U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15 (d) of the Securities Exchange Act of 1934
Date of Report: November 9, 1999
Commission file number 0-8898
Midcoast Energy Resources, Inc.
(Exact name of Registrant as Specified in Its
Charter)
Nevada 76-0378638
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
1100 Louisiana, Suite 2950 Houston, Texas 77002
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (713) 6508900
Item 2.Acquisition of Assets
KANSAS PIPELINE COMPANY ACQUISITION
On November 9, 1999, Midcoast Energy Resources, Inc.
("Midcoast") purchased Kansas Pipeline Company
("KPC"), MarGasCo Partnership ("MarGasCo") and
other related entities. The acquisition
includes the KPC owned and operated 1,120 mile
interstate gas pipeline system which transports
natural gas from Oklahoma and western Kansas
to the metropolitan Wichita and Kansas City
markets. The KPC system also includes three
compressor stations with a total of 14,680
horsepower and has a capacity of approximately
160 Mmcf/day. KPC has supply interconnections with
the Transok, Panhandle Eastern, and ANR pipeline
systems.
MarGasCo is a non-regulated company, which
primarily markets natural gas off the KPC interstate pipeline system.
Currently MarGasCo markets gas to over 125 end-use
customers in Kansas, Missouri and Oklahoma.
Under the terms of the agreement, Midcoast
paid cash consideration of approximately $190
million, which includes repayment of $68.4 million
in existing KPC senior secured notes and other
indebtedness, and an $8.7 million prepayment penalty
in connection with the early retirement of
debt. Midcoast
anticipates taking an extraordinary charge for the
prepayment penalty in the fourth quarter of 1999. Midcoast
financed this transaction by amending its existing
credit facility (see Item 5 below).
Item 5. Other Events
AMENDMENT TO EXISTING CREDIT AGREEMENT
On November 8, 1999, Midcoast amended and
restated its bank financing agreement under the
certain Amended and Restated Credit Agreement dated
August 31, 1998. The amendments increased our
borrowing availability, modified our letter of
credit facility, extended the maturity five years
to November 2004, modified financial covenants,
established waiver and amendment approvals and
changed the method to determine the interest rate
to be charged.
The amendments to the credit agreement increased
our borrowing availability from $125 million to $265
million, with an accordian feature up to $400
million. The amended credit agreement provides
borrowing availability as follows: (i) up to a
$25 million sublimit for the issuance of standby
and commercial letters of credit and (ii) the
difference between the $265 million and the used
sublimit available as a revolving credit
facility. The facility will provide for Canadian
Dollar borrowings of up to C$50 million. At the
option of the Company, borrowings under the amended
credit agreement accrue interest at LIBOR plus
an applicable margin or the higher of the Bank of
America prime rate or the Federal Funds rate plus an
applicable margin.
The applicable margin percentage to be added to the
interest rate is based on the Company's total
debt to total capitalization ratio at the end of
each fiscal quarter. The Company is charged a
margin between 1.0% and 2.0% as the Company's total
debt to total capitalization ratio ranges from
under 40% and over 65%, respectively. As a
result of the KPC acquisition and the resulting
increase in Midcoast's total debt to total
capitalization ratio to approximately 67%, Midcoast's
borrowings are currently being charged at the
highest applicable margin of 2.0%.
At closing on November 9, 1999, Midcoast was
subject to an arrangement fee, agency fee,
underwriting fee and commitment fee totaling $1.2
million. Additionally, Midcoast is subject to an
annual administrative agency fee of $35,000.
The credit agreement is secured by all accounts
receivable, contracts, and the pledge of all of our
subsidiaries' stock and a first lien security
interest in our pipeline systems. The credit
agreement also contains a number of customary
covenants that require us to maintain certain
financial ratios and limit our ability to incur
additional indebtedness, transfer or sell assets,
create liens, or enter into a merger or
consolidation. The Company was in compliance with
such financial covenants at September 30, 1999.
However, the Company is required to comply with more
stringent covenant ratios on its debt to
capitalization and EBITDA to interest by June 30,
2000.
Item 7.Financial Statements and exhibits
(a) Financial Statements of Business Acquired
The required financial statement
information will be provided as an
amendment to this Form 8-K as soon as
practicable but in any event no later than
60 days
from the date of this filing.
(b) Pro Forma Financial Information
The required pro forma financial
information will be provided as an
amendment to this Form 8-K as soon as
practicable but in any event no later
than 60 days from the date of this
filing.
(c) Exhibits
2.4 Asset Purchase Agreement dated November 9, 1999 by and
between K-Pipe Merger Corporation, Midcoast Energy
Resources, Inc., Midcoast Kansas Pipeline, Inc., and
Midcoast Kansas General Partner, Inc.
10.4 Amended and Restated Credit Agreement dated
November 8, 1999, by and between Midcoast Energy
Resources, Inc., Bank of America, N.A.,
individually and as administrative
agent, Bank One, N.A., individually
and as syndication agent, CIBC,
Inc., individually and as
documentation agent, Banc of
America Securities LLC, as lead
arranger and book manager, and
certain other Lenders.
Signature
In accordance with the requirements of the
Exchange Act, the Registrant caused this report to
be signed on its behalf by the undersigned,
thereunto duly authorized.
MIDCOAST ENERGY RESOURCES, INC.
(Registrant)
BY: /s/ Richard A. Robert
Richard A. Robert
Principal Financial Officer
Treasurer
Principal Accounting Officer
Date: November 19, 1999
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ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT is made and entered into
as of November 5, 1999, by and among K-PIPE MERGER
CORPORATION, a Delaware corporation (the "Seller"),
MIDCOAST ENERGY RESOURCES, INC., a Texas corporation
("MERI"), MIDCOAST KANSAS PIPELINE, INC., a Delaware
corporation ("Midcoast Pipeline"), and MIDCOAST KANSAS
GENERAL PARTNER, INC., a Delaware corporation ("Midcoast
General Partner"). Midcoast Pipeline and Midcoast
General Partner are hereinafter sometimes collectively
referred to as the "Buyers". The Seller, MERI and the
Buyers are hereinafter sometimes collectively referred
to as the "Parties" and individually as a "Party".)
RECITALS
WHEREAS, the Seller has contracted to acquire the
businesses known as Kansas Pipeline Company, MarGasCo
Partnership, MidKansas Partnership and Riverside
Pipeline Company (more specifically defined herein as
the "Assets");
WHEREAS, the Seller desires to sell or cause to be
sold to the Buyers, and the Buyers desire to purchase the
Assets;
WHEREAS, the Buyers are wholly owned direct or
indirect subsidiaries of MERI;
WHEREAS, this Agreement contemplates a
transaction in which the Buyers will purchase, and the
Seller will sell or cause to be sold to the Buyers, the
Assets for the consideration hereinafter specified;
AGREEMENT
In consideration of the mutual agreements, promises
and covenants set forth herein and the recitals set forth
above, and other good and valuable consideration, the
receipt and adequacy of which are acknowledged, the
Parties hereto, intending to be legally bound, agree as
follows.
ARTICLE I
DEFINITIONS
1.1 Defined Terms. As used herein, the following terms
shall have the following meanings:
Adverse Consequences shall mean all debts,
obligations, losses, costs of investigation and defense,
damages, liabilities, claims, judgments, awards,
settlements, taxes, penalties, fines, assessments and
other costs and expenses (including any prejudgment
interest in any litigated or arbitrated matter) which may
be incurred, made or levied; provided, however, that such
term shall not include any punitive or exemplary damages.
Adjustment Amount shall have the meaning set
forth in Section 2.3(b).
Adjustment Value shall have the meaning set forth in
Section 2.3(b).
Affiliated Entity or Affiliate, Entities or Persons
shall be deemed Affiliated as to each other to the extent:
a) one of the
Entities directly or indirectly controls, or is controlled
by, the operations of the other, or the direct or indirect
control of one of the Entities is exercised by the
officers, directors, stockholders, or partners of the
other Entity (whether or not such persons exercise
such control in their capacities as officers,
directors, stockholders, or partners); and b) one of the
Entities directly or indirectly owns, and/or its officers,
directors, stockholders or partners (limited or general)
directly or indirectly own, a five percent (5%) or greater
interest in the capital and/or profits of the other
Entity. By way of
illustration, if Corporation A owns 51% of the stock of
Corporation B, which owns 51% of the stock of
Corporation C, which owns 51% of the stock of Corporation
D; then each of A, B, C and D would be an Affiliate of
each and every one of the other three corporations.
Agreement shall mean this Asset Purchase
Agreement, including the preamble, recitals, schedules and
exhibits hereto, all of which are hereby incorporated
herein by reference and made a part hereof.
Agreement-Related Litigation shall have the meaning
set forth in Section 9.5.
Assets shall mean all of those Partnership
Interests together with certain other assets, properties, rights,
holdings and interests described or referred to on Schedule
1.1(A) hereto.
Butcher Interests shall have the meaning set
forth on Schedule 1.1(B) hereto.
Buyers' Disclosure Schedule shall mean that schedule
from the Buyers to the Seller to be delivered upon the
execution of this Agreement, and updated, subject to the
approval of the Seller, and redelivered at Closing,
which sets forth certain disclosures concerning the
Buyers and their businesses.
Buyers' Indemnified Parties shall have the meaning set
forth in Section 6.2.
Buyers' Indemnified Party shall have the meaning set
forth in Section 6.2.
Buyers' Revised Adjustment Value shall have the meaning
set forth in Section 2.3(c).
Close shall mean the concluding of the Transaction.
Closing shall mean a meeting for the purpose of
concluding the Transaction to be held at the place and on
the date fixed in accordance with Section 2.6.
Closing Approval shall mean the expiration or
early termination of any waiting period pursuant to the
HSR Act in connection with Filing Number 20000034.
Closing Date shall mean the date upon which the
Preliminary Cash Consideration is paid to the Seller by
the Escrow Agent pursuant to the Escrow Agreement.
Code shall mean the Internal Revenue Code of
1986, as amended.
Companies shall mean collectively MGC, MID-KANSAS, KPC,
and RIVERSIDE.
Companies' Financial Statements shall have the meaning
set forth in Section 3.5.
Cut-Off Date shall mean November 5, 1999 at 4:00
p.m. central time.
Debt shall mean (i) the principal of long term debt,
current principal portion of long term debt, and the
principal portion of short term notes payable of the
Companies, all as defined by generally accepted
accounting principles, and (ii) the debt obligations of
Syenergy described in Schedule 1.1(C), but
specifically shall not include the Retained Liabilities.
Effective Time shall mean 12:01 a.m. as of the Closing
Date.
Entity shall mean any corporation,
proprietorship, partnership (general or limited), trust,
estate, foundation, association or any other entity or
group.
Environmental Claim shall mean any action, cause of
action, claim, investigation, demand or notice by any
Person alleging liability under or non-compliance with any
Environmental Law.
ERISA shall mean The Employee Retirement Income
Security Act of 1974, as amended.
Escrow Agent shall mean Cooperative Centrale
RaiffeisenBoerenleenbank B.A., "Rabobank International", New
York branch.
Escrow Agreement shall mean the Agreement attached
hereto as Schedule 2.6.
Excluded Assets shall have the meaning set forth in
Section 2.5.
GAAP shall mean generally accepted accounting
principles consistently applied.
Gas Contracts shall have the meaning set forth
in Section 3.16.
Governmental Authority shall mean the federal
government, any state, county, municipal, local or foreign
government and any governmental agency, bureau, commission,
authority or body.
HSR Act shall mean The Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended.
Indemnified Party shall have the meaning set
forth in Section 6.4(a).
Indemnifying Party shall have the meaning set
forth in Section 6.4(a).
Judgment shall mean any judgment, writ, injunction,
order or decree of or by any court, judge, justice
or magistrate, including any bankruptcy court or judge,
having appropriate jurisdiction, and any adjudicative order
of or by a Governmental Authority.
KPC shall mean Kansas Pipeline Company, a Kansas
general partnership.
Law shall mean the common law and any statute,
ordinance, code or other law, rule, regulation, order,
requirement or procedure enacted, adopted, promulgated,
applied or followed by any Governmental Authority or court.
Lien shall mean any mortgage, lien or encumbrance,
which (i) creates or confers an interest in property to
secure payment or performance of a liability, obligation
or claim, or which retains or reserves such an
interest for such purpose; (ii) grants to any Person
the right to purchase or otherwise acquire, or obligates
any Person to sell or otherwise dispose of, or otherwise
results or may result in any Person acquiring, any property
or interest in property; (iii) restricts the transfer of,
or the exercise of any rights in or the enjoyment of any
benefits arising by reason of ownership of, any
property; or (iv) otherwise constitutes an interest in,
or claim against, property, whether arising pursuant to
any Law, Judgment or any binding contract.
Material Adverse Effect shall mean any change,
event, occurrence or state of facts which is or which would
reasonably be expected to lead to an adverse change or
effect on in the business or operations pertaining to
the Assets and/or Adverse Consequences as the case may be,
which is material to the Assets other than any change
or effect (i) arising out of general economic conditions,
(ii) arising with respect to the industry to which the
Assets are related, but not specifically relating to the
Assets, (iii) arising out of or as a result of the public
announcement of the Transaction, or (iv) arising out of
events or facts set forth on the Seller's Disclosure
Schedule or the Buyers' Disclosure Schedule. No
change or event shall be material unless it is
individually greater than $250,000 (not including
multiples of revenues or earnings in the case of
changes or events affecting the revenue or earnings of
the relevant company).
MID-KANSAS shall mean Mid-Kansas Partnership, a
Kansas general partnership.
MRG shall mean MarGasCo Partnership, an Oklahoma
general partnership.
Partnership Interests shall mean one-hundred percent
(100%) of the partnership interests in each of KPC, MGC,
MIDKANSAS, and RIVERSIDE.
Pending Claims shall have the meaning set forth in
Section 3.6.
Partnership Debt Instruments shall mean the debt
obligations of SYENERGY and MGC described in Schedule
1.1(C).
Person shall mean any natural person, corporation,
limited liability company, general or limited partnership,
joint venture, trust, association, unincorporated entity
of any kind or Governmental Authority.
Preliminary Cash Consideration shall mean a sum of
cash equal to $179,216,444.00, plus or minus the Adjustment
Amount as defined in Section 2.3(b) below and minus the
Debt as of the Closing.
Purchase Price shall mean the Preliminary
Cash Consideration, as adjusted at and following Closing as
set forth in Article II.
Revised Adjustment Amount shall have the meaning set
forth in Section 2.3(c).
Revised Adjustment Value shall have the meaning set
forth in Section 2.3(c).
Representatives shall mean officers, employees,
legal counsel, financial advisors, accountants or other
authorized representatives of any of the Parties, to be
provided access to information.
Retained Liabilities shall have the meaning set
forth in Section 2.4.
RIVERSIDE shall mean Riverside Pipeline Company,
L.P., a Kansas general partnership.
Seller's Disclosure Schedule shall mean that schedule
from the Seller to the Buyers to be delivered upon the
execution of this Agreement, and updated, subject to
approval of the Buyers, and redelivered at the
Closing, which sets forth certain disclosures concerning
the Seller and its Partnership Interests.
Seller's Revised Adjustment Value shall have the
meaning set forth in Section 2.3(c).
Subsidiary shall mean in reference to any entity,
any corporation, limited liability company, limited
partnership or general partnership, a majority of the
outstanding voting securities or voting control of
which are owned directly or indirectly by such entity.
SYENERGY shall mean Syenergy Pipeline Company,
L.P., a Kansas limited partnership.
Taxes shall mean all Federal, state, local, foreign
and other taxes of any kind, including without limitation,
those on or measured by or referred to as income, gross
receipts, sales, use, ad valorem, franchise, profits,
withholding, payroll, employment, excise, severance,
stamp, occupation, value added, windfall profits taxes,
customs duties or similar fees and assessments of any
kind, including interest, penalties and additions to
tax or additional amounts imposed by any
governmental authority with respect thereto.
Tax Returns shall mean all returns, declarations,
reports, information returns and statements with respect
to Taxes of whatsoever kind.
Third Party Claim shall have the meaning set
forth in Section 6.4.
Threshold shall have the meaning set forth in Section
6.5.
Transaction shall mean the transaction contemplated by
this Agreement.
True-up Date shall have the meaning set forth in
Schedule 2.3(b).
1.2 Additional Terms. Terms not set forth in Section
1.1, but otherwise defined in the body of this Agreement,
shall have the specific meanings attributed to them in the
text. Terms in the singular shall have the same meanings
when used in the plural and vice versa.
ARTICLE II
PURCHASE AND SALE
2.1 Purchase and Sale. Upon the terms and subject to the
terms and conditions of this Agreement at the Closing, but
effective as of the Effective Time, the Buyers will purchase
directly from the Affiliates of the Seller that own the
Assets, and the Seller will cause its Affiliates that own
the Assets to sell and transfer to the Buyers, the Assets
for the Purchase Price.
2.2 Preliminary Cash Consideration. The Buyers agree to
pay to the Seller, at the Closing, the Preliminary Cash
Consideration with the adjustments set forth in Section 2.3.
2.3 Adjustments.
(a) The Preliminary Cash Consideration shall be paid
to the Seller at Closing.
(b) The Preliminary Cash Consideration paid to the
Seller at Closing shall be increased or decreased (as the
case may be) (with such difference being paid in cash as
hereinafter provided by either the Buyers or the Seller, as
the case may be) to the extent the Adjustment Value
(based on the Seller's estimate as provided below) is
greater or less than Twenty-Five Thousand Dollars
($25,000) (such difference is referred to as the
"Adjustment Amount"). "Adjustment Value" shall be
calculated on a consolidated basis as of the True-up Date,
in accordance with GAAP, for the Companies as set forth
on Schedule 2.3(b).
The Seller shall submit to the Buyers its good faith estimate of
the Adjustment Value as of and including November 4, 1999.
(c) After the True-up Date, the Seller and the Buyers
shall true up Seller's estimate of the Adjustment Value
made prior to True-up Date. The Revised Adjustment Value
or Revised Adjustment Amount shall be determined based on
Schedule 2.3(b) as follows:
(i) Seller shall submit to the Buyers, not more
than thirty (30) days after the True-up Date, its good
faith estimate of the Adjustment Value as revised based on
any information then available to the Seller (the "Revised
Adjustment Value").
The Seller shall also provide the Buyers with the work papers
and back-up materials used in preparing its estimated
Revised Adjustment Value.
(ii) Within thirty (30) days after receiving
the Revised Adjustment Value from the Seller, the
Buyers shall prepare and deliver to the Seller a detailed
statement as to their calculation of the Adjustment Value
(the "Buyers' Revised Adjustment Value").
(iii) If the Seller has any objections to
the Buyers' Revised Adjustment Value calculation, it shall
deliver a detailed statement describing its objections to
the Buyers and setting its calculation of the Revised
Adjustment Value (the "Seller's Revised Adjustment
Value") within thirty (30) days after receiving the
Buyers' Revised Adjustment Value calculation. The Seller and
the Buyers shall use reasonable efforts to resolve any such
objections themselves. If they do not resolve such
objection within thirty (30) days after the Seller has
delivered its statement of objections, the Buyers and the
Seller shall select an accounting firm mutually acceptable
to them which shall resolve any remaining objections. If
they are unable to agree on the choice of accounting firm,
they shall select a nationallyrecognized accounting firm
by lot (after excluding their respective regular
outside accounting firms), which such selection shall
occur no later than ten (10) days following the expiration
of the foregoing thirty (30) day time period.
The determinations made by the accounting firm so selected
shall be set forth in writing and shall be conclusive and binding
upon all parties hereto. The determinations made by the
accounting firm shall be delivered to the Buyers and the
Seller no later than thirty (30) days following selection
of the accounting firm. The Seller and the Buyers shall
revise the statement of the Revised Adjustment Value as
appropriate to effect the resolution of any objections
thereto pursuant to this Section 2.3 and such revised
statement shall be the Revised Adjustment Value. The
difference (positive or negative) between the Revised
Adjustment Value and the Adjustment Value shall be paid by
the Seller or the Buyers, as appropriate, within three (3)
business days after the final determination of the Revised
Adjustment Amount.
(iv) In the event the Buyers and the Seller
submit any unresolved objections to an accounting firm for
resolution as provided in this section, they shall share
responsibility for the fees and expenses of the accounting
firm as follows:
(A) if the accounting firm resolves all of
the unresolved objections in favor of the Buyers, the Seller
shall be responsible for all of the fees and expenses of
the accounting firm;
(B) if the accounting firm resolves all of
the unresolved objections in favor of the Seller, the Buyers
shall be responsible for all of the fees and expenses of
the accounting firm;
(C) if the accounting firm resolves some of
the unresolved objections in favor of the Buyers and the
rest of the unresolved objections in favor of the Seller,
the Buyers shall be responsible for the fraction of the
fees and expenses of the accounting firm equal to (x)
the difference between the Revised Adjustment Value and
the Buyers' Revised Adjustment Value, divided by (y)
the difference between the Seller's Revised Adjustment
Value and the Buyers' Revised Adjustment Value.
Example #1:
If the Buyers' Revised Adjustment Value is 100,
the Revised Adjustment Value is 125, and the
Seller's Revised Adjustment Value is 175, then the
Buyers shall pay 25/75 or 1/3 of the fees and
expenses of the accounting firm, and the Seller
shall pay the remaining 2/3.
125-100 = 25 or 1/3
175-100 75
Example #2:
If the Buyers' Revised Adjustment Value is 50,
the Revised Adjustment Value is 150, and the
Seller's Revised Adjustment is 200, then the
Buyers' shall pay 100/150 or 2/3 of the fees
and expenses of the accounting firm, and the
Seller shall pay the remaining 1/3.
150-50 = 100 or 2/3
200-50 150
(v) The Buyers shall make the books and records
of the Companies and its Affiliates available for
inspection, review and copying to
the Seller and its accountants and other
representatives. The Buyers shall cooperate with the Seller
and will make the work papers and backup materials used in
preparing the statement of the Buyers' Revised Adjustment
Value available to the Seller and its accountants and
other representatives in each case at reasonable times and
upon reasonable notice at any time during (A) the
preparation by the Buyers of the statement of Buyers'
Revised Adjustment Value, (B) the review by the Seller of
the statement of Buyers' Revised Adjustment Value, and (C)
the resolution by the Buyers and the Seller of any
objections thereto.
2.4 Assumption of Debt. Subject to the Closing, the
Buyers
agree to pay or cause to be paid, substantially simultaneous
with the Closing, all indebtedness evidences by the
Partnership Debt Instruments. The Buyers shall pay
any and all principal, interest, make whole premium,
and any and all other premiums, costs, fees (including
assumption fees), penalties, due or which may be due at
Closing or at any date thereafter, pursuant to the terms of
the Partnership Debt Instruments. The Partnership Debt
Instruments are identified in the Seller's Disclosure
Schedule. Except for the Debt, the Buyers shall not assume
by virtue of this Agreement or transactions contemplated
hereby, and shall have no liability for, any liabilities
of the Seller (or any Affiliates of the Seller) of any
kind, character or description whatsoever (the "Retained
Liabilities").
2.5 Excluded Assets. The following assets associated with
the
businesses of the Companies are specifically excluded from
the purchase and sale contemplated by this Agreement:
(a) The Butcher Interests;
(b) The $10,000,000 principal balance in the Cash
Reserve
Account held in the name of Syenergy Pipeline Company,
L.P. at State Street Bank and Trust Company, Boston,
Massaschusetts; and
(c) Any and all causes of action, tort or
breach of
contract, or otherwise, held by Companies and/or their
Affiliated Entities against Western Resources, Inc. and/or
OneoK, Inc. or their Affiliated Entities arising out of
or related to the failure of Western Resources, Inc. to
sell Companies and/or their Affiliated Entities the gas
local distribution company assets and business which is now
KGS, a division of OneoK, Inc.
2.6 Closing. On November 8, 1999, the Preliminary
Cash Consideration and all documents required by Section 2.7
shall be deposited by the Parties with the Escrow Agent
pursuant to the Escrow Agreement attached hereto as
Schedule 2.6. The Closing of the Transaction shall occur
at the offices of LeBoeuf, Lamb, Greene & MacRae LLP,
125 West 55th Street, New York, NY 100195389, commencing
at 10:00 A.M., local time, on November 9, 1999, unless
extended by reason of any cure periods which the Buyers or
the Seller may have pursuant to Article VIII with which to
cure a breach of warranty, a misrepresentation or perform
a covenants, in which event the Closing shall occur on the
first day following such cure period or the date otherwise
mutually agreed to by the Parties.
2.7 Deliveries at Closing. At Closing, (i) the Seller
will deliver to the Buyers the various certificates,
instruments and documents referred to in Section 7.2,
(ii) the Buyers will deliver to the Seller the various
certificates, instruments and documents referred to in
Section 7.3, (iii) the Seller will deliver to the Buyers
such instruments of assignment, conveyance and transfer,
with general warranty of title, and otherwise in form and
content mutually acceptable to the Seller and the
Buyers, as shall be necessary to transfer and convey to
the Buyers all of the Assets, (iii) the Escrow Agent will
deliver the Preliminary Cash Consideration to the Sellers,
and (v) the Buyers will deliver to the Seller such
instruments which evidence, in form and content reasonably
acceptable to the Seller, compliance with the provisions of
Section 2.4 hereof.
2.8 Apportionments. The Buyers shall be responsible
for the actual payment of all ad valorem and property taxes
with respect to the Assets for the calendar year in which
the Closing occurs; provided, however, that the Seller shall
reimburse the Buyers for its pro rata share of such taxes
to the extent not previously paid by the Seller. An
estimate of such taxes shall be made at the Closing and
such amount shall be paid to the Buyers at Closing.
The ad valorem and property taxes for the year of
Closing for which the Seller is responsible shall be
determined by applying a fraction based on the number
of days in the calendar year prior to the Effective Time
to such taxes for the calendar year. Payment of any
amount owed by the Buyers to the Seller or by the Seller
to the Buyers shall be made within thirty (30) days after
the actual ad valorem and property taxes with respect to
the Assets for the calendar year in which Closing occurs
have been determined.
2.9 Purchase Price Allocation. Within sixty (60) days
from Closing, the Buyers will provide to the Seller a
schedule of the Buyers' estimated allocation of the
Purchase Price among the Assets acquired.
ARTICLE III
REPRESENTATIONS AND WARRANTIES REGARDING THE SELLER AND
THE COMPANIES
Except as provided in this Agreement and except as set
forth in the Seller's Disclosure Schedule (each section
of which qualifies all of the relevant representations or
warranties), the Seller represents and warrants to the
Buyers as follows:
3.1 Corporate Organization, Qualification and Power. The
Seller and each of the Companies is duly formed, validly
existing and in good standing under the Laws of the
jurisdiction of its formation, and is duly qualified to
conduct its business and each is in good standing in
every other jurisdiction in which its business is
conducted, except where failure to be so qualified,
licensed or to be in good standing would not have a
Material Adverse Effect. The Seller and each of the
Companies has the power to own or lease its respective
properties and to carry on its business as now being
conducted, wherever located.
3.2 Authorization of Agreement and the Transaction.
The Seller has all requisite corporate power and
authority to approve, authorize, execute and deliver this
Agreement and to consummate the Transaction. This
Agreement and the consummation of the Transaction by the
Seller have been duly and validly authorized by the
Seller's Board of Directors and no other corporate
proceedings on the part of the Seller are necessary to
authorize this Agreement or to consummate the Transaction.
3.3 Enforceable Agreement. This Agreement has been
duly and validly executed and delivered by the Seller and,
assuming it constitutes the valid and binding agreement
of MERI and the Buyers, constitutes a valid and binding
obligation of the Seller, enforceable against the Seller
according to its terms, subject to bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and
similar Laws affecting the enforceability of
contractual obligations and creditor's rights generally
and by the application of equitable principles by courts
of competent jurisdiction, sitting at law or in equity.
3.4 No Conflicts, Violations, Breaches or Defaults.
Except as set forth on the Seller's Disclosure Schedule
or in this Section 3.4,
the execution and delivery of this Agreement by the
Seller and its performance of the obligations hereunder and
the consummation of the Transaction, do not (a) conflict
with or result in any breach of any provision of the
Articles of Incorporation, as amended, or Bylaws, as
amended, of the Seller or the Companies; (b)
require any consent,
approval,
authorization or permit of, or filing with, or notification
to, any Governmental Authority, except (i) in connection
with the applicable requirements, if any, of the HSR Act;
(ii) the filing of appropriate documents with the relevant
authorities of states in which the Seller or any of its
Affiliates or Subsidiaries is authorized to do business,
(iii) approvals, if any, required of the Federal Energy
Regulatory Commission ("FERC") and any Governmental
Authorities having jurisdiction over the Seller or any of
its Affiliates or Subsidiaries; (iv) approvals of the
lenders to Seller; or (v) where the failure to obtain
such consent, approval, authorization or permit, or to
make such filing or notification, would not have a
Material Adverse Effect or materially adversely affect the
ability of the Seller to consummate the Transaction;
(c) except as would not have a Material Adverse
Effect, conflict with or result in a breach or violation
of, or constitute a default under, or result in (or
create in any party the right to cause) the acceleration of
any performance required by the Seller under, (i) any
Judgment or Law to which it is subject or bound
(subject to any consents, approvals, authorizations,
permits, filings or notifications required under (b)
above), or (ii) any mortgage, bond, indenture, agreement,
contract, license or other instrument or obligation to which
the Seller is subject or bound; or (d) result in the
creation of any Lien on any of the assets of the Seller,
its Subsidiaries and Affiliates, which would have a Material
Adverse Effect, except for liens created under this
Agreement, Schedules or Exhibits hereto and related
transactions and as accepted by the Buyers.
3.5 Financial Statements. The consolidated balance
sheets and the related consolidated statements of earnings,
stockholders' equity and cash flows (including the related
notes thereto) of the Companies for and as of December 31,
1997 and 1998 and for and as of June 30, 1999
(collectively, "Companies' Financial
Statements") and included in Seller's Disclosure
Schedule, have been prepared in accordance with GAAP applied
on a basis consistent with prior periods (except as
otherwise noted therein), and present fairly the
financial position of the Companies as of their
respective dates, and the consolidated results of their
operations and their cash flows for the periods presented
therein (subject, in the case of the unaudited interim
financial statements, to normal year-end adjustments and
except that the unaudited interim financial statements do
not contain all of the footnote disclosure required by
GAAP).
3.6 Litigation. Except as set forth on the
Seller's Disclosure Schedule (the "Pending Claims"), there
is no action, suit, claim, governmental investigation,
arbitration or other proceeding pending, or, to the
actual knowledge of the Seller's present or former
officers, threatened in writing, against the Companies or
their present Affiliates, the Seller, any of its
Subsidiaries or any of the Affiliates which, if
adversely determined, would have a Material Adverse Effect.
3.7 Taxes. The Companies have timely filed all
material Tax Returns required to be filed (taking into
account extensions approved by Governmental Authorities)
and as of the Effective Time will have paid all Taxes for
periods prior to the Effective Time to be due and have
provided reserves in accordance with GAAP in their
respective financial statements for any Taxes that have not
been paid, whether or not shown as being due on any Tax
Returns, except as set forth in the Seller's Disclosure
Schedule or where the failure to pay or provide for such
Taxes would not have a Material Adverse Effect, and (i)
no material claim for unpaid Taxes has been asserted
against the Companies or the Assets in writing by a tax
authority or has become a Lien (except for Liens for Taxes
not yet due and payable or for Taxes that are being disputed
in good faith by appropriate proceedings and that have
been reserved against in accordance with GAAP) against
Assets or the property of the Companies, except as to
such matters as would not have a Material Adverse Effect,
(ii) as of the date of this Agreement, no audit of any
material Tax Return of the Companies is being conducted
by a tax authority, and (iii) as of the date of this
Agreement, no extension of the statute of limitations on
the assessment of any Taxes has been granted by the
Companies and is currently in effect.
3.8 Environmental Laws and Regulations. Except as set
forth on Seller's Disclosure Schedule, the Companies and
their present Affiliates, the Seller and each of its
Subsidiaries and the Affiliates (a) are in compliance
with Environmental Laws (as defined below) except for
noncompliance that will not have a Material Adverse
Effect, and (b) have not received written notice of, or to
the actual knowledge of any of the present or former
officers of the Companies and their present Affiliates,
the Seller, its Subsidiaries and the Affiliates, are the
subject of an Environmental Claim which would have a
Material Adverse Effect.
The term "Environmental Laws" shall mean any state or
federal environmental statute or regulation, including but
not limited to the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended (collectively,
"Environmental Laws").
3.9 Compliance with Applicable Laws. Except as set
forth on the Seller's Disclosure Schedule or for violations
that will not have a Material Adverse Effect, the
businesses of the Companies and their present Affiliates,
the Seller, its Subsidiaries and the Affiliates are not
being conducted in violation of any Laws.
3.10 Title to Properties. The Companies and their
present Affiliates, the Seller and each of its
Subsidiaries and the Affiliates have good and marketable
title to, or valid leasehold interests in, all their
respective material properties and assets except for such as
are no longer used or useful in the conduct of their
respective businesses or as have been disposed of in the
ordinary course of business and except for defects in
title, easements, encroachments, restrictive covenants
and similar
encumbrances or impediments that would not have a
Material Adverse Effect. All such assets and properties of
the Companies, other than assets and properties in which
the Companies have leasehold interests, are free and
clear of all Liens except for Liens that would not have a
Material Adverse Effect and those set forth on the Seller's
Disclosure Schedule.
3.11 Employee Benefit Matters.
(a) The Seller has furnished to the Buyers true and
complete copies of all material employee benefit plans
within the meaning of Section 3(3) of ERISA that covers
employees, directors, former employees or former directors
of the Companies, all as listed on
the Seller's Disclosure Schedule. In addition, the Seller
has furnished all trust agreements or insurance contracts
forming a part of any such employee benefit plans
maintained by or for the Companies, a copy of the most
recent determination letter for any such employee benefit
plan which is an employee pension benefit plan within the
meaning of Section 3(2) of ERISA and is intended to comply
with Section 401(a) of the Code, and a copy of the most
recent Form 5500, if applicable.
(b) Each of the employee benefit plans maintained by
or for the Companies is in substantial compliance with all
applicable Laws including ERISA and the Code, except for
any noncompliance that would not have a Material Adverse
Effect
(c) No employee benefit plan is a "multiemployer
plan" as such term is defined in Section 4001(a)(3) of
ERISA or Section 414(f) of the Code or a multiemployer
plan described in clauses (i) or (ii) of Section
3(37)(A) of ERISA; or is a part of a "multiple employer
welfare arrangement" within the meaning of Section 3(40)
of ERISA.
(d) There are no pending, threatened, or anticipated
claims (other than routine claims for benefits or immaterial
claims) by, on behalf of or against any of the employee
benefit plans or any trusts related thereto that would have
a Material Adverse Effect.
3.12 Broker's Fees. The Seller has not employed any
investment bank, broker, finder, consultant or other
intermediary which would be entitled to any fee or
commission from the Buyers in connection with this Agreement
or the Transaction.
3.13 Absence of Certain Changes or Events. Since
December 31, 1998, the Companies and their present
Affiliates, the Seller and its Subsidiaries and the
Affiliates have conducted their business in all
material respects in the ordinary course consistent
with past practice, and there is not and has not been: (i)
any change which has had a Material Adverse Effect, or (ii)
any condition, event or occurrence which is reasonably
likely to have a Material Adverse Effect.
3.14 Labor Matters. As of the date of this
Agreement, neither the Companies nor their present
Affiliates, nor the Seller nor any of its Subsidiaries or
the Affiliates, is a party to or bound by, and none of
their employees is subject to, any collective bargaining
agreement relating to the term
and
conditions of employment for any group of employees (any
such agreement, memorandum or document, a "Collective
Bargaining Agreement"), and as of the date of this
Agreement there are no labor unions or other
organizations representing or, to the knowledge of any
of the present or former officers of the Companies or
their present Affiliates, the Seller, purporting to
represent, any employees employed by the Seller or its
Subsidiaries. As of the date of this Agreement, no labor
union is currently engaged in or, to the knowledge of
any of the present or former officers of the Companies
or their present Affiliates or the Seller, threatening,
organizational efforts with respect to any employees of
the Seller or any of its Subsidiaries.
3.15 Year 2000 Compatibility. Except as set forth on
the Seller's Disclosure Schedule, the Companies have
developed and are executing a plan (the "Y2K Plan") to
address significant year 2000 compatibility issues. In the
case of certain equipment with imbedded chips where
testing for year 2000 compliance is impossible or
impractical, the Y2K Plan may include plans and strategies
for replacing such capability with redundant capacity
within the Companies or with alternative third party
sourcing with comparable quality and pricing, excluding any
provider of basic services and utilities.
3.16 Gas Contracts. All material gas sales, purchase
and transportation contracts (the "Gas Contracts") to which
the Companies, or either of them, is a party or is
otherwise bound are listed on the Seller's Disclosure
Schedule. Copies of all such Gas Contracts, together
with all amendments, modifications, revocations and notices
pertaining thereto have been delivered or made available to
the Buyers. Except as set forth and expressly noted on the
Seller's Disclosure Schedule, none of the Companies or
their present Affiliates, or the Seller, its Subsidiaries
and the Affiliates is party to any arrangement under which
it will be obligated, by virtue of a prepayment arrangement,
a "take-or-pay" arrangement or any other arrangement, to
transport or deliver hydrocarbons at some future time
without then or thereafter receiving full payment
therefor, or to pay for hydrocarbons or their
transportation without then receiving such hydrocarbons.
3.18 No Defaults. Except as set forth on the
Seller's Disclosure Schedule, to the actual knowledge of the present
and former officers of the Companies or their present
Affiliates, the Seller, its Subsidiaries and the
Affiliates, (i) none of the Seller, its Subsidiaries
and the Affiliates is in breach or default under any
term or provision of any of the Gas Contracts, except where
such breaches or defaults would not, either
individually or in the aggregate, have a Material Adverse
Effect, (ii) all of the Gas Contracts are in full force and
effect, and constitute legal, valid and binding obligations
of the Companies, and to the Companies and their
present Affiliates and the Seller's knowledge, the other
Parties thereto except where the failure to be in full
force and effect and legal, valid and binding would not
have a Material Adverse Effect, (iii) none of the
Companies and their present Affiliates has received any
written notice from any other party indicating any
intent to rescind or dishonor any material provision
contained in any of the Contracts. Except as set forth
on the Seller's Disclosure Schedule, none of the Companies
and their present Affiliates, the Seller, its Subsidiaries
and the Affiliates is a party to any contract to sell
any portion of its assets other than in the ordinary
course of business.
3.18 Insurance. To the actual knowledge of the present
and former officers of the Companies and their present
Affiliates, the Seller, its Subsidiaries and the Affiliates,
the Companies or their Affiliates maintain in effect
insurance on their respective assets as described on the
Seller's Disclosure Schedule and such insurance policies
are in full force and effect on the date hereof and
will remain in effect through the Closing.
To the actual knowledge of the present and former officers of
the Companies and their present Affiliates, the
Seller, its Subsidiaries and the Affiliates, none of the Companies and
their Affiliates is in default with respect to any provision
contained in any insurance policy covering any portion of
their assets, except where such default would not have
a Material Adverse Effect.
3.19 Tariffs. To the actual knowledge of the present
and former officers of the Companies and their present
Affiliates and the Seller, except as set forth on the
Seller's Disclosure Schedule or for noncompliance that
will not have a Material Adverse Effect, all operations
of any of the Companies which are subject to a tariff
approved by FERC are in compliance with each such tariff.
3.20 Gas Imbalances. To the actual knowledge of the
present and former officers of the Companies and their present
Affiliates, the Seller, its Subsidiaries and the
Affiliates, as of September 30, 1999 the KPC and MRG
imbalances are as set forth in the Seller's Disclosure
Schedule.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF MERI AND BUYERS
Except as set forth in th e Buyers' Disclosure
Schedule (each section of which qualifies the
correspondingly numbered representation or warranty) MERI
and the Buyers jointly and severally represent and
warrant to the Seller as follows:
4.1 Corporate Organization, Qualification and Power.
Each of MERI and the Buyers is a corporation duly
organized, validly existing and in good standing
under the Laws of the jurisdiction
of its incorporation and is duly qualified to conduct
its business in every other jurisdiction in which its business is
conducted, except where failure to be so qualified or
licensed would not have a Material Adverse Effect on the
Seller. Each of MERI and the Buyers has the corporate
power to own or lease its respective properties and to
carry on its business as now being conducted, wherever
located.
4.2 Authorization of Agreement and the Transaction.
MERI and the Buyers have all requisite corporate power and
authority to approve,
authorize, execute and deliver this Agreement and to
consummate the Transaction. This Agreement and the
consummation of the Transaction by MERI and the Buyers
have been duly and validly authorized by the Boards of
Directors of MERI and each of the Buyers and no other
corporate proceedings on the part of MERI or either of the
Buyers are necessary to authorize this Agreement or to
consummate the Transaction.
4.3 Enforceable Agreement. This Agreement has been
duly and
validly executed and delivered by MERI and the Buyers
and, assuming it
constitutes the valid and binding agreement of the
Seller, constitutes a valid and binding obligation of
each of MERI and the Buyers, enforceable against each of
them according to its terms, subject to bankruptcy,
insolvency, fraudulent conveyance, reorganization,
moratorium and similar Laws affecting the enforceability
of contractual obligations and creditor's rights
generally and by the application of equitable principles by
courts of competent jurisdiction, sitting at law or in
equity.
4.4 No Conflicts, Violations, Breaches or Defaults. The
execution and delivery of this Agreement by each of MERI and
the Buyers and their performance of the obligations
hereunder and the consummation of the Transaction, do not
(a) conflict with or result in any breach of any
provision of the respective Articles of Incorporation,
Certificate of Incorporation or Bylaws of MERI or the
Buyers; (b) require any consent, approval, authorization or
permit of, or filing with or notification to, any
Governmental Authority, except (i) in connection with
the applicable requirements, if any, of the HSR Act;
(ii) approvals, if any, required of Governmental
Authorities having jurisdiction over
MERI or either of the Buyers; or (iii) where the
failure to
obtain such consent, approval, authorization or permit,
or to make such filing or notification, would not have
a Material Adverse Effect on MERI or the Buyers or
materially adversely affect the ability of the Buyers to
consummate the Transaction; (c) except as would not,
individually or in the aggregate, have a Material
Adverse Effect,conflict with or result in a breach or
violation of, or constitute a default under, or result in
(or create in any party the right to cause) the
acceleration of any
performance of MERI or the Buyers under, (i) any Judgment or
Law to which they are subject or bound (subject to any
consents, approvals, authorizations, permits, filings or
notifications required under (b) above), or (ii) any
mortgage, bond, indenture, agreement, contract, license or
other instrument or obligations to which MERI or either
of the Buyers are subject or bound; or (d) result in the
creation of any Lien on any of the assets of MERI or
either of the Buyers which would have a Material Adverse
Effect on MERI or either of the Buyers.
4.5 Litigation. There is no action, suit,
claim,
governmental investigation, arbitration or other
proceeding pending, or, to the actual knowledge of the
officers of MERI or either of the Buyers, threatened in
writing, against MERI or either of the Buyers which, if
adversely determined would have a Material Adverse Effect.
4.6 Taxes. Each of MERI and the Buyers and its
Subsidiaries
has (a) filed all material Tax Returns that they are
required to file through the date hereof and shall
prepare and file all material Tax Returns required to be
filed after the date hereof and on or before the Closing
and (b) paid or provided for the payment of all Taxes
due and owing for the periods covered by such Tax Returns
and all Taxes, if any, required to be paid for which no
return is required, except in either case where the
failure to file such returns or to pay or provide for such
Taxes would not have a Material Adverse Effect.
4.7. Environmental Laws and Regulations. Except as
set
forth on the Buyers' Disclosure Schedule or for non-
compliance that will not have a Material Adverse Effect,
MERI and each of the Buyers and each of its Subsidiaries
(a) are in compliance with Environmental Laws, and (b)
have not received written notice of, or, to the actual
knowledge of the officers of MERI or either of the Buyers,
is the subject of an Environmental Claim.
4.8 Compliance with Applicable Laws. Except as set
forth on
the Buyers' Disclosure Schedule or for violations that will
not have a Material Adverse Effect, the businesses of MERI
and the Buyers and its Subsidiaries are not being
conducted in violation of any Laws.
4.9 Broker's Fees. Neither MERI nor either of the
Buyers has
employed any investment bank, broker, finder, consultant or
other intermediary which would be entitled to any fee or
commission from the in connection with the Transaction.
ARTICLE V
CONDUCT PENDING THE CLOSING AND COVENANTS
5.1 Conduct of Business by the Seller. Except as set
forth in this Agreement or on the Seller's Disclosure
Schedule, the Seller covenants and agrees that prior to
Closing, unless MERI and the Buyers otherwise agree in
writing or as otherwise contemplated by this Agreement, it
will cause the Companies to conduct their business and
day to day operations in the ordinary and usual course of
business, consistent with its past custom and practice, and
will seek to preserve intact the business organizations and
goodwill of the Companies keep in full force and effect
all material rights, licenses, permits and franchises
relating to such businesses, and maintain satisfactory
relationships with suppliers, customers and others having
business relationships with the Companies. The Seller
specifically agrees that, prior to Closing, unless MERI and
the Buyers otherwise agree in writing or as otherwise
contemplated by this Agreement, neither the Seller nor
any its Seller's Subsidiaries or Affiliates, will:
(a) except as contemplated by this Agreement, take
any action which would render, or which reasonably may be
expected to render, any representation or warranty made
by it in this Agreement untrue in any material respect at
the Effective Time;
(b) take any action that would, or that could
reasonably be expected to, cause any condition to
Closing, as set forth in Article VII hereof, to not be
satisfied; or
(c) authorize, propose or announce an intention to do
any of the foregoing, or enter into any contract or
agreement to do any of the foregoing.
5.2 All Reasonable Efforts. Subject to the terms
and conditions herein, each of the Parties shall use
reasonable efforts to take, or cause to be taken, all
actions and to do, or cause to be done, all things
necessary, proper or advisable under applicable Laws to
consummate and make effective the Transaction (but shall
not be required to file or prosecute any lawsuits or
administrative proceedings, or otherwise expend any
sums in excess of $200,000 in connection with its
reasonable efforts), including using reasonable efforts
to obtain all necessary or appropriate waivers, consents
and approvals, to effect all necessary registrations,
filings and submissions, including, but not limited to,
(i) filings under the HSR Act and any other submissions
required by any Governmental Authority, including FERC,
and (ii) required approvals under the applicable Laws and
to lift any injunction or other legal bar to the
Transaction (and, in such case, to proceed with the Closing
as expeditiously as possible).
5.3 Access to/Confidentiality of Information.
Upon reasonable notice, the Seller, MERI, and the Buyers
shall (and shall cause their Subsidiaries and the
Affiliates to) afford to each other's Representatives, so
that they may evaluate the Transaction, reasonable
access during normal business hours throughout the
period prior to the Closing, to all properties, personnel,
books and records and other information as reasonably
requested under the circumstances, and, during such
period, furnish promptly to such Representatives the
specific information concerning the Assets and the business,
properties and personnel, including, but not limited to,
that listed on the Seller's Disclosure Schedule. Each
of MERI and the Buyers agrees that it will not, and will
cause its Representatives not to, use any information
obtained pursuant to this Section 5.3 for any purpose
unrelated to the consummation of the Transaction.
5.4 Publicity. The Parties will consult with each
other and will mutually agree upon any press
releases or public announcements pertaining to the
Transaction and shall not issue any such press releases
or make any such public announcements prior to such
consultation and agreement.
5.5 Employee Matters. MERI and the Buyers shall cause
the Companies after the Closing to maintain and continue to
pay the healthcare insurance, dental insurance,
life insurance, disability insurance premiums, car
purchase and/or lease payments and/or car allowances and
auto insurance currently in effect as of the date of
Closing of this Agreement, or substantially comparable
benefits, for all employees of the Companies and its
Affiliates as of the date of Closing for a period of six
(6) months after Closing, with the exception of those
employees and other persons listed on Schedule 5.5. After
said six (6) month period, upon termination of any such
employees, the Companies shall provide all such
employees all of the Federal COBRA
benefits mandated relating to any of the above described
employee benefits.
5.6 MERI's and the Buyers' Diligence. MERI and the
Buyers acknowledge that they have conducted an extensive
investigation of the financial condition and the properties
and operations of the Companies and that during the
course of such investigation, the
Seller has caused the facilities, books, records and
personnel of the Companies to be made available to MERI and
the Buyers, and have caused to be provided to MERI and
the Buyers such other information with respect to the
Companies as they have requested. MERI and the Buyers have
received from the Seller all information which they have
requested to their satisfaction, and MERI and the Buyers
have been given the opportunity to discuss the Assets and
the business and prospects of the Companies and to have
such representatives answer any questions regarding the
Assets and the business of the Companies, all of which
questions have been answered to their satisfaction, and
to obtain any additional information which MERI or the
Buyers possess that is necessary to verify the accuracy
of the information supplied during the course of such
investigation. MERI and the Buyers have had access to
the Assets and to the facilities and properties of
the Companies and have inspected them to their
satisfaction. Further, MERI and the Buyers acknowledge that
(i) they have been advised that the Companies have certain
Pending Claims, including without limitation a rate case by
KPC, pursuant to Section 4 of the Natural Gas Act, (ii) the
outcomes of Pending Claims, including the rate case, are
impossible to predict, (iii) the Seller is not making any
representations or warranties of any kind or nature with
respect to the Pending Claims (including the rate case)
including without limitation with respect to the outcome
thereof, (iv) the outcome of the Pending Claims,
including the rate case, could have a Material Adverse
Effect and (v) the Preliminary Cash Consideration and the
assumption of obligations pursuant to Section 2.4 hereof
and the consummation of the Transaction by MERI and the
Buyers are based on their independent evaluation of the
Pending Claims, including the rate case. As a result of
the foregoing, as of the Closing, and without any
further action required and except as specifically set
forth in Article VI hereof, MERI and the Buyers, on behalf
of themselves and all of their Affiliates, shall be
deemed to release and discharge, as of the Closing, the
Seller and its Subsidiaries and each of their former
and present officers, directors, stockholders, employees,
agents and representatives from and against all claims
which could be made in any AgreementRelated Litigation
pursuant to Rule 10(b)-5 of the Exchange Act or common law
fraud.
5.7 Representations Cut-Off. On or prior to the Cut-Off
Date, MERI and the Buyers must submit to the Seller a
statement (the "Representations Statement") describing in
detail any breaches of representations or warranties by
Seller then known to MERI or either of the Buyers. The
Seller will then have 30 days to cure said breaches of
representations or warranties. MERI and the Buyers will
be barred from seeking any indemnities or other remedies
hereunder or from refusing to Close pursuant to Section
7.2(b) for any breaches of representations or warranties by
the Seller known to MERI or either of the Buyers prior to
the Cut-Off Date and not set forth in the Representations
Statement.
5.8 Employee Benefits. MERI and the Buyers agree that
after the Closing it will not allow the Companies (or any
successor or assign thereof) to take any action or omit
to take any action which would, directly or indirectly,
reduce any COBRA benefits being made available or which
may be due to employees of the Companies after the
Closing for any employees terminated prior to
the Closing or within 6 months after Closing.
5.9 Update Representations. MERI and the Buyers, on one
hand, and the Seller, on the other hand, each shall promptly
notify the other party in writing if they become aware after
the date hereof and before the Closing of any fact,
information or condition that causes or constitutes a
breach of any representation or any warranty made by
them in this Agreement, whether such fact, information or
condition (i) existed (whether or not known by the
representing/warranting party for representations or
warranties not predicated on such Party's knowledge) before
the date hereof (a "Breach Event") or (ii) came into
existence after the date hereof (a "Subsequent
Development"). Such fact, information or condition shall
be set forth in a supplemental schedule specifying
the applicable section of this Agreement to which such
information relates (a "Supplemental Schedule"). The
Supplemental Schedule shall be delivered to the other party,
and if not objected to in writing within five (5) business
days of delivery, shall amend and, if applicable, replace
the section of the original Seller's Disclosure Schedule
or Buyers' Disclosure Schedule to which it relates. If
objected to in writing within five (5) business days of
delivery, the Supplemental Schedule shall not be deemed to
amend the relevant Disclosure Schedule. 5.10 Tax Matters.
The Seller shall be responsible for the payment of
Taxes which relate to the Companies and which are
attributable to time periods up to and including the Closing
Date (whether or not the liability, obligation or claim for
such Taxes exists as of such date), including Taxes imposed
on the Seller as a result of the transfer of the Assets to
the Buyers. The Buyers shall be responsible for the payment
of Taxes which relate to the Companies and which are
attributable to time periods beginning after the Closing
Date. The party which has the primary obligation to
do so under applicable law shall file any Tax Return
that is required to be filed in respect of Taxes, and that
party shall pay the Taxes shown on such Tax Return.
ARTICLE VI
INDEMNIFICATION; REMEDIES
6.1. Survival of Representations and Warranties. The
representations, warranties and agreements of the Parties
made herein shall survive Closing, any investigation by the
Parties, and the execution and delivery of the documents
contemplated by this Agreement, and shall continue in force
and effect until terminated, as hereinafter provided in
Sections 6.2 and 6.3.
6.2 General Indemnity by the Seller. The Seller agrees to
protect, defend, indemnify and hold MERI and the Buyers,
their successors and assigns as to all or part of the assets
of the Companies (collectively, the "Buyers' Indemnified
Parties" and individually a "Buyers' Indemnified Party")
harmless from and against and shall reimburse the Buyers'
Indemnified Parties for, all Adverse Consequences to the
Buyers' Indemnified Parties and the Companies, or any of
them, which arise from any of the following:
(a) the breach of any of the Seller's representations and
warranties contained in this Agreement;
(b) any severance obligation (excluding Federal COBRA
benefits) to any employees or consultants listed on Schedule 6.2;
and
(c) all actions, suits, proceedings, demands,
assessments, costs and expenses (including reasonable
attorneys' fees and expenses of investigation and defense)
incident to any such
breach.
The representations and warranties of Seller under
Article III and the indemnity obligations of Seller under
this Section 6.2 shall terminate and be of no further force
and effect as of 10:59 a.m. central time on October 29,
2000, except as to matters which are the subject of a
written claim made to the Seller by any and all Buyers'
Indemnified Parties prior thereto and except for matters
covered by Section 3.7 (which shall survive until the
expiration of the applicable statute of limitations period
with respect to such Taxes). Further, the Seller shall not
be liable to MERI and/or the Buyers for any breaches of
representations or warranties of which MERI or either or the
Buyers had actual knowledge (without any duty of inquiry) as
of the Cut-Off Date.
6.3 General Indemnity by MERI and the Buyers. MERI and
the Buyers agree to protect, defend, indemnify and hold the
Seller harmless from and against, and shall reimburse the
Seller for, all Adverse Consequences which arise from any of
the following:
(a) the breach of any of MERI's and the Buyers'
representations and warranties contained in this Agreement;
and
(b) all actions, suits, proceedings, demands,
assessments, costs and expenses (including reasonable
attorneys' fees and expenses of investigation and defense)
incident to any such breach.
The representations and warranties of MERI and the Buyers
under Article IV and the indemnity obligations of MERI and
the Buyers to the Seller under this Section 6.3 shall
terminate and be of no further force and effect as of 10:59
a.m. central time on October 29, 2000, except as to matters
which are the subject of a written claim made to MERI and/or
the Buyers by the Seller prior thereto. Further, MERI and
the Buyers shall not be liable to the Seller for any
breaches of representations or warranties of which the
Seller had actual knowledge (without any duty of inquiry) as
of the Cut-Off Date.
6.4 Matters Involving Third Parties.
(a) If any third party shall notify any Party (the
"Indemnified Party") with respect to any claim ("Third Party
Claim") that may give rise to a claim for indemnification
against any other Party (the "Indemnifying Party") under
this Article 6, then the Indemnified Party shall promptly
(and in any event within five (5) business days after
receiving notice of the Third Party Claim) notify the
Indemnifying Party thereof in writing.
(b) The Indemnifying Party will have the right to
assume and thereafter conduct the defense of the Third Party
Claim with counsel of its choice reasonably satisfactory to
the Indemnified Party; provided, however, that the
Indemnifying Party will not consent to the entry of any
judgment or enter into any settlement with respect to the
Third Party Claim without the prior written consent of the
Indemnified Party (not to be withheld unreasonably) unless
the judgment or proposed settlement involves only the
payment of money damages and does not impose an injunction
or other equitable relief upon the Indemnified Party.
(c) Unless and until the Indemnifying Party assumes the
defense of the Third Party Claim as provided in subsection
6.4(b) above, however, the Indemnified Party may defend
against the Third Party Claim in any manner it reasonably
may deem appropriate.
(d) In no event will the Indemnified Party consent to the
entry of any judgment or enter into any settlement with
respect to the Third Party Claim without the prior written
consent of the Indemnifying Party which consent shall not be
withheld unreasonably.
6.5 Monetary Limitations on the Seller's
Indemnification. Notwithstanding anything herein to the
contrary, in no event and under no circumstances shall the
Seller be required to pay any amounts to the Buyers'
Indemnified Parties under or in connection with the Seller's
warranties, representations and indemnities under this
Agreement to the extent such amounts for any single claim
(other than claims in connection with a breach of the
representations and warranties in Section 3.7 for which the
Seller shall be liable from the first dollar of Adverse
Consequences as a result of a breach of the representations
and warranties in Section 3.7) are less than Two Hundred
Fifty Thousand Dollars ($250,000) (the "Threshold");
provided, however, that once the Threshold for a claim is
met, the Seller shall be liable for all Adverse Consequences
from such claim (and not just the amount that exceeds the
Threshold). Notwithstanding the foregoing, the Seller's
liability to all Buyers' Indemnified Parties for all Adverse
Consequences from all claims under this Article VI shall not
exceed Five Million Dollars ($5,000,000) in the aggregate.
For purposes of this Section 6.5, the representations and
warranties of the Seller contained in this Agreement shall
be read without giving effect to any "Material Adverse
Effect" exception.
6.6 Computation of Adverse Consequences.
(a) Computation of Losses. The amount of any
Adverse Consequences for which indemnification is provided
under this Article VI shall be reduced by (x) any related
tax benefits to be received by the Indemnified Party as a
result of such Adverse Consequence, and (y) any insurance
recovery if and when actually received or realized, in each
case in respect of such Adverse Consequence. Any such
recovery shall be promptly repaid by the Indemnified Party
to the Indemnifying Party following the time at which such
recovery is realized or received pursuant to the previous
sentence, minus all reasonably allocable costs, charges, and
expenses incurred by the Indemnified Party in obtaining such
recovery.
(b) Characterization of Indemnification Payments.
All amounts paid by any of the Parties, as the case may be,
under this Article VI shall be treated as adjustments to the
Purchase Price for purposes of all relevant Taxes.
6.7 Exclusive Remedy if Closing Occurs. The provisions
of this Article VI shall constitute the exclusive remedy of
the Parties if Closing shall occur with respect to any
claims or Adverse Consequences resulting from or arising out
of the provisions of this Agreement and any other claims or
Adverse Consequences, whether based on tort, contract, Law,
or otherwise, resulting from or arising out of the
Transaction which may be asserted after the Closing.
6.8 Post-Closing Access. From and after the Closing,
MERI and the Buyers shall afford to authorized
representatives of the Seller reasonable access during
normal business hours to the Assets and related records and
personnel as the Seller may reasonably require to prosecute
or defend any claim, litigation, or investigation by any
Governmental Authority or third party or pursuant to Article
VI hereof (including without limitation tax audits);
provided, that the Seller shall reimburse MERI and the
Buyers for all reasonable out-of-pocket expenses and costs
incurred in connection therewith.
ARTICLE VII
CONDITIONS
7.1 Conditions to Each Party's Obligation to Close. The
obligations of each of the Parties to consummate the
Transaction is subject to the satisfaction, or mutual
waiver, on or prior to the Closing of each of the following
conditions:
(a) Injunction. There shall not be in effect any Law or
any Judgment directing that the Transaction not be
consummated; provided, however, that prior to invoking this
condition each Party shall use all reasonable efforts to
have any such Judgment vacated; and there shall have been no
Law enacted or promulgated which would make consummation of
the Transaction illegal.
(b) HSR Act. Any waiting period (and any extension
thereof) applicable to the consummation of the Transaction
under the HSR Act shall have expired or shall have been
earlier terminated.
(c) Escrow Agreement. All conditions precedent to
Closing under the Escrow Agreement shall have been satisfied
or otherwise excused.
7.2 Additional Conditions to the Obligation of the
Buyers to Close. The obligation of the Buyers to consummate
the Transaction is subject to satisfaction, or, to the
extent permitted by Law, waiver on or prior to the Cut-Off
Date of each of the following conditions:
(a) Performance. The Seller shall have performed, in
all material respects, all the obligations required to be
performed by it under this Agreement at or prior to the
Closing.
(b) Representations and Warranties. The representations
and warranties of the Seller under this Agreement shall be
true and correct, in each such case as of the date of this
Agreement and as of the Cut-Off Date as though made on the
Cut-Off Date (except that representations and warranties
that speak as of a specific date shall be true and correct
as of such date), provided that for purposes of determining
the satisfaction of the foregoing, such representations and
warranties shall be deemed true and correct if the failure
or failures of such representations and warranties to be so
true and correct have not caused and could not reasonably be
expected to cause a Material Adverse Effect; provided
further, however, that to assert this Section 7.2(b) as a
reason for not Closing the Transaction, MERI and the Buyers
must provide written notice to the Seller at or prior to the
CutOff Date asserting its right to refuse to Close pursuant
to this Section 7.2(b).
(c) Ownership of Assets. The Seller, through its wholly
owned subsidiary, shall have acquired ownership of the
Assets.
(d) Deliveries. MERI and the Buyers shall have received
at the Closing the following documents:
(i) a certificate dated the Closing and executed
by the Chief Executive Officer or President of the Seller
certifying to the fulfillment of the conditions specified in
Sections 7.2(a), (b), (c), and (e);
(ii) assignment of the Assets in form and content
reasonably satisfactory to the Buyers; and
(iii) an executed assumption agreement in the
form of that attached hereto as Schedule 7.2(c)(iii)
assuming the debt obligations of Syenergy described in
Schedule 1.1(C).
(e) Consents and Approvals. All other consents,
approvals and authorizations legally required to be obtained
to consummate the Transaction shall have been obtained from
all Governmental Authorities and third persons, except for
such consents, approvals and authorizations the failure of
which to obtain would not have a Material Adverse Effect
(assuming for purposes of this Section 7.2(e) that the
Closing shall have been effected).
7.3 Additional Conditions to the Seller's Obligation to
Close. The obligation of the Seller to consummate the
Transaction is subject to satisfaction, or, to the extent
permitted by Law, waiver on or prior to the Closing of each
of the following conditions:
(a) Performance. MERI and the Buyers shall have
performed, in all material respects, all the obligations
required to be performed by them under this Agreement at or
prior to the Closing.
(b) Representations and Warranties. The representations
and warranties of MERI and the Buyers under this Agreement
shall be true and correct, in each such case as of the date
of this Agreement and as of the Closing as though made on
the Closing Date (except that representations and warranties
that speak as of a specific date shall be true and correct
as of such date), provided that for purposes of determining
the satisfaction of the foregoing, such representations and
warranties shall be deemed true and correct if the failure
or failures of such representations and warranties to be so
true and correct have not caused and could not reasonably be
expected to cause a Material Adverse Effect.
(c) Deliveries. The Seller shall have received at the
Closing Date the following documents:
(i) a certificate dated the Closing and executed
by the Chief Executive Officer or President of both MERI and
each of the Buyers certifying to the fulfillment of the
conditions specified in Sections 7.3(a), (b) and (d); and
(ii) an executed guaranty in the form of that
attached hereto as Schedule 7.3.
(d) Consents and Approvals. All consents, approvals and
authorizations legally required to be obtained to consummate
the Transaction shall have been obtained from all
Governmental Authorities and third persons (including those
listed in Section 3.4), except for such consents, approvals
and authorizations the failure of which to obtain would not
have a Material Adverse Effect (assuming for purposes of
this Section 7.3(d) that the Closing shall have been
effected).
7.4 Frustration of Closing Conditions. Neither the Seller
nor the Buyers may rely on the failure of any condition set
forth in Section 7.1, 7.2 or 7.3, as the case may be, to be
satisfied if such failure was caused by such Party's failure
to use reasonable efforts to consummate the Transaction
contemplated by this Agreement, or otherwise occurred
because of a breach of this Agreement by such Party.
ARTICLE VIII
TERMINATION AND REMEDIES
8.1 Termination. This Agreement may be terminated and
the Transaction may be abandoned at any time prior to the
Closing:
(a) by the mutual written consent of the Parties;
(b) by any Party, if:
(i) any court of competent jurisdiction in the
United States, or some other Governmental
Authority, shall have issued an order, decree
or ruling or taken any other action
permanently restraining, enjoining or otherwise
prohibiting the Transaction and such order,
decree, ruling or other action shall have become
final and nonappealable; provided, however, that
the Party seeking to
terminate this Agreement under this
Section 8.1(b)(i) shall have used its
reasonable
commercial efforts to remove such injunction,
order or decree; or
(ii) the Transaction shall not have been
consummated by December 8, 1999 (plus any cure
periods permitted by either 8.1(c) or (d)
below); provided, that the right to terminate
this Agreement pursuant to this Section
8.1(b)(ii) shall not be available to any Party
whose failure to fulfill any of its obligations
under this Agreement results in the failure of
the Transaction to occur on or before such date.
(c) by MERI and the Buyers if there has
been a misrepresentation or breach of warranty or failure
to perform a covenant on the part of Seller, in each case
of which Seller has been given notice in writing by MERI or
the Buyers on or prior to the Cut-Off Date and which has
not been cured by Seller or the Seller within thirty
(30) days of such notice and which misrepresentation,
breach or failure to perform
(provided,
however, that no cure period need be given as to a
failure to make the deliveries required by Section 2.7),
in the aggregate with all other misrepresentations,
breaches or failures to perform, caused or would cause a
Material Adverse Effect.
(d) by Seller if there has been a
misrepresentation or breach of warranty or failure to
perform a covenant on the part of MERI or the Buyers of
which MERI or the Buyers have been given notice in writing
by Seller or the Seller and which has not been cured by
MERI or Buyers, as the case may be, within thirty (30) days
of such notice and which misrepresentation, breach or
failure to perform (provided, however, that no notice or
cure period need be given as to a failure to make the
deliveries required by Section 2.7 or to timely execute
and deliver the Escrow Agreement or to timely make
deposits with the Escrow Agent as set forth in the Escrow
Agreement), in the aggregate with all other
misrepresentations, breaches, or failures to perform,
caused or would cause a Material Adverse Effect.
8.2 Effect of Termination. In the event of the termination
and abandonment of this Agreement pursuant to Section
8.1, this Agreement shall become void and have no
effect, provided, however, that any such termination shall
not affect any Party's ability to seek damages or
specific performance for breach of this Agreement;
further provided, however, if MERI or the Buyers terminates
this Agreement pursuant to Section 8.1(c) or if Seller or
the Seller terminates this Agreement pursuant to
Section 8.1(d) and at the time of termination (a) the non-
breaching Party
shall have been legally permitted to and shall have
offered in writing (i) to waive all misrepresentations,
breaches or failures to perform on the part of the
defaulting Party (other than the deliveries required to
be made at Closing to the non-defaulting Party pursuant to
Section 2.7) as to which the defaulting Party has been
given notice in writing by the non-defaulting Party and (ii)
to proceed with the Closing, and (b) all of the conditions
to Closing set forth in Article VII required to be
fulfilled by the non-breaching party shall have either
been fulfilled or waived by the breaching party, then
the breaching Party shall thereupon be obligated to pay to
the non-breaching Party (within 3 days after
termination) the sum of $15,000,000 cash (the "Fee"),
as agreed liquidated damages and as the sole remedy of the
non-defaulting Party for the failure or refusal of the
defaulting party to close the Transaction.
Specifically, however, if the Buyers have not timely
submitted a Representation Statement or if all matters
listed on the Representation Statement have been cured,
then if the Buyers refuse to Close on November 9, 1999
(other than a failure by the Seller to make the deliveries
required by Section 2.7), then the Fee shall be paid by
the Buyers on November 10, 1999.
ARTICLE IX
GENERAL PROVISIONS
9.1 Expenses. Whether or not the Transaction is
consummated, all costs and expenses, incurred in
connection with this Agreement and the Transaction shall
be paid by the Party incurring such expense, except that
any filing fee under the HSR Act shall be paid by MERI.
9.2 Modification or Amendment. This Agreement may be
amended by an instrument in writing executed and delivered
on behalf of each of the Parties hereto at any time prior to
the Closing.
9.3 Waiver. The conditions to each of the Parties'
obligations to consummate the Transaction are for the sole
benefit of such Party and may be waived, at any time
prior to the Closing, by such Party in whole or in part
to the extent permitted by Law. Any agreement on the part
of a Party to any extension or waiver shall be valid only
if set forth in writing signed on behalf of such Party,
and shall not be inferred by the failure of any such Party
to assert any of its rights hereunder. Waiver of any
provision of this Agreement or of any breach hereof shall
be a waiver of only said specific provision or breach and
shall not be deemed a waiver of any other provision or any
future breach hereof.
9.4 Notices. All notices, documents, or other
communications to be given hereunder shall be in writing
and shall be deemed validly given if delivered by
messenger, facsimile transmission (with a confirming copy
sent by overnight courier), or express overnight delivery,
or sent by certified mail, return receipt requested, as
follows:
(a) If to Seller, to:
K-Pipe Merger Corporation
c/o SCALP
750 Lexington Avenue, 30th Floor
New York, NY 10022
Telephone:(21
2) 826-0770
Telecopier:(2
12) 826-0077
with a copy
to:
Howard Teig, CPA
510 Jericho Turnpike,
Suite 320 Jericho, NY
11753 Telephone:(516)
931-5506
Telecopier:(516) 931-
5327
(b) If to MERI and/or
Seller, to:
Midcoast Energy
Resources, Inc. 1100
Louisiana, Suite 2950
Houston, TX 77002
Attn: General
Counsel
Telephone: (713) 650-
8900 Telecopier:
(713) 650-3232
with a copy to:
Ronald L. Chachere,
Esq.
615 N. Upper
Broadway, Suite 970
Corpus Christi,
Texas 78401
Telephone: (361) 883-
2356 Telecopier:
(361) 883-2357
or such other Persons or addresses as may be
designated in writing by the Party to receive
such notice. Any notice delivered by messenger
shall be deemed received when such delivery is
tendered; notices sent by facsimile transmission
shall be deemed received upon faxed confirmation
of receipt; notices mailed in the manner provided
above, shall be deemed received on the third day
after such are postmarked; and notices delivered by
other methods shall be deemed received when actually
received by the addressee or its authorized agent.
9.5 Governing Law; Jurisdiction; Venue. This
Agreement shall be governed by, and construed and
enforced in accordance with, the Laws of the
State of Kansas, without giving effect to the
principles of the conflicts of law thereof. The
Parties agree that the Federal Court of the
District of Kansas shall have exclusive
jurisdiction and venue to hear and determine any
claims or disputes between the parties hereto,
pertaining directly or indirectly to this
Agreement, the Transaction, any additional
agreements or to any matter arising out of, in
connection with or related to any thereof
(collectively, "Agreement-Related
Litigation"). Each Party expressly submits and
consents in advance to such jurisdiction in
any action or proceeding
commenced in such courts, hereby waiving personal
service of the summons and complaint or other
process or papers issued therein and agreeing that
service of such summons and complaint or other
process or papers may be made by registered or
certified mail addressed to the relevant Party at
the address set forth in Section 9.4, which
service shall be deemed made upon receipt
thereof. The exclusive choice of forum set forth in
this Section shall not be deemed to preclude the
enforcement of any judgment obtained in such forum
or the taking of any action under this Agreement to
enforce the same in any appropriate jurisdiction.
9.6 Entire Agreement. This Agreement, including the
Schedules, constitute the entire agreement and
understanding of the Parties with respect to the
Transaction and supersedes any and all prior
agreements, representations and understandings
relating to the subject matter hereof. There are no
representations or warranties except as specifically
set forth in this Agreement.
9.7 Construction. The section and article headings
contained in this Agreement are inserted for
convenience of reference only and shall not affect
the meaning or interpretation of this Agreement.
The preamble hereof, the recitals hereto, and
all schedules attached hereto are hereby
incorporated herein by reference and made a part
hereof.
9.8 Binding Effect. This Agreement shall be
binding upon and inure to the benefit of the
Parties, and their respective successors and
assigns, to the extent allowed hereby. Nothing in
this Agreement, express or implied, is intended
to or shall confer upon any other Person any
rights, benefits or remedies of any nature
whatsoever under or by reason of this Agreement,
except as provided in Section 6.2.
9.9 Assignment. None of the Parties may assign any
rights or delegate any obligations provided for in
this Agreement without the prior written consent of
all the other Parties, which consent shall not be
unreasonably withheld. Any assignment in violation
of the preceding sentence shall be void.
Subject to the preceding sentence, this Agreement
will be binding upon, inure to the benefit of, and
be enforceable by, the parties and their respective
successors and assigns.
9.10 Counterparts. This Agreement may be executed in
any number of separate counterparts, each of which
shall be deemed to be an original, but which
together shall constitute one and the same
instrument and may be executed by facsimile.
9.11 Obligations of Subsidiaries. Whenever this Agreement
requires a Subsidiary of MERI or either of the Buyers
to take any action, such requirement shall be
deemed to include an
undertaking on the part of MERI and/or either of the
Buyers, as the case may be, to cause such Subsidiary
to take such action and a guarantee of the
performance thereof. Whenever this Agreement
requires a Subsidiary of the Seller to take any
action, such requirement shall be deemed to include
an undertaking on the part of the Seller to cause
such Subsidiary to take such action and a guarantee
of the performance thereof.
9.12 Severability. The provisions of this
Agreement shall be deemed severable and the
invalidity or unenforceability of any provision
shall not affect the validity or enforceability or
the other provisions hereof. If any provision of
this Agreement, or the application thereof to any
Person or any circumstance, is invalid or
unenforceable, (a) a suitable or equitable provision
shall be substituted therefor in order to carry out,
so far as may be valid or enforceable, the
intent and purpose of such invalid or unenforceable
provision and (b) the remainder of this Agreement
and the application of such provision to other
Persons or circumstances shall not be affected by
such invalidity or unenforceability, nor shall
such invalidity or unenforceability affect the
validity or enforceability of such provision, or the
application thereof, in any other jurisdiction.
9.13 Costs and Fees. In connection with
Agreement-Related Litigation (regardless of whether
the action alleges breach of contract, tort,
violation of a statute, or any other cause of
action), the prevailing Party will be entitled to
recover from the nonprevailing Party its
reasonable costs in bringing or defending such
claims, including its reasonable attorneys' fees,
accounting fees, professional and/or expert witness
fees, court costs, and travel and out-of-pocket
expenditures incurred in preparation for and during
such proceedings. If a Party prevails on some
aspects of its claims but not on others, the court
shall apportion any award of costs in bringing or
defending such claims in such manner as it deems
equitable.
9.14 Cy Pres. The doctrine of Cy Pres shall be
applicable to
the Agreement such that in interpreting the terms and
conditions hereunder the intentions of the parties are
to be carried out as near as may be, when it would
otherwise be impossible or illegal to give it literal
effect. In any dispute arising out of this
Agreement, the doctrine of Cy Pres shall be applied by
the Court.
IN WITNESS WHEREOF, the Parties have caused this
Agreement to be executed by their respective duly
authorized officers as of the date first above written.
K-PIPE MERGER CORPORATION
By_______________________
__________ Name:
Title:
MIDCOAST ENERGY
RESOURCES, INC.
By_______________________
__________ Name:
Title:
MIDCOAST KANSAS PIPELINE,
INC.
By_______________________
__________ Name:
Title:
MIDCOAST KANSAS GENERAL
PARTNER, INC.
By_______________________
__________ Name:
Title:
f:\data\wp\061\0999\0999200z.061:rcs::
AMENDED AND RESTATED CREDIT AGREEMENT
among
MIDCOAST ENERGY RESOURCES, INC.
as Borrower
THE SUBSIDIARY GUARANTORS
and
BANK OF AMERICA, N.A.
as Administrative Agent
BANK ONE, NA
as Syndication Agent
CIBC, INC.
as Documentation Agent
BANC OF AMERICA SECURITIES LLC
as Lead Arranger and Book Manager
and
CERTAIN FINANCIAL INSTITUTIONS
as Lenders
_______________________________________________________
$265,000,000
(including up to $50,000,000 Canadian Dollar Revolving Loan)
November 8, 1999
AMENDED AND RESTATED CREDIT AGREEMENT
THIS AMENDED AND RESTATED CREDIT AGREEMENT is made as of
November 8, 1999, by and among MIDCOAST ENERGY RESOURCES, INC., a
Texas corporation (herein called "Borrower"), BANK OF AMERICA,
N.A., individually and as administrative agent (in its agency
capacity herein called "Administrative Agent"), BANK ONE, NA,
individually and as syndication agent (in its agency capacity
herein called "Syndication Agent"), CIBC, INC., individually and
as documentation agent (in its agency capacity herein called
"Documentation Agent"), the Lenders referred to below and BANC OF
AMERICA SECURITIES LLC, as lead arranger and book manager (herein
called "Book Manager").
RECITALS:
A. Borrower and various of its subsidiaries entered into
an Amended and Restated Credit Agreement dated as of August 31,
1998 with Bank One, Texas, N.A., individually and as
administrative agent, CIBC, Inc., individually and as syndication
agent, and Bank of America, N.A., formerly known as NationsBank,
N.A., individually and as documentation agent (the "Prior Credit
Agreement").
B. Borrower and the other parties to the Prior Credit
Agreement desire to amend and restate the Prior Credit Agreement
in its entirety pursuant to this Amended and Restated Credit
Agreement to (i) increase the amount of the credit facility, (ii)
permit additional parties to become Lenders, (iii) evidence more
particularly their respective agreements and obligations in
respect to the renewal, extension and rearrangement of the terms
existing and arising under the Prior Credit Agreement, and the
obligations, liabilities and indebtedness outstanding and arising
thereunder.
C. Subject to the terms and conditions hereof, and relying
on the representations, warranties and covenants made by Borrower
to Administrative Agent, Syndication Agent, Documentation Agent
and Lenders (as hereafter defined), the Administrative Agent,
Syndication Agent, Documentation Agent and Lenders are prepared
to enter into this Agreement (as hereafter defined) and to make
the Loans (as hereafter defined) contemplated hereby.
NOW, THEREFORE, in consideration of the foregoing and the
mutual covenants set forth herein, Borrower, Administrative
Agent, Syndication Agent, Documentation Agent and Lenders agree
to amend and restate the Prior Credit Agreement in its entirety
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:
"Acquisition Agreement" means that certain Asset Purchase
Agreement dated November 8, 1999, between Midcoast Kansas
Pipeline, Midcoast Kansas General and K-Pipe, relating to
Midcoast Kansas Pipeline's and Midcoast Kansas General's
acquisition of all of the partnership interests in KPC, MarGasCo,
Mid-Kansas, and Riverside.
"Adjusted Base Rate" means the Base Rate plus the Applicable
Margin; provided that the Adjusted Base Rate charged by any
Person shall never exceed the Highest Lawful Rate.
(i) "Adjusted Canadian Eurodollar Rate" means, for any
Canadian Eurodollar Loan for any Interest Period therefor, the
rate per annum equal to the sum of (a) the Applicable Margin plus
(b) the rate per annum (rounded upwards, if necessary, to the
nearest 1/100 of 1%) determined by Administrative Agent to be
equal to the quotient obtained by dividing the Canadian
Eurodollar Rate for such Canadian Eurodollar Loan for such
Interest Period by 1 minus the Reserve Requirement for such
Canadian Eurodollar Loan for such Interest Period; provided that
no Adjusted Canadian Eurodollar Rate charged by any Person shall
ever exceed the Highest Lawful Rate. The Adjusted Canadian
Eurodollar Rate for any Canadian Eurodollar Loan shall change
whenever the Applicable Margin or the Reserve Requirement
changes.
(ii)
(iii) "Adjusted Eurodollar Rates" means collectively the
Adjusted Canadian Eurodollar Rate and the Adjusted U.S.
Eurodollar Rate and "Adjusted Eurodollar Rate" means individually
either the Adjusted Canadian Eurodollar Rate or the Adjusted U.S.
Eurodollar Rate.
(iv)
(i) (v) "Adjusted U.S. Eurodollar Rate" means, for any
U.S. Eurodollar Loan for any Interest Period therefor, the rate
per annum equal to the sum of the Applicable Margin plus the
rate per annum (rounded upwards, if necessary, to the nearest
1/100 of 1%) determined by Administrative Agent to be equal to
the quotient obtained by dividing the U.S. Eurodollar Rate for
such U.S. Eurodollar Loan for such Interest Period by 1 minus
the Reserve Requirement for such U.S. Eurodollar Loan for such
Interest Period; provided that no Adjusted U.S. Eurodollar Rate
charged by any Person shall ever exceed the Highest Lawful Rate.
The Adjusted U.S. Eurodollar Rate for any U.S. Eurodollar Loan
shall change whenever the Applicable Margin or the Reserve
Requirement changes.
(vi)
(vii) "Administrative Agent" means Bank of America,
N.A., as Administrative Agent hereunder, and its successors in
such capacity.
(viii)
(ix) "Affected Loans" has the meaning given that term in
Section 3.8.
(x)
(xi) "Affected Type" has the meaning given that term in
Section 3.8.
(xii)
(xiii) "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
(xiv)
(i) (a) in the case of a public company, to vote 20% or
more, and in the case of a non-public company, to vote 50% 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.
"Agreement" means this Credit Agreement.
"Applicable Lending Office" means, for each Lender and for
each Type of Loan, the Eurodollar Lending Office or Domestic
Lending Office of such Lender (or of an Affiliate of such Lender)
designated for such Type of Loan on the signature pages hereof or
such other office of such Lender (or an Affiliate of such Lender)
as such Lender may from time to time specify to Administrative
Agent and Borrower by written notice in accordance with the terms
hereof as the office by which its Loans of such Type are to be
made and maintained.
"Applicable Margin" means for each Type of Loan and for the
corresponding margin described below, the number of Basis Points
designated below based on Borrower's Debt to Capitalization
Ratio, measured quarterly:
Debt to U.S. Base Rate Canadian
Capitalization Eurodollar Margin Eurodollar
Ratio Margin Margin
Less than or equal 100 Basis zero Basis 100 Basis
to 40% Points Points Points
Less than or equal 125 Basis zero Basis 125 Basis
to 50% but greater Points Points Points
than 40%
Less than or equal 150 Basis zero Basis 150 Basis
to 60% but greater Points Points Points
than 50%
Less than or equal 175 Basis 25 Basis 175 Basis
to 65% but greater Points Points Points
than 60%
Greater than 65% 200 Basis 50 Basis 200 Basis
Points Points Points
provided, however, that adjustments, if any, to the Applicable
Margin based on changes in Borrower's Debt to Capitalization
Ratio as set forth above shall be determined by Administrative
Agent quarterly, based upon Borrower's most recently delivered
quarterly financial statements, beginning with Borrower's
financial statements for the period ended December 31, 1999, and
shall become effective upon and following the date of such
delivery; provided further, however, if Borrower shall fail to
deliver any such quarterly financial statements within the time
period required by Section 6.2(b), then the Applicable Margin for
any Loan shall be that shown above for a Debt to Capitalization
Ratio greater than 65%, it being understood that if and when such
quarterly financial statements are subsequently delivered, then
the Applicable Margin shall be readjusted, effective upon and
following the date of such delivery, to that number of Basis
Points designated above based on Borrower's Debt to
Capitalization Ratio as reflected in such delivered quarterly
financial statements. From the date of the first Borrowing
through delivery of the Borrower's financial statements for the
period ending December 31, 1999, the U.S. Eurodollar Margin and
the Canadian Eurodollar Margin shall be 200 Basis Points and the
Base Rate Margin shall be 50 Basis Points.
"Assignment and Acceptance" means an assignment and
acceptance which meet the requirement of Section 10.6(c).
"Bank of America" means Bank of America, N.A.
"Bankruptcy Code" means the United States Bankruptcy Code of
1979, as amended from time to time and any successor statute or
statutes, together with all rules and regulations promulgated
with respect thereto.
"Base Rate" means, a fluctuating rate per annum equal to the
higher of (a) the Federal Funds Rate plus 1/2 of 1% and, (b) the
rate of interest in effect for such day as publicly announced
from time to time by Bank of America as its "prime rate." Such
rate is a rate set by Bank of America based upon various factors
including Bank of America's costs and desired return, general
economic conditions and other factors, and is used as a reference
point for pricing some loans, which may be priced at, above, or
below such announced rate. Any change in such rate announced by
Bank of America shall take effect at the opening of business on
the day specified in the public announcement of such change.
"Base Rate Loan" means a Loan which bears interest at the
Base Rate.
"Base Rate Margin" means the margin added to a Base Rate
Loan as set forth in the definition of "Applicable Margin".
"Basis Point" and "bp"means one one-hundredth of one percent
(0.01%).
"Book Manager" means Banc of America Securities LLC, as lead
arranger and book manager hereunder, and its successors in such
capacity.
"Borrower" means Midcoast Energy Resources, Inc., a Texas
corporation.
"Borrowing" means a borrowing of new Loans of a single Type
pursuant to Section 2.2 or a Continuation or Conversion of
existing Loans into a single Type (and, in the case of U.S.
Eurodollar Loans and Canadian Eurodollar Loans, with the same
Interest Period) pursuant to Section 2.3.
"Borrowing Notice" means a written request, or a telephonic
request promptly confirmed in writing, made by Borrower which
meets the requirements of Section 2.2.
"Business Day" means a day, other than a Saturday or Sunday,
on which commercial banks are open for business with the public
in Houston, Texas and San Francisco, California, and if such day
relates to any Eurodollar Loan, means any such day on which
dealings in Dollar deposits are conducted by and between banks in
the offshore Dollar interbank market.
"Butcher Interest Partnership" means Butcher Interest
Partnership, a Delaware partnership and an indirect 45% owned
Subsidiary of Borrower.
"Canadian Dollars" and "C$" means the lawful currency of
Canada.
"Canadian Dollar Equivalent" of any amount of any currency
at any date means (i) if such currency is Canadian Dollars, the
amount of such currency, or (ii) if such currency is Dollars, the
equivalent in Canadian Dollars of such amount of such currency,
calculated on the basis of the buy rate of exchange of
Administrative Agent for Canadian Dollars on the London market at
approximately 11:00 a.m., London time, on the date on or as of
which such amount is to be determined.
"Canadian Eurodollar Loan" means any Loan which Borrower has
requested, in the initial Borrowing Notice for such Loan or a
subsequent Borrowing Notice for a portion of such Loan, be made
in or converted to Canadian Dollars and bear interest at the
Adjusted Canadian Eurodollar Rate and which is permitted by the
terms hereof to bear interest at the Adjusted Canadian Eurodollar
Rate.
"Canadian Eurodollar Margin" means the margin added to a
Canadian Eurodollar Loan as set forth in the definition of
"Applicable Margin".
"Canadian Eurodollar Rate" means, with respect to any
Interest Period for any Canadian Eurodollar Loan, the lesser of
(a) the rate per annum (rounded upwards, if necessary, to the
nearest 1/16th of 1%) equal to the average of the offered
quotations for Canadian Dollars appearing on Telerate Page 3740
(or if such Telerate Page shall not be available, any successor
or similar service selected by Administrative Agent and Borrower)
as the London interbank offered rate as of approximately 11:00
a.m., London time, as the case may be, on the day two Business
Days prior to the first day of such Interest Period for Canadian
Dollar deposits in an amount comparable to the principal amount
of such Canadian Eurodollar Loan and having a term comparable to
the Interest Period for such Canadian Eurodollar Loan, and (b)
the Highest Lawful Rate. If neither such Telerate Page 3740 nor
any successor or similar service is available, the term "Canadian
Eurodollar Rate" means, with respect to any Interest Period for
any Canadian Eurodollar Loan, the lesser of (a) the rate per
annum (rounded upwards if necessary, to the nearest 1/16th of 1%)
determined by Administrative Agent at approximately 11:00 a.m.,
London time (or as soon thereafter as practicable) two Business
Days prior to the first day of the Interest Period for such
Canadian Eurodollar Loan to be the rate quoted by Administrative
Agent for the offering by Administrative Agent to leading banks
in the London interbank market of Canadian Dollar deposits in an
amount comparable to the principal amount of such Canadian
Eurodollar Loan and having a term comparable to the Interest
Period for such Canadian Eurodollar Loan, and (b) the Highest
Lawful Rate.
"Canadian Subsidiaries" means collectively Midcoast Canada
Capital, Inc., a corporation formed under the Business
Corporation Act of the Province of Alberta, Midcoast Canada
Operating Corporation, a corporation formed under the Business
Corporation Act of the Province of Alberta, and any other
Subsidiary organized under the laws of Canada or any Province of
Canada, acquired or formed by a Restricted Person in compliance
with the terms and provisions of this Agreement, giving effect to
such acquisition or formation, and "Canadian Subsidiary"
individually means any of the foregoing.
"Cash Equivalents" means Investments in:
(a) marketable obligations, maturing within twelve months
after acquisition thereof, issued or unconditionally guaranteed
by the United States or an instrumentality or agency thereof and
entitled to the full faith and credit of the United States;
(b) certificates of deposit, demand deposits, eurodollar
time deposits, overnight bank deposits and bankers' acceptances,
with maturities of no more than one year from the date of
acquisition, issued by or acquired from or through Administrative
Agent, any Lender or any bank or trust company organized under
the laws of the United States or any state thereof and having
capital surplus and undivided profits aggregating at least
$100,000,000;
(c) open market commercial paper, with maturities of no
more than one year after acquisition thereof, which are rated at
least P-2 by Moody's or A-2 by S&P;
(d) repurchase obligations with a term of not more than
seven days for underlying securities of the types described in
subsections (a) and (b) above entered into with any commercial
bank meeting the specifications of subsection (b) above;
(e) other short-term Investments similar in nature and
degree of risk to those described in clauses (a) through (d)
above;
(f) money-market funds; and
(g) stocks, bonds, notes or other securities accepted from
customers in connection with good faith work-outs of past due
receivables or in bankruptcy or insolvency proceedings.
"Cash Flow Coverage Ratio" has the meaning given to such
term in Section 7.12.
"Change of Control" means any of (a) the acquisition by any
Person or group (within the meaning of Section 13(d)(3) of the
Securities Exchange Act of 1934, as amended) of beneficial
ownership (within the meaning of Rule 13d-3 promulgated under the
Securities Exchange Act of 1934, as amended) of 30% or more of
the voting power of the outstanding shares of voting stock of
Borrower, (b) 50% or more of the members of the Board of
Directors of Borrower on any date shall not have been (i) members
of the Board of Directors of Borrower on the date 12 months prior
to such date or (ii) approved (by recommendation, nomination,
election or otherwise) by Persons who constitute at least a
majority of the members of the Board of Directors of Borrower as
constituted on the date 12 months prior to such date, (c) all or
substantially all of the assets of Borrower are sold in a single
transaction or series of related transactions to any Person, or
(d) Borrower merges or consolidates with or into any other
Person, with the effect that immediately after such transaction
the stockholders of Borrower immediately prior to such
transaction hold less than a majority of the total voting power
entitled to vote in the election of directors, managers or
trustees of the Person surviving such transaction.
"Collateral" means all property of any kind which is subject
to a Lien in favor of Lenders (or in favor of Administrative
Agent for the benefit of Lenders) or which, under the terms of
any Security Document, is purported to be subject to such a Lien.
"Commitment" means the Dollar amount set forth opposite such
Lender's name on its signature page hereto, as such Commitment
may be reduced pursuant to Section 2.1, increased (as determined
by such Lender in its sole and absolute discretion) pursuant to
Section 2.14, or reduced or increased pursuant to Section 10.6.
"Commitment Letter" means that certain letter dated
September 28, 1999 among Administrative Agent, Book Manager and
Borrower relating to the agreement of Bank of America, N.A. to
act as Administrative Agent, as supplemented by that certain
letter dated October 22, 1999 among Administrative Agent, Book
Manager and Borrower.
"Commitment Percentages" means the commitment percentage set
forth opposite such Lender's name on its signature page hereto,
as such commitment percentage may be reduced pursuant to Section
2.1, increased (as determined by such Lender in its sole and
absolute discretion) pursuant to Section 2.14, or reduced or
increased pursuant to Section 10.6.
"Commitment Period" means the period from and including the
date hereof until the Maturity Date (or, if earlier, the day on
which the obligations of Lenders to make Loans hereunder or the
obligations of LC Issuer to issue Letters of Credit hereunder
have been terminated or 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
and also, with respect to Borrower only, to the consolidation of
any Subsidiary owned 40% or more by Borrower, regardless of
whether such consolidation would be in accordance with GAAP.
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.
"Contingent Obligation" shall mean, as to any Restricted
Person, any obligation of such Restricted Person guaranteeing or
in effect guaranteeing any Indebtedness, leases, dividends, or
other obligations of any other Restricted Person (for purposes of
this definition, a "primary obligation") in any manner, whether
directly or indirectly, including any obligation of such
Restricted Person, regardless of whether such obligation is
contingent, (a) to purchase any primary obligation or any
property constituting direct or indirect security therefor, (b)
to advance or supply funds (i) for the purchase or payment of any
primary obligation, or (ii) to maintain working or equity capital
of any other Restricted Person in respect of any primary
obligation, or otherwise to maintain the Net Worth or solvency of
any other Restricted Person, (c) to purchase property,
securities or services primarily for the purpose of assuring the
owner of any primary obligation of the ability of the Restricted
Person primarily liable for such primary obligation to make
payment thereof, or (d) otherwise to assure or hold harmless the
owner of any such primary obligation against loss in respect
thereof, with the amount of any Contingent Obligation being
deemed to be equal to the stated or determinable amount of the
primary obligation in respect of which such Contingent Obligation
is made or, if not stated or determinable, the maximum reasonably
anticipated liability in respect thereof as determined by such
Restricted Person in good faith. For purposes of this Agreement,
any indemnification obligations of Borrower in favor of K-Pipe
shall be deemed a "Contingent Obligation" of Borrower.
"Continuation" shall refer to the continuation pursuant to
Section 2.3 hereof of a Eurodollar Loan as a Eurodollar Loan in
the same currency from one Interest Period to the next Interest
Period.
"Continuation/Conversion Notice" means a written or
telephonic request, or a written confirmation, made by Borrower
which meets the requirements of Section 2.3.
"Conversion" shall refer to a conversion pursuant to Section
2.3 or Sections 3.6, 3.7 and 3.8 of one Type of Loan into another
Type of Loan.
"Current Assets" shall mean all assets which would, in
accordance with GAAP, be included as current assets on a
Consolidated balance sheet of Borrower and its Subsidiaries after
eliminating any intercompany items, as of the date of
calculation, after deducting adequate reserves in each case in
which a reserve is proper in accordance with GAAP, plus an amount
equal to the lesser of (a) Unused Amount and (b) the maximum
permissible borrowing under this Agreement, after giving effect
to such borrowing.
"Current Liabilities" shall mean all liabilities which
would, in accordance with GAAP, be included as current
liabilities on a Consolidated balance sheet of Borrower and its
Subsidiaries as of the date of calculation, but excluding current
maturities in respect of the Obligations.
"Debt to Capitalization Ratio" means at any time the ratio
of Borrower's Consolidated Total Funded Debt to the sum of (i)
Borrower's Consolidated Net Worth, plus (ii) Borrower's
Consolidated Total Funded Debt.
"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.
(a) "Default Rate" means, at the time in question with
respect to any Base Rate Loan or any amount paid by
Administrative Agent pursuant to Section 6.9, the rate per annum
equal to five percent (5%) above the Adjusted Base Rate then in
effect and with respect to any Eurodollar Loan, the rate per
annum equal to five percent (5%) above the Adjusted Eurodollar
Rate then in effect for such Loan; provided in each case that no
Default Rate charged by any Person shall ever exceed the Highest
Lawful Rate.
(b)
(c) "Disclosure Report" means either a notice given by
Borrower under Section 6.4 or a certificate given by Borrower's
chief financial officer under Section 6.2(c).
(d)
(e) "Disclosure Schedule" means Schedule 1 hereto.
(f)
(a) (g) "Distribution" means any dividend or other
distribution made by a Restricted Person on or in respect of any
stock, partnership interest, or other equity interest in such
Restricted Person (including any option or warrant to buy such an
equity interest), or any payment made by a Restricted Person to
purchase, redeem, acquire or retire any stock, partnership
interest, or other equity interest in such Restricted Person
(including any such option or warrant).
(h)
(i) "Documentation Agent" means CIBC, as Documentation
Agent hereunder, and its successors in such capacity.
(j)
(k) "Dollar Equivalent" of any amount of any currency at
any date means (i) if such currency is Dollars, the amount of
such currency, or (ii) if such currency is any currency other
than Dollars, the equivalent in Dollars of such amount of such
currency, calculated on the basis of the arithmetical mean of the
buy and sell spot rates of exchange of Administrative Agent for
such currency on the London market at approximately 11:00 a.m.,
London time, on the date on or as of which such amount is to be
determined.
(l)
(m) "Dollars" and "$" means the lawful currency of the
United States.
(n)
(o) "Domestic Lending Office" means, with respect to any
Lender, the office of such Lender specified as its "Domestic
Lending Office" below its name on its signature page 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.
(p)
(q) "Domestic Subsidiary" shall mean any Subsidiary of
Borrower incorporated or formed under the laws of any state of
the United States or the District of Columbia.
(r)
(s) "EBITDA" means for any period, the sum of the
following: (i) Net Income for such period; (ii) the amount of
depreciation and amortization expense which was deducted from
gross income in determining such Net Income for such period;
(iii) the amount of Interest Expense which was deducted in the
calculation of such Net Income for such period; (iv) the amount
of depletion expense which was deducted in the calculation of
such Net Income for such period; and (v) the amount of income
taxes deducted in the calculation of such Net Income for such
period; less (y) any interest income included in the calculation
of Net Income for such period; and (z) the amount of gains on
sales of assets (excluding sales in the ordinary course of
business) and other extraordinary gains and losses which were
added in the calculation of such Net Income for such period, all
as determined on a Consolidated basis. In calculating the
Consolidated EBITDA of Borrower after the acquisition of any
acquired company the historical EBITDA of such acquired company
for the preceding four (4) consecutive fiscal quarters, as shown
by the acquired company's most recent audited financial
statements and subsequent unaudited interim statements (or such
other financial statements as shall be acceptable to
Administrative Agent in its sole and absolute discretion), shall
be considered as part of Borrower's Consolidated EBITDA as of the
date of the next quarter-ending period, with the oldest quarter
being replaced by each succeeding quarter after such acquired
company is acquired by any Restricted Person. If a division or
group of assets is acquired by any Restricted Person, the term
"acquired company" shall refer to such division or group of
assets or its or their related EBITDA. Furthermore, in
calculating Borrower's Consolidated EBITDA following the
acquisition of an acquired company, the amount of pro forma
Obligations including increased Interest Expense resulting from
the acquisition of such acquired company and, subject to the
prior approval of Lenders, any Indebtedness of such acquired
company and interest expense associated therewith, either
directly or indirectly, assumed by Borrower shall be taken into
account as if such items had been outstanding for the preceding
four (4) consecutive fiscal quarters. For purposes of Section
7.12, "EBITDA" shall exclude, as they relate to the acquisition
of the assets pursuant to the Acquisition Agreement, any make
whole premium, extraordinary charges and one time charges.
(t)
(a) "Eligible Transferee" means: (a) a financial
institution organized under the laws of the United States, or any
state thereof, and having a combined capital and surplus of at
least $100,000,000; (b) a commercial bank organized under the
laws of any other country which is a member of the Organization
for Economic Cooperation and Development, or a political
subdivision of any such country, and having a combined capital
and surplus of at least $100,000,000, provided that such bank is
acting through a branch or agency located in the United States;
(c) a Person that is primarily engaged in the business of
commercial banking and that is (i) a Subsidiary of a Lender, (ii)
a Subsidiary of a Person of which a Lender is a Subsidiary, or
(iii) a Person of which a Lender is a Subsidiary; (d) another
Lender; (e) any other entity which is an "accredited investor"
(as defined in Regulation D under the Securities Act of 1933, as
amended) which extends credit or buys loans as one of its
businesses, including but not limited to, insurance companies,
mutual funds and lease financing companies; or (f) other lenders
or institutional investors consented to in writing in advance by
Administrative Agent and LC Issuer 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 on the date of the
assignment to pay withholding taxes on interest or principal owed
to such Person). No Restricted Person or any Affiliate of a
Restricted Person shall be an Eligible Assignee.
"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 and any successor statutes or
statute, together with all rules and regulations promulgated with
respect thereto.
"ERISA Affiliate" means Borrower and all members of a
controlled group of corporations and all trades or businesses
(whether or not incorporated) under common control that, together
with Borrower, are treated as a single employer under Section 414
of the Internal Revenue Code.
"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.
"Escrow Agreement" shall mean the Escrow Agreement among
Borrower, Administrative Agent, for the benefit of Lenders, and
Cooperative Centrale Raiffkisen-Boerenleenbank BA, "Rabobank
Nederland," New York branch substantially in the form attached
hereto as Exhibit I.
"Eurodollar Lending Office" means, with respect to any
Lender, the office of such Lender specified as its "Eurodollar
Lending Office" below its name on the signature page 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.
"Eurodollar Loans" means collectively Canadian Eurodollar
Loans and U.S. Eurodollar Loans and "Eurodollar Loan" means
individually either a Canadian Eurodollar Loan or a U.S.
Eurodollar Loan.
"Eurodollar Rates" means collectively the Canadian
Eurodollar Rate and the U.S. Eurodollar Rate and "Eurodollar
Rate" means individually either the Canadian Eurodollar Rate or
the U.S. Eurodollar Rate.
"Event of Default" has the meaning given to such term in
Section 8.1.
"Facility Amount" means $265,000,000, subject to increase to
$400,000,000 pursuant to Section 2.14 and subject to reduction
pursuant to Section 2.1.
"Facility Usage" means, at the time in question, the
aggregate amount of outstanding Loans and existing LC Obligations
at such time.
"Fee Letter" means that certain letter dated September 28,
1999 among Administrative Agent, Book Manager and Borrower
relating to Borrower's payment of certain fees to Administrative
Agent.
(a) "Federal Funds Rate" means, for any day, the rate per
annum (rounded upwards, if necessary, to the nearest 1/100th of
one percent) equal to the weighted average of the rates on
overnight federal funds transactions with members of the Federal
Reserve System arranged by federal funds brokers on such day, as
published by the Federal Reserve Bank of Dallas, Texas on the
Business Day next succeeding such day, provided that 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 if such rate is not so
published for any day, the Federal Funds Rate for such day shall
be the average rate quoted to Bank of America on such day on such
transactions as determined by Administrative Agent.
(b)
(c) "Fiscal Quarter" means a three-month period ending on
March 31, June 30, September 30 or December 31 of any year.
(d)
(e) "Fiscal Year" means a twelve-month period ending on
December 31 of any year.
(f)
(g) "Foreign Subsidiaries" means collectively Borrower's
Subsidiaries listed in Section 5.14 of the Disclosure Schedule
under the caption "Foreign Subsidiaries", together with all
hereafter formed or acquired Subsidiaries of Borrower organized
under laws other than the laws of any state of the United States
or the District of Columbia, and "Foreign Subsidiary" means any
one of such Foreign Subsidiaries.
(h)
(i) "GAAP" means those generally accepted accounting
principles and practices which are recognized as such by the
Financial Accounting Standards Board (or any generally recognized
successor) and which, in the case of Borrower and its
Consolidated Subsidiaries, are applied for all periods after the
date hereof in a manner consistent with the manner in which such
principles and practices were applied to the audited Initial
Financial Statements. If any change in any accounting principle
or practice is required by the Financial Accounting Standards
Board (or any such successor) in order for such principle or
practice to continue as a generally accepted accounting principle
or practice, all reports and financial statements required
hereunder with respect to Borrower or with respect to Borrower
and its Consolidated Subsidiaries may be prepared in accordance
with such change only after notice of such change is given to
each Lender and Majority Lenders agree to such change insofar as
it affects the accounting of Borrower or of Borrower and its
Consolidated Subsidiaries.
(j)
(k) "Guarantor" means any Person who has guaranteed some or
all of the Obligations pursuant to a guaranty listed on the
Security Schedule or any other Person who has guaranteed some or
all of the Obligations and who has been accepted by
Administrative Agent as a Guarantor or any Subsidiary of Borrower
which now or hereafter executes and delivers a guaranty to
Administrative Agent pursuant to Section 6.17.
(l)
(m) "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.
(n)
(a) (o) "Hedging Contract" means 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, any option, futures or forward contract
traded on an exchange, and any other derivative agreement or
other similar agreement or arrangement.
(p)
(q) "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.
(r)
(s) "Indebtedness" of any Person means Liabilities in any
of the following categories:
(a)
(a) Liabilities for borrowed money;
(b)
(c) Liabilities constituting an obligation to pay the
deferred purchase price of property or services ( other than
potential liabilities tied to the occurrence of a contingent
event, not to exceed $1,000,000 at any time);
(d)
(e) Liabilities evidenced by a bond, debenture, note or
similar instrument;
(f)
(i) Liabilities which would under GAAP be shown on such
Person's balance sheet as a liability, and are payable more than
one year from the date of creation thereof (other than reserves
for taxes and reserves for Contingent Obligations);
(ii)
(g) Liabilities arising under Hedging Contracts;
(h)
(i) Liabilities constituting principal under leases
capitalized in accordance with GAAP;
(j)
(k) Liabilities arising under conditional sales or other
title retention agreements;
(l)
(m) 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;
(n)
(o) Liabilities (for example, repurchase agreements,
unconditional mandatorily redeemable preferred stock and
sale/leaseback agreements) consisting of an obligation to
purchase or redeem securities or other property, if such
Liabilities arise out of or in connection with the sale or
issuance of the same or similar securities or property;
(p)
(q) Liabilities with respect to letters of credit or
applications or reimbursement agreements therefor;
(r)
(s) Liabilities with respect to payments received in
consideration of oil, gas, or other minerals yet to be acquired
or produced at the time of payment (including obligations under
"take-or-pay" contracts to deliver gas in return for payments
already received and the undischarged balance of any production
payment created by such Person or for the creation of which such
Person directly or indirectly received payment); or
(t)
(u) Liabilities with respect to other obligations to
deliver goods or services in consideration of advance payments
therefor;
(v)
(w) provided, however, that the "Indebtedness" of any Person
shall not include Liabilities that were incurred by such Person
on ordinary trade terms to vendors, suppliers, or other Persons
providing goods and services for use by such Person in the
ordinary course of its business, unless and until such
Liabilities are outstanding more than 60 days past the original
invoice or billing date therefor.
(x)
(y) "Initial Financial Statements" means collectively (a)
the audited annual Consolidated financial statements of Borrower
dated as of December 31, 1998, (b) the unaudited quarterly
Consolidated financial statements of Borrower dated as of June
30, 1999, (c) the audited annual Consolidated financial
statements of KPC, MarGasCo, Mid-Kansas and Riverside dated as of
December 31, 1998, (d) the unaudited quarterly Consolidated
financial statements of KPC, MarGasCo, Mid-Kansas and Riverside
dated as of June 30, 1999, and (e) a pro forma balance sheet as
of June 30, 1999 reflecting Borrower's Consolidated assets,
liabilities and stockholders' equity, giving effect to Borrower's
acquisition of KPC, MarGasCo, Mid-Kansas and Riverside.
(z)
(aa) "Insurance Schedule" means Schedule 3 attached hereto.
(bb)
(cc) "Interest Expense" means, for any period, the aggregate
of all interest expense deducted in the calculation of the Net
Income for such period.
(dd)
(a) (ee) "Interest Payment Date" means with respect to
each Base Rate Loan, the last Business Day of each Fiscal
Quarter, and with respect to each Eurodollar Loan, the last day
of the Interest Period that is applicable thereto and, if such
Interest Period is six months in length, the date specified by
Administrative Agent which is approximately three months 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).
(ff)
(gg) "Interest Period" means, with respect to each
particular Eurodollar 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, or
six months thereafter, as Borrower may elect in such notice;
provided that: 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; 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 notwithstanding
the foregoing, any Interest Period which would otherwise end
after the last day of the Commitment Period shall end on the last
day of the Commitment Period (or, if the last day of the
Commitment Period is not a Business Day, on the next preceding
Business Day).
(hh)
(ii) "Internal Revenue Code" means the United States
Internal Revenue Code of 1986, as amended from time to time and
any successor statute or statutes, together with all rules and
regulations promulgated with respect thereto.
(jj)
(a) "Investment" means any investment, made directly or
indirectly, in any Person or any property, whether by acquisition
of shares of capital stock, indebtedness or other obligations or
securities or by loan, advance, capital contribution or otherwise
(other than current trade and customer accounts) and whether made
in cash, by the transfer of property, or by any other means.
"KPC" means Kansas Pipeline Company, a Kansas general
partnership.
"KPC Notes" means those certain 9.64% Senior Secured Notes
dated June 15, 1992 in the aggregate principal amount of
$91,000,000, issued by Syenergy Pipeline, L.P., a Kansas limited
partnership, which notes are guaranteed by each of KPC, MarGasCo,
Mid-Kansas and Riverside and the outstanding aggregate principal
amount of which on the date hereof is $62,386,262.
"K-Pipe" means K- Pipe Holding Partners, L.P., a Delaware
limited partnership.
"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
Canada or any other 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 that term in Section
2.13(a).
"LC Conditions" has the meaning given to such term in
Section 2.08.
"LC Fronting Fee" has the meaning given that term in Section
2.11.
"LC Issuance Fee" has the meaning given that term in Section
2.11.
"LC Issuer" means Bank of America, N.A. 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 Bank of America,
N.A.
"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.
"LC Sublimit" means a Dollar Equivalent amount equal to
$25,000,000.
"Lender Parties" means Administrative Agent, Syndication
Agent, Documentation Agent, LC Issuer, and all Lenders.
"Lenders" means each signatory hereto (other than Borrower
and any Restricted Person that is a party hereto), including Bank
of America, N.A. in its capacity as a Lender hereunder rather
than as Administrative Agent or LC Issuer, and the successors of
each such party as holder of a Note.
"Letter of Credit" means any standby letter of credit issued
by LC Issuer hereunder at the application of Borrower and which
Borrower may request be issued in either Dollars or Canadian
Dollars.
"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, all as
required to be considered pursuant to GAAP.
"Lien" means any interest in property securing Liabilities
owed to, or a claim by, a Person other than the owner of such
property, whether such interest is based on common law, statute,
or contract, and including, but not limited to, the lien or
security interest arising from a mortgage, ship mortgage,
encumbrance, pledge, security agreement, conditional sale or
trust receipt, or a lease, consignment, or bailment for security
purposes (other than true leases or true consignments), liens of
mechanics, materialmen, and artisans, maritime liens and
reservations, exceptions, encroachments, easements, rights of
way, covenants, conditions, restrictions, leases, and other title
exceptions and encumbrances affecting property which secure
Liabilities owed to, or a claim by, a Person other than the owner
of such property (for the purpose of this Agreement, Borrower and
any of its Subsidiaries shall be deemed to be the owner of any
property which it has acquired or holds subject to a conditional
sale agreement, financing lease, or other arrangement pursuant to
which title to the property has been retained by or vested in
some other Person for security purposes), and the filing or
recording of any financing statement or other security instrument
in any public office.
"Loan" individually means any loan made in either Dollars or
Canadian Dollars by any Lender to or for the benefit of Borrower
pursuant to this Agreement, and "Loans" collectively means all
loans made in either Dollars or Canadian Dollars by the Lenders
to or for the benefit of Borrower pursuant to this Agreement and
all payments made by L/C Issuer under all Letters of Credit
issued in either Dollars or Canadian Dollars.
"Loan Documents" means this Agreement, the Notes, the
Security Documents, the Letters of Credit, the LC Applications,
the Commitment Letter, the Fee Letter and all other agreements,
certificates, documents, instruments and writings at any time
delivered in connection herewith or therewith (exclusive of term
sheets).
"Majority Lenders" means Lenders whose aggregate Percentage
Shares equal or exceed sixty-six and two-thirds percent (66?%).
"MarGasCo" means MarGasCo Partnership, an Oklahoma general
partnership.
(a) "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 Borrower's Consolidated financial condition,
Borrower's Consolidated operations, properties or prospects,
considered as a whole, Borrower's ability to timely pay the
Obligations, or the enforceability of the material terms of any
Loan Documents.
(b)
(c) "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).
(d)
(e) "Maturity Date" means five (5) years from the date
hereof.
(f)
(g) "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
which are then outstanding.
(h)
(i) "Mexican Pesos" means the lawful currency of Mexico.
(j)
(k) "Mexican Subsidiary" means collectively Midcoast del
Bajio S. de R.L.de C.V., a Mexican corporation, and any other
Subsidiary organized under the laws of Mexico or any State of
Mexico, acquired or formed by a Restricted Person in compliance
with the terms and provisions of this Agreement, giving effect to
such acquisition or formation, and "Mexican Subsidiary"
individually means any of the foregoing.
(l)
(m) "Midcoast Kansas General" means Midcoast Kansas General
Partner, Inc., a Delaware corporation and Subsidiary of Borrower.
(n)
(o) "Midcoast Kansas Pipeline" means Midcoast Kansas
Pipeline, Inc., a Delaware corporation and Subsidiary of
Borrower.
(p)
(q) "Mid-Kansas" means Mid-Kansas Partnership, a Kansas
general partnership.
(r)
(s) "Moody's" means Moody's Investors Service, Inc.
(t) "Net Income" means, for any period, the Consolidated
net earnings of Borrower and its Subsidiaries for such period.
(u)
(v) "Net Worth" means, for any Person as of any date, the
total Stockholders' Equity (including capital stock, additional
paid-in capital and retained earnings after deducting treasury
stock) which would appear on a Consolidated balance sheet of such
Person and its Subsidiaries prepared as of such date in
accordance with GAAP.
(w)
(x) "Note" has the meaning given to such term in Section
2.1.
(y)
(z) "Obligations" means all Liabilities from time to time
owing by any Restricted Person to any Lender Party or any
Affiliate of any Lender Party under or pursuant to any of the
Loan Documents, including all LC Obligations and any obligation
owing to a Lender in connection with any Hedging Contract.
"Obligation" means any part of the Obligations.
(aa)
(bb) "Other Taxes" has the meaning given that term in
Section 3.10(b).
(cc)
(i) "Percentage Share" means, with respect to any Lender
(i) when used in Section 2.1, 2.2 or 2.5, in any Borrowing Notice
or when no Loans are outstanding hereunder, the percentage set
forth opposite such Lender's name on its signature page hereto,
as such percentage may be reduced or increased pursuant to
Section 10.6., and (ii) when used otherwise, the percentage
obtained by dividing 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
2.10(c) plus the portion of the Maximum Drawing Amount which such
Lender might be obligated to fund under Section 2.10(c), by 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.
(ii)
(iii) "Permitted Canadian Investments" means (without
duplication) equity Investments by a Restricted Person in a
Canadian Subsidiary; provided that, after giving effect to the
making by any Restricted Person of any equity Investment in a
Canadian Subsidiary, the sum of (i) the Dollar Equivalent of the
aggregate outstanding principal amount of all loans and advances
made by all Restricted Persons to the Canadian Subsidiaries, plus
(ii) the Dollar Equivalent of the aggregate amount of all equity
Investments made by all Restricted Persons in the Canadian
Subsidiaries, would not exceed fifteen percent (15%) of
Borrower's Consolidated total assets.
(iv)
(v) "Permitted Investments" means collectively: (1)
Permitted Canadian Investments; (2) Permitted Mexican
Investments; and (3) the purchase or acquisition by Borrower or
any Guarantor of:
(vi)
(a) assets consisting of hydrocarbon trucking
operations, pipelines, processing plants, gathering
lines and/or oil and gas properties (herein
collectively called "Eligible Assets") (provided that
all Eligible Assets acquired by Borrower or a
Guarantor are located in the United States);
(b) the stock or other ownership interests of any
Person owning any Eligible Assets located in the United
States;
(c) Cash Equivalents; and
(d) interests in joint ventures doing business
solely in the United States as to which Borrower or any
of its Subsidiaries is a venturer, so long as such
joint venture is engaged in the same line of business
as Borrower (or such Subsidiary) as of the date hereof.
"Permitted Liens" means (a) Liens for taxes, assessments, or
other governmental charges or levies not yet due or which (if
foreclosure, distraint, sale, or other similar proceedings shall
not have been initiated) are being contested in good faith by
appropriate proceedings, and such reserve as may be required by
GAAP shall have been made therefor, (b) Liens in connection with
workers compensation, unemployment insurance or other social
security (other than Liens created by Section 4068 of ERISA),
old-age pension, or public liability obligations which are not
yet due or which are being contested in good faith by appropriate
proceedings, and such reserve as may be required by GAAP shall
have been made therefor, (c) Liens in favor of vendors, carriers,
warehousemen, repairmen, mechanics, workmen, materialmen,
construction, or similar Liens arising by operation of law in the
ordinary course of business in respect of obligations which are
not yet due or which are being contested in good faith by
appropriate proceedings, and such reserve as may be required by
GAAP shall have been made therefor, (d) other Liens in favor of
Administrative Agent and other Liens expressly permitted under
the Security Documents, (e) Liens on property securing purchase
money debt permitted by Section 7.1(c) incurred solely for the
purpose of financing the acquisition of such property and Liens
on property securing non-purchase money Indebtedness not to
exceed the Dollar Equivalent of $500,000 in the aggregate, (f)
encumbrances consisting of minor easements, zoning restrictions,
or other restrictions on the use of property that do not
(individually or in the aggregate) materially affect the value of
assets encumbered thereby or materially impair the ability of
Borrower or any Restricted Person to use such assets in their
respective business, and none of which is violated in any
material respect by existing or proposed structures or land use,
(g) Liens resulting from good faith deposits to secure the
performance of statutory obligations, surety and appeal bonds,
bids, or contracts, or leases made in the ordinary course of
business, (h) Liens securing the KPC Notes, (i) Liens granted by
Butcher Interest Partnership to secure its Liabilities to Bank of
America in connection with the $6,100,000 Credit Agreement of
even date herewith between Butcher Interest Partnership and Bank
of America, and (j) encumbrances consisting of easements,
licenses, and rights of way burdening real property owned by KPC,
MarGasCo, Mid-Kansas and/or Riverside solely for purposes of
installing and maintaining third party fiber optic lines and
third party pipelines not used for the transportation of
hydrocarbons.
"Permitted Mexican Investments" means without duplication
equity Investments by a Restricted Person in a Mexican
Subsidiary; provided that, after giving effect to the making by
any Restricted Person of any equity Investment in a Mexican
Subsidiary, the sum of (i) the Dollar Equivalent of the aggregate
outstanding principal amount of all loans and advances made by
all Restricted Persons to the Mexican Subsidiaries, plus (ii) the
Dollar Equivalent of the aggregate amount of all equity
Investments made by all Restricted Persons in the Mexican
Subsidiaries, would not exceed ten percent (10%) of Borrower's
Consolidated total assets.
"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.
"Prior Credit Documents" means that certain Amended and
Restated Credit Agreement dated as of August 31, 1998 among
Borrower, Borrower's Subsidiaries, Bank One, Texas, N.A.,
individually and as administrative agent, and the other lenders
party thereto, together with the promissory notes, security
agreements, security instruments and guaranties made by Borrower
and/or its Subsidiaries in connection therewith.
"Rating Agency" means either S&P or Moody's.
"Regulation A" means Regulation A of the Board of Governors
of the Federal Reserve System as from time to time in effect.
"Regulation D" means Regulation D of the Board of Governors
of the Federal Reserve System as from time to time in effect.
"Regulation U" means Regulation U of the Board of Governors
of the Federal Reserve System as from time to time in effect.
"Reserve Requirement" means, at any time, the maximum rate
at which reserves (including any marginal, special, supplemental,
or emergency reserves) are required to be maintained under
regulations issued from time to time by the Board of Governors of
the Federal Reserve System (or any successor) by member banks of
the Federal Reserve System against "Eurocurrency liabilities" (as
such term is used in Regulation D). Without limiting the effect
of the foregoing, the Reserve Requirement 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 Adjusted U.S. Eurodollar Rate
or Adjusted Canadian Eurodollar Rate is to be determined, or
(b) any category of extensions of credit or other assets which
include U.S. Eurodollar Loans or Canadian Eurodollar Loans.
"Restricted Person" means any of Borrower, each Subsidiary
of Borrower, Butcher Interest Partnership, and each Guarantor.
"Riverside" means Riverside Pipeline Company, L.P., a Kansas
limited partnership.
"S&P" means Standard & Poor's Ratings Group (a division of
The McGraw Hill Companies, Inc.).
"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 the Prior Credit Documents, this
Agreement or any transaction contemplated hereby to secure or
guarantee the payment of any part of the Obligations or the
performance of any Restricted Person's other duties and
obligations under the Loan Documents.
"Security Schedule" means Schedule 2.
"Stockholders' Equity" means, with respect to any Person as
at any date of determination, the stockholders' equity of such
Person, determined on a Consolidated basis.
"Subsidiary" means, with respect to any Person, any
corporation, association, partnership, limited liability company,
joint venture, or other business or corporate entity, enterprise
or organization which is directly or indirectly (through one or
more intermediaries) controlled by or owned forty percent (40%)
or more by such Person. Unless otherwise expressly provided, all
references herein to a "Subsidiary" shall mean a Subsidiary of
Borrower.
"Syndication Agent" means Bank One, NA, as Syndication Agent
hereunder, and its successors in such capacity.
"Tangible Net Worth" shall mean for any Person (a) total
assets, as would be reflected on a balance sheet of such Person
prepared on a Consolidated basis (exclusive of patents, patent
applications, trademarks, tradenames, copyrights, experimental or
organization expenses, franchises, licenses, permits, and other
intangible assets, treasury stock, unamortized underwriters' debt
discount and expenses, and goodwill) minus (b) total liabilities,
as would be reflected on a balance sheet of such Person prepared
on a Consolidated basis.
"Taxes" has the meaning given that term in Section 3.10(a).
(a) "Termination Event" means the occurrence with respect
to any ERISA Plan of a reportable event described in Section
4043(b)(5) or (6) of ERISA or any other reportable event
described in Section 4043(b) of ERISA other than a reportable
event not subject to the provision for 30-day notice to the
Pension Benefit Guaranty Corporation pursuant to a waiver by such
corporation under Section 4043(a) of ERISA, or 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 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 the
institution of proceedings to terminate any ERISA Plan by the
Pension Benefit Guaranty Corporation under Section 4042 of ERISA,
or 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.
(b)
(c) "Total Funded Debt" means, without duplication, all
Indebtedness for money borrowed including any subordinated
indebtedness, the KPC Notes, purchase money mortgages, lease
obligations capitalized in accordance with GAAP, amounts
outstanding in respect of asset securitization vehicles,
conditional sales contracts and similar title retention debt
instruments, including any current maturities of such
Indebtedness, plus the net present value of future operating
lease payments calculated using standard S&P methodology, plus
the redemption amount with respect to any redeemable preferred
stock of Borrower or any Subsidiary required to be redeemed
within the next twelve (12) months. Total Funded Debt shall also
include, without limitation, any Total Funded Debt which has been
guaranteed by any Restricted Person or which is supported by a
letter of credit issued for the account of any Restricted Person.
(d)
(e) "Tribunal" means any government, any arbitration panel,
any court or any governmental department, central bank or
comparable agency, commission, board, bureau, agency or
instrumentality of the United States or any state, province,
commonwealth, nation, territory, possession, county, parish,
town, township, village or municipality, whether now or hereafter
constituted or existing.
(f)
(g) "Type" of Loan is determined by reference to the
interest rate applicable to such Loan and the currency in which
such Loan is denominated, with a Base Rate Loan and a Eurodollar
Loan being different Types of Loans, Loans in Dollars and
Canadian Dollars being different Types of Loans and Eurodollar
Loans having different Interest Periods being different Types of
Loans.
(h)
(i) "United States" means the United States of America.
(j)
(k) "U.S. Eurodollar Loan" means a Loan that bears interest
at the Adjusted U.S. Eurodollar Rate.
(l)
(m) "U.S. Eurodollar Margin" means the margin added to a
U.S. Eurodollar Loan as set forth in the definition of
"Applicable Margin".
(n)
(o) "U.S. Eurodollar Rate" means, for any U.S. Eurodollar
Loan within a Borrowing and with respect to the related Interest
Period therefor, the rate per annum (rounded upwards, if
necessary, to the nearest 1/100 of 1%) appearing on Telerate Page
3750 (or any successor page) as the London interbank offered rate
for deposits in Dollars at approximately 11:00 a.m. (London time)
two Business Days prior to the first day of such Interest Period
for a term comparable to such Interest Period. If for any reason
such rate is not available, the term "U.S. Eurodollar Rate"
means, for any U.S. Eurodollar Loan within a Borrowing and with
respect to the related Interest Period therefor, the rate per
annum (rounded upwards, if necessary, to the nearest 1/100 of 1%)
appearing on Reuters Screen LIBO Page as the London interbank
offered rate for deposits in Dollars at approximately 11:00 a.m.
(London time) two Business Days prior to the first day of such
Interest Period for a term comparable to 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 1/100 of 1%).
(p)
(q) "Unused Amount" means, at any time, an amount equal to
(a) the Facility Amount less (b) the Dollar Equivalent of
Facility Usage at such time.
(r)
(s) "Unused Fee" means, for each day, an amount equal to
the product of (a) the Unused Amount for such day times (b) the
number of Basis Points designated in Section 2.5(b) based on
Borrower's Debt to Capitalization Ratio for the prior Fiscal
Quarter or as otherwise provided in Section 2.5(b)
(t)
(u) "Wholly Owned Domestic Subsidiary" shall mean any
Domestic Subsidiary of Borrower which is directly or indirectly
100% owned by Borrower.
(v)
(w) "Wholly Owned Foreign Subsidiary" shall mean any
Foreign Subsidiary of Borrower which is directly or indirectly
100% owned by Borrower.
(x)
(a) "Year 2000 Compliant" means, in regard to any Person,
that all software, hardware, firmware, equipment, goods or
systems utilized by or material to the business operations or
financial condition of such Person, will properly perform date
sensitive functions before, during and after the year 2000.
2. Section 1.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.
3.
4. Section 1.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.
5.
6. Section 1.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. All
references in this Agreement to any Person refer to such Person's
successors and assigns 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.
7.
8. Section 1.Calculations and Determinations . All
calculations under the Loan Documents of interest chargeable with
respect to Eurodollar Loans and of fees shall be made on the
basis of actual days elapsed (including the first day but
excluding the last) and a year of 360 days. All other
calculations of interest made under the Loan Documents shall be
made on the basis of actual days elapsed (including the first day
but excluding the last) and a year of 365 or 366 days, as
appropriate. Each determination by a 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 Eurodollar
Rate, Adjusted Eurodollar Rate, Business Day, Interest Period, or
Reserve Requirement) 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.
9.
10. Section 1.Joint Preparation; Construction of
Indemnities and Releases . This Agreement and the other Loan
Documents have been reviewed and negotiated by sophisticated
parties with access to legal counsel and no rule of construction
shall apply thereto which would require or allow any Loan
Document to be construed against any party because of its role in
drafting such Loan Document. All indemnification and release
provisions of this Agreement shall be construed broadly (and not
narrowly) in favor of the Persons receiving indemnification from
or being released.
11.
Remainder of Page Intentionally Left Blank.
ARTICLE II - The Loans and Letters of Credit
1. Section 2.Commitments to Lend; Notes . Subject to the
terms and conditions hereof, each Lender severally agrees to make
Loans to Borrower 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 Dollar Equivalent of the
Facility Usage does not exceed the Facility Amount determined as
of the date on which the requested Loans are to be made,
(c) after giving effect to such Loans, the Dollar Equivalent of
such Lender's Loans and Percentage Share of any LC Obligations
does not exceed such Lender's Commitment determined as of the
date on which the requested Loans are to be made, and (d) the
aggregate outstanding principal amount of Canadian Eurodollar
Loans does not exceed Fifty Million Canadian Dollars
(C$50,000,000). The aggregate amount of all Loans in any
Borrowing consisting of Base Rate Loans must be greater than or
equal to $1,000,000 or must equal the remaining availability
under the Facility Amount and the aggregate amount of all Loans
in any Borrowing consisting of Eurodollar Loans must be greater
than or equal to $3,000,000. Borrower may have no more than
seven (7) Borrowings of Eurodollar Loans outstanding at 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 on each Interest Payment Date 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 hereof,
Borrower may borrow, repay, and reborrow hereunder. Borrower
may, upon three (3) Business Days' prior written notice to
Administrative Agent, irrevocably cancel all or any portion of
the Unused Amount.
2.
3. Section 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 new
Loans to be advanced by Lenders. Each such notice constitutes a
"Borrowing Notice" hereunder and must:
4.
(i) specify 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 the aggregate amount of any such
Borrowing of new Eurodollar Loans, the date on which such
Eurodollar Loans are to be advanced (which shall be the first day
of the Interest Period which is to apply thereto), the length of
the applicable Interest Period, and the respective amounts of
such Eurodollar Loans to be made as U.S. Eurodollar Loans or
Canadian Eurodollar Loans; and
(ii)
(iii) be received by Administrative Agent not later than
10:00 a.m., Houston time, on the day on which any such Base Rate
Loans are to be made, or the third Business Day preceding the
day on which any such Eurodollar Loans are to be made.
(iv)
(i) (v) 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. Each
Borrowing Notice shall be irrevocable and binding on Borrower. 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 Dallas,
Texas (or such other office as may be designated in writing by
Administrative Agent) the amount of such Lender's new Loan in the
currency requested, 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 (3) 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 the Federal Funds Rate,
if such Lender is making such payment and 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 in
addition to such amount be entitled to recover from such Lender
and from Borrower, on demand, interest thereon at the Default
Rate applicable to Base Rate Loans, 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.
1. Section 2.Continuations and Conversions of Existing
Loans . Borrower may make the following elections with respect
to Loans already outstanding; provided, however, that Borrower
comply with the minimum Borrowing amounts specified in Section
2.1: to convert Base Rate Loans to Eurodollar Loans; to convert
Eurodollar Loans to Base Rate Loans on the last day of the
Interest Period applicable thereto; to continue Eurodollar Loans
beyond the expiration of such Interest Period by designating a
new Interest Period to take effect at the time of such
expiration; and to convert the currency of Loans from Dollars to
Canadian Dollars and from Canadian Dollars to Dollars; provided,
any conversion from Canadian Dollars to Dollars shall occur only
on the last day of the Interest Period applicable thereto. If
any Dollar Loan is converted into a Canadian Dollar Loan, the
amount of the resulting Canadian Dollar Loan shall be equal to
the Canadian Dollar Equivalent of such converted Dollar Loan and
the aggregate outstanding principal amount of Canadian Dollar
Loans shall not exceed Fifty Million Canadian Dollars
(C$50,000,000); and, if any Canadian Dollar Loan is converted
into a Dollar Loan, the amount of the resulting Dollar Loan
shall be equal to the Dollar Equivalent of such converted
Canadian Dollar Loan. In making the foregoing elections where
there is no currency conversion involved, 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 eight (8) Borrowings of Loans outstanding at any time,
all Base Rate Loans constituting one Loan, each Borrowing
consisting of U.S. Eurodollar Loans made by Lender at one time
and for a particular Interest Period constituting one Loan and
each Borrowing consisting of Canadian Eurodollar Loans made by
Lenders at one time and for a particular Interest Period
constituting one Loan. 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:
2.
(a) specify the existing Loans which are to be continued or
converted;
(b)
(i) specify 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 the aggregate amount of any Borrowing of
Eurodollar Loans into which such existing Loans are to be
continued or converted, the date on which such Continuation or
Conversion is to occur (which shall be the first day of the
Interest Period which is to apply to such Eurodollar Loans), the
length of the applicable Interest Period, and the respective
amounts of such Eurodollar Loans to be made as U.S. Eurodollar
Loans or Canadian Eurodollar Loans; and
(ii)
(iii) be received by Administrative Agent not later than
10:00 a.m., Houston time, on the day on which any such
Continuation or Conversion to Base Rate Loans is to occur, or
the third Business Day preceding the day on which any such
Continuation or Conversion to Eurodollar Loans is to occur.
(iv)
(v) 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 Eurodollar Loans or continue existing Loans
as Eurodollar Loans. If (due to the existence of a Default or
for any other reason) Borrower fails to timely and properly give
any Continuation/Conversion Notice with respect to a Borrowing of
existing Eurodollar Loans at least three (3) days prior to the
end of the Interest Period applicable thereto, such Eurodollar
Loans shall automatically be converted into Base Rate Loans at
the end of such Interest Period. No new funds shall be repaid by
Borrower or advanced by any Lender in connection with any
Continuation or Conversion of existing Loans pursuant to this
section, and no such Continuation or Conversion shall be deemed
to be a new advance of funds for any purpose; such Continuations
and Conversions merely constitute a change in the interest rate
applicable to already outstanding Loans.
(vi)
3. Section 2.Use of Proceeds . Borrower shall use up to $
[193,000,000] of the Loans under the Facility to finance its or
any Restricted Person's purchase of the partnership interests in
KPC, MarGasCo, Mid-Kansas and Riverside owned by K-Pipe pursuant
to the Acquisition Agreement, and the balance of the Loans shall
be used to (i) refinance Indebtedness owing under the KPC Notes,
(ii) refinance Indebtedness owing under the Prior Credit
Documents, (iii) finance capital expenditures and acquisitions,
(iv) refinance Matured LC Obligations, and (v) provide working
capital for its operations and for other general business
purposes. Borrower shall use all Letters of Credit for its
general corporate purposes. In no event shall the funds from any
Loan or any Letter of Credit be used directly or indirectly by
any Person for personal, family, household or agricultural
purposes or for the purpose, whether immediate, incidental or
ultimate, of purchasing, acquiring or carrying any "margin stock"
(as such term is defined in Regulation U) 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.
4.
5. Section 2.Interest Rates and Fees .
6.
(a) Interest Rates. As provided in the Notes: (i) each
Base Rate Loan shall bear interest on each day outstanding at the
Adjusted Base Rate in effect on such day; (ii) each Eurodollar
Loan shall bear interest on each day during the related Interest
Period at the related Adjusted Eurodollar Rate in effect on such
day; and (iii) if an Event of Default has occurred and is
continuing, all Loans shall bear interest on each day outstanding
at the applicable Default Rate. Past due payments of principal
and interest shall also bear interest at the rates and in the
manner set forth in the Notes.
(b)
(c) Unused Fees. In consideration of each Lender's
Commitment to make Loans, Borrower will pay to Administrative
Agent for the account of and ratable distribution to each Lender
based on such Lender's Percentage Share, an Unused Fee during the
Commitment Period determined on a daily basis on such Unused Fee
being payable quarterly in arrears on the last Business Day of
each Fiscal Quarter of Borrower and at the end of the Commitment
Period, computed at a rate equal to the number of Basis Points
designated below based on Borrower's Debt to Capitalization
Ratio, measured quarterly:
(d)
Debt to Capitalization Ratio Unused Fee
Less than or equal to 40% 20 Basis Points
Less than or equal to 50% but greater 25 Basis Points
than 40%
Less than or equal to 60% but greater 35 Basis Points
than 50%
Less than or equal to 65% but greater 40 Basis Points
than 60%
Greater than 65% 45 Basis Points
provided, however, that adjustments, if any, to the Unused Fee
based on changes in Borrower's Debt to Capitalization Ratio as
set forth above shall be determined by Administrative Agent
quarterly, based upon Borrower's most recent quarterly financial
statements, beginning with Borrower's statements for the period
ended December 31, 1999; provided further, however, if Borrower
shall fail to deliver any such quarterly financial statements
within the time period required by Section 6.2(b), then the
Unused Fee shall be that shown above for a Debt to Capitalization
Ratio greater than 65%, it being understood that if and when such
quarterly financial statements are subsequently delivered, then
the Unused Fee shall be readjusted, effective upon and following
the date of such delivery, to the Unused Fee designated above
based on Borrower's Debt to Capitalization Ratio as reflected in
such delivered quarterly financial statements. From the date of
the first Borrowing through the delivery of the Borrower's
financial statements for the period ending December 31, 1999, the
Unused Fee shall be 45 Basis Points.
(a) Other Fees. In addition to all other amounts due to
Administrative Agent under the Loan Documents, Borrower will pay
such other fees as may be agreed to in the Commitment Letter and
Fee Letter.
(b)
2. Section 2.Optional Prepayments and Payment of Breakage
Costs . (a) Subject to applicable provisions of this Agreement,
Borrower shall have the right at any time or from time to time to
prepay Loans and to convert Loans of one Type or with one
Interest Period into Loans of another Type or with a different
Interest Period; provided, however, that (i) Borrower shall give
Administrative Agent notice of each such prepayment or conversion
of all or any portion of a Eurodollar Loan no less than three (3)
Business Days prior to prepayment or conversion, (ii) any
Eurodollar Loan may be prepaid or converted only on the last day
of an Interest Period for such Eurodollar Loan or as otherwise
provided in Section 2.6(b), (iii) Borrower shall pay all accrued
and unpaid interest on the amounts of Eurodollar Loans prepaid or
converted, and (iv) no such prepayment or conversion shall serve
to postpone the repayment when due of any Obligation , (v) the
aggregate amount of all partial prepayments of the Notes equals
$5,000,000 or any higher integral multiple of $1,000,000, and
(vi) Borrower shall not make any prepayments which would reduce
the unpaid principal balance of all Loans to less than $100,000
without first either (a) terminating this Agreement or (b)
providing assurance satisfactory to Administrative Agent in its
discretion that Lenders' legal rights under the Loan Documents,
including the Security Documents, are in no way affected by such
prepayment.
3.
4. (b) Borrower may prepay all or any portion of the
principal amount of a Loan bearing interest at a Eurodollar Rate;
provided that if Borrower makes any such prepayment other than on
the last day of the applicable Interest Period, Borrower (i) with
such prepayment, shall pay all accrued interest on the principal
amount prepaid, (ii) if such prepayment is of a Canadian
Eurodollar Loan, shall reimburse the Lenders and hold the Lenders
harmless from all losses and expenses incurred by the Lenders as
a result of any currency exchange losses related to funding such
Canadian Eurodollar Loan, and (iii) on demand, shall reimburse
the Lenders and hold the Lenders harmless from all losses and
expenses incurred by the Lenders as a result of such prepayment,
including, without limitation, any losses (including currency
exchange losses) and expenses arising from the liquidation or
reemployment of deposits acquired to fund or maintain the
principal amount prepaid ("breakage costs"). Such breakage costs
with respect to the prepayment of U.S. Eurodollar Loans shall be
calculated as though the Lenders funded the principal amount
prepaid through the purchase of Dollar deposits in the London
interbank market having a maturity corresponding to such Interest
Period and bearing an interest rate equal to the U.S. Eurodollar
Rate for such Interest Period, whether in fact that is the case
or not. Such breakage costs with respect to the prepayment of
Canadian Eurodollar Loans shall be calculated as though the
Lenders funded the principal amount prepaid through the purchase
of Canadian Dollar deposits in the London interbank market having
a maturity corresponding to such Interest Period and bearing an
interest rate equal to the Canadian Eurodollar Rate for such
Interest Period, whether in fact that is the case or not. Each
Lender's determination of the amount of any such reimbursement
shall be conclusive in the absence of manifest error.
5.
6. Section 2.Mandatory Prepayments .
7.
8. (a) If at any time the Dollar Equivalent of the
Facility Usage exceeds the Facility Amount, Borrower shall
immediately upon Administrative Agent's demand prepay the
principal of the Loans in an amount at least equal to such
excess.
9.
10. (b) 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.
11.
12. Section 2.Letters of Credit . Subject to the terms and
conditions hereof, Borrower may during the Commitment Period
request LC Issuer to issue one or more Letters of Credit;
provided, after taking such Letter of Credit into account:
13.
14. (a) the Dollar Equivalent of the Facility Usage does
not exceed the Facility Amount at such time;
15.
16. (b) the Dollar Equivalent aggregate amount of LC
Obligations at such time does not exceed the LC Sublimit;
17.
18. (c) the expiration date of such Letter of Credit shall
be no later than 365 days after the date of its issuance and
prior to the end of the Commitment Period unless such Letter of
Credit is issued in connection with Borrower's gas marketing
activities, in which case the expiration date of such Letter of
Credit shall be no later than 90 days after the date of its
issuance and prior to the end of the Commitment Period;
19.
20. (d) the LC Issuer shall not be obligated to issue any
Letter of Credit in any currency other than Dollars, Canadian
Dollars or Mexican Pesos;
21.
22. (e) such Letter of Credit is to be used for general
corporate purposes of a Restricted Person;
23.
24. (f) such Letter of Credit is not directly or
indirectly used to assure payment of or otherwise support any
Indebtedness of any Person other than Indebtedness of any
Restricted Person;
25.
26. (g) 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;
27.
28. (h) the form and terms of such Letter of Credit are
acceptable to LC Issuer in its discretion; and
29.
30. (i) all other conditions in this Agreement and the LC
Application to the issuance of such Letter of Credit have been
satisfied.
31.
32. LC Issuer will honor any such request if the foregoing
conditions (a) through (i) (the "LC Conditions") have been met as
of the date of issuance of such Letter of Credit and Borrower
will deliver to LC Issuer a certificate confirming conditions
(a), (b), (c), (e), (f) and (i) above, which certificate shall be
delivered contemporaneously with the LC Application to the LC
Issuer. LC Issuer may choose to honor any such request for any
other Letter of Credit but has no obligation to do so and may
refuse to issue any other requested Letter of Credit for any
reason which LC Issuer in its sole discretion deems relevant.
33.
34. Section 2.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 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). Two Business Days after the LC Conditions
for a Letter of Credit have been met as described in Section 2.8
(or if LC Issuer otherwise desires to issue such Letter of
Credit), LC Issuer will issue such Letter of Credit at LC
Issuer's office in Dallas, Texas. If any provisions of any LC
Application conflict with any provisions of this Agreement, the
provisions of this Agreement shall govern and control.
35.
36. Section 2.Reimbursement and Participations .
37.
(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 at the Default Rate applicable to Base Rate
Loans.
(b)
(c) Letter of Credit Advances. If the beneficiary of any
Letter of Credit presents 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.
(d)
(e) 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, through
Administrative Agent, 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 through Administrative Agent
pursuant to the terms of this subsection is irrevocable and
unconditional. If any amount required to be paid by any Lender
to LC Issuer through Administrative Agent pursuant to this
subsection is paid by such Lender through Administrative Agent 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 through Administrative Agent to
LC Issuer pursuant to this subsection is not paid by such Lender
through Administrative Agent 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
Default Rate applicable to Base Rate Loans for a Debt to
Capitalization Ratio greater than 65%.
(f)
(g) 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 through Administrative Agent 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 through Administrative Agent to LC Issuer the
portion thereof which LC Issuer has previously distributed to it.
(h)
(i) 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.
(j)
(k) Section 2.Letter of Credit Fees . In consideration of
LC Issuer's issuance of any Letter of Credit, Borrower agrees to
pay to such LC Issuer for its own account, a per annum letter of
credit fronting fee equal to the product of (i) twelve and one
half Basis Points (12.5 bp) times (ii) the face amount of such
Letter of Credit, calculated and payable as provided below (the
"LC Fronting Fee") and (b) to Administrative Agent, for the
account of all Lenders in accordance with their respective
Percentage Shares, a letter of credit issuance fee calculated as
provided below (the "LC Issuance Fee"), but in no event less than
$750, equal to the product of (i) the number of Basis Points
designated below based on Borrower's Debt to Capitalization
Ratio, measured quarterly times (ii) the face amount of such
Letter of Credit:
(l)
Debt to Capitalization Ratio L/C Issuance Fee
Less than or equal to 40% 100 Basis Points Per
Annum
Less than or equal to 50% but greater 125 Basis Points Per
than 40% Annum
Less than or equal to 60% but greater 150 Basis Points Per
than 50% Annum
Less than or equal to 65% but greater 175 Basis Points Per
than 60% Annum
Greater than 65% 200 Basis Points Per
annum
The LC Fronting Fee and LC Issuance Fee will each be payable
quarterly in arrears on the last Business Day of each Fiscal
Quarter; provided, however, that adjustments, if any, to the LC
Issuance Fee based on changes in Borrower's Debt to
Capitalization Ratio as set forth above shall be determined by
Administrative Agent quarterly, based upon Borrower's most recent
quarterly financial statements, beginning with Borrower's
statements for the period ended December 31, 1999; provided
further, however, if Borrower shall fail to deliver any such
quarterly financial statements within the time period required by
Section 6.2(b), then the LC Issuance Fee shall be that shown
above for a Debt to Capitalization Ratio greater than 65%, it
being understood that if and when such quarterly financial
statements are subsequently delivered, then the LC Issuance Fee
shall be readjusted, effective upon and following the date of
such delivery, to the LC Issuance Fee designated above based on
Borrower's Debt to Capitalization Ratio as reflected in such
delivered quarterly financial statements. In addition to payment
of the LC Fronting Fee and LC Issuance Fee, Borrower will pay LC
Issuer's customary administrative issuance fees and
administrative drawing fees upon any drawing under a Letter of
Credit. From the date of the first Borrowing through delivery of
the Borrower's financial statements for the period ending
December 31, 1999, the LC Issuance Fee shall be 200 Basis Points.
1. Section 2.No Duty to Inquire .
2.
(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.
(b)
(c) Extension of Maturity. Subject to the conditions
precedent specified in Section 4.3, if the maturity of any Letter
of Credit is extended by its terms or by Law or governmental
action, if any extension of the maturity or time for presentation
of drafts or any other modification of the terms of any Letter of
Credit is made at the request of any Restricted Person, or if the
amount of any Letter of Credit is increased at the request of any
Restricted Person, this Agreement shall be binding upon all
Restricted Persons with respect to such Letter of Credit as so
extended, increased or otherwise modified, with respect to drafts
and property covered thereby, and with respect to any action
taken by LC Issuer, LC Issuer's correspondents, or any Lender
Party in accordance with such extension, increase or other
modification.
(d)
(e) 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.
(f)
3. Section 2.LC Collateral .
4.
5. (a) LC Obligations in Excess of Facility Amount. If,
after the making of all mandatory prepayments required under
Section 2.7, the outstanding LC Obligations exceed the Facility
Amount, 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 security for the remaining LC Obligations (all such amounts
held as 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 any Matured LC
Obligations or other Obligations which are due and payable.
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.
6.
7. (b) Acceleration of LC Obligations. If the
Obligations or any part thereof become immediately due and
payable pursuant to Section 8.1 then, unless Majority Lenders
otherwise specifically elect to the contrary (which election may
thereafter be retracted by Majority 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 obligated
to pay to LC Issuer immediately an amount equal to the aggregate
LC Obligations which are then outstanding.
8.
9. (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 a
continuing security interest in all LC Collateral paid by it to
LC Issuer, all Cash Equivalents 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, Cash Equivalents 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 Texas 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.
10.
11. (d) Payment of LC Collateral. When Borrower is
required to provide LC Collateral for any reason and fails to do
so on the day when required, LC Issuer may without notice to
Borrower or any other Restricted Person provide such LC
Collateral (whether by application of proceeds of other
Collateral, by transfers from other accounts maintained with LC
Issuer, or otherwise) using any available funds of Borrower or
any other Person also liable to make such payments. Any such
amounts which are required to be provided as LC Collateral and
which are not provided on the date required shall, for purposes
of each Security Document, be considered past due Obligations
owing hereunder, and LC Issuer is hereby authorized to exercise
its respective rights under each Security Document to obtain such
amounts.
12.
13. Section 2.Increase in Facility Amount . So long as no
Default or Event of Default shall have occurred and be
continuing, Borrower shall have the right from time to time upon
not less than thirty (30) days' prior written notice to
Administrative Agent to increase the Facility Amount; provided,
that in no event shall the Facility Amount be increased to an
amount greater than $400,000,000; provided, further, that:
14.
15. (a) any increase in the Facility Amount which is
accomplished by increasing the Commitment of any Lender or
Lenders who are at the time of such increase party to this
Agreement (which Lender or Lenders shall consent to such increase
in their sole and absolute discretion) shall be accomplished as
follows: (i) this Agreement will be amended by Borrower,
Administrative Agent, Syndication Agent, Documentation Agent and
those Lender(s) whose Commitment(s) is or are being increased to
reflect the revised Commitment amounts of each of the Lenders;
(ii) the outstanding Loans and Commitments will be reallocated on
the effective date of such increase among the Lenders in
accordance with their revised Commitment Percentages (and
Borrower shall pay any and all costs required pursuant to Section
3.9 in connection with such reallocation as if such reallocation
were a prepayment); and (iii) Borrower will deliver new Note(s)
to the Lender or Lenders whose Commitment(s) is or are being
increased reflecting the revised Commitment amount of such
Lender(s) (in exchange for such Lender's or Lenders' old
Note(s)); and
16.
17. (b) any increase in the Facility Amount which is
accomplished by addition of a new Lender under the Agreement
shall be accomplished as follows: (i) such new Lender shall be an
Eligible Transferee and shall be subject to the consent of
Administrative Agent and LC Issuer, which consent shall not be
unreasonably withheld; (ii) this Agreement will be amended by
Borrower, Administrative Agent, LC Issuer, Syndication Agent,
Documentation Agent and by the party becoming an additional
Lender hereunder to reflect the addition of such party as a
Lender hereunder; (iii) Administrative Agent will deliver an
updated schedule to Borrower and each of the Lenders reflecting
the revised Commitment amounts and Commitment Percentages of each
of the Lenders; (iv) the outstanding Loans and Commitment
Percentages will be reallocated on the effective date of such
increase among the Lenders in accordance with their revised
Commitment Percentages (and Borrower shall pay any and all costs
required pursuant to Section 3.9 in connection with such
reallocation as if such reallocation were a prepayment); and (v)
Borrower will deliver a new Note to such party.
18.
Remainder of Page Intentionally Left Blank.
ARTICLE III - Payments to Lenders
1. Section 3.General Procedures .
2.
3. (a) 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 at the office of
Administrative Agent in Dallas, Texas. All payments of principal
or interest required pursuant to this Agreement or the Notes on
or with respect to Canadian Base Rate Loans or Canadian
Eurodollar Loans shall be made in Canadian Dollars and in such
funds as may then be customary for the settlement of
international transactions in Canadian Dollars, and all other
payments required pursuant to this Agreement or the Notes shall
be made in Dollars and in immediately available funds.
Notwithstanding the foregoing provisions of this Section 3.1(a),
if, after the making of any Loan in Canadian Dollars, currency
control or exchange regulations are imposed in Canada with the
result that Canadian Dollars no longer exist or Borrower is not
able to make payment to Administrative Agent for the account of
the Lender Party to whom such payment is owed in Canadian
Dollars, then all payments to be made by Borrower hereunder in
Canadian Dollars shall instead be made when due in Dollars in an
amount equal to the Dollar Equivalent (as of the date of
repayment) of such payment due, it being the intention of the
parties hereto that Borrower takes all risks of the imposition of
any such currency control or exchange regulations.
4.
5. (b) All payments by Borrower shall be without set-off,
deduction or counterclaim, and in immediately available funds.
Each such payment must be received by Administrative Agent not
later than 11:00 a.m., Houston 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 office of Administrative Agent or such other places as
designated in writing by Administrative Agent. 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:
6.
7. (i) 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 due Administrative Agent and any other
Lenders as provided under Section 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);
8.
9. (ii) then for the prepayment of amounts owing under the
Loan Documents (other than principal on the Notes) if so
specified by Borrower;
10.
11. (iii) then for the prepayment of principal on the
Notes, together with accrued and unpaid interest on the principal
so prepaid; and
12.
13. (iv) last, for the payment or prepayment of any other
Obligations.
14.
15. 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 (i),
(ii), (iii) or (iv) 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 2.10(c) or to Administrative Agent
under Section 9.8, 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.
16.
17. Section 3.Intentionally Deleted .
18.
19. Section 3.Intentionally Deleted .
20.
(a) Section 3.Replacement of Lender Party . If any Lender
Party seeks reimbursement for increased costs under Sections 3.5
or 3.6, then provided no Event of Default then exists, within
ninety (90) days thereafter 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 Commitment
hereunder to an Eligible Transferee reasonably acceptable to
Administrative Agent, LC Issuer and to Borrower; provided that
all Obligations of Borrower owing to such Lender Party being
replaced (including such increased costs, but excluding principal
and accrued interest on the Notes being assigned) shall be paid
in full by Borrower to such Lender Party concurrently with such
assignment, and 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 thereon together with all other accrued but
unpaid fees and any costs or expenses payable by Borrower
pursuant to Section 2.6(b) and Section 3.9. For purposes of this
Section, the assignment by the Lender Party being replaced of its
Note to the Eligible Transferee and the Eligible Transferee's
purchase of such Lender Party's Note shall be treated for
purposes of Section 2.6(b) and Section 3.9 as a prepayment by the
Borrower of such Lender Party's Note for purposes of determining
if any fees or expenses are payable under those sections,
regardless of the fact that such Lender Party's Note was in fact
assigned, not prepaid. In connection with any such assignment
Borrower, Administrative Agent, such Lender Party and the
replacement Eligible Transferee shall otherwise comply with
Section 10.6. Notwithstanding the foregoing rights of Borrower
under this section, however, Borrower may not replace any Lender
Party which seeks reimbursement for increased costs under
Sections 3.5 or 3.6 unless Borrower is at the same time replacing
all Lender Parties which are then seeking such compensation.
(b)
21. Section 3.Increased Cost and Reduced Return .
22.
(a) If, after the date hereof, the adoption of any
applicable Law or any change in any applicable Law or any change
in the interpretation or administration thereof by any Tribunal
or compliance by any Lender Party (or its Applicable Lending
Office) with any request or directive (whether or not having the
force of Law) of any such Tribunal:
(i) shall subject such Lender Party (or its Applicable
Lending Office) to any tax, duty, or other charge with respect to
any Eurodollar Loans, its Note, its obligation to make Eurodollar
Loans or change the basis of taxation of any amounts payable to
such Lender Party (or its Applicable Lending Office) under this
Agreement or its Note in respect of any Eurodollar Loans (other
than taxes imposed on the overall net income of such Lender Party
by the jurisdiction in which such Lender Party has its principal
office or such Applicable Lending Office);
(i) shall impose, modify, or deem applicable any reserve,
special deposit, assessment, or similar requirement (other than
the Reserve Requirement utilized in the determination of the U.S.
Adjusted Eurodollar Rate and Canadian Adjusted Eurodollar Rate,
respectively) relating to any extensions of credit or other
assets of, or any deposits with or other liabilities or
commitments of, such Lender Party (or its Applicable Lending
Office), including the Commitment of such Lender Party hereunder;
or
(i) shall impose on such Lender Party (or its Applicable
Lending Office) or the London interbank market any other
condition affecting this Agreement or its Notes or any such
extensions of credit or liabilities or commitments;
and the result of any of the foregoing is to increase the cost to
such Lender Party (or its Applicable Lending Office) of making,
converting into, continuing, or maintaining any Eurodollar Loans
or to reduce any sum received or receivable by such Lender Party
(or its Applicable Lending Office) under this Agreement or its
Notes with respect to any Eurodollar Loans, then Borrower shall
pay to such Lender Party on demand such amount or amounts as will
compensate such Lender Party for such increased cost or
reduction. If any Lender Party requests compensation by Borrower
under this Section 3.5(a), Borrower may, by notice to such Lender
Party (with a copy to Administrative Agent), suspend the
obligation of such Lender Party to make or continue Loans of the
Type with respect to which such compensation is requested, or to
convert Loans of any other Type into Loans of such Type, until
the event or condition giving rise to such request ceases to be
in effect; provided that such suspension shall not affect the
right of such Lender Party to receive the compensation so
requested.
(a) If, after the date hereof, LC Issuer or any Lender
Party shall have determined that the adoption of any applicable
Law regarding capital adequacy or any change therein or in the
interpretation or administration thereof by any Tribunal or any
request or directive regarding capital adequacy (whether or not
having the force of Law) of any such Tribunal has or would have
the effect of reducing the rate of return on the capital of such
Lender Party or any corporation controlling such Lender Party as
a consequence of the obligations of LC Issuer or such Lender
Party hereunder to a level below that which such Lender Party or
such corporation could have achieved but for such adoption,
change, request, or directive (taking into consideration its
policies with respect to capital adequacy), then from time to
time upon demand Borrower shall pay to LC Issuer or such Lender
Party such additional amount or amounts as will compensate LC
Issuer or such Lender Party for such reduction, but only to the
extent that such Lender Party has not been compensated therefor
by any increase in the applicable Adjusted Eurodollar Rate.
(b)
(c) LC Issuer and each Lender Party shall promptly notify
Borrower and Administrative Agent of any event of which it has
knowledge, occurring after the date hereof, which will entitle LC
Issuer or such Lender Party to compensation pursuant to this
section and will designate a different Applicable Lending Office
if such designation will avoid the need for, or reduce the amount
of, such compensation and will not, in the judgment of such
Lender Party, be otherwise disadvantageous to it. LC Issuer or
any Lender Party claiming compensation under this section shall
furnish to Borrower and Administrative Agent a statement setting
forth the additional amount or amounts to be paid to it hereunder
which shall be conclusive in the absence of manifest error. In
determining such amount, LC Issuer or such Lender Party shall act
in good faith and may use any reasonable averaging and
attribution methods.
(d)
2. Section 3.Limitation on Types of Loans . If on or
prior to the first day of any Interest Period for a Eurodollar
Loan:
3.
(a) Administrative Agent determines (which determination
shall be conclusive) that by reason of circumstances affecting
the relevant market, adequate and reasonable means do not exist
for ascertaining the applicable Eurodollar Rate for such
Eurodollar Loan for such Interest Period; or
(b)
(c) the Majority Lenders determine (which determination
shall be conclusive) and notify Administrative Agent that the
Adjusted Eurodollar Rate will not adequately and fairly reflect
the cost to the Lenders of funding such Eurodollar Loans or for
such Interest Period;
(d)
(e) then Administrative Agent shall give Borrower prompt notice
thereof specifying the relevant amounts or periods, and so long
as such condition remains in effect, the Lender Parties shall be
under no obligation to make additional Eurodollar Loans, continue
such Type of Eurodollar Loans or convert Base Rate Loans into
such Type of Eurodollar Loans, and Borrower shall, on the last
day(s) of the then current Interest Period(s) for the outstanding
Eurodollar Loans of the effected Type, either prepay such Loans
or convert such Loans into Base Rate Loans in accordance with the
terms of this Agreement.
(f)
4. Section 3.Illegality . Notwithstanding any other
provision of this Agreement, in the event that it becomes
unlawful for any Lender Party or its Applicable Lending Office to
make, maintain, or fund Eurodollar Loans hereunder, then such
Lender Party shall promptly notify Borrower thereof and such
Lender Party's obligation to make or continue Eurodollar Loans
and to convert Base Rate Loans into Eurodollar Loans shall be
suspended until such time as such Lender Party may again make,
maintain, and fund Eurodollar Loans (in which case the provisions
of Section 1.5 shall be applicable).
5.
6. Section 3.Treatment of Affected Loans . If the
obligation of any Lender Party to make a particular Type of Loan
or to continue, or to convert Loans of any other Type into, Loans
of a particular Type shall be suspended pursuant to Section 3.5,
3.6 or 3.7 (Loans of such Type being herein called "Affected
Loans" and such Type being herein called the "Affected Type"),
such Lender Party's Affected Loans shall be automatically
converted into Base Rate Loans on the last day(s) of the then
current Interest Period(s) for Affected Loans (or, in the case of
a Conversion required by Section 3.7 hereof, on such earlier date
as such Lender Party may specify to Borrower with a copy to
Administrative Agent) and, unless and until such Lender Party
gives notice as provided below that the circumstances specified
in Section 3.5, 3.6 or 3.7 that gave rise to such Conversion no
longer exist:
7.
(a) to the extent that such Lender Party's Affected Loans
have been so converted, all payments and prepayments of principal
that would otherwise be applied to such Lender Party's Affected
Loans shall be applied instead to its Base Rate Loans; and
(b)
(c) all Loans that would otherwise be made or continued by
such Lender Party as Loans of the Affected Type shall be made or
continued instead as Base Rate Loans, and all Loans of such
Lender Party that would otherwise be converted into Loans of the
Affected Type shall be converted instead into (or shall remain
as) Base Rate Loans.
(d)
(e) If such Lender Party gives notice to Borrower (with a copy
to Administrative Agent) that the circumstances specified in
Section 3.5, 3.6 or 3.7 that gave rise to the Conversion of such
Lender Party's Affected Loans pursuant to this Section 3.8 no
longer exist (which such Lender Party agrees to do promptly upon
such circumstances ceasing to exist) at a time when Loans of the
Affected Type made by other Lender Parties are outstanding, such
Lender Party's Base Rate Loans shall be automatically converted,
on the first day(s) of the next succeeding Interest Period(s) for
such outstanding Loans of the Affected Type, to the extent
necessary so that, after giving effect thereto, all Loans held by
the Lender Parties holding Loans of the Affected Type and by such
Lender Party are held pro rata (as to principal amounts, Types,
and Interest Periods) in accordance with their Percentage Shares
of the Facility Amount.
(f)
8. Section 3.Compensation . Upon the request of any
Lender Party, Borrower shall pay to such Lender Party such amount
or amounts as shall be sufficient (in the reasonable opinion of
such Lender Party) to compensate it for any loss, cost, or
expense (including loss of anticipated profits) incurred by it as
a result of:
9.
(a) any payment, prepayment, assignment pursuant to Section
3.4 or Conversion of a Eurodollar Loan for any reason (including,
without limitation, the acceleration of the Loans pursuant to
Section 8.2 on a date other than the last day of the Interest
Period for such Loan); or
(b)
(c) any failure by Borrower for any reason (including,
without limitation, the failure of any condition precedent
specified in Article IV to be satisfied) to borrow, convert,
continue, or prepay a Eurodollar Loan on the date for such
borrowing, Conversion, Continuation, or prepayment specified in
the relevant notice of borrowing, prepayment, Continuation, or
Conversion under this Agreement.
(d)
10. Section 3.Taxes .
11.
(i) Any and all payments by Borrower to or for the account
of any Lender Party, Administrative Agent or LC Issuer hereunder
or under any other Loan Document shall be made free and clear of
and without deduction for any and all present or future taxes,
duties, levies, imposts, deductions, charges or withholdings, and
all liabilities with respect thereto, including any withholding
or other Canadian taxes imposed on any Lender Party in connection
with Canadian Eurodollar Loans; excluding, in the case of each
Lender Party, taxes imposed on its income, and franchise taxes
imposed on it, by the jurisdiction under the Laws of which such
Lender Party (or its Applicable Lending Office) is organized or
any political subdivision thereof (all such non-excluded taxes,
duties, levies, imposts, deductions, charges, withholdings, and
liabilities being hereinafter referred to as "Taxes"). If
Borrower shall be required by Law to deduct any Taxes from or in
respect of any sum payable under this Agreement or any other Loan
Document to any Lender Party, the sum payable shall be increased
as necessary so that after making all required deductions
(including deductions applicable to additional sums payable under
this section) such Lender Party receives an amount equal to the
sum it would have received had no such deductions been made,
Borrower shall make such deductions, and Borrower shall pay the
full amount deducted to the relevant taxation authority or other
authority in accordance with applicable Law.
(ii)
(b) In addition, Borrower agrees to pay any and all present
or future stamp or documentary taxes and any other excise or
property taxes or charges or similar levies which arise from any
payment made under this Agreement or any other Loan Document or
from the execution or delivery of, or otherwise with respect to,
this Agreement or any other Loan Document (hereinafter referred
to as "Other Taxes").
(c)
(d) Borrower agrees to indemnify each Lender Party for the
full amount of Taxes and Other Taxes (including any Taxes or
Other Taxes imposed or asserted by any jurisdiction on amounts
payable under this section) paid by such Lender Party and any
liability (including penalties, interest, and expenses) arising
therefrom or with respect thereto.
(e)
(i) Each Lender Party organized under the Laws of a
jurisdiction outside the United States, on or prior to the date
of its execution and delivery of this Agreement in the case of
each Lender Party listed on the signature pages hereof and on or
prior to the date on which it becomes a Lender Party in the case
of each other Lender Party, and from time to time thereafter if
requested in writing by Borrower or Administrative Agent (but
only so long as such Lender Party remains lawfully able to do
so), shall provide Borrower and Administrative Agent with a
properly executed Internal Revenue Service Form 1001 or 4224, as
appropriate, or any successor form prescribed by the Internal
Revenue Service, certifying that such Lender Party is entitled to
benefits under an income tax treaty to which the United States is
a party which reduces the rate of withholding tax on payments of
interest or certifying that the income receivable pursuant to
this Agreement is effectively connected with the conduct of a
trade or business in the United States, Internal Revenue Service
Form W-8 or W-9, as appropriate, or any successor form prescribed
by the Internal Revenue Service, and any other form or
certificate required by any taxing authority (including any
certificate required by Sections 871(h) and 881(c) of the
Internal Revenue Code), certifying that such Lender Party is
entitled to an exemption from or a reduced rate of tax on
payments pursuant to this Agreement or any of the other Loan
Documents.
(ii)
(f) For any period with respect to which a Lender Party has
failed to provide Borrower and Administrative Agent with the
appropriate form pursuant to Section 3.9(d) (unless such failure
is due to a change in Law occurring subsequent to the date on
which a form originally was required to be provided), such Lender
Party shall not be entitled to indemnification under Section
3.9(a) or 3.9(b) with respect to Taxes imposed by the United
States; provided, however, that should a Lender Party, which is
otherwise exempt from or subject to a reduced rate of withholding
tax, become subject to Taxes because of its failure to deliver a
form required hereunder, Borrower shall take such steps as such
Lender Party shall reasonably request to assist such Lender Party
to recover such Taxes.
(g)
(h) If Borrower is required to pay additional amounts to or
for the account of any Lender Party pursuant to this section,
then such Lender Party will agree to use reasonable efforts to
change the jurisdiction of its Applicable Lending Office so as to
eliminate or reduce any such additional payment which may
thereafter accrue if such change, in the judgment of such Lender
Party, is not otherwise disadvantageous to such Lender Party and
in the event Lender Party is reimbursed for an amount paid by
Borrower pursuant to this Section 3.10, it shall promptly return
such amount to Borrower.
(i)
(j) Within thirty (30) days after the date of any payment
of Taxes, Borrower shall furnish to Administrative Agent the
original or a certified copy of a receipt evidencing such
payment.
(k)
(l) Without prejudice to the survival of any other
agreement of Borrower hereunder, the agreements and obligations
of Borrower contained in this section shall survive the
termination of the Commitment Period and the payment in full of
the Notes.
(m)
Remainder of Page Intentionally Left Blank.
ARTICLE IV - Conditions Precedent to Lending
1. Section 4.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,
duly executed and delivered and in form, substance and date
satisfactory to Administrative Agent and its counsel:
2.
(a) this Agreement and any other documents that Lenders are
to execute in connection herewith;
(b)
(c) each Note;
(d)
(e) each Security Document listed in the Security Schedule;
(f)
(g) certain certificates of Borrower including:
(h)
(1) an "Omnibus Certificate" of the Secretary or Assistant
Secretary and of the President or Chief Financial Officer of
Borrower, which shall contain the names and signatures of the
officers of Borrower authorized to execute Loan Documents and
which shall certify to the truth, correctness and completeness of
the following exhibits attached thereto: a copy of resolutions
duly adopted by the Board of Directors of Borrower and in full
force and effect at the time this Agreement is entered into,
authorizing the execution of this Agreement and the other Loan
Documents delivered or to be delivered in connection herewith and
the consummation of the transactions contemplated herein and
therein; a copy of the charter documents of Borrower and all
amendments thereto, certified by the appropriate official of
Borrower's state of organization; and a copy of any bylaws of
Borrower; and
(i) a "Compliance Certificate" of the President or of the
Chief Financial Officer of Borrower, of even date with such Loan
or such Letter of Credit, in which such officer certifies to the
satisfaction of the conditions set out in Sections 4.3(a), (b),
(c) and (d); and
(iii) a "Y2K Compliance Certificate" of the Chief
Financial Officer of Borrower, of even date herewith, in
which such officer certifies that (a) Borrower and its
Subsidiaries are taking all necessary and appropriate steps
to ascertain the extent of, and to quantify and successfully
address, business and financial risks facing Borrower and
its Subsidiaries as a result of what is commonly referred to
as the "Year 2000 problem" (i.e., the inability of certain
computer applications to recognize correctly and perform
date-sensitive functions involving certain dates prior to
and after December 31, 1999), including risks resulting from
the failure of key vendors and customers of Borrower and its
Subsidiaries to successfully address the Year 2000 problem,
and (b) Borrower's and its Subsidiaries' material computer
applications will, on a timely basis, adequately address the
Year 2000 problem in all material respects.
(a) certificate (or certificates) of the due formation,
valid existence and good standing of Borrower in its state of
organization, issued by the appropriate authorities of such
jurisdiction;
(b)
(c) 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;
(d)
(e) the favorable legal opinions of Porter & Hedges,
L.L.P. and E. Chris Kaitson, General Counsel of Borrower,
substantially in the forms set forth in Exhibit E;
(f)
(g) the Initial Financial Statements;
(h)
(i) certificates or binders evidencing Restricted Persons'
insurance in effect on the date hereof;
(j)
(k) a certificate of the Secretary or Assistant Secretary
of Borrower stating that attached thereto is a true, correct
complete copy of a fully executed counterpart of the Acquisition
Agreement, all schedules and exhibits thereto and all other
documents, instruments and certifications executed and delivered
in connection therewith;
(l)
(m) 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;
(n)
(o) evidence that Borrower has obtained approvals required
pursuant to the Hart-Scott-Rodino Antitrust Improvement Act of
1976, as amended;
(p)
(i) documents confirming the refinancing of all
Indebtedness under the Prior Credit Documents, assigning all
promissory notes evidencing Indebtedness under the Prior Credit
Documents and assigning Liens on any Restricted Person's property
securing Indebtedness under the Prior Credit Documents to
Administrative Agent for the benefit of Lender Parties and
delivery to Administrative Agent of the originals of such
promissory notes, endorsed to Administrative Agent, for the
benefit of Lenders, amending and restating the credit facility
under the Prior Credit Documents, and (iv) confirming the
refinancing of all Indebtedness under the KPC Notes and (A)
pledging the partnership interests in each of KPC, Mid-Kansas,
MarGasCo and Riverside, and (B) assigning the KPC Notes and all
Liens on any property of KPC, Mid-Kansas, MarGasCo and Riverside
securing such Indebtedness to Administrative Agent for the
benefit of Lenders.
(ii)
(q) Section 4.Closing of Acquisition . No Lender has any
obligation to make its first Loan, and LC Issuer has no
obligation to issue the first Letter of Credit, unless
contemporaneously with the first Loan or Letter of Credit
hereunder, Borrower shall have consummated the transactions
contemplated under the Acquisition Agreement, in all matters
satisfactorily to Administrative Agent. Borrower, for itself and
on behalf of each Restricted Person, hereby acknowledges and
agrees that the consummation of the transactions contemplated
under this Agreement and the Acquisition Agreement, including the
making of the Loans, are intended to be simultaneous for all
intents and purposes, and each Restricted Person shall be deemed
to have executed and delivered each Loan Document as set forth in
Section 4.1, including each Security Document, immediately prior
to or simultaneously with the making of the Loans hereunder.
(r)
2. Section 4.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) or to increase the amount of, extend the maturity of,
or make any material modification to, any Letter of Credit,
unless the following conditions precedent have been satisfied:
3.
(a) all representations and warranties made by any
Restricted Person in any Loan Document shall be true on and as of
the date of such Loan or the date of issuance of such Letter of
Credit (except to the extent that the facts upon which such
representations are based have been changed by the extension of
credit hereunder) as if such representations and warranties had
been made as of the date of such Loan or the date of issuance of
such Letter of Credit;
(b)
(c) no Default shall exist at the date of such Loan or the
date of issuance of such Letter of Credit;
(d)
(e) no Material Adverse Change shall have occurred since
June 30, 1999;
(f)
(g) 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;
(h)
(i) the making of such Loan or the issuance, increase,
extension, or material modification 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; and
(j)
(i) 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 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, the satisfaction of all
conditions contained herein or therein, and all other matters
pertaining hereto and thereto. All such additional documents and
instruments shall be satisfactory to Administrative Agent and its
counsel in form, substance and date.
(ii)
4. Section 4.Funding Into Escrow . Prior to satisfying
all the conditions precedent specified in this Article IV,
Borrower has requested Lenders to fund into the escrow created
pursuant to the Escrow Agreement an amount sufficient to fund
Borrower's purchase obligations under the Acquisition Agreement.
Subject to the following conditions, Lenders will fund the amount
requested by Borrower through the Administrative Agent into the
escrow account created pursuant to the Escrow Agreement:
5.
6. (a) Borrower will submit a Borrowing Notice for the
amount to be funded into escrow and such funding will for all
purposes be deemed and treated as a Loan under this Agreement and
Borrower will be liable for and will pay interest, fees, costs,
expenses and indemnities just as if such funding were a Loan for
purposes of this Agreement and as if this Agreement had closed in
the ordinary commercial meaning of such term. Such funding by
each Lender will be evidenced by such Lender's respective Note
and prior to such funding Borrower will sign all of the Loan
Documents to which it or any Restricted Person is a party. Such
funding will be deemed and treated as a Base Rate Loan and while
the escrow is in existence, Borrower may not exercise any
conversion rights under this Agreement.
7.
8. (b) Amounts funded into escrow pursuant to the Escrow
Agreement will be disbursed only as specified in the Escrow
Agreement and the Escrow Agreement will not be amended, modified
or altered in any way without the written consent of
Administrative Agent and each Lender.
9.
10. (c) Pursuant to the terms of the Escrow Agreement,
amounts held in the escrow created pursuant to the Escrow
Agreement may not be disbursed to any Person other than the
Administrative Agent for the benefit of the Lenders (in the
amount funded by each of them) unless all of the conditions
precedent set forth in this Article IV are satisfied (or the
Administrative Agent and all of the Lenders have agreed to waive
any such conditions precedent).
11.
12.
Remainder of Page Intentionally Left Blank.
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, Borrower represents and
warrants to each Lender that:
1. Section 5.No Default . No event has occurred and is
continuing which constitutes a Default.
2.
3. Section 5.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 do so
could 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
desirable, except where the failure to do so could not cause a
Material Adverse Change.
4.
5. Section 5.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.
6.
(a) Section 5.No Conflicts or Consents . The execution and
delivery by the various Restricted Persons of the Loan Documents
to which each is a party, the performance by each of its
obligations under such Loan Documents, and the consummation of
the transactions contemplated by the various Loan Documents, do
not and will not conflict with any provision of any Law, the
organizational documents of any Restricted Person, or any
agreement, judgment, license, order or permit applicable to or
binding upon any Restricted Person, result in the acceleration
of any Indebtedness owed by any Restricted Person, or result in
or require the creation of any Lien upon any assets or properties
of any Restricted Person except as expressly contemplated or
permitted in the Loan Documents. Except as expressly
contemplated in the Loan Documents and Acquisition Agreement, no
consent, approval, authorization or order of, and no notice to or
filing with, any Tribunal or third party is required in
connection with the execution, delivery or performance by any
Restricted Person of any Loan Document or the Acquisition
Agreement or to consummate any transactions contemplated by the
Loan Documents or the Acquisition Agreement.
(b)
7. Section 5.Enforceable Obligations . This Agreement is,
and the other Loan Documents when duly executed and delivered
will be, legal, valid and binding obligations of each Restricted
Person which is a party hereto or thereto, enforceable in
accordance with their terms except as such enforcement may be
limited by bankruptcy, insolvency or similar Laws of general
application relating to the enforcement of creditors' rights.
8.
9. Section 5.Initial Financial Statements . Borrower has
heretofore delivered to each Lender true, correct and complete
copies of the Initial Financial Statements. The Initial
Financial Statements fairly present Borrower's Consolidated
financial position at the respective dates thereof and the
Consolidated results of Borrower's operations and Borrower's
Consolidated cash flows for the respective periods thereof.
Since the date of the annual Initial Financial Statements no
Material Adverse Change has occurred, except as reflected in the
quarterly Initial Financial Statements or in Section 5.6 of the
Disclosure Schedule. All Initial Financial Statements were
prepared in accordance with GAAP.
10.
11. Section 5.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 Borrower or material with respect to Borrower's
Consolidated financial condition and not shown in the Initial
Financial Statements or disclosed in Section 5.7 of the
Disclosure Schedule or a Disclosure Report. Except as shown in
the Initial Financial Statements or disclosed in Section 5.7 of
the Disclosure Schedule or a Disclosure Report, 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.
12.
13. Section 5.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 known to any
Restricted Person (other than industry-wide risks normally
associated with the types of businesses conducted by Restricted
Persons) necessary to make the statements contained herein or
therein not misleading as of the date made or deemed made. There
is no fact known to any Restricted Person that has not been
disclosed to each Lender in writing which could cause a Material
Adverse Change.
14.
(a) Section 5.Litigation . Except as disclosed in the
Initial Financial Statements or in Section 5.9 of the Disclosure
Schedule 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 before any Tribunal which could cause a
Material Adverse Change, and 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 which could cause a
Material Adverse Change.
(b)
15. Section 5.Labor Disputes and Acts of God . Except as
disclosed in Section 5.10 of the Disclosure Schedule or a
Disclosure Report, 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.
16.
(a) Section 5.ERISA Plans and Liabilities . All currently
existing ERISA Plans are listed in Section 5.11 of the Disclosure
Schedule or a Disclosure Report. Except as disclosed in the
Initial Financial Statements or in Section 5.11 of the Disclosure
Schedule or a Disclosure Report, no Termination Event has
occurred with respect to any ERISA Plan and all ERISA Affiliates
are in compliance 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
Section 5.11 of the Disclosure Schedule or a Disclosure Report
no "accumulated funding deficiency" (as defined in Section
412(a) of the Internal Revenue Code) exists with respect to any
ERISA Plan, whether or not waived by the Secretary of the
Treasury or his delegate, and 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.
(b)
(c) Section 5.Environmental and Other Laws . Except as
disclosed in Section 5.12 of the Disclosure Schedule or a
Disclosure Report: Restricted Persons are conducting their
businesses in material compliance with all applicable Laws,
including Environmental Laws, and have and are in compliance with
all material licenses and permits required under any such Laws;
none of the operations or properties of any Restricted Person is
the subject of federal, state or local investigation evaluating
whether any material remedial action is needed to respond to a
release of any Hazardous Materials into the environment or to the
improper storage or disposal (including storage or disposal at
offsite locations) of any Hazardous Materials; no Restricted
Person (and to the best knowledge of Borrower, no other Person)
has filed any notice under any Law indicating that any Restricted
Person is responsible for the improper release into the
environment, or the improper storage or disposal, of any material
amount of any Hazardous Materials or that any Hazardous Materials
have been improperly released, or are improperly stored or
disposed of, upon any property of any Restricted Person; 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 the Comprehensive
Environmental Response, Compensation and Liability Act of 1980,
as amended, listed for possible inclusion on such National
Priorities List by the Environmental Protection Agency in its
Comprehensive Environmental Response, Compensation and Liability
Information System List, or listed on any similar state list or
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 (whether under
Environmental Laws or otherwise); and no Restricted Person
otherwise has any known material contingent liability under any
Environmental Laws or in connection with the release into the
environment, or the storage or disposal, of any Hazardous
Materials.
(i)
17. Section 5.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 Section 5.13 of the Disclosure Schedule. Except as otherwise
indicated in Section 5.13 of the Disclosure Schedule or a
Disclosure Report, the chief executive office and principal place
of business of each Restricted Person are (and for the preceding
five years have been) located at the address of Borrower set out
on the signature pages hereto. Except as indicated in Section
5.13 of the Disclosure Schedule or a Disclosure Report, no
Restricted Person has any other office or place of business.
18.
19. Section 5.Borrower's Subsidiaries . Borrower does not
presently have any Subsidiary or own any stock in any other
corporation or association except those listed in Section 5.14 of
the Disclosure Schedule or a Disclosure Report. 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 Section
5.14 of the Disclosure Schedule or a Disclosure Report. Except
as otherwise revealed in a Disclosure Report, Borrower owns,
directly or indirectly, the equity interest in each of its
Subsidiaries which is indicated in Section 5.14 of the Disclosure
Schedule.
20.
21. Section 5.Title to Properties; Licenses . Each
Restricted Person has good and defensible title to all of the
Collateral and to all of its material properties and assets, free
and clear of all Liens, encumbrances, or adverse claims other
than Permitted Liens and of all impediments to the use of the
Collateral and such properties and assets in such Restricted
Person's business. Each Restricted Person possesses all
licenses, permits, franchises, easements, rights of way, patents,
copyrights, trademarks and trade names, and real, personal and
intellectual property rights (or otherwise possesses the right to
use such real, personal and intellectual property rights 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 real, personal and intellectual property rights or
the right to use any intellectual property.
22.
23. Section 5.Government Regulation . Neither Borrower nor
any other Restricted Person owing Obligations is subject to
regulation under the Public Utility Holding Company Act of 1935,
the Federal Power Act, the Investment Company Act of 1940 (as any
of the preceding acts have been amended) or any other Law which
regulates the incurring by such Person of Indebtedness, including
Laws relating to common contract carriers or the sale of
electricity, gas, steam, water or other public utility services,
except as disclosed in Section 5.16 of the Disclosure Schedule.
24.
25. Section 5.Insider . No Restricted Person, nor any
Person having "control" (as that term is defined in 12 U.S.C.
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.
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.
26.
27. Section 5.Solvency . Upon giving effect to the
issuance of the Notes, the execution of the Loan Documents by
Borrower and the consummation of the transactions contemplated
hereby, Borrower will be solvent (as such term is used in
applicable bankruptcy, liquidation, receivership, insolvency or
similar Laws).
28.
29. Section 5.Refunds . Except as disclosed in Section
5.19 of the Disclosure Schedule, no orders of, proceedings
pending before, or other requirements of, the Federal Energy
Regulatory Commission, the Texas Railroad Commission, or any
other Tribunal exist which could result in any Restricted Person
being required to refund any material portion of the proceeds
received or to be received from the sale of hydrocarbons by any
such Restricted Person in any instance where such refund would
result in a Material Adverse Change.
30.
31. Section 5.Acquisition Agreement . The transactions
contemplated by the Acquisition Agreement have closed or will
close into escrow simultaneously with the funding of the initial
Loans hereunder and neither Borrower nor K-Pipe has waived nor
shall waive, or in any way amend, without the prior written
consent of the Lenders, the terms of the Acquisition Agreement,
including any condition to the obligations to close as so set
forth therein. A true and complete copy of the Acquisition
Agreement (including all exhibits, schedules and amendments
thereto) has been delivered to Administrative Agent pursuant to
Section 4.1(j), and a true and complete copy of each document
delivered at the closing of the Acquisition Agreement will be
delivered to Lenders on the closing date. K-Pipe is not in
default under the Acquisition Agreement or under any instrument
or document to be delivered in connection with the Acquisition
Agreement. The representations and warranties made in the
Acquisition Agreement by K-Pipe will be true and correct in all
material respects (except for changes expressly provided for
therein or herein) on and as of the closing date as though made
on and as of such date.
32.
33. Section 5.Year 2000 Compliance . Borrower and its
Subsidiaries are Year 2000 Compliant.
34.
35. Section 5.Nature of Contracts . Restricted Persons
have not entered into contracts, agreements or any other
understandings which are now or at the time entered into were
for speculative purposes.
36.
37.
Remainder of Page Intentionally Left Blank.
ARTICLE VI - Affirmative Covenants of Borrower
To conform with the terms and conditions under which each
Lender is willing to have credit outstanding to Borrower, and to
induce each Lender Party to enter into this Agreement and make
the Loans, Borrower warrants, covenants and agrees that until the
full and final payment of the Obligations and the termination of
this Agreement, unless Majority Lenders have previously agreed
otherwise:
1. Section 6.Payment and Performance . Borrower will pay
all amounts due under the Loan Documents in accordance with the
terms thereof and will observe, perform and comply with every
covenant, term and condition expressed or implied in the Loan
Documents. Borrower will cause each other Restricted Person to
observe, perform and comply with every such term, covenant and
condition in any Loan Document.
2.
3. Section 6.Books, Financial Statements and Reports .
Each Restricted Person will at all times maintain full and
accurate books of account and records. Borrower will maintain
and will cause its Subsidiaries to maintain a standard system of
accounting, will maintain its Fiscal Year, and will furnish the
following statements and reports to each Lender Party at
Borrower's expense:
4.
(a) As soon as available, and in any event within one
hundred twenty (120) days after the end of each Fiscal Year,
complete Consolidated financial statements of Borrower together
with all notes thereto, prepared in reasonable detail in
accordance with GAAP, together with an unqualified opinion, based
on an audit using generally accepted auditing standards, by
PricewaterhouseCoopers, L.L.P., or other independent certified
public accountants selected by Borrower and acceptable to
Majority Lenders, stating that such Consolidated financial
statements have been so prepared. These financial statements
shall contain a Consolidated balance sheet as of the end of such
Fiscal Year and Consolidated statements of earnings, of cash
flows, and of changes in owners' equity for such Fiscal Year,
each setting forth in comparative form the corresponding figures
for the preceding Fiscal Year.
(b)
(c) As soon as available, and in any event within sixty
(60) days after the end of each Fiscal Quarter, Borrower's
Consolidated balance sheet as of the end of such Fiscal Quarter
and Consolidated statements of Borrower's earnings and cash flows
for the period from the beginning of the then current Fiscal Year
to the end of such Fiscal Quarter, all in reasonable detail and
prepared in accordance with GAAP, subject to changes resulting
from normal year-end adjustments.
(d)
(e) (c) In addition Borrower will, within sixty (60) days
after the end of each Fiscal Quarter in each Fiscal Year and
within one hundred twenty days after the end of each Fiscal Year,
furnish a certificate in the form of Exhibit D signed by the
chief financial officer of Borrower stating that the financial
statements as of the end of such Fiscal Quarter or Fiscal Year,
as the case may be, are accurate and complete (subject, in the
case of interim financial statements, 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 or Fiscal Year, as the case may
be, with the requirements of Sections 7.12, 7.13, 7.14 and 7.15
and stating that no Default exists at the end of such Fiscal
Quarter or Fiscal Year, as the case may be, or at the time of
such certificate or specifying the nature and period of existence
of any such Default.
(f)
(g) (d) Within five (5) Business Days of their becoming
available, copies of all financial statements, reports, notices
and proxy statements sent by any Restricted Person to its
stockholders and all registration statements, periodic reports
and other statements and schedules filed by any Restricted Person
with any securities exchange, the Securities and Exchange
Commission or any similar governmental authority.
(h)
(i) (e) Borrower will, within sixty (60) days after the
end of each Fiscal Year, furnish a certificate in the form of
Exhibit H signed by the chief financial officer of Borrower.
(j)
(k) (f) Within thirty (30) days from the date hereof,
certificates of Borrower's and each Guarantor's good standing
and due qualification to do business, issued by appropriate
officials in any states in which Borrower or such Guarantor owns
property subject to Security Documents
(l)
5. Section 6.Other Information and Inspections . Each
Restricted Person will furnish to each Lender any information
which Administrative Agent may from time to time reasonably
request concerning any covenant, provision, representation or
condition of the Loan Documents or any matter in connection with
Restricted Persons' businesses, properties, financial condition
and operations and statements and schedules identifying and
describing the Collateral and all other reports and information
requested in connection with the Collateral, all in reasonable
detail. Each Restricted Person will permit representatives
appointed by Administrative Agent (and after the occurrence and
during the continuance of an Event of Default, representatives
appointed by any Lender) (including independent accountants,
auditors, agents, attorneys, appraisers and any other Persons)
upon reasonable notice 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 (and after the occurrence and during the
continuance of an Event of Default, any Lender 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, the Acquisition Agreement and
the KPC Notes and to discuss all such matters with its officers,
employees and representatives. Each Restricted Person will keep
adequate records concerning the Collateral.
6.
7. Section 6.Notice of Material Events and Change of
Address . Borrower will promptly notify Administrative Agent and
each Lender Party in writing, stating that such notice is being
given pursuant to this Agreement, of:
8.
(a) the occurrence of any Material Adverse Change;
(b)
(c) the occurrence of any Default;
(d)
(e) 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;
(f) the occurrence of any Termination Event;
(g)
(h) any claim of $3,000,000 or more, any notice of
potential liability under any Environmental Laws which might
exceed such amount, or any other material adverse claim asserted
against any Restricted Person or with respect to any Restricted
Person's properties; and
(i)
(j) any suit or proceeding involving any Restricted Person
as a defendant or in which any property of any Restricted Person
is subject to a claim and in which the amount involved is
$3,000,000 or more and which is not covered by insurance or in
which injunctive or similar relief is sought.
(k)
(l) 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. Borrower will
also notify Administrative Agent and Administrative Agent's
counsel in writing at least twenty (20) 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.
(m)
9. Section 6.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 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.
10.
11. Section 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.
12.
(a) Section 6.Payment of Trade Liabilities, Taxes, etc.
Each Restricted Person will timely file all required tax
returns, timely pay all taxes, assessments, and other
governmental charges or levies imposed upon it or upon its
income, profits or property, timely 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, pay and discharge when due all other
Liabilities now or hereafter owed by it, and 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 and has set aside on its books adequate reserves
therefor.
(b)
13. Section 6.Insurance .
14.
(a) Each Restricted Person shall at all times maintain (at
its own expense) insurance for its property in accordance with
the Insurance Schedule and insurance with respect to all
Collateral which constitutes goods in such amounts, against such
risks, in such form and with such financially sound and reputable
insurers as shall be satisfactory to Administrative Agent from
time to time. Upon demand by Administrative Agent any insurance
policies covering Collateral shall be endorsed (i) to provide for
payment of losses to Administrative Agent, for the benefit of the
Lenders, as its interests may appear, (ii) to provide that such
policies may not be canceled or reduced or affected in any
material manner for any reason without fifteen (15) days' prior
notice to Administrative Agent, (iii) to provide for any other
matters specified in any applicable Security Document or which
Administrative Agent may reasonably require, and (iv) to provide
for insurance against fire, casualty and any other hazards
normally insured against, in the amount of the full value (less a
reasonable deductible not to exceed amounts customary in the
industry for similarly situated businesses and properties) of the
property insured. 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 the amounts set out on
the Insurance Schedule.
(b)
(c) (b) Each policy for liability insurance shall provide
for all losses to be paid on behalf of Administrative Agent (for
the benefit of Lender Parties) and Restricted Persons as their
respective interests may appear, and each policy for property
damage insurance shall provide for all losses to be paid directly
to Administrative Agent. Each such policy shall in addition (i)
name the appropriate Restricted Person and Administrative Agent
as insured parties thereunder (without any representation or
warranty by or obligation upon Administrative Agent) as their
interests may appear, (ii) contain the agreement by the insurer
that any loss thereunder shall be payable to Administrative Agent
notwithstanding any action, inaction or breach of representation
or warranty by such Restricted Person, (iii) provide that there
shall be no recourse against Administrative Agent or Lenders for
payment of premiums or other amounts with respect thereto, and
(iv) provide that at least thirty (30) days' prior written notice
of cancellation or of lapse shall be given to Administrative
Agent by the insurer. Each Restricted Person will, if so
requested by Administrative Agent, deliver to Administrative
Agent original or duplicate policies of such insurance and, as
often as Administrative Agent may reasonably request, a report of
a reputable insurance broker with respect to such insurance.
Each Restricted Person will also, at the request of
Administrative Agent, duly execute and deliver instruments of
assignment of such insurance policies and cause the respective
insurers to acknowledge notice of such assignment.
(d)
(e) (c) Reimbursement under any liability insurance
maintained by Restricted Persons pursuant to this Section 6.8 may
be paid directly to the Person who has incurred the liability
covered by such insurance. With respect to any loss involving
damage to Collateral which constitutes goods as to which
subsection (d) of this Section 6.8 is not applicable, each
Restricted Person will make or cause to be made the necessary
repairs to or replacements of such Collateral, and any proceeds
of insurance maintained by each Restricted Person pursuant to
this Section 6.8 shall be paid to such Restricted Person by
Administrative Agent as reimbursement for the costs of such
repairs or replacements as such repairs or replacements are made
or acquired.
(f)
(g) (d) Upon the occurrence and during the continuance of
an Event of Default or upon the occurrence of a loss in excess of
$3,000,000 of any Collateral which constitutes goods during any
twelve month period, all insurance payments in respect of such
loss or destruction of Collateral shall be paid to Administrative
Agent and applied against the Obligations.
(h)
15. Section 6.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.
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.
16.
17. Section 6.Interest . Borrower hereby promises to each
Lender Party to pay interest at the Default Rate on all
Obligations (including Obligations to pay fees or to reimburse or
indemnify any Lender Party) which Borrower has in this Agreement
promised to pay to such Lender Party and which are not paid when
due. Such interest shall accrue from the date such Obligations
become due until they are paid.
18.
19. Section 6.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, franchise, agreement,
contract or other instrument or obligation to which it is a party
or by which it or any of its properties is bound. Each
Restricted Person will conduct its business and affairs in
compliance with all Laws applicable thereto.
20.
21. Section 6.Environmental Matters; Environmental Reviews
.
22.
(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)
(c) Borrower 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 of which Borrower has
notice, pending or threatened against any Restricted Person, by
any Tribunal with respect to any alleged violation of or non-
compliance with any Environmental Laws or any permits, licenses
or authorizations in connection with such Restricted Person's
ownership or use of its properties or the operation of its
business.
(d)
(e) Borrower will promptly furnish to Administrative Agent
all requests for information, notices of claim, demand letters,
and other notifications, received by any Restricted Person in
connection with such Restricted Person's 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.
(f)
23. Section 6.Evidence of Compliance . Each Restricted
Person will furnish to Administrative Agent and each Lender at
such Restricted Person's or Borrower'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.
24.
25. Section 6.Agreements Regarding Collateral and Security
Documents .
26.
(a) All Liens securing the Prior Credit Documents shall
be assigned to Administrative Agent for the benefit of Lender
Parties. All stock certificates of any Subsidiary pledged to
secure the Prior Credit Documents shall be delivered to
Administrative Agent for the benefit of Lender Parties. Borrower
hereby grants Administrative Agent, for the benefit of Lender
Parties, a security interest in all property and stock
certificates assigned to Administrative Agent as security for the
Obligations.
(b)
(c) The KPC Notes and the Liens on assets of the
partnerships being acquired by Borrower which presently secure
the KPC Notes shall be assigned and delivered to Administrative
Agent for the benefit of Lender Parties.
(d)
(e) The Liens assigned to Administrative Agent shall be
held by Administrative Agent but shall not be filed of record
unless either (i) a Default or Event of Default shall occur or
(ii) Administrative Agent deems it necessary to record such Lien
assignments to maintain the validity and/or priority of such
assigned Liens.
(f)
(g) If a Default or Event of Default exists Borrower
agrees to deliver and to cause each other Restricted Person to
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.
(h)
(i) (e) Borrower will immediately pledge to Administrative
Agent, for the ratable benefit of Lender Parties, as security for
the Obligations, Borrower's direct or indirect equity ownership
interest in, and any loans or advances to, any Person that
becomes a Subsidiary of Borrower (directly or indirectly) or any
Person in whom Borrower, directly or indirectly, while owning an
equity interest, does not own a sufficiently large equity
interest for such Person to be Subsidiary as defined in this
Agreement; provided, however, if Borrower would be subject to any
deemed dividend or similar adverse tax consequence as a result of
a pledge of all of the stock of a Foreign Subsidiary, then
Borrower is obligated to pledge to Administrative Agent as
security for the Obligations only so much of such stock as would
not result in such adverse tax consequence; provided further,
however, that Borrower shall not be obligated to comply with the
terms of this Section 6.14(e) with respect to any such Subsidiary
or other Person unless and until the Dollar Equivalent aggregate
book value or estimated fair market value of the assets of such
Subsidiary or other Person (or Borrower's ownership interest
therein) equals $500,000 or more.
(j)
27. Section 6.Perfection and Protection of Security
Interests and Liens . Borrower will from time to time deliver,
and will cause each other Restricted Person from time to time to
deliver, to 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.
28.
(a) Section 6.Bank Accounts; Offset. To secure the
repayment of the Obligations Borrower hereby grants to each
Lender Party a security interest, a lien, and a right of offset,
each of which shall be in addition to all other interests, liens,
and rights of any Lender Party at common Law, under the Loan
Documents, or otherwise, and each of which shall be upon and
against any and all monies, securities or other property (and
the proceeds therefrom) of Borrower now or hereafter held or
received by or in transit to any Lender Party from or for the
account of Borrower, whether for safekeeping, custody, pledge,
transmission, collection or otherwise, any and all deposits
(general or special, time or demand, provisional or final) of
Borrower with any Lender Party, and any other credits and claims
of Borrower at any time existing against any Lender Party,
including claims under certificates of deposit. At any time and
from time to time after the occurrence of any Default, each
Lender Party is hereby authorized to foreclose upon, or to offset
against the Obligations then due and payable (in either case
without notice to Borrower), any and all items hereinabove
referred to. The remedies of foreclosure and offset are separate
and cumulative, and either may be exercised independently of the
other without regard to procedures or restrictions applicable to
the other.
(b)
29. Section 6.Guaranties of Borrower's Subsidiaries .
30.
31. (a) Each Wholly Owned Domestic Subsidiary of Borrower
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 guarantee of the timely repayment of the
Obligations and the due and punctual performance of the
obligations of Borrower hereunder, which guarantee shall be
satisfactory to Administrative Agent in form and substance;
provided, however, that Borrower shall not be obligated to comply
with the terms of this Section 6.17(a) with respect to any such
Wholly Owned Domestic Subsidiary until the Dollar Equivalent
aggregate book value of the assets or estimated fair market value
of such Wholly Owned Domestic Subsidiary equals $500,000 or more.
Subject to the provisos at the end of the preceding sentence,
each Wholly Owned Domestic Subsidiary of Borrower existing on the
date hereof shall duly execute and deliver such a guaranty prior
to the making of any Loan hereunder. Borrower will cause each of
its Wholly Owned Domestic Subsidiaries required to guarantee the
Obligations to deliver to Administrative Agent, simultaneously
with its delivery of such a guarantee, written evidence
satisfactory to Administrative Agent and its counsel that such
Wholly Owned Domestic Subsidiary has taken all corporate or
partnership action necessary to duly approve and authorize its
execution, delivery and performance of such guarantee and any
other documents which it is required to execute.
32.
33. (b) Each Wholly Owned Foreign Subsidiary 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 guarantee of the timely repayment of the
Obligations and the due and punctual performance of the
obligations of Borrower hereunder, which guarantee shall be
satisfactory to Administrative Agent in form and substance;
provided, however, that Borrower shall not be obligated to comply
with the terms of this Section 6.17(b) with respect to any such
Wholly Owned Foreign Subsidiary until the Dollar Equivalent
aggregate book value of the assets or estimated fair market value
of such Wholly Owned Foreign Subsidiary equals $500,000 or more;
provided further, however, if Borrower would be subject to any
deemed dividend or similar adverse tax consequence as a result of
a guarantee of the Obligations by a Wholly Owned Foreign
Subsidiary, then such Wholly Owned Foreign Subsidiary is
obligated to guarantee only so much of the Obligations as would
not result in such adverse tax consequence. Subject to the
provisos at the end of the preceding sentence, each Wholly Owned
Foreign Subsidiary of Borrower existing on the date hereof shall
duly execute and deliver such a guaranty prior to the making of
any Loan hereunder. Borrower will cause each of its Wholly Owned
Foreign Subsidiaries required to guarantee the Obligations to
deliver to Administrative Agent, simultaneously with its delivery
of such a guarantee, written evidence satisfactory to
Administrative Agent and its counsel that such Wholly Owned
Foreign Subsidiary has taken all corporate or partnership action
necessary to duly approve and authorize its execution, delivery
and performance of such guarantee and any other documents which
it is required to execute.
34.
35. Section 6.18 Year 2000 Compliance . Borrower shall
perform all acts reasonably necessary (and will cause its
Subsidiaries to perform all acts reasonably necessary) to ensure
that Borrower and its Subsidiaries and any business in which
Borrower or its Subsidiaries holds a substantial interest
continue to be Year 2000 Compliant. Borrower shall, immediately
upon request, provide to the Administrative Agent such
certifications or other evidence of Borrower's compliance with
the terms of this section as the Administrative Agent may from
time to time require.
36.
Remainder of Page Intentionally Left Blank.
ARTICLE VII - Negative Covenants of Borrower
To conform with the terms and conditions under which each
Lender is willing to have credit outstanding to Borrower, and to
induce each Lender Party to enter into this Agreement and make
the Loans, Borrower warrants, covenants and agrees that until the
full and final payment of the Obligations and the termination of
this Agreement, unless Majority Lenders have previously agreed
otherwise, no Restricted Person shall:
1. Section 7.Indebtedness . Except as otherwise provided
in Section 7.2, create, incur, assume, or suffer to exist any
Indebtedness, whether by way of loan or otherwise; provided,
however, the foregoing restriction shall not apply to (a) the
Obligations, (b) unsecured accounts payable incurred in the
ordinary course of business, which are not unpaid in excess of
sixty (60) days beyond invoice date or are being contested in
good faith and as to which such reserve as is required by GAAP
has been made, (c) purchase money Indebtedness not to exceed the
Dollar Equivalent of $1,000,000 in the aggregate during the term
of this Agreement incurred solely for the purpose of financing
the acquisition of fixed assets, including any extensions,
renewals and replacements thereof, (d) Indebtedness which has
been subordinated to the Obligations in form and substance and
upon terms satisfactory to Administrative Agent and Majority
Lenders, (e) inter-company Indebtedness (i) incurred by Borrower
or any Guarantor and payable to Borrower or another Guarantor, or
(ii) incurred by a Canadian Subsidiary and payable to Borrower, a
Guarantor or another Canadian Subsidiary, including any
extensions, renewals and replacements of any such inter-company
Indebtedness; provided that the sum of (A) the Canadian Dollar
Equivalent of the aggregate outstanding principal amount of all
loans and advances made by Restricted Persons to Canadian
Subsidiaries, plus (B) the Canadian Dollar Equivalent of the
aggregate amount of all equity Investments made by Restricted
Persons in Canadian Subsidiaries, does not exceed at any time
during the term of this Agreement fifteen percent (15%) of
Borrower's Consolidated total assets, and (f) operating leases
entered into in the ordinary course of business but not to exceed
at any one time the Dollar Equivalent of $10,000,000, (g)
Indebtedness associated with leases which in accordance with GAAP
would be capitalized but not to exceed at any one time the Dollar
Equivalent of $10,000,000, (h) Liabilities of Butcher Interest
Partnership to Bank of America under their Credit Agreement of
even date herewith, (i) Hedging Contracts with third Persons
existing on the date hereof, and (j) future Hedging Contracts
with third Person relating to commodities or commodity prices..
2.
3. Section 7.Contingent Obligations . Create, incur,
assume, or suffer to exist any Contingent Obligation; provided,
however, the foregoing restriction shall not apply to (a)
performance guarantees and performance surety or other bonds and
other similar instruments provided in the ordinary course of
business but not to exceed in the aggregate at any one time the
Dollar Equivalent of $10,000,000, (b) existing guaranties to Pan
Grande Joint Venture not to exceed $12,000 in the aggregate,
which guaranties cannot be increased, (c) any indemnification
obligations of Borrower in favor of K-Pipe, (d) the obligations
of any Restricted Person in its capacity as a general partner of
Butcher Interest Partnership, a Delaware general partnership, and
(f) guarantees by a Restricted Person of Indebtedness of another
Restricted Person permitted under Section 7.1.
4.
5. Section 7.Liens . Create, incur, assume, or suffer to
exist any Lien on any of its properties or assets, whether now
owned or hereafter acquired; provided, however, the foregoing
restrictions shall not apply to Permitted Liens.
6. Section 7.Sales of Assets . Sell, transfer, or
otherwise dispose of its properties or assets, whether now owned
or hereafter acquired, except for (a) sales, transfers or
dispositions in the ordinary course of business not to exceed the
Dollar Equivalent of $5,000,000 per year up to an aggregate
during the term of this Agreement of $10,000,000, (b) transfers
of assets among Borrower and Subsidiary Guarantors of $5,000,000
per year up to an aggregate during the term of this Agreement of
$10,000,000, and (c) transfers of assets from Borrower to a non-
Guarantor Subsidiary or from a Guarantor Subsidiary to non-
Guarantor Subsidiary in an amount not to exceed the Dollar
Equivalent of $500,000 in the aggregate in any twelve month
period; provided that after giving effect to such sale, transfer
or other disposition no Default or Event of Default would exist.
Administrative Agent is hereby authorized to execute on behalf
of all Lenders, without the joinder of or further action by any
Lender, any release or similar instrument necessary in connection
with any sale of assets permitted by this Agreement.
7.
8. Section 7.Leasebacks . Enter into any agreement to sell
or transfer any property and thereafter rent or lease as lessee
such property or other property intended for the same use or
purpose as the property sold or transferred except for sales or
transfers not to exceed the Dollar Equivalent of $5,000,000 per
year up to an aggregate during the term of this Agreement of
$10,000,000, which limitation is inclusive of any operating or
capitalized leases permitted by subsections 7.1(f) and (g).
9.
10. Section 7.Loans or Advances . Except as otherwise
provided in Section 7.7, make or agree to make or allow to remain
outstanding any loans or advances to any Person; provided,
however, the foregoing restrictions shall not apply to (a)
advances or extensions of credit in the form of accounts
receivable incurred in the ordinary course of business and upon
terms common in the industry for such accounts receivable, (b)
advances to employees of any Restricted Person for the payment of
expenses in the ordinary course of business, (c) loans or
advances by Borrower to any Guarantor or by one Guarantor to
another Guarantor or to any of their respective Subsidiaries;
provided any such loans or advances are subject to the
limitations specified in Section 7.1(e), (d) loans or advances to
joint ventures in amounts not to exceed the Dollar Equivalent of
$10,000,000 in the aggregate; provided that within three (3)
Business Days of the making of such a loan or advance, Borrower
provides Administrative Agent with written notice thereof which
shall include a detailed explanation of the business purpose for
such loan or advance, (e) loans or advances made by one Canadian
Subsidiary to another Canadian Subsidiary, (f) loans or advances
made by a Restricted Person to a Canadian Subsidiary; provided
that, after giving effect to the making by any Restricted Person
of any loan or advance to a Canadian Subsidiary, the sum of (A)
the Canadian Dollar Equivalent of the aggregate outstanding
principal amount of all loans and advances made by Restricted
Persons to the Canadian Subsidiaries, plus (B) the Canadian
Dollar Equivalent of the aggregate amount of all equity
Investments made by Restricted Persons in the Canadian
Subsidiaries, does not exceed at any time during the term of this
Agreement fifteen percent (15%) of Borrower's Consolidated total
assets or (g) loans and advances extended by one or more
Restricted Persons not covered by any of the foregoing in an
aggregate amount not to exceed at any one time $500,000.
11.
12. Section 7.Investments . Except as otherwise provided in
Section 7.6 and except for Permitted Investments, acquire
Investments in, or purchase or otherwise acquire all or
substantially all of the assets of any Person.
13.
14. Section 7.Distributions . Declare, pay, or make,
whether in cash or property, any Distribution on, or purchase,
redeem, or otherwise acquire for value, any share of any class of
it's capital stock or any partnership or other interest at any
time; provided, that Borrower may declare, pay, or make, whether
in cash or property of Borrower, any Distribution on, or
purchase, redeem, or otherwise acquire for value, any share of
any class of Borrower's capital stock; provided, however, no
Default or Event of Default exists or would exist after giving
effect to such Distribution.
15.
16. Section 7.Issuance of Stock; Changes in Corporate
Structure . Permit any of its Subsidiaries to issue or agree to
issue additional shares of capital stock, in one or any series of
transactions.
17.
18. Section 7.Transactions with Affiliates . Directly or
indirectly, enter into any transaction (including the sale,
lease, or exchange of property or the rendering of service) with
any of its Affiliates, other than upon fair and reasonable terms
no less favorable than could be obtained in an arm's length
transaction with a Person which was not an Affiliate, and if such
transactions are on less than an arm's length basis, Borrower
will provide Administrative Agent with a detailed explanation of
the business purpose therefore; provided, however, the foregoing
shall not apply to transactions between Borrower and any
Guarantor or between Guarantors; and provided further, however,
the foregoing shall not apply to any transaction related to
Borrower's acquisition of a revenue interest burdening the
operations of KPC.
19.
20. Section 7.Lines of Business . Expand, on its own or
through any Subsidiary, into any line of business other than
those in which Restricted Persons are engaged as of the date
hereof and other businesses reasonably related thereto.
21.
22. Section 7.Cash Flow Coverage Ratio . Permit its Cash
Flow Coverage Ratio for any four consecutive fiscal quarters to
be less than 1.1 to 1.0 prior to June 30, 2000 or to be less than
1.25 to 1.0 on and after June 30, 2000. As used in this Section,
"Cash Flow Coverage Ratio" is the ratio of Borrower's
Consolidated EBITDA to the sum of (i) Borrower's Consolidated
Interest Expense for such period, plus (ii) the greater of (A)
current maturities of Consolidated Total Funded Debt, and (B)
1/10th of Consolidated Total Funded Debt. Testing of the Cash
Flow Coverage Ratio shall begin with the pro forma financial
statements delivered pursuant to Section 6.2(b), for the fiscal
quarter ending September 30, 1999 and shall be based on
information contained in such financial statements and Borrower's
financial statements for the preceding three fiscal quarters.
23.
24. Section 7.Debt to Capitalization Ratio . Permit its
Debt to Capitalization Ratio to be greater than .70 to 1.0 prior
to June 30, 2000 or to be greater than .65 to 1.0 on and after
June 30, 2000.
25.
26. Section 7.Current Ratio . Permit the ratio of
Consolidated Current Assets to Consolidated Current Liabilities
to be less than 1.0 to 1.0 at any time.
27.
28. Section 7.Tangible Net Worth . Permit Consolidated
Tangible Net Worth as of the close of any fiscal quarter to be
less than the sum of (a) ninety percent (90%) of Borrower's pro
forma Consolidated Tangible Net Worth as of September 30, 1999,
plus (b) fifty percent (50%) of positive Consolidated Net Income
for all fiscal periods ending subsequent to September 30, 1999,
plus (c) seventy-five percent (75%) of the net proceeds of any
equity offering of any Restricted Person.
29.
(a) Section 7.Limitation on Mergers . Will merge or
consolidate with or into any other Person except that any
Subsidiary of Borrower may be merged into or consolidated with
another Subsidiary of Borrower, so long as a Guarantor is the
surviving business entity, or Borrower, so long as Borrower is
the surviving business entity. No Subsidiary of Borrower will
issue any additional shares of its capital stock or other
securities or any options, warrants or other rights to acquire
such additional shares or other securities except to Borrower and
only to the extent not otherwise forbidden under the terms
hereof. No Subsidiary of Borrower which is a partnership will
allow any diminution of Borrower's interest (direct or indirect)
therein.
(b)
30. Section 7.Hedging Contracts . No Restricted Person will
enter into any Hedging Contract involving interest rate or
foreign exchange transactions except with a Lender.
31.
Remainder of Page Intentionally Left Blank.
ARTICLE VIII - Events of Default and Remedies
1. Section 8.Events of Default . Each of the following
events constitutes an Event of Default under this Agreement (an
"Event of Default"):
2.
(a) any Restricted Person fails to pay any principal
component of any Obligation when due and payable, whether at a
date for the payment of a fixed installment or as a contingent or
other payment becomes due and payable or as a result of
acceleration or otherwise;
(b)
(c) 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 (3) Business
Days after the same becomes due;
(d)
(e) any "default" or "event of default" occurs under any
Loan Document as defined therein, and the same is not remedied
within the applicable period of grace (if any) provided in such
Loan Document;
(f)
(g) any Restricted Person fails to duly observe, perform or
comply with any covenant, agreement or provision of Section 6.4
or Article VII;
(h)
(i) any Restricted Person fails (other than as referred to
in subsections (a), (b), (c) or (d) above) to duly observe,
perform or comply with any covenant, agreement, condition or
provision of any Loan Document, and such failure remains
unremedied for a period of thirty (30) days after the earlier of
notice of such failure being given by Administrative Agent to
Borrower or Borrower first obtaining knowledge thereof;
(j)
(k) 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;
(l)
(m) any Restricted Person fails to duly observe, perform or
comply with any agreement with any Person or any term or
condition of any instrument, if such agreement or instrument is
materially significant to Borrower or to Borrower and its
Subsidiaries on a Consolidated basis or materially significant to
any Guarantor, and such failure is not remedied within the
applicable period of grace (if any) provided in such agreement or
instrument;
(n)
(i) any Restricted Person fails to pay any portion, when
such portion is due, of any of its Indebtedness in excess of
$3,000,000, or breaches or defaults in the performance of any
agreement or instrument by which any such Indebtedness is issued,
evidenced, governed, or secured, and any such failure, breach or
default continues beyond any applicable period of grace provided
therefor;
(ii)
(iii) either any "accumulated funding deficiency" (as
defined in Section 412(a) of the Internal Revenue Code) in excess
of $100,000 exists with respect to any ERISA Plan, whether or not
waived by the Secretary of the Treasury or his delegate, or 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 $100,000 (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);
(iv)
(o) any Restricted Person:
(p)
(i) suffers the entry against it of a judgment, decree or
order for relief by a Tribunal of competent jurisdiction in an
involuntary proceeding commenced under any applicable bankruptcy,
insolvency or other similar Law of any jurisdiction now or
hereafter in effect, including the Bankruptcy Code or has any
such proceeding commenced against it which remains undismissed
for a period of sixty (60) days; or
(i) commences a voluntary case under any applicable
bankruptcy, insolvency or similar Law now or hereafter in effect,
including the Bankruptcy Code; 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 fails generally to pay (or admits in writing its
inability to pay) its debts as such debts become due; or takes
corporate or other action to authorize any of the foregoing; or
(i) suffers the appointment of or taking possession by a
receiver, liquidator, assignee, custodian, trustee, sequestrator
or similar official of all or a substantial part of its assets or
of any part of the Collateral in a proceeding brought against or
initiated by it, and such appointment or taking possession is
neither made ineffective nor discharged within sixty (60) 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
(i) suffers the entry against it of a final judgment for
the payment of money in excess of the Dollar Equivalent of
$3,000,000 (not covered by insurance satisfactory to
Administrative Agent in its discretion), unless the same is
discharged within thirty (30) 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
(i) suffers a writ or warrant of attachment or any similar
process to be issued by any Tribunal against all or any
substantial part of its assets or any part of the Collateral, and
such writ or warrant of attachment or any similar process is not
stayed or released within thirty (30) days after the entry or
levy thereof or after any stay is vacated or set aside;
(i) conceals, removes, or diverts, or permits to be
concealed, removed, or diverted, any part of its property, with
intent to hinder, delay, or defraud its creditors or any of them;
(i) makes or suffers a transfer of any of its property
which may be fraudulent under any bankruptcy, fraudulent
conveyance, or similar Law;
(i) makes any transfer of its property to or for the
benefit of a creditor at a time when other creditors similarly
situated have not been paid; or
(i) shall have suffered or permitted, while insolvent, any
creditor to obtain a Lien upon any of its property through legal
proceedings or distraint which is not vacated within thirty (30)
days from the date thereof;
(a) any Material Adverse Change occurs and continues for a
period of thirty (30) days;
(b)
(c) any Security Document shall for any reason not, or
cease to, create valid and perfected first-priority Liens in
favor of the Administrative Agent, for the benefit of the
Lenders, against the Collateral purportedly covered thereby and
the failure to create or maintain such first-priority Lien in
favor of the Administrative Agent, for the benefit of the Lender
Party, shall materially and adversely affect the value of the
Collateral taken as a whole; and
(d)
(e) (m) there occurs any Change of Control.
(f)
(1) Upon the occurrence of an Event of Default described in
subsection (j)(i), (j)(ii) or (j)(iii) of this section with
respect to any Restricted Person, 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, increase, extend or modify
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: terminate any
obligation of Lenders to make Loans hereunder, and any obligation
of LC Issuer to issue, increase, extend or modify Letters of
Credit hereunder; and 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.
(2)
2. Section 8.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.
3.
4.
5.
6.
ARTICLE IX - Administrative Agent
(a) Section 9.Appointment, Powers, and Immunities . Each
Lender hereby irrevocably appoints and authorizes Administrative
Agent to act as its Administrative Agent under this Agreement and
the other Loan Documents with such powers and discretion as are
specifically delegated to Administrative Agent by the terms of
this Agreement and the other Loan Documents, together with such
other powers as are reasonably incidental thereto.
Administrative Agent (which term as used in this sentence and in
Section 9.5 and the first sentence of Section 9.6 hereof shall
include its Affiliates and its own and its Affiliates' officers,
directors, employees, and agents): shall not have any duties or
responsibilities except those expressly set forth in this
Agreement and shall not be or be deemed to be a trustee or
fiduciary for any Lender; shall not be responsible to the
Lenders for any recital, statement, representation, or warranty
(whether written or oral) made in or in connection with any Loan
Document or any certificate or other document referred to or
provided for in, or received by any of them under, any Loan
Document, or for the value, validity, effectiveness, genuineness,
enforceability, or sufficiency of any Loan Document, or any other
document referred to or provided for therein or for any failure
by any Restricted Person or any other Person to perform any of
its obligations thereunder; shall not be responsible for or have
any duty to ascertain, inquire into, or verify the performance
or observance of any covenants or agreements by any Restricted
Person or the satisfaction of any condition or to inspect the
property (including the books and records) of any Restricted
Person or any of its Subsidiaries or Affiliates; shall not be
required to initiate or conduct any litigation or collection
proceedings under any Loan Document; and shall not be
responsible for any action taken or omitted to be taken by it
under or in connection with any Loan Document, except for its own
gross negligence or willful misconduct. Administrative Agent may
employ agents and attorneys-in-fact and shall not be responsible
for the negligence or misconduct of any such agents or attorneys-
in-fact selected by it with reasonable care.
1. Section 9.Reliance by Administrative Agent .
Administrative Agent shall be entitled to rely upon any
certification, notice, instrument, writing, or other
communication (including, without limitation, any thereof by
telephone or telecopy) believed by it to be genuine and correct
and to have been signed, sent or made by or on behalf of the
proper Person or Persons, and upon advice and statements of legal
counsel (including counsel for any Restricted Person),
independent accountants, and other experts selected by
Administrative Agent. Administrative Agent may deem and treat
the payee of any Note as the holder thereof for all purposes
hereof unless and until Administrative Agent receives and accepts
an Assignment and Acceptance executed in accordance with Section
10.6 hereof. As to any matters not expressly provided for by
this Agreement, Administrative Agent shall not be required to
exercise any discretion or take any action, but shall be required
to act or to refrain from acting (and shall be fully protected in
so acting or refraining from acting) upon the instructions of
the Majority Lenders, and such instructions shall be binding on
all of the Lenders; provided, however that Administrative Agent
shall not be required to take any action that exposes
Administrative Agent to personal liability or that is contrary to
any Loan Document or applicable Law or unless it shall first be
indemnified to its satisfaction by the Lenders against any and
all liability and expense which may be incurred by it by reason
of taking any such action.
2.
3. Section 9.Defaults . Administrative Agent shall not be
deemed to have knowledge or notice of the occurrence of a Default
or Event of Default unless Administrative Agent has received
written notice from a Lender or Borrower specifying such Default
or Event of Default and stating that such notice is a "Notice of
Default". In the event that Administrative Agent receives such a
notice of the occurrence of a Default or Event of Default,
Administrative Agent shall give prompt notice thereof to the
Lenders and LC Issuer (and to Borrower if such Notice of Default
is given by a Lender). Administrative Agent shall (subject to
Section 9.2) take such action with respect to such Default or
Event of Default as shall reasonably be directed by the Majority
Lenders; provided that, unless and until Administrative Agent
shall have received such directions, Administrative Agent may
(but shall not be obligated to) take such action, or refrain from
taking such action, with respect to such Default or Event of
Default as it shall deem advisable in the best interest of the
Lender Parties.
4.
5. Section 9.Rights as Lender . With respect to its
Commitment Percentage of the Commitment and its Percentage Share
of the Facility Amount and the Loans made by it, Administrative
Agent (and any successor acting as Administrative Agent) in its
capacity as a Lender hereunder shall have the same rights and
powers hereunder as any other Lender and may exercise the same as
though it were not acting as Administrative Agent, and the term
"Lender" or "Lenders" shall, unless the context otherwise
indicates, include Administrative Agent in its individual
capacity. Administrative Agent (and any successor acting as
Administrative Agent) and its Affiliates may (without having to
account therefor to any Lender) accept deposits from, lend money
to, make Investments in, provide services to, and generally
engage in any kind of lending, trust, or other business with any
Restricted Person or any of its Subsidiaries or Affiliates as if
it were not acting as Administrative Agent, and Administrative
Agent (and any successor acting as Administrative Agent) and its
Affiliates may accept fees and other consideration from any
Restricted Person or any of its Subsidiaries or Affiliates for
services in connection with this Agreement or otherwise without
having to account for the same to the Lenders.
6.
7. Section 9.Indemnification . The Lenders agree to
indemnify Administrative Agent (to the extent not reimbursed
under Section 10.4, but without limiting the obligations of
Borrower under such section) ratably in accordance with their
respective Percentage Shares, for any and all liabilities,
obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses (including attorneys' fees), or
disbursements of any kind and nature whatsoever that may be
imposed on, incurred by or asserted against Administrative Agent,
in its capacity as Administrative Agent (including by any Lender)
in any way relating to or arising out of any Loan Document or the
transactions contemplated thereby or any action taken or omitted
by Administrative Agent under any Loan Document (INCLUDING ANY OF
THE FOREGOING ARISING FROM THE NEGLIGENCE OF ADMINISTRATIVE
AGENT); provided that no Lender shall be liable for any of the
foregoing to the extent they arise from the gross negligence or
willful misconduct of the Person to be indemnified; provided,
further, however, that any action taken or omitted to be taken by
Administrative Agent at the direction of the Majority Lenders is
agreed not to constitute gross negligence or willful misconduct.
Without limitation of the foregoing, each Lender agrees to
reimburse Administrative Agent promptly upon demand for its
ratable share of any costs or expenses payable by Borrower under
Section 10.4 to the extent that Administrative Agent is not
promptly reimbursed for such costs and expenses by Borrower. The
agreements contained in this section shall survive payment in
full of the Loans and all other amounts payable under this
Agreement.
8.
9. Section 9.Non-Reliance on Administrative Agent and
Other Lenders . Each Lender agrees that it has, independently
and without reliance on Administrative Agent or any other Lender,
and based on such documents and information as it has deemed
appropriate, made its own credit analysis of Borrower and its
Subsidiaries and decision to enter into this Agreement and that
it will, independently and without reliance upon Administrative
Agent or any other Lender, and based on such documents and
information as it shall deem appropriate at the time, continue to
make its own analysis and decisions in taking or not taking
action under the Loan Documents. Except for notices, reports,
and other documents and information expressly required to be
furnished to the Lenders by Administrative Agent hereunder,
Administrative Agent shall not have any duty or responsibility to
provide any Lender with any credit or other information
concerning the affairs, financial condition, or business of any
Restricted Person or any of its Subsidiaries or Affiliates that
may come into the possession of Administrative Agent or any of
its Affiliates.
10.
11. Section 9.Intentionally Omitted .
12.
(a) Section 9.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 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
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, 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.
(b)
13. Section 9.Intentionally Omitted .
14.
15. Section 9.Benefit of Article IX . The provisions of
this Article (other than the following Section 9.11) 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
Party. Lender Parties may waive or amend such provisions as they
desire without any notice to or consent of Borrower or any
Restricted Person.
16.
17. Section 9.Successor Administrative Agent .
Administrative Agent may, and at the request of Majority Lenders
shall, resign as Administrative Agent upon 30 days' notice to
Lenders. If Administrative Agent resigns under this Agreement,
Majority Lenders shall appoint from among Lenders a successor
administrative agent for Lenders which successor administrative
agent shall be approved by Borrower. If no successor
administrative agent is appointed prior to the effective date of
the resignation of Administrative Agent, Administrative Agent may
appoint, after consulting with Lenders and Borrower, a successor
administrative agent from among Lenders. Upon the acceptance of
its appointment as successor administrative agent hereunder, such
successor administrative agent shall succeed to all the rights,
powers and duties of the retiring Administrative Agent and the
term "Administrative Agent" shall mean such successor
administrative agent and the retiring Administrative Agent's
appointment, powers and duties as Administrative Agent shall be
terminated. After any retiring Administrative Agent's
resignation hereunder as Administrative Agent, the provisions of
this Article IX and Sections 10.4 and 10.13 shall inure to its
benefit as to any actions taken or omitted to be taken by it
while it was Administrative Agent under this Agreement. If no
successor administrative agent has accepted appointment as
Administrative Agent by the date which is 30 days following a
retiring Administrative Agent's notice of resignation, the
retiring Administrative Agent's resignation shall nevertheless
thereupon become effective and Lenders shall perform all of the
duties of Administrative Agent hereunder until such time, if any,
as Majority Lenders appoint a successor agent as provided for
above. Notwithstanding the foregoing, however, Bank of America
may not be removed as Administrative Agent at the request of
Majority Lenders unless Bank of America shall also simultaneously
be replaced as "LC Issuer" hereunder pursuant to documentation in
form and substance reasonably satisfactory to Bank of America.
18.
19. Section 9.Documentation Agent and Syndication Agent .
None of the Lenders identified on the facing page or signature
pages of this Agreement as Documentation Agent or Syndication
Agent shall have any right, power, obligation, liability,
responsibility or duty under this Agreement other than those
applicable to all Lenders as such. Without limiting the
foregoing, none of the Lenders so identified as a Documentation
Agent or Syndication Agent shall have or be deemed to have any
fiduciary relationship with any Lender. Each Lender acknowledges
that it has not relied, and will not rely, on any of the Lenders
so identified in deciding to enter into this Agreement or in
taking or not taking action hereunder.
20.
Remainder of Page Intentionally Left Blank.
ARTICLE X - Miscellaneous
1. Section 10.Waivers and Amendments; Acknowledgments .
(a) Waivers and Amendments.
(b)
(i) (i) No failure or delay (whether by course of conduct
or otherwise) by any Lender Party 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 if such party is
Borrower, by Borrower, if such party is Administrative Agent or
LC Issuer, by such party, and 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 10.10). 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: 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 4.3(f)); increase
such Lender's Commitment (unless such Lender's Commitment is
increased consensually pursuant to Section 10.6); reduce any
fees payable to such Lender hereunder, or the principal of, or
interest on, such Lender's Note; postpone any date fixed for any
payment of any such fees, principal or interest; 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; release Borrower
from its obligation to pay such Lender's Note or any Guarantor
from its guarantee of such payment or release all or
substantially all of the Collateral; or amend this Section
10.1(a).
(ii) No amendment, waiver or consent shall, unless in
writing and signed by LC Issuer in addition to Majority
Lenders or all Lenders, as the case may be, affect the
rights or duties of LC Issuer; no amendment, waiver or
consent shall, unless in writing and signed by
Administrative Agent in addition to Majority Lenders or all
Lenders, as the case may be, affect the rights or duties of
Administrative Agent; and the Fee Letter may be amended, or
rights or privileges thereunder waived, in a writing
executed by the parties thereto. Any amendment,
modification, supplement, termination, waiver or consent
pursuant to this Section shall apply equally to, and shall
be binding upon, all Lender Parties and Administrative
Agent.
(i) Acknowledgments and Admissions. Borrower hereby
represents, warrants, acknowledges and admits that it has been
advised by counsel in the negotiation, execution and delivery of
the Loan Documents to which it is a party, 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 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,
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, no
Lender Party has any fiduciary obligation toward Borrower with
respect to any Loan Document or the transactions contemplated
thereby, 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, no partnership or joint
venture exists with respect to the Loan Documents between any
Restricted Person and any Lender Party, Administrative Agent is
not Borrower's Administrative Agent, but Administrative Agent for
Lenders, 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, 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 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.
(ii)
(b) 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.
(c)
(d) There are no unwritten oral agreements between the
parties.
(e)
2. Section 10.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.
3.
(a) Section 10.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 each other Restricted Person 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 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, in the case of facsimile or other
electronic transmission, upon delivery in legible form, or in
the case of registered or certified United States mail, three
days after deposit in the mail; provided, however, that no notice
pursuant to Article II shall become effective until actually
received by Administrative Agent or the LC Issuer, as
appropriate.
(b)
4. Section 10.Payment of Expenses; Indemnity .
5.
(i) Payment of Expenses. Whether or not the transactions
contemplated by this Agreement are consummated, Borrower will
promptly (and in any event, within thirty (30) days after any
invoice or other statement or notice) pay: 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; all reasonable
costs and expenses incurred by or on behalf of Administrative
Agent or Book Manager (including without limitation attorneys'
fees, consultants' fees and engineering fees, travel costs and
miscellaneous expenses) and following any Default or Event of
Default, of each Lender, in connection with the negotiation,
preparation, due diligence, syndication, execution and delivery
and administration of the Loan Documents, and any and all
consents, waivers or other documents or instruments relating
thereto, 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, the borrowings
hereunder and other action reasonably required in the course of
administration hereof, 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 all reasonable costs and expenses
incurred by or on behalf of any Lender Party (including without
limitation 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. In addition to
the foregoing and without in any way limiting Lenders' rights
under Sections 3.2 through 3.6, if during the 180 day period
following the closing of this Agreement, any breakage costs,
charges or fees are incurred on account of the syndication of
this Agreement, Borrower shall immediately reimburse
Administrative Agent for any such costs, charges or fees.
(a) Indemnity. Borrower agrees to indemnify Book Manager
and each Lender Party and their Affiliates (in this section
collectively called "Indemnitees"), 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 any
such Indemnitee 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 Indemnitee or any other Person or any liabilities or
duties of any Indemnitee or any other Person with respect to
Hazardous Materials found in or released into the environment).
(b)
(c) The foregoing indemnification shall apply at all times after
borrower's acceptance of the lenders' commitments notwithstanding
any failure to fund the escrow created pursuant to the escrow
agreement or to make the loan to borrower contemplated by this
agreement and 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
indemnitee,
(d)
(e) provided only that no Indemnitee 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 Indemnitee, 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 "Indemnitee" shall refer not only to each Person designated
as such in this Section 10.4(b) but also to each director,
officer, agent, attorney, employee, representative and Affiliate
of such Indemnitee.
1. Section 10.Joint and Several Liability; Parties in
Interest . All Obligations which are incurred by two or more
Restricted Persons shall be their joint and several obligations
and liabilities. All grants, covenants and agreements contained
in the Loan Documents shall bind and inure to the benefit of the
parties thereto and their respective successors and assigns;
provided, however, that no Restricted Person may assign or
transfer any of its rights or delegate any of its duties or
obligations under any Loan Document without the prior consent of
Majority Lenders. Neither Borrower nor any Affiliates of
Borrower shall 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.
1. Section 10.Assignments and Participations .
2.
(a) Each Lender may assign to one or more Eligible
Transferees all or a portion of its rights and obligations under
this Agreement (including, without limitation, all or a portion
of its Loans, its Note, and its Percentage Share of the Facility
Amount and its Commitment Percentage of the Commitment; provided,
however, that:
(b)
(i) each such assignment shall be to an Eligible
Transferee;
(i) except in the case of an assignment to another Lender
or an assignment of all of a Lender's rights and obligations
under this Agreement, any such partial assignment shall be in an
amount at least equal to $5,000,000 or an integral multiple of
$1,000,000 in excess thereof;
(i) each such assignment by a Lender shall be of a
constant, and not varying, percentage of all of its rights and
obligations under the Loan Documents; and
(i) the parties to such assignment shall execute and
deliver to Administrative Agent for its acceptance an Assignment
and Acceptance in the form of Exhibit F hereto, together with any
Note subject to such assignment and a processing fee of $3,500.
Upon execution, delivery, and acceptance of such Assignment and
Acceptance, the assignee thereunder shall be a party hereto and,
to the extent of such assignment, have the obligations, rights,
and benefits of a Lender hereunder and the assigning Lender
shall, to the extent of such assignment, relinquish its rights
and be released from its obligations under this Agreement. Upon
the consummation of any assignment pursuant to this section, the
assignor, Administrative Agent and Borrower shall make
appropriate arrangements so that, if required, new Notes are
issued to the assignor and the assignee. If the assignee is not
incorporated under the Laws of the United States or a state
thereof, it shall deliver to Borrower and Administrative Agent
certification as to exemption from deduction or withholding of
Taxes in accordance with Section 3.10(d).
(a) Administrative Agent shall maintain at its address
referred to in Section 10.3 a copy of each Assignment and
Acceptance delivered to and accepted by it.
(b)
(i) Upon its receipt of an Assignment and Acceptance
executed by the parties thereto, together with any Note subject
to such assignment and payment of the processing fee,
Administrative Agent shall, if such Assignment and Acceptance has
been completed and is in substantially the form of Exhibit F
hereto, accept such Assignment and Acceptance, record the
information contained therein in the Register and give prompt
notice thereof to the parties thereto.
(ii)
(iii) Each Lender may sell participations to one or more
Persons in all or a portion of its rights and obligations under
this Agreement (including all or a portion of its Facility Amount
and its Loans); provided, however, that such Lender's
obligations under this Agreement shall remain unchanged, such
Lender shall remain solely responsible to the other parties
hereto for the performance of such obligations, the participant
shall be entitled to the benefit of the yield protection
provisions contained in Article III and the right of offset
contained in Section 6.16, and Borrower, Administrative Agent
and LC Issuer shall continue to deal solely and directly with
such Lender in connection with such Lender's rights and
obligations under this Agreement, and such Lender shall retain
the sole right to enforce the obligations of Borrower relating to
its Loans and its Note and to approve any amendment,
modification, or waiver of any provision of this Agreement (other
than amendments, modifications, or waivers decreasing the amount
of principal of or the rate at which interest is payable on such
Loans or Note, extending any scheduled principal payment date or
date fixed for the payment of interest on such Loans or Note,
releasing all or substantially all of the Guarantors or
Collateral or increasing its Commitment).
(iv)
(c) Notwithstanding any other provision set forth in this
Agreement, any Lender may at any time assign and pledge all or
any portion of its Loans and its Note to any Federal Reserve Bank
as collateral security pursuant to Regulation A and any Operating
Circular issued by such Federal Reserve Bank. No such assignment
shall release the assigning Lender from its obligations
hereunder.
(d)
(e) Any Lender may furnish any information concerning
Borrower or any of its Subsidiaries in the possession of such
Lender from time to time to assignees and participants (including
prospective assignees and participants); subject, however, to the
provisions of Section 10.7.
(f)
(g) Section 10.Confidentiality . Each Lender Party agrees
to keep confidential any information furnished or made available
to it by Borrower pursuant to this Agreement that is marked
confidential; provided that nothing herein shall prevent any
Lender Party from disclosing such information to any other
Lender Party or any Affiliate of any Lender Party, or any
officer, director, employee, agent, or advisor of any Lender
Party or Affiliate of any Lender Party, to any other Person if
reasonably incidental to the administration of the credit
facility provided herein, as required by any Law, upon the
order of any Tribunal, upon the request or demand of any
Tribunal, that is or becomes available to the public or that is
or becomes available to any Lender Party other than as a result
of a disclosure by any Lender Party prohibited by this Agreement,
in connection with any litigation to which such Lender Party or
any of its Affiliates may be a party, to the extent necessary in
connection with the exercise of any remedy under this Agreement
or any other Loan Document, and subject to provisions
substantially similar to those contained in this section, to any
actual or proposed participant or assignee.
(h)
2. Section 10.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 Texas and shall be construed and enforced in accordance with
and governed by the Laws of the State of Texas and the Laws of
the United States, without regard to principles of conflicts of
law. Chapter 346 of the Texas Finance Code (which regulates
certain revolving credit loan accounts and revolving tri-party
accounts) does not apply to this Agreement or to the Notes.
Borrower hereby irrevocably submits itself and each other
Restricted Person to the jurisdiction of the state and federal
courts sitting in the State of Texas and agrees and consents that
service of process may be made upon it or any Restricted Person
in any legal proceeding relating to the Loan Documents or the
Obligations by any means allowed under Texas or federal law. Any
legal proceeding arising out of or in any way related to any of
the Loan Documents shall be brought and litigated exclusively in
the United States District Court for the Southern District of
Texas, to the extent it has subject matter jurisdiction, and
otherwise in the Texas District Courts sitting in Harris County,
Texas. The parties hereto hereby waive and agree not to assert,
by way of motion, as a defense or otherwise, that any such
proceeding is brought in an inconvenient forum or that the venue
thereof is improper, and further agree to a transfer of any such
proceeding to a federal court sitting in the State of Texas to
the extent that it has subject matter jurisdiction, and otherwise
to a state court in Houston, Texas. In furtherance thereof,
Borrower and Lender Parties each hereby acknowledge and agree
that it was not inconvenient for them to negotiate and receive
funding of the transactions contemplated by this Agreement in
such county and that it will be neither inconvenient nor unfair
to litigate or otherwise resolve any disputes or claims in a
court sitting in such county.
3.
(a) Section 10.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 charged by applicable Law from time to time in
effect. Neither any Restricted Person nor any present or future
guarantors, endorsers, or other Persons hereafter becoming liable
for payment of any Obligation shall ever be liable for unearned
interest thereon or shall ever be required to pay interest
thereon in excess of the maximum amount that may be lawfully
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
collect excessive unearned interest or finance charges in the
event the maturity of any Obligation is accelerated. If the
maturity of any Obligation is accelerated for any reason, any
Obligation is prepaid and as a result any amounts held to
constitute interest are determined
