1
EXHIBIT 10.1
Execution Copy
===============================================================================
AMENDED AND RESTATED CREDIT AGREEMENT
-------------------------------------------------------
CONTINENTAL NATURAL GAS, INC.
and
ING (U.S.) CAPITAL CORPORATION,
as Agent,
and
CERTAIN FINANCIAL INSTITUTIONS
as Revolving Credit Lenders,
and
CERTAIN FINANCIAL INSTITUTIONS
as Term Lenders,
-------------------------------------------------------
$100,000,000
November 25, 1997
===============================================================================
2
TABLE OF CONTENTS
Page
AMENDED AND RESTATED CREDIT AGREEMENT.............................................................................1
ARTICLE I - Definitions and References............................................................................2
Section 1.1. Defined Terms..............................................................................2
Section 1.2. Exhibits and Schedules; Additional Definitions............................................17
Section 1.3. Amendment of Defined Instruments..........................................................17
Section 1.4. References and Titles.....................................................................17
Section 1.5. Calculations and Determinations...........................................................17
ARTICLE II - The Loans...........................................................................................18
Section 2.1. Revolving Credit Loans and Term Loans.....................................................18
Section 2.2. Requests for Loans........................................................................19
Section 2.3. Continuations and Conversions of Existing Loans...........................................21
Section 2.4. Use of Proceeds...........................................................................22
Section 2.5. Fees......................................................................................22
Section 2.6. Optional Prepayments......................................................................22
Section 2.7. Mandatory Prepayment of Revolving Credit Loans and Term Loans.............................23
Section 2.8. Initial Borrowing Base....................................................................24
Section 2.9. Subsequent Determinations of Borrowing Base...............................................24
Section 2.10. Letters of Credit........................................................................25
Section 2.11. Requesting Letters of Credit.............................................................25
Section 2.12. Reimbursement and Participations.........................................................26
Section 2.13. Letter of Credit Fees....................................................................27
Section 2.14. No Duty to Inquire.......................................................................27
Section 2.15. LC Collateral............................................................................28
Section 2.16. Hedging Agreement Indemnity..............................................................30
ARTICLE III - Payments to Lenders................................................................................30
Section 3.1. General Procedures........................................................................30
Section 3.2. Capital Reimbursement.....................................................................31
Section 3.3. Increased Cost of Eurodollar Loans or Letters of Credit...................................32
Section 3.4. Availability..............................................................................32
Section 3.5. Funding Losses............................................................................33
Section 3.6. Reimbursable Taxes........................................................................33
Section 3.7. Change of Applicable Lending Office.......................................................34
Section 3.8. Replacement of Lenders....................................................................35
ARTICLE IV - Conditions Precedent to Lending.....................................................................35
Section 4.1. Documents to be Delivered.................................................................35
Section 4.2. Closing of Acquisition; Post-Closing Merger of Taurus LP and C/T
Acquisition....................................................................................37
Section 4.3. Additional Conditions Precedent...........................................................37
i
3
ARTICLE V - Representations and Warranties.......................................................................39
Section 5.1. No Default................................................................................39
Section 5.2. Organization and Good Standing............................................................39
Section 5.3. Authorization.............................................................................39
Section 5.4. No Conflicts or Consents..................................................................39
Section 5.5. Enforceable Obligations...................................................................39
Section 5.6. Initial Financial Statements..............................................................40
Section 5.7. Other Obligations and Restrictions. ......................................................40
Section 5.8. Full Disclosure...........................................................................40
Section 5.9. Litigation................................................................................40
Section 5.10. Labor Disputes and Acts of God...........................................................41
Section 5.11. ERISA Plans and Liabilities..............................................................41
Section 5.12. Environmental and Other Laws.............................................................41
Section 5.13. Names and Places of Business.............................................................43
Section 5.14. Borrower's Subsidiaries..................................................................44
Section 5.15. Title to Properties; Licenses............................................................44
Section 5.16. Government Regulation....................................................................44
ARTICLE VI - Affirmative Covenants of Borrower...................................................................44
Section 6.1. Payment and Performance...................................................................44
Section 6.2. Books, Financial Statements and Reports...................................................45
Section 6.3. Other Information and Inspections.........................................................47
Section 6.4. Notice of Material Events and Change of Address...........................................47
Section 6.5. Maintenance of Properties.................................................................48
Section 6.6. Maintenance of Existence and Qualifications...............................................48
Section 6.7. Payment of Trade Liabilities, Taxes, etc..................................................48
Section 6.8. Insurance.................................................................................49
Section 6.9. Performance on Borrower's Behalf..........................................................49
Section 6.10. Interest.................................................................................49
Section 6.11. Compliance with Agreements and Law; Required Hedges......................................49
Section 6.12. Environmental Matters; Environmental Reviews.............................................50
Section 6.13. Evidence of Compliance...................................................................50
Section 6.14. Solvency.................................................................................50
Section 6.15. Agreement to Deliver Security Documents..................................................50
Section 6.16. Perfection and Protection of Security Interests and Liens................................51
Section 6.17. Bank Accounts; Offset....................................................................51
Section 6.18. Guaranties of Borrower's Subsidiaries....................................................51
Section 6.19. Assignment of Proceeds...................................................................52
ii
4
ARTICLE VII - Negative Covenants of Borrower.....................................................................52
Section 7.1. Indebtedness..............................................................................52
Section 7.2. Limitation on Liens.......................................................................53
Section 7.3. Hedging Contracts.........................................................................53
Section 7.4. Limitation on Mergers, Issuances of Securities............................................55
Section 7.5. Limitation on Sales of Property...........................................................55
Section 7.6. Limitation on Dividends and Redemptions...................................................55
Section 7.7. Limitation on Investments and New Businesses; Limitation on Capital
Expenditures...................................................................................56
Section 7.8. Limitation on Credit Extensions...........................................................56
Section 7.9. Transactions with Affiliates..............................................................56
Section 7.10. Certain Contracts; Amendments; Multiemployer ERISA Plans.................................56
Section 7.11. Current Ratio............................................................................57
Section 7.12. Net Worth................................................................................57
Section 7.13. EBITDA...................................................................................57
Section 7.14. Debt to Capital Ratio....................................................................57
ARTICLE VIII - Events of Default and Remedies....................................................................57
Section 8.1. Events of Default.........................................................................57
Section 8.2. Remedies..................................................................................60
ARTICLE IX - Agent...............................................................................................60
Section 9.1. Appointment and Authority.................................................................60
Section 9.2. Exculpation, Agent's Reliance, Etc........................................................61
Section 9.3. Credit Decisions; Limited Scope of Agent's Duties.........................................61
Section 9.4. Indemnification...........................................................................62
Section 9.5. Rights as Lender..........................................................................63
Section 9.6. Sharing of Set-Offs and Other Payments....................................................63
Section 9.7. Investments...............................................................................63
Section 9.8. Benefit of Article IX.....................................................................63
Section 9.9. Resignation...............................................................................64
iii
5
ARTICLE X - Miscellaneous........................................................................................64
Section 10.1. Waivers and Amendments; Acknowledgments..................................................64
Section 10.2. Survival of Agreements; Cumulative Nature................................................66
Section 10.3. Notices..................................................................................66
Section 10.4. Payment of Expenses; Indemnity...........................................................67
Section 10.5. Joint and Several Liability; Parties in Interest; Assignments............................68
Section 10.6. Confidentiality..........................................................................70
Section 10.7. Governing Law; Submission to Process.....................................................70
Section 10.8. Limitation on Interest...................................................................72
Section 10.9. Termination; Limited Survival............................................................72
Section 10.10. Severability............................................................................72
Section 10.11. Counterparts............................................................................72
Section 10.12. Waiver of Jury Trial, Punitive Damages, etc.............................................72
Section 10.13. Restatement of Original Agreement.......................................................73
Schedules and Exhibits:
Lender Schedule
Schedule 1 - Disclosure Schedule
Schedule 2 - Security Schedule
Schedule 3 - Insurance Schedule
Exhibit A - Revolving Credit Note
Exhibit B - Term Note
Exhibit C-1 - Borrowing Notice
Exhibit C-2 - Request for Term Loans
Exhibit D - Continuation/Conversion Notice
Exhibit E - Certificate Accompanying Financial Statements
Exhibit F - Borrowing Base Report
Exhibit G - Environmental Compliance Certificate
Exhibit H - Letter of Credit Application and Agreement
Exhibit I - Opinion of Gerald R. Shrader, Esq, general counsel for Restricted
Persons
Exhibit J - Assignment and Assumption Agreement
iv
6
AMENDED AND RESTATED CREDIT AGREEMENT
THIS AMENDED AND RESTATED CREDIT AGREEMENT is made as of
November 25, 1997, by and among Continental Natural Gas, Inc., an Oklahoma
corporation (herein called "Borrower"), ING (U.S.) Capital Corporation ("ING
Capital"), individually as a Revolving Credit Lender and a Term Lender, and as
Agent, and the other Lenders from time to time a party hereto. In consideration
of the mutual covenants and agreements contained herein the parties hereto
agree as follows:
RECITALS:
WHEREAS, Borrower and its Subsidiaries have previously acquired
certain of the Plants and the Stand-Alone Gathering Systems and financed the
purchase of such Plants and Stand-Alone Gathering Systems pursuant to the
Original Agreement; and
WHEREAS, Borrower owns all of: the outstanding capital stock of
(i) Continental Holdings Company, an Oklahoma corporation ("CHC"),
and
(ii) Continental/Taurus Holdings Company, L.L.C., an Oklahoma
limited liability company ("C/T Holdings"); and
WHEREAS, C/T Holdings owns all of the outstanding capital stock of
Continental/Taurus Acquisition Corp., a Delaware corporation ("C/T
Acquisition"), and
WHEREAS, pursuant to the Acquisition Documents, C/T Acquisition shall
acquire a 99% limited partnership interest in Continental/Taurus Energy
Company, L.P., a Delaware limited partnership ("Taurus LP"), and CHC shall have
acquired a 1% general partnership interest in Taurus LP; and
WHEREAS, to refinance the outstanding indebtedness under the Original
Agreement and to finance the acquisition by C/T Acquisition and CHC of such
interests in Taurus LP, subject to the terms and conditions set forth herein:
(i) ING Capital and the other Revolving Credit Lenders propose to lend to
Borrower up to $25,000,000, and (ii) ING Capital and the other Term Lenders
propose to lend to Borrower up to $75,000,000; and
WHEREAS, $41,580,000 of the proceeds of the Term Loans are to be
contributed by Borrower as capital to C/T Holdings, and then contributed by C/T
Holdings as capital to C/T Acquisition, and $420,000 of the proceeds of the
Term Loans are to be contributed by Borrower as capital to CHC; and
WHEREAS, immediately following the consummation of such acquisition,
C/T Acquisition is to merge into Taurus LP, with Taurus LP as the surviving
entity, pursuant to which C/T Holdings shall acquire a 99% limited partnership
interest in Taurus LP;
1
7
NOW, THEREFORE, in consideration of the mutual covenants and
agreements contained herein the parties hereto agree as follows:
ARTICLE I - Definitions and References
Section 1.1. Defined Terms. As used in this Agreement, each of the
following terms has the meaning given it in this Section 1.1 or in the sections
and subsections referred to below:
"Acquisition Closing Date" shall mean the date on which the
acquisition of the partnership interests in Taurus LP by C/T Acquisition and
CHC is consummated pursuant to the Acquisition Documents, which shall be on or
before November 30, 1997.
"Acquisition Documents" means (a) the Agreement and Plan of Merger
dated November 24, 1997 among Coda, Borrower and CHC, regarding the acquisition
of the partnership interests in Taurus LP, (b) the assignments of partnership
interests and agreements and plans of merger, articles of merger and
certificates of merger delivered thereunder and (c) all other agreements or
instruments delivered in connection therewith to consummate the acquisitions
and mergers contemplated thereby.
"Affiliate" means, as to any Person, each other Person that directly
or indirectly (through one or more intermediaries or otherwise) controls, is
controlled by, or is under common control with, such Person. A Person shall be
deemed to be "controlled by" any other Person if such other Person possesses,
directly or indirectly, power
(a) to vote 20% or more of the securities (on a fully diluted
basis) having ordinary voting power for the election of directors or
managing general partners; or
(b) to direct or cause the direction of the management and
policies of such Person whether by contract or otherwise.
"Agent" means ING Capital, as Agent hereunder, and its successors in
such capacity; provided, however, that until such time as a Lender other than
ING Capital becomes a party hereto, "Agent" shall mean ING Capital,
individually.
"Agreement" means this Credit Agreement.
"Applicable Lending Office" means, with respect to each Lender, such
Lender's Domestic Lending Office in the case of Base Rate Loans and such
Lender's Eurodollar Lending Office in the case of Eurodollar Loans.
"Approved Counterparty" means any of ONEOK, Williams, Natural Gas
Clearinghouse, ConAgra Energy Services, Inc., Koch Hydrocarbon Company, Mapco,
Aquila Risk Management Corporation, Enron Capital & Trade Resources Corp.,
Southern Company Energy Mktg LP (formerly Vastar), PG&E Energy Trading, NP
Energy, Inc., Duke Energy
2
8
Trading and Marketing, L.L.C., El Paso Energy Marketing, Tenaslea Marketing
Ventures, Entergy Power Marketing, L.S.B. Industries, Inc. or Mountain Energy,
Inc. (Mountain Iron).
"Bank Parties" means Agent, LC Issuer, and all Lenders.
"Base Rate" means the Base Rate Margin plus the higher of (a) the
Reference Rate and (b) the Federal Funds Rate plus one-half percent (0.5%) per
annum. For purposes of this definition, "Reference Rate" means the arithmetic
average of the rates of interest publicly announced by The Chase Manhattan Bank
(National Association), Citibank, N.A. and Morgan Guaranty Trust Company of New
York (or their respective successors) as their respective prime commercial
lending rates (or, as to any such bank that does not announce such a rate, such
bank's "base" or other rate reasonably determined by Agent to be the equivalent
rate announced by such bank), except that, if any such bank shall, for any
period, cease to announce publicly its prime commercial lending (or equivalent)
rate, Agent shall, during such period, determine the "Base Rate" based upon the
prime commercial lending (or equivalent) rates announced publicly by the other
such banks. The Base Rate shall in no event, however, exceed the Highest Lawful
Rate.
"Base Rate Loan" means a Loan which does not bear interest at the
Eurodollar Rate.
"Base Rate Margin" means, on each day:
(a) zero percent (0%) per annum when the Debt to EBITDA Ratio on such
day is less than or equal to 3.50 to 1,
(b) one-half percent (0.5%) per annum when the Debt to EBITDA Ratio on
such day is greater than 3.50 to 1, but less than or equal to 4.50 to 1, and
(c) three-quarters percent (0.75%) per annum when the Debt to EBITDA
Ratio on such day is greater than 4.50 to 1.
"Borrower" means Continental Natural Gas, Inc., an Oklahoma
corporation.
"Borrowing" means a borrowing of new Loans of a single Type pursuant
to Section 2.2 or a continuation or conversion of existing Loans into a single
Type (and, in the case of Eurodollar Loans, with the same Interest Period)
pursuant to Section 2.3.
"Borrowing Base" means, at the particular time in question, either the
amount provided for in Section 2.8 or the amount determined by Agent in
accordance with the provisions of Section 2.9; provided, however, that in no
event shall the Borrowing Base ever exceed the Revolving Credit Maximum Loan
Amount.
"Borrowing Base Deficiency" has the meaning given it in Section 2.7(a).
3
9
"Borrowing Base Report" means a report in the form attached hereto as
Exhibit E, appropriately completed, together with the following attachments:
(a) a summary aged schedule of all Eligible Receivables as of the date
specified in such report, listing face amounts and dates of invoices of each
such Eligible Receivable and the name of each account debtor obligated on such
Eligible Receivable (and, upon request of Agent, copies of invoices, credit
reports, and any other matters and information relating to the Eligible
Receivables), and (b) a schedule of all unbilled trade accounts for Natural Gas
sold which will constitute Eligible Receivables upon invoicing the account
debtor therefor.
"Borrowing Notice" means a written or telephonic request, or a written
confirmation, made by Borrower which meets the requirements of Section 2.2.
"Business Day" means a day, other than a Saturday or Sunday, on which
commercial banks are open for business with the public in New York, New York.
Any Business Day in any way relating to Eurodollar Loans (such as the day on
which an Interest Period begins or ends) must also be a day on which, in the
judgment of Agent, significant transactions in dollars are carried out in the
interbank eurocurrency market.
"Cash Equivalents" means investments in:
(a) marketable obligations, maturing within 12 months after
acquisition thereof, issued or unconditionally guaranteed by the United States
of America or an instrumentality or agency thereof and entitled to the full
faith and credit of the United States of America.
(b) demand deposits, and time deposits (including certificates of
deposit) maturing within 12 months from the date of deposit thereof, with any
office of any Lender or with a domestic office of any national or state bank or
trust company which is organized under the Laws of the United States of America
or any state therein, which has capital, surplus and undivided profits of at
least $500,000,000, and whose certificates of deposit have a rating of at least
AA or Aa3 given by either Rating Agency.
(c) open market commercial paper, maturing within 270 days after
acquisition thereof, which has a rating of A1 or P1 given by either Rating
Agency.
(d) investments in money market or other mutual funds substantially
all of whose assets comprise securities of the types described in clauses (a)
through (c) above.
"Change of Control" means the occurrence of either of the following
events: (i) any Person or two or more Persons acting as a group shall acquire
beneficial ownership (within the meaning of Rule 13d-3 of the Securities and
Exchange Commission under the Securities Act of 1934, as amended, and including
holding proxies to vote for the election of directors other than proxies held
by Borrower's management or their designees to be voted in favor of Persons
nominated by Borrower's Board of Directors) of 49% or more of the outstanding
voting securities of Borrower, measured by voting power (including both common
stock and any preferred stock or other equity securities entitling the holders
thereof to vote with the holders
4
10
of common stock in elections for directors of Borrower) or (ii) a majority of
the directors of Borrower shall consist of Persons not nominated by Borrower's
Board of Directors (not including as Board nominees any directors which the
Board is obligated to nominate pursuant to shareholders agreements, voting
trust arrangements or similar arrangements).
"Closing Date" means November 25, 1997, or any other date on or before
November 30, 1997 upon which Borrower, Agent and Lenders may agree.
"Collateral" means all property of any kind which is subject to a Lien
in favor of Lenders (or in favor of Agent for the benefit of Lenders) or which,
under the terms of any Security Document, is purported to be subject to such a
Lien.
"Consolidated" refers to the consolidation of any Person, in
accordance with GAAP, with its properly consolidated subsidiaries. References
herein to a Person's Consolidated financial statements, financial position,
financial condition, liabilities, etc. refer to the consolidated financial
statements, financial position, financial condition, liabilities, etc. of such
Person and its properly consolidated subsidiaries.
"Consolidated Gross Operating Cash Flow" has the meaning given it in
Section 2.7(b).
"Consolidated Net Income" means, as to any Person or Consolidated
group of Persons for any period, the gross revenues of such Person or Persons
for such period, plus any cash dividends or distributions actually received by
such Person or Persons from any other Persons not part of such Consolidated
group, minus all expenses and other proper charges (including taxes on income,
to the extent imposed upon such Person or Persons), determined on a
Consolidated basis after eliminating earnings or losses attributable to
outstanding minority interests, but excluding the undistributed net earnings of
any other Persons not part of such Consolidated group in which such Person or
Persons has an ownership interest.
"Consolidated Net Worth" means, as to any Person or Consolidated group
of Persons, the Consolidated owners' equity of such Person or group of Persons,
not including treasury stock, subscribed but unissued stock, or minority
interests.
"Continuation/Conversion Notice" means a written or telephonic
request, or a written confirmation, made by Borrower which meets the
requirements of Section 2.3.
"Debt Service" means, on a Consolidated basis, the sum of (i) all
rentals (other than rentals on capitalized leases) payable during such period
by Borrower and its Subsidiaries and (ii) all interest charges on all
Indebtedness (including the interest component of rentals on capitalized
leases) of Borrower and its Subsidiaries.
"Debt to Capital Ratio" means the ratio of (i) the aggregate amount of
Borrower's Consolidated Indebtedness (excluding Liabilities with respect to
Letters of Credit issued hereunder) to (ii) the sum of (a) Borrower's
Consolidated Net Worth plus (b) Borrower's Consolidated Indebtedness as of the
end of the preceding Fiscal Quarter.
5
11
"Debt to EBITDA Ratio" means at the end of any Fiscal Quarter, the
ratio of (i) the aggregate amount of Borrower's Consolidated Indebtedness
(excluding Liabilities with respect to Letters of Credit issued hereunder) at
such time to (ii) EBITDA for the four-Fiscal Quarter period ending with such
Fiscal Quarter, to be determined on the date on which Agent and Lenders receive
the financial statements of Borrower for each Fiscal Quarter as set forth in
Section 6.2(b), based on the financial information contained therein as of the
end of such Fiscal Quarter, and effective from such date until the next date on
which the next such financial statements are received.
"Default" means any Event of Default and any default, event or
condition which would, with the giving of any requisite notices and the passage
of any requisite periods of time, constitute an Event of Default.
"Default Rate" means, at the time in question, two percent (2.0%) per
annum plus the Base Rate then in effect; provided that, with respect to any
Eurodollar Loan with an Interest Period extending beyond the date such
Eurodollar Loan becomes due and payable, "Default Rate" shall mean two percent
(2.0%) per annum plus the related Eurodollar Rate. The Default Rate shall never
exceed the Highest Lawful Rate.
"Disclosure Report" means either a notice given by Borrower under
Section 6.4 or a certificate given by Borrower's chief financial officer under
Section 6.2(b).
"Disclosure Schedule" means Schedule 1 hereto.
"Domestic Lending Office" means, with respect to any Lender, the
office of such Lender specified as its "Domestic Lending Office" below its name
on the Lender Schedule attached hereto, or such other office as such Lender may
from time to time specify to Borrower and Agent.
"EBITDA" means, for any period, the Consolidated Net Income of
Borrower for such period plus (i) income taxes, depreciation and amortization
and other non-cash charges that were deducted in determining the Consolidated
Net Income of Borrower (less all non-cash items of income that were included in
determining the Consolidated Net Income of Borrower), and (ii) Debt Service
during such period.
"Eligible Receivables" means at any time an amount equal to the
aggregate net invoice or ledger amount owing on all trade accounts receivable
of Restricted Persons, arising pursuant to the sale, gathering, processing or
transportation of Natural Gas, in which Agent has a perfected, first priority
security interest (subject only to Permitted Liens securing taxes not yet due
and payable) after deducting (a) the amount of all such accounts unpaid for
more than ninety (90) days after the date of original invoice (and, if more
than 50% of the aggregate amount of all accounts of any account debtor is more
than ninety (90) days past due, all accounts of such account debtor), (b) the
amount of all discounts, allowances, rebates, credits and adjustments to such
accounts, (c) all contra accounts, setoffs, defenses or counterclaims asserted
by or available to the Persons obligated on such accounts, (d) the amount
billed for or
6
12
representing retainage, if any, until all prerequisites to the immediate
payment of retainage have been satisfied, (e) all such accounts owed by account
debtors which are insolvent or otherwise not reasonably satisfactory to Agent,
and (f) all such accounts owing by Affiliates of Restricted Persons or by
officers or employees of Restricted Persons or any such Affiliate.
"Eligible Transferee" means a Person which either (a) is a Lender, or
(b) is consented to as an Eligible Transferee by Agent and, so long as no Event
of Default is continuing, by Borrower, which consents in each case will not be
unreasonably withheld (provided that no Person organized outside the United
States may be an Eligible Transferee if Borrower would be required to pay
withholding taxes on interest or principal owed to such Person).
"Engineering Report" means the Initial Engineering Report and each
engineering report delivered pursuant to Section 6.2(c).
"Environmental Laws" means any and all Laws relating to the
environment or to emissions, discharges, releases or threatened releases of
pollutants, contaminants, chemicals, or industrial, toxic or hazardous
substances or wastes into the environment including ambient air, surface water,
ground water, or land, or otherwise relating to the manufacture, processing,
distribution use, treatment, storage, disposal, transport, or handling of
pollutants, contaminants, chemicals, or industrial, toxic or hazardous
substances or wastes.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, together with all rules and regulations promulgated
with respect thereto.
"ERISA Affiliate" means Borrower and all members of a controlled group
of corporations and all trades or businesses (whether or not incorporated)
under common control that, together with Borrower, are treated as a single
employer under Section 414 of the Internal Revenue Code of 1986, as amended.
"ERISA Plan" means any employee pension benefit plan subject to Title
IV of ERISA maintained by any ERISA Affiliate with respect to which any
Restricted Person has a fixed or contingent liability.
"Eurodollar Lending Office" means, with respect to any Lender, the
office of such Lender specified as its "Eurodollar Lending Office" below its
name on the Lender Schedule attached hereto (or, if no such office is
specified, its Domestic Lending Office), or such other office of such Lender as
such Lender may from time to time specify to Borrower and Agent.
"Eurodollar Loan" means a Loan which is properly designated as a
Eurodollar Loan pursuant to Section 2.2 or 2.3.
"Eurodollar Margin" means, on each day:
(a) one and three-eighths percent (1.375%) per annum when the Debt to
EBITDA Ratio on such day is less than or equal to 2.50 to 1,
7
13
(b) one and three-quarters percent (1.75%) per annum when the Debt to
EBITDA Ratio on such day is greater than 2.50 to 1, but less than or equal to
3.50 to 1,
(c) two and one-quarter percent (2.25%) per annum when the Debt to
EBITDA Ratio on such day is greater than 3.50 to 1, but less than or equal to
4.50 to 1, and
(d) two and one-half percent (2.5%) per annum when the Debt to EBITDA
Ratio on such day is greater than 4.50 to 1.
"Eurodollar Rate" means, with respect to each particular Eurodollar
Loan and the associated LIBOR Rate and Reserve Percentage, the rate per annum
calculated by Agent (rounded upwards, if necessary, to the next higher 0.01%)
determined on a daily basis pursuant to the following formula:
Eurodollar Rate =
LIBOR Rate + Eurodollar Margin
----------------------
100.0% - Reserve Percentage
The Eurodollar Rate for any Eurodollar Loan shall change whenever the
Eurodollar Margin or the Reserve Percentage changes. No Eurodollar Rate shall
ever exceed the Highest Lawful Rate.
"Event of Default" has the meaning given it in Section 8.1.
"Federal Funds Rate" shall mean, for any day, the rate per annum
(rounded upwards, if necessary, to the nearest 1/100th of one percent) equal to
the weighted average of the rates on overnight Federal funds transactions with
members of the Federal Reserve System arranged by Federal funds brokers on such
day, as published by the Federal Reserve Bank of New York on the Business Day
next succeeding such day, provided that (i) if the day for which such rate is
to be determined is not a Business Day, the Federal Funds Rate for such day
shall be such rate on such transactions on the next preceding Business Day as
so published on the next succeeding Business Day, and (ii) if such rate is not
so published for any day, the Federal Funds Rate for such day shall be the
average rate quoted to Agent on such day on such transactions as determined by
Agent.
"Fiscal Quarter" means a three-month period ending on March 31, June
30, September 30 or December 31 of any year.
"Fiscal Year" means a twelve-month period ending on December 31 of any
year.
"GAAP" means those generally accepted accounting principles and
practices which are recognized as such by the Financial Accounting Standards
Board (or any generally recognized successor) and which, in the case of Borrower
and its Consolidated subsidiaries, are applied for all periods after the date
hereof in a manner consistent with the manner in which such
8
14
principles and practices were applied to the audited Initial Financial
Statements. If any change in any accounting principle or practice is required
by the Financial Accounting Standards Board (or any such successor) in order
for such principle or practice to continue as a generally accepted accounting
principle or practice, all reports and financial statements required hereunder
with respect to Borrower or with respect to Borrower and its Consolidated
subsidiaries may be prepared in accordance with such change, but all
calculations and determinations to be made hereunder may be made in accordance
with such change only after notice of such change is given to each Lender and
Majority Lenders agree to such change insofar as it affects the accounting of
Borrower or of Borrower and its Consolidated subsidiaries.
"Guarantor" means any Person who has guaranteed some or all of the
Obligations pursuant to a guaranty listed on the Security Schedule or any other
Person who has guaranteed some or all of the Obligations and who has been
accepted by Agent as a Guarantor or any Subsidiary of Borrower which now or
hereafter executes and delivers a guaranty to Agent pursuant to Section 6.18.
"Hazardous Materials" means any substances regulated under any
Environmental Law, whether as pollutants, contaminants, or chemicals, or as
industrial, toxic or hazardous substances or wastes, or otherwise.
"Hedging Contract" means (a) any agreement providing for options,
swaps, floors, caps, collars, forward sales or forward purchases involving
interest rates, commodities or commodity prices, equities, currencies, bonds,
or indexes based on any of the foregoing, (b) any option, futures or forward
contract traded on an exchange, and (c) any other derivative agreement or other
similar agreement or arrangement.
"Highest Lawful Rate" means, with respect to each Lender, the maximum
nonusurious rate of interest that such Lender is permitted under applicable Law
to contract for, take, charge, or receive with respect to its Loan. All
determinations herein of the Highest Lawful Rate, or of any interest rate
determined by reference to the Highest Lawful Rate, shall be made separately
for each Lender as appropriate to assure that the Loan Documents are not
construed to obligate any Person to pay interest to any Lender at a rate in
excess of the Highest Lawful Rate applicable to such Lender.
"Indebtedness" of any Person means, without duplication, Liabilities in
any of the following categories:
(a) Liabilities for borrowed money,
(b) Liabilities constituting an obligation to pay the deferred
purchase price of property or services,
(c) Liabilities evidenced by a bond, debenture, note or similar
instrument,
9
15
(d) Liabilities which (i) would under GAAP be shown on such Person's
balance sheet as a liability, and (ii) are payable more than one year from the
date of creation thereof (other than reserves for taxes and reserves for
contingent obligations),
(e) Liabilities arising under Hedging Contracts,
(f) Liabilities constituting principal under leases capitalized in
accordance with GAAP,
(g) Liabilities arising under conditional sales or other title
retention agreements,
(h) Liabilities owing under direct or indirect guaranties of
Liabilities of any other Person or constituting obligations to purchase or
acquire or to otherwise protect or insure a creditor against loss in respect of
Liabilities of any other Person (such as obligations under working capital
maintenance agreements, agreements to keep-well, or agreements to purchase
Liabilities, assets, goods, securities or services), but excluding endorsements
in the ordinary course of business of negotiable instruments in the course of
collection,
(i) Liabilities (for example, repurchase agreements) consisting of an
obligation to purchase securities or other property, if such Liabilities arises
out of or in connection with the sale of the same or similar securities or
property,
(j) Liabilities with respect to letters of credit or applications or
reimbursement agreements therefor,
(k) Liabilities with respect to payments received in consideration of
oil, gas, or other minerals yet to be acquired or produced at the time of
payment (including obligations under "take-or-pay" contracts to deliver gas in
return for payments already received and the undischarged balance of any
production payment created by such Person or for the creation of which such
Person directly or indirectly received payment), or
(l) Liabilities with respect to other obligations to deliver goods or
services in consideration of advance payments therefor;
provided, however, that the "Indebtedness" of any Person shall not include
Liabilities that were incurred by such Person on ordinary trade terms to
vendors, suppliers, or other Persons providing goods and services for use by
such Person in the ordinary course of its business, unless and until such
Liabilities are outstanding more than 90 days after the incurrence thereof.
"ING Capital" means ING (U.S.) Capital Corporation, a Delaware
corporation, as a Lender hereunder, and its successors in such capacity.
"Initial Engineering Report" means the engineering report concerning
gas reserves of Restricted Persons dated April 30, 1997, prepared by Lee
Keeling & Associates as of January 1, 1997, together with corresponding
information relating the information contained in such reports to each gas
processing plant or pipeline system of Restricted Persons.
10
16
"Initial Financial Statements" means (i) the audited annual
Consolidated financial statements of Borrower dated as of December 31, 1996 and
(ii) the unaudited quarterly Consolidated financial statements of Borrower
dated as of September 30, 1997.
"Insurance Schedule" means Schedule 3 attached hereto.
"Interest Period" means, with respect to each particular Eurodollar
Loan in a Borrowing a period of 1, 2, 3 or 6 months (provided, that prior to
the Syndication Date, Interest Periods with respect to Eurodollar Loans shall
be 1 month), as specified in the Borrowing Notice applicable thereto beginning
on and including the date specified in such Borrowing Notice (which must be a
Business Day), and ending on but not including the same day of the month as the
day on which it began (e.g., a period beginning on the third day of one month
shall end on but not include the third day of another month), provided that
each Interest Period which would otherwise end on a day which is not a Business
Day shall end on the next succeeding Business Day (unless such next succeeding
Business Day is the first Business Day of a calendar month, in which case such
Interest Period shall end on the immediately preceding Business Day), and that
each such period beginning on the last Business Day of a calendar month (or on
a day for which there is no numerically corresponding day in the calendar month
at the end of such period) shall end on the last Business Day of a calendar
month. No Interest Period may be elected which would extend past the date on
which the associated Note is due and payable in full.
"Law" means any statute, law, regulation, ordinance, rule, treaty,
judgment, order, decree, permit, concession, franchise, license, agreement or
other governmental restriction of the United States or any state or political
subdivision thereof or of any foreign country or any department, province or
other political subdivision thereof.
"LC Application" means any application for a Letter of Credit
hereunder made by Borrower to LC Issuer.
"LC Collateral" has the meaning given it in Section 2.15(a).
"LC Issuer" means ING Capital in its capacity as the issuer of Letters
of Credit hereunder, and its successors in such capacity. Agent may, with the
consent of Borrower and the Lender in question, appoint any Lender hereunder as
the LC Issuer in place of or in addition to ING Capital.
"LC Obligations" means, at the time in question, the sum of all
Matured LC Obligations plus the Maximum Drawing Amount.
"Lender" means a Revolving Credit Lender or a Term Lender, as
appropriate. "Lenders" means, collectively, all Lenders.
"Lending Office" means, with respect to any Lender, the office,
branch, or agency through which it funds its Eurodollar Loans; with respect to
LC Issuer, the office, branch, or
11
17
agency through which it issues Letters of Credit; and, with respect to Agent or
Collateral Agent, the office, branch, or agency through which it administers
this Agreement.
"Letter of Credit" means any letter of credit issued by LC Issuer
hereunder at the application of Borrower.
"Liabilities" means, as to any Person, all indebtedness, liabilities
and obligations of such Person, whether matured or unmatured, liquidated or
unliquidated, primary or secondary, direct or indirect, absolute, fixed or
contingent, and whether or not required to be considered pursuant to GAAP.
"LIBOR Rate" means, with respect to each particular Eurodollar Loan
and the related Interest Period, the rate per annum (rounded upwards, if
necessary, to the nearest 1/32 of 1%) reported, on the date two Business Days
prior to the first day of such Interest Period, on Telerate Access Service Page
3750 (British Bankers Association Settlement Rate) as the London Interbank
Offered Rate for dollar deposits having a term comparable to such Interest
Period and in an amount of $500,000 or more (or, if such Page shall cease to be
publicly available or if the information contained on such Page, in Agent's
sole reasonable judgment, shall cease to accurately reflect such London
Interbank Offered Rate, as reported by any publicly available source of similar
market data selected by Agent that, in Agent's sole reasonable judgment,
accurately reflects such London Interbank Offered Rate).
"Lien" means, with respect to any property or assets, any right or
interest therein of a creditor to secure Liabilities owed to him or any other
arrangement with such creditor which provides for the payment of such
Liabilities out of such property or assets or which allows him to have such
Liabilities satisfied out of such property or assets prior to the general
creditors of any owner thereof, including any lien, mortgage, security
interest, pledge, deposit, production payment, rights of a vendor under any
title retention or conditional sale agreement or lease substantially equivalent
thereto, tax lien, mechanic's or materialman's lien, or any other charge or
encumbrance for security purposes, whether arising by Law or agreement or
otherwise, but excluding any right of offset which arises without agreement in
the ordinary course of business. "Lien" also means any filed financing
statement, any registration of a pledge (such as with an issuer of
uncertificated securities), or any other arrangement or action which would
serve to perfect a Lien described in the preceding sentence, regardless of
whether such financing statement is filed, such registration is made, or such
arrangement or action is undertaken before or after such Lien exists.
"Loan" means a Revolving Credit Loan or a Term Loan, as appropriate.
"Loans" means, collectively, all Loans.
"Loan Documents" means this Agreement, the Notes, the Security
Documents, the Letters of Credit, the LC Applications, and all other
agreements, certificates, documents, instruments and writings at any time
delivered in connection herewith or therewith (exclusive of term sheets,
commitment letters, correspondence and similar documents used in the
12
18
negotiation hereof, except to the extent the same contain information about
Borrower or its Affiliates, properties, business or prospects).
"Majority Lenders" means Lenders whose aggregate Percentage Shares
equal or exceed sixty-six and two-thirds percent (662/3%).
"Material Adverse Change" means a material and adverse change, from
the state of affairs presented in the Initial Financial Statements, to (a)
Borrower's Consolidated financial condition, (b) the operations or properties
of Borrower and its Subsidiaries, considered as a whole, (c) Borrower's ability
to timely pay the Obligations, or (d) the enforceability of the material terms
of any Loan Documents.
"Matured LC Obligations" means all amounts paid by LC Issuer on drafts
or demands for payment drawn or made under or purported to be under any Letter
of Credit and all other amounts due and owing to LC Issuer under any LC
Application for any Letter of Credit, to the extent the same have not been
repaid to LC Issuer (with the proceeds of Loans or otherwise).
"Maximum Drawing Amount" means at the time in question the sum of the
maximum amounts which LC Issuer might then or thereafter be called upon to
advance under all Letters of Credit then outstanding.
"Natural Gas" means all gaseous hydrocarbons, including, but not
limited to, oil well gas, gas well gas, casinghead gas and all products refined
therefrom or produced in association therewith, including condensate,
distillate and other liquid hydrocarbons produced from gaseous hydrocarbons.
"Note" means a Revolving Credit Note or a Term Note, as appropriate.
"Notes" means, collectively, all Lenders' Notes.
"Obligations" means all Liabilities from time to time owing by any
Restricted Person to any Bank Party under or pursuant to any of the Loan
Documents, including all LC Obligations. "Obligation" means any part of the
Obligations.
"Original Agreement" has the meaning given it in Section 10.13.
"Percentage Share" means, with respect to any Lender (a) when no Loans
are outstanding hereunder, the "Total Percentage" set forth opposite such
Lender's name on the Lender Schedule attached hereto, and (b) when used
otherwise, the percentage obtained by dividing (i) the sum of the unpaid
principal balance of such Lender's Loans at the time in question (plus, with
respect to Revolving Credit Lenders, the Matured LC Obligations which such
Lender has funded pursuant to Section 2.14(c) plus the portion of the Maximum
Drawing Amount which such Lender might be obligated to fund under Section
2.14(c)), by (ii) the sum of the aggregate unpaid principal balance of all
Loans at such time plus the aggregate amount of LC Obligations outstanding at
such time.
13
19
"Permitted Lien" has the meaning given to such term in Section 7.2.
"Person" means an individual, corporation, partnership, limited
liability company, association, joint stock company, trust or trustee thereof,
estate or executor thereof, unincorporated organization or joint venture,
Tribunal, or any other legally recognizable entity.
"Plant" means each gas processing plant and related gas gathering
systems, if any, and any interests therein, owned by any Restricted Person, as
may be described in detail in the Security Documents.
"Rating Agency" means either Standard & Poor's Ratings Group (a
division of McGraw Hill, Inc.) or Moody's Investors Service, Inc., or their
respective successors.
"Regulation D" means Regulation D of the Board of Governors of the
Federal Reserve System as from time to time in effect.
"Required Hedges" means forward, future, swap or hedging contracts
entered into by Borrower pursuant to Section 7.3(b) in the aggregate covering
at all times not less than fifty percent (50%) of the then-outstanding Term
Loans for a period of not less than two and a half years.
"Restricted Person" means any of Borrower, each Subsidiary of Borrower
and each Guarantor, excluding any Unrestricted Subsidiaries but including
Taurus LP.
"Reserve Percentage" means, on any day with respect to each particular
Eurodollar Loan, the maximum reserve requirement, as determined by Agent
(including without limitation any basic, supplemental, marginal, emergency or
similar reserves), expressed as a percentage and rounded to the next higher
0.01%, which would then apply under Regulation D with respect to "Eurocurrency
liabilities", as such term is defined in Regulation D, of $500,000 or more. If
such reserve requirement shall change after the date hereof, the Reserve
Percentage shall be automatically increased or decreased, as the case may be,
from time to time as of the effective time of each such change in such reserve
requirement.
"Revolving Credit Commitment Period" means the period from and
including the date hereof until and including the Revolving Credit Commitment
Termination Date (or, if earlier, the day on which the Revolving Credit Notes
first become due and payable in full).
"Revolving Credit Commitment Termination Date" means December 31,
1999; provided, Borrower may, by written request to Agent and each Revolving
Credit Lender at any time not less than 120 days prior to the Revolving Credit
Commitment Termination Date (whether the initial Revolving Credit Commitment
Termination Date or such date as previously extended by Revolving Credit
Lenders in their sole discretion pursuant to this proviso), request Revolving
Credit Lenders to extend the Revolving Credit Commitment Termination Date upon
the same terms and conditions as set forth herein, and Revolving Credit Lenders
may, in their
14
20
individual sole discretion and upon their unanimous agreement, extend the
Revolving Credit Commitment Termination Date for successive periods of up to
one year.
"Revolving Credit Facility Usage" means, at the time in question, the
aggregate amount of outstanding Revolving Credit Loans and existing LC
Obligations at such time.
"Revolving Credit Lender" means each Lender signatory hereto as a
"Revolving Credit Lender" (including ING Capital in its capacity hereunder as a
Revolving Credit Lender rather than as Agent, a Term Lender, or LC Issuer), and
the successors of each, as permitted pursuant to Section 10.5, as a holder of a
Revolving Credit Note.
"Revolving Credit Loan" has the meaning given it in Section 2.1(a).
"Revolving Credit Loans" means, collectively, all Revolving Credit Lenders'
Revolving Credit Loans.
"Revolving Credit Maximum Loan Amount" means the amount of $25,000,000.
"Revolving Credit Note" has the meaning given it in Section 2.1(a).
"Revolving Credit Notes" means, collectively, all Revolving Credit Lenders'
Revolving Credit Notes.
"Revolving Credit Percentage Share" means, with respect to any
Revolving Credit Lender, the "Revolving Credit Percentage" set forth opposite
such Revolving Credit Lender's name on the Lender Schedule attached hereto.
"Security Documents" means the instruments listed in the Security
Schedule and all other security agreements, deeds of trust, mortgages, chattel
mortgages, pledges, guaranties, financing statements, continuation statements,
extension agreements and other agreements or instruments now, heretofore, or
hereafter delivered by any Restricted Person to Agent in connection with this
Agreement or any transaction contemplated hereby to secure or guarantee the
payment of any part of the Obligations or the performance of any Restricted
Person's other duties and obligations under the Loan Documents.
"Security Schedule" means Schedule 2 hereto.
"Stand-Alone Gathering Systems" means those various gas transportation
systems, gas gathering systems, gas pipelines, and other related properties
located in Oklahoma and Texas owned by Continental Gathering, L.L.C., and
described in detail in the Security Documents.
"Subsidiary" means, with respect to any Person, any corporation,
association, partnership, limited liability company, joint venture, or other
business or corporate entity, enterprise or organization which is directly or
indirectly (through one or more intermediaries) controlled by or owned fifty
percent or more by such Person.
"Syndication Date" means the date on which ING Capital has
successfully syndicated the Loans as provided in that certain letter agreement
of even date herewith between ING Capital and Borrower.
15
21
"Termination Event" means (a) the occurrence with respect to any ERISA
Plan of (i) a reportable event described in Sections 4043(b)(5) or (6) of ERISA
or (ii) any other reportable event described in Section 4043(b) of ERISA other
than a reportable event not subject to the provision for 30-day notice to the
Pension Benefit Guaranty Corporation pursuant to a waiver by such corporation
under Section 4043(a) of ERISA, or (b) the withdrawal of any ERISA Affiliate
from an ERISA Plan during a plan year in which it was a "substantial employer"
as defined in Section 4001(a)(2) of ERISA, or (c) the filing of a notice of
intent to terminate any ERISA Plan or the treatment of any ERISA Plan amendment
as a termination under Section 4041 of ERISA, or (d) the institution of
proceedings to terminate any ERISA Plan by the Pension Benefit Guaranty
Corporation under Section 4042 of ERISA, or (e) any other event or condition
which might constitute grounds under Section 4042 of ERISA for the termination
of, or the appointment of a trustee to administer, any ERISA Plan.
"Term Loan Percentage Share" means, with respect to any Term Lender,
the "Term Loan Percentage" set forth opposite such Term Lender's name on the
Lender Schedule attached hereto.
"Term Loan" has the meaning given it in Section 2.1(b). "Term Loans"
means, collectively, all Term Lenders' Term Loans.
"Term Lender" means each Lender signatory hereto as a "Term Lender"
(including ING Capital in its capacity hereunder as a Term Lender rather than
as Agent, a Revolving Credit Lender or LC Issuer), and the successors of each,
as permitted pursuant to Section 10.5, as a holder of a Term Note.
"Term Note" has the meaning given it in Section 2.1(b). "Term Notes"
means, collectively, all Term Lenders' Term Notes.
"Transaction Documents" means the Loan Documents, the Acquisition
Documents and all other agreements, certificates, documents, instruments and
writings at any time delivered in connection herewith or therewith.
"Tribunal" means any government, any arbitration panel, any court or
any governmental department, commission, board, bureau, agency or
instrumentality of the United States of America or any state, province,
commonwealth, nation, territory, possession, county, parish, town, township,
village or municipality, whether now or hereafter constituted and/or existing.
"Type" means, with respect to any Loans, the characterization of such
Loans as either Base Rate Loans or Eurodollar Loans.
"Unrestricted Subsidiary" means Continental Energy Services, L.L.C.,
an Oklahoma limited liability company and a wholly-owned Subsidiary of
Borrower.
16
22
Section 1.2. Exhibits and Schedules; Additional Definitions. All
Exhibits and Schedules attached to this Agreement are a part hereof for all
purposes. Reference is hereby made to the Security Schedule for the meaning of
certain terms defined therein and used but not defined herein, which
definitions are incorporated herein by reference.
Section 1.3. Amendment of Defined Instruments. Unless the context
otherwise requires or unless otherwise provided herein the terms defined in
this Agreement which refer to a particular agreement, instrument or document
also refer to and include all renewals, extensions, modifications, amendments
and restatements of such agreement, instrument or document, provided that
nothing contained in this section shall be construed to authorize any such
renewal, extension, modification, amendment or restatement.
Section 1.4. References and Titles. All references in this Agreement
to Exhibits, Schedules, articles, sections, subsections and other subdivisions
refer to the Exhibits, Schedules, articles, sections, subsections and other
subdivisions of this Agreement unless expressly provided otherwise. Titles
appearing at the beginning of any subdivisions are for convenience only and do
not constitute any part of such subdivisions and shall be disregarded in
construing the language contained in such subdivisions. The words "this
Agreement", "this instrument", "herein", "hereof", "hereby", "hereunder" and
words of similar import refer to this Agreement as a whole and not to any
particular subdivision unless expressly so limited. The phrases "this section"
and "this subsection" and similar phrases refer only to the sections or
subsections hereof in which such phrases occur. The word "or" is not exclusive,
and the word "including" (in its various forms) means "including without
limitation". Pronouns in masculine, feminine and neuter genders shall be
construed to include any other gender, and words in the singular form shall be
construed to include the plural and vice versa, unless the context otherwise
requires.
Section 1.5. Calculations and Determinations. All calculations under
the Loan Documents of interest chargeable with respect to Eurodollar Loans and
of fees shall be made on the basis of actual days elapsed (including the first
day but excluding the last) and a year of 360 days. All other calculations of
interest made under the Loan Documents shall be made on the basis of actual
days elapsed (including the first day but excluding the last) and a year of 365
or 366 days, as appropriate. Each determination by a Bank Party of amounts to
be paid under Sections 3.2 through 3.6 or any other matters which are to be
determined hereunder by a Bank Party (such as any Eurodollar Rate, LIBOR Rate,
Business Day, Interest Period, or Reserve Percentage) shall, in the absence of
demonstrable error, be conclusive and binding. Unless otherwise expressly
provided herein or unless Majority Lenders otherwise consent all financial
statements and reports furnished to any Bank Party hereunder shall be prepared
and all financial computations and determinations pursuant hereto shall be made
in accordance with GAAP.
17
23
ARTICLE II - The Loans and Letters of Credit
Section 2.1. Revolving Credit Loans and Term Loans.
(a) Revolving Credit Commitments to Lend. Subject to the terms and
conditions hereof, each Revolving Credit Lender agrees to make revolving credit
loans to Borrower (herein called such Revolving Credit Lender's "Revolving
Credit Loans") upon Borrower's request from time to time during the Revolving
Credit Commitment Period, provided that (i) subject to Sections 3.3, 3.4 and
3.6, all Revolving Credit Lenders are requested to make Revolving Credit Loans
of the same Type in accordance with their respective Revolving Credit
Percentage Shares and as part of the same Borrowing, and (ii) after giving
effect to such Revolving Credit Loans, the Revolving Credit Facility Usage does
not exceed the Borrowing Base determined as of the date on which the requested
Revolving Credit Loans are to be made. The aggregate amount of all Revolving
Credit Loans in any Borrowing must be greater than or equal to $500,000 or must
equal the remaining availability under the Borrowing Base. Borrower may have no
more than eight Borrowings of Eurodollar Loans that are Revolving Credit Loans
outstanding at any time. The obligation of Borrower to repay to each Revolving
Credit Lender the aggregate amount of all Revolving Credit Loans made by such
Revolving Credit Lender, together with interest accruing in connection
therewith, shall be evidenced by a single promissory note (herein called such
Revolving Credit Lender's "Revolving Credit Note") made by Borrower payable to
the order of such Revolving Credit Lender in the form of Exhibit A with
appropriate insertions. The amount of principal owing on any Revolving Credit
Lender's Revolving Credit Note at any given time shall be the aggregate amount
of all Revolving Credit Loans theretofore made by such Revolving Credit Lender
minus all payments of principal theretofore received by such Revolving Credit
Lender on such Revolving Credit Note. Interest on each Revolving Credit Note
shall accrue and be due and payable as provided herein and therein, with
Eurodollar Loans bearing interest at the Eurodollar Rate and Base Rate Loans
bearing interest at the Base Rate (subject to the applicability of the Default
Rate and limited by the provisions of Section 10.8). Subject to the terms and
conditions hereof, Borrower may borrow, repay, and reborrow Revolving Credit
Loans.
(b) Term Loans. Subject to the terms and conditions hereof, each Term
Lender agrees to make an advance to Borrower on the Closing Date in an amount
which does not exceed such Term Lender's Term Loan Percentage Share of
$75,000,000 (or, if less, such Term Lender's Term Loan Percentage Share of the
aggregate amount then requested of all such Term Lenders) (such advance
collectively herein called such Term Lender's "Term Loan"), provided that
subject to Sections 3.3, 3.4 and 3.6, all Term Lenders are requested to make
such Term Loans of the same Type in accordance with their respective Term Loan
Percentage Shares and as part of the same Borrowing. Following such advances,
Borrower may have no more than five Borrowings of Eurodollar Loans that are
Term Loans outstanding at any time. The obligation of Borrower to repay to each
Term Lender the amount of such Term Loan made by such Term Lender, together
with interest accruing in connection therewith, shall be evidenced by a single
promissory note (herein called such Term Lender's "Term Note") made by Borrower
payable to the order of such Term Lender in the form of Exhibit B with
appropriate insertions. Interest on each Term Note shall accrue and be due and
payable as provided herein
18
24
and therein, with Eurodollar Loans bearing interest at the Eurodollar Rate and
Base Rate Loans bearing interest at the Base Rate (subject to the applicability
of the Default Rate and limited by the provisions of Section 10.8). Borrower
may not borrow, repay, and reborrow Term Loans.
Section 2.2. Requests for Loans.
(a) Requests for New Revolving Credit Loans. Borrower must give to
Agent written notice (or telephonic notice promptly confirmed in writing) of
any requested Borrowing of new Revolving Credit Loans to be advanced by
Revolving Credit Lenders. Each such notice constitutes a "Borrowing Notice"
hereunder and must:
(i) specify (A) the aggregate amount of any such Borrowing of
new Base Rate Loans and the date on which such Base Rate Loans are to
be advanced, or (B) the aggregate amount of any such Borrowing of new
Eurodollar Loans, the date on which such Eurodollar Loans are to be
advanced (which shall be the first day of the Interest Period which is
to apply thereto), and the length of the applicable Interest Period;
and
(ii) be received by Agent not later than 10:00 a.m., New
York, New York time, on (A) the day on which any such Base Rate Loans
are to be made, or (B) the third Business Day preceding the day on
which any such Eurodollar Loans are to be made.
Each such written request or confirmation must be made in the form and
substance of the "Borrowing Notice" attached hereto as Exhibit C-1, duly
completed. Each such telephonic request shall be deemed a representation,
warranty, acknowledgment and agreement by Borrower as to the matters which are
required to be set out in such written confirmation. Upon receipt of any such
Borrowing Notice, Agent shall give each Revolving Credit Lender prompt notice
of the terms thereof. If all conditions precedent to such new Revolving Credit
Loans have been met, each Revolving Credit Lender will on the date requested
promptly remit to Agent's account in New York, New York the amount of such
Revolving Credit Lender's new Revolving Credit Loan in immediately available
funds, and upon receipt of such funds, unless to its actual knowledge any
conditions precedent to such Revolving Credit Loans have been neither met nor
waived as provided herein, Agent shall promptly make such Revolving Credit
Loans available to Borrower. Unless Agent shall have received prompt notice
from a Revolving Credit Lender that such Revolving Credit Lender will not make
available to Agent such Revolving Credit Lender's new Revolving Credit Loan,
Agent may in its discretion assume that such Revolving Credit Lender has made
such Revolving Credit Loan available to Agent in accordance with this section
and Agent may if it chooses, in reliance upon such assumption, make such
Revolving Credit Loan available to Borrower. If and to the extent such
Revolving Credit Lender shall not so make its new Revolving Credit Loan
available to Agent, such Revolving Credit Lender and Borrower severally agree
to pay or repay to Agent within three days after demand the amount of such
Revolving Credit Loan together with interest thereon, for each day from the
date such amount was made available to Borrower until the date such amount is
paid or repaid to Agent, with interest at (i) the Federal Funds Rate, if such
19
25
Revolving Credit Lender is making such payment and (ii) the interest rate
applicable at the time to the other new Revolving Credit Loans made on such
date, if Borrower is making such repayment. If neither such Revolving Credit
Lender nor Borrower pay or repay to Agent such amount within such three-day
period, Agent shall in addition to such amount be entitled to recover from such
Revolving Credit Lender and from Borrower, on demand, interest thereon at the
Default Rate, calculated from the date such amount was made available to
Borrower. The failure of any Revolving Credit Lender to make any new Revolving
Credit Loan to be made by it hereunder shall not relieve any other Revolving
Credit Lender of its obligation hereunder, if any, to make its new Revolving
Credit Loan, but no Revolving Credit Lender shall be responsible for the
failure of any other Revolving Credit Lender to make any new Revolving Credit
Loan to be made by such other Revolving Credit Lender.
(b) Requesting the Term Loans. Before the Term Loans are made,
Borrower must give Agent a written request therefor in the form and substance
of the "Request for Term Loans" attached hereto as Exhibit C-2, duly completed.
If all conditions precedent to such Term Loans have been met, each Term Lender
will on the date requested promptly remit to Agent's account in New York, New
York the amount of such Term Lender's Term Loan in immediately available funds,
and upon receipt of such funds, unless to its actual knowledge any conditions
precedent to such Term Loans have been neither met nor waived as provided
herein, Agent shall promptly make such Term Loans available to Borrower. The
Request for Term Loans shall be irrevocable and binding on Borrower. Unless
Agent shall have received prompt notice from a Term Lender that such Term
Lender will not make available to Agent such Term Lender's new Term Loan, Agent
may in its discretion assume that such Term Lender has made such Term Loan
available to Agent in accordance with this section and Agent may if it chooses,
in reliance upon such assumption, make such Term Loan available to Borrower. If
and to the extent such Term Lender shall not so make its new Term Loan
available to Agent, such Term Lender and Borrower severally agree to pay or
repay to Agent within three days after demand the amount of such Term Loan
together with interest thereon, for each day from the date such amount was made
available to Borrower until the date such amount is paid or repaid to Agent,
with interest at (i) the Federal Funds Rate, if such Term Lender is making such
payment and (ii) the interest rate applicable at the time to the other new Term
Loans made on such date, if Borrower is making such repayment. If neither such
Term Lender nor Borrower pay or repay to Agent such amount within such
three-day period, Agent shall in addition to such amount be entitled to recover
from such Term Lender and from Borrower, on demand, interest thereon at the
Default Rate, calculated from the date such amount was made available to
Borrower. The failure of any Term Lender to make any new Term Loan to be made
by it hereunder shall not relieve any other Term Lender of its obligation
hereunder, if any, to make its new Term Loan, but no Term Lender shall be
responsible for the failure of any other Term Lender to make any new Term Loan
to be made by such other Term Lender.
(c) Loans Refinancing Existing Indebtedness under Original Agreement.
The Term Loan to refinance loans under the Original Agreement shall be a
Eurodollar Loan with an Interest Period of 36 days.
20
26
Section 2.3. Continuations and Conversions of Existing Loans. Borrower
may make the following elections with respect to Loans from time to time
outstanding: to convert Base Rate Loans to Eurodollar Loans, to convert
Eurodollar Loans to Base Rate Loans on the last day of the Interest Period
applicable thereto, or to continue Eurodollar Loans beyond the expiration of
such Interest Period by designating a new Interest Period to take effect at the
time of such expiration. In making such elections, Borrower may combine
existing Loans made pursuant to separate Borrowings into one new Borrowing or
divide existing Loans made pursuant to one Borrowing into separate new
Borrowings. To make any such election, Borrower must give to Agent written
notice (or telephonic notice promptly confirmed in writing) of any such
conversion or continuation of existing Loans, with a separate notice given for
each new Borrowing. Each such notice constitutes a "Continuation/Conversion
Notice" hereunder and must:
(a) specify the existing Loans which are to be continued or
converted;
(b) specify (i) the aggregate amount of any Borrowing of Base
Rate Loans into which such existing Loans are to be continued or
converted and the date on which such continuation or conversion is to
occur, or (ii) the aggregate amount of any Borrowing of Eurodollar
Loans into which such existing Loans are to be continued or converted,
the date on which such continuation or conversion is to occur (which
shall be the first day of the Interest Period which is to apply to
such Eurodollar Loans), and the length of the applicable Interest
Period; and
(c) be received by Agent not later than 10:00 a.m., New York,
New York time, on (i) the day on which any such continuation or
conversion to Base Rate Loans is to occur, or (ii) the third Business
Day preceding the day on which any such continuation or conversion to
Eurodollar Loans is to occur.
Each such written request or confirmation must be made in the form and
substance of the "Continuation/Conversion Notice" attached hereto as Exhibit C,
duly completed. Each such telephonic request shall be deemed a representation,
warranty, acknowledgment and agreement by Borrower as to the matters which are
required to be set out in such written confirmation. Upon receipt of any such
Borrowing Notice, Agent shall give each Lender prompt notice of the terms
thereof. Each Borrowing Notice shall be irrevocable and binding on Borrower.
During the continuance of any Default, Borrower may not make any election to
convert existing Loans into Eurodollar Loans or continue existing Loans as
Eurodollar Loans. If (due to the existence of a Default or for any other
reason) Borrower fails to timely and properly give any notice of continuation
or conversion with respect to a Borrowing of existing Eurodollar Loans at least
three days prior to the end of the Interest Period applicable thereto, such
Eurodollar Loans shall automatically be converted into Base Rate Loans at the
end of such Interest Period. No new funds shall be repaid by Borrower or
advanced by any Lender in connection with any continuation or conversion of
existing Loans pursuant to this section, and no such continuation or conversion
shall be deemed to be a new advance of funds for any purpose; such
continuations and conversions merely constitute a change in the interest rate
applicable to already outstanding Loans.
21
27
Section 2.4. Use of Proceeds. Borrower shall use all Term Loans to
refinance the existing indebtedness under the Original Agreement and for
general other general business purposes, and $41,580,000 of the proceeds of the
Term Loans will be contributed by Borrower as capital to C/T Holdings, and then
contributed by C/T Holdings as capital to C/T Acquisition, and $420,000 of the
proceeds of the Term Loans will be contributed by Borrower as capital to CHC,
to finance the acquisition of the partnership interests in Taurus LP pursuant
to the Acquisition Documents. Borrower shall use all Revolving Credit Loans to
finance capital expenditures, to refinance Matured LC Obligations, and to
provide working capital for its operations and for other general business
purposes. Borrower shall use all Letters of Credit for its general business
purposes. In no event shall the funds from any Loan or any Letter of Credit be
used directly or indirectly by any Person for personal, family, household or
agricultural purposes or for the purpose, whether immediate, incidental or
ultimate, of purchasing, acquiring or carrying any "margin stock" or any
"margin securities" (as such terms are defined respectively in Regulation U and
Regulation G promulgated by the Board of Governors of the Federal Reserve
System) or to extend credit to others directly or indirectly for the purpose of
purchasing or carrying any such margin stock or margin securities. Borrower
represents and warrants that Borrower is not engaged principally, or as one of
Borrower's important activities, in the business of extending credit to others
for the purpose of purchasing or carrying such margin stock or margin
securities.
Section 2.5. Fees.
(a) Revolving Credit Commitment Fee. In consideration of each
Revolving Credit Lender's commitment to make Revolving Credit Loans, Borrower
will pay to Agent for the account of each Revolving Credit Lender a commitment
fee determined on a daily basis by applying a rate of three-eighths percent
(0.375%) per annum to such Revolving Credit Lender's Revolving Credit
Percentage Share of the unused portion of the Revolving Credit Maximum Loan
Amount on each day during the Revolving Credit Commitment Period, determined
for each such day by deducting from the amount of the Revolving Credit Maximum
Loan Amount at the end of such day the Revolving Credit Facility Usage. This
commitment fee shall be due and payable in arrears on the last day of each
March, June, September and December and at the end of the Revolving Credit
Commitment Period.
(b) Agent's Fees. In addition to all other amounts due to Agent under
the Loan Documents, Borrower will pay fees to Agent as described in a letter
agreement of even date herewith between Agent and Borrower.
Section 2.6. Optional Prepayments. Borrower may, upon five Business
Days' notice to Agent (who shall upon receipt of such notice promptly notify
each Lender), from time to time and without premium or penalty prepay the Notes
(and, so long as no Default has occurred and is continuing, Borrower may
designate such prepayment to be applied to the Revolving Credit Notes or the
Term Notes), in whole or in part, so long as the aggregate amounts of all
partial prepayments of principal on the Notes equals $100,000 or any higher
integral multiple of $100,000, so long as Borrower does not prepay any
Eurodollar Loan, and so long as Borrower does not make any prepayments which
would reduce the unpaid principal
22
28
balance of the Loans to less than $100,000 without first either (a) terminating
this Agreement or (b) providing assurance satisfactory to Agent in its
discretion that Lenders' legal rights under the Loan Documents are in no way
affected by such reduction. Each partial prepayment of the principal of the
Term Notes shall be applied to the regular installments of principal due
thereunder in the inverse order of their maturities. Each prepayment of
principal under this section shall be accompanied by all interest then accrued
and unpaid on the principal so prepaid. Any principal or interest prepaid
pursuant to this section shall be in addition to, and not in lieu of, all
payments otherwise required to be paid under the Loan Documents at the time of
such prepayment.
Section 2.7. Mandatory Prepayment of Revolving Credit Loans and Term
Loans; Payment of Term Loans.
(a) Mandatory Prepayment of Revolving Credit Loans. If at any time the
Revolving Credit Facility Usage is in excess of the Borrowing Base (such excess
being herein called a "Borrowing Base Deficiency"), Borrower shall, within
fifteen days after Agent gives notice of such fact to Borrower prepay the
principal of the Revolving Credit Loans in an aggregate amount at least equal
to such Borrowing Base Deficiency (or, if the Revolving Credit Loans have been
paid in full, deliver LC Collateral to LC Issuer as required under Section
2.15(a)). Each prepayment of principal under this subsection shall be
accompanied by all interest then accrued and unpaid on the principal so
prepaid. Any principal or interest prepaid pursuant to this subsection shall be
in addition to, and not in lieu of, all payments otherwise required to be paid
under the Loan Documents at the time of such prepayment.
(b) Mandatory Prepayment of Term Loans. Following the one-year
anniversary hereof, Borrower shall prepay the principal of the Term Loans on
the forty-fifth day of each Fiscal Quarter, commencing February 15, 1999 in an
amount equal to thirty-five percent (35%) of Borrower's Consolidated Gross
Operating Cash Flow for the preceding Fiscal Quarter, to be applied to the
regular installments of principal due thereunder in the inverse order of their
maturities. As used herein, "Consolidated Gross Operating Cash Flow" means, for
any Fiscal Quarter, Borrower's Consolidated net cash provided by operating
activities (excluding changes in operating assets and liabilities) as reported
on Borrower's quarterly statement of cash flows for such Fiscal Quarter
delivered pursuant to Section 6.2(b), minus (i) capital expenditures pursuant
to and as set forth in the most recent budget delivered pursuant to Section
6.2(d), and (ii) scheduled Term Loan principal payments during such Fiscal
Quarter. In no event shall net cash provided or used by investing activities or
financing activities be included in the determination of Consolidated Gross
Operating Cash Flow.
(c) Repayment of Term Loans. Borrower shall repay the principal of the
Term Loans in installments on the last day of each March, June, September and
December, commencing March 31, 1998, with the final installment being due and
payable on or before December 31, 2002. Each such installment shall be the
lesser of (i) the remaining outstanding principal of the Term Loans on such
date or (ii) the following amounts:
23
29
March 31, 1998 $1,875,000
June 30, 1998 $1,875,000
September 30, 1998 $1,875,000
December 31, 1998 $1,875,000
March 31, 1999 $1,875,000
June 30, 1999 $1,875,000
September 30, 1999 $1,875,000
December 31, 1999 $1,875,000
March 31, 2000 $2,500,000
June 30, 2000 $2,500,000
September 30, 2000 $2,500,000
December 31, 2000 $2,500,000
March 31, 2001 $2,500,000
June 30, 2001 $2,500,000
September 30, 2001 $2,500,000
December 31, 2001 $2,500,000
March 31, 2002 $2,500,000
June 30, 2002 $2,500,000
September 30, 2002 $2,500,000
December 31,2002 $32,500,000
provided, that in the event the principal amount advanced on the Term Loans is
less than $75,000,000, then each amount set forth above shall be reduced by
multiplying such amount by the original principal amount of the Term Loans
divided by $75,000,000. In any event all unpaid principal and interest on the
Term Notes shall be due and payable in full on the final maturity of December
31, 2002.
Section 2.8. Initial Borrowing Base. During the period from the date
hereof to the first redetermination date the Borrowing Base shall be
$25,000,000.
Section 2.9. Subsequent Determinations of Borrowing Base. Promptly
after receiving any Borrowing Notice, Revolving Credit Lenders shall, based
upon the most recent Borrowing Base Report delivered to Agent and each
Revolving Credit Lender pursuant to Section 6.2(e) hereof or in connection with
such Borrowing Notice, and such other information, reports and data available
to Revolving Credit Lenders at the time in question, redetermine the Borrowing
Base to remain in effect until the next such redetermination. The amount so
redetermined shall be equal to eighty percent (80%) of Eligible Receivables. In
the event Agent and each Revolving Credit Lender have not received an
appropriately completed Borrowing Base Report (with all attachments) within the
time period specified therein, Revolving Credit Lenders shall have no
obligation to redetermine the Borrowing Base or to make any additional
Revolving Credit Loans until such time as Revolving Credit Lenders shall have
received such information.
Section 2.10. Letters of Credit. Subject to the terms and conditions
hereof, Borrower may during the Revolving Credit Commitment Period request LC
Issuer to issue one or more Letters of Credit, provided that, after taking such
Letter of Credit into account:
24
30
(a) the Revolving Credit Facility Usage does not exceed the
Borrowing Base at such time; and
(b) the aggregate amount of LC Obligations at such time does
not exceed $18,000,000; and
(c) the expiration date of such Letter of Credit is prior to
the end of the Revolving Credit Commitment Period; and
(d) such Letter of Credit is to be used for general business
purposes of Borrower;
(e) such Letter of Credit is not directly or indirectly used
to assure payment of or otherwise support any Indebtedness of any
Person other than Indebtedness of any Restricted Person;
(f) the issuance of such Letter of Credit will be in
compliance with all applicable governmental restrictions, policies,
and guidelines and will not subject LC Issuer to any cost which is
note reimbursable under Article III;
(g) the form and terms of such Letter of Credit are
acceptable to LC Issuer in its sole and absolute discretion; and
(h) all other conditions in this Agreement to the issuance of
such Letter of Credit have been satisfied.
LC Issuer will honor any such request if the foregoing conditions (a) through
(h) (in the following Section 2.11 called the "LC Conditions") have been met as
of the date of issuance of such Letter of Credit. LC Issuer may choose to honor
any such request for any other Letter of Credit but has no obligation to do so
and may refuse to issue any other requested Letter of Credit for any reason
which LC Issuer in its sole discretion deems relevant.
Section 2.11. Requesting Letters of Credit. Borrower must make written
application for any Letter of Credit at least one Business Day before the date
on which Borrower desires for LC Issuer to issue such Letter of Credit. By
making any such written application Borrower shall be deemed to have
represented and warranted that the LC Conditions described in Section 2.10 will
be met as of the date of issuance of such Letter of Credit. Each such written
application for a Letter of Credit must be made in writing in the form and
substance of Exhibit G, the terms and provisions of which are hereby
incorporated herein by reference (or in such other form as may mutually be
agreed upon by LC Issuer and Borrower). Two Business Days after the LC
Conditions for a Letter of Credit have been met as described in Section 2.10
(or if LC Issuer otherwise desires to issue such Letter of Credit), LC Issuer
will issue such Letter of Credit at LC Issuer's office in New York, New York.
If any provisions of any LC Application conflict with any provisions of this
Agreement, the provisions of this Agreement shall govern and control.
25
31
Section 2.12. Reimbursement and Participations.
(a) Reimbursement by Borrower. Each Matured LC Obligation shall
constitute a loan by LC Issuer to Borrower. Borrower promises to pay to LC
Issuer, or to LC Issuer's order, on demand, the full amount of each Matured LC
Obligation, unless funded under Section 2.12(b) hereof, together with interest
thereon at the Default Rate.
(b) Revolving Credit Loans Upon Letter of Credit Drawings. If the
beneficiary of any Letter of Credit makes a draft or other demand for payment
thereunder, then Borrower shall be deemed to have requested Revolving Credit
Lenders to make Revolving Credit Loans to Borrower on the date such draft or
demand is to be paid in the amount of such draft or demand. If all conditions
precedent to such Revolving Credit Loans shall be satisfied as of the date on
which such Revolving Credit Loans are to be made, Revolving Credit Lenders
shall make such Revolving Credit Loans pursuant to Section 2.1(a) concurrently
with LC Issuer's payment of such draft or demand, and such Revolving Credit
Loans shall be immediately used by LC Issuer to repay the amount of the
resulting Matured LC Obligation. For the purposes of the first sentence of
Section 2.1 the amount of such Revolving Credit Loans shall be considered but
the amount of the Matured LC Obligation to be concurrently paid by such
Revolving Credit Loans shall not be considered.
(c) Participation by Revolving Credit Lenders. LC Issuer irrevocably
agrees to grant and hereby grants to each Revolving Credit Lender, and -- to
induce LC Issuer to issue Letters of Credit hereunder -- each Revolving Credit
Lender irrevocably agrees to accept and purchase and hereby accepts and
purchases from LC Issuer, on the terms and conditions hereinafter stated and
for such Revolving Credit Lender's own account and risk an undivided interest
equal to such Revolving Credit Lender's Revolving Credit Lender's Revolving
Credit Percentage Share of LC Issuer's obligations and rights under each Letter
of Credit issued hereunder and the amount of each Matured LC Obligation paid by
LC Issuer thereunder. Each Revolving Credit Lender unconditionally and
irrevocably agrees with LC Issuer that, if a Matured LC Obligation is paid
under any Letter of Credit for which LC Issuer is not reimbursed in full by
Borrower in accordance with the terms of this Agreement and the related LC
Application (including any reimbursement by means of concurrent Revolving
Credit Loans or by the application of LC Collateral), such Revolving Credit
Lender shall (in all circumstances and without set-off or counterclaim) pay to
LC Issuer on demand, in immediately available funds at LC Issuer's address for
notices hereunder, such Revolving Credit Lender's Revolving Credit Percentage
Share of such Matured LC Obligation (or any portion thereof which has not been
reimbursed by Borrower). Each Revolving Credit Lender's obligation to pay LC
Issuer pursuant to the terms of this subsection is irrevocable and
unconditional. If any amount required to be paid by any Revolving Credit Lender
to LC Issuer pursuant to this subsection is paid by such Revolving Credit
Lender to LC Issuer within three Business Days after the date such payment
26
32
is due, LC Issuer shall in addition to such amount be entitled to recover from
such Revolving Credit Lender, on demand, interest thereon calculated from such
due date at the Federal Funds Rate. If any amount required to be paid by any
Revolving Credit Lender to LC Issuer pursuant to this subsection is not paid by
such Revolving Credit Lender to LC Issuer within three Business Days after the
date such payment is due, LC Issuer shall in addition to such amount be
entitled to recover from such Revolving Credit Lender, on demand, interest
thereon calculated from such due date at the Default Rate.
(d) Distributions to Participants. Whenever LC Issuer has in
accordance with this section received from any Revolving Credit Lender payment
of such Revolving Credit Lender's Revolving Credit Percentage Share of any
Matured LC Obligation, if LC Issuer thereafter receives any payment of such
Matured LC Obligation or any payment of interest thereon (whether directly from
Borrower or by application of LC Collateral or otherwise, and excluding only
interest for any period prior to LC Issuer's demand that such Revolving Credit
Lender make such payment of its Revolving Credit Percentage Share), LC Issuer
will distribute to such Revolving Credit Lender its Revolving Credit Percentage
Share of the amounts so received by LC Issuer; provided, however, that if any
such payment received by LC Issuer must thereafter be returned by LC Issuer,
such Revolving Credit Lender shall return to LC Issuer the portion thereof
which LC Issuer has previously distributed to it.
(e) Calculations. A written advice setting forth in reasonable detail
the amounts owing under this section, submitted by LC Issuer to Borrower or any
Revolving Credit Lender from time to time, shall be conclusive, absent
demonstrable error, as to the amounts thereof.
Section 2.13. Letter of Credit Fees. In consideration of LC Issuer's
issuance of any Letter of Credit, Borrower agrees to pay to Agent, for the
account of all Revolving Credit Lenders in accordance with their respective
Revolving Credit Percentage Shares, a letter of credit issuance fee at a rate
equal to the lesser of (a) one and one-half percent (1.5%) per annum and (b)
the Eurodollar Rate Margin per annum; provided that such fee shall not be less
than $500. Each such fee will be calculated based on the term and face amount
of such Letter of Credit and the above applicable rate and will be payable
quarterly in arrears. In addition, Borrower will pay to LC Issuer a minimum
administrative issuance fee of $100 for each Letter of Credit and an
administrative drawing fee of $300 upon any drawing under a Letter of Credit.
Section 2.14. No Duty to Inquire.
(a) Drafts and Demands. LC Issuer is authorized and instructed to
accept and pay drafts and demands for payment under any Letter of Credit
without requiring, and without responsibility for, any determination as to the
existence of any event giving rise to said draft, either at the time of
acceptance of payment or thereafter. LC Issuer is under no duty to determine
the proper identity of anyone presenting such a draft or making such a demand
(whether by tested telex or otherwise) as the officer, representative or agent
of any beneficiary under any Letter of Credit, and payment by LC Issuer to any
such beneficiary when requested by any such purported officer, representative
or agent is hereby authorized and approved. Borrower agrees to hold LC Issuer
and each other Bank Party harmless and indemnified against any liability or
claim in connection with or arising out of the subject matter of this section,
WHICH INDEMNITY SHALL APPLY WHETHER OR NOT ANY SUCH LIABILITY OR CLAIM IS IN
ANY WAY OR TO ANY EXTENT CAUSED, IN WHOLE OR IN PART, BY ANY NEGLIGENT ACT OR
OMISSION OF ANY KIND BY ANY
27
33
BANK PARTY, provided only that no Bank Party shall be entitled to
indemnification for that portion, if any, of any liability or claim which is
proximately caused by its own individual gross negligence or willful
misconduct.
(b) Extension of Maturity. If the maturity of any Letter of Credit is
extended by its terms or by Law or governmental action, if any extension of the
maturity or time for presentation of drafts or any other modification of the
terms of any Letter of Credit is made at the request of any Restricted Person,
or if the amount of any Letter of Credit is increased at the request of any
Restricted Person, this Agreement shall be binding upon all Restricted Persons
with respect to such Letter of Credit as so extended, increased or otherwise
modified, with respect to drafts and property covered thereby, and with respect
to any action taken by LC Issuer, LC Issuer's correspondents, or any Bank Party
in accordance with such extension, increase or other modification.
(c) Transferees of Letters of Credit. If any Letter of Credit provides
that it is transferable, LC Issuer shall have no duty to determine the proper
identity of anyone appearing as transferee of such Letter of Credit, nor shall
LC Issuer be charged with responsibility of any nature or character for the
validity or correctness of any transfer or successive transfers, and payment by
LC Issuer to any purported transferee or transferees as determined by LC Issuer
is hereby authorized and approved, and Borrower further agrees to hold LC
Issuer and each other Bank Party harmless and indemnified against any liability
or claim in connection with or arising out of the foregoing, WHICH INDEMNITY
SHALL APPLY WHETHER OR NOT ANY SUCH LIABILITY OR CLAIM IS IN ANY WAY OR TO ANY
EXTENT CAUSED, IN WHOLE OR IN PART, BY ANY NEGLIGENT ACT OR OMISSION OF ANY
KIND BY ANY BANK PARTY, provided only that no Bank Party shall be entitled to
indemnification for that portion, if any, of any liability or claim which is
proximately caused by its own individual gross negligence or willful
misconduct.
Section 2.15. LC Collateral.
(a) LC Obligations in Excess of Borrowing Base. If, after the making
of all mandatory prepayments required under Section 2.7(a), the outstanding LC
Obligations will exceed the Borrowing Base, then in addition to prepayment of
the entire principal balance of the Revolving Credit Loans Borrower will
immediately pay to LC Issuer an amount equal to such excess. LC Issuer will
hold such amount as security for the remaining LC Obligations (all such amounts
held as security for LC Obligations being herein collectively called "LC
Collateral") until such LC Obligations become Matured LC Obligations, at which
time such LC Collateral may be applied to such Matured LC Obligations. So long
as no Default has occurred and is continuing, if such LC Obligations shall
expire or otherwise terminate without a drawing or other demand for payment, or
if the Borrowing Base shall increase such that the Borrowing Base exceeds the
Revolving Credit Facility Usage, LC Collateral in an amount equal to such
expired or terminated and undrawn LC Obligation shall be returned to Borrower.
Neither this subsection nor the following subsection shall, however, limit or
impair any rights which LC Issuer may have under any other document or
agreement relating to any Letter of
28
34
Credit or LC Obligation, including any LC Application, or any rights which any
Bank Party may have to otherwise apply any payments by Borrower and any LC
Collateral under Section 3.1.
(b) Acceleration of LC Obligations. If the Obligations or any part
thereof become immediately due and payable pursuant to Section 8.1 then, all LC
Obligations shall become immediately due and payable without regard to whether
or not actual drawings or payments on the Letters of Credit have occurred, and
Borrower shall be obligated to pay to LC Issuer immediately an amount equal to
the aggregate LC Obligations which are then outstanding. All amounts so paid
shall first be applied to Matured LC Obligations and then held by LC Issuer as
LC Collateral until such LC Obligations become Matured LC Obligations, at which
time such LC Collateral shall be applied to such Matured LC Obligations.
(c) Investment of LC Collateral. Pending application thereof, all LC
Collateral shall be invested by LC Issuer in such investments as LC Issuer may
choose in its sole discretion. All interest on such investments shall be
reinvested or applied to Matured LC Obligations. When all Obligations have been
satisfied in full, including all LC Obligations, all Letters of Credit have
expired or been terminated, and all of Borrower's reimbursement obligations in
connection therewith have been satisfied in full, LC Issuer shall release any
remaining LC Collateral. Borrower hereby assigns and grants to LC Issuer a
continuing security interest in all LC Collateral paid by it to LC Issuer, all
investments purchased with such LC Collateral, and all proceeds thereof to
secure its Matured LC Obligations and its Obligations under this Agreement, the
Note, and the other Loan Documents, and Borrower agrees that such LC Collateral
and investments shall be subject to all of the terms and conditions of the
Security Documents. Borrower further agrees that LC Issuer shall have all of
the rights and remedies of a secured party under the Uniform Commercial Code as
adopted in the State of New York with respect to such security interest and
that an Event of Default under this Agreement shall constitute a default for
purposes of such security interest.
(d) Payment of LC Collateral. When Borrower is required to provide LC
Collateral for any reason and fails to do so on the day when required, LC
Issuer may without notice to Borrower or any other Restricted Person provide
such LC Collateral (whether by application of proceeds of other Collateral, by
transfers from other accounts maintained with LC Issuer, or otherwise) using
any available funds of Borrower or any other Person also liable to make such
payments. Any such amounts which are required to be provided as LC Collateral
and which are not provided on the date required shall, for purposes of each
Security Document, be considered past due Obligations owing hereunder, and LC
Issuer is hereby authorized to exercise its respective rights under each
Security Document to obtain such amounts.
Section 2.16. Hedging Agreement Indemnity. From time to time ING
Capital may provide an indemnity or other credit support on behalf of
Restricted Persons to AIG Trading Corporation, whereby ING Capital agrees to
pay the obligations of such Restricted Person arising from time to time under a
Hedging Agreement (a "Hedging Agreement Indemnity"). In consideration thereof,
Borrower hereby promises and agrees to pay to ING Capital each amount which ING
Capital is called upon to pay on behalf of or for the benefit of such
29
35
Restricted Person under a Hedging Agreement Indemnity. Borrower shall pay each
such amount, immediately upon demand, in legal tender of the United States in
same day funds. Such promise and agreement of Borrower is irrevocable and
unconditional. ING Capital is authorized and instructed to pay all demands for
payment under any such Hedging Agreement Indemnity after exercising reasonable
care to determine whether such demand or the amount thereof is correct.
Borrower hereby promises to pay to ING Capital, on demand, interest at the
Default Rate on any amount payable by Borrower under this section from the date
such amounts become due until they are paid. Borrower may enter into a separate
Reimbursement Agreement governing such promise and agreement of Borrower to pay
to ING Capital each amount which ING Capital is called upon to pay on behalf of
or for the benefit of such Restricted Person under a Hedging Agreement
Indemnity. Notwithstanding the existence of any such separate Reimbursement
Agreement, the obligation of Borrower described in this section shall be an
"Obligation" arising under this Agreement and shall be secured by and entitled
to the benefit of all Security Documents, whether or not the Security Documents
specifically describe such separate Reimbursement Agreement or the obligations
of Borrower under this section. Each payment under a Hedging Agreement
Indemnity (whether in response to a demand for payment or otherwise) shall
constitute a loan by ING Capital and shall be secured by and entitled to all
benefits under the Security Documents.
ARTICLE III - Payments to Lenders
Section 3.1. General Procedures. Borrower will make each payment which
it owes under the Loan Documents to Agent for the account of the Bank Party to
whom such payment is owed. Each such payment must be received by Agent not
later than 11:00 a.m., New York, New York time, on the date such payment
becomes due and payable, in lawful money of the United States of America,
without set-off, deduction or counterclaim, and in immediately available funds.
Any payment received by Agent after such time will be deemed to have been made
on the next following Business Day. Should any such payment become due and
payable on a day other than a Business Day, the maturity of such payment shall
be extended to the next succeeding Business Day, and, in the case of a payment
of principal or past due interest, interest shall accrue and be payable thereon
for the period of such extension as provided in the Loan Document under which
such payment is due. Each payment under a Loan Document shall be due and
payable at the place provided therein and, if no specific place of payment is
provided, shall be due and payable at the place of payment of Agent's Note.
When Agent collects or receives money on account of the Obligations, Agent
shall distribute all money so collected or received, and each Bank Party shall
apply all such money so distributed, as follows:
(a) first, for the payment of all Obligations of any kind
which are then due (and if such money is insufficient to pay all such
Obligations, first to any reimbursements due Agent under Section 6.9
or 10.4 and then to the partial payment of all other Obligations then
due in proportion to the amounts thereof, or as Bank Parties shall
otherwise agree);
30
36
(b) then for the prepayment of amounts owing under the Loan
Documents (other than principal on the Notes) if so specified by
Borrower;
(c) then for the prepayment of principal on the Notes (either
the Term Notes, the Revolver Notes, or all, as specified by Borrower),
together with accrued and unpaid interest on the principal so prepaid;
and
(d) last, for the payment or prepayment of any other
Obligations.
All payments applied to principal or interest on any Note shall be applied
first to any interest then due and payable, then to principal then due and
payable, and last to any prepayment of principal and interest in compliance
with Sections 2.6 and 2.7. All distributions of amounts described in any of
subsections (b), (c) or (d) above shall be made by Agent pro rata to each Bank
Party then owed Obligations described in such subsection in proportion to all
amounts owed to all Bank Parties which are described in such subsection;
provided that if any Lender then owes payments to LC Issuer for the purchase of
a participation under Section 2.12(c) hereof, any amounts otherwise
distributable under this section to such Lender shall be deemed to belong to LC
Issuer, to the extent of such unpaid payments, and Agent shall apply such
amounts to make such unpaid payments rather than distribute such amounts to
such Lender.
Section 3.2. Capital Reimbursement. If either (a) the introduction or
implementation of or the compliance with or any change in or in the
interpretation of any Law, or (b) the introduction or implementation of or the
compliance with any request, directive or guideline from any central bank or
other governmental authority (whether or not having the force of Law) affects
or would affect the amount of capital required or expected to be maintained by
any Bank Party or any corporation controlling any Bank Party, then, upon demand
by such Bank Party, Borrower will pay to Agent for the benefit of such Bank
Party, from time to time as specified by such Bank Party, such additional
amount or amounts which such Bank Party shall determine to be appropriate to
compensate such Bank Party or any corporation controlling such Bank Party in
light of such circumstances, to the extent that such Bank Party reasonably
determines that the amount of any such capital would be increased or the rate
of return on any such capital would be reduced by or in whole or in part based
on the existence of the face amount of such Bank Party's Loans, Letters of
Credit, participations in Letters of Credit or commitments under this
Agreement.
Section 3.3. Increased Cost of Eurodollar Loans or Letters of Credit.
If after the date hereof any applicable Law (whether now in effect or
hereinafter enacted or promulgated, including Regulation D) or any
interpretation or administration thereof by any governmental authority charged
with the interpretation or administration thereof (whether or not having the
force of Law):
(a) shall change the basis of taxation of payments to any
Bank Party of any principal, interest, or other amounts attributable
to any Eurodollar Loan or Letter of Credit or otherwise due under this
Agreement in respect of any Eurodollar Loan or Letter of Credit (other
than taxes imposed on the overall net income of such Bank Party
31
37
or any lending office of such Bank Party by any jurisdiction in which
such Bank Party or any such lending office is located); or
(b) shall change, impose, modify, apply or deem applicable
any reserve, special deposit or similar requirements in respect of any
Eurodollar Loan or any Letter of Credit (excluding those for which
such Bank Party is fully compensated pursuant to adjustments made in
the definition of Eurodollar Rate) or against assets of, deposits with
or for the account of, or credit extended by, such Bank Party; or
(c) shall impose on any Bank Party or the interbank
eurocurrency deposit market any other condition affecting any
Eurodollar Loan or Letter of Credit, the result of which is to
increase the cost to any Bank Party of funding or maintaining any
Eurodollar Loan or of issuing any Letter of Credit or to reduce the
amount of any sum receivable by any Bank Party in respect of any
Eurodollar Loan or Letter of Credit by an amount deemed by such Bank
Party to be material,
then such Bank Party shall promptly notify Agent and Borrower in writing of the
happening of such event and of the amount required to compensate such Bank
Party for such event (on an after-tax basis, taking into account any taxes on
such compensation), whereupon (i) Borrower shall pay such amount to Agent for
the account of such Bank Party and (ii) Borrower may elect, by giving to Agent
and such Bank Party not less than three Business Days' notice, to convert all
(but not less than all) of any such Eurodollar Loans into Base Rate Loans.
Notwithstanding anything herein to the contrary, Borrower shall not be required
to reimburse any such Bank Party for any such increased costs incurred more
than 90 days prior to such Bank Party's notice thereof.
Section 3.4. Availability. If (a) any change in applicable Laws, or in
the interpretation or administration thereof of or in any jurisdiction
whatsoever, domestic or foreign, shall make it unlawful or impracticable for
any Bank Party to fund or maintain Eurodollar Loans or to issue or participate
in Letters of Credit, or shall materially restrict the authority of any Bank
Party to purchase or take offshore deposits of dollars (i.e., "eurodollars"),
or (b) any Bank Party determines that matching deposits appropriate to fund or
maintain any Eurodollar Loan are not available to it, or (c) any Bank Party
determines that the formula for calculating the Eurodollar Rate does not fairly
reflect the cost to such Bank Party of making or maintaining loans based on
such rate, then, upon notice by such Bank Party to Borrower and Agent,
Borrower's right to elect Eurodollar Loans from such Bank Party (or, if
applicable, to obtain Letters of Credit) shall be suspended to the extent and
for the duration of such illegality, impracticability or restriction and all
Eurodollar Loans of such Bank Party which are then outstanding or are then the
subject of any Borrowing Notice and which cannot lawfully or practicably be
maintained or funded shall immediately become or remain, or shall be funded as,
Base Rate Loans of such Bank Party. Borrower agrees to indemnify each Bank
Party and hold it harmless against all costs, expenses, claims, penalties,
liabilities and damages which may result from any such change in Law,
interpretation or administration. Such indemnification shall be on an after-tax
basis, taking into account any taxes imposed on the amounts paid as indemnity.
32
38
Section 3.5. Funding Losses. In addition to its other obligations
hereunder, Borrower will indemnify each Bank Party against, and reimburse each
Bank Party on demand for, any loss or expense incurred or sustained by such
Bank Party (including any loss or expense incurred by reason of the liquidation
or reemployment of deposits or other funds acquired by a Bank Party to fund or
maintain Eurodollar Loans), as a result of (a) any payment or prepayment
(whether authorized or required hereunder or otherwise) of all or a portion of
a Eurodollar Loan on a day other than the day on which the applicable Interest
Period ends, (b) any payment or prepayment, whether required hereunder or
otherwise, of a Loan made after the delivery, but before the effective date, of
a Continuation/Conversion Notice, if such payment or prepayment prevents such
Continuation/Conversion Notice from becoming fully effective, (c) the failure
of any Loan to be made or of any Continuation/Conversion Notice to become
effective due to any condition precedent not being satisfied or due to any
other action or inaction of any Restricted Person, or (d) any conversion
(whether authorized or required hereunder or otherwise) of all or any portion
of any Eurodollar Loan into a Base Rate Loan or into a different Eurodollar
Loan on a day other than the day on which the applicable Interest Period ends.
Such indemnification shall be on an after-tax basis, taking into account any
taxes imposed on the amounts paid as indemnity.
Section 3.6. Reimbursable Taxes. Borrower covenants and agrees that:
(a) Borrower will indemnify each Bank Party against and
reimburse each Bank Party for all present and future income, stamp and
other taxes, levies, costs and charges whatsoever imposed, assessed,
levied or collected on or in respect of this Agreement or any
Eurodollar Loans or Letters of Credit (whether or not legally or
correctly imposed, assessed, levied or collected), excluding, however,
any taxes imposed on or measured by the overall net income of Agent or
such Bank Party or any lending office of such Bank Party by any
jurisdiction in which such Bank Party or any such lending office is
located (all such non-excluded taxes, levies, costs and charges being
collectively called "Reimbursable Taxes" in this section). Such
indemnification shall be on an after-tax basis, taking into account
any taxes imposed on the amounts paid as indemnity.
(b) All payments on account of the principal of, and interest
on, each Bank Party's Loans and Note, and all other amounts payable by
Borrower to any Bank Party hereunder, shall be made in full without
set-off or counterclaim and shall be made free and clear of and
without deductions or withholdings of any nature by reason of any
Reimbursable Taxes, all of which will be for the account of Borrower.
In the event of Borrower being compelled by Law to make any such
deduction or withholding from any payment to any Bank Party, Borrower
shall pay on the due date of such payment, by way of additional
interest, such additional amounts as are needed to cause the amount
receivable by such Bank Party after such deduction or withholding to
equal the amount which would have been receivable in the absence of
such deduction or withholding. If Borrower should make any deduction
or withholding as aforesaid, Borrower shall within 60 days thereafter
forward to such Bank Party an official receipt or other official
document evidencing payment of such deduction or withholding.
33
39
(c) If Borrower is ever required to pay any Reimbursable Tax
with respect to any Eurodollar Loan, Borrower may elect, by giving to
Agent and such Bank Party not less than three Business Days' notice,
to convert all (but not less than all) of any such Eurodollar Loan
into a Base Rate Loan, but such election shall not diminish Borrower's
obligation to pay all Reimbursable Taxes.
(d) Notwithstanding the foregoing provisions of this section,
Borrower shall be entitled, to the extent it is required to do so by
Law, to deduct or withhold (and not to make any indemnification or
reimbursement for) income or other similar taxes imposed by the United
States of America (other than any portion thereof attributable to a
change in federal income tax Laws effected after the date hereof) from
interest, fees or other amounts payable hereunder for the account of
any Bank Party, other than a Bank Party (i) who is a U.S. person for
Federal income tax purposes or (ii) who has the Prescribed Forms on
file with Agent (with copies provided to Borrower) for the applicable
year to the extent deduction or withholding of such taxes is not
required as a result of the filing of such Prescribed Forms, provided
that if Borrower shall so deduct or withhold any such taxes, it shall
provide a statement to Agent and such Bank Party, setting forth the
amount of such taxes so deducted or withheld, the applicable rate and
any other information or documentation which such Bank Party may
reasonably request for assisting such Bank Party to obtain any
allowable credits or deductions for the taxes so deducted or withheld
in the jurisdiction or jurisdictions in which such Bank Party is
subject to tax. As used in this section, "Prescribed Forms" means such
duly executed forms or statements, and in such number of copies, which
may, from time to time, be prescribed by Law and which, pursuant to
applicable provisions of (x) an income tax treaty between the United
States and the country of residence of the Bank Party providing the
forms or statements, (y) the Internal Revenue Code of 1986, as amended
from time to time, or (z) any applicable rules or regulations
thereunder, permit Borrower to make payments hereunder for the account
of such Bank Party free of such deduction or withholding of income or
similar taxes.
Section 3.7. Change of Applicable Lending Office. Each Bank Party
agrees that, upon the occurrence of any event giving rise to the operation of
Sections 3.2 through 3.6 with respect to such Bank Party, it will, if requested
by Borrower, use reasonable efforts (subject to overall policy considerations
of such Bank Party) to designate another Lending Office, provided that such
designation is made on such terms that such Bank Party and its Lending Office
suffer no economic, legal or regulatory disadvantage, with the object of
avoiding the consequence of the event giving rise to the operation of any such
section. Nothing in this section shall affect or postpone any of the
obligations of Borrower or the rights of any Bank Party provided in Sections
3.2 through 3.6.
Section 3.8. Replacement of Lenders. If any Bank Party seeks
reimbursement for increased costs under Sections 3.2 through 3.6, then within
ninety days thereafter -- provided no Event of Default then exists -- Borrower
shall have the right (unless such Bank Party withdraws its request for
additional compensation) to replace such Bank Party by requiring such Bank
Party to assign its Loans and Notes and its commitments hereunder to an
Eligible
34
40
Transferee reasonably acceptable to Agent and to Borrower, provided
that: (i) all Obligations of Borrower owing to such Bank Party being replaced
(including such increased costs, but excluding principal and accrued interest
on the Notes being assigned) shall be paid in full to such Bank Party
concurrently with such assignment, and (ii) the replacement Eligible Transferee
shall purchase the Note being assigned by paying to such Bank Party a price
equal to the principal amount thereof plus accrued and unpaid interest thereon.
In connection with any such assignment Borrower, Agent, such Bank Party and the
replacement Eligible Transferee shall otherwise comply with Section 10.5.
Notwithstanding the foregoing rights of Borrower under this section, however,
Borrower may not replace any Bank Party which seeks reimbursement for increased
costs under Section 3.2 through 3.6 unless Borrower is at the same time
replacing all Bank Parties which are then seeking such compensation.
ARTICLE IV - Conditions Precedent to Lending
Section 4.1. Documents to be Delivered. No Lender has any obligation
to make its first Loan, and LC Issuer has no obligation to issue the first
Letter of Credit unless Agent shall have received all of the following, at
Agent's office in New York, New York, duly executed and delivered and in form,
substance and date satisfactory to Agent:
(a) This Agreement and any other documents that Lenders are
to execute in connection herewith.
(b) Each Note.
(c) Each Security Document listed in the Security Schedule
(other than those specified "to be delivered post-merger").
(d) Certain certificates of Borrower including:
(i) An "Omnibus Certificate" of the Vice President -
Controller and the Secretary or Assistant Secretary of
Borrower, which shall contain the names and signatures of the
officers of Borrower authorized to execute Loan Documents and
which shall certify to the truth, correctness and
completeness of the following exhibits attached thereto: (1)
a copy of resolutions duly adopted by the Board of Directors
of Borrower and in full force and effect at the time this
Agreement is entered into, authorizing the execution of this
Agreement and the other Loan Documents delivered or to be
delivered in connection herewith and the consummation of the
transactions contemplated herein and therein, (2) a copy of
the charter documents of Borrower and all amendments thereto,
certified by the appropriate official of Borrower's state of
organization, and (3) a copy of any bylaws of Borrower; and
(ii) A "Compliance Certificate" of the Vice
President - Operations and the Vice President - Controller of
Borrower, of even date with such Loan or
35
41
such Letter of Credit, in which such officers certify to the
satisfaction of the conditions set out in subsections (a),
(b), (c) and (d) of Section 4.3.
(iii) A "Solvency Certificate" of the Vice President
- Controller of Borrower, of even date with such Loan or
Letter of Credit, in which such officer certifies Borrower's
solvency.
(e) A certificate (or certificates) of the due formation,
valid existence and good standing of Borrower in its state of
organization, issued by the appropriate authorities of such
jurisdiction, and certificates of Borrower's good standing and due
qualification to do business, issued by appropriate officials in any
states in which Borrower owns property subject to Security Documents.
(f) Documents similar to those specified in subsections
(d)(i) and (iii) and (e) of this section with respect to each
Guarantor and the execution by it of its guaranty of Borrower's
Obligations.
(g) A favorable opinion of Gerald R. Shrader, general counsel
for Restricted Persons, substantially in the form set forth in Exhibit
I.
(h) The Initial Engineering Report and the Initial Financial
Statements.
(i) Certificates or binders evidencing Borrower's and its
Subsidiaries' insurance in effect on the date hereof.
(j) A favorable Phase One environmental report of Pilko &
Associates, Inc. regarding their environmental assessment of the
material properties of Restricted Persons and any other properties
constituting Collateral, in scope and results acceptable to Agent.
(k) Binding commitments for title insurance policies covering
each Plant.
(l) Copies of all rights-of-way and permits regarding the
Stand-Alone Gathering Systems.
(m) A favorable report of Agent's professional insurance
consultants regarding their assessment of the insurance maintained by
Borrower and its Subsidiaries, in scope and results acceptable to
Agent.
(n) A copy of each Acquisition Document, duly executed and
delivered by each party thereto.
(o) Payment of (i) all commitment, facility, agency and other
fees required to be paid to any Bank Party pursuant to any Loan
Documents or any commitment agreement heretofore entered into,
including without limitation attorney's fees of
36
42
Thompson & Knight, P.C., counsel for Agent, (ii) any fees under
Section 2.5 of the Original Agreement which have accrued through the
date of the Assignment and Acceptance Agreements described in
subsection (p) below, and (iii) any fees which would be owing to the
lenders under the Original Agreement (other than ING Capital) pursuant
to Sections 3.2 through 3.6 thereof if the loans of such lenders
thereunder were being voluntarily prepaid rather than assigned to ING
Capital.
(p) Assignment and Assumption Agreements between ING Capital
and each lender under the Original Agreement, pursuant to which such
lenders are assigning to ING Capital all of their rights, titles and
interests under the Original Agreement, and (ii) the original
promissory notes issued to such lenders pursuant thereto, endorsed
payable to the order of ING Capital.
Section 4.2. Closing of Acquisition; Post-Closing Merger of Taurus LP
and C/T Acquisition. Contemporaneously with the Term Loans hereunder, Borrower
shall have consummated the transactions contemplated under the Acquisition
Documents, in form and substance satisfactory to Agent. Immediately following
the consummation of the transactions contemplated under the Acquisition
Documents, Taurus LP shall be merged with C/T Acquisition, with Taurus LP as
the surviving entity, and the Security Documents listed on the Security
Schedule "to be delivered post-merger" shall be duly executed and delivered by
Taurus LP to Agent, in form, substance and date satisfactory to Agent, at
Agent's office in New York, New York.
Section 4.3. Additional Conditions Precedent. No Lender has any
obligation to make any Loan (including its first), and LC Issuer has no
obligation to issue any Letter of Credit (including its first), unless the
following conditions precedent have been satisfied:
(a) All representations and warranties made by any Restricted
Person in any Loan Document shall be true on and as of the date of
such Loan or the date of issuance of such Letter of Credit (except to
the extent that the facts upon which such representations are based
have been changed by the extension of credit hereunder) as if such
representations and warranties had been made as of the date of such
Loan or the date of issuance of such Letter of Credit.
(b) No Default shall exist at the date of such Loan or the
date of issuance of such Letter of Credit; provided, that no Revolving
Credit Lender has any obligation to make any Revolving Credit Loan if
a Default shall have occurred and shall have been waived by Majority
Lenders unless Revolving Credit Lenders whose aggregate Revolving
Credit Percentage Shares equal or exceed sixty-six and two-thirds
percent (662/3%) shall have waived such Default.
(c) No Material Adverse Change shall have occurred to, and no
event or circumstance shall have occurred that could cause a Material
Adverse Change to, Borrower's Consolidated financial condition or
businesses since the date of this Agreement.
37
43
(d) Each Restricted Person shall have performed and complied
with all agreements and conditions required in the Loan Documents to
be performed or complied with by it on or prior to the date of such
Loan or the date of issuance of such Letter of Credit.
(e) The making of such Loan or the issuance of such Letter of
Credit shall not be prohibited by any Law and shall not subject any
Lender or any LC Issuer to any penalty or other onerous condition
under or pursuant to any such Law.
(f) Agent shall have received all documents and instruments
which Agent has then reasonably requested, in addition to those
described in Section 4.1 (including opinions of legal counsel for
Restricted Persons and Agent; corporate documents and records;
documents evidencing governmental authorizations, consents, approvals,
licenses and exemptions; and certificates of public officials and of
officers and representatives of Borrower and other Persons), as to (i)
the accuracy and validity of or compliance with all representations,
warranties and covenants made by any Restricted Person in this
Agreement and the other Loan Documents, (ii) the satisfaction of all
conditions contained herein or therein, and (iii) all other matters
pertaining hereto and thereto. All such additional documents and
instruments shall be satisfactory to Agent in form, substance and
date.
(g) Borrower shall, prior to the making of the first Loan (or
using the proceeds thereof), have deposited $5,000 with Thompson &
Knight, P.C., counsel for Agent, to be held by such counsel and
applied toward payment of costs and expenses for recordation of the
Security Documents, as provided pursuant to Section 10.4(a). If such
deposit exceeds the amount of such costs and expenses, the excess
shall be returned to Borrower (or applied toward such counsel's legal
fees). If such deposit is less than such costs and expenses, the
deficit shall be paid by Borrower pursuant to Section 10.4(a).
ARTICLE V - Representations and Warranties
To confirm each Bank Party's understanding concerning Borrower's and
its Subsidiaries' businesses, properties and obligations and to induce each
Bank Party to enter into this Agreement and to extend credit hereunder,
Borrower represents and warrants to each Bank Party that:
Section 5.1. No Default. No Restricted Person is in default in the
performance of any of the covenants and agreements contained in any Loan
Document. No event has occurred and is continuing which constitutes a Default.
Section 5.2. Organization and Good Standing. Borrower and each of its
Subsidiaries is duly organized, validly existing and in good standing under the
Laws of its jurisdiction of organization, having all powers required to carry
on its business and enter into and carry out the transactions contemplated
hereby. Each Restricted Person is duly qualified, in good
38
44
standing, and authorized to do business in all other jurisdictions within the
United States wherein the character of the properties owned or held by it or
the nature of the business transacted by it makes such qualification necessary.
Each Restricted Person has taken all actions and procedures customarily taken
in order to enter, for the purpose of conducting business or owning property,
each jurisdiction outside the United States wherein the character of the
properties owned or held by it or the nature of the business transacted by it
makes such actions and procedures desirable.
Section 5.3. Authorization. Each Restricted Person has duly taken all
action necessary to authorize the execution and delivery by it of the Loan
Documents to which it is a party and to authorize the consummation of the
transactions contemplated thereby and the performance of its obligations
thereunder. Borrower is duly authorized to borrow funds hereunder.
Section 5.4. No Conflicts or Consents. The execution and delivery by
the various Restricted Persons of the Loan Documents to which each is a party,
the performance by each of its obligations under such Loan Documents, and the
consummation of the transactions contemplated by the various Loan Documents, do
not and will not (i) conflict with any provision of (1) any Law, (2) the
organizational documents of any Restricted Person, or (3) any agreement,
judgment, license, order or permit applicable to or binding upon any Restricted
Person, (ii) result in the acceleration of any Indebtedness owed by any
Restricted Person, or (iii) result in or require the creation of any Lien upon
any assets or properties of any Restricted Person except as expressly
contemplated in the Loan Documents. Except as expressly contemplated in the
Loan Documents no consent, approval, authorization or order of, and no notice
to or filing with, any Tribunal or third party is required in connection with
the execution, delivery or performance by any Restricted Person of any Loan
Document or to consummate any transactions contemplated by the Loan Documents.
Section 5.5. Enforceable Obligations. This Agreement is, and the other
Loan Documents when duly executed and delivered will be, legal, valid and
binding obligations of each Restricted Person which is a party hereto or
thereto, enforceable in accordance with their terms except as such enforcement
may be limited by bankruptcy, insolvency or similar Laws of general application
relating to the enforcement of creditors' rights.
Section 5.6. Initial Financial Statements. Borrower has heretofore
delivered to each Bank Party true, correct and complete copies of the Initial
Financial Statements. The Initial Financial Statements fairly present
Borrower's Consolidated financial position at the respective dates thereof and
the Consolidated results of Borrower's operations and Borrower's Consolidated
cash flows for the respective periods thereof. Since the date of the annual
Initial Financial Statements no Material Adverse Change has occurred, except as
reflected in the quarterly Initial Financial Statements or in the Disclosure
Schedule. All Initial Financial Statements were prepared in accordance with
GAAP.
Section 5.7. Other Obligations and Restrictions. Neither Borrower nor
any of its Subsidiaries has any outstanding Liabilities of any kind (including
contingent obligations, tax assessments, and unusual forward or long-term
commitments) which is, in the aggregate,
39
45
material to Borrower or material with respect to Borrower's Consolidated
financial condition and not shown in the Initial Financial Statements or
disclosed in the Disclosure Schedule or a Disclosure Report. Except as shown in
the Initial Financial Statements or disclosed in the Disclosure Schedule or a
Disclosure Report, neither Borrower nor any of its Subsidiaries is subject to
or restricted by any franchise, contract, deed, charter restriction, or other
instrument or restriction which could cause a Material Adverse Change.
Section 5.8. Full Disclosure. No certificate, statement or other
information delivered herewith or heretofore by Borrower or any of its
Subsidiaries to any Bank Party in connection with the negotiation of this
Agreement or in connection with any transaction contemplated hereby contains
any untrue statement of a material fact or omits to state any material fact
known to Borrower or any of its Subsidiaries (other than industry-wide risks
normally associated with the types of businesses conducted by Borrower and its
Subsidiaries) necessary to make the statements contained herein or therein not
misleading as of the date made or deemed made. There is no fact known to
Borrower or any of its Subsidiaries (other than industry-wide risks normally
associated with the types of businesses conducted by Borrower and its
Subsidiaries) that has not been disclosed to each Bank Party in writing which
could cause a Material Adverse Change. There are no statements or conclusions
in any Engineering Report which are based upon or include misleading
information or fail to take into account material information regarding the
matters reported therein, it being understood that each Engineering Report is
necessarily based upon professional opinions, estimates and projections and
that Borrower does not warrant that such opinions, estimates and projections
will ultimately prove to have been accurate. Borrower has heretofore delivered
to each Bank Party true, correct and complete copies of the Initial Engineering
Report.
Section 5.9. Litigation. Except as disclosed in the Initial Financial
Statements or in the Disclosure Schedule: (i) there are no actions, suits or
legal, equitable, arbitrative or administrative proceedings pending, or to the
knowledge of Borrower or any of its Subsidiaries threatened, against Borrower
or any of its Subsidiaries before any Tribunal which could cause a Material
Adverse Change, and (ii) there are no outstanding judgments, injunctions,
writs, rulings or orders by any such Tribunal against Borrower or any of its
Subsidiaries, or any of their stockholders, partners, directors or officers,
which could cause a Material Adverse Change.
Section 5.10. Labor Disputes and Acts of God. Except as disclosed in
the Disclosure Schedule or a Disclosure Report, neither the business nor the
properties of Borrower or any of its Subsidiaries has been affected by any
fire, explosion, accident, strike, lockout or other labor dispute, drought,
storm, hail, earthquake, embargo, act of God or of the public enemy or other
casualty (whether or not covered by insurance), which could cause a Material
Adverse Change.
Section 5.11. ERISA Plans and Liabilities. All currently existing
ERISA Plans are listed in the Disclosure Schedule or a Disclosure Report.
Except as disclosed in the Initial Financial Statements or in the Disclosure
Schedule or a Disclosure Report, no Termination Event has occurred with respect
to any ERISA Plan and all ERISA Affiliates are in compliance
40
46
with ERISA in all material respects. No ERISA Affiliate is required to
contribute to, or has any other absolute or contingent liability in respect of,
any "multiemployer plan" as defined in Section 4001 of ERISA. Except as set
forth in the Disclosure Schedule or a Disclosure Report: (i) no "accumulated
funding deficiency" (as defined in Section 412(a) of the Internal Revenue Code
of 1986, as amended) exists with respect to any ERISA Plan, whether or not
waived by the Secretary of the Treasury or his delegate, and (ii) the current
value of each ERISA Plan's benefits does not exceed the current value of such
ERISA Plan's assets available for the payment of such benefits by more than
$500,000.
Section 5.12. Environmental and Other Laws. As used in this section:
"CERCLA" means the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended, "CERCLIS" means the Comprehensive
Environmental Response, Compensation and Liability Information System List of
the Environmental Protection Agency, and "Release" has the meaning given such
term in 42 U.S.C. Section 9601(22). Except as set forth in the Disclosure
Schedule or a Disclosure Report:
(a) Borrower and each of its Subsidiaries are conducting their
businesses in material compliance with all applicable Laws, including
Environmental Laws, and have all permits, licenses and authorizations required
in connection with the conduct of their businesses. Borrower and each of its
Subsidiaries are in compliance with the terms and conditions of all such
permits, licenses and authorizations, and are also in compliance with all other
limitations, restrictions, conditions, standards, prohibitions, requirements,
obligations, schedules and timetables contained in any applicable Environmental
Law or in any regulation, code, plan, order, decree, judgment, injunction,
notice or demand letter issued, entered, promulgated or approved thereunder,
except to the extent failure to comply in either such case could not cause a
Material Adverse Change.
(b) No notice, notification, demand, request for information,
citation, summons or order has been issued, no complaint has been filed, no
penalty has been assessed, and no investigation or review is pending (or, to
the best knowledge of Borrower and its Subsidiaries, threatened) by any
Tribunal or any other Person with respect to (i) any alleged generation,
treatment, storage, recycling, transportation, disposal, or Release of any
Hazardous Materials, either by Borrower or any of its Subsidiaries or on any
property owned by Borrower or any of its Subsidiaries, (ii) any material
remedial action which might be needed to respond to any such alleged
generation, treatment, storage, recycling, transportation, disposal, or
Release, or (iii) any alleged failure by Borrower or any of its Subsidiaries to
have any permit, license or authorization required in connection with the
conduct of its business or with respect to any such generation, treatment,
storage, recycling, transportation, disposal, or Release.
(c) Neither Borrower nor any of its Subsidiaries otherwise has any
known material contingent liability in connection with any alleged generation,
treatment, storage, recycling, transportation, disposal, or Release of any
Hazardous Materials.
(d) Neither Borrower nor any of its Subsidiaries has handled any
Hazardous Materials, other than as a generator, on any properties now or
previously owned or leased by Borrower
41
47
or any of its Subsidiaries to an extent that such handling has caused, or could
cause, a Material Adverse Change; and
(i) to the best knowledge of Borrower after due inquiry, no PCBs
are or have been present at any properties now or previously
owned or leased by Borrower or any of its Subsidiaries to an
extent that such PCBs have caused, or could cause, a material
liability to Borrower or any of its Subsidiaries;
(ii) to the best knowledge of Borrower after due inquiry, no
asbestos is or has been present at any properties now or
previously owned or leased by Borrower or any of its
Subsidiaries to an extent that such asbestos has caused, or
could cause, a material liability to Borrower or any of its
Subsidiaries;
(iii) to the best knowledge of Borrower after due inquiry, there
are no underground storage tanks for Hazardous Materials,
active or abandoned, at any properties now or previously
owned or leased by Borrower or any of its Subsidiaries that
have caused, or could cause, a material liability to Borrower
or any of its Subsidiaries;
(iv) to the best knowledge of Borrower after due inquiry, no
Hazardous Materials have been Released, in a reportable
quantity, where such a quantity has been established by
statute, ordinance, rule, regulation or order, at, on or
under any properties now or previously owned or leased by
Borrower or any of its Subsidiaries to an extent that such
Release has caused, or could cause, a material liability to
Borrower or any of its Subsidiaries;
(v) to the best knowledge of Borrower after due inquiry, no
Hazardous Materials have been otherwise Released at, on or
under any properties now or previously owned or leased by
Borrower or any of its Subsidiaries to an extent that such
release has caused, or could cause, a Material Adverse
Change.
In determining whether a representation or warranty contained in the
foregoing clauses (i) through (v) is "false or incorrect in any
material respect" on any date on or as of which made (including the
date as of which such representation or warranty is initially made or
may thereafter be restated) for purposes of Section 8.1(f) hereof,
such representation and warranty shall be read solely for such purpose
and no other, as if the qualification "to the best knowledge of
Borrower after due inquiry" was deleted.
(e) Neither Borrower nor any of its Subsidiaries has transported or
arranged for the transportation of any Hazardous Material to any location which
is listed on the National Priorities List under CERCLA, listed for possible
inclusion on the National Priorities List by the Environmental Protection
Agency in CERCLIS, or listed on any similar state list or which is the subject
of federal, state or local enforcement actions or other investigations which
may lead to claims against Borrower or any of its Subsidiaries for clean-up
costs, remedial work,
42
48
damages to natural resources or for personal injury claims, including, but not
limited to, claims under CERCLA.
(f) No Hazardous Material generated by Borrower or any of its
Subsidiaries has been recycled, treated, stored, disposed of or released by
Borrower or any of its Subsidiaries at any location other than those listed in
Disclosure Schedule.
(g) No oral or written notification of a Release of a Hazardous
Material has been filed by or on behalf of Borrower or any of its Subsidiaries
(and to the best knowledge of Borrower, no such notification has been filed
with respect to Borrower or any of its Subsidiaries by any other Person), and
no property now or previously owned or leased by Borrower or any of its
Subsidiaries is listed or proposed for listing on the National Priority list
promulgated pursuant to CERCLA, in CERCLIS, or on any similar state list of
sites requiring investigation or clean-up.
(h) There are no Liens arising under or pursuant to any Environmental
Laws on any of the real properties or properties owned or leased by Borrower or
any of its Subsidiaries, and no government actions have been taken (or, to the
best knowledge of Borrower and its Subsidiaries are in process) which could
subject any of such properties to such Liens; nor would Borrower or any of its
Subsidiaries be required to place any notice or restriction relating to the
presence of Hazardous Materials at any properties owned by it in any deed to
such properties.
(i) There have been no environmental investigations, studies, audits,
tests, reviews or other analyses conducted by or which are in the possession of
Borrower or any of its Subsidiaries in relation to any properties or facility
now or previously owned or leased by Borrower or any of its Subsidiaries which
have not been made available to Agent.
Section 5.13. Names and Places of Business. No Restricted Person has,
during the preceding five years, had, been known by, or used any other trade or
fictitious name, except as disclosed in the Disclosure Schedule. Except as
otherwise indicated in the Disclosure Schedule or a Disclosure Report, the
chief executive office and principal place of business of each Restricted
Person are (and for the preceding five years have been) located at the address
of Borrower set out in Section 10.3. Except as indicated in the Disclosure
Schedule or a Disclosure Report, no Restricted Person has any other office or
place of business.
Section 5.14. Borrower's Subsidiaries. Borrower does not presently
have any Subsidiary or own any stock in any other corporation or association
except those listed in the Disclosure Schedule or a Disclosure Report. Neither
Borrower nor any Restricted Person is a member of any general or limited
partnership, joint venture or association of any type whatsoever except those
listed in the Disclosure Schedule or a Disclosure Report. Except as otherwise
revealed in a Disclosure Report, Borrower owns, directly or indirectly, the
equity interest in each of its Subsidiaries which is indicated in the
Disclosure Schedule.
43
49
Section 5.15. Title to Properties; Licenses. Borrower and each of its
Subsidiaries has good and defensible title to all of its material properties
and assets, free and clear of all Liens other than Permitted Liens and of all
impediments to the use of such properties and assets in its business. Borrower
and each of its Subsidiaries possesses all licenses, permits, franchises,
patents, copyrights, trademarks and trade names, and other intellectual
property (or otherwise possesses the right to use such intellectual property
without violation of the rights of any other Person) which are reasonably
necessary to carry out its business as presently conducted and as presently
proposed to be conducted hereafter, and neither Borrower nor any of its
Subsidiaries is in violation in any material respect of the terms under which
it possesses such intellectual property or the right to use such intellectual
property.
Section 5.16. Government Regulation. Neither Borrower nor any other
Restricted Person owing Obligations is subject to regulation under the Public
Utility Holding Company Act of 1935, the Federal Power Act, the Investment
Company Act of 1940 (as any of the preceding acts have been amended) or any
other Law which regulates the incurring by such Person of Indebtedness,
including Laws relating to common contract carriers or the sale of electricity,
gas, steam, water or other public utility services.
ARTICLE VI - Affirmative Covenants of Borrower
To conform with the terms and conditions under which each Bank Party
is willing to have credit outstanding to Borrower, and to induce each Bank
Party to enter into this Agreement and extend credit hereunder, Borrower
warrants, covenants and agrees that until the full and final payment of the
Obligations and the termination of this Agreement, unless Majority Lenders have
previously agreed otherwise:
Section 6.1. Payment and Performance. Borrower will pay all amounts
due under the Loan Documents in accordance with the terms thereof and will
observe, perform and comply with every covenant, term and condition expressed
or implied in the Loan Documents. Borrower will cause each of its Subsidiaries
to observe, perform and comply with every such term, covenant and condition.
Section 6.2. Books, Financial Statements and Reports. Borrower and
each of its Subsidiaries will at all times maintain full and accurate books of
account and records. Borrower will maintain and will cause its Subsidiaries to
maintain a standard system of accounting, will maintain its Fiscal Year, and
will furnish the following statements and reports to each Bank Party at
Borrower's expense:
(a) As soon as available, and in any event within ninety (90)
days after the end of each Fiscal Year, complete Consolidated and
consolidating financial statements of Borrower together with all notes
thereto, prepared in reasonable detail in accordance with GAAP,
together with an unqualified opinion, based on an audit using
generally accepted auditing standards, by Coopers & Lybrand, L.L.P.,
or other independent certified public accountants selected by Borrower
and acceptable to Majority Lenders, stating that such Consolidated
financial statements have been so prepared; such
44
50
unqualified opinion and audit shall not include the consolidating
financial statements of Borrower. These financial statements shall
contain a Consolidated and consolidating balance sheet as of the end
of such Fiscal Year and Consolidated and consolidating statements of
earnings, of cash flows, and of changes in owners' equity for such
Fiscal Year, each setting forth in comparative form the corresponding
figures for the preceding Fiscal Year. In addition, within ninety (90)
days after the end of each Fiscal Year Borrower will furnish a report
signed by such accountants (i) stating that they have read this
Agreement, (ii) containing calculations showing compliance (or
non-compliance) at the end of such Fiscal Year with the requirements
of Sections 7.11 through 7.14, and (iii) further stating that in
making their examination and reporting on the Consolidated financial
statements described above they did not conclude that any Default
existed at the end of such Fiscal Year or at the time of their report,
or, if they did conclude that a Default existed, specifying its nature
and period of existence.
(b) As soon as available, and in any event within forty-five
(45) days after the end of each Fiscal Quarter, Borrower's
Consolidated and consolidating balance sheet as of the end of such
Fiscal Quarter and Consolidated and consolidating statements of
Borrower's earnings and cash flows for the period from the beginning
of the then current Fiscal Year to the end of such Fiscal Quarter, all
in reasonable detail and prepared in accordance with GAAP, subject to
changes resulting from normal year-end adjustments. In addition
Borrower will, together with each such set of financial statements and
each set of financial statements furnished under subsection (a) of
this section, furnish a certificate in the form of Exhibit D signed by
the chief financial officer of Borrower stating that such financial
statements are accurate and complete (subject to normal year-end
adjustments), stating that he has reviewed the Loan Documents,
containing calculations showing compliance (or non-compliance) at the
end of such Fiscal Quarter with the requirements of Sections 7.11
through 7.14 and stating that no Default exists at the end of such
Fiscal Quarter or at the time of such certificate or specifying the
nature and period of existence of any such Default.
(c) By March 31 of each year, an engineering report prepared
as of the immediately preceding January 1 by Lee Keeling & Associates,
or other independent petroleum engineers chosen by Borrower and
acceptable to Majority Lenders, concerning the Collateral and other
oil and gas properties and interests which have attributable to them
proved oil or gas reserves serviced by or subject to Restricted
Persons' gas processing plants or pipeline gathering systems, in form
and substance satisfactory to Agent, and shall contain information and
analysis comparable in scope to that contained in the Initial
Engineering Report. Borrower shall in addition furnish information
relating the information contained in such report to each gas
processing plant or pipeline gathering system.
(d) As soon as available, and in any event within ninety (90)
days after the end of each Fiscal Year, a business and financial plan
for Borrower (in form reasonably satisfactory to Agent), prepared by a
senior financial officer thereof, setting forth for the first year
thereof, quarterly financial projections and budgets for Borrower, and
45
51
thereafter yearly financial projections and budgets during the
Revolving Credit Commitment Period.
(e) As soon as available, and in any event within twenty-five
(25) days after the end of each calendar month, a Borrowing Base
Report duly completed by an authorized officer of Borrower.
(f) As soon as available, and in any event within forty-five
(45) days after the end of each Fiscal Quarter, a report setting forth
in detail the following:
(i) throughput pipeline volumes of Natural Gas
delivered by Restricted Persons for such Fiscal Quarter in
connection with, and transportation fees charged by the
Restricted Persons for such Fiscal Quarter delivered through
all pipeline facilities of Restricted Persons,
(ii) average daily throughput volumes and total
throughput volumes of Natural Gas processed by Restricted
Persons during such Fiscal Quarter, and processing fees
charged by the Restricted Persons for such Fiscal Quarter,
for each Plant,
(iii) total volumes of all Natural Gas liquids
produced by Restricted Persons during such Fiscal Quarter,
and prices and margins for all sales of Natural Gas liquid
production for such Fiscal Quarter,
(iv) a list of all gathering, transportation and
processing contracts of Restricted Persons effective as of
the last day of such Fiscal Quarter, for each Plant and each
Stand-Alone Gathering System, listing counterparty, term,
volumes and fees,
(v) a detailed listing of all general and
administrative expenses of Restricted Persons during such
Fiscal Quarter, and
(vi) volumes, prices and margins for all marketing
activities of Restricted Persons.
(g) As soon as available, and in any event within thirty (30)
days after the end of each Fiscal Year, Borrower shall deliver to
Agent an environmental compliance certificate signed by the president
or chief executive officer of Borrower in the form attached hereto as
Exhibit F. Further, if requested by Agent, Borrower shall permit and
cooperate with an environmental and safety review made in connection
with the operations of Borrower's oil and gas properties one time
during each Fiscal Year beginning with the Fiscal Year 1997, by Pilko
& Associates, Inc. or other consultants selected by Agent which review
shall, if requested by Agent, be arranged and supervised by
environmental legal counsel for Agent, all at Borrower's cost and
46
52
expense. The consultant shall render a verbal or written report, as
specified by Agent, based upon such review at Borrower's cost and
expense.
(h) Concurrently with the annual renewal of the Borrower's
insurance policies, Borrower shall, if requested by Agent in writing,
cause a certificate or report to be issued by Agent's professional
insurance consultants or other insurance consultants satisfactory to
Agent certifying that Borrower's insurance for the next succeeding
year after such renewal (or for such longer period for which such
insurance is in effect) complies with the provisions of this Agreement
and the Security Documents.
Section 6.3. Other Information and Inspections. Borrower and each of
its Subsidiaries will furnish to each Bank Party any information which Agent
may from time to time reasonably request in writing concerning any covenant,
provision or condition of the Transaction Documents or any matter in connection
with Borrower' and its Subsidiaries' businesses and operations. Borrower and
each of its Subsidiaries will permit representatives appointed by Agent
(including independent accountants, auditors, agents, attorneys, appraisers and
any other Persons) to visit and inspect during normal business hours any of
such Person's property, including its books of account, other books and
records, and any facilities or other business assets, and to make extra copies
therefrom and photocopies and photographs thereof, and to write down and record
any information such representatives obtain, and Borrower and each of its
Subsidiaries shall permit Agent or its representatives to investigate and
verify the accuracy of the information furnished to Agent or any Lender in
connection with the Transaction Documents and to discuss all such matters with
its officers, employees and representatives.
Section 6.4. Notice of Material Events and Change of Address. Borrower
will promptly notify each Bank Party in writing, stating that such notice is
being given pursuant to this Agreement, of:
(a) the occurrence of any Material Adverse Change,
(b) the occurrence of any Default,
(c) the acceleration of the maturity of any Indebtedness owed
by Borrower or any of its Subsidiaries or of any default by Borrower
or any of its Subsidiaries under any indenture, mortgage, agreement,
contract or other instrument to which any of them is a party or by
which any of them or any of their properties is bound, if such
acceleration or default could cause a Material Adverse Change,
(d) the occurrence of any Termination Event,
(e) any claim of $500,000 or more, any notice of potential
liability under any Environmental Laws which might exceed such amount,
or any other material adverse claim asserted against Borrower or any
of its Subsidiaries or with respect to Borrower's or any Subsidiaries'
properties, and
47
53
(f) the filing of any suit or proceeding against Borrower or
any of its Subsidiaries in which an adverse decision could cause a
Material Adverse Change.
Upon the occurrence of any of the foregoing Borrower and its Subsidiaries will
take all necessary or appropriate steps to remedy promptly any such Material
Adverse Change, Default, acceleration, default or Termination Event, to protect
against any such adverse claim, to defend any such suit or proceeding, and to
resolve all controversies on account of any of the foregoing. Borrower will
also notify Agent and Agent's counsel in writing at least twenty Business Days
prior to the date that any Restricted Person changes its name or the location
of its chief executive office or principal place of business or the place where
it keeps its books and records concerning the Collateral, furnishing with such
notice any necessary financing statement amendments or requesting Agent and its
counsel to prepare the same.
Section 6.5. Maintenance of Properties. Borrower and each of its
Subsidiaries will maintain, preserve, protect, and keep all Collateral and all
other property used or useful in the conduct of its business in good condition
and in compliance with all applicable Laws, and will from time to time make all
repairs, renewals and replacements needed to enable the business and operations
carried on in connection therewith to be promptly and advantageously conducted
at all times.
Section 6.6. Maintenance of Existence and Qualifications. Borrower and
each of its Subsidiaries will maintain and preserve its existence and its
rights and franchises in full force and effect and will qualify to do business
in all states or jurisdictions where required by applicable Law, except where
the failure so to qualify will not cause a Material Adverse Change.
Section 6.7. Payment of Trade Liabilities, Taxes, etc. Borrower and
each of its Subsidiaries will (a) timely file all required tax returns; (b)
timely pay all taxes, assessments, and other governmental charges or levies
imposed upon it or upon its income, profits or property; (c) within ninety (90)
days after the same becomes due pay all Liabilities owed by it on ordinary
trade terms to vendors, suppliers and other Persons providing goods and
services used by it in the ordinary course of its business; (d) pay and
discharge when due all other Liabilities now or hereafter owed by it; and (e)
maintain appropriate accruals and reserves for all of the foregoing in
accordance with GAAP. Borrower or any Subsidiary may, however, delay paying or
discharging any of the foregoing so long as it is in good faith contesting the
validity thereof by appropriate proceedings and has set aside on its books
adequate reserves therefor.
Section 6.8. Insurance. Borrower and each of its Subsidiaries will
keep or cause to be kept insured by financially sound and reputable insurers
its property in accordance with the Insurance Schedule. Borrower will maintain
the additional insurance coverage as described in the respective Security
Documents. Upon demand by Agent any insurance policies covering Collateral
shall be endorsed (a) to provide for payment of losses to Agent as its
interests may appear, (b) to provide that such policies may not be canceled or
reduced or affected in any material manner for any reason without fifteen days
prior notice to Agent, (c) to provide for
48
54
any other matters specified in any applicable Security Document or which Agent
may reasonably require; and (d) to provide for insurance against fire, casualty
and any other hazards normally insured against, in the amount of the full value
(less a reasonable deductible not to exceed amounts customary in the industry
for similarly situated businesses and properties) of the property insured.
Borrower and each of its Subsidiaries shall at all times maintain insurance
against its liability for injury to persons or property in accordance with the
Insurance Schedule, which insurance shall be by financially sound and reputable
insurers. Without limiting the foregoing, Borrower and each of its Subsidiaries
shall at all time maintain liability insurance in the amounts set out on the
Insurance Schedule.
Section 6.9. Performance on Borrower's Behalf. If any Restricted
Person fails to pay any taxes, insurance premiums, expenses, attorneys' fees or
other amounts it is required to pay under any Loan Document, Agent may pay the
same. Borrower shall immediately reimburse Agent for any such payments and each
amount paid by Agent shall constitute an Obligation owed hereunder which is due
and payable on the date such amount is paid by Agent.
Section 6.10. Interest. Borrower hereby promises to each Bank Party to
pay interest at the Default Rate on all Obligations (including Obligations to
pay fees or to reimburse or indemnify any Bank Party) which Borrower has in
this Agreement promised to pay to such Bank Party and which are not paid when
due. Such interest shall accrue from the date such Obligations become due until
they are paid.
Section 6.11. Compliance with Agreements and Law; Required Hedges.
Borrower and each of its Subsidiaries will perform all material obligations it
is required to perform under the terms of each indenture, mortgage, deed of
trust, security agreement, lease, franchise, agreement, contract or other
instrument or obligation to which it is a party or by which it or any of its
properties is bound. Borrower and each of its Subsidiaries will conduct its
business and affairs in compliance with all Laws applicable thereto. Borrower
shall at all time maintain the Required Hedges, which shall comply with Section
7.3.
Section 6.12. Environmental Matters; Environmental Reviews.
(a) Borrower and each of its Subsidiaries will comply in all material
respects with all Environmental Laws now or hereafter applicable to such Person
and shall obtain, at or prior to the time required by applicable Environmental
Laws, all environmental, health and safety permits, licenses and other
authorizations necessary for its operations and will maintain such
authorizations in full force and effect. Borrower will (i) not later than March
31, 1998, adopt a formal environmental management program reasonably necessary
to assure compliance in all material respects with applicable Environmental
Laws and otherwise to avoid environmental liabilities, (ii) continue the
existing remediation program regarding the groundwater contamination at the
Laverne Plant, as described in the environmental report delivered pursuant to
Section 4.1(j) and 4.2(c).
(b) Borrower will promptly furnish to Agent all written notices of
violation, orders, claims, citations, complaints, penalty assessments, suits or
other proceedings received by
49
55
Borrower, or of which it has notice, pending or threatened against Borrower, by
any governmental authority with respect to any alleged violation of or
non-compliance with any Environmental Laws or any permits, licenses or
authorizations in connection with its ownership or use of its properties or the
operation of its business.
(c) Borrower will promptly furnish to Agent all requests for
information, notices of claim, demand letters, and other notifications,
received by Borrower in connection with its ownership or use of its properties
or the conduct of its business, relating to potential responsibility with
respect to any investigation or clean-up of Hazardous Material at any location.
Section 6.13. Evidence of Compliance. Borrower and each of its
Subsidiaries will furnish to each Bank Party at such Borrower's or such
Subsidiary's expense all evidence which Agent from time to time reasonably
requests in writing as to the accuracy and validity of or compliance with all
representations, warranties and covenants made by any Restricted Person in the
Loan Documents, the satisfaction of all conditions contained therein, and all
other matters pertaining thereto.
Section 6.14. Solvency. Upon giving effect to the issuance of the
Notes, the execution of the Loan Documents by Restricted Persons and the
consummation of the transactions contemplated hereby, each Restricted Person
will be solvent (as such term is used in applicable bankruptcy, liquidation,
receivership, insolvency or similar laws).
Section 6.15. Agreement to Deliver Security Documents. Borrower agrees
to deliver and to cause each other Restricted Person to deliver, to further
secure the Obligations whenever requested by Agent in its sole and absolute
discretion, deeds of trust, mortgages, chattel mortgages, security agreements,
financing statements and other Security Documents in form and substance
satisfactory to Agent for the purpose of granting, confirming, and perfecting
first and prior liens or security interests in any real or personal property
now owned or hereafter acquired by any Restricted Person. Borrower also agrees
to deliver, whenever requested by Agent in its sole and absolute discretion,
favorable title opinions from legal counsel or title insurance policies from
insurers, in each case acceptable to Agent, with respect to any Restricted
Person's properties and interests designated by Agent (other than
rights-of-way), based upon abstract or record examinations to dates acceptable
to Agent and (a) stating that such Restricted Person has good and defensible
title to such properties and interests, free and clear of all Liens other than
Permitted Liens, (b) confirming that such properties and interests are subject
to Security Documents securing the Obligations that constitute and create
legal, valid and duly perfected first deed of trust or mortgage liens in such
properties and interests and first priority assignments of and security
interests in the oil and gas attributable to such properties and interests and
the proceeds thereof, and (c) covering such other matters as Agent may
reasonably request.
Section 6.16. Perfection and Protection of Security Interests and
Liens. Borrower will from time to time deliver, and will cause each other
Restricted Person from time to time to deliver, to Agent any financing
statements, continuation statements, extension agreements and
50
56
other documents, properly completed and executed (and acknowledged when
required) by Restricted Persons in form and substance satisfactory to Agent,
which Agent requests for the purpose of perfecting, confirming, or protecting
any Liens or other rights in Collateral securing any Obligations.
Section 6.17. Bank Accounts; Offset. To secure the repayment of the
Obligations Borrower hereby grants to each Bank Party a security interest, a
lien, and a right of offset, each of which shall be in addition to all other
interests, liens, and rights of any Bank Party at common law, under the Loan
Documents, or otherwise, and each of which shall be upon and against (a) any
and all moneys, securities or other property (and the proceeds therefrom) of
Borrower now or hereafter held or received by or in transit to any Bank Party
from or for the account of Borrower, whether for safekeeping, custody, pledge,
transmission, collection or otherwise, (b) any and all deposits (general or
special, time or demand, provisional or final) of Borrower with any Bank Party,
and (c) any other credits and claims of Borrower at any time existing against
any Bank Party, including claims under certificates of deposit. At any time and
from time to time after the occurrence of any Default, each Bank Party is
hereby authorized to foreclose upon, or to offset against the Obligations then
due and payable (in either case without notice to Borrower), any and all items
hereinabove referred to. The remedies of foreclosure and offset are separate
and cumulative, and either may be exercised independently of the other without
regard to procedures or restrictions applicable to the other.
Section 6.18. Guaranties of Borrower's Subsidiaries. Each Subsidiary
of Borrower now existing or created, acquired or coming into existence after
the date hereof shall, promptly upon request by Agent, execute and deliver to
Agent an absolute and unconditional guaranty of the timely repayment of the
Obligations and the due and punctual performance of the obligations of Borrower
hereunder, which guaranty shall be satisfactory to Agent in form and substance.
Each Subsidiary of Borrower existing on the date hereof shall duly execute and
deliver such a guaranty prior to the making of any Loan hereunder. Borrower
will cause each of its Subsidiaries to deliver to Agent, simultaneously with
its delivery of such a guaranty, written evidence satisfactory to Agent and its
counsel that such Subsidiary has taken all corporate or partnership action
necessary to duly approve and authorize its execution, delivery and performance
of such guaranty and any other documents which it is required to execute.
Section 6.19. Assignment of Proceeds. Notwithstanding that, by the
terms of the various Security Documents, Restricted Persons are and will be
assigning to Agent and Lenders all of the "Production Proceeds" and
"Transportation, Separation and Processing Proceeds" (as defined therein and
collectively referred to in this section as "Proceeds") accruing to the
Collateral covered thereby, so long as no Default has occurred Restricted
Persons may continue to receive all such Proceeds, subject, however, to the
Liens created under the Security Documents, which Liens are hereby affirmed and
ratified. Upon the occurrence of a Default, Agent and Lenders may exercise all
rights and remedies granted under the Security Documents, including the right
to obtain possession of all Proceeds then held by Restricted Persons or to
receive directly from the purchasers, shippers or other payors, as the case may
be, all other Proceeds. In no case shall any failure, whether purposed or
inadvertent, by Agent or Lenders to collect directly any such Proceeds
constitute in any way a waiver,
51
57
remission or release of any of their rights under the Security Documents, nor
shall any release of any Proceeds by Agent or Lenders to Restricted Persons
constitute a waiver, remission, or release of any other Proceeds or of any
rights of Agent or Lenders to collect other Proceeds thereafter.
ARTICLE VII - Negative Covenants of Borrower
To conform with the terms and conditions under which each Bank Party
is willing to have credit outstanding to Borrower, and to induce each Bank
Party to enter into this Agreement and make the Loans, Borrower warrants,
covenants and agrees that until the full and final payment of the Obligations
and the termination of this Agreement, unless Majority Lenders have previously
agreed otherwise:
Section 7.1. Indebtedness. No Restricted Person will in any manner
owe or be liable for Indebtedness except:
(a) the Obligations.
(b) Indebtedness under leases of such Restricted Person as lessee
which are capitalized in accordance with GAAP, including leases covering gas
compressors, provided the aggregate amount of capitalized lease payments
(including principal and interest payable under such capitalized leases)
required to be made under such capitalized leases does not in the aggregate
exceed $3,000,000 in any Fiscal Year.
(c) unsecured Indebtedness among Borrower and Guarantors arising in
the ordinary course of business.
(d) Indebtedness arising under Hedging Contracts permitted under
Section 7.3.
Section 7.2. Limitation on Liens. No Restricted Person will create,
assume or permit to exist any Lien upon any of the properties or assets which
it now owns or hereafter acquires, except, to the extent not otherwise
forbidden by the Security Documents the following (each a "Permitted Lien"):
(a) Liens which secure Obligations only.
(b) The lessors' interests under capital leases permitted under
Section 7.1(b).
(c) statutory Liens for taxes, assessments or other Tribunal charges,
or statutory mechanics', materialmen's and landlords' Liens incurred in the
ordinary course of business, and other similar statutory Liens incurred in the
ordinary course of business, provided such Liens do not secure Indebtedness and
secure only Liabilities which are not delinquent or which are being contested
as provided in Section 6.7.
52
58
(d) as to property which is Collateral, any Liens expressly permitted
to encumber such Collateral under any Security Document covering such
Collateral.
(e) royalties, overriding royalties, reversionary interests and
similar burdens on oil and gas leasehold interests or mineral interests which
are created in the ordinary course of business and not for financing purposes.
(f) easements, rights of way, servitudes, permits, surface leases and
other rights in respect to surface operations, pipelines, grazing, logging,
canals, ditches, reservoirs or the like, conditions, covenants and other
restrictions, and easements of streets, alleys, highways, pipelines, telephone
lines, power lines, railways and other easements and rights of way on, over or
in respect of Borrower's assets or properties which do not materially detract
from the value or usefulness of such assets or property for the business
conducted or materially interfere with the ordinary conduct of Borrower's
business.
(g) inchoate Liens arising in connection with workmen's compensation,
unemployment insurance or other social security, old age pension or public
liability obligations, provided such Liens do not secure Indebtedness and
secure only Liabilities which are not delinquent or which are being contested
as provided in Section 6.7.
Section 7.3. Hedging Contracts. No Restricted Person will be a party
to or in any manner be liable on any Hedging Contract, except:
(a) contracts entered into with the purpose and effect of fixing
prices on Natural Gas or Natural Gas liquids expected to be bought or sold by
Restricted Persons, provided that at all times: (1) no such contract fixes a
price for a term of more than twenty-four (24) months; (2) the aggregate
monthly production of Natural Gas liquids covered by all such Hedging Contracts
(determined, in the case of contracts that are not settled on a monthly basis,
by a monthly proration acceptable to Agent) for any single month does not in
the aggregate exceed eighty percent (80%) of the aggregate Projected Natural
Gas Liquid Production of Restricted Persons anticipated to be sold in the
ordinary course of their businesses for such month, (3) the aggregate monthly
volumes of Natural Gas covered by all such Hedging Contracts (determined, in
the case of contracts that are not settled on a monthly basis, by a monthly
proration acceptable to Agent) for any single month does not in the aggregate
exceed eighty percent (80%) of the aggregate Projected Natural Gas Purchases of
Restricted Persons anticipated to be purchased in the ordinary course of their
businesses for such month, (4) no such contract entered into after the date
hereof requires any Restricted Person to put up money, assets, or other
security, other than letters of credit (and such contracts, in the aggregate,
do not require Restricted Persons to put up letters of credit in an aggregate
amount in excess of $1,000,000), against the event of its nonperformance prior
to actual default by such Restricted Person in performing its obligations
thereunder; (5) each such contract is with a counterparty or has a guarantor of
the obligation of the counterparty who (unless such counterparty is a Bank
Party, AIG Trading Corporation or one of their respective Affiliates) at the
time the contract is made has long-term obligations rated AA or Aa2 or better,
respectively, by either Rating Agency, or is an Approved Counterparty, and (6)
Restricted Persons shall not enter into
53
59
any such contracts for the purpose of speculative investment. As used in this
subsection, the term "Projected Natural Gas Liquid Production" means the
projected production of Natural Gas liquids (measured by volume unit or BTU
equivalent, not sales price) for the term of the contracts or a particular
month, as applicable, from the interests in the Plants owned by Restricted
Persons, as such production is projected in the most recent Engineering Reports
delivered pursuant to Section 6.2(c), after deducting projected production from
any interests sold or under contract for sale that had been included in such
reports and after adding projected production from any interests that had not
been reflected in such reports but that are reflected in a separate or
supplemental reports meeting the requirements of such Section 6.2(c) hereof and
otherwise are satisfactory to Agent, and the term "Projected Natural Gas
Purchases" means the projected purchases of Natural Gas (measured by volume
unit or BTU equivalent, not sales price) for the term of the contracts or a
particular month, as applicable, as such purchases are projected in the most
recent Engineering Reports delivered pursuant to Section 6.2(c), after
deducting projected purchases from any interests sold or under contract for
sale that had been included in such reports and after adding projected
purchases from any interests that had not been reflected in such reports but
that are reflected in a separate or supplemental reports meeting the
requirements of such Section 6.2(c) hereof and otherwise are satisfactory to
Agent.
(b) contracts entered into by a Restricted Person with the purpose and
effect of fixing interest rates on a principal amount of indebtedness of such
Restricted Person that is accruing interest at a variable rate, provided that
(1) the aggregate notional amount of such contracts never exceeds seventy-five
percent (75%) of the anticipated outstanding principal balance of the
indebtedness to be hedged by such contracts or an average of such principal
balances calculated using a generally accepted method of matching interest swap
contracts to declining principal balances, (2) the floating rate index of each
such contract generally matches the index used to determine the floating rates
of interest on the corresponding indebtedness to be hedged by such contract,
and (3) each such contract is with a counterparty or has a guarantor of the
obligation of the counterparty who (unless such counterparty is a Bank Party or
one of its Affiliates) at the time the contract is made has long-term
obligations rated AA or Aa2 or better, respectively, by either Rating Agency.
Section 7.4. Limitation on Mergers, Issuances of Securities. Except as
expressly provided in this subsection no Restricted Person will merge or
consolidate with or into any other business entity. Any Subsidiary of Borrower
that is a Guarantor may, however, be merged into or consolidated with (i)
another Guarantor, or (ii) Borrower, so long as Borrower is the surviving
business entity. Borrower will not issue any securities other than shares of
its common stock and any options or warrants giving the holders thereof only
the right to acquire such shares. No Subsidiary of Borrower will issue any
additional shares of its capital stock or other securities or any options,
warrants or other rights to acquire such additional shares or other securities
except to Borrower and only to the extent not otherwise forbidden under the
terms hereof. No Subsidiary of Borrower which is a partnership will allow any
diminution of Borrower's interest (direct or indirect) therein.
54
60
Section 7.5. Limitation on Sales of Property. No Restricted Person
will sell, transfer, lease, exchange, alienate or dispose of any of its
material assets or properties or any material interest therein except, to the
extent not otherwise forbidden under the Security Documents:
(a) equipment which is worthless or obsolete or which is replaced by
equipment of equal suitability and value.
(b) inventory which is sold in the ordinary course of business on
ordinary trade terms.
Neither Borrower nor any of Borrower's Subsidiaries will sell, transfer or
otherwise dispose of capital stock of any of Borrower's Subsidiaries except
that any Subsidiary of Borrower may sell or issue its own capital stock to the
extent not otherwise prohibited hereunder. No Restricted Person will discount,
sell, pledge or assign any notes payable to it, accounts receivable or future
income except to the extent expressly permitted under the Loan Documents.
Section 7.6. Limitation on Dividends and Redemptions. No Restricted
Person will declare or pay any dividends on, or make any other distribution in
respect of, any class of its capital stock or any partnership or other interest
in it, nor will any Restricted Person directly or indirectly make any capital
contribution to or purchase, redeem, acquire or retire any shares of the
capital stock of or partnership interests in any Person (whether such interests
are now or hereafter issued, outstanding or created), or cause or permit any
reduction or retirement of the capital stock of any Restricted Person, except
as expressly provided in this section. Such dividends, distributions,
contributions, purchases, redemptions, acquisitions, retirements or reductions
may be made by Borrower and the Guarantors (i) without limitation to Borrower;
(ii) to Guarantors which are Subsidiaries of Borrower, to the extent permitted
under the investment restrictions of Section 7.7; (iii) during Fiscal Year 1997
only, to pay the owners of Borrower's preferred stock a 7% dividend, provided,
the aggregate amount of such preferred stock dividend shall not exceed $140,000
in any Fiscal Quarter; (iv) after the one-year anniversary hereof and so long
as no Default has occurred and is continuing, to other Persons, to the extent
that the aggregate value of all such dividends, distributions, contributions,
purchases, redemptions, acquisitions, retirements and reductions made in any
Fiscal Year does not exceed ten percent (10%) of Borrower's Consolidated Net
Income for the period commencing with such one-year anniversary (including any
dividends under any preferred stock issued by Borrower).
Section 7.7. Limitation on Investments and New Businesses; Limitation
on Capital Expenditures. No Restricted Person will (i) make any expenditure or
commitment or incur any obligation or enter into or engage in any transaction
except in the ordinary course of business, (ii) engage directly or indirectly
in any business or conduct any operations except in connection with or
incidental to its present businesses and operations, (iii) make any
acquisitions of or capital contributions to or other investments in any Person,
other than investments in Cash Equivalents and Subsidiaries (either heretofore
owned or hereafter formed or acquired with the consent of Majority Lenders)
that are Guarantors, or (iv) make any significant acquisitions or investments
in any properties other than gas gathering and transportation pipelines and gas
55
61
processing facilities. Restricted Persons shall not incur capital expenditures
in excess of $2,500,000 as to any single project without (i) furnishing to
Agent and Lenders detailed projections and budgets regarding such project and
(ii) receiving the prior written consent of Majority Lenders, such consent not
to be unreasonably withheld.
Section 7.8. Limitation on Credit Extensions. Except for Cash
Equivalents, no Restricted Person will extend credit, make advances or make
loans other than (i) normal and prudent extensions of credit to customers
buying goods and services in the ordinary course of business, which extensions
shall not be for longer periods than those extended by similar businesses
operated in a normal and prudent manner, (ii) loans to Borrower or to any
Guarantor, and (iii) loans to employees of any Restricted Person, so long as
the aggregate amount of such loans does not exceed $20,000.
Section 7.9. Transactions with Affiliates. Neither Borrower nor any of
its Subsidiaries will engage in any material transaction with any of its
Affiliates on terms which are less favorable to it than those which would have
been obtainable at the time in arm's-length dealing with Persons other than
such Affiliates, provided that such restriction shall not apply to transactions
among Restricted Persons.
Section 7.10. Certain Contracts; Amendments; Multiemployer ERISA
Plans. Except as expressly provided for in the Loan Documents, neither Borrower
nor any of its Subsidiaries will, directly or indirectly, enter into, create,
or otherwise allow to exist any contract or other consensual restriction on the
ability of any Subsidiary of Borrower to: (i) pay dividends or make other
distributions to Borrower, (ii) to redeem equity interests held in it by
Borrower, (iii) to repay loans and other indebtedness owing by it to Borrower,
or (iv) to transfer any of its assets to Borrower. No Restricted Person will
enter into any "take-or-pay" contract or other contract or arrangement for the
purchase of goods or services which obligates it to pay for such goods or
service regardless of whether they are delivered or furnished to it. No
Restricted Person will amend or permit any amendment to any contract or lease
which releases, qualifies, limits, makes contingent or otherwise detrimentally
affects the rights and benefits of Agent or any Lender under or acquired
pursuant to any Security Documents. No ERISA Affiliate will incur any
obligation to contribute to any "multiemployer plan" as defined in Section 4001
of ERISA.
Section 7.11. Current Ratio. The ratio of Borrower's Consolidated
current assets to Borrower's Consolidated current liabilities will never be
less than (a) 0.90 to 1 for the period from the date hereof through and
including September 30, 1998 and (b) 1.00 to 1 on any day thereafter. For
purposes of this section (i) all LC Obligations (other than Letters of Credit
issued hereunder to secure payables) shall be included as current liabilities,
regardless of whether or not contingent (but without duplication), and (ii)
Borrower's Consolidated current liabilities will be calculated without
including any payments of principal on the Term Notes which are required to be
repaid within one year from the time of calculation.
Section 7.12. Net Worth. Borrower's Consolidated Net Worth will never
be less than the sum of (i) $40,000,000 plus (ii) fifty percent (50%) of
Borrower's Consolidated Net
56
62
Income (if positive) for each Fiscal Quarter from and after September 30, 1997
to and including the date of determination thereof, computed on a cumulative
basis for such period plus (iii) seventy-five percent (75%) of the net proceeds
(after costs of sale) of any common or preferred stock hereafter issued by
Borrower.
Section 7.13. EBITDA. At the end of any Fiscal Quarter:
(a) The ratio of (i) EBITDA to (ii) Debt Service for the four-Fiscal
Quarter period ending with such Fiscal Quarter will not be less than (A) 2.00
to 1 for any Fiscal Quarter ending on or before December 31, 1998, (B) 2.50 to
1 for any Fiscal Quarter ending after December 31, 1998 and on or before
December 31, 1999, and (B) 3.00 to 1 for any Fiscal Quarter thereafter.
(b) The ratio of (i) EBITDA to (ii) the sum of (A) Debt Service plus
(B) scheduled payments of principal (including the principal component of
rentals or capitalized leases but excluding principal payments on the Revolving
Credit Notes) on Indebtedness for the four- Fiscal Quarter period ending with
such Fiscal Quarter will not be less than 1.2 to 1.
Section 7.14. Debt to Capital Ratio. The Debt to Capital Ratio will
never exceed (a) seventy percent (70%) at any time from the date hereof through
and including September 30, 1998, (b) sixty-five percent (65%) from and
including October 1, 1998 through and including September 30, 1999, (c) sixty
percent (60%) from and including October 1, 1999 through and including December
31, 2000, or (d) fifty percent (50%) at any time thereafter.
ARTICLE VIII - Events of Default and Remedies
Section 8.1. Events of Default. Each of the following events
constitutes an Event of Default under this Agreement:
(a) Any Restricted Person fails to pay the principal component of any
Obligation when due and payable, whether at a date for the payment of a fixed
installment or as a contingent or other payment becomes due and payable or as a
result of acceleration or otherwise;
(b) Any Restricted Person fails to pay any Obligation (other than the
Obligations in clause (a) above) when due and payable, whether at a date for
the payment of a fixed installment or as a contingent or other payment becomes
due and payable or as a result of acceleration or otherwise, within three
Business Days after the same becomes due;
(c) Any "default" or "event of default" occurs under any Loan Document
which defines either such term (other than by reference to the Credit
Agreement), and the same is not remedied within the applicable period of grace
(if any) provided in such Loan Document;
(d) Any Restricted Person fails to duly observe, perform or comply
with any covenant, agreement or provision of Section 6.4 or Article VII;
57
63
(e) Any Restricted Person fails (other than as referred to in
subsections (a), (b), (c) or (d) above) to duly observe, perform or comply with
any covenant, agreement, condition or provision of any Loan Document, and such
failure remains unremedied for a period of thirty (30) days after notice of
such failure is given by Agent to Borrower;
(f) Any representation or warranty previously, presently or hereafter
made in writing by or on behalf of Borrower or any of its Subsidiaries in
connection with any Transaction Document shall prove to have been false or
incorrect in any material respect on any date on or as of which made, or any
Loan Document at any time ceases to be valid, binding and enforceable as
warranted in Section 5.5 for any reason other than its release or subordination
by Agent;
(g) Borrower or any of its Subsidiaries fails to duly observe, perform
or comply with any agreement with any Person or any term or condition of any
instrument, if such agreement or instrument is materially significant to
Borrower or to Borrower and its subsidiaries on a Consolidated basis or
materially significant to any Guarantor, and such failure is not remedied
within the applicable period of grace (if any) provided in such agreement or
instrument;
(h) Borrower or any of its Subsidiaries (i) fails to pay any portion,
when such portion is due, of any of its Indebtedness in excess of $500,000, or
(ii) breaches or defaults in the performance of any agreement or instrument by
which any such Indebtedness is issued, evidenced, governed, or secured, and any
such failure, breach or default continues beyond any applicable period of grace
provided therefor;
(i) Either (i) any "accumulated funding deficiency" (as defined in
Section 412(a) of the Internal Revenue Code of 1986, as amended) in excess of
$500,000 exists with respect to any ERISA Plan, whether or not waived by the
Secretary of the Treasury or his delegate, or (ii) any Termination Event occurs
with respect to any ERISA Plan and the then current value of such ERISA Plan's
benefit liabilities exceeds the then current value of such ERISA Plan's
assets available for the payment of such benefit liabilities by more than
$500,000 (or in the case of a Termination Event involving the withdrawal of a
substantial employer, the withdrawing employer's proportionate share of such
excess exceeds such amount);
(j) Borrower or any of its Subsidiaries:
(i) suffers the entry against it of a judgment, decree or
order for relief by a Tribunal of competent jurisdiction in an
involuntary proceeding commenced under any applicable bankruptcy,
insolvency or other similar Law of any jurisdiction now or hereafter
in effect, including the federal Bankruptcy Code, as from time to time
amended, or has any such proceeding commenced against it which remains
undismissed for a period of thirty days; or
(ii) commences a voluntary case under any applicable
bankruptcy, insolvency or similar Law now or hereafter in effect,
including the federal Bankruptcy Code, as from time to time amended;
or applies for or consents to the entry of an order for relief
58
64
in an involuntary case under any such Law; or makes a general
assignment for the benefit of creditors; or fails generally to pay (or
admits in writing its inability to pay) its debts as such debts become
due; or takes corporate or other action to authorize any of the
foregoing; or
(iii) suffers the appointment of or taking possession by a
receiver, liquidator, assignee, custodian, trustee, sequestrator or
similar official of all or a substantial part of its assets or of any
part of the Collateral in a proceeding brought against or initiated by
it, and such appointment or taking possession is neither made
ineffective nor discharged within thirty days after the making
thereof, or such appointment or taking possession is at any time
consented to, requested by, or acquiesced to by it; or
(iv) suffers the entry against it of a final judgment for the
payment of money in excess of $500,000 (not covered by insurance
satisfactory to Agent in its discretion), unless the same is
discharged within thirty days after the date of entry thereof or an
appeal or appropriate proceeding for review thereof is taken within
such period and a stay of execution pending such appeal is obtained;
or
(v) suffers a writ or warrant of attachment or any similar
process to be issued by any Tribunal against all or any substantial
part of its assets or any part of the Collateral, and such writ or
warrant of attachment or any similar process is not stayed or released
within thirty days after the entry or levy thereof or after any stay
is vacated or set aside;
(k) Any Change in Control occurs;
(l) Any Material Adverse Change occurs; or
(m) Any Restricted Person shall put up any money, assets or other
security (other than letters of credit in an aggregate amount for all
Restricted Persons not to exceed $1,000,000) against the event of its
nonperformance prior to actual default in performing its obligations under any
Hedging Contract.
Upon the occurrence of an Event of Default described in subsection (j)(i),
(j)(ii) or (j)(iii) of this section with respect to Borrower, all of the
Obligations shall thereupon be immediately due and payable, without demand,
presentment, notice of demand or of dishonor and nonpayment, protest, notice of
protest, notice of intention to accelerate, declaration or notice of
acceleration, or any other notice or declaration of any kind, all of which are
hereby expressly waived by Borrower and each Restricted Person who at any time
ratifies or approves this Agreement. Upon any such acceleration, any obligation
of any Lender to make any further Loans shall be permanently terminated. During
the continuance of any other Event of Default, Agent at any time and from time
to time may (and upon written instructions from Majority Lenders, Agent shall),
without notice to Borrower or any other Restricted Person, do either or both of
the following: (1) terminate any obligation of Lenders to make Loans hereunder,
and (2) declare any or all of the Obligations immediately due and payable, and
all such Obligations shall
59
65
thereupon be immediately due and payable, without demand, presentment, notice
of demand or of dishonor and nonpayment, protest, notice of protest, notice of
intention to accelerate, declaration or notice of acceleration, or any other
notice or declaration of any kind, all of which are hereby expressly waived by
Borrower and each Restricted Person who at any time ratifies or approves this
Agreement.
Section 8.2. Remedies. If any Default shall occur and be continuing,
each Bank Party may protect and enforce its rights under the Loan Documents by
any appropriate proceedings, including proceedings for specific performance of
any covenant or agreement contained in any Loan Document, and each Bank Party
may enforce the payment of any Obligations due it or enforce any other legal or
equitable right which it may have. All rights, remedies and powers conferred
upon Bank Parties under the Loan Documents shall be deemed cumulative and not
exclusive of any other rights, remedies or powers available under the Loan
Documents or at Law or in equity.
ARTICLE IX - Agent
Section 9.1. Appointment and Authority. Each Bank Party hereby
irrevocably authorizes Agent, and Agent hereby undertakes, to receive payments
of principal, interest and other amounts due hereunder as specified herein and
to take all other actions and to exercise such powers under the Loan Documents
as are specifically delegated to Agent by the terms hereof or thereof, together
with all other powers reasonably incidental thereto. The relationship of Agent
to the other Bank Parties is only that of one commercial lender acting as
administrative agent for others, and nothing in the Loan Documents shall be
construed to constitute Agent a trustee or other fiduciary for any holder of
any of the Notes or of any participation therein nor to impose on Agent duties
and obligations other than those expressly provided for in the Loan Documents.
With respect to any matters not expressly provided for in the Loan Documents
and any matters which the Loan Documents place within the discretion
of Agent, Agent shall not be required to exercise any discretion or take any
action, and it may request instructions from Lenders with respect to any such
matter, in which case it shall be required to act or to refrain from acting
(and shall be fully protected and free from liability to all Lenders in so
acting or refraining from acting) upon the instructions of Majority Lenders
(including itself), provided, however, that Agent shall not be required to take
any action which exposes it to a risk of personal liability that it considers
unreasonable or which is contrary to the Loan Documents or to applicable Law.
Section 9.2. Exculpation, Agent's Reliance, Etc. Neither Agent nor any
of its directors, officers, agents, attorneys, or employees shall be liable for
any action taken or omitted to be taken by any of them under or in connection
with the Loan Documents, INCLUDING THEIR NEGLIGENCE OF ANY KIND, except that
each shall be liable for its own gross negligence or willful misconduct.
Without limiting the generality of the foregoing, Agent (a) may treat the payee
of any Note as the holder thereof until Agent receives written notice of the
assignment or transfer thereof in accordance with this Agreement, signed by
such payee and in form satisfactory to Agent; (b) may consult with legal
counsel (including counsel for Borrower), independent public accountants and
other experts selected by it and shall not be
60
66
liable for any action taken or omitted to be taken by it in accordance with the
advice of such counsel, accountants or experts; (c) makes no warranty or
representation to any other Bank Party and shall not be responsible to any
other Bank Party for any statements, warranties or representations made in or
in connection with the Loan Documents; (d) shall not have any duty to ascertain
or to inquire as to the performance or observance of any of the terms,
covenants or conditions of the Loan Documents on the part of any Restricted
Person or to inspect the property (including the books and records) of Borrower
or any of its Subsidiaries; (e) shall not be responsible to any other Bank
Party for the due execution, legality, validity, enforceability, genuineness,
sufficiency or value of any Loan Document or any instrument or document
furnished in connection therewith; (f) may rely upon the representations and
warranties of each Restricted Person and the Lenders in exercising its powers
hereunder; (g) shall incur no liability under or in respect of the Loan
Documents by acting upon any notice, consent, certificate or other instrument
or writing (including any telecopy, telegram, cable or telex) believed by it to
be genuine and signed or sent by the proper Person or Persons; and (h) shall
not be obligated to initiate or conduct any litigation or collection
proceedings.
Section 9.3. Credit Decisions; Limited Scope of Agent's Duties. Each
Bank Party acknowledges that it has, independently and without reliance upon
any other Bank Party, made its own analysis of Borrower and the transactions
contemplated hereby and its own independent decision to enter into this
Agreement and the other Loan Documents. Each Bank Party also acknowledges that
it will, independently and without reliance upon any other Bank Party and based
on such documents and information as it shall deem appropriate at the time,
continue to make its own credit decisions in taking or not taking action under
the Loan Documents. Except for notices, reports and other documents and
information expressly required to be furnished to another Bank Party by Agent
hereunder, Agent shall have no duty or responsibility to provide any other Bank
Party with any credit or other information concerning the affairs, financial
condition or businesses of the Company or any of its Subsidiaries (or any of
their Affiliates) which may come into the possession of Agent or any of
its Affiliates. Agent shall not be required to keep itself informed as to the
performance or observance by Restricted Persons of this Agreement or any other
Loan Document or other document referred to or provided for herein or to
inspect the properties or books of Borrower or any of its Subsidiaries, and
shall not be deemed to have knowledge or notice of the occurrence of a Default
(other than the non-payment of any obligation to the extent the same is
required to be paid to Agent for the account of LC Issuer or Lenders) unless it
has received notice from another Bank Party or Borrower specifying such Default
and stating that such notice is a "Notice of Default". In the event Agent
receives such a notice of the occurrence of a Default (or upon the occurrence
of any such non-payment), Agent shall give prompt notice thereof to each Bank
Party and shall take such action with respect to such Default as shall be
directed by Majority Lenders, provided that Agent may, but shall not be
obligated to, take such action, or refrain from taking such action, with
respect to such Default as Agent may deem advisable in the best interest of
Bank Parties.
Section 9.4. Indemnification. Each Lender agrees to indemnify Agent
(to the extent not reimbursed by Borrower within ten (10) days after demand)
from and against such Lender's Percentage Share of any and all liabilities,
obligations, claims, losses, damages,
61
67
penalties, fines, actions, judgments, suits, settlements, costs, expenses or
disbursements (including reasonable fees of attorneys, accountants, experts and
advisors) of any kind or nature whatsoever (in this section collectively called
"liabilities and costs") which to any extent (in whole or in part) may be
imposed on, incurred by, or asserted against Agent growing out of, resulting
from or in any other way associated with any of the Collateral, the Loan
Documents and the transactions and events at any time associated therewith or
contemplated therein (including any enforcement of the Loan Documents, any
violation or noncompliance with any Environmental Laws by any Person, or any
liabilities or duties of any Person with respect to Hazardous Materials found
in or released into the environment).
THE FOREGOING INDEMNIFICATION SHALL APPLY WHETHER OR NOT SUCH LIABILITIES AND
COSTS ARE IN ANY WAY OR TO ANY EXTENT OWED, IN WHOLE OR IN PART, UNDER ANY
CLAIM OR THEORY OF STRICT LIABILITY, OR ARE CAUSED, IN WHOLE OR IN PART, BY ANY
NEGLIGENT ACT OR OMISSION OF ANY KIND BY AGENT,
provided only that no Lender shall be obligated under this section to indemnify
Agent for that portion, if any, of any liabilities and costs which is
proximately caused by Agent's own individual gross negligence or willful
misconduct. Cumulative of the foregoing, each Lender agrees to reimburse Agent
promptly upon demand for such Lender's Percentage Share of any costs and
expenses to be paid to Agent by Borrower under Section 10.4(a) to the extent
that Agent is not timely reimbursed for such expenses by Borrower as provided
in such section. As used in this section the term "Agent" shall refer not only
to the Person designated as such in Section 1.1 but also to each director,
officer, agent, attorney, employee, representative and Affiliate of such
Person.
Section 9.5. Rights as Lender. In its capacity as a Lender, Agent
shall have the same rights and obligations as any Lender and may exercise such
rights as though it were not Agent. Agent may accept deposits from, lend money
to, act as Trustee under indentures of, and generally engage in any kind of
business with Borrower, any of its Subsidiaries, or any of their respective
Affiliates, all as if it were not Agent hereunder and without any duty to
account therefor to any other Lender.
Section 9.6. Sharing of Set-Offs and Other Payments. Each Bank Party
agrees that if it shall, whether through the exercise of rights under Security
Documents or rights of banker's lien, set off, or counterclaim against Borrower
or otherwise, obtain payment of a portion of the aggregate Obligations owed to
it which, taking into account all distributions made by Agent under Section
3.1, causes such Bank Party to have received more than it would have received
had such payment been received by Agent and distributed pursuant to Section
3.1, then (a) it shall be deemed to have simultaneously purchased and shall be
obligated to purchase interests in the Obligations as necessary to cause all
Bank Parties to share all payments as provided for in Section 3.1, and (b) such
other adjustments shall be made from time to time as shall be equitable to
ensure that Agent and all Lenders share all payments of Obligations as provided
in Section 3.1; provided, however, that nothing herein contained shall in any
way affect the right
62
68
of any Bank Party to obtain payment (whether by exercise of rights of banker's
lien, set-off or counterclaim or otherwise) of indebtedness other than the
Obligations. Borrower expressly consents to the foregoing arrangements and
agrees that any holder of any such interest or other participation in the
Obligations, whether or not acquired pursuant to the foregoing arrangements,
may to the fullest extent permitted by Law exercise any and all rights of
banker's lien, set-off, or counterclaim as fully as if such holder were a
holder of the Obligations in the amount of such interest or other
participation. If all or any part of any funds transferred pursuant to this
section is thereafter recovered from the seller under this section which
received the same, the purchase provided for in this section shall be deemed to
have been rescinded to the extent of such recovery, together with interest, if
any, if interest is required pursuant to Tribunal order to be paid on account
of the possession of such funds prior to such recovery.
Section 9.7. Investments. Whenever Agent in good faith determines that
it is uncertain about how to distribute to Lenders any funds which it has
received, or whenever Agent in good faith determines that there is any dispute
among Lenders about how such funds should be distributed, Agent may choose to
defer distribution of the funds which are the subject of such uncertainty or
dispute. If Agent in good faith believes that the uncertainty or dispute will
not be promptly resolved, or if Agent is otherwise required to invest funds
pending distribution to Lenders, Agent shall invest such funds pending
distribution; all interest on any such investment shall be distributed upon the
distribution of such investment and in the same proportion and to the same
Persons as such investment.
Section 9.8. Benefit of Article IX. The provisions of this Article
(other than the following Section 9.9) are intended solely for the benefit of
Bank Parties, and no Restricted Person shall be entitled to rely on any such
provision or assert any such provision in a claim or defense against any Bank
Party. Bank Parties may waive or amend such provisions as they desire without
any notice to or consent of Borrower or any Restricted Person.
Section 9.9. Resignation. Agent may resign at any time by giving
written notice thereof to Lenders and Borrower. Each such notice shall set
forth the date of such resignation. Upon any such resignation Majority Lenders
shall have the right to appoint a successor Agent. A successor must be
appointed for any retiring Agent, and such Agent's resignation shall become
effective when such successor accepts such appointment. If, within thirty days
after the date of the retiring Agent's resignation, no successor Agent has been
appointed and has accepted such appointment, then the retiring Agent may
appoint a successor Agent, which shall be a commercial bank organized or
licensed to conduct a banking or trust business under the Laws of the United
States of America or of any state thereof. Upon the acceptance of any
appointment as Agent hereunder by a successor Agent, the retiring Agent shall
be discharged from its duties and obligations under this Agreement and the
other Loan Documents. After any retiring Agent's resignation hereunder the
provisions of this Article IX shall continue to inure to its benefit as to any
actions taken or omitted to be taken by it while it was Agent under the Loan
Documents.
63
69
ARTICLE X - Miscellaneous
Section 10.1. Waivers and Amendments; Acknowledgments.
(a) Waivers and Amendments. No failure or delay (whether by course of
conduct or otherwise) by any Bank Party in exercising any right, power or
remedy which such Bank Party may have under any of the Loan Documents shall
operate as a waiver thereof or of any other right, power or remedy, nor shall
any single or partial exercise by any Bank Party of any such right, power or
remedy preclude any other or further exercise thereof or of any other right,
power or remedy. No waiver of any provision of any Loan Document and no consent
to any departure therefrom shall ever be effective unless it is in writing and
signed as provided below in this section, and then such waiver or consent shall
be effective only in the specific instances and for the purposes for which
given and to the extent specified in such writing. No notice to or demand on
any Restricted Person shall in any case of itself entitle any Restricted Person
to any other or further notice or demand in similar or other circumstances.
This Agreement and the other Loan Documents set forth the entire understanding
between the parties hereto with respect to the transactions contemplated herein
and therein and supersede all prior discussions and understandings with respect
to the subject matter hereof and thereof, and no waiver, consent, release,
modification or amendment of or supplement to this Agreement or the other Loan
Documents shall be valid or effective against any party hereto unless the same
is in writing and signed by (i) if such party is Borrower, by Borrower, (ii) if
such party is Agent or LC Issuer, by such party, and (iii) if such party is a
Lender, by such Lender or by Agent on behalf of Lenders with the written
consent of Majority Lenders (which consent has already been given as to the
termination of the Loan Documents as provided in Section 10.9). Notwithstanding
the foregoing or anything to the contrary herein, Agent shall not, without the
prior consent of each individual Lender, execute and deliver on behalf of such
Lender any waiver or amendment which would: (1) waive any of the conditions
specified in Article IV (provided that Agent may in its discretion withdraw any
request it has made under Section 4.3(e)), (2) increase the Revolving Credit
Maximum Loan Amount of any Revolving Credit Lender or subject any Lender to any
additional obligations, (3) reduce any fees payable to such Lender hereunder,
or the principal of, or interest on, such Lender's Note, (4) postpone any date
fixed for any payment of any such fees, principal or interest, (5) amend the
definition herein of "Eligible Accounts" or the "advance rate" related thereto
as set forth in Section 2.9 hereof, (6) amend the definition herein of
"Majority Lenders" or otherwise change the aggregate amount of Percentage
Shares which is required for Agent, Lenders or any of them to take any
particular action under the Loan Documents, or (7) release Borrower from its
obligation to pay such Lender's Note or any Guarantor from its guaranty of such
payment.
(b) Acknowledgments and Admissions. Borrower hereby represents,
warrants, acknowledges and admits that (i) it has been advised by counsel in
the negotiation, execution and delivery of the Loan Documents to which it is a
party, (ii) it has made an independent decision to enter into this Agreement
and the other Loan Documents to which it is a party, without reliance on any
representation, warranty, covenant or undertaking by Agent or any Lender,
whether written, oral or implicit, other than as expressly set out in this
Agreement or in another Loan Document delivered on or after the date hereof,
(iii) there are no
64
70
representations, warranties, covenants, undertakings or agreements by any Bank
Party as to the Loan Documents except as expressly set out in this Agreement or
in another Loan Document delivered on or after the date hereof, (iv) no Bank
Party has any fiduciary obligation toward Borrower with respect to any Loan
Document or the transactions contemplated thereby, (v) the relationship
pursuant to the Loan Documents between Borrower and the other Restricted
Persons, on one hand, and each Bank Party, on the other hand, is and shall be
solely that of debtor and creditor, respectively, (vi) no partnership or joint
venture exists with respect to the Loan Documents between any Restricted Person
and any Bank Party, (vii) Agent is not Borrower's Agent, but Agent for Lenders,
(viii) should an Event of Default or Default occur or exist, each Bank Party
will determine in its sole discretion and for its own reasons what remedies and
actions it will or will not exercise or take at that time, (ix) without
limiting any of the foregoing, Borrower is not relying upon any representation
or covenant by any Bank Party, or any representative thereof, and no such
representation or covenant has been made, that any Bank Party will, at the time
of an Event of Default or Default, or at any other time, waive, negotiate,
discuss, or take or refrain from taking any action permitted under the Loan
Documents with respect to any such Event of Default or Default or any other
provision of the Loan Documents, and (x) all Bank Parties have relied upon the
truthfulness of the acknowledgments in this section in deciding to execute and
deliver this Agreement and to become obligated hereunder.
(c) Representation by Lenders. Each Lender hereby represents that it
will acquire its Note for its own account in the ordinary course of its
commercial lending business; however, the disposition of such Lender's property
shall at all times be and remain within its control and, subject to Section
10.5, such Lender may sell or otherwise transfer its Note, any participation
interest or other interest in its Note, or any of its other rights and
obligations under the Loan Documents.
(d) Joint Acknowledgment. THIS WRITTEN AGREEMENT AND THE OTHER LOAN
DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE
CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL
AGREEMENTS OF THE PARTIES.
THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
Section 10.2. Survival of Agreements; Cumulative Nature. All of
Restricted Persons' various representations, warranties, covenants and
agreements in the Transaction Documents shall survive the execution and
delivery of this Agreement and the other Loan Documents and the performance
hereof and thereof, including the making or granting of the Loans and the
delivery of the Notes and the other Loan Documents, and shall further survive
until all of the Obligations are paid in full to each Bank Party and all of
Bank Parties' obligations to Restricted Persons are terminated. All statements
and agreements contained in any certificate or other instrument delivered by
Borrower or any of its Subsidiaries to any Bank Party under any Loan Document
shall be deemed representations and warranties by Borrower or
65
71
agreements and covenants of Borrower under this Agreement. The representations,
warranties, indemnities, and covenants made by Restricted Persons in the Loan
Documents, and the rights, powers, and privileges granted to Bank Parties in
the Loan Documents, are cumulative, and, except for expressly specified waivers
and consents, no Loan Document shall be construed in the context of another to
diminish, nullify, or otherwise reduce the benefit to any Bank Party of any
such representation, warranty, indemnity, covenant, right, power or privilege.
In particular and without limitation, no exception set out in this Agreement to
any representation, warranty, indemnity, or covenant herein contained shall
apply to any similar representation, warranty, indemnity, or covenant contained
in any other Loan Document, and each such similar representation, warranty,
indemnity, or covenant shall be subject only to those exceptions which are
expressly made applicable to it by the terms of the various Loan Documents.
Section 10.3. Notices. All notices, requests, consents, demands and
other communications required or permitted under any Loan Document shall be in
writing, unless otherwise specifically provided in such Loan Document (provided
that Agent may give telephonic notices to the other Bank Parties), and shall be
deemed sufficiently given or furnished if delivered by personal delivery, by
telecopy, by delivery service with proof of delivery, or by registered or
certified United States mail, postage prepaid, to Borrower and Restricted
Persons at the address of Borrower specified on the signature pages hereto and
to each Bank Party at its address specified on the signature pages hereto
(unless changed by similar notice in writing given by the particular Person
whose address is to be changed). Any such notice or communication shall be
deemed to have been given (a) in the case of personal delivery or delivery
service, as of the date of first attempted delivery during normal business
hours at the address provided herein, (b) in the case of telecopy, upon
receipt, or (c) in the case of registered or certified United States mail,
three days after deposit in the mail; provided, however, that no Borrowing
Notice or Continuation/Conversion Notice shall become effective until actually
received by Agent.
Section 10.4. Payment of Expenses; Indemnity.
(a) Payment of Expenses. Whether or not the transactions contemplated
by this Agreement are consummated, Borrower will promptly (and in any event,
within 30 days after any invoice or other statement or notice) pay: (i) all
transfer, stamp, mortgage (except as may be prohibited by Law), documentary or
other similar taxes, assessments or charges levied by any governmental or
revenue authority in respect of this Agreement or any of the other Loan
Documents or any other document referred to herein or therein, (ii) all
reasonable costs and expenses incurred by or on behalf of Agent (including fees
of attorneys, accountants, engineers and other experts and advisors, travel
costs and miscellaneous expenses) in connection with (1) the negotiation,
preparation, execution and delivery of the Loan Documents, and any and all
consents, waivers or other documents or instruments relating thereto, (2) the
filing, recording, refiling and re-recording of any Loan Documents and any
other documents or instruments or further assurances required to be filed or
recorded or refiled or re-recorded by the terms of any Loan Document, (3) the
borrowings hereunder and other action reasonably required in the course of
administration hereof, or (4) monitoring or confirming (or preparation or
negotiation
66
72
of any document related to) Borrower's compliance with any covenants or
conditions contained in this Agreement or in any Loan Document, and (iii) all
reasonable costs and expenses incurred by or on behalf of any Bank Party
(including fees of attorneys, accountants, engineers and other experts and
advisors) in connection with the defense or, upon the occurrence of a Default,
enforcement of any of the Loan Documents or the defense of any Bank Party's
exercise of its rights thereunder. In addition to the foregoing, until and all
Obligations have been paid in full, Borrower will also pay or reimburse Agent
for all reasonable out-of-pocket costs and expenses of Agent or its agents or
employees in connection with the continuing administration of the Loans and the
related due diligence of Agent, including travel and miscellaneous expenses and
fees and expenses of Agent's outside counsel, reserve engineers and consultants
engaged in connection with the Loan Documents.
(b) Indemnity. Borrower agrees to indemnify each Bank Party, upon
demand, from and against any and all liabilities, obligations, claims, losses,
damages, penalties, fines, actions, judgments, suits, settlements, costs,
expenses or disbursements (including reasonable fees of attorneys, accountants,
engineers and other experts and advisors) of any kind or nature whatsoever (in
this section collectively called "liabilities and costs") which to any extent
(in whole or in part) may be imposed on, incurred by, or asserted against such
Bank Party growing out of, resulting from or in any other way associated with
any of the Collateral, the Loan Documents and the transactions and events at
any time associated therewith or contemplated therein (including any
enforcement or defense of the Loan Documents, any violation or noncompliance
with any Environmental Laws by any Person, or any liabilities or duties of any
Person with respect to Hazardous Materials found in or released into the
environment).
THE FOREGOING INDEMNIFICATION SHALL APPLY WHETHER OR NOT SUCH LIABILITIES AND
COSTS ARE IN ANY WAY OR TO ANY EXTENT OWED, IN WHOLE OR IN PART, UNDER ANY
CLAIM OR THEORY OF STRICT LIABILITY, OR ARE CAUSED, IN WHOLE OR IN PART, BY ANY
NEGLIGENT ACT OR OMISSION OF ANY KIND BY ANY BANK PARTY,
provided only that no Bank Party shall be entitled under this section to
receive indemnification for that portion, if any, of any liabilities and costs
which is proximately caused by its own individual gross negligence or willful
misconduct. As used in this section the term "Bank Parties" shall refer not
only to the Persons designated as such in Section 1.1 but also to each
director, officer, agent, attorney, employee, representative and Affiliate of
such Persons.
Section 10.5. Joint and Several Liability; Parties in Interest;
Assignments. All Obligations which are incurred by two or more Restricted
Persons shall be their joint and several obligations and liabilities. All
grants, covenants and agreements contained in the Loan Documents shall bind and
inure to the benefit of the parties thereto and their respective successors and
assigns; provided, however, that no Restricted Person may assign or transfer
any of its rights or delegate any of its duties or obligations under any Loan
Document without the prior consent of Majority Lenders. Neither Borrower nor
any Affiliates of Borrower shall
67
73
directly or indirectly purchase or otherwise retire any Obligations owed to any
Lender nor will any Lender accept any offer to do so, unless each Lender shall
have received substantially the same offer with respect to the same Percentage
Share of the Obligations owed to it. If Borrower or any Affiliate of Borrower
at any time purchases some but less than all of the Obligations owed to all
Bank Parties, such purchaser shall not be entitled to any rights of any Bank
Party under the Loan Documents unless and until Borrower or its Affiliates have
purchased all of the Obligations.
(b) No Lender shall sell any participation interest in its commitment
hereunder or any of its rights under its Loans or under the Loan Documents to
any Person other than an Eligible Transferee, and then only if the agreement
between such Lender and such participant at all times provides: (i) that such
participation exists only as a result of the agreement between such participant
and such Lender and that such transfer does not give such participant any right
to vote as a Lender or any other direct claims or rights against any Person
other than such Lender, (ii) that such participant is not entitled to payment
from any Restricted Person under Sections 3.2 through 3.6 of amounts in excess
of those payable to such Lender under such sections (determined without regard
to the sale of such participation), (iii) that (unless Agent and Borrower
otherwise consent) such participant has an identical percentage interest
(through such participation) in both the Term Loans and the Revolving Credit
Loans, and (iv) unless such participant is an Affiliate of such Lender, that
such participant shall not be entitled to require such Lender to take any
action under any Loan Document or to obtain the consent of such participant
prior to taking any action under any Loan Document, except for actions which
would require the consent of all Lenders under the last sentence of subsection
(a) of Section 10.1. No Lender selling such a participation shall, as between
the other parties hereto and such Lender, be relieved of any of its obligations
hereunder as a result of the sale of such participation. Each Lender which
sells any such participation to any Person (other than an Affiliate of such
Lender) shall give prompt notice thereof to Agent and Borrower.
(c) Except for sales of participations under the immediately preceding
subsection (b), no Lender shall make any assignment or transfer of any kind of
its commitments or any of its rights under its Loans or under the Loan
Documents, except for assignments to an Eligible Transferee, and then only if
such assignment is made in accordance with the following requirements:
(i) Each such assignment shall apply to all Obligations owing
to the assignor Lender hereunder and to the unused portion of the
assignor Lender's commitments, so that after such assignment is made
the assignor Lender shall have a fixed (and not a varying) Percentage
Share in its Loans and Notes, have an identical Percentage Share in
both the Term Loans and the Revolving Credit Loans (unless Agent and
Borrower otherwise consent), and be committed to make that Percentage
Share of all future Loans, the assignee shall have a fixed Percentage
Share in such Loans and Notes, have an identical Percentage Share in
both the Term Loans and the Revolving Credit Loans (unless Agent and
Borrower otherwise consent), and be committed to make that Percentage
Share of all future Loans, and the individual Percentage Share of the
Revolving Credit
68
74
Maximum Loan Amount of each of the assignor and assignee shall equal
or exceed $5,000,000 (unless such assignor Lender is assigning one
hundred percent (100%) of its Percentage Share).
(ii) The parties to each such assignment shall execute and
deliver to Agent, for its acceptance and recording in the "Register"
(as defined below in this section), an Assignment and Assumption
Agreement substantially in the form of Exhibit J, appropriately
completed, together with the Note subject to such assignment and, as
to any such assignment after the Syndication Date, and shall pay a
processing fee to Agent of $2,500. Upon such execution, delivery, and
payment and upon the satisfaction of the conditions set out in such
Assignment and Assumption Agreement, then (i) Borrower shall issue new
Notes to such assignor and assignee upon return of the old Notes to
Borrower, and (ii) as of the "Settlement Date" specified in such
Assignment and Assumption Agreement the assignee thereunder shall be a
party hereto and a Lender hereunder and Agent shall thereupon deliver
to Borrower and each Lender a schedule showing the revised Percentage
Shares of such assignor Lender and such assignee Lender and the
Percentage Shares of all other Lenders.
(iii) Each assignee Lender which is not a United States
person (as such term is defined in Section 7701(a)(30) of the Internal
Revenue Code of 1986, as amended) for Federal income tax purposes,
shall (to the extent it has not already done so) provide Agent and
Borrower with the "Prescribed Forms" referred to in Section 3.6(d).
(d) Nothing contained in this section shall prevent or prohibit any
Lender from assigning or pledging all or any portion of its Loans and Note to
any Federal Reserve Bank as collateral security pursuant to Regulation A of the
Board of Governors of the Federal Reserve System and any Operating Circular
issued by such Federal Reserve Bank; provided that no such assignment or pledge
shall relieve such Lender from its obligations hereunder.
(e) By executing and delivering an Assignment and Assumption
Agreement, each assignee Lender thereunder will be confirming to and agreeing
with Borrower, Agents and each other Lender hereunder that such assignee
understands and agrees to the terms of the Loan Documents, including Article IX
hereof.
(f) Agent shall maintain a copy of each Assignment and Assumption
Agreement and a register for the recordation of the names and addresses of
Lenders and the Percentage Shares of, and principal amount of the Loans owing
to, each Lender from time to time (in this section called the "Register"). The
entries in the Register shall be conclusive, in the absence of manifest error,
and Borrower and each Bank Party may treat each Person whose name is recorded
in the Register as a Lender hereunder for all purposes. The Register shall be
available for inspection by Borrower or any Bank Party at any reasonable time
and from time to time upon reasonable prior notice.
Section 10.6. Confidentiality. Each Bank Party agrees that it will
take all reasonable steps to keep confidential any proprietary information
given to it by Borrower or any of its
69
75
Subsidiaries, provided, however, that this restriction shall not apply to
information which (i) has at the time in question entered the public domain,
(ii) is required to be disclosed by Law (whether valid or invalid) of any
Tribunal, (iii) is disclosed to any Bank Party's Affiliates, auditors,
attorneys, or agents, (iv) is furnished to any other Bank Party or to any
purchaser or prospective purchaser of participations or other interests in any
Loan or Loan Document, provided each such purchaser or prospective purchaser
first agrees to hold such information in confidence on the terms provided in
this section), or (v) is disclosed in the course of enforcing its rights and
remedies during the existence of an Event of Default.
Section 10.7. Governing Law; Submission to Process. EXCEPT TO THE
EXTENT THAT THE LAW OF ANOTHER JURISDICTION IS EXPRESSLY ELECTED IN A LOAN
DOCUMENT, THE LOAN DOCUMENTS SHALL BE DEEMED CONTRACTS AND INSTRUMENTS MADE
UNDER THE LAWS OF THE STATE OF NEW YORK AND SHALL BE CONSTRUED AND ENFORCED IN
ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK AND THE LAWS
OF THE UNITED STATES OF AMERICA, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF
LAW. BORROWER HEREBY AGREES THAT ANY LEGAL ACTION OR PROCEEDING AGAINST
BORROWER WITH RESPECT TO THIS AGREEMENT, THE NOTES OR ANY OF THE LOAN DOCUMENTS
MAY BE BROUGHT IN THE COURTS OF THE STATE OF NEW YORK OR OF THE UNITED STATES
OF AMERICA FOR THE SOUTHERN DISTRICT OF NEW YORK AS BANK PARTIES MAY ELECT,
AND, BY EXECUTION AND DELIVERY HEREOF, BORROWER ACCEPTS AND CONSENTS FOR ITSELF
AND IN RESPECT TO ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, THE JURISDICTION
OF THE AFORESAID COURTS, AND FURTHER AGREES TO A TRANSFER OF ANY SUCH
PROCEEDING TO A FEDERAL COURT SITTING IN THE STATE OF NEW YORK TO THE EXTENT
THAT IT HAS SUBJECT MATTER JURISDICTION, AND OTHERWISE TO A STATE COURT IN NEW
YORK, NEW YORK, AND AGREES THAT SUCH JURISDICTION SHALL BE EXCLUSIVE, UNLESS
WAIVED BY BANK PARTIES IN WRITING, WITH RESPECT TO ANY ACTION OR PROCEEDING
BROUGHT BY IT AGAINST BANK PARTIES AND ANY QUESTIONS RELATING TO USURY.
BORROWER AGREES THAT SECTIONS 5-1401 AND 5-1402 OF THE GENERAL OBLIGATIONS LAW
OF THE STATE OF NEW YORK SHALL APPLY TO THE LOAN DOCUMENTS AND WAIVES ANY RIGHT
TO STAY OR TO DISMISS ANY ACTION OR PROCEEDING BROUGHT BEFORE SAID COURTS ON
THE BASIS OF FORUM NON CONVENIENS. IN FURTHERANCE OF THE FOREGOING, BORROWER
HEREBY IRREVOCABLY DESIGNATES AND APPOINTS CT CORPORATION SYSTEM, 1633
BROADWAY, NEW YORK, NEW YORK, AS AGENT OF BORROWER TO RECEIVE SERVICE OF ALL
PROCESS BROUGHT AGAINST BORROWER WITH RESPECT TO ANY SUCH
70
76
PROCEEDING IN ANY SUCH COURT IN NEW YORK, SUCH SERVICE BEING HEREBY
ACKNOWLEDGED BY BORROWER TO BE EFFECTIVE AND BINDING SERVICE IN EVERY RESPECT.
COPIES OF ANY SUCH PROCESS SO SERVED SHALL ALSO, IF PERMITTED BY LAW, BE SENT
BY REGISTERED MAIL TO BORROWER AT ITS ADDRESS SET FORTH BELOW, BUT THE FAILURE
OF BORROWER TO RECEIVE SUCH COPIES SHALL NOT AFFECT IN ANY WAY THE SERVICE OF
SUCH PROCESS AS AFORESAID. BORROWER SHALL FURNISH TO BANK PARTIES A CONSENT OF
CT CORPORATION SYSTEM AGREEING TO ACT HEREUNDER PRIOR TO THE EFFECTIVE DATE OF
THIS AGREEMENT. NOTHING HEREIN SHALL AFFECT THE RIGHT OF BANK PARTIES TO SERVE
PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR SHALL LIMIT THE RIGHT OF BANK
PARTIES TO BRING PROCEEDINGS AGAINST BORROWER IN THE COURTS OF ANY OTHER
JURISDICTION. IF FOR ANY REASON CT CORPORATION SYSTEM SHALL RESIGN OR OTHERWISE
CEASE TO ACT AS BORROWER'S AGENT, BORROWER HEREBY IRREVOCABLY AGREES TO (A)
IMMEDIATELY DESIGNATE AND APPOINT A NEW AGENT ACCEPTABLE TO AGENT TO SERVE IN
SUCH CAPACITY AND, IN SUCH EVENT, SUCH NEW AGENT SHALL BE DEEMED TO BE
SUBSTITUTED FOR CT CORPORATION SYSTEM FOR ALL PURPOSES HEREOF AND (B) PROMPTLY
DELIVER TO BANK PARTIES THE WRITTEN CONSENT (IN FORM AND SUBSTANCE SATISFACTORY
TO AGENT) OF SUCH NEW AGENT AGREEING TO SERVE IN SUCH CAPACITY.
Section 10.8. Limitation on Interest. Bank Parties, Restricted Persons
and the other parties to the Loan Documents intend to contract in strict
compliance with applicable usury Law from time to time in effect. In
furtherance thereof such persons stipulate and agree that none of the terms and
provisions contained in the Loan Documents shall ever be construed to provide
for interest in excess of the maximum amount of interest permitted to be
charged by applicable Law from time to time in effect. Neither any Restricted
Person nor any present or future guarantors, endorsers, or other Persons
hereafter becoming liable for payment of any Obligation shall ever be liable
for unearned interest thereon or shall ever be required to pay interest thereon
in excess of the maximum amount that may be lawfully charged under applicable
Law from time to time in effect, and the provisions of this section shall
control over all other provisions of the Loan Documents which may be in
conflict or apparent conflict herewith.
Section 10.9. Termination; Limited Survival. In its sole and absolute
discretion Borrower may at any time that no Obligations are owing elect in a
written notice delivered to Agent to terminate this Agreement. Upon receipt by
Agent of such a notice, if no Obligations are then owing this Agreement and all
other Loan Documents shall thereupon be terminated and the parties thereto
released from all prospective obligations thereunder. Notwithstanding the
foregoing or anything herein to the contrary, any waivers or admissions made by
any
71
77
Restricted Person in any Loan Document, any Obligations under Sections 3.2
through 3.6, and any obligations which any Person may have to indemnify or
compensate any Bank Party shall survive any termination of this Agreement or
any other Loan Document. At the request and expense of Borrower, Agent shall
prepare and execute all necessary instruments to reflect and effect such
termination of the Loan Documents. Agent is hereby authorized to execute all
such instruments on behalf of all Lenders, without the joinder of or further
action by any Lender.
Section 10.10. Severability. If any term or provision of any Loan
Document shall be determined to be illegal or unenforceable all other terms and
provisions of the Loan Documents shall nevertheless remain effective and shall
be enforced to the fullest extent permitted by applicable Law.
Section 10.11. Counterparts. This Agreement may be separately executed
in any number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed shall be deemed to constitute one
and the same Agreement.
Section 10.12. Waiver of Jury Trial, Punitive Damages, etc. TO THE
EXTENT PERMITTED BY LAW, BANK PARTIES AND BORROWER HEREBY KNOWINGLY,
VOLUNTARILY, AND INTENTIONALLY WAIVE ANY RIGHTS THEY MAY HAVE TO A TRIAL BY
JURY IN RESPECT OF ANY LITIGATION BASED HEREON, OR DIRECTLY OR INDIRECTLY
ARISING OUT OF, UNDER, OR IN CONNECTION WITH, THIS AGREEMENT OR ANY OTHER LOAN
DOCUMENT, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER
VERBAL OR WRITTEN) OR ACTIONS OF SUCH PERSONS OR BORROWER. THIS PROVISION IS
A MATERIAL INDUCEMENT FOR BANK PARTIES' ENTERING INTO THIS AGREEMENT AND THE
OTHER LOAN DOCUMENTS. BORROWER AND EACH BANK PARTY HEREBY FURTHER (A)
IRREVOCABLY WAIVES, TO THE MAXIMUM EXTENT NOT PROHIBITED BY LAW, ANY RIGHT IT
MAY HAVE TO CLAIM OR RECOVER IN ANY SUCH LITIGATION ANY "SPECIAL DAMAGES", AS
DEFINED BELOW, (B) CERTIFIES THAT NO PARTY HERETO NOR ANY REPRESENTATIVE OR
AGENT OR COUNSEL FOR ANY PARTY HERETO HAS REPRESENTED, EXPRESSLY OR OTHERWISE,
OR IMPLIED THAT SUCH PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO
ENFORCE THE FOREGOING WAIVERS, AND (C) ACKNOWLEDGES THAT IT HAS BEEN INDUCED TO
ENTER INTO THIS AGREEMENT, THE OTHER LOAN DOCUMENTS AND THE TRANSACTIONS
CONTEMPLATED HEREBY AND THEREBY BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND
CERTIFICATIONS CONTAINED IN THIS SECTION. AS USED IN THIS SECTION, "SPECIAL
DAMAGES" INCLUDES ALL SPECIAL, CONSEQUENTIAL, EXEMPLARY, OR PUNITIVE DAMAGES
(REGARDLESS OF HOW NAMED), BUT DOES NOT INCLUDE ANY PAYMENTS OR
72
78
FUNDS WHICH ANY PARTY HERETO HAS EXPRESSLY PROMISED TO PAY OR DELIVER TO ANY
OTHER PARTY HERETO.
Section 10.13. Restatement of Original Agreement. Borrower and its
Subsidiaries refinanced the purchase of certain of the Plants and the
Stand-Alone Gathering Systems pursuant to that certain Credit Agreement dated
as of December 30, 1996 among Borrower, ING Capital, individually and as agent,
and the lenders named therein (as heretofore amended, the "Original
Agreement"). Each lender under the Original Agreement (other than ING Capital)
is contemporaneously herewith selling and assigning all outstanding promissory
notes under the Original Agreement to ING Capital, and this Agreement, the
Notes and the other Loan Documents amend, restate, renew and extend (but do not
novate or extinguish) the Original Agreement, the "Notes" and the "Loan
Documents" (as defined therein) and the obligations and indebtedness
thereunder.
To confirm Bank Parties' understanding concerning the Original
Agreement and Borrower's and its Subsidiaries' obligations and indebtedness
thereunder, and to induce each Bank Party to enter into this Agreement and to
extend credit hereunder, Borrower represents and warrants to each Bank Party
that the Original Agreement and each "Loan Document" (as defined therein) has
been duly authorized, executed and delivered and is a legal, valid and binding
obligation of each Restricted Person which is a party hereto or thereto,
enforceable in accordance with its terms, except as such enforcement may be
limited by bankruptcy, insolvency or similar Laws of general application
relating to the enforcement of creditors' rights. In furtherance of the
foregoing, BORROWER HEREBY WAIVES IN ALL RESPECTS ANY AND ALL DEFENSES,
SETOFFS, DEDUCTIONS AND COUNTERCLAIMS WHICH MAY EXIST AS OF THE DATE HEREOF
WHICH ANY RESTRICTED PERSON MAY HAVE TO THE PERFORMANCE OF THE OBLIGATIONS AND
PAYMENT OF THE INDEBTEDNESS DESCRIBED THEREIN, including any defense based upon
the invalidity, deficiency, illegality, or unenforceability of the Original
Agreement, any "Note" or any "Loan Document" (as defined therein), in whole or
in part, including any defense based upon any claim of usury, any bar by any
Law or any statute of limitations or other law of recovery on any of the
obligations or indebtedness described therein, or any defense or excuse for
failure to perform on account of force majeure, act of God, casualty,
impossibility, impracticability, or other defense or excuse whatsoever.
73
79
IN WITNESS WHEREOF, this Agreement is executed as of the date first
written above.
CONTINENTAL NATURAL GAS, INC.
Borrower
By:
---------------------------------------
Garry D. Smith, Vice President - Controller
Address:
1400 Boston Building
1412 So. Boston, Suite 500
Tulsa, Oklahoma 74119
Attention: Garry D. Smith
Telephone: (918) 582-4700
Telecopy: (918) 560-4900
74
80
ING (U.S.) CAPITAL CORPORATION, as Agent
By:
---------------------------------------
W. King Grant, Senior Vice President
Address:
135 East 57th Street
New York, New York 10022
Attention: W. King Grant
Telephone: 212-409-1730
Telecopy: 212-832-3616
REVOLVING CREDIT LENDERS:
ING (U.S.) CAPITAL CORPORATION,
as a Revolving Credit Lender and LC Issuer
By:
---------------------------------------
W. King Grant, Senior Vice President
TERM LENDERS:
ING (U.S.) CAPITAL CORPORATION
By:
---------------------------------------
W. King Grant, Senior Vice President
75
81
LENDER SCHEDULE
LENDER SCHEDULE
Revolving Credit Term Loan
Percentage
Name of Lender Percentage Amount Percentage Amount Share
- -------------- ---------- ------ ---------- ------ -----
ING (U.S.) Capital Corporation 100% $25,000,000 100% $75,000,000 100%
82
SCHEDULE 1
DISCLOSURE SCHEDULE
To supplement the following sections of the Agreement of which this
Schedule is a part, Borrower hereby makes the following disclosures:
1. Section 5.9 Litigation:
Colorado Interstate Gas Company, Plaintiff v. C&L Processors and
Warren Petroleum Co., a Division of Chevron USA, Inc., Defendants, and
Third Party Plaintiffs v. Continental Hydrocarbons, Inc., Third Party
Defendant, Case No. 93CV1894, Dist. Ct., El Paso County, Colorado. CIG
has asserted claims against CHI (and, pursuant to a pending motion,
CNG) relating to processing of CIG gas at the Mocane Plant. CIG seeks
recovery of approximately $1,500,000-$3,000,000 relating to processing
since April 30, 1996. CNG disputes the amounts due CIG and has
established some reserves.
Settlement discussions regarding the above litigation are ongoing.
2. Section 5.12 Environmental and Other Laws:
Asbestos is present at the Mocane Plant as set forth on page 4 of the
report dated October 31, 1996 by Pilko & Associates, Inc. to ING
Capital (the "Pilko Report"). Borrower has created and maintains an
Asbestos Operations and Maintenance Plan.
Groundwater contamination is present at the Laverne Plant as set forth
on pages 6 and 7 of the Pilko Report. Remediation has been ongoing
since approximately 1993.
Underground tanks used for the storage of Natural Gas liquids are
located at the Mocane Plant.
Matters disclosed in Schedule 2.01(q) of the Agreement and Plan of
Merger dated November 24, 1997, between Borrower, Coda Energy, Inc.,
and others.
3. Sections 5.13 and 10.3 Names and Places of Business:
Other Names: Continental Hydrocarbons, Inc.
(predecessor to Continental Hydrocarbons, L.L.C.)
1
83
4. Section 5.14 Borrower's Subsidiaries and Stockholdings:
Continental Holdings Company, an Oklahoma corporation ("CHC")
(100% of capital stock owned by Borrower)
Continental Hydrocarbons, L.L.C., an Oklahoma limited
liability company (99% of interests owned by Borrower, 1%
by CHC)
Continental Natural Gas Gathering, L.L.C., an Oklahoma
limited liability company (99% of interests owned by
Borrower, 1% by CHC)
Continental Gas Processing, L.L.C., an Oklahoma limited
liability company (99% of interests owned by Borrower, 1%
by CHC)
Continental Spearman Gas Processing, L.L.C., an Oklahoma
limited liability company (99% of interests owned by
Borrower, 1% by CHC)
Continental Laverne Gas Processing, L.L.C., an Oklahoma
limited liability company (99% of interests owned by
Borrower, 1% by CHC)
Continental/Taurus Holdings Company, L.L.C., an Oklahoma
limited liability company (100% of interests owned by
Borrower)
Continental/Taurus Acquisition Corp. a Delaware corporation
(100% of capital stock owned by C/T Holdings)
(To be merged into Taurus LP following acquisition)
Continental/Taurus Energy Company, L.P., a Delaware limited
partnership (1% general partnership interest owned by CHC,
99% limited partnership interest initially owned by C/T
Acquisition) (after C/T Acquisition/Taurus LP merger, to
be owned by C/T Holdings)
Continental Energy Services, L.L.C., an Oklahoma limited
liability company (99% of interests owned by Borrower, 1%
by CHC)
2
84
SCHEDULE 2
SECURITY SCHEDULE
1. Guaranty dated December 30, 1996 by Continental Hydrocarbons,
Continental Gathering, Continental Processing and Continental Holdings
Company ("CHC") in favor of ING Capital, individually and as Agent, as
amended by First Amendment to Guaranty dated November 25, 1997.
2. Guaranty dated June 12, 1997 by Continental Laverne in favor of ING
Capital, individually and as Agent, as amended by First Amendment to
Guaranty dated November 25, 1997.
3. Guaranty dated July 1, 1997 by Continental Spearman in favor of ING
Capital, individually and as Agent, as amended by First Amendment to
Guaranty dated November 25, 1997.
4. Guaranty dated November 25, 1997 by C/T Holdings and C/T Acquisition
in favor of ING Capital, individually and as Agent, with Ratification
by Taurus LP to be delivered post-merger.
5. Security Agreement dated December 30, 1996 by each of Borrower,
Continental Hydrocarbons, Continental Gathering, Continental
Processing and CHC, in favor of ING Capital, individually and as
Agent, covering all personal property, as amended by First Amendment
to Security Agreement dated November 25, 1997.
6. Security Agreement dated June 12, 1997 by Continental Laverne in favor
of ING Capital, individually and as Agent, covering all personal
property, as amended by First Amendment to Security Agreement dated
November 25, 1997.
7. Security Agreement dated July 1, 1997 by Continental Spearman in favor
of ING Capital, individually and as Agent, covering all personal
property, as amended by First Amendment to Security Agreement dated
November 25, 1997.
8. Security Agreement dated November 25, 1997 by each of C/T Holdings and
Taurus LP, in favor of ING Capital, individually and as Agent,
covering all personal property, to be delivered post-merger by Taurus
LP.
9. UCC-1 Financing Statements covering the collateral described in the
foregoing Security Agreements, naming ING Capital, individually and as
Agent, as secured party.
10. Pledge Agreement dated December 30, 1996 in favor of ING Capital,
individually and as Agent, as amended by First Amendment to Pledge
Agreement dated June 12, 1997, Second Amendment to Pledge Agreement
dated July 1, 1997 and Third Amendment to Pledge Agreement dated
November 25, 1997, by Borrower, CHC, C/T Holdings and
1
85
C/T Acquisition pledging all stock, partnership and ownership
interests in the Subsidiaries.
11. UCC-1 Financing Statements covering the collateral described in the
Pledge Agreement, naming ING Capital, individually and as Agent, as
secured party.
12. Deed of Trust, Mortgage, Security Agreement, Fixture Filing and
Financing Statement dated December 30, 1996 by Borrower, Continental
Hydrocarbons, Continental Gathering and Continental Processing in
favor of ING Capital, covering (i) the Beaver Plant and related
gathering system and facilities, (ii) the Mocane Plant and related
facilities and (iii) the Stand-Alone Gathering Systems, as amended by
First Amendment to Deed of Trust dated November 25, 1997.
13. Deed of Trust, Mortgage, Security Agreement, Fixture Filing and
Financing Statement dated June 12, 1997 by Continental Laverne in
favor of ING Capital, covering the Laverne Plant and related gathering
system and facilities.
14. Deed of Trust, Mortgage, Security Agreement, Fixture Filing and
Financing Statement dated November 25, 1997 by Taurus LP in favor of
ING Capital, covering (i) the Shackleford Plant and related gathering
system and facilities, (ii) the Hamlin Plant and related gathering
system and facilities, to be delivered post-merger.
15. UCC-1 Financing Statements covering the collateral described in the
foregoing Mortgages, naming ING Capital, individually and as Agent, as
secured party.
2
86
SCHEDULE 3
INSURANCE SCHEDULE
1
87
EXHIBIT A
REVOLVING CREDIT NOTE
$25,000,000 New York, New York November 25, 1997
FOR VALUE RECEIVED, the undersigned, Continental Natural Gas, Inc., an
Oklahoma corporation (herein called "Borrower"), hereby promises to pay to the
order of ING (U.S.) CAPITAL CORPORATION (herein called "Revolving Credit
Lender"), the principal sum of Twenty-Five Million Dollars ($25,000,000), or,
if greater or less, the aggregate unpaid principal amount of the Revolving
Credit Loans made under this Revolving Credit Note by Revolving Credit Lender
to Borrower pursuant to the terms of the Credit Agreement (as hereinafter
defined), together with interest on the unpaid principal balance thereof as
hereinafter set forth, both principal and interest payable as herein provided
in lawful money of the United States of America at the offices of the Agent
under the Credit Agreement, 135 East 57th Street, New York, New York or at such
other place within New York County, New York, as from time to time may be
designated by the holder of this Revolving Credit Note.
This Revolving Credit Note (a) is issued and delivered under that
certain Credit Agreement of even date herewith among Borrower, ING (U.S.)
Capital Corporation, as Agent, and the lenders (including Revolving Credit
Lender) referred to therein (herein, as from time to time supplemented, amended
or restated, called the "Credit Agreement"), and is a "Revolving Credit Note"
as defined therein, (b) is subject to the terms and provisions of the Credit
Agreement, which contains provisions for payments and prepayments hereunder and
acceleration of the maturity hereof upon the happening of certain stated
events, and (c) is secured by and entitled to the benefits of certain Security
Documents (as identified and defined in the Credit Agreement). Payments on this
Revolving Credit Note shall be made and applied as provided herein and in the
Credit Agreement. Reference is hereby made to the Credit Agreement for a
description of certain rights, limitations of rights, obligations and duties of
the parties hereto and for the meanings assigned to terms used and not defined
herein and to the Security Documents for a description of the nature and extent
of the security thereby provided and the rights of the parties thereto.
For the purposes of this Revolving Credit Note, the following terms
have the meanings assigned to them below:
"Base Rate Payment Date" means (i) the last day of each
March, June, September and December, beginning December 31, 1997, and
(ii) any day on which past due interest or principal is owed hereunder
and is unpaid. If the terms hereof or of the Credit Agreement provide
that payments of interest or principal hereon shall be deferred from
one Base Rate Payment Date to another day, such other day shall also
be a Base Rate Payment Date.
1
88
"Eurodollar Rate Payment Date" means, with respect to any
Eurodollar Loan: (i) the day on which the related Interest Period ends
(and, if such Interest Period is three months or longer, the
three-month anniversary of the first day of such Interest Period), and
(ii) any day on which past due interest or past due principal is owed
hereunder with respect to such Eurodollar Loan and is unpaid. If the
terms hereof or of the Credit Agreement provide that payments of
interest or principal with respect to such Eurodollar Loan shall be
deferred from one Eurodollar Rate Payment Date to another day, such
other day shall also be a Eurodollar Rate Payment Date.
The principal amount of this Note, together with all interest accrued
hereon, shall be due and payable in full on the Revolving Credit Commitment
Termination Date.
So long as no Default has occurred and is continuing, the Base Rate
Loans from time to time outstanding shall bear interest on each day outstanding
at the Base Rate in effect on such day. On each Base Rate Payment Date Borrower
shall pay to the holder hereof all unpaid interest which has accrued on the
Base Rate Loans to but not including such Base Rate Payment Date. So long as no
Default has occurred and is continuing, each Eurodollar Loan shall bear
interest on each day during the related Interest Period at the related
Eurodollar Rate in effect on such day. On each Eurodollar Rate Payment Date
relating to such Eurodollar Loan, Borrower shall pay to the holder hereof all
unpaid interest which has accrued on such Eurodollar Loan to but not including
such Eurodollar Rate Payment Date. Upon the occurrence and during the
continuance of a Default, the Base Rate Loans and the Eurodollar Loans shall
bear interest on each day outstanding at the Default Rate in effect on such
day, and such interest shall be due and payable daily as it accrues.
Notwithstanding the foregoing provisions of this paragraph: (a) this Revolving
Credit Note shall never bear interest in excess of the Highest Lawful Rate, and
(b) if at any time the rate at which interest is payable on this Revolving
Credit Note is limited by the Highest Lawful Rate (by the foregoing clause (a)
or by reference to the Highest Lawful Rate in the definitions of Base Rate,
Eurodollar Rate, and Default Rate), this Revolving Credit Note shall bear
interest at the Highest Lawful Rate and shall continue to bear interest at the
Highest Lawful Rate until such time as the total amount of interest accrued
hereon equals (but does not exceed) the total amount of interest which would
have accrued hereon had there been no Highest Lawful Rate applicable hereto.
Notwithstanding the foregoing paragraph and all other provisions of
this Revolving Credit Note, in no event shall the interest payable hereon,
whether before or after maturity, exceed the maximum interest which, under
applicable Law, may be charged on this Revolving Credit Note, and this
Revolving Credit Note is expressly made subject to the provisions of the Credit
Agreement which more fully set out the limitations on how interest accrues
hereon.
If this Revolving Credit Note is placed in the hands of an attorney
for collection after default, or if all or any part of the indebtedness
represented hereby is proved, established or collected in any court or in any
bankruptcy, receivership, debtor relief, probate or other court proceedings,
Borrower and all endorsers, sureties and guarantors of this Revolving Credit
Note jointly and severally agree to pay reasonable attorneys' fees and
collection costs to the holder hereof in addition to the principal and interest
payable hereunder.
2
89
Borrower and all endorsers, sureties and guarantors of this Revolving
Credit Note hereby severally waive demand, presentment, notice of demand and of
dishonor and nonpayment of this Revolving Credit Note, protest, notice of
protest, notice of intention to accelerate the maturity of this Revolving
Credit Note, declaration or notice of acceleration of the maturity of this
Revolving Credit Note, diligence in collecting, the bringing of any suit
against any party and any notice of or defense on account of any extensions,
renewals, partial payments or changes in any manner of or in this Revolving
Credit Note or in any of its terms, provisions and covenants, or any releases
or substitutions of any security, or any delay, indulgence or other act of any
trustee or any holder hereof, whether before or after maturity.
THIS REVOLVING CREDIT NOTE AND THE RIGHTS AND DUTIES OF THE PARTIES
HERETO SHALL BE GOVERNED BY THE LAWS OF THE STATE OF NEW YORK (WITHOUT REGARD
TO PRINCIPLES OF CONFLICTS OF LAW), EXCEPT TO THE EXTENT THE SAME ARE GOVERNED
BY APPLICABLE FEDERAL LAW.
This Revolving Credit Note renews and extends (but does not extinguish
or novate) those certain Revolving Credit Notes dated February 28, 1997 made by
Borrower in the aggregate original principal amount of $25,000,000, each of
which is now payable to the order of ING (U.S.) Capital Corporation, as
assignee, which Revolving Credit Notes in turn renewed and extended the
indebtedness described therein.
CONTINENTAL NATURAL GAS, INC.
By:
-----------------------------------------
Garry D. Smith, Vice President - Controller
3
90
EXHIBIT B
TERM NOTE
$75,000,000 New York, New York November 25, 1997
FOR VALUE RECEIVED, the undersigned, Continental Natural Gas, Inc., an
Oklahoma corporation (herein called "Borrower"), hereby promises to pay to the
order of ING (U.S.) CAPITAL CORPORATION (herein called "Term Lender"), the
principal sum of Seventy-Five Million Dollars ($75,000,000), or, if greater or
less, the aggregate unpaid principal amount of the Term Loans made under this
Term Note by Term Lender to Borrower pursuant to the terms of the Credit
Agreement (as hereinafter defined), together with interest on the unpaid
principal balance thereof as hereinafter set forth, both principal and interest
payable as herein provided in lawful money of the United States of America at
the offices of the Agent under the Credit Agreement, 135 East 57th Street, New
York, New York or at such other place within New York County, New York, as from
time to time may be designated by the holder of this Term Note.
This Term Note (a) is issued and delivered under that certain Credit
Agreement of even date herewith among Borrower, ING (U.S.) Capital Corporation,
as Agent, and the lenders (including Term Lender) referred to therein (herein,
as from time to time supplemented, amended or restated, called the "Credit
Agreement"), and is a "Term Note" as defined therein, (b) is subject to the
terms and provisions of the Credit Agreement, which contains provisions for
payments and prepayments hereunder and acceleration of the maturity hereof upon
the happening of certain stated events, and (c) is secured by and entitled to
the benefits of certain Security Documents (as identified and defined in the
Credit Agreement). Payments on this Term Note shall be made and applied as
provided herein and in the Credit Agreement. Reference is hereby made to the
Credit Agreement for a description of certain rights, limitations of rights,
obligations and duties of the parties hereto and for the meanings assigned to
terms used and not defined herein and to the Security Documents for a
description of the nature and extent of the security thereby provided and the
rights of the parties thereto.
For the purposes of this Term Note, the following terms have the
meanings assigned to them below:
"Base Rate Payment Date" means (i) the last day of each
March, June, September and December, beginning December 31, 1997, and
(ii) any day on which past due interest or principal is owed hereunder
and is unpaid. If the terms hereof or of the Credit Agreement provide
that payments of interest or principal hereon shall be deferred from
one Base Rate Payment Date to another day, such other day shall also
be a Base Rate Payment Date.
"Eurodollar Rate Payment Date" means, with respect to any
Eurodollar Loan: (i) the day on which the related Interest Period ends
(and, if such Interest Period is
1
91
three months or longer, the three-month anniversary of the first day
of such Interest Period), and (ii) any day on which past due interest
or past due principal is owed hereunder with respect to such
Eurodollar Loan and is unpaid. If the terms hereof or of the Credit
Agreement provide that payments of interest or principal with respect
to such Eurodollar Loan shall be deferred from one Eurodollar Rate
Payment Date to another day, such other day shall also be a Eurodollar
Rate Payment Date.
The principal amount of this Note, together with all interest accrued
hereon, shall be due and payable in full on December 31, 2002.
So long as no Default has occurred and is continuing, the Base Rate
Loans from time to time outstanding shall bear interest on each day outstanding
at the Base Rate in effect on such day. On each Base Rate Payment Date Borrower
shall pay to the holder hereof all unpaid interest which has accrued on the
Base Rate Loans to but not including such Base Rate Payment Date. So long as no
Default has occurred and is continuing, each Eurodollar Loan (exclusive of any
past due principal or interest) shall bear interest on each day during the
related Interest Period at the related Eurodollar Rate in effect on such day.
On each Eurodollar Rate Payment Date relating to such Eurodollar Loan, Borrower
shall pay to the holder hereof all unpaid interest which has accrued on such
Eurodollar Loan to but not including such Eurodollar Rate Payment Date. Upon
the occurrence and during the continuance of a Default, the Base Rate Loans and
the Eurodollar Loans shall bear interest on each day outstanding at the Default
Rate in effect on such day, and such interest shall be due and payable daily as
it accrues. Notwithstanding the foregoing provisions of this paragraph: (a)
this Term Note shall never bear interest in excess of the Highest Lawful Rate,
and (b) if at any time the rate at which interest is payable on this Term Note
is limited by the Highest Lawful Rate (by the foregoing clause (a) or by
reference to the Highest Lawful Rate in the definitions of Base Rate,
Eurodollar Rate, and Default Rate), this Term Note shall bear interest at the
Highest Lawful Rate and shall continue to bear interest at the Highest Lawful
Rate until such time as the total amount of interest accrued hereon equals (but
does not exceed) the total amount of interest which would have accrued hereon
had there been no Highest Lawful Rate applicable hereto.
Notwithstanding the foregoing paragraph and all other provisions of
this Term Note, in no event shall the interest payable hereon, whether before
or after maturity, exceed the maximum interest which, under applicable Law, may
be charged on this Term Note, and this Term Note is expressly made subject to
the provisions of the Credit Agreement which more fully set out the limitations
on how interest accrues hereon.
If this Term Note is placed in the hands of an attorney for collection
after default, or if all or any part of the indebtedness represented hereby is
proved, established or collected in any court or in any bankruptcy,
receivership, debtor relief, probate or other court proceedings, Borrower and
all endorsers, sureties and guarantors of this Term Note jointly and severally
agree to pay reasonable attorneys' fees and collection costs to the holder
hereof in addition to the principal and interest payable hereunder.
2
92
Borrower and all endorsers, sureties and guarantors of this Term Note
hereby severally waive demand, presentment, notice of demand and of dishonor
and nonpayment of this Term Note, protest, notice of protest, notice of
intention to accelerate the maturity of this Term Note, declaration or notice
of acceleration of the maturity of this Term Note, diligence in collecting, the
bringing of any suit against any party and any notice of or defense on account
of any extensions, renewals, partial payments or changes in any manner of or in
this Term Note or in any of its terms, provisions and covenants, or any
releases or substitutions of any security, or any delay, indulgence or other
act of any trustee or any holder hereof, whether before or after maturity.
THIS TERM NOTE AND THE RIGHTS AND DUTIES OF THE PARTIES HERETO SHALL
BE GOVERNED BY THE LAWS OF THE STATE OF NEW YORK (WITHOUT REGARD TO PRINCIPLES
OF CONFLICTS OF LAW), EXCEPT TO THE EXTENT THE SAME ARE GOVERNED BY APPLICABLE
FEDERAL LAW.
This Term Note renews, extends and increases (but does not extinguish
or novate) those certain Term Notes dated February 28, 1997 made by Borrower in
the aggregate original principal amounts of $39,000,000, each of which is now
payable to the order of ING (U.S.) Capital Corporation, as assignee, which Term
Notes in turn renewed and extended certain indebtedness described therein.
CONTINENTAL NATURAL GAS, INC.
By:
-------------------------------------------
Garry D. Smith, Vice President - Controller
3
93
EXHIBIT C-1
BORROWING NOTICE
Reference is made to that certain Amended and Restated Credit
Agreement dated as of November 25, 1997 (as from time to time amended, the
"Agreement"), by and among Continental Natural Gas, Inc., ("Borrower"), ING
(U.S.) Capital Corporation, as Agent, and certain financial institutions
("Lenders"). Terms which are defined in the Agreement are used herein with the
meanings given them in the Agreement.
Borrower hereby requests a Borrowing of new Revolving Credit Loans to
be advanced pursuant to Section 2.2(a) of the Agreement as follows:
Aggregate amount of Revolving Credit Loan Borrowing: $_________________
Type of Revolving Credit Loans in Borrowing: __________________
Date on which Revolving Credit Loans are to be advanced: __________________
Length of Interest Period for Eurodollar Loans
(1, 2, 3 or 6 months): ___________ months
To induce Revolving Credit Lenders to make such Revolving Credit
Loans, Borrower hereby represents, warrants, acknowledges, and agrees to and
with Agent and each Lender that:
(a) The officer of Borrower signing this instrument is the
duly elected, qualified and acting officer of Borrower as indicated
below such officer's signature hereto having all necessary authority
to act for Borrower in making the request herein contained.
(b) The representations and warranties of Restricted Persons
set forth in the Agreement and the other Loan Documents are true and
correct on and as of the date hereof (except to the extent that the
facts on which such representations and warranties are based have been
changed by the extension of credit under the Agreement), with the same
effect as though such representations and warranties had been made on
and as of the date hereof.
(c) There does not exist on the date hereof any condition or
event which constitutes a Default which has not been waived in writing
as provided in Section 10.1(a) of the Agreement; nor will any such
Default exist upon Borrower's receipt and application of the Advances
requested hereby. Borrower will use the Revolving Credit Loans hereby
requested in compliance with Section 2.4 of the Agreement.
(d) Except to the extent waived in writing as provided in
Section 10.1(a) of the Agreement, Borrower and each of its
Subsidiaries have performed and complied with
1
94
all agreements and conditions in the Agreement required to be
performed or complied with by Borrower on or prior to the date
hereof, and each of the conditions precedent to Revolving Credit Loans
contained in the Agreement remains satisfied.
(e) The Revolving Credit Facility Usage, after the making of
the Revolving Credit Loans requested hereby, will not be in excess of
the Borrowing Base on the date requested for the making of such
Revolving Credit Loans.
(f) The Loan Documents have not been modified, amended or
supplemented by any unwritten representations or promises, by any
course of dealing, or by any other means not provided for in Section
10.1(a) of the Agreement. The Agreement and the other Loan Documents
are hereby ratified, approved, and confirmed in all respects.
The officer of Borrower signing this instrument hereby certifies that,
to the best of his knowledge after due inquiry, the above representations,
warranties, acknowledgments, and agreements of Borrower are true, correct and
complete.
IN WITNESS WHEREOF, this instrument is executed as of ____________,
19__.
CONTINENTAL NATURAL GAS, INC.
By:
-------------------------------------
Name:
Title:
2
95
EXHIBIT C-2
REQUEST FOR TERM LOANS
Reference is made to that certain Amended and Restated Credit
Agreement dated as of November 25, 1997 (as from time to time amended, the
"Agreement"), by and among Continental Natural Gas, Inc., ("Borrower"), ING
(U.S.) Capital Corporation, as Agent, and certain financial institutions
("Lenders"). Terms which are defined in the Agreement are used herein with the
meanings given them in the Agreement.
Borrower hereby requests a Borrowing of Term Loans to be advanced
pursuant to Section 2.2(b) of the Agreement as follows:
Aggregate amount of Term Loan Borrowing: $__________________
Type of Term Loans in Borrowing: __________________
Date on which Term Loans are to be advanced: __________________
Length of Interest Period for Eurodollar Loans
(1, 2, 3 or 6 months): ___________ months
To induce Term Lenders to make such Term Loans, Borrower hereby
represents, warrants, acknowledges, and agrees to and with Agent and each
Lender that:
(a) The officer of Borrower signing this instrument is the
duly elected, qualified and acting officer of Borrower as indicated
below such officer's signature hereto having all necessary authority
to act for Borrower in making the request herein contained.
(b) The representations and warranties of Borrower set forth
in the Agreement and the other Loan Documents are true and correct on
and as of the date hereof (except to the extent that the facts on
which such representations and warranties are based have been changed
by the extension of credit under the Agreement), with the same effect
as though such representations and warranties had been made on and as
of the date hereof.
(c) There does not exist on the date hereof any condition or
event which constitutes a Default which has not been waived in writing
as provided in Section 10.1(a) of the Agreement; nor will any such
Default exist upon Borrower's receipt and application of the Advances
requested hereby. Borrower will use the Term Loans hereby requested in
compliance with Section 2.4 of the Agreement.
(d) Except to the extent waived in writing as provided in
Section 10.1(a) of the Agreement, Borrower has performed and complied
with all agreements and conditions in the Agreement required to be
performed or complied with by Borrower on or prior
1
96
to the date hereof, and each of the conditions precedent to Term Loans
contained in the Agreement remains satisfied.
(e) The Loan Documents have not been modified, amended or
supplemented by any unwritten representations or promises, by any
course of dealing, or by any other means not provided for in Section
10.1(a) of the Agreement. The Agreement and the other Loan Documents
are hereby ratified, approved, and confirmed in all respects.
The officer of Borrower signing this instrument hereby certifies that,
to the best of his knowledge after due inquiry, the above representations,
warranties, acknowledgements, and agreements of Borrower are true, correct and
complete.
IN WITNESS WHEREOF, this instrument is executed as of ____________,
19__.
CONTINENTAL NATURAL GAS, INC.
By:
------------------------------------
Name:
Title:
2
97
EXHIBIT D
CONTINUATION/CONVERSION NOTICE
Reference is made to that certain Amended and Restated Credit
Agreement dated as of November 25, 1997 (as from time to time amended, the
"Agreement"), by and among Continental Natural Gas, Inc., ("Borrower"), ING
(U.S.) Capital Corporation, as Agent, and certain financial institutions
("Lenders"). Terms which are defined in the Agreement are used herein with the
meanings given them in the Agreement.
Borrower hereby requests a conversion or continuation of existing
[Revolving Credit/Term] Loans into a new Borrowing pursuant to Section 2.3 of
the Agreement as follows:
Existing Borrowing(s) to be continued or converted:
$___________ of Eurodollar Loans with Interest Period ending _______
$___________ of Base Rate Loans
Aggregate amount of new Borrowing: $__________________
Type of Loans in new Borrowing: __________________
Date of continuation or conversion: __________________
Length of Interest Period for Eurodollar Loans
(1, 2, 3 or 6 months): ___________ months
To meet the conditions set out in the Agreement for such
conversion/continuation, Borrower hereby represents, warrants, acknowledges,
and agrees to and with Agent and each Lender that:
(a) The officer of Borrower signing this instrument is the
duly elected, qualified and acting officer of Borrower as indicated
below such officer's signature hereto having all necessary authority
to act for Borrower in making the request herein contained.
(b) There does not exist on the date hereof any condition or
event which constitutes a Default which has not been waived in writing
as provided in Section 10.1(a) of the Agreement.
(c) The Loan Documents have not been modified, amended or
supplemented by any unwritten representations or promises, by any
course of dealing, or by any other means not provided for in Section
10.1(a) of the Agreement. The Agreement and the other Loan Documents
are hereby ratified, approved, and confirmed in all respects.
1
98
The officer of Borrower signing this instrument hereby certifies that,
to the best of his knowledge after due inquiry, the above representations,
warranties, acknowledgements, and agreements of Borrower are true, correct and
complete.
IN WITNESS WHEREOF this instrument is executed as of _________________.
CONTINENTAL NATURAL GAS, INC.
By:
----------------------------------
Name:
Title:
2
99
EXHIBIT E
CERTIFICATE ACCOMPANYING FINANCIAL STATEMENTS
Reference is made to that certain Amended and Restated Credit
Agreement dated as of November 25, 1997 (as from time to time amended, the
"Agreement"), by and among Continental Natural Gas, Inc., ("Borrower"), ING
(U.S.) Capital Corporation, as Agent, and certain financial institutions
("Lenders"), which Agreement is in full force and effect on the date hereof.
Terms which are defined in the Agreement are used herein with the meanings
given them in the Agreement.
This Certificate is furnished pursuant to Section 6.2(b) of the
Agreement. Together herewith Borrower is furnishing to Agent and each Lender
Borrower's *[audited/unaudited] financial statements (the "Financial
Statements") as at ____________ (the "Reporting Date"). Borrower hereby
represents, warrants, and acknowledges to Agent and each Lender that:
(a) the officer of Borrower signing this instrument is the
duly elected, qualified and acting ____________ of Borrower and as
such is Borrower's chief financial officer;
(b) the Financial Statements are accurate and complete and
satisfy the requirements of the Agreement;
(c) attached hereto is a schedule of calculations showing
Borrower's compliance as of the Reporting Date with the requirements
of Sections 7.11 through 7.14 of the Agreement *[and Borrower's
non-compliance as of such date with the requirements of Section(s)
____________ of the Agreement];
(d) on the Reporting Date Borrower was, and on the date
hereof Borrower is, in full compliance with the disclosure
requirements of Section 5.4 of the Agreement, and no Default otherwise
existed on the Reporting Date or otherwise exists on the date of this
instrument *[except for Default(s) under Section(s) ____________ of
the Agreement, which *[is/are] more fully described on a schedule
attached hereto].
(e) *[Unless otherwise disclosed on a schedule attached
hereto,] The representations and warranties of Borrower set forth in
the Agreement and the other Loan Documents are true and correct on and
as of the date hereof (except to the extent that the facts on which
such representations and warranties are based have been changed by the
extension of credit under the Agreement), with the same effect as
though such representations and warranties had been made on and as of
the date hereof.
The officer of Borrower signing this instrument hereby certifies that
he has reviewed the Loan Documents and the Financial Statements and has
otherwise undertaken such inquiry as is in his opinion necessary to enable him
to express an informed opinion with respect to the above representations,
warranties and acknowledgments of Borrower and, to the best of his
1
100
knowledge, such representations, warranties, and acknowledgments are true,
correct and complete.
IN WITNESS WHEREOF, this instrument is executed as of ____________,
19__.
CONTINENTAL NATURAL GAS, INC.
By:
----------------------------------
Name:
Title:
2
101
EXHIBIT F
CONTINENTAL NATURAL GAS, INC.
BORROWING BASE REPORT
AS OF ____________, 199__
A. Total Accounts Receivable Billed $___________
B. Less: Accounts over 90 days past due -___________
C. Discounts, allowances, rebates, credits
and adjustments -___________
D. Contra accounts, setoffs, defenses,
counterclaims -___________
E. Amounts billed for retainage -___________
F. Accounts owed by insolvent account debtors -___________
or other excluded by Agent
G. Accounts owed by Affiliates, officers or
employees of Borrower or any Affiliate -___________
H. Accounts not subject to first Liens -___________
in favor of Agent
I. Net Eligible Receivables ___________
J. Times Advance Rate x 80%
K. Borrowing Base $___________
L. Revolving Credit Commitment $25,000,000
M. Gross Availability (Lesser of Line K or Line L) $___________
N. Less Revolving Credit Facility Usage [$__________]
(Revolving Credit Loans and LC Obligations Outstanding)
O. Remaining Availability (Line M minus Line N) $___________
1
102
*If Line O is a negative amount, Borrower will, within fifteen (15) days after
Agent gives notice of such fact to Borrower, repay principal on the Revolving
Credit Notes by such amount.
2
103
The undersigned certifies that the information presented here, and any
financial statements presented in conjunction with this Borrowing Base Report,
are true and correct. The undersigned further certifies that he/she is an
officer of the corporation duly authorized to present such information for
purposes of obtaining credit.
CONTINENTAL NATURAL GAS, INC.
By:
--------------------------------
Name:
Title:
3
104
EXHIBIT G
ENVIRONMENTAL COMPLIANCE CERTIFICATE
Reference is made to that certain Amended and Restated Credit
Agreement dated as of November 25, 1997 (as from time to time amended, the
"Agreement"), by and among Continental Natural Gas, Inc., ("Borrower"), ING
(U.S.) Capital Corporation, as Agent, and certain financial institutions
("Lenders"), which Agreement is in full force and effect on the date hereof.
Terms which are defined in the Agreement are used herein with the meanings
given them in the Agreement. The undersigned, being the *[President/Chief
Executive Officer] of Borrower, hereby certifies to Agent and Lenders as
follows:
1. For the Fiscal Year ending immediately prior to the date
hereof, Borrower has complied and is complying with Section 5.12 of
the Credit Agreement *[except as set forth in Schedule I attached
hereto];
2. To the best knowledge of the undersigned after due
inquiry, Borrower and each of its Subsidiaries are on the date hereof
in compliance with all applicable Environmental Laws, noncompliance
with which could cause a Material Adverse Change;
3. Borrower has taken (and continues to take) steps to
minimize the generation of potentially harmful effluents;
4. Borrower is in the process of establishing an ongoing
program of conducting an internal audit of each operating facility of
Borrower to identify actual or potential environmental liabilities
which could cause a Material Adverse Change; and
5. Borrower is in the process of establishing an ongoing
program of training its employees in issues of environmental, health
and safety compliance, and Borrower presently has one or more
individuals in charge of implementing such training program.
The officer of Borrower signing this instrument hereby certifies that,
to the best of his knowledge after due inquiry and consultation with the
operating officers of Borrower, the above representations, warranties,
acknowledgments, and agreements of Borrower are true, correct and complete.
IN WITNESS WHEREOF, this instrument is executed as of ____________,
19__.
CONTINENTAL NATURAL GAS, INC.
By:
--------------------------------------
Name:
Title:
1
105
EXHIBIT H
LETTER OF CREDIT APPLICATION AND AGREEMENT
[Attach ING Letter of Credit Application and Agreement]
1
106
EXHIBIT I
OPINION OF ALBRIGHT & RUSHER, A PROFESSIONAL CORPORATION
COUNSEL FOR RESTRICTED PERSONS
[Attach form of Opinion]
1
107
EXHIBIT J
ASSIGNMENT AND ASSUMPTION AGREEMENT
Date _______________, ______
Reference is made to that certain Amended and Restated Credit
Agreement dated as of November 25, 1997 (as from time to time amended, the
"Agreement"), by and among Continental Natural Gas, Inc., ("Borrower"), ING
(U.S.) Capital Corporation, as Agent, and certain financial institutions
("Lenders"), which Agreement is in full force and effect on the date hereof.
Terms which are defined in the Agreement are used herein with the meanings
given them in the Agreement.
____________________ ("Assignor") and ____________________ ("Assignee")
hereby agree as follows:
1. Assignor hereby sells and assigns to Assignee without recourse and
without representation or warranty (other than as expressly provided herein),
and Assignee hereby purchases and assumes from Assignor, that interest in and
to all of Assignor's rights and duties under the Agreement as of the date
hereof which represents the percentage interest specified in Item 3 of Annex I
hereto (the "Assigned Share") of all of the outstanding rights and obligations
of all Lenders under the Agreement, including, without limitation, all rights
and obligations with respect to the Assigned Share in Assignor's Loans and
Notes. After giving effect to such sale and assignment, Assignee's Percentage
Share (and Assignor's remaining Percentage Share) will be as set forth in Item
3 of Annex I hereto.
2. Assignor: (i) represents and warrants that it is the legal and
beneficial owner of the interest being assigned by it hereunder and that such
interest is free and clear of any adverse claim; (ii) makes no representation
or warranty and assumes no responsibility with respect to any statements,
warranties or representations made in or in connection with the Agreement, the
other Loan Documents or the execution, legality, validity, enforceability,
genuineness, sufficiency or value of the Agreement, the other Loan Documents or
any other instrument or document furnished pursuant thereto; and (iii) makes no
representation or warranty and assumes no responsibility with respect to the
financial condition of Borrower, any of its Subsidiaries, any other Restricted
Person or the performance or observance by any of them of any of their
respective obligations under the Agreement, the other Loan Documents, or any
other instrument or document furnished pursuant thereto.
3. Assignee: (i) confirms that it has received a copy of the
Agreement, together with copies of the financial statements most recently
delivered thereunder and such other Loan Documents and other documents and
information as it has deemed appropriate to make its own analysis of Borrower
and the transactions contemplated by the Agreement and its own independent
decision to enter into this Assignment and Assumption Agreement; (ii) agrees
that it will, independently and without reliance upon Assignor or any other
Bank Party and based
1
108
on such documents and information as it shall deem appropriate at the time,
continue to make its own credit decisions in taking or not taking action under
the Agreement; (iii) confirms that it is a an Eligible Transferee under the
Agreement; (iv) appoints and authorizes Agent to take such action as agent on
its behalf and to exercise such powers under the Agreement and the other Loan
Documents as are specifically delegated to them, together with all other powers
reasonably incidental thereto; and (v) agrees that it will perform in
accordance with their terms all of the obligations which by the terms of the
Agreement are required to be performed by it as a Lender (including the
obligation to make future Loans). [; and (vi) attaches the "Prescribed Forms"
described in Section 3.6(d) of the Agreement.]
4. Following the execution of this Assignment and Assumption Agreement
by Assignor and Assignee, an executed original hereof (together with all
attachments) will be delivered to Agent. The effective date of this Assignment
and Assumption Agreement (the "Settlement Date") shall be the date specified in
Item 4 of Annex I hereto; provided that this Assignment and Assumption
Agreement shall not be deemed to have taken effect unless (i) the consent
hereto of Agent and Borrower has been obtained (to the extent required in the
Agreement), (ii) Agent has received a fully executed original hereof, and (iii)
Agent has received the processing fee (if required) which is referred to in
Section 10.5(c)(ii) of the Agreement.
5. Upon the satisfaction of the foregoing conditions, then as of the
Settlement Date: (i) Assignee shall be a party to the Agreement and, to the
extent provided in this Assignment and Assumption Agreement, have the rights
and obligations of a Lender thereunder and under the other Loan Documents and
(ii) Assignor shall, to the extent provided in this Assignment and Assumption
Agreement, relinquish its rights and be released from its duties under the
Agreement and the other Loan Documents.
6. All interest, fees and other amounts that would otherwise accrue
pursuant to the Agreement and Assignor's Notes for the account of Assignor from
and after the Settlement Date shall, instead accrue for the account of, and be
payable to, Assignor and Assignee, as the case may be, in accordance with their
respective interests as reflected in Item 3 to Annex I hereto. All payments of
principal that would otherwise be payable from and after the Settlement Date to
or for the account of Assignor pursuant to the Agreement and Assignor's Notes
shall, instead, be payable to or for the account of Assignor and Assignee, as
the case may be, in accordance with their respective interests as reflected in
Item 3 to Annex I hereto. On the Settlement Date, Assignee shall pay to
Assignor an amount specified by Assignor in writing which represents the
portion of Assignor's Loans which is being assigned and which is outstanding on
the Settlement Date, net of any closing costs. Assignor and Assignee shall make
any appropriate adjustments in payments under the Agreement for periods prior
to the Settlement Date directly between themselves on the Settlement Date.
7. Each of the parties to this Assignment and Assumption Agreement
agrees that at any time and from time to time upon the written request of any
other party, it will execute and deliver such further documents and do such
further acts and things as such other party may reasonably request in order to
effect the purposes of this Assignment and Assumption Agreement.
2
109
8. This Assignment and Assumption Agreement shall be governed by, and
construed in accordance with, the Laws of the State of New York.
IN WITNESS WHEREOF, the parties hereto have caused their duly
authorized officers to execute and deliver this Assignment and Assumption
Agreement, as of the date first above written, such execution also being made
on Annex I hereto.
[NAME OF ASSIGNOR], as Assignor
By:_________________________
Title:
[NAME OF ASSIGNEE], as Assignee
By:_________________________
Title:
CONSENTED TO AND ACKNOWLEDGED:
ING (U.S.) CAPITAL CORPORATION, as Agent
By:
----------------------------
Title:
3
110
ANNEX FOR ASSIGNMENT AND ASSUMPTION AGREEMENT
ANNEX I
1. Borrower: Continental Natural Gas, Inc.
2. Date of Assignment Agreement:
3. Amounts (as of date of item #2 above):
Assignor Assignee
(as Revised) (New)
a. Percentage Share ________% ________%
b. Percentage Share of
Maximum Loan Amount: $__________ $__________
4. Settlement Date:
5. Notices:
ASSIGNEE:
--------------------
--------------------
--------------------
Attention:
Telephone:
Telecopy:
6. Wiring Instructions:
--------------------
--------------------
--------------------