EXHIBIT 10.10
[Execution Copy]
- - --------------------------------------------------------------------------------
TRANSMONTAIGNE OIL COMPANY
$100,000,000
SENIOR NOTES
MASTER SHELF AGREEMENT
(INCLUDING GUARANTEES OF SUBSIDIARIES)
DATED AS OF APRIL 17, 1997
- - --------------------------------------------------------------------------------
TABLE OF CONTENTS
(Not Part of Agreement)
1. AUTHORIZATION OF ISSUE OF NOTES 1
2. PURCHASE AND SALE OF NOTES.2
2A. FACILITY.2
2B. ISSUANCE PERIOD.2
2C. PERIODIC SPREAD INFORMATION.2
2D. REQUEST FOR PURCHASE.3
2E. RATE QUOTES.4
2F. ACCEPTANCE.4
2G. MARKET DISRUPTION.5
2H. CLOSING.5
2I. FEES.6
3. CONDITIONS OF CLOSING.8
3A. CERTAIN DOCUMENTS.8
3B. ADDITIONAL DOCUMENTS TO BE DELIVERED AT THE INITIAL CLOSING.9
3C. PERFECTION OF SECURITY.9
3D. PAYMENT OF FEES.9
3E. REPRESENTATIONS AND WARRANTIES; NO DEFAULT.10
3F. PURCHASE PERMITTED BY APPLICABLE LAWS.10
3G. LEGAL MATTERS.10
3H. PROCEEDINGS.10
3I. FACILITY FEE.10
4. PREPAYMENTS.10
4A. REQUIRED PREPAYMENTS.10
4B. OPTIONAL PREPAYMENT WITH YIELD-MAINTENANCE AMOUNT.10
4C. NOTICE OF OPTIONAL PREPAYMENT.11
4D. APPLICATION OF PREPAYMENTS.11
4E. RETIREMENT OF NOTES.11
5. AFFIRMATIVE COVENANTS.12
5A. FINANCIAL STATEMENTS AND REPORTS.12
5B. INFORMATION REQUIRED BY RULE 144A.16
5C. INSPECTION OF PROPERTY.16
5D. COVENANT TO SECURE NOTES EQUALLY.16
5E. TAXES AND OTHER CHARGES; ACCOUNTS PAYABLE.17
5F. TYPES OF BUSINESS.17
5G. MAINTENANCE OF PROPERTIES.17
5H. STATUTORY COMPLIANCE.18
5I. COMPLIANCE WITH MATERIAL AGREEMENTS.18
5J. TRADING POLICY.18
5K. SUBORDINATED DEBENTURES.18
5L. INVENTORY ACCOUNTING.19
5M. INSURANCE.19
5N. ERISA, ETC.19
5O. OPEN POSITIONS.19
5P. ENVIRONMENTAL LAWS.20
6. NEGATIVE COVENANTS.20
6A. CERTAIN FINANCIAL TESTS.20
6B. DISTRIBUTIONS.21
6C. LIENS, INDEBTEDNESS AND OTHER RESTRICTIONS.21
6D. ISSUANCE OF STOCK BY SUBSIDIARIES; SUBSIDIARY DISTRIBUTIONS.27
6E. DERIVATIVE CONTRACTS.27
6F. NEGATIVE PLEDGE CLAUSES.27
6G. TRANSACTIONS WITH AFFILIATES.28
6H. INACTIVE SUBSIDIARIES.28
7. EVENTS OF DEFAULT.28
7A. ACCELERATION.32
7B. RESCISSION OF ACCELERATION.32
7C. NOTICE OF ACCELERATION OR RESCISSION.32
7D. OTHER REMEDIES.32
7E. ANNULMENT OF DEFAULTS.32
8. REPRESENTATIONS, COVENANTS AND WARRANTIES.33
8A. ORGANIZATION.33
8B. FINANCIAL STATEMENTS.34
8C. ACTIONS PENDING.34
8D. OUTSTANDING DEBT.35
8E. TITLE TO PROPERTIES.35
8F. TAXES.35
8G. CONFLICTING AGREEMENTS AND OTHER MATTERS.35
8H. OFFERING OF NOTES.36
8I. USE OF PROCEEDS.36
8J. ERISA.36
8K. GOVERNMENTAL CONSENT.37
8L. DISCLOSURE.37
8M. HOSTILE TENDER OFFERS.37
8N. LICENSES, ETC.38
8O. CERTAIN BUSINESS REPRESENTATIONS.38
8P. ENVIRONMENTAL REGULATIONS.39
8Q. FOREIGN TRADE REGULATIONS; GOVERNMENT REGULATION.40
8R. FACILITY CONVERSION DATE.41
8S. BANK AGREEMENT.41
8T. MATERIAL AGREEMENTS.41
9. REPRESENTATIONS OF THE PURCHASERS.41
9A. NATURE OF PURCHASE.41
9B. SOURCE OF FUNDS.41
10. DEFINITIONS.41
10A. YIELD-MAINTENANCE TERMS.42
10B. OTHER TERMS.43
10C. ACCOUNTING PRINCIPLES, TERMS AND DETERMINATIONS.58
11. GUARANTEES.59
11A. GUARANTEES OF OBLIGATIONS.59
11B. CONTINUING OBLIGATION.59
11C. WAIVERS WITH RESPECT TO OBLIGATIONS.60
11D. LENDERS' POWER TO WAIVE, ETC.61
11E. INFORMATION REGARDING THE COMPANY, ETC.62
11F. CERTAIN GUARANTOR REPRESENTATIONS.62
11G. SUBROGATION.63
11H. SUBORDINATION.63
11I. FUTURE SUBSIDIARIES; FURTHER ASSURANCES.63
12. MISCELLANEOUS.64
12A. NOTE PAYMENTS.64
12B. EXPENSES.64
12C. CONSENT TO AMENDMENTS.64
12D. FORM, REGISTRATION, TRANSFER AND EXCHANGE OF NOTES; LOST NOTES.65
12E. PERSONS DEEMED OWNERS; PARTICIPATIONS.66
12F. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ENTIRE AGREEMENT.66
12G. SUCCESSORS AND ASSIGNS.66
12H. NOTICES.67
12I. PAYMENTS DUE ON NON-BUSINESS DAYS.67
12J. SEVERABILITY.67
12K. DESCRIPTIVE HEADINGS.67
12L. SATISFACTION REQUIREMENT.67
12M. MAXIMUM INTEREST PAYABLE.68
12N. GOVERNING LAW.68
12O. WAIVER OF JURY TRIAL; SUBMISSION TO JURISDICTION.68
12P. COUNTERPARTS.70
12Q. BINDING AGREEMENT.70
INFORMATION SCHEDULE
SCHEDULE 3A(vii) -- UCC Searches
SCHEDULE 5A(i) -- Form of Covenant Compliance Certificate
SCHEDULE 5J -- Risk and Product Management Policy
SCHEDULE 8A -- Company and Subsidiary Information
SCHEDULE 8D -- Financing Debt, Liens, Guarantees and Investments
SCHEDULE 8G -- List of Agreements Restricting Debt
SCHEDULE 8J -- Defined Benefit Plans
SCHEDULE 8P -- Environmental Information
SCHEDULE 8T -- Material Agreements
EXHIBIT A-1 -- FORM OF SERIES A NOTE
EXHIBIT A-2 -- FORM OF NOTE
EXHIBIT B -- FORM OF REQUEST FOR PURCHASE
EXHIBIT C -- FORM OF CONFIRMATION OF ACCEPTANCE
EXHIBIT D -- FORM OF OPINION OF COMPANY'S COUNSEL
EXHIBIT E -- FORM OF PLEDGE AGREEMENT
EXHIBIT F -- FORM OF INTERCREDITOR AGREEMENT
TRANSMONTAIGNE OIL COMPANY
370 17TH STREET, SUITE 2750
DENVER, COLORADO 80202
As of April 17, 1997
To: The Prudential Insurance Company
of America (herein called "PRUDENTIAL")
Each Prudential Affiliate (as hereinafter
defined) which becomes bound by certain
provisions of this Agreement as hereinafter
provided (together with Prudential, the
"PURCHASERS")
c/o Prudential Capital Group
Gateway Center Four
100 Mulberry Street
Newark, NJ 07102-4069
Ladies and Gentlemen:
The undersigned, TransMontaigne Oil Company (the "COMPANY"), hereby
agrees with you as follows:
1. AUTHORIZATION OF ISSUE OF NOTES. The Company will authorize the
issue of its senior promissory notes (the "NOTES") in the aggregate principal
amount of $100,000,000, to be dated the date of issue thereof; to mature, in the
case of each Note so issued, no more than 12 years after the date of original
issuance thereof; to have an average life, in the case of each note so issued,
of no more than 10 years after the date of original issuance thereof; to bear
interest on the unpaid balance thereof from the date thereof at the rate per
annum, and to have such other particular terms, as shall be set forth, in the
case of each Note so issued, in the Confirmation of Acceptance with respect to
such Note delivered pursuant to paragraph 2F; and to be substantially in the
form of Exhibit A-2 attached hereto. The term "NOTES" as used herein shall
-----------
include each Note delivered pursuant to any provision of this Agreement and each
Note delivered in substitution or exchange for any such Note pursuant to any
such provision. Notes which have (i) the same final maturity, (ii) the same
installment payment dates, (iii) the same installment payment amounts (as a
percentage of the original principal amount of each Note), (iv) the same
interest rate, (v) the same interest payment periods, and (vi) the same original
date of issuance are herein called a "SERIES" of Notes. Capitalized terms used
herein have the meanings specified in paragraph 10.
2. PURCHASE AND SALE OF NOTES.
1
2A. FACILITY. Prudential is willing to consider, in its sole
discretion and within limits which may be authorized for purchase by Prudential
and Prudential Affiliates from time to time, the purchase of Notes pursuant to
this Agreement. The willingness of Prudential to consider such purchase of
Notes is herein called the "FACILITY". At any time, the aggregate principal
amount of Notes stated in paragraph 1, minus the aggregate principal amount of
-----
Notes purchased and sold pursuant to this Agreement prior to such time, minus
the aggregate principal amount of Accepted Notes (as hereinafter defined) which
have not yet been purchased and sold hereunder prior to such time is herein
called the "AVAILABLE FACILITY AMOUNT" at such time. NOTWITHSTANDING THE
WILLINGNESS OF PRUDENTIAL TO CONSIDER PURCHASES OF NOTES, THIS AGREEMENT IS
ENTERED INTO ON THE EXPRESS UNDERSTANDING THAT NEITHER PRUDENTIAL NOR ANY
PRUDENTIAL AFFILIATE SHALL BE OBLIGATED TO MAKE OR ACCEPT OFFERS TO PURCHASE
NOTES, OR TO QUOTE RATES, SPREADS OR OTHER TERMS WITH RESPECT TO SPECIFIC
PURCHASES OF NOTES, AND THE FACILITY SHALL IN NO WAY BE CONSTRUED AS A
COMMITMENT BY PRUDENTIAL OR ANY PRUDENTIAL AFFILIATE.
2B. ISSUANCE PERIOD. Notes may be issued and sold pursuant to this
Agreement until the earlier of (i) (a) if no Notes have been previously issued
hereunder in addition to the Series A Notes, the first anniversary of the date
of this Agreement or (b) upon receipt of the Renewal Fee provided for in
paragraph 2I(4) or the issuance of Notes in addition to the Series A Notes prior
to the first anniversary date of this Agreement, the second anniversary of the
date of this Agreement (or if any such anniversary is not a Business Day, the
Business Day next preceding such anniversary) and (ii) the thirtieth day after
Prudential shall have given to the Company, or the Company shall have given to
Prudential, a notice stating that it elects to terminate the issuance and sale
of Notes pursuant to this Agreement (or if such thirtieth day is not a Business
Day, the Business Day next preceding such thirtieth day). The period during
which Notes may be issued and sold pursuant to this Agreement is herein called
the "ISSUANCE PERIOD".
2C. PERIODIC SPREAD INFORMATION. Provided no Default or Event of
Default exists, not later than 9:30 A.M. (New York City local time) on a
Business Day during the Issuance Period if there is an Available Facility Amount
on such Business Day, the Company may request by telecopier or telephone, and
Prudential will, to the extent reasonably practicable, provide to the Company on
such Business Day (or, if such request is received after 9:30 A.M. (New York
City local time) on such Business Day, on the following Business Day),
information (by telecopier or telephone) with respect to various spreads at
which Prudential or Prudential Affiliates might be interested in purchasing
Notes of different average lives; provided, however, that the Company may not
-------- -------
make such requests more frequently than once in every five Business Days or such
other period as shall be mutually agreed to by the Company and Prudential. The
amount and content of information so provided shall be in the sole discretion of
Prudential but it is the intent of Prudential to provide information which will
be of use to the Company in determining whether to initiate procedures for use
of the Facility. Information so provided shall not constitute an offer to
purchase Notes, and neither Prudential nor any Prudential Affiliate shall
2
be obligated to purchase Notes at the spreads specified. Information so provided
shall be representative of potential interest only for the period commencing on
the day such information is provided and ending on the earlier of the fifth
Business Day after such day and the first day after such day on which further
spread information is provided. Prudential may suspend or terminate providing
information pursuant to this paragraph 2C if, in its sole discretion, it
determines that there has been an adverse change in the credit quality of the
Company after the date of this Agreement.
2D. REQUEST FOR PURCHASE.
(i) The Company may from time to time during the Issuance Period make
requests for purchases of Notes (each such request being a "REQUEST FOR
PURCHASE"). Each Request for Purchase shall be made to Prudential by
telecopier and confirmed by nationwide overnight delivery service, and
shall (a) specify the aggregate principal amount of Notes covered thereby,
which shall not be less than $10,000,000 and not be greater than the
Available Facility Amount at the time such Request for Purchase is made,
(b) specify the principal amounts, final maturities, installment payment
dates and amounts and interest payment periods (quarterly or semi-annual in
arrears) of the Notes covered thereby, (c) specify the use of proceeds of
such Notes, (d) specify the proposed day for the closing of the purchase
and sale of such Notes, which shall be a Business Day during the Issuance
Period not less than 10 days and not more than 20 days after the making of
such Request for Purchase, (e) specify the number of the account and the
name and address of the depository institution to which the purchase prices
of such Notes are to be transferred on the Closing Day for such purchase
and sale, (f) certify that the representations and warranties contained in
paragraph 8 are true on and as of the date of such Request for Purchase
except to the extent of changes caused by the transactions herein
contemplated and that there exists on the date of such Request for Purchase
no Event of Default or Default, and (g) be substantially in the form of
Exhibit B attached hereto. Each Request for Purchase shall be in writing
---------
and shall be deemed made when received by Prudential.
(ii) PRUDENTIAL AGREES, TO THE EXTENT THE INFORMATION PROVIDED
PURSUANT TO CLAUSE (I)(C) OF PARAGRAPH 2D CONTAINS CONFIDENTIAL
INFORMATION, PRUDENTIAL WILL USE ITS BEST EFFORTS TO HOLD IN CONFIDENCE AND
NOT TO DISCLOSE THE CONFIDENTIAL INFORMATION, EXCEPT (A) AS MAY BE REQUIRED
BY LAW, AND (B) TO PRUDENTIAL'S AND ITS SUBSIDIARIES' OFFICERS, DIRECTORS
AND EMPLOYEES, AND TO PRUDENTIAL'S AGENTS AND PROFESSIONAL CONSULTANTS IN
CONNECTION WITH THE PURCHASE OF THE NOTES TO WHICH SUCH REQUEST FOR
PURCHASE RELATES; PROVIDED THAT PRUDENTIAL WILL BE FREE, AFTER NOTICE TO
--------
THE COMPANY, TO CORRECT ANY FALSE OR MISLEADING INFORMATION WHICH MAY
BECOME PUBLIC CONCERNING PRUDENTIAL'S RELATIONSHIP TO THE COMPANY OR TO THE
PURCHASE OF SUCH NOTES.
"CONFIDENTIAL INFORMATION" shall mean information about the use of
proceeds specified in such Request for Purchase, but does not include
information (i) which was publicly known, or otherwise known to Prudential, at
the time of disclosure,
3
(ii) which subsequently becomes publicly known through no act or omission by
Prudential, or (iii) which otherwise becomes known to Prudential, other than
through disclosure by the Company.
Notwithstanding the foregoing, the Company acknowledges that
Prudential and each Purchaser of Accepted Notes specified in such Request for
Purchase may disclose Confidential Information to (i) any Purchaser or holder of
any Note, (ii) any Person to which it offers to sell any Note or any part
thereof, (iii) any Person to which it sells or offers to sell a participation in
all or any part of any Note, (iv) any Person from which it offers to purchase
any security of the Company, (v) any federal or state regulatory authority
having jurisdiction over it, (vi) the National Association of Insurance
Commissioners or any similar organization, or (vii) any other Person to which
such delivery or disclosure may be necessary or appropriate (a) in compliance
with any law, rule, regulation or order applicable to it, (b) in response to any
subpoena or other legal process or informal investigative demand or (c) in
connection with any litigation to which it is a party.
2E. RATE QUOTES. Not later than five Business Days after the Company
shall have given Prudential a Request for Purchase pursuant to paragraph 2D,
Prudential may provide (by telephone promptly thereafter confirmed by
telecopier, in each case no earlier than 9:30 A.M. and no later than 1:30 P.M.
New York City local time) interest rate quotes for the several principal
amounts, maturities, installment payment schedules, and interest payment periods
of Notes specified in such Request for Purchase. Each quote shall represent the
interest rate per annum payable on the outstanding principal balance of such
Notes until such balance shall have become due and payable, at which Prudential
or a Prudential Affiliate would be willing to purchase such Notes at 100% of the
principal amount thereof.
2F. ACCEPTANCE. Within 30 minutes after Prudential shall have
provided any interest rate quotes pursuant to paragraph 2E or, in the event that
due to conditions in the market place it shall not be feasible to hold such
interest rate quotes open 30 minutes, such shorter period as Prudential may
specify to the Company (such period being the "ACCEPTANCE WINDOW"), the Company
may, subject to paragraph 2G, elect to accept such interest rate quotes as to
not less than $10,000,000 aggregate principal amount of the Notes specified in
the related Request for Purchase. Such election shall be made by an Authorized
Officer of the Company notifying Prudential by telephone or telecopier within
the Acceptance Window (but not earlier than 9:30 A.M. or later than 1:30 P.M.,
New York City local time) that the Company elects to accept such interest rate
quotes, specifying the Notes (each such Note being an "ACCEPTED NOTE") as to
which such acceptance (an "ACCEPTANCE") relates. The day the Company notifies an
Acceptance with respect to any Accepted Notes is herein called the "ACCEPTANCE
DAY" for such Accepted Notes. Any interest rate quotes as to which Prudential
does not receive an Acceptance within the Acceptance Window shall expire, and no
purchase or sale of Notes hereunder shall be made based on such expired interest
rate quotes. Subject to paragraph 2G and the other terms and conditions hereof,
the Company agrees to sell to Prudential or a Prudential Affiliate, and
Prudential agrees to
4
purchase, or to cause the purchase by a Prudential Affiliate of, the
Accepted Notes at 100% of the principal amount of such Notes. As soon as
practicable following the Acceptance Day, the Company, Prudential and each
Prudential Affiliate which is to purchase any such Accepted Notes will execute a
confirmation of such Acceptance substantially in the form of Exhibit C attached
---------
hereto (a "CONFIRMATION OF ACCEPTANCE").
2G. MARKET DISRUPTION. Notwithstanding the provisions of paragraph
2F, if Prudential shall have provided interest rate quotes pursuant to paragraph
2E and thereafter prior to the time an Acceptance with respect to such quotes
shall have been notified to Prudential in accordance with paragraph 2F there
shall occur a general suspension, material limitation, or significant disruption
of trading in securities generally on the New York Stock Exchange or in the
market for U.S. Treasury securities and other financial instruments, then such
interest rate quotes shall expire, and no purchase or sale of Notes hereunder
shall be made based on such expired interest rate quotes. If the Company
thereafter notifies Prudential of the Acceptance of any such interest rate
quotes, such Acceptance shall be ineffective for all purposes of this Agreement,
and Prudential shall promptly notify the Company that the provisions of this
paragraph 2G are applicable with respect to such Acceptance.
2H. CLOSING.
2H(1) INITIAL CLOSING -- The Company hereby agrees to sell to
Prudential and, subject to the terms and conditions herein set forth, the
Purchasers listed on the Information Schedule attached hereto agree to purchase
---------------------
from the Company under the Facility $50,000,000 of 7.85% Senior Notes, Series A,
due April 17, 2003 (the "SERIES A NOTES") at 100% of such aggregate principal
amount. The Series A Notes shall be substantially in the form of Exhibit A-1
-----------
attached hereto. The Company will deliver to Prudential, at the offices of
Prudential Capital Group at 2200 Ross Avenue, Suite 4200E, Dallas, Texas 75201,
one or more Notes registered in such Purchaser's name, evidencing the
aggregate principal amount of Series A Notes to be purchased by such Purchaser's
and in the denomination or denominations specified in the Information Schedule
--------------------
attached hereto against payment of the purchase price thereof by transfer of
immediately available funds to the credit of the Company's account 522-59654 at
The First National Bank of Boston, 100 Federal Street, Boston MA 02110 (ABA No.
011-000-390 Reference: TransMontaigne Oil Company) on the date of closing, which
shall be April 17, 1997, or any other date on or before April 17, 1997 upon
which the Company and Prudential may mutually agree (the "INITIAL CLOSING").
2H(2) SUBSEQUENT CLOSINGS. Not later than 11:30 A.M. (New York
City local time) on the Closing Day for any Accepted Notes, the Company will
deliver to each Purchaser listed in the Confirmation of Acceptance relating
thereto at the offices of Prudential Capital Group at 2200 Ross Avenue, Suite
4200E, Dallas, Texas 75201 the Accepted Notes to be purchased by such Purchaser
in the form of one or more Notes in authorized denominations as such Purchaser
may request for each Series of
5
Accepted Notes to be purchased on the Closing Day, dated the Closing Day and
registered in such Purchaser's name (or in the name of its nominee), against
payment of the purchase price thereof by transfer of immediately available funds
for credit to the Company's account specified in the Request for Purchase of
such Notes.
2H(3) RESCHEDULED CLOSINGS. If the Company fails to tender to any
Purchaser the Accepted Notes to be purchased by such Purchaser on the scheduled
Closing Day for such Accepted Notes as provided above in this paragraph 2H, or
any of the conditions specified in paragraph 3 shall not have been fulfilled by
the time required on such scheduled Closing Day, the Company shall, prior to
1:00 P.M., New York City local time, on such scheduled Closing Day notify such
Purchaser in writing whether (x) such closing is to be rescheduled (such
rescheduled date to be a Business Day during the Issuance Period not less than
one Business Day and not more than 30 Business Days after such scheduled Closing
Day (the "RESCHEDULED CLOSING DAY") and certify to such Purchaser that the
Company reasonably believes that it will be able to comply with the conditions
set forth in paragraph 3 on such Rescheduled Closing Day and that the Company
will pay the Delayed Delivery Fee in accordance with paragraph 2I(2) or (y) such
closing is to be canceled as provided in paragraph 2I(3). In the event that the
Company shall fail to give such notice referred to in the preceding sentence,
such Purchaser may at its election, at any time after 1:00 P.M., New York City
local time, on such scheduled Closing Day, notify the Company in writing that
such closing is to be canceled as provided in paragraph 2I(3).
2I. FEES.
2I(1) FACILITY FEE -- The Company will pay to Prudential in
immediately available funds a fee (the "FACILITY FEE") on each Closing Day that
occurs after the first anniversary of the date of this Agreement, in an amount
equal to 0.20% of the aggregate principal amount of Notes sold on such Closing
Day.
2I(2) DELAYED DELIVERY FEE -- If the closing of the purchase and sale
of any Accepted Note is delayed for any reason beyond the original Closing Day
for such Accepted Note (other than if all the conditions in paragraph 3 are
satisfied and Prudential fails to purchase such Accepted Notes), the Company
will pay to Prudential on the Cancellation Date or actual closing date of such
purchase and sale (if such Cancellation Date or closing date occurs on a date
later than the date specified in the Confirmation of Acceptance for such
Accepted Note), a fee (the "DELAYED DELIVERY FEE") calculated as follows:
(BEY - MMY) X DTS/360 X PA
where "BEY" means Bond Equivalent Yield, i.e., the bond equivalent yield per
annum of such Accepted Note, "MMY" means Money Market Yield, i.e., the yield per
annum on an alternative investment selected by Prudential on the date Prudential
receives notice of the delay in the closing for such Accepted Notes having a
maturity date or dates the same as, or closest to, the Rescheduled Closing Day
or Rescheduled Closing Days (a
6
new alternative investment being selected by Prudential each time such closing
is delayed); "DTS" means Days to Settlement, i.e., the number of actual days
elapsed from and including the originally scheduled Closing Day with respect to
such Accepted Note to but excluding the date of such payment; and "PA" means
Principal Amount, i.e., the principal amount of the Accepted Note for which such
calculation is being made. In no case shall the Delayed Delivery Fee be less
than zero. Nothing contained herein shall obligate any Purchaser to purchase any
Accepted Note on any day other than the Closing Day for such Accepted Note, as
the same may be rescheduled from time to time in compliance with paragraph 2H.
2I(3) CANCELLATION FEE -- If the Company at any time notifies
Prudential in writing that the Company is canceling the closing of the purchase
and sale of any Accepted Note, or if Prudential notifies the Company in writing
under the circumstances set forth in the last sentence of paragraph 2H that the
closing of the purchase and sale of such Accepted Note is to be canceled, or if
the closing of the purchase and sale of such Accepted Note is not consummated on
or prior to the last day of the Issuance Period (the date of any such
notification, or the last day of the Issuance Period, as the case may be, being
the "CANCELLATION DATE"), the Company will pay Prudential in immediately
available funds an amount (the "CANCELLATION FEE") calculated as follows:
PI X PA
where "PI" means Price Increase, i.e., the quotient (expressed in decimals)
obtained by dividing (a) the excess of the ask price (as determined by
Prudential) of the Hedge Treasury Note(s) on the Cancellation Date over the bid
price (as determined by Prudential) of the Hedge Treasury Notes(s) on the
Acceptance Day for such Accepted Note by (b) such bid price; and "PA" has the
meaning specified in paragraph 2I(2). The foregoing bid and ask prices shall be
as reported by Telerate Systems, Inc. (or, if such data for any reason ceases to
be available through Telerate Systems, Inc., any publicly available source of
similar market data). Each price shall be based on a U.S. Treasury security
having a par value of $100.00 and shall be rounded to the second decimal place.
In no case shall the Cancellation Fee be less than zero.
2I(4) RENEWAL FEE -- If no additional Notes are issued during the
period from the issuance of the Series A Notes until the first anniversary of
the date of this Agreement, the Facility shall be terminated and the Issuance
Period shall end on such anniversary date unless on or before such first
anniversary the Company shall pay to Prudential a renewal fee (the "RENEWAL
FEE") in the aggregate amount of $50,000. In the event the Company pays the
Renewal Fee, the Facility shall remain in place and the Issuance Period shall
extend until the second anniversary of the date of this Agreement (unless
terminated earlier pursuant to paragraph 2B).
2I(5) STRUCTURING FEE -- At the time of the execution and delivery of
this Agreement by the Company and Prudential, the Company will pay to Prudential
in immediately available funds a one time fee (the "STRUCTURING FEE") in an
amount equal to $187,500. If following payment of the Structuring Fee and prior
to the first
7
anniversary of the date of this Agreement a Refund Event shall occur, Prudential
shall refund to the Company the Refundable Portion of the Structuring Fee.
3. CONDITIONS OF CLOSING. The obligation of any Purchaser to
purchase and pay for any Accepted Notes is subject to the satisfaction, on or
before the Closing Day for such Accepted Notes, of the following conditions:
3A. CERTAIN DOCUMENTS. Such Purchaser shall have received the
following, each dated the date of the applicable Closing Day:
(i) The Accepted Note(s) to be purchased by such Purchaser.
(ii) Certified copies of the resolutions of the Board of Directors
of the Company and each other Obligor approving this Agreement and the
other Loan Documents to which it is a party, and of all documents
evidencing other necessary corporate action and governmental approvals, if
any, with respect to this Agreement and the Accepted Notes; or for any
Closing Day other than the first Closing Day, a certificate of the
Secretary or an Assistant Secretary of the Company or such other Obligor
stating that such resolutions remain in effect.
(iii) A certificate of the Secretary or an Assistant Secretary of the
Company and each other Obligor certifying the names and true signatures of
the officers of the Company authorized to sign this Agreement, the Accepted
Notes, the other Loan Documents to which it is a party and any other
documents to be delivered hereunder to which it is a party; or for any
Closing Day other than the first Closing Day, a certificate of the
Secretary or an Assistant Secretary of the Company or such other Obligor
stating that the information in such certificate continues to be true and
correct.
(iv) Certified copies of the Certificate of Incorporation and
By-laws of the Company and each other Obligor; or a certificate of the
Secretary or an Assistant Secretary of the Company or such other Obligor
stating that the Certificate of Incorporation and By-laws of the Company or
such other Obligor have not changed since last delivered pursuant to this
Agreement.
(v) Favorable opinions of the following counsel satisfactory to
such Purchaser and substantially in the form of Exhibit D attached hereto
---------
and as to such other matters as such Purchaser may reasonably request: (a)
Holme Roberts & Owen LLP, special counsel for the Company - Exhibit D-1;
-----------
Clanahan Tanner Downing and Knowlton, general counsel for Bear Paw Energy
Inc. - Exhibit D-2; and Jim H. Boyd, general counsel of the Guarantors -
-----------
Exhibit D-3. The Company hereby directs each such counsel to deliver such
-----------
opinion, agrees that the issuance and sale of any Accepted Notes will
constitute a reconfirmation of such direction, and understands and agrees
that each Purchaser receiving such an opinion will and is hereby authorized
to rely on such opinion.
(vi) A good standing certificate for the Company and the other
Obligors
8
from the Secretary of State of Delaware and Colorado dated of a recent date
and such other evidence of the status of the Company as you may reasonably
request.
(vii) With respect to the Initial Closing only, certified copies of
Requests for Information or Copies (Form UCC-11) or equivalent reports
listing all effective financing statements which name the Company or any
Subsidiary (under its present name and previous names) as debtor and which
are filed in the offices of the Secretaries of State listed in Schedule
--------
3A(vii) together with copies of such financing statements.
-------
(viii) Additional documents or certificates with respect to legal
matters or corporate or other proceedings related to the transactions
contemplated hereby as may be reasonably requested by such Purchaser.
3B. ADDITIONAL DOCUMENTS TO BE DELIVERED AT THE INITIAL CLOSING.
Such Purchaser shall have received the following, each dated the date of the
Initial Closing:
(i) The Pledge Agreement, duly executed and delivered by the parties
thereto.
(ii) The Intercreditor Agreement, duly executed and delivered by the
parties thereto.
(iii) The Bank Agreement shall have been duly amended to permit the
issuance of the Notes under the Facility, and a copy thereof shall have
been delivered to the Purchasers.
3C. PERFECTION OF SECURITY. Each Obligor shall have duly authorized,
executed, acknowledged, delivered, filed, registered and recorded such security
agreements, notices, financing statements and other instruments as Prudential
may have requested in order to perfect the Liens purported or required pursuant
to the Loan Documents to be created in the Loan Security.
3D. PAYMENT OF FEES. The Company shall have paid to Prudential (i)
for the account of the Purchasers, the Structuring Fee, and (ii) without
limiting the provisions of paragraph 12B, the fees and disbursements of the
Purchaser's special counsel and other costs and expenses of the Purchasers for
which statements have been rendered on or prior to the date of the Initial
Closing.
3E. REPRESENTATIONS AND WARRANTIES; NO DEFAULT. The representations
and warranties contained in paragraph 8 shall be true on and as of such Closing
Day, except to the extent of changes caused by the transactions herein
contemplated; there shall exist on such Closing Day no Event of Default or
Default; and
9
the Company shall have delivered to such Purchaser an Officer's Certificate,
dated such Closing Day, to both such effects.
3F. PURCHASE PERMITTED BY APPLICABLE LAWS. The purchase of and
payment for the Accepted Notes to be purchased by such Purchaser on the terms
and conditions herein provided (including the use of the proceeds of such Notes
by the Company) shall not violate any applicable law or governmental regulation
(including, without limitation, Section 5 of the Securities Act or Regulation G,
T or X of the Board of Governors of the Federal Reserve System) and shall not
subject such Purchaser to any tax, penalty, liability or other onerous condition
under or pursuant to any applicable law or governmental regulation, and such
Purchaser shall have received such certificates or other evidence as it may
request to establish compliance with this condition.
3G. LEGAL MATTERS. Counsel for such Purchaser, including any special
counsel for the Purchasers retained in connection with the purchase and sale of
such Accepted Notes, shall be satisfied as to all legal matters relating to such
purchase and sale, and such Purchaser shall have received from such counsel
favorable opinions as to such legal matters as it may request.
3H. PROCEEDINGS. All corporate and other proceedings taken or to be
taken in connection with the transactions contemplated hereby and all documents
incident thereto shall be satisfactory in substance and form to such Purchaser,
and it shall have received all such counterpart originals or certified or other
copies of such documents as it may reasonably request.
3I. FACILITY FEE. With respect to any Closing Day occurring after
the first anniversary and the Note hereof, the Company shall have paid the
Facility Fee due on such date.
4. PREPAYMENTS. The Notes shall be subject to prepayment with
respect to any required prepayments set forth in such Notes as provided in
paragraph 4A and with respect to the optional prepayments permitted by paragraph
4B.
4A. REQUIRED PREPAYMENTS. The Notes of each Series shall be subject
to required prepayments, if any, set forth in the Notes of such Series.
4B. OPTIONAL PREPAYMENT WITH YIELD-MAINTENANCE AMOUNT. The Notes
shall be subject to prepayment on any Business Day occurring six months after
the day of issue, in whole at any time or from time to time in part (in a
minimum amount of $1,000,000 and integral multiples of $100,000), at the option
of the Company, at 100% of the principal amount so prepaid plus interest thereon
to the prepayment date and the Yield-Maintenance Amount, if any, with respect to
each such Note. Any partial prepayment of Notes pursuant to this paragraph 4B
shall be applied in satisfaction of required payments of principal of the Notes
in inverse order of their scheduled due dates.
10
4C. NOTICE OF OPTIONAL PREPAYMENT. The Company shall give the holder
of each Note to be prepaid pursuant to paragraph 4B irrevocable written notice
of such prepayment not less than 10 Business Days prior to the prepayment date,
specifying such prepayment date, specifying the aggregate principal amount of
the Notes to be prepaid on such date, identifying each Note held by such holder,
and the principal amount of each such Note, to be prepaid on such date and
stating that such prepayment is to be made pursuant to paragraph 4B; provided
--------
that notice to Prudential under this paragraph 4C shall constitute notice to
each Prudential Affiliate that is a holder. Notice of prepayment having been
given as aforesaid, the principal amount of the Notes specified in such notice,
together with interest thereon to the prepayment date and together with the
Yield-Maintenance Amount, if any, herein provided, shall become due and payable
on such prepayment date. The Company shall, on or before the day on which it
gives written notice of any prepayment pursuant to paragraph 4A, give telephonic
notice of the principal amount of the Notes to be prepaid and the prepayment
date to each Significant Holder which shall have designated a recipient for such
notices in the Information Schedule attached hereto or by notice in writing to
the Company.
4D. APPLICATION OF PREPAYMENTS.
(i) REQUIRED PREPAYMENTS. Upon any partial prepayment of the Notes of
any Series pursuant to paragraph 4A, the amount so prepaid shall be
allocated to all outstanding Notes of such Series (including, for the
purpose of this paragraph 4D only, all Notes (other than the Series A
Notes, which are due at maturity) prepaid or otherwise retired or purchased
or otherwise acquired by the Company or any of its Subsidiaries or
Affiliates other than by prepayment pursuant to paragraph 4A or 4B) in
proportion to the respective outstanding principal amounts thereof.
(ii) OPTIONAL PREPAYMENTS. Upon any partial prepayment of the Notes
pursuant to 4B, the amount to be prepaid shall be applied pro rata to all
outstanding Notes of all Series (including, for the purpose of this
paragraph 4D only, all Notes (other than the Series A Notes, which are due
at maturity) prepaid or otherwise retired or purchased or otherwise
acquired by the Company or any of its Subsidiaries or Affiliates other than
by prepayment pursuant to paragraph 4A or 4B) according to the respective
unpaid principal amounts thereof.
4E. RETIREMENT OF NOTES. The Company shall not, and shall not permit
any of its Subsidiaries or Affiliates to, prepay or otherwise retire in whole or
in part prior to their stated final maturity (other than by prepayment pursuant
to paragraph 4A or 4B or upon acceleration of such final maturity pursuant to
paragraph 7A), or purchase or otherwise acquire, directly or indirectly, Notes
held by any holder unless the Company or such Subsidiary or Affiliate shall have
offered to prepay or otherwise retire or purchase or otherwise acquire, as the
case may be, the same proportion of the aggregate principal amount of Notes held
by each other holder of Notes at the time outstanding upon the same terms and
conditions. Any Notes so prepaid or otherwise
11
retired or purchased or otherwise acquired by the Company or any of its
Subsidiaries or Affiliates shall not be deemed to be outstanding for any purpose
under this Agreement, except as provided in paragraph 4D.
------
5. AFFIRMATIVE COVENANTS. During the Issuance Period and so long
thereafter as any Note is outstanding and unpaid, the Company covenants as
follows:
5A. FINANCIAL STATEMENTS AND REPORTS. The Company shall, and shall
cause each of its Subsidiaries to, maintain a system of accounting in
accordance with generally accepted accounting practices. The fiscal year of the
Company and its Subsidiaries shall end on April 30 in each year and the fiscal
quarters of the Company and its Subsidiaries shall end on July 31, October 31,
January 31 and April 30 in each year.
(i) ANNUAL REPORTS. The Company shall furnish to each holder in
duplicate (unless a greater or lesser number is requested by such holder)
and as soon as available, and in any event within 95 days after the end of
each fiscal year, the Consolidated balance sheet of the Company and its
Subsidiaries as at the end of such fiscal year, the Consolidated statements
of income, changes in shareholders' equity and cash flows of the Company
and its Subsidiaries for such fiscal year (all in reasonable detail) and
together with Consolidating schedules as of such date and for such period
and, in the case of Consolidated financial statements, comparative figures
for the immediately preceding fiscal year, all accompanied by:
(a) Unqualified reports of KPMG Peat Marwick LLP (or, if they cease to
be auditors of the Company and its Subsidiaries, other independent
certified public accountants of recognized national standing reasonably
satisfactory to the Majority Holders), containing no material uncertainty,
to the effect that they have audited the foregoing Consolidated financial
statements in accordance with generally accepted auditing standards and
that such Consolidated financial statements present fairly, in all material
respects, the financial position of the Company and its Subsidiaries
covered thereby at the dates thereof and the results of their operations
for the periods covered thereby in conformity with GAAP.
(b) The statement of such accountants that they have caused this
Agreement to be reviewed and that in the course of their audit of the
Company and its Subsidiaries no facts have come to their attention that
cause them to believe that any Default or Event of Default exists and in
particular that they have no knowledge of any Default or Event of Default
under paragraphs 6A through 6H, inclusive, or 5N, 5O or 5P, if such is not
the case, specifying such Default or Event of Default and the nature
thereof. This statement is furnished by such accountants with the
understanding that the examination of such accountants
12
cannot be relied upon to give such accountants knowledge of any such
Default except as it relates to accounting or auditing matters within the
scope of their audit.
(c) A certificate of the Company signed by a Financial Officer to the
effect that such officer has caused this Agreement to be reviewed and has
no knowledge of any Default or Event of Default, or if such officer has
such knowledge, specifying such Default or Event of Default and the nature
thereof, and what action the Company has taken, is taking or proposes to
take with respect thereto.
(d) Computations by the Company in the form set forth in Schedule
--------
5A(i) hereto demonstrating, as of the end of such fiscal year, compliance
-----
with the Computation Covenants, certified by a Financial Officer.
(e) Calculations, as at the end of such fiscal year, of (I) the
Accumulated Benefit Obligations for each Plan covered by Title IV of ERISA
(other than Multiemployer Plans) and (II) the fair market value of the
assets of such Plan allocable to such benefits.
(f) Supplements to Schedules 8A, 8D and 8J showing any changes in
------------ -- --
the information set forth in such Schedules not previously furnished to the
holders in writing, as well as any changes in the Charter, Bylaws or
incumbency of officers of the Company or its Subsidiaries from those
previously certified to the holders.
(ii) QUARTERLY REPORTS. The Company shall furnish to each holder in
duplicate (unless a greater or lesser number is requested by such holder)
as soon as available and, in any event, within 50 days after the end of
each of the first three fiscal quarters of the Company, the internally
prepared Consolidated balance sheet of the Company and its Subsidiaries as
of the end of such fiscal quarter, the Consolidated statements of income,
changes in shareholders' equity and cash flows of the Company and its
Subsidiaries for such fiscal quarter and for the portion of the fiscal year
then ended (all in reasonable detail) and together with Consolidating
schedules as of such date and for such period and, in the case of
Consolidated statements, comparative figures for the same period (if such
Consolidating schedules are requested by Prudential or the Majority
Holders) in the preceding fiscal year, all accompanied by:
(a) A certificate of the Company signed by a Financial Officer to
the effect that such financial statements have been prepared in accordance
with GAAP and present fairly, in all material respects, the financial
position of the Company and its Subsidiaries covered thereby at the dates
thereof and the results of their operations for the periods covered
thereby, subject only to normal year-end audit adjustments and the addition
of footnotes.
13
(b) A certificate of the Company signed by a Financial Officer to the
effect that such officer has caused this Agreement to be reviewed and has
no knowledge of any Default, or if such officer has such knowledge,
specifying such Default and the nature thereof and what action the Company
has taken, is taking or proposes to take with respect thereto.
(c) Computations by the Company in the form set forth in Schedule
--------
5A(i) hereto demonstrating, as of the end of such quarter, compliance with
-----
the Computation Covenants, certified by a Financial Officer.
(d) Supplements to Schedules 8A, 8D and 8J showing any changes in the
------------ -- --
information set forth in such Schedules not previously furnished to the
holders in writing, as well as any changes in the Charter, Bylaws or
incumbency of officers of the Company and its Subsidiaries from those
previously certified to the holders.
(iii) OTHER REPORTS. The Company shall promptly furnish to each
holder:
(a) As soon as prepared and in any event within 90 days after the
beginning of each fiscal year, an annual budget and operating projections
for such fiscal year of the Company and its Subsidiaries, prepared in a
manner consistent with the manner in which the financial projections
described in paragraph 8L were prepared and shall include a capital
expenditure plan for such fiscal year.
(b) Any material updates of such budget and projections.
(c) Any management letters furnished to the Company or any of its
Subsidiaries by the Company's auditors.
(d) All budgets, projections, statements of operations and other
reports furnished generally to the shareholders of the Company.
(e) Such registration statements, proxy statements and reports,
including Forms S-1, S-2, S-3, 10-K, 10-Q and 8-K, as may be filed by the
Company or any of its Subsidiaries with the Securities and Exchange
Commission.
(f) Any 90-day letter or 30-day letter from the federal Internal
Revenue Service asserting material tax deficiencies against the Company or
any of its Subsidiaries; and any similar notice from a state or other
taxing authority asserting material tax deficiencies against the Company or
any of its Subsidiaries that are not fully resolved without the assessment
of a material tax deficiency (and any tax paid) within 90 days following
the date of such notice.
(g) Notice of the issuance of any Funded Debt permitted by paragraph
14
6C(2)(xi) or 6C(2)(xii), together with a calculation of the proceeds
thereof (net of costs of issuance) and copies of all evidence of
Indebtedness and other documentation governing such Funded Debt.
(h) Any revised versions of the Risk and Product Management Policy
Statement referred to in paragraph 5J.
(iv) NOTICE OF LITIGATION. The Company shall promptly furnish to each
holder notice of any litigation or any administrative or arbitration
proceeding (a) to which the Company or any of its Subsidiaries may
hereafter become a party if the damages claimed in such proceeding exceed
$2,000,000 or (b) which creates a material risk of resulting, after giving
effect to any applicable insurance, in the payment by the Company and its
Subsidiaries of more than $1,000,000 or (c) which results, or creates a
material risk of resulting, in a Material Adverse Change.
(v) NOTICE OF DEFAULTS. Promptly upon acquiring knowledge thereof,
the Company shall notify the holders of the existence of any Default or
Event of Default, specifying the nature thereof and what action the Company
or any Subsidiary has taken, is taking or proposes to take with respect
thereto.
(vi) ERISA REPORTS. The Company shall furnish to the holders as soon
as available the following items with respect to any Plan:
(a) any request for a waiver of the funding standards or an extension
of the amortization period,
(b) any reportable event (as defined in section 4043 of ERISA), unless
the notice requirement with respect thereto has been waived by regulation,
(c) any notice received by any ERISA Group Person that the PBGC has
instituted or intends to institute proceedings to terminate any Plan, or
that any Multiemployer Plan is insolvent or in reorganization,
(d) notice of the possibility of the termination of any Plan by its
administrator pursuant to section 4041 of ERISA, and
(e) notice of the intention of any ERISA Group Person to withdraw, in
whole or in part, from any Multiemployer Plan.
(vii) OTHER INFORMATION. From time to time at reasonable intervals
upon request of Prudential or the Majority Holders, each of the Company and
its Subsidiaries shall furnish to the holders such other information
regarding the business, assets, financial condition, income or prospects of
the Company and its Subsidiaries as such officer may reasonably request,
including copies of all tax returns, licenses, agreements, leases and
instruments to which any of the
15
Company or its Subsidiaries is party.
5B. INFORMATION REQUIRED BY RULE 144A. The Company will, upon the
request of any holder, provide such holder, and any qualified institutional
buyer designated by such holder, such financial and other information as such
holder may reasonably determine to be necessary in order to permit compliance
with the information requirements of Rule 144A under the Securities Act in
connection with the resale of Notes, except at such times as the Company is
subject to the reporting requirements of section 13 or 15(d) of the Exchange
Act. For the purpose of this paragraph 5B, the term "QUALIFIED INSTITUTIONAL
BUYER" shall have the meaning specified in Rule 144A under the Securities Act.
5C. INSPECTION OF PROPERTY.
(i) The Company will permit any Person designated by the Majority
Holders in writing, at the expense of the holders making such request, to
visit and inspect any of the properties of the Company and its
Subsidiaries, to examine the corporate books and financial records of the
Company and its Subsidiaries and make copies thereof or extracts therefrom
and to discuss the affairs, finances and accounts of any of such
corporations with the principal officers of the Company, all at such
reasonable times and as often as the Majority Holders may reasonably
request.
(ii) The Company will permit any Person designated by any Significant
Holder in writing, at such Significant Holder's expense, to visit and
inspect any of the properties of the Company and its Subsidiaries, to
examine the corporate books and financial records of the Company and its
Subsidiaries and make copies thereof or extracts therefrom and to discuss
the affairs, finances and accounts of any of such corporations with the
principal officers of the Company, all at such reasonable times and as
often as such Significant Holder may reasonably request; provided, however,
-------- -------
that so long as no Default or Event of Default exists, such Significant
Holder may only make one such request during a calendar year.
(iii) The Majority Holders, upon reasonable advance notice, may at the
expense of the Company undertake to have the Company and its Subsidiaries
reviewed by the commercial financial examiners and fixed asset appraisers
appointed by the Majority Holders; provided that so long as no Event of
--------
Default shall have occurred and be continuing, the Majority Holders shall
not request such reviews more than twice in any fiscal year of the Company.
5D. COVENANT TO SECURE NOTES EQUALLY. The Company will, if it or any
Subsidiary shall create or assume any Lien upon any of its property or assets,
whether now owned or hereafter acquired, other than Liens permitted by the
provisions of paragraph 6C(1) (unless prior written consent to the creation or
assumption thereof
16
shall have been obtained pursuant to paragraph 11C), make or cause to be made
effective provision whereby the Notes will be secured by such Lien equally and
ratably with any and all other Indebtedness thereby secured so long as any such
other Indebtedness shall be so secured.
5E. TAXES AND OTHER CHARGES; ACCOUNTS PAYABLE.
(i) TAXES AND OTHER CHARGES. The Company shall, and shall cause each
of its Subsidiaries to, duly pay and discharge, or cause to be paid and
discharged, before the same becomes in arrears, all material taxes,
assessments and other governmental charges imposed upon such Person and its
properties, sales or activities, or upon the income or profits therefrom,
as well as all claims for labor, materials or supplies which if unpaid
might by law become a Lien upon any of its property; provided, however,
-------- -------
that any such tax, assessment, charge or claim need not be paid if the
validity or amount thereof shall at the time be contested in good faith by
appropriate proceedings and if such Person shall have set aside on its
books adequate reserves with respect thereto to the extent required by
GAAP; and provided, further, that the Company shall, and shall cause each
-------- -------
of its Subsidiaries to, pay or bond, or cause to be paid or bonded, all
such taxes, assessments, charges or other governmental claims immediately
upon the commencement of proceedings to foreclose any Lien which may have
attached as security therefor (except to the extent such proceedings have
been dismissed or stayed).
(ii) ACCOUNTS PAYABLE. The Company shall, and shall cause each of
its Subsidiaries to, promptly pay when due, or in conformity with customary
trade terms, all other material Indebtedness incident to the operations of
such Person not referred to in paragraph 5E(I); provided, however, that any
-------- -------
such Indebtedness need not be paid if the validity or amount thereof shall
at the time be contested in good faith and if such Person shall have set
aside on its books adequate reserves with respect thereto to the extent
required by GAAP.
5F. TYPES OF BUSINESS. The Company shall, and shall cause each of
its Subsidiaries to, engage principally in one or more of the businesses of (a)
providing transportation, terminaling and storage services for petroleum
products and the distribution, purchase and/or sale of petroleum products, (b)
natural gas gathering, processing, transmission and marketing and (c) other
activities related thereto. The Company and its Subsidiaries may engage in
businesses other than those described in the preceding sentence, provided that
--------
the gross revenues of such other businesses in any fiscal year of the Company
shall not exceed 10% of the Consolidated gross revenues of the Company and its
Subsidiaries.
5G. MAINTENANCE OF PROPERTIES. The Company shall, and shall cause
each of its Subsidiaries to:
(i) keep its properties in such repair, working order and condition,
and shall from time to time make such repairs, replacements, additions and
17
improvements thereto as are necessary for the efficient operation of its
businesses and shall comply at all times in all material respects with all
material franchises, licenses and leases to which it is party so as to
prevent any loss or forfeiture thereof or thereunder, except where failure
to comply with such provisions has not resulted, and does not create a
material risk of resulting, in the aggregate in any Material Adverse
Change; and
(ii) (other than Republic Natural Gas Company) do all things
necessary to preserve, renew and keep in full force and effect and in good
standing its legal existence and authority necessary to continue its
business; provided, however, that this paragraph 5G(ii) shall not prevent
-------- -------
the merger, consolidation or liquidation of Subsidiaries permitted by
paragraph 6C(5).
5H. STATUTORY COMPLIANCE. The Company shall, and shall cause each of
its Subsidiaries to, comply in all material respects with all valid and
applicable statutes, laws, ordinances, zoning and building codes and other rules
and regulations of the United States of America, of the states and territories
thereof and their counties, municipalities and other subdivisions and of any
foreign country or other jurisdictions applicable to such Person, except where
failure so to comply with such provisions has not resulted, and does not create
a material risk of resulting, in the aggregate in any Material Adverse Change.
5I. COMPLIANCE WITH MATERIAL AGREEMENTS. The Company shall, and
shall cause each of its Subsidiaries to, comply in all material respects with
the Material Agreements (to the extent not in violation of the other provisions
of this Agreement or any other Loan Document). Without the prior written
consent of the Majority Holders, no Material Agreement shall be amended,
modified, waived or terminated in any manner that would have in any material
respect an adverse effect on the interests of the holders; provided, without
--------
limitation of the foregoing, that any modification of the Bank Agreement that
would cause the covenants of the Company or the defaults thereunder to be more
restrictive than the covenants or defaults, respectively, contained in this
Agreement or that would constitute or cause a Default or Event of Default shall
require the prior written consent of the Majority Holders.
5J. TRADING POLICY. The Company shall, and shall cause each of its
Subsidiaries (to the extent they are engaged in such business) to, maintain and
follow a policy of managing petroleum inventory risk with the objective of
minimizing potentially adverse impacts on earnings arising from volatility
in refined petroleum product prices. The holders acknowledge that the policy
described in the Risk and Product Management Policy Statement dated December
1996 of Continental Ozark, Inc., a copy of which is attached to this Agreement
as Schedule 5J, represents such a policy.
-----------
5K. SUBORDINATED DEBENTURES. The Company shall do all things
necessary to assure that the Notes and all of the Obligations be and remain
"Superior Indebtedness" within the meaning of Section 10 of the Subordinated
Debentures Agreement.
18
5L. INVENTORY ACCOUNTING. The Company shall, and shall cause each of
its Subsidiaries to, account for their inventory on the basis of the "LIFO"
method of accounting; provided, that they may change to the "FIFO" method of
--------
inventory accounting, if such method is then permitted by GAAP and if the
provisions of paragraph 6A are amended in such manner as the Majority Holders
shall consider necessary in the reasonable judgment to maintain the same
standards of creditworthiness.
5M. INSURANCE.
(i) PROPERTY INSURANCE. The Company shall, and shall cause each of
its Subsidiaries to, keep its assets which are of an insurable character
insured by financially sound and reputable insurers against theft and fraud
and against loss or damage by fire, explosion and hazards insured against
by extended coverage to the extent, in amounts and with deductibles at
least as favorable as those generally maintained by businesses of similar
size engaged in similar activities.
(ii) LIABILITY INSURANCE. The Company shall, and shall cause each of
its Subsidiaries to, maintain with financially sound and reputable insurers
insurance against liability for hazards, risks and liability to persons and
property to the extent, in amounts and with deductibles at least as
favorable as those generally maintained by businesses of similar size
engaged in similar activities; provided, however, that it may effect
-------- -------
workers' compensation insurance or similar coverage with respect to
operations in any particular state or other jurisdiction through an
insurance fund operated by such state or jurisdiction or by meeting the
self-insurance requirements of such state or jurisdiction.
5N. ERISA, ETC. The Company shall comply, and shall cause each of
its Subsidiaries and all ERISA Group Persons to comply, in all material
respects, with the provisions of ERISA and the Code applicable to each Plan.
The Company shall meet, and shall cause each of its Subsidiaries and all ERISA
Group Persons to meet, all minimum funding requirements applicable to them with
respect to any Plan pursuant to section 302 of ERISA or section 412 of the Code,
without giving effect to any waivers of such requirements or extensions of the
related amortization periods which may be granted. At no time shall the
Accumulated Benefit Obligations under any Plan that is not a Multiemployer Plan
exceed the fair market value of the assets of such Plan allocable to such
benefits by more than $1,000,000. The Company shall not withdraw, and shall
cause its Subsidiaries and all other ERISA Group Persons not to withdraw, in
whole or in part, from any Multiemployer Plan so as to give rise to withdrawal
liability exceeding $1,000,000 in the aggregate. At no time shall the actuarial
present value of unfunded liabilities for post-employment health care benefits,
whether or not provided under a Plan, calculated in a manner consistent with
Statement No. 106 of the Financial Accounting Standards Board, exceed
$1,000,000.
5O. OPEN POSITIONS. The Company and its Subsidiaries may maintain
19
Open Positions relating to product inventory requirements that do not exceed the
amount permitted by the Risk and Product Management Policy Statement then in
effect, so long as that policy is materially consistent with the requirements of
the first sentence of paragraph 5J.
5P. ENVIRONMENTAL LAWS.
(i) COMPLIANCE WITH LAW AND PERMITS. The Company shall, and shall
cause each of its Subsidiaries to, use and operate all of its facilities
and properties in material compliance with all Environmental Laws, keep all
necessary permits, approvals, certificates, licenses and other
authorizations relating to environmental matters in effect and remain in
material compliance therewith, and handle all Hazardous Materials in
material compliance with all applicable Environmental Laws, except where
any failure to so act could not, individually or in the aggregate, have a
Material Adverse Effect.
(ii) NOTICE OF CLAIMS, ETC. The Company shall immediately notify the
holders, and provide copies upon receipt, of all written claims,
complaints, notices or inquiries from governmental authorities relating to
the condition of the facilities and properties of the Company or its
Subsidiaries or compliance with Environmental Laws which could have a
Material Adverse Effect, and shall use best efforts to promptly cure and
have dismissed with prejudice to the satisfaction of the Majority Holders
any actions and proceedings relating to compliance with Environmental Laws.
6. NEGATIVE COVENANTS. During the Issuance Period and so long
thereafter as any Note is outstanding and unpaid, the Company covenants as
follows:
6A. CERTAIN FINANCIAL TESTS.
6A(1) FIXED CHARGES COVERAGE. The Company will not permit, on the
last day of each fiscal quarter of the Company, the Consolidated Income from
Operations of the Company and its Subsidiaries for the period of four
consecutive fiscal quarters then ended to be less than 225% of the Consolidated
interest expense of the Company and its Subsidiaries for such period determined
in accordance with GAAP.
6A(2) LEVERAGE RATIO. The Company will not permit the Leverage Ratio
of the Company and its Subsidiaries at any time during each period specified
below to equal or exceed the percentage set forth below next to such period:
Period Percentage
------ ----------
To and including April 29, 1999 65%
From and including April 30, 1999 60%
20
to and including April 29, 2000
April 30, 2000 and thereafter 55%.
6A(3) CONSOLIDATED TANGIBLE NET WORTH. The Company will not permit
Consolidated Tangible Net Worth at any time to be less than $100,000,000;
provided, however, that on April 30, 1997 and on the last day of each fiscal
- - -------- -------
quarter of the Company thereafter, the then effective dollar amount in this
paragraph 6A(3) shall be increased by the sum of (a) 50% of Consolidated Net
Income (if positive) for the fiscal quarter then ended plus (b) 50% of the net
proceeds realized by the Company and its Subsidiaries, calculated on a
Consolidated basis in accordance with GAAP, from the issuance of any equity
securities during the fiscal quarter then ended.
6B. DISTRIBUTIONS. The Company will not, and will not permit any of
its Subsidiaries to, make any Distribution except for the following:
------
(i) Subsidiaries of the Company may make Distributions to the Company
or any Wholly Owned Subsidiary of the Company.
(ii) So long as immediately before and after giving effect thereto no
Default or Event of Default exists, the
Company may make Distributions to its stockholders; provided that the
--------
cumulative amount distributed after October 31, 1996 shall not exceed the
sum of (a) $5,000,000 plus (b) 50% of the cumulative Consolidated Net
----
Income of the Company and its Subsidiaries commencing November 1, 1996.
(iii) So long as immediately before and after giving effect thereto no
Default or Event of Default exists, the Company may make scheduled payments
of interest and principal on the Subordinated Debentures and other Funded
Debt of the Company permitted under paragraph 6C(2)(xi).
6C. LIENS, INDEBTEDNESS AND OTHER RESTRICTIONS. The Company will
not, and will not permit any of its Subsidiaries to:
6C(1) LIENS. Create, incur or enter into, or suffer to be created or
incurred or to exist, any Lien, except the following:
------
(i) Liens on the Loan Security that secure the Notes, and, so long as
the Intercreditor Agreement is in effect, Liens on the Loan Security that
secure the Bank Obligations.
(ii) Liens to secure taxes, assessments and other governmental
charges, to the extent that payment thereof shall not at the time be
required by paragraph 5E.
(iii) Deposits or pledges made (a) in connection with, or to secure
21
payment of, workers' compensation, unemployment insurance, old age pensions
or other social security, (b) in connection with casualty insurance
maintained in accordance with paragraph 5M, (c) to secure the performance
of bids, tenders, contracts (other than contracts relating to Financing
Debt) or leases, (d) to secure statutory obligations or surety or appeal
bonds, (e) to secure indemnity, performance or other similar bonds in the
ordinary course of business or (f) in connection with contested amounts to
the extent that payment thereof shall not at that time be required by
paragraph 5E.
(iv) Liens in respect of judgments or awards, to the extent that such
judgments or awards are permitted by paragraph 6C(2)(vi).
(v) Liens of carriers, warehouses, mechanics and similar Liens, in
each case (a) in existence less than 90 days from the date of creation
thereof or (b) being contested in good faith by the Company or any
Subsidiary in appropriate proceedings (so long as the Company or such
Subsidiary shall have set aside on its books adequate reserves with respect
thereto to the extent required by GAAP).
(vi) Encumbrances in the nature of (a) zoning restrictions, (b)
easements, (c) restrictions of record on the use of real property, (d)
landlords' and lessors' Liens on rented premises and (e) restrictions on
transfers or assignment of leases, which in each case do not materially
detract from the value of the encumbered property or materially impair the
use thereof in the business of the Company or any Subsidiary.
(vii) Restrictions under federal and state securities laws on the
transfer of securities.
(viii) Restrictions under Foreign Trade Regulations on the transfer or
licensing of certain assets of the Company and its Subsidiaries.
(ix) Liens constituting (a) purchase money security interests
(including mortgages, conditional sales, Capitalized Leases and any other
title retention or deferred purchase devices) in real property, interests
in leases or tangible personal property (other than inventory) existing or
created on the date on which such property is acquired, and (b) the
renewal, extension or refunding of any security interest referred to in the
foregoing clause (a) in an amount not to exceed the amount thereof
remaining unpaid immediately prior to such renewal, extension or refunding;
provided, however, that (i) each such security interest shall attach solely
-------- -------
to the particular item of property so acquired, and the principal amount of
Indebtedness (including Indebtedness in respect of Capitalized Lease
Obligations) secured thereby shall not exceed the cost (including all such
Indebtedness secured thereby, whether or not assumed) of such item of
property; and (ii) the aggregate principal amount of all Indebtedness
secured by Liens permitted by this paragraph 6C(1)(ix) shall not exceed the
amount
22
permitted by paragraph 6C(2)(vii).
6C(2) INDEBTEDNESS. Create, incur, assume or otherwise become or
remain liable with respect to any Indebtedness except the following if incurred
------
and existing in compliance with paragraph 6A(1) and 6A(2):
(i) Indebtedness in respect of the Notes.
(ii) Guarantees permitted by paragraph 6C(3).
(iii) Current liabilities, other than Financing Debt, incurred in the
ordinary course of business.
(iv) To the extent that payment thereof shall not at the time be
required by paragraph 5E, Indebtedness in respect of taxes, assessments,
governmental charges and claims for labor, materials and supplies.
(v) Indebtedness secured by Liens of carriers, warehouses, mechanics
and landlords permitted by paragraphs 6C(1)(v) and 6C(1)(vi).
(vi) Indebtedness in respect of judgments or awards (a) which have
been in force for less than the applicable appeal period or (b) in respect
of which the Company or any Subsidiary shall at the time in good faith be
prosecuting an appeal or proceedings for review and, in the case of each of
clauses (a) and (b), the Company or such Subsidiary shall have taken
appropriate reserves therefor in accordance with GAAP and execution of such
judgment or award shall not be levied.
(vii) To the extent permitted by paragraph 6C(1)(ix), Indebtedness in
respect of Capitalized Lease Obligations or secured by purchase money
security interests; provided, however, that (a) the aggregate principal
-------- -------
amount of all Indebtedness permitted by this paragraph 6C(2)(vii) which
consists of Indebtedness in respect of Capital Lease Obligations and other
Indebtedness incurred for the acquisition of equipment shall not exceed
$2,000,000 at any one time outstanding and (b) that the aggregate principal
amount of all Indebtedness permitted by this paragraph 6C(2)(vii) which
consists of Indebtedness issued to sellers of any business or part thereof
or operating assets in consideration for the acquisition thereof by the
Company or a Subsidiary shall not exceed $10,000,000 at any one time
outstanding.
(viii) Indebtedness in respect of deferred taxes arising in the
ordinary course of business.
(ix) Indebtedness in respect of inter-company loans and advances among
the Company and its Subsidiaries which are not prohibited by paragraph
6C(4).
23
(x) Indebtedness of the Company in respect of its 12.75% Guaranteed
Senior Subordinated Debentures due December 15, 2000 (the "SUBORDINATED
DEBENTURES").
(xi) Unsecured Funded Debt of the Company which is incurred or issued
for the purpose of financing acquisitions permitted by paragraphs 6C(4)(v)
or 6C(4)(vii) and/or by the last paragraph of paragraph 6C(4) and which is
subordinated to the Obligations on terms satisfactory to the Majority
Holders.
(xii) So long as the Intercreditor Agreement is in effect, Funded Debt
of the Company under the Bank Agreement not exceeding $125,000,000, and
other "Credit Obligations" (as defined in the Bank Agreement) of the
Company and the Guarantors under the Bank Agreement.
(xiii) Unfunded pension liabilities with respect to Plans so long as
the Company is in compliance with paragraph 5N.
(xiv) Indebtedness outstanding on December 18, 1996 and described in
Schedule 8D.
-----------
(xv) Unsecured Funded Debt of the Company; provided that after giving
--------
effect to the issuance of such unsecured Funded Debt and the
application of any of the proceeds thereof on the issuance date no
Default or Event of Default shall exist, the Leverage Ratio shall not
exceed 60% on or before April 29, 1999, 55% on or after April 30, 1999
and on or before April 29, 2000, or 50% on or after April 30, 2000 and
the Company shall have delivered to the holders a certificate of a
Financial Officer of the Company in reasonable detail demonstrating
compliance with these conditions after giving effect to such issuance
and application; provided, further, either (a) that the terms and
-------- -------
conditions of such unsecured Funded Debt, including without
limitation, financial covenants, defaults, amortization and rate of
interest shall have been consented to by to the Majority Holders or
(b) that the sum of (I) the aggregate outstanding principal amount of
Notes (other than the Series A Notes) plus (II) the aggregate
----
principal amount of Indebtedness permitted under this clause (b) and
not consented to as provided in the preceding clause (a) at no time
shall exceed $50,000,000.
(xvi) Indebtedness of the Company (other than Financing Debt) in
addition to the foregoing; provided, however, that the aggregate amount of
-------- -------
all such Indebtedness at any one time outstanding shall not exceed
$2,000,000.
6C(3) GUARANTEES; LETTERS OF CREDIT. Become or remain liable with
respect to any Guarantee, including reimbursement obligations under letters of
credit or other financial guarantees by third parties, except the following:
------
(i) Guarantees of the Guarantors of the Obligations.
(ii) Guarantees by the Company or its Subsidiaries of Indebtedness
incurred by any of its Subsidiaries and permitted by paragraph 6C(2).
24
(iii) Unsecured Guarantees by Wholly Owned Subsidiaries of the
Obligations or Indebtedness of the Company permitted by paragraphs 6C(2)(x)
and 6C(2)(xi), so long as such Wholly Owned Subsidiaries are Guarantors and
such Guarantees are subordinated to such Guarantors' Guarantees of the
Obligations to the same extent and in the same manner as the Indebtedness
of the Company permitted by paragraphs 6C(2)(x) and 6C(2)(xi).
(iv) Guarantees of the Company and reimbursement obligations of the
Company with respect to letters of credit issued in support of Lion Oil
Company, an Arkansas corporation, but only so long as the Investment
represented thereby is permitted under paragraph 6C(4)(vi) or 6C(4)(vii)
and, if permitted by paragraph 6C(4)(vii), is counted toward the limit
provided therein.
(v) The unsecured Guarantee by TransMontaigne Product Services, Inc.
(formerly known as Continental Ozark, Inc.), an Arkansas corporation, of
the Subordinated Debentures pursuant to the Senior Subordinated Debenture
Guarantee dated March 28, 1991 (the "SUBORDINATED DEBENTURES GUARANTEE")
executed by such corporation.
(vi) Letters of Credit and Guarantees under the Bank Agreement so long
as the Intercreditor Agreement is in effect.
6C(4) INVESTMENTS AND ACQUISITIONS. Have outstanding, acquire, commit
itself to acquire or hold any Investment (including any Investment consisting of
the acquisition of any business) except for the following:
------
(i) Investments of the Company and its Subsidiaries in Wholly Owned
Subsidiaries as long as such Wholly Owned Subsidiaries are or become
Guarantors; provided, that Investments consisting of all or part of a
--------
business or operating assets shall be permitted under this paragraph
6C(4)(i) to the extent that such business or assets shall be acquired as
assets of the Company or of a Wholly Owned Subsidiary which is or becomes a
Guarantor.
(ii) Intercompany loans and advances from any Wholly Owned Subsidiary
to the Company or other Wholly Owned Subsidiaries but in each case only to
the extent reasonably necessary for Consolidated tax planning and working
capital management.
(iii) Investments in Cash Equivalents.
(iv) Guarantees permitted by paragraph 6C(3).
(v) Investments made after the date hereof in Subsidiaries listed in
Schedule 8A hereto as supplemented from time to time other than Wholly
-----------
Owned Subsidiaries, provided that the aggregate outstanding amount of
--------
loans, advances
25
and other Investments in such Subsidiaries, measured in each case as of the
date of the making of such Investment, shall not at any time exceed 10% of
Consolidated Net Tangible Assets.
(vi) Investments outstanding on December 18, 1996 and identified in
Schedule 8D, in each case as said Schedule 8D is in effect on December 18,
----------- -----------
1996.
(vii) Other Investments made after December 18, 1996 that are not
permitted by any of the foregoing subsections of this paragraph 6C(4),
provided that the aggregate outstanding amount of loans, advances and other
--------
Investments of the Company and its Subsidiaries permitted under this
paragraph 6C(4)(vii), measured in each case as of the date of the making of
such Investment, shall not at any time exceed 10% of Consolidated Tangible
Net Worth; provided, however, that no Investment may be made in a
-------- -------
Subsidiary unless the Subsidiary is listed in Schedule 8A hereto as
-----------
supplemented from time to time.
In addition, the Company covenants that the Company and its
Subsidiaries shall not acquire any operating business unless, after giving
effect to such acquisition and the financing thereof, the Company and its
Subsidiaries will not suffer any Default or Event of Default under any
Computation Covenant or any other provision of this Agreement; and provided,
--------
that, if the consideration (including without limitation any assumption of
Indebtedness, any deferred consideration and any consideration paid for any
related non-competition agreement) given shall exceed $3,000,000 for any single
acquisition or $15,000,000 in the aggregate for acquisitions consummated in any
period of 12 consecutive months, then prior to consummating any such acquisition
the Company shall provide to the holders a certificate of a Financial Officer
demonstrating that, after giving effect to such acquisition and the financing
thereof, the Company and its Subsidiaries will not suffer any Default or Event
of Default under any Computation Covenant or any other provision of this
Agreement.
6C(5) MERGER, CONSOLIDATION AND DISPOSITIONS OF ASSETS. Merge or
enter into a consolidation or sell, lease, sell and lease back, sublease or
otherwise dispose of any of its assets, except the following:
------
(i) The Company and any of its Subsidiaries may sell or otherwise
dispose of (a) inventory in the ordinary course of business, (b) tangible
assets to be replaced in the ordinary course of business within six months
by other tangible assets of equal or greater value and (c) tangible assets
that are no longer used or useful in the business of the Company or such
Subsidiary, the fair market value (or book value if greater) of which shall
not exceed 4% of Consolidated Net Tangible Assets of the Company and its
Subsidiaries as of the last day of the next preceding fiscal year.
(ii) Any Wholly Owned Subsidiary of the Company may merge or be
liquidated into the Company or any other Wholly Owned Subsidiary of the
Company so long as after giving effect to any such merger to which the
Company
26
is a party the Company shall be the surviving or resulting Person.
(iii) The Company and its Subsidiaries may enter into leases (other
than Capitalized Leases) as lessor of real and tangible personal property
and rights associated therewith in the ordinary course of business.
(iv) Any inactive Subsidiary other than a Guarantor may be
liquidated.
6C(6) LEASE OBLIGATIONS. Be or become obligated as lessee under any
lease except:
------
(i) Capitalized Leases permitted by paragraph 6C(2)(vii) and
6C(1)(ix).
(ii) Leases other than Capitalized Leases; provided, however, that the
-------- -------
aggregate fixed rental obligations for any fiscal year (excluding payments
required to be made by the lessee in respect of taxes and insurance whether
or not denominated as rent) shall not exceed $8,000,000 per annum.
6D. ISSUANCE OF STOCK BY SUBSIDIARIES; SUBSIDIARY DISTRIBUTIONS.
(i) ISSUANCE OF STOCK BY SUBSIDIARIES. The Company will not permit
any Subsidiary to issue or sell any shares of its capital stock or other
evidence of beneficial ownership to any Person other than the Company or
any Wholly Owned Subsidiary of the Company, which shares shall have been
pledged to the Collateral Agent as part of the Loan Security.
(ii) NO RESTRICTIONS ON SUBSIDIARY DISTRIBUTIONS. Except for this
Agreement and the Loan Documents and the Bank Agreement, the Company will
not, and will not permit any Subsidiary to, enter into or be bound by any
agreement (including covenants requiring the maintenance of specified
amounts of net worth or working capital) restricting the right of any
Subsidiary to make Distributions or extensions of credit to the Company
(directly or indirectly through another Subsidiary).
6E. DERIVATIVE CONTRACTS. The Company will not, and will not permit
any of its Subsidiaries to, enter into any Interest Rate Protection Agreement,
foreign currency exchange contract or other financial or commodity derivative
contracts except to provide hedge protection for an underlying economic
transaction in the ordinary course of business.
6F. NEGATIVE PLEDGE CLAUSES. The Company will not, and will not
permit any of its Subsidiaries to, enter into any agreement, instrument, deed or
lease which prohibits or limits the ability of the Company or any of its
Subsidiaries to create, incur, assume or suffer to exist any Lien upon any of
their respective properties, assets or revenues, whether now owned or hereafter
acquired, except the following:
------
27
(i) This Agreement and the other Loan Documents.
(ii) Covenants in documents creating Liens permitted by paragraph
6C(1) prohibiting further Liens on the assets encumbered thereby.
(iii) The Bank Agreement.
6G. TRANSACTIONS WITH AFFILIATES. The Company will not, and will not
permit any of its Subsidiaries to, effect any transaction with any of their
respective Affiliates (except for the Company and its Subsidiaries) on a basis
less favorable to the Company and its Subsidiaries than would be the case if
such transaction had been effected with a non-Affiliate.
6H. INACTIVE SUBSIDIARIES. The Company will not, and will not permit
any of its Subsidiaries to, make any Investment in or transfer any assets to
each of K123 Corporation, a Colorado corporation, and Republic Natural Gas
Company, a Kansas corporation, each of which is a Wholly Owned Subsidiary of the
Company.
7. EVENTS OF DEFAULT.
7A. ACCELERATION. If any of the following events shall occur and be
continuing for any reason whatsoever (and whether such occurrence shall be
voluntary or involuntary or come about or be effected by operation of law or
otherwise):
(i) the Company defaults in the payment of any principal of, or Yield
Maintenance Amount payable with respect to, any Note when the same shall
become due, either by the terms thereof or otherwise as herein provided; or
(ii) the Company defaults in the payment of any interest on any Note
for more than three Business Days after the date due; or
(iii) the Company or any Subsidiary defaults (whether as primary
obligor or as guarantor or other surety) in any payment of principal of or
interest on any other Financing Debt beyond any period of grace provided
with respect thereto, or the Company or any Subsidiary fails to perform or
observe any other agreement, term or condition contained in any agreement
under which any such obligation is created (or if any other event
thereunder or under any such agreement shall occur and be continuing) and
the effect of such failure or other event is to cause, or to permit the
holder or holders of such obligation (or a trustee on behalf of such holder
or holders) to cause, such obligation to become due (or to be repurchased
by the Company or any Subsidiary) prior to any stated maturity, provided
--------
that the aggregate amount of all obligations as to which such a payment
default shall occur and be continuing or such a failure or other event
causing or permitting acceleration (or resale to the Company or any
Subsidiary) shall occur and be continuing exceeds $3,000,000; or any Lien
or any property of the Company or any of its Subsidiary securing any such
Financing Debt shall be enforced by foreclosure or
28
similar action; or
(iv) any representation or warranty made by the Company herein or by
any Obligor in any Loan Document or by the Company, any other Obligor or
any of their officers in any writing furnished in connection with or
pursuant to this Agreement or the other Loan Documents shall be false in
any material respect on the date as of which made; or
(v) the Company fails to perform or observe any term, covenant or
agreement contained in paragraph 5A(v), 5J, 5O, 6A, 6C(1), 6C(2), 6C(3),
6C(5) or 6C(6); or
(vi) the Company or any other Obligor fails to perform or observe any
other agreement, covenant, term or condition contained herein or in any
other Loan Document and such failure shall not be remedied within 30 days
after the earlier of (a) Financial Officer obtains actual knowledge thereof
or (b) notice thereof by any holder to the Company; or
(vii) the Company or any Subsidiary makes an assignment for the
benefit of creditors or is generally not paying its debts as such debts
become due; or
(viii) any decree or order for relief in respect of the Company or any
Subsidiary is entered under any bankruptcy, reorganization, compromise,
arrangement, insolvency, readjustment of debt, dissolution or liquidation
or similar law, whether now or hereafter in effect (the "BANKRUPTCY LAW"),
of any jurisdiction; or
(ix) the Company or any Subsidiary petitions or applies to any
tribunal for, or consents to, the appointment of, or taking possession by,
a trustee, receiver, custodian, liquidator or similar official of the
Company or any Subsidiary, or of any substantial part of the assets of the
Company or any Subsidiary, or commences a voluntary case under the
Bankruptcy Law of the United States or any proceedings (other than
proceedings for the voluntary liquidation and dissolution of a Subsidiary)
relating to the Company or any Subsidiary under the Bankruptcy Law of any
other jurisdiction; or
(x) any such petition or application is filed, or any such
proceedings are commenced, against the Company or any Subsidiary and the
Company or such Subsidiary by any act indicates its approval thereof,
consent thereto or acquiescence therein, or an order, judgment or decree is
entered appointing any such trustee, receiver, custodian, liquidator or
similar official, or approving the petition in any such proceedings, and
such order, judgment or decree remains unstayed and in effect for more than
90 days; or
(xi) any order, judgment or decree is entered in any proceedings
against the Company decreeing the dissolution of the Company and such
order, judgment or
29
decree remains unstayed and in effect for more than 60 days: or
(xii) any order, judgment or decree is entered in any proceedings
against the Company or any Subsidiary decreeing a split-up of the Company
or such Subsidiary which requires the divestiture of assets representing a
substantial part, or the divestiture of the stock of a Subsidiary whose
assets represent a substantial part, of the consolidated assets of the
Company and its Subsidiaries (determined in accordance with generally
accepted accounting principles) or which requires the divestiture of
assets, or stock of a Subsidiary, which shall have contributed a
substantial part of the consolidated net income of the Company and its
Subsidiaries (determined in accordance with generally accepted accounting
principles) for any of the three fiscal years then most recently ended, and
such order, judgment or decree remains unstayed and in effect for more than
60 days; or
(xiii) one or more final judgments or orders in an aggregate amount
in excess of $1,000,000 is rendered against the Company or any Subsidiary
and either (i) enforcement proceedings have been commenced by any creditor
upon any such judgment or order of (ii) within 60 days after entry thereof,
such judgment is not discharged or execution thereof stayed pending appeal,
or within 60 days after the expiration of any such stay, such judgment is
not discharged; or
(xiv) any "reportable event" (as defined in section 4043 of ERISA)
shall have occurred that reasonably could be expected to result in
termination of a Plan or the appointment by the appropriate United States
District Court of a trustee to administer any Plan or the imposition of a
Lien in favor of a Plan; or any ERISA Group Person shall fail to pay when
due amounts aggregating in excess of $1,000,000 which it shall have become
liable to pay to the PBGC or to a Plan under Title IV of ERISA; or notice
of intent to terminate a Plan shall be filed under Title IV of ERISA by any
ERISA Group Person or administrator; or the PBGC shall institute
proceedings under Title IV of ERISA to terminate or to cause a trustee to
be appointed to administer any Plan or a proceeding shall be instituted by
a fiduciary of any Plan against any ERISA Group Person to enforce section
515 or 4219(c)(5) of ERISA and such proceeding shall not have been
dismissed within 60 days thereafter; or a condition shall exist by reason
of which the PBGC would be entitled to obtain a decree adjudicating that
any Plan must be terminated.
(xv) any Loan Document shall cease for any reason (other than the
scheduled termination thereof in accordance with its terms) to be
enforceable in accordance with its terms or in full force and effect and
such enforceability shall not be restored, or other provision therefor
made, to the satisfaction of the Majority Holders within 30 days following
such cessation; or any party to any Loan Document shall so assert in a
judicial or similar proceeding; or the security interests created by or any
Loan Document shall cease to be enforceable and of the same effect and
priority purported to be created hereby; or
(xvi) except as permitted by paragraph 6C(5):
30
(a) The Company shall cease to own, directly or indirectly, all the
capital stock of any Subsidiary which is a Wholly Owned Subsidiary on the
date hereof or subsequently becomes a Wholly Owned Subsidiary;
(b) any Person, together with "affiliates" and "associates" of such
Person within the meaning of Rule 12b-2 of the Exchange Act, which is not
now a beneficial owner of equity securities of the Company shall acquire
after the date hereof beneficial ownership within the meaning of Rule 13d-3
of the Exchange Act of 50% or more of either the voting stock or total
equity capital of the Company;
(c) a majority of the board of directors shall consist of
individuals who were not on the date hereof members of such board, except
to the extent that the new members were nominated by a majority of the
directors serving on the date hereof; and
(d) The Company or any of its Subsidiaries or any other Obligor
shall initiate any action to dissolve, liquidate or otherwise terminate its
existence; or
(xvii) there shall occur any "Event of Default" as defined in Section
13.1 of the Subordinated Debentures Agreement, or any of the Obligations
shall fail to be "Superior Indebtedness" within the meaning of Section 10
of the Subordinated Debentures Agreement;
then (a) if such event is an Event of Default specified in clause (i) or (ii) of
this paragraph 7A, any holder of any Note may at its option, by notice in
writing to the Company, declare all of the Notes held by such holder to be, and
all of the Notes held by such holder shall thereupon be and become, immediately
due and payable together with interest accrued thereon, without presentment,
demand, protest or notice of any kind, all of which are hereby waived by the
Company, (b) if such event is an Event of Default specified in clause (viii),
(ix) or (x) of this paragraph 7A with respect to the Company, all of the Notes
at the time outstanding shall automatically become immediately due and payable
at par together with interest accrued thereon and the Yield-Maintenance Amount,
if any, with respect to all such Notes, without presentment, demand, protest or
notice of any kind, all of which are hereby waived by the Company, and (C) if
such event is any Event of Default other than as specified in preceding clause
(b), the Required Holder(s) of the Notes of any Series may at its or their
option by notice in writing to the Company, declare all of the Notes of such
Series to be, and all of the Notes of such Series shall thereupon be and become,
immediately due and payable together with interest accrued thereon and together
with the Yield-Maintenance Amount, if any, with respect to each Note of such
Series, without presentment, demand, protest or notice of any kind, all of which
are hereby waived by the Company.
7B. RESCISSION OF ACCELERATION. At any time after any or all of the
Notes of any Series shall have been declared immediately due and payable
pursuant to paragraph 7A, the Required Holder(s) of the Notes of such Series
may, by notice in
31
writing to the Company, rescind and annul such declaration and its consequences
if (i) the Company shall have paid all overdue interest on the Notes of such
Series, the principal of and Yield-Maintenance Amount, if any, payable with
respect to any Notes of such Series which have become due otherwise than by
reason of such declaration, and interest on such overdue interest and overdue
principal and Yield Maintenance Amount at the rate specified in the Notes of
such Series, (ii) the Company shall not have paid any amounts which have become
due solely by reason of such declaration, (iii) all Events of Default and
Defaults, other than non-payment of amounts which have become due solely by
reason of such declaration, shall have been cured or waived pursuant to
paragraph 12C, and (iv) no judgment or decree shall have been entered for the
payment of any amounts due pursuant to the Notes of such Series or this
Agreement. No such rescission or annulment shall extend to or affect any
subsequent Event of Default or Default or impair any right arising therefrom.
7C. NOTICE OF ACCELERATION OR RESCISSION. Whenever any Note shall be
declared immediately due and payable pursuant to paragraph 7A or any such
declaration shall be rescinded and annulled pursuant to paragraph 7B, the
Company shall forthwith give written notice thereof to the holder of each Note
of each Series at the time outstanding.
7D. OTHER REMEDIES. If any Event of Default or Default shall occur
and be continuing, the holder of any Note may proceed to protect and enforce its
rights under this Agreement and such Note by exercising such remedies as are
available to such holder in respect thereof under applicable law, either by suit
in equity or by action at law, or both, whether for specific performance of any
covenant or other agreement contained in this Agreement or in aid of the
exercise of any power granted in this Agreement. No remedy conferred in this
Agreement upon the holder of any Note is intended to be exclusive of any other
remedy, and each and every such remedy shall be cumulative and shall be in
addition to every other remedy conferred herein or now or hereafter existing at
law or in equity or by statute or otherwise.
7E. ANNULMENT OF DEFAULTS. Once an Event of Default has occurred,
such Event of Default shall be deemed to exist and be continuing for all
purposes of the Loan Documents until the Majority Holders (unless otherwise
specified in paragraph 12C) shall have waived such Event of Default in writing,
stated in writing that the same has been cured to such holders' reasonable
satisfaction or entered into an amendment to this Agreement which by its express
terms cures such Event of Default, at which time such Event of Default shall no
longer be deemed to exist or to have continued. No such action by the holders
shall extend to or affect any subsequent Event of Default or impair any rights
of the holders upon the occurrence thereof. The making of any extension of
credit (including the purchase of Notes) during the existence of any Default or
Event of Default shall not constitute a waiver thereof.
8. REPRESENTATIONS, COVENANTS AND WARRANTIES. The Company
represents, covenants and warrants as follows:
32
8A. ORGANIZATION.
(i) THE COMPANY. The Company is a corporation duly organized and
validly existing in good standing under the laws of the State of Delaware,
and the Company has the corporate power to own its respective property and
to carry on its respective business as now being conducted. The execution,
delivery and performance by the Company of this Agreement and the other
Loan Documents to which it is a party (including, without limitation to
grant the Collateral Agent, for the benefit of the holders, the security
interests in the Loan Security owned by it to secure the Obligations) are
within the Company's corporate powers and have been duly authorized by all
necessary corporate action. Certified copies of the Charter and By-laws of
the Company have been previously delivered to the holders and are correct
and complete. Schedule 8A, as from time to time hereafter supplemented in
-----------
accordance with paragraphs 5A(i) and 5A(ii), sets forth, as of the later of
the date hereof or as of the end of the most recent fiscal quarter for
which financial statements are required to be furnished in accordance with
such paragraphs, (i) the jurisdiction of incorporation of the Company, (ii)
the address of the Company's principal executive office and chief place of
business, (iii) each name, including any trade name, under which the
Company conducts its business and (iv) the jurisdictions in which the
Company keeps tangible personal property.
(ii) SUBSIDIARIES. Each Subsidiary is a corporation duly organized
and validly existing in good standing under the laws of the jurisdiction in
which it is incorporated, and each Subsidiary has the corporate power to
own its respective property and to carry on its respective business as now
being conducted. The execution, delivery and performance by each
Subsidiary of this Agreement and the other Loan Documents to which it is a
party (including, without limitation to grant the Collateral Agent, for the
benefit of the holders, the security interests in the Loan Security owned
by it to secure the Obligations) are within such Subsidiary's corporate
powers and have been duly authorized by all necessary corporate action.
Certified copies of the Charter and By-laws of each Guarantor have been
previously delivered to the Purchasers and are correct and complete.
Schedule 8A, as from time to time hereafter supplemented in accordance with
-----------
paragraphs 5A(i) and 5A(ii), sets forth, as of the later of the date hereof
or as of the end of the most recent fiscal quarter for which financial
statements are required to be furnished in accordance with such paragraphs,
(i) the jurisdiction of incorporation of each Subsidiary, (ii) the address
of each Subsidiary's principal executive office and chief place of
business, (iii) each name, including any trade name, under which such
Subsidiary conducts its business and (iv) the jurisdictions in which such
Subsidiary keeps tangible personal property; provided, however, that there
-------- -------
may be omitted from Schedule 8A one or more Subsidiaries which have no
-----------
business operations and no assets or liabilities.
(iii) CAPITALIZATION. No options, warrants, conversion rights,
preemptive rights or other statutory or contractual rights to purchase
shares of capital stock or
33
other securities of any Subsidiary now exist, nor has any Subsidiary
authorized any such right, nor is any Subsidiary obligated in any other
manner to issue shares of its capital stock or other securities.
8B. FINANCIAL STATEMENTS. The Company has furnished each Purchaser
of any Accepted Notes with the following financial statements, provided by a
principal Financial Officer of the Company: (i) a Consolidated balance sheet of
the Company and its Subsidiaries as at April 30 in each of the three fiscal
years of the Company most recently completed prior to the date as of which this
representation is made or repeated to such Purchaser (other than fiscal years
completed within 95 days prior to such date for which audited financial
statements have not been released) and Consolidated statements of income,
stockholders' equity and cash flows of the Company and its Subsidiaries for each
such year, all reported on by KPMG Peat Marwick LLP; and (ii) a Consolidated
balance sheet of the Company and its Subsidiaries as at the end of the quarterly
period (if any) most recently completed prior to such date and after the end of
such fiscal year (other than quarterly periods completed within 50 days prior to
such date for which financial statements have not been released) and the
comparable quarterly period in the preceding fiscal year and Consolidated
statements of income, stockholders' equity and cash flows for the periods from
the beginning of the fiscal years in which such quarterly periods are included
to the end of such quarterly periods, prepared by the Company. Such financial
statements (including any related schedules and/or notes) are true and correct
in all material respects (subject, as to interim statements, to changes
resulting from audits and year-end adjustments), have been prepared in
accordance with generally accepted accounting principles consistently followed
throughout the periods involved and show all liabilities, direct and contingent,
of the Company and its Subsidiaries required to be shown in accordance with such
principles. The balance sheets fairly present the condition of the Company and
its Subsidiaries as at the dates thereof, and the statements of income,
stockholders' equity and cash flows fairly present the results of the operations
of the Company and its Subsidiaries and their cash flows for the periods
indicated. There has been no material adverse change in the business, property
or assets, condition (financial or otherwise) operations or prospects of the
Company and its Subsidiaries taken as a whole since the end of the most recent
fiscal year for which such audited financial statements have been furnished, and
neither the Company nor any Subsidiary of the Company has entered into any
material transaction outside the ordinary course of business except for the
transactions contemplated by this Agreement and the Material Agreements.
8C. ACTIONS PENDING. There is no action, suit, investigation or
proceeding pending or, to the knowledge of the Company, threatened against the
Company or any of its Subsidiaries, or any properties or rights of the Company
or any of its Subsidiaries, by or before any court, arbitrator or administrative
or governmental body which might result in any material adverse change in the
business, property or assets, condition (financial or otherwise) or operations
of the Company and its Subsidiaries taken as a whole. There is no action, suit,
investigation or proceeding pending or, to the knowledge of the
34
Company, threatened against the Company or any of its Subsidiaries which
purports to affect the validity or enforceability of this Agreement or any other
Loan Document.
8D. OUTSTANDING DEBT. Schedule 8D, as from time to time hereafter
-----------
supplemented in accordance with paragraph 5A(i) and 5A(ii) sets forth (a) the
amounts (as of the dates indicated in Schedule 8D, as so supplemented) of all
-----------
Financing Debt of the Company and its Subsidiaries and all agreements which
relate to such Financing Debt, (b) all Liens and Guarantees with respect to such
Financing Debt, (c) all agreements which directly or indirectly require the
Company or any Subsidiary to make any Investment and (d) all Investments
permitted under paragraph 6C(4)(vi). The Company has furnished the Purchasers
with correct and complete copies of any agreements described in clauses (a),
(b), (c) and (d) above requested by the Purchasers. There exists no default
under the provisions of any instrument evidencing such Indebtedness or of any
agreement relating thereto.
8E. TITLE TO PROPERTIES. The Company has and each of its
Subsidiaries has defensible title to its respective real properties (other than
properties which it leases) and good title to all of its other respective
properties and assets, including the properties and assets reflected in the most
recent audited balance sheet referred to in paragraph 8B (other than properties
and assets disposed of in the ordinary course of business), subject to no Lien
of any kind except Liens permitted by paragraph 6C(1) and except for assets
disposed of as permitted by paragraph 6C(5). All leases necessary in any
material respect for the conduct of the respective businesses of the Company and
its Subsidiaries are valid and subsisting and are in full force and effect.
8F. TAXES. The Company has and each of its Subsidiaries has filed
all federal, state and other income tax returns which, to the best knowledge of
the officers of the Company and its Subsidiaries, are required to be filed, and
each has paid all taxes as shown on such returns and on all assessments received
by it to the extent that such taxes have become due, except such taxes as are
being contested in good faith by appropriate proceedings for which adequate
reserves have been established in accordance with generally accepted accounting
principles.
8G. CONFLICTING AGREEMENTS AND OTHER MATTERS. Neither the Company
nor any of its Subsidiaries is a party to any contract or agreement or subject
to any charter or other corporate restriction which materially and adversely
affects its business, property or assets, condition (financial or otherwise) or
operations. Neither the execution nor delivery of this Agreement, the Notes or
the other Loan Documents, nor the offering, issuance and sale of the Notes, nor
fulfillment of nor compliance with the terms and provisions hereof and of the
Notes or the other Loan Documents will conflict with, or result in a breach of
the terms, conditions or provisions of, or constitute a default under, or result
in any violation of, or result in the creation of any Lien upon any of the
properties or assets of the Company or any of its Subsidiaries pursuant to, the
Charter or By-laws of the Company or any of its Subsidiaries, any award of any
35
arbitrator or any agreement (including any agreement with stockholders),
instrument, order, judgment, decree, statute, law, rule or regulation to which
the Company or any of its Subsidiaries is subject (other than the Liens created
by the Pledge Agreement). Neither the Company nor any of its Subsidiaries is a
party to, or otherwise subject to any provision contained in, any instrument
evidencing Indebtedness of the Company or such Subsidiary, any agreement
relating thereto or any other contract or agreement (including its Charter)
which limits the amount of, or otherwise imposes restrictions on the incurring
of, Indebtedness of the Company of the type to be evidenced by the Notes except
as set forth in the agreements listed in Schedule 8G attached hereto.
-----------
8H. OFFERING OF NOTES. Neither the Company nor any agent acting on
its behalf has, directly or indirectly, offered the Notes or any similar
security of the Company for sale to, or solicited any offers to buy the Notes or
any similar security of the Company from, or otherwise approached or negotiated
with respect thereto with, any Person other than institutional investors, and
neither the Company nor any agent acting on its behalf has taken or will take
any action which would subject the issuance or sale of the Notes to the
provisions of Section 5 of the Securities Act or to the provisions of any
securities or Blue Sky law of any applicable jurisdiction.
8I. USE OF PROCEEDS. None of the proceeds of the sale of any Notes
will be used, directly or indirectly, for the purpose, whether immediate,
incidental or ultimate, of purchasing or carrying any "margin stock" as defined
in Regulation G (12 CFR Part 207) of the Board of Governors of the Federal
Reserve System ("MARGIN STOCK") or for the purpose of maintaining, reducing or
retiring any Indebtedness which was originally incurred to purchase or carry any
stock that is then currently a margin stock or for any other purpose which might
constitute the purchase of such Notes a "purpose credit" within the meaning of
such Regulation G, unless the Company shall have delivered to the Purchaser
which is purchasing such Notes, on the Closing Day for such Notes, an opinion of
counsel satisfactory to such Purchaser stating that the purchase of such Notes
does not constitute a violation of such Regulation G. Neither the Company nor
any agent acting on its behalf has taken or will take any action which might
cause this Agreement or the Notes to violate Regulation G, T, or X or any other
regulation of the Board of Governors of the Federal Reserve System or to violate
the Exchange Act, in each case as in effect now or as the same may hereafter be
in effect.
8J. ERISA. No accumulated funding deficiency (as defined in section
302 of ERISA and section 412 of the Code), whether or not waived, exists with
respect to any Plan (other than a Multiemployer Plan). No liability to the PBGC
has been or is expected by the Company or any ERISA Affiliate to be incurred
with respect to any Plan (other than a Multiemployer Plan) by the Company , any
Subsidiary or any ERISA Affiliate which is or would be materially adverse to the
business, property or assets, condition (financial or otherwise) or operations
of the
36
Company and its Subsidiaries taken as a whole. Neither the Company , any
Subsidiary nor any ERISA Affiliate has incurred or presently expects to incur
any withdrawal liability under Title IV of ERISA with respect to any
Multiemployer Plan which is or would be materially adverse to the business,
property or assets, condition (financial or otherwise) or operations of the
Company and its Subsidiaries taken as a whole. The execution and delivery of
this Agreement and the issuance and sale of the Notes will be exempt from or
will not involve any transaction which is subject to the prohibitions of section
406 of ERISA and will not involve any transaction in connection with which a
penalty could be imposed under section 502(i) of ERISA or a tax could be imposed
pursuant to section 4975 of the Code. The representation by the Company in the
next preceding sentence is made in reliance upon and subject to the accuracy of
the representation of each Purchaser in paragraph 9B as to the source of funds
to be used by it to purchase any Notes. Each Multiemployer Plan and each plan
that constitutes a "defined benefit plan" (as defined in ERISA) are set forth in
Schedule 8J.
- - -----------
8K. GOVERNMENTAL CONSENT. Neither the nature of the Company or of
any Subsidiary, nor any of their respective businesses or properties, nor any
relationship between the Company or any Subsidiary and any other Person, nor any
circumstance in connection with the offering, issuance, sale or delivery of the
Notes is such as to require any authorization, consent, approval, exemption or
any action by or notice to or filing with any court or administrative or
governmental or regulatory body (other than routine filings after the Closing
Day for any Notes with the Securities and Exchange Commission and/or state Blue
Sky authorities) in connection with the execution and delivery of this
Agreement, the offering, issuance, sale or delivery of the Notes or fulfillment
of or compliance with the terms and provisions hereof or of the Notes.
8L. DISCLOSURE. Neither this Agreement nor any other document,
certificate or statement furnished to any Purchaser by or on behalf of the
Company in connection herewith contains any untrue statement of a material fact
or omits to state a material fact necessary in order to make the statements
contained herein and therein not misleading. There is no fact peculiar to the
Company or any of its Subsidiaries which materially adversely affects or in the
future may (so far as the Company can now foresee) materially adversely affect
the business, property or assets, condition (financial or otherwise) or
operations of the Company or any of its Subsidiaries and which has not been set
forth in this Agreement or in the section of the Company's prospectus dated
February 11, 1997 titled "Risk Factors". In the Company's judgment, the
financial and operational projections and current capital expenditures plan of
the Company and its Subsidiaries dated November 15, 1996 constitute a reasonable
basis as of the date of the Initial Closing for the assessment of the future
performance of the Company and its Subsidiaries during the periods indicated
therein, it being understood that any projected financial information represents
an estimate, based on various assumptions, of future results of operations,
which assumption may prove to have been incorrect and which results may not in
fact occur.
8M. HOSTILE TENDER OFFERS. None of the proceeds of the sale of any
Notes will be used to finance a Hostile Tender Offer.
8N. LICENSES, ETC. To the best knowledge of the Company and the
Guarantors, the Company and its Subsidiaries have all material patents, patent
37
applications, patent licenses, patent rights, trademarks, trademark rights,
trade names, trade name rights, copyrights, licenses, franchises, permits,
authorizations and other rights as are necessary for the conduct of the business
of the Company and its Subsidiaries as now conducted by them. All of the
foregoing are in full force and effect in all material respects, and each of the
Company and its Subsidiaries is in substantial compliance with the foregoing
without any known conflict with the valid rights of others which has resulted,
or creates a material risk of resulting, in any Material Adverse Effect. No
event has occurred which permits, or after notice or lapse of time or both would
permit, the revocation or termination of any such license, franchise or other
right or which affects the rights of any of the Company and its Subsidiaries
thereunder so as to result, or to create a material risk of resulting, in any
Material Adverse Effect. No litigation or other proceeding or dispute exists
with respect to the validity or, where applicable, the extension or renewal, of
any of the foregoing which has resulted, or creates a material risk of
resulting, in any Material Adverse Effect.
8O. CERTAIN BUSINESS REPRESENTATIONS.
(i) LABOR RELATIONS. No dispute or controversy between the Company or
any of its Subsidiaries and any of their respective employees has resulted,
or is reasonably likely to result, in any Material Adverse Effect, and
neither the Company nor any of its Subsidiaries anticipates that its
relationships with its unions or employees will result, or are reasonably
likely to result, in any Material Adverse Effect. The Company and each of
its Subsidiaries is in compliance in all material respects with all federal
and state laws with respect to (a) non-discrimination in employment with
which the failure to comply, in the aggregate, has resulted, or creates a
material risk of resulting, in a Material Adverse Effect and (b) the
payment of wages.
(ii) ANTITRUST. Each of the Company and its Subsidiaries is in
compliance in all material respects with all federal and state antitrust
laws relating to its business and the geographic concentration of its
business.
(iii) CONSUMER PROTECTION. Neither the Company nor any of its
Subsidiaries is in violation of any rule, regulation, order, or
interpretation of any rule, regulation or order of the Federal Trade
Commission (including truth-in-lending), with which the failure to comply,
in the aggregate, has resulted, or creates a material risk of resulting, in
a Material Adverse Effect.
(iv) BURDENSOME OBLIGATIONS. Neither the Company nor any of its
Subsidiaries is party to or bound by any agreement, instrument, deed or
lease or is subject to any Charter, By-law or other restriction, commitment
or requirement which, in the opinion of the management of such Person, is
so unusual or burdensome as in the foreseeable future to result, or create
a material risk of resulting, in a Material Adverse Effect.
(v) FUTURE EXPENDITURES. Neither the Company nor any of its
Subsidiaries
38
anticipate that the future expenditures, if any, by the Company and its
Subsidiaries needed to meet the provisions of any federal, state or foreign
governmental statutes, orders, rules or regulations will be so burdensome
as to result, or create a material risk of resulting, in any Material
Adverse Effect.
8P. ENVIRONMENTAL REGULATIONS.
(i) ENVIRONMENTAL COMPLIANCE. To the best knowledge of the Company
and the Guarantors, each of the Company and its Subsidiaries is in
compliance in all material respects with the Clean Air Act, the Federal
Water Pollution Control Act, the Marine Protection Research and Sanctuaries
Act, RCRA, CERCLA and any other Environmental Law in effect in any
jurisdiction in which any properties of the Company or any of its
Subsidiaries are located or where any of them conducts its business, and
with all applicable published rules and regulations (and applicable
standards and requirements) of the federal Environmental Protection Agency
and of any similar agencies in states or foreign countries in which the
Company or its Subsidiaries conducts its business, in each case other than
those which in the aggregate have not resulted, and do not create a
material risk of resulting, in a Material Adverse Effect.
(ii) ENVIRONMENTAL LITIGATION. Except in instances in which such
event has not resulted, and does not create a material risk of resulting,
in a Material Adverse Effect, no suit, claim, action or proceeding of which
the Company or any of its Subsidiaries has been given notice or otherwise
has knowledge is now pending before any court, governmental agency or board
or other forum, or to the Company's or any of its Subsidiaries knowledge,
threatened by any Person (nor to the Company's or any of its Subsidiaries'
knowledge, does any factual basis exist therefor) for, and neither the
Company nor any of its Subsidiaries have received written correspondence
from any federal, state or local governmental authority with respect to:
(a) noncompliance by the Company or any of its Subsidiaries with any
Environmental Law;
(b) personal injury, wrongful death or other tortious conduct
relating to materials, commodities or products used, generated, sold,
transferred or manufactured by the Company or any of its Subsidiaries
(including products made of, containing or incorporating asbestos, lead or
other hazardous materials, commodities or toxic substances); or
(c) the release into the environment by the Company or any of its
Subsidiaries of any Hazardous Material generated by the Company or any of
its Subsidiaries whether or not occurring at or on a site owned, leased or
operated by the Company or any of its Subsidiaries.
39
(iii) HAZARDOUS MATERIAL. Schedule 8P contains a list as of the date
-----------
hereof of all waste disposal or dump sites at which Hazardous Material
generated by either the Company or any of its Subsidiaries has been
disposed of directly by the Company or any of its Subsidiaries and all
independent contractors to whom the Company and its Subsidiaries have
delivered Hazardous Material, or to the Company's or any of its
Subsidiary's knowledge, where Hazardous Material finally came to be
located, and indicates all such sites which are or have been included
(including as a potential or suspect site) in any published federal, state
or local "superfund" or other list of hazardous or toxic waste sites,
except sites as to which the involvement of the Company or any Subsidiary
has not resulted, and does not present a material risk of resulting, in a
Material Adverse Effect. Any waste disposal or dump sites at which
Hazardous Material generated by either the Company or any of its
Subsidiaries has been disposed of directly by the Company or any of its
Subsidiaries and all independent contractors to whom the Company or any of
its Subsidiaries have delivered Hazardous Material, or to the Company's or
any of its Subsidiaries' knowledge, where Hazardous Material finally came
to be located, has not resulted, and does not present a material risk of
resulting, in a Material Adverse Effect.
(iv) ENVIRONMENTAL CONDITION OF PROPERTIES. None of the properties
owned or leased by the Company or any of its Subsidiaries has been used as
a treatment, storage or disposal site, other than as disclosed in Schedule
--------
8P, except sites as to which the involvement of the Company or any
--
Subsidiary has not resulted, and does not present a material risk of
resulting, in a Material Adverse Effect. No Hazardous Material is present
in any real property currently or formerly owned or operated by the Company
or any of its Subsidiaries except that which has not resulted, and does
not present a material risk of resulting, in a Material Adverse Effect.
8Q. FOREIGN TRADE REGULATIONS; GOVERNMENT REGULATION.
(i) FOREIGN TRADE REGULATIONS. Neither the execution and delivery of
this Agreement or any other Loan Document, nor issuance by the Company of
any Notes, nor the guaranteeing of the Obligations by any Guarantor, nor
the securing of the Obligations with the Loan Security, has constituted or
resulted in or will constitute or result in the violation of any Foreign
Trade Regulation.
(ii) GOVERNMENT REGULATION. Neither the Company nor any of its
Subsidiaries, nor any Person controlling the Company or any of its
Subsidiaries or under common control with the Company or any of its
Subsidiaries, is subject to regulation under the Public Utility Holding
Company Act of 1935, the Federal Power Act, the Investment Company Act, the
Interstate Commerce Act or any statute or regulation which regulates the
incurring by the Company or any of its Subsidiaries of Financing Debt as
contemplated by this Agreement and the other Loan Documents.
40
8R. FACILITY CONVERSION DATE. The Facility Conversion Date occurred
on February 14, 1997.
8S. BANK AGREEMENT. The Company has previously furnished the
Purchasers with a correct and complete copy of the Bank Agreement (including all
schedules and exhibits) in effect as of the date of the Initial Closings.
8T. MATERIAL AGREEMENTS. The Company has previously furnished to the
Purchasers a correct and complete copy of the Securities Purchase Agreement
dated March 28, 1991 (the "SUBORDINATED DEBENTURES AGREEMENT") between the
Company's predecessor, Continental Ozark Corporation and Dillon, Read & Co.,
Inc., as nominee, and correct and complete copies, including all exhibits,
schedules and amendments thereto, of the agreements, each as in effect on the
date hereof, listed in Schedule 8T (together with the Subordinated Debentures,
-----------
the Subordinated Debentures Agreements, the Subordinated Debentures Guarantee
and the Bank Agreement, the "MATERIAL AGREEMENTS").
9. REPRESENTATIONS OF THE PURCHASERS.
Each Purchaser represents as follows:
9A. NATURE OF PURCHASE. Such Purchaser is not acquiring the Notes
purchased by it hereunder with a view to or for sale in connection with any
distribution thereof within the meaning of the Securities Act, provided that the
disposition of such Purchaser's property shall at all times be and remain within
its control.
9B. SOURCE OF FUNDS. The source of the funds being used by such
Purchaser to pay the purchase price of the Notes being purchased by such
Purchaser hereunder constitutes assets (i) allocated to the "insurance company
general account" of such Purchaser (as such term is defined under Section V of
the United States Department of Labor's Prohibited Transaction Class Exemption
("PTCE") 95-60), and as of the date of the purchase of the Notes such Purchaser
satisfies all of the applicable requirements for relief under Section I and IV
of PtCE 95-60, (ii) allocated to a separate account maintained by such Purchaser
in which no employee benefit plan, other than employee benefit plans identified
on a list which has been furnished by such Purchaser to the Company,
participates to the extent of 10% or more or (iii) of an investment fund, the
assets of which do not include assets of any employee benefit plan within the
meaning of ERISA. For the purpose of this paragraph 9B, the terms "SEPARATE
ACCOUNT" and "EMPLOYEE BENEFIT PLAN" shall have the respective meanings
specified in section 3 of ERISA.
10. DEFINITIONS. For the purpose of this Agreement, the terms
defined in paragraphs 1 and 2 shall have the respective meanings specified
therein, and the following terms shall have the meanings specified with respect
thereto below (such meanings to be equally applicable to both the singular and
plural forms of the terms defined):
41
10A. YIELD-MAINTENANCE TERMS.
"CALLED PRINCIPAL" shall mean, with respect to any Note, the principal
of such Note that is to be prepaid pursuant to paragraph 4B or is declared to be
immediately due and
payable pursuant to paragraph 7A, as the context requires.
"DESIGNATED SPREAD" shall mean 0.75% in the case of each Series A Note
and 0% in the case of each Note of any other Series unless the Confirmation of
Acceptance with respect to the Notes of such Series specifies a different
Designated Spread in which case it shall mean, with respect to each Note of such
Series, the Designated Spread so specified.
"DISCOUNTED VALUE" shall mean, with respect to the Called Principal of
any Note, the amount obtained by discounting all Remaining Scheduled Payments
with respect to such Called Principal from their respective scheduled due dates
to the Settlement Date with respect to such Called Principal, in accordance with
accepted financial practice and at a discount factor (applied on the same
periodic basis as that on which interest on such Note is payable) equal to the
Reinvestment Yield with respect to such Called Principal.
"REINVESTMENT YIELD" shall mean, with respect to the Called Principal
of any Note, the Designated Spread plus the yield to maturity implied by (i) the
yields reported, as of 10:00 A.M. (New York City local time) on the Business Day
next preceding the Settlement Date with respect to such Called Principal, on the
display designated as "Page 678" on the Telerate Service (or such other display
as may replace page 678 on the Telerate Service) for actively traded U.S.
Treasury securities having a maturity equal to the Remaining Average Life of
such Called Principal as of such Settlement Date, or if such yields shall not be
reported as of such time or the yields reported as of such time shall not be
ascertainable, (ii) 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 with respect to such Called
Principal, 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 the Remaining Average Life of such Called Principal
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 yields reported for various maturities.
"REMAINING AVERAGE LIFE" shall mean, with respect to the Called
Principal of any Note, the number of years (calculated to the nearest one-
twelfth year) obtained by dividing (i) such Called Principal into (ii) the sum
-
of the products obtained by multiplying (a) each Remaining Scheduled Payment of
such Called Principal (but not of interest thereon) by (b) the number of years
(calculated to the nearest one-twelfth
42
year) which will elapse between the Settlement Date with respect to such Called
Principal and the scheduled due date of such Remaining Scheduled Payment.
"REMAINING SCHEDULED PAYMENTS" shall mean, with respect to the Called
Principal of any Note, all payments of such Called Principal and interest
thereon that would be due on or after the Settlement Date with respect to such
Called Principal if no payment of such Called Principal were made prior to its
scheduled due date.
"SETTLEMENT DATE" shall mean, with respect to the Called Principal of
any Note, the date on which such Called Principal is to be prepaid pursuant to
paragraph 4B or is declared to be immediately due and payable pursuant to
paragraph 7A, as the context requires.
"YIELD-MAINTENANCE AMOUNT" shall mean, with respect to any Note, an
amount equal to the excess, if any, of the Discounted Value of the Called
Principal of such Note over the sum of (i) such Called Principal plus (ii)
interest accrued thereon as of (including interest due on) the Settlement Date
with respect to such Called Principal. The Yield-Maintenance Amount shall in no
event be less than zero.
10B. OTHER TERMS.
"ACCEPTANCE" shall have the meaning specified in paragraph 2F.
"ACCEPTANCE DAY" shall have the meaning specified in paragraph 2F.
"ACCEPTANCE WINDOW" shall have the meaning specified in paragraph 2F.
"ACCEPTED NOTE" shall have the meaning specified in paragraph 2F.
"ACCUMULATED BENEFIT OBLIGATIONS" shall mean the actuarial present
value of the accumulated benefit obligations under any Plan, calculated in
accordance with Statement No. 87 of the Financial Accounting Standards Board.
"AFFILIATE" shall mean, with respect to the Company (or any other
specified Person), any other Person directly or indirectly controlling,
controlled by or under direct or indirect common control with the Company, and
shall include (a) any executive officer or director or general partner of the
Company and (b) any Person of which the Company or any Affiliate (as defined in
clause (a) above) of the Company shall, directly or indirectly, beneficially own
either (i) at least 25% of the outstanding equity securities having the general
power to vote or (ii) at least 25% of all equity interests; provided, however,
-------- -------
that Lion Oil Company, an Arkansas corporation, shall not be deemed to be an
Affiliate of the Company or of any Subsidiary of the Company under clause (b) of
this definition, unless the Company or such Subsidiary shall, directly or
indirectly, beneficially own either (x) at least 30% of the outstanding equity
securities having the general power to vote of Lion Oil Company or (y) at least
30% of all equity interests in
43
Lion Oil Company.
"AUTHORIZED OFFICER" shall mean (i) in the case of the Company, its
chief executive officer, its chief financial officer, any vice president of the
Company designated as an "Authorized Officer" of the Company in the Information
-----------
Schedule attached hereto or any vice president of the Company designated as an
- - --------
"Authorized Officer" of the Company for the purpose of this Agreement in an
Officer's Certificate executed by the Company's chief executive officer or chief
financial officer and delivered to Prudential, and (ii) in the case of
Prudential, any officer of Prudential designated as its "Authorized Officer" in
the Information Schedule or any officer of Prudential designated as its
----------- --------
"Authorized Officer" for the purpose of this Agreement in a certificate executed
by one of its Authorized Officers. Any action taken under this Agreement on
behalf of the Company by any individual who on or after the date of this
Agreement shall have been an Authorized Officer of the Company and whom
Prudential in good faith believes to be an Authorized Officer of the Company at
the time of such action shall be binding on the Company even though such
individual shall have ceased to be an Authorized Officer of the Company, and any
action taken under this Agreement on behalf of Prudential by any individual who
on or after the date of this Agreement shall have been an Authorized Officer of
Prudential and whom the Company in good faith believes to be an Authorized
Officer of Prudential at the time of such action shall be binding on Prudential
even though such individual shall have ceased to be an Authorized Officer of
Prudential.
"AVAILABLE FACILITY AMOUNT" shall have the meaning specified in
paragraph 2A.
"BANK AGENT" shall mean The First National Bank of Boston and any
successor agent under the Bank Agreement.
"BANK AGREEMENT" shall mean the Credit Agreement dated as of December
18, 1996 among the Company and the Bank Agent, as amended from time to time.
"BANK OBLIGATIONS" shall mean the obligations of the Company and the
other Obligors under the Bank Agreement.
"BANKRUPTCY DEFAULT" shall mean an Event of Default described in
paragraph 7A(vii), 7A(viii) or 7A(ix).
"BANKRUPTCY LAW" shall have the meaning specified in clause (viii) of
paragraph 7A.
"BUSINESS DAY" shall mean any day other than (i) a Saturday or a
Sunday, (ii) a day on which commercial banks in New York City are required or
authorized to be closed and (iii) for purposes of paragraph 2C hereof only, a
day on
44
which Prudential is not open for business.
"BY-LAWS" shall mean all written by-laws, rules, regulations and all
other documents relating to the governance of any Person other than an
individual, or interpretive of the Charter of such Person, all as from time to
time in effect.
"CANCELLATION DATE" shall have the meaning specified in paragraph
2I(3).
"CANCELLATION FEE" shall have the meaning specified in paragraph
2I(3).
"CAPITALIZED LEASE" shall mean any lease which is required to be
capitalized on the balance sheet of the lessee in accordance with GAAP,
including Statement Nos. 13 and 98 of the Financial Accounting Standards Board.
"CAPITALIZED LEASE OBLIGATIONS" shall mean the amount of the liability
reflecting the aggregate discounted amount of future payments under all
Capitalized Leases calculated in accordance with GAAP, including Statement Nos.
13 and 98 of the Financial Accounting Standards Board.
"CASH EQUIVALENTS" shall mean:
(a) negotiable certificates of deposit, time deposits (including sweep
accounts), demand deposits and bankers' acceptances having a maturity of
nine months or less and issued by any United States financial institution
having capital and surplus and undivided profits aggregating at least
$100,000,000 and rated at least Prime-1 by Moody's Investors Service, Inc.
or A-1 by Standard & Poor's Ratings Service or issued by any Lender;
(b) corporate obligations having a maturity of nine months or less and
rated at least Prime-1 by Moody's Investors Service, Inc. or A-1 by
Standard & Poor's Ratings Service or issued by any Lender;
(c) any direct obligation of the United States of America or any
agency or instrumentality thereof, or of any state or municipality thereof,
(i) which has a remaining maturity at the time of purchase of not more than
one year or which is subject to a repurchase agreement with any Lender (or
any other financial institution referred to in clause (a) above)
exercisable within one year from the time of purchase and (ii) which, in
the case of obligations of any state or municipality, is rated at least Aa
by Moody's Investors Service, Inc. or AA by Standard & Poor's Ratings
Service; and
(d) any mutual fund or other pooled investment vehicle rated at least
Aa by Moody's Investors Service, Inc. or AA by Standard & Poor's Ratings
Service which invests principally in obligations described above.
"CERCLA" shall mean the federal Comprehensive Environmental
45
Response, Compensation and Liability Act of 1980.
"CHARTER" shall mean the articles of organization, certificate of
incorporation, statute, constitution, joint venture agreement, partnership
agreement, trust indenture, limited liability company agreement or other charter
document of any Person other than an individual, each as from time to time in
effect.
"CLOSING DAY" for any Accepted Note shall mean the Business Day
specified for the closing of the purchase and sale of such Note in the Request
for Purchase of such Note, provided that (i) if the Acceptance Day for such
--------
Accepted Note is less than five Business Days after the Company shall have made
such Request for Purchase and the Company and the Purchaser which is obligated
to purchase such Note agree on an earlier Business Day for such closing, the
"CLOSING DAY" for such Accepted Note shall be such earlier Business Day, and
(ii) if the closing of the purchase and sale of such Accepted Note is
rescheduled pursuant to paragraph 2H, the Closing Day for such Accepted Note,
for all purposes of this Agreement except paragraph 2I(3), shall mean the
Rescheduled Closing Day with respect to such Closing.
"CODE" shall mean the Internal Revenue Code of 1986, as amended.
"COLLATERAL AGENT" shall mean the Collateral Agent under the
Intercreditor Agreement which shall initially be The First National Bank of
Boston.
"COMPUTATION COVENANTS" shall mean paragraphs 5O, 6A, 6C(2)(vii),
6C(2)(xv), 6C(2)(xvi), 6C(4)(v), 6C(4)(vii), 6B(ii), 6C(5)(i) and 6C(6)(ii).
"CONFIRMATION OF ACCEPTANCE" shall have the meaning specified in
paragraph 2F.
"CONFIDENTIAL INFORMATION" shall have the meaning specified in
paragraph 2D.
"CONSOLIDATED" and "CONSOLIDATING", when used with reference to any
term, shall mean that term as applied to the accounts of the Company (or other
specified Person) and all of its Subsidiaries (or other specified group of
Persons), or such of its Subsidiaries as may be specified, consolidated (or
combined) or consolidating (or combining), as the case may be, in accordance
with GAAP and with appropriate deductions for minority interests in
Subsidiaries.
"CONSOLIDATED CURRENT LIABILITIES" shall mean, at any date, all
amounts that are or should be carried as current liabilities on the balance
sheet of the Company and its Subsidiaries determined in accordance with GAAP on
a Consolidated basis, including the current portion of all Funded Debt.
"CONSOLIDATED INCOME FROM OPERATIONS" shall mean, for any period,
46
gross revenues of the Company and its Subsidiaries, determined in accordance
with GAAP on a Consolidated basis, minus the sum of (a) the cost of operations
-----
of the Company and its Subsidiaries for such period, determined in accordance
with GAAP on a Consolidated basis, and (b) the selling, general and
administrative expenses of the Company and its Subsidiaries for such period,
determined in accordance with GAAP on a Consolidated basis.
"CONSOLIDATED NET INCOME" shall mean, for any period, the net income
(or loss) of the Company and its Subsidiaries, determined in accordance with
GAAP on a Consolidated basis; provided, however, that Consolidated Net Income
-------- -------
shall not include:
---
(a) the income (or loss) of any Person accrued prior to the date such
Person becomes a Subsidiary or is merged into or consolidated with the
Company or any of its Subsidiaries;
(b) the income (or loss) of any Person (other than a Subsidiary) in
which the Company or any of its Subsidiaries has an ownership interest;
provided, however, that (i) Consolidated Net Income shall include amounts
-------- -------
in respect of the income of such Person when actually received in cash by
the Company or such Subsidiary in the form of dividends or similar
Distributions and (ii) Consolidated Net Income shall be reduced by the
aggregate amount of all Investments, regardless of the form thereof, made
by the Company or any of its Subsidiaries in such Person for the purpose of
funding any deficit or loss of such Person;
(c) all amounts included in computing such net income (or loss) in
respect of the write-up of any asset or the retirement of any Indebtedness
or equity at less than face value after April 30, 1996;
(d) extraordinary and nonrecurring gains;
(e) the income of any Subsidiary to the extent the payment of such
income in the form of a Distribution or repayment of Indebtedness to the
Company or a Wholly Owned Subsidiary is not permitted, whether on account
of any Charter or By-law restriction, any agreement, instrument, deed or
lease or any law, statute, judgment, decree or governmental order, rule or
regulation applicable to such Subsidiary; and
(f) any after-tax gains or losses attributable to returned surplus
assets of any Plan.
"CONSOLIDATED NET TANGIBLE ASSETS" shall mean at any date the total
of:
(a) the total assets of the Company and its Subsidiaries
determined in accordance with GAAP on a Consolidated basis;
minus (b) Consolidated Current Liabilities;
-----
47
minus (c) all other liabilities of the Company and its
-----
Subsidiaries determined in accordance with GAAP on a Consolidated basis
other than liabilities for Funded Debt;
minus (d) the amount of intangible assets carried on the balance sheet
-----
of the Company and its Subsidiaries determined in accordance with GAAP on a
Consolidated basis, including goodwill, patents, patent applications,
copyrights, trademarks, tradenames, research and development expense,
organizational expense, annualized debt discount and expense, deferred
financing charges and debt acquisition costs;
minus (e) the amount at which any minority interest in a
-----
Subsidiary appears as a liability on the Consolidated balance sheet of the
Company and its Subsidiaries.
"CONSOLIDATED TANGIBLE NET WORTH" shall mean, at any date, the
total of:
(a) stockholders' equity of the Company and its Subsidiaries
determined in accordance with GAAP on a Consolidated basis, excluding the
effect of any foreign currency translation adjustments;
minus (b) the amount by which such stockholders' equity has been
-----
increased after April 30, 1996 by the items described in clauses (a)
through (f) of the definition of Consolidated Net Income;
minus (c) to the extent not already deducted from the amount in clause
-----
(a) above, (i) treasury stock, (ii) receivables due from an employee stock
ownership plan and (iii) Guarantees of Indebtedness incurred by an employee
stock ownership plan;
minus (d) the amount of intangible assets carried on the balance
-----
sheet of the Company and its Subsidiaries determined in accordance with
GAAP on a Consolidated basis, including goodwill, patents, patent
applications, copyrights, trademarks, tradenames, research and development
expense, organizational expense, unamortized debt discount and expense,
deferred financing charges and debt acquisition costs.
"DELAYED DELIVERY FEE" shall have the meaning specified in paragraph
2I(2).
"DISTRIBUTION" shall mean, with respect to the Company (or other
specified Person):
(a) the declaration or payment of any dividend or distribution,
including dividends payable in shares of capital stock of or other equity
interests in the
48
Company (or such specified Person), on or in respect of
any shares of any class of capital stock of or other equity interests in
the Company (or such specified Person);
(b) the purchase, redemption or other retirement of any shares of any
class of capital stock of or other equity interest in the Company (or such
specified Person) or of options, warrants or other rights for the purchase
of such shares, directly, indirectly through a Subsidiary or otherwise;
(c) any other distribution on or in respect of any shares of any class
of capital stock of or equity or other beneficial interest in the Company
(or such specified Person);
(d) any payment of principal or interest with respect to, or any
purchase, redemption or defeasance of, any Indebtedness of the Company (or
such specified Person) which by its terms or the terms of any agreement is
subordinated to the payment of the Obligations; and
(e) any loan or advance by the Company (or such specified Person) to,
or any other Investment by the Company (or such specified Person) in, the
holder of any shares of any class of capital stock of or equity interest in
the Company (or such specified Person), or any Affiliate of such holder;
provided, however, that the term "Distribution" shall not include (i)
-------- -------
dividends payable in perpetual common stock of or other similar equity interests
in the Company (or such specified Person), (ii) payments in the ordinary course
of business in respect of (A) reasonable compensation paid to employees,
officers and directors or (B) advances to employees for travel expenses, drawing
accounts and similar expenditures, (iii) any loan or advance by the Company to
any Guarantor or (iv) any other loan or advance by the Company which constitutes
an Investment permitted under paragraph 6C(4)(v), 6C(4)(vi) or 6C(4)(vii).
"ENVIRONMENTAL LAWS" shall mean all applicable federal, state or local
statutes, laws, ordinances, codes, rules, regulations and guidelines (including
consent decrees and administrative orders) relating to public health and safety
and protection of the environment, including OSHA.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended.
"ERISA AFFILIATE" shall mean any corporation which is a member of the
same controlled group of corporations as the Company within the meaning of
section 414(b) of the Code, or any trade or business which is under common
control with the Company within the meaning of section 414(c) of the Code.
"ERISA GROUP PERSON" shall mean the Company, any Subsidiary of the
Company and any Person which is a member of the controlled group or under common
control with the Company or any Subsidiary within the meaning of section 414 of
the
49
Code or section 4001(a)(14) of ERISA.
"EVENT OF DEFAULT" shall mean any of the events specified in paragraph
7A, provided that there has been satisfied any requirement in connection with
such event for the giving of notice, or the lapse of time, or the happening of
any further condition, event or act, and "DEFAULT" shall mean any of such
events, whether or not any such requirement has been satisfied.
"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as
amended.
"FACILITY" shall have the meaning specified in paragraph 2A.
"FACILITY FEE" shall have the meaning specified in paragraph 2I(1).
"FACILITY CONVERSION DATE" shall have the meaning specified in the
Bank Agreement as in effect on December 18, 1996.
"FINANCIAL OFFICER" of the Company (or other specified Person) shall
mean its chief executive officer, chief financial officer, chief operating
officer, chairman, president, treasurer or any of its vice presidents whose
primary responsibility is for its financial affairs, all of whose incumbency and
signatures have been certified to the Majority Holders by the secretary or other
appropriate attesting officer of the Company (or such specified Person).
"FINANCING DEBT" shall mean each of the items described in clauses (a)
through (f) of the definition of the term "Indebtedness".
"FOREIGN TRADE REGULATIONS" means (a) any act that prohibits or
restricts, or empowers the President or any executive agency of the United
States of America to prohibit or restrict, exports to or financial transactions
with any foreign country or foreign national, (b) the regulations with respect
to certain prohibited foreign trade transactions set forth at 22 C.F.R Parts
120-130 and 31 C.F.R. Part 500 and (c) any order, regulation, ruling,
interpretation, direction, instruction or notice relating to any of the
foregoing.
"FUNDED DEBT" shall mean all Indebtedness of the Company or other
specified Person which is payable more than one year from the date of creation
thereof and shall include (a) current maturities of such Indebtedness and (b)
all Indebtedness consisting of reimbursement obligations with respect to
letters of credit other than letters of credit issued to finance inventory
purchases or to secure other debt appearing on the balance sheet of the obligor.
"GUARANTEE" shall mean, with respect to the Company (or other
specified Person):
50
(a) any guarantee by the Company (or such specified Person), of the
payment or performance of, or any contingent obligation by the Company (or
such specified Person), in respect of, any Indebtedness or other obligation
of any primary obligor;
(b) any other arrangement whereby credit is extended to a primary
obligor on the basis of any promise or undertaking of the Company (or such
specified Person), including any binding "comfort letter" or "keep well
agreement" written by the Company (or such specified Person), to a creditor
or prospective creditor of such primary obligor, to (i) pay the
Indebtedness of such primary obligor, (ii) purchase an obligation owed by
such primary obligor, (iii) pay for the purchase or lease of assets or
services regardless of the actual delivery thereof or (iv) maintain the
capital, working capital, solvency or general financial condition of such
primary obligor;
(c) any liability of the Company (or such specified Person), as a
general partner of a partnership in respect of Indebtedness or other
obligations of such partnership;
(d) any liability of the Company (or such specified Person) as a
joint venturer of a joint venture in respect of Indebtedness or other
obligations of such joint venture; and
(e) reimbursement obligations of the Company (or such specified
Person) with respect to letters of credit, bankers acceptances, surety
bonds, other financial guarantees and Interest Rate Protection Agreements,
whether or not any of the foregoing are reflected on the balance sheet
of the Company (or such specified Person) or in a footnote thereto; provided,
--------
however, that the term "Guarantee" shall not include endorsements for collection
- - -------
or deposit in the ordinary course of business. The amount of any Guarantee and
the amount of Indebtedness resulting from such Guarantee shall be the maximum
amount that the guarantor may become obligated to pay in respect of the
obligations (whether or not such obligations are outstanding at the time of
computation).
"GUARANTOR" shall mean each Subsidiary listed on the signature page
hereto or which subsequently becomes party to this Agreement as a Guarantor.
"HAZARDOUS MATERIAL" shall mean any pollutant, toxic or hazardous
material or waste, including any "hazardous substance" or "pollutant" or
"contaminant" as defined in section 101(14) of CERCLA or any other Environmental
Law or regulated as toxic or hazardous under RCRA or any other Environmental
Law.
"HEDGE TREASURY NOTE(S)" shall mean, with respect to any Accepted
Note, the United States Treasury Note or Notes whose duration (as determined by
51
Prudential) most closely matches the duration of such Accepted Note.
"HOLDERS" shall mean the holders of the Notes from time to time.
"HOSTILE TENDER OFFER" shall mean, with respect to the use of proceeds
of any Note, any offer to purchase, or any purchase of, shares of capital stock
of any corporation or equity interests in any other entity, or securities
convertible into or representing the beneficial ownership of, or rights to
acquire, any such shares or equity interests, if such shares, equity interests,
securities or rights are of a class which is publicly traded on any securities
exchange or in any over-the-counter market, other than purchases of such shares,
equity interests, securities or rights representing less than 5% of the equity
interests or beneficial ownership of such corporation or other entity for
portfolio investment purposes, and such offer or purchase has not been duly
approved by the board of directors of such corporation or the equivalent
governing body of such other entity prior to the date on which the Company makes
the Request for Purchase of such Note.
"INDEBTEDNESS" shall mean all obligations, contingent or otherwise,
which in accordance with GAAP are required to be classified upon the balance
sheet of the Company (or other specified Person) as liabilities, but in any
event including (without duplication):
(a) borrowed money;
(b) indebtedness evidenced by notes, debentures or similar
instruments;
(c) Capitalized Lease Obligations;
(d) the deferred purchase price of assets or securities, including
related noncompetition, consulting and stock repurchase obligations (other
than ordinary trade accounts payable within six months after the incurrence
thereof in the ordinary course of business);
(e) mandatory redemption or dividend obligations on capital stock
(or other equity);
(f) reimbursement obligations with respect to letters of credit,
bankers acceptances, surety bonds, other financial guarantees and Interest
Rate Protection Agreements;
(g) unfunded pension liabilities;
(h) obligations that are immediately and directly due and payable
out of the proceeds of or production from property;
52
(i) liabilities secured by any Lien existing on property owned or
acquired by the Company (or such specified Person), whether or not the
liability secured thereby shall have been assumed; and
(j) all Guarantees in respect of Indebtedness of others.
"INITIAL CLOSING" shall have the meaning specified in paragraph
2H(1).
"INTERCREDITOR AGREEMENT" shall mean the Intercreditor Agreement in
substantially the form of Exhibit F hereto, as amended from time to time.
---------
"INTEREST RATE PROTECTION AGREEMENT" shall mean any interest rate
swap, interest rate cap, interest rate hedge or other contractual arrangement
that converts variable interest rates into fixed interest rates, fixed interest
rates into variable interest rates or other similar arrangements.
"INVESTMENT" shall mean, with respect to the Company (or other
specified Person):
(a) any share of capital stock, partnership or other equity
interest, evidence of Indebtedness or other security issued by any other
Person to the Company (or such other specified Person);
(b) any loan, advance or extension of credit to, or contribution to
the capital of, any other Person;
(c) any Guarantee of the Indebtedness of any other Person;
(d) any acquisition of all or any part of the business of any other
Person or the assets comprising such business or part thereof; and
(e) any other similar investment.
The investments described in the foregoing clauses (a) through (e)
shall be included in the term "Investment" whether they are made or acquired by
purchase, exchange, issuance of stock or other securities, merger,
reorganization or any other method; provided, however, that the term
-------- -------
"Investment" shall not include (i) current trade and customer accounts
receivable for property leased, goods furnished or services rendered in the
ordinary course of business and payable in accordance with customary trade
terms, (ii) advances and prepayments to suppliers for property leased, goods
furnished and services rendered in the ordinary course of business, (iii)
advances to employees for travel expenses, drawing accounts and similar
expenditures, (iv) stock or other securities acquired in connection with the
satisfaction or enforcement of Indebtedness or claims due to the Company (or
such specified Person) or as security for any such Indebtedness or claim or (v)
demand deposits in banks or similar financial
53
institutions.
In determining the amount of outstanding Investments:
(A) the amount of any Investment shall be the cost thereof minus any
-----
returns of capital in cash on such Investment (determined in accordance
with GAAP without regard to amounts realized as income on such Investment);
(B) the amount of any Investment in respect of a purchase described
in clause (d) above shall be increased by the amount of any Indebtedness
assumed in connection with such purchase or secured by any asset acquired
in such purchase (whether or not any Indebtedness is assumed) or for which
any Person that becomes a Subsidiary is liable on the date on which the
securities of such Person are acquired; and
(C) no Investment shall be increased as the result of an increase in
the undistributed retained earnings of the Person in which the Investment
was made or decreased as a result of an equity interest in the losses of
such Person.
"ISSUANCE PERIOD" shall have the meaning specified in paragraph 2B.
"LEVERAGE RATIO" shall mean on any date the quotient, expressed as a
percentage, equal to the Consolidated Funded Debt of the Company and its
Subsidiaries divided by the Consolidated Net Tangible Assets of the Company and
its Subsidiaries.
"LIEN" shall mean, with respect to the Company (or any other specified
Person):
(a) Any lien, encumbrance, mortgage, pledge, charge or security
interest of any kind upon any property or assets of the Company (or such
specified Person), whether now owned or hereafter acquired, or upon the
income or profits therefrom;
(b) The acquisition of, or the agreement to acquire, any property or
asset upon conditional sale or subject to any other title retention
agreement, device or arrangement (including a Capitalized Lease);
(c) The sale, assignment, pledge or transfer for security of any
accounts, general intangibles or chattel paper of the Company (or such
specified Person), with or without recourse;
(d) The transfer of any tangible property or assets for the purpose
of subjecting such items to the payment of previously outstanding
Indebtedness in priority to payment of the general creditors of the Company
(or such specified Person); and
54
(e) The existence for a period of more than 120 consecutive days of
any Indebtedness against the Company (or such specified Person) which if
unpaid would by law or upon a Bankruptcy Default be given any priority over
general creditors.
"LOAN DOCUMENTS" shall mean:
(a) this Agreement, the Notes, the Intercreditor Agreement, the Pledge
Agreement, and each Interest Rate Protection Agreement provided by a holder
(or an Affiliate of a holder) to the Company or any of its Subsidiaries,
each as from time to time in effect;
(b) all financial statements, reports, notices, mortgages,
assignments, UCC financing statements or certificates delivered to the
Collateral Agent or any of the holders by the Company, any of its
Subsidiaries or any other Obligor in connection herewith or therewith; and
(c) any other present or future agreement or instrument from time to
time entered into among the Company, any of its Subsidiaries or any other
Obligor, on one hand, and the Collateral Agent, any or all the holders, on
the other hand, relating to, amending or modifying this Agreement or any
other Loan Document referred to above or which is stated to be a Loan
Document, each as from time to time in effect.
"LOAN SECURITY" shall mean all assets now or from time to time
hereafter subjected to a security interest, mortgage or charge (or intended or
required so to be subjected pursuant to this agreement or any other Loan
Document) to secure the payment or performance of any of the Obligations,
including the assets described in the Pledge Agreement.
"MAJORITY HOLDERS" shall mean, at any time, the holders of more than
50% of the outstanding principal amount of the Notes outstanding at such time.
"MATERIAL ADVERSE CHANGE" shall mean, since any specified date or from
the circumstances existing immediately prior to the happening of any specified
event, a material adverse change in the business, assets, financial condition or
income of the Company and its Subsidiaries on a Consolidated basis, whether as a
result of (a) general economic conditions affecting the petroleum industry, (b)
difficulties in obtaining supplies and raw materials, (c) fire, flood or other
natural calamities, (d) environmental pollution, (e) regulatory changes,
judicial decisions, war or other governmental action or (f) any other event or
development, whether or not related to those enumerated above.
"MATERIAL ADVERSE EFFECT" shall mean a material adverse effect on the
business, assets, financial condition or income of the Company and its
Subsidiaries on a Consolidated basis.
55
"MATERIAL AGREEMENTS" shall have the meaning specified in paragraph
8T.
"MULTIEMPLOYER PLAN" shall mean any Plan which is a "multiemployer
plan" (as such term is defined in section 4001(a)(3) of ERISA).
"NOTES" shall have the meaning specified in paragraph 1.
"OBLIGATIONS" shall mean all present and future liabilities,
obligations and Indebtedness of the Company, any of its Subsidiaries or any
other Obligor owing to the any holder under or in connection with this Agreement
or any other Loan Document, including without limitation obligations in respect
of principal, interest and Interest Rate Protection Agreements provided by a
holder (or an Affiliate of a holder), Yield-Maintenance Amount, commitment fees,
Facility Fees, Structuring Fees, amounts provided for in paragraphs 2I(2), 2I(3)
and 12B and other fees, charges, indemnities and expenses from time to time
owing hereunder or under any other Loan Document (whether accruing before or
after a Bankruptcy Default).
"OBLIGOR" shall mean the Company, each Guarantor and each Person
guaranteeing, providing collateral for or subordinating obligations to the
Obligations.
"OFFICER'S CERTIFICATE" shall mean a certificate signed in the name of
the Company by an Authorized Officer of the Company.
"OPEN POSITION" shall mean any difference (whether positive or
negative) between (a) the number of barrels of petroleum product the Company and
its Subsidiaries hold in inventory or have contracted to buy and (b) the number
of barrels of petroleum product the Company and its Subsidiaries have contracted
to sell.
"OSHA" shall mean the federal Occupational Health and Safety Act.
"PBGC" shall mean the Pension Benefit Guaranty Corporation or any
successor entity.
"PERCENTAGE INTEREST" shall mean, at any time, the ratio that the
respective amounts of the Obligations owing to the holders in respect of the
Notes to the total outstanding Obligations owing to all holders in respect of
the Notes.
"PERSON" shall mean and include an individual, a partnership, a
limited liability, joint stock or other company, a joint venture, a corporation,
a trust, an unincorporated organization, and a government or any department or
agency thereof.
"PLAN" shall mean any employee pension benefit plan (as such term is
defined in section 3 of ERISA) which is or has been established or maintained,
or to which contributions are or have been made, by the Company or any ERISA
Affiliate.
56
"PLEDGE AGREEMENT" shall mean the Pledge Agreement substantially in
the form of Exhibit E hereto, as amended from time to time.
---------
"PLEDGED INDEBTEDNESS" has the meaning specified in the Pledge
Agreement.
"PLEDGED RIGHTS" has the meaning specified in the Pledge Agreement.
"PLEDGED SECURITIES" means the Pledged Stock, the Pledged Rights and
the Pledged Indebtedness, collectively.
"PLEDGED STOCK" has the meaning specified in the Pledge Agreement.
"PRUDENTIAL" shall mean The Prudential Insurance Company of America.
"PRUDENTIAL AFFILIATE" shall mean any corporation or other entity all
of the Voting Stock (or equivalent voting securities or interests) of which is
owned by Prudential either directly or through Prudential Affiliates and any
investment fund over which Prudential (or a subsidiary of Prudential) has
investment authority.
"PURCHASERS" shall mean, with respect to any Accepted Notes the
Persons, either Prudential or a Prudential Affiliate, who is purchasing such
Accepted Notes.
"RCRA" shall mean the federal Resource Conservation and Recovery Act,
42 U.S.C. (S) 690, et seq.
"REFUND EVENT" shall mean a termination of the Facility resulting from
Prudential's provision of a notice of termination as contemplated by clause (ii)
of paragraph 2B unless a Default or Event of Default existed at the time of the
provision of such notice.
"REFUNDABLE PORTION" shall mean with respect to the Structuring Fee,
that portion thereof determined by multiplying $62,500 by a fraction, the
denominator of which shall be 365 and the numerator of which shall be the
difference between 365 and the number of days elapsed between the date of this
Agreement and the date of the Refund Event.
"RENEWAL FEE" shall have the meaning specified in paragraph 2I(4).
"REQUEST FOR PURCHASE" shall have the meaning specified in paragraph
2D.
"REQUIRED HOLDER(S)" shall mean, with respect to the Notes of any
Series, at any time, the holder or holders of at least 66 2/3% of the aggregate
principal
57
amount of the Notes of such Series outstanding at such time.
"RESCHEDULED CLOSING DAY" shall have the meaning specified in
paragraph 2H.
"RESPONSIBLE OFFICER" shall mean the chief executive officer, chief
operating officer, chief financial officer or chief accounting officer of the
Company or any other officer of the Company involved principally in its
financial administration or its controllership function.
"SECURITIES ACT" shall mean the Securities Act of 1933, as amended.
"SERIES" shall have the meaning specified in paragraph 1.
"SERIES A NOTES" shall have the meaning specified in paragraph 2H(1).
"SIGNIFICANT HOLDER" shall mean (i) Prudential, so long as Prudential
or any Prudential Affiliate shall hold (or be committed under this Agreement to
purchase) any Note, or (ii) any other holder of at least 5% of the aggregate
principal amount of the Notes from time to time outstanding.
"STRUCTURING FEE" shall have the meaning specified in paragraph 2I(5).
"SUBORDINATED DEBENTURES" shall have the meaning specified in
paragraph 6C(2)(x).
"SUBORDINATED DEBENTURES AGREEMENT" has the meaning specified in
paragraph 8T.
"SUBORDINATED DEBENTURES GUARANTEE" has the meaning specified in
paragraph 6C(3)(v).
"SUBSIDIARY" shall mean any Person of which the Company (or other
specified Person) shall at the time, directly or indirectly through one or more
of its Subsidiaries, (a) own more than 50% of the outstanding capital stock (or
other shares of beneficial interest) entitled to vote generally or (b) hold more
than 50% of the partnership, joint venture or similar interests.
"TRANSFEREE" shall mean any direct or indirect transferee of all or
any part of any Note purchased by any Purchaser under this Agreement.
"WHOLLY OWNED SUBSIDIARY" shall mean any Subsidiary of which all of
the outstanding capital stock (or other shares of beneficial interest) entitled
to vote generally (other than directors' qualifying shares) is owned by the
Company (or other specified Person) directly, or indirectly through one or more
Wholly Owned
58
Subsidiaries.
10C. ACCOUNTING PRINCIPLES, TERMS AND DETERMINATIONS. All
references in this Agreement to "GENERALLY ACCEPTED ACCOUNTING PRINCIPLES" or
"GAAP" shall be deemed to refer to generally accepted accounting principles in
effect in the United States at the time of application thereof. Unless
otherwise specified herein, all accounting terms used herein shall be
interpreted, all determinations with respect to accounting matters hereunder
shall be made, and all unaudited financial statements and certificates and
reports as to financial matters required to be furnished hereunder shall be
prepared, in accordance with generally accepted accounting principles applied on
a basis consistent with the most recent audited consolidated financial
statements of the Company and its Subsidiaries delivered pursuant to clause (ii)
of paragraph 5A or, if no such statements have been so delivered, the most
recent audited financial statements referred to in clause (i) of paragraph 8B.
11. GUARANTEES.
11A. GUARANTEES OF OBLIGATIONS. Each Guarantor irrevocably and
unconditionally, jointly and severally, guarantees that the Obligations will be
performed and will be paid in full in cash when due and payable, whether at the
stated or accelerated maturity thereof or otherwise, this guarantee being a
guarantee of payment and not of collectability and being absolute and in no way
conditional or contingent. In the event any part of the Obligations shall not
have been so paid in full when due and payable, each Guarantor will, immediately
upon notice by any holder or, without notice, immediately upon the occurrence of
a Bankruptcy Default, pay or cause to be paid to the holders in accordance with
the holders' respective Percentage Interests the amount of such Obligations
which are then due and payable and unpaid. The obligations of each Guarantor
hereunder shall not be affected by the invalidity, unenforceability or
irrecoverability of any of the Obligations as against any other Obligor, any
other guarantor thereof or any other Person. For purposes hereof, the
Obligations shall be due and payable when and as the same shall be due and
payable under the terms of this Agreement, the Notes or any other Loan Document
notwithstanding the fact that the collection or enforcement thereof may be
stayed or enjoined under any Bankruptcy Law or other applicable law.
11B. CONTINUING OBLIGATION. Each Guarantor acknowledges that
Prudential and the other Purchasers have entered into this Agreement (and, to
the extent that the Purchasers or the holders may enter into any future Loan
Document, will have entered into such agreement) in reliance on the Guarantee in
this paragraph 11 being a continuing irrevocable agreement, and such Guarantor
agrees that its guarantee may not be revoked in whole or in part. The
obligations of the Guarantors hereunder shall terminate when the Facility shall
have terminated and all of the Obligations have been indefeasibly paid in full
in cash and discharged; provided, however, that
-------- -------
(a) if a claim is made upon the holders at any time for repayment or
59
recovery of any amounts or any property received by the holders from any
source on account of any of the Obligations and the holders repay or return
any amounts or property so received (including interest thereon to the
extent required to be paid by the holders) or
(b) if the holders become liable for any part of such claim by
reason of (i) any judgment or order of any court or administrative
authority having competent jurisdiction, or (ii) any settlement or
compromise of any such claim of which the Company has notice and an
opportunity to comment, then the Guarantors shall remain liable under this
Agreement for the amounts so repaid or property so returned or the amounts
for which the holders become liable (such amounts being deemed part of the
Obligations) to the same extent as if such amounts or property had never
been received by the holders, notwithstanding any termination hereof or the
cancellation of any instrument or agreement evidencing any of the
Obligations. Not later than five days after receipt of notice from the
Majority Holders, the Guarantors shall jointly and severally pay to the
holders an amount equal to the amount of such repayment or return for which
such holders have so become liable. Payments hereunder by a Guarantor may
be required by the holders on any number of occasions.
11C. WAIVERS WITH RESPECT TO OBLIGATIONS. Except to the extent
expressly required by this Agreement or any other Loan Document, each Guarantor
waives all of the following (including all defenses, counterclaims and other
rights of any nature based upon any of the following):
(i) presentment, demand for payment and protest of nonpayment of any
of the Obligations, and notice of protest, dishonor or nonperformance;
(ii) notice of acceptance of this guarantee and notice that credit
has been extended in reliance on the Guarantor's guarantee of the
Obligations;
(iii) notice of any Default or of any inability to enforce
performance of the obligations of the Company or any other Person with
respect to any Loan Document, or notice of any acceleration of maturity of
any Obligations;
(iv) demand for performance or observance of, and any enforcement of
any provision of, the Obligations, this Agreement or any other Loan
Document or any pursuit or exhaustion of rights or remedies with respect to
any Loan Security or against the Company or any other Person in respect of
the Obligations or any requirement of diligence or promptness on the part
of the holders in connection with any of the foregoing;
(v) any act or omission on the part of the holders which may impair
or prejudice the rights of the Guarantor, including rights to obtain
subrogation, exoneration, contribution, indemnification or any other
reimbursement from the
60
Company or any other Person, or otherwise operate as a deemed release or
discharge;
(vi) failure or delay to perfect or continue the perfection of any
security interest in any Loan Security or any other action which harms or
impairs the value of, or any failure to preserve or protect the value of,
any Loan Security;
(vii) any statute of limitations or any statute or rule of law which
provides that the obligation of a surety must be neither larger in amount
nor in other respects more burdensome than the obligation of the principal;
(viii) any "single action" or "anti-deficiency" law which would
otherwise prevent the Lenders from bringing any action, including any claim
for a deficiency, against the Guarantor before or after the holders'
commencement or completion of any foreclosure action, whether judicially,
by exercise of power of sale or otherwise, or any other law which would
otherwise require any election of remedies by any holder;
(ix) all demands and notices of every kind with respect to the
foregoing; and
(x) to the extent not referred to above, all defenses (other than
payment) which the Company may now or hereafter have to the payment of the
Obligations, together with all suretyship defenses, which could otherwise
be asserted by such Guarantor.
Each Guarantor represents that it has obtained the advice of counsel
as to the extent to which suretyship and other defenses may be available to it
with respect to its obligations hereunder in the absence of the waivers
contained in this paragraph 11C.
No delay or omission on the part of any holder in exercising any right
under this Agreement or any other Loan Document or under any guarantee of the
Obligations or with respect to the Loan Security shall operate as a waiver or
relinquishment of such right. No action which any holder or the Company may
take or refrain from taking with respect to the Obligations, including any
amendments thereto or modifications thereof or waivers with respect thereto,
shall affect the provisions of this Agreement or the obligations of any
Guarantor hereunder. None of the holders' rights shall at any time in any way
be prejudiced or impaired by any act or failure to act on the part of any
Obligor, or by any noncompliance by the Company with the terms, provisions and
covenants of this Agreement, regardless of any knowledge thereof which any
holder may have or otherwise be charged with.
11D. LENDERS' POWER TO WAIVE, ETC. Each Guarantor grants to the
holders full power in their discretion, without notice to or consent of such
Guarantor, such notice and consent being expressly waived, and without in any
way affecting the
61
liability of the Guarantor under its guarantee hereunder:
(a) To waive compliance with, and any Default or Event of Default
under, and to consent to any amendment to or modification or termination of
any terms or provisions of, or to give any waiver in respect of, this
Agreement, any other Loan Document, the Loan Security, the Obligations or
any guarantee thereof (each as from time to time in effect);
(b) To grant any extensions of the Obligations (for any duration),
and any other indulgence with respect thereto, and to effect any total or
partial release (by operation of law or otherwise), discharge, compromise
or settlement with respect to the obligations of the Obligors or any other
Person in respect of the Obligations, whether or not rights against the
Guarantor under this Agreement are reserved in connection therewith;
(c) To take security in any form for the Obligations, and to consent
to the addition to or the substitution, exchange, release or other
disposition of, or to deal in any other manner with, any part of any
property contained in the Loan Security whether or not the property, if
any, received upon the exercise of such power shall be of a character or
value the same as or different from the character or value of any property
disposed of, and to obtain, modify or release any present or future
guarantees of the Obligations and to proceed against any of the Loan
Security or such guarantees in any order;
(d) To collect or liquidate or realize upon any of the Obligations
or the Loan Security in any manner or to refrain from collecting or
liquidating or realizing upon any of the Obligations or the Loan Security;
and
(e) To extend credit under this Agreement, any other Loan Document
or otherwise in such amount as the holders or Prudential may determine,
including increasing the amount of credit and the interest rate and fees
with respect thereto, even though the condition of the Obligors (financial
or otherwise on an individual or Consolidated basis) may have deteriorated
since the date hereof.
11E. INFORMATION REGARDING THE COMPANY, ETC. Each Guarantor has
made such investigation as it deems desirable of the risks undertaken by it in
entering into this Agreement and is fully satisfied that it understands all such
risks. Each Guarantor waives any obligation which may now or hereafter exist on
the part of Prudential or the holders to inform it of the risks being undertaken
by entering into this Agreement or of any changes in such risks and, from and
after the date hereof, each Guarantor undertakes to keep itself informed of such
risks and any changes therein. Each Guarantor expressly waives any duty which
may now or hereafter exist on the part of Prudential or the holders to disclose
to the Guarantor any matter related to the business, operations, character,
collateral, credit, condition (financial or otherwise), income or prospects of
the Company or its Affiliates or their properties or management,
62
whether now or hereafter known by the Prudential or the holders. Each Guarantor
represents, warrants and agrees that it assumes sole responsibility for
obtaining from the Company all information concerning this Agreement and all
other Loan Documents and all other information as to the Company and its
Affiliates or their properties or management as such Guarantor deems necessary
or desirable.
11F. CERTAIN GUARANTOR REPRESENTATIONS. Each Guarantor
represents that:
(a) it is in its best interest and in pursuit of the purposes for
which it was organized as an integral part of the business conducted and
proposed to be conducted by the Company and its Subsidiaries, and
reasonably necessary and convenient in connection with the conduct of the
business conducted and proposed to be conducted by them, to induce the
Prudential and the other Purchasers to enter into this Agreement and to
extend credit to the Company by making the Guarantees contemplated by this
paragraph 11,
(b) the credit available hereunder will directly or indirectly inure
to its benefit,
(c) by virtue of the foregoing it is receiving at least reasonably
equivalent value from the holders for its Guarantee,
(d) it will not be rendered insolvent as a result of entering into
this Agreement,
(e) after giving effect to the transactions contemplated by this
Agreement, it will have assets having a fair saleable value in excess of
the amount required to pay its probable liability on its existing debts as
they become absolute and matured,
(f) it has, and will have, access to adequate capital for the
conduct of its business,
(g) it has the ability to pay its debts from time to time incurred
in connection therewith as such debts mature, and
(h) it has been advised by Prudential that the other Purchasers are
unwilling to enter into this Agreement unless the Guarantees contemplated
by this paragraph 11 are given by it.
11G. SUBROGATION. Each Guarantor agrees that, until the
Obligations are paid in full, it will not exercise any right of reimbursement,
subrogation, contribution, offset or other claims against the other Obligors
arising by contract or operation of law in connection with any payment made or
required to be made by such Guarantor under this Agreement. After the payment in
full of the Obligations, each Guarantor shall be entitled to exercise against
the Company and the other Obligors all such rights of
63
reimbursement, subrogation, contribution and offset, and all such other claims,
to the fullest extent permitted by law.
11H. SUBORDINATION. Each Guarantor covenants and agrees that,
after the occurrence of an Event of Default, all Indebtedness, claims and
liabilities then or thereafter owing by the Company or any other Obligor to such
Guarantor whether arising hereunder or otherwise are subordinated to the prior
payment in full of the Obligations and are so subordinated as a claim against
such Obligor or any of its assets, whether such claim be in the ordinary course
of business or in the event of voluntary or involuntary liquidation,
dissolution, insolvency or bankruptcy, so that no payment with respect to any
such Indebtedness, claim or liability will be made or received while any Event
of Default exists.
11I. FUTURE SUBSIDIARIES; FURTHER ASSURANCES. The Company will
from time to time cause (a) any present Wholly Owned Subsidiary that is not a
Guarantor within 30 days after notice from the Majority Holders or (b) any
future Wholly Owned Subsidiary within 30 days after any such Person becomes a
Wholly Owned Subsidiary, to join this Agreement as a Guarantor pursuant to a
joinder agreement in form and substance satisfactory to the Majority Holders.
Each Guarantor will, promptly upon the request of the Majority Holders from time
to time, execute, acknowledge and deliver, and file and record, all such
instruments, and take all such action, as the Majority Holders deem necessary or
advisable to carry out the intent and purposes of this paragraph 11.
12. MISCELLANEOUS.
12A. NOTE PAYMENTS. The Company agrees that, so long as any
Purchaser shall hold any Note, it will make payments of principal of, interest
on, and any Yield-Maintenance Amount payable with respect to, such Note, which
comply with the terms of this Agreement, by wire transfer of immediately
available funds for credit (not later than 12:00 noon, New York City local time,
on the date due) to the account or accounts of such Purchaser, if any, as are
specified in the Information Schedule, attached hereto, or, in the case of any
----------- --------
Purchaser not named in the Information Schedule or any Purchaser wishing to
----------- --------
change the account specified for it in the Information Schedule, such account or
----------- --------
accounts in the United States as such Purchaser may from time to time designate
in writing, notwithstanding any contrary provision herein or in any Note with
respect to the place of payment. Each Purchaser agrees that, before disposing of
any Note, it will make a notation thereon (or on a schedule attached thereto) of
all principal payments previously made thereon and of the date to which interest
thereon has been paid. The Company agrees to afford the benefits of this
paragraph 12A to any Transferee which shall have made the same agreement as the
Purchasers have made in this paragraph 12A.
12B. EXPENSES. The Company agrees, whether or not the
transactions contemplated hereby shall be consummated, to pay, and save
Prudential, each Purchaser and any Transferee harmless against liability for the
payment of, all
64
out-of-pocket expenses arising in connection with such transactions, including
(i) all document production and duplication charges and the fees and expenses of
any special counsel engaged by the Purchasers or any Transferee in connection
with this Agreement, the transactions contemplated hereby and any subsequent
proposed modification of, or proposed consent under, this Agreement and the
other Loan Documents, whether or not such proposed modification shall be
effected or proposed consent granted, (ii) the costs and expenses, including
attorneys' fees, incurred by any Purchaser or any Transferee in enforcing (or
determining whether or how to enforce) any rights under this Agreement or the
Notes or the other Loan Documents or in responding to any subpoena or other
legal process or informal investigative demand issued in connection with this
Agreement or the transactions contemplated hereby or by reason of any
Purchaser's or any Transferee's having acquired any Note, including without
limitation costs and expenses incurred in any bankruptcy case and (iii) the
costs and expenses, including attorneys' fees, incurred by the Collateral Agent
in enforcing (or determining whether or how to enforce) any rights under the
Pledge Agreement or the Intercreditor Agreement. The obligations of the Company
under this paragraph 12B shall survive the transfer of any Note or portion
thereof or interest therein by any Purchaser or any Transferee and the payment
of any Note.
12C. CONSENT TO AMENDMENTS. This Agreement may be amended, and
the Company may take any action herein prohibited, or omit to perform any act
herein required to be performed by it, if the Company shall obtain the written
consent to such amendment, action or omission to act, of the Majority Holders
except that, (i) with the written consent of the holders of all
- - ------ ----
Notes of a particular Series, and if an Event of Default shall have occurred and
be continuing, of the holders of all Notes of all Series, at the time
outstanding (and not without such written consents), the Notes of such Series
may be amended or the provisions thereof waived to change the maturity thereof,
to change or affect the principal thereof, or to change or affect the rate or
time of payment of interest on or any Yield-Maintenance Amount payable with
respect to the Notes of such Series, (ii) without the written consent of the
-------
holder or holders of all Notes at the time outstanding, no amendment to or
waiver of the provisions of this Agreement shall change or affect the provisions
of paragraph 7A or this paragraph 12C insofar as such provisions relate to
proportions of the principal amount of the Notes of any Series, or the rights of
any individual holder of Notes, required with respect to any declaration of
Notes to be due and payable or with respect to any consent, amendment, waiver or
declaration, (iii) with the written consent of Prudential (and not without the
----
written consent of Prudential) the provisions of paragraph 2 may be amended or
waived (except insofar as any such amendment or waiver would affect any rights
or obligations with respect to the purchase and sale of Notes which shall have
become Accepted Notes prior to such amendment or waiver), and (iv) with the
----
written consent of all of the Purchasers which shall have become obligated to
purchase Accepted Notes of any Series (and not without the written consent of
all such Purchasers), any of the provisions of paragraphs 2 and 3 may be amended
or waived insofar as such amendment or waiver would affect only rights or
obligations with respect to the purchase and sale of the Accepted Notes of such
Series or the terms and provisions of such Accepted Notes. Each holder of any
Note at the time or thereafter outstanding
65
shall be bound by any consent authorized by this paragraph 12C, whether or not
such Note shall have been marked to indicate such consent, but any Notes issued
thereafter may bear a notation referring to any such consent. No course of
dealing between the Company and the holder of any Note nor any delay in
exercising any rights hereunder or under any Note shall operate as a waiver of
any rights of any holder of such Note. As used herein and in the Notes, the term
"THIS AGREEMENT" and references thereto shall mean this Agreement as it may from
time to time be amended or supplemented.
12D. FORM, REGISTRATION, TRANSFER AND EXCHANGE OF NOTES; LOST
NOTES. The Notes are issuable as registered notes without coupons in
denominations of at least $100,000, except as may be necessary to reflect any
principal amount not evenly divisible by $100,000. 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. Upon surrender for
registration of transfer of any Note at the principal office of the Company, the
Company shall, at its expense, execute and deliver one or more new Notes of like
tenor and of a like aggregate principal amount, registered in the name of such
transferee or transferees. At the option of the holder of any Note, such Note
may be exchanged for other Notes of like tenor and of any authorized
denominations, of a like aggregate principal amount, upon surrender of the Note
to be exchanged at the principal office of the Company. Whenever any Notes are
so surrendered for exchange, the Company shall, at its expense, execute and
deliver the Notes which the holder making the exchange is entitled to receive.
Each installment of principal payable on each installment date upon each new
Note issued upon any such transfer or exchange shall be in the same proportion
to the unpaid principal amount of such new Note as the installment of principal
payable on such date on the Note surrendered for registration of transfer or
exchange bore to the unpaid principal amount of such Note. No reference need be
made in any such new Note to any installment or installments of principal
previously due and paid upon the Note surrendered for registration of transfer
or exchange. Every Note surrendered for registration of transfer or exchange
shall be duly endorsed, or be accompanied by a written instrument of transfer
duly executed, by the holder of such Note or such holder's attorney duly
authorized in writing. 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, so that
neither gain nor loss of interest shall result from any such transfer or
exchange. Upon receipt of written notice from the holder of any Note of the
loss, theft, destruction or mutilation of such Note and, in the case of any such
loss, theft or destruction, upon receipt of such holder's unsecured indemnity
agreement, or in the case of any such mutilation upon surrender and cancellation
of such Note, the Company will make and deliver a new Note, of like tenor, in
lieu of the lost, stolen, destroyed or mutilated Note.
12E. PERSONS DEEMED OWNERS; PARTICIPATIONS. Prior to due
presentment for registration of transfer, the Company may treat the Person in
whose name any Note is registered as the owner and holder of such Note for the
purpose of receiving payment of principal of and interest on, and any Yield-
Maintenance Amount
66
payable with respect to, such Note and for all other purposes whatsoever,
whether or not such Note shall be overdue, and the Company shall not be affected
by notice to the contrary. Subject to the preceding sentence, the holder of any
Note may from time to time grant participations in all or any part of such Note
to any Person on such terms and conditions as may be determined by such holder
in its sole and absolute discretion.
12F. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ENTIRE
AGREEMENT. All representations and warranties contained herein or made in
writing by or on behalf of the Company in connection herewith shall survive the
execution and delivery of this Agreement and the Notes, the transfer by any
Purchaser of any Note or portion thereof or interest therein and the payment of
any Note, and may be relied upon by any Transferee, regardless of any
investigation made at any time by or on behalf of any Purchaser or any
Transferee. Subject to the preceding sentence, this Agreement and the Notes
embody the entire agreement and understanding between the parties hereto with
respect to the subject matter hereof and supersede all prior agreements and
understandings relating to such subject matter.
12G. SUCCESSORS AND ASSIGNS. All covenants and other agreements
in this Agreement contained by or on behalf of any of the parties hereto shall
bind and inure to the benefit of the respective successors and assigns of the
parties hereto (including, without limitation, any Transferee) whether so
expressed or not.
12H. NOTICES. All written communications provided for hereunder
(other than communications provided for under paragraph 2) shall be sent by
first class mail or nationwide overnight delivery service (with charges prepaid)
and (i) if to any Person listed in the Information Schedule attached hereto,
----------- --------
addressed to it at the address specified for such communications in such
Information Schedule, or at such other address as it shall have specified in
- - ----------- --------
writing to the Person sending such communication, and (ii) if to any Purchaser
or holder of any Note which is not a Person listed in such Information Schedule,
----------- --------
addressed to it at such address as it shall have specified in writing to the
Person sending such communication or, if any such holder shall not have so
specified an address, then addressed to such holder in care of the last holder
of such Note which shall have so specified an address to the Person sending such
communication, provided, however, that any such communication to the Company may
-------- -------
also, at the option of the Person sending such communication, be delivered by
any other means either to the Company at its address specified in the
Information Schedule or to any Authorized Officer of the Company. Any
- - ----------- --------
communication pursuant to paragraph 2 shall be made by the method specified for
such communication in paragraph 2, and shall be effective to create any rights
or obligations under this Agreement only if, in the case of a telephone
communication, an Authorized Officer of the party conveying the information and
of the party receiving the information are parties to the telephone call, and in
the case of a telecopier communication, the communication is signed by an
Authorized Officer of the party conveying the information, addressed to the
attention of an Authorized Officer of the party receiving the information, and
in fact received at the telecopier terminal the number of which is listed for
the party receiving the communication in the Information Schedule or at such
----------- --------
67
other telecopier terminal as the party receiving the information shall have
specified in writing to the party sending such information.
12I. PAYMENTS DUE ON NON-BUSINESS DAYS. Anything in this
Agreement or the Notes to the contrary notwithstanding, any payment of principal
of or interest on, or Yield-Maintenance Amount payable with respect to, any Note
that is due on a date other than a Business day shall be made on the next
succeeding Business Day without including the additional days elapsed in the
computation of the interest payable on such next succeeding Business Day.
12J. SEVERABILITY. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
12K. DESCRIPTIVE HEADINGS. The descriptive headings of the
several paragraphs of this Agreement are inserted for convenience only and do
not constitute a part of this Agreement.
12L. SATISFACTION REQUIREMENT. If any agreement, certificate or
other writing, or any action taken or to be taken, is by the terms of this
Agreement required to be satisfactory to any Purchaser, to any holder of Notes
or to the Majority Holder(s), the determination of such satisfaction shall be
made by such Purchaser, such holder or the Majority Holder(s), as the case may
be, in the sole and exclusive judgment (exercised in good faith) of the Person
or Persons making such determination.
12M. MAXIMUM INTEREST PAYABLE. The Company, each other Obligor,
the Purchasers and any other holders of the Notes specifically intend and agree
to limit contractually the amount of interest payable under this Agreement, the
Notes, the other Loan Documents and all other instruments and agreements related
hereto and thereto to the maximum amount of interest lawfully permitted to be
charged under applicable law. Therefore, none of the terms of this Agreement,
the Notes, the other Loan Documents or any instrument pertaining to or relating
to this Agreement, the Notes or any other Loan Document shall ever be construed
to create a contract to pay interest at a rate in excess of the maximum rate
permitted to be charged under applicable law, and neither the Company, each
other Obligor, any other guarantor nor any other party liable or to become
liable hereunder, under the Notes, any guaranty or under any other instruments
and agreements related hereto and thereto shall ever be liable for interest in
excess of the amount determined at such maximum rate, and the provisions of this
paragraph 12M shall control over all other provisions of this Agreement, any
Notes, the other Loan Documents, any guaranty or any other instrument pertaining
to or relating to the transactions herein contemplated. If any amount of
interest taken or received by any Purchaser or any holder of a Note shall be in
excess of said maximum amount of interest which, under applicable law, could
lawfully have been collected by any Purchaser or such holder incident to such
transactions, then such excess shall be deemed to have been the result of a
mathematical error by all parties hereto and shall
68
be refunded promptly by the Person receiving such amount to the party paying
such amount, or, at the option of the recipient, credited ratably against the
unpaid principal amount of the Note or Notes held by such holder. All amounts
paid or agreed to be paid in connection with such transactions which would under
applicable law be deemed "interest" shall, to the extent permitted by such
applicable law, be amortized, prorated, allocated and spread throughout the
stated term of this Agreement and the Notes. "APPLICABLE LAW" as used in this
paragraph means that law in effect from time to time applicable to the
transactions contemplated by this Agreement and the other Loan Documents which
permits the charging and collection of the highest permissible lawful,
nonusurious rate of interest on the transactions herein contemplated including
laws of the United States of America, and "MAXIMUM RATE" as used in this
paragraph means, with respect to each of the Notes, the maximum lawful,
nonusurious rates of interest (if any) which under applicable law may be charged
to the Company from time to time with respect to such Notes.
12N. GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED AND
ENFORCED IN ACCORDANCE WITH, AND THE RIGHTS OF THE PARTIES SHALL BE GOVERNED BY,
THE LAW OF THE STATE OF NEW YORK.
12O. WAIVER OF JURY TRIAL; SUBMISSION TO JURISDICTION.
(i) THE COMPANY, EACH OTHER OBLIGOR AND EACH HOLDER HEREBY KNOWINGLY,
VOLUNTARILY, AND INTENTIONALLY WAIVES ANY RIGHTS IT MAY HAVE TO A TRIAL BY
JURY IN ANY LITIGATION OF ANY CLAIM WHICH IS BASED HEREON, OR ARISES OUT
OF, UNDER, OR IN CONNECTION WITH THIS AGREEMENT, THE NOTES OR ANY OTHER
LOAN DOCUMENT, OR ANY TRANSACTIONS RELATING HERETO OR THERETO, OR ANY
COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER ORAL OR WRITTEN),
OR ACTIONS OF THE COMPANY, ANY OTHER OBLIGOR OR THE HOLDERS. THE COMPANY
AND EACH OTHER OBLIGOR ACKNOWLEDGES THAT THIS PROVISION IS A MATERIAL
INDUCEMENT FOR THE PURCHASERS TO ENTER INTO THIS AGREEMENT.
(ii) EACH OBLIGOR HEREBY IRREVOCABLY SUBMITS ITSELF TO THE JURISDICTION OF
THE SUPREME COURT OF THE STATE OF NEW YORK, NEW YORK COUNTY, OF THE UNITED
STATES OF AMERICA AND TO THE JURISDICTION OF THE UNITED STATES DISTRICT
COURT FOR THE SOUTHERN DISTRICT OF NEW YORK, FOR THE PURPOSE OF ANY SUIT,
ACTION OR OTHER PROCEEDING ARISING OUT OF, OR RELATING TO, THIS AGREEMENT
OR ANY OTHER LOAN DOCUMENT OR THE SUBJECT MATTER HEREOF, AND HEREBY WAIVES,
AND AGREES NOT TO ASSERT, BY WAY OF MOTION, AS A DEFENSE OR OTHERWISE, IN
ANY SUCH SUIT, ACTION OR PROCEEDINGS, ANY CLAIM THAT IT IS NOT PERSONALLY
SUBJECT TO THE JURISDICTION OF THE ABOVE-NAMED COURTS FOR ANY REASON
WHATSOEVER, THAT SUCH SUIT, ACTION OR PROCEEDING IS BROUGHT IN
69
AN INCONVENIENT FORUM OR THAT THE VENUE OF SUCH SUIT, ACTION OR PROCEEDING
IS IMPROPER. THE GUARANTOR HEREBY AGREES THAT PROCESS MAY BE SERVED ON THE
SECRETARY OF STATE OF THE STATE OF NEW YORK. ANY AND ALL SERVICE OF PROCESS
AND ANY OTHER NOTICE IN ANY SUCH ACTION, SUIT OR PROCEEDING SHALL BE
EFFECTIVE AGAINST SUCH PARTIES IF GIVEN BY REGISTERED OR CERTIFIED MAIL,
RETURN RECEIPT REQUESTED, OR BY ANY OTHER MEANS OR MAIL WHICH REQUIRES A
SIGNED RECEIPT, POSTAGE PREPAID, MAILED TO SUCH PARTIES HAS HEREIN PROVIDED
IN PARAGRAPH 12H. DURING THE TERM OF THIS AGREEMENT, IN THE EVENT THE
SECRETARY OF STATE OF THE STATE OF NEW YORK SHALL NOT BE ABLE TO ACCEPT
SERVICE OF PROCESS AS AFORESAID AND IF THE OBLIGORS SHALL NOT MAINTAIN AN
OFFICE IN NEW YORK CITY, THE OBLIGORS SHALL, PROMPTLY APPOINT AND MAINTAIN
AN AGENT QUALIFIED TO ACT AS AN AGENT FOR SERVICE OF PROCESS WITH RESPECT
TO ALL COURTS IN AND OF NEW YORK CITY, AND ACCEPTABLE TO THE HOLDERS, AS
THE OBLIGOR'S AUTHORIZED AGENT TO ACCEPT AND ACKNOWLEDGE ON THE OBLIGOR'S
BEHALF SERVICE OF ANY AND ALL PROCESS WHICH MAY BE SERVED IN ANY SUCH
ACTION, SUIT OR PROCEEDING.
THE OBLIGOR HEREBY AGREES THAT THE SUBMISSION TO JURISDICTION REFERRED
TO IN THIS PARAGRAPH 12O SHALL NOT LIMIT IN ANY MANNER THE RIGHTS OF ANY OF
THE HOLDERS TO TAKE PROCEEDINGS AGAINST SUCH OBLIGOR IN SOME OTHER COURT OF
COMPETENT JURISDICTION WHETHER WITHIN OR OUTSIDE THE UNITED STATES.
12P. COUNTERPARTS. This Agreement may be executed in any number
of counterparts, each of which shall be an original, but all of which together
shall constitute one instrument.
12Q. BINDING AGREEMENT. When this Agreement is executed and
delivered by the Company and Prudential, it shall become a binding agreement
between the Company and Prudential. This Agreement shall also inure to the
benefit of each Purchaser which shall have executed and delivered a Confirmation
of Acceptance, and each such Purchaser shall be bound by this Agreement to the
extent provided in such Confirmation of Acceptance.
If you are in agreement with the foregoing, please sign the form of
acceptance on the enclosed counterpart of this letter and return the same to the
Company, whereupon this letter shall become a binding agreement between the
Company and you.
Very truly yours,
TRANSMONTAIGNE OIL COMPANY
70
By: /s/ RICHARD E. GATHRIGHT
----------------------------
Title: President and Chief
Operating Officer
GUARANTORS
TRANSMONTAIGNE PRODUCT
SERVICES INC.
TRANSMONTAIGNE PIPELINE INC.
TRANSMONTAIGNE TERMINALING INC.
TRANSMONTAIGNE TRANSPORTATION
SERVICES INC.
By: /s/ RICHARD E. GATHRIGHT
----------------------------
As C.E.O. of each of the foregoing
corporations
BEAR PAW ENERGY INC.
By: /s/ ROBERT J. CLARK
----------------------------
Title: President
The foregoing Agreement is
hereby accepted as of the
date first above written.
THE PRUDENTIAL INSURANCE
COMPANY OF AMERICA
By: /s/ RANDALL M. KOB
-------------------------------
Vice President
U.S. PRIVATE PLACEMENT FUND
By: Prudential Private Placement
Investors, L.P., Investment Advisor
By: Prudential Private Placement
71
Investors, Inc., its General Partner
By: /s/ RANDALL M. KOB
-------------------------------
Vice President
72
INFORMATION SCHEDULE
PRUDENTIAL/PURCHASER(S)
Aggregate Principal
Amount of Series A
Notes to be Purchased Denominations
--------------------- -------------
$45,000,000 $40,000,000
$ 5,000,000
THE PRUDENTIAL INSURANCE COMPANY OF AMERICA
(1) All payments on account of Notes held by such purchaser shall be made by
wire transfer of immediately available funds for credit to:
Account No. 890-0303-391 (in the case of payments on account of the Note
originally issued in the principal amount of $40,000,000)
Account No. 890-0304-944 (in the case of payments on account of the Note
originally issued in the principal amount of $5,000,000)
The Bank of New York
New York, New York
(ABA No.: 021-000-018)
SERIES A NOTES
Each such wire transfer shall set forth the name of the Company, a reference to
"7.85% Senior Notes, Series A, due April 17, 2003, Security No. !INV5596!" (in
the case of payments on account of the Note originally issued in the principal
amount of $40,000,000) and "Security No.!INV5597!" (in the case of payments on
account of the Note originally issued in the principal amount of $5,000,000),
and the due date and application (as among principal, interest and Yield-
Maintenance Amount) of the payment being made.
(2) Address for all notices relating to payments:
The Prudential Insurance Company of America
c/o Prudential Capital Group
Four Gateway Center
100 Mulberry Street
Newark, New Jersey 07102-4069
Investment Operations Group
(Attention: Manager)
(3) Address for all other communications and notices:
The Prudential Insurance Company of America
c/o Prudential Capital Group
2200 Ross Avenue, Suite 4200E
Dallas, Texas 75201
Attention: Managing Director
73
(4) Recipient of telephonic or facsimile prepayment notices:
Manager, Investment Structure and Pricing
(201) 802-7398
(201) 624-6432 (facsimile)
(5) Tax Identification No.: 22-1211670
(6) Authorized Officers:
R.A. Walker, Randall M. Kob, Robert G. Gwin,
Steven D. Arnold, and Jay D. Squiers
74
INFORMATION SCHEDULE
PRUDENTIAL/PURCHASER(s)
Aggregate Principal
Amount of Series A
Notes to be Purchased Denominations
--------------------- -------------
$5,000,000 $5,000,000
U.S. PRIVATE PLACEMENT FUND
(1) All payments on account of Notes held by such purchaser shall be made by
wire transfer of immediately available funds for credit to:
Account No. UIFF1000002
Boston Safe Deposit and Trust Company
One Boston Place
Boston, MA 02108
ABA No.: 0l1-001-234
DDA No.: 108111
Account Name: U.S. Private Placement Fund
Each such wire transfer shall set forth the name of the Company, a reference to
"7.85% Senior Secured Notes, Series A, due April 17, 2003", and the due date
and application (as among principal, interest and Yield-Maintenance Amount) of
the payment being made.
(2) Address for all notices relating to payments:
Mellon Trust
One Cabot Road
Mail Stop #028-003C
Medford, MA 02155-5159
Attention: Derek von Vliet
Telephone: (617) 382-4850
Facsimile: (617) 382-4003
(3) Address for copies of notices under (2) above and all other communications
and notices:
Prudential Private Placement Investors, Inc.
Four Gateway Center
100 Mulberry Street
Newark, NJ 07102-4069
Attention: Vice President
Telephone:(201) 802-8608
Facsimile: (201) 802-7045
(4) Recipient of telephonic prepayment notices:
See (2) above.
75
The Company
TransMontaigne Oil Company
(1) Address for Notices:
TransMontaigne Oil Company
370 17th Street, Suite 2750
Denver, Colorado 80202
Attention: President
(2) Receipt of telephonic or facsimile notices:
(303) 626-8200 (telephone)
(303) 626-8228 (facsimile)
(3) Authorized Officers:
Cortlandt S. Dietler, Chief Executive Officer
Richard E. Gathright, President and Chief Operating Officer
Harold R. Logan, Jr., Executive Vice President-Finance and Treasurer
W.A. Sikora, Executive Vice President
75A
SCHEDULE 3A(vii)
----------------
SUMMARY OF UCC SEARCHES
-----------------------
TRANSMONTAIGNE/PRUDENTIAL PRIVATE PLACEMENT
A. Listing of all companies searched including total number of listings:
Secretary of Total Number
Company Name State Office of Listings
- - ------------ ------------ ------------
1. TransMontaigne Oil Company Delaware* NONE
Arkansas 3 Filings
Colorado 2 Filings
2. TransMontaigne Product Services Inc. Arkansas* 4 Filings
(f/k/a Continental Ozark, Inc.) Colorado None
Illinois None
Indiana None
Iowa None
Kansas None
Kentucky None
Louisiana None
Michigan None
Minnesota None
Mississippi Not Rec'd
Missouri None
Nebraska None
North Dakota None
Ohio None
Oklahoma None
South Dakota None
Texas None
Wisconsin None
3. TransMontaigne Pipeline Inc. Arkansas* 3 Filings
(f/k/a COZ Pipeline, Inc.) Missouri None
Texas None
Norco Pipeline, Inc. (merged into COZ Pipeline, Inc. Arkansas* 3 Filings
12/96 and no longer exists) Illinois None
Indiana None
Iowa None
Ohio None
4. TransMontaigne Terminaling Inc. Arkansas* 3 Filings
(f/k/a COZ Terminaling,Inc.) Indiana None
Missouri None
75B
Ohio None
5. Bear Paw Energy Inc. Colorado* 3 Filings
(f/k/a Sheffield Gas Processors, Inc.) Montana 1 Filing
North Dakota 1 Filing
B. Detailed summary of companies that have ucc filings listed in Part A:
1. Debtor: TransMontaigne Oil Company
a. Jurisdiction: Arkansas Secretary of State
File No.: 992441
File Date: 12/7/95
Secured Party: The First National Bank of Boston, as Agent
Collateral: All indebtedness owing to Debtor from subs
b. Jurisdiction: Arkansas Secretary of State
File No..: 992442
File Date: 12/7/95
Secured Party: The First National Bank of Boston, as Agent
Collateral: All indebtedness owing to Debtor from subs
c. Jurisdiction: Arkansas Secretary of State
File No.: 1050595
File Date:12/20/96
Secured Party: The First National Bank of Boston, as Agent
Collateral: All indebtedness owing to Debtor from subs; rights
to receive profits, surplus or distributions, all
proceeds and products
d. Jurisdiction: Colorado Secretary of State
File No.: 952090078
File Date:12/7/95
Secured Party: The First National Bank of Boston, as Agent
Collateral: All indebtedness owing from subs
e. Jurisdiction: Colorado Secretary of State
File No.: 962095280
File Date: 12/23/96
Secured Party: The First National Bank of Boston, as Agent
Collateral: All indebtedness from subs; rights to receive
profits, surplus or distributions; all proceeds and
products
75C
2. Debtor: Continental Ozark, Inc. (n/k/a TransMontaigne Product
Services Inc.)
a. Jurisdiction: Arkansas Secretary of State
File No.: 889591
File Date: 3/1/94
Secured Party: B&B Resources Inc. Assigned to Associates
Commercial Corporation
Collateral: Equipment
b. Included as Debtor on filing described in B.1.a. above
c. Included as Debtor on filing described in B.1.b. above
d. Jurisdiction: Arkansas Secretary of State
File No.: 1050596
File Date: 12/20/96
Secured Party: The First National Bank of Boston, as Agent
Collateral: All indebtedness owing to Debtor from parent or
subs; all rights to receive profits, surplus or
distributions; all proceeds and products
3. Debtor: COZ Pipeline, Inc. (n/k/a TransMontaigne Pipeline Inc.)
a. Included as Debtor on filing described in B.1.a. above
b. Included as Debtor on filing described in B.1.b. above
c. Included as Debtor on filing described in B.2.d. above
4. Debtor: Norco Pipeline, Inc. (merged into COZ Pipeline, Inc.)
a. Included as Debtor on filing described in B.1.a. above
b. Included as Debtor on filing described in B.1.b. above
c. Included as Debtor on filing described in B.2.d. above
5. Debtor: COZ Terminaling (n/k/a TransMontaigne Terminaling Inc.)
a. Included as Debtor on filing described in B.1.a. above
b. Included as Debtor on filing described in B.1.b. above
c. Included as Debtor on filing described in B.2.d. above
75d
6. Debtor: Bear Paw Energy Inc. (f/k/a Sheffield Gas Processors, Inc.)
a. Jurisdiction: Colorado Secretary of State
File No.: 962095296
File Date: 12/23/96
Secured Party: The First National Bank of Boston as Agent
Collateral: All indebtedness owned to Debtor from parent or
subs; all rights to receive profits, surplus or
distributions; all proceeds and products
b. Jurisdiction: Colorado Secretary of State
Debtor Name: Sheffield Gas Processors Inc. and Torch Energy
Corp.
File No.: 932027685
File Date: 4/13/93
Secured Party: Norwest Bank Denver N.A.
Collateral:
Note: Orig. Financing Statement was partially released and
amended
c. Jurisdiction: Colorado Secretary of State
Debtor Name: Sheffield Operating Company
Additional Debtors: Republic National Gas Co.
Sheffield Gas Processors, Inc.
K123 Corporation
File No.: 962047326
File Date: 6/20/96
Secured Party: The First National Bank of Boston, as Agent
Collateral:
d. Jurisdiction: Montana Secretary of State
Debtor Name: Bear Paw Energy, Inc.
File No.: 498717
File Date: 12/24/96
Secured Party: The First National Bank of Boston, as Agent
Collateral: All indebtedness owing Debtor from parent or subs;
all rights to receive profits, surplus or
distributions; all proceeds or products
e. Jurisdiction: North Dakota Secretary of State
Debtor Name: Bear Paw Energy, Inc.
File No.: 97-000649931
File Date: 1/6/97
Secured Party: The First National Bank of Boston, as Agent
Collateral: All indebtedness owing Debtor from parent or subs;
all rights to receive profits, surplus or
distributions; all proceeds or products
- - ----------
*State of Incorporation
75e
SCHEDULE 5A(i)
--------------
FORM OF COVENANT COMPLIANCE CERTIFICATE
The Prudential Insurance Company of America
U.S. Private Placement Fund
c/o Prudential Capital Group
2200 Ross Ave., Suite 4200E
Dallas, Texas 75201
Attn: Managing Director
[other Holders]
Ladies and Gentlemen:
Reference is made to the Master Shelf Agreement dated as of April 17,
1997 among TransMontaigne Oil Company, a Delaware corporation (the "Company"),
certain Guarantors named therein, The Prudential Insurance Company of America,
and the other holders from time to time of Notes issued thereunder (the "Shelf
Agreement"). Terms defined in the Shelf Agreement and not otherwise defined
herein are used herein as defined in the Shelf Agreement.
Pursuant to paragraph 5A of the Shelf Agreement, the Company is
furnishing to you herewith [or has most recently furnished to you] the
financial statements of the Company and its Subsidiaries for the fiscal period
ended_________(the "Balance Sheet Date"). Such financial statements have been
prepared in accordance with generally accepted accounting principles and
present fairly, in all material respects, the financial position of the Company
and its Subsidiaries covered thereby at the date thereof and the results of
their operations for the period covered thereby, subject in the case of interim
statements only to normal year-end audit adjustments and the addition of
footnotes and except that permanent base product inventory will be recorded at
historical cost.
This certificate is submitted in compliance with the requirements of
paragraph 5A(i)(d) or 5A(ii)(c) of the Shelf Agreement. The undersigned officer
of the Company is a duly authorized Financial Officer.
The undersigned officer has caused the provisions of the Shelf
Agreement to be reviewed and has no knowledge of any Default or Event of
Default. [Note: If the signer does have knowledge of any Default or Event of
Default, the form of certificate should be revised to specify the Default or
Event of Default, the nature thereof and the actions taken, being taken or
proposed to be taken by the Company with respect thereto.]
The Company is providing the following information to demonstrate
compliance as of the Balance Sheet Date with the following Computation
Covenants:
75f
1. Paragraph 6A(1). Fixed Charges Coverage.
----------------------------------------
A. Consolidated Income from Operations
Consolidated gross revenues (per income statement) $
---------------
Minus Consolidated cost of operations (per income statement) ( )
---------------
Minus Consolidated selling, general and administrative expenses ( )
(per income statement) ---------------
Subtotal for most recent quarter $
---------------
Consolidated Income from Operations for three prior quarters:
Quarter ended ---------------
Quarter ended ---------------
Quarter ended ---------------
Total $
---------------
Consolidated Interest Expense
Subtotal for most recent quarter (per income $ statement) $
---------------
Consolidated interest expense for three prior quarters:
Quarter ended ---------------
Quarter ended ---------------
Quarter ended ---------------
Total $
---------------
A divided by B equals (may not be less than 225%)
2. Paragraph 6A(2). Leverage Ratio.
--------------------------------
A. Consolidated Funded Debt
Long term debt (per balance sheet) ---------------
Current maturities of long term debt, unless included above (per
balance sheet) ---------------
Other Funded Debt, including certain letter of credit
reimbursement obligations ---------------
Total $
---------------
75g
B. Consolidated Net Tangible Assets
Consolidated Total Assets (per balance sheet) $
---------------
Minus Consolidated Current Liabilities (per balance sheet) ( )
---------------
Minus Consolidated other liabilities (other than liabilities for
Funded Debt) per balance sheet) ( )
---------------
Minus Consolidated intangible assets (per balance sheet) ( )
---------------
Minus book value of any minority interest in a Subsidiary (per
balance sheet) ( )
---------------
Total $
---------------
A divided by B equals (may not equal or exceed the applicable
percentage) %
---------------
3. Paragraph 6A(3). Consolidated Tangible Net Worth
------------------------------------------------
A. Consolidated Tangible Net Worth
Consolidated stockholders' equity (per balance sheet) (excluding
effect of any foreign currency translation adjustments) $
---------------
Minus increase in such stockholders' equity after April 30, 1997
because of items (a) - (f) in definition of Consolidated Net
Income ---------------
Minus (without duplication) the book value of treasury stock,
receivables due from an employee stock ownership plan and
Guarantees of Indebtedness incurred by an employee stock
ownership plan ( )
---------------
Minus Consolidated intangible assets ( )
---------------
Total $
---------------
B. Requirement
Initial requirement $ 100,000,000
Cumulative increases through quarter preceding most recent
quarter
----------------
50% of Consolidated Net Income (if positive) in most recent
quarter (commencing quarter ended April 30, 1997)
----------------
75h
50% of Consolidated net proceeds from issuance of equity
securities in most recent quarter (commencing quarter ended
April 30, 1997) ------------------
Total $
------------------
A must exceed B.
4. Paragraph 6C(2). Certain Indebtedness.
--------------------------------------
A. Aggregate principal amount of all Indebtedness in respect of
Capital Lease Obligations and other Indebtedness incurred for
acquisition of equipment
Total (may not exceed $2,000,000) $
------------------
B. Aggregate principal amount of paragraph 6C(2)(vii) Indebtedness
issued to sellers of any business or part thereof or operating
assets for the acquisition thereof
Total (may not exceed $10,000,000) $
------------------
5. Paragraph 6C(2)(xv). Unsecured Funded Debt.
-------------------------------------------
A. Aggregate outstanding principal of Indebtedness permitted by
paragraph 6C(2)(xv)
Total $
------------------
B. Aggregate outstanding principal of Indebtedness permitted by
clause (b) of paragraph 6C(2)(xv) and not consented to under
clause (a) thereof.
Total $
------------------
A plus B equals (may not exceed $50,000,000) $
------------------
6. Paragraph 6C(2)(xvi). Other Indebtedness.
-----------------------------------------
A. Indebtedness (other than Financing Debt) in addition to other
types of indebtedness permitted by paragraph 6C(2)
[List Indebtedness]
Total (may not exceed $2,000,000) $
------------------
7. Paragraph 6C(4). Investments in Certain Subsidiaries.
-----------------------------------------------------
A. Investments in Subsidiaries listed in Schedule 8A other than
Wholly Owned Subsidiaries (after December 18, 1996):
75i
[List Investments]
Total $
------------
B. Consolidated Net Tangible Assets
Total (per (P)2B) $
------------
A divided by B equals (may not exceed 10%) %
------------
8. Paragraph 6C(4)(vii). Other Investments.
----------------------------------------
A. Investments in Subsidiaries listed in Schedule 8A otherwise not
permitted in paragraph 6C(4)
[List Investments]
Total $
------------
B. Consolidated Tangible Net Worth
Total (per (P)3A) $
------------
A divided by B equals (may not exceed 10%) %
------------
9. Paragraph 6B. Distributions.
----------------------------
A. Consolidated Net Income (cumulative since November 1, 1996)
Cumulative Consolidated Net Income from November 1, 1996 to
beginning of most recent quarter $
------------
Consolidated net income (or loss) (per income statement)
------------
Minus income (or loss) of any Person accrued prior to becoming a
Subsidiary ( )
------------
Minus income (or loss) of any Person (other than a Subsidiary)
in which the Company or a Subsidiary has an ownership interest
(subject to certain exceptions in Section) [definition of
Consolidated Net Income] ( )
------------
Minus amounts included in net income (or loss) in respect of the
write-up of any asset or retirement of any Indebtedness or
equity at less than face value after October 31, 1996 ( )
------------
Minus extraordinary and nonrecurring gains ( )
------------
Minus income from an impermissible Distribution or repayment of
Indebtedness by any Subsidiary ( )
------------
75j
Minus after-tax gains or losses attributable to returned ( )
surplus assets of any Plan --------------
Total $
--------------
B. Distributions
Total of cumulative Distributions after October 31, 1996 $
--------------
B minus ($5,000,000 plus 50% of A) equals (may not exceed zero) %
--------------
10. Paragraph 6C(5). Dispositions of Certain Assets.
--------------------------------------------------
A. Assets disposed of (at fair market value or book value if
greater) to date in fiscal year
[List assets]
Total $
--------------
B. Consolidated Net Tangible Assets (as of last day of next
preceding fiscal year)
Consolidated total assets (per balance sheet) $
--------------
Minus Consolidated Current Liabilities (per balance sheet) ( )
--------------
Minus Consolidated other liabilities (other than liabilities for
Funded Debt) (per balance sheet) ( )
--------------
Minus Consolidated intangible assets (per balance sheet) ( )
--------------
Minus book value of any minority interest in a Subsidiary (per ( )
--------------
balance sheet)
Total $
--------------
A divided by B equals (may not exceed 4% in any fiscal year) %
--------------
11. Paragraph 6C(6). Certain Lease Obligations.
---------------------------------------------
A. Leases Other than Capitalized Leases
Aggregate fixed rental obligations for fiscal year $
--------------
Minus payments required in respect of taxes and insurance-(if ( )
--------------
included above)
Total (may not exceed $8,000,000) $
--------------
75k
12. Paragraph 5O. Open Positions.
-----------------------------
A. Consolidated Open Positions
Number of barrels of petroleum product held in inventory or
subject to purchase contracts -----------
Minus number of barrels of petroleum product subject to sale
contracts ( )
----------
Total (may not exceed Company policy of barrels) ----------
If the Balance Sheet Date is the last day of a fiscal quarter of the
Company, this certificate is accompanied by supplements to Schedule 7A, 8D and
8J to the extent required by paragraph 5A(i)(f) or 5A(ii)(d).
If the Balance Sheet Date is the last day of the fiscal year of the
Company, this certificate is accompanied by a written statement of the
independent certified public accountants of the Company complying with the
terms of paragraph 5A(i)(a) of the Shelf Agreement and the calculations of
Accumulated Benefit Obligations and Plan assets complying with the terms of
paragraph 5A(1)(e) of the Shelf Agreement.
IN WITNESS WHEREOF, the undersigned Financial Officer of the Company
has set his or her hand and seal this day of __________, 199__.
TRANSMONTAIGNE OIL COMPANY
By:
----------------------------------
Title
75l
SCHEDULE 5J
-----------
RISK AND PRODUCT MANAGEMENT POLICY
76
SCHEDULE 8A
-----------
COMPANY AND SUBSIDIARY INFORMATION
78
SCHEDULE 8D
-----------
FINANCING DEBT, LIENS, GUARANTEES AND INVESTMENTS
Bank of Boston financing
$62,600,000 outstanding as of March 31, 1997
Guaranteed by subsidiaries
Secured by stock of subsidiaries and intercompany debt
12.75% Guaranteed Senior Subordinated Debentures due December 15, 2000
$4,000,000 outstanding as of March 31, 1997
Guaranteed by TransMontaigne Product Services, Inc.
Ownership by TransMontaigne Holding Inc. of approximately 28% of the common
stock of Lion Oil Company.
Ownership by TransMontaigne Pipeline Inc. of a 60% ownership interest in
Razorback Pipeline Company.
Ownership by Bear Paw Energy Inc. of a 50% ownership interest in InterEnergy
Sheffield Processing Company.
79
EXHIBIT A-1
-----------
[FORM OF NOTE]
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 AND MAY NOT
BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION EXCEPT PURSUANT TO AN
EXEMPTION THEREFROM UNDER SUCH ACT.
TRANSMONTAIGNE OIL COMPANY
7.85% SENIOR NOTE, SERIES A, DUE APRIL 17, 2003
No. R-____
ORIGINAL PRINCIPAL AMOUNT:
ORIGINAL ISSUE DATE: APRIL 17, 1997
INTEREST RATE: 7.85%
INTEREST PAYMENT DATES: OCTOBER 17 AND APRIL 17 OF EACH YEAR COMMENCING
OCTOBER 17, 1997.
FINAL MATURITY DATE: APRIL 17, 2003
PRINCIPAL INSTALLMENT DATES AND AMOUNTS: NONE, DUE AT MATURITY
FOR VALUE RECEIVED, the undersigned, TRANSMONTAIGNE OIL COMPANY (herein called
the "COMPANY"), a corporation organized and existing under the laws of the State
Delaware, hereby promises to pay to ____________________, or registered assigns,
the principal sum of ______________________________________ DOLLARS on the Final
Maturity Date specified above with interest (computed on the basis of a 360-day
year--30-day month) (a) on the unpaid balance thereof from the date hereof at
the Interest Rate per annum specified above, payable on each Interest Payment
Date specified above and on the Final Maturity Date specified above, commencing
with the Interest Payment Date next succeeding the date hereof, until the
principal hereof shall have become due and payable, and (b) on any overdue
payment (including any overdue prepayment) of principal, any overdue payment of
interest, and any overdue payment of any Yield-Maintenance Amount (as defined in
the Master Shelf Agreement referred to below), payable on each Interest Payment
Date as aforesaid (or, at the option of the registered holder hereof, on
demand), at a rate per annum from time to time equal to the lesser of (a) the
maximum rate permitted by applicable law or (b) the greater of (i) 9.85% or (ii)
2% over the rate of interest publicly announced by The Bank of New York from
time to time in New York City as its Prime Rate.
Payments of principal of, interest on and any Yield-Maintenance Amount payable
with respect to this Note are to be made at the main office of The Bank of New
York in New
84
York City or at such other place as the holder hereof shall designate to the
Company in writing, in lawful money of the United States of America.
This Note is one of a series of Senior Notes (herein called the "NOTES")
issued pursuant to a Master Shelf Agreement, dated as of April 17, 1997 (herein
called the "AGREEMENT"), between the Company and The Prudential Insurance
Company of America and is entitled to the benefits thereof. As provided in the
Agreement, this Note is subject to prepayment, in whole or from time to time in
part on the terms specified in the Agreement.
This Note is guaranteed as provided in paragraph 11 of the Agreement and is
secured by, and entitled to the benefits of, the Pledge Agreement (as defined in
the Agreement).
This Note is a registered Note and, as provided in the Agreement, upon
surrender of this Note for registration of transfer, duly endorsed, or
accompanied by a written instrument of transfer duly executed, by the registered
holder hereof or such holder's attorney duly authorized in writing, a new Note
for a like principal amount will be issued to, and registered in the name of,
the transferee. Prior to due presentment for registration of transfer, the
Company may treat the person in whose name this Note is registered as the owner
hereof for the purpose of receiving payment and for all other purposes, and the
Company shall not be affected by any notice to the contrary.
This Note is subject to optional prepayment, in whole or from time to time in
part, on the terms specified in the Agreement.
In case an Event of Default, as defined in the Agreement, shall occur and be
continuing, the principal of this Note may be declared or otherwise become due
and payable in the manner and with the effect provided in the Agreement.
The Company and any and all endorsers, guarantors and sureties severally waive
grace, demand, presentment for payment, notice of dishonor or default, notice of
intent to accelerate, notice of acceleration (to the extent set forth in the
Agreement), protest and diligence in collecting.
Should any indebtedness represented by this Note be collected at law or in
equity, or in bankruptcy or other proceedings, or should this Note be placed in
the hands of attorneys for collection, the Company agrees to pay, in addition to
the principal, premium, if any, and interest due and payable hereon, all costs
of collecting or attempting to collect this Note, including reasonable
attorneys' fees and expenses (including those incurred in connection with any
appeal).
85
The Company, each other Obligor (as defined in the Agreement) and the
Purchaser and the registered holder of this Note specifically intend and agree
to limit contractually the amount of interest payable under this Note to the
maximum amount of interest lawfully permitted to be charged under applicable
law. Therefore, none of the terms of this Note shall ever be construed to
create a contract to pay interest at a rate in excess of the maximum rate
permitted to be charged under applicable law, and neither the Company nor any
other party liable or to become liable hereunder shall ever be liable for
interest in excess of the amount determined at such maximum rate, and the
provisions of paragraph 12M of the Agreement shall control over any contrary
provision of this Note.
THIS NOTE IS INTENDED TO BE PERFORMED IN THE STATE OF NEW YORK AND SHALL BE
CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAW OF SUCH STATE.
TRANSMONTAIGNE OIL COMPANY
By:
____________________________
[Vice] President
86
EXHIBIT A-2
-----------
[FORM OF NOTE]
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 AND MAY NOT
BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION EXCEPT PURSUANT TO AN
EXEMPTION THEREFROM UNDER SUCH ACT.
TRANSMONTAIGNE OIL COMPANY
________% SENIOR NOTE, SERIES _______, DUE _____________
No. R-____
ORIGINAL PRINCIPAL AMOUNT:
ORIGINAL ISSUE DATE:
INTEREST RATE:
INTEREST PAYMENT DATES:
FINAL MATURITY DATE:
PRINCIPAL INSTALLMENT DATES AND AMOUNTS:
FOR VALUE RECEIVED, the undersigned, TRANSMONTAIGNE OIL COMPANY (herein called
the "COMPANY"), a corporation organized and existing under the laws of the State
of Delaware, hereby promises to pay to ____________________, or registered
assigns, the principal sum of ______________________________________ DOLLARS [on
the Final Maturity Date specified above] [, payable in installments on the
Principal Installment Dates and in the amounts specified above, and on the Final
Maturity Date specified above in an amount equal to the unpaid balance of the
principal hereof,] with interest (computed on the basis of a 360-day year--30-
day month) (a) on the unpaid balance thereof from the date hereof at the
Interest Rate per annum specified above, payable on each Interest Payment Date
specified above and on the Final Maturity Date specified above, commencing with
the Interest Payment Date next succeeding the date hereof, until the principal
hereof shall have become due and payable, and (b) on any overdue payment
(including any overdue prepayment) of principal, any overdue payment of
interest, and any overdue payment of any Yield-Maintenance Amount (as defined in
the Master Shelf Agreement referred to below), payable on each Interest Payment
Date as aforesaid (or, at the option of the registered holder hereof, on
demand), at a rate per annum from time to time equal to the lesser of (a) the
maximum rate permitted by applicable law or (b) the greater of (i) ____%/1/ or
(ii) 2% over the rate of interest publicly announced by The Bank of New York
from time to time in New York City as its Prime Rate.
- - -------------------------------
/1/ Interest rate plus 2%.
87
Prime Rate.
Payments of principal of, interest on and any Yield-Maintenance Amount payable
with respect to this Note are to be made at the main office of The Bank of New
York in New York City or at such other place as the holder hereof shall
designate to the Company in writing, in lawful money of the United States of
America.
This Note is one of a series of Senior Notes (herein called the "NOTES")
issued pursuant to a Master Shelf Agreement, dated as of April 17, 1997 (herein
called the "AGREEMENT"), between the Company and The Prudential Insurance
Company of America and U.S. Private Placement Fund and is entitled to the
benefits thereof. As provided in the Agreement, this Note is subject to
prepayment, in whole or from time to time in part on the terms specified in the
Agreement.
This Note is guaranteed as provided in paragraph 11 of the Agreement and is
secured by, and entitled to the benefits of, the Pledge Agreement.
This Note is a registered Note and, as provided in the Agreement, upon
surrender of this Note for registration of transfer, duly endorsed, or
accompanied by a written instrument of transfer duly executed, by the registered
holder hereof or such holder's attorney duly authorized in writing, a new Note
for a like principal amount will be issued to, and registered in the name of,
the transferee. Prior to due presentment for registration of transfer, the
Company may treat the person in whose name this Note is registered as the owner
hereof for the purpose of receiving payment and for all other purposes, and the
Company shall not be affected by any notice to the contrary.
[The Company agrees to make required prepayments of principal on the dates and
in the amounts specified in the Agreement.] [This Note is [also] subject to
optional prepayment, in whole or from time to time in part, on the terms
specified in the Agreement.]
In case an Event of Default, as defined in the Agreement, shall occur and be
continuing, the principal of this Note may be declared or otherwise become due
and payable in the manner and with the effect provided in the Agreement.
The Company and any and all endorsers, guarantors and sureties severally waive
grace, demand, presentment for payment, notice of dishonor or default, notice of
intent to accelerate, notice of acceleration (to the extent set forth in the
Agreement), protest and diligence in collecting.
Should any indebtedness represented by this Note be collected at law or in
equity, or in bankruptcy or other proceedings, or should this Note be placed in
the hands of attorneys for collection, the Company agrees to pay, in addition to
the principal, premium, if any, and interest due and payable hereon, all costs
of collecting or attempting to collect this Note, including reasonable
attorneys' fees and expenses (including those incurred in connection with any
appeal).
88
The Company, each other Obligor (as defined in the Agreement) and the
Purchaser and the registered holder of this Note specifically intend and agree
to limit contractually the amount of interest payable under this Note to the
maximum amount of interest lawfully permitted to be charged under applicable
law. Therefore, none of the terms of this Note shall ever be construed to
create a contract to pay interest at a rate in excess of the maximum rate
permitted to be charged under applicable law, and neither the Company nor any
other party liable or to become liable hereunder shall ever be liable for
interest in excess of the amount determined at such maximum rate, and the
provisions of paragraph 12M of the Agreement shall control over any contrary
provision of this Note.
THIS NOTE IS INTENDED TO BE PERFORMED IN THE STATE OF NEW YORK AND SHALL BE
CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAW OF SUCH STATE.
TRANSMONTAIGNE OIL COMPANY
By:
_____________________________
[Vice] President
89
EXHIBIT B
---------
[FORM OF REQUEST FOR PURCHASE]
[ON LETTERHEAD OF COMPANY]
TRANSMONTAIGNE OIL COMPANY
Reference is made to the Master Shelf Agreement (the "AGREEMENT"), dated
as of April 17, 1997, between TransMontaigne Oil Company (the "COMPANY") and The
Prudential Insurance Company of America and U.S. Private Placement Fund. All
terms used herein that are defined in the Agreement have the respective meanings
specified in the Agreement.
Pursuant to Paragraph 2D of the Agreement, the Company hereby makes the
following Request for Purchase:
1. Aggregate principal amount of
the Notes covered hereby
(the "NOTES")............. $
2. Individual specifications of the Notes:
Principal
Final Installment Interest
Principal Maturity Dates and Payment
Amount Date Amounts Period/2/
- - ----------- ----------- --------- ---------
3. Use of proceeds of the Notes:
4. Proposed day for the closing of the purchase and sale of the Notes:
- - ---------------------------
/2/ Specify quarterly or semi-annual.
90
5. The purchase price of the Notes is to be transferred to:
Name and
Name and Address Number of Telephone No.
of Bank Account of Bank Officer
---------------- --------- ---------------
6. The Company certifies (a) that the representations and warranties
contained in paragraph 8 of the Agreement are true on and as of the date of
this Request for Purchase except to the extent of changes caused by the
transactions contemplated in the Agreement and (b) that there exists on the
date of this Request for Purchase no Event of Default or Default.
7. In connection with any rate quotes it may provide, Prudential should
assume a Designated Spread of ___%.
Dated:
TRANSMONTAIGNE OIL COMPANY
By:
_________________________
Authorized Officer
91
EXHIBIT C
---------
[FORM OF CONFIRMATION OF ACCEPTANCE]
TRANSMONTAIGNE OIL COMPANY
Reference is made to the Master Shelf Agreement (the "AGREEMENT"),
dated as of April 17, 1997, between TransMontaigne Oil Company (the "COMPANY")
and The Prudential Insurance Company of America and the U.S. Private Placement
Fund. All terms used herein that are defined in the Agreement have the
respective meanings specified in the Agreement.
Each of the undersigned institutions which is named below as a
Purchaser of any Accepted Notes hereby confirms the representations as to such
Accepted Notes set forth in paragraph 9 of the Agreement, and agrees to be bound
by the provisions of paragraphs 2F and 2H of the Agreement relating to the
purchase and sale of such Accepted Notes.
Pursuant to paragraph 2F of the Agreement, an Acceptance with respect
to the following Accepted Notes is hereby confirmed:
I. Aggregate principal amount $____________
(A) (a) Name of Purchaser:
(b) Principal amount:
(c) Final maturity date:
(d) Principal installment dates and amounts:
(e) Interest rate:
(f) Interest payment period:
(g) Designated Spread:
(B) (a) Name of Purchaser:
(b) Principal amount:
(c) Final maturity date:
(d) Principal installment dates and amounts:
(e) Interest rate:
(f) Interest payment period:
(g) Designated Spread:
[(C),(D) ....: same information as to any other
92
II. Closing Day:
III. Facility Fee:
Dated:
TRANSMONTAIGNE OIL COMPANY
By:
___________________
Title:
THE PRUDENTIAL INSURANCE
COMPANY OF AMERICA
By:
___________________
Vice President
[Signature block for each named Purchaser other
than Prudential]
93
EXHIBIT D
---------
[FORM OF OPINION OF COMPANY'S COUNSEL]
[Letterhead of _______________]
[Date of Closing]
[Name(s) and address(es) of
purchaser(s)]
Dear Sirs:
We have acted as counsel for [Name of Issuer] (the "Company") in
connection [As _____________________ of [Name of Issuer] (the "Company"), I am
familiar] with the Master Shelf Agreement, dated as of ____________ 19__,
between the Company and The Prudential Insurance Company of America (the
"Agreement"), pursuant to which the Company has issued to you today Senior Notes
of the Company in the aggregate principal amount of $_____________(the "Notes").
All terms used herein that are defined in the Agreement have the respective
meanings specified in the Agreement. This letter is being delivered to you in
satisfaction of the condition set forth in paragraph 3A of the Agreement and
with the understanding that you are purchasing the Notes in reliance on the
opinions expressed herein.
In this connection, we [I] have examined such certificates of public
officials, certificates of officers of the Company and copies certified to our
[my] satisfaction of corporate documents and records of the Company and of other
papers, and have made such other investigations, as we [I] have deemed relevant
and necessary as a basis for our [my] opinion hereinafter set forth. We [I]
have relied upon such certificates of public officials and of officers of the
Company with respect to the accuracy of material factual matters contained
therein which were not independently established. With respect to the opinion
expressed in paragraph 3 below, we [I] have also relied upon the representation
made by [each of] you, and by each other Purchaser, in the first sentence of
paragraph 9 of the Agreement.
Based on the foregoing, it is our [my] opinion that:
1. The Company is a corporation duly organized and validly existing
in good standing under the laws of the State of ____________. [Each Subsidiary
is a corporation duly organized and validly existing in good standing under the
laws of its jurisdiction of incorporation.] The Company [and its Subsidiaries]
has [have] the corporate power to carry on its [their respective] businesses[es]
as now being conducted. [The Company has no Subsidiaries.]
94
2. The Agreement and the Notes have been duly authorized by all
requisite corporate action and duly executed and delivered by authorized
officers of the Company, and are valid obligations of the Company, legally
binding upon and enforceable against the Company in accordance with their
respective terms, except as such enforceability may be limited by (a)
bankruptcy, insolvency, reorganization or other similar laws affecting the
enforcement of creditors' rights generally and (b) general principles of equity
(regardless of whether such enforceability is considered in a proceeding in
equity or at law), and the Notes are entitled to the benefits of the Agreement.
We [I] express no opinion as to the provisions of paragraph 11I of the
Agreement.
3. It is not necessary in connection with the offering, issuance,
sale and delivery of the Notes under the circumstances contemplated by the
Agreement to register the Notes under the Securities Act or to qualify an
indenture in respect of the Notes under the Trust Indenture Act of 1939, as
amended.
4. The extension, arranging and obtaining of the credit represented
by the Notes do not result in any violation of regulation G, T or X of the Board
of Governors of the Federal Reserve System.
5. The execution and delivery of the Agreement and the Notes, the
offering, issuance and sale of the Notes and fulfillment of and compliance with
the respective provisions of the Agreement and the Notes do not conflict with,
or result in a breach of the terms, conditions or provisions of, or constitute a
default under, or result in any violation of, or result in the creation of any
Lien upon any of the properties or assets of the Company [or any of its
Subsidiaries] pursuant to, or require any authorization, consent, approval,
exemption, or other action by or notice to or filing with any court,
administrative or governmental body or other Person (other than routine filings
after the date hereof with the Securities and Exchange Commission and/or state
Blue Sky authorities) pursuant to, the charter or by-laws of the Company [or any
of its Subsidiaries], any applicable law (including any securities or Blue Sky
law), statute, rule or regulation or (insofar as is known to us [me] after
having made due inquiry with respect thereto) any agreement (including, without
limitation, any agreement listed in Exhibit E to the Agreement), instrument,
order, judgment or decree to which the Company [or any of its Subsidiaries] is a
party or otherwise subject.
A copy of this letter may be delivered by you or any Transferee to any
Person to which you or such Transferee sells or offers to sell any Note or a
participation in any Note, and such Person may rely upon this letter as if it
were addressed and had been delivered to such Person on the date hereof. Subject
to the foregoing, this letter may be relied upon by you only in connection with
the transactions contemplated by the Agreement and may not be used or relied
upon by you or any other Person for any other purpose whatsoever, without [our]
[my] prior written consent.
Very truly yours,
95