws of the United States or any state thereof maturing within one
year or less from the date of investment and rated at least A-2, P-2, or
Duff 2 by Standard & Poor's Corporation, Moody's Investors Service, or
Duff & Phelps, Inc., respectively;
23
(iii) tax exempt securities maturing within one year or less
rated at least AA- by Standard & Poor's Corporation, Aa3 by Moody's
Investors Service, or AA- by Duff & Phelps Inc.;
(iv) cash surrender value of life insurance policies carried by
and for the benefit of the Company on the lives of key employees, in
amounts that the Board of Directors of the Company determines in good
faith are customary in the Company's industry and are necessary and
appropriate for the protection of the business, operations, and
financial condition of the Company;
(v) investments by the Company or a Subsidiary in the capital
stock or other equity securities of any other Subsidiary or any
corporation which concurrently with such investment becomes a
Subsidiary, and loans and advances by the Company or a Subsidiary to any
such other Subsidiary (but excluding Guaranties of the obligations of
any such other Subsidiary except for Guaranties of the obligations of
any Wholly-Owned Subsidiary, which may be included if the Guaranty
reasonably may be expected to benefit, directly or indirectly, the
guarantor corporation); provided, however, that the Subsidiary in which
the investment is made or to which the loan or advance is made pursuant
to this clause (v) is engaged in the business of gas, electric, water,
or other utilities (including, where relevant to the particular utility
involved, the generation, transportation, transmission, or distribution
thereof) or a related business;
(vi) investments, loans, or advances which would be permitted
under the immediately preceding clause (v) except that the entity in
which such investment is made or to which such loan or advance is made
is not (and does not as a result of such investment become) a
Subsidiary, provided that at no time shall the aggregate of all
investments, loans, or advances outstanding pursuant to this clause (vi)
exceed 50% of the Company's Shareholder's Equity;
(vii) investments, loans, or advances which would be permitted
under the preceding clause (v) except that the entity in which such
investment is made or to which such loan or advance is made is not a
utility and is not (and does not as a result of such investment become)
a Subsidiary, provided that at no time shall the aggregate of all
investments, loans, or advances outstanding pursuant to this clause
(vii) exceed 25% of the Company's Shareholders Equity;
(viii) other investments, loans, or advances by the Company
which would not be permitted under the preceding clauses (v), (vi), or
(vii), provided that immediately after the making of such investment,
and if the amount of such investment and all other outstanding
investments pursuant to this clause (viii) were treated as cash
dividends paid on the stock of the Company and the Subsidiaries for
purposes of Section 4.9, the Company would be permitted to pay at least
one additional dollar in cash dividends under Section 4.9 (investments
made pursuant to this clause (viii) are herein called "Limited
Investments");
(ix) loans or advances to officers, directors, and employees of
the Company or any Subsidiary for home ownership or consumer or similar
24
purposes, but not for commercial or investment purposes, provided that
such loans reasonably may be expected to benefit, directly or
indirectly, the Company, and provided further that the aggregate amount
of all such loans or advances at any time outstanding shall not exceed
2-1/2% of the Company's Shareholders' Equity;
(x) time and demand deposits of any bank or trust company
organized under the laws of the United States of America or any State
thereof that are fully insured as to payment by the Federal Deposit
Insurance Corporation, provided, however, that such deposits need not be
so insured if the deposits are made in the ordinary course of the
collection process for the Company or any Subsidiary;
(xi) security deposits and notes receivable from customers
arising in the ordinary course of the Company's business; and
(xii) certificates of deposit or similar instruments evidencing
Eurodollar deposits maturing within one year or less issued by a bank or
trust company with combined capital and surplus not less than
$100,000,000 and whose unsecured certificates of deposit are rated at
least AA by Standard & Poor's Corporation or Duff & Phelps Inc. or at
least Aa2 by Moody's Investors Service.
The preceding notwithstanding, in no event shall the Company or any Subsidiary
make or incur any Permitted Investment listed in clauses (v), (vi), (vii),
(viii), and (ix) of this Section 4.15 at any time following the occurrence of
an Event of Default or an event or condition which, upon the passing of time
or the giving of notice or both, would constitute an Event of Default or if
the incurrence of such Investment would result in a violation of any other
provision of this Agreement (including, without limitation, Sections 4.5 and
4.10).
Section 4.16. Reports. The Company shall furnish to each Holder the
following reports and information:
(a) as soon as available, but no later than 75 days following the end
of each fiscal quarter of the Company (except the last such quarter in any
fiscal year), copies of the consolidated (and, if available or with respect to
Subsidiaries that are not wholly owned by the Company, consolidating) balance
sheet and the consolidated (and, if available or with respect to Subsidiaries
that are not wholly owned by the Company, consolidating) statements of income
and retained earnings and cash flow of the Company and the Subsidiaries as of
the close of such quarter, each setting forth in comparable form the figures
for the same period of the immediately preceding fiscal year, all in
reasonable detail and certified by the Chief Financial Officer of the Company
to the effect that such statements have been prepared in accordance with
generally accepted accounting principles consistently applied (other than
changes in which the Company's independent public accountant concurs) and
fairly present the financial condition and results of operations of the
Company and the Subsidiaries, subject to normal year-end adjustments;
(b) as soon as available, but no later than 120 days following the
end of each fiscal year of the Company, copies of the consolidated (and, if
available or with respect to Subsidiaries that are not wholly owned by the
Company, consolidating) balance sheet and the consolidated (and, if available
25
or with respect to Subsidiaries that are not wholly owned by the Company,
consolidating) statements of income and retained earnings and cash flow of the
Company and the Subsidiaries as of the close of such year, each setting forth
in comparable form the figures for the immediately preceding fiscal year, all
in reasonable detail and accompanied by an opinion of a nationally recognized
firm of independent public accountants to the effect that such statements have
been prepared in accordance with generally accepted accounting principles
consistently applied (other than changes in which such firm concurs) and
fairly present the financial condition and results of operations of the
Company and the Subsidiaries and to the effect that the examination of the
books and records of the Company and the Subsidiaries has been made in
accordance with generally accepted auditing standards, including, without
limitation, customary tests and other auditing procedures;
(c) Simultaneously with the delivery of each set of statements
referred to in clause (b) above, a statement of the firm of independent public
accountants which reports such statements to the effect that nothing has come
to their attention to cause them to believe that there existed on the date of
such statements any Default or Event of Default, provided that, if in the
opinion of such accounts any such Default or Event of Default does exist, such
accountants shall describe, to the best of their knowledge, its nature and the
length of time it has existed;
(d) Together with each report delivered pursuant to Section 4.16(a),
(b), or (c), (i) a certificate from the President or a Vice President of the
Company to the effect that no Default or Event of Default exists as of the end
of the applicable fiscal period and, to the best of his knowledge, as of the
date of the certificate, or if any does exist, describing the nature and
status thereof, and (ii) a certificate from the Chief Financial Officer of the
Company to the effect that the financial standards and other covenants set
forth in Sections 4.5, 4.7, 4.8, 4.9, 4.10(b), and 4.15 have been and continue
to be met as of the end of the applicable fiscal period;
(e) Promptly upon their becoming available, a copy of any report,
proxy statement, or other filing made by the Company or any Subsidiary with
the Securities and Exchange Commission, any state securities agency, or any
national stock exchange or quotation service;
(f) Immediately upon an officer of the Company obtaining knowledge of
the occurrence of any Event of Default, or condition or event which with the
passing of time or the giving of notice or both would become an Event of
Default, and upon the knowledge by the Company of the pendency of any action,
proceeding, or investigation of the nature described in Section 3.8 hereof,
written notice of such Event of Default, condition, event, or pendency,
identifying the same with particularity; and what action the Company or such
Subsidiary, as the case may be, is taking or proposes to take with respect
thereto;
(g) Promptly upon becoming aware of the occurrence of any (i)
"reportable event", as such term is defined in Section 4043(b) of ERISA (other
than a reportable event not subject to the provision for the 30-day notice to
the Pension Benefit Guaranty Corporation), (ii) material "accumulated funding
deficiency", as such term is defined in Section 302 of ERISA, or (iii)
"prohibited transaction", as such term is defined in Section 4975 of the Code,
in connection with any pension plan or trust created thereunder, a written
26
notice specifying the nature thereof, what action the Company is taking or
proposes to take with respect thereto, and, when known, any action by the
Internal Revenue Service with respect thereto; and
(h) Promptly following receipt of a request, any other data or
information regarding the financial position or business of the Company or any
Subsidiary that any Holder may reasonably request.
Section 4.17. Maintenance and Insurance. The Company and each
Subsidiary shall maintain its property in good repair and working order and
shall maintain insurance with insurers of recognized responsibility in amounts
and with deductibles and exclusions in accordance with customary and prudent
business practices for Persons of comparable size engaged in the same or a
similar business and similarly situated, and shall apply all insurance
proceeds resulting from damage, destruction, or casualty to any property to
the repair or replacement thereof (other than in cases in which the failure to
repair or replace such property is in the best interests of the Company, does
not materially adversely affect the business, operations, or financial
conditions of the Company and the Subsidiaries on a consolidated basis, and is
not disadvantageous to the Holders of the Notes); provided, however, that, if
at any time the Company shall be required to create a Lien pursuant to Section
4.8, it shall cause all such insurance policies to be amended to include each
Holder as a loss payee, to require 30 days prior written notice of
cancellation be sent to each Holder, and to modify the amounts, the
deductibles, and the exclusions as the Requisite Holders may reasonably
specify.
Section 4.18. Purchase of Notes. Neither the Company nor any
Subsidiary shall purchase any Note or any portion thereof without first
offering such Note or portion thereof for purchase Pro Rata by the Holders of
all other Notes. Such Holders may purchase such Note or portion thereof Pro
Rata or in such other proportion as they may agree among themselves. The
Company or any Subsidiary may purchase such Note or any portion thereof not
purchased by one or more of such Holders if such purchase by the Company or
such Subsidiary is not otherwise prohibited under the other provisions of this
Agreement. Any Note acquired by the Company or by a Person directly or
indirectly controlled by the Company shall be immediately canceled and shall
not be deemed to be outstanding for any purpose under this Agreement or the
Notes.
Section 4.19. ERISA Compliance. None of the Company, the
Subsidiaries and the ERISA Affiliates will, nor will any of them allow any
Plan maintained by them to, at any time:
(a) engage in any "prohibited transaction" as such term is defined in
Section 4975 of the Internal Revenue Code of 1986, as amended, which could
subject the Company, any Subsidiary, or any ERISA Affiliate to any excise tax
or liability therefor;
(b) incur any material "accumulated funding deficiency" as such term
is defined in Section 302 of ERISA; or
(c) terminate any such plan in a manner that could result in the
imposition of a Lien on any property or assets of the Company, any Subsidiary,
or any ERISA Affiliate pursuant to Section 4068 of ERISA.
27
The Company will not, and will not allow any Subsidiary or ERISA Affiliate, to
create or maintain any Plan subject to ERISA which invests or has invested
funds with, or purchases or has purchased a contract from, any Holder which
would cause the general account assets of any Holder to be deemed to be "plan
assets" for purposes of the prohibited transactions provisions of ERISA or the
Internal Revenue Code of 1986, as amended. The Company will not permit, and
will not allow any Plan to permit, any condition to exist or any event or
transaction to occur which could result in the incurrence by the Company, any
Subsidiary or any ERISA Affiliate of any material liability, fine or penalty
under ERISA or the Internal Revenue Code of 1986, as amended.
Section 4.20. Downstream Transfers. Notwithstanding any other
provision hereof to the contrary, the Company shall not at any time transfer,
sell, assign or contribute any substantial portion of its assets that would
properly be included in the determination of Consolidated Net Property to any
Subsidiary regardless of the consideration received in exchange therefor.
Section 4.21. To Keep Books. The Company will, and will cause each
Subsidiary to, keep proper books of record and account in accordance with
generally accepted accounting principles.
Section 4.22. Environmental Law Compliance. The Company will, and
will cause each of the Subsidiaries, their contractors, tenants,
representatives and invitees to, comply in all respects with the requirements
of all Environmental Laws including those relating to the production,
generation, emission, discharge, release, threatened release, treatment, or
transportation of Hazardous Materials. Neither the Company nor any Subsidiary
shall cause or permit any Hazardous Materials to be brought upon or kept or
used on or about the property owned, leased, operated, or controlled by the
Company or such Subsidiary (the "Property") in violation of any Environmental
Law. Failures to comply with, or violations of, Environmental Laws which
would not have a material adverse effect on the properties, business,
operations, or financial condition of the Company and the Subsidiaries on a
consolidated basis, or on the Company's ability to perform under this
Agreement or the other Purchase Documents, will not be deemed a breach of this
Section 4.22.
Section 4.23. Notification and Remediation of Releases of Hazardous
Materials. The Company will, and will cause each of the Subsidiaries to,
immediately notify each Holder of and to provide each Holder with copies of
any notifications of discharges or releases or threatened releases or
discharges of a Hazardous Material on, upon, into, or from the Property which
are required to be given pursuant to applicable Environmental Laws by or on
behalf of the Company or a Subsidiary to any Governmental Authorities and the
response to which would have a material adverse effect on the properties,
business, operations, or financial condition of the Company and the
Subsidiaries on a consolidated basis or on the Company's ability to perform
under this Agreement or the other Purchase Documents. Such copies of
notifications shall be delivered to each Holder within a reasonable period of
time after they are delivered to the Governmental Authorities. The Company
and the Subsidiaries further agree promptly to undertake and diligently pursue
to completion any appropriate and legally required investigation, abatement,
and remedial containment and cleanup action in the event of any release or
discharge, or threatened release or discharge, of a Hazardous Material on,
upon, into, or from the Property.
28
Section 4.24. Environmental Indemnification. The Company hereby
indemnifies and agrees to defend and hold harmless each Holder and all of its
respective affiliates, parents, subsidiaries, directors, officers, employees,
agents, successors, attorneys and assigns (collectively, the "Indemnified
Parties") from and against all liabilities, claims, actions, consequential
damages, costs and expenses or loss, regardless of whether any of the
foregoing are foreseeable or unforeseeable, whether brought by Governmental
Authorities or third parties or otherwise arising out of, in connection with
or in any way related to (a) any Hazardous Material being present before or
during the period of ownership, use or control of the Property by the Company
or a Subsidiary in or upon any part of any Property, or in the soil, air,
groundwater, or surface water on, above or under the Property; (b) the use,
generation, manufacture, production, storage, release, threatened release,
discharge or disposal of a Hazardous Material on or under or from the Property
before or during the period of ownership, use, or control of the Property by
the Company or any Subsidiary; or (c) the imposition or recording of liens on
the Property pursuant to any Environmental Laws. The liabilities, claims,
actions, consequential damages, costs and expenses and losses included in the
indemnity in this Section shall include, without limitation, amounts paid in
settlement of claims, any damages or injuries to the person or property of any
third parties or to land, air, water or other natural resources, and to the
extent the Company fails to cure the environmental problem as provided herein,
all consultant, expert and legal fees and expenses of any Indemnified Party's
legal counsel, costs and expenses incurred in connection with any
investigations of site conditions, and any abatement, cleanup, remediation,
removal, or restoration work. Without limiting the foregoing, upon reasonable
demand by the Requisite Holders, the Company shall and shall cause the
Subsidiaries to, jointly and severally defend any investigation, action, or
proceeding alleging the occurrence of any event or circumstance described in
clauses (a) or (b) above which affects any Property and which is brought or
commenced against any Indemnified Party, whether alone or together with the
Company, the Subsidiaries or any other Person, all at the Company's cost and
expense but with counsel to be approved by the Requisite Holders in the
exercise of its reasonable judgment.
Section 4.25. Notification. If the Company or any of the
Subsidiaries shall become aware of or receive notice or other communication
concerning any actual, alleged, suspected, or threatened violation of
Environmental Laws, or liability of the Company or any of the Subsidiaries
relating to environmental matters, including for any release of Hazardous
Materials affecting the Property or past or present activities of any Person
thereon, which violation or liability would have a material adverse effect on
the properties, business, operations, or financial condition of the Company
and the Subsidiaries on a consolidated basis or on the Company's ability to
perform under this Agreement or the other Purchase Documents, or that the
representation regarding Environmental Laws set forth in Section 3.23 of this
Agreement is not or is no longer accurate, then the Company shall and shall
cause such Subsidiaries immediately to deliver to each Holder, a written
description of said violation, liability, correcting information, or actual or
threatened event or condition, copies of any documents evidencing same that
are not otherwise subject to a privilege or protection from disclosure to
third parties, and a written description of what action the Company or
Subsidiary is taking or proposes to take with respect thereto. Receipt of
such notice shall not be deemed to create any obligation on the part of any
Holder to defend or otherwise respond to any such notification.
29
Section 4.26. No Foreign Subsidiaries. The Company does not have,
and will not have, any Subsidiary which is incorporated under the laws of any
jurisdiction other than the United States of America or one of the states
thereof or which carries any major part of its business outside of the
boundaries of the United States of America.
ARTICLE V
PAYMENTS ON NOTES
Section 5.1. Interest Payments.
(a) 8.07% Notes. The unpaid principal amount of the 8.07% Notes shall
bear interest at the rate of 8.07% per annum (the "Contract Rate 8.07% Notes")
from the date of issuance thereof until such unpaid principal amount shall
have become due and payable. Any principal amount of the 8.07% Notes and any
Make-Whole Premium, as the case may be, not paid when due, and (to the extent
permitted by law) any due and unpaid interest accrued thereon, shall bear
interest at the Overdue Rate 8.07% Notes for the period that the same is
overdue. The Overdue Rate 8.07% Notes (herein so called) is equal to the
lesser of 9.07% per annum and the maximum rate permitted by applicable law.
Interest at the Contract Rate 8.07% Notes and the Overdue Rate 8.07% Notes
shall be computed on the basis of a year of 365 or 366 days, as the case may
be, for the actual number of days elapsed (including the first but excluding
the last day). Interest at the Overdue Rate 8.07% Notes shall, to the extent
permitted by law, be compounded monthly. Interest at the Contract Rate 8.07%
Notes shall be payable semi-annually as it accrues on the last day of April
and October of each year (or if any such date shall not be a Business Day, the
immediately following Business Day), beginning April 30, 1995 and continuing
regularly thereafter until the 8.07% Notes are paid in full. Interest at the
Overdue Rate 8.07% Notes shall be payable upon demand and, whether or not
demand is made, on the last day of each calendar month. All interest on the
8.07% Notes, if not already due and payable, shall be due and payable on
October 31, 2006.
(b) 8.26% Notes. The unpaid principal amount of the 8.26% Notes shall
bear interest at the rate of 8.26% per annum (the "Contract Rate 8.26% Notes")
from the date of issuance thereof until such unpaid principal amount shall
have become due and payable. Any principal amount of the 8.26% Notes and any
Make-Whole Premium, as the case may be, not paid when due, and (to the extent
permitted by law) any due and unpaid interest accrued thereon, shall bear
interest at the Overdue Rate 8.26% Notes for the period that the same is
overdue. The Overdue Rate 8.26% Notes (herein so called) is equal to the
lesser of 9.26% per annum and the maximum rate permitted by applicable law.
Interest at the Contract Rate 8.26% Notes and the Overdue Rate 8.26% Notes
shall be computed on the basis of a year of 365 or 366 days, as the case may
be, for the actual number of days elapsed (including the first but excluding
the last day). Interest at the Overdue Rate 8.26% Notes shall, to the extent
permitted by law, be compounded monthly. Interest at the Contract Rate 8.26%
Notes shall be payable semi-annually as it accrues on the last day of April
and October of each year (or if any such date shall not be a Business Day, the
immediately following Business Day), beginning April 30, 1995 and continuing
regularly thereafter until the 8.26% Notes are paid in full. Interest at the
Overdue Rate 8.26% Notes shall be payable upon demand and, whether or not
30
demand is made, on the last day of each calendar month. All interest on the
8.26% Notes, if not already due and payable, shall be due and payable on
October 31, 2014.
Section 5.2. Mandatory Prepayment. The 8.07% Notes shall be subject to
mandatory prepayments as follows: on October 31, 2002, on each October 31
thereafter to and including October 31, 2006 (as long as any of the 8.07%
Notes shall be outstanding), the Company will prepay $4,000,000 aggregate
principal amount of the 8.07% Notes (or if less, the unpaid balance thereof).
The 8.26% Notes shall be subject to mandatory prepayments as follows: on
October 31, 2004, on each October 31 thereafter to and including October 31,
2014 (as long as any of the 8.26% Notes shall be outstanding), the Company
will prepay $1,818,182 aggregate principal amount of the 8.26% Notes (or if
less, the unpaid balance thereof). Each such prepayment under this Section
5.2 shall be at the principal amount so to be prepaid, together with accrued
and unpaid interest thereon to the date of such prepayment, without prepayment
charge and shall be made simultaneously with, and in addition to, all other
payments then required to be made hereunder. When the aggregate payments then
being made with respect to the Notes pursuant to this Section 5.2 are in an
amount equal to the total of all payments then due with respect to the Notes,
then all such payments with respect to the 8.07% Notes and/or the 8.26% Notes,
as the case may be, shall be made Pro Rata among all Holders of the 8.07%
Notes and/or the 8.26% Notes, as appropriate, upon which payments are then
due. In the event of any prepayment pursuant to this Section 5.2 of less than
all amounts then due on the Notes, the Company will allocate the principal
amount so to be prepaid (but only in units of $1,000), together with interest
thereon, if any, among the Notes in proportion, as nearly as may be, to the
respective unpaid principal amounts thereof. No prepayment of less than all
of the Notes pursuant to Section 5.3 shall relieve the Company to any extent
of its obligation to make the prepayments of principal on the Notes required
by this Section 5.2.
Section 5.3. Optional Prepayment. The Company may, at its option,
prepay all the Notes in whole or in part (but not any one Note or group of
Notes, if less than all), so long as the aggregate amount of all partial
prepayments of principal concurrently paid on the Notes equals $1,000,000 or
any higher integral multiple of $100,000. The Company shall notify each
Holder in writing of such prepayment and the date thereof at least 30 days,
but no more than 60 days, in advance of the date fixed for such prepayment
(the "Prepayment Date"), which notice shall also specify the amount of the
Notes held by such Holder so to be prepaid and its estimate of the Make-Whole
Premium (setting forth its computation in reasonable detail) of the Notes held
by all Holders to be so prepaid. By 2:00 p.m. Eastern time on the Business
Day next preceding the applicable Prepayment Date, the Company shall notify
each Holder in writing by telecopy (with an original sent by overnight
delivery service, with proof of delivery) of its final calculation of the
Make-Whole Premium (setting forth its computation in reasonable detail) of the
Notes held by all Holders to be then prepaid. If Holders of less than two-
thirds of the aggregate principal balance then outstanding under the 8.07%
Notes and 8.26% Notes, as applicable (in this section, the "Applicable
Requisite Holders"), disagree with the Company's final calculation of the
Make-Whole Premium applicable to their Notes contained in such certificate,
the Applicable Requisite Holders may recalculate the Make-Whole Premium of the
8.07% Notes and/or the 8.26% Notes, as appropriate, held by all holders of the
8.07% Notes and/or the 8.26% Notes, as the case may be, to be so prepaid and
31
notify the Company in writing by telecopy (with an original sent by overnight
delivery service, with proof of delivery) of its recalculation of the Make-
Whole Premium. Upon its receipt of any such notice, the Company will
immediately notify all other Holders in writing by telecopy (with an original
sent by overnight delivery service, with proof of delivery) of the
recalculated Make-Whole Premium. Any such recalculation shall be binding upon
the Company and the other Holders absent manifest error, and any such notice,
once delivered, may not be withdrawn. On the Prepayment Date, the Company
shall prepay to each Holder the principal amount of the Notes held by such
Holder to be so prepaid, together with all unpaid interest accrued thereon as
of the prepayment date plus, in each case, as a prepayment premium reasonably
calculated to compensate such Holder for the loss of its bargain and not as a
penalty, the applicable Make-Whole Premium. In the event of any prepayment of
less than all of the outstanding Notes, the Company will allocate the
principal amount so to be prepaid (but only in units of $1,000), together with
interest thereon and the Make-Whole Premium applicable thereto, if any, among
the Notes in proportion as nearly as may be, to the respective unpaid
principal amounts thereof. All prepayments made under this Section 5.3 shall
be applied to their respective Notes in the inverse order of their maturities.
Section 5.4. Payment Procedure. Each of the Holders agrees that if it
shall obtain payment of a portion of the aggregate obligations owing under
this Agreement, the Notes and the other Purchase Documents owed to it (other
than pursuant to Section 5.6 or 5.7), which, when taken into account with all
other payments, if any, then made by the Company to the other Holders causes
such Holder to receive more than it would have received had such payment been
made to all Holders on a Pro Rata basis, then such Holder shall hold such
excess funds in trust for the other Holders, as appropriate. All payments to
a Holder made on any of the Notes or under this Agreement shall be made to
such Holder on the date that such payment is required to be made by wire
transfer of immediately available funds credited to such Holder's account as
specified in Exhibit L no later than 12:00 noon Eastern time or by such other
method or to such other place as such Holder may direct on at least five
Business Days' prior written notice to the Company, each such payment being
accompanied by the reference number specified in Exhibit L and by such other
information as is necessary to identify the source and application thereof,
and all without any presentment or surrender of such Note and without any
notation of such payment being made thereon. Contemporaneously with each such
payment, the Company shall notify such Holder that such payment has been made.
Any payment credited to a Holder after 12:00 noon Eastern time shall be
considered for all purposes to have been made on the next following Business
Day. All payments on any Note or under this Agreement shall be applied first
to expenses of the applicable Holder, second to accrued but unpaid interest on
such Note, third to the Make-Whole Premium (if any) applicable thereto, and
then to outstanding principal thereon.
Section 5.5. Nonbusiness Days. If the date for any payment under any
of the Notes or this Agreement falls on a day that is not a Business Day, then
for all purposes the same shall be deemed to have fallen on the next Business
Day.
Section 5.6. Mandatory Prepayment Offer Following Change of Control.
No later than five (5) Business Days after there occurs any Change of Control
(as defined below), the Company shall give written notice thereof to each
Holder (describing in reasonable detail the facts and circumstances giving
32
rise to such Change of Control and the effect thereof on the Company) and make
a written offer to each Holder to prepay the entire outstanding principal
balance on the Notes held by such Holder, together with unpaid interest
accrued to the date of payment, but without any Make-Whole Premium. Each
Holder shall have 30 days following receipt of such written offer to decide
whether to accept or reject such offer and to give the Company written notice
of such election. A Holder's failure to give written notice of such election
to the Company within such time period shall be deemed to constitute such
Holder's election not to accept the prepayment offer. The Company shall make
the required prepayment to each Holder who shall have accepted the offer not
later than 45 days following (a) the Company's receipt of an election to
accept prepayment from all Holders or (b) the last day on which any Holder
could timely elect to accept prepayment, whichever first occurs. For purposes
hereof, "Change of Control" shall mean (i) the acquisition of more than 50% of
the outstanding voting stock of the Company by any Person or group of Persons
acting in concert or (ii) the acquisition of more than 10% of the outstanding
voting stock of the Company by any Person or group of Persons acting in
concert if at any time following such acquisition of 10% or more of the
Company's outstanding voting stock more than 50% of the Persons serving on the
Board of Directors of the Company are Persons proposed, directly or
indirectly, by the Person or group of Persons acting in concert who have
acquired such 10% or more of the Company's outstanding voting stock.
Section 5.7. Mandatory Prepayment Offer Following Certain Mergers,
Consolidations, or Acquisitions.
(a) Prior to consummating any merger, consolidation, or acquisition
permitted under the provisions of Sections 4.4 or 4.15, but as a result of
which the acquiring or surviving corporation would not be permitted by the
provisions of this Agreement to incur at least one additional dollar of
Consolidated Funded Indebtedness, the Company shall notify the Holders in
writing of the Company's intention to consummate such merger, consolidation,
or acquisition. Such notice shall be accompanied (or shall be followed
promptly thereafter) by pro forma financial statements in such form and
containing such information as the Requisite Holders may reasonably request
pertaining to the proposed transaction and shall further include a statement
of any plan that the Company may wish to make regarding its compliance with
the provisions of Section 4.7 hereof following the consummation of such
transaction. Finally, such notice shall include a written offer to each
Holder to prepay the entire outstanding principal balance on the Notes held by
such Holder, together with unpaid interest accrued to the date of payment, but
without any Make-Whole Premium.
(b) Each Holder shall have 30 days following receipt of such written
notice and offer and all other material required under Section 5.7(a) to
decide whether to accept or reject such offer and to give the Company written
notice of such election. A Holder's failure to give written notice of such
election to the Company within such time period shall be deemed to constitute
such Holder's election not to accept the prepayment offer. It is specifically
agreed that a Holder's election to accept the prepayment offer may be
conditioned upon the consummation in fact of the proposed transaction. An
election not to accept the offer by a Holder (whether deemed or made in fact)
shall constitute (i) such Holder's waiver of any default arising under Section
4.7 as a result of the consummation of the proposed transaction (if no plan
for curing such default shall have been offered) or (ii) such Holder's
33
acceptance of the plan proposed by the Company, as the case may be. In the
case of the Holder's acceptance of the Company's plan, the terms of the plan
shall become covenants and agreements of the Company hereunder, and any
default by the Company in the performance of any such covenants or agreements
under the plan shall constitute an Event of Default hereunder. The Company
shall make the required prepayment to each Holder who shall have accepted the
offer of prepayment not later than 30 days after (A) the consummation of the
transaction giving rise to the mandatory prepayment offer under this Section
5.7 or (B) the last day on which any Holder could timely elect to accept
prepayment, whichever occurs later.
ARTICLE VI
EVENTS OF DEFAULT AND REMEDIES
Section 6.1. Events of Default. Any one or more of the following shall
constitute an Event of Default for whatever reason it shall occur and
regardless of whether it shall be outside the control of the Company, occur
involuntarily, or arise by operation of law or pursuant to any judgment,
decree, or order of any court or other governmental body:
(a) the Company shall fail to make when due any payment of (i)
principal or Make-Whole Premium (if any) on any Note or under this Agreement,
regardless of how such payment shall have become due, including, without
limitation, by acceleration or on a date set for prepayment, or (ii) interest,
expenses, or other amounts on any Note or under this Agreement or the other
Purchase Documents and such payment of interest, expenses, or other amounts
(other than principal or premium) is not made within ten (10) Business Days of
the due date thereof;
(b) any representation or warranty in this Agreement, any of the
Notes, or any other Purchase Document shall be untrue or breached when made or
when deemed made;
(c) (i) any covenant or agreement set forth in Sections 4.1, 4.2, 4.4
through 4.11, inclusive (other than Section 4.6, to the extent the same refers
to any payment due on any Note or under this Agreement), or in Sections 4.15,
4.16(f), 4.16(g), 4.18, 4.19, 4.20, 4.21, 4.22, 4.23, 4.25 or 4.26 shall be
breached; (ii) any covenant or agreement set forth in Sections 4.3 or 4.17 is
breached and such breach continues unremedied for 30 days (except, in the case
of Section 4.3, any breach which cannot be remedied within 30 days or which
may result (regardless of whether cured within such 30 days) in a material
adverse effect on the business, properties, operations, or financial condition
of the Company and the Subsidiaries on a consolidated basis, in which case the
30-day cure period afforded under this clause (ii) shall not apply and such
breach shall be governed by clause (i) of this Section 6.1(c), or (iii) any
other covenant or agreement set forth in this Agreement is breached, such
breach is not otherwise addressed in this Section 6.1, and such breach
continues without being cured for 30 or more days after the Company's
knowledge thereof;
(d) the Company or any Subsidiary shall default under any covenant or
agreement included in any plan submitted to the Holders pursuant to Section
34
5.7 or the Company shall fail to give any written notice required under
Section 5.6 or 5.7 within the period of time therein provided;
(e) final judgment or judgments for the payment of money aggregating
in excess of $10,000,000 shall be outstanding against the Company or any
Subsidiary or against any property or assets of either and any one of such
judgments has remained unpaid, unvacated, unbonded, or unstayed by appeal or
otherwise for a period of 30 consecutive days;
(f) entry of a decree or order relating to the Company or any
Subsidiary by a court having jurisdiction (i) granting relief under Title 11
of the United States Code (Bankruptcy) or any successor statute, (ii)
approving as properly filed a petition seeking reorganization of such party
under Title 11 of the United States Code or any successor statute or any other
state or federal law, (iii) appointing a receiver, liquidator, or trustee in
bankruptcy or insolvency of the Company or any Subsidiary or of its property
or any substantial portion thereof, (iv) appointing a custodian, trustee,
receiver, or agent with authorization to take charge of a material portion of
the property of the Company or any Subsidiary for the purpose of enforcing a
lien against such property, or (v) winding up or liquidating the affairs of
the Company or any Subsidiary; and, in any such case, such decree or order
shall have remained in force undischarged and unstayed for 60 days;
(g) (i) the institution of proceedings by or against the Company or
any Subsidiary under any state or federal law relating to debtor
rehabilitation, insolvency, bankruptcy, liquidation, or reorganization,
including specifically Title 11 of the United States Code or any successor
statute and either the Company or such Subsidiary shall consent to such
proceeding (which consent shall be deemed where initiation is by the Company
or any Subsidiary) or such proceeding shall not be dismissed within 60 days;
(ii) consent by the Company or any Subsidiary to the appointment of a
receiver, liquidator, or trustee in bankruptcy or other insolvency proceedings
of it or of its property or any substantial portion thereof; (iii) action or
inaction by the Company or any Subsidiary to procure, permit, or suffer the
appointment of a custodian, trustee, receiver, or agent with authorization to
take charge of a material portion of its property or for the purposes of
enforcing a lien against such property; (iv) an assignment by the Company or
any Subsidiary for the benefit of creditors or admission by the Company or any
Subsidiary that it is generally not able to pay its debts as they become due;
or (v) failure by the Company or any Subsidiary generally to pay their debts
as they become due; or
(h) the Company or any Subsidiary shall fail to pay when due any
payments in respect of, or otherwise fails to perform its obligations under,
or there shall occur any default or event of default under, any Debt of the
Company or any Subsidiary (regardless of whether such failure is a breach of
Section 4.6 hereof in light of the proviso thereto), including, without
limitation, Debt secured by the Lien of the Greeley Indenture or by any other
Lien, or there shall occur any default or event of default under the Greeley
Indenture or any other instrument evidencing or establishing a Lien, and any
applicable cure or grace period pertaining to such failure or default shall
have expired without such failure or default having been remedied.
Section 6.2. Acceleration. If an Event of Default shall have occurred
pursuant to Section 6.1(f) or (g), the full outstanding balance of principal
35
and interest on each Note and all amounts due under this Agreement shall
become immediately due and payable without any further action by any Person.
Subject to the provisions of Section 6.6, if any other Event of Default shall
have occurred, any Holder at its sole option shall have the right to declare
the full outstanding balance of principal and interest on its Note or Notes
and all amounts due such Holder under this Agreement immediately due and
payable, in which event such balance and amounts shall become immediately due
and payable.
The amount payable upon the occurrence of an Event of Default pursuant
to Section 6.1(f) or (g) shall be, to the extent permitted by law, the entire
unpaid principal amount of the Notes, together with interest accrued thereon
to the date of the occurrence of such Event of Default, and such amount shall
be payable without presentment, demand, protest or other requirement of any
kind, all of which are expressly waived by the Company. The amount payable
upon an acceleration based on any other Event of Default shall be, to the
extent permitted by law, the entire unpaid principal amount of the Notes so
accelerated, the interest accrued thereon to the date of acceleration, the
Make-Whole Premium, and such amount shall be payable without presentment,
demand, protest or further notice, all of which are expressly waived by the
Company.
On any date on which a Holder has declared its Note or Notes and all
amounts due such Holder under this Agreement immediately due and payable, such
Holder shall notify the Requisite Holders in writing of its acceleration.
Within five (5) Business Days after the Requisite Holders receive such
notification, the Requisite Holders shall notify the Company in writing of the
Make-Whole Premium of the Note or Notes so accelerated, which notice shall set
forth in reasonable detail the computation thereof. The Make-Whole Premium
set forth in any such notice shall set forth in reasonable detail the
computation thereof, which calculation shall be binding upon the Company and
the other Holders absent manifest error.
Section 6.3. Actions for Enforcement. Subject to the provisions of
Section 6.6, if an Event of Default shall have occurred, any Holder may
proceed to protect and enforce its rights either by suit in equity or by
action at law or both, whether for the specific performance of any covenant or
agreement contained in this Agreement or in aid of the exercise of any right,
power, or remedy granted in this Agreement or to enforce the payment of such
Holder's Note or Notes or to enforce any other legal or equitable right,
power, or remedy such Holder may have. The Company shall pay all reasonable
expenses of each Holder incident or relating to the foregoing (including,
without limitation, each Holder's out-of-pocket expenses and the fees and
disbursements of counsel) upon demand for payment thereof by such Holder. The
Company's obligations pursuant to this Section 6.3 shall survive the full
payment of all amounts due under the Notes and the expiration or termination
of this Agreement.
Section 6.4. Remedies Cumulative. No right, power, or remedy herein
conferred upon any Holder is intended to be exclusive of any other right,
power, or remedy, and each and every such right, power, or remedy shall be
cumulative of every other right, power, or remedy given under any of the Notes
or this Agreement or the other Purchase Documents or now or hereafter existing
at law or in equity or by statute or otherwise.
36
Section 6.5. Remedies Not Waived. No failure or delay in exercising
any right, power, or remedy under any of the Notes or this Agreement, and no
course of dealing or unwritten agreement or practice between the Company or
any Holder, shall operate as a waiver of, or otherwise shall prejudice, any of
the rights, powers, or remedies of any Holder.
Section 6.6. Other Lenders. Notwithstanding any other provision
hereof, the Requisite Holders of Notes by written instrument may waive any
Event of Default or rescind any notice of acceleration sent by any Holder of
Notes; provided, however, that no such waiver or rescission shall be effective
with respect to any Holder without such Holder's consent with respect to an
Event of Default described in Section 6.1(a) (to the extent the same applies
to obligations to such Holder), (f), or (g), or with respect to a provision
that cannot be amended under Section 8.8 without such Holder's consent. No
such waiver or rescission shall extend to or affect any subsequent Event of
Default or notice of acceleration sent by any Holder or impair any right,
power, or remedy consequent thereto.
ARTICLE VII
REGISTRATION, TRANSFER, AND EXCHANGE OF NOTES
Section 7.1. Form, Registration, Transfer, and Exchange of Notes. The
Notes are issuable only as registered Notes, and each 8.07% Note shall be in
the form of Exhibit B-1 and each 8.26% Note shall be in the form of Exhibit
B-2. The Company shall keep at its principal office a register in which the
Company shall provide for the registration of Notes and of transfers of Notes,
and, upon the request of any Holder, the Company shall promptly deliver to
such Holder a true and correct copy of such register as in effect at such
time. Subject to any applicable federal or state securities laws and
regulations, at any time and from time to time any Holder shall have the right
to sell, assign, or otherwise transfer any Note held by it or any portion
thereof, together with the rights of a Holder under this Agreement with
respect to which such Note or portion thereof so transferred. Upon surrender
for registration of transfer of any Note at the office of the Company, the
Company shall execute and deliver, at its expense, one or more new Notes of a
like aggregate principal amount registered in the name of the designated
transferee or transferees. At the option of the Holder of any Note, such Note
may be exchanged for other Notes of any denominations of a like aggregate
principal amount upon surrender of the Note to be exchanged at the office of
the Company. Whenever any Notes are so surrendered for exchange, the Company
shall execute and deliver, at its expense, the Notes which the Holder making
the exchange is entitled to receive. Every Note presented or surrendered for
registration of transfer shall be duly endorsed, or accompanied by a written
instrument of transfer duly executed, by the Holder of such Note or the
Holder's attorney duly authorized in writing and shall be accompanied by a
written instrument of transfer in the form of Exhibit M hereto. Any Note or
Notes issued in exchange for any Note or upon transfer thereof shall carry the
rights to unpaid interest and interest to accrue which were carried by the
Note so exchanged or transferred, and neither gain nor loss of interest shall
result from any such transfer or exchange. Upon such transfer, the transferee
shall succeed to all rights of the transferring Holder under such Note and
this Agreement with respect to the interest so transferred. Notwithstanding
any other provision hereof, any Note or portion thereof acquired by the
37
Company or any Subsidiary shall be deemed canceled and not outstanding for any
purpose, and the Company shall note the same as canceled in the register.
Section 7.2. Replacement of Notes. Upon receipt of evidence reasonably
satisfactory to the Company of the loss, theft, destruction, or mutilation of
any Note and, in the case of any such loss, theft, or destruction, upon
delivery of an indemnity agreement or surety reasonably satisfactory to the
Company in form and amount (provided that, if any Purchaser shall be the
Holder, its written notice and written undertaking to indemnify shall be
sufficient evidence of indemnity and no surety shall be required), or, in the
case of any such mutilation, upon the surrender of such Note for cancellation
at its office, the Company at its expense shall execute and deliver, in lieu
thereof, a new Note of like tenor, dated as of the date of and in the stated
principal amount as the Note so lost, stolen, destroyed, or mutilated.
Thereafter, the Note in lieu of which such new Note has been so executed and
delivered shall not be deemed to be an outstanding Note for any purpose.
ARTICLE VIII
MISCELLANEOUS
Section 8.1. Successors and Assigns. The Company may not assign this
Agreement or any of its rights or obligations hereunder without the prior
written consent of the Requisite Holders. Subject to the provisions of the
immediately preceding sentence and Article VII, this Agreement shall bind and
inure to the benefit of the Purchasers, the Company, and their respective
successors and assigns, including, without limitation, all future Holders.
Section 8.2. Governing Law, Submission to Process, and Usury. This
Agreement, the Notes and the other Purchase Documents, are contracts and
instruments made under the laws of the State of Texas and shall be construed
and enforced in accordance with and governed by the laws of the State of Texas
and the United States of America, without regard to principles of conflicts of
law. THE COMPANY HEREBY IRREVOCABLY SUBMITS ITSELF TO THE JURISDICTION OF THE
STATE AND FEDERAL COURTS OF THE STATE OF TEXAS IN ANY LEGAL ACTION OR
PROCEEDING RELATING TO ANY NOTE, THIS AGREEMENT, ANY OTHER PURCHASE DOCUMENT,
OR THE OBLIGATIONS EVIDENCED HEREBY OR THEREBY. ANY LEGAL ACTION OR
PROCEEDING ARISING OUT OF OR IN ANY WAY RELATED TO ANY NOTE, THIS AGREEMENT OR
ANY OTHER PURCHASE DOCUMENT SHALL BE BROUGHT AND LITIGATED EXCLUSIVELY IN THE
UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF TEXAS, DALLAS
DIVISION, TO THE EXTENT IT HAS SUBJECT MATTER JURISDICTION, AND OTHERWISE IN
THE TEXAS DISTRICT COURTS SITTING IN DALLAS COUNTY, TEXAS AND THE COMPANY
AGREES AND CONSENTS THAT SERVICE OF PROCESS MAY BE MADE UPON IT IN ANY LEGAL
PROCEEDING RELATING TO ANY NOTE, THIS AGREEMENT, ANY OTHER PURCHASE DOCUMENT
OR THE OBLIGATIONS EVIDENCED HEREBY OR THEREBY, BY ANY MEANS ALLOWED UNDER
TEXAS OR FEDERAL LAW. THE COMPANY HEREBY WAIVES AND AGREES NOT TO ASSERT, BY
WAY OF MOTION, AS A DEFENSE OR OTHERWISE, THAT ANY SUCH PROCEEDING IS BROUGHT
IN AN INCONVENIENT FORUM OR THAT THE VENUE THEREOF IS IMPROPER. IN
FURTHERANCE THEREOF, THE HOLDERS AND THE COMPANY EACH ACKNOWLEDGE AND AGREE
THAT IT WAS NOT INCONVENIENT TO NEGOTIATE AND RECEIVE FUNDING OF THE
TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT AND THE NOTES IN SUCH COUNTY AND
THAT IT WILL BE NEITHER INCONVENIENT NOR UNFAIR TO LITIGATE OR OTHERWISE
RESOLVE ANY DISPUTES OR CLAIMS IN A COURT SITTING IN SUCH COUNTY.
38
It is expressly stipulated and agreed to be the intent of the Company
and the Holders at all times to comply with the applicable Texas law governing
the maximum rate or amount of interest payable on or in connection with the
Notes and the indebtedness evidenced by this Agreement (or applicable United
States federal law to the extent that it permits the Holders to contract for,
charge, take, reserve, or receive a greater amount of interest than under
Texas law). If the applicable law is ever judicially interpreted so as
otherwise to render usurious any amount called for under the Notes or under
this Agreement, or contracted for, charged, taken, reserved, or received with
respect to the indebtedness evidenced hereby or thereby, or if acceleration of
the maturity of any Note or any prepayment by the Company results in the
Company's having paid any interest in excess of that permitted by law, then it
is the Company's and each Holder's express intent that all excess amounts
theretofore collected by such Holder be credited on the principal balance of
such Holder's Note (or, if such Note has been or would thereby be paid in
full, refunded to the Company), and the provisions of each Note and this
Agreement immediately be deemed reformed and the amounts thereafter
collectible hereunder and thereunder reduced, without the necessity of the
execution of any new document, so as to comply with the applicable law, but so
as to permit the recovery of the fullest amount otherwise called for hereunder
and thereunder. The right to accelerate maturity of any Note does not include
the right to accelerate any interest which has not otherwise accrued on the
date of such acceleration, and the Holders do not intend to collect any
unearned interest in the event of acceleration. All sums paid or agreed to be
paid to any Holder for the use, forbearance, or detention of the indebtedness
evidenced by the Notes or this Agreement shall, to the extent permitted by
applicable law, be amortized, prorated, allocated, and spread throughout the
full term of such indebtedness until payment in full so that the rate or
amount of interest on account of such indebtedness does not exceed the
applicable usury ceiling. To the extent that Texas law determines the Maximum
Rate (as hereafter defined), such Maximum Rate shall be determined by
utilizing the indicated (weekly) rate ceiling from time to time in effect
pursuant to Tex. Rev. Civ. Stat. art. 5069-1.04, as amended. In no event
shall the provisions of Tex. Rev. Civ. Stat. arts. 5069-2.01 through 5069-8.06
or 5069-15.01 through 5069-15.11 be applicable to the Notes, this Agreement,
or the indebtedness evidenced hereby or thereby. As used herein, the term
"Maximum Rate" shall mean the maximum nonusurious rate of interest that may be
lawfully contracted for, charged, taken, reserved, or received by the Holders
from the Company in connection with the loan evidenced hereby under applicable
Texas law (or applicable United States federal law to the extent that it
permits a Holder to contract for, charge, take, reserve, or receive a greater
amount of interest than under Texas law).
Section 8.3. Entire Agreement. This Agreement, the Notes and the other
Purchase Documents constitute the entire agreement and understanding between
the Purchasers and the Company with respect to the subject matter hereof, and
no promises, inducements, or statements not contained herein or therein shall
be binding; provided, however, that all representations, warranties, and
obligations made or undertaken by or on behalf of the Company or any
Subsidiary in any written document executed or provided in connection with the
transactions contemplated hereby and thereby shall be binding upon such
parties as if fully set forth herein.
Section 8.4. Survival of Representations, Warranties, Covenants, and
Agreement. The Holders have relied upon each and every representation,
39
warranty, covenant, and agreement made by the Company in this Agreement, the
Notes, and the other Purchase Documents, and each such representation,
warranty, covenant, or agreement shall survive the issuance to the Purchasers
of the Notes and remain actionable thereafter regardless of any investigation
made by any Holder or any Person on behalf of any Holder (it being
acknowledged that each representation or warranty made by the Company is made
only as of the date or dates the same is so made or deemed to be made
hereunder or thereunder according to its terms), with respect to each Holder,
for so long as any obligation under this Agreement, the Notes or any other
Purchase Document remains outstanding to such Holder. All statements in any
Purchase Document shall constitute representations and warranties of the
Company under this Agreement.
Section 8.5. Partial Invalidity. In case any one or more of the
provisions of any of the Notes or this Agreement shall be invalid, illegal, or
unenforceable in any respect or as applied to any Person or circumstance, the
validity of the remaining provisions, and the applicability of such provision
to any other Person or circumstance shall be in no way affected, prejudiced,
or disturbed thereby.
Section 8.6. Notices. Except as provided for in Section 5.4 with
regard to payments, all notices, consents, approvals, requests, demands, or
other communications required or permitted to be given hereunder shall be in
writing, shall be given by (a) telecopy, with the original sent by registered
or certified United States mail, return receipt requested, postage prepaid,
(b) registered or certified United States mail, return receipt requested,
postage prepaid or (c) personally delivered or by hand delivery with
confirmation of delivery obtained no later than the next following day, and in
each case the address specified below:
If to the Company:
Atmos Energy Corporation
1800 Three Lincoln Centre
5430 LBJ Freeway
Dallas, Texas 75240
Attention: Chief Financial Officer
Telecopy: (214) 788-3793
If to any Holder:
As provided in Exhibit L
provided, however, that the Company and each Holder shall have the right to
change its address for notice hereunder (or supply additional addresses) from
time to time to such other address or addresses within the continental United
States of America as may hereafter be furnished in writing by such party to
the other parties hereto. Any such notice or communication shall be deemed to
have been given (i) in the case of facsimile transmission followed by
registered or certified United States mail, three days after deposit in the
mail, (ii) in the case of registered or certified United States mail, three
days after deposit in the mail and (iii) in the case of personal delivery or
delivery service, as of the date of first attempted delivery at the address
provided herein.
40
Section 8.7. Further Assurances. The Company and each Holder from time
to time shall do and perform such further acts and execute and deliver such
further instruments, assignments, and documents as may be reasonably required
to establish, maintain, or protect the respective rights and remedies of the
Company and the Holders and to carry out and effect the intentions and
purposes of this Agreement.
Section 8.8. Amendment. This Agreement may be amended only by a writing
signed by the Requisite Holders and the Company; provided, however, that no
amendment that alters the principal, the interest, the interest rate, the time
for any payment, or the prepayment premium of any Note, gives any Note
preference over any other Note, amends the percentage of Requisite Holders or
otherwise reduces the percentage of Holders required to approve any such
amendment, or the provisions of Sections 5.1, 5.2, 5.3, 5.6, 5.7, 6.2, or 6.6
or this Section 8.8 shall be effective without the written consent of all
Holders. The Company will not grant any Holder any benefit or payment for or
in connection with any amendment or waiver in respect of any of the Notes,
whether pursuant to this Section 8.8 or otherwise, unless such benefit or
payment is extended on the same terms ratably to all other Holders.
Section 8.9. No Waiver. The failure of any Holder or group of Holders
to insist upon strict performance of any provision of any of the Notes or this
Agreement shall not constitute a waiver of, or estoppel against asserting, the
right to require such performance in the future, nor shall a waiver or
estoppel in any one instance constitute a waiver or estoppel with respect to a
later breach of a similar nature or otherwise.
Section 8.10. Headings; Internal References. Headings herein are
for reference only and shall not be construed as limiting or otherwise
affecting the provisions hereof. Unless the context otherwise requires, all
references to "Articles" and "Sections" are to Articles and Sections of this
Agreement and all references to "Exhibits" and "Schedules" are to Exhibits and
Schedules attached to this Agreement, each of which is made a part hereof for
all purposes. Pronouns in masculine, feminine and neuter genders shall be
construed to include any other gender, and words in the singular form shall be
construed to include the plural and vice versa, unless the context otherwise
requires.
Section 8.11. Counterparts. This Agreement may be executed in
multiple counterparts, all of which shall constitute but one instrument.
Section 8.12. Limitation on Rights of Certain Holders.
Notwithstanding any provision of this Agreement granting rights or privileges
to "any Holder," no Holder who holds Notes representing less than 10% of the
aggregate principal balance outstanding under all Notes as of such time shall
be entitled other than in concert with other Holders of Notes who, together
with the Holder in question, hold Notes representing 10% or more of the
aggregate principal balance then outstanding under all Notes to (a) exercise
the inspection rights set forth in Section 4.13 prior to the occurrence of an
Event of Default or (b) upon an Event of Default, accelerate the maturity of
the Note or Notes held by such Holder or exercise the remedies set forth in
Sections 6.2 and 6.3 (except upon an Event of Default under Section 6.1(a) (to
the extent the same applies to obligations to such Holder), (f) or (g), in
which case such Holder shall be entitled to so accelerate the maturity of the
41
Note or Notes held by it and to exercise its remedies under Sections 6.2 and
6.3).
Section 8.13. Construction of Representations and Warranties. All
representations and warranties of the Company set forth herein are made
without any qualification for the best of Company's knowledge and are made
both as of the date hereof and as of the time of Closing, except to the extent
that any such representation or warranty expressly provides that it is so
qualified.
Section 8.14. Statutory Notice No Oral Agreements. THIS WRITTEN
AGREEMENT, TOGETHER WITH THE NOTES AND THE OTHER PURCHASE DOCUMENTS, REPRESENT
THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY
EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE
PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
42
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date written first above.
ATMOS ENERGY CORPORATION
By:
------------------------------
Name:
Title:
NEW YORK LIFE INSURANCE COMPANY
By:
------------------------------
Name:
Title:
NEW YORK LIFE INSURANCE AND
ANNUITY CORPORATION
By:
------------------------------
Name:
Title:
THE VARIABLE ANNUITY LIFE
INSURANCE COMPANY
By:
------------------------------
Name:
Title:
AMERICAN GENERAL LIFE INSURANCE
COMPANY
By:
------------------------------
Name:
Title:
MERIT LIFE INSURANCE COMPANY
By:
------------------------------
Name:
Title:
EXHIBIT A
PURCHASERS AND AMOUNTS OF NOTES
Name Principal Amount
- ---- ----------------
New York Life Insurance Company 8.26% Note
(Tax ID No. 13-5582869) $10,000,000
New York Life Insurance and Annuity Corporation 8.26% Note
(Tax ID No. 13-3044743) $10,000,000
The Variable Annuity Life Insurance Company 8.07% Note
(Tax ID No. 74-1625348) $15,000,000
American General Life Insurance Company 8.07% Note
(Tax ID No. 25-0598210) $4,000,000
Merit Life Insurance Company 8.07% Note
(Tax ID No. 35-1005090) $1,000,000
44
EXHIBIT B-1
ATMOS ENERGY CORPORATION
8.07% SENIOR NOTE
DUE OCTOBER 31, 2006
(PPN 049560 C* 4)
Registered Note No. R Dallas, Texas
-------
$ November 14, 1994
----------------------------
ATMOS ENERGY CORPORATION, a Texas corporation (hereinafter called
"Maker"), for value received, promises and agrees to pay, as herein provided,
unto
, a
- ------------------------------ ------------------------------
or its registered assigns (hereinafter called "Payee"), in lawful money of the
United States of America, the principal sum of
($ )
- ----------------------------------------- --------------------
together with interest on the principal amount from time to time remaining
unpaid hereunder from and after the date hereof until maturity at the rate of
8.07% per annum, in installments as provided in the Note Purchase Agreement
(hereinafter defined) and below. All past due amounts shall accrue interest
at the Overdue Rate 8.07% Notes. Interest shall be computed on a per annum
basis of a year of 365 or 366 days, as the case may be, for the actual number
of days elapsed (including the first but excluding the last day). All sums
paid hereon shall apply first to the expenses of the Payee, second to the
satisfaction of accrued interest, third to the premium (if any), and the
balance to outstanding principal. The principal hereof and interest to accrue
hereon are payable in accordance with the terms hereof and the Note Purchase
Agreement (hereinafter defined).
Accrued interest on this Note is payable semi-annually as it accrues on
the last day of April and October of each year beginning April 30, 1995 and
continuing regularly thereafter until this Note is paid in full.
45
This note is one of the 8.07% Senior Notes of Maker (individually a
"Note" and collectively the "Notes") issued pursuant to, and having the
benefit of, that certain Note Purchase Agreement (the "Note Purchase
Agreement") dated November 14, 1994, by and among Maker, Payee and
----------------------.
Reference is made to the Note Purchase Agreement for provisions regarding
events of default, acceleration, interest payments, voluntary prepayments,
mandatory prepayments, mandatory offers to prepay, premiums, attorneys' fees,
and other matters addressed therein. Terms used but not defined herein shall
have the meanings given them in the Note Purchase Agreement.
This Note is a registered note and, as provided in the Note Purchase
Agreement, is transferable on the Note Register of Maker upon written notice
from the registered holder hereof to Maker.
This Note may, under certain circumstances, be declared due prior to its
expressed maturity date, all in the events, on the terms, and in the manner as
provided in the Note Purchase Agreement.
Should the indebtedness represented by this Note or any part thereof be
collected in any proceeding provided for in the Note Purchase Agreement or be
placed in the hands of attorneys for collection, Maker agrees to pay, in
addition to the principal, premium, if any, and interest due and payable
hereon, all costs of collecting this Note, including reasonable attorneys'
fees and expenses.
Maker, co-makers, signers, sureties, endorsers, and guarantors, and each
of them, expressly waive demand and presentment for payment, notice of
nonpayment, protest, notice of protest, notice of dishonor, notice of intent
to accelerate the maturity hereof, notice of the acceleration of the maturity
hereof, bringing of suit, and diligence in taking any action to collect
amounts called for hereunder and in the handling of security at any time
existing in connection herewith and are and shall be jointly, severally,
directly, and primarily liable for the payment of all sums owing and to be
owing hereon, regardless of and without any notice, diligence, act, or
omission as or with respect to the collection of any amount called for
hereunder or in connection with any right, lien, interest, or property at any
and all times had or existing as security for any amount called for hereunder.
This Note is an instrument made under the laws of the State of Texas and
shall be construed and enforced in accordance with and governed by the laws of
the State of Texas and the United States of America, without regard to
principles of conflicts of law. It is expressly stipulated and agreed to be
the intent of Maker and Payee at all times to comply with the applicable Texas
law governing the maximum rate or amount of interest payable on or in
connection with this Note and the indebtedness evidenced by the Note Purchase
Agreement (or applicable United States federal law to the extent that it
permits the Payee to contract for, charge, take, reserve, or receive a greater
amount of interest than under Texas law). If the applicable law is ever
judicially interpreted so as otherwise to render usurious any amount called
for under this Note or under the Note Purchase Agreement, or contracted for,
charged, taken, reserved, or received with respect to the indebtedness
evidenced hereby or thereby, or if acceleration of the maturity of this Note
or if any prepayment by Maker results in Maker's having paid any interest in
excess of that permitted by law, then it is Maker's and Payee's express intent
46
that all excess amounts theretofore collected by Payee be credited on the
principal balance of this Note (or, if this Note has been or would thereby be
paid in full, refunded to Maker) and the provisions of this Note and the Note
Purchase Agreement immediately be deemed reformed and the amounts thereafter
collectible hereunder and thereunder reduced, without the necessity of the
execution of any new document, so as to comply with the applicable law, but so
as to permit the recovery of the fullest amount otherwise called for hereunder
and thereunder. The right to accelerate maturity of this Note does not
include the right to accelerate any interest which has not otherwise accrued
on the date of such acceleration, and Payee does not intend to collect any
unearned interest in the event of acceleration. All sums paid or agreed to be
paid to Payee for the use, forbearance, or detention of the indebtedness
evidenced hereby shall, to the extent permitted by applicable law, be
amortized, prorated, allocated, and spread throughout the full term of such
indebtedness until payment in full so that the rate or amount of interest on
account of such indebtedness does not exceed the applicable usury ceiling. To
the extent that Texas law determines the Maximum Rate (as hereafter defined),
such Maximum Rate shall be determined by utilizing the indicated (weekly) rate
ceiling from time to time in effect pursuant to Tex. Rev. Civ. Stat. art.
5069-1.04, as amended. In no event shall the provisions of Tex. Rev. Civ.
Stat. arts. 5069-2.01 through 5069-8.06 or 5069-15.01 through 5069-15.11 be
applicable to the loan evidenced hereby. As used herein, the term "Maximum
Rate" shall mean the maximum nonusurious rate of interest that may be lawfully
contracted for, charged, taken, reserved, or received by Payee from Maker in
connection with the loan evidenced hereby under applicable Texas law (or
applicable United States federal law to the extent that it permits Payee to
contract for, charge, take, reserve, or receive a greater amount of interest
than under Texas law).
THIS NOTE AND THE WRITTEN NOTE PURCHASE AGREEMENT REPRESENT THE FINAL
AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRA-DICTED BY EVIDENCE OF
PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE
ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
ATMOS ENERGY CORPORATION
By:
------------------------------
Name:
Title:
47
EXHIBIT B-2
ATMOS ENERGY CORPORATION
8.26% SENIOR NOTE
DUE OCTOBER 31, 2014
(PPN 049560 C@ 2)
Registered Note No. R Dallas, Texas
-------
$ November 14, 1994
----------------------------
ATMOS ENERGY CORPORATION, a Texas corporation (hereinafter called
"Maker"), for value received, promises and agrees to pay, as herein provided,
unto
, a
- ----------------------------- -------------------------------
or its registered assigns (hereinafter called "Payee"), in lawful money of the
United States of America, the principal sum of
($ )
- ----------------------------------------- --------------------
together with interest on the principal amount from time to time remaining
unpaid hereunder from and after the date hereof until maturity at the rate of
8.26% per annum, in installments as provided in the Note Purchase Agreement
(hereinafter defined) and below. All past due amounts shall accrue interest
at the Overdue Rate 8.26% Notes. Interest shall be computed on a per annum
basis of a year of 365 or 366 days, as the case may be, for the actual number
of days elapsed (including the first but excluding the last day). All sums
paid hereon shall apply first to the expenses of the Payee, second to the
satisfaction of accrued interest, third to the premium (if any), and the
balance to outstanding principal. The principal hereof and interest to accrue
hereon are payable in accordance with the terms hereof and the Note Purchase
Agreement (hereinafter defined).
Accrued interest on this Note is payable semi-annually as it accrues on
the last day of April and October of each year beginning April 30, 1995 and
continuing regularly thereafter until this Note is paid in full.
48
This note is one of the 8.26% Senior Notes of Maker (individually a
"Note" and collectively the "Notes") issued pursuant to, and having the
benefit of, that certain Note Purchase Agreement (the "Note Purchase
Agreement") dated November 14, 1994, by and among Maker, Payee and
.
--------------------
Reference is made to the Note Purchase Agreement for provisions regarding
events of default, acceleration, interest payments, voluntary prepayments,
mandatory prepayments, mandatory offers to prepay, premiums, attorneys' fees,
and other matters addressed therein. Terms used but not defined herein shall
have the meanings given them in the Note Purchase Agreement.
This Note is a registered note and, as provided in the Note Purchase
Agreement, is transferable on the Note Register of Maker upon written notice
from the registered holder hereof to Maker.
This Note may, under certain circumstances, be declared due prior to its
expressed maturity date, all in the events, on the terms, and in the manner as
provided in the Note Purchase Agreement.
Should the indebtedness represented by this Note or any part thereof be
collected in any proceeding provided for in the Note Purchase Agreement or be
placed in the hands of attorneys for collection, Maker agrees to pay, in
addition to the principal, premium, if any, and interest due and payable
hereon, all costs of collecting this Note, including reasonable attorneys'
fees and expenses.
Maker, co-makers, signers, sureties, endorsers, and guarantors, and each
of them, expressly waive demand and presentment for payment, notice of
nonpayment, protest, notice of protest, notice of dishonor, notice of intent
to accelerate the maturity hereof, notice of the acceleration of the maturity
hereof, bringing of suit, and diligence in taking any action to collect
amounts called for hereunder and in the handling of security at any time
existing in connection herewith and are and shall be jointly, severally,
directly, and primarily liable for the payment of all sums owing and to be
owing hereon, regardless of and without any notice, diligence, act, or
omission as or with respect to the collection of any amount called for
hereunder or in connection with any right, lien, interest, or property at any
and all times had or existing as security for any amount called for hereunder.
This Note is an instrument made under the laws of the State of Texas and
shall be construed and enforced in accordance with and governed by the laws of
the State of Texas and the United States of America, without regard to
principles of conflicts of law. It is expressly stipulated and agreed to be
the intent of Maker and Payee at all times to comply with the applicable Texas
law governing the maximum rate or amount of interest payable on or in
connection with this Note and the indebtedness evidenced by the Note Purchase
Agreement (or applicable United States federal law to the extent that it
permits the Payee to contract for, charge, take, reserve, or receive a greater
amount of interest than under Texas law). If the applicable law is ever
judicially interpreted so as otherwise to render usurious any amount called
for under this Note or under the Note Purchase Agreement, or contracted for,
charged, taken, reserved, or received with respect to the indebtedness
evidenced hereby or thereby, or if acceleration of the maturity of this Note
or if any prepayment by Maker results in Maker's having paid any interest in
49
excess of that permitted by law, then it is Maker's and Payee's express intent
that all excess amounts theretofore collected by Payee be credited on the
principal balance of this Note (or, if this Note has been or would thereby be
paid in full, refunded to Maker) and the provisions of this Note and the Note
Purchase Agreement immediately be deemed reformed and the amounts thereafter
collectible hereunder and thereunder reduced, without the necessity of the
execution of any new document, so as to comply with the applicable law, but so
as to permit the recovery of the fullest amount otherwise called for hereunder
and thereunder. The right to accelerate maturity of this Note does not
include the right to accelerate any interest which has not otherwise accrued
on the date of such acceleration, and Payee does not intend to collect any
unearned interest in the event of acceleration. All sums paid or agreed to be
paid to Payee for the use, forbearance, or detention of the indebtedness
evidenced hereby shall, to the extent permitted by applicable law, be
amortized, prorated, allocated, and spread throughout the full term of such
indebtedness until payment in full so that the rate or amount of interest on
account of such indebtedness does not exceed the applicable usury ceiling. To
the extent that Texas law determines the Maximum Rate (as hereafter defined),
such Maximum Rate shall be determined by utilizing the indicated (weekly) rate
ceiling from time to time in effect pursuant to Tex. Rev. Civ. Stat. art.
5069-1.04, as amended. In no event shall the provisions of Tex. Rev. Civ.
Stat. arts. 5069-2.01 through 5069-8.06 or 5069-15.01 through 5069-15.11 be
applicable to the loan evidenced hereby. As used herein, the term "Maximum
Rate" shall mean the maximum nonusurious rate of interest that may be lawfully
contracted for, charged, taken, reserved, or received by Payee from Maker in
connection with the loan evidenced hereby under applicable Texas law (or
applicable United States federal law to the extent that it permits Payee to
contract for, charge, take, reserve, or receive a greater amount of interest
than under Texas law).
THIS NOTE AND THE WRITTEN NOTE PURCHASE AGREEMENT REPRESENT THE FINAL
AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF
PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE
ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
ATMOS ENERGY CORPORATION
By:
------------------------------
Name:
Title:
50
EXHIBIT C-1
FORM OF OPINION OF ATMOS ENERGY CORPORATION
[ATMOS ENERGY CORPORATION LETTERHEAD]
November 14, 1994
New York Life Insurance Company
New York Life Insurance and Annuity Corporation
The Variable Annuity Life Insurance Company
American General Life Insurance Company
Merit Life Insurance Company
RE: 8.07% Senior Notes Due 2006 and 8.26% Notes Due 2014 of Atmos
Energy Corporation and Related Note Purchase Agreement
Ladies and Gentlemen:
I am the Senior Vice President and General Counsel of Atmos Energy
Corporation, a Texas corporation (the "Company"), and, as such, am familiar
with the legal affairs of the Company and the Subsidiaries (as hereinafter
defined by reference). This opinion is rendered to you in connection with the
issuance and sale this date by the Company of $20,000,000 aggregate principal
amount of its 8.07% Senior Notes due 2006 and $20,000,000 aggregate principal
amount of its 8.26% Senior Notes due 2014 pursuant to that certain Note
Purchase Agreement (the "Agreement") dated November 14, 1994 by and between
the Company and New York Life Insurance Company, New York Life Insurance and
Annuity Corporation, The Variable Annuity Life Insurance Company, American
General Life Insurance Company, and Merit Life Insurance Company (collectively
the "Purchasers"). Capitalized terms used herein and not otherwise defined
have the meanings given them in the Agreement.
In connection with this opinion, I have examined executed counterparts
of the Notes purchased by the Purchasers, the Agreement, and such other
documents, instruments, and certificates as I have deemed relevant.
Based on the foregoing, having due regard for the legal considerations I
deem relevant, and subject to the qualifications hereinafter set forth, I am
of the opinion that:
1. The Company is a corporation duly organized, validly existing, and
in good standing under the laws of the State of Texas. Exhibit E to the
Agreement lists all Subsidiaries of the Company as of the date hereof. All of
the outstanding capital stock of each Subsidiary has been duly authorized and
validly issued, is fully paid and non-assessable, and is owned of record and
beneficially by the Company free and clear of all liens, charges,
encumbrances, security interests, equities, options, and claims. Neither the
51
Company nor any Subsidiary has any obligation or commitment to issue any other
shares of capital stock nor has any of them granted any options with respect
thereto. Each Subsidiary is a corporation duly organized, validly existing,
and in good standing under the laws of its state of incorporation. Each of
the Company and the Subsidiaries has all requisite corporate power and
authority to own and operate its properties and to carry on its business as
now conducted and as presently proposed to be conducted. The Company has all
requisite power and authority to enter into the Agreement, to issue the Notes,
and to carry out the terms of each of the aforesaid. Each of the Company and
the Subsidiaries is qualified to do business in each jurisdiction where it
maintains any place of business or the nature of its business or properties
requires such qualification. Neither the Company nor any Subsidiary is a
partner (general or limited) or member in any partnership or joint venture,
except as otherwise disclosed to Purchaser on Exhibit D to the Agreement.
2. The execution, delivery, and performance of the Agreement and the
Notes have been duly authorized by all requisite actions of the Company. The
Agreement and each of the Notes issued on this date have been duly authorized,
executed and delivered by the Company and constitute legal, valid, and binding
obligations of the Company, enforceable against the Company in accordance with
their respective terms, subject as to enforcement of remedies to applicable
bankruptcy, insolvency, moratorium, reorganization, or similar laws relating
to or affecting the enforcement of creditors' rights generally, and provided
that no opinion is rendered as to the availability of specific performance,
injunctive relief, or other equitable remedies.
3. To the best of my knowledge, each of the Company and the
Subsidiaries has all such franchises, certificates of convenience and
necessity, operating rights, licenses, permits, consents, approvals,
authorizations, and orders of governmental bodies, political subdivisions, and
regulatory authorities as are necessary for the ownership of the properties
now owned by it, the maintenance and operation of the properties now
maintained or operated by it, and the conduct of the business now conducted by
it (other than those, if any, the lack of which will not result in any
material adverse effect on the properties, operations, business, or financial
condition of the Company).
4. To the best of my knowledge, each of the Company and the
Subsidiaries has good and marketable title, or valid and subsisting leasehold
interests, to all real property assets and good and indefeasible title to all
personal property assets, in each case necessary or appropriate for the
operation of its respective businesses (subject to no Liens other than those
permitted under Section 4.10 of the Agreement, and free and clear of all other
title defects, exceptions, and encumbrances which, if present, would have a
material adverse effect on the business, properties, operations, or financial
condition of the Company and its Subsidiaries on a consolidated basis), and
collectively have such title to all assets accounted for on the unaudited
consolidated financial statements of the Company dated June 30, 1994 delivered
by the Company to the Purchasers (subject to no Liens other than those
permitted under Section 4.10 of the Agreement and free and clear of all Title
Defects).
5. No Debt of the Company or any Subsidiary is senior to, or has
collection rights preferential to, the Notes (except to the extent certain
preferential collection rights may exist with respect to certain assets of the
52
Company located in the States of Colorado, Kansas, and Missouri that are
encumbered by the Lien of the Greeley Indenture).
6. Except as disclosed in Exhibit O to the Agreement, there is no
action, proceeding, or investigation pending or, to the best of my knowledge,
threatened against or affecting the Company or any Subsidiary in any court or
before or by any federal, state, or other governmental department, commission,
agency, or other instrumentality, or before any arbitrator that, if adversely
determined, would have a material adverse effect on the Company and its
Subsidiaries on a consolidated basis or on the Company's ability to perform
under the Agreement or the Notes.
7. Neither the Company nor any Subsidiary is in violation of its
articles of incorporation or bylaws, and the execution, delivery, and
performance of the Agreement and the Notes will not violate or contravene the
articles of incorporation or bylaws of the Company or any Subsidiary. Neither
the Company nor any Subsidiary is in default under or violation of any
agreement, instrument, judgment, writ, injunction, award, decree, order, law,
statute, or governmental or stock exchange rule or regulation applicable to
the Company or any Subsidiary (including, without limitation, Environmental
Laws, ERISA, and applicable statutes or governmental rules, regulations, and
orders relating to safety and other similar standards or controls), which
would have a material adverse effect on the business or operations of the
Company or that affects the Company's ability to perform any of its
obligations under the Agreement or any of the Notes. The execution, delivery,
and performance of the Agreement and each of the Notes will not result in any
such default or violation (including, without limitation, any default or
violation of Regulation G, Regulation T, Regulation U, Regulation X, or any
other regulation of the Board of Governors of the Federal Reserve System, or
the Security Exchange Act of 1934) or result in the creation of any Lien upon
any of the properties or assets of the Company or any Subsidiary nor will the
execution, delivery, and performance of the Agreement and the Notes require
any Holder to complete a Federal Reserve System Form G-3.
8. Neither the Company nor any Subsidiary has been or is required to
obtain any consent, approval, or authorization of, or to make any declaration
or filing with, any governmental authority, stock exchange (including,
without limitation, the filing with and approval of the Public Service
Commissions of the States of Kentucky and Missouri, the Public Utilities
Commission of Colorado, and the Kansas Corporation Commission), or any other
Person as a condition precedent to the valid execution, delivery, and
performance of the Agreement or any of the Notes, except such of the foregoing
as have been obtained or made.
9. The execution, delivery and sale of the Notes by the Company
pursuant to the Agreement is exempt from registration under the Securities Act
of 1933, as amended, and the Securities Exchange Act of 1934, as amended, and
from the qualification of an indenture in respect thereof under the Trust
Indenture Act of 1939, as amended. In addition, the Notes are not required to
be registered or qualified under the provisions of any applicable state blue
sky law.
10. Each of the Company and the Subsidiaries has all patents,
trademarks, service marks, trade names, copyrights, and licenses, or rights
with respect to the foregoing, as are adequate for the conduct of its business
53
as now conducted and proposed to be conducted, without any known conflict with
the rights of others.
11. Neither the Company nor any Subsidiary is an "investment company"
or a company, directly or indirectly, "controlled" by or "acting on behalf of"
an "investment company" as such terms are defined in the Investment Company
Act of 1940, as amended.
12. Neither the Company nor any Subsidiary is required to register
under the Public Utility Holding Company Act of 1935, as amended, or the rules
and regulations thereunder.
I am licensed to practice law in Texas, and accordingly the opinions
above are limited to the laws of the State of Texas and applicable federal law
except that, with respect to the opinions in Paragraph 1 above and in
Paragraph 8 above, I am opining based upon the laws of the States of Delaware,
Kentucky, Louisiana, Colorado, Kansas, and Missouri, as applicable, and
without limitation to the laws of the State of Texas.
54
This opinion is rendered for your benefit and that of any other Holder
and your or their respective counsel in rendering opinions to you or them and
may not be quoted or referred to (other than in a list of closing documents)
by anyone else (except as required by applicable regulatory authorities or by
law) without my prior written consent.
Very truly yours,
Don E. James
55
EXHIBIT C-2
FORM OF OPINION OF LOCKE PURNELL RAIN HARRELL
EXHIBIT C-2
Opinion of Locke Purnell Rain Harrell
[LOCKE PURNELL RAIN HARRELL LETTERHEAD]
November 14, 1994
New York Life Insurance Company
New York Life Insurance and Annuity Corporation
The Variable Annuity Life Insurance Company
American General Life Insurance Company
Merit Life Insurance Company
Re: 8.07% Senior Notes Due 2006 and 8.26% Notes Due 2014 of Atmos
Energy Corporation and Related Note Purchase Agreement
Ladies and Gentlemen:
We have been requested by Atmos Energy Corporation, a Texas corporation
(the "Company"), to furnish you with certain opinions with respect to the
Company and Subsidiaries of the Company in connection with the issuance and
sale this date by the Company of
$20,000,000 aggregate principal amount of its 8.07% Senior Notes due 2006 and
$20,000,000 aggregate principal amount of its 8.26% Senior Notes due 2014
pursuant to that certain Note Purchase Agreement (the "Agreement") dated
November 14, 1994, by and between the Company and New York Life Insurance
Company, New York Life Insurance and Annuity Corporation, The Variable Annuity
Life Insurance Company, American General Life Insurance Company, and Merit
Life Insurance Company (collectively the "Purchasers"). Capitalized terms
used herein and not otherwise defined have the meanings given them in the
Agreement.
In connection with the opinions herein expressed, we have examined
executed counterparts of the Notes purchased by the Purchasers, the Agreement,
and such other documents, instruments, and certificates as we have deemed
relevant.
Based on the foregoing, having due regard for the legal considerations
we deem relevant, and subject to the qualifications hereinafter set forth, we
are of the opinion that:
56
1. The Company is a corporation duly organized, validly existing, and
in good standing under the laws of the State of Texas. Each Subsidiary is a
corporation duly organized, validly existing, and in good standing under the
laws of the state of its incorporation. Each of the Company and the
Subsidiaries has all requisite corporate power and authority to own and
operate its properties and to carry on its business as now conducted. The
Company has all requisite power and authority to enter into the Agreement, to
issue the Notes, and to carry out the terms thereof.
2. The execution, delivery, and performance of the Agreement and each
of the Notes have been duly authorized by all requisite actions of the
Company. The Agreement and each of the Notes issued on this date have been
duly authorized and executed by the Company, and when delivered by the Company
will constitute a legal, valid, and binding obligation of the Company,
enforceable against the Company in accordance with its respective terms,
subject as to enforcement of remedies to applicable bankruptcy, insolvency,
moratorium, reorganization, or similar laws relating to or affecting the
enforcement of creditors' rights generally; provided, however, that no opinion
is rendered as to the availability of specific performance, injunctive relief,
or other equitable remedies.
3. Based solely upon representations made to us by representatives of
the Company as to which we have made no independent investigation, there is no
action, proceeding, or investigation pending or threatened (or any basis
therefor known to us) against or affecting the Company or any Subsidiary in
any court or before or by any federal, state, or governmental department,
commission, agency, or other instrumentality, or before any administrator
that, if adversely determined, would have a material adverse effect on the
Company and its Subsidiaries on a consolidated basis.
4. Based solely upon representations made to us by representatives of
the Company as to which we have made no independent investigation, to our
knowledge neither the Company nor any Subsidiary is in violation of its
articles of incorporation or bylaws. The execution, delivery, and performance
by the Company of the Notes and the Agreement will not violate or contravene
the articles of incorporation or bylaws of the Company or any Subsidiary.
5. Neither the Company nor any Subsidiary has been, or will be,
required to obtain any consent, approval, or authorization of, or to make any
declaration or filing with, any governmental authority, stock exchange
(including, without limitation, the filing with and approval of the Public
Service Commissions of the States of Kentucky and Missouri, the Public
Utilities Commission of Colorado, and the Kansas Corporation Commission), or
any other Person as a condition precedent to the valid execution, delivery,
and performance of any of the Notes or the Agreement, except such of the
foregoing as have been obtained or made.
6. The execution, delivery, and sale, of the Notes by the Company is
exempt from registration under the Securities Act of 1933, as amended, and the
Securities Exchange Act of 1934, as amended, and from the qualification of an
indenture in respect thereof under the Trust Indenture Act of 1939, as
amended. In addition, the Notes are not required to be registered or
qualified under the provisions of any applicable state blue sky law.
57
7. Assuming that the Company uses the proceeds from the sale of the
Notes as required by Section 2.3 of the Agreement, the issuance, sale, and
purchase of the Notes being purchased by you under the Agreement do not
violate any of Regulations G, T, U, or X of the Board of Governors of the
Federal Reserve System or Section 7 of the Securities Exchange Act of 1934, as
now in effect, nor will the execution, delivery, and performance of the
Agreement and the Notes require any Holder to complete a Federal Reserve
System Form G-3.
8. Neither the Company nor any Subsidiary is an "investment company"
or a company, directly or indirectly, "controlled" by or "acting on behalf of"
an "investment company" as such terms are defined in the Investment Company
Act of 1940, as amended.
9. Neither the Company nor any Subsidiary is required to register
under the Public Utility Holding Company Act of 1935, as amended, or the rules
and regulations thereunder.
58
This opinion is rendered for your benefit and that of any other Holder
and may not be quoted or referred (other than in a list of closing documents)
by anyone else (except as required by applicable regulatory authorities or by
law) without our prior written consent.
Very truly yours,
LOCKE PURNELL RAIN HARRELL
(A Professional Corporation)
By:
--------------------------------
59
EXHIBIT D
PARTNERSHIPS AND JOINT VENTURES
None
60
EXHIBIT E
SUBSIDIARIES
States in
Percentage which
Name and Jurisdiction Owned by Qualified
of Formation Atmos Energy To Do
Corporation Business
- -----------------------------------------------------------------
EGASCO, Inc. Texas 100% Texas
EnerMart, Inc. Delaware 100% Delaware
Texas
Trans Louisiana
Industrial Gas Company,
Inc. Louisiana 100% Louisiana
Western Kentucky Gas
Resources
Company Delaware 100% Delaware
Louisiana
Kentucky
Oklahoma
Atmos Energy Corporation
Texas Texas
Colorado
Missouri
Kansas
Louisiana
Kentucky
Vermont
61
EXHIBIT F
CHANGES IN FINANCIAL CONDITION
None
62
EXHIBIT G
DEBT
Debt Outstanding
(as of November 14, 1994)
- -----------------------------------------------------------------
A. Long-Term Debt of the Company:
Unsecured 7.95% Senior Notes, due
August 31, 2006 $ 10,000,000
Unsecured 9.57% Senior Notes, due
September 30, 2006 20,000,000
Unsecured 9.76% Senior Notes, due
December 30, 2004 30,000,000
Unsecured 9.75% Senior Notes, due
December 30, 1996 5,000,000
Unsecured 11.2% Senior Notes, due
December 30, 2002 18,000,000
First Mortgage Bonds, 9.4% Series
J, due May 1, 2021 17,000,000
Unsecured 10% Notes, due
December 31, 2011 2,303,000
------------
$102,303,000
============
B. Short-Term Debt of the Company:
1. Committed Lines of Credit
NationsBank of Texas, N.A.,
$50,000,000 line of credit $ 34,900,000
Amarillo National Bank,
$12,000,000 line of credit 0
2. Uncommitted Lines of Credit
Amarillo National Bank,
$10,000,000 Master Note 10,000,000
The Fuji Bank, Limited
$10,000,000 line of credit 0
First Interstate Bank of Texas, N.A.
$10,000,000 line of credit 0
63
Wachovia Bank of Georgia, N.A.,
$10,000,000 line of credit 0
Societe Generale,
$10,000,000 line of credit 0
The Mitsubishi Bank, Limited,
$10,000,000 line of credit 0
The Sanwa Bank, Limited
$10,000,000 line of credit 0
The Sumitomo Bank, Limited
$10,000,000 line of credit 0
PNC Bank, National Association
$10,000,000 line of credit 0
The Bank of Tokyo, Ltd.
$15,000,000 line of credit 0
NationsBank of Texas, N.A.
$20,000,000 line of credit 0
C. Other Obligations:
1. Capitalized Leases $6,294,097 (a)
2. The Company has executed a written Guaranty of Payment, dated November 2,
1994, in which the Company guaranteed the payment when due of amounts
owed by Trans Louisiana Industrial Gas Company, Inc. to Texaco, Inc. and
Texaco Gas Marketing Inc. under two interruptible and one firm gas
purchase contracts.
(a) This amount constitutes the net present value, as of September 30, 1994,
of future obligations for capitalized leases.
64
EXHIBIT H
MATERIAL AGREEMENTS
1. Gas Sales Agreement between Energas Company and Westar Trans-
mission Company dated January 1, 1986, as amended.
2. Gas Transportation Agreement between Energas Company and Westar
Transmission Company dated January 1, 1986, as amended.
3. Gas Sales Agreement, dated January 1, 1988, between Anthem Energy
Company, L.P. ("Anthem") and the Company, relating to Amarillo supplemental
supplies.
4. Gas Purchase and Sales Agreement, dated January 1, 1988, between
Anthem and EnerMart, Inc.
5. Gas Sales Agreement, dated January 1, 1988, between the Company
and Anthem, relating to West Texas supplemental supplies.
6. Amarillo Supply Agreement, dated January 2, 1993, between the
Company and Mesa Operating Company.
7. Interruptible Gas Transportation and Sales Agreement dated
January 1, 1991, between Mesa Operating Company and Energas Company.
8. Agreement for Natural Gas Service for Distribution and Resale
between Trans Louisiana Gas Company ("Trans La") and Louisiana Intrastate Gas
Company ("LIG") dated October 28, 1991.
9. Agreement for Intrastate Transportation of Natural Gas between
Trans La and LIG dated October 28, 1991.
10. Gas Transportation Agreement, Contract No. 2550, dated
September 1, 1993, between Tennessee Gas Pipeline Company, a division of
Tenneco, Inc. ("Tennessee Gas"), and Western Kentucky, Campbellsville Service
Area.
11. Gas Transportation Agreement, Contract No. 2546, dated
September 1, 1993, between Tennessee Gas and Western Kentucky, Danville
Service Area.
12. Gas Transportation Agreement, Contract No. 2385, dated September
1, 1993, between Tennessee Gas and Western Kentucky, Greensburg et al. Service
Area.
13. Gas Transportation Agreement, Contract No. 2551, dated September
1, 1993, between Tennessee Gas and Western Kentucky, Harrodsburg Service Area.
14. Gas Transportation Agreement, Contract No. 2548, dated September
1, 1993, between Tennessee Gas and Western Kentucky, Lebanon Service Area.
65
15. Firm No-Notice Transportation Agreement between Western Kentucky
Gas Company and Texas Gas Transmission Corporation dated November 1, 1993.
16. Gas Transportation Agreement No. T3817 between Western Kentucky
Gas Company and Texas Gas Transmission Corporation dated November 1, 1993, for
Zone 2.
17. Gas Transportation Agreement No. T3770 between Western Kentucky
Gas Company and Texas Gas Transmission Corporation dated November 1, 1993, for
Zone 2.
18. Gas Transportation Agreement No. T3355 between Western Kentucky
Gas Company and Texas Gas Transmission Corporation dated November 1, 1993, for
Zone 3.
19. Gas Transportation Agreement No. T3819 between Western Kentucky
Gas Company and Texas Gas Transmission Corporation dated November 1, 1993, for
Zone 4.
20. Service Agreement No. 50,772 between Greeley Gas Company and
Public Service Company of Colorado dated August 1, 1992.
21. Transportation-Storage Service Agreement No. TA-0544 between
Greeley Gas Company and Williams Natural Gas Company dated October 1, 1993.
22. No-Notice Transportation Service Agreement No. 31013, Rate
Schedule NNT-1, between Greeley Gas Company and Colorado Interstate Gas
Company, as amended, dated October 1, 1993.
23. Firm Transportation Service Agreement No. 35009, Rate Schedule
TF2, between Greeley Gas Company and Colorado Interstate Gas Company, as
amended, dated October 1, 1993.
66
EXHIBIT I
ERISA MATTERS
A. List of Pension Plans maintained by the Company that are subject to
ERISA:
Plan Administrators and
Name of Plan Type Investment Managers
- -----------------------------------------------------------------
1. Employees' Defined Benefit Trustee: Boatmen's Trust
Retirement Plan NonContributory Company
of Atmos Energy Investment Managers:
Corporation Columbus Circle Investors
Delaware Investment
Advisors
J.P. Morgan Investment
Management, Inc.
Sovran Capital Management
Corporation
2. Employee Stock Defined Trustee: ESOP Trust
Ownership Plan Contribution Committee of the Company
and Trust for ESOP Custodian: T. Rowe Price
Employees of Associates, Inc.,
Atmos Energy Institutional Services
Corporation Group
3. Western Defined Benefit Trustee: Boatmen's Trust
Kentucky Gas NonContributory Company
Retirement Plan Investment Managers:
Columbus Circle Investors
Delaware Investment
Advisors
J.P. Morgan Investment
Management, Inc.
Sovran Capital Management
Corporation
4. Greeley Gas Defined Benefit Trustee: Boatmen's Trust
Company NonContributory Company
Employees Investment Managers:
Pension Plan Columbus Circle Investors
Delaware Investment
Advisors
J.P. Morgan Investment
Management, Inc.
Sovran Capital Management
Corporation
Gary A. Morris, R.I.A.
5. Greeley Defined Trustee, Investment
67
Retirement and Contribution Advisor, and Custodian:
Savings Plan 401(k) First Interstate
Bank of Denver, N.A.
6. Supplemental Nonqualified Trustee: Bank One Texas,
Executive Deferred N.A.
Benefits Plan Compensation Investment Manager:
The One Group, an
affiliate of Bank One
The Company also maintains various welfare benefit plans for its employees,
covering medical, life, and other similar types of benefits.
B. Funds invested by a pension plan with a Purchaser:
None
68
EXHIBIT J
PERMITTED INVESTMENTS
(As of September 30, 1994)
Cash Surrender Value
Life Insurance on Key Employees $ 361,138
=============
Loans and Advances
Officers, Directors and Employees $ 142,976
Employee Merchandise Receivables 163,144
Country Club Memberships 15,501
-------------
$ 321,621
=============
Bank Accounts
Operating and Auxiliary Bank Accounts $ 2,766,260*
NationsBank of Texas, N.A.
Interest Bearing Account 9,900,000
Reclassification to offset
short term debt outstanding (9,900,000)
-------------
$ 2,766,260
=============
Notes Receivable from Customers Main Extensions $ 172,451
=============
* See attached Operating Bank Data and Auxiliary Bank Data
69
EXHIBIT K
ENVIRONMENTAL MATTERS
None
70
EXHIBIT L
PAYMENT AND NOTE PROCEDURES
NEW YORK LIFE INSURANCE COMPANY
All payments to be by wire transfer of immediately available funds, with
sufficient information (including issuer, PPN number, interest rate, maturity
date, interest amount, principal amount and premium amount, if applicable) to
identify the source and application of such funds, to:
ABA No. 021000238
Morgan Guaranty Trust Company of New York
New York, New York
Re: New York Life Insurance Company
General Account No. 810-00-000
Payment notices to:
New York Life Insurance Company
51 Madison Avenue
New York, New York 10010-1603
Attn: Treasury Department
Securities Income Section
Room 209
Duplicate payment notices and all other correspondence to:
New York Life Insurance Company
51 Madison Avenue
New York, New York 10010-1603
Attn: Investment Department
Private Finance Group, Room 206
Telecopy No.: (212) 447-4122
New York Life Insurance Company
51 Madison Avenue
New York, New York 10010-1603
Attn: Office of the General Counsel
Investment Section, Room 10SB
Telecopy No.: (212) 576-8340
71
NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION
All payments to be by wire transfer of immediately available funds, with
sufficient information (including issuer, PPN number, interest rate, maturity
date, interest amount, principal amount and premium amount, if applicable) to
identify the source and application of such funds, to:
ABA No. 021000128
Chemical Bank
New York, New York
Re: New York Life Insurance and Annuity Corporation
General Account No. 008-0-57001
Payment notices to:
New York Life Insurance and Annuity Corporation
c/o New York Life Insurance Company
51 Madison Avenue
New York, New York 10010-1603
Attn: Treasury Department
Securities Income Section
Room 209
Duplicate payment notices and all other correspondence to:
New York Life Insurance and Annuity Corporation
c/o New York Life Insurance Company
51 Madison Avenue
New York, New York 10010-1603
Attn: Investment Department
Private Finance Group, Room 206
Telecopy No.: (212) 447-4122
New York Life Insurance and Annuity Corporation
c/o New York Life Insurance Company
51 Madison Avenue
New York, New York 10010-1603
Attn: Office of the General Counsel
Investment Section, Room 10SB
Telecopy No.: (212) 576-8340
72
THE VARIABLE ANNUITY LIFE INSURANCE COMPANY
All payments to be by wire transfer of immediately available funds, with
sufficient information (including issuer, PPN number, interest rate, maturity
date, interest amount, principal amount and premium amount, if applicable) to
identify the source and application of such funds, to:
ABA No. 011000028
State Street Bank and Trust Company
Boston, Massachusetts 02101
Re: The Variable Annuity Life Insurance Company
AC 0125-821-9
OBI=Description of payment
Fund Number PA 54
Payment notices to:
The Variable Annuity Life Insurance Company and PA 54
c/o State Street Bank and Trust Company
State Street South
Ann Hutchinson Offices, 2nd Floor
108 Myrtle Street
Two Newport Office Park
North Quincy, Massachusetts 02171
Telecopy No.: (617) 985-4923
Duplicate payment notices and all other correspondence to:
The Variable Annuity Life Insurance Company
c/o American General Corporation
P.O. Box 3247
Houston, Texas 77253-3247
Overnight Mail Address: 2929 Allen Parkway, 77019-2155
Attn: Investment Research Department, A37-01
Telecopy No.: (713) 831-1366
73
AMERICAN GENERAL LIFE INSURANCE COMPANY
All payments to be by wire transfer of immediately available funds, with
sufficient information (including issuer, PPN number, interest rate, maturity
date, interest amount, principal amount and premium amount, if applicable) to
identify the source and application of such funds, to:
ABA No. 011000028
State Street Bank and Trust Company
Boston, Massachusetts 02101
Re: American General Life Insurance Company
AC 0125-881-3
OBI=Description of payment
Fund Number PA 40
Payment notices to:
American General Life Insurance Company and PA 40
c/o State Street Bank and Trust Company
State Street South
Ann Hutchinson Offices, 2nd Floor
108 Myrtle Street
Two Newport Office Park
North Quincy, Massachusetts 02171
Telecopy No.: (617) 985-4923
Duplicate payment notices and all other correspondence to:
American General Life Insurance Company
c/o American General Corporation
P.O. Box 3247
Houston, Texas 77253-3247
Overnight Mail Address: 2929 Allen Parkway, 77019-2155
Attn: Investment Research Department, A37-01
Telecopy No.: (713) 831-1366
74
MERIT LIFE INSURANCE COMPANY
All payments to be by wire transfer of immediately available funds, with
sufficient information (including issuer, PPN number, interest rate, maturity
date, interest amount, principal amount and premium amount, if applicable) to
identify the source and application of such funds, to:
ABA No. 011000028
State Street Bank and Trust Company
Boston, Massachusetts 02101
Re: Merit Life Insurance Company
AC 4653-082-0
OBI=Description of payment
Fund Number PA 20
Payment notices to:
Merit Life Insurance Company and PA 20
c/o State Street Bank and Trust Company
State Street South
Ann Hutchinson Offices, 2nd Floor
108 Myrtle Street
Two Newport Office Park
North Quincy, Massachusetts 02171
Telecopy Number: (617) 985-4923
Duplicate payment notices and all other correspondence to:
Merit Life Insurance Company
c/o American General Corporation
P.O. Box 3247
Houston, Texas 77253-3247
Overnight Mail Address: 2929 Allen Parkway, 77019-2155
Attn: Investment Research Department, A37-01
Telecopy Number: (713) 831-1366
75
EXHIBIT M
FORM OF LETTER OF TRANSFER OF NOTES
[DATE]
Atmos Energy Corporation
1800 Three Lincoln Centre
5430 LBJ Freeway
Dallas, Texas 75240
Re: Transfer of $ Principal Amount of
--------------------
[8.07%/8.26%] Senior Note Due October 31, [2006/2014] (the "Note")
from [Seller] to [Purchaser]
Ladies and Gentlemen:
Pursuant to Section 7.1 of the Note Purchase Agreement dated as of
November 14, 1994, between Atmos Energy Corporation, a Texas corporation (the
"Company"), the original holder of the Note and the other parties thereto (the
"Note Agreement"), and the Company's [8.07%/8.26%] Senior Notes due
October 31, [2006/2014], this letter is to advise you that [Seller] (the
"Seller") has transferred the Note or a portion thereof in the above-
referenced principal amount to [Purchaser] (the "Purchaser"). In connection
with such transfer the Purchaser and the Seller hereby request that the
Company deliver to the Purchaser a Note in the above-referenced principal
amount in the form of Exhibit [B-1/B-2] to the Note Agreement.
1. In connection with the transfer, the Seller hereby
represents that the transfer of the Note will not require registration
of the Note under the Securities Act of 1933 or under any state
securities law.
2. In connection with the transfer, the Purchaser represents
that:
(i) the Purchaser is an "accredited investor" within the
meaning of Rule 501 under the Securities Act of 1933,
as amended (the "Act");
(ii) the Purchaser is acquiring the Note for its own
account as principal and not with a view to the
distribution or resale of the Note or any portion
thereof (it being understood, however, that the
76
disposition of the Note shall at all times be within
the Purchaser's control); and
(iii) no part of the funds used by the Purchaser to purchase
the Note constitutes assets allocated to any separate
or other account (as defined in Section 3(17) of the
Employment Retirement Income Security Act of 1974, as
amended) maintained by the Purchaser, in which any
employee benefit plan participates to the extent of
10% or more.
3. The Purchaser acknowledges that the Note has not been
registered under the Act or the securities laws of any state on the
ground that the original sale contemplated hereby is exempt from
registration under the Act and such state securities laws and agrees
that in the absence of such registration the Note will be sold or
disposed of only pursuant to an exemption from registration under the
Act and such state securities laws.
4. For the purposes of making any payment to the Purchaser of
principal, interest, premiums, if any, under the Note, or any other
amount payable thereunder, such payment shall be made to the following
account:
[BANK]
[ADDRESS]
[ABA NO.]
[ACCOUNT NO.]
[REFERENCE:]
5. For the purpose of giving any notice or providing
information to the Purchaser required under the Note or the Note
Agreement, any such notice or information shall be delivered to the
Purchaser at the following address:
[ADDRESS]
[ATTENTION:]
[TELEPHONE]
[TELECOPY]
77
[6. Please deliver the registered Note to the Purchaser via
courier at the following address:]
[SELLER]
By:
----------------------------------------
Name:
Title:
[PURCHASER]
By:
----------------------------------------
Name:
Title:
78
EXHIBIT N
FORM OF DELAWARE LEGALITY CERTIFICATE
TO: NEW YORK LIFE INSURANCE COMPANY
NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION
THE VARIABLE ANNUITY LIFE INSURANCE COMPANY
AMERICAN GENERAL LIFE INSURANCE COMPANY
MERIT LIFE INSURANCE COMPANY
FROM: ATMOS ENERGY CORPORATION
DATE: November 14, 1994
RE: 8.07% Senior Notes of Atmos Energy Corporation Due October 31,
2006
8.26% Senior Notes of Atmos Energy Corporation Due October 31,
2014
Section 1308(2) of the Delaware Insurance Code
(000's omitted)
Indicate basis used: Consolidated
[Entire Certificate appears on following page]
79
Section 1308(2) of the Delaware Insurance Code
(000's omitted)
Indicate basis used: Consolidated
For Fiscal Years Ended September 30
-----------------------------------
1989 1990 1991 1992 1993 Total
---- ---- ---- ---- ---- -----
1 Net Income Available
for Dividends
2 Add: Federal and
State and Other Income
Taxes of Parent (and
of 100% owned
subsidiaries if computed
on a consolidated basis)
Extraordinary Non-Recurring
Items of Expenses (a)
3 Subtotal (1 plus 2)
4 Deduct: Extraordinary Non-
Recurring Items of Income (a)
5 Adjust Net Income (3 minus 4)
6 Add Fixed Charges:
Interest on Funded and
Unfunded Debt
Amortization of Debt Discount
Rental for Leased Properties (b)
Preferred Dividends of
Subsidiaries Payable to
Others (c)
Total Fixed Charges
7 Net Earnings Available for
Fixed Charges (5 plus 6)
8 Fixed Charges Times Earned
(7 divided by 6)
(a) Include only those appearing in regular financial statements; state
nature of items and amounts.
(b) Include all payments (whether or not stated to be "rentals") required to
be made by lessee, such as taxes, insurance premiums, etc.
(c) Not applicable to Company only basis.
By:
----------------------------------------
Name:
Title:
80
EXHIBIT O
PENDING LITIGATION
On March 15, 1991, suit was filed in the 15th Judicial District Court of
Lafayette Parish, Louisiana, by the "Lafayette Daily Advertiser" and others
against the Company's Trans La Division, Trans Louisiana Industrial Gas
Company, Inc. ("TLIG"), a wholly owned subsidiary of the Company, and
Louisiana Intrastate Gas Corporation and certain of its affiliates ("LIG").
LIG is the Company's primary supplier of natural gas in Louisiana and is not
otherwise affiliated with the Company.
The plaintiffs purported to represent a class consisting of all
residential and commercial gas customers in the Trans La Division's service
area. Among other things, the lawsuit alleged that the defendants violated
antitrust laws of the state of Louisiana by manipulating the cost-of-gas
component of the Trans La Division's gas rate to the purported customer class,
thereby causing such purported class members to pay a higher rate. The
plaintiffs made no specific allegation of an amount of damages.
The defendants brought an appeal to the Louisiana Supreme Court of
rulings by the trial court and the Third Circuit Court of Appeal which denied
defendants' exceptions to the jurisdiction of the trial court. It was the
position of the defendants that the plaintiffs' claims amount to complaints
about the level of gas rates and should be within the exclusive jurisdiction
of the Louisiana Public Service Commission.
On January 19, 1993, the Louisiana Supreme Court issued a decision
reversing in part the lower courts' rulings, dismissing all of the plaintiffs'
claims against the defendants which seek damages due to alleged overcharges
and further ruling that all such claims are within the exclusive jurisdiction
of the Louisiana Public Service Commission. Any claims which seek damages
other than overcharges were remanded to the trial court but were stayed
pending the completion of the Louisiana Public Service Commission proceeding
referred to below.
The Louisiana Public Service Commission has instituted a docketed
proceeding for the purpose of investigating the costs included in the Trans La
Division's purchased gas adjustment component of its rates. Both the Trans La
Division and LIG are parties to the proceeding. Much of the discovery in this
proceeding has been conducted and a procedural schedule has been established.
The Company believes the allegations as they relate to the Company, whether
brought in court or at the Louisiana Public Service Commission, are without
merit, and that the chances of a material adverse outcome are remote.
81