<PAGE>
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2000
OR
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
COMMISSION FILE NUMBER: 1-14569
PLAINS ALL AMERICAN PIPELINE, L.P.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 76-0582150
(STATE OR OTHER JURISDICTION OF (I.R.S. Employer
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
500 DALLAS STREET
HOUSTON, TEXAS 77002
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
(ZIP CODE)
(713) 654-1414
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes [X] No [_]
At May 10, 2000, there were outstanding 23,049,239 Common Units, 1,307,190 Class
B Common Units and 10,029,619 Subordinated Units.
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<PAGE>
PLAINS ALL AMERICAN PIPELINE, L.P. AND SUBSIDIARIES
TABLE OF CONTENTS
PAGE
----
PART I. FINANCIAL INFORMATION
CONSOLIDATED FINANCIAL STATEMENTS:
Consolidated Balance Sheets:
March 31, 2000 and December 31, 1999................................... 3
Consolidated Statements of Operations:
For the three months ended March 31, 2000 and 1999..................... 4
Consolidated Statements of Cash Flows:
For the three months ended March 31, 2000 and 1999..................... 5
Consolidated Statement of Partners' Capital:
For the three months ended March 31, 2000.............................. 6
Notes to Consolidated Financial Statements................................. 7
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS.................................... 11
PART II. OTHER INFORMATION................................................. 19
2
<PAGE>
PLAINS ALL AMERICAN PIPELINE, L.P. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands, except unit data)
<TABLE>
<CAPTION>
March 31, December 31,
2000 1999
----------- -----------
(unaudited)
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 7,193 $ 53,768
Accounts receivable and other 502,895 508,920
Inventory 52,848 72,697
Assets held for sale (Note 3) - 103,615
----------- -----------
Total current assets 562,936 739,000
----------- -----------
PROPERTY AND EQUIPMENT 455,572 454,878
Less allowance for depreciation and amortization (14,774) (11,581)
----------- -----------
440,798 443,297
----------- -----------
OTHER ASSETS
Pipeline linefill 17,633 17,633
Other 15,346 23,107
----------- -----------
$ 1,036,713 $ 1,223,037
=========== ===========
LIABILITIES AND PARTNERS' CAPITAL
CURRENT LIABILITIES
Accounts payable and other current liabilities $ 480,559 $ 485,400
Due to affiliates 28,463 42,692
Short-term debt and current portion of long-term debt - 109,369
----------- -----------
Total current liabilities 509,022 637,461
LONG-TERM LIABILITIES
Bank debt 159,100 259,450
Subordinated note payable - general partner 114,000 114,000
Other long-term liabilities and deferred credits 12,516 19,153
----------- -----------
Total liabilities 794,638 1,030,064
----------- -----------
PARTNERS' CAPITAL
Common unitholders (23,049,239 units outstanding) 237,503 208,359
Class B common unitholders (1,307,190 units outstanding) 22,201 20,548
Subordinated unitholders (10,029,619 units outstanding) (18,426) (35,621)
General partner 797 (313)
----------- -----------
Total partners' capital 242,075 192,973
----------- -----------
$ 1,036,713 $ 1,223,037
=========== ===========
</TABLE>
See notes to consolidated financial statements.
3
<PAGE>
PLAINS ALL AMERICAN PIPELINE, L.P. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per unit data)
(unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
---------------------------
2000 1999
--------- ---------
(restated)
<S> <C> <C>
REVENUES $ 999,319 $ 455,760
COST OF SALES AND OPERATIONS 962,767 436,101
UNAUTHORIZED TRADING LOSSES
AND RELATED EXPENSES (Note 2) - 21,205
--------- ---------
Gross Margin 36,552 (1,546)
--------- ---------
EXPENSES
General and administrative 8,495 2,178
Depreciation and amortization 10,138 2,831
Restructuring expense - 410
--------- ---------
Total expenses 18,633 5,419
--------- ---------
Operating income (loss) 17,919 (6,965)
Interest expense (6,856) (3,193)
Related party interest expense (2,302) -
Noncash compensation expense (131) -
Gain on sale of assets (Note 3) 48,188 -
Interest and other income 7,482 97
--------- ---------
Net income (loss) before extraordinary item 64,300 (10,061)
Extraordinary item (4,145) -
--------- ---------
NET INCOME (LOSS) $ 60,155 $ (10,061)
========= =========
NET INCOME (LOSS) - LIMITED PARTNERS $ 58,952 $ (9,860)
========= =========
NET INCOME (LOSS) - GENERAL PARTNER $ 1,203 $ (201)
========= =========
BASIC AND DILUTED NET INCOME (LOSS)
PER LIMITED PARTNER UNIT
Net income (loss) before extraordinary item $ 1.83 $ (0.33)
Extraordinary item (0.12) -
--------- ---------
Net income (loss) $ 1.71 $ (0.33)
========= =========
WEIGHTED AVERAGE UNITS
OUTSTANDING 34,386 30,089
========= =========
</TABLE>
See notes to consolidated financial statements.
4
<PAGE>
PLAINS ALL AMERICAN PIPELINE, L.P. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
----------------------------
2000 1999
--------- ---------
(restated)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) $ 60,155 $ (10,061)
Items not affecting cash flows
from operating activities:
Depreciation and amortization 10,138 2,831
Gain on the sale of assets (Note 3) (48,188) -
Other noncash items (2,961) 110
Change in assets and liabilities:
Accounts receivable and other (19,800) (36,396)
Inventory (18,163) 13,316
Accounts payable and other current liabilities (9,526) 36,966
Pipeline linefill - (2,490)
--------- ---------
Net cash provided by (used in) operating activities (28,345) 4,276
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES
Additions to property and equipment (2,198) (2,791)
Proceeds from sales of assets (Note 3) 219,100 -
Additions to other assets - (647)
--------- ---------
Net cash provided by (used in) investing activities 216,902 (3,438)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES
Advances from affiliates (14,229) (82)
Proceeds from long-term debt 12,000 14,100
Proceeds from short-term debt 20,000 4,250
Principal payments of long-term debt (136,500) (8,100)
Principal payments of short-term debt (105,219) (9,900)
Distributions to unitholders (11,184) (5,926)
--------- ---------
Net cash used in financing activities (235,132) (5,658)
--------- ---------
Net decrease in cash and cash equivalents (46,575) (4,820)
Cash and cash equivalents, beginning of period 53,768 5,503
--------- ---------
Cash and cash equivalents, end of period $ 7,193 $ 683
========= =========
</TABLE>
See notes to consolidated financial statements.
5
<PAGE>
PLAINS ALL AMERICAN PIPELINE, L.P. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF PARTNERS' CAPITAL
(in thousands)
(unaudited)
<TABLE>
<CAPTION>
Total
Class B General Partners'
Common Units Common Units Subordinated Units Partner Capital
------------------- ----------------- ------------------ ------ ---------
Units Amount Units Amount Units Amount Amount Amount
------ --------- ----- -------- ------ -------- ------ ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1999 23,049 $ 208,359 1,307 $ 20,548 10,030 $(35,621) $ (313) $ 192,973
Noncash compensation expense - - - - - - 131 131
Distributions - (10,372) - (588) - - (224) (11,184)
Net income - 39,516 - 2,241 - 17,195 1,203 60,155
------ --------- ----- -------- ------ -------- ------ ---------
Balance at March 31, 2000 23,049 $ 237,503 1,307 $ 22,201 10,030 $(18,426) $ 797 $ 242,075
====== ========= ===== ======== ====== ======== ====== =========
</TABLE>
See notes to consolidated financial statements.
6
<PAGE>
PLAINS ALL AMERICAN PIPELINE, L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1 -- ORGANIZATION AND ACCOUNTING POLICIES
We are a Delaware limited partnership that was formed in September of 1998 to
acquire and operate the midstream crude oil business and assets of Plains
Resources Inc. and its wholly owned subsidiaries. On November 23, 1998, we
completed our initial public offering and the transactions whereby we became the
successor to the business of the midstream subsidiaries of Plains Resources. Our
operations are conducted through Plains Marketing, L.P., All American Pipeline,
L.P. and Scurlock Permian Pipe Line LLC. Our general partner, Plains All
American Inc., is a wholly owned subsidiary of Plains Resources. We are engaged
in interstate and intrastate crude oil transportation, gathering and marketing
as well as crude oil terminalling and storage activities. Our operations are
conducted primarily in California, Texas, Oklahoma, Louisiana and the Gulf of
Mexico.
The accompanying financial statements and related notes present our
consolidated financial position as of March 31, 2000 and December 31, 1999; the
results of our operations and cash flows for the three months ended March 31,
2000 and 1999; and changes in partners' capital for the three months ended March
31, 2000. The financial statements have been prepared in accordance with the
instructions to interim reporting as prescribed by the Securities and Exchange
Commission ("SEC"). All adjustments, consisting only of normal recurring
adjustments, which in the opinion of management were necessary for a fair
statement of the results for the interim periods have been reflected. All
significant intercompany transactions have been eliminated. Certain
reclassifications have been made to prior period amounts to conform with current
period presentation. The results of operations for the three months ended March
31, 2000 should not be taken as indicative of the results to be expected for the
full year. The interim financial statements should be read in conjunction with
our consolidated financial statements and notes thereto presented in our 1999
Annual Report on Form 10-K.
Accounting Pronouncements
In June 1998, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards No. 133, Accounting for Derivative
Instruments and Hedging Activities ("SFAS 133"). SFAS 133 requires that all
derivative instruments be recorded on the balance sheet at their fair value.
Changes in the fair value of derivatives are recorded each period in current
earnings or other comprehensive income, depending on whether a derivative is
designated as part of a hedge transaction and if so, the type of hedge
transaction. For fair value hedge transactions in which we are hedging changes
in the fair value of an asset, liability, or firm commitment, changes in the
fair value of the derivative instrument will generally be offset in the income
statement by changes in the fair value of the hedged item. For cash flow hedge
transactions, in which we are hedging the variability of cash flows related to a
variable-rate asset, liability, or a forecasted transaction, changes in the fair
value of the derivative instrument will be reported in other comprehensive
income. The gains and losses on the derivative instrument that are reported in
other comprehensive income will be reclassified as earnings in the periods in
which earnings are affected by the variability of the cash flows of the hedged
item. This statement was amended by Statement of Financial Accounting Standards
No. 137, Accounting for Derivative Instruments and Hedging Activities - Deferral
of the Effective Date of FASB Statement No. 133 ("SFAS 137") issued in June
1999. SFAS 137 defers the effective date of SFAS 133 to fiscal years beginning
after June 15, 2000. We are required to adopt this statement beginning in 2001.
We have not yet determined the impact of adopting SFAS 133; however, this
standard could increase volatility in earnings and partners' capital through
comprehensive income.
NOTE 2 -- UNAUTHORIZED TRADING LOSSES AND RESTATED FINANCIAL STATEMENTS
In November 1999, we discovered that a former employee had engaged in
unauthorized trading activity, resulting in losses of approximately $162.0
million ($174.0 million, including estimated associated costs and legal
expenses). A full investigation into the unauthorized trading activities by
outside legal counsel and independent accountants and consultants determined
that the vast majority of the losses occurred from March through November 1999,
and that the impact warranted a restatement of previously reported financial
information for 1999 and 1998. Consequently, the consolidated financial
statements for 1999 appearing in this report were previously restated to reflect
the unauthorized trading losses.
7
<PAGE>
NOTE 3 -- ASSET DISPOSITIONS
We initiated the sale of approximately 5.2 million barrels of crude oil
linefill from the All American Pipeline in November 1999. This sale was
completed in March 2000. The linefill was located in the segment of the All
American Pipeline that extends from Emidio, California, to McCamey, Texas.
Except for minor third party volumes, one of our subsidiaries has been the sole
shipper on this segment of the pipeline since its predecessor acquired the line
from Goodyear on July 30, 1998. Proceeds from the sale of the linefill were
approximately $100.0 million, net of associated costs, and were used (1) to
repay outstanding indebtedness under our $65.0 million senior secured term
credit facility entered into in December 1999 to fund short-term working capital
requirements resulting from the unauthorized trading losses and (2) for general
working capital purposes. We recognized a total gain of $44.6 million in
connection with the sale of the linefill, of which $16.5 million was recorded in
the fourth quarter of 1999.
On March 24, 2000, we completed the sale of the above referenced segment of
the All American Pipeline to a unit of El Paso Energy Corporation for proceeds
of approximately $124.0 million, which are net of associated transaction costs
and estimated costs to remove certain equipment. We recognized a gain of $20.1
million in connection with the sale in the first quarter of 2000. Proceeds from
the sale were used to permanently reduce the All American Pipeline, L.P. term
loan facility. As a result, $6.8 million of an unamortized gain realized upon
the termination of interest rate swaps was recognized in the first quarter of
2000 and is included in interest and other income.
NOTE 4 -- ACQUISITIONS
Scurlock Acquisition
On May 12, 1999, we completed the acquisition of Scurlock Permian LLC and
certain other pipeline assets from Marathon Ashland Petroleum LLC. Including
working capital adjustments and closing and financing costs, the cash purchase
price was approximately $141.7 million.
Pro Forma Results for the Scurlock Acquisition
The following unaudited pro forma data is presented to show pro forma
revenues, net loss and basic and diluted net loss per limited partner unit as if
the Scurlock acquisition, which was effective May 1, 1999, had occurred on
January 1, 1999 (in thousands):
Three Months
Ended
March 31, 1999
------------
Revenues $ 730,751
=========
Net loss $ (842)
=========
Basic and diluted net loss
per limited partner unit $ (0.03)
=========
NOTE 5 -- DISTRIBUTIONS
On February 14, 2000, we paid a cash distribution of $0.45 per unit on our
outstanding common units and Class B units. The distribution was paid to
unitholders of record on February 7, 2000 for the period October 1, 1999 through
December 31, 1999. The total distribution paid was approximately $11.2 million,
with approximately $7.2 million paid to our public unitholders and the remainder
paid to our general partner for its limited and general partner interests. The
distribution is equal to the minimum quarterly distribution specified in the
Partnership Agreement. No distribution was declared on the subordinated units
owned by our general partner.
On April 25, 2000, we declared a cash distribution of $0.45 per unit on our
outstanding common units, Class B units and subordinated units. The distribution
is payable on May 15, 2000, to unitholders of record on May 5, 2000 for the
period January 1, 2000 through March 31, 2000. The total distribution to be paid
is approximately $15.8 million, with approximately $7.3 million to be paid to
our public unitholders and the remainder to be paid to our general partner for
its limited and general partner interests.
8
<PAGE>
NOTE 6 -- EXTRAORDINARY ITEM
During the quarter ended March 31, 2000, we recognized an extraordinary loss
related to the early extinguishment of debt. The loss is related to the
permanent reduction of the All American Pipeline, L.P. term loan facility with
proceeds from the sale of the segment of the All American Pipeline (see Note 3).
NOTE 7 -- OPERATING SEGMENTS
Our operations consist of two operating segments: (1) Pipeline Operations -
engages in interstate and intrastate crude oil pipeline transportation and
certain related merchant activities; (2) Marketing, Gathering, Terminalling and
Storage Operations - engages in purchases and resales of crude oil at various
points along the distribution chain and the leasing of certain terminalling and
storage.
<TABLE>
<CAPTION>
Marketing,
Gathering,
Terminalling
(in thousands) (unaudited) Pipeline & Storage Total
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Three Months Ended March 31, 2000
Revenues:
External Customers $ 180,058 $ 819,261 $ 999,319
Intersegment (a) 54,415 - 54,415
Other 6,973 509 7,482
--------- --------- -----------
Total revenues of reportable segments $ 241,446 $ 819,770 $ 1,061,216
========= ========= ===========
Segment gross margin (b) $ 13,155 $ 23,397 $ 36,552
Segment gross profit (c) 12,198 15,859 28,057
Net income before extraordinary item 62,329 1,971 64,300
Total assets 764,328 272,385 1,036,713
- ------------------------------------------------------------------------------------------------
Three Months Ended March 31, 1999 (restated)
Revenues:
External Customers $ 154,487 $ 301,273 $ 455,760
Intersegment (a) 15,305 55 15,360
Other 66 31 97
--------- --------- -----------
Total revenues of reportable segments $ 169,858 $ 301,359 $ 471,217
========= ========= ===========
Segment gross margin (b) $ 12,019 $ (13,565) $ (1,546)
Segment gross profit (c) 11,224 (14,948) (3,724)
Net income (loss) 5,474 (15,535) (10,061)
- ------------------------------------------------------------------------------------------------
</TABLE>
a) Intersegment sales were conducted on an arm's length basis.
b) Gross margin is calculated as revenues less cost of sales and operations
expenses.
c) Gross profit is calculated as revenues less costs of sales and operations
expenses and general and administrative expenses.
NOTE 8 -- SUBSEQUENT EVENTS
Credit Facilities
On May 8, 2000, we entered into new bank credit agreements. The borrower
under the new facilities is Plains Marketing, L.P. We are a guarantor of the
obligations under the credit facilities. The obligations are also guaranteed by
the subsidiaries of Plains Marketing, L.P. We entered into the credit agreements
in order to:
. refinance the existing bank debt of Plains Marketing, L.P. and Plains
Scurlock Permian, L.P. in conjunction with the merger of these
subsidiaries;
. refinance existing bank debt of All American Pipeline, L.P.;
. repay up to $114.0 million plus accrued interest of subordinated debt to
our general partner, and
. provide additional flexibility for working capital, capital expenditures,
and for other general corporate purposes.
9
<PAGE>
Our new bank credit agreements consist of:
. a $400 million senior secured revolving credit facility. At closing, we had
$256.0 million outstanding under the revolving credit facility. The
revolving credit facility is secured by substantially all of our assets and
matures in April 2004. No principal is scheduled for payment prior to
maturity. The revolving credit facility bears interest at our option at
either the base rate, as defined, plus an applicable margin, or LIBOR plus
an applicable margin. We incur a commitment fee on the unused portion of
the revolving credit facility.
. a $300 million senior secured letter of credit and borrowing facility, the
purpose of which is to provide standby letters of credit to support the
purchase and exchange of crude oil for resale and borrowings to finance
crude oil inventory which has been hedged against future price risk. The
letter of credit facility has a sublimit for cash borrowings of $100
million to purchase crude oil which has been hedged against future price
risk and is secured by substantially all of our assets. The letter of
credit facility expires in April 2003. Aggregate availability under the
letter of credit facility for direct borrowings and letters of credit is
limited to a borrowing base which is determined monthly based on certain of
our current assets and current liabilities, primarily accounts receivable
and accounts payable related to the purchase and sale of crude oil. At
closing, there were letters of credit of approximately $173.8 million and
borrowings of approximately $20.3 million outstanding under this facility.
Our bank credit agreements prohibit distributions on, or purchases or
redemptions of, units if any default or event of default is continuing. In
addition, the agreements contain various covenants limiting our ability to,
among other things:
. incur indebtedness;
. grant liens;
. sell assets;
. enter into hedging contracts;
. make investments;
. extend credit;
. engage in transactions with affiliates;
. enter into prohibited contracts; and
. enter into a merger or consolidation.
Our bank credit agreements treat a change of control as an event of default
and also requires us to maintain:
. a current ratio (as defined) of 1.0 to 1.0;
. a debt coverage ratio which is not greater that 4.0 to 1.0 for the period
from March 31, 2000 to March 31, 2002 and subsequently 3.75 to 1.0;
. an interest coverage ratio which is not less than 2.75 to 1.0; and
. a debt to capital ratio of not greater than 0.65 to 1.0.
At March 31, 2000, there were letters of credit of approximately $192.8
million and borrowings of $159.1 million outstanding under the credit facilities
which were refinanced. Due to the refinancing, we reclassified the current
portion of our existing bank debt of $24.2 million at March 31, 2000, to long-
term.
10
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Overview
We were formed in September of 1998 to acquire and operate the midstream crude
oil business and assets of Plains Resources Inc. and its wholly owned
subsidiaries. On November 23, 1998, we completed our initial public offering and
the transactions whereby we became the successor to the business of the
midstream subsidiaries of Plains Resources. Our operations are conducted through
Plains Marketing, L.P., All American Pipeline, L.P. and Scurlock Pipe Line LLC.
Plains All American Inc., a wholly owned subsidiary of Plains Resources, is our
general partner. We are engaged in interstate and intrastate crude oil
transportation, gathering and marketing as well as crude oil terminalling and
storage activities. Our operations are conducted primarily in California, Texas,
Oklahoma, Louisiana and the Gulf of Mexico.
Pipeline Operations. Our activities from pipeline operations generally consist
of transporting third-party volumes of crude oil for a tariff and merchant
activities designed to capture price differentials between the cost to purchase
and transport crude oil to a sales point and the price received for such crude
oil at the sales point. Tariffs on our pipeline systems vary by receipt point
and delivery point. The gross margin generated by our tariff activities depends
on the volumes transported on the pipeline and the level of the tariff charged,
as well as the fixed and variable costs of operating the pipeline. Our ability
to generate a profit on margin activities is not tied to the absolute level of
crude oil prices but is generated by the difference between an index-related
price paid and other costs incurred in the purchase of crude oil and an index-
related price at which we sell crude oil. We are well positioned to take
advantage of these price differentials due to our ability to move purchased
volumes on our pipeline systems. We combine reporting of gross margin for tariff
activities and margin activities due to the sharing of fixed costs between the
two activities.
Terminalling and Storage Activities and Gathering and Marketing Activities.
Gross margin from terminalling and storage activities is dependent on the
throughput volume of crude oil stored and the level of fees generated at our
terminalling and storage facilities. Gross margin from our gathering and
marketing activities is dependent on our ability to sell crude oil at a price in
excess of our aggregate cost. These operations are not directly affected by the
absolute level of crude oil prices, but are affected by overall levels of supply
and demand for crude oil and fluctuations in market related indices.
2000 ASSET DISPOSITIONS
On March 24, 2000, we completed the sale of the segment of the All American
Pipeline that extends from Emidio, California to McCamey, Texas to a unit of El
Paso Energy Corporation, for proceeds of approximately $124.0 million, which are
net of associated transaction costs and estimated costs to remove certain
equipment. We recognized a total gain of $20.1 million in connection with the
sale in the first quarter of 2000. In November 1999, we initiated the sale of
approximately 5.2 million barrels of crude oil linefill from the All American
Pipeline. The sale of the linefill was completed in March 2000. We recognized a
total gain of $44.6 million in connection with the sale of the linefill, of
which $16.5 million was recorded in the fourth quarter of 1999.
UNAUTHORIZED TRADING LOSSES
In November 1999, we discovered that a former employee had engaged in
unauthorized trading activity, resulting in losses of approximately $162.0
million ($174.0 million, including estimated associated costs and legal
expenses). A full investigation into the unauthorized trading activities by
outside legal counsel and independent accountants and consultants determined
that the vast majority of the losses occurred from March through November 1999,
and that the impact warranted a restatement of previously reported financial
information for 1999 and 1998. Consequently, the consolidated financial
statements for 1999 appearing in this report were previously restated to reflect
the unauthorized trading losses.
11
<PAGE>
RESULTS OF OPERATIONS
For the three months ended March 31, 2000, we reported net income of $60.2
million on total revenue of $1.0 billion compared to a net loss for the same
period in 1999 of $10.1 million on total revenues of $455.8 million. The results
for the three months ended March 31, 2000 and 1999 include the following
nonrecurring or notable items:
2000
. a $28.1 million gain on the portion of the All American Pipeline linefill
that was sold in 2000;
. a $20.1 million gain on the sale of the segment of the All American
Pipeline that extends from Emidio, California, to McCamey, Texas;
. $6.8 million of previously deferred gains on interest rate swap
terminations recognized due to the early extinguishment of debt;
. an extraordinary loss of $4.1 million related to the early extinguishment
of debt, and
. amortization of $4.6 million of debt issue costs associated with facilities
put in place during the fourth quarter of 1999.
1999
. $21.2 million of unauthorized trading losses and
. restructuring expenses of $0.4 million.
Excluding the above mentioned items, we would have reported net income of
$13.9 million and $11.5 million for the three months ended March 31, 2000 and
1999, respectively.
The following table sets forth our operating results for the periods indicated
and includes the impact of nonrecurring items discussed above (in thousands)
(unaudited):
THREE MONTHS ENDED
MARCH 31,
------------------------
2000 1999
-------- --------
(RESTATED)
OPERATING RESULTS:
Revenues $999,319 $455,760
======== ========
Gross margin:
Pipeline $ 13,155 $ 12,019
Gathering and marketing
and terminalling and storage 23,397 7,640
Unauthorized trading losses - (21,205)
-------- --------
Total 36,552 (1,546)
General and administrative expense (8,495) (2,178)
-------- --------
Gross profit $ 28,057 $ (3,724)
======== ========
Net income (loss) $ 60,155 $(10,061)
======== ========
AVERAGE DAILY VOLUMES (BARRELS):
Pipeline Activities:
All American
Tariff activities 71 126
Margin activities 44 47
Other 115 -
-------- --------
Total 230 173
======== ========
Lease gathering 257 121
Bulk purchases 29 94
-------- --------
Total 286 215
======== ========
Terminal throughput 50 75
======== ========
Storage leased to third parties,
monthly average volumes 820 1,710
======== ========
12
<PAGE>
Pipeline Operations. Gross margin from pipeline operations was $13.2 million
for the quarter ended March 31, 2000 compared to $12.0 million for the prior
year quarter. The increase resulted primarily from the Scurlock and West Texas
gathering systems that were acquired in the second and third quarters of 1999,
and which contributed approximately $2.8 million of pipeline gross margin in the
first quarter of 2000. The increase was partially offset by lower tariff
transport volumes, due to lower production from Exxon's Santa Ynez Field and the
Point Arguello Field, both offshore California, and the sale of the segment of
the All American Pipeline.
The margin between revenue and direct cost of crude purchased was $5.1 million
for the quarter ended March 31, 2000 compared to $5.0 million for the prior year
first quarter. Pipeline tariff revenues were approximately $11.3 million for the
first quarter of 2000 compared to approximately $13.1 million for the same
period in 1999. Pipeline operations and maintenance expenses were approximately
$3.5 million for the first quarter of 2000 compared to $6.1 million for the
first quarter of 1999 primarily due to the sale of the All American Pipeline
segment.
Tariff transport volumes on the All American Pipeline decreased from an
average of 126,000 barrels per day for the quarter ended March 31, 1999 to
71,000 barrels per day in the comparable quarter of 2000, primarily due to a
decrease in shipments of offshore California production, which decreased from
87,000 barrels per day to 71,000 barrels per day and the sale of the California
to Texas portion of the line. Barrels associated with our merchant activities on
the All American Pipeline decreased from 47,000 barrels per day in the first
quarter of 1999 to 44,000 barrels per day in the same quarter of 2000 also due
to the sale of the line. Tariff volumes shipped on the Scurlock and West Texas
gathering systems (acquired subsequent to the first quarter of 1999) averaged
115,000 barrels per day during the first quarter of 2000.
The following table sets forth All American Pipeline average deliveries per
day within and outside California for the periods presented (in thousands):
THREE MONTHS
ENDED
MARCH 31,
---------------
2000 1999
---- ----
Deliveries:
Average daily volumes (barrels):
Within California 115 112
Outside California(1) - 61
---- ----
Total 115 173
==== ====
--------------
(1) Shipments outside California in 1999 were attributable to the
segment of the pipeline that was sold in 2000.
Gathering and Marketing Activities and Terminalling and Storage Activities.
Gross margin from gathering, marketing, terminalling and storage activities was
approximately $23.4 million for the quarter ended March 31, 2000 compared to
$7.6 million in the prior year quarter (excluding the unauthorized trading
losses). The increase in gross margin is primarily due to an increase in lease
gathering volumes, as a result of the Scurlock acquisition and favorable market
conditions in the current year quarter. Lease gathering volumes increased from
an average of 121,000 barrels per day for the first quarter of 1999 to
approximately 257,000 barrels per day in 2000. Bulk purchase volumes decreased
from approximately 94,000 barrels per day for the first quarter of 1999 to
approximately 29,000 barrels per day in the current period due to the
termination of purchase contracts subsequent to the discovery of the
unauthorized trading losses. Due to a shift in the market from contango to
backwardation, lease capacity decreased to 820,000 barrels per month and use of
tankage for proprietary arbitrage opportunities increased.
In the period immediately following the disclosure of the unauthorized trading
losses, a significant number of our suppliers and trading partners reduced or
eliminated the open credit previously extended to us. Consequently, the amount
of letters of credit we needed to support the level of our crude oil purchases
then in effect increased significantly. In addition, the cost to us of obtaining
letters of credit increased under our amended credit facility. In many instances
we arranged for letters of credit to secure our obligations to purchase crude
oil from our customers, which increased our letter of credit costs and decreased
our unit margins. In other instances, primarily involving lower-margin wellhead
and bulk purchases, our purchase contracts were terminated.
Lease gathering and bulk purchase volumes are down approximately 190,000
barrels per day from the 1999 fourth quarter level. We had previously estimated
that our lease gathering and bulk volumes would be down approximately 150,000
barrels per day. The impact during the quarter was negligible as these barrels
were predominantly thin margin barrels that did not support the additional cost
of a letter of credit.
13
<PAGE>
General and administrative expenses were $8.5 million for the quarter ended
March 31, 2000, compared to $2.2 million for the first quarter in 1999. The
increase in 2000 is primarily due to the Scurlock and West Texas gathering
system acquisitions and the resulting increase in activity and increased
consulting and legal expenses as a result of the unauthorized trading losses.
Depreciation and amortization expense was $10.1 million for the quarter ended
March 31, 2000, compared to $2.8 million for the first quarter of 1999. The
increase is primarily due to the Scurlock acquisition and the West Texas
gathering system acquisition during the second and third quarters of 1999. In
addition, during the quarter, we amortized $4.6 million associated with
facilities put in place during the fourth quarter of 1999 due to the
unauthorized trading losses. Such amounts will not be carried forward into
future quarters. These increases were partially offset by decreased depreciation
related to the segment of the All American Pipeline that was sold.
Interest expense was $9.2 million for the quarter ended March 31, 2000,
compared to $3.2 million for 1999. The increase is primarily due to interest
associated with the debt incurred for the Scurlock and West Texas gathering
system acquisitions and to an increase in debt levels and interest rates as a
result of the unauthorized trading losses. Based on current interest rate and
debt levels, we estimate second quarter interest expense will be approximately
$3.0 million lower than the first quarter.
On March 24, 2000, we permanently reduced the All American Pipeline, L.P. term
loan facility with the proceeds from the sale of the segment of the All American
Pipeline. In connection therewith, a proportionate amount of unamortized
interest rate swap gains of approximately $6.8 million was recognized in the
first quarter of 2000 and is included in interest and other income. In addition,
the extraordinary item of $4.1 million in 2000 relates to the write-off of a
proportionate amount of debt issue costs associated with this facility.
CAPITAL RESOURCES, LIQUIDITY AND FINANCIAL CONDITION
Asset Dispositions
We initiated the sale of approximately 5.2 million barrels of crude oil
linefill from the All American Pipeline in November 1999. The sale was completed
in March 2000. The linefill was located in the segment of the All American
Pipeline that extends from Emidio, California, to McCamey, Texas. Except for
minor third-party volumes, one of our subsidiaries has been the sole shipper on
this segment of the pipeline since its predecessor acquired the line from
Goodyear on July 30, 1998. Proceeds from the sale of the linefill were
approximately $100.0 million, net of associated costs, and were used (1) to
repay outstanding indebtedness under our $65.0 million senior secured term
credit facility entered into in December 1999 to fund short-term working capital
requirements resulting from the unauthorized trading losses and (2) for general
working capital purposes. We recognized a total gain of $44.6 million in
connection with the sale of the linefill, of which $16.5 million was recorded in
the fourth quarter of 1999.
On March 24, 2000, we completed the sale of the above referenced segment of
the All American Pipeline to a unit of El Paso Energy Corporation for proceeds
of approximatley $124.0 million, which are net of associated transaction costs
and estimated costs to remove certain equipment. We recognized a gain of $20.1
million in connection with the sale in the first quarter of 2000. Proceeds from
the sale were used to permanently reduce the All American Pipeline, L.P. term
loan facility. As a result, $6.8 million of an unamortized gain realized upon
the termination of interest rate swaps was recognized in the first quarter of
2000 and is included in interest and other income.
Credit Facilities
Amounts outstanding under our credit agreements before and after refinancing
were as follows (in thousands) (unaudited):
<TABLE>
<CAPTION>
MARCH 31, MAY 8,
2000 2000
--------- ---------
<S> <C> <C>
New Plains Marketing, L.P. revolving credit facility $ - $ 256,250
New Plains Marketing, L.P. letter of credit and hedged inventory facility - 20,250
All American Pipeline, L.P. bank credit agreement 63,000 -
Plains Scurlock bank credit agreement 82,600 -
Plains Marketing, L.P. letter of credit and borrowing facility 13,500 -
Subordinated note payable - general partner 114,000 -
--------- ---------
$ 273,100 $ 276,250
========= =========
</TABLE>
14
<PAGE>
Credit Facilities
On May 8, 2000, we entered into new bank credit agreements. The borrower under
the new facilities is Plains Marketing, L.P. We are a guarantor of the
obligations under the credit facilities. The obligations are also guaranteed by
the subsidiaries of Plains Marketing, L.P. We entered into the credit agreements
in order to:
. refinance the existing bank debt of Plains Marketing, L.P. and Plains
Scurlock Permian, L.P. in conjunction with the merger of these
subsidiaries;
. refinance existing bank debt of All American Pipeline, L.P.;
. repay up to $114.0 million plus accrued interest of subordinated debt to
our general partner, and
. provide additional flexibility for working capital, capital expenditures,
and for other general corporate purposes.
Our new bank credit agreements consist of:
. a $400 million senior secured revolving credit facility. At closing, we had
$256.0 million outstanding under the revolving credit facility. The
revolving credit facility is secured by substantially all of our assets and
matures in April 2004. No principal is scheduled for payment prior to
maturity. The revolving credit facility bears interest at our option at
either the base rate, as defined, plus an applicable margin, or LIBOR plus
an applicable margin. We incur a commitment fee on the unused portion of
the revolving credit facility.
. a $300 million senior secured letter of credit and borrowing facility, the
purpose of which is to provide standby letters of credit to support the
purchase and exchange of crude oil for resale and borrowings to finance
crude oil inventory which has been hedged against future price risk. The
letter of credit facility is secured by substantially all of our assets and
has a sublimit for cash borrowings of $100 million to purchase crude oil
which has been hedged against future price risk. The letter of credit
facility expires in April 2003. Aggregate availability under the letter of
credit facility for direct borrowings and letters of credit is limited to a
borrowing base which is determined monthly based on certain of our current
assets and current liabilities, primarily accounts receivable and accounts
payable related to the purchase and sale of crude oil. At closing, there
were letters of credit of approximately $173.8 million and borrowings of
approximately $20.3 million outstanding under this facility.
Our bank credit agreements prohibit distributions on, or purchases or
redemptions of, units if any default or event of default is continuing. In
addition, the agreements contain various covenants limiting our ability to,
among other things:
. incur indebtedness;
. grant liens;
. sell assets;
. enter into hedging contracts;
. make investments;
. extend credit;
. engage in transactions with affiliates;
. enter into prohibited contracts; and
. enter into a merger or consolidation.
Our bank credit agreements treat a change of control as an event of default
and also requires us to maintain:
. a current ratio (as defined) of 1.0 to 1.0;
. a debt coverage ratio which is not greater that 4.0 to 1.0 for the period
from March 31, 2000 to March 31, 2002 and subsequently 3.75 to 1.0;
. an interest coverage ratio which is not less than 2.75 to 1.0; and
. a debt to capital ratio of not greater than 0.65 to 1.0.
At March 31, 2000, there were letters of credit of approximately $192.8
million and borrowings of $159.1 million outstanding under the credit facilities
which were refinanced. Due to the refinancing, we reclassified the current
portion of our existing bank debt of $24.2 million at March 31, 2000, to long-
term.
15
<PAGE>
Cash Flows
THREE MONTHS ENDED
MARCH 31,
-------------------
(IN MILLIONS) (UNAUDITED) 2000 1999
----------------------------------------------------
(restated)
Cash provided by (used in):
Operating activities $ (28.3) $ 4.3
Investing activities 216.9 (3.4)
Financing activities (235.1) (5.7)
----------------------------------------------------
Operating Activities. Net cash used in operating activities for the first
quarter of 2000 resulted from the amounts paid during the first quarter of 2000
for the 1999 unauthorized trading losses.
Investing Activities. Net cash provided by investing activities for the first
quarter of 2000 included approximately $129.0 million and $90.1 million of
proceeds from the sale of the segment of the All American Pipeline and pipeline
linefill, respectively. The balance of the linefill proceeds of approximately
$5.0 million was received in April 2000.
Financing activities. Cash used in financing activities for the first quarter
of 2000 resulted from net payments of $209.7 million of short-term and
long-term debt. Proceeds used to reduce debt primarily came from the asset sales
discussed above.
Contingencies
Since our announcement in November 1999 of our losses resulting from
unauthorized trading by a former employee, numerous class action lawsuits have
been filed against us, certain of our general partner's officers and directors
and in some of these cases, our general partner and Plains Resources Inc.
alleging violations of the federal securities laws. In addition, derivative
lawsuits were filed in the Delaware Chancery Court against our general partner,
its directors and certain of its officers alleging the defendants breached the
fiduciary duties owed to us and our unitholders by failing to monitor properly
the activities of our traders.
While we maintain an extensive inspection program designed to prevent and, as
applicable, to detect and address releases of crude oil into the environment
from our pipeline and storage operations, we may experience such releases in the
future, or discover releases that were previously unidentified. Damages and
liabilities incurred due to any future environmental releases from our assets
may substantially affect our business. See Item 1. - "Legal Proceedings."
ACCOUNTING PRONOUNCEMENTS
In June 1998, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards No. 133, Accounting for Derivative
Instruments and Hedging Activities ("SFAS 133"). SFAS 133 requires that all
derivative instruments be recorded on the balance sheet at their fair value.
Changes in the fair value of derivatives are recorded each period in current
earnings or other comprehensive income, depending on whether a derivative is
designated as part of a hedge transaction and if so, the type of hedge
transaction. For fair value hedge transactions in which we are hedging changes
in the fair value of an asset, liability, or firm commitment, changes in the
fair value of the derivative instrument will generally be offset in the income
statement by changes in the fair value of the hedged item. For cash flow hedge
transactions, in which we are hedging the variability of cash flows related to a
variable-rate asset, liability, or a forecasted transaction, changes in the fair
value of the derivative instrument will be reported in other comprehensive
income. The gains and losses on the derivative instrument that are reported in
other comprehensive income will be reclassified as earnings in the periods in
which earnings are affected by the variability of the cash flows of the hedged
item. This statement was amended by Statement of Financial Accounting Standards
No. 137, Accounting for Derivative Instruments and Hedging Activities - Deferral
of the Effective Date of FASB Statement No. 133 ("SFAS 137") issued in June
1999. SFAS 137 defers the effective date of SFAS 133 to fiscal years beginning
after June 15, 2000. We are required to adopt this statement beginning in 2001.
We have not yet determined the impact of adopting SFAS 133; however, this
standard could increase volatility in earnings and partners' capital through
comprehensive income.
16
<PAGE>
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS
We are exposed to various market risks, including volatility in crude oil
commodity prices and interest rates. To manage such exposure, we monitor our
inventory levels and our expectations of future commodity prices and interest
rates when making decisions with respect to risk management. We do not enter
into derivative transactions for speculative trading purposes that would expose
us to price risk. Substantially all of our derivative contracts are exchanged or
traded with major financial institutions and the risk of credit loss is
considered remote.
Commodity Price Risk. The fair value of outstanding derivative instruments and
the change in fair value that would be expected from a 10 percent adverse price
change are shown in the table below (in millions) (unaudited):
MARCH 31, 2000 DECEMBER 31, 1999
-------------- -----------------
EFFECT OF EFFECT OF
10% 10%
FAIR PRICE FAIR PRICE
VALUE CHANGE VALUE CHANGE
----- ------ ----- ------
Crude oil:
Futures contracts $ 6.4 $ 3.1 $ - $ (2.8)
Swaps and options contracts (0.4) - (0.6) (0.1)
The fair values of the futures contracts are based on quoted market prices
obtained from the NYMEX. The fair value of the swaps are estimated based on
quoted prices from independent reporting services compared to the contract price
of the swap which approximate the gain or loss that would have been realized if
the contracts had been closed out at the dates indicated above. All hedge
positions offset physical positions exposed to the cash market; none of these
offsetting physical positions are included in the above table. Price-risk
sensitivities were calculated by assuming an across-the-board 10 percent
increase in prices regardless of term or historical relationships between the
contractual price of the instruments and the underlying commodity price. In the
event of an actual 10 percent change in prompt month crude prices, the fair
value of our derivative portfolio would typically change less than that shown in
the table due to lower volatility in out-month prices.
Interest Rate Risk. Our debt instruments are sensitive to market fluctuations
in interest rates. The table below presents principal payments and the related
weighted average interest rates by expected maturity dates for debt outstanding
at March 31, 2000. Our variable rate debt bears interest at LIBOR plus the
applicable margin. The average interest rates presented below are based upon
rates in effect at March 31, 2000. The carrying value of variable rate bank debt
approximates fair value as interest rates are variable, based on prevailing
market rates ($ in millions) (unaudited).
<TABLE>
<CAPTION>
EXPECTED YEAR OF MATURITY
---------------------------------------------------------------------- FAIR
2000 2001 2002 2003 2004 THEREAFTER TOTAL VALUE
----- ------- ------- ------- ------- ------- ------ -----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
LIABILITIES:
Short-term debt - variable rate $13.5 $ - $ - $ - $ - $ - $ 13.5 $ 13.5
Average interest rate 8.22% 8.22%
Long-term debt - variable rate 10.6 0.6 0.7 0.7 80.0 167.0 259.6 259.6
Average interest rate 8.21% 9.06% 9.06% 9.06% 9.06% 8.19% 8.46%
</TABLE>
At December 31, 1999, the carrying value of short-term and long-term debt of
$58.7 million and $424.1 million, respectively, approximated fair value.
Interest rate swaps and collars are used to hedge underlying debt obligations.
These instruments hedge specific debt issuances and qualify for hedge
accounting. The interest rate differential is reflected as an adjustment to
interest expense over the life of the instruments. At March 31, 2000, we had
interest rate swap and collar arrangements for an aggregate notional principal
amount of $215.0 million, which positions had an aggregate value of
approximately $0.6 million as of such date. These instruments are based on LIBOR
margins and generally provide for a floor of 5% and a ceiling of 6.5% for $90.0
million of debt and a floor of 6% and a ceiling of 8% for $125.0 million of
debt.
17
<PAGE>
FORWARD-LOOKING STATEMENTS AND ASSOCIATED RISKS
All statements, other than statements of historical fact, included in this
report are forward-looking statements, including, but not limited to, statements
identified by the words ''anticipate,'' ''believe,'' ''estimate,'' ''expect,''
''plan,'' ''intend'' and ''forecast'' and similar expressions and statements
regarding our business strategy, plans and objectives of our management for
future operations. These statements reflect our current views and those of our
general partner with respect to future events, based on what we believe are
reasonable assumptions. These statements, however, are subject to certain risks,
uncertainties and assumptions, including, but not limited to:
. the availability of adequate supplies of and demand for crude oil in the
areas in which we operate;
. the impact of crude oil price fluctuations;
. the effects of competition;
. the success of our risk management activities;
. the availability (or lack thereof) of acquisition or combination
opportunities;
. the impact of current and future laws and governmental regulations;
. environmental liabilities that are not covered by an indemnity or
insurance; and
. general economic, market or business conditions.
If one or more of these risks or uncertainties materialize, or if underlying
assumptions prove incorrect, actual results may vary materially from the results
anticipated in the forward-looking statements. Except as required by applicable
securities laws, we do not intend to update these forward-looking statements and
information.
18
<PAGE>
PART II. OTHER INFORMATION
ITEMS 1. LEGAL PROCEEDINGS
Texas Securities Litigation. On November 29, 1999, a class action lawsuit was
filed in the United States District Court for the Southern District of Texas
entitled Di Giacomo v. Plains All American Pipeline, et al. The suit alleged
that Plains All American Pipeline, L.P. and certain of our general partner's
officers and directors violated federal securities laws, primarily in connection
with unauthorized trading by a former employee. An additional nineteen cases
were filed in the Southern District of Texas, some of which name our general
partner and Plains Resources as additional defendants. Plaintiffs allege that
the defendants are liable for securities fraud violations under Rule 10b-5 and
Section 20(a) of the Securities Exchange Act of 1934 and for making false
registration statements under Sections 11 and 15 of the Securities Act of 1933.
The court has consolidated all subsequently filed cases under the first filed
action described above. On April 27, 2000 the court appointed two distinct lead
plaintiffs to represent two different plaintiff classes: (1) purchasers of
Plains Resources common stock and options and (2) purchasers of our common
units. No answer or responsive pleading is due until thirty days after the lead
plaintiffs have filed a consolidated amended complaint.
Delaware Derivative Litigation. On December 3, 1999, two derivative lawsuits
were filed in the Delaware Chancery Court, New Castle County, entitled Susser v.
Plains All American Inc., et al and Senderowitz v. Plains All American Inc., et
al. These suits, and three others which were filed in Delaware subsequently,
named our general partner, its directors and certain of its officers as
defendants, and allege that the defendants breached the fiduciary duties that
they owed to Plains All American Pipeline, L.P. and its unitholders by failing
to monitor properly the activities of its employees. The derivative complaints
allege, among other things, that Plains All American Pipeline has been harmed
due to the negligence or breach of loyalty of the officers and directors that
are named in the lawsuits. These cases are currently in the process of being
consolidated. No answer or responsive pleading is due until these cases have
been consolidated and a consolidated complaint has been filed.
We intend to vigorously defend the claims made in the Texas securities
litigation and the Delaware derivative litigation. However, there can be no
assurance that we will be successful in our defense or that these lawsuits will
not have a material adverse effect on our financial position or results of
operation.
We, in the ordinary course of business, are a claimant and/or a defendant in
various other legal proceedings. Management does not believe that the outcome of
these other legal proceedings, individually and in the aggregate, will have a
materially adverse effect on our financial condition or results of operation.
ITEMS 2, 3, 4 & 5 ARE NOT APPLICABLE AND HAVE BEEN OMITTED.
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K
A. Exhibits
10.1 Credit Agreement [Letter of Credit and Hedged Inventory Facility]
dated May 8, 2000, among Plains Marketing, L.P., All American
Pipeline, L.P., Plains All American Pipeline, L.P. and Fleet
National Bank and certain other lenders.
10.2 Credit Agreement [Revolving Credit Facility] dated May 8, 2000,
among Plains Marketing, L.P., All American Pipeline, L.P., Plains
All American Pipeline, L.P. and Fleet National Bank and certain
other lenders.
27. Financial Data Schedule
B. Reports on Form 8-K
None.
19
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned and thereunto duly authorized.
PLAINS ALL AMERICAN PIPELINE, L.P.
By: PLAINS ALL AMERICAN INC.
Its General Partner
Date: May 12, 2000 By: /s/ Cynthia A. Feeback
----------------------
Cynthia A. Feeback, Treasurer
(Principal Accounting Officer) of the
General Partner
20
<PAGE>
Execution Copy
================================================================================
CREDIT AGREEMENT
[Letter of Credit and Hedged Inventory Facility]
_______________________________________________________
PLAINS MARKETING, L.P.,
as Borrower,
ALL AMERICAN PIPELINE, L.P.
and
PLAINS ALL AMERICAN PIPELINE, L.P.,
as Guarantors,
FLEET NATIONAL BANK,
as Administrative Agent,
FIRST UNION NATIONAL BANK,
as Syndication Agent,
BANK OF AMERICA, N.A.,
as Documentation Agent,
BANK ONE, TEXAS, N.A. and PARIBAS,
as Senior Managing Agents,
FLEETBOSTON ROBERTSON STEPHENS INC.,
as Lead Arranger and Book Manager,
and CERTAIN FINANCIAL INSTITUTIONS,
as Lenders
_______________________________________________________
$300,000,000
May 8, 2000
================================================================================
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
CREDIT AGREEMENT................................................................................ 1
ARTICLE I - Definitions and References.......................................................... 1
Section 1.1. Defined Terms................................................................ 1
Section 1.2. Exhibits and Schedules; Additional Definitions............................... 25
Section 1.3. Amendment of Defined Instruments............................................. 25
Section 1.4. References and Titles........................................................ 25
Section 1.5. Calculations and Determinations.............................................. 25
ARTICLE II - The Loans.......................................................................... 26
Section 2.1. Commitments to Lend; Notes................................................... 26
Section 2.2. Requests for New Loans....................................................... 26
Section 2.3. Continuations and Conversions of Existing Loans.............................. 27
Section 2.4. Use of Proceeds.............................................................. 28
Section 2.5. Optional Prepayments of Loans................................................ 28
Section 2.6. Mandatory Prepayments........................................................ 29
Section 2.7. Letters of Credit............................................................ 29
Section 2.8. Requesting Letters of Credit................................................. 30
Section 2.9. Reimbursement and Participations............................................. 30
Section 2.10. No Duty to Inquire........................................................... 31
Section 2.11. LC Collateral................................................................ 32
Section 2.12. Interest Rates and Fees; Reduction in Commitment............................. 33
Section 2.13. Borrowing Base Reporting..................................................... 34
ARTICLE III - Payments to Lenders............................................................... 34
Section 3.1. General Procedures........................................................... 34
Section 3.2. Capital Reimbursement........................................................ 35
Section 3.3. Increased Cost of LIBOR Loans or Letters of Credit........................... 36
Section 3.4. Notice; Change of Applicable Lending Office.................................. 36
Section 3.5. Availability................................................................. 37
Section 3.6. Funding Losses............................................................... 37
Section 3.7. Reimbursable Taxes........................................................... 38
ARTICLE IV - Conditions Precedent to Credit..................................................... 39
Section 4.1. Documents to be Delivered.................................................... 39
Section 4.2. Additional Conditions Precedent.............................................. 41
ARTICLE V - Representations and Warranties...................................................... 42
Section 5.1. No Default................................................................... 43
Section 5.2. Organization and Good Standing............................................... 43
Section 5.3. Authorization................................................................ 43
Section 5.4. No Conflicts or Consents..................................................... 43
</TABLE>
<PAGE>
<TABLE>
<S> <C>
Section 5.5. Enforceable Obligations...................................................... 43
Section 5.6. Initial Financial Statements................................................. 44
Section 5.7. Other Obligations and Restrictions........................................... 44
Section 5.8. Full Disclosure.............................................................. 44
Section 5.9. Litigation................................................................... 44
Section 5.10. Labor Disputes and Acts of God............................................... 45
Section 5.11. ERISA Plans and Liabilities.................................................. 45
Section 5.12. Compliance with Laws......................................................... 45
Section 5.13. Environmental Laws........................................................... 45
Section 5.14. Names and Places of Business................................................. 47
Section 5.15. Borrower's Subsidiaries...................................................... 47
Section 5.16. Title to Properties; Licenses................................................ 47
Section 5.17. Government Regulation........................................................ 47
Section 5.18. Insider...................................................................... 48
Section 5.19. Solvency..................................................................... 48
Section 5.20. Credit Arrangements.......................................................... 48
ARTICLE VI - Affirmative Covenants.............................................................. 48
Section 6.1. Payment and Performance...................................................... 48
Section 6.2. Books, Financial Statements and Reports...................................... 49
Section 6.3. Other Information and Inspections............................................ 51
Section 6.4. Notice of Material Events and Change of Address.............................. 52
Section 6.5. Maintenance of Properties.................................................... 52
Section 6.6. Maintenance of Existence and Qualifications.................................. 53
Section 6.7. Payment of Trade Liabilities, Taxes, etc..................................... 53
Section 6.8. Insurance.................................................................... 53
Section 6.9. Performance on Borrower's Behalf............................................. 53
Section 6.10. Interest..................................................................... 54
Section 6.11. Compliance with Agreements and Law........................................... 54
Section 6.12. Environmental Matters; Environmental Reviews................................. 54
Section 6.13. Evidence of Compliance....................................................... 54
Section 6.14. Agreement to Deliver Security Documents...................................... 55
Section 6.15. Perfection and Protection of Security Interests and Liens.................... 55
Section 6.16. Bank Accounts; Offset........................................................ 55
Section 6.17. Guaranties of Subsidiaries................................................... 55
Section 6.18. Compliance with Agreements................................................... 56
Section 6.19. Rents........................................................................ 56
Section 6.20. Operating Practices.......................................................... 56
ARTICLE VII - Negative Covenants................................................................ 57
Section 7.1. Indebtedness................................................................. 57
Section 7.2. Limitation on Liens.......................................................... 57
Section 7.3. Hedging Contracts............................................................ 59
Section 7.4. Limitation on Mergers, Issuances of Securities............................... 60
Section 7.5. Limitation on Sales of Property.............................................. 60
Section 7.6. Limitation on Dividends and Redemptions...................................... 61
</TABLE>
<PAGE>
<TABLE>
<S> <C>
Section 7.7. Limitation on Investments and New Businesses................................ 61
Section 7.8. Limitation on Credit Extensions............................................. 61
Section 7.9. Transactions with Affiliates................................................ 61
Section 7.10. Prohibited Contracts....................................................... 62
Section 7.11. Current Ratio............................................................... 62
Section 7.12. Debt Coverage Ratio......................................................... 62
Section 7.13. Interest Coverage Ratio..................................................... 63
Section 7.14. Debt to Capital Ratio....................................................... 63
Section 7.15. Open Position; Certain Permitted Financial Instruments; NYMEX
Transactions...................................................................... 63
Section 7.16. Redelivery of Borrowing Base Report......................................... 64
ARTICLE VIII - Events of Default and Remedies.................................................... 65
Section 8.1. Events of Default........................................................... 65
Section 8.2. Remedies.................................................................... 67
ARTICLE IX - Administrative Agent................................................................ 68
Section 9.1. Appointment and Authority................................................... 68
Section 9.2. Exculpation, Administrative Agent's Reliance, Etc........................... 68
Section 9.3. Credit Decisions............................................................ 69
Section 9.4. Indemnification............................................................. 69
Section 9.5. Rights as Lender............................................................ 70
Section 9.6. Sharing of Set-Offs and Other Payments...................................... 70
Section 9.7. Investments................................................................. 70
Section 9.8. Benefit of Article IX....................................................... 71
Section 9.9. Resignation................................................................. 71
Section 9.10. Other Agents................................................................ 71
ARTICLE X - Miscellaneous........................................................................ 71
Section 10.1. Waivers and Amendments; Acknowledgments..................................... 71
Section 10.2. Survival of Agreements; Cumulative Nature................................... 73
Section 10.3. Notices..................................................................... 74
Section 10.4. Payment of Expenses; Indemnity.............................................. 74
Section 10.5. Joint and Several Liability; Parties in Interest; Assignments; Replacement
Notes.............................................................................. 75
Section 10.6. Confidentiality............................................................. 78
Section 10.7. Governing Law; Submission to Process........................................ 78
Section 10.8. Limitation on Interest...................................................... 79
Section 10.9. Termination; Limited Survival............................................... 80
Section 10.10. Severability................................................................ 81
Section 10.11. Counterparts................................................................ 81
Section 10.12. Waiver of Jury Trial, Punitive Damages, etc................................. 81
Section 10.13. Amendment and Restatement................................................... 81
</TABLE>
<PAGE>
Schedules and Exhibits:
- ----------------------
Schedule 1 - Lender Schedule
Schedule 2 - Disclosure Schedule
Schedule 3 - Security Schedule
Schedule 4 - Insurance Schedule
Schedule 5 - Restructuring Documents
Schedule 6 - Borrowing Base Procedures
Exhibit A - Promissory Note
Exhibit B - Borrowing Notice
Exhibit C - Continuation/Conversion Notice
Exhibit D - Forms of Letter of Credit
Exhibit E - Letter of Credit Application and Agreement
Exhibit F - Certificate Accompanying Financial Statements
Exhibit G-1 - Opinion of In-House Counsel for Restricted Persons
Exhibit G-2 - Opinion of Fulbright & Jaworski L.L.P., Counsel for Restricted
Persons
Exhibit G-3 - Opinion of Andrews & Kurth L.L.P., Counsel for Restricted Persons
Exhibit H - Borrowing Base Report
Exhibit I - Environmental Compliance Certificate
Exhibit J - Assignment and Acceptance Agreement
Exhibit K - Intercreditor Agreement
<PAGE>
CREDIT AGREEMENT
----------------
THIS CREDIT AGREEMENT is made as of May 8, 2000, by and among PLAINS
MARKETING, L.P. ("Borrower"), a Delaware limited partnership, ALL AMERICAN
PIPELINE, L.P. ("All American"), a Texas limited partnership, PLAINS ALL
AMERICAN PIPELINE, L.P. ("Plains MLP"), a Delaware limited partnership, and
FLEET NATIONAL BANK, as administrative agent (in such capacity, "Administrative
Agent"), FIRST UNION NATIONAL BANK, as syndication agent (in such capacity,
"Syndication Agent"), BANK OF AMERICA, N.A., as documentation agent (in such
capacity, "Documentation Agent"), FLEETBOSTON ROBERTSON STEPHENS INC., as lead
arranger and book manager (in such capacity, "Lead Arranger and Book Manager")
and the Lenders referred to below.
W I T N E S S E T H:
WHEREAS, Borrower, All American, Plains MLP, Administrative Agent, and
certain Lenders entered into that certain Second Amended and Restated Credit
Agreement dated as of December 1, 1999 (as amended, restated, or supplemented to
the date hereof, the "Existing Agreement") for the purposes and consideration
therein expressed, pursuant to which one or more such Lenders became obligated
to make and made loans to, and issue letters of credit for the account of,
Borrower as therein provided; and
WHEREAS, Borrower, All American, Plains MLP, Administrative Agent, and
Lenders desire to amend and restate the Existing Agreement for the purposes
described herein;
NOW, THEREFORE, in consideration of the premises and the mutual covenants
and agreements contained herein and in the Existing Agreement, as amended and
restated hereby, in consideration of the loans which may hereafter be made by
Lenders to, and the Letters of Credit that may hereafter be issued by the LC
Issuer for the account of, Borrower, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto do hereby 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 to such term in this Section 1.1 or in
the sections and subsections referred to below:
"Acceptable Issuer" means any national or state bank or trust company which
-----------------
is organized under the laws of the United States of America or any state thereof
or any branch licensed to operate under the laws of the United States of America
or any state thereof, which is a branch of a bank organized under any country
which is a member of the Organization for Economic Cooperation and Development,
in each case which has capital, surplus and undivided profits of at least
$500,000,000 and whose commercial paper is rated at least P-1 by Moody's or A-1
by S&P.
1
<PAGE>
"Account" shall have the meaning given that term in the UCC.
-------
"Account Debtor" means any Person who is or who may become obligated under,
--------------
with respect to, or on account of, an Account.
"Administrative Agent" means Fleet National Bank, as Administrative Agent
--------------------
hereunder, and its successors in such capacity.
"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 5% 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.
"Affiliate Agreements" means the Crude Oil Marketing Agreement and the
--------------------
Omnibus Agreement.
"Agent" means any of the Administrative Agent, Syndication Agent or
-----
Documentation Agent.
"Agreement" means this Credit Agreement.
---------
"All American" means All American Pipeline, L.P., a Texas limited
------------
partnership.
"All American Pipeline" shall have the meaning given that term in Section
---------------------
1.3.
"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 LIBOR Lending Office in the case of LIBOR Loans.
"Applicable Leverage Level" means the level set forth below that
-------------------------
corresponds to the ratio of (i) Consolidated Funded Indebtedness of Plains MLP
and its Subsidiaries to (ii) the Consolidated EBITDA for the applicable period
of four Fiscal Quarters (the "Leverage Ratio"):
2
<PAGE>
======================================================
Applicable
Leverage Level Leverage Ratio
-------------- --------------
------------------------------------------------------
Level I greater than or equal to
3.50 to 1.0
------------------------------------------------------
Level II greater than or equal to 3.00 to
1.0
but less than 3.50 to 1.0
------------------------------------------------------
Level III greater than or equal to 2.25 to
1.0
but less than 3.00 to 1.0
------------------------------------------------------
Level IV greater than or equal to 1.75 to
1.0
but less than 2.25 to 1.0
------------------------------------------------------
Level V less than 1.75 to 1.0
======================================================
The Leverage Ratio will be determined quarterly by Administrative Agent within
two (2) Business Days after Administrative Agent's receipt of Plains MLP's
Consolidated financial statements for the immediate preceding Fiscal Quarter
based upon: (i) Consolidated Funded Indebtedness as of the end of such Fiscal
Quarter, and (ii) the Consolidated EBITDA for the four Fiscal Quarters ending
with such Fiscal Quarter. The Applicable Leverage Level shall become effective
upon such determination of the Leverage Ratio by Administrative Agent and shall
remain effective until the next such determination by Administrative Agent of
the Leverage Ratio.
"Approved Eligible Receivables" means each Eligible Receivable (other than
-----------------------------
Eligible Exchange Balances) (a) from a Person whose Debt Rating is either at
least Baa3 by Moody's or at least BBB- by S&P; (b) fully and unconditionally
guaranteed as to payment by a Person whose Debt Rating is either at least Baa3
by Moody's or at least BBB- by S&P; (c) from any other Person Currently Approved
by Majority Lenders; or (d) fully covered by a letter of credit from an
Acceptable Issuer.
"Available Cash" has the meaning given such term in the Partnership
--------------
Agreement.
"Base Rate" means the sum of (a) the Base Rate Margin plus (b) the higher
---------
of (i) the variable per annum rate of interest so designated from time to time
by Administrative Agent as its "prime rate", or (ii) the Federal Funds Rate plus
one-half percent (0.5%) per annum. The "prime rate" is a reference rate and
does not necessarily represent the lowest or best rate being charged to any
customer. Changes in the Base Rate resulting from changes in the "prime rate"
shall take place immediately without notice or demand of any kind.
"Base Rate Loan" means a Loan which does not bear interest at the LIBOR
--------------
Rate.
"Base Rate Margin" means (i) from the date hereof through but not including
----------------
the six-month anniversary of the date hereof, the greater of (A) 0.125% per
annum and (B) the percent per annum set forth below based on the Applicable
Leverage Level in effect on such date, and
3
<PAGE>
(ii) on and after the six-month anniversary of the date hereof, the percent per
annum set forth below based on the Applicable Leverage Level in effect on such
date.
=====================================================
Applicable Leverage Level Base Rate Margin
-----------------------------------------------------
Level I 0.250%
-----------------------------------------------------
Level II 0.125%
-----------------------------------------------------
Level III, Level IV or Level V 0.000%
=====================================================
Changes in the applicable Base Rate Margin will occur automatically without
prior notice as changes in the Applicable Leverage Level occur. Administrative
Agent will give notice promptly to Borrower and Lenders of changes in the Base
Rate Margin.
"Borrower" means Plains Marketing, L.P., a Delaware limited partnership.
--------
"Borrowing" means a borrowing of new Loans of a single Type pursuant to
---------
Section 2.2 or a Continuation or Conversion of all or a portion of an existing
Loan (whether alone or as a combination with a new Loan) into a single Type
(and, in the case of LIBOR Loans, with the same Interest Period) pursuant to
Section 2.3.
"Borrowing Base" means the remainder of (a) minus (b) below as of the date
--------------
of determination (without duplication):
(a) the sum of the following as of the date of determination :
(i) 100% of Eligible Cash Equivalents; plus
(ii) 90% of Approved Eligible Receivables; plus
(iii) the lesser of (A) 85% of Other Eligible Receivables or (B)
1/3 of the sum of the amounts of clauses (a)(i) plus (a)(ii)
[(i.e., (a)(i) plus (a)(ii) must be 75% of (a)(i) plus
(a)(ii) plus (a)(iii)]; plus
(iv) 85% of Eligible Margin Deposits; plus
(v) the lesser of (A) 95% of Hedged Eligible Inventory plus 100%
of Other Eligible Inventory Value or (B) $100,000,000; plus
(vi) 80% of Eligible Exchange Balances; plus
(vii) 100% of all Paid but Unexpired Letters of Credit
MINUS (b) the following as of the date of determination:
4
<PAGE>
(i) 100% of First Purchase Crude Payables; plus
(ii) 100% of Other Priority Claims; plus
(iii) The Estimate Adjustment Amount as provided in Section 2.13;
plus
(iv) The amount of any setoff or contra account to any Eligible
Receivable which could arise from an obligation of Borrower
to sell or purchase crude oil in any future month to the
extent not otherwise reflected as a reduction of Eligible
Receivables, such amount to be determined on an early
termination or mark to market basis.
"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 any day, other than a Saturday, Sunday or day which
------------
shall be in the Commonwealth of Massachusetts a legal holiday or day on which
banking institutions are required or authorized to close. Any Business Day in
any way relating to LIBOR Loans (such as the day on which an Interest Period
begins or ends) must also be a day on which commercial banks settle payments in
London.
"Capital Lease" means a lease with respect to which the lessee is required
-------------
concurrently to recognize the acquisition of an asset and the incurrence of a
liability in accordance with GAAP.
"Capital Lease Obligation" means, with respect to any Person and a Capital
------------------------
Lease, the amount of the obligation of such Person as the lessee under such
Capital Lease which would, in accordance with GAAP, appear as a liability on a
balance sheet of such Person.
"Cash and Carry Purchases" means purchases of crude oil for physical
------------------------
storage at a Plains Terminal or in storage or in transit in pipelines Currently
Approved by Majority Lenders which constitute Hedged Eligible Inventory.
"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, (i) with any office
of any Lender or (ii) 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 long-term certificates of deposit are rated at
least Aa3 by Moody's or AA- by S&P;
5
<PAGE>
(c) repurchase obligations with a term of not more than seven days for
underlying securities of the types described in subsection (a) above entered
into with (i) any Lender or (ii) any other commercial bank meeting the
specifications of subsection (b) above;
(d) open market commercial paper, maturing within 270 days after
acquisition thereof, which are rated at least P-1 by Moody's or A-1 by S&P; and
(e) money market or other mutual funds substantially all of whose assets
comprise securities of the types described in subsections (a) through (d) above.
"Change of Control" means the occurrence of any of the following events:
-----------------
(i) an event or series of events by which any Person or other entity or group of
Persons or other entities acting in concert as a partnership or other group (a
"Group of Persons") shall, as a result of a tender or exchange offer, open
market purchases, privately negotiated purchases, merger, consolidation or
otherwise, have become the beneficial owner (within the meaning of Rule 13d-3
under the Securities Exchange Act of 1934, as amended) of (A) 50% or more of the
combined voting power of the then outstanding voting stock of Resources, in the
case of any Person or Group of Persons constituting or controlled by Affiliates
of Kayne Anderson Investment Management, Inc., or (B) 40% or more of such
combined voting power in the case of any other Person or Group of Persons, (ii)
during any period of two consecutive years (A) the members of the board of
directors of Resources (the "Board") as of January 1, 2000, (B) any director
elected thereafter in any annual meeting of the stockholders of Resources upon
the recommendation of the Board, and (C) any other member of the Board who will
be recommended or elected to succeed those Persons described in subclauses (A)
and (B) of this clause (ii) by a majority of such Persons who are then members
of the Board, cease for any reason to constitute collectively a majority of the
Board then in office, (iii) the direct or indirect sale, lease, exchange or
other transfer of all or substantially all of the Consolidated assets of
Resources and its Subsidiaries, to any Person or Group of Persons, or (iv)
Resources, either directly or through a Wholly Owned Subsidiary of Resources,
shall cease to be the legal and beneficial owner (as defined above) of more than
50% of the voting power of the outstanding voting stock of General Partner, or
General Partner shall cease to be the sole legal and beneficial owner (as
defined above) of all of the general partner interests (including all securities
which are convertible into general partner interests), of Plains MLP, All
American, or Borrower, (v) any Person or Group of Persons other than Resources
or any Subsidiary of Resources shall be the legal and beneficial owner (as
defined above) of 50% or more of the combined voting power of the then total
partnership interests (including all securities which are convertible into
partnership interests) of Plains MLP, Borrower, All American or any other
Restricted Person that is a partnership, (vi) Plains MLP or Borrower shall cease
to be the sole legal and beneficial owner (as defined above) of all of the
limited partnership interests of Borrower and All American, respectively
(including all securities which are convertible into limited partner interests),
or (vii) Resources and its Wholly Owned Subsidiaries taken as a whole shall hold
legal and beneficial ownership of issued and outstanding partnership interests
of Plains MLP representing less than 5% of the total outstanding partnership
interests of Plains MLP.
"Co-Agent" shall have the meaning given that term in Section 9.10.
--------
6
<PAGE>
"Code" means the Internal Revenue Code of 1986, as amended from time to
----
time, together with all rules and regulations promulgated with respect thereto.
"Collateral" means all property of any kind which is subject to a Lien in
----------
favor of Lenders (or in favor of Administrative Agent or the collateral agent
under the Intercreditor Agreement described in Section 4.1(m) for the benefit of
Lenders) or which, under the terms of any Security Document, is purported to be
subject to such a Lien, in each case granted or created to secure all or part of
the Obligations.
"Commitment Fee Rate" means, on any day (i) from the date hereof through
-------------------
but not including the six-month anniversary of the date hereof, 0.5% per annum,
and (ii) on and after the six-month anniversary of the date hereof, the rate per
annum set forth below based on the Applicable Leverage Level on such date.
=====================================================
Applicable Leverage Level Commitment Fee Rate
-----------------------------------------------------
Level I or Level II 0.500%
-----------------------------------------------------
Level III or Level IV 0.375%
-----------------------------------------------------
Level V 0.250%
=====================================================
Changes in the applicable Commitment Fee Rate will occur automatically without
prior notice as changes in the Applicable Leverage Level occur. Administrative
Agent will give notice promptly to Borrower and Lenders of changes in the
Commitment Fee Rate.
"Commitment Period" means the period from and including the date hereof
-----------------
until April 30, 2003 (or, if earlier, the day on which (i) the obligation of
Lenders to make Loans hereunder and the obligations of LC Issuer to issue
Letters of Credit hereunder have terminated, (ii) the obligation of LC Issuer to
issue Letters of Credit hereunder has terminated, or (iii) the Notes first
become due and payable in full, whichever shall first occur).
"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 EBITDA" means, for any period, the sum of (1) the
-------------------
Consolidated Net Income of Plains MLP and its Subsidiaries during such period,
plus (2) all interest expense which was deducted in determining such
Consolidated Net Income for such period, plus (3) all income taxes (including
any franchise taxes to the extent based upon net income) which were deducted in
determining such Consolidated Net Income, plus (4) all depreciation,
amortization (including amortization of good will and debt issue costs) and
other non-cash charges (including any provision for the reduction in the
carrying value of assets recorded in accordance with
7
<PAGE>
GAAP) which were deducted in determining such Consolidated Net Income, minus (5)
all non-cash items of income which were included in determining such
Consolidated Net Income.
"Consolidated Funded Indebtedness" means as of any date, the sum of the
--------------------------------
following (without duplication): (i) all Indebtedness which is classified as
"long-term indebtedness" on a consolidated balance sheet of Plains MLP and its
Consolidated Subsidiaries prepared as of such date in accordance with GAAP and
any current maturities and other principal amount in respect of such
Indebtedness due within one year but which was classified as "long-term
indebtedness" at the creation thereof, (ii) indebtedness for borrowed money of
Plains MLP and its Consolidated Subsidiaries outstanding under a revolving
credit or similar agreement providing for borrowings (and renewals and
extensions thereof) over a period of more than one year, notwithstanding the
fact that any such borrowing is made within one year of the expiration of such
agreement, and (iii) Indebtedness in respect of Capital Leases of Plains MLP and
its Consolidated Subsidiaries; provided, however, Consolidated Funded
Indebtedness shall not include Indebtedness in respect of letters of credit or
in respect of Cash and Carry Purchases.
"Consolidated Net Income" means, for any period, Plains MLP's and its
-----------------------
Subsidiaries' gross revenues for such period, including any cash dividends or
distributions actually received from any other Person during such period, minus
Plains MLP's and its Subsidiaries' expenses and other proper charges against
income (including taxes on income to the extent imposed), determined on a
Consolidated basis after eliminating earnings or losses attributable to
outstanding minority interests and excluding the net earnings of any Person
other than a Subsidiary in which Plains MLP or any of its Subsidiaries has an
ownership interest. Consolidated Net Income shall not include any gain or loss
from the sale of assets or any extraordinary gains or losses.
"Consolidated Net Worth" means the remainder of all Consolidated assets, as
----------------------
determined in accordance with GAAP, of Plains MLP and its Subsidiaries minus the
sum of (a) Plains MLP's Consolidated liabilities, as determined in accordance
with GAAP, and (b) all outstanding Minority Interests. The effect of any
increase or decrease in net worth in any period as a result of items of income
or loss not reflected in the determination of net income but reflected in the
determination of comprehensive income (to the extent provided under GAAP (x) as
in effect on the date hereof or (y) to become effective after the date hereof
under rules currently proposed as of the date hereof that become effective on or
before January 1, 2001) shall be excluded in determining Consolidated Net Worth.
"Minority Interests" means the book value of any equity interests in any of
Plains MLP's Subsidiaries (exclusive of the general partner interests held by
the General Partner in Borrower, All American or any other Restricted Person of
up to two percent (2%) of the aggregate ownership interest in any such Person)
which equity interests are owned by a Person other than Plains MLP or a Wholly
Owned Subsidiary of Plains MLP.
"Continuation/Conversion Notice" means a written or telephonic request, or
------------------------------
a written confirmation, made by Borrower which meets the requirements of Section
2.3.
8
<PAGE>
"Continue", "Continuation", and "Continued" shall refer to the continuation
-------- ------------ ---------
pursuant to Section 2.3 hereof of a LIBOR Loan as a LIBOR Loan from one Interest
Period to the next Interest Period.
"Convert", "Conversion", and "Converted" shall refer to a conversion
--------------------------------------
pursuant to Section 2.3 or Article III of one Type of Loan into another Type of
Loan.
"Crude Oil Marketing Agreement" means that certain Crude Oil Marketing
-----------------------------
Agreement among Resources, Plains Illinois Inc., Stocker Resources, L.P.,
Arguello Inc. and Borrower dated November 23, 1998.
"Current Trading Month" has the meaning given that term in Section 7.15.
---------------------
"Currently Approved by Majority Lenders" means such Person (including a
--------------------------------------
limit on the maximum credit exposure to any such Person), storage location,
pipeline, form of Letter of Credit or other matter as the case may be, as
reflected in the most recent written notice given by Administrative Agent to
Borrower as being approved by Majority Lenders. Each such written notice will
supersede and revoke each prior notice.
"Debt Coverage Ratio" shall have the meaning given that term in Section
-------------------
7.12.
"Debt Rating" means with respect to a Person, the rating then in effect by
-----------
a Rating Agency for the long term senior unsecured non-credit enhanced debt of
such Person.
"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, (i) three and three-fourths
------------
percent (3.75%) per annum plus the LIBOR Rate then in effect for any LIBOR Loan
(up to the end of the applicable Interest Period) or (ii) two percent (2%) per
annum plus the Base Rate for each Base Rate Loan; provided, however, the Default
Rate shall never exceed the Highest Lawful Rate
"Default Rate Period" means (i) any period during which an Event of
-------------------
Default, other than pursuant to Section 8.1 (a) or (b), is continuing, provided
that such period shall not begin until notice of the commencement of the Default
Rate has been given to Borrower by Administrative Agent upon the instruction by
Majority Lenders and (ii) any period during which any Event of Default pursuant
to Section 8.1 (a) or (b) is continuing unless Borrower has been notified
otherwise by Administrative Agent upon the instruction by Majority Lenders.
"Disclosure Schedule" means Schedule 2 hereto.
-------------------
"Domestic Lending Office" means, with respect to any Lender, the office of
-----------------------
such Lender specified as its "Domestic Lending Office" in the Lender Schedule
hereto, or such other office as such Lender may from time to time specify to
Borrower and Administrative Agent; with respect
9
<PAGE>
to LC Issuer, the office, branch, or agency through which it issues Letters of
Credit; and, with respect to Administrative Agent, the office, branch, or agency
through which it administers this Agreement.
"Effective Time" shall have the meaning given that term in Section 10.13.
--------------
"Eligible Cash Equivalents" means Cash Equivalents in which Borrower has
-------------------------
lawful and absolute title, which are free from any express or implied at law
Lien, trust or other beneficial interest, in which Administrative Agent holds a
fully perfected first-priority security interest prior to the rights of, and
enforceable as such against, any other Persons pursuant to an account agreement
satisfactory to Administrative Agent and which remain under the sole dominion
and control of Administrative Agent.
"Eligible Exchange Balances" means each Approved Eligible Receivable
--------------------------
(including for this purpose only either the right to receive crude oil in kind
or to receive money) arising from the trading, lending, borrowing or exchange of
crude oil, net of any netted obligations or other offsets or counterclaims
determined in accordance with prices set forth in the applicable exchange
contracts, based on current value at the Market Price, in which Borrower has
lawful and absolute title, which is not subject to any Lien in favor of any
Person (other than Permitted Inventory Liens), and which is subject to a fully
perfected first-priority security interest (subject only to Permitted Inventory
Liens) in favor of Administrative Agent pursuant to the Loan Documents prior to
the rights of, and enforceable as such against, any other Persons minus without
duplication the amount of any Permitted Inventory Lien on any crude oil
receivable in kind.
"Eligible Inventory" means inventories of crude oil in which Borrower has
------------------
lawful and absolute title (specifically excluding, however, tank bottoms and
pipeline linefill of any Restricted Person classified as a long-term asset),
which are not subject to any Lien in favor of any Person (other than Permitted
Inventory Liens), which are subject to a fully perfected first priority security
interest (subject only to Permitted Inventory Liens) in favor of Administrative
Agent pursuant to the Loan Documents prior to the rights of, and enforceable as
such against, any other Person, which are otherwise satisfactory to Majority
Lenders in their reasonable business judgment and which are located in storage
locations (including pipelines) which are either (a) owned by a Restricted
Person or (b) Currently Approved by Majority Lenders minus without duplication
the amount of any Permitted Inventory Lien on any such inventory. Eligible
Inventory shall specifically exclude inventory to be delivered in the current or
next succeeding trading month.
"Eligible Margin Deposit" means net equity value of investments by Borrower
-----------------------
in margin deposit accounts with commodities brokers on nationally recognized
exchanges subject to a perfected security interest in favor of Administrative
Agent and a three-party agreement among Borrower, Administrative Agent and the
depository institution, in form and substance satisfactory to Administrative
Agent.
10
<PAGE>
"Eligible Receivables" means, at the time of any determination thereof (and
--------------------
without duplication), each Account and, with respect to each determination made
on or after the 20th day of each calendar month and prior to the first day of
the next calendar month, each amount which will be, in the good faith estimate
reasonably determined by Borrower, an Account of the Borrower with respect to
sales and deliveries of crude oil during such calendar month or deliveries of
crude oil during the next calendar month under firm written purchase and sale
agreements, in either event as to which the following requirements have been
fulfilled (or as to future Accounts, will be fulfilled as of the date of such
sales and deliveries of crude oil), to the reasonable satisfaction of
Administrative Agent:
(i) Borrower has lawful and absolute title to such Account;
(ii) such Account is a valid, legally enforceable obligation of
an Account Debtor payable in United States dollars, arising from the sale
and delivery of crude oil to such Person in the United States of America in
the ordinary course of business of Borrower, to the extent of the volumes
of crude oil delivered to such Person prior to the date of determination;
(iii) there has been excluded from such Account (A) any portion
that is subject to any dispute, rejection, loss, non-conformance ,
counterclaim or other claim or defense on the part of any Account Debtor or
to any claim on the part of any Account Debtor denying liability under such
Account, and (B) the amount of any account payable or other liability owed
by Borrower to the Account Debtor on such Account, whether or not a
specific netting agreement may exist, excluding, however, any portion of
any such account payable or other liability which is at the time in
question covered by a Letter of Credit;
(iv) Borrower has the full and unqualified right to assign and
grant a security interest in such Account to Administrative Agent as
security for the Obligation;
(v) such Account (A) is evidenced by an invoice rendered to the
Account Debtor, or (B) represents the uninvoiced amount in respect of
volumes of crude oil scheduled to be delivered by Borrower in the current
or next-following calendar month, is governed by a purchase and sale
agreement, exchange agreement or other written agreement, and in either
event such Account is not evidenced by any promissory note or other
instrument;
(vi) such Account is not subject to any Lien in favor of any
Person and is subject to a fully perfected first priority security interest
in favor of Administrative Agent pursuant to the Loan Documents, prior to
the rights of, and enforceable as such against, any other Person except for
a Lien in respect of First Purchase Crude Payables;
(vii) such Account is due not more than 30 days following the last
day of the calendar month in which the crude oil delivery occurred and is
not more than 30 days past due (except that Accounts of a single Account
Debtor in excess of $500,000 which are
11
<PAGE>
not Approved Eligible Receivables shall be excluded from Eligible
Receivables if not paid within three Business Days after the due date);
(viii) such Account is not payable by an Account Debtor with more
than twenty percent (20%) of its Accounts to Borrower that are outstanding
more than 60 days from the invoice date;
(ix) the Account Debtor in respect of such Account (A) is
located, is conducting significant business or has significant assets in
the United States of America or is a Person Currently Approved by Majority
Lenders, (B) is not an Affiliate of Borrower, and (C) is not the subject of
any event of the type described in Section 8.1(i);
(x) the Account Debtor in respect of such Account is not a
governmental authority, domestic or foreign; and
(xi) such Account is not the obligation of an Account Debtor that
Administrative Agent or Majority Lenders determine in good faith that there
is a legitimate concern over the timing or collection of such receivable.
"Eligible Transferee" means a Person which either (a) is a Lender, or (b)
-------------------
is consented to as an Eligible Transferee by Administrative Agent and, so long
as no Default or 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).
"El Paso Longline Sale Agreement" means that certain Pipeline Sale and
-------------------------------
Purchase Agreement dated January 31, 2000 among Plains MLP, All American and
EPNG Pipeline Company.
"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 each Restricted Person and all members of a
---------------
controlled group of corporations and all trades or businesses (whether or not
incorporated) under common control that, together with such Restricted Person,
are treated as a single employer under Section 414 of the Code.
12
<PAGE>
"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.
"Event of Default" has the meaning given to such term in Section 8.1.
----------------
"Existing Agreement" has the meaning given in the first recital.
------------------
"Facility Usage" means, at the time in question, the aggregate amount of
--------------
outstanding Loans and LC Obligations at such time.
"Federal Funds Rate" means, for any day, the rate per annum (rounded
------------------
upwards, if necessary, to the nearest 1/1000th 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 Administrative Agent on such day on such transactions as
determined by Administrative Agent.
"First Purchase Crude Payables" means the unpaid amount of any payable
-----------------------------
obligation related to the purchase of crude oil by Borrower which Administrative
Agent determines will be secured by a statutory Lien, including but not limited
to the statutory Liens, if any, created under the laws of Texas, New Mexico,
Wyoming, Kansas, Oklahoma or any other state to the extent such payable
obligation is not at the time in question covered by a Letter of Credit.
"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.
"Floating Price Contract" has the meaning given that term in Section 7.15.
-----------------------
"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 Plains MLP and its
Consolidated Subsidiaries, are applied for all periods after the date hereof in
a manner consistent with the manner in which such principles and practices were
applied to the 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 Plains MLP or with respect to
Plains MLP and its Consolidated Subsidiaries may be prepared in accordance with
such change, but all calculations and determinations to be made
13
<PAGE>
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 Plains MLP or of Plains MLP and its
Consolidated Subsidiaries.
"General Partner" means Plains All American Inc., a Delaware corporation.
---------------
"Guarantors" means Plains MLP and all of its Subsidiaries (including All
----------
American but excluding Borrower) and any other Person who has guaranteed some or
all of the Obligations and who has been accepted by Administrative Agent as a
Guarantor or any Subsidiary of Plains MLP which now or hereafter executes and
delivers a guaranty to Administrative Agent pursuant to Section 6.17.
"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.
"Hedged Eligible Inventory" means (a) Eligible Inventory or (b) crude oil
-------------------------
inventory scheduled to be purchased in the following month, which in either case
has been (i) hedged for delivery within the next 190 days by either (x) a
contract on the NYMEX arranged through brokers approved by Administrative Agent
and with whom a three-party agreement among Borrower, Administrative Agent and
such broker has been entered in form and substance satisfactory to
Administrative Agent or (y) a contract for physical delivery of such inventory
to a counterparty whose Account would qualify as an Approved Eligible Receivable
or (ii) otherwise hedged in a manner satisfactory to Majority Lenders. The
value of Hedged Eligible Inventory shall be the volume of the inventory times
the prices fixed in such hedge, minus all storage, transportation and other
applicable costs.
"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, excluding in each case for purposes of Section 7.3
only, any such agreement or contract covering crude oil.
"Highest Lawful Rate" means, with respect to each Lender Party to whom
-------------------
Obligations are owed, the maximum nonusurious rate of interest that such Lender
Party is permitted under applicable Law to contract for, take, charge, or
receive with respect to such Obligations. 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 Party as
appropriate to assure that the Loan Documents are not construed to obligate any
Person to pay interest to any Lender Party at a rate in excess of the Highest
Lawful Rate applicable to such Lender Party.
"Incentive and Option Plans" means the Plains All American Inc. 1998 Long-
--------------------------
Term Incentive Plan as in effect on the date hereof, the Plains All American
Inc. Management
14
<PAGE>
Incentive Plan as in effect on the date hereof and those certain Transaction
Grant Agreements disclosed in writing to Administrative Agent prior to the date
of this Agreement.
"Indebtedness" of any Person means its Liabilities (without duplication) 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,
(d) Liabilities (other than reserves for taxes and reserves for contingent
obligations) 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
or incurrence thereof,
(e) Liabilities arising under Hedging Contracts (on a net basis to the
extent netting is provided for in the applicable Hedging Contract),
(f) Liabilities constituting principal under Capital Leases,
(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 otherwise 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 consisting of an obligation to purchase or redeem
securities or other property, if such Liabilities arises out of or in connection
with the sale or issuance of the same or similar securities or property (for
example, repurchase agreements, mandatorily redeemable preferred stock and
sale/leaseback agreements),
(j) Liabilities with respect to letters of credit or applications or
reimbursement agreements therefor,
(k) Liabilities with respect to banker's acceptances, or
(l) Liabilities with respect to obligations to deliver goods or services
in consideration of advance payments therefor;
15
<PAGE>
provided, however, that the "Indebtedness" of any Person shall not include
Liabilities that were incurred in the ordinary course of business 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 120 days after the
date the respective goods are delivered or the respective services are rendered,
other than Liabilities contested in good faith by appropriate proceedings, if
required, and for which adequate reserves are maintained on the books of such
Person in accordance with GAAP.
"Initial Financial Statements" means (i) the audited Consolidated financial
----------------------------
statements of Plains MLP as of December 31, 1999, (ii) the unaudited
consolidating balance sheet and income statement of Plains MLP as of December
31, 1999, (iii) the unaudited Consolidated and consolidating balance sheet and
income statement of Plains MLP as of February 29, 2000, and (iv) the unaudited
pro forma Consolidated and consolidating balance sheet of Plains MLP as of
February 29, 2000, after giving effect to (x) the Restructuring, (y) the
consummation of the transactions set forth in the El Paso Longline Sale
Agreement, including the repayment of Indebtedness with the proceeds thereof,
and (z) the payoff by Borrower of the Paribas Linefill Financing.
"Insurance Schedule" means Schedule 4 attached hereto.
------------------
"Interest Expense" means, with respect to any period, the sum (without
----------------
duplication) of the following (in each case, eliminating all offsetting debits
and credits between Plains MLP and its Subsidiaries and all other items required
to be eliminated in the course of the preparation of Consolidated financial
statements of Plains MLP and its Subsidiaries in accordance with GAAP): (a) all
interest and commitment fees in respect of Indebtedness of Plains MLP or any of
its Subsidiaries (including imputed interest on Capital Lease Obligations) which
are accrued during such period and whether expensed in such period or
capitalized; plus (b) all fees, expenses and charges in respect of letters of
credit issued for the account of Plains MLP or any of its Subsidiaries, which
are accrued during such period and whether expensed in such period or
capitalized. The determination of Interest Expense for the Fiscal Quarter ended
March 31, 2000 shall exclude (i) interest and fees under the Paribas Linefill
Financing and (ii) interest paid under the All American Agreement (as defined in
the Revolver Agreement) with respect to a principal amount equal to the net
proceeds applied from the assets sold pursuant to the El Paso Longline Sale
Agreement.
"Interest Payment Date" means (a) with respect to each Base Rate Loan, the
---------------------
last day of each March, June, September and December, and (b) with respect to
each LIBOR Loan, the last day of the Interest Period that is applicable thereto.
"Interest Period" means, with respect to each particular LIBOR Loan in a
---------------
Borrowing, the period specified in the Borrowing Notice or
Continuation/Conversion Notice applicable thereto, beginning on and including
the date specified in such Borrowing Notice or Continuation/Conversion Notice
(which must be a Business Day), and ending one, two or three months thereafter,
as Borrower may elect in such notice; provided that: (a) any Interest Period
which would otherwise end on a day which is not a Business Day shall be extended
to the next
16
<PAGE>
succeeding Business Day unless such Business Day falls in another calendar
month, in which case such Interest Period shall end on the next preceding
Business Day; (b) any Interest Period which begins on the last Business Day in a
calendar month (or on a day for which there is no numerically corresponding day
in the calendar month at the end of such Interest Period) shall end on the last
Business Day in a calendar month; and (c) notwithstanding the foregoing, no
Interest Period may be selected that would end after the last day of the
Commitment Period.
"Investment" means any investment made, directly or indirectly in any
----------
Person, whether by acquisition of shares of capital stock, indebtedness or other
obligations or securities or by loan, advance, capital contribution or otherwise
and whether made in cash, by the transfer of property or by any other means.
"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 hereafter
--------------
made by Borrower to LC Issuer.
"LC Collateral" has the meaning given to such term in Section 2.11(a).
-------------
"LC Issuer" means Fleet National Bank, in its capacity as the issuer of
---------
Letters of Credit hereunder, and its successors in such capacity.
Administrative Agent may, with the consent of Borrower and the Lender in
question, appoint any Lender hereunder as an LC Issuer in place of or in
addition to Fleet National Bank.
"LC Obligations" means, at the time in question, the sum of all Matured LC
--------------
Obligations plus the maximum amounts which LC Issuer might then or thereafter be
called upon to advance under all Letters of Credit then outstanding.
"Lender Parties" means Administrative Agent, Syndication Agent,
--------------
Documentation Agent, Lead Arranger and Book Manager, LC Issuer, and all Lenders.
"Lender Schedule" means Schedule 1 hereto.
---------------
"Lenders" means each signatory hereto (other than Borrower and any
-------
Restricted Person that is a party hereto), including Fleet National Bank, in its
capacity as a Lender hereunder rather than as Administrative Agent and LC
Issuer, and the successors of each such party as holder of a Note.
"Letter of Credit" means any letter of credit issued (or deemed issued
----------------
pursuant to the provisions of Section 10.13) by LC Issuer hereunder at the
application of Borrower.
17
<PAGE>
"Letter of Credit Fee Rate" means, on any day (i) from the date hereof
-------------------------
through but not including the six-month anniversary of the date hereof, the
greater of (A) 1.625% per annum and (B) the rate per annum set forth below based
on the Applicable Leverage Level on such date, and (ii) on and after the six-
month anniversary of the date hereof, the rate per annum set forth below based
on the Applicable Leverage Level on such date.
==============================================
Applicable Leverage Level LC Fee Rate
----------------------------------------------
Level I 1.750%
----------------------------------------------
Level II 1.625%
----------------------------------------------
Level III 1.500%
----------------------------------------------
Level IV 1.250%
----------------------------------------------
Level V 1.000%
==============================================
Changes in the applicable Letter of Credit Fee Rate will occur automatically
without prior notice as changes in the Applicable Leverage Level occur.
Administrative Agent will give notice promptly to Borrower and Lenders of
changes in the Letter of Credit Fee Rate.
"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 Lending Office" means, with respect to any Lender, the office of
--------------------
such Lender specified as its "LIBOR Lending Office" on the Lender Schedule
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 Administrative Agent.
"LIBOR Loan" means a Loan that bears interest at a rate based upon the
----------
LIBOR Rate.
"LIBOR Rate" means, as applicable to any LIBOR Loan within a Borrowing and
----------
with respect to the related Interest Period therefor, the rate per annum
(rounded upwards, if necessary, to the nearest 1/32 of 1%) as determined on the
basis of offered rates for deposits in U.S. dollars, for a period of time
comparable to such Interest Period which appears on Telerate Page 3750 (or any
successor page) as of 11:00 a.m. London time on the day that is two Business
Days preceding the first day of such LIBOR Loan; provided, however, if the rate
described above does not appear on the Telerate system on any applicable
interest determination date, the LIBOR Rate shall be the rate (rounded upwards
as described above, if necessary) for deposits in dollars for a period
substantially equal to such Interest Period on the Reuters Page "LIBO" (or such
other page as may replace the LIBO Page on that service for the purpose of
displaying such rates), as of 11:00 a.m. (London time), on the date that is two
Business Days prior to the beginning of such Interest Period; provided, however,
if more than one rate is specified on Reuters Screen LIBO Page, the applicable
rate shall be the arithmetic mean of all such rates (rounded upwards, if
18
<PAGE>
necessary, to the nearest 1/1000 of 1%). If both the Telerate and Reuters
system are unavailable, then the LIBOR Rate for that date will be determined on
the basis of the offered rates for deposits in U.S. dollars for a period of time
comparable to such Interest Period which are offered by four major banks in the
London interbank market at approximately 11:00 a.m. London time, on the day that
is two (2) Business Days preceding the first day of such LIBOR Loan as selected
by Administrative Agent. The principal London office of each of the four major
London banks will be requested to provide a quotation of its U.S. dollar deposit
offered rate. If at least two such quotations are provided, the rate for that
date will be the arithmetic mean of the quotations. If fewer than two
quotations are provided as requested, the rate for that date will be determined
on the basis of the rates quoted for loans in U.S. dollars to leading European
banks for a period of time comparable to such Interest Period offered by major
banks in New York City at approximately 11:00 a.m. New York City time, on the
day that is two Business Days preceding the first day of such LIBOR Loan. In
the event that Administrative Agent is unable to obtain any such quotation as
provided above, it will be deemed that the LIBOR Rate pursuant to such LIBOR
Loan cannot be determined. In the event that the Board of Governors of the
Federal Reserve System shall impose a Reserve Percentage with respect to LIBOR
deposits of any Lender, then for any period during which such Reserve Percentage
shall apply, the LIBOR Rate shall be equal to the amount determined above
divided by an amount equal to 1 minus the Reserve Percentage. "Reserve
Percentage" means the maximum aggregate reserve requirement (including all
basic, supplemental, marginal, special, emergency and other reserves) which is
imposed on member banks of the Federal Reserve System against "Euro-currency
Liabilities" as defined in Regulation D. Without limiting the effect of the
foregoing, the Reserve Percentage shall reflect any other reserves required to
be maintained by such member banks with respect to (a) any category of
liabilities which includes deposits by reference to which the LIBOR Rate is to
be determined, or (b) any category of extensions of credit or other assets which
include LIBOR Loans. The LIBOR Rate for any LIBOR Loan shall change whenever
the Reserve Percentage changes.
"LIBOR Rate Margin" means (i) from the date hereof through but not
-----------------
including the six-month anniversary of the date hereof, the greater of (A)
1.625% per annum and (B) the percent per annum set forth below based on the
Applicable Leverage Level in effect on such date, and (ii) on and after the six-
month anniversary of the date hereof, the percent per annum set forth below
based on the Applicable Leverage Level in effect on such date.
================================================
Applicable Leverage Level LIBOR Rate Margin
------------------------------------------------
Level I 1.750%
------------------------------------------------
Level II 1.625%
------------------------------------------------
Level III 1.500%
------------------------------------------------
Level IV 1.250%
------------------------------------------------
Level V 1.000%
================================================
19
<PAGE>
Changes in the applicable LIBOR Rate Margin will occur automatically without
prior notice as changes in the Applicable Leverage Level occur. Administrative
Agent will give notice promptly to Borrower and Lenders of changes in the LIBOR
Rate Margin.
"Lien" means, with respect to any property or assets, any right or interest
----
therein of a creditor to secure Liabilities owed to it or any other arrangement
with such creditor which provides for the payment of such Liabilities out of
such property or assets or which allows such creditor 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.
"Loans" has the meaning given to such term in Section 2.1.
-----
"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 and commitment
letters).
"Majority Lenders" means Lenders whose aggregate Percentage Shares equal or
----------------
exceed sixty-six and two-thirds percent (66-2/3%).
"Market Price" means on each day a spot price for the inventory of crude
------------
oil being valued, determined by published prices and methodology approved by
Administrative Agent from time to time, based on an index gravity and grade of
crude oil at a delivery point reflecting as nearly as practical the actual
gravity, grade, and location of the crude oil being valued, adjusted to reflect
any differences in gravity and grade between the index crude oil and the actual
inventory and to reflect transportation costs or other appropriate location
price differential from the actual location to the index location.
"Material Adverse Change" means a material and adverse change, from the
-----------------------
state of affairs presented in the Initial Financial Statements or as represented
or warranted in any Loan Document, to (a) Plains MLP's Consolidated financial
condition, (b) Plains MLP's Consolidated operations, properties or prospects,
considered as a whole, (c) Borrower's ability to timely pay the Obligations, or
(d) the enforceability of the material terms of any Loan Document.
"Material Market Open Position Loss" means a cumulative amount of net
----------------------------------
losses resulting from Open Positions (other than Open Positions permitted under
Section 7.15) of all Restricted
20
<PAGE>
Persons on a mark to market basis during any period of 12 consecutive months in
excess of $5,000,000, calculated without inclusion of that portion of the loss
arising from unauthorized trading activity by Borrower during the period of
January 1, 1999 to November 20, 1999 incurred during such 12-month period.
"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.
"Maximum Facility Amount" means the amount of $300,000,000, as such amount
-----------------------
may be reduced by Borrower from time to time as provided in Section 2.12.
"Maximum Loan Amount" means $100,000,000.
-------------------
"Moody's" means Moody's Investor Service, Inc., or its successor.
-------
"Note" has the meaning given to such term in Section 2.1.
----
"NYMEX" means the New York Mercantile Exchange.
-----
"Obligations" means all Liabilities from time to time owing by any
-----------
Restricted Person to any Lender Party under or pursuant to any of the Loan
Documents, including all LC Obligations. "Obligation" means any part of the
----------
Obligations.
"Offsetting Position" means any offsetting sale or purchase agreement, an
-------------------
offsetting NYMEX contract, an offsetting physical inventory position (excluding
tank bottoms and pipeline linefill inventory classified as a long term asset and
working inventory not held for resale), or an offsetting swap, collar or option
contract, in each case eliminating price risk and substantially all basis risk.
"Omnibus Agreement" means that certain Omnibus Agreement between Resources,
-----------------
Plains MLP, Borrower, All American and General Partner dated November 23, 1998.
"Open Position" means, with respect to crude oil inventory or crude oil
-------------
purchase or sale contracts, any position that does not have an Offsetting
Position.
"Other Eligible Inventory Value" means the following amount of Eligible
------------------------------
Inventory, other than Hedged Eligible Inventory: (a) if the WTI Price is less
than or equal to $30 per barrel, 80% of the product of the volume of such crude
oil times the Market Price, or (b) if the WTI Price is greater than $30 per
barrel the greater of (i) 70% of the product of the volume of such crude oil
times the Market Price or (ii) 80% of the product of the volume of such
21
<PAGE>
crude oil times $30 per barrel; minus, in each case, all storage, transportation
and other applicable costs. As used herein "WTI Price" means on each day the
---------
Platt's Average Spot Price for West Texas intermediate crude oil (Cushing,
Oklahoma).
"Other Eligible Receivable" means any Eligible Receivable which is not an
-------------------------
Approved Eligible Receivable nor an Eligible Exchange Balance. The portions of
the aggregate of the Other Eligible Receivables owed by any obligor and its
Affiliates exceeding five percent (5%) of the sum of (i) Approved Eligible
Receivables plus (ii) Other Eligible Receivables, shall not be included without
the prior written approval of the Majority Lenders.
"Other Priority Claims" means any account payable, obligation or liability
---------------------
which Administrative Agent has determined has or will have a Lien upon or claim
against any Cash Equivalent, account or inventory of Borrower senior or equal in
priority to the security interests in favor of Administrative Agent for the
benefit of Lenders, in each case to the extent such Cash Equivalent, account or
inventory of Borrower is otherwise included in the determination of the
Borrowing Base and the included portion thereof has not already been reduced by
such Lien or claim.
"Paid but Unexpired Letters of Credit" means, on any day, the maximum
------------------------------------
drawing amount of Letters of Credit on such day where no underlying obligation
exists on such day, or if the amount of the Letter of Credit exceeds the
underlying obligation on such day, the amount of such excess. As used herein,
"underlying obligation" includes without limitation, all existing and future
obligations to the beneficiary of such Letter of Credit in respect of crude oil
purchased or received on or prior to such day or in respect of crude oil
Borrower is then obligated to purchase or receive or has then nominated to
purchase or receive.
"Paribas Linefill Financing" means the $65,000,000 linefill financing under
--------------------------
that certain Credit Agreement dated December 30, 1999 among Borrower, Paribas,
as administrative agent, and the lenders named therein.
"Partnership Agreement" means the Second Amended and Restated Agreement of
---------------------
Limited Partnership of Plains MLP dated November 23, 1998.
"Percentage Share" means, with respect to any Lender (a) when used in
----------------
Sections 2.1, 2.2 or 2.12, in any Borrowing Notice or when no Loans are
outstanding hereunder, the percentage set forth opposite such Lender's name on
the Lender Schedule 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 the Matured LC Obligations which such Lender has
funded pursuant to Section 2.9(c) plus the portion of the Maximum Drawing Amount
which such Lender might be obligated to fund under Section 2.9(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.
22
<PAGE>
"Permitted Acquisitions" means (A) the acquisition of all of the capital
----------------------
stock or other equity interest in a Person (exclusive of general partner
interests held by General Partner or another Wholly Owned Subsidiary of
Resources not in excess of a 1% economic interest) and exclusive of director
qualifying shares and other equity interests required to be held by an Affiliate
to comply with a requirement of Law) or (B) any acquisition of all or a portion
of the business, assets or operations of a Person (whether in a single
transaction or a series of related transactions), provided that (i) prior to and
after giving effect to such acquisition no Default or Event of Default shall
have occurred and be continuing; (ii) all representations and warranties shall
be true and correct as if restated immediately following the consummation of
such acquisition; and (iii) substantially all of such business, assets and
operations so acquired, or of the Person so acquired, consists of crude oil
and/or gas marketing, gathering, transportation, storage, terminaling and
pipeline operation.
"Permitted Inventory Liens" means any Lien, and the amount of any Liability
-------------------------
secured thereby, on crude oil inventory which would be a Permitted Lien under
Section 7.2(ii)(b) (so long as such Lien is inchoate) or Section 7.2(ii)(d).
"Permitted Investments" means (a) Cash Equivalents, (b) Investments
---------------------
described in the Disclosure Schedule, (c) Investments by Plains MLP or any of
its Subsidiaries in any Wholly Owned Subsidiary of Plains MLP which is a
Guarantor, (d) Investments in publicly traded units of master limited
partnerships whose dividends are "qualifying income", as such term is defined in
Section 7704 of the Code (provided, the amount of any such Investments under
--------
this clause (d) minus any amounts received on such Investments (excluding
-----
dividends thereon) shall not at any time exceed $5,000,000), and (e) Permitted
Acquisitions.
"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.
"Plains MLP" means Plains All American Pipeline, L.P., a Delaware limited
----------
partnership.
"Plains Terminal" means any storage terminal, tankage or facility owned by
---------------
any Restricted Person.
"Rating Agency" means either S&P or Moody's.
-------------
"Regulation D" means Regulation D of the Board of Governors of the Federal
------------
Reserve System as from time to time in effect.
"Resources" means Plains Resources Inc., a Delaware corporation.
---------
23
<PAGE>
"Restricted Person" means any of Plains MLP and each Subsidiary of Plains
-----------------
MLP, including but not limited to Borrower, All American, and each Subsidiary of
Borrower and/or All American.
"Restructuring" means the restructuring of Borrower and its Subsidiaries
-------------
pursuant to which (i) Plains Scurlock Permian, L.P. and all of its Subsidiaries
(other than Scurlock Permian Pipe Line LLC) shall be merged into Borrower or All
American, as applicable, and (ii) as a result thereof (a) all non-FERC regulated
assets shall be transferred into Borrower and (b) all FERC-regulated assets
shall be held by All American or its Subsidiaries.
"Restructuring Documents" means the documents listed on Schedule 5 hereto.
-----------------------
"Revolver Agreement" means that certain Credit Agreement [Revolving Credit
------------------
Agreement] of even date herewith among Borrower, All American and Plains MLP, as
guarantors, and the agents and lenders named therein, providing for a
$400,000,000 revolving credit facility.
"Revolver Availability" means for any day, the unutilized portion available
---------------------
on such day of the commitment for revolving credit loans to Borrower pursuant to
the Revolver Agreement.
"S&P" means Standard & Poor's Ratings Group (a division of McGraw Hill,
---
Inc.) or its successor.
"Scurlock Agreement" means that certain Credit Agreement dated May 12, 1999
------------------
among Plains Scurlock Permian, L.P., as borrower, Fleet National Bank, as
administrative agent, and certain lenders named therein, as amended, as in
effect immediately prior to the Restructuring and the amendment and restatement
of such Credit Agreement pursuant to the Revolver Agreement.
"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 Administrative 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 3 hereto.
-----------------
"SJV Gathering System" shall have the meaning given that term in Section
--------------------
1.3.
"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 or owned more than
fifty percent by such Person.
24
<PAGE>
"Termination Event" means (a) the occurrence with respect to any ERISA Plan
-----------------
of (i) a reportable event described in Sections 4043(c)(5) or (6) of ERISA or
(ii) any other reportable event described in Section 4043(c) 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.
"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 or existing.
"Type" means, with respect to any Loans, the characterization of such Loans
----
as either Base Rate Loans or LIBOR Loans.
"UCC" means the Uniform Commercial Code as in effect in the State of New
---
York.
"Wholly Owned Subsidiary" means any Subsidiary of a Person, all of the
-----------------------
issued and outstanding stock, limited liability company membership interests, or
partnership interests of which (including all rights or options to acquire such
stock or interests) are directly or indirectly (through one or more
Subsidiaries) owned by such Person, excluding any general partner interests
owned by General Partner in any such Subsidiary that is a partnership, such
general partner interests not to exceed two percent (2%) of the aggregate
ownership interests of any such partnership and directors' qualifying shares if
applicable.
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. All references to the term
"Revolver Agreement" shall be deemed to be references to such agreement as such
agreement is executed and delivered by the parties thereto on the date hereof.
The term "All American Pipeline" means the common carrier crude oil pipeline
system owned by All American transporting crude oil
25
<PAGE>
produced from fields offshore and onshore California to locations in California,
and the term "SJV Gathering System" means the crude oil gathering system owned
by Borrower located in the California San Joaquin Valley and connected to the
South Beldridge, Elk Hills and Midway Sunset fields, each as further described
in the Security Documents.
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 LIBOR 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 Lender Party of amounts to be paid
under Article III or any other matters which are to be determined hereunder by a
Lender Party (such as any LIBOR Rate, Business Day, Interest Period, or Reserve
Percentage) shall, in the absence of manifest error, be conclusive and binding.
Unless otherwise expressly provided herein or unless Majority Lenders otherwise
consent all financial statements and reports furnished to any Lender Party
hereunder shall be prepared and all financial computations and determinations
pursuant hereto shall be made in accordance with GAAP.
ARTICLE II - The Loans and Letters of Credit
-------------------------------
Section 2.1. Commitments to Lend; Notes. Subject to the terms and
--------------------------
conditions hereof, each Lender agrees to make loans to Borrower (herein called
such Lender's "Loans") upon Borrower's request from time to time during the
Commitment Period, provided that (a) subject to Sections 3.3, 3.4 and 3.6, all
Lenders are requested to make Loans of the same Type in accordance with their
respective Percentage Shares and as part of the same Borrowing, (b) after giving
effect to such loans, the aggregate principal amount of outstanding Loans will
not exceed the Maximum Loan Amount, and (c) after giving effect to such Loans,
the Facility Usage does not exceed the lesser of (i) the Maximum Facility Amount
and (ii) the Borrowing Base determined as of the date on which the requested
Loans are to be made. The aggregate amount of all Loans in any Borrowing must
be equal to $2,000,000 or any higher integral multiple of $250,000. Borrower may
have no more than five Borrowings of LIBOR Loans outstanding at
26
<PAGE>
any time. The obligation of Borrower to repay to each Lender the aggregate
amount of all Loans made by such Lender, together with interest accruing in
connection therewith, shall be evidenced by a single promissory note (herein
called such Lender's "Note") made by Borrower payable to the order of such
Lender in the form of Exhibit A with appropriate insertions. The amount of
principal owing on any Lender's Note at any given time shall be the aggregate
amount of all Loans theretofore made by such Lender minus all payments of
principal theretofore received by such Lender on such Note. Interest on each
Note shall accrue and be due and payable as provided herein and therein. Each
Note shall be due and payable as provided herein and therein, and shall be due
and payable in full on the last day of the Commitment Period. Subject to the
terms and conditions of this Agreement, Borrower may borrow, repay, and reborrow
hereunder.
Section 2.2. Requests for New Loans. Borrower must give to
----------------------
Administrative Agent written notice (or telephonic notice promptly confirmed in
writing) of any requested Borrowing of Loans to be funded by Lenders. Each such
notice constitutes a "Borrowing Notice" hereunder and must:
(a) specify (i) the aggregate amount of any such Borrowing of
Base Rate Loans and the date on which such Base Rate Loans are to be
advanced, or (ii) the aggregate amount of any such Borrowing of LIBOR
Loans, the date on which such LIBOR 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
(b) be received by Administrative Agent not later than 11:00
a.m., Boston, Massachusetts time, on (i) the day on which any such Base
Rate Loans are to be made, or (ii) the third Business Day preceding the day
on which any such LIBOR 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 B, 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, Administrative Agent shall give each Lender prompt notice of the terms
thereof. If all conditions precedent to such new Loans have been met, each
Lender will on the date requested promptly remit to Administrative Agent at
Administrative Agent's office in Boston, Massachusetts the amount of such
Lender's Loan in immediately available funds, and upon receipt of such funds,
unless to its actual knowledge any conditions precedent to such Loans have been
neither met nor waived as provided herein, Administrative Agent shall promptly
make such Loans available to Borrower. Unless Administrative Agent shall have
received prompt notice from a Lender that such Lender will not make available to
Administrative Agent such Lender's new Loan, Administrative Agent may in its
discretion assume that such Lender has made such Loan available to
Administrative Agent in accordance with this section and Administrative Agent
may if it chooses, in reliance upon such assumption, make such Loan available to
Borrower. If and to the extent such Lender shall not so make its new Loan
available to Administrative Agent, such Lender and Borrower severally agree to
pay or repay to Administrative Agent within three days after demand the amount
of such Loan together with
27
<PAGE>
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 Administrative Agent,
with interest at (i) the Federal Funds Rate, if such Lender is making such
payment and (ii) the interest rate applicable at the time to the other new Loans
made on such date, if Borrower is making such repayment. If neither such Lender
nor Borrower pays or repays to Administrative Agent such amount within such
three-day period, Administrative Agent shall be entitled to recover from
Borrower, on demand, in lieu of the interest provided for in the preceding
sentence, interest thereon at the Default Rate, calculated from the date such
amount was made available to Borrower. The failure of any Lender to make any new
Loan to be made by it hereunder shall not relieve any other Lender of its
obligation hereunder, if any, to make its new Loan, but no Lender shall be
responsible for the failure of any other Lender to make any new Loan to be made
by such other Lender.
Section 2.3. Continuations and Conversions of Existing Loans. Borrower
-----------------------------------------------
may make the following elections with respect to Loans already outstanding: to
Convert, in whole or in part, Base Rate Loans to LIBOR Loans, to Convert, in
whole or in part, LIBOR Loans to Base Rate Loans on the last day of the Interest
Period applicable thereto, and to Continue, in whole or in part, LIBOR 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, provided that Borrower may have no more than five
Borrowings of LIBOR Loans outstanding at any time. To make any such election,
Borrower must give to Administrative 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 LIBOR 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 LIBOR Loans), and the length of
the applicable Interest Period; and
(c) be received by Administrative Agent not later than 11:00
a.m., Boston, Massachusetts 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 LIBOR 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
28
<PAGE>
by Borrower as to the matters which are required to be set out in such written
confirmation. Upon receipt of any such Continuation/Conversion Notice,
Administrative Agent shall give each Lender prompt notice of the terms thereof.
Each Continuation/Conversion 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 LIBOR Loans or Continue existing Loans
as LIBOR Loans beyond the expiration of their respective and corresponding
Interest Period then in effect. If (due to the existence of a Default or for any
other reason) Borrower fails to timely and properly give any
Continuation/Conversion Notice with respect to a Borrowing of existing LIBOR
Loans at least three days prior to the end of the Interest Period applicable
thereto, such LIBOR Loans, to the extent not prepaid at the end of such Interest
Period, 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.
Section 2.4. Use of Proceeds. Borrower shall use the proceeds of all
---------------
Loans to finance Cash and Carry Purchases and to refinance Matured LC
Obligations. Borrower shall use all Letters of Credit solely for the purposes
specified in Section 2.7(d). In no event shall any Loan or any Letter of Credit
be used (i) to fund distributions by Plains MLP, (ii) directly or indirectly by
any Person for personal, family, household or agricultural purposes, (iii) for
the purpose, whether immediate, incidental or ultimate, of purchasing, acquiring
or carrying any "margin stock" (as such term is defined in Regulation U
promulgated by the Board of Governors of the Federal Reserve System) or (iv) to
extend credit to others directly or indirectly for the purpose of purchasing or
carrying any such margin stock. 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.
Section 2.5. Optional Prepayments of Loans. Borrower may, upon five
-----------------------------
Business Days' notice to Administrative Agent (and Administrative Agent will
promptly give notice to the other Lenders), from time to time and without
premium or penalty prepay the Loans, in whole or in part, so long as the
aggregate amounts of all partial prepayments of principal on the Loans equals
$2,000,000 or any higher integral multiple of $250,000. 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 2.6. Mandatory Prepayments. If at any time the Facility Usage
---------------------
exceeds the Borrowing Base (whether due to a reduction in the Borrowing Base in
accordance with this Agreement, or otherwise), Borrower shall immediately upon
demand prepay the principal of the Loans in an amount at least equal to such
excess. If at any time the outstanding principal balance of the Loans exceed
the sum of (i) Hedged Eligible Inventory plus (ii) the outstanding amount of
Accounts resulting from the sale of such Hedged Eligible Inventory (without
duplication), Borrower shall within one Business Day prepay the principal of the
Loans in an amount at least
29
<PAGE>
equal to such excess. 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. Letters of Credit. Subject to the terms and conditions
-----------------
hereof, Borrower may during the Commitment Period request LC Issuer to issue,
amend, or extend the expiration date of, one or more Letters of Credit, provided
that:
(a) after taking such Letter of Credit into account, the Facility
Usage does not exceed the lesser of (i) the Maximum Facility Amount at such
time or (ii) the Borrowing Base at such time;
(b) the expiration date of such Letter of Credit is prior to the
earlier of (i) (A) 70 days, (B) 180 days, if the beneficiary thereof is
Exxon Mobil Company, or (C) one year, if the beneficiary thereof is only
the United States Mineral Management Service or other federal or state
governmental agency regulating crude oil purchases, after the date of
issuance of such Letter of Credit, and (ii) 30 days prior to the end of the
Commitment Period;
(c) 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 not reimbursable under
Article III;
(d) such Letter of Credit is related to the purchase or exchange
by Borrower or, with respect to outstanding letters of credit issued by LC
Issuer under the Scurlock Agreement, by Scurlock, of crude oil and is in
the Form of Exhibit D hereto or such other form and terms as shall be
acceptable to LC Issuer in its sole and absolute discretion and Currently
Approved by Majority Lenders, and, if the beneficiary thereof is the United
States Mineral Management Service, after taking such Letter of Credit into
account, the aggregate amount of LC Obligations in respect to all Letters
of Credit naming the United States Mineral Management Service as
beneficiary does not exceed $5,000,000; and
(e) 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
(e) (in the following Section 2.8 called the "LC Conditions") have been met as
-------------
of the date of issuance, amendment, or extension of such Letter of Credit. The
outstanding letters of credit issued by LC Issuer under the Existing Agreement
and under the Scurlock Agreement shall be deemed to be Letters of Credit issued
hereunder; Borrower hereby represents and warrants that the LC Conditions have
been met as of the date hereof with respect to each such Letter of Credit.
Section 2.8. 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
30
<PAGE>
Issuer to issue such Letter of Credit. By making any such written application,
unless otherwise expressly stated therein, Borrower shall be deemed to have
represented and warranted that the LC Conditions described in Section 2.7 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 E, 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). If all LC Conditions for a Letter of
Credit have been met as described in Section 2.7 on any Business Day before
11:00 a.m, Boston, Massachusetts time, LC Issuer will issue such Letter of
Credit on the same Business Day at LC Issuer's office in Boston, Massachusetts.
If the LC Conditions are met as described in Section 2.7 on any Business Day on
or after 11:00 a.m, Boston, Massachusetts time, LC Issuer will issue such Letter
of Credit on the next succeeding Business Day at LC Issuer's office in Boston,
Massachusetts. If any provisions of any LC Application conflict with any
provisions of this Agreement, the provisions of this Agreement shall govern and
control.
Section 2.9. 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, together with interest thereon (i) at the Base Rate to and including
the second Business Day after the Matured LC Obligation is incurred and (ii) at
the Default Rate on each day thereafter.
(b) Letter of Credit Advances. If the beneficiary of any Letter of Credit
-------------------------
makes a draft or other demand for payment thereunder then Borrower may,
during the interval between the making thereof and the honoring thereof
by LC Issuer, request Lenders to make Loans to Borrower in the amount
of such draft or demand, which Loans shall be made concurrently with LC
Issuer's payment of such draft or demand and shall be immediately used
by LC Issuer to repay the amount of the resulting Matured LC
Obligation. Such a request by Borrower shall be made in compliance with
all of the provisions hereof, provided that for the purposes of the
first sentence of Section 2.1, the amount of such Loans shall be
considered, but the amount of the Matured LC Obligation to be
concurrently paid by such Loans shall not be considered.
(c) Participation by Lenders. LC Issuer irrevocably agrees to grant and
------------------------
hereby grants to each Lender, and -- to induce LC Issuer to issue Letters of
Credit hereunder -- each 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 Lender's own account and risk an undivided
interest equal to such Lender's 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 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 Loans or by the
application of LC Collateral), such 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
31
<PAGE>
for notices hereunder, such Lender's Percentage Share of such Matured LC
Obligation (or any portion thereof which has not been reimbursed by Borrower).
Each 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 Lender to LC Issuer pursuant to this subsection is paid by such 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 Lender,
on demand, interest thereon calculated from such due date at the Federal Funds
Rate. If any amount required to be paid by any Lender to LC Issuer pursuant to
this subsection is not paid by such 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 Lender, on demand, interest thereon
calculated from such due date at the Base Rate.
(d) Distributions to Participants. Whenever LC Issuer has in accordance
-----------------------------
with this section received from any Lender payment of such Lender's 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
Lender make such payment of its Percentage Share), LC Issuer will distribute to
such Lender its 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 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
Lender from time to time, shall be conclusive, absent manifest error, as to the
amounts thereof.
Section 2.10. 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 or
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 releases each Lender Party
from, and agrees to hold each Lender 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 LENDER PARTY, provided only that no
Lender 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, as determined in a final judgment.
32
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(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 Borrower, or if the
amount of any Letter of Credit is increased at the request of Borrower, 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 Lender 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 releases each Lender Party from,
and agrees to hold each Lender 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 LENDER PARTY, provided only that no Lender 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, as determined in a final judgment.
Section 2.11. LC Collateral.
-------------
(a) LC Obligations in Excess of Borrowing Base. If, after the making of
------------------------------------------
all mandatory prepayments required under Section 2.6, the outstanding LC
Obligations will exceed the Borrowing Base, then in addition to prepayment of
the entire principal balance of the Loans Borrower will immediately pay to LC
Issuer an amount equal to such excess. LC Issuer will hold such amount as
collateral security for the remaining LC Obligations (all such amounts held as
collateral security for LC Obligations being herein collectively called "LC
--
Collateral") and the other Obligations, and such collateral may be applied from
- ----------
time to time to pay Matured LC Obligations. 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 Credit,
LC Collateral or LC Obligation, including any LC Application, or any rights
which any Lender 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, unless
all Lenders otherwise specifically elect to the contrary (which election may
thereafter be retracted by all Lenders at any time), 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
33
<PAGE>
obligated to pay to LC Issuer immediately an amount equal to the aggregate LC
Obligations which are then outstanding to be held as LC Collateral.
(c) Investment of LC Collateral. Pending application thereof, all LC
---------------------------
Collateral shall be invested by LC Issuer in such Cash Equivalents as LC Issuer
may choose in its sole discretion. All interest on (and other proceeds of) such
Investments shall be reinvested or applied to Matured LC Obligations or other
Obligations which are due and payable. 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 for the benefit of
Lenders 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, each Note, and the other Loan Documents, and Borrower agrees that
such LC Collateral, Investments and proceeds 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
UCC 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
or Administrative Agent may without prior 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, and LC Issuer or Administrative Agent will give
notice thereof to Borrower promptly after such application or transfer. 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 2.12. Interest Rates and Fees; Reduction in Commitment.
------------------------------------------------
(a) Interest Rates. Unless the Default Rate shall apply, (i) each Base
--------------
Rate Loan shall bear interest on each day outstanding at the Base Rate in effect
on such day and (ii) each LIBOR Loan shall bear interest on each day during the
related Interest Period at the related LIBOR Rate plus the LIBOR Rate Margin in
effect on such day. During a Default Rate Period, all Loans shall bear interest
on each day outstanding at the Default Rate. If an Event of Default based upon
Section 8.1(a), Section 8.1(b) or, with respect to Borrower, based upon Section
8.1(i)(i), (i)(ii) or (i)(iii) exists and the Loans are not bearing interest at
the Default Rate, the past due principal and past due interest shall bear
interest on each day outstanding at the Default Rate. The interest rate shall
change whenever the applicable Base Rate, the LIBOR Rate or the LIBOR Rate
Margin changes. In no event shall the interest rate on any Loan exceed the
Highest Lawful Rate.
34
<PAGE>
(b) Commitment Fees. In consideration of each Lender's commitment to make
---------------
Loans, Borrower will pay to Administrative Agent for the account of each Lender
a commitment fee determined on a daily basis equal to the Commitment Fee Rate in
effect on such day times such Lender's Percentage Share of the unused portion of
the Maximum Facility Amount on each day during the Commitment Period, determined
for each such day by deducting from the amount of the Maximum Facility Amount at
the end of such day the Facility Usage. This commitment fee shall be due and
payable in arrears on the last day of each Fiscal Quarter and at the end of the
Commitment Period. Borrower shall have the right from time to time to
permanently reduce the Maximum Facility Amount, provided that (i) notice of such
reduction is given not less than 2 Business Days prior to such reduction, (ii)
the resulting Maximum Facility Amount is not less than the Facility Usage, and
(iii) each partial reduction shall be in an amount at least equal to $500,000
and in multiples of $100,000 in excess thereof.
(c) Letter of Credit Fees. In consideration of LC Issuer's issuance of
---------------------
any Letter of Credit, Borrower agrees to pay (i) to Administrative Agent, for
the account of all Lenders in accordance with their respective Percentage
Shares, a letter of credit fee equal to the Letter of Credit Fee Rate applicable
each day times the face amount of such Letter of Credit and (ii) to such LC
Issuer for its own account, a letter of credit fronting fee at a rate equal to
one-eighth percent (0.125%) per annum times the face amount of such Letter of
Credit. Each such fee will be calculated on the face amount of each Letter of
Credit outstanding on each day at the above applicable rates and will be payable
monthly in arrears on the last day of each month. In addition, Borrower will
pay to LC Issuer a minimum administrative issuance fee and such other fees and
charges customarily charged by the LC Issuer in respect of any issuance,
amendment or negotiation of any Letter of Credit in accordance with the LC
Issuer's published schedule of such charges effective as of the date of such
amendment or negotiation.
(d) Administrative Agent's Fees. In addition to all other amounts due to
---------------------------
Administrative Agent under the Loan Documents, Borrower will pay fees to
Administrative Agent as described in a letter agreement dated May 3, 2000
between Administrative Agent and Borrower.
Section 2.13. Borrowing Base Reporting. The Borrowing Base Reports are
------------------------
subject to the procedures set forth on Schedule 6.
ARTICLE III - Payments to Lenders
-------------------
Section 3.1. General Procedures. Borrower will make each payment which
------------------
it owes under the Loan Documents to Administrative Agent for the account of the
Lender Party to whom such payment is owed in lawful money of the United States
of America, without set-off, deduction or counterclaim, and in immediately
available funds. Each such payment must be received by Administrative Agent not
later than noon, Boston, Massachusetts time, on the date such payment becomes
due and payable. Any payment received by Administrative 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
35
<PAGE>
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 Administrative Agent's Note. When Administrative Agent
collects or receives money on account of the Obligations, Administrative Agent
shall distribute all money so collected or received, and each Lender Party shall
apply all such money so distributed, as follows:
(a) first, for the payment of all Obligations which are then due (and
if such money is insufficient to pay all such Obligations, first to any
reimbursements due Administrative 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 Lender Parties shall otherwise agree);
(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, together with
accrued and unpaid interest on the principal so prepaid, and then held as
LC Collateral pursuant to Section 2.11(c); 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
2.5 and 2.6. All distributions of amounts described in any of subsections (b),
(c) or (d) above shall be made by Administrative Agent pro rata to each Lender
Party then owed Obligations described in such subsection in proportion to all
amounts owed to all Lender 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 2.9(c) or to Administrative Agent under Section
9.4, any amounts otherwise distributable under this section to such Lender shall
be deemed to belong to LC Issuer or Administrative Agent, respectively, to the
extent of such unpaid payments, and Administrative 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
Lender Party or any corporation controlling any Lender Party, then, within five
Business Days after demand by such Lender Party, Borrower will pay to
Administrative Agent for the benefit of such Lender Party, from time to time as
specified by such Lender Party, such additional amount or amounts which such
Lender Party shall determine to be appropriate to compensate such Lender Party
or any corporation controlling such Lender Party in light of such circumstances,
to the extent that such Lender Party reasonably determines that the amount of
any such capital
36
<PAGE>
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 Lender
Party's Loans, Letters of Credit, participations in Letters of Credit or
commitments under this Agreement.
Section 3.3. Increased Cost of LIBOR Loans or Letters of Credit. If 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 Lender
Party of any principal, interest, or other amounts attributable to any
LIBOR Loan or Letter of Credit or otherwise due under this Agreement in
respect of any LIBOR Loan or Letter of Credit (other than taxes imposed on,
or measured by, the overall net income of such Lender Party or any
Applicable Lending Office of such Lender Party by any jurisdiction in which
such Lender Party or any such Applicable 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 LIBOR
Loan or any Letter of Credit (excluding those for which such Lender Party
is fully compensated pursuant to adjustments made in the definition of
LIBOR Rate) or against assets of, deposits with or for the account of, or
credit extended by, such Lender Party; or
(c) shall impose on any Lender Party or the interbank eurocurrency
deposit market any other condition affecting any LIBOR Loan or Letter of
Credit, the result of which is to increase the cost to any Lender Party of
funding or maintaining any LIBOR Loan or of issuing any Letter of Credit or
to reduce the amount of any sum receivable by any Lender Party in respect
of any LIBOR Loan or Letter of Credit by an amount deemed by such Lender
Party to be material,
then such Lender Party shall promptly notify Administrative Agent and Borrower
in writing of the happening of such event and of the amount required to
compensate such Lender Party for such event (on an after-tax basis, taking into
account any taxes on such compensation), whereupon (i) Borrower shall, within
five Business Days after demand therefor by such Lender Party, pay such amount
to Administrative Agent for the account of such Lender Party and (ii Borrower
may elect, by giving to Administrative Agent and such Lender Party not less than
three Business Days' notice, to Convert all (but not less than all) of any such
LIBOR Loans into Base Rate Loans.
Section 3.4. Notice; Change of Applicable Lending Office. A Lender Party
-------------------------------------------
shall notify Borrower of any event occurring after the date of this Agreement
that will entitle such Lender Party to compensation under Section 3.2, 3.3 or
3.5 hereof as promptly as practicable, but in any event within 90 days, after
such Lender Party obtains actual knowledge thereof; provided, that (i) if such
--------
Lender Party fails to give such notice within 90 days after it obtains actual
knowledge of such an event, such Lender Party shall, with respect to
compensation payable pursuant to Section 3.2, 3.3 or 3.5 in respect of any costs
resulting from such event, only be entitled to payment
37
<PAGE>
under Section 3.2, 3.3 or 3.5 hereof for costs incurred from and after the date
90 days prior to the date that such Lender Party does give such notice and (ii)
such Lender Party will designate a different Applicable Lending Office for the
Loans affected by such event if such designation will avoid the need for, or
reduce the amount of, such compensation and will not, in the sole opinion of
such Lender Party, be disadvantageous to such Lender Party, except that such
Lender Party shall have no obligation to designate an Applicable Lending Office
located in the United States of America. Each Lender Party will furnish to
Borrower a certificate setting forth the basis and amount of each request by
such Lender Party for compensation under Section 3.2, 3.3 or 3.5 hereof.
Section 3.5. 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
Lender Party to fund or maintain LIBOR Loans or to issue or participate in
Letters of Credit, or shall materially restrict the authority of any Lender
Party to purchase or take offshore deposits of dollars (i.e., "eurodollars"), or
(b) any Lender Party determines that matching deposits appropriate to fund or
maintain any LIBOR Loan are not available to it, or (c) any Lender Party
determines that the formula for calculating the LIBOR Rate does not fairly
reflect the cost to such Lender Party of making or maintaining loans based on
such rate, then, upon notice by such Lender Party to Borrower and Administrative
Agent, Borrower's right to elect LIBOR Loans from such Lender 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
LIBOR Loans of such Lender 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 Lender Party. Borrower agrees to indemnify each Lender
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.
Section 3.6. Funding Losses. In addition to its other obligations
--------------
hereunder, Borrower will indemnify each Lender Party against, and reimburse each
Lender Party on demand for, any loss or expense incurred or sustained by such
Lender Party (including any loss or expense incurred by reason of the
liquidation or reemployment of deposits or other funds acquired by a Lender
Party to fund or maintain LIBOR Loans), as a result of (a) any payment or
prepayment (whether or not authorized or required hereunder) of all or a portion
of a LIBOR Loan on a day other than the day on which the applicable Interest
Period ends, (b) any payment or prepayment, whether or not required hereunder,
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 or not
authorized or required hereunder) of all or any portion of any LIBOR Loan into a
Base Rate Loan or into a different LIBOR Loan on a day other than the day
38
<PAGE>
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 3.7. Reimbursable Taxes. Borrower covenants and agrees that:
------------------
(a) Borrower will indemnify each Lender Party against and
reimburse each Lender Party for all present and future stamp and other
taxes, levies, costs and charges whatsoever imposed, assessed, levied or
collected on or in respect of this Agreement or any LIBOR 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 Administrative Agent or such Lender Party or any
Applicable Lending Office of such Lender Party by any jurisdiction in which
such Lender Party or any such Applicable 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 Lender Party's Loans and Note, and all other amounts payable by
Borrower to any Lender 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 Lender 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 Lender 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 Lender Party an official receipt
or other official document evidencing payment of such deduction or
withholding.
(c) If Borrower is ever required to pay any Reimbursable Tax with
respect to any LIBOR Loan, Borrower may elect, by giving to Administrative
Agent and such Lender Party not less than three Business Days' notice, to
Convert all (but not less than all) of any such LIBOR 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 Lender Party, other than a
Lender Party (i) who is a U.S. person for Federal income tax purposes or
(ii) who has the Prescribed Forms on file with Administrative Agent (with
copies provided to Borrower)
39
<PAGE>
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 Administrative Agent and such Lender Party,
setting forth the amount of such taxes so deducted or withheld, the
applicable rate and any other information or documentation which such
Lender Party may reasonably request for assisting such Lender Party to
obtain any allowable credits or deductions for the taxes so deducted or
withheld in the jurisdiction or jurisdictions in which such Lender 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 Lender Party providing the forms or statements,
(y) the Code, or (z) any applicable rules or regulations thereunder, permit
Borrower to make payments hereunder for the account of such Lender Party
free of such deduction or withholding of income or similar taxes.
Section 3.8 Replacement of Lenders. If any Lender Party seeks
----------------------
reimbursement for increased costs under Sections 3.2 through 3.7, then within
ninety days thereafter -- provided no Event of Default then exists -- Borrower
shall have the right (unless such Lender Party withdraws its request for
additional compensation) to replace such Lender Party by requiring such Lender
Party to assign its Loans and Notes and its commitments hereunder to an Eligible
Transferee reasonably acceptable to Administrative Agent and to Borrower,
provided that: (i) all Obligations of Borrower owing to such Lender Party being
replaced (including such increased costs and any breakage costs with respect to
any outstanding LIBOR Loans), but excluding principal and accrued interest on
the Notes being assigned) shall be paid in full to such Lender Party
concurrently with such assignment, and (ii) the replacement Eligible Transferee
shall purchase the Note being assigned by paying to such Lender Party a price
equal to the principal amount thereof plus accrued and unpaid interest and
accrued and unpaid commitment fees thereon. In connection with any such
assignment Borrower, Administrative Agent, such Lender 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 Lender Party which seeks reimbursement for increased costs under
Section 3.2 through 3.7 unless Borrower is at the same time replacing all Lender
Parties which are then seeking such compensation.
ARTICLE IV - Conditions Precedent to Credit
------------------------------
Section 4.1. Documents to be Delivered. This Agreement shall not be
-------------------------
effective to amend or restate the Existing Agreement or govern the indebtedness,
obligations or liabilities thereunder and no Lender has any obligation to make
its first Loan, and LC Issuer has no obligation to issue the first Letter of
Credit unless Administrative Agent shall have received all of the following, at
Administrative Agent's office in Boston, Massachusetts, duly executed and
delivered and in form, substance and date satisfactory to Administrative Agent:
(a) This Agreement and any other documents that Lenders are to
execute in connection herewith.
40
<PAGE>
(b) Each Note.
(c) Each Security Document listed in the Security Schedule.
(d) Certain certificates including:
(i) An "Omnibus Certificate" of the secretary and of the
president of General Partner, which shall contain the names and
signatures of the officers of General Partner 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
General Partner 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 each Restricted Person and all amendments thereto,
certified by the appropriate official of such Restricted Person's
state of organization, and (3) a copy of any bylaws or agreement of
limited partnership of each Restricted Person; and
(ii) A certificate of the president and of the chief
financial officer of General Partner, regarding satisfaction of
Section 4.2.
(iii) A solvency certificate from Borrower and each
Guarantor, with attached pro forma balance sheet for such Person
giving effect to the Restructuring.
(e) A certificate (or certificates) of the due formation, valid
existence and good standing of each Restricted Person in its respective
state of organization, issued by the appropriate authorities of such
jurisdiction, and certificates of each Restricted Person's good standing
and due qualification to do business, issued by appropriate officials in
any states in which such Restricted Person owns property subject to
Security Documents.
(f) Documents similar to those specified in subsections (d)(i) 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 Michael Patterson, Esq., General Counsel
for Restricted Persons, substantially in the form set forth in Exhibit G-1,
Fulbright & Jaworski L.L.P., special Texas and New York counsel to
Restricted Persons, substantially in the form set forth in Exhibit G-2,
Andrews & Kurth L.L.P., special counsel to Restricted Persons,
substantially in the form of Exhibit G-3, and local counsel for the states
of California, Illinois, Louisiana, Mississippi and Oklahoma satisfactory
to Administrative Agent.
(h) The Initial Financial Statements.
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(i) Certificates or binders evidencing Restricted Persons' insurance
in effect on the date hereof.
(j) Copies of such permits and approvals regarding the property and
business of Restricted Persons as Administrative Agent may request.
(k) A certificate signed by the chief executive officer of General
Partner in form and detail acceptable to Administrative Agent confirming
the insurance that is in effect as of the date hereof and certifying that
such insurance is customary for the businesses conducted by Restricted
Persons and is in compliance with the requirements of this Agreement.
(l) Payment of all commitment, facility, agency and other fees
required to be paid to any Lender pursuant to any Loan Documents or any
commitment agreement heretofore entered into.
(m) The Intercreditor Agreement with the lenders party to the
Revolver Agreement in the form of Exhibit K hereto.
(n) Borrower shall have adopted such risk management procedures and
controls and such trading policies as shall be satisfactory to each Agent
in its sole and absolute discretion.
(o) Each Agent and its counsel shall have reviewed and approved, in
its sole and absolute discretion, all outstanding Plains MLP or Resources
shareholder litigation and available insurance with respect thereto.
(p) The Restructuring and all of the transactions contemplated under
the Restructuring Documents shall have been consummated.
(q) Each Restricted Person shall have executed and delivered the
Revolver Agreement and all conditions precedent to the Revolver Agreement
shall have been satisfied.
(r) General Partner shall have delivered to Administrative Agent a
certificate by the chief financial officer of General Partner, certifying
the Initial Financial Statements delivered pursuant to clause (h) above and
reflecting pro forma compliance with each event specified in Sections 7.11
through 7.14, inclusive.
(s) The Borrowing Base as of the date of such first Loan and first
Letter of Credit shall be at least $5,000,000 more than the initial
Facility Usage on such date after giving effects to the Loans and Letters
of Credit requested for such date, and General Partner shall have delivered
to the Administrative Agent a Borrowing Base Report in reasonable detail
demonstrating compliance with this requirement.
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Section 4.2. 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 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 except to the extent that
such representation or warranty was made as of a specific date or updated,
modified or supplemented as of a subsequent date with the consent of
Majority Lenders.
(b) No Default shall exist at the date of such Loan or the date of
issuance of such Letter of Credit.
(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, Plains MLP's or Borrower's Consolidated financial
condition or businesses since the date of the Initial Financial Statements.
(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) Administrative Agent shall have received all documents and
instruments which Administrative Agent has then requested, in addition to
those described in Section 4.1 (including opinions of legal counsel for
Restricted Persons and Administrative 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 (ii all other matters pertaining hereto
and thereto. All such additional documents and instruments shall be
satisfactory to Administrative Agent in form, substance and date.
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ARTICLE V - Representations and Warranties
------------------------------
To confirm each Lender's understanding concerning Restricted Persons and
Restricted Persons' businesses, properties and obligations and to induce each
Lender to enter into this Agreement and to extend credit hereunder, after giving
effect to the consummation of the transactions set forth in the Restructuring
Documents, Plains MLP and Borrower represent and warrant to each Lender 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. Each Restricted Person 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 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 except where the failure to
so qualify would not cause a Material Adverse Change. 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
necessary except where the failure to so qualify would not cause a Material
Adverse Change.
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 and Restructuring Documents to
which each is a party, the performance by each of its obligations under such
Loan Documents and Restructuring Documents, and the consummation of the
transactions contemplated by the various Loan Documents and various
Restructuring Documents, do not and will not (i) conflict with any provision of
(1) any Law, (2) the organizational documents of any Restricted Person or any of
its Affiliates, or (3) any agreement, judgment, license, order or permit
applicable to or binding upon any Restricted Person or any of its Affiliates,
(ii) result in the acceleration of any Indebtedness owed by any Restricted
Person or any of its Affiliates, or (iii) result in or require the creation of
any Lien upon any assets or properties of any Restricted Person or any of its
Affiliates except as expressly contemplated in the Loan Documents. Except as
expressly contemplated in the Loan Documents or disclosed in the Disclosure
Schedule, no permit, consent, approval, authorization or order of, and no notice
to or filing, registration or qualification 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 Restructuring Document or to
consummate any transactions
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contemplated by the Loan Documents and the Restructuring Documents, other than
consents, approvals, authorizations or orders that have been obtained or notices
given or filings made prior to the date hereof and other than various notices or
filings required to be given or made following the effectiveness of the
Restructuring Documents.
Section 5.5. Enforceable Obligations. This Agreement is, and the other
-----------------------
Loan Documents and the Restructuring 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. Plains MLP has heretofore
----------------------------
delivered to each Lender true, correct and complete copies of the Initial
Financial Statements. The Initial Financial Statements other than pro forma
financial statements fairly present Plains MLP's Consolidated and consolidating
financial position at the date thereof and the Consolidated and consolidating
results of Plains MLP's operations for the periods thereof, and in the case of
the annual Initial Financial Statements, Consolidated cash flows for the period
thereof. The pro forma Initial Financial Statements fairly present Plains MLP's
pro forma Consolidated and consolidating financial position at the date thereof
and the pro forma Consolidated results of Plains MLP's operations for the period
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 other than pro forma financial statements were prepared in accordance
with GAAP. All Initial Financial Statements that are pro forma financial
statements were prepared in accordance with GAAP with such pro forma adjustments
as have been accepted by Administrative Agent.
Section 5.7. Other Obligations and Restrictions. No Restricted Person
----------------------------------
has any outstanding Liabilities of any kind (including contingent obligations,
tax assessments, and unusual forward or long-term commitments) which are, in the
aggregate, material to Plains MLP or material with respect to Plains MLP's
Consolidated financial condition and not shown in the Initial Financial
Statements or disclosed in the Disclosure Schedule. Except as shown in the
Initial Financial Statements or disclosed in the Disclosure Schedule, no
Restricted Person 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 any Restricted Person to any
Lender 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 necessary to make the
statements contained herein or therein, in light of the circumstances under
which they were made, not misleading as of the date made or deemed made. All
written information furnished after the date hereof by or on behalf of any
Restricted Person to Administrative Agent or any Lender Party in connection with
this Agreement and the other Loan Documents and the transactions contemplated
hereby and thereby will be true, complete and accurate in every material respect
in light of the circumstances in which made, or based on reasonable estimates on
the date as of
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which such information is stated or certified. There is no fact known to any
Restricted Person that has not been disclosed to each Lender in writing which
could cause a Material Adverse Change.
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 any Restricted Person threatened, against any Restricted Person or
affecting any Collateral (including, without limitation, any which challenge or
otherwise pertain to any Restricted Person's title to any Collateral) before any
Tribunal which could reasonably be expected to cause a Material Adverse Change,
and (ii) there are no outstanding judgments, injunctions, writs, rulings or
orders by any such Tribunal against any Restricted Person or any Restricted
Person's stockholders, partners, directors or officers or affecting any
Collateral which could reasonably be expected to cause a Material Adverse
Change.
Section 5.10. Labor Disputes and Acts of God. Except as disclosed in the
------------------------------
Disclosure Schedule, neither the business nor the properties of any Restricted
Person 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. Except as disclosed in the Initial
Financial Statements or in the Disclosure Schedule, no Termination Event has
occurred with respect to any ERISA Plan and all ERISA Affiliates are in
compliance 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: (i) no "accumulated funding deficiency" (as
defined in Section 412(a) of the Code 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. Compliance with Laws. Except as set forth in the
--------------------
Disclosure Schedule, each Restricted Person has all permits, licenses and
authorizations required in connection with the conduct of its businesses, except
to the extent failure to have any such permit, license or authorization could
not cause a Material Adverse Change. Each Restricted Person is in compliance
with the terms and conditions of all such permits, licenses and authorizations,
and is also in compliance with all other limitations, restrictions, conditions,
standards, prohibitions, requirements, obligations, schedules and timetables
contained in any Law, including 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 could not cause a Material Adverse Change.
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Section 5.13. Environmental 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.
-------
(S) 9601(22). Without limiting the provisions of Section 5.12 and except as set
forth in the Disclosure Schedule:
(a) 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 threatened by any
Tribunal or any other Person with respect to any of the following which in the
aggregate could cause a Material Adverse Change (i) any alleged generation,
treatment, storage, recycling, transportation, disposal, or Release of any
Hazardous Materials, either by any Restricted Person or on any property owned by
any Restricted Person, (ii) any 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 any Restricted Person 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.
(b) No Restricted Person otherwise has any known material contingent
liability in connection with any alleged generation, treatment, storage,
recycling, transportation, disposal, or Release of any Hazardous Materials.
(c) No Restricted Person has handled any Hazardous Materials, other than
as a generator, on any properties now or previously owned or leased by any
Restricted Person to an extent that such handling has caused, or could cause, a
Material Adverse Change.
(d) Except to the extent that the following in the aggregate has not
caused and could not cause a Material Adverse Change:
(i) no PCBs are or have been present at any properties now or previously
owned or leased by any Restricted Person;
(ii) no asbestos is or has been present at any properties now or
previously owned or leased by any Restricted Person;
(iii) there are no underground storage tanks for Hazardous Materials,
active or abandoned, at any properties now or previously owned or
leased by any Restricted Person; and
(iv) no Hazardous Materials have been Released at, on or under any
properties now or previously owned or leased by any Restricted
Person.
(e) No Restricted Person has transported or arranged for the
transportation of any Hazardous Material to any location which is listed on the
National Priorities List under
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CERCLA, any location listed for possible inclusion on the National Priorities
List by the Environmental Protection Agency in CERCLIS, nor, except to the
extent that has not caused and could not cause a Material Adverse Change, any
location 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 any Restricted Person for clean-up costs, remedial work, damages
to natural resources or for personal injury claims, including, but not limited
to, claims under CERCLA.
(f) No property now or previously owned or leased by any Restricted Person
is listed or proposed for listing on the National Priority list promulgated
pursuant to CERCLA, in CERCLIS, nor, except to the extent that has not caused
and could not cause a Material Adverse Change, on any similar state list of
sites requiring investigation or clean-up.
(g) There are no Liens arising under or pursuant to any Environmental Laws
on any of the real properties or properties owned or leased by any Restricted
Person, and no government actions of which Borrower is aware have been taken or
are in process which could subject any of such properties to such Liens; nor
would any Restricted Person 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.
(h) There have been no environmental investigations, studies, audits,
tests, reviews or other analyses for ground water or soil contamination relating
to the Release of Hazardous Materials conducted by or which are in the
possession of any Restricted Person in relation to any properties or facility
now or previously owned or leased by any Restricted Person which have not been
made available to Administrative Agent.
Section 5.14. 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 or as
contemplated by the Restructuring Documents. Except as otherwise indicated in
the Disclosure Schedule, 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, no Restricted Person has any other office
or place of business.
Section 5.15. 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. Neither Borrower nor any Restricted
Person is a member of any general or limited partnership, limited liability
company, joint venture or association of any type whatsoever except those listed
in the Disclosure Schedule. Borrower owns, directly or indirectly, the equity
interest in each of its Subsidiaries which is indicated in the Disclosure
Schedule.
Section 5.16. Title to Properties; Licenses. Each Restricted Person 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 such Restricted Person's business. Each
Restricted Person possesses all licenses, permits, franchises, patents,
copyrights, trademarks and trade names, and other intellectual property (or
otherwise possesses
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the right to use such intellectual property without violation of the rights of
any other Person) which are necessary to carry out its business as presently
conducted and as presently proposed to be conducted hereafter, and no Restricted
Person 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 5.17. 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 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. Neither Borrower nor any other Restricted Person is subject
to regulation under the Federal Power Act which would violate, result in a
default of, or prohibit the effectiveness or the performance of any of the
provisions of the Loan Documents.
Section 5.18. Insider. No Restricted Person, nor any Person having
-------
"control" (as that term is defined in 12 U.S.C. (S) 375b(9) or in regulations
promulgated pursuant thereto) of any Restricted Person, is a "director" or an
"executive officer" or "principal shareholder" (as those terms are defined in 12
U.S.C. (S) 375b(8) or (9) or in regulations promulgated pursuant thereto) of any
Lender, of a bank holding company of which any Lender is a Subsidiary or of any
Subsidiary of a bank holding company of which any Lender is a Subsidiary.
Section 5.19. Solvency. Upon giving effect to the issuance of the Notes,
--------
the execution of the Loan Documents by Borrower and each Guarantor and the
consummation of the transactions contemplated hereby, (i) Borrower and each
Guarantor will be solvent (as such term is used in applicable bankruptcy,
liquidation, receivership, insolvency or similar Laws), and the sum of
Borrower's and each Guarantor's absolute and contingent liabilities, including
the Obligations or guarantees thereof, shall not exceed the fair market value of
such Restricted Person's assets, and (ii) Borrower's and each Guarantor's
capital should be adequate for the businesses in which such Restricted Person is
engaged and intends to be engaged. Neither Borrower nor any Restricted Person
has incurred (whether under the Loan Documents or otherwise), nor does any
Restricted Person intend to incur or believe that it will incur, debts which
will be beyond its ability to pay as such debts mature.
Section 5.20. Credit Arrangements. The Disclosure Schedule contains a
-------------------
complete and correct list, as of the date of this Agreement, of each credit
agreement, loan agreement, indenture, purchase agreement, guaranty or other
arrangement providing for or otherwise relating to any Indebtedness or any
extension of credit (or commitment for any extension of credit) to, or guaranty
by, any Restricted Person, or to which any Restricted Person is subject, other
than the Loan Documents, and the aggregate principal or face amount outstanding
or which may become outstanding under each such arrangement is correctly
described in the Disclosure Schedule. No Restricted Person is subject to any
restriction under any credit agreement, loan agreement, indenture, purchase
agreement, guaranty or other arrangement providing for or otherwise relating to
any Indebtedness or any extension of credit (or commitment for any extension of
credit) to, or guaranty by, any Affiliate, other than another Restricted Person.
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ARTICLE VI - Affirmative Covenants
---------------------
To conform with the terms and conditions under which each Lender is willing
to have credit outstanding to Borrower, and to induce each Lender to enter into
this Agreement and extend credit hereunder, Plains MLP and Borrower covenant and
agree that until the full and final payment of the Obligations and the
termination of this Agreement, unless Majority Lenders, or all Lenders as
required under Section 10.1, have previously agreed otherwise:
Section 6.1. Payment and Performance. Each Restricted Person will pay
-----------------------
all amounts due under the Loan Documents, to which it is a party, in accordance
with the terms thereof and will observe, perform and comply with every covenant,
term and condition expressed in the Loan Documents to which it is a party.
Section 6.2. Books, Financial Statements and Reports. Each Restricted
---------------------------------------
Person will at all times maintain full and accurate books of account and
records. Plains MLP 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 Lender at Restricted Person's
expense:
(a) As soon as available, and in any event within ninety (90) days
after the end of each Fiscal Year (i) complete Consolidated financial
statements of Plains MLP 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
PricewaterhouseCoopers LLP, or other independent certified public
accountants selected by General Partner and acceptable to Majority Lenders,
stating that such Consolidated financial statements have been so prepared
and (ii) supporting unaudited consolidating balance sheets and statements
of income of each other Restricted Person (except for any Restricted Person
whose financial statements are substantially the same as those of Plains
MLP). 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 for such Fiscal Year.
Such Consolidated financial statements shall set 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 Plains MLP will
furnish a certificate 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, inclusive, and (iii) further stating that in
making their examination and reporting on the Consolidated financial
statements described above they obtained no knowledge of any Default
existing at the end of such Fiscal Year, or, if they did so 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 of the first three Fiscal Quarters of each
Fiscal Year (i) Plains MLP's Consolidated balance sheet as of the end of
such Fiscal Quarter and Consolidated statements of Plains MLP's earnings
and cash flows for such Fiscal Quarter and for the
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period from the beginning of the then current Fiscal Year to the end of
such Fiscal Quarter, and (ii) supporting consolidating balance sheets and
statements of income of each other Restricted Person (except for any
Restricted Person whose financial statements are substantially the same as
those of Plains MLP), all in reasonable detail and prepared in accordance
with GAAP, subject to changes resulting from normal year-end adjustments,
and as soon as available, and in any event within forty-five (45) days
after the end of the last Fiscal Quarter of each Fiscal Year, Plains MLP's
unaudited Consolidated balance sheet as of the end of such Fiscal Quarter
and income statement for such Fiscal Quarter and for the period from the
beginning of the current Fiscal Year to the end of such Fiscal Quarter. In
addition Plains MLP 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 F signed
by the chief financial officer, principal accounting officer or treasurer
of General Partner stating that such financial statements are accurate and
complete in all material respects (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, inclusive 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) Promptly upon their becoming available, copies of all
financial statements, reports, notices and proxy statements sent by Plains
MLP to its unit holders and all registration statements, periodic reports
and other statements and schedules filed by Plains MLP with any securities
exchange, the Securities and Exchange Commission or any similar
governmental authority.
(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 Plains
MLP (in form reasonably satisfactory to Administrative Agent), prepared or
caused to be prepared by a senior financial officer thereof, setting forth
for the first year thereof, quarterly financial projections and budgets for
Plains MLP, and thereafter yearly financial projections during the
Commitment Period.
(e) On or about the twenty-sixth (26th) (but no later than the
twenty-eighth (28th)) day of each calendar month (i) a Borrowing Base
Report in the form of Exhibit H duly completed by an authorized officer of
General Partner and conforming with the requirements of Section 2.13, and
(ii) a statement reconciling such report with the Borrowing Base Report
delivered on or about the 26th day of the preceding calendar month.
(f) As soon as available, and in any event within thirty-five (35)
days after the end of each calendar month, a report setting forth for such
month aggregate volumes and margins for all marketing activities of
Restricted Persons.
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(g) As soon as available, and in any event within thirty (30) days
after the end of each Fiscal Year, an environmental compliance certificate
signed by the president or chief executive officer of General Partner in
the form attached hereto as Exhibit I. Further, if requested by
Administrative Agent, Restricted Persons shall permit and cooperate with an
environmental and safety review made in connection with the operations of
Restricted Persons' properties one time during each Fiscal Year, by Pilko &
Associates, Inc. or other consultants selected by Administrative Agent
which review shall, if requested by Administrative Agent, be arranged and
supervised by environmental legal counsel for Administrative Agent, all at
Restricted Persons' cost and expense. The consultant shall render a verbal
or written report, as specified by Administrative Agent, based upon such
review at Restricted Persons' cost and expense and a copy thereof will be
provided to Restricted Persons.
(h) Concurrently with the annual renewal of Restricted Persons'
insurance policies, Restricted Persons shall at their own cost and expense,
if requested by Administrative Agent in writing, cause a certificate or
report to be issued by Administrative Agent's professional insurance
consultants or other insurance consultants satisfactory to Administrative
Agent certifying that Restricted Persons' 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.
(i) As soon as available, and in any event within thirty-five (35)
days after the end of each calendar month, a Consolidated statement of
Plains MLP's earnings for such calendar month in form satisfactory to
Administrative Agent.
(j) By 10:00 a.m., Boston Massachusetts time, each Monday, a
report on a mark to market basis of all Floating Rate Contracts as of the
close of business on the previous Friday, and together with such report a
complete list of all net realized losses on any Floating Rate Contracts for
the prior twelve months in form satisfactory to Administrative Agent.
Section 6.3. Other Information and Inspections. In each case subject to
---------------------------------
the last sentence of this Section 6.3, each Restricted Person will furnish to
each Lender any information which Administrative Agent or any Lender may from
time to time request concerning any covenant, provision or condition of the Loan
Documents or any matter in connection with Restricted Persons' businesses and
operations. In each case subject to the last sentence of this Section 6.3, each
Restricted Person will permit representatives appointed by Administrative Agent
(including independent accountants, auditors, agents, attorneys, appraisers and
any other Persons) to visit and inspect during normal business hours any of such
Restricted 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 each Restricted Person shall
permit Administrative Agent or its representatives to investigate and verify the
accuracy of the information furnished to Administrative Agent or any Lender in
connection with the Loan
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Documents and to discuss all such matters with its officers, employees and, upon
prior notice to Borrower, its representatives. Without limitation of the
foregoing, within one hundred twenty (120) days after the end of each Fiscal
Year, and in addition once during each Fiscal Year, if requested by
Administrative Agent at the instruction of Majority Lenders, Borrower shall
permit commercial financial examiners appointed by Administrative Agent to
conduct a commercial finance examination of the business and assets of
Restricted Persons and in connection with such examination to have full access
to and the right to examine, audit, make abstracts and copies from, and inspect
Restricted Persons' records, files, books of account and all other documents,
instruments and agreements to which a Restricted Person is a party. Borrower
shall pay all reasonable costs and expenses of Administrative Agent associated
with any such examination. Each of the foregoing inspections and examinations
shall be made subject to compliance with applicable safety standards and the
same conditions applicable to any Restricted Person in respect of property of
that Restricted Person on the premises of Persons other than a Restricted Person
or an Affiliate of a Restricted Person, and all information, books and records
furnished or requested to be furnished, or of which copies, photocopies or
photographs are made or requested to be made, all information to be investigated
or verified and all discussions conducted with any officer, employee or
representative of any Restricted Person shall be subject to any applicable
attorney-client privilege exceptions which the Restricted Person determines is
reasonably necessary and compliance with conditions to disclosures under non-
disclosure agreements between any Restricted Person and Persons other than a
Restricted Person or an Affiliate of a Restricted Person and the express
undertaking of each Person acting at the direction of or on behalf of any Lender
Party to be bound by the confidentiality provisions of Section 10.6 of this
Agreement.
Section 6.4. Notice of Material Events and Change of Address. Each
-----------------------------------------------
Restricted Person will notify each Lender Party, not later than five (5)
Business Days after any executive officer of Restricted Persons has knowledge
thereof, 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
any Restricted Person or of any default by any Restricted Person 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) Under any Environmental Law, any claim of $1,000,000 or more,
any notice of potential liability which might be reasonably likely to
exceed such amount, or any other material adverse claim asserted against
any Restricted Person or with respect to any Restricted Person's properties
taken as a whole, and
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(f) the filing of any suit or proceeding, or the assertion in
writing of a claim against any Restricted Person or with respect to any
Restricted Person's properties in which an adverse decision reasonably
could be expected to cause a Material Adverse Change.
Upon the occurrence of any of the foregoing, Restricted Persons 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. Restricted Persons will
also notify Administrative Agent and Administrative 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 Administrative Agent and its counsel to prepare the
same.
Section 6.5. Maintenance of Properties. Each Restricted Person will
-------------------------
maintain, preserve, protect, and keep all Collateral and all other property used
or useful in the conduct of its business in good condition (ordinary wear and
tear excepted) 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. Each
-------------------------------------------
Restricted Person 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. Each Restricted
-----------------------------------------
Person will (a) timely file all required tax returns including any extensions;
(b) timely pay all taxes, assessments, and other governmental charges or levies
imposed upon it or upon its income, profits or property; (c) within one hundred
twenty (120) days after the date such goods are delivered or such services are
rendered, 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, other than royalty payments suspended
in the ordinary course of business; and (e) maintain appropriate accruals and
reserves for all of the foregoing in accordance with GAAP. Each Restricted
Person 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,
if necessary, and has set aside on its books adequate reserves therefor which
are required by GAAP.
Section 6.8. Insurance. Each Restricted Person shall at all times
---------
maintain insurance for its property in accordance with the Insurance Schedule
which insurance shall be by financially sound and reputable insurers. Borrower
will maintain any additional insurance coverage as described in the respective
Security Documents. Upon demand by Administrative Agent any insurance policies
covering Collateral shall be endorsed (a) to provide for payment of losses to
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Administrative 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 Administrative Agent, and (c) to
provide for any other matters specified in any applicable Security Document or
which Administrative Agent may reasonably require. Each Restricted Person 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, each
Restricted Person shall at all time maintain liability insurance in accordance
with 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, Administrative Agent may
pay the same after notice of such payment by Administrative Agent is given to
Borrower. Borrower shall immediately reimburse Administrative Agent for any
such payments and each amount paid by Administrative Agent shall constitute an
Obligation owed hereunder which is due and payable on the date such amount is
paid by Administrative Agent.
Section 6.10. Interest. Borrower hereby promises to each Lender to pay
--------
interest at the Default Rate on all Obligations (including Obligations to pay
fees or to reimburse or indemnify any Lender) which Borrower has in this
Agreement promised to pay to such Lender 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. Each Restricted Person
----------------------------------
will perform all material obligations it is required to perform under the terms
of each indenture, mortgage, deed of trust, security agreement, lease, and
franchise, and each material agreement, contract or other instrument or
obligation to which it is a party or by which it or any of its properties is
bound. Each Restricted Person will conduct its business and affairs in
compliance with all Laws applicable thereto.
Section 6.12. Environmental Matters; Environmental Reviews.
--------------------------------------------
(a) Each Restricted Person will comply in all material respects with all
Environmental Laws now or hereafter applicable to such Restricted Person as well
as all contractual obligations and agreements with respect to environmental
remediation or other environmental matters 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.
(b) Each Restricted Person will promptly furnish to Administrative Agent
all written notices of violation, orders, claims, citations, complaints, penalty
assessments, suits or other proceedings received by any Restricted Person or
General Partner, or of which it has notice, pending or threatened against any
Restricted Person, the potential liability of which exceeds $1,000,000 or would
cause a Material Adverse Change if resolved adversely against any Restricted
Person, by any governmental authority with respect to any alleged violation of
or non-
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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) Each Restricted Person will promptly furnish to Administrative Agent
all requests for information, notices of claim, demand letters, and other
notifications, received by any Restricted Person or General Partner 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, the potential liability of
which exceeds $1,000,000 or would cause a Material Adverse Change if resolved
adversely against any Restricted Person.
Section 6.13. Evidence of Compliance. Subject to the last sentence of
----------------------
Section 6.3, each Restricted Person will furnish to each Lender at such
Restricted Person's expense all evidence which Administrative 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. Agreement to Deliver Security Documents. Restricted
---------------------------------------
Persons will deliver to further secure the Obligations whenever requested by
Administrative 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 Administrative
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.
Section 6.15. Perfection and Protection of Security Interests and Liens.
---------------------------------------------------------
Each Restricted Person will from time to time deliver to Administrative Agent
any financing statements, continuation statements, extension agreements and
other documents, properly completed and executed (and acknowledged when
required) by Restricted Persons in form and substance satisfactory to
Administrative Agent, which Administrative Agent requests for the purpose of
perfecting, confirming, or protecting any Liens or other rights in Collateral
securing any Obligations.
Section 6.16. Bank Accounts; Offset. To secure the repayment of the
---------------------
Obligations, each Restricted Person hereby grants to each Lender 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 Lender 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
such Restricted Person now or hereafter held or received by or in transit to any
Lender from or for the account of such Restricted Person, whether for
safekeeping, custody, pledge, transmission, collection or otherwise, (b) any and
all deposits (general or special, time or demand, provisional or final) of such
Restricted Person with any Lender, and (c) any other credits and claims of such
Restricted Person at any time existing against any Lender, including claims
under certificates of deposit. At any time and from time to time during the
continuance of any Event of Default, each Lender is hereby authorized to
foreclose upon, or to offset against the Obligations then due and
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payable (in either case without notice to any Restricted Person), any and all
items herein above 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 6.17. Guaranties of Subsidiaries. Each Subsidiary of Plains MLP
--------------------------
now existing or created, acquired or coming into existence after the date hereof
shall, promptly upon request by Administrative Agent, execute and deliver to
Administrative 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
Administrative Agent in form and substance. Each Subsidiary of Plains MLP
existing on the date hereof shall duly execute and deliver such a guaranty prior
to the making of any Loan hereunder. Plains MLP will cause each of its
Subsidiaries to deliver to Administrative Agent, simultaneously with its
delivery of such a guaranty, written evidence satisfactory to Administrative
Agent and its counsel that such Subsidiary has taken all corporate, limited
liability company 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 6.18. Compliance with Agreements. Each Restricted Person shall
--------------------------
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 such Restricted Person or to Restricted Persons on a Consolidated
basis or materially significant to any Guarantor, unless any such failure to so
observe, perform or comply is remedied within the applicable period of grace (if
any) provided in such agreement or instrument.
Section 6.19. Rents. By the terms of the various Security Documents,
-----
certain Restricted Persons are and will be assigning to Administrative Agent,
for the benefit of Lender Parties, all of the "Rents" (as defined therein)
accruing to the property covered thereby. Notwithstanding any such assignments,
so long as no Default has occurred and is continuing, (i) such Restricted
Persons may continue to receive and collect from the payors of such Rents all
such Rents, subject, however, to the Liens created under the Security Documents,
which Liens are hereby affirmed and ratified, and free and clear of such Liens,
use the proceeds of the Rents, and (ii) the Administrative Agent will not notify
the obligors of such Rents or take any other action to cause proceeds thereof to
be remitted to the Administrative Agent. Upon the occurrence of a Default,
Administrative Agent may exercise all rights and remedies granted under the
Security Documents, including the right to obtain possession of all Rents then
held by such Restricted Persons or to receive directly from the payors of such
Rents all other Rents until such time as such Default is no longer continuing.
If the Administrative Agent shall receive any Rent proceeds from any payor at
any time other than during the continuance of a Default, then it shall notify
Borrower thereof and (i) upon request and pursuant to the instructions of
Borrower, it shall, if no Default is then continuing, remit such proceeds to the
Borrower and (ii) at the request and expense of Borrower, execute and deliver a
letter to such payors confirming Restricted Persons' right to receive and
collect Rents until otherwise notified by Administrative Agent. In no case
shall any failure, whether purposed or inadvertent, by Administrative Agent to
collect
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directly any such Rents constitute in any way a waiver, remission or release of
any of its rights under the Security Documents, nor shall any release of any
Rents by Administrative Agent to such Restricted Persons constitute a waiver,
remission, or release of any other Rents or of any rights of Administrative
Agent to collect other Rents thereafter.
Section 6.20. Operating Practices. Each Restricted Person shall operate
-------------------
its business in a manner that is consistent with the policies and procedures
approved by the board of directors of General Partner and in effect on, and
delivered to Administrative Agent and Lenders prior to, the date hereof, and
revisions thereto referred to in the following sentence. Borrower shall review
such policies and procedures at least annually, and shall promptly recommend to
the board of directors of General Partner such revisions to such policies and
procedures as may be recommended by Restricted Persons' or, upon consultation
with Borrower and its consultants and at the request of Administrative Agent,
Administrative Agent's third party consultants, to remedy deficiencies in
internal controls, and Borrower shall promptly provide a report to Lenders
regarding such policies and procedures, including such policies and procedures
which the board of directors of General Partner could adopt and has adopted.
ARTICLE VII - Negative Covenants
------------------
To conform with the terms and conditions under which each Lender is willing
to have credit outstanding to Borrower, and to induce each Lender to enter into
this Agreement and make the Loans, Plains MLP and Borrower covenant and agree
that until the full and final payment of the Obligations and the termination of
this Agreement, unless Majority Lenders, or all Lenders as required under
Section 10.1, 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 arising under Hedging Contracts (i) permitted under
Section 7.3 or (ii) consisting of options, swaps, collars and similar
instruments that relate to crude oil and are either referred to in any of
clauses (i) - (iii) of Section 7.15(a) or permitted by Section 7.15(b) or (c);
(c) Indebtedness of any Restricted Person owing to another Restricted
Person;
(d) Liabilities with respect to obligations to deliver crude oil or to
render terminaling or storage services in consideration for advance payments to
a Restricted Person provided such delivery or rendering, as applicable, is to be
made within 60 days after such payment;
(e) Indebtedness under the Revolver Agreement, provided that the principal
amount of loans and face amount of letters of credit thereunder at any one time
outstanding (excluding any exposure related to Hedging Contracts secured in
connection therewith) shall not exceed $400,000,000;
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(f) guaranties by Plains MLP of trade payables of any Restricted Person
incurred and paid in the ordinary course of business on ordinary trade terms;
and
(g) other Indebtedness not to exceed in the aggregate in respect of all
Restricted Persons the principal amount of $25,000,000 at any one time
outstanding.
Section 7.2. Limitation on Liens. No Restricted Person will create,
-------------------
assume or permit to exist (i) any Lien upon any Accounts, inventory, cash or
investment securities which constitute Collateral except (A) Permitted Inventory
Liens, (B) Liens created pursuant to the Security Documents, Liens created
pursuant to the Revolver Agreement, and Liens created pursuant to the "Security
Documents" (as such term is defined in the Existing Agreement), (C) statutory
Liens in respect of First Purchase Crude Payables, (D) Liens of the type
described in clause (e) below in connection with any Eligible Margin Deposit to
secure Hedging Contracts permitted under Section 7.1 with the broker that is the
holder of such Eligible Margin Deposit, (E) Liens of the type described in
clauses (a), (c) and (f) below, and (F) any other Liens expressly permitted to
encumber such Collateral under any Security Document covering such Collateral or
(ii) any Lien upon any of the properties or assets other than such Collateral
which it now owns or hereafter acquires except the following (Liens, to the
extent permitted by this Section, herein called "Permitted Liens"):
(a) Liens created pursuant to this Agreement or the Security Documents,
Liens existing on the date of this Agreement and listed in the Disclosure
Schedule, and Liens created pursuant to the Revolver Agreement or the "Security
Documents" as defined in the Revolver, subject to the terms of the Intercreditor
Agreement referred to in Section 4.1(m);
(b) Liens imposed by any governmental authority for taxes, assessments or
charges not yet due or the validity of which is being contested in good faith
and by appropriate proceedings, if necessary, for which adequate reserves are
maintained on the books of any Restricted Person in accordance with GAAP;
(c) pledges or deposits of cash or securities under worker's compensation,
unemployment insurance or other social security legislation;
(d) carriers', warehousemen's, mechanics', materialmen's, repairmen's,
landlord's, or other like Liens (including, without limitation, Liens on
property of any Restricted Person in the possession of storage facilities,
pipelines or barges) arising in the ordinary course of business for amounts
which are not more than 60 days past due or the validity of which is being
contested in good faith and by appropriate proceedings, if necessary, and for
which adequate reserves are maintained on the books of any Restricted Person in
accordance with GAAP;
(e) Liens under or with respect to accounts with brokers or counterparties
with respect to Hedging Contracts consisting of cash, commodities or futures
contracts, options, securities, instruments, and other like assets securing only
Hedging Contracts permitted under Section 7.1;
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(f) deposits of cash or securities to secure the performance of bids,
trade contracts (other than for borrowed money), leases, statutory obligations,
surety and appeal bonds, performance bonds and other obligations of a like
nature incurred in the ordinary course of business;
(g) easements, rights-of-way, restrictions and other similar encumbrances
incurred in the ordinary course of business and encumbrances consisting of
zoning restrictions, easements, licenses, restrictions on the use of real
property or minor imperfections in title thereto which, in the aggregate, are
not material in amount, and which do not in any case materially detract from the
value of the property subject thereto or interfere with the ordinary conduct of
the business of any Restricted Person;
(h) Liens in respect of operating leases and Capital Leases permitted
under Section 7.1;
(i) Liens upon any property or assets acquired after the date hereof by a
Restricted Person, each of which either (i) existed on such property or asset
before the time of its acquisition and was not created in anticipation thereof,
or (ii) was created solely for the purpose of securing Indebtedness
representing, or incurred to finance, refinance or refund, the cost (including
the cost of construction) of such property or asset; provided that no such Lien
shall extend to or cover any property or asset of a Restricted Person other than
the property or asset so acquired (or constructed) and the Indebtedness secured
thereby is permitted under Section 7.1(g) hereof; and any extension, renewal,
refinancing, refunding or replacement (or successive extensions, renewals,
refinancings, refundings or replacements), in whole or part, of the foregoing,
provided, however, that such Liens shall not cover or secure any additional
Indebtedness, obligations, property or asset;
(j) rights reserved to or vested in any governmental authority by the
terms of any right, power, franchise, grant, license or permit, or by any
provision of law, to revoke or terminate any such right, power, franchise,
grant, license or permit or to condemn or acquire by eminent domain or similar
process;
(k) rights reserved to or vested by Law in any governmental authority to
in any manner, control or regulate in any manner any of the properties of any
Restricted Person or the use thereof or the rights and interests of any
Restricted Person therein, in any manner under any and all Laws;
(l) rights reserved to the grantors of any properties of any Restricted
Person, and the restrictions, conditions, restrictive covenants and limitations,
in respect thereto, pursuant to the terms, conditions and provisions of any
rights-of-way agreements, contracts or other agreements therewith; and
(m) inchoate Liens in respect of pending litigation or with respect to a
judgment which has not resulted in an Event of Default under Section 8.1.
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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) Hedging 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 (i) the aggregate notional amount of such contracts never exceeds one
hundred percent (100%) 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, (ii) 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
(iii) each such contract is with a counterparty or has a guarantor of the
obligation of the counterparty who (unless such counterparty is a Lender, a
"Lender" as such term is defined in the Revolver Agreement, or an Affiliate of
any Lender or "Lender" at the time such contract is entered into) at the time
the contract is made has long-term unsecured and unenhanced debt obligations
rated A or A2 or better, respectively, by either Rating Agency or is otherwise
acceptable to Majority Lenders.
(b) Hedging Contracts relating to heating oil used to hedge price risk for
fuel requirements of the truck fleet of a Restricted Person in the ordinary
course of business.
Section 7.4. Limitation on Mergers, Issuances of Securities. Except as
----------------------------------------------
expressly provided in this section, no Restricted Person will (a) enter into any
transaction of merger or consolidation or amalgamation, or liquidate, wind up or
dissolve itself (or suffer any liquidation or dissolution), (b) acquire any
business or property from, or capital stock of, or be a party to any acquisition
of, any Person except for purchases of inventory and other property to be sold
or used in the ordinary course of business and Investments permitted under
Section 7.7 hereof or (c) sell, transfer, lease, exchange, alienate or
otherwise dispose of, in one transaction or a series of transactions, any part
of its business or property, whether now owned or hereafter acquired, except for
sales or transfers not prohibited by under Section 7.5 hereof. Any Person,
other than Borrower, that is a Subsidiary of a Restricted Person may, however,
be merged into or consolidated with (i) another Subsidiary of such Restricted
Person, so long as a Guarantor is the surviving business entity, or (ii such
Restricted Person, so long as such Restricted Person is the surviving business
entity. Plains MLP will not issue any securities other than (i) limited
partnership interests and any options or warrants giving the holders thereof
only the right to acquire such interests, (ii) general or subordinate
partnership interests issued to Resources or a Wholly Owned Subsidiary of
Resources and (iii) debt securities permitted by Section 7.1(g). No Subsidiary
of Plains MLP 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 a direct Subsidiary of a Restricted Person may
issue additional shares or other securities to such Restricted Person, to Plains
MLP or to General Partner so long as such Subsidiary is a Wholly Owned
Subsidiary of Plains MLP after giving effect thereto. No Subsidiary of Borrower
which is a partnership will allow any diminution of Borrower's interest (direct
or indirect) therein.
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Section 7.5. Limitation on Sales of Property. No Restricted Person will
-------------------------------
sell, transfer, lease, exchange, alienate or dispose of any Collateral or any of
its material assets or properties or any material interest therein except:
(a) equipment which is worthless or obsolete or no longer necessary or
useful to the proper conduct of its business or which is replaced by equipment
of equal suitability and value;
(b) inventory (including pipeline linefill) which is sold in the ordinary
course of business on ordinary trade terms;
(c) in other property which is sold for fair consideration not in the
aggregate in excess of $10,000,000 in any Fiscal Year, the sale of which will
not materially impair or diminish the value of the Collateral or any Restricted
Person's financial condition, business or operations; and
(d) sales or transfers, subject to the Security Documents, by a Person
(other than Borrower) that is a Subsidiary of a Restricted Person to such
Restricted Person or to a Wholly Owned Subsidiary of such Restricted Person that
is a Guarantor.
No Restricted Person will sell, transfer or otherwise dispose of capital stock
of or interest in any of its Subsidiaries except to Plains MLP or a Wholly Owned
Subsidiary of Plains MLP. No Restricted Person will discount, sell, pledge or
assign any notes payable to it, accounts receivable or future income. So long
as no Default then exists, Administrative Agent will, at Borrower's request and
expense, execute a release, satisfactory to Borrower and Administrative Agent,
of any Collateral so sold, transferred, leased, exchanged, alienated or disposed
of pursuant to the clause (a) or (c) of this Section.
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, limited liability
company or other interest in it, nor will any Restricted Person directly or
indirectly make any capital contribution of any nature to or purchase, redeem,
acquire or retire any shares of the capital stock of or partnership or limited
liability company interests in any Restricted 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, while any
Loan or commitment hereunder is outstanding. Notwithstanding the foregoing, but
subject to Section 7.5, (i) Subsidiaries of Plains MLP, Borrower, or of any
Guarantor shall not be restricted, directly or indirectly, from declaring and
paying dividends or making any other distributions to Plains MLP, Borrower, or
any such Guarantor, respectively, (ii) no Restricted Person shall be restricted
from making capital contributions of any nature to a Wholly Owned Subsidiary of
such Restricted Person that is a Guarantor, and (iii) so long as no Default or
Event of Default has occurred and is continuing or would result therefrom,
Plains MLP shall not be restricted from (A) distributing Available Cash (other
than amounts required to be applied as otherwise required in any Loan Document)
to its partners in accordance with the Partnership Agreement or (B) purchasing
its partnership units on the open market in connection with the Incentive and
Option Plans.
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Section 7.7. Limitation on Investments and New Businesses. No Restricted
--------------------------------------------
Person will (a) make any expenditure or commitment or incur any obligation or
enter into or engage in any transaction except in the ordinary course of
business, (b) engage directly or indirectly in any business or conduct any
operations except in connection with or incidental to its present businesses and
operations, (c) make any acquisitions of or capital contributions to or other
Investments in any Person, other than Permitted Investments and Permitted
Acquisitions, or (d) make any acquisitions of properties other than Permitted
Acquisitions. All transactions permitted under the foregoing subsections (a)
through (d), inclusive, are subject to Section 7.5.
Section 7.8. Limitation on Credit Extensions. Except for Permitted
-------------------------------
Investments and Hedging Contracts permitted under Section 7.3(b) hereof, no
Restricted Person will extend credit, make advances or make loans other than
normal and prudent extensions of credit to customers buying goods and services
in the ordinary course of business or to another Restricted Person 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.
Section 7.9. Transactions with Affiliates. No Restricted Person will
----------------------------
engage in any material transaction with any of its Affiliates except: (a)
transactions among Plains MLP and Wholly Owned Subsidiaries of Plains MLP,
subject to the other provisions of this Agreement, (b) transactions governed by
the Affiliate Agreements, and (c) transactions entered into in the ordinary
course of business of such Restricted Person on terms which are no less
favorable to such Restricted Person than those which would have been obtainable
at the time in arm's-length transactions with Persons other than such
Affiliates.
Section 7.10. Prohibited Contracts. Except as expressly provided for in
---------------------
the Loan Documents and as described in the Disclosure Schedule, no Restricted
Person 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 Plains MLP, including but not limited to Borrower and any
Subsidiary of Borrower to: (a) pay dividends or make other distributions to
Borrower or Plains MLP, (b) redeem equity interests held in it by Borrower or
Plains MLP, (c) repay loans and other indebtedness owing by it to Borrower or
Plains MLP, or (d) transfer any of its assets to Borrower or Plains MLP. 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 other than contracts for pipeline capacity or for services in either case
reasonably anticipated to be utilized in the ordinary course of business. No
Restricted Persons will amend, modify or release any of the Affiliate
Agreements. 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 Administrative 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 that is subject to Title IV of ERISA.
Section 7.11. Current Ratio. The ratio of (i) the sum of Plains MLP's
-------------
Consolidated current assets plus the Revolver Availability to (ii) Plains MLP's
Consolidated current liabilities will never be less than 1.0 to 1.0. For
purposes of this section, Plains MLP's Consolidated
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current liabilities will be calculated without including (a) any payments of
principal on the Notes which are required to be repaid within one year from the
time of calculation and (b) all Liabilities arising under permitted Hedging
Contracts.
Section 7.12. Debt Coverage Ratio. (a) At the end of any Fiscal Quarter,
-------------------
(b) on any date on which General Partner declares a distribution permitted under
Section 7.6 and (c) on the date of any Permitted Acquisition, both immediately
prior to and after giving effect to the consummation thereof, the Debt Coverage
Ratio will not be greater than (i) 4.0 to 1.0, in the case of any determination
during the period from the date hereof through and including March 31, 2002, and
(ii) 3.75 to 1.0, in the case of any determination thereafter. As used herein,
"Debt Coverage Ratio" means the ratio of (a) Consolidated Funded Indebtedness to
-------------------
(b) Consolidated EBITDA for the four Fiscal Quarter period (or other period
specified below) most recently ended prior to the date of determination for
which financial statements contemplated by Section 6.2(a) or (b) are available
to Borrower; provided, however, for purposes of this Section 7.12, (i) for
-----------------
determinations with respect to the period ending March 31, 2000, Consolidated
EBITDA shall be equal to the Consolidated EBITDA for the one Fiscal Quarter
ending on such date times four, (ii) for determinations with respect to the
period ending June 30, 2000, Consolidated EBITDA shall be equal to the
Consolidated EBITDA for the two Fiscal Quarters ending on such date times two,
and (iii) for determinations with respect to the period ending September 30,
2000, Consolidated EBITDA shall be equal to the Consolidated EBITDA for the
three Fiscal Quarters ending on such date times four-thirds; provided, further,
-----------------
for purposes of this Section 7.12, if, since the beginning of the four Fiscal
Quarter period ending on the date for which Consolidated EBITDA is determined,
any Restricted Person shall have made any asset disposition or acquisition,
shall have consolidated or merged with or into any Person (other than another
Restricted Person), or shall have made any disposition or acquisition of a
Restricted Person, Consolidated EBITDA shall be calculated giving pro forma
effect thereto as if the disposition, acquisition, consolidation or merger had
occurred on the first day of such period. Such pro forma effect shall be
determined (i) in good faith by the chief financial officer of Borrower, (ii)
without giving effect to any anticipated or proposed change in operations,
revenues, expenses or other items included in the computation of Consolidated
EBITDA, except with the consent of Majority Lenders, and (iii) in the case of
determinations with respect to periods ending on or prior to September 30, 2000,
with respect to acquisitions, based upon the results of operation of the
acquired Person or assets for the full four Fiscal Quarter period.
Section 7.13. Interest Coverage Ratio. The ratio of (a) Consolidated
-----------------------
EBITDA to (b) Interest Expense for (i) the Fiscal Quarter ending March 31, 2000,
(ii) the two-Fiscal Quarter period ending June 30, 2000, (iii) the three-Fiscal
Quarter period ending September 30, 2000 and (iv) each four Fiscal Quarter
period ending on or after December 31, 2000 will not be less than 2.75 to 1.0.
Section 7.14. Debt to Capital Ratio. The ratio of (a) all Consolidated
---------------------
Funded Indebtedness to (b) the sum of Consolidated Funded Indebtedness plus
Consolidated Net Worth will never be greater than 0.65 to 1.0 at any time.
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Section 7.15. Open Position; Certain Permitted Financial Instruments;
-------------------------------------------------------
NYMEX Transactions.
- ------------------
(a) Open Position. No Restricted Person shall at any time have any Open
-------------
Positions; provided, however, that a Restricted Person may have:
(i) Physical inventories of crude oil (A) consisting of tank bottoms and
pipeline linefill requirements, in each case classified as a long-term asset,
(B) working inventory of up to 1,300,000 barrels in the aggregate at any time,
(C) excess inventory of up to 200,000 barrels in the aggregate at any time
resulting from crude gathering receipts in excess of scheduled quantities,
provided that such Restricted Person shall establish an Offsetting Position with
respect to such quantities within five business days following identification of
such inventory, but in any event not later than the 20/th/ day following the
month in which such excess volumes were received and (D) Hedged Eligible
Inventory.
(ii) Floating Price Contracts to purchase or sell crude oil in the Current
Trading Month; provided that, such Floating Price Contracts either (A) have an
Offsetting Position by the 26th day of the month preceding the month of receipt
or delivery, or (B) are scheduled to be stored at a Plains Terminal or in
pipelines Currently Approved by Majority Lenders and are hedged in the delivery
month with NYMEX contracts; and further provided that such Floating Price
Contracts relating to the sale of crude oil for the Current Trading Month do not
exceed purchases by more than 15,000 barrels per day.
(iii) Floating Price Contracts to purchase or sell crude oil to be received
or delivered after the Current Trading Month, but within the twelve months
following the Current Trading Month provided that (A) such contracts are at the
then market price and (B) at any point in time the sum of (x) net realized
losses relating to such contracts within the preceding twelve months and (y)
mark to market exposure relating to such contracts does not, at any time, exceed
$5.0 million.
As used herein, "Current Trading Month" means (i) with respect to the first
---------------------
twenty-five days of any calendar month, the next following calendar month and
(ii) with respect to the period from the 26/th/ day of a calendar month through
the last day of such month, the second calendar month next following such month
(for example, for the period from January 26/th/ through February 25/th/, the
Current Trading Month is March), and "Floating Price Contract" means (i) a
-----------------------
purchase or sale contract based upon a daily index such as a posted price or
NYMEX price from time to time in effect during the delivery month and (ii) a
NYMEX spread transaction in which the length of time between the offsetting
purchase and sale obligations do not exceed twelve months.
(b) Certain Permitted Financial Instruments. No Restricted Person will
---------------------------------------
write (i.e. sell) or otherwise participate in any swap, collar or similar
agreement relating to crude oil, or write (i.e. sell) any option, unless, with
respect thereto, (i) such Restricted Person has an Offsetting Position in crude
volumes for which there is no basis risk between such financial instrument and
such Offsetting Position and (ii) the counter-party (or guarantor to the
obligations of such counter-party) at the time such financial instrument is made
(A) has one or more long term unsecured and unenhanced debt obligations rated A
or A2 or better, respectively, by either
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Rating Agency, or (B) is a Lender, a "Lender" as such term is defined in the
Revolver Agreement, or an Affiliate of a Lender or "Lender", or (C) is listed in
the Disclosure Schedule.
(c) NYMEX Transactions. No Restricted Person will enter in to any NYMEX
------------------
contracts that are time-spread positions to each other, except (i) in the case
where the sale obligation is in the future month of the purchase obligation,
where both (A) the length of time between the purchase and sale contracts does
not exceed thirty-six months and (B) the volume does not in the aggregate exceed
the lesser of 3,000,000 barrels or 30% of the Plains Terminals' storage capacity
and (ii) in the case where the purchase obligation is in the future month of the
sale obligation, where the length of time between the sale and purchase
contracts does not exceed twelve months. No Restricted Person will convert a
NYMEX position to a physical position by way of an "exchange for physicals" or
an "alternative delivery procedure"unless the credit extended in connection with
such physical position would comply with the credit requirements of the
definition of "Approved Eligible Receivables".
Section 7.16. Redelivery of Borrowing Base Report. If any contract gives
-----------------------------------
rise to an "Eligible Receivable" that is reflected in a Borrowing Base Report
representing the obligation to deliver crude oil in the month next succeeding
the month in which the Borrowing Base Report is delivered, and such contract is
modified, sold or exchanged in any way that would negatively affect the
Borrowing Base, then Borrower shall immediately (i) deliver to Administrative
Agent a revised Borrowing Base Report satisfactory to Administrative Agent,
which Administrative Agent shall thereafter furnish to Lenders, and (ii) make
any prepayment as may be required under Section 2.6 resulting from such reduced
Borrowing Base.
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 Loan
or any reimbursement obligation with respect to any Letter of Credit 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 subsection (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 event defined as a "default" or "event of default" in any Loan
Document occurs, 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;
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(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 to which it is
a party, and such failure remains unremedied for a period of thirty (30) days
after notice of such failure is given by Administrative Agent to Borrower;
(f) Any representation or warranty previously, presently or hereafter made
in writing by or on behalf of any Restricted Person in connection with any Loan
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 Administrative Agent;
(g) Any Restricted Person shall default in the payment when due of any
principal of or interest on any of its other Indebtedness in excess of
$2,500,000 in the aggregate (other than Indebtedness the validity of which is
being contested in good faith by appropriate proceedings and for which adequate
reserves with respect thereto are maintained on the books of such Restricted
Person in accordance with GAAP), or any event specified in any note, agreement,
indenture or other document evidencing or relating to any such Indebtedness
shall occur if the effect of such event is to cause, or (with the giving of any
notice or the lapse of time or both) to permit the holder or holders of such
Indebtedness (or a trustee or agent on behalf of such holder or holders) to
cause, such Indebtedness to become due, or to be prepaid in full (whether by
redemption, purchase, offer to purchase or otherwise), prior to its stated
maturity;
(h) Either (i) any "accumulated funding deficiency" (as defined in Section
412(a) of the Code) 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);
(i) General Partner or any Restricted Person:
(i) has entered 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, in each case, which remains undismissed for a period
of sixty 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 in an involuntary case under any such
Law; or makes a general assignment for the benefit of creditors; or is
generally unable to pay (or admits in writing its inability to so pay) its
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debts as such debts become due; or takes corporate or other action to
authorize any of the foregoing; or
(ii) has entered against it 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 in a proceeding
brought against or initiated by it, and such appointment or taking
possession is neither made ineffective nor discharged within sixty 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) has entered against it the appointment of or taking possession by
a receiver, liquidator, assignee, custodian, trustee, sequestrator or
similar official of any part of the Collateral of a value in excess of
$2,500,000 in a proceeding brought against or initiated by it, and such
appointment or taking possession is neither made ineffective nor discharged
within sixty 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
(v) has entered against it a final judgment for the payment of money
in excess of $2,500,000 (in each case not covered by insurance satisfactory
to Administrative Agent in its discretion), unless the same is stayed or
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
(vi) 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 of a value in excess of $2,500,000,
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;
(j) General Partner shall default in the payment when due of any principal
of or interest on any of its Indebtedness in excess of $1,000,000 in the
aggregate, or any event specified in any note, agreement, indenture or other
document evidencing or relating to any such Indebtedness shall occur if the
effect of such event is to cause, or (with the giving of any notice or the lapse
of time or both) to permit the holder or holders of such Indebtedness (or a
trustee or agent on behalf of such holder or holders) to cause, such
Indebtedness to become due, or to be prepaid in full (whether by redemption,
purchase, offer to purchase or otherwise), prior to its stated maturity;
(k) Any Change in Control occurs; or
(l) Any Material Market Open Position Loss occurs.
Upon the occurrence of an Event of Default described in subsection (i)(i),
(i)(ii) or (i)(iii) of this section with respect to Borrower or Plains MLP, 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
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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 and any obligation of LC
Issuer to issue Letters of Credit hereunder shall be permanently terminated.
During the continuance of any other Event of Default, Administrative Agent at
any time and from time to time may (and upon written instructions from Majority
Lenders, Administrative 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 any obligation of LC Issuer to
issue Letters of Credit hereunder, and (2) declare any or all of the Obligations
immediately due and payable, and all such 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.
Section 8.2. Remedies. If any Default shall occur and be continuing,
--------
each Lender 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 Lender 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 Lender 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 - Administrative Agent
--------------------
Section 9.1. Appointment and Authority. Each Lender Party hereby
-------------------------
irrevocably authorizes Administrative Agent, and Administrative 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 Administrative
Agent by the terms hereof or thereof, together with all other powers reasonably
incidental thereto. The relationship of Administrative Agent to the other
Lender 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 Administrative Agent a trustee or other fiduciary for any Lender
Party or any holder of any participation in a Note nor to impose on
Administrative 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 Administrative Agent, Administrative 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 Lender Parties in so acting or refraining from
acting) upon the instructions of Majority Lenders (including itself), provided,
however, that Administrative 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
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contrary to the Loan Documents or to applicable Law. Upon receipt by
Administrative Agent from Borrower of any communication calling for action on
the part of Lenders or upon notice from Borrower or any Lender to Administrative
Agent of any Default or Event of Default, Administrative Agent shall promptly
notify each other Lender thereof.
Section 9.2. Exculpation, Administrative Agent's Reliance, Etc. Neither
-------------------------------------------------
Administrative 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,
Administrative Agent (a) may treat the payee of any Note as the holder thereof
until Administrative Agent receives written notice of the assignment or transfer
thereof in accordance with this Agreement, signed by such payee and in form
satisfactory to Administrative Agent; (b) may consult with legal counsel
(including counsel for Borrower), independent public accountants and other
experts selected by it and shall not be liable for any action taken or omitted
to be taken in good faith by it in accordance with the advice of such counsel,
accountants or experts; (c) makes no warranty or representation to any other
Lender Party and shall not be responsible to any other Lender 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 any Restricted Person; (e) shall not be
responsible to any other Lender 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 or Lender Party in
exercising its powers hereunder; and (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 facsimile, telegram, cable or telex)
believed by it to be genuine and signed or sent by the proper Person or Persons.
Section 9.3. Credit Decisions. Each Lender Party acknowledges that it
----------------
has, independently and without reliance upon any other Lender 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 Lender Party also acknowledges that it will, independently and without
reliance upon any other Lender 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.
Section 9.4. Indemnification. Each Lender agrees to indemnify
---------------
Administrative 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, 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")
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which to any extent (in whole or in part) may be imposed on, incurred by, or
asserted against Administrative 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 (including the enforcement thereof) at any time
associated therewith or contemplated therein (whether arising in contract or in
tort or otherwise and including 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 caused, in whole or in part, by any negligent
act or omission of any kind by Administrative Agent,
provided only that no Lender shall be obligated under this section to indemnify
Administrative Agent for that portion, if any, of any liabilities and costs
which is proximately caused by Administrative Agent's own individual gross
negligence or willful misconduct, as determined in a final judgment. Cumulative
of the foregoing, each Lender agrees to reimburse Administrative Agent promptly
upon demand for such Lender's Percentage Share of any costs and expenses to be
paid to Administrative Agent by Borrower under Section 10.4(a) to the extent
that Administrative Agent is not timely reimbursed for such expenses by Borrower
as provided in such section. As used in this section the term "Administrative
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,
----------------
Administrative Agent shall have the same rights and obligations as any Lender
and may exercise such rights as though it were not Administrative Agent.
Administrative Agent may accept deposits from, lend money to, act as trustee
under indentures of, and generally engage in any kind of business with any
Restricted Person or their Affiliates, all as if it were not Administrative
Agent hereunder and without any duty to account therefor to any other Lender.
Section 9.6. Sharing of Set-Offs and Other Payments. Each Lender 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 Administrative Agent
under Section 3.1, causes such Lender Party to have received more than it would
have received had such payment been received by Administrative 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 Lender 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 Administrative Agent and all
Lender Parties share all payments of Obligations as provided in Section 3.1;
provided, however, that nothing
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herein contained shall in any way affect the right of any Lender 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 and, subject to the provisions of Section 6.16, 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 the order of a Tribunal to be paid on account of the
possession of such funds prior to such recovery.
Section 9.7. Investments. Whenever Administrative Agent in good faith
-----------
determines that it is uncertain about how to distribute to Lender Parties any
funds which it has received, or whenever Administrative Agent in good faith
determines that there is any dispute among Lender Parties about how such funds
should be distributed, Administrative Agent may choose to defer distribution of
the funds which are the subject of such uncertainty or dispute. If
Administrative Agent in good faith believes that the uncertainty or dispute will
not be promptly resolved, or if Administrative Agent is otherwise required to
invest funds pending distribution to Lender Parties, Administrative 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. All moneys received by
Administrative Agent for distribution to Lender Parties (other than to the
Person who is Administrative Agent in its separate capacity as a Lender Party)
shall be held by Administrative Agent pending such distribution solely as
Administrative Agent for such Lender Parties, and Administrative Agent shall
have no equitable title to any portion thereof.
Section 9.8. Benefit of Article IX. The provisions of this Article are
---------------------
intended solely for the benefit of Lender 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 Lender (other than in relation to the reference
to Section 6.16 contained in Section 9.6 or the right to reasonably approve a
successor Administrative Agent under Section 9.9). Lender Parties may waive or
amend such provisions as they desire without any notice to or consent of
Borrower or any other Restricted Person.
Section 9.9. Resignation. Administrative 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 Administrative Agent,
subject to the approval of Borrower, unless a Default has occurred and is
continuing, which approval will not be unreasonably withheld. A successor must
be appointed for any retiring Administrative Agent, and such Administrative
Agent's resignation shall become effective when such successor accepts such
appointment. If, within thirty days after the date of the retiring
Administrative Agent's resignation, no successor Administrative Agent has been
appointed and has accepted such appointment, then the retiring Administrative
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Agent may appoint a successor Administrative 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 Administrative Agent hereunder by a successor Administrative
Agent, the retiring Administrative Agent shall be discharged from its duties and
obligations under this Agreement and the other Loan Documents. After any
retiring Administrative 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 Administrative Agent under the Loan
Documents.
Section 9.10. Other Agents. Neither the Syndication Agent nor the
------------
Documentation Agent ("Co-Agents"), in such capacities, shall have any duties or
responsibilities or incur any liabilities in such agency capacities (as opposed
to its capacity as a Lender) under or in connection with this Agreement or under
any of the other Loan Documents. The relationship between Borrower, on the one
hand, and the Co-Agents and Administrative Agent, on the other hand, shall be
solely that of borrower and lender. None of the Co-Agents shall have any
fiduciary responsibilities to Borrower or any of its Affiliates. None of the
Co-Agents undertakes any responsibility to Borrower or any of its respective
Affiliates to review or inform Borrower of any matter in connection with any
phase of Borrower's or such Affiliate's business or operations.
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 Lender in exercising any right, power or remedy
which such Lender 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 Lender 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 Administrative Agent or LC Issuer, by such party, and (ii if such
party is a Lender, by such Lender or by Administrative 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,
Administrative Agent shall
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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 Administrative Agent may in
its discretion withdraw any request it has made under Section 4.2(f)), (2)
increase the Percentage Share of any such Lender or the maximum amount any such
Lender is committed to fund in respect of Letter of Credit Obligations and Loans
or subject such 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) change any date fixed for any payment of any such fees,
principal or interest, (5) amend the definition herein of "Borrowing Base" or
any of the terms used in that definition, (6) amend the definition herein of
"Majority Lenders" or otherwise change the aggregate amount of Percentage Shares
which is required for Administrative Agent, Lenders or any of them to take any
particular action under the Loan Documents, (7) release Borrower from its
obligation to pay such Lender's Note or any Guarantor from its guaranty of such
payment, or (8) release any Collateral, except such releases relating to sales
of property permitted under Section 7.5.
(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 Administrative Agent or any
other Lender Party, 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, (ii there are no representations, warranties, covenants,
undertakings or agreements by any Lender 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 Lender 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 Lender
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 Lender Party, (vi
Administrative Agent is not Borrower's Administrative Agent, but Administrative
Agent for Lenders, (vi should an Event of Default or Default occur or exist,
each Lender 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 Lender Party, or any representative thereof,
and no such representation or covenant has been made, that any Lender 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 Lender 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, in
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particular and without limitation, 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 subject to compliance
with Sections 10.5(b) through (f), inclusive, and applicable Law.
(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 Loan 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 Lender Party and all of Lender Parties'
obligations to Borrower are terminated. All statements and agreements contained
in any certificate or other instrument delivered by any Restricted Person to any
Lender Party under any Loan Document shall be deemed representations and
warranties by Borrower or 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 Lender 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 Lender 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 Administrative Agent may give telephonic notices to the other Lender
Parties), and shall be deemed sufficiently given or furnished if delivered by
personal delivery, by facsimile or other electronic transmission, 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 Lender 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
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business hours at the address provided herein, (b) in the case of facsimile or
other electronic transmission, 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 Administrative 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, 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
Administrative Agent (including attorneys' fees, consultants' fees and
engineering fees, 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, (4) monitoring or confirming (or
preparation or negotiation of any document related to) Borrower's compliance
with any covenants or conditions contained in this Agreement or in any Loan
Document, and (ii all reasonable costs and expenses incurred by or on behalf of
any Lender Party (including attorneys' fees, consultants' fees and accounting
fees) in connection with the defense or enforcement of any of the Loan Documents
(including this section) or the defense of any Lender Party's exercise of its
rights thereunder. In addition to the foregoing, until all Obligations have
been paid in full, Borrower will also pay or reimburse Administrative Agent for
all reasonable out-of-pocket costs and expenses of Administrative Agent or its
agents or employees in connection with the continuing administration of the
Loans and the related due diligence of Administrative Agent, including travel
and miscellaneous expenses and fees and expenses of Administrative Agent's
outside counsel, reserve engineers and consultants engaged in connection with
the Loan Documents.
(b) Indemnity. Borrower agrees to indemnify each Lender 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,
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 Lender 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 (including the
enforcement or defense thereof) at any time associated therewith or contemplated
therein whether arising in contract or in tort or otherwise and including any
violation or noncompliance with any Environmental Laws by any Lender Party or
any other
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Person or any liabilities or duties of any Lender Party or any other 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 caused, in whole or in part, by any negligent
act or omission of any kind by any Lender Party,
provided only that no Lender 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 determined in a final judgment. If any Person (including
Borrower or any of its Affiliates) ever alleges such gross negligence or willful
misconduct by any Lender Party, the indemnification provided for in this section
shall nonetheless be paid upon demand, subject to later adjustment or
reimbursement, until such time as a court of competent jurisdiction enters a
final judgment as to the extent and effect of the alleged gross negligence or
willful misconduct. As used in this section the term "Lender Party" shall refer
not only to each Person 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
-------------------------------------------------------------
Replacement Notes.
------------------
(a) 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 permitted
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 all Lenders. Neither Borrower nor any
Affiliates of Borrower shall 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 Lender Parties, such purchaser shall not be entitled to
any rights of any Lender 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 unless 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), and
(iii) unless such participant is an Affiliate of such Lender, that such
participant shall not be
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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 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 Administrative Agent and
Borrower; provided, however, that no liability shall arise if any Lender fails
to give such notice to Borrower.
(c) Except for sales of participations under the immediately preceding
subsection, 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, or, subject to the provisions
of subsection (g) below, to an Affiliate 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 Note and be committed to make that Percentage Share of all future
Loans, the assignee shall have a fixed Percentage Share in such Loans and
Note and be committed to make that Percentage Share of all future Loans,
and the Percentage Share of the Maximum Loan Amount of both the assignor
and assignee shall equal or exceed $5,000,000.
(ii) The parties to each such assignment shall execute and deliver to
Administrative Agent, for its acceptance and recording in the "Register"
(as defined below in this section), an Assignment and Acceptance in the
form of Exhibit J, appropriately completed, together with the Note subject
to such assignment and a processing fee payable by such assignor Lender
(and not at Borrower's expense) to Administrative Agent of $3,500. Upon
such execution, delivery, and payment and upon the satisfaction of the
conditions set out in such Assignment and Acceptance, 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 Acceptance the assignee thereunder shall be a party hereto
and a Lender hereunder and Administrative Agent shall thereupon deliver to
Borrower and each Lender a revised Schedule 1 hereto 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 Code) for Federal income
tax purposes, shall (to the extent it has not already done so) provide
Administrative Agent and Borrower with the "Prescribed Forms" referred to
in Section 3.7(d).
(d) Any Lender may at any time pledge all or any portion of its Loan and
Note (and related rights under the Loan Documents including any portion of its
Note) to any of the twelve (12) Federal Reserve Banks organized under Section 4
of the Federal Reserve Act, 12 U.S.C.
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Section 341. No such pledge or enforcement thereof shall release any such Lender
from its obligations under any of the Loan Documents; provided that all related
costs, fees and expenses in connection with any such pledge shall be for the
sole account of such Lender.
(e) By executing and delivering an Assignment and Acceptance, each
assignee Lender thereunder will be confirming to and agreeing with Borrower,
Administrative Agent and each other Lender Party that such assignee understands
and agrees to the terms hereof, including Article IX hereof.
(f) Administrative Agent shall maintain a copy of each Assignment and
Acceptance 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 Lender Party may treat each Person whose name is recorded
in the Register as a Lender Party hereunder for all purposes. The Register
shall be available for inspection by Borrower or any Lender Party at any
reasonable time and from time to time upon reasonable prior notice.
(g) Any Lender may assign or transfer its commitment or its rights under
its Loans or under the Loan Documents to (i) any Affiliate that is wholly-owned
direct or indirect subsidiary of such Lender or of any Person that wholly owns,
directly or indirectly, such Lender, or (ii) if such Lender is a fund that
invests in bank loans, any other fund that invests in bank loans and is advised
or managed by (A) the same investment advisor as any Lender or (B) any Affiliate
of such investment advisor that is a wholly-owned direct or indirect subsidiary
of any Person that wholly owns, directly or indirectly, such investment advisor,
subject to the following additional conditions:
(x) any right of such Lender assignor and such assignee to vote as a
Lender, or any other direct claims or rights against any other Persons,
shall be uniformly exercised or pursued in the manner that such Lender
assignor would have so exercised such vote, claim or right if it had not
made such assignment or transfer;
(y) such assignee shall not be entitled to payment from any Restricted
Person under Sections 3.2 through 3.7 of amounts in excess of those payable
to such Lender assignor under such sections (determined without regard to
such assignment or transfer); and
(z) if such Lender assignor assigns or transfers to such assignee any of
such Lender's commitment, such assignee may become primarily liable for
such commitment, but such assignment or transfer shall not relieve or
release such Lender from such commitment.
(h) Upon receipt of an affidavit reasonably satisfactory to Borrower of an
officer of any Lender as to the loss, theft, destruction or mutilation of its
Note or any Security Document which is not of public record, and, in the case of
any such loss, theft, destruction or mutilation, upon cancellation of such Note
or such Security Document, Borrower will execute and deliver, in lieu thereof, a
replacement Note in the same principal amount thereof and otherwise of like
tenor (or
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each Restricted Person a party to any such Security Document will execute and
deliver a replacement Security Document of like tenor).
Section 10.6. Confidentiality. Each Lender Party agrees (on behalf of
---------------
itself and each of its Affiliates, and each of its and their directors,
officers, agents, attorneys, employees, and representatives) that it (and each
of them) will take all reasonable steps to keep confidential any non-public
information supplied to it by or at the direction of any Restricted Person so
identified when delivered, provided, however, that this restriction shall not
apply to information which (a) has at the time in question entered the public
domain, (b) is required to be disclosed by Law (whether valid or invalid) of any
Tribunal, (c) is disclosed to any Lender Party's Affiliates, auditors,
attorneys, or agents, (d) is furnished to any other Lender 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 (d) 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 Lender 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 non-exclusive jurisdiction of the
aforesaid courts. 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
Corporation Service Company, 80 State Street, Albany, New York 12207, as agent
of Borrower to receive service of all process brought against Borrower with
respect to any such proceeding in any such court in
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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 Lender Parties a consent of Corporation Service Company agreeing to
act hereunder prior to the effective date of this agreement. Nothing herein
shall affect the right of Lender Parties to serve process in any other manner
permitted by Law or shall limit the right of Lender Parties to bring proceedings
against Borrower in the courts of any other jurisdiction. If for any reason
Corporation Service Company 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 Administrative Agent to serve in such capacity
and, in such event, such new agent shall be deemed to be substituted for
Corporation Service Company for all purposes hereof and (b) promptly deliver to
Agent the written consent (in form and substance satisfactory to Administrative
Agent) of such new agent agreeing to serve in such capacity.
Section 10.8. Limitation on Interest. Lender Parties, Restricted Persons
----------------------
and any 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 create a
contract to pay, for the use, forbearance or detention of money, interest in
excess of the maximum amount of interest permitted to be contracted for,
charged, or received 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 contracted for,
charged, or received 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. Lender
Parties expressly disavow any intention to contract for, charge, or receive
excessive unearned interest or finance charges in the event the maturity of any
Obligation is accelerated. If (a) the maturity of any Obligation is accelerated
for any reason, (b) any Obligation is prepaid and as a result any amounts held
to constitute interest are determined to be in excess of the legal maximum, or
(c) any Lender or any other holder of any or all of the Obligations shall
otherwise collect moneys which are determined to constitute interest which would
otherwise increase the interest on any or all of the Obligations to an amount in
excess of
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that permitted to be contracted for, charged or received by applicable Law then
in effect, then all sums determined to constitute interest in excess of such
legal limit shall, without penalty, be promptly applied to reduce the then
outstanding principal of the related Obligations or, at such Lender's or
holder's option, promptly returned to Borrower or other payor thereof upon such
determination. In determining whether or not the interest paid or payable, under
any specific circumstance, exceeds the maximum amount permitted under applicable
Law, Lender Parties and Restricted Persons (and any other payors thereof) shall
to the greatest extent permitted under applicable Law, (i) characterize any non-
principal payment as an expense, fee or premium rather than as interest, (ii)
exclude voluntary prepayments and the effects thereof, and (iii) amortize,
prorate, allocate, and spread the total amount of interest throughout the entire
contemplated term of the instruments evidencing the Obligations in accordance
with the amounts outstanding from time to time thereunder and the maximum legal
rate of interest from time to time in effect under applicable Law in order to
lawfully charge the maximum amount of interest permitted under applicable Law.
In the event applicable Law provides for an interest ceiling under Chapter 303
of the Texas Finance Code (the "Texas Finance Code") as amended, to the extent
that the Texas Finance Code is mandatorily applicable to any Lender, for that
day, the ceiling shall be the "weekly ceiling" as defined in the Texas Finance
Code, provided that if any applicable Law permits greater interest, the Law
permitting the greatest interest shall apply. In no event shall Chapter 346 of
the Texas Finance Code apply to this Agreement or any other Loan Document, or
any transactions or loan arrangement provided or contemplated hereby or thereby.
Section 10.9. Termination; Limited Survival. In its sole and absolute
-----------------------------
discretion Borrower may at any time that no Obligations are owing or outstanding
elect in a written notice delivered to Administrative Agent to terminate this
Agreement. Upon receipt by Administrative Agent of such a notice, if no
Obligations are then owing or outstanding 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
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 Lender Party shall survive any termination of this Agreement or
any other Loan Document. At the request and expense of Borrower, Administrative
Agent shall prepare and execute all necessary instruments to reflect and effect
such termination of the Loan Documents. Administrative 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.
82
<PAGE>
Section 10.12. Waiver of Jury Trial, Punitive Damages, etc. Restricted
--------------------------------------------
persons and lender parties mutually hereby knowingly, voluntarily, and
intentionally waive the right to a trial by jury in respect of any claim based
hereon, arising out of, under or in connection with, this agreement or any other
loan documents contemplated to be executed in connection herewith or any course
of conduct, course of dealings, statements (whether verbal or written) or
actions of any party. This waiver constitutes a material inducement for lenders
to enter into this agreement and the other loan documents and make the loans.
Borrower and each lender 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 of funds which any party hereto has expressly promised to pay or
deliver to any other party hereto.
Section 10.13. Amendment and Restatement. Upon satisfaction with each of
--------------------------
the conditions set forth in Section 4.1 (except any condition the performance of
which has been waived as a condition to the initial Loan or initial issuance of
a Letter of Credit pursuant to this Agreement), this Agreement shall be deemed
to amend and restate in its entirety the Existing Agreement, at which time (the
"Effective Time") each Lender and each Restricted Person hereby agrees that (i)
the Percentage Share of each Lender shall be as set forth in the definition to
this Agreement, (ii) the loans outstanding under the Existing Agreement and all
accrued and unpaid interest thereon, all letters of credit issued and
outstanding under the Existing Agreement and under the Scurlock Agreement and
reimbursement obligations with respect thereto, and all accrued and unpaid fees
and expenses under the Existing Agreement (the "Outstanding Obligations") shall
be deemed to be outstanding under and governed by this Agreement, and (iii) any
party named as a "Lender" under the Existing Agreement that is not a signatory
hereto as a Lender under this Agreement (an "Exiting Lender") shall cease to be
a Lender and shall be
83
<PAGE>
released from its obligations under the Existing Agreement and this Agreement.
At the Effective Time, the Borrower shall make such adjustments in the Loans,
including the borrowing of additional Loans and the repayment of Loans under the
Existing Agreement plus all applicable accrued interest, fees and expenses
(including any costs under Article III of the Existing Agreement) as shall be
necessary to repay in full all Exiting Lenders and to provide for Loans by each
Lender in the amount of its new Percentage Share of all Loans as of the
Effective Time.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK.]
84
<PAGE>
IN WITNESS WHEREOF, this Agreement is executed as of the date first written
above.
BORROWER: PLAINS MARKETING, L.P.
By: PLAINS ALL AMERICAN INC.,
its general partner
By: /s/ Phil Kramer
______________________________________
Phil Kramer, Exec. Vice President
GUARANTORS: ALL AMERICAN PIPELINE, L.P.
By: PLAINS ALL AMERICAN INC.,
its general partner
By: /s/ Phil Kramer
______________________________________
Phil Kramer, Exec. Vice President
PLAINS ALL AMERICAN PIPELINE, L.P.
By: PLAINS ALL AMERICAN INC.,
its general partner
By: /s/ Phil Kramer
______________________________________
Phil Kramer, Exec. Vice President
Address for Borrower and Guarantors:
500 Dallas Street, Suite 700
Houston, Texas 77002
Attention: Phil Kramer
Telephone: (713) 654-1414
Fax: (713) 654-1523
85
<PAGE>
FLEET NATIONAL BANK,
Administrative Agent, LC Issuer and
a Lender
By: /s/ Terrence Ronan
________________________________________
Terrence Ronan, Director
Address:
100 Federal Street
Boston, Massachusetts 02110
Attention: Terrence Ronan
Mail Code: MADE 10008D
Telephone: (617) 434-5472
Fax: (617) 434-3652
FLEETBOSTON ROBERTSON
STEPHENS INC., Lead Arranger and Book
Manager
By: /s/ Richard Makin
________________________________________
Richard Makin, Managing Director
FIRST UNION NATIONAL BANK,
Syndication Agent and a Lender
By: /s/ Robert R. Wetteroff
________________________________________
Robert R. Wetteroff, Sr. Vice Pres.
Address:
1001 Fannin, Suite 2255
Houston, Texas 77002
Attention: David Humphreys
Telephone: (713) 650-9843
Fax: (713) 650-6354
86
<PAGE>
BANK OF AMERICA, N.A.,
Documentation Agent and a Lender
By: /s/ Irene Rummel
________________________________________
Name: Irene Rummel
Title: Vice President
Address:
Energy Finance Group
333 Clay Street, Suite 4550
Houston, Texas 77002
Attention: Irene Rummel
Telephone: (713) 651-4921
Fax: (713) 651-4801
BANK ONE, TEXAS, N.A.,
Senior Managing Agent and a Lender
By: /s/ Charles Kingswell-Smith
________________________________________
Name: Charles Kingswell-Smith
Title: First Vice President
Address:
910 Travis
Houston, Texas 77002
Attention: Charles Kingswell-Smith
Telephone: (713) 751-7803
Telecopy: (713) 751-3544
87
<PAGE>
PARIBAS,
Senior Managing Agent and a Lender
By: /s/ Edward K. Chin
________________________________________
Name: Edward K. Chin
Title: Director
By: /s/ Marcie Weiss
________________________________________
Name: Marcie Weiss
Title: Director
Address:
787 7th Avenue
New York, New York 10019
Attention: Edward Chin/Marcie Weiss
Telephone: (212) 841-2020
Telecopy: (212) 841-2536
MEESPIERSON CAPITAL CORP.,
a Lender
By: /s/ Darrell W. Holley
________________________________________
Name: Darrell W. Holley
Title: Managing Director
By: /s/ Karel Louman
________________________________________
Name: Karel Louman
Title: Managing Director
Address:
100 Crescent Court, Suite 1777
Dallas, Texas 75201
Attention: Darrell W. Holley
Telephone: (214) 754-0009
Telecopy: (214) 754-5951
88
<PAGE>
U.S. BANK NATIONAL ASSOCIATION,
a Lender
By: /s/ Monte E. Deckerd
________________________________________
Name: Monte E. Deckerd
Title: Vice President
Address:
918 17th Street
Denver, Colorado 80202
Attention: Monte E. Deckerd
Telephone: (303) 585-4212
Telecopy: (303) 585-4362
BANK OF SCOTLAND,
a Lender
By: /s/ Annie Glynn
________________________________________
Name: Annie Glynn
Title: Senior Vice President
Address:
565 Fifth Avenue
New York, New York 10017
Attention: Annie Glynn
Telephone: (212) 450-0871
Telecopy: (212) 557-9460
With Copy to:
1021 Main Street, Suite 1370
Houston, Texas 77002
Attention: Richard C. Butler
Telephone: (713) 650-0609
Telecopy: (713) 651-9714
89
<PAGE>
WELLS FARGO BANK (TEXAS),
NATIONAL ASSOCIATION, a Lender
By: /s/ John Lane
_______________________________________
Name: John Lane
Title: Vice President
Address:
1000 Louisiana, 3rd Floor
Houston, Texas 77002
Attention: John Lane
Telephone: (713) 319-1370
Telecopy: (713) 739-1087
SIEMENS FINANCIAL SERVICES, INC.,
a Lender
By: /s/ Frank Amodio
________________________________________
Name: Frank Amodio
Title: Vice President - Credit
Address:
991 US Highway 22
Bridgewater, New Jersey 08807
Attention: Victor Alarcon
Telephone: (908) 575-4074
Telecopy: (908) 575-4060
90
<PAGE>
THE BANK OF NOVA SCOTIA,
a Lender
By: /s/ F.C.H. Ashby
________________________________________
Name: F.C.H. Ashby
Title: Senior Manager Loan Operations
Address:
600 Peachtree Street, N.E., Ste 2700
Atlanta, Georgia 30308
Attention: Claude Ashby
Telephone: 404-877-_____
Telecopy: 404-888-8998
With Copy to:
Houston Representative Office
1100 Louisiana, Ste 3000
Houston, Texas 77002
Attention: Mark Ammerman
Telephone: 713-759-3441
Telecopy: 713-752-2425
CREDIT AGRICOLE INDOSUEZ,
a Lender
By: /s/ Douglas A. Whiddon
________________________________________
Name: Douglas A. Whiddon
Title: Vice President
Senior Relationship Manager
By:________________________________________
Name:
Title:
Address:
600 Travis Street, Suite 2340
Houston, Texas 77002
Attention: Doug Whiddon
Telephone: 713-223-7003
Telecopy: 713-223-7029
91
<PAGE>
GUARANTY FEDERAL BANK, F.S.B.,
a Lender
By: /s/ Jim R. Hamilton
________________________________________
Name: Jim R. Hamilton
Title: Vice President
Address:
1100 Northeast Loop 410
San Antonio, Texas 78209
Attention: James Hamilton
Telephone: 210-930-2926
Telecopy: 210-930-1783
92
<PAGE>
Execution Copy
================================================================================
CREDIT AGREEMENT
[Revolving Credit Facility]
_______________________________________________________
PLAINS MARKETING, L.P.,
as Borrower,
ALL AMERICAN PIPELINE, L.P.
and
PLAINS ALL AMERICAN PIPELINE, L.P.,
as Guarantors,
FLEET NATIONAL BANK,
as Administrative Agent,
FIRST UNION NATIONAL BANK,
as Syndication Agent,
BANK OF AMERICA, N.A.,
as Documentation Agent,
BANK ONE, TEXAS, N.A. and MEESPIERSON CAPITAL CORP.,
as Senior Managing Agents,
FLEETBOSTON ROBERTSON STEPHENS, INC.,
as Lead Arranger and Book Manager,
and CERTAIN FINANCIAL INSTITUTIONS,
as Lenders
_______________________________________________________
$400,000,000 Revolving Credit Facility
May 8, 2000
================================================================================
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
CREDIT AGREEMENT............................................................................................... 1
ARTICLE I - Definitions and References......................................................................... 1
Section 1.1. Defined Terms.............................................................................. 1
Section 1.2. Exhibits and Schedules; Additional Definitions............................................. 19
Section 1.3. Amendment of Defined Instruments........................................................... 19
Section 1.4. References and Titles...................................................................... 20
Section 1.5. Calculations and Determinations............................................................ 20
ARTICLE II - The Loans......................................................................................... 20
Section 2.1. Commitments to Lend; Notes................................................................. 20
Section 2.2. Requests for Loans......................................................................... 21
Section 2.3. Continuations and Conversions of Existing Loans............................................ 22
Section 2.4. Use of Proceeds............................................................................ 23
Section 2.5. Interest Rates and Fees.................................................................... 23
Section 2.6. Optional Prepayments....................................................................... 24
Section 2.7. Mandatory Prepayments...................................................................... 25
Section 2.8. Letters of Credit.......................................................................... 25
Section 2.9. Requesting Letters of Credit............................................................... 26
Section 2.10. Reimbursement and Participations........................................................... 26
Section 2.11. Letter of Credit Fees...................................................................... 28
Section 2.12. No Duty to Inquire......................................................................... 28
Section 2.13. LC Collateral.............................................................................. 29
ARTICLE III - Payments to Lenders.............................................................................. 30
Section 3.1. General Procedures......................................................................... 30
Section 3.2. Capital Reimbursement...................................................................... 31
Section 3.3. Increased Cost of LIBOR Loans or Letters of Credit......................................... 31
Section 3.4. Notice; Change of Applicable Lending Office................................................ 32
Section 3.5. Availability............................................................................... 32
Section 3.6. Funding Losses............................................................................. 33
Section 3.7. Reimbursable Taxes......................................................................... 33
ARTICLE IV - Conditions Precedent to Lending................................................................... 36
Section 4.1. Documents to be Delivered.................................................................. 36
Section 4.2. Additional Conditions Precedent............................................................ 38
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
</TABLE>
i
<PAGE>
<TABLE>
<S> <C>
Section 5.5. Enforceable Obligations.................................................................... 40
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................................................................................. 41
Section 5.10. Labor Disputes and Acts of God............................................................. 41
Section 5.11. ERISA Plans and Liabilities................................................................ 41
Section 5.12. Compliance with Laws....................................................................... 41
Section 5.13. Environmental Laws......................................................................... 42
Section 5.14. Names and Places of Business............................................................... 43
Section 5.15. Borrower's Subsidiaries.................................................................... 43
Section 5.16. Title to Properties; Licenses.............................................................. 44
Section 5.17. Government Regulation...................................................................... 44
Section 5.18. Insider.................................................................................... 44
Section 5.19. Solvency................................................................................... 44
Section 5.20. Credit Arrangements........................................................................ 44
ARTICLE VI - Affirmative Covenants............................................................................. 45
Section 6.1. Payment and Performance.................................................................... 45
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............................................ 48
Section 6.5. Maintenance of Properties.................................................................. 49
Section 6.6. Maintenance of Existence and Qualifications................................................ 49
Section 6.7. Payment of Trade Liabilities, Taxes, etc................................................... 49
Section 6.8. Insurance.................................................................................. 49
Section 6.9. Performance on Borrower's Behalf........................................................... 50
Section 6.10. Interest................................................................................... 50
Section 6.11. Compliance with Agreements and Law......................................................... 50
Section 6.12. Environmental Matters; Environmental Reviews............................................... 50
Section 6.13. Evidence of Compliance..................................................................... 51
Section 6.14. Agreement to Deliver Security Documents.................................................... 51
Section 6.15. Perfection and Protection of Security Interests and Liens.................................. 51
Section 6.16. Bank Accounts; Offset...................................................................... 51
Section 6.17. Guaranties of Subsidiaries................................................................. 52
Section 6.18. Compliance with Agreements................................................................. 52
Section 6.19. Rents...................................................................................... 52
Section 6.20. Post-Closing Actions....................................................................... 53
Section 6.21. Working Capital Borrowings................................................................. 53
ARTICLE VII - Negative Covenants............................................................................... 53
Section 7.1. Indebtedness............................................................................... 53
Section 7.2. Limitation on Liens........................................................................ 54
Section 7.3. Hedging Contracts.......................................................................... 56
Section 7.4. Limitation on Mergers, Issuances of Securities............................................. 56
</TABLE>
ii
<PAGE>
<TABLE>
<S> <C>
Section 7.5. Limitation on Sales of Property............................................................ 57
Section 7.6. Limitation on Dividends and Redemptions.................................................... 57
Section 7.7. Limitation on Investments and New Businesses............................................... 58
Section 7.8. Limitation on Credit Extensions............................................................ 58
Section 7.9. Transactions with Affiliates............................................................... 58
Section 7.10. Prohibited Contracts....................................................................... 58
Section 7.11. Current Ratio.............................................................................. 58
Section 7.12. Debt Coverage Ratio........................................................................ 59
Section 7.13. Interest Coverage Ratio.................................................................... 59
Section 7.14. Debt to Capital Ratio...................................................................... 59
Section 7.15. Open Position; Certain Permitted Financial Instruments; NYMEX
Transactions......................................................................................... 60
ARTICLE VIII - Events of Default and Remedies.................................................................. 61
Section 8.1. Events of Default.......................................................................... 61
Section 8.2. Remedies................................................................................... 64
ARTICLE IX - Administrative Agent.............................................................................. 64
Section 9.1. Appointment and Authority.................................................................. 64
Section 9.2. Exculpation, Administrative Agent's Reliance, Etc.......................................... 64
Section 9.3. Credit Decisions........................................................................... 65
Section 9.4. Indemnification............................................................................ 65
Section 9.5. Rights as Lender........................................................................... 66
Section 9.6. Sharing of Set-Offs and Other Payments..................................................... 66
Section 9.7. Investments................................................................................ 67
Section 9.8. Benefit of Article IX...................................................................... 67
Section 9.9. Resignation................................................................................ 67
Section 9.10. Other Agents............................................................................... 68
ARTICLE X - Miscellaneous...................................................................................... 68
Section 10.1. Waivers and Amendments; Acknowledgments.................................................... 68
Section 10.2. Survival of Agreements; Cumulative Nature.................................................. 70
Section 10.3. Notices.................................................................................... 70
Section 10.4. Payment of Expenses; Indemnity............................................................. 70
Section 10.5. Joint and Several Liability; Parties in Interest; Assignments; Replacement
Notes................................................................................................ 72
Section 10.6. Confidentiality............................................................................ 74
Section 10.7. Governing Law; Submission to Process....................................................... 75
Section 10.8. Limitation on Interest..................................................................... 76
Section 10.9. Termination; Limited Survival.............................................................. 77
Section 10.10. Severability............................................................................... 77
Section 10.11. Counterparts............................................................................... 77
Section 10.12. Waiver of Jury Trial, Punitive Damages, etc................................................ 77
Section 10.13. Amendment and Restatement.................................................................. 78
</TABLE>
iii
<PAGE>
Schedules and Exhibits:
- ----------------------
Schedule 1 - Lender Schedule
Schedule 2 - Disclosure Schedule
Schedule 3 - Security Schedule
Schedule 4 - Insurance Schedule
Schedule 5 - Restructuring Documents
Exhibit A - Note
Exhibit B - Borrowing Notice
Exhibit C - Continuation/Conversion Notice
Exhibit D - Certificate Accompanying Financial Statements
Exhibit E-1 - Opinion of In-House Counsel for Restricted Persons
Exhibit E-2 - Opinion of Fulbright & Jaworski L.L.P., Counsel for Restricted
Persons
Exhibit E-3 - Opinion of Andrews & Kurth L.L.P., Counsel for Restricted Persons
Exhibit F - Environmental Compliance Certificate
Exhibit G - Letter of Credit Application and Agreement
Exhibit H - Assignment and Acceptance Agreement
Exhibit I - Intercreditor Agreement
iv
<PAGE>
CREDIT AGREEMENT
-----------------
THIS CREDIT AGREEMENT is made as of May 8, 2000 by and among PLAINS
MARKETING, L.P., a Delaware limited partnership ("Borrower"), ALL AMERICAN
PIPELINE, L.P., a Texas limited partnership ("All American"), PLAINS ALL
AMERICAN PIPELINE, L.P. ("Plains MLP"), a Delaware limited partnership, FLEET
NATIONAL BANK, as administrative agent (in such capacity, "Administrative
Agent"), FIRST UNION NATIONAL BANK, as syndication agent (in such capacity,
"Syndication Agent"), BANK OF AMERICA, N.A., as documentation agent (in such
capacity, "Documentation Agent") and FLEETBOSTON ROBERTSON STEPHENS INC., as
lead arranger and book manager (in such capacity, "Lead Arranger and Book
Manager") and the Lenders referred to below. In consideration of the mutual
covenants and agreements contained herein the parties hereto agree as follows:
W I T N E S S E T H
WHEREAS, All American, as borrower, Borrower and Plains MLP, as guarantors,
and Administrative Agent and certain lenders named therein entered into that
certain Amended and Restated Credit Agreement dated December 1, 1999, as amended
(the "All American Agreement"), providing for extensions of credit by such
financial institutions to All American up to the amount of $225,000,000; and
WHEREAS, Plains Scurlock Permian, L.P. ("Scurlock"), as borrower, and
Administrative Agent and certain lenders named therein entered into that certain
Credit Agreement dated May 12, 1999, as amended (the "Scurlock Agreement"; the
Scurlock Agreement and the All American Agreement, collectively, the "Existing
Agreements"), providing for extensions of credit by such financial institutions
to Scurlock up to the amount of $165,000,000, and pursuant to the Restructuring,
All American has merged with Scurlock and by operation of law has assumed all
obligations and indebtedness of Scurlock under the Scurlock Agreement, and
certain assets of Scurlock have been distributed to, and another subsidiary of
Scurlock has merged with, Borrower; and
WHEREAS, Borrower, All American and Plains MLP have requested that
Administrative Agent and the lenders under the Existing Agreements renew and
extend the aggregate unpaid principal balance of the loans, and participate in
outstanding letters of credit issued, thereunder and provide for the extension
of additional credit on the terms and conditions set forth herein;
Accordingly, 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 to such term in this Section 1.1 or in
the sections and subsections referred to below:
1
<PAGE>
"Administrative Agent" means Fleet National Bank, as Administrative Agent
--------------------
hereunder, and its successors in such capacity.
"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 5% 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.
"Affiliate Agreements" means the Crude Oil Marketing Agreement and the
--------------------
Omnibus Agreement.
"Agent" means any of the Administrative Agent, Syndication Agent or
-----
Documentation Agent.
"Agreement" means this Credit Agreement.
---------
"All American" means All American Pipeline, L.P., a Texas limited
------------
partnership.
"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 LIBOR Lending Office in the case of LIBOR Loans.
"Applicable Leverage Level" means the level set forth below that
-------------------------
corresponds to the ratio of (i) Consolidated Funded Indebtedness of Plains MLP
and its Subsidiaries to (ii) the Consolidated EBITDA for the applicable period
of four Fiscal Quarters (the "Leverage Ratio"):
================================================================
Applicable
Leverage Level Leverage Ratio
-------------- --------------
----------------------------------------------------------------
Level I greater than or equal to 3.50 to 1.0
----------------------------------------------------------------
Level II greater than or equal to 3.00 to 1.0
but less than 3.50 to 1.0
----------------------------------------------------------------
Level III greater than or equal to 2.25 to 1.0
but less than 3.00 to 1.0
----------------------------------------------------------------
Level IV greater than or equal to 1.75 to 1.0
but less than 2.25 to 1.0
----------------------------------------------------------------
Level V less than 1.75 to 1.0
================================================================
2
<PAGE>
The Leverage Ratio will be determined quarterly by Administrative Agent within
two (2) Business Days after Administrative Agent's receipt of Plains MLP's
Consolidated financial statements for the immediate preceding Fiscal Quarter
based upon: (i) Consolidated Funded Indebtedness as of the end of such Fiscal
Quarter, and (ii) the Consolidated EBITDA for the four Fiscal Quarters ending
with such Fiscal Quarter. The Applicable Leverage Level shall become effective
upon such determination of the Leverage Ratio by Administrative Agent and shall
remain effective until the next such determination by Administrative Agent of
the Leverage Ratio.
"Available Cash" has the meaning given such term in the Partnership
--------------
Agreement.
"Base Rate" means the sum of (a) the Base Rate Margin plus (b) the higher
---------
of (i) the variable per annum rate of interest so designated from time to time
by Administrative Agent as its "prime rate", or (ii) the Federal Funds Rate plus
one-half percent (0.5%) per annum. The "prime rate" is a reference rate and
does not necessarily represent the lowest or best rate being charged to any
customer. Changes in the Base Rate resulting from changes in the "prime rate"
shall take place immediately without notice or demand of any kind.
"Base Rate Loan" means a Loan which does not bear interest at the LIBOR
--------------
Rate.
"Base Rate Margin" means (i) from the date hereof through but not including
----------------
the six-month anniversary of the date hereof, the greater of (A) 0.75% per annum
and (B) the percent per annum set forth below based on the Applicable Leverage
Level in effect on such date, and (ii) on and after the six-month anniversary of
the date hereof, the percent per annum set forth below based on the Applicable
Leverage Level in effect on such date.
================================================================
Applicable Leverage Level Base Rate Margin
----------------------------------------------------------------
Level I 1.00%
----------------------------------------------------------------
Level II 0.50%
----------------------------------------------------------------
Level III 0.25%
----------------------------------------------------------------
Level IV or Level V 0.00%
================================================================
Changes in the applicable Base Rate Margin will occur automatically without
prior notice as changes in the Applicable Leverage Level occur. Administrative
Agent will give notice promptly to Borrower and Lenders of changes in the Base
Rate Margin.
"Borrower" means Plains Marketing, L.P., a Delaware limited partnership.
--------
"Borrowing" means a borrowing of new Loans of a single Type pursuant to
---------
Section 2.2 or a Continuation or Conversion of all or a portion of an existing
Loan (whether alone or as a combination with a new Loan) into a single Type
(and, in the case of LIBOR Loans, with the same Interest Period) pursuant to
Section 2.3.
3
<PAGE>
"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 any day, other than a Saturday, Sunday or day which
------------
shall be in the Commonwealth of Massachusetts a legal holiday or day on which
banking institutions are required or authorized to close. Any Business Day in
any way relating to LIBOR Loans (such as the day on which an Interest Period
begins or ends) must also be a day on which commercial banks settle payments in
London.
"Capital Lease" means a lease with respect to which the lessee is required
-------------
concurrently to recognize the acquisition of an asset and the incurrence of a
liability in accordance with GAAP.
"Capital Lease Obligation" means, with respect to any Person and a Capital
------------------------
Lease, the amount of the obligation of such Person as the lessee under such
Capital Lease which would, in accordance with GAAP, appear as a liability on a
balance sheet of such Person.
"Cash and Carry Purchases" means purchases of crude oil for physical
------------------------
storage at a Plains Terminal or in storage or in transit in pipelines Currently
Approved by Majority Lenders which constitute Hedged Eligible Inventory, as such
terms are defined in the Marketing Credit Agreement.
"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, (i) with any office
of any Lender or (ii) 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 long term certificates of deposit are rated at
least Aa3 by Moody's or AA- by S&P;
(c) repurchase obligations with a term of not more than seven days for
underlying securities of the types described in subsection (a) above entered
into with (i) any Lender or (ii) any other commercial bank meeting the
specifications of subsection (b) above;
(d) open market commercial paper, maturing within 270 days after
acquisition thereof, which are rated at least P-1 by Moody's or A-1 by S&P; and
(e) money market or other mutual funds substantially all of whose assets
comprise securities of the types described in subsections (a) through (d) above.
4
<PAGE>
"Change of Control" means the occurrence of any of the following events:
-----------------
(i) an event or series of events by which any Person or other entity or group of
Persons or other entities acting in concert as a partnership or other group (a
"Group of Persons") shall, as a result of a tender or exchange offer, open
market purchases, privately negotiated purchases, merger, consolidation or
otherwise, have become the beneficial owner (within the meaning of Rule 13d-3
under the Securities Exchange Act of 1934, as amended) of (A) 50% or more of the
combined voting power of the then outstanding voting stock of Resources, in the
case of any Person or Group of Persons constituting or controlled by Affiliates
of Kayne Anderson Investment Management, Inc., or (B) 40% or more of such
combined voting power in the case of any other Person or Group of Persons, (ii)
during any period of two consecutive years (A) the members of the board of
directors of Resources (the "Board") as of January 1, 2000, (B) any director
elected thereafter in any annual meeting of the stockholders of Resources upon
the recommendation of the Board, and (C) any other member of the Board who will
be recommended or elected to succeed those Persons described in subclauses (A)
and (B) of this clause (ii) by a majority of such Persons who are then members
of the Board, cease for any reason to constitute collectively a majority of the
Board then in office, (iii) the direct or indirect sale, lease, exchange or
other transfer of all or substantially all of the Consolidated assets of
Resources and its Subsidiaries, to any Person or Group of Persons, or (iv)
Resources, either directly or through a Wholly Owned Subsidiary of Resources,
shall cease to be the legal and beneficial owner (as defined above) of more than
50% of the voting power of the outstanding voting stock of General Partner, or
General Partner shall cease to be the sole legal and beneficial owner (as
defined above) of all of the general partner interests (including all securities
which are convertible into general partner interests), of Plains MLP, All
American, or Borrower, (v) any Person or Group of Persons other than Resources
or any Subsidiary of Resources shall be the legal and beneficial owner (as
defined above) of 50% or more of the combined voting power of the then total
partnership interests (including all securities which are convertible into
partnership interests) of Plains MLP, Borrower, All American or any other
Restricted Person that is a partnership, (vi) Plains MLP or Borrower shall cease
to be the sole legal and beneficial owner (as defined above) of all of the
limited partnership interests of Borrower and All American, respectively
(including all securities which are convertible into limited partner interests),
or (vii) Resources and its Wholly Owned Subsidiaries taken as a whole shall hold
legal and beneficial ownership of issued and outstanding partnership interests
of Plains MLP representing less than 5% of the total outstanding partnership
interests of Plains MLP.
"Co-Agent" shall have the meaning given that term in Section 9.10.
--------
"Code" means the Internal Revenue Code of 1986, as amended from time to
----
time, together with all rules and regulations promulgated with respect thereto.
"Collateral" means all property of any kind which is subject to a Lien in
----------
favor of Lenders (or in favor of Administrative Agent or the collateral agent
under the Intercreditor Agreement described in Section 4.1(m) for the benefit of
Lenders) or which, under the terms of any Security Document, is purported to be
subject to such a Lien, in each case granted or created to secure all or part of
the Obligations.
5
<PAGE>
"Commitment" means $400,000,000. Each Lender's Commitment shall be the
----------
amount set forth on the Lender Schedule.
"Commitment Fee Rate" means, on any day (i) from the date hereof through
-------------------
but not including the six-month anniversary of the date hereof, 0.5% per annum,
and (ii) on and after the six-month anniversary of the date hereof, the rate per
annum set forth below based on the Applicable Leverage Level on such date.
===============================================================
Applicable Leverage Level Commitment Fee Rate
---------------------------------------------------------------
Level I or Level II 0.500%
---------------------------------------------------------------
Level III or Level IV 0.375%
---------------------------------------------------------------
Level V 0.250%
===============================================================
Changes in the applicable Commitment Fee Rate will occur automatically without
prior notice as changes in the Applicable Leverage Level occur. Administrative
Agent will give notice promptly to Borrower and Lenders of changes in the
Commitment Fee Rate.
"Commitment Period" means the period from and including the date hereof
-----------------
until the Maturity Date (or, if earlier, the day on which the obligation of
Lenders to make Loans hereunder and the obligation of LC Issuer to issue Letters
of Credit hereunder has terminated or the day on which the Notes first become
due and payable in full).
"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 EBITDA" means, for any period, the sum of (1) the
-------------------
Consolidated Net Income of Plains MLP and its Subsidiaries during such period,
plus (2) all interest expense which was deducted in determining such
Consolidated Net Income for such period, plus (3) all income taxes (including
any franchise taxes to the extent based upon net income) which were deducted in
determining such Consolidated Net Income, plus (4) all depreciation,
amortization (including amortization of good will and debt issue costs) and
other non-cash charges (including any provision for the reduction in the
carrying value of assets recorded in accordance with GAAP) which were deducted
in determining such Consolidated Net Income, minus (5) all non-cash items of
income which were included in determining such Consolidated Net Income.
"Consolidated Funded Indebtedness" means as of any date, the sum of the
--------------------------------
following (without duplication): (i) all Indebtedness which is classified as
"long-term indebtedness" on a consolidated balance sheet of Plains MLP and its
Consolidated Subsidiaries prepared as of such date in accordance with GAAP and
any current maturities and other principal amount in respect of such
Indebtedness due within one year but which was classified as "long-term
indebtedness"
6
<PAGE>
at the creation thereof, (ii) indebtedness for borrowed money of Plains MLP and
its Consolidated Subsidiaries outstanding under a revolving credit or similar
agreement providing for borrowings (and renewals and extensions thereof) over a
period of more than one year, notwithstanding the fact that any such borrowing
is made within one year of the expiration of such agreement, and (iii)
Indebtedness in respect of Capital Leases of Plains MLP and its Consolidated
Subsidiaries; provided, however, Consolidated Funded Indebtedness shall not
include Indebtedness in respect of letters of credit or in respect of Cash and
Carry Purchases.
"Consolidated Net Income" means, for any period, Plains MLP's and its
-----------------------
Subsidiaries' gross revenues for such period, including any cash dividends or
distributions actually received from any other Person during such period, minus
Plains MLP's and its Subsidiaries' expenses and other proper charges against
income (including taxes on income, to the extent imposed), determined on a
Consolidated basis after eliminating earnings or losses attributable to
outstanding minority interests and excluding the net earnings of any Person
other than a Subsidiary in which Plains MLP or any of its Subsidiaries has an
ownership interest. Consolidated Net Income shall not include any gain or loss
from the sale of assets or any extraordinary gains or losses.
"Consolidated Net Worth" means the remainder of all Consolidated assets, as
----------------------
determined in accordance with GAAP, of Plains MLP and its Subsidiaries minus the
sum of (a) Plains MLP's Consolidated liabilities, as determined in accordance
with GAAP, and (b) all outstanding Minority Interests. The effect of any
increase or decrease in net worth in any period as a result of items of income
or loss not reflected in the determination of net income but reflected in the
determination of comprehensive income (to the extent provided under GAAP (x) as
in effect on the date hereof or (y) to become effective after the date hereof
under rules currently proposed as of the date hereof that become effective on or
before January 1, 2001) shall be excluded in determining Consolidated Net Worth.
"Minority Interests" means the book value of any equity interests in any of
Plains MLP's Subsidiaries (exclusive of the general partner interests held by
the General Partner in Borrower, All American or any other Restricted Person of
up to two percent (2%) of the aggregate ownership interest in any such Person)
which equity interests are owned by a Person other than Plains MLP or a Wholly
Owned Subsidiary of Plains MLP.
"Continuation/Conversion Notice" means a written or telephonic request, or
------------------------------
a written confirmation, made by Borrower which meets the requirements of Section
2.3.
"Continue", "Continuation", and "Continued" shall refer to the continuation
-------- ------------ ---------
pursuant to Section 2.3 hereof of a LIBOR Loan as a LIBOR Loan from one Interest
Period to the next Interest Period.
"Convert", "Conversion", and "Converted" shall refer to a conversion
--------------------------------------
pursuant to Section 2.3 or Article III of one Type of Loan into another Type of
Loan.
"Crude Oil Marketing Agreement" means that certain Crude Oil Marketing
-----------------------------
Agreement among Resources, Plains Illinois Inc., Stocker Resources, L.P.,
Arguello Inc. and Borrower dated November 23, 1998.
7
<PAGE>
"Current Trading Month" has the meaning given that term in Section 7.15.
---------------------
"Debt Coverage Ratio" shall have the meaning given that term in Section
-------------------
7.12.
"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, (i) three and three-fourths
------------
percent (3.75%) per annum plus the LIBOR Rate then in effect for any LIBOR Loan
(up to the end of the applicable Interest Period) or (ii) two percent (2%) per
annum plus the Base Rate for each Base Rate Loan; provided, however, the Default
Rate shall never exceed the Highest Lawful Rate
"Default Rate Period" means (i) any period during which an Event of
-------------------
Default, other than pursuant to Section 8.1 (a) or (b), is continuing, provided
that such period shall not begin until notice of the commencement of the Default
Rate has been given to Borrower by Administrative Agent upon the instruction by
Majority Lenders and (ii) any period during which any Event of Default pursuant
to Section 8.1 (a) or (b) is continuing unless Borrower has been notified
otherwise by Administrative Agent upon the instruction by Majority Lenders.
"Disclosure Schedule" means Schedule 2 hereto.
-------------------
"Domestic Lending Office" means, with respect to any Lender, the office of
-----------------------
such Lender specified as its "Domestic Lending Office" in the Lender Schedule
hereto, or such other office as such Lender may from time to time specify to
Borrower and Administrative Agent; with respect to LC Issuer, the office,
branch, or agency through which it issues Letters of Credit; and, with respect
to Administrative Agent, the office, branch, or agency through which it
administers this Agreement.
"Effective Time" shall have the meaning given that term in Section 10.13.
--------------
"Eligible Transferee" means a Person which either (a) is a Lender, or (b)
-------------------
is consented to as an Eligible Transferee by Administrative Agent and, so long
as no Default or 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).
"El Paso Longline Sale Agreement" means that certain Pipeline Sale and
-------------------------------
Purchase Agreement dated January 31, 2000 among Plains MLP, All American and
EPNG Pipeline Company.
"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,
8
<PAGE>
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 each Restricted Person and all members of a
---------------
controlled group of corporations and all trades or businesses (whether or not
incorporated) under common control that, together with such Restricted Person,
are treated as a single employer under Section 414 of the Code.
"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.
"Event of Default" has the meaning given to such term in Section 8.1.
----------------
"Existing Agreements" has the meaning given in the second recital.
-------------------
"Facility Usage" means, at the time in question, the aggregate amount of
--------------
outstanding Loans and LC Obligations at such time.
"Federal Funds Rate" means, for any day, the rate per annum (rounded
------------------
upwards, if necessary, to the nearest 1/1000th 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 Administrative Agent on such day on such transactions as
determined by Administrative 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.
"Floating Price Contract" has the meaning given that term in Section 7.15.
-----------------------
"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 Plains MLP and its
Consolidated Subsidiaries, are applied for all periods after the date hereof in
a manner consistent with the manner in which such
9
<PAGE>
principles and practices were applied to the 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 Plains MLP or with respect to Plains MLP 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 Plains MLP or of
Plains MLP and its Consolidated Subsidiaries.
"General Partner" means Plains All American Inc., a Delaware corporation.
---------------
"Guarantors" means Plains MLP and all of its Subsidiaries (including All
----------
American but excluding Borrower) and any other Person who has guaranteed some or
all of the Obligations and who has been accepted by Administrative Agent as a
Guarantor or any Subsidiary of Plains MLP which now or hereafter executes and
delivers a guaranty to Administrative Agent pursuant to Section 6.17.
"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, excluding in each case for purposes of Section 7.3
only, any such agreement or contract covering crude oil .
"Highest Lawful Rate" means, with respect to each Lender Party to whom
-------------------
Obligations are owed, the maximum nonusurious rate of interest that such Lender
Party is permitted under applicable Law to contract for, take, charge, or
receive with respect to such Obligations. 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 Party as
appropriate to assure that the Loan Documents are not construed to obligate any
Person to pay interest to any Lender Party at a rate in excess of the Highest
Lawful Rate applicable to such Lender Party.
"Incentive and Option Plans" means the Plains All American Inc. 1998 Long-
--------------------------
Term Incentive Plan as in effect on the date hereof, the Plains All American
Inc. Management Incentive Plan as in effect on the date hereof and those certain
Transaction Grant Agreements disclosed in writing to Administrative Agent prior
to the date of this Agreement.
"Indebtedness" of any Person means its Liabilities (without duplication) in
------------
any of the following categories:
10
<PAGE>
(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,
(d) Liabilities (other than reserves for taxes and reserves for contingent
obligations) 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
or incurrence thereof,
(e) Liabilities arising under Hedging Contracts (on a net basis to the
extent netting is provided for in the applicable Hedging Contract),
(f) Liabilities constituting principal under Capital Leases,
(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 otherwise 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 consisting of an obligation to purchase or redeem
securities or other property, if such Liabilities arises out of or in connection
with the sale or issuance of the same or similar securities or property (for
example, repurchase agreements, mandatorily redeemable preferred stock and
sale/leaseback agreements),
(j) Liabilities with respect to letters of credit or applications or
reimbursement agreements therefor,
(k) Liabilities with respect to banker's acceptances, or
(l) Liabilities with respect to 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 in the ordinary course of business 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 120 days after the
date the respective goods are delivered or the respective services are rendered,
other than Liabilities contested in good faith by appropriate proceedings, if
required, and for which adequate reserves are maintained on the books of such
Person in accordance with GAAP.
11
<PAGE>
"Initial Financial Statements" means (i) the audited Consolidated financial
----------------------------
statements of Plains MLP as of December 31, 1999, (ii) the unaudited
consolidating balance sheet and income statement of Plains MLP as of December
31, 1999, (iii) the unaudited Consolidated and consolidating balance sheet and
income statement of Plains MLP as of February 29, 2000, and (iv) the unaudited
pro forma Consolidated and consolidating balance sheet of Plains MLP as of
February 29, 2000, after giving effect to (x) the Restructuring, (y) the
consummation of the transactions set forth in the El Paso Longline Sale
Agreement, including the repayment of Indebtedness with the proceeds thereof,
and (z) the payoff by Borrower of the Paribas Linefill Financing.
"Insurance Schedule" means Schedule 4 attached hereto.
------------------
"Interest Expense" means, with respect to any period, the sum (without
----------------
duplication) of the following (in each case, eliminating all offsetting debits
and credits between Plains MLP and its Subsidiaries and all other items required
to be eliminated in the course of the preparation of Consolidated financial
statements of Plains MLP and its Subsidiaries in accordance with GAAP): (a) all
interest and commitment fees in respect of Indebtedness of Plains MLP or any of
its Subsidiaries (including imputed interest on Capital Lease Obligations) which
are accrued during such period and whether expensed in such period or
capitalized; plus (b) all fees, expenses and charges in respect of letters of
credit issued for the account of Plains MLP or any of its Subsidiaries, which
are accrued during such period and whether expensed in such period or
capitalized. The determination of Interest Expense for the Fiscal Quarter
ended March 31, 2000 shall exclude (i) interest and fees under the Paribas
Linefill Financing and (ii) interest paid under the All American Agreement with
respect to a principal amount equal to the net proceeds applied from the assets
sold pursuant to the El Paso Longline Sale Agreement.
"Interest Payment Date" means (a) with respect to each Base Rate Loan, the
---------------------
last day of each March, June, September and December, and (b) with respect to
each LIBOR Loan, the last day of the Interest Period that is applicable thereto
and, if such Interest Period is six, or twelve months in length, the dates
specified by Administrative Agent which are approximately three, six, and nine
months (as appropriate) after such Interest Period begins; provided that the
last Business Day of each calendar month shall also be an Interest Payment Date
for each such Loan so long as any Event of Default exists under Section 8.1 (a)
or (b).
"Interest Period" means, with respect to each particular LIBOR Loan in a
---------------
Borrowing, the period specified in the Borrowing Notice or
Continuation/Conversion Notice applicable thereto, beginning on and including
the date specified in such Borrowing Notice or Continuation/Conversion Notice
(which must be a Business Day), and ending one, two, three, six or twelve months
(if twelve months is available for each Lender) thereafter, as Borrower may
elect in such notice; provided that: (a) any Interest Period which would
otherwise end on a day which is not a Business Day shall be extended to the next
succeeding Business Day unless such Business Day falls in another calendar
month, in which case such Interest Period shall end on the next preceding
Business Day; (b) any Interest Period which begins on the last Business Day in a
calendar month (or on a day for which there is no numerically corresponding day
in the calendar month at the end of such Interest Period) shall end on the last
Business Day in a calendar month;
12
<PAGE>
and (c) notwithstanding the foregoing, no Interest Period may be selected for a
Loan that would end after the Maturity Date.
"Investment" means any investment made, directly or indirectly in any
----------
Person, whether by acquisition of shares of capital stock, indebtedness or other
obligations or securities or by loan, advance, capital contribution or
otherwise, and whether made in cash, by the transfer of property or by any other
means.
"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 hereafter
--------------
made by Borrower to LC Issuer.
"LC Collateral" has the meaning given to such term in Section 2.13(a).
-------------
"LC Issuer" means Fleet National Bank, in its capacity as the issuer of
---------
Letters of Credit hereunder, and its successors in such capacity.
Administrative Agent may, with the consent of Borrower and the Lender in
question, appoint any Lender hereunder as an LC Issuer in place of or in
addition to Fleet National Bank.
"LC Obligations" means, at the time in question, the sum of all Matured LC
--------------
Obligations plus the maximum amounts which LC Issuer might then or thereafter be
called upon to advance under all Letters of Credit then outstanding.
"Lender Parties" means Administrative Agent, Syndication Agent,
--------------
Documentation Agent, Lead Arranger and Book Manager, LC Issuer, and all
Lenders.
"Lender Schedule" means Schedule 1 hereto.
---------------
"Lenders" means each signatory hereto (other than Borrower and any
-------
Restricted Person that is a party hereto), including Fleet National Bank in its
capacity as a Lender hereunder rather than as Administrative Agent, and LC
Issuer, and the successors of each such party as holder of a Note.
"Letter of Credit" means any letter of credit issued by LC Issuer hereunder
----------------
at the application of Borrower.
"Letter of Credit Fee Rate" means, on any day (i) from the date hereof
-------------------------
through but not including the six-month anniversary of the date hereof, the
greater of (A) 2.25% per annum and (B) the rate per annum set forth below based
on the Applicable Leverage Level on such date, and (ii) on and after the six-
month anniversary of the date hereof, the rate per annum set forth below based
on the Applicable Leverage Level on such date.
13
<PAGE>
===========================================
Applicable Leverage Level LC Fee Rate
-------------------------------------------
Level I 2.50%
-------------------------------------------
Level II 2.00%
-------------------------------------------
Level III 1.75%
-------------------------------------------
Level IV 1.50%
-------------------------------------------
Level V 1.25%
===========================================
Changes in the applicable Letter of Credit Fee Rate will occur automatically
without prior notice as changes in the Applicable Leverage Level occur.
Administrative Agent will give notice promptly to Borrower and Lenders of
changes in the Letter of Credit Fee Rate.
"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 Lending Office" means, with respect to any Lender, the office of
--------------------
such Lender specified as its "LIBOR Lending Office" on the Lender Schedule
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 Administrative Agent.
"LIBOR Loan" means a Loan that bears interest at a rate based upon the
----------
LIBOR Rate.
"LIBOR Rate" means, as applicable to any LIBOR Loan within a Borrowing and
----------
with respect to the related Interest Period therefor, the rate per annum
(rounded upwards, if necessary, to the nearest 1/32 of 1%) as determined on the
basis of offered rates for deposits in U.S. dollars, for a period of time
comparable to such Interest Period which appears on Telerate Page 3750 (or any
successor page) as of 11:00 a.m. London time on the day that is two Business
Days preceding the first day of such LIBOR Loan; provided, however, if the rate
described above does not appear on the Telerate system on any applicable
interest determination date, the LIBOR Rate shall be the rate (rounded upwards
as described above, if necessary) for deposits in dollars for a period
substantially equal to such Interest Period on the Reuters Page "LIBO" (or such
other page as may replace the LIBO Page on that service for the purpose of
displaying such rates), as of 11:00 a.m. (London time), on the date that is two
Business Days prior to the beginning of such Interest Period; provided, however,
if more than one rate is specified on Reuters Screen LIBO Page, the applicable
rate shall be the arithmetic mean of all such rates (rounded upwards, if
necessary, to the nearest 1/1000 of 1%). If both the Telerate and Reuters
system are unavailable, then the LIBOR Rate for that date will be determined on
the basis of the offered rates for deposits in U.S. dollars for a period of time
comparable to such Interest Period which are offered by four major banks in the
London interbank market at approximately 11:00 a.m. London time, on the day that
is two (2) Business Days preceding the first day of such LIBOR Loan as selected
by Administrative Agent. The principal London office of each of the four major
London banks
14
<PAGE>
will be requested to provide a quotation of its U.S. dollar deposit offered
rate. If at least two such quotations are provided, the rate for that date will
be the arithmetic mean of the quotations. If fewer than two quotations are
provided as requested, the rate for that date will be determined on the basis of
the rates quoted for loans in U.S. dollars to leading European banks for a
period of time comparable to such Interest Period offered by major banks in New
York City at approximately 11:00 a.m. New York City time, on the day that is two
Business Days preceding the first day of such LIBOR Loan. In the event that
Administrative Agent is unable to obtain any such quotation as provided above,
it will be deemed that the LIBOR Rate pursuant to such LIBOR Loan cannot be
determined. In the event that the Board of Governors of the Federal Reserve
System shall impose a Reserve Percentage with respect to LIBOR deposits of any
Lender, then for any period during which such Reserve Percentage shall apply,
the LIBOR Rate shall be equal to the amount determined above divided by an
amount equal to 1 minus the Reserve Percentage. "Reserve Percentage" means the
maximum aggregate reserve requirement (including all basic, supplemental,
marginal, special, emergency and other reserves) which is imposed on member
banks of the Federal Reserve System against "Euro-currency Liabilities" as
defined in Regulation D. Without limiting the effect of the foregoing, the
Reserve Percentage shall reflect any other reserves required to be maintained by
such member banks with respect to (a) any category of liabilities which includes
deposits by reference to which the LIBOR Rate is to be determined, or (b) any
category of extensions of credit or other assets which include LIBOR Loans. The
LIBOR Rate for any LIBOR Loan shall change whenever the Reserve Percentage
changes.
"LIBOR Rate Margin" means (i) from the date hereof through but not
-----------------
including the six-month anniversary of the date hereof, the greater of (A) 2.25%
per annum and (B) the percent per annum set forth below based on the Applicable
Leverage Level in effect on such date, and (ii) on and after the six-month
anniversary of the date hereof, the percent per annum set forth below based on
the Applicable Leverage Level in effect on such date.
=================================================
Applicable Leverage Level LIBOR Rate Margin
-------------------------------------------------
Level I 2.50%
-------------------------------------------------
Level II 2.00%
-------------------------------------------------
Level III 1.75%
-------------------------------------------------
Level IV 1.50%
-------------------------------------------------
Level V 1.25%
=================================================
Changes in the applicable LIBOR Rate Margin will occur automatically without
prior notice as changes in the Applicable Leverage Level occur. Administrative
Agent will give notice promptly to Borrower and Lenders of changes in the LIBOR
Rate Margin.
"Lien" means, with respect to any property or assets, any right or interest
----
therein of a creditor to secure Liabilities owed to it or any other arrangement
with such creditor which provides for the payment of such Liabilities out of
such property or assets or which allows such
15
<PAGE>
creditor 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.
"Loans" has the meaning given to such term in Section 2.1.
-----
"Loan Documents" means this Agreement, the Notes, the Security Documents,
--------------
the Letters of Credit, the LC Applications, the Hedging Contracts described in
Section 2.14, and all other agreements, certificates, documents, instruments and
writings at any time delivered in connection herewith or therewith (exclusive of
term sheets and commitment letters).
"Majority Lenders" means Lenders whose aggregate Percentage Shares equal or
----------------
exceed sixty-six and two-thirds percent (66-2/3%).
"Marketing Credit Agreement" means that certain Credit Agreement [Letter of
--------------------------
Credit and Hedged Inventory Facility] of even date herewith among Borrower, All
American and Plains MLP as guarantors, and the agents and financial institutions
as lenders named therein.
"Material Adverse Change" means a material and adverse change, from the
-----------------------
state of affairs presented in the Initial Financial Statements or as represented
or warranted in any Loan Document, to (a) Plains MLP's Consolidated financial
condition, (b) Plains MLP's Consolidated operations, properties or prospects,
considered as a whole, (c) Borrower's ability to timely pay the Obligations, or
(d) the enforceability of the material terms of any Loan Document.
"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).
"Maturity Date" means April 30, 2004.
-------------
"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.
"Moody's" means Moody's Investor Service, Inc., or its successor.
-------
16
<PAGE>
"Note" has the meaning given to such term in Section 2.1.
----
"NYMEX" means the New York Mercantile Exchange.
-----
"Obligations" means all Liabilities from time to time owing by any
-----------
Restricted Person to any Lender Party under or pursuant to any of the Loan
Documents, including all LC Obligations. "Obligation" means any part of the
----------
Obligations.
"Offsetting Position" means any offsetting sale or purchase agreement, an
-------------------
offsetting NYMEX contract, an offsetting physical inventory position (excluding
tank bottoms and pipeline linefill inventory classified as a long term asset and
working inventory not held for resale), or an offsetting swap, collar or option
contract, in each case eliminating price risk and substantially all basis risk.
"Omnibus Agreement" means that certain Omnibus Agreement between Resources,
-----------------
Plains MLP, Borrower, All American and General Partner dated November 23, 1998.
"Open Position" means, with respect to crude oil inventory or crude oil
-------------
purchase or sale contracts, any position that does not have an Offsetting
Position.
"Paribas Linefill Financing" means the $65,000,000 linefill financing under
--------------------------
that certain Credit Agreement dated December 30, 1999 among Borrower, Paribas,
as administrative agent, and the lenders named therein.
"Partnership Agreement" means the Second Amended and Restated Agreement of
---------------------
Limited Partnership of Plains MLP dated November 23, 1998.
"Percentage Share" means, with respect to any Lender, (a) when used in
----------------
Sections 2.1, 2.2 or 2.12, in any Borrowing Notice or when no Loans are
outstanding hereunder, the percentage set forth opposite such Lender's name on
the Lender Schedule 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 the Matured LC Obligations which such Lender has
funded pursuant to Section 2.9(c) plus the portion of the Maximum Drawing Amount
which such Lender might be obligated to fund under Section 2.9(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.
"Permitted Acquisitions" means (A) the acquisition of all of the capital
----------------------
stock or other equity interest in a Person (exclusive of general partner
interests held by General Partner or another Wholly Owned Subsidiary of
Resources not in excess of a 1% economic interest and exclusive of director
qualifying shares and other equity interests required to be held by an Affiliate
to comply with a requirement of Law) or (B) any acquisition of all or a portion
of the business, assets or operations of a Person (whether in a single
transaction or a series of related transactions), provided that (i) prior to and
after giving effect to such acquisition no Default or Event of Default shall
have occurred and be continuing; (ii) all representations and warranties
17
<PAGE>
shall be true and correct as if restated immediately following the consummation
of such acquisition; (iii) substantially all of such business, assets and
operations so acquired, or of the Person so acquired, consists of crude oil
and/or gas marketing, gathering, transportation, storage, terminaling and
pipeline operation, and (iv) (a) the total purchase price of any such
acquisition does not exceed $5,000,000, and (b) if the total purchase price of
any such acquisition exceeds $5,000,000, then the aggregate of the total
purchase prices (including any assumed Indebtedness) for all such acquisitions
from the date hereof through the Maturity Date does not exceed $50,000,000
(which amount, for the avoidance of doubt, excludes acquisitions described in
the preceding clause (iv)(a)).
"Permitted Investments" means (a) Cash Equivalents, (b) Investments
---------------------
described in the Disclosure Schedule, (c) Investments by Plains MLP or any of
its Subsidiaries in any Wholly Owned Subsidiary of Plains MLP which is a
Guarantor, (d) Investments in publicly traded units of master limited
partnerships whose dividends are "qualifying income" as such term is defined in
Section 7704 of the Code (provided, the amount of any such Investments under
--------
this clause (d) minus any amounts received on such Investments (excluding
-----
dividends thereon) shall not at any time exceed $5,000,000), and (e) Permitted
Acquisitions.
"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.
"Plains MLP" means Plains All American Pipeline, L.P., a Delaware limited
----------
partnership.
"Plains Terminal" means any storage terminal, tankage or facility owned by
---------------
any Restricted Person.
"Rating Agency" means either S&P or Moody's.
-------------
"Regulation D" means Regulation D of the Board of Governors of the Federal
------------
Reserve System as from time to time in effect.
"Resources" means Plains Resources Inc., a Delaware corporation.
---------
"Restricted Person" means any of Plains MLP and each Subsidiary of Plains
-----------------
MLP, including but not limited to Borrower, All American and each Subsidiary of
Borrower and/or All American.
"Restructuring" means the restructuring of Borrower and its Subsidiaries
-------------
pursuant to which (i) Plains Scurlock Permian, L.P. and all of its Subsidiaries
(other than Scurlock Permian Pipe Line LLC) shall be merged into Borrower or All
American, as applicable, and (ii) as a result thereof (a) all non-FERC regulated
assets shall be transferred into Borrower and (b) all FERC-regulated assets
shall be held by All American or its Subsidiaries.
18
<PAGE>
"Restructuring Documents" means the documents listed on Schedule 5 hereto.
-----------------------
"S&P" means Standard & Poor's Ratings Group (a division of McGraw Hill,
---
Inc.) or its successor.
"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 Administrative 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 3 hereto.
-----------------
"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 or owned more than
fifty percent by such Person.
"Termination Event" means (a) the occurrence with respect to any ERISA Plan
-----------------
of (i) a reportable event described in Sections 4043(c)(5) or (6) of ERISA or
(ii) any other reportable event described in Section 4043(c) 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.
"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 or existing.
"Type" means, with respect to any Loans, the characterization of such Loans
----
as either Base Rate Loans or LIBOR Loans.
"Wholly Owned Subsidiary" means any Subsidiary of a Person, all of the
-----------------------
issued and outstanding stock, limited liability company membership interests, or
partnership interests of which (including all rights or options to acquire such
stock or interests) are directly or indirectly (through one or more
Subsidiaries) owned by such Person, excluding any general partner
19
<PAGE>
interests owned by General Partner in any such Subsidiary that is a partnership,
such general partner interests not to exceed two percent (2%) of the aggregate
ownership interests of any such partnership and directors' qualifying shares if
applicable.
"Working Capital Borrowings" has the meaning given to such term in Section
--------------------------
2.2(c) hereof.
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. All references to the term
"Marketing Credit Agreement" shall be deemed to be references to such agreement
as such agreement is executed and delivered by the parties thereto on the date
hereof.
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 LIBOR 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 Lender Party of amounts to be paid
under Article III or any other matters which are to be determined hereunder by a
Lender Party (such as any LIBOR Rate, Business Day, Interest Period, or Reserve
Percentage) shall, in the absence of manifest error, be conclusive and binding.
Unless otherwise expressly provided herein or unless Majority Lenders otherwise
consent all financial statements and reports furnished to any Lender
20
<PAGE>
Party hereunder shall be prepared and all financial computations and
determinations pursuant hereto shall be made in accordance with GAAP.
ARTICLE II - The Loans and Letters of Credit
-------------------------------
Section 2.1. Commitments to Lend; Notes. Subject to the terms and
--------------------------
conditions hereof, each Lender agrees to make loans to Borrower (herein called
such Lender's "Loans") upon Borrower's request from time to time during the
Commitment Period, provided that (a) subject to Sections 3.3, 3.4 and 3.6, all
Lenders are requested to make Loans of the same Type in accordance with their
respective Percentage Shares and as part of the same Borrowing, (b) after giving
effect to such Loans, the Facility Usage does not exceed the Commitment
determined as of the date on which the requested Loans are to be made and (c)
after giving effect to such Loans the Loans by each Lender plus the existing LC
Obligations of such Lender does not exceed such Lender's Commitment. The
aggregate amount of all Loans in any Borrowing must be equal to $2,000,000 or
any higher integral multiple of $250,000. The obligation of Borrower to repay
to each Lender the aggregate amount of all Loans made by such Lender, together
with interest accruing in connection therewith, shall be evidenced by a single
promissory note (herein called such Lender's "Note") made by Borrower payable to
the order of such Lender in the form of Exhibit A with appropriate insertions.
The amount of principal owing on any Lender's Note at any given time shall be
the aggregate amount of all Loans theretofore made by such Lender minus all
payments of principal theretofore received by such Lender on such Note.
Interest on each Note shall accrue and be due and payable as provided herein and
therein. Each Note shall be due and payable as provided herein and therein, and
shall be due and payable in full on the Maturity Date. Subject to the terms
and conditions of this Agreement, Borrower may borrow, repay, and reborrow under
this Section 2.1. Borrower may have no more than seven Borrowings of LIBOR
Loans outstanding at any time.
Section 2.2. Requests for Loans. Borrower must give to Administrative
------------------
Agent written notice (or telephonic notice promptly confirmed in writing) of any
requested Borrowing of Loans to be funded by Lenders. Each such notice
constitutes a "Borrowing Notice" hereunder and must:
(a) specify (i) 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 (ii) the aggregate amount of any such Borrowing of new LIBOR Loans, the
date on which such LIBOR 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
(b) be received by Administrative Agent not later than 11:00 a.m.,
Boston, Massachusetts time, on (i) the day on which any such Base Rate
Loans are to be made, or (ii) the third Business Day preceding the day on
which any such LIBOR Loans are to be made.
(c) If any requested Borrowing of Loans or portion thereof is to be
utilized by Borrower exclusively for working capital purposes (such
Borrowing or such portion
21
<PAGE>
being called a "Working Capital Borrowing"), Borrower shall specify in the
Borrowing Notice that such Borrowing or such portion is a Working Capital
Borrowing. In addition, any repayment of a Loan that is intended as a
repayment of all or any part of the outstanding amount of one or more
Working Capital Borrowings shall be so identified to the Administrative
Agent at the time of such repayment.
Each such written request or confirmation must be made in the form and substance
of the "Borrowing Notice" attached hereto as Exhibit B, 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, Administrative Agent shall give each Lender prompt notice of the terms
thereof. If all conditions precedent to such new Loans have been met, each
Lender will on the date requested promptly remit to Administrative Agent at
Administrative Agent's office in Boston, Massachusetts the amount of such
Lender's new Loan in immediately available funds, and upon receipt of such
funds, unless to its actual knowledge any conditions precedent to such Loans
have been neither met nor waived as provided herein, Administrative Agent shall
promptly make such Loans available to Borrower. Unless Administrative Agent
shall have received prompt notice from a Lender that such Lender will not make
available to Administrative Agent such Lender's new Loan, Administrative Agent
may in its discretion assume that such Lender has made such Loan available to
Administrative Agent in accordance with this section, and Administrative Agent
may if it chooses, in reliance upon such assumption, make such Loan available to
Borrower. If and to the extent such Lender shall not so make its new Loan
available to Administrative Agent, such Lender and Borrower severally agree to
pay or repay to Administrative Agent within three days after demand the amount
of such 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 Administrative Agent, with interest at (i) the Federal Funds Rate, if
such Lender is making such payment and (ii) the interest rate applicable at the
time to the other new Loans made on such date, if Borrower is making such
repayment. If neither such Lender nor Borrower pays or repays to Administrative
Agent such amount within such three-day period, Administrative Agent shall, be
entitled to recover from Borrower, on demand in lieu of the interest provided
for in the preceding sentence, interest thereon at the Default Rate, calculated
from the date such amount was made available to Borrower. The failure of any
Lender to make any new Loan to be made by it hereunder shall not relieve any
other Lender of its obligation hereunder, if any, to make its new Loan, but no
Lender shall be responsible for the failure of any other Lender to make any new
Loan to be made by such other Lender.
Section 2.3. Continuations and Conversions of Existing Loans. Borrower
-----------------------------------------------
may make the following elections with respect to Loans already outstanding: to
Convert, in whole or in part, Base Rate Loans to LIBOR Loans, to Convert, in
whole or in part, LIBOR Loans to Base Rate Loans on the last day of the Interest
Period applicable thereto, and to Continue, in whole or in part, LIBOR 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, provided that
22
<PAGE>
Borrower may have no more than seven Borrowings of LIBOR Loans outstanding at
any time. To make any such election, Borrower must give to Administrative 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 LIBOR 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 LIBOR Loans), and the length of the
applicable Interest Period; and
(c) be received by Administrative Agent not later than 11:00 a.m.,
Boston, Massachusetts 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 LIBOR
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
Continuation/Conversion Notice, Administrative Agent shall give each Lender
prompt notice of the terms thereof. Each Continuation/Conversion 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 LIBOR Loans or
Continue existing Loans as LIBOR Loans beyond the expiration of their respective
and corresponding Interest Period then in effect. If (due to the existence of a
Default or for any other reason) Borrower fails to timely and properly give any
Continuation/Conversion Notice with respect to a Borrowing of existing LIBOR
Loans at least three days prior to the end of the Interest Period applicable
thereto, such LIBOR Loans, to the extent not prepaid at the end of such Interest
Period, 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.
Section 2.4. Use of Proceeds. Borrower shall use (i) all Loans
---------------
designated as Working Capital Borrowings pursuant to Section 2.2(c) to provide
working capital (including, without limitation, to make distributions to the
partners of Restricted Persons), and (ii) all Loans not designated as Working
Capital Borrowings pursuant to Section 2.2(c) to (a) refinance all outstanding
indebtedness under the Existing Agreements, (b) repay up to $114,000,000 of
23
<PAGE>
intercompany debt, plus accrued and unpaid interest, owing to General Partner,
and (c) finance capital expenditures of any Restricted Person, pay reimbursement
obligations of Letters of Credit, provide working capital for operations and for
other general business purposes, including acquisitions, but not to pay
distributions to partners of Restricted Persons. Borrower shall use all Letters
of Credit for its and its Subsidiaries' general corporate purposes, but not to
pay distributions to partners of Restricted Persons or in relation to the
purchase or exchange by Borrower of crude oil. 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" (as such term is defined in Regulation U 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. 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.
Section 2.5. Interest Rates and Fees.
-----------------------
(a) Interest Rates. Each Loan shall bear interest as follows: (i) unless
--------------
the Default Rate shall apply, (A) each Base Rate Loan shall bear interest on
each day outstanding at the Base Rate in effect on such day, and (B) each LIBOR
Loan shall bear interest on each day during the related Interest Period at the
related LIBOR Rate plus the LIBOR Rate Margin in effect on such day, and (ii)
during a Default Rate Period, all Loans shall bear interest on each day
outstanding at the Default Rate. If an Event of Default based upon Section
8.1(a), Section 8.1(b) or, with respect to Borrower, based upon Section
8.1(i)(i), (i)(ii) or (i)(iii) exists and the Loans are not bearing interest at
the Default Rate, the past due principal and past due interest shall bear
interest on each day outstanding at the Default Rate. The interest rate shall
change whenever the applicable Base Rate, the LIBOR Rate or the LIBOR Rate
Margin changes. In no event shall the interest rate on any Loan exceed the
Highest Lawful Rate.
(b) Commitment Fees. In consideration of each Lender's commitment to make
---------------
Loans, Borrower will pay to Administrative Agent for the account of each Lender
a commitment fee determined on a daily basis equal to the Commitment Fee Rate in
effect on such day times such Lender's Percentage Share of the unused portion of
the Commitment on each day during the Commitment Period, determined for each
such day by deducting from the amount of the Commitment at the end of such day
the Facility Usage. This commitment fee shall be due and payable in arrears on
the last day of each Fiscal Quarter and at the end of the Commitment Period.
Borrower shall have the right from time to time to permanently reduce the
Commitment, provided that (i) notice of such reduction is given not less than 2
Business Days prior to such reduction, (ii) the resulting Commitment is not less
than the Facility Usage and (iii) each partial reduction shall be in an amount
at least equal to $500,000 and in multiples of $100,000 in excess thereof.
(c) Administrative Agent's Fees. In addition to all other amounts due to
---------------------------
Administrative Agent under the Loan Documents, Borrower will pay fees to
Administrative
24
<PAGE>
Agent as described in a letter agreement dated May 3, 2000 between
Administrative Agent and Borrower.
Section 2.6. Optional Prepayments. Borrower may, upon five Business
--------------------
Days' notice to Administrative Agent (and Administrative Agent will promptly
give notice to the other Lenders) from time to time and without premium or
penalty prepay the Loans, in whole or in part, so long as the aggregate amounts
of all partial prepayments of principal on the Loans equals $1,000,000 or any
higher integral multiple of $250,000, and so long as Borrower does not make any
prepayments which would reduce the unpaid principal balance of the Loans to less
than $100,000 without first either (i) terminating this Agreement or (ii)
providing assurance satisfactory to Administrative Agent in its discretion that
Lenders' legal rights under the Loan Documents are in no way affected by such
reduction. Upon receipt of any such notice, Administrative Agent shall give each
Lender prompt notice of the terms thereof. 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 Prepayments.
---------------------
(a) Without limiting the requirements of Section 7.5 hereof regarding the
consent of Majority Lenders to sales of property by Restricted Persons which are
not permitted by Section 7.5, the proceeds of any sale of property (net of all
reasonable costs and expenses, but excluding proceeds consisting of tangible
property to be used in the business of Restricted Persons) by any Restricted
Person (other than a sale of property permitted under Section 7.5 hereof) shall
be placed in a collateral account under the control of Administrative Agent in a
manner satisfactory to Administrative Agent immediately upon such Restricted
Person's receipt of such proceeds and maintained therein for a period of ninety
(90) days following the date of receipt thereof in cash (in this Section 2.7(a)
referred to as the "Collateral Period"). If any consideration consists of an
instrument or security, the Collateral Period shall, with respect to each amount
of cash received in respect thereof, continue until ninety (90) days following
such Restricted Person's receipt of such cash unless, pursuant to the following
sentence, an approved investment included such cash; any cash in a collateral
account may be invested in Cash Equivalents designated by Borrower. During each
Collateral Period, Borrower may propose to invest such proceeds in other
property subject to the approval of Majority Lenders, and shall thereafter
invest such proceeds in such property so approved by Majority Lenders. At the
end of each Collateral Period or, if an investment is so proposed and approved
during such Collateral Period, within one hundred-eighty (180) days after such
proposed investment has been so approved by Majority Lenders, any such proceeds
which have not been so invested by Borrower shall be applied to the reduction of
the outstanding principal balance of the Loans at such time, and the Commitment
shall be reduced by an amount equal to the prepayment applied to the Loans.
(b) If at any time the Facility Usage exceeds the Commitment (whether due
to a reduction in the Commitment in accordance with this Agreement, or
otherwise), Borrower shall immediately upon demand prepay the principal of the
Loans in an amount at least equal to such
25
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excess. 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 2.8. Letters of Credit. Subject to the terms and conditions
-----------------
hereof, Borrower may during the Commitment Period request LC Issuer to issue,
amend, or extend the expiration date of, one or more Letters of Credit, provided
that, after taking such Letter of Credit into account:
(a) the Facility Usage does not exceed the Commitment at such time;
(b) the aggregate amount of LC Obligations at such time does not
exceed $10,000,000;
(c) the expiration date of such Letter of Credit is prior to the
earlier of (i) one (1) year after the date of issuance of such Letter of
Credit or (ii) the end of the Commitment Period;
(d) such Letter of Credit is to be used for general corporate purposes
of Borrower or any of its Subsidiaries and is not directly or indirectly
used to assure payment of or otherwise support any Indebtedness of any
Person, except Indebtedness of a Restricted Person;
(e) 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 not reimbursable under Article
III;
(f) the form and terms of such Letter of Credit are acceptable to LC
Issuer in its sole and absolute discretion; and
(g) 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
(g) (in the following Section 2.9 called the "LC Conditions") have been met as
-------------
of the date of issuance, amendment, or extension of the expiration, of such
Letter of Credit.
Section 2.9. Requesting Letters of Credit. Borrower must make written
----------------------------
application for any Letter of Credit at least two Business Days before the date
on which Borrower desires for LC Issuer to issue such Letter of Credit. By
making any such written application, unless otherwise expressly stated therein,
Borrower shall be deemed to have represented and warranted that the LC
Conditions described in Section 2.8 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). If
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<PAGE>
all LC Conditions for a Letter of Credit have been met as described in Section
2.8 on any Business Day before 11:00 a.m., Boston, Massachusetts time, LC Issuer
will issue such Letter of Credit on the same Business Day at LC Issuer's office
in Boston, Massachusetts. If the LC Conditions are met as described in Section
2.8 on any Business Day on or after 11:00 a.m., Boston, Massachusetts time, LC
Issuer will issue such Letter of Credit on the next succeeding Business Day at
LC Issuer's office in Boston, Massachusetts. If any provisions of any LC
Application conflict with any provisions of this Agreement, the provisions of
this Agreement shall govern and control.
Section 2.10. 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,
together with interest thereon (i) at the Base Rate to and including the second
Business Day after the Matured LC Obligation is incurred and (ii) at the Default
Rate on each day thereafter.
(b) Letter of Credit Advances. If the beneficiary of any Letter of Credit
-------------------------
makes a draft or other demand for payment thereunder then Borrower may, during
the interval between the making thereof and the honoring thereof by LC Issuer,
request Lenders to make Loans to Borrower in the amount of such draft or demand,
which Loans shall be made concurrently with LC Issuer's payment of such draft or
demand and shall be immediately used by LC Issuer to repay the amount of the
resulting Matured LC Obligation. Such a request by Borrower shall be made in
compliance with all of the provisions hereof, provided that for the purposes of
the first sentence of Section 2.1, the amount of such Loans shall be considered,
but the amount of the Matured LC Obligation to be concurrently paid by such
Loans shall not be considered.
(c) Participation by Lenders. LC Issuer irrevocably agrees to grant and
------------------------
hereby grants to each Lender, and -- to induce LC Issuer to issue Letters of
Credit hereunder -- each 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 Lender's own account and risk an undivided
interest equal to such Lender's 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 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 Loans or by the
application of LC Collateral), such 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 Lender's
Percentage Share of such Matured LC Obligation (or any portion thereof which has
not been reimbursed by Borrower). Each 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 Lender to LC Issuer pursuant to this
subsection is paid by such 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 Lender, on demand,
27
<PAGE>
interest thereon calculated from such due date at the Federal Funds Rate. If any
amount required to be paid by any Lender to LC Issuer pursuant to this
subsection is not paid by such 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 Lender, on demand, interest thereon calculated
from such due date at the Base Rate.
(d) Distributions to Participants. Whenever LC Issuer has in accordance
-----------------------------
with this section received from any Lender payment of such Lender's 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
Lender make such payment of its Percentage Share), LC Issuer will distribute to
such Lender its 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 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
Lender from time to time, shall be conclusive, absent manifest error, as to the
amounts thereof.
Section 2.11. Letter of Credit Fees. In consideration of LC Issuer's
---------------------
issuance of any Letter of Credit, Borrower agrees to pay (i) to Administrative
Agent for the account of each Lender in proportion to its Percentage Share, a
letter of credit fee equal to the Letter of Credit Fee Rate applicable each day
times the face amount of such Letter of Credit and (ii) to such LC Issuer for
its own account, a letter of credit fronting fee at a rate equal to one-eighth
percent (.125%) per annum times the face amount of such Letter of Credit. Each
such fee will be calculated on the face amount of each Letter of Credit
outstanding on each day at the above applicable rates and will be payable
quarterly in arrears on the last day of each March, June, September and
December. In addition, Borrower will pay to LC Issuer a minimum administrative
issuance fee and such other fees and charges customarily charged by the LC
Issuer in respect of any issuance, amendment or negotiation of any Letter of
Credit in accordance with the LC Issuer's published schedule of such charges
effective as of the date of such amendment or negotiation.
Section 2.12. 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 or
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 releases each Lender Party
from, and agrees to hold each Lender Party harmless and indemnified against,
28
<PAGE>
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 Lender Party, provided only that no
Lender 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, as determined in a final judgment.
(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 Borrower, or if the
amount of any Letter of Credit is increased at the request of Borrower, 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 Lender 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 releases each Lender Party from,
and agrees to hold each Lender 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 Lender Party, provided only that no Lender 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, as determined in a final judgment.
Section 2.13. LC Collateral.
-------------
(a) LC Obligations in Excess of Commitment. If, after the making of all
--------------------------------------
mandatory prepayments required under Section 2.7, the outstanding LC Obligations
will exceed the Commitment, then in addition to prepayment of the entire
principal balance of the Loans Borrower will immediately pay to LC Issuer an
amount equal to such excess. LC Issuer will hold such amount as collateral
security for the remaining LC Obligations (all such amounts held as collateral
security for LC Obligations being herein collectively called "LC Collateral")
-------------
and the Loans, and such collateral may be applied from time to time to pay
Matured LC Obligations. 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 Credit, LC Collateral or
LC Obligation, including any LC Application, or any rights which any
29
<PAGE>
Lender 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, unless all
Lenders otherwise specifically elect to the contrary (which election may
thereafter be retracted by any Lender at any time), 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 to be held as LC Collateral.
(c) Investment of LC Collateral. Pending application thereof, all LC
---------------------------
Collateral shall be invested by LC Issuer in such Cash Equivalents as LC Issuer
may choose in its sole discretion. All interest on (and other proceeds of) such
Investments shall be reinvested or applied to Matured LC Obligations or the
Loans which are due and payable. 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 for the benefit of
Lenders 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, each Note, and the other Loan Documents, and Borrower agrees that
such LC Collateral, Investments and proceeds 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
or Administrative Agent may without prior 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, and LC Issuer or Administrative Agent will give
notice thereof to Borrower promptly after such application or transfer. 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 2.14. Hedging Contracts. All Hedging Contracts permitted
-----------------
hereunder entered into with any one or more Lenders or their Affiliates shall be
deemed to be Obligations and be secured by all Collateral; subject, however, to
the provisions of Section 3.9 hereof.
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<PAGE>
ARTICLE III - Payments to Lenders
-------------------
Section 3.1. General Procedures. Borrower will make each payment which
------------------
it owes under the Loan Documents to Administrative Agent for the account of the
Lender Party to whom such payment is owed in lawful money of the United States
of America, without set-off, deduction or counterclaim, and in immediately
available funds. Each such payment must be received by Administrative Agent not
later than noon, Boston, Massachusetts time, on the date such payment becomes
due and payable. Any payment received by Administrative 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 Administrative Agent's Note. When Administrative Agent collects or
receives money on account of the Obligations, other than as provided in Section
3.9, Administrative Agent shall distribute all money so collected or received,
and each Lender Party shall apply all such money so distributed, as follows:
(a) first, for the payment of all Obligations which are then due (and
if such money is insufficient to pay all such Obligations, first to any
reimbursements due Administrative 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 Lender Parties shall otherwise agree);
(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, together with
accrued and unpaid interest on the principal so prepaid, and then held as
LC Collateral pursuant to Section 2.13(c); 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 Administrative Agent pro rata to each Lender
Party then owed Obligations described in such subsection in proportion to all
amounts owed to all Lender 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 2.13(c) or to Administrative Agent under Section
9.4, any amounts otherwise distributable under this section to such Lender shall
be deemed to belong to LC Issuer, or Administrative Agent,
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<PAGE>
respectively, to the extent of such unpaid payments, and Administrative 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
Lender Party or any corporation controlling any Lender Party, then, within five
Business Days after demand by such Lender Party, Borrower will pay to
Administrative Agent for the benefit of such Lender Party, from time to time as
specified by such Lender Party, such additional amount or amounts which such
Lender Party shall determine to be appropriate to compensate such Lender Party
or any corporation controlling such Lender Party in light of such circumstances,
to the extent that such Lender 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 Lender Party's Loans, Letters of Credit, participations in
Letters of Credit or commitments under this Agreement.
Section 3.3. Increased Cost of LIBOR Loans or Letters of Credit. If 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 Lender Party
of any principal, interest, or other amounts attributable to any LIBOR Loan
or Letter of Credit or otherwise due under this Agreement in respect of any
LIBOR Loan or Letter of Credit (other than taxes imposed on, or measured
by, the overall net income of such Lender Party or any Applicable Lending
Office of such Lender Party by any jurisdiction in which such Lender Party
or any such Applicable 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 LIBOR
Loan or any Letter of Credit (excluding those for which such Lender Party
is fully compensated pursuant to adjustments made in the definition of
LIBOR Rate) or against assets of, deposits with or for the account of, or
credit extended by, such Lender Party; or
(c) shall impose on any Lender Party or the interbank eurocurrency
deposit market any other condition affecting any LIBOR Loan or Letter of
Credit, the result of which is to increase the cost to any Lender Party of
funding or maintaining any LIBOR Loan or of issuing any Letter of Credit or
to reduce the amount of any sum receivable by any Lender Party in respect
of any LIBOR Loan or Letter of Credit by an amount deemed by such Lender
Party to be material,
then such Lender Party shall promptly notify Administrative Agent and Borrower
in writing of the happening of such event and of the amount required to
compensate such Lender Party for
32
<PAGE>
such event (on an after-tax basis, taking into account any taxes on such
compensation), whereupon (i) Borrower shall, within five Business Days after
demand therefor by such Lender Party, pay such amount to Administrative Agent
for the account of such Lender Party and (ii Borrower may elect, by giving to
Administrative Agent and such Lender Party not less than three Business Days'
notice, to Convert all (but not less than all) of any such LIBOR Loans into Base
Rate Loans.
Section 3.4. Notice; Change of Applicable Lending Office. A Lender Party
-------------------------------------------
shall notify Borrower of any event occurring after the date of this Agreement
that will entitle such Lender Party to compensation under Section 3.2, 3.3 or
3.5 hereof as promptly as practicable, but in any event within 90 days, after
such Lender Party obtains actual knowledge thereof; provided, that (i) if such
--------
Lender Party fails to give such notice within 90 days after it obtains actual
knowledge of such an event, such Lender Party shall, with respect to
compensation payable pursuant to Section 3.2, 3.3 or 3.5 in respect of any costs
resulting from such event, only be entitled to payment under Section 3.2, 3.3 or
3.5 hereof for costs incurred from and after the date 90 days prior to the date
that such Lender Party does give such notice and (ii) such Lender Party will
designate a different Applicable Lending Office for the Loans affected by such
event if such designation will avoid the need for, or reduce the amount of, such
compensation and will not, in the sole opinion of such Lender Party, be
disadvantageous to such Lender Party, except that such Lender Party shall have
no obligation to designate an Applicable Lending Office located in the United
States of America. Each Lender Party will furnish to Borrower a certificate
setting forth the basis and amount of each request by such Lender Party for
compensation under Section 3.2, 3.3, or 3.5 hereof.
Section 3.5. 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
Lender Party to fund or maintain LIBOR Loans or to issue or participate in
Letters of Credit, or shall materially restrict the authority of any Lender
Party to purchase or take offshore deposits of dollars (i.e., "eurodollars"), or
(b) any Lender Party determines that matching deposits appropriate to fund or
maintain any LIBOR Loan are not available to it, or (c) any Lender Party
determines that the formula for calculating the LIBOR Rate does not fairly
reflect the cost to such Lender Party of making or maintaining loans based on
such rate, then, upon notice by such Lender Party to Borrower and Administrative
Agent, Borrower's right to elect LIBOR Loans from such Lender 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
LIBOR Loans of such Lender 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 Lender Party. Borrower agrees to indemnify each Lender
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.
33
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Section 3.6. Funding Losses. In addition to its other obligations
--------------
hereunder, Borrower will indemnify each Lender Party against, and reimburse each
Lender Party on demand for, any loss or expense incurred or sustained by such
Lender Party (including any loss or expense incurred by reason of the
liquidation or reemployment of deposits or other funds acquired by a Lender
Party to fund or maintain LIBOR Loans), as a result of (a) any payment or
prepayment (whether or not authorized or required hereunder) of all or a portion
of a LIBOR Loan on a day other than the day on which the applicable Interest
Period ends, (b) any payment or prepayment, whether or not required hereunder,
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 or not
authorized or required hereunder) of all or any portion of any LIBOR Loan into a
Base Rate Loan or into a different LIBOR 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 3.7. Reimbursable Taxes. Borrower covenants and agrees that:
------------------
(a) Borrower will indemnify each Lender Party against and reimburse
each Lender Party for all present and future stamp and other taxes, levies,
costs and charges whatsoever imposed, assessed, levied or collected on or
in respect of this Agreement or any LIBOR 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 Administrative Agent or such Lender Party or any
Applicable Lending Office of such Lender Party by any jurisdiction in which
such Lender Party or any such Applicable 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
Lender Party's Loans and Note, and all other amounts payable by Borrower to
any Lender 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 Lender 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 Lender 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 Lender Party an official receipt or other
official document evidencing payment of such deduction or withholding.
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(c) If Borrower is ever required to pay any Reimbursable Tax with
respect to any LIBOR Loan, Borrower may elect, by giving to Administrative
Agent and such Lender Party not less than three Business Days' notice, to
Convert all (but not less than all) of any such LIBOR 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 Lender Party, other than a
Lender Party (i) who is a U.S. person for Federal income tax purposes or
(ii) who has the Prescribed Forms on file with Administrative 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 Administrative
Agent and such Lender Party, setting forth the amount of such taxes so
deducted or withheld, the applicable rate and any other information or
documentation which such Lender Party may reasonably request for assisting
such Lender Party to obtain any allowable credits or deductions for the
taxes so deducted or withheld in the jurisdiction or jurisdictions in which
such Lender 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 Lender Party providing
the forms or statements, (y) the Code, or (z) any applicable rules or
regulations thereunder, permit Borrower to make payments hereunder for the
account of such Lender Party free of such deduction or withholding of
income or similar taxes.
Section 3.8 Replacement of Lenders. If any Lender Party seeks
----------------------
reimbursement for increased costs under Sections 3.2 through 3.7, then within
ninety days thereafter -- provided no Event of Default then exists -- Borrower
shall have the right (unless such Lender Party withdraws its request for
additional compensation) to replace such Lender Party by requiring such Lender
Party to assign its Loans and Note and its commitments hereunder to an Eligible
Transferee reasonably acceptable to Administrative Agent and to Borrower,
provided that: (i) all Obligations of Borrower owing to such Lender Party being
replaced (including such increased costs and any breakage costs with respect to
any outstanding LIBOR Loans, but excluding principal and accrued interest on the
Notes being assigned) shall be paid in full to such Lender Party concurrently
with such assignment, and (ii) the replacement Eligible Transferee shall
purchase the Note being assigned by paying to such Lender Party a price equal to
the principal amount thereof plus accrued and unpaid interest and accrued and
unpaid commitment fees thereon. In connection with any such assignment
Borrower, Administrative Agent, such Lender 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 Lender Party which seeks reimbursement for increased costs under
Section 3.2
35
<PAGE>
through 3.7 unless Borrower is at the same time replacing all Lender Parties
which are then seeking such compensation.
Section 3.9. Application of Proceeds After Acceleration. If any Event of
------------------------------------------
Default shall have occurred and be continuing, and if the Obligations have
become due and payable, all cash collateral held by Administrative Agent under
this Agreement and the proceeds of any sale, disposition, or other realization
by Administrative Agent upon the Collateral (or any portion thereof) pursuant to
the Security Documents, shall be distributed in whole or in part by
Administrative Agent in the following order of priority, unless otherwise
directed by all of the Lenders:
First, to the Administrative Agent, in an amount equal to all
-----
reimbursements to Administrative Agent due and payable as of the date of such
distribution;
Second, to the Lenders, ratably, in an amount equal to all accrued and
------
unpaid interest and fees owing to the Lenders under this Agreement due and
payable as of the date of such distribution; provided, however, that in case
such proceeds shall be insufficient to pay in full all such Obligations, then to
the payment thereof to the Lenders, ratably, in proportion to its percentage of
the sum of the aggregate amounts of all such Obligations;
Third, to the Lenders, ratably, in an amount equal to all Loans plus LC
-----
Obligations; provided, however, that in the case such proceeds shall be
insufficient to pay in full all such Obligations, then to the payment thereof to
the Lenders, ratably, in proportion to its percentage of the sum of the
aggregate amounts of all such Obligations;
Fourth, to the Lenders, ratably, in an amount equal to all amounts owing to
------
the Lenders under all Obligations with respect to Hedging Contracts between any
Restricted Person and any Lender or an Affiliate; provided, however, that in
case such proceeds shall be insufficient to pay in full all such Obligations,
then to the payment thereof to the Lenders, ratably, in proportion to its
percentage of the sum of the aggregate amounts of all such Obligations;
Fifth, to the Lenders in an amount equal to all other Obligations;
-----
provided, however, that in the case such proceeds shall be insufficient to pay
in full such Obligations, then to the payment thereof to the Lenders, ratably,
in proportion to its percentage of the sum of the aggregate amounts of all such
Obligations; and
Sixth, to the extent of any surplus, to the Restricted Persons as their
-----
respective interests may appear, except as may be provided otherwise by law;
it being understood that the Restricted Persons shall remain liable to the
extent of any deficiency between the amount of proceeds of the Collateral and
the aggregate sums referred to in clauses First through Fifth above.
ARTICLE IV - Conditions Precedent to Lending
-------------------------------
36
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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 Administrative Agent shall have received all of the following,
at Administrative Agent's office in Boston, Massachusetts, duly executed and
delivered and in form, substance and date satisfactory to Administrative 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.
(d) Certain certificates including:
(i) An "Omnibus Certificate" of the secretary and of the
president of General Partner, which shall contain the names and
signatures of the officers of General Partner 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 General Partner
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 each Restricted Person and all
amendments thereto, certified by the appropriate official of such
Restricted Person's state of organization, and (3) a copy of any
bylaws or agreement of limited partnership of each Restricted Person;
and
(ii) A certificate of the president and of the chief financial
officer of General Partner, regarding satisfaction of Section 4.2.
(iii) A solvency certificate from Borrower and each Guarantor,
with attached pro forma balance sheet for such Person giving effect to
the Restructuring.
(e) A certificate (or certificates) of the due formation, valid
existence and good standing of each Restricted Person in its respective
state of organization, issued by the appropriate authorities of such
jurisdiction, and certificates of each Restricted Person's good standing
and due qualification to do business, issued by appropriate officials in
any states in which such Restricted Person owns property subject to
Security Documents.
(f) Documents similar to those specified in subsections (d)(i) and (e)
of this section with respect to each Guarantor and the execution by it of
its guaranty of Borrower's Obligations.
37
<PAGE>
(g) A favorable opinion of Michael Patterson, Esq., General Counsel
for Restricted Persons, substantially in the form set forth in Exhibit E-1,
Fulbright & Jaworski L.L.P., special Texas and New York counsel to
Restricted Persons, substantially in the form set forth in Exhibit E-2,
Andrews & Kurth L.L.P., special counsel to Restricted Persons,
substantially in the form of Exhibit E-3, and local counsel for the states
of California and Oklahoma satisfactory to Administrative Agent.
(h) The Initial Financial Statements.
(i) Certificates or binders evidencing Restricted Persons' insurance
in effect on the date hereof.
(j) Copies of such permits and approvals regarding the property and
business of Restricted Persons as Administrative Agent may request.
(k) A certificate signed by the chief executive officer of General
Partner in form and detail acceptable to Administrative Agent confirming
the insurance that is in effect as of the date hereof and certifying that
such insurance is customary for the businesses conducted by Restricted
Persons and is in compliance with the requirements of this Agreement.
(l) Payment of all commitment, facility, agency and other fees
required to be paid to any Lender pursuant to any Loan Documents or any
commitment agreement heretofore entered into.
(m) The Intercreditor Agreement with the lenders party to the
Marketing Credit Agreement in the form of Exhibit I hereto.
(n) Borrower shall have adopted such risk management procedures and
controls and such trading policies as shall be satisfactory to each Agent
in its sole and absolute discretion.
(o) Each Agent and its counsel shall have reviewed and approved, in
its sole and absolute discretion, all outstanding Plains MLP or Resources
shareholder litigation and available insurance with respect thereto.
(p) The Restructuring and all of the transactions contemplated under
the Restructuring Documents shall have been consummated.
(q) Each Restricted Person shall have executed and delivered the
Marketing Credit Agreement and all conditions precedent to the Marketing
Credit Agreement shall have been satisfied.
(r) General Partner shall have delivered to Administrative Agent a
certificate by the chief financial officer of General Partner, certifying
the Initial Financial
38
<PAGE>
Statements delivered pursuant to clause (h) above and reflecting pro forma
compliance with each event specified in Sections 7.11 through 7.14,
inclusive.
Section 4.2. 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 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 except to the extent that such
representation or warranty was made as of a specific date or updated,
modified or supplemented as of a subsequent date with the consent of
Majority Lenders.
(b) No Default shall exist at the date of such Loan or the date of
issuance of such Letter of Credit.
(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, Plains MLP's or Borrower's Consolidated financial condition or
businesses since the date of the Initial Financial Statements.
(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) Administrative Agent shall have received all documents and
instruments which Administrative Agent has then requested, in addition to
those described in Section 4.1 (including opinions of legal counsel for
Restricted Persons and Administrative 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 (ii all other matters pertaining hereto
and thereto. All such additional documents and instruments shall be
satisfactory to Administrative Agent in form, substance and date.
39
<PAGE>
ARTICLE V - Representations and Warranties
------------------------------
To confirm each Lender's understanding concerning Restricted Persons and
Restricted Persons' businesses, properties and obligations and to induce each
Lender to enter into this Agreement and to extend credit hereunder, after giving
effect to the consummation of the transactions set forth in the Restructuring
Documents, Plains MLP and Borrower represent and warrant to each Lender 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. Each Restricted Person 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 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 except where the failure to
so qualify would not cause a Material Adverse Change. 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
necessary except where the failure to so qualify would not cause a Material
Adverse Change.
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 and Restructuring Documents to
which each is a party, the performance by each of its obligations under such
Loan Documents and Restructuring Documents, and the consummation of the
transactions contemplated by the various Loan Documents and various
Restructuring Documents, do not and will not (i) conflict with any provision of
(1) any Law, (2) the organizational documents of any Restricted Person or any of
its Affiliates, or (3) any agreement, judgment, license, order or permit
applicable to or binding upon any Restricted Person or any of its Affiliates,
(ii result in the acceleration of any Indebtedness owed by any Restricted Person
or any of its Affiliates, or (ii result in or require the creation of any Lien
upon any assets or properties of any Restricted Person or any of its Affiliates
except as expressly contemplated in the Loan Documents. Except as expressly
contemplated in the Loan Documents or disclosed in the Disclosure Schedule, no
permit, consent, approval, authorization or order of, and no notice to or
filing, registration or qualification 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 Restructuring Document or to
consummate any transactions
40
<PAGE>
contemplated by the Loan Documents and the Restructuring Documents, other than
consents, approvals, authorizations or orders that have been obtained or notices
given or filings made prior to the date hereof and other than various notices or
filings required to be given or made following the effectiveness of the
Restructuring Documents.
Section 5.5. Enforceable Obligations. This Agreement is, and the other
-----------------------
Loan Documents and the Restructuring 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. Plains MLP has heretofore
----------------------------
delivered to each Lender true, correct and complete copies of the Initial
Financial Statements. The Initial Financial Statements other than pro forma
financial statements fairly present Plains MLP's Consolidated and consolidating
financial position at the date thereof and the Consolidated and consolidating
results of Plains MLP's operations for the periods thereof, and in the case of
the annual Initial Financial Statements, Consolidated cash flows for the period
thereof. The pro forma Initial Financial Statements fairly present Plains MLP's
pro forma Consolidated and consolidating financial position at the date thereof
and the pro forma Consolidated results of Plains MLP's operations for the period
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 other than pro forma financial statements were prepared in accordance
with GAAP. All Initial Financial Statements that are pro forma financial
statements were prepared in accordance with GAAP with such pro forma adjustments
as have been accepted by Administrative Agent.
Section 5.7. Other Obligations and Restrictions. No Restricted Person
----------------------------------
has any outstanding Liabilities of any kind (including contingent obligations,
tax assessments, and unusual forward or long-term commitments) which are, in the
aggregate, material to Plains MLP or material with respect to Plains MLP's
Consolidated financial condition and not shown in the Initial Financial
Statements or disclosed in the Disclosure Schedule. Except as shown in the
Initial Financial Statements or disclosed in the Disclosure Schedule, no
Restricted Person 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 any Restricted Person to any
Lender 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 necessary to make the
statements contained herein or therein, in light of the circumstances under
which they were made, not misleading as of the date made or deemed made. All
written information furnished after the date hereof by or on behalf of any
Restricted Person to Administrative Agent or any Lender Party in connection with
this Agreement and the other Loan Documents and the transactions contemplated
hereby and thereby will be true, complete and accurate in every material respect
in light of the circumstances in which made or based on reasonable estimates on
the date as of
41
<PAGE>
which such information is stated or certified. There is no fact known to any
Restricted Person that has not been disclosed to each Lender in writing which
could cause a Material Adverse Change.
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 any Restricted Person threatened, against any Restricted Person or
affecting any Collateral (including, without limitation, any which challenge or
otherwise pertain to any Restricted Person's title to any Collateral) before any
Tribunal which could reasonably be expected to cause a Material Adverse Change,
and (ii) there are no outstanding judgments, injunctions, writs, rulings or
orders by any such Tribunal against any Restricted Person or any Restricted
Person's stockholders, partners, directors or officers or affecting any
Collateral which could reasonably be expected to cause a Material Adverse
Change.
Section 5.10. Labor Disputes and Acts of God. Except as disclosed in the
------------------------------
Disclosure Schedule, neither the business nor the properties of any Restricted
Person 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. Except as disclosed in the Initial
Financial Statements or in the Disclosure Schedule, no Termination Event has
occurred with respect to any ERISA Plan and all ERISA Affiliates are in
compliance 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: (i) no "accumulated funding deficiency" (as
defined in Section 412(a) of the Code) 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. Compliance with Laws. Except as set forth in the
--------------------
Disclosure Schedule, each Restricted Person has all permits, licenses and
authorizations required in connection with the conduct of its businesses, except
to the extent failure to have any such permit, license or authorization could
not cause a Material Adverse Change. Each Restricted Person is in compliance
with the terms and conditions of all such permits, licenses and authorizations,
and is also in compliance with all other limitations, restrictions, conditions,
standards, prohibitions, requirements, obligations, schedules and timetables
contained in any Law, including 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 could not cause a Material Adverse Change. Without limiting
the foregoing, each Restricted Person (i) has filed and maintained all tariffs
applicable to its business with each applicable commission, (ii) and all such
tariffs are in compliance with all Laws administered or
42
<PAGE>
promulgated by each applicable commission and (iii) has imposed charges on its
customers in compliance with such tariffs, all contracts applicable to its
business and all applicable Laws. As used herein, "commission" includes the
Federal Energy Regulatory Commission, the Public Utility Commission of the State
of California and each other federal, state or local governmental department,
commission, board, bureau, agency or instrumentality having jurisdiction over
any Restricted Person or its properties.
Section 5.13. Environmental 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.
-------
(S) 9601(22). Without limiting the provisions of Section 5.12, and except as
set forth in the Disclosure Schedule:
(a) 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 threatened by any
Tribunal or any other Person with respect to any of the following which in the
aggregate could cause a Material Adverse Change: (i) any alleged generation,
treatment, storage, recycling, transportation, disposal, or Release of any
Hazardous Materials, either by any Restricted Person or on any property owned by
any Restricted Person, (ii) any 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 any Restricted Person 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.
(b) No Restricted Person otherwise has any known material contingent
liability in connection with any alleged generation, treatment, storage,
recycling, transportation, disposal, or Release of any Hazardous Materials.
(c) No Restricted Person has handled any Hazardous Materials, other than as
a generator, on any properties now or previously owned or leased by any
Restricted Person to an extent that such handling has caused, or could cause, a
Material Adverse Change.
(d) Except to the extent that the following in the aggregate has not caused
and could not cause a Material Adverse Change:
(i) no PCBs are or have been present at any properties now or
previously owned or leased by any Restricted Person;
(ii) no asbestos is or has been present at any properties now or
previously owned or leased by any Restricted Person;
43
<PAGE>
(iii) there are no underground storage tanks for Hazardous Materials,
active or abandoned, at any properties now or previously owned or leased by
any Restricted Person; and
(iv) no Hazardous Materials have been Released at, on or under any
properties now or previously owned or leased by any Restricted Person.
(e) No Restricted Person has transported or arranged for the
transportation of any Hazardous Material to any location which is listed on the
National Priorities List under CERCLA, any location listed for possible
inclusion on the National Priorities List by the Environmental Protection Agency
in CERCLIS, nor, except to the extent that has not caused and could not cause a
Material Adverse Change, any location 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 any Restricted Person for clean-
up costs, remedial work, damages to natural resources or for personal injury
claims, including, but not limited to, claims under CERCLA.
(f) No property now or previously owned or leased by any Restricted Person
is listed or proposed for listing on the National Priority list promulgated
pursuant to CERCLA, in CERCLIS, nor, except to the extent that has not caused
and could not cause a Material Adverse Change, on any similar state list of
sites requiring investigation or clean-up.
(g) There are no Liens arising under or pursuant to any Environmental Laws
on any of the real properties or properties owned or leased by any Restricted
Person, and no government actions of which Borrower is aware have been taken or
are in process which could subject any of such properties to such Liens; nor
would any Restricted Person 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.
(h) There have been no environmental investigations, studies, audits,
tests, reviews or other analyses for ground water or soil contamination relating
to the Release of Hazardous Materials conducted by or which are in the
possession of any Restricted Person in relation to any properties or facility
now or previously owned or leased by any Restricted Person which have not been
made available to Administrative Agent.
Section 5.14. 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 or as
contemplated by the Restructuring Documents. Except as otherwise indicated in
the Disclosure Schedule, 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, no Restricted Person has any other office
or place of business.
Section 5.15. 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. Neither Borrower nor any Restricted
Person is a member of any general or limited
44
<PAGE>
partnership, limited liability company, joint venture or association of any type
whatsoever except those listed in the Disclosure Schedule. Borrower owns,
directly or indirectly, the equity interest in each of its Subsidiaries which is
indicated in the Disclosure Schedule.
Section 5.16. Title to Properties; Licenses. Each Restricted Person 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 such Restricted Person's business. Each
Restricted Person 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 necessary to carry out
its business as presently conducted and as presently proposed to be conducted
hereafter, and no Restricted Person 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 5.17. 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 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. Neither Borrower nor any other Restricted Person is subject
to regulation under the Federal Power Act which would violate, result in a
default of, or prohibit the effectiveness or the performance of any of the
provisions of the Loan Documents.
Section 5.18. Insider. No Restricted Person, nor any Person having
-------
"control" (as that term is defined in 12 U.S.C. (S) 375b(9) or in regulations
promulgated pursuant thereto) of any Restricted Person, is a "director" or an
"executive officer" or "principal shareholder" (as those terms are defined in 12
U.S.C. (S) 375b(8) or (9) or in regulations promulgated pursuant thereto) of any
Lender, of a bank holding company of which any Lender is a Subsidiary or of any
Subsidiary of a bank holding company of which any Lender is a Subsidiary.
Section 5.19. Solvency. Upon giving effect to the issuance of the Notes,
--------
the execution of the Loan Documents by Borrower and each Guarantor and the
consummation of the transactions contemplated hereby, (i) Borrower and each
Guarantor will be solvent (as such term is used in applicable bankruptcy,
liquidation, receivership, insolvency or similar Laws), and the sum of
Borrower's and each Guarantor's absolute and contingent liabilities, including
the Obligations or guarantees thereof, shall not exceed the fair market value of
such Restricted Person's assets, and (ii) Borrower's and each Guarantor's
capital should be adequate for the businesses in which such Restricted Person is
engaged and intends to be engaged. Neither Borrower nor any Restricted Person
has incurred (whether under the Loan Documents or otherwise), nor does any
Restricted Person intend to incur or believe that it will incur, debts which
will be beyond its ability to pay as such debts mature.
Section 5.20. Credit Arrangements. The Disclosure Schedule contains a
-------------------
complete and correct list, as of the date of this Agreement, of each credit
agreement, loan agreement, indenture,
45
<PAGE>
purchase agreement, guaranty or other arrangement providing for or otherwise
relating to any Indebtedness or any extension of credit (or commitment for any
extension of credit) to, or guaranty by, any Restricted Person, or to which any
Restricted Person is subject, other than the Loan Documents, and the aggregate
principal or face amount outstanding or which may become outstanding under each
such arrangement is correctly described in the Disclosure Schedule. No
Restricted Person is subject to any restriction under any credit agreement, loan
agreement, indenture, purchase agreement, guaranty or other arrangement
providing for or otherwise relating to any Indebtedness or any extension of
credit (or commitment for any extension of credit) to, or guaranty by, any
Affiliate, other than another Restricted Person.
ARTICLE VI - Affirmative Covenants
----------------------
To conform with the terms and conditions under which each Lender is willing
to have credit outstanding to Borrower, and to induce each Lender to enter into
this Agreement and extend credit hereunder, Plains MLP and Borrower covenant and
agree that until the full and final payment of the Obligations and the
termination of this Agreement, unless Majority Lenders, or all Lenders as
required under Section 10.1, have previously agreed otherwise:
Section 6.1. Payment and Performance. Each Restricted Person will pay
-----------------------
all amounts due under the Loan Documents, to which it is a party, in accordance
with the terms thereof and will observe, perform and comply with every covenant,
term and condition expressed in the Loan Documents to which it is a party.
Section 6.2. Books, Financial Statements and Reports. Each Restricted
---------------------------------------
Person will at all times maintain full and accurate books of account and
records. Plains MLP 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 Lender at Restricted Person's
expense:
(a) As soon as available, and in any event within ninety (90) days
after the end of each Fiscal Year (i) complete Consolidated financial
statements of Plains MLP 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
PricewaterhouseCoopers LLP, or other independent certified public
accountants selected by General Partner and acceptable to Majority Lenders,
stating that such Consolidated financial statements have been so prepared
and (ii) supporting unaudited consolidating balance sheets and statements
of income of each other Restricted Person (except for any Restricted Person
whose financial statements are substantially the same as those of Plains
MLP). 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 for such Fiscal Year.
Such Consolidated financial statements shall set 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 Plains MLP will
furnish a certificate signed by such accountants (i) stating that they have
read this Agreement, (ii) containing calculations showing compliance (or
non-compliance) at
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the end of such Fiscal Year with the requirements of Sections 7.11 through
7.14, inclusive, and (iii) further stating that in making their examination
and reporting on the Consolidated financial statements described above they
obtained no knowledge of any Default existing at the end of such Fiscal
Year, or, if they did so 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 of the first three Fiscal Quarters of each Fiscal
Year, (i) Plains MLP's Consolidated balance sheet as of the end of such
Fiscal Quarter and Consolidated statements of Plains MLP's earnings and
cash flows for such Fiscal Quarter and for the period from the beginning of
the then current Fiscal Year to the end of such Fiscal Quarter, and (ii)
supporting consolidating balance sheets and statements of income of each
other Restricted Person (except for any Restricted Person whose financial
statements are substantially the same as those of Plains MLP), all in
reasonable detail and prepared in accordance with GAAP, subject to changes
resulting from normal year-end adjustments; and as soon as available, and
in any event within forty-five (45) days after the end of the last Fiscal
Quarter of each Fiscal Year, Plains MLP's unaudited Consolidated balance
sheet as of the end of such Fiscal Quarter and income statement for such
Fiscal Quarter and for the period from the beginning of the current Fiscal
Year to the end of such Fiscal Quarter. In addition Plains MLP 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, principal accounting officer or treasurer of General
Partner stating that such financial statements are accurate and complete in
all material respects (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 7.11through 7.14, inclusive 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) Promptly upon their becoming available, copies of all financial
statements, reports, notices and proxy statements sent by Plains MLP to its
unit holders and all registration statements, periodic reports and other
statements and schedules filed by Plains MLP with any securities exchange,
the Securities and Exchange Commission or any similar governmental
authority.
(d) As soon as available, and in any event within ninety (90) days
after the end of each Fiscal Year, a five-year business and financial plan
for Plains MLP (in form reasonably satisfactory to Administrative Agent),
prepared or caused to be prepared by a senior financial officer thereof,
setting forth for the first year thereof, quarterly financial projections
and budgets for Plains MLP, and thereafter yearly financial projections for
the next four Fiscal Years.
(e) As soon as available, and in any event within forty-five (45) days
after the end of each month, throughput volume reports setting forth in
detail pipeline volumes of
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crude oil delivered by Restricted Persons for such month in connection
with, and transportation fees charged and margins realized by the
Restricted Persons for such month delivered through all pipeline facilities
of Plains MLP and its Subsidiaries.
(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 volumes 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, an environmental compliance certificate
signed by the president or chief executive officer of General Partner in
the form attached hereto as Exhibit F. Further, if requested by
Administrative Agent, Restricted Persons shall permit and cooperate with an
environmental and safety review made in connection with the operations of
Restricted Persons' properties one time during each Fiscal Year, by Pilko &
Associates, Inc. or other consultants selected by Administrative Agent
which review shall, if requested by Administrative Agent, be arranged and
supervised by environmental legal counsel for Administrative Agent, all at
Restricted Persons' cost and expense. The consultant shall render a verbal
or written report, as specified by Administrative Agent, based upon such
review at Restricted Persons' cost and expense and a copy thereof will be
provided to Restricted Persons.
(h) Concurrently with the annual renewal of Restricted Persons'
insurance policies, Restricted Persons shall at their own cost and expense,
if requested by Administrative Agent in writing, cause a certificate or
report to be issued by Administrative Agent's professional insurance
consultants or other insurance consultants satisfactory to Administrative
Agent certifying that Restricted Persons' 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.
(i) As soon as available, and in any event within thirty-five (35)
days after the end of each calendar month, a Consolidated statement of
Plains MLP's earnings for such calendar month in form satisfactory to
Administrative Agent.
(j) By 10:00 a.m., Boston Massachusetts time, each Monday, a report on
a mark to market basis of all Floating Rate Contracts as of the close of
business on the previous Friday, and together with such report a complete
list of all net realized losses on any Floating Rate Contracts for the
prior twelve months in form satisfactory to Administrative Agent.
Section 6.3. Other Information and Inspections. In each case subject to
---------------------------------
the last sentence of this Section 6.3, each Restricted Person will furnish to
each Lender any information which Administrative Agent or any Lender may from
time to time request concerning any covenant, provision or condition of the Loan
Documents or any matter in connection with Restricted Persons' businesses and
operations. In each case subject to the last sentence of this Section 6.3,
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each Restricted Person will permit representatives appointed by Administrative
Agent (including independent accountants, auditors, agents, attorneys,
appraisers and any other Persons) to visit and inspect during normal business
hours any of such Restricted 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 each
Restricted Person shall permit Administrative Agent or its representatives to
investigate and verify the accuracy of the information furnished to
Administrative Agent or any Lender in connection with the Loan Documents and to
discuss all such matters with its officers, employees and, upon prior notice to
Borrower, its representatives. Without limitation of the foregoing, within one
hundred twenty (120) days after the end of each Fiscal Year, and in addition
once during each Fiscal Year, if requested by Administrative Agent at the
instruction of Majority Lenders, Borrower shall permit commercial financial
examiners appointed by Administrative Agent to conduct a commercial finance
examination of the business and assets of Restricted Persons and in connection
with such examination to have full access to and the right to examine, audit,
make abstracts and copies from, and inspect Restricted Persons' records, files,
books of account and all other documents, instruments and agreements to which a
Restricted Person is a party. Borrower shall pay all reasonable costs and
expenses of Administrative Agent associated with any such examination. Each of
the foregoing inspections and examinations shall be made subject to compliance
with applicable safety standards and the same conditions applicable to any
Restricted Person in respect of property of that Restricted Person on the
premises of Persons other than a Restricted Person or an Affiliate of a
Restricted Person, and all information, books and records furnished or requested
to be furnished, or of which copies, photocopies or photographs are made or
requested to be made, all information to be investigated or verified and all
discussions conducted with any officer, employee or representative of any
Restricted Person shall be subject to any applicable attorney-client privilege
exceptions which the Restricted Person determines is reasonably necessary and
compliance with conditions to disclosures under non-disclosure agreements
between any Restricted Person and Persons other than a Restricted Person or an
Affiliate of a Restricted Person and the express undertaking of each Person
acting at the direction of or on behalf of any Lender Party to be bound by the
confidentiality provisions of Section 10.6 of this Agreement.
Section 6.4. Notice of Material Events and Change of Address. Each
-----------------------------------------------
Restricted Person will notify each Lender Party, not later than five (5)
Business Days after any executive officer of Restricted Persons has knowledge
thereof, 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 any
Restricted Person or of any default by any Restricted Person under any
indenture, mortgage, agreement, contract or other instrument to which any
of them is a party or by
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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) Under any Environmental Law, any claim of $1,000,000 or more, any
notice of potential liability which might be reasonably likely to exceed
such amount, or any other material adverse claim asserted against any
Restricted Person or with respect to any Restricted Person's properties
taken as a whole, and
(f) the filing of any suit or proceeding, or the assertion in writing
of a claim against any Restricted Person or with respect to any Restricted
Person's properties in which an adverse decision reasonably could be
expected to cause a Material Adverse Change.
Upon the occurrence of any of the foregoing Restricted Persons 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. Restricted Persons will
also notify Administrative Agent and Administrative 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 Administrative Agent and its counsel to prepare the
same.
Section 6.5. Maintenance of Properties. Each Restricted Person will
-------------------------
maintain, preserve, protect, and keep all Collateral and all other property used
or useful in the conduct of its business in good condition (ordinary wear and
tear excepted) 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. Each Restricted
-------------------------------------------
Person 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. Each Restricted
-----------------------------------------
Person will (a) timely file all required tax returns (including any extensions);
(b) timely pay all taxes, assessments, and other governmental charges or levies
imposed upon it or upon its income, profits or property; (c) within one hundred
twenty (120) days after the date such goods are delivered or such services are
rendered, 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, other than royalty payments suspended
in the ordinary course of business; and (e) maintain
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appropriate accruals and reserves for all of the foregoing in accordance with
GAAP. Each Restricted Person 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, if necessary, and has set aside on its books adequate
reserves therefor which are required by GAAP.
Section 6.8. Insurance. Each Restricted Person shall at all times
---------
maintain insurance for its property in accordance with the Insurance Schedule,
which insurance shall be by financially sound and reputable insurers. Borrower
will maintain any additional insurance coverage as described in the respective
Security Documents. Upon demand by Administrative Agent any insurance policies
covering Collateral shall be endorsed (a) to provide for payment of losses to
Administrative 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 Administrative Agent, and (c) to
provide for any other matters specified in any applicable Security Document or
which Administrative Agent may reasonably require. Each Restricted Person 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, each
Restricted Person shall at all time maintain liability insurance in accordance
with 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, Administrative Agent may
pay the same after notice of such payment by Administrative Agent is given to
Borrower. Borrower shall immediately reimburse Administrative Agent for any
such payments and each amount paid by Administrative Agent shall constitute an
Obligation owed hereunder which is due and payable on the date such amount is
paid by Administrative Agent.
Section 6.10. Interest. Borrower hereby promises to each Lender to pay
--------
interest at the Default Rate on all Obligations (including Obligations to pay
fees or to reimburse or indemnify any Lender) which Borrower has in this
Agreement promised to pay to such Lender 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. Each Restricted Person
----------------------------------
will perform all material obligations it is required to perform under the terms
of each indenture, mortgage, deed of trust, security agreement, lease, and
franchise, and each material agreement, contract or other instrument or
obligation to which it is a party or by which it or any of its properties is
bound. Each Restricted Person will conduct its business and affairs in
compliance with all Laws applicable thereto.
Section 6.12. Environmental Matters; Environmental Reviews.
--------------------------------------------
(a) Each Restricted Person will comply in all material respects with all
Environmental Laws now or hereafter applicable to such Restricted Person as well
as all contractual obligations and agreements with respect to environmental
remediation or other
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environmental matters, 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.
(b) Each Restricted Person will promptly furnish to Administrative Agent
all written notices of violation, orders, claims, citations, complaints, penalty
assessments, suits or other proceedings received by any Restricted Person or
General Partner, or of which it has notice, pending or threatened against any
Restricted Person, the potential liability of which exceeds $1,000,000 or would
cause a Material Adverse Change if resolved adversely against any Restricted
Person, 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) Each Restricted Person will promptly furnish to Administrative Agent
all requests for information, notices of claim, demand letters, and other
notifications, received by any Restricted Person or General Partner 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, the potential liability of
which exceeds $1,000,000 or would cause a Material Adverse Change if resolved
adversely against any Restricted Person.
Section 6.13. Evidence of Compliance. Subject to the last sentence of
----------------------
Section 6.3, each Restricted Person will furnish to each Lender at such
Restricted Person's expense all evidence which Administrative 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. Agreement to Deliver Security Documents. Restricted
---------------------------------------
Persons will deliver to further secure the Obligations whenever requested by
Administrative 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 Administrative
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.
Section 6.15. Perfection and Protection of Security Interests and Liens.
---------------------------------------------------------
Each Restricted Person will from time to time deliver to Administrative Agent
any financing statements, continuation statements, extension agreements and
other documents, properly completed and executed (and acknowledged when
required) by Restricted Persons in form and substance satisfactory to
Administrative Agent, which Administrative Agent requests for the purpose of
perfecting, confirming, or protecting any Liens or other rights in Collateral
securing any Obligations.
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Section 6.16. Bank Accounts; Offset. To secure the repayment of the
---------------------
Obligations, each Restricted Person hereby grants to each Lender 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 Lender 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
such Restricted Person now or hereafter held or received by or in transit to any
Lender from or for the account of such Restricted Person, whether for
safekeeping, custody, pledge, transmission, collection or otherwise, (b) any and
all deposits (general or special, time or demand, provisional or final) of such
Restricted Person with any Lender, and (c) any other credits and claims of such
Restricted Person at any time existing against any Lender, including claims
under certificates of deposit. At any time and from time to time during the
continuance of any Event of Default, each Lender is hereby authorized to
foreclose upon, or to offset against the Obligations then due and payable (in
either case without notice to any Restricted Person), any and all items herein
above 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 6.17. Guaranties of Subsidiaries. Each Subsidiary of Plains MLP
--------------------------
now existing or created, acquired or coming into existence after the date hereof
shall, promptly upon request by Administrative Agent, execute and deliver to
Administrative 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
Administrative Agent in form and substance. Each Subsidiary of Plains MLP
existing on the date hereof shall duly execute and deliver such a guaranty prior
to the making of any Loan hereunder. Plains MLP will cause each of its
Subsidiaries to deliver to Administrative Agent, simultaneously with its
delivery of such a guaranty, written evidence satisfactory to Administrative
Agent and its counsel that such Subsidiary has taken all corporate, limited
liability company 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 6.18. Compliance with Agreements. Each Restricted Person shall
--------------------------
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 such Restricted Person or to Restricted Persons on a Consolidated
basis or materially significant to any Guarantor, unless and such failure to so
observe, perform or comply is remedied within the applicable period of grace (if
any) provided in such agreement or instrument.
Section 6.19. Rents. By the terms of the various Security Documents,
-----
certain Restricted Persons are and will be assigning to Administrative Agent,
for the benefit of Lender Parties, all of the "Rents" (as defined therein)
accruing to the property covered thereby. Notwithstanding any such assignments,
so long as no Default has occurred and is continuing, (i) such Restricted
Persons may continue to receive and collect from the payors of such Rents all
such Rents, subject, however, to the Liens created under the Security Documents,
which Liens are hereby affirmed and ratified, and free and clear of such Liens,
use the proceeds of the Rents, and (ii) the
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Administrative Agent will not notify the obligors of such Rents or take any
other action to cause proceeds thereof to be remitted to the Administrative
Agent. Upon the occurrence of a Default, Administrative Agent may exercise all
rights and remedies granted under the Security Documents, including the right to
obtain possession of all Rents then held by such Restricted Persons or to
receive directly from the payors of such Rents all other Rents until such time
as such Default is no longer continuing. If the Administrative Agent shall
receive any Rent proceeds from any payor at any time other than during the
continuance of a Default, then it shall notify Borrower thereof and (i) upon
request and pursuant to the instructions of Borrower, it shall, if no Default is
then continuing, remit such proceeds to the Borrower and (ii) at the request and
expense of Borrower, execute and deliver a letter to such payors confirming
Restricted Persons' right to receive and collect Rents until otherwise notified
by Administrative Agent. In no case shall any failure, whether purposed or
inadvertent, by Administrative Agent to collect directly any such Rents
constitute in any way a waiver, remission or release of any of its rights under
the Security Documents, nor shall any release of any Rents by Administrative
Agent to such Restricted Persons constitute a waiver, remission, or release of
any other Rents or of any rights of Administrative Agent to collect other Rents
thereafter.
Section 6.20. Post-Closing Actions. Borrower will and will cause each
--------------------
other Restricted Person to prepare and deliver to Administrative Agent right-of-
way alignment maps reflecting the main line segments of the pipelines
constituting "Major Pipelines and Terminals" (as such term is defined in the
Scurlock Agreement) and identifying the specific easements or right-of-way
documents covering each portion of such pipeline location (the "Alignment
Maps"), such Alignment Maps to be prepared and delivered to Administrative Agent
on or before (a) October 1, 2000, with respect to the West Texas Gathering
System, (b) July 1, 2000, with respect to the Venice Terminal, and (c) May 31,
2000, with respect to the other "Major Pipelines and Terminals".
Section 6.21. Working Capital Borrowings. For an economically meaningful
--------------------------
period of time in each Fiscal Year, as reasonably determined by the General
Partner, the aggregate outstanding principal balance of all Working Capital
Borrowings shall be reduced to a relatively small amount as may be reasonably
specified by the General Partner.
ARTICLE VII - Negative Covenants
------------------
To conform with the terms and conditions under which each Lender is willing
to have credit outstanding to Borrower, and to induce each Lender to enter into
this Agreement and make the Loans, Plains MLP and Borrower covenant and agree
that until the full and final payment of the Obligations and the termination of
this Agreement, unless Majority Lenders, or all Lenders as required under
Section 10.1, 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;
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(b) Indebtedness arising under Hedging Contracts (i) permitted under
Section 7.3 or (ii) consisting of options, swaps, collars and similar
instruments that relate to crude oil and are either referred to in any of
clauses (i) - (iii) of Section 7.15(a) or permitted by Section 7.15(b) or (c);
(c) Indebtedness of any Restricted Person owing to another Restricted
Person;
(d) Liabilities with respect to obligations to deliver crude oil or to
render terminaling or storage services in consideration for advance payments to
a Restricted Person provided such delivery or rendering, as applicable, is to be
made within 60 days after such payment;
(e) Indebtedness under the Marketing Credit Agreement, provided that the
principal amount of loans and face amount of letters of credit thereunder at any
one time outstanding shall not exceed $350,000,000;
(f) guaranties by Plains MLP of trade payables of any Restricted Person
incurred and paid in the ordinary course of business on ordinary trade terms;
and
(g) other Indebtedness not to exceed in the aggregate in respect of all
Restricted Persons the principal amount of $25,000,000 at any one time
outstanding; provided, no such other Indebtedness under this clause (g) in
respect of borrowed money by a Restricted Person other than Borrower or
Restricted Persons acquired after the date hereof shall exceed in the aggregate
the principal amount of $5,000,000 at any one time outstanding.
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 the following ("Permitted Liens"):
(a) Liens created pursuant to this Agreement or the Security Documents and
Liens existing on the date of this Agreement and listed in the Disclosure
Schedule or Liens created pursuant to the Marketing Credit Agreement or the
"Security Documents" as defined in the Marketing Credit Agreement, subject to
the terms of the Intercreditor Agreement referred to in Section 4.1(m).
(b) Liens imposed by any governmental authority for taxes, assessments or
charges not yet due or the validity of which is being contested in good faith
and by appropriate proceedings, if necessary, for which adequate reserves are
maintained on the books of any Restricted Person in accordance with GAAP;
(c) pledges or deposits of cash or securities under worker's compensation,
unemployment insurance or other social security legislation;
(d) carriers', warehousemen's, mechanics', materialmen's, repairmen's,
landlord's, or other like Liens (including without limitation, Liens on property
of any Restricted Person in the possession of storage facilities, pipelines or
barges) arising in the ordinary course of business for
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amounts which are not more than 60 days past due or the validity of which is
being contested in good faith and by appropriate proceedings, if necessary, and
for which adequate reserves are maintained on the books of any Restricted Person
in accordance with GAAP;
(e) Liens under or with respect to accounts with brokers or counterparties
with respect to Hedging Contracts consisting of cash, commodities or futures
contracts, options, securities, instruments, and other like assets securing only
Hedging Contracts permitted under Section 7.1;
(f) deposits of cash or securities to secure the performance of bids,
trade contracts (other than for borrowed money), leases, statutory obligations,
surety and appeal bonds, performance bonds and other obligations of a like
nature incurred in the ordinary course of business;
(g) easements, rights-of-way, restrictions and other similar encumbrances
incurred in the ordinary course of business and encumbrances consisting of
zoning restrictions, easements, licenses, restrictions on the use of real
property or minor imperfections in title thereto which, in the aggregate, are
not material in amount, and which do not in any case materially detract from the
value of the property subject thereto or interfere with the ordinary conduct of
the business of any Restricted Person;
(h) Liens in respect of operating leases and Capital Leases permitted
under Section 7.1;
(i) Liens upon any property or assets acquired after the date hereof by a
Restricted Person, each of which either (i) existed on such property or asset
before the time of its acquisition and was not created in anticipation thereof,
or (ii) was created solely for the purpose of securing Indebtedness
representing, or incurred to finance, refinance or refund, the cost (including
the cost of construction) of such property or asset; provided that no such Lien
shall extend to or cover any property or asset of a Restricted Person other than
the property or asset so acquired (or constructed) and the Indebtedness secured
thereby is permitted under Section 7.1(g) hereof; and any extension, renewal,
refinancing, refunding or replacement (or successive extensions, renewals,
refinancings, refundings or replacements), in whole or part, of the foregoing,
provided, however, that such Liens shall not cover or secure any additional
Indebtedness, obligations, property or asset;
(j) rights reserved to or vested in any governmental authority by the
terms of any right, power, franchise, grant, license or permit, or by any
provision of law, to revoke or terminate any such right, power, franchise,
grant, license or permit or to condemn or acquire by eminent domain or similar
process;
(k) rights reserved to or vested by Law in any governmental authority to
in any manner, control or regulate in any manner any of the properties of any
Restricted Person or the use thereof or the rights and interests of any
Restricted Person therein, in any manner under any and all Laws;
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(l) rights reserved to the grantors of any properties of any Restricted
Person, and the restrictions, conditions, restrictive covenants and limitations,
in respect thereto, pursuant to the terms, conditions and provisions of any
rights-of-way agreements, contracts or other agreements therewith;
(m) inchoate Liens in respect of pending litigation or with respect to a
judgment which has not resulted in an Event of Default under Section 8.1; and
(n) Liens on property of Borrower permitted pursuant to the terms of the
Marketing Credit Agreement.
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) Hedging 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 (i) the aggregate notional amount of such contracts never exceeds one
hundred percent (100%) 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, (ii) 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
(iii) each such contract is with a counterparty or has a guarantor of the
obligation of the counterparty who (unless such counterparty is a Lender, a
"Lender" as such term is defined in the Marketing Credit Agreement, or an
Affiliate of a Lender or "Lender" at the time such contract is entered into) at
the time the contract is made has long-term unsecured and unenhanced debt
obligations rated A or A2 or better, respectively, by either Rating Agency or is
otherwise acceptable to Majority Lenders.
(b) Hedging Contracts relating to heating oil used to hedge price risk for
fuel requirements of the truck fleet of a Restricted Person in the ordinary
course of business.
Section 7.4. Limitation on Mergers, Issuances of Securities. Except as
----------------------------------------------
expressly provided in this section, no Restricted Person will (a) enter into any
transaction of merger or consolidation or amalgamation, or liquidate, wind up or
dissolve itself (or suffer any liquidation or dissolution), (b) acquire any
business or property from, or capital stock of, or be a party to any acquisition
of, any Person except for purchases of inventory and other property to be sold
or used in the ordinary course of business and Investments permitted under
Section 7.7 hereof or (c) sell, transfer, lease, exchange, alienate or
otherwise dispose of, in one transaction or a series of transactions, any part
of its business or property, whether now owned or hereafter acquired, except for
sales or transfers not prohibited by under Section 7.5 hereof. Any Person,
other than Borrower, that is a Subsidiary of a Restricted Person may, however,
be merged into or consolidated with (i) another Subsidiary of such Restricted
Person, so long as a Guarantor is the surviving business entity, or (ii) such
Restricted Person, so long as such Restricted Person is the surviving business
entity. Plains MLP will not issue any securities other than (i) limited
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partnership interests and any options or warrants giving the holders thereof
only the right to acquire such interests, (ii) general or subordinate
partnership interests issued to Resources or a Wholly Owned Subsidiary of
Resources and (iii) debt securities permitted by Section 7.1(g). No Subsidiary
of Plains MLP 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 a direct Subsidiary of a Restricted Person may
issue additional shares or other securities to such Restricted Person, to Plains
MLP or to General Partner so long as such Subsidiary is a Wholly Owned
Subsidiary of Plains MLP after giving effect thereto. No Subsidiary of Borrower
which is a partnership will allow any diminution of Borrower's interest (direct
or indirect) therein.
Section 7.5. Limitation on Sales of Property. No Restricted Person will
-------------------------------
sell, transfer, lease, exchange, alienate or dispose of any Collateral or any of
its material assets or properties or any material interest therein except:
(a) equipment which is worthless or obsolete or no longer necessary or
useful to the proper conduct of its business or which is replaced by equipment
of equal suitability and value;
(b) inventory (including pipeline linefill) which is sold in the ordinary
course of business on ordinary trade terms;
(c) in other property which is sold for fair consideration not in the
aggregate in excess of $10,000,000 in any Fiscal Year, the sale of which will
not materially impair or diminish the value of the Collateral or any Restricted
Person's financial condition, business or operations; and
(d) sales or transfers, subject to the Security Documents, by a Person
(other than Borrower) that is a Subsidiary of a Restricted Person to such
Restricted Person or to a Wholly Owned Subsidiary of such Restricted Person that
is a Guarantor.
No Restricted Person will sell, transfer or otherwise dispose of capital stock
of or interest in any of its Subsidiaries except to Plains MLP or a Wholly Owned
Subsidiary of Plains MLP. No Restricted Person will discount, sell, pledge or
assign any notes payable to it, accounts receivable or future income. So long
as no Default then exists, Administrative Agent will, at Borrower's request and
expense, execute a release, satisfactory to Borrower and Administrative Agent,
of any Collateral so sold, transferred, leased, exchanged, alienated or disposed
of pursuant to the clause (a) or (c) of this Section.
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, limited liability
company or other interest in it, nor will any Restricted Person directly or
indirectly make any capital contribution of any nature to or purchase, redeem,
acquire or retire any shares of the capital stock of or partnership or limited
liability company interests in any Restricted 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, while the
Loan or any Commitment is outstanding. Notwithstanding
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the foregoing, but subject to Section 7.5, (i) Subsidiaries of Plains MLP,
Borrower, or of any Guarantor shall not be restricted, directly or indirectly,
from declaring and paying dividends or making any other distributions to Plains
MLP, Borrower, or any such Guarantor, respectively, (ii) no Restricted Person
shall be restricted from making capital contributions of any nature to a Wholly
Owned Subsidiary of such Restricted Person that is a Guarantor, and (iii) so
long as no Default or Event of Default has occurred and is continuing or would
result therefrom, Plains MLP shall not be restricted from (A) distributing
Available Cash (other than amounts required to be applied as otherwise required
in any Loan Document) to its partners in accordance with the Partnership
Agreement or (B) purchasing its partnership units on the open market in
connection with the Incentive and Option Plans.
Section 7.7. Limitation on Investments and New Businesses. No Restricted
--------------------------------------------
Person will (a) make any expenditure or commitment or incur any obligation or
enter into or engage in any transaction except in the ordinary course of
business, (b) engage directly or indirectly in any business or conduct any
operations except in connection with or incidental to its present businesses and
operations, (c) make any acquisitions of or capital contributions to or other
Investments in any Person, other than Permitted Investments and Permitted
Acquisitions, or (d) make any acquisitions of properties other than Permitted
Acquisitions. All transactions permitted under the foregoing subsections (a)
through (d), inclusive, are subject to Section 7.5.
Section 7.8. Limitation on Credit Extensions. Except for Permitted
-------------------------------
Investments and Hedging Contracts permitted under Section 7.3(b) hereof, no
Restricted Person will extend credit, make advances or make loans other than
normal and prudent extensions of credit to customers buying goods and services
in the ordinary course of business or to another Restricted Person 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.
Section 7.9. Transactions with Affiliates. No Restricted Person will
----------------------------
engage in any material transaction with any of its Affiliates except: (a)
transactions among Plains MLP and Wholly Owned Subsidiaries of Plains MLP,
subject to the other provisions of this Agreement, (b) transactions governed by
the Affiliate Agreements, and (c) transactions entered into in the ordinary
course of business of such Restricted Person on terms which are no less
favorable to such Restricted Person than those which would have been obtainable
at the time in arm's-length transactions with Persons other than such
Affiliates.
Section 7.10. Prohibited Contracts. Except as expressly provided for in
--------------------
the Loan Documents and as described in the Disclosure Schedule, no Restricted
Person 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 Plains MLP, including but not limited to Borrower and any
Subsidiary of Borrower to: (a) pay dividends or make other distributions to
Borrower or Plains MLP, (b) redeem equity interests held in it by Borrower or
Plains MLP, (c) repay loans and other indebtedness owing by it to Borrower or
Plains MLP, or (d) transfer any of its assets to Borrower or Plains MLP. 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 other than
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contracts for pipeline capacity or for services in either case reasonably
anticipated to be utilized in the ordinary course of business. No Restricted
Persons will amend, modify or release any of the Affiliate Agreements. 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 Administrative 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 that is subject to Title IV of ERISA.
Section 7.11. Current Ratio. The ratio of (i) the sum of Plains MLP's
-------------
Consolidated current assets plus the excess, if any, of the Commitment over the
Facility Usage to (ii) Plains MLP's Consolidated current liabilities will never
be less than 1.0 to 1.0. For purposes of this section, Plains MLP's
Consolidated current liabilities will be calculated without including (a) any
payments of principal on the Notes which are required to be repaid within one
year from the time of calculation and (b) all Liabilities arising under
permitted Hedging Contracts.
Section 7.12. Debt Coverage Ratio. (a) At the end of any Fiscal
-------------------
Quarter, (b) on any date on which General Partner declares a distribution
permitted under Section 7.6 and (c) on the date of any Permitted Acquisition,
both immediately prior to and after giving effect to the consummation thereof,
the Debt Coverage Ratio will not be greater than (i) 4.0 to 1.0, in the case of
any determination during the period from the date hereof through and including
March 31, 2002, and (ii) 3.75 to 1.0, in the case of any determination
thereafter. As used herein, "Debt Coverage Ratio" means the ratio of (a)
-------------------
Consolidated Funded Indebtedness to (b) Consolidated EBITDA for the four Fiscal
Quarter period (or other period specified below) most recently ended prior to
the date of determination for which financial statements contemplated by Section
6.2(a) or (b) are available to Borrower; provided, however, for purposes of this
-----------------
Section 7.12, (i) for determinations with respect to the period ending March 31,
2000, Consolidated EBITDA shall be equal to the Consolidated EBITDA for the one
Fiscal Quarter ending on such date times four, (ii) for determinations with
respect to the period ending June 30, 2000, Consolidated EBITDA shall be equal
to the Consolidated EBITDA for the two Fiscal Quarters ending on such date times
two, and (iii) for determinations with respect to the period ending September
30, 2000, Consolidated EBITDA shall be equal to the Consolidated EBITDA for the
three Fiscal Quarters ending on such date times four-thirds; provided, further,
-----------------
for purposes of this Section 7.12, if, since the beginning of the four Fiscal
Quarter period ending on the date for which Consolidated EBITDA is determined,
any Restricted Person shall have made any asset disposition or acquisition,
shall have consolidated or merged with or into any Person (other than another
Restricted Person), or shall have made any disposition or acquisition of a
Restricted Person, Consolidated EBITDA shall be calculated giving pro forma
effect thereto as if the disposition, acquisition, consolidation or merger had
occurred on the first day of such period. Such pro forma effect shall be
determined (i) in good faith by the chief financial officer of Borrower, (ii)
without giving effect to any anticipated or proposed change in operations,
revenues, expenses or other items included in the computation of Consolidated
EBITDA, except with the consent of Majority Lenders, and (iii) in the case of
determinations with respect to periods ending on or prior to September 30, 2000,
with respect to acquisitions, based upon the results of operation of the
acquired Person or assets for the full four Fiscal Quarter period.
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Section 7.13. Interest Coverage Ratio. The ratio of (a) Consolidated
-----------------------
EBITDA to (b) Interest Expense for (i) the Fiscal Quarter ending March 31, 2000,
(ii) the two-Fiscal Quarter period ending June 30, 2000, (iii) the three-Fiscal
Quarter period ending September 30, 2000 and (iv) each four Fiscal Quarter
period ending on or after December 31, 2000 will not be less than 2.75 to 1.0.
Section 7.14. Debt to Capital Ratio. The ratio of (a) all Consolidated
---------------------
Funded Indebtedness to (b) the sum of Consolidated Funded Indebtedness plus
Consolidated Net Worth will never be greater than 0.65 to 1.0 at any time.
Section 7.15. Open Position; Certain Permitted Financial Instruments;
-------------------------------------------------------
NYMEX Transactions.
- ------------------
(a) Open Position. No Restricted Person shall at any time have any Open
-------------
Positions; provided, however, that a Restricted Person may have:
(i) Physical inventories of crude oil (A) consisting of tank bottoms and
pipeline linefill requirements, in each case classified as a long-term asset,
(B) working inventory of up to 1,300,000 barrels in the aggregate at any time,
(C) excess inventory of up to 200,000 barrels in the aggregate at any time
resulting from crude gathering receipts in excess of scheduled quantities,
provided that such Restricted Person shall establish an Offsetting Position with
respect to such quantities within five business days following identification of
such inventory, but in any event not later than the 20/th/ day following the
month in which such excess volumes were received and (D) Hedged Eligible
Inventory.
(ii) Floating Price Contracts to purchase or sell crude oil in the Current
Trading Month; provided that, such Floating Price Contracts either (A) have an
Offsetting Position by the 26th day of the month preceding the month of receipt
or delivery, or (B) are scheduled to be stored at a Plains Terminal or in
pipelines Currently Approved by Majority Lenders and are hedged in the delivery
month with NYMEX contracts; and further provided that such Floating Price
Contracts relating to the sale of crude oil for the Current Trading Month do not
exceed purchases by more than 15,000 barrels per day.
(iii) Floating Price Contracts to purchase or sell crude oil to be received
or delivered after the Current Trading Month, but within the twelve months
following the Current Trading Month provided that (A) such contracts are at the
then market price and (B) at any point in time the sum of (x) net realized
losses relating to such contracts within the preceding twelve months and (y)
mark to market exposure relating to such contracts does not, at any time, exceed
$5.0 million.
As used herein, "Current Trading Month" means (i) with respect to the first
---------------------
twenty-five days of any calendar month, the next following calendar month and
(ii) with respect to the period from the 26/th/ day of a calendar month through
the last day of such month, the second calendar month next following such month
(for example, for the period from January 26/th/ through February 25/th/, the
Current Trading Month is March), and "Floating Price Contract" means (i) a
-----------------------
purchase or sale contract based upon a daily index such as a posted price or
NYMEX price from time to time in
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effect during the delivery month and (ii) a NYMEX spread transaction in which
the length of time between the offsetting purchase and sale obligations do not
exceed twelve months.
(b) Certain Permitted Financial Instruments. No Restricted Person will
---------------------------------------
write (i.e. sell) or otherwise participate in any swap, collar or similar
agreement relating to crude oil, or write (i.e. sell) any option, unless, with
respect thereto, (i) such Restricted Person has an Offsetting Position in crude
volumes for which there is no basis risk between such financial instrument and
such Offsetting Position and (ii) the counter-party (or guarantor to the
obligations of such counter-party) at the time such financial instrument is made
(A) has one or more long term unsecured and unenhanced debt obligations rated A
or A2 or better, respectively, by either Rating Agency, or (B) is a Lender, a
"Lender" as such term is defined in the Marketing Credit Agreement, or an
Affiliate of a Lender or "Lender", or (C) is listed in the Disclosure Schedule.
(c) NYMEX Transactions. No Restricted Person will enter in to any NYMEX
------------------
contracts that are time-spread positions to each other, except (i) in the case
where the sale obligation is in the future month of the purchase obligation,
where both (A) the length of time between the purchase and sale contracts does
not exceed thirty-six months and (B) the volume does not in the aggregate exceed
the lesser of 3,000,000 barrels or 30% of the Plains Terminals' storage capacity
and (ii) in the case where the purchase obligation is in the future month of the
sale obligation, where the length of time between the sale and purchase
contracts does not exceed twelve months. No Restricted Person will convert a
NYMEX position to a physical position by way of an "exchange for physicals" or
an "alternative delivery procedure"unless the credit extended in connection with
such physical position would comply with the credit requirements of the
definition of "Approved Eligible Receivables".
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 Loan
or any reimbursement obligation with respect to any Letter of Credit 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 subsection (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 event defined as a "default" or "event of default" in any Loan
Document occurs, and the same is not remedied within the applicable period of
grace (if any) provided in such Loan Document;
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(d) Any Restricted Person fails to duly observe, perform or comply with
any covenant, agreement or provision of Section 6.4 or Article VII;
(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 to which it is
a party, and such failure remains unremedied for a period of thirty (30) days
after notice of such failure is given by Administrative Agent to Borrower;
(f) Any representation or warranty previously, presently or hereafter made
in writing by or on behalf of any Restricted Person in connection with any Loan
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 Administrative Agent;
(g) Any Restricted Person shall default in the payment when due of any
principal of or interest on any of its other Indebtedness in excess of
$2,500,000 in the aggregate (other than Indebtedness the validity of which is
being contested in good faith by appropriate proceedings and for which adequate
reserves with respect thereto are maintained on the books of such Restricted
Person in accordance with GAAP), or any event specified in any note, agreement,
indenture or other document evidencing or relating to any such Indebtedness
shall occur if the effect of such event is to cause, or (with the giving of any
notice or the lapse of time or both) to permit the holder or holders of such
Indebtedness (or a trustee or agent on behalf of such holder or holders) to
cause, such Indebtedness to become due, or to be prepaid in full (whether by
redemption, purchase, offer to purchase or otherwise), prior to its stated
maturity;
(h) Either (i) any "accumulated funding deficiency" (as defined in Section
412(a) of the Code) 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);
(i) General Partner or any Restricted Person:
(i) has entered 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, in each case, which remains undismissed for a period
of sixty days; or
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(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 in an involuntary case under any such
Law; or makes a general assignment for the benefit of creditors; or is
generally unable to pay (or admits in writing its inability to so pay) its
debts as such debts become due; or takes corporate or other action to
authorize any of the foregoing; or
(ii) has entered against it 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
in a proceeding brought against or initiated by it, and such appointment or
taking possession is neither made ineffective nor discharged within sixty
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) has entered against it the appointment of or taking
possession by a receiver, liquidator, assignee, custodian, trustee,
sequestrator or similar official of any part of the Collateral of a value
in excess of $2,500,000 in a proceeding brought against or initiated by it,
and such appointment or taking possession is neither made ineffective nor
discharged within sixty 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
(v) has entered against it a final judgment for the payment of
money in excess of $2,500,000 (in each case not covered by insurance
satisfactory to Administrative Agent in its discretion), unless the same is
stayed or 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
(vi) 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 of a value in excess of
$2,500,000, 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;
(j) General Partner shall default in the payment when due of any principal
of or interest on any of its Indebtedness in excess of $1,000,000 in the
aggregate, or any event specified in any note, agreement, indenture or other
document evidencing or relating to any such Indebtedness shall occur if the
effect of such event is to cause, or (with the giving of any notice or the lapse
of time or both) to permit the holder or holders of such Indebtedness (or a
trustee or agent on behalf of such holder or holders) to cause, such
Indebtedness to become due, or to be prepaid in full (whether by redemption,
purchase, offer to purchase or otherwise), prior to its stated maturity; or
(k) Any Change in Control occurs.
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Upon the occurrence of an Event of Default described in subsection (i)(i),
(i)(ii) or (i)(iii) of this section with respect to Borrower, All American or
Plains MLP, 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 and any
obligation of LC Issuer to issue Letters of Credit hereunder shall be
permanently terminated. During the continuance of any other Event of Default,
Administrative Agent at any time and from time to time may (and upon written
instructions from Majority Lenders, Administrative 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 any
obligation of LC Issuer to issue Letters of Credit hereunder, and (2) declare
any or all of the Obligations immediately due and payable, and all such
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.
Section 8.2. Remedies. If any Default shall occur and be continuing,
--------
each Lender 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 Lender 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 Lender 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 - Administrative Agent
--------------------
Section 9.1. Appointment and Authority. Each Lender Party hereby
-------------------------
irrevocably authorizes Administrative Agent, and Administrative 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 Administrative
Agent by the terms hereof or thereof, together with all other powers reasonably
incidental thereto. The relationship of Administrative Agent to the other
Lender 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 Administrative Agent a trustee or other fiduciary for any Lender
Party or any holder of any participation in a Note nor to impose on
Administrative 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 Administrative Agent, Administrative 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
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required to act or to refrain from acting (and shall be fully protected and free
from liability to all Lender Parties in so acting or refraining from acting)
upon the instructions of Majority Lenders (including itself), provided, however,
that Administrative 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. Upon receipt by
Administrative Agent from Borrower of any communication calling for action on
the part of Lenders or upon notice from Borrower or any Lender to Administrative
Agent of any Default or Event of Default, Administrative Agent shall promptly
notify each other Lender thereof.
Section 9.2. Exculpation, Administrative Agent's Reliance, Etc. Neither
-------------------------------------------------
Administrative 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,
Administrative Agent (a) may treat the payee of any Note as the holder thereof
until Administrative Agent receives written notice of the assignment or transfer
thereof in accordance with this Agreement, signed by such payee and in form
satisfactory to Administrative Agent; (b) may consult with legal counsel
(including counsel for Borrower), independent public accountants and other
experts selected by it and shall not be liable for any action taken or omitted
to be taken in good faith by it in accordance with the advice of such counsel,
accountants or experts; (c) makes no warranty or representation to any other
Lender Party and shall not be responsible to any other Lender 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 any Restricted Person; (e) shall not be
responsible to any other Lender 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 or Lender Party in
exercising its powers hereunder; and (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 facsimile, telegram, cable or telex)
believed by it to be genuine and signed or sent by the proper Person or Persons.
Section 9.3. Credit Decisions. Each Lender Party acknowledges that it
----------------
has, independently and without reliance upon any other Lender 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 Lender Party also acknowledges that it will, independently and without
reliance upon any other Lender 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.
Section 9.4. Indemnification. Each Lender Agrees To Indemnity
---------------
Administrative Agent (To The Extent Not Reimbursed By Borrower
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within ten (10) days after demand) from and against such Lender's Percentage
Share of any and all liabilities, obligations, claims, losses, damages,
penalties, fines, actions, judgments, suits, settlements, costs, expenses or
disbursements (including reasonable fees of attorneys, accountants, experts and
advisors) of any kind or nature whatsoever (in this section collectively called
"liabilities and costs") which to any extent (in whole or in part) may be
imposed on, incurred by, or asserted against Administrative 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 (including the enforcement
thereof) at any time associated therewith or contemplated therein (whether
arising in contract or in tort or otherwise and including 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 caused, in whole or in part, by any negligent
act or omission of any kind by Administrative Agent, provided only that no
Lender shall be obligated under this section to indemnify Administrative Agent
for that portion, if any, of any liabilities and costs which is proximately
caused by Administrative Agent's own individual gross negligence or willful
misconduct, as determined in a final judgment. Cumulative of the foregoing,
each Lender agrees to reimburse Administrative Agent promptly upon demand for
such Lender's Percentage Share of any costs and expenses to be paid to
Administrative Agent by Borrower under Section 10.4(a) to the extent that
Administrative Agent is not timely reimbursed for such expenses by Borrower as
provided in such section. As used in this section the term "Administrative
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,
----------------
Administrative Agent shall have the same rights and obligations as any Lender
and may exercise such rights as though it were not Administrative Agent.
Administrative Agent may accept deposits from, lend money to, act as trustee
under indentures of, and generally engage in any kind of business with any
Restricted Person or their Affiliates, all as if it were not Administrative
Agent hereunder and without any duty to account therefor to any other Lender.
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Section 9.6. Sharing of Set-Offs and Other Payments. Each Lender 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 Administrative Agent
under Section 3.1, causes such Lender Party to have received more than it would
have received had such payment been received by Administrative 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 Lender 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 Administrative Agent and all
Lender Parties share all payments of Obligations as provided in Section 3.1;
provided, however, that nothing herein contained shall in any way affect the
right of any Lender 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 and, subject to the provisions of Section
6.16, 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 the order of a Tribunal to
be paid on account of the possession of such funds prior to such recovery.
Section 9.7. Investments. Whenever Administrative Agent in good faith
-----------
determines that it is uncertain about how to distribute to Lender Parties any
funds which it has received, or whenever Administrative Agent in good faith
determines that there is any dispute among Lender Parties about how such funds
should be distributed, Administrative Agent may choose to defer distribution of
the funds which are the subject of such uncertainty or dispute. If
Administrative Agent in good faith believes that the uncertainty or dispute will
not be promptly resolved, or if Administrative Agent is otherwise required to
invest funds pending distribution to Lender Parties, Administrative 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. All moneys received by
Administrative Agent for distribution to Lender Parties (other than to the
Person who is Administrative Agent in its separate capacity as a Lender Party)
shall be held by Administrative Agent pending such distribution solely as
Administrative Agent for such Lender Parties, and Administrative Agent shall
have no equitable title to any portion thereof.
Section 9.8. Benefit of Article IX. The provisions of this Article are
---------------------
intended solely for the benefit of Lender 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 Lender (other than in relation to the reference
to Section 6.16 contained in Section 9.6 or the right to reasonably approve a
successor Administrative Agent under Section 9.9). Lender Parties may waive or
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amend such provisions as they desire without any notice to or consent of
Borrower or any other Restricted Person.
Section 9.9. Resignation. Administrative 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 Administrative Agent,
subject to the approval of Borrower, unless a Default has occurred and is
continuing, which approval will not be unreasonably withheld. A successor must
be appointed for any retiring Administrative Agent, and such Administrative
Agent's resignation shall become effective when such successor accepts such
appointment. If, within thirty days after the date of the retiring
Administrative Agent's resignation, no successor Administrative Agent has been
appointed and has accepted such appointment, then the retiring Administrative
Agent may appoint a successor Administrative 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 Administrative Agent hereunder by a successor Administrative
Agent, the retiring Administrative Agent shall be discharged from its duties and
obligations under this Agreement and the other Loan Documents. After any
retiring Administrative 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 Administrative Agent under the Loan
Documents.
Section 9.10. Other Agents. Neither the Syndication Agent nor the
------------
Documentation Agent ("Co-Agents"), in such capacities, shall have any duties or
responsibilities or incur any liabilities in such agency capacities (as opposed
to its capacity as a Lender) under or in connection with this Agreement or under
any of the other Loan Documents. The relationship between Borrower, on the one
hand, and the Co-Agents and Administrative Agent, on the other hand, shall be
solely that of borrower and lender. None of the Co-Agents shall have any
fiduciary responsibilities to Borrower or any of its Affiliates. None of the
Co-Agents undertakes any responsibility to Borrower or any of its respective
Affiliates to review or inform Borrower of any matter in connection with any
phase of Borrower's or such Affiliate's business or operations.
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 Lender in exercising any right, power or remedy
which such Lender 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 Lender 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
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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 Administrative Agent or LC Issuer,
by such party, and (iii) if such party is a Lender, by such Lender or by
Administrative 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, Administrative 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 Administrative Agent may in its
discretion withdraw any request it has made under Section 4.2(f)), (2) increase
the maximum amount which such Lender is committed hereunder to lend, (3) reduce
any fees payable to such Lender hereunder, or the principal of, or interest on,
such Lender's Note, (4) change any date fixed for any payment of any such fees,
principal or interest, (5) amend the definition herein of "Majority Lenders" or
otherwise change the aggregate amount of Percentage Shares which is required for
Administrative Agent, Lenders or any of them to take any particular action under
the Loan Documents, (6) release Borrower from its obligation to pay such
Lender's Note or any Guarantor from its guaranty of such payment, or (7) release
any Collateral, except such releases relating to sales of property as permitted
under Section 7.5.
(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 Administrative Agent or any
other Lender Party, 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 representations, warranties, covenants,
undertakings or agreements by any Lender 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 Lender 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 Lender
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 Lender Party, (vii)
Administrative Agent is not Borrower's Administrative Agent, but Administrative
Agent for Lenders, (viii) should an Event of Default or Default occur or exist,
each Lender 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 Lender Party, or any representative thereof,
and no such
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representation or covenant has been made, that any Lender 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 Lender 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 or investing business; however, the disposition of such Lender's
property shall at all times be and remain within its control and, in particular
and without limitation, 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 subject to compliance with Sections
10.5(b) through (f), inclusive, and applicable Law.
(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 Loan 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 Lender Party and all of Lender Parties'
obligations to Borrower are terminated. All statements and agreements contained
in any certificate or other instrument delivered by any Restricted Person to any
Lender Party under any Loan Document shall be deemed representations and
warranties by Borrower or 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 Lender 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 Lender 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.
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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 Administrative Agent may give telephonic notices to the other Lender
Parties), and shall be deemed sufficiently given or furnished if delivered by
personal delivery, by facsimile or other electronic transmission, 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 Lender 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 facsimile or other electronic transmission, 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
Administrative 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, 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
Administrative Agent (including attorneys' fees, consultants' fees and
engineering fees, 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, (4) monitoring or confirming (or
preparation or negotiation 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 Lender Party (including attorneys' fees, consultants' fees and accounting
fees) in connection with the defense or enforcement of any of the Loan Documents
(including this section) or the defense of any Lender Party's exercise of its
rights thereunder. In addition to the foregoing, until all Obligations have been
paid in full, Borrower will also pay or reimburse Administrative Agent for all
reasonable out-of-pocket costs and expenses of Administrative Agent or its
agents or employees in connection with the continuing administration of the
Loans and the related due diligence of Administrative Agent, including travel
and miscellaneous expenses and fees and expenses of Administrative Agent's
outside counsel, reserve engineers and consultants engaged in connection with
the Loan Documents.
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(b) Indemnity. Borrower agrees to indemnify each Lender 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,
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 Lender 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 (including the
enforcement or defense thereof) at any time associated therewith or contemplated
therein (whether arising in contract or in tort or otherwise and including any
violation or noncompliance with any Environmental Laws by any Lender Party or
any other Person or any liabilities or duties of any Lender Party or any other
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 caused, in whole or in part, by any negligent
act or omission of any kind by any Lender Party, provided only that no Lender
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 determined in a final
judgment. If any Person (including Borrower or any of its Affiliates) ever
alleges such gross negligence or willful misconduct by any Lender Party, the
indemnification provided for in this section shall nonetheless be paid upon
demand, subject to later adjustment or reimbursement, until such time as a court
of competent jurisdiction enters a final judgment as to the extent and effect of
the alleged gross negligence or willful misconduct. As used in this section the
term "Lender Party" shall refer not only to each Person designated as such in
Section 1.1 but also to each director, officer, trustee, agent, attorney,
employee, representative and Affiliate of such Persons.
Section 10.5. Joint and Several Liability; Parties in Interest;
-------------------------------------------------
Assignments; Replacement Notes.
- ------------------------------
(a) 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 permitted
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 all Lenders. Neither Borrower nor any
Affiliates of Borrower shall 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 Lender Parties, such purchaser shall not be entitled to
any rights of any Lender under the
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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 unless 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), and
(iii) 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 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 Administrative Agent and Borrower; provided, however, that no
liability shall arise if any such Lender fails to give such notice to Borrower.
(c) Except for sales of participations under the immediately preceding
subsection, 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 or, subject to the provisions
of Subsection (g) below, to an Affiliate, and then only if such assignment is
made in accordance with the following requirements:
(i) In the case of an assignment by a Lender of less than all of its
Loans, LC Obligations, and Commitments, each such assignment shall apply to
a consistent percentage of all Loans and LC Obligations owing to the
assignor Lender hereunder and to the same percentage of the unused portion
of the assignor Lender's Commitments, so that after such assignment is made
both the assignee Lender and the assignor Lender shall have a fixed (and
not a varying) Percentage Share in its Loans and LC Obligations and be
committed to make that Percentage Share of all future Loans and make that
Percentage Share of all future participations in LC Obligations, and the
Percentage Share of the Commitment of both the assignor and assignee shall
equal or exceed $5,000,000.
(ii) The parties to each such assignment shall execute and deliver to
Administrative Agent, for its acceptance and recording in the "Register"
(as defined below in this section), an Assignment and Acceptance in the
form of Exhibit H, appropriately completed, together with the Note subject
to such assignment and a processing fee payable by such assignor Lender
(and not at Borrower's expense) to Administrative Agent of $3,500. Upon
such execution, delivery, and payment and upon the satisfaction of the
conditions set out in such
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Assignment and Acceptance, 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 Acceptance the
assignee thereunder shall be a party hereto and a Lender hereunder and
Administrative Agent shall thereupon deliver to Borrower and each Lender a
revised Schedule 1 hereto showing the revised Percentage Shares and total
Percentage Shares of such assignor Lender and such assignee Lender and the
revised Percentage Shares and total 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 Code) for Federal income
tax purposes, shall (to the extent it has not already done so) provide
Administrative Agent and Borrower with the "Prescribed Forms" referred to
in Section 3.7(d).
(d) Any Lender may at any time pledge all or any portion of its Loan and
Note (and related rights under the Loan Documents including any portion of its
Note) to any of the twelve (12) Federal Reserve Banks organized under Section 4
of the Federal Reserve Act, 12 U.S.C. Section 341. No such pledge or
enforcement thereof shall release any such Lender from its obligations under any
of the Loan Documents; provided that all related costs, fees and expenses in
connection with any such pledge shall be for the sole account of such Lender.
(e) By executing and delivering an Assignment and Acceptance, each
assignee Lender thereunder will be confirming to and agreeing with Borrower,
Administrative Agent and each other Lender Party that such assignee understands
and agrees to the terms hereof, including Article IX hereof.
(f) Administrative Agent shall maintain a copy of each Assignment and
Acceptance 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 Lender Party may treat each Person whose name is recorded
in the Register as a Lender Party hereunder for all purposes. The Register
shall be available for inspection by Borrower or any Lender Party at any
reasonable time and from time to time upon reasonable prior notice.
(g) Any Lender may assign or transfer its commitment or its rights under
its Loans or under the Loan Documents to (i) any Affiliate that is wholly-owned
direct or indirect subsidiary of such Lender or of any Person that wholly owns,
directly or indirectly, such Lender, or (ii) if such Lender is a fund that makes
or invests in bank loans, any other fund that makes or invests in bank loans and
is advised or managed by (A) the same investment advisor as any Lender or (B)
any Affiliate of such investment advisor that is a wholly-owned direct or
indirect subsidiary of any Person that wholly owns, directly or indirectly, such
investment advisor, subject to the following additional conditions:
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(x) any right of such Lender assignor and such assignee to vote as a
Lender, or any other direct claims or rights against any other Persons,
shall be uniformly exercised or pursued in the manner that such Lender
assignor would have so exercised such vote, claim or right if it had not
made such assignment or transfer;
(y) such assignee shall not be entitled to payment from any Restricted
Person under Sections 3.2 through 3.7 of amounts in excess of those payable
to such Lender assignor under such sections (determined without regard to
such assignment or transfer); and
(z) if such Lender assignor is a Lender that assigns or transfers to such
assignee any of such Lender Commitment, assignee may become primarily
liable for such Commitment, but such assignment or transfer shall not
relieve or release such Lender from such Commitment.
(h) Upon receipt of an affidavit reasonably satisfactory to Borrower of an
officer of any Lender as to the loss, theft, destruction or mutilation of its
Note or any Security Document which is not of public record, and, in the case of
any such loss, theft, destruction or mutilation, upon cancellation of such Note
or such Security Document, Borrower will execute and deliver, in lieu thereof, a
replacement Note in the same principal amount thereof and otherwise of like
tenor (or each Restricted Person a party to any such Security Document will
execute and deliver a replacement Security Document of like tenor).
Section 10.6. Confidentiality. Each Lender Party agrees (on behalf of
---------------
itself and each of its Affiliates, and each of its and their directors,
officers, agents, attorneys, employees, and representatives) that it (and each
of them) will take all reasonable steps to keep confidential any non-public
information supplied to it by or at the direction of any Restricted Person so
identified when delivered, provided, however, that this restriction shall not
apply to information which (a) has at the time in question entered the public
domain, (b) is required to be disclosed by Law (whether valid or invalid) of any
Tribunal, (c) is disclosed to any Lender Party's Affiliates, auditors,
attorneys, or agents, (d) is furnished to any other Lender 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 (d) 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
76
<PAGE>
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 Lender 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 non-
exclusive jurisdiction of the aforesaid courts. 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 Corporation Service Company, 80 State Street, Albany,
New York 12207, as agent of Borrower to receive service of all process brought
against Borrower with respect to any such 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 Lender Parties a consent of Corporation Service Company agreeing to
act hereunder prior to the effective date of this agreement. Nothing herein
shall affect the right of Lender Parties to serve process in any other manner
permitted by Law or shall limit the right of Lender Parties to bring proceedings
against Borrower in the courts of any other jurisdiction. If for any reason
Corporation Service Company 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 Administrative Agent to serve in such capacity
and, in such event, such new agent shall be deemed to be substituted for
Corporation Service Company for all purposes hereof and (b) promptly deliver to
Agent the written consent (in form and substance satisfactory to Administrative
Agent) of such new agent agreeing to serve in such capacity.
77
<PAGE>
Section 10.8. Limitation on Interest. Lender Parties, Restricted Persons
----------------------
and any 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 create a
contract to pay, for the use, forbearance or detention of money, interest in
excess of the maximum amount of interest permitted to be contracted for,
charged, or received 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 contracted for,
charged, or received 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. Lender
Parties expressly disavow any intention to contract for, charge, or receive
excessive unearned interest or finance charges in the event the maturity of any
Obligation is accelerated. If (a) the maturity of any Obligation is accelerated
for any reason, (b) any Obligation is prepaid and as a result any amounts held
to constitute interest are determined to be in excess of the legal maximum, or
(c) any Lender or any other holder of any or all of the Obligations shall
otherwise collect moneys which are determined to constitute interest which would
otherwise increase the interest on any or all of the Obligations to an amount in
excess of that permitted to be contracted for, charged or received by applicable
Law then in effect, then all sums determined to constitute interest in excess of
such legal limit shall, without penalty, be promptly applied to reduce the then
outstanding principal of the related Obligations or, at such Lender's or
holder's option, promptly returned to Borrower or other payor thereof upon such
determination. In determining whether or not the interest paid or payable,
under any specific circumstance, exceeds the maximum amount permitted under
applicable Law, Lender Parties and Restricted Persons (and any other payors
thereof) shall to the greatest extent permitted under applicable Law, (i)
characterize any non-principal payment as an expense, fee or premium rather than
as interest, (ii exclude voluntary prepayments and the effects thereof, and (ii
amortize, prorate, allocate, and spread the total amount of interest throughout
the entire contemplated term of the instruments evidencing the Obligations in
accordance with the amounts outstanding from time to time thereunder and the
maximum legal rate of interest from time to time in effect under applicable Law
in order to lawfully charge the maximum amount of interest permitted under
applicable Law. In the event applicable Law provides for an interest ceiling
under Chapter 303 of the Texas Finance Code (the "Texas Finance Code") as
amended, to the extent that the Texas Finance Code is mandatorily applicable to
any Lender, for that day, the ceiling shall be the "weekly ceiling" as defined
in the Texas Finance Code, provided that if any applicable Law permits greater
interest, the Law permitting the greatest interest shall apply. In no event
shall Chapter 346 of the Texas Finance Code apply to this Agreement or any other
Loan Document, or any transactions or loan arrangement provided or contemplated
hereby or thereby.
Section 10.9. Termination; Limited Survival. In its sole and absolute
-----------------------------
discretion Borrower may at any time that no Obligations are owing or outstanding
elect in a written notice delivered to Administrative Agent to terminate this
Agreement. Upon receipt by Administrative Agent of such a notice, if no
Obligations are then owing or outstanding this Agreement and all other Loan
Documents shall thereupon be terminated and the parties thereto released from
all
78
<PAGE>
prospective obligations thereunder. Notwithstanding the foregoing or anything
herein to the contrary, any waivers or admissions made by any 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 Lender
Party shall survive any termination of this Agreement or any other Loan
Document. At the request and expense of Borrower, Administrative Agent shall
prepare and execute all necessary instruments to reflect and effect such
termination of the Loan Documents. Administrative 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. Restricted
--------------------------------------------
Persons and Lender Parties mutually hereby knowingly, voluntarily, and
intentionally waive the right to a trial by jury in respect of any claim based
hereon, arising out of, under or in connection with, this Agreement or any other
Loan Documents contemplated to be executed in connection herewith or any course
of conduct, course of dealings, statements (whether verbal or written) or
actions of any party. This waiver constitutes a material inducement for Lenders
to enter into this Agreement and the other Loan Documents and make the Loans.
Borrower and each Lender 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
79
<PAGE>
of how named), but does not include any payments or funds which any party hereto
has expressly promised to pay or deliver to any other party hereto.
Section 10.13. Amendment and Restatement. Upon satisfaction with each of
--------------------------
the conditions set forth in Section 4.1 (except any condition the performance of
which has been waived as a condition to the initial Loan or initial issuance of
a Letter of Credit pursuant to this Agreement), this Agreement shall be deemed
to amend and restate in their entirety the Existing Agreements, at which time
(the "Effective Time") each Lender and each Restricted Person hereby agrees that
(i) the Percentage Share of each Lender shall be as set forth in the definition
to this Agreement, (ii) the loans outstanding under the Existing Agreements and
all accrued and unpaid interest thereon (but not any letters of credit issued
and outstanding under the Existing Agreements and reimbursement obligations with
respect thereto, which are to be deemed to be outstanding under and governed by
the Marketing Credit Agreement as provided therein), and all accrued and unpaid
fees and expenses under the Existing Agreement (the "Outstanding Obligations")
shall be deemed to be outstanding under and governed by this Agreement, and
(iii) any party named as a "Lender" under the Existing Agreement that is not a
signatory hereto as a Lender under this Agreement (an "Exiting Lender") shall
cease to be a Lender and shall be released from its obligations under the
Existing Agreement and this Agreement. At the Effective Time, the Borrower
shall make such adjustments in the Loans, including the borrowing of additional
Loans and the repayment of Loans under the Existing Agreements plus all
applicable accrued interest, fees and expenses (including any costs under
Article III of the Existing Agreements) as shall be necessary to repay in full
all Exiting Lenders and to provide for Loans by each Lender in the amount of its
new Percentage Share of all Loans as of the Effective Time.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK.]
80
<PAGE>
IN WITNESS WHEREOF, this Agreement is executed as of the date first written
above.
BORROWER: PLAINS MARKETING, L.P.
By: PLAINS ALL AMERICAN INC.,
its general partner
By: /s/ Phil Kramer
-----------------------------------
Phil Kramer, Exec. Vice President
GUARANTORS: ALL AMERICAN PIPELINE, L.P.
By: PLAINS ALL AMERICAN INC.,
its general partner
By: /s/ Phil Kramer
-----------------------------------
Phil Kramer, Exec. Vice President
PLAINS ALL AMERICAN PIPELINE, L.P.
By: PLAINS ALL AMERICAN INC.,
its general partner
By: /s/ Phil Kramer
-----------------------------------
Phil Kramer, Exec. Vice President
Address for Borrower and Guarantors:
500 Dallas Street, Suite 700
Houston, Texas 77002
Attention: Phil Kramer
Telephone: (713) 654-1414
Fax: (713) 654-1523
81
<PAGE>
FLEET NATIONAL BANK,
Administrative Agent, LC Issuer and
a Lender
By: /s/ Terrence Ronan
------------------------------------
Terrence Ronan, Director
Address:
100 Federal Street
Boston, Massachusetts 02110
Attention: Terrence Ronan
Mail Code: MADE 10008D
Telephone: (617) 434-5472
Fax: (617) 434-3652
FLEETBOSTON ROBERTSON
STEPHENS INC., Lead Arranger and Book
Manager
By: /s/ Richard Makin
------------------------------------
Richard Makin, Managing Director
FIRST UNION NATIONAL BANK,
Syndication Agent and a Lender
By: /s/ Robert R. Wetteroff
------------------------------------
Robert R. Wetteroff, Sr. Vice Pres.
Address:
1001 Fannin, Suite 2255
Houston, Texas 77002
Attention: David Humphreys
Telephone: (713) 650-9843
Fax: (713) 650-6354
82
<PAGE>
BANK OF AMERICA, N.A.,
Documentation Agent and a Lender
By: /s/ Irene Rummel
----------------------------------
Name: Irene Rummel
Title: Vice President
Address:
Energy Finance Group
333 Clay Street, Suite 4550
Houston, Texas 77002
Attention: Irene Rummel
Telephone: (713) 651-4921
Fax: (713) 651-4801
BANK ONE, TEXAS, N.A.,
Senior Managing Agent and a Lender
By: /s/ Charles Kingswell-Smith
----------------------------------
Name: Charles Kingswell-Smith
Title: First Vice President
Address:
910 Travis
Houston, Texas 77002
Attention: Charles Kingswell-Smith
Telephone: (713) 751-7803
Telecopy: (713) 751-3544
83
<PAGE>
MEESPIERSON CAPITAL CORP.,
Senior Managing Agent and a Lender
By: /s/ Darrell W. Holley
----------------------------------
Name: Darrell W. Holley
Title: Managing Director
By: /s/ Karel Louman
----------------------------------
Name: Karel Louman
Title: Managing Director
Address:
100 Crescent Court, Suite 1777
Dallas, Texas 75201
Attention: Darrell W. Holley
Telephone: (214) 754-0009
Telecopy: (214) 754-5951
U.S. BANK NATIONAL ASSOCIATION,
a Lender
By: /s/ Monte E. Deckerd
----------------------------------
Name: Monte E. Deckerd
Title: Vice President
Address:
918 17th Street
Denver, Colorado 80202
Attention: Monte E. Deckerd
Telephone: (303) 585-4212
Telecopy: (303) 585-4362
84
<PAGE>
BANK OF SCOTLAND,
a Lender
By: /s/ Annie Glynn
------------------------------
Name: Annie Glynn
Title: Senior Vice President
Address:
565 Fifth Avenue
New York, New York 10017
Attention: Annie Glynn
Telephone: (212) 450-0871
Telecopy: (212) 557-9460
With Copy to:
1021 Main Street, Suite 1370
Houston, Texas 77002
Attention: Richard C. Butler
Telephone: (713) 650-0609
Telecopy: (713) 651-9714
WELLS FARGO BANK (TEXAS),
NATIONAL ASSOCIATION, a Lender
By: /s/ John Lane
------------------------------
Name: John Lane
Title: Vice President
Address:
1000 Louisiana, 3rd Floor
Houston, Texas 77002
Attention: John Lane
Telephone: (713) 319-1370
Telecopy: (713) 739-1087
85
<PAGE>
THE BANK OF NOVA SCOTIA,
a Lender
By: /s/ F.C.H. Ashby
------------------------------
Name: F.C.H. Ashby
Title: Senior Manager Loan Operations
Address:
600 Peachtree Street, N.E., Ste 2700
Atlanta, Georgia 30308
Attention: Claude Ashby
Telephone: 404-877-____
Telecopy: 404-888-8998
With Copy to:
Houston Representative Office
1100 Louisiana, Ste 3000
Houston, Texas 77002
Attention: Mark Ammerman
Telephone: 713-759-3441
Telecopy: 713-752-2425
CREDIT AGRICOLE INDOSUEZ,
a Lender
By: /s/ Douglas A. Whiddon
------------------------------
Name: Douglas A. Whiddon
Title: Vice President
Senior Relationship Manager
By:______________________________
Attention: Doug Whiddon
Telephone: 713-223-7003
Telecopy: 713-223-7029
86
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM PLAINS ALL
AMERICAN PIPELINE, L.P. CONSOLIDATED BALANCE SHEET AS OF MARCH 31, 2000 AND
CONSOLIDATED STATEMENT OF INCOME FOR THE THREE MONTHS ENDED MARCH 31, 2000, AND
IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0001070423
<NAME> PLAINS ALL AMERICAN PIPELINE, L.P.
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<CASH> 7,193
<SECURITIES> 0
<RECEIVABLES> 502,895
<ALLOWANCES> 0
<INVENTORY> 52,848
<CURRENT-ASSETS> 562,936
<PP&E> 455,572
<DEPRECIATION> 14,774
<TOTAL-ASSETS> 1,036,713
<CURRENT-LIABILITIES> 509,022
<BONDS> 0
0
0
<COMMON> 259,704
<OTHER-SE> (17,629)
<TOTAL-LIABILITY-AND-EQUITY> 1,036,713
<SALES> 999,319
<TOTAL-REVENUES> 1,054,989
<CGS> 962,767
<TOTAL-COSTS> 981,400
<OTHER-EXPENSES> 131
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 9,158
<INCOME-PRETAX> 64,300
<INCOME-TAX> 0
<INCOME-CONTINUING> 64,300
<DISCONTINUED> 0
<EXTRAORDINARY> (4,145)
<CHANGES> 0
<NET-INCOME> 60,155
<EPS-BASIC> 1.71
<EPS-DILUTED> 1.71
</TABLE>
